Mr. J. T. THORSON (Winnipeg South Centre):

Mr. Speaker, no one will deny that the budget presented to this house last Thursday was a bold budget. That was to be expected from the present Minister of Finance (Mr. Dunning). When he occupied the important position of Minister of Railways and Canals he showed himself to be a courageous and aggressive minister. This was particularly exemplified when he changed the terminal of the Hudson Bay railway from Port Nelson to Fort Churchill. Western Canada will be grateful to him for that change and will thank him for the aggressive manner in which he has pushed towards completion the great Hudson Bay railway project. Last Thursday, he showed again as Minister of Finance the qualities of courage and aggressiveness that he displayed when he was Minister of Railways and Canals, and again Canada will have reason to be grateful to him for these qualities which he displayed.

No budget that has ever been introduced in the history of Canada has pleased everybody; this budget most certainly did not please hon. members opposite, if one might judge from the expressions which appeared on their faces as the budget speech was delivered. It obviously annoyed the hon. leader of the opposition (Mr. Bennett).

I am sure that everyone will be pleased with the record of public debt reduction that was

announced by the Minister of Finance. During the past year our public debt was reduced by almost $80,000,000; that marks the peak of achievement in this respect in the history of this country. No other administration has equalled the record of this one during the past five years in the matter of public debt reduction; the reduction has amounted during the past five years to over $257,000,000. In fact no other country in the world engaged in the great war from its outset has equalled the record of Canada in the matter of public debt reduction.

What about the

United States?

Mr. THORSON:

It is a record of which Canada may be proud. It is a tribute to the great country in which we live; it is a tribute also to the resourcefulness of our people and to their ability to bear and their desire to lessen the burden of taxation cast upon them by the great war. Everyone will be pleased, too, with the reductions of taxation which were announced in the matter of sales tax and exemptions from income tax. According to estimates which have been made these will amount to almost $30,000,000 of tax reduction.

These are not however, the outstanding features of this budget, and they do not constitute the sole reasons for my support of it. I support this budget 'because it is a Canadian budget, made in Canada to meet Canadian needs and to meet a situation in Canada which actually exists.

Mr. CHAPLIN:

And a situation which has existed for ten years.

Mr. THORSON:

The objection has been

raised that the budget is sectional in character. If the implications of that charge are properly understood I would not quarrel with the charge. The budget indicates a fundamental distinction between the policy of this administration and that of the opposition towards Canada's economic problems. Canada is not an economic entity; it is divided into sections whose economic needs are varied and widely divergent; it is apparent that those who were responsible for this budget dl early recognised that fact. The problem of the maritime provinces is not that of central Canada, and the problem of the manufacturer is not the same as that of the farmer on the western prairies or the farmer in our other agricultural areas.

Oh yes, it is.

Mr. THORSON:

The Conservative party

has sought to apply one panacea to all the economic ills of Canada, that of higher pro-

The Budget-Mr. Thorson

1S53

tection. The policy of this administration has been different; it has sought to inquire into the needs of the various sections of Canada and to meet those needs by the appropriate remedy so that all the sections might develop according to their requirements. This policy has been established in order to promote the economic harmony of Canada as a whole; that has been the policy of this administration and it has brought beneficial results to Canada. I favour the present budget because it is in accord with that Liberal policy which has achieved in recent years such great results throughout Canada.

A moment ago I said that no budget ever pleased everybody; there are items in this budget which do not please me. I am quite willing to admit that fact, but I support the budget as a whole in the belief that national progress is made by willingness to compromise; I accept this budget in that spirit of give and take which is so essential to the successful government of a country such as Canada. The Liberal party is not one of absolute free trade, although many of us would like to see free trade throughout the world. On the other hand it is most certainly not a party of extreme protection. It seeks to maintain an even balance between those two theories in accordance with the economic needs of Canada varied and divergent as they are.

As a Canadian and as a representative [DOT] of western Canada I support the budget chiefly because of the substantial increase announced with regard to the British preference. In my opinion that increased British preference is beneficial to Canada as well as to Great Britain. It is of particular importance to the people of western Canada and I shall therefore confine my remarks largely to those features of the budget which deal with increases in the British preference.

