March 18, 1929


The Budget-Mr. Cowan come a daily factor in the business life of the communities throughout that country. Prior to February 15th, 1926, the air mail service in the United States was operated by the Post Office Department. On that date, the air mail service under contract between the Post Office Department and private individuals or corporations was established, and on September 1, 1927, the government relinquished its operation of the air mail service, and now all mailing routes are under contract. I think it is taken for granted that the service provided by airplanes would be more expensive to the department. An increase in the air mail postage rate would help to bear a portion of the extra expense thus incurred. In the United States they have adopted a rate of 10 cents per half ounce, as compared to a rate of 2 cents per ounce for ordinary first-class mail. This increase in the rate would create a fund to offset the increase in the cost to the department for transportation of mail by aircraft. Naturally every city could not have delivery of mail by aircraft, but means could be found of distribution from the larger centres to the smaller communities. Now I turn to the question of the waterways. One of the questions which had been discussed a great deal in the press, by engineering societies, and by the people generally, is that of a highway to the sea. Should there be a deep water canal connecting the Great lakes with the Atlantic, and what should be our relation with the United States in connection therewith? We must keep in mind the fact that the United States is insisting upon a seaway by way of the Great lakes and the St. Lawrence, and if Canada does not cooperate, the question of an alternative route through the United States must be considered. This is one of the important questions that has arisen in Canada during the first quarter of the twentieth century, and upon this important question no lead or direction has been given by the Prime Minister or the government of the day. The policy of the government seems to be one of shuffling and evasion. It is to be observed that no communication has passed from Canada to the United States in regard thereto since April 4, 1928, that no advance has been made in the matter of determining the respective jurisdictions of the provinces and the federal authorities and that at least another year will pass away before the government takes any step to reconcile the interests of the provinces and the Dominion. If any conclusion can be drawn from the attitude and actions of the government, it is that the water-power privileges are the dominant factor and the chief interest underlying the waterways project. This may be of interest to eastern Ontario and a portion of Quebec, but it does not take into account the long view of the interest of the rest of Canada in the canalization of the St. Lawrence river. This is certainly a work for the general advantage of Canada, and the opinion has been freely expressed that it would have been better business to have withheld action on the water-power franchises until the whole scheme had been worked out and a settled policy determined upon as regards both the water-power development and the construction of the canal. I think the time is opportune for the government to give a lead to the discussion on this subject, and that the attitude of the government should be presented to the house and to the public. According to the press reports, a great body of public opinion in the United States views with alarm the franchise proposed to be given to the Beauharnois Power and Canal Company. It is easier to retain than to regain privileges and franchises, and it is the more remarkable in view of the fact that the St. Lawrence advisory commission recommended that the cost of the construction of the canal should be paid out of the sale or earnings of the power franchises. It would appear that the day is past when the cost of the canal is to be borne in the manner suggested by the advisory board. I think the Prime Minister owes it to the house and to the country to state in unequivocal terms the attitude of himself and his government towards this enterprise, so that we shall know the position we are in, and the course he proposes to take. I intend for a few moments to elaborate on the argument which has just been presented by my hon. friend from West Algoma (Mr. Simpson) with regard to the iron ore situation. The importance of the iron and steel industry in Canada warrants exceptional measures being taken to make that industry as far as possible self-sustaining in regard to its supply of raw material. For* the last calendar year, and for several years prior thereto, not a ton of iron ore has been mined in Canada or used by Canadian furnaces. This is a condition that should not be allowed to continue. The great area of northern Quebec, northern Ontario and Manitoba, known as the precambrian shield, is the most highly mineralized area in the world. Geologists tell us that in that geological formation is found all the great mines that are in existence to-day. Eighty-five per cent of the pre-



