May 29, 1917

CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

Then, where is your free trade doctrine?

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LIB

Hugh Guthrie

Liberal

Mr. GUTHRIE:

I was asked a question, and I have answered it. Now, to summarize what I intended to say: We cannot

maintain this taxation on the ground that it is necessary for revenue purposes, for the revenues from it amount to nothing. It can only be maintained on the ground that it is necessary for the protection of the people in Canada who are engaged in the production of these various goods. We are told that the war tax of 7J per cent as

against foreign countries and 5 per cent as against Great Britain has been productive last year of an increase of $38,000,000 in our customs returns, and for the preceding year of $25,000,000, and that it was absolutely necessary to imposethat tax in order to raise the revenue to meet the requirements of the country during this period of stress due to the war. I agree that we must have the' money, and I voted for the increase, because I did not dissent from it-and neither did any one in this House dissent from it-and I am not dissenting from it now, unless some better way of raising the money can be found which the Government will adopt. When I was elected to this House seventeen years ago, I was elected on a tariff policy which I believed in then and believe in now-a tariff sufficient to produce a revenue necessary to carry on the affairs of this country economically. I believe that for many and many a year to come the greater portion of the revenues necessary for the country are going to be raised by a customs tariff. But there are other ways of raising revenue which I think the Government has, to some extent, slighted. I desire to point out to the Minister of Finance one or two things which, I think, he has rather overlooked in considering the raising of the money necessary for the carrying on of this war. I am prepared to vote for a higher tariff if more money will come from it, and if that money is indispensable. But we may make the tariff so high that we shall get no revenue. I should like to see other means fairly tried before wc have more increases in the tariff. I believe in the free list given in the amendment of the hon. member for Edmonton (Mr. Oliver) for all the revenue we get from that free list can be supplied by other means of taxation if the Finance Minister and his Government will only look the facts in the face. The Finance Minister is a very able financier, one of the ablest, probably, we have ever had in the Dominion of Canada. But for some reason best known to himself he has not, I believe, squarely faced the question of direct taxation. I do not believe he has ever fairly and fully considered the question of the taxation of revenue from the invested wealth of Canada. I believe that invested wealth is something which one can legitimately tax; the rich man should be taxed; the invested wealth is employing practically no one and should be the first subject of taxation. I do not agree with the propositions the Minister of Finance has laid down in this House from time to time-or the

excuses he has made from time to time- for allowing the largest incomes in this country to go practically untaxed during almost three years of the present war. I tell him in all fairness and all candour that when he goes away from the city of Ottawa, when he goes out into the rural districts, and towns and villages of Ontario, he will meet the question that the rest of us are often called upon to answer.

I have been one of those who has sat in this House during the three years of the war, and I have seldom interfered with the proceedings. But I have been asked time and time again: Why do you not propose this, why do you not object to that? The question which most frequently arises is: Why do you not attempt to tax the wealthy? I have voted for the business tax, or at all events I did not dissent, and that means that I supported it. I do not believe it is a fair tax at all. I believe that the munitions tax is an eminently faij one, and that it might be well to increase it, but I do not think that the business tax is a fair tax, although I supported it in the past, and will support it again if it is necessary for the carrying on of this war. But, the Minister of Finance has skated around the question of an income tax year after year. He has gone over it, he has gone around it, he has postponed it and he is still considering it. During the first year he said he did not think that it would yield sufficient revenue to justify the cost of collection. He postponed it the second year, and I think he is inclined to postpone it this third year. But, he should tackle this question of an income tax. The other night in this House he gave as one reason for not adopting an income tax, the fact that he .had a telegram from the collector of taxes in Toronto saying the available wealth for taxation as income for Toronto was $19,500,000, on which the amount collected was $440,000. Consequently-, he said: In the second greatest city of Canada that is all you get, and I do not think it is worth while seriously considering it, although we may have to come to it in the future. But the Minister of Finance should come to it now. Any one who lives in the province of Ontario knows that the income tax is more of a farce than anything else. It is not enforced. I do not believe there is any proper machinery for the enforcement of it. The question of the collection of income tax is looked on as a joke. There is no municipality in Ontario that gets a fair return from the income tax, and many of them

have given up attempting to collect it at all. I have never heard of a prosecution in the case of a man who has given a wrong statement of his income. I have never heard that a penalty has been exacted from a man who did not pay what he should pay, the law is a dead letter and the tax is negligible in Ontario.