Our natural channels of trade have been north and south, but the attitude towards us of our southern neighbour in recent years, with its protectionist theory running mad and with every possible effort being made to exclude Canadian imports from her markets, has changed the ordinary course of trade for Canada. We have been forced-to our advantage, it is true-into a policy of trade with the world; as a result we are now trading with one hundred and five different countries. We have searched for favourable markets for our products; we have entered into preferential trade agreements with those countries which have expressed a willingness to trade with us. We have refused to engage in tariff wars

While the rest of the world has raised its tariffs, we in many respects have reduced ours. What has been the result? The result has been that Canada has made greater progress in the matter of foreign trade than has any other country in the world. At the end of 1928, while Canada was twenty-eighth amongst the countries of the world in the matter of population, she was fifth in thetotal volume of her foreign trade, fifth in thetotal volume of her export trade, fifth in thetotal volume of her import trade, fifth in her

imports per capita, second in her exports per capita, and second in her foreign trade per capita. Only the United States, Great Britain, Germany, and France exceeded Canada in the total volume of their foreign trade. The problem of finding markets for our products is the greatest economic problem which now confronts us. So far we have had remarkable success in the solution of that problem; particularly is this true with regard to our exports of manufactured goods. Few people realize the success which we have achieved. To-day Canada exports more of manufactured goods per capita than any other country in the world. I have before me the record in this respect of the five leading countries of the world. The figures are given in exports of manufactured goods per capita of population and are as follows: Canada, $64.80; Great Britain, $5580; Germany, $32.68; France, $30.58, and United States, $25.13. If we leave out our nearest competitor, Great Britain, we see that Canada exports more than twice as much of manufactured goods per capita as any other country in the world.

The leader of the opposition referred to our unfavourable trade balance for the fiscal year just ended, but he omitted to tell the House that it was the first unfavourable trade balance that we have had in Canada for many years, For the fiscal year ending March 31st 1929 our favourable trade balance was $123,216,984, while for the fiscal year just ended our unfavourable trade balance was $103,335,512. That was due to one cause only, our reduced exports of grain and flour. If we leave out of consideration our exports of grain and flour we shall find that our other exports increased by $23,892,074. Our exports of grain and flour alone decreased by $267,343,444. That decrease during the past fiscal year in our exports of grain and flour was due [DOT] partly to our reduced crop in 1929 and partly also to our inability to market the crop we had.

This change in our trade balance brings home to us in Canada the importance of our largest industry and the extent to which we

The Budget-Mr. Thorson

depend upon it for our prosperity. The change in our balance sheet brings home to us more clearly than ever before the importance of our marketing problem particularly in so far as our grain is concerned. Obviously our home market is insufficient to absorb our grain production, and we are dependent and must be dependent upon buyers abroad. If we wish to sell to them we must be willing to buy from them. Why not then buy from those countries which are willing to buy from us? During recent years the United States has shown a desire to shut out Canadian goods from her markets, and we must seek markets elsewhere for those goods which formerly were exported to the United States. We must continue our policy of trading with those who are willing to trade with us. One of the objects of this budget is to accomplish that diversion of trade made necessary by the recent unfriendly tariff action of the United States towards Canada. With that object I am entirely in accord. In that respect this is a Canadian budget.

During the past summer it was a favourite pastime of the hon. leader of the opposition to refer to our adverse trade balance with the United States. He did not so often refer to our favourable trade balance with Great Britain, and rarely if ever, mentioned our favourable trade balance with the world at large. For a moment let me place before you, Mr. Speaker, the figures relating to our trade relations with our two greatest customers. Our trade with the United States shows that for the fiscal year 1929 our imports from the United States amounted to $868,012,229, and our exports to $521,267,087. For the fiscal year 1930 our imports amounted to $847,466,079 and our exports to $536,611,950. During the past fiscal year our imports have decreased by over $20,000,000 while our exports have increased by over $15,000,000, yet our unfavourable trade balance with the United States is almost $300,000,000. On the other hand our trade with Great Britain shows that during the fiscal year 1929 our imports were $194,041,381 and our exports $431,660,941; in 1930 our imports amounted to $189,178,156 and our exports to $283,274,555. Our imports from Great Britain have decreased by almost $5,000,000, but our exports have also decreased by over $150,000,000. The United States is our greatest customer for our exports and the greatest source of our imports; Great Britain comes next in both respects. Having regard to the tariff changes which have recently been made in the United States against Canadian imports it is altogether likely that now Great Britain will become our greatest purchaser of Canadian exports. It