The Budget-Mr. Cowan



Cambrian formation is in Canada and the remainder is in the United States. The 15 per cent in the United States we find in the great Mesaba range, upon which to-day the prosperity of the United States depends in regard to steel and iron products. Our balance of trade is adversely affected to the extent of over $300,000,000 by the importation of American ores during a period of twelve months. Under the system of bounties on certain mineral products, there was paid out of the federal treasury up until the year 1911 the sum of $17,000,000. At that time a great number of blast furnaces were established' in Canada, at Hamilton, Port Colborne, Midland, Parry Sound, Deseronto, Ojibway, Port Arthur and Sault Ste. Marie, but many of these have ceased to operate as a result of the discontinuance of the bounty provided. The advantages to be gained by the use of our own ore are apparent to anyone who has given any thought to the subject. Sufficient investigation has been made to demonstrate that there are iron ores in Canada in sufficient tonnage that could be made available immediately by some preliminary treatment. I urge that the federal Department of Mines should conduct experiments to demonstrate an efficient method of bene-ficiating our low grade iron ores, and assistance by means of a bounty would encourage the installation of extensive plants and permit Canadian furnaces to utilize Canadian ore. Researches have been conducted in the state of Minnesota to demonstrate the most economical metallurgical methods of bringing our low grade magnetites up to merchantable grades. The United States Bureau of Mines at Duluth have been experimenting on ores similar to our own, but of much lower grade, giving from 20 to 27 per cent iron content. I think the department could well make use of experiments so conducted, as they have extended over a period of years. Extensive areas have been explored in many parts of Canada, and I have no reason to doubt that concentrates of merchantable ores will be found in these ranges. This is particularly true of northern Ontario, which on more than one occasion has been referred to as the breaking point between eastern and western Canada. The development of the iron ore industry would increase the revenue of our railways. It is estimated that at least 65 per cent of the tonnage of the railways in the United States is derived from the products of the (nines. It would help to solve the question of providing tonnage and earning power for the Canadian National Railways. It would stimulate the development of all our mining activities, and the increment in the revenues of Canada that the proposed bounty would require would amount to only a very small tax. I would urge the Minister of Finance to take advantage of the opportunity of granting needed assistance to this industry, particularly in view of the fact that the Ontario government in 1924 passed what is known as the Iron Ore Bounty Act, for the very purpose of assisting this industry. It is to be noted in this connection that the treasury would be assuming no responsibility if no iron ore was produced). I suggest it is worthy of a trial to ascertain whether the producers with the aid of a bounty could make a success of the enterprise or not. The advantages are numerous, and the disadvantages are not evident. The Minister of Finance should, therefore, take advantage of the Ontario act, and the Dominion should contribute a sum sufficient to put this enterprise upon a satisfactory basis. It is a striking commentary on Canadian industry that the number of men employed in blast furnaces in 1913 was 1,589 and that in 1925 the number had been reduced to 656 and is still less at this date. There are now only three furnaces in operation in Canada, and their total output is only 21 per cent of the total capacity of such furnaces. Iron ore, coal and steel are the three main roots that give life to and support the trunk of the iron trades tree. No matter how wide-spreading and fruitful its branches, if this tree has its roots outside of Canada it is not a Canadian possession. It is time now to establish, in cooperation with the province of Ontario, this industry on a permanent and successful commercial basis. The time to begin is now, in order that it may be fairly established within the next ten years. There are many iron ore deposits in northern Ontario that would be developed if this legislation should receive approval, and I know of no legislation of a constructive character that would be of greater advantage to Canada as a whole. Mr. 'SPEAKER: Is the house ready for the question?


CON

John Anderson Fraser

Conservative (1867-1942)

Mr. J. A. FRASER (Cariboo):

Before the question is put, Mr. Speaker, I want to say a few words about the district that I represent in this assembly. I have listened attentively to a good deal of what has been said in regard to other parts of the Dominion, and as I represent the district of Cariboo, from which

The Budget-Mr. Fraser

you do not hear a great deal, I propose for a few minutes to give you a description of my constituency.

In the first plane,, let me tell you that British Columbia starts at the 49th parallel and extends as far north as the 60th. The district of Cariboo starts at the 49^ parallel and extends north to the 60th. Then if you take it east and west, British Columbia is about 700 miles across, and my constituency takes in only 350 miles of it. You see, sir, I represent about one-half the area of British Columbia, and therefore should have as much to say as the other thirteen members from that province.

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An hon. MEMBER:

Go ahead.