But, I can tell my hon. friend the Minister of Finance-and he knows it far better than I do-that there are millions and millions available in Toronto by way of income tax, and that if he applies the English rate to the big incomes he will get far more money in his treasury than he does out of the articles proposed to be added to the free list by my hon. friend from Edmonton. He could get far more money out of Toronto alone by an income tax than he would lose in revenue out of all the articles enumerated in this resolution. The rate in Toronto is only about 23 or 25 mills on the dollar. I do not propose anything like that. I think it is a joke. Why cannot we get down to something like the rates imposed in Great Britain and the United States? I am asking that seriously. Why do we not do it? Who is behind the curtain. Every one knows the high reputation of the hon. gentleman who is the Finance Minister of this country, and every one knows his great ability in matters of finance. Who is behind the curtain,? What is withholding his hand? Why cannot we adopt those rates that they have adopted in England? Is there any reason for it? The Minister of Finance has been, in England on one or two occasions since the war and he knows that the people there are actually feeling this war, that they are suffering from it. He knows that they are going down into their pockets to pay for it. He knows just as well as I do-every man in this House knows-it-is a shame to confess it, but I have to confess it-that the people of Canada have not felt the stress oif the war at all. We are more extravagant to-day than ever. We are spending more in this critical year of the war individually and by family than ever before. There is more extravagance and luxurious expenditure in this year than ever before. There are more automobiles being purchased and used for joy riding, more luxury, more fur sales, more jewellery sales. We have got into that sort of semi-mad condition, which appears in any country where money has been piling up abnormally for a few years, as it has in Canada. We are not in, as bad a condition in that respect as they are in

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?

Some hon. MEMBERS:

Hear, hear.

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LIB

Hugh Guthrie

Liberal

Mr. GUTHRIE:

And after the war is won we can take up our old fights just as we did before. I must say that the Order Paper from day to day has on it matters which in my judgment should be wiped off. If we are going to pursue in this country a policy of winning the war let us stick to war measures and let questions, no matter how important they may he, in regard to the nationalization of railways or the building of national highways-let them be swept aside and let us keep to war measures.

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LIB
LIB

Hugh Guthrie

Liberal

Mr. GUTHRIE:

Then, when the war is over, we can discuss the other questions. If we can come together on the matter, so much the better, but let us clear the Order Paper of all the old academic discussions and questions that drive us apart rather than bring us together. For imy part, I feel and I believe that on this side of the House there is a feeling, a genuine honest feeling, that at the present time, of all times, our paramount duty is to discuss and enact measures that will insure victory for ourselves and the Allies, even if we have to allow other matters to stand until after the final victory is won. That is why I say to my hon. friend for Edmonton (Mr. Oliver) that I cannot vote for his present proposal to revise the tariff.

I do not approve of his present proposal to revise the British preference, much good

as that might do. We do not know what position we shall be in after the war. All our trade conditions may be changed. We may be making new arrangements of every kind with all people, and can we not wait a year or two, or even three years, before making such a revision? A tariff cannot be revised in three months, or six months. I believe that the revision of the tariff should be made as Mr. Fielding made it when he was Minister of Finance, that is, by direct consultation with all classes of the community, even if it require over a year to do it. That is the proper method of proceeding. If my hon. friend would eliminate from his resolution the last two clauses I should be happy to support it; otherwise, as I would have to take it all or nothing, I should have to reject it all.

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LIB

William Erskine Knowles

Liberal

Mr. W. E. KNOWLES (Moosejaw):

The discussion of this proposition offered to the House by the hon. member from Edmonton (Mr. Oliver) has fortunately proceeded largely on the merits of the case and without any bitter partisan spirit. I shall endeavour to discuss the matter in the sameway. I think it might be well to consider whether the proposition of the hon. member for Edmonton makes for the successful carrying on of this war or does not. If it could be shown to us that the proposition of the hon. member for Edmonton in any way retarded or handicapped us in our competency for carrying on this great war, the debate would be closed and the hon. member for Edmonton would be the very first to withdraw the resolution. But let us not think that, because from the lips of some people drop the words "I want to win the war," everything else they say is true. It is not difficult to say: I want to win the war. But it does not follow that that proves every conclusion to which the debater may come.