(Mr. Thorson.]

is desirable, if not necessary, to adjust more evenly our trade balance between these two countries. I welcome any proposals in this budget which will accomplish that object. I believe that the tariff items in this budget showing an increase in the British preference are items of that nature and will accomplish the object which we have in mind. I am prepared to support the budget on that ground alone.

No doubt we in Canada shall continue to import from the United States, regardless of how much we sell to that country, a very large volume of our total imports but we shall do so for two very good reasons. In the first place it will pay the Canadian consumer to do so, and in the second place there is no other country from which Canada can so conveniently import many of the articles which she requires. We have no intention of waging any tariff war against any country and we do not intend to be led into tariff reprisals against any country, the only effect of which would be to compel the Canadian consumer to pay more for what he has to buy. However, I see no reason why we should not divert a very large portion of our import trade from the United States, which has shown its unwillingness to deal with us, to Great Britain, which is willing to deal with us. Therefore, Mr. Speaker, I am in favour of those items on which the British preference has been increased, because I think they will accomplish that diversion and bring about that necessary adjustment between our two countries.

Duiing the course of the amazing contribution to the budget debate made by the hon. leader of the opposition last Thursday I asked him this question:

Is the hon. member in favour of the British preference or not?

It was pardonable curiosity on my part, Mr. Speaker, that prompted the question, because no hon. member of the house could tell from what the hon. gentleman was saying whether or not he was in favour of the British preference. He evaded my question, and to-day I do not know whether or not he is in favour of the British preference, in spite of the fact that he spoke for almost three hours yesterday. Instead of answering my question he made a personal reference to myself, as follows:

The hon. gentleman has never been noted for his high regard for British views, but I am somewhat surprised at his little regard for Canadians this afternoon.

I suppose I must treat that personal reference to myself with some respect, and I shall do so. I shall treat it with such respect as it

The Budget-Mr. Thorson

deserves having regard to the source from which it came and the spirit in which it was made. I pass it by with no further comment, save to say that in almost every political speech I have made during the course of the past year on economic questions I have advocated a substantial increase in the British preference in respect of all those articles which we now import from the United States and which we could import equally well from Great Britain. As to my regard for British views, I prefer the opinion of my constituents to that of the hon. leader of the opposition. I have expressed myself in favour of the British preference for two reasons; they are the same reasons which actuated the late Sir Wilfrid Laurier, the great chieftain of the Liberal party, in placing the British preference upon the statute books of this country. They are the same reasons which actuate the Liberal party to-day. In the first place, as a Canadian-and I place Canada above all other countries in the world in my affections without any reservations whatsoever-I believe that the British preference is in the best interests of the Canadian people. As a member of one of the British nations, which are united one with the other by the bonds of common institutions and common traditions, I would rather see British export trade prosper than see it fail. Export trade is the life of Great Britain; if it should fail, then Great Britain dies and we in Canada and the world at large would be the poorer for her death.