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CON

John Anderson Fraser

Conservative (1867-1942)

Mr. FRASER:

Thank you. Now, let me say also that so far as occupations are concerned, in my riding they are almost as diversified as its area is extensive, because we have there almost every kind of known occupation. We are richly endowed with raw materials, and we are developing them to sustain our population. We engage in all branches of agriculture, including wheat-growing and fruitgrowing. We have the great grain-growing area of the Peace river, as well as other graingrowing areas in the southern part of the district in the neighborhood of Kamloops, up through the Cariboo country along the line of the Pacific Great Eastern. We have in addition a large area suitable for the raising of cattle, in fact the largest area anywhere in the Dominion to-day. And I mean the raising of cattle without the necessity of providing them with shelter during the winteT time except in a very primitive way. That area extends from the Nicola valley in the south clear up to the Cariboo country, a distance of three or four hundred miles, and from the base of the coast range on the west to the base of the Selkirk range on the east, a distance of some two hundred miles. We raise a large number of cattle there, but the area is easily capable of raising three or four times the number.

Now, you will appreciate the importance of this industry when you remember that to-day the city of Vancouver provides a very good market for the beef produced from those cattle. The population of Vancouver is certainly going to grow, so there is no need to be afraid of the expansion of the beefraising industry. It is only a very few years since the city of Vancouver was founded; to-day it has a population cf 325,000, and I can assure the 'house that in the next twenty-five years it will be a city of a million people.

We have also the dairying industry, a very important industry, but it has been affected to a certain extent, and not favourably either, by the policy of this government. I hear from all the dairying centres of my constituency the same complaint that is voiced in this house, and I would suggest to the government that it would be in the interests of the dairy farmers, especially those in my county, if some remedy were applied to meet the present unsatisfactory condition. However, I shall have more to say in regard to this a little later on.

We have also an important fruit and vegetable growing industry, extending from the Shuswap lake and Salmon arm in the east all the way down the Thompson river and up the Fraser river to Lillooet. This is the choicest fruit-growing area in British Columbia, and given a fair chance a very profitable industry could be developed. But under present conditions the people there are not operating very successfully. A similar condition prevails to that which obtains in the west in regard to wheat-growing, as we are advised by members from the prairie provinces. Although they have had a big crop of wheat the complaint is general that it has not been profitable to the farmers. But the reason why we cannot grow fruit profitably in these valleys is that, to a certain extent, the policy of the government is not what it should be. Last session when the question of some measure of protection for the fruit and vegetable growers was before the house I remember distinctly that when I asserted the Prime Minister (Mr. Mackenzie King) had no intention of putting the dumping regulations into effect he assured me that he could act in five minutes if the occasion presented itself. At that time I said that the Prime Minister had no intention of taking action because he had sat in his place in parliament as Prime Minister for the' four years from 1922 to 1926, and there was urgent necessity during all that time to put the clause into effect, but he had not done so. What has been the result? During the whole of last season the fruit growers of British Columbia were demanding that the dumping clause should be put into operation. This was not done by the government, and consequently the fruit growers in this district have suffered very severely.

Now, in addition to these impc rtant agricultural activities we have an extensive mining industry. Not only in placer mining, which is the original form of mining, in which you discover a gravel pit, wash the gravel through a sluice box and find in the bot-

The Budget-Mr. Fraser

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CON

Alexander McKay Edwards

Conservative (1867-1942)

Mr. EDWARDS (Frontenac):

And that is the best they have done for seven years?

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CON

John Anderson Fraser

Conservative (1867-1942)

Mr. FRASER:

Yes, and let me say that in the years 1922 and 1923 the statement was made to me by one of the largest raisers of cattle in that district that the money he received for his beef would not pay the wages of his men. Now that industry is making enough to pay the cost of production, but that is not enough; they want something better.

I have occupied more time than I had expected in talking about the Cariboo district, and now I wish to take up the statement of the Minister of Finance with regard to the increase in customs revenue of $28,000,000, or 15 per cent. The claim is made by the minister that he is not increasing taxation in this country, that as a matter of fact he is reducing taxation, but what are the figures? In 1925 the customs revenue was $120,122,453; in 1926 it increased to $143,933,110; in 1927 it was $158,960,367 and in 1928 it was $171,872,768. Then how can the minister say that he is reducing taxation while the amount of money which is being collected in customs duties is increasing? And again, why is he collecting more money in this way?