We find that our friends opposite, including the Minister of Finance, have paid scant courtesy to the merits of the debate. The minister, when he replied to the hon. member for Edmonton, did not enter into the argument. We find their main point is that now is an inopportune time to revise the tariff downward. I do not know what time to the minister is not an inopportune time to revise the tariff downward.. It reminds me of a man under sentence to be hanged on Friday who, hearing some one-say. that it was unlucky to be hanged on a Friday, said that there were only six other days in the week on which it was unlucky to be hanged. That is the view taken by.

the minister on the revision of the tariff. He takes the same position, that now and all other times are inopportune times for the revision of the tariff downward.

We come to the question, would a revision of the tariff downward, as we advocate, in any way hamper or impede us in our ability to prosecute the war? I think that is the question now before the House. I have not heard any argument showing that it would in any way handicap us or impede us; we have heard implications and suggestions, but to carry conviction, hon. gentlemen who are opposing this resolution ought to establish some sort of proof that the passing of this resolution and the putting of it into force would in some way handicap or impede us in the prosecution of the war. I submit respectfully that no one has as yet established that in the slightest degree. The Minister of Finance swept the whole resolution aside. He said that the city of Toronto was satisfied with his conduct of the finances of the country, and that he had many congratulations from Toronto. He said that in Toronto rents were high and houses well filled, and all went merry as a marriage bell since Toronto was in that very fortunate condition. But I do not think that is replying to the splendid address of the hon. member for Edmonton in the debate. I listened to the Minister of Finance carefully, but I did not hear him give any reason why we should not have free agricultural implements, I did not hear him give any reason why we should not have free cement; I did not hear him give any reason why we should not have free foodstuffs in exchange with those countries granting us free foodstuffs. He dealt not at all with any of these specific items; he swept them aside by saying that the time was not opportune. My opinion is, and I give it only for what it is worth, that the time is exceptionally opportune for revising the tariff downward. The time to revise the tariff downwards is when those who are the wards of the tariff, are in the best position to stand that revision. We do not want to ruin any industries. Hon. gentlemen may think we do. Well, it does not matter what they think. But, even taking their side of it, when are you likely to injure the industries the most? Ever since 1878 or thereabouts, when we had a national policy, there has not been a time when our manufacturing industries could stand a revision of the tariff downwards as well as they could stand it to-day. Prices are high; competition is

not keen-this is the greatest opportunity in Canadian history to see just how much the manufacturing industries would be injured by a downward revision of the tariff. From the viewpoint of the manufacturing industries, therefore-which none of us have a desire to injure, let people say what they like-this is an opportune time for tariff revision.

I wish to state another reason why this is an opportune time for tariff revision. Engaged as we are in this war, what we want more than millionaires' houses in Toronto, Montreal, London or Hamilton - more than money; more than anything else-is what the farmer will give us if farming is encouraged to develop and to expand. We want foodstuffs to win this war. The true war policy as laid down by Lloyd George is to produce to the utmost capacity and to conserve food supplies- which means what the farmer produces. The old academic argument of free trade versus protection has gone to the winds for the moment.

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LIB
LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I think the hon. member for Red Deer will agree that in an academic sense the argument has gone to the winds so far as my present remarks are concerned, because we have proved it academically so often that I do not need to deal with it. As a real, practical war measure, the proposal of the hon. member for Edmonton leads directly to the goal which Lloyd George says must be attained in order that we may successfully carry on the operations of the war to victory.