The present tariff revision will involve a consideration of some 495 separate tariff items. This budget has been referred to as a protectionist budget, but it must not be forgotten that there are 400 items in it which show a reduction in tariff. Let that fact be understood quite clearly. Of the items involved in the budget, 281 relate to the British preference; of that number, 11 items show a reduction in the British preference but 270 items show an increase. The hon. Minister of Finance stated that the British preference had been substantially increased, and I am prepared to accept his statement. He stated further that during the past year Canada imported over $200,000,000 worth of goods covered by the items in which there has been an increase in the British preference. Inquiries have led me to believe that that figure is much too low, although I admit that it is difficult to determine with any degree of exactness what portion of that amount would cover goods now coming from Great Britain, and what portion would cover those from other countries. I do not consider that question to be one of prime importance, because the essence

of our British preference proposals lies in the fact that we invite the British manufacturer to enter the Canadian market. We open the door to him and say: Come in. It will depend upon the genius of the British manufacturer to what extent he profits from the opportunities which we now present to him. Why has he not in the past more greatly increased his sales in Canada? Sentiment is in his favour; there is no doubt of that. Has he been alive to his opportunities? There was no phrase in the budget speech more striking than the following statement of the hon. Minister of Finance:

In modern commerce the buyer does not seek the seller. The seller, even with the advantage of the British preference, must seek the buyer in Canada through sales and service organizations comparable with those of his effective competitor.

That effective competitor is the competitor in the United States. If the British manufacturer will equal that competitor in the art of merchandising, he will profit from the opportunities which are now presented to him. We are predisposed to do business with the British manufacturer, but he must sell us the goods which we need, made up and marketed according to our requirements. If he sits in his office and simply waits for orders, or attempts to sell us goods which he thinks we ought to buy rather than those we wish to buy, then he will fail to accomplish that which we wish him to accomplish.

Several suggestions have been made in this regard, and I pass them on for what they are worth with a view to stressing the point which I am endeavouring to make. For example, why should not the British manufacture make his quotations to the Canadian trade in dollars and cents, instead of in pounds, shillings and pence? Why should he not have regard for our requirements in the matter of packages and boxes? On many commodities we pay a tariff upon the container as well as upon the contents. Why pack goods in a heavy iron-bound box when a cardboard container would suffice? Why should he not open his agencies in Canada and supply to us the manufacturer's services to which we are accustomed? These are only a few suggestions of the many that have been offered. If the British manufacturer will sell to us the goods which we want to buy, subject to the conditions to which we are accustomed we are predisposed to deal with him. We offer him the opportunity of displacing his United States competitor in the Canadian market. Other conditions being equal, we would rather buy British goods than those of the United States. The volume of the British

The Budget-Mr. Thorson

manufacturer's sales and the extent of his success will largely depend upon his own efforts.

We in western Canada are particularly interested in the British preference. There is a special market in western Canada for Great Britain. The Hudson Bay railway will soon be in operation, thanks to the aggressiveness of this administration. When Fort Churchill is opened western Canada will be next door to Great Britain, and Great Britain will have the double advantage of the British preference on the one hand, and of decreased transportation costs on goods destined to western Canada via Churchill, on the other. There is no reason why a whole new field should not be opened in western Canada to Great Britain. Saskatoon is the centre, geographically speaking, at any rate, of western Canada, and it is 1,100 miles nearer to Liverpool via Churchill than it is via Montreal. If Great Britain cannot enter western Canada by the front door at Churchill during the winter season, she can enter by the back door via the Panama canal and Vancouver. No matter at which door she enters, she will find a willing purchaser. I look to the time in the very near future when the volume of our imports over the Hudson Bay railway via Fort Churchill will be equal at any rate to the volume of our exports through that port. I hope that that will be one of the results of this increase in the British preference. If that should happen,

and there is no reason why it should not, then western Canada will benefit particularly by this budget and the proposals contained therein. The western consumer will have the advantage of cheaper British goods. The Hudson Bay railway will be a success by reason of the volume of return freight traffic, and Great Britain will benefit by the increased volume of her trade. In addition to that, a friendlier feeling will be created between Great Britain and western Canada towards the exports of grain products which western Canada must make. There is one suggestion in this connection which I should like to make, one which involves cooperation between Canada and Great Britain. Every effort will be made by certain agencies to discourage shipping traffic via Fort Churchill in order to discredit the Hudson Bay railway project. One of the devices which undoubtedly will be employed will be the imposition of high maritime insurance rates on shipping coming to and going from Churchill. I suggest that the Canadian and British governments should cooperate in the matter of maritime insurance rates so that this new route to western Canada via Churchill and the Hudson Bay railway may be given a fair trial. These are some

of the reasons why as a Canadian and as a representative of western Canada I support the budget. I wish the increase in the British preference had gone further, but I am prepared to accept what has been done; the value of the changes to Canada and Great Britain will be seen in the future.