I may be mistaken, but I am under the impression that a certain hon. member on this side of the house is responsible in a large measure for that increase; I refer to the hon. member for Vancouver Centre (Mr. Stevens), who commenced an agitation in 1925 for the investigation of the customs department. The increase in the amount being collected at present is largely due to that investigation, and I think it is only right and just to the hon. member for Vancouver Centre that some one should mention this fact. I think the country should know that the increased efficiency in that department and the more rigid supervision really has been the result of that investigation.

The Minister of Finance also says that the policy of this government is not a high tariff but a low tariff policy. How those people on the other side of the house do love to talk about a high tariff policy; if they have anything to say about the tariff at all they cannot leave out that word "high." The hon. member for Vegreville (Mr. Luchkovioh), during the course of his excellent speech the other day, said that he had been investigating the difference between the Liberal and the

The Budget-Mr. Fraser

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CON
CON

John Anderson Fraser

Conservative (1867-1942)

Mr. FRASER:

Yes, from Saskatchewan. A Mr. Robinson of Quebec, discussing the reason why there had been a reduction in the quantity of milk and cream produced in this country, said:

When the farmers of this country get a price for their products which will be just a little more attractive to them than they are _ at present, then the butter fat will be forthcoming, and not before.

That is his reason for the decrease in the production of these dairy products-that the price has been too low. Why is it too low? Ever' since the Australian trade agreement came into operation we have been told that it has made no difference in the price of these products, but we have the evidence of expert dairymen to the contrary. I would ask the house to remember that members from British Columhia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec and, I think, from some of the maritime provinces, were present at this convention. They were discussing matters which pertained to their industry, and the following resolution was laid on the table for discussion:

That the National Dairy Council reaffirms its adherence to the principle of adequate protection for the dairy industry on butter and cheese.

That resolution was moved by a Mr. Berry from British Columbia. In moving the resolution he said:

The tariff in this Dominion has heen for the benefit of almost everybody but the farmer all the way down the line. There is nothing wrong, to my mind, in the farmer of the prairies asking some advantages in the way of protection. The implement manufacturer and the automobile manufacturer ask for adequate tariff protection, and there is no reason why the farmer should not have adequate protection in connection with the manufacture of butter.

Mr. Clarke, from Alberta, said:

I am sure Mr. Berry has given you exactly the feeling of the western farmers. I think it is up to us to look for protection in our own interests.

Mr. Tovell, a representative from Manitoba, said:

I am going to be quite frank in this matter and say that I believe the dairy business in Canada was more prosperous under the situation which prevailed prior to the coming of the Australian trade agreement, but I would also say that I believe we need to use all the good judgment we can in determining methods to try to remedy the present situation.

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LIB
PRO

Robert Milne

Progressive

Mr. ROBERT MILNE (Neepawa):

' Mr. Speaker, in rising to say a few words in connection with the budget, it is not my intention to enter upon any discussion of the financial standing of the Dominion of Canada. This question has already been dealt with, and will probably be touched upon later. 1 may say, however, that the man by the roadside oannot help but be of the opinion that a surplus of practically 170,000,000 is a fairly satisfactory condition so far as the finances of the Dominion are concerned.

There are things in the budget which I like and things which I do not like. I am very glad that this year the income tax has been left untouched. I am pleased also that the sales tax has been reduced, because this is a tax which affects practically the whole consuming public. We have heard a great deal about the prosperity of Canada, and perhaps if we measured that prosperity on the basis upon which it has been measured in this house we might believe that our present prosperity has never been exceeded. But I am of the opinion that this prosperity has not been equally distributed; the primary producer has not been getting his share of it. I do not propose to pick out any extreme cases to illustrate this point. The reason why the primary producer is not enjoying to the extent he is entitled the prosperity that exists at present is because in every case he has to take what is left of the price that is paid for the commodity he has to sell. The transportation people get their share first; the distributing organizations get theirs next, and the remainder goes to the primary producer. It costs just as much to distribute grain whether it grades the highest or whether it comes down six or eight grades below the top. Last year, until a very short time before the binders were put into the fields in western Canada, we were promised an abnormal crop. Climatic conditions, however, intervened during the last few weeks of its development, with the result that a large percentage of the grain in western Canada fell into very low grades. That is, there was passing through the inspection department in Winnipeg more grain grading No. 5, No. 6, and feed, than any other grade. A few days ago I picked up a paper which gave the shippings to the head of the lakes, and it was shown that for the week ending March 8 more grain grading No. 5 was shipped than any other grade. This, according to the figures that were given, was worth about twenty-five cents a bushel less than No. 1 northern, or the top grade of wheat. The same conditions applied to oats and barley; the