Unfortunately, for many years-not only during the war, but long before the war- an abnormal state of affairs existed in Canada from time to time. The financial boom which had been caused, in a measure, by the immense railway construction which took place in Canada, fostered industries in an abnormal way. This artificial prosperity ceased, even prior to the war. To-day a similar artificial prosperity, created 'by the war, prevails; it, too, will pass away, at the conclusion of the war. We shall have to bear the burden of a debt of great magnitude. We must face the task bravely. We must look into the future and ask ourselves how we shall meet, after the present condition of artificial prosperity ceases, the financial burdens arising out of this war. The Minister of Finance has been very much complimented on his knowledge. I hope he does

not believe all the pleasant things that are said about him; if he would refer to the Grain Growers' Association they would tell him the other side of the story. On the one side, we have the artificial prosperity created by the war; on the other, the great debt that is being built up because of the war, the large amounts we have to pay out by way of pensions, and so on. Where is the minister to get the money for these things if he does not get it from the agricultural interests? If he does not lay down a policy that will make for large production of national wealth from the soil, where is he going to get the money? If he knows where he is going to get it I wish he would tell us. One of the reasons why we on this side say that the proposal of the hon. member for Edmonton should be accepted is that the carrying out of the principle which it asserts would result in men being attracted to the farms, and in large zones of land in the western prairies, now idle, being made productive. Thus we would have a maximum production of national wealth that would enable us to bear the great financial burdens which we shall be called upon to face after the war is over.

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CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

Does the hon. gentleman intend that the agricultural interests shall pay all these burdens?

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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I would use the word " afraid " rather than the word " intend."

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CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

But my hon. friend adduces an argument.

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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I fear that the 'burden will rest very largely on them.

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CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

The hon. gentleman says that we have to develop wealth from the soil in order to pay these debts. You cannot eat more than a certain amount; let us hear how the thing is demonstrated.

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LIB

Michael Clark

Liberal

Mr. MICHAEL CLARK:

You will get all the money we will make.

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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I do not understand my hon. friend's question.

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CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

Suppose the agricultural interests of Canada should raise fifty times as much as they do now?

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LIB
CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

The people of Canada could not eat it, though they might, possibly, dispose of it abroad. Production is represented by the hon. gentleman as the source from which we are to derive the money to pay these burdens, because the

other industries in Canada cannot provide it. It appears to me, therefore, that the hon. gentleman intends the farmer to pay all these burdens.

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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

To the extent that we develop the farming industry we provide a source of national wealth, and only national wealth can pay off a national debt. If there is any other way of doing it, I should like to hear it.

I wish to refer to what I said and to some figures which I gave in my remarks last session on this subject, as they appear on page 3934 of Hansard. I said:

Last year we had in the Provinces of Alberta and Saskatchewan, and I speak of those two provinces alone, nearly 15,000,000 of acres of land under cultivation. I take the figures from the statistical departments of this Government. The total amount of arable land which is at our disposal in those two western provinces is 190,000,000. We had 15,000,000 acres, approximately, under cultivation, producing wealth for this nation, and 175,000,000 acres lying idle. There must be some reason for this.

I quote from the same page, a little further on:

We are not developing in the direction of even gradually exploiting that great national asset which lies before us. Last year according to the statistics of the Government, and I have no reason to doubt their accuracy, the value of the crops produced on those 15,000,000 acres in those two western prairie provinces of Alberta and Saskatchewan, was over three hundred million dollars. If we could apply the same proportion to these unused arable lands, we would have, not three hundred million dollars, but three billion, nine hundred million dollars. When we are through with this war we are going to have an enormous debt; it may be one billion dollars; it may be two billion dollars. The interest on it will be probably fifty million dollars per annum at the least. Here there lies in our hands and in our possession 175,000,000 acres of land which, if they were to produce at the rate the acres in use last year yielded, would produce in one year three billion, nine hundred million dollars worth of produce, a value four times as great as this terrible war debt that is staring us in the face.

Later, speaking about the condition of affairs when war broke out-how the men had ceased to go on the land, after the Government had been in power for three years-I said, page 3936:

Then we saw that there was no encouragement for those two to be brought together.

I meant idle men and idle lands.

The raw material was there, and the men were there ready to exercise their muscle on the raw material, but the conditions were not sufficiently encouraging to bring the two together. Surely we could make these conditions encouraging enough to bring these two ele-

ments together. You are bonusing every kind of industry. By protection you are bonusing them all. It may be hard to work out, but surely we can work out some system by which men will go on the land and use it for the purpose for which it was meant to be used.

I read these words in order to emphasize my conviction that it is the duty of this Government, quite apart from any academic convictions or prejudices with regard to free trade and protection, to devise a scheme by which the great unused resources of Canada shall be used. That is the way you will make Canada prosperous.