This extension of the British preference is not tariff bargaining; we are not asking for any preference for our Canadian wheat in the British market, for we have no desire to tax the British workmen's bread. The British voter will be wise if he will resist any effort to cast such a tariff burden upon him. Our offer is not in the nature of tariff dickering; it is based partly upon sentiment and partly upon self interest. It would be hypocrisy on my part to say that our motives are entirely altruistic. Canada will benefit by the increase in the British preference and so will Great Britain in the better trade relations that will result. We in western Canada are alive to the problem of marketing our wheat. It is no longer possible for us to sit in Winnipeg and wait for orders to come to us. We must seek the buyer just as the British manufacturer must do. We also wish to have a buyer predisposed to do business with us and we hope these British preference tariff proposals will assist us in that respect. We realize that if we wish to sell our grain to Great Britain, we must be prepared to buy from Great Britain. We must pay for our imports by our exports, and we must receive payment for our exports by our imports. Our export trade is the measure of our external purchasing power. If we are to continue to receive those imports which are so necessary to our present standard of living, we must have markets for our surplus products.

Our growth in foreign trade has been enormous during the life of this Liberal administration and we realize that we are dependent upon that trade for our prosperity. The leader of the opposition stated last Thursday that he was in favour of any proposal that would make for the advancement of Canada as an independent economic entity. If by that he meant that Canada could be absolutely independent of all other nations and totally disregard their interests in matters of trade, I entirely disagree with him.

Mr. STEVENS:

He never said anything

of the kind.

Mr. THORSON:

In this day of the interchange of commodities on a world basis, the world is becoming an economic whole. No nation can be independent of other nations;

ft ~

The Budget-Mr. Cantley

all nations are interdependent, one upon another. We realize that if we are to sell our surplus agricultural and other products, we must depend upon foreign buyers and we must be willing to buy from them. Our security as a world trading country is dependent not upon armaments but upon international good will. We desire to promote good will between Canada and Great Britain and that is the object of our proposals to increase the British preference. If I were to describe this budget in one sentence, I would say: This budget is one of good will towards those countries that are willing to trade with us.

I hope the budget will promote such good will between Canada on the one hand and Great Britain on the other. It is in that hope that I support the budget, and in speaking as I do I think I voice the opinion of the great majority of the Canadian people.

Mr. THOMAS CANTLEY (Pictou):

Mr. Speaker, the tariff resolutions as brought down in the house on Thursday last will doubtless during coming years be regarded as evidence of the high administrative statesmanship of the new Minister of Finance (Mr. Dunning), for in these resolutions are embalmed the first indication, so far as I know, of the great national policy of protection being extended to the very important item of hash. If hon. members will turn to page 1637 of Hansard of May 1st last, they will there see under item 90, section (d) "hash and all similar products, composed wholly of vegetables or of vegetables and meat or fish or both, not otherwise provided for", are dutiable at 15 per cent, 32| per cent and 35 per cent. This great national industry of the west is to now be protected by the highest rate of duties the minister has provided in any item of the tariff proposals submitted to the house the other day.

Referring now to the (proposals of the Minister of Finance, and I am sorry he is not in his place, because so far as the iron and steel industry is concerned I desire to thank the minister, if he really intends to put the resolutions relating to Canadian coal used in the production of iron and steel into effect, for at last implementing the recommendations of the Duncan commission in regard to Canadian coal. We are glad to have this, although it is at least three or four years in default. Iron and steel manufacturers in Nova Scotia have been labouring under most unfair disadvantages as compared with other manufacturers of these products in the other provinces of Canada. The latter were able, due to the rebate of duty on United States coal and exceptionally low freight rates, to assemble foreign fuel at their furnaces at less cost than that at which

we in Nova Scotia were able to produce fuel at the pit mouth.