The Budget-Mr. Milne

largest number of carloads were always in the lower grades, which, on the market, were bringing in oats, around sixteen cents below the top price, and in barley, around ten cents below the top price. Just to give an idea of the expense in moving 1,000 bushels of wheat from an average point in the prairie provinces to the market at Liverpool, let me quote from the 1927-28 Canada Year Book, page 286:

Railway freight $150 00Inland water freight

82 92Ocean freight

62 10Commission, profits, fees, interest, loading and other handling charges.... 87 03Insurance

1526Total $397 31

Or approximately forty cents per bushel. These charges do not vary. That is, it costs

just as much to handle a low grade wheat as a No. 1 grade, so when one deducts the forty cents from a low grade grain, it can readily see that the price the producer receives is not very large.

I might give another illustration of how the farmer has to take what is left. About the^first of March I noticed these figures in the city of Winnipeg. The consumer was paying $1.13 per bushel for Prince Edward Island potatoes. The transportation company received 45 cents per bushel for carrying the potatoes from the maritimes to Winnipeg, and I am told by some of my maritime friends that the farmers were receiving around 20 cents a bushel. There was another 48 cents that disappeared somewhere, no doubt going to the distributors. The fact that the potato market was $1.13 in Winnipeg at that particular time is no indication that the potato grower in Prince Edward Island was getting a fair price for his potatoes. I might say in passing that the people of the Dominion were subsidizing the railway companies to a certain extent to assist the Prince Edward Island growers in getting rid of their potatoes. Then my protectionist friends come along and ask for a duty on potatoes to hold the market for the potato growers of the Dominion. I maintain that 20 cents a bushel is not of much value to t'he potato growers of the maritime provinces or any other province. If it is not possible to return more to the farmer than 20 cents, it is not in the best interest to hold any bouquets in front of them to encourage them to grow potatoes. Those two illustrations are given to show that the primary producer is not getting a fair share of the prosperity that appears to exist when we measure it by the number of carloads that are shipped.

Farmers in western Canada are quite frequently accused of being extravagant and inefficient, and I want, in order to give an illustration of the so-called extravagance of the prairie farmers, to quote the census returns of 1926 for the western provinces. These returns show that the average farm buildings, which include the home, barn and necessary outbuildings to carry on farm work in the province of Saskatchewan, were valued at an average of $1,802. That amount would scarcely build1 a garage for some of my prosperous friends in the industrial sections of the Dominion.

In Saskatchewan only 1.1 per cent of the farms had water piped into their bouses. Only 1.9 per cent of the total farms had electric light in their homes. Eighteen per cent of the farmers had automobiles, and in Manitoba, the oldest of the three prairie provinces, only 27 per cent enjoyed the advantages of the telephone. In the fact of these facts will anyone accuse the farmers of the prairies of being extravagant in regard to home conveniences?

Not infrequently we hear it said that the real cause of the farmer's trouble is inefficiency; that if he would adopt the well-tested methods of the businessman, he would soon be out of the woods. This is something I have always doubted, because we have had a number of eminently successful business men try their hands at farming. They undertook to employ their well-tested methods to agriculture, only to find that their farms were a useful device for reducing their income tax. We are forced to conclude that the real dirt farmer knows a thing or two, which even a business man does not know. lYe are now comforted by seeing this opinion confirmed by the researches of the National Industrial Conference Board of the United States. Its findings were that the average output of the farm worker increased 47 per cent during the period from 1899 to 1925, and during the same period the increase per factory worker amounted to 49 per cent. In spite of our industrial miracles and our Henry Fords, the farmer has managed to keep well abreast of the manufacturer so far as improved production goes.

I am not one of those who believe that all the ills of agriculture can be remedied by the Dominion government or by any government in any section of our country. I am inclined to think that the political parties rather flatter themselves when they try to take the responsibility on their shoulders of bringing prosperity to any one particular class. No

The Budget-Mr. Milne

doubt through the system of taxation they can have an influence on certain phases of the troubles of a particular class.