'Sir Wilfrid Laurier came into power in 1896 when there was only a little handful of land in use in the West. People were not attracted to settle on the land as conditions were not inviting, and so3hey stayed away from the western provinces. Tlhe Government of Sir W'illfrdd Laurier, however, by its immigration policy, its railroad policy and its grain commission policy, made conditions so attractive that men rushed out to the West and, where there had formerly been one acre under cultivation, there became ten, twenty acres under cultivation, and the whole of Canada responded to that great expansion and development in western Canada. The policy of reciprocity may be dead 'and gone now, but thlat policy of the leader' of the Opposition, then Prime Minister, was simply this, that the day had come when it was necessary further to improve the conditions of the western farmer so that men would continue to go into the remoter districts and open up and develop further landis and in that way produce national wealth. The reciprocity issue was defeated, as every one knows, and the result has been that in the three years prior to the outbreak of war and since the defeat

reciprocity, the greatest .stagnation h>

occurred since the early nineties. The Government now has this proposition staring it in the face, that the Dominion of Canada has all that land 'as a great national asset -'and it is a tragedy that that land should he lying idle-and skill the Government are doing nothing whatever to bring it under cultivation as the Creator intended it should be cultivated and should produce national wealth. In the boom days many people in the city of Moosej'aw were very rich

we were all rich then-and then the .bubble burst. It happened that many people had half sections somewhere ox other in the West and they looked on them as very minor matters, as they probably had something like $100,000 or $200,000 worth of vacant lots; hut when the bubble burst and

those men had to turn their hands to making a living, they .said1: Well, we must go and use tho.se farms that are lying idle, that we never thought of, and produce our living and our wealth out of them. In the Dominion of Canada at the close of the war we are going to be like men when, the bubble has burst; we are going to face a desperate condition, with all our unemployed, with all this 'artificial prosperity gone, with all our soldiers coming back and with all the pensions to be paid. We shall be in the position of a man with an immense farm of 100,000,000 acres that to-day should have the- plough turning them over, but that are not used at all, and this afternoon y/e advocate this policy; we say to the Government: You would encourage men to go on that land and produce wealth, produce $20 an acre, which amounts to an enormous sum when you multiply it by the millions of acres that are lying idle in the West, if you would make the conditions favourable so that our agricultural population would not hang around the towns and cities, but would go into the rural districts and be encouraged to cultivate this great heritage and produce national wealth. And if you produce national wealth, I repeat, you can pay national debt.

The tariff question is going to be a live issue in Canada, if not during the war, then not very long after the close of the war. We shall have to look very keenly into the financial condition of Canada, and after the war the question is going to be above all the question of finance which is altogether linked with the question of tariff. It is unfortunate that while the war is on we do not like, and it is not wise, to press too much the tariff question, and we do not receive an attentive ear if we do bring up that question; but I submit that the day is coming-and I think it will come very soon after the close of the war-when the outstanding issue in the Dominion of Canada will be whether the people want a lower tariff system in Canada so as to encourage agriculture. T.he .Minister of Finance says that you must not unsettle things by lowering the tariff when the war is on, but that if you tack an increase of 7J per cent on the tariff on to the farmer and the consumer they will work harder. That, according to the Minister of Finance, is the easiest thing in the world to do, war or no war; but if we presume to ask that the tariff be lowered, we are met with the cry: We want to win the war, and therefore, ergo, there must be no reduction in taxes. The

war was on in Great Britain and the authorities there were in a pretty desperate state financially, but they wanted to encourage agriculture and they said quite frankly: We will pay the farmer to produce and we will guarantee him so many shillings per stone for his wheat for the next three years. They did not penalize the farmers, but they said: We want foodstuffs and we will encourage farming and we will give a guaranteed price for wheat for the next three years. The Minister of Finance knows about what happened in Great Britain, and yet he meets us with the cry: We want to win the war. I presume the British people want to win the war also, but they go about it in a different manner from that of my hon. friend. This is an opportune time for a revision of the tariff; the need of foodstuffs and the high prices make it an opportune time, and the future of the country, in connection with the great national burdens that we shall have to bear, makes it necessary that we should develop the agricultural industry of Canada. ,

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May 29, 1917