I also wish to thank the minister-and I can do this very freely and honestly-for putting on the free list hospital and operating room supplies. His thoughtfulness in that regard will be appreciated in every Canadian community where hospital accommodation, treatment and care are given, and in most cases supplied largely through private beneficence and given free in practically all our institutions to those who need medical and surgical treatment. For that I desire to thank him and I think the house as a whole, irrespective of party or policy, will thank him for his consideration in that regard.

The Minister of Finance, in that portion of his budget speech which refers more particularly to the iron and steel schedules, stated that this industry concerned the employment of more than 120,000 people in more than 1,100 plants, with an aggregate pay-roll of more than $170,000,000. I do not know just what the minister had in his mind when referring to that matter. If he referred to the basic forms of iron and steel, his statement as to the number of persons employed and the wages paid was very greatly exaggerated. The fundamental things in this country to protect so far as the tariff on iron and steel are concerned are the primary forms of iron and steel, pig iron and steel blooms, billets and slabs and no such number of primary iron and steel making enterprises exists in Canada, and no such number of men is employed. If he departs from the question of the primary forms of iron and steel, I hold that there is no particular point where he can draw the line and say: This is a manufacturer of iron and steel, and the other is not; because we get into such a wide range of manufacturing enterprises employing a varied proportion of iron and steel and a proportion of other materials. Manifestly these cannot properly be considered as manufacturers of iron and steel. The only place where you can draw the line safely is at the primary products pig iron and steel, with their subsequent treatment in the forges and rolling mills attached to these blast furnaces and open hearth furnaces. If you so restrict it, it will be found that we employed in Canada in the year 1928, which I find are the latest figures supplied by the government, 4,605 hands, with a reported pay roll of $S,644,000 in round figures. That represents the value of that industry purely from an employment point of view, and it also restricts the location of these plants to three points in Canada, one or two in Nova Scotia and two in Ontario, the Ontario plants, of course, being at Hamilton and the Soo.

1S58

The Budget-Mr. Cantley

I would again point out to the house, and

to the Minister of Finance, that the important feature in connection with the iron and steel trade, and it is a matter of national importance, is the production of pig iron and open hearth or Bessemer steel. This latter takes the form of ingots, blooms, billets, heavy forgings, slabs and plate. This basic industry is of supreme national importance and should above all others be fostered and protected; for with the primary forms safeguarded from unfair forms of competition, the establishment and permanency of the secondary trades will certainly follow. I submit that that is an element which has been largely overlooked in the tariff that was presented to the house last week by the Minister of Finance. He stated:

The government had first in mind the national necessity of maintaining a sufficient and selfreliant iron and steel industry and that these considerations had been kept in mind throughout the schedule but particularly in those sections which cover crude, primary and secondary forms up to and including the production of the rolling mills and that within this range lies the product of Canada's great, basic, ferrous industry, as well as many others in the production of which Great Britain excels.

With that statement as to national necessity I agree. But the tariff proposals brought down by the minister do not comply with those conditions. As to that I do not think there can be any doubt on the part of anyone who has carefully looked over the budget provisions and is familiar with the trade.

I would remind the minister and the house that the most extreme protection that was ever adopted in any country in the world was adopted by Great Britain in the manufacture of iron. That countiy not only imposed high duties on all iron coming from abroad, but when it discovered that coal could replace the charcoal fuel formerly used, and when the steam-blowing engine had been invented, Great Britain through these two basic facts rose to a position of absolute supremacy over the whole world in the production of iron and to maintain that supremacy Great Britain took extreme steps. She actually prohibited all skilled iron workers from leaving the kingdom, and also prohibited the export of rolling mills, blowing engines and machinery of any kind whatsoever that could be used for the production of iron abroad. Due to these very extreme measures, Great Britain was able for many years practically to control entirely the whole iron production of Europe. The practical statesmen of that day recognized that the iron industry lay at the foundation of their national supremacy, and that supremacy they maintained in the way to which I have just referred for a very considerable number

of years. Later the United States recognized much the same thing, and to-day, as everybody knows, the United States is far and away the greatest producer of iron and steel in the world. Their protective tariff, the most scientific as it relates to the different branches of the steel trade, furnishes them with ample protection. They recognize the first principle to be observed in protecting the labour of the country, and under their policy they have built up an industry which has astonished the civilized world, and which floods this country of Canada with steel products to the value of practically SI,000,000 per day.