I am going to outline briefly what I consider are the real problems of agriculture, and I do not think that this applies particularly to the grain growers of western Canada, because I have listened to a great many members speaking in this house and have talked with a good many of my friends from other sections of the Dominion, and I gather that what I have to say would cover perhaps the whole country from one end to the other.

I think one of the greatest costs is the cost of distribution. The next biggest cost is the cost of transportation, and the third, which might be divided under many headings, is the cost of production. I was somewhat surprised at the hon. member for South Wellington (Mr. Guthrie), for whose judgment and opinion I have a very high regard, when he said that he could remedy present conditions with a scratch of the pen. I cannot think he was serious in making that statement. Instead of studying the actual conditions he must, I think, have been reading some fairy story about a magic pen in a wizard's hand. This magic wand of protection, together with the British flag, has been very kind to the Conservative party in the past, but in my estimation it has been of little benefit to the farmer. I am rather surprised that my hon. friends opposite should be so eager to adopt any policy that originates under the stars and stripes when they have the British flag nailed so firmly to their mast. One would naturally think they would turn their eyes rather to the British flag and imitate the ways and means evolved under it.

Let me develop briefly the question of distribution, to show where I believe there is room for considerable improvement. It is my opinion that those in charge of distribution have not increased their efficiency in proportion to the increased efficiency of the agriculturist and industrialist. When eggs, graded extras, are selling in the city of Winnipeg for 60 cents a dozen, the farmer receives for them on an average 40 cents a dozen, or he gets about 75 cents out of the consumer's dollar. Later in the season, when eggs are selling around 40 cents a dozen, the farmer and the distributor break about fifty-fifty. I maintain that that is not a fair division. Again, when dressed chickens are retailing in the city of Winnipeg at 37 cents a pound, the market quotation f.o.b. Winnipeg is 23 cents a pound; in other words, the farmer gets 60 cents out of the consumer's dollar, and out of that he has to pay the freight from where he lives to the distributing point. In this case the man who

has dressed chicken in his warehouse for a week or ten days receives more for his work than the farmer who hatches the chicken, feeds and protects it for a period of from three to six months, dresses and packs, ships it to market, and pays the transportation charges. Last week the market quotations on potatoes in Winnipeg were as follows: wholesale, f.o.b. Winnipeg, SI.10 per 100 pounds, carload lots; jobbers to retailers, SI.35 per 100 pounds; retailers to consumers, $1.88 per 100 pounds. In this case the producer, after paying the freight, gets 52 cents out of the consumer's dollar. So, Mr. Speaker, I maintain that there is more room for greater efficiency in the distribution of goods than in any other of the lines I have mentioned.

Not having access to the prices of manufactured products at the factory, I am unable to say what the spread is between the manufacturers price and the price the consumer pays, but judging from the number of drummers chasing up and down our country in automobiles and the number you see crowding pullman and dining cars I am fairly well convinced that the cost of distribution of manufactured products is about as far out of line, as is the case with the farmer's products. The farmers are attempting seriously to cope with this difficulty by the establishment of cooperative marketing organizations. We now have cooperative wheat pools, cooperative organizations for the selling of poultry and eggs, and for the marketing of live stock, all of which organizations are making substantial progress in spite of persistent opposition from the old established systems of distribution. Just to illustrate that we have persistent opposition, let me quote from the Canada Year Book, page 770:

Over one hundred complaints have been received and dealt with since the enactment of the Combines Investigation Act. Many of these have related to the basic industries or manufacturing, most have arisen as a result of rapidly changing methods of distribution, the development of chain stores, cooperative buying agencies, department stores, mail order business, and the growing practice of direct selling.

I received a letter some time ago from a wholesale concern in Winnipeg which is endeavouring to cut corners and reduce the cost of distribution, from which I quote this

sentence:

Many commodities are controlled both as to price and as to channels of distribution by agreements amongst manufacturers, wholesalers and many other groups, which tend to stifle open competition and enhance prices to the consumer.

In spite of all our difficulties we are hoping that these systems that we are trying to

The Budget-Mr. Milne

develop will return a larger percentage of the consumer's dollar to the producer, without materially raising the cost to the consuming public, and I humbly suggest that our manufacturing organizations should make an intensive study of the distribution of their goods in order to narrow the spread between the producer and the consumer.