You ask why I ridicule and deride this tariff. Why not, it may be Said, accept and respond to the supposed generous offer of protection? I answer, because I have no faith in the efficiency of the tariff or in the intentions of the government in regard to these provisions. Experience teaches even the most ignorant. Sudden conversions do not appeal to men of my birth or my faith. I prefer to accept protection for the iron and steel trade from the people and the statesmen who believe in protection, from the party and the people who initiated protection in Canada, rather than from recent converts whose good intentions I may perhaps be permitted to doubt, and who for a long period of years expressed themselves as opposed to what they formerly deemed the economic heresies contained in the tariff brought down in this house a few days ago.

I repeat that I am sorry the Minister of Finance is not in his place. His fame preceded him when he came to this house a few years ago. I listened as did many of my fellow members of the house to the epic narrative which he gave us on a June day, on June 7, two years ago. It was given with a charm of narrative which in no way detracted from its commanding appeal, he then rightly won the esteem and admiration and respect of all who heard him. The minister's energy and zeal, has often appealed to me while his exhibition at times of ill-concealed contempt for some of his slower-moving colleagues, has amused me. Could I believe that he had now really changed his views in regard to protection, that he really had abandoned his *well known former fiscal free trade views, I should look upon his present tariff and his administration of it differently. I may say that if he has experienced a real change in his attitude towards protection, then he should change hi.s political associates; and, personally, I should be glad to see him do so. I fear, however, that there is no real change of heart, and that this precious tariff which he has given to us,

The Budget-Mr. Canlley

so far as iron and steel and other related items are concerned, is but an election bait. In any case, it is either a sacrifice of past convictions on the part of the minister and his associates, or a desperate expedient to save a discredited ministry and a government which has lost the 'confidence of the people of this country. Men of my province, my nationality and my faith usually remain true to their convictions, and also to their friends.

I have had some five and forty years experience in the iron and steel industry and have seen the development of that industry practically in its entirety, first in Nova Scotia and later in Ontario. The first real modern production of iron and steel-steel particularly -in this Dominion occurred under the regime of Sir Charles Tupper who was at the time Minister of Finance. It was afterwards fostered and greatly extended under the patronage of another distinguished Nova Scotian, the late W. S. Fielding. Unfortunately this tariff will not do for the iron and steel industry, either of Nova Scotia or the rest of Canada, what the Tupper or the Fielding tariff did.

For a few minutes I want to refer to skelp. We are told that this cannot be made in Canada. This is the same old story that was told us on September 6, 1914, when the British War Office said that shell steel could not be made from basic material, that it must be acid steel. The Germans had used basic steel for a score of years, and we in Nova Scotia demonstrated in a very short time that basic steel made in Canada was equally as suitable for the production of shells as any acid steel made in the old country or elsewhere. If that fact had not been demonstrated, and such steel had not been used, Canada could not have taken the high place in the great war that she did, and at the close of the war she would not have been put in the financial position in which she found herself.

I did attend two sessions of the tariff board, Mr. Speaker, and, frankly, was disgusted with the exhibition of lack of knowledge, intolerance, misrepresentation and misstatements, in regard to both primary and secondary steel manufacturing. There I saw what I considered the vital interests of the country committed to the advocacy of corporation lawyers, who knew no more about the production of steel and the working of it than does the man on the street of the movements of the planetary system. Those are the type of men who are supposed to represent the iron and steel industry in Canada before the tariff board. Look through that tariff. It might make angels weep to see some of the phraseology used in regard to the various iron and