I want to refer for a moment to the suggestion that has been put forward by the Conservative party that industry, if given adequate protection, would be able to absorb all the products of our farms. It seems to me that this is rather an unreasonable proposition, and too much to expect. In the development of all countries agriculture has always led, that is, the agriculturists open up and develop the virgin soil. After them come the industrialists and they proceed to develop industry. In this country agriculture is so far in the lead that at the present rate of progress many years must elapse before the consumption of farm products catches up even with our present production; in fact the prospect is too remote to be considered seriously. The following figures will illustrate my point. Our exports of cheese exceed our imports by 135,325,000 pounds. The average per capita consumption of cheese in this country during the past year was four pounds. It will readily be seen therefore that we would need an additional population of 33,580,000 to consume our surplus production of cheese. I was not able to get figures for our other milk products in such definite form, but all told we have an excess production of about thirty million dollars' worth. From the Trade of Canada for 1927. I secured these figures with respect to meat products. Taking our fresh pork, dry salted pork and bacon and ham, I find we have a surplus of exports over imports of 415,930,000 pounds. The average per capita consumption of pork is about 70 pounds. It will be seen that to take care of our surplus pork production we would need a additional population of 5,940.000. Our total exports of beef, including pickle, frozen and live, amount to 102,869,000 pounds. To consume this surplus, allowing a per capita consumption of 70 pounds, which is about what we average, we would require a further population of 1,460,000. Last year our wheat crops was estimated at something over five hundred million bushels. Our average consumption of wheat per capita is about 4J bushels, and it would take an additional population of 111 or 112 millions to consume our surplus production. In view of these figures I maintain that it is futile to hold out to the agriculturists of Canada the expectation that within any reasonable period of time in-

dustry can be developed to the point where our industrial population will be able to consume the surplus products of the farm.

It seems to me that our transportation has always been a difficult problem. Nearly every member who has taken part in this debate has referred to transportation, whether he represented the fishermen of the maritimes or the coal men of British Columbia. I became curious to know how the tariff has affected the capital cost of our railway system. Last session before the special committee on railway estimates a question was asked as to the comparative cost, exclusive of duty, of locomotives, box cars and passenger cars in the United States and in Canada. The figures given are for the year 1927. Locomotives, type 482, cost in Canada $94,250, in the United States $83,500, or an increased cost in Canada of $10,750,-approximately 25 per cent. Forty-ton steel frame box cars cost $2,800 in Canada, in the United States, $2,180, or an increased cost in Canada of $620-a gain approximately 25 per cent. Steel colonist cars cost in Canada $35,000, in the United States $26,000, or an increased cost in Canada of $9,000-approximately 30 per cent. Convertible ballast cars cost in Canada $3,150, in the United States $2,600, or an increased cost in Canada of $550-approximately 25 per cent.

Talcing these figures, I calculated what this excess cost would mean for an ordinary train of box cars composed of an engine and fifty care. The excess cost would be $41,750. This would mean an average increased annual charge, allowing interest at five per cent and depreciation at ten per cent, of $6,262.

Then I proceeded to apply this to the whole railway system of the Dominion. The figures are somewhat staggering, but I give them for what they are worth. I had to go back to 1926 to get the equipment figures, but no doubt there has been an increase in the equipment since that time. In 1926 we had 5,680 locomotives. Taking the average cost at $60,000-this is considerably less than the cost I quoted for type 482, but I thought some of the engines might be smaller, [DOT] although I have no doubt some are larger and more expensive than type 482-taking this average figure of $60,000 gives a total value for our locomotives of $340,000,000. In 1926 we had 6,628 passenger cars. For these I have allowed an average cost of $45,000-I think I am not too high-which gives a total investment of $297,000,000. In that year we also had 211,255 box cars, including stock cars, ballast cars and other equipment. Taking their average value at $2,000, we have a total of $424,000,000. Adding together these three

The Budget-Mr. Milne

totals we have a grand total for the rolling stock of $1,061,000,000. If all this equipment had been brought into Canada, taking the rate of duty at 25 per cent, it would mean an extra cost for our rolling stock of $265,000,000.

But I went a little further. We have forty-one thousand miles of railway track. Taking 80-pound steel rails, this would represent 140 tons of steel per mie, or a total of

5,740,000 tons. The duty on steel rails at seven dollars a ton represents a total of S41,180,000. If we add this to the 25 per cent duty on the equipment, amounting to $265,000,000, we have a total excess cost of over $306,000,000. I do not think anyone will dispute my statement that the tariff has increased the cost of building our railways and the cost of our rolling stock.

While this protection was being accorded to the steel industry, in order to encourage the building of railways, Canada gave to various railway companies land subsidies totalling more than 47,180,000 acres. She gave a cash bonus of $225,500,000 and guaranteed bonds to the extent of approximately $484,500,000. And then our good friend from Fort William (Mr. Manion) comes to this house and suggests that the steel industry of Canada has not been receiving fair consideration at the hands of the government. But 1 would point out further that the steel industry of Canada had a tube to the federal treasury which sucked out in subsidy between 1896 and 1912, ten millions of pure gold. Yet we are told, as I say, that that industry has not been getting fair consideration. In 1922 the hon. member for Fort William made this statement in the house:

I admit frankly I know nothing of the details as to whether a certain article should have fifteen, or twenty, or thirty per cent protection.

I am inclined to think he has not given the question much consideration since. No doubt, after listening to high tariff advocates and preaching it himself, he has made himself believe that high protection is the only means of making possible the development of the iron and steel industry of Canada. I wonder how long he will prescribe the same medicine for this infant that has been unable to walk after all this pampering for the last' thirty-six years. The hon. gentleman in his speech a few days ago referred to the fact that something like $300,000,000 odd worth of steel and its products was brought into Canada last year. He did not tell the house that on this amount of steel brought in there was approximately $50,000,000 in duty collected, or almost half the

total wage bill of the whole industry which he included under the heading of imports of iron and its products.

In an effort to gain some information regarding the iron and steel industry, I consulted the year book and found a chart showing the production of the different minerals in the Dominion. It was headed, with nickel produced in Canada, showing 90 per cent of the world's production, while asbestos was 85 per cent of the world's production; and in the whole table iron was not mentioned. I understand that iron is not produced in the Dominion at the present time, and surely it is not for want of protection. There must be something else at the bottom of it; it must be the cost of getting the iron ore, or some difficulty in smelting. While iron is perhaps the most important metal to our industries, at the same time, in my opinion, instead of a tariff to encourage production, what should be considered is the question of research and investigation. That will help solve the problem so far as the iron industry is concerned.

We in western Canada have been struggling with freight rates ever since the Dominion Was established and we have been pressing for many years for an outlet to Hudson bay. We wish to have that construction as cheap as is possible, yet out of every rail laid and every spike driven on that line the steel industry gets its toll. In the newspapers the other day I read that three hundred cars of cement were to be shipped into the port for work at Churchill. From every shovelful of cement put into the works at Churchill the Canada Cement Company, with its head office at Montreal, calmly site by and takes its

slice because of the tariff.

Mr. STEWART (Leeds): What is the

tariff on cement?

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PRO

Robert Milne

Progressive

Mr. MILNE:

Eight cents a hundred

pounds.

Mr. STEWART (Leeds): Did not the

recent investigation before the tariff board show that cement was cheaper in Canada than in the United States?

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LIB
PRO

Robert Milne

Progressive

Mr. MILNE:

The report shows that the

Canada Cement Company has a monopoly in the Canadian market, and since its coming into existence it has split its stock at least twice. It is a wealthy corporation that practically has a monopoly of the Canadian cement business.

The Budget-Mr. Milne

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LIB
?

Some hon. MEMBERS:

Order.

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LIB

Kenneth Alexander Blatchford

Liberal

Mr. BLATCHFORD:

May I ask the hon. member a question? Is he aware of the fact that Canada cement is sold at 35 cents a barrel less where there is independent competition?

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PRO

Robert Milne

Progressive

Mr. MILNE:

That was the impression

I had from reading the report, but I have not the facts before me and I do not propose to make statements I cannot verify. I maintain that cement and paint are two products that are of national importance. In the first place, cement is a substitute for wood', and we hear to-day great complaints about the depletion of our forests. If cement were made as cheap as possible it would tend to prolong the life of the forests. And paint is a commodity which is used in the protection of wood, and for the same reason I suggest that it also should receive very serious consideration. I submit that the tariff on these two items should be reduced to the lowest point. Now, Mr. Speaker, some people are of the opinion, no doubt-

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March 18, 1929