steel items. The highly protected makers of pipe there asserted that the only suitable material for making ordinary welded pipe was Bessemer steel. The pundits of the war office in 1914 said that acid steel was only suitable for shells. Their statement was quite as authoritative and quite as correct as that of the steel pipe makers of to-day. There is no inherent difference between steel made under the Bessemer or open hearth processes apart from the chemical constituents. Mild steel made by either process, given low sulphur, will readily weld. Wrought iron or steel pipe skelp must be made of such a quality of steel as will readily weld, because most of the pipe commercially used in plumbing and for similar purposes is butt welded. The other requisite of skelp is that it must be of such a character that it will screw readily; that is, when you come to screw it with taps and dies the thread will not tear, but will be sharp and clean. That is provided for by putting in a certain percentage of phosphorus, say about -08 per cent. Given proper analysis as to sulphur and phosphorus there is no difficulty in supplying from Canadian mills basic steel which will make first class skelp and first class pipe, if it is properly treated by the pipe makers. Given control of suitable steel basic furnaces and mills in Nova Scotia, I would undertake in ten days to provide steel skelp which will meet all the conditions requisite for making first class pipe. The real facts were not submitted to the tariff board. People representing one of the most highly protected interests in the whole of Canada were allowed to make their misleading statements practically uncontradicted. Does not the house admit that an important industry of this kind should have been a matter of concern to the government? I submit the government or its creation, the tariff board, should have seen to it that evidence bearing on the true facts of the case was presented to the board before they reached their decision in regard to skelp.

If we are to listen to those gentry and others of their type, no great progress is possible or will be made in Canada so far as iron and steel production is concerned, and this country will remain as it is to-day, largely a vassal of the United States, while Germany and every other progressive nation command and depend on their own resources so far as the vital matter of a national supply of iron and steel is concerned. Much the same situation as that which confronted the chairman of the tariff commission was faced by Sir Charles Tupper in I8S7. Sir Charles Tupper in that year provided for a duty on wrought and cast scrap. This affected, or was thought

The Budget-Mr. Cantley

to affect, the manufacture of bar iron in Montreal by three or four different concerns that were producing bar iron from scrap. Those firms were Peck, Benny and Company, who had rolling mills on the St. Lawrence canal, Pillow Hersey, and the Montreal Rolling Mills. Delegations from these three companies came up to Ottawa and met the minister in his room in the east block. The primary iron and steel makers of that day were represented by the late A. T. Patterson of Londonderry and myself. The spokesman for the Montreal mills at that meeting was my friend the late William MacMaster, whose passing I noted with deep regret in yesterday's press. May I here say that in my judgment, William MacMaster was the brightest, probably the most forceful and certainly one of the most successful of all the men I have known who have been interested in the iron and steel industry of Canada. That delegation was introduced by the late Sir Donald A. Smith, later Lord Strathcona, who at that time represented one of the constituencies of the island of Montreal. They made their statement and Sir Charles Tupper replied that the tariff would stand as brought down. He added that if they were affected adversely and if after mutual agreement they would give him a statement showing in what way they were affected and what they proposed he should do to remedy the situation the matter would have his immediate consideration. They came back at a later hour and made their proposals; those proposals were converted into law and the whole matter was in that way adjusted without a day's delay. That is an example of a statesman dealing with an important question in a definite, decisive, prompt and satisfactory way.

May I suggest to the minister that due to the mistaken tariff policy of Canada during the past seven years we have become to a yearly increasing degree vassals of the United States steel makers. This is decisively shown by the growing importations from that country in the important matter of steel structural shapes? Our structural engineers, both those connected with our railway enterprises and more particularly those responsible for our modem city building structures, which absorb a large and increasing tonnage of steel worked up into structures of many kinds, have for about ten years and particularly during the last few years made their calculations entirely with a view to using American structural shapes. Why is that the case? Primarily because as to the steel tariff we have not dealt fairly as between Great Britain, the United States and ourselves in the matter

of structural shapes. The American Shapes generally are lighter than the British or continental shapes. The sections are thinner and they differ in their principal dimensions as to depth of web and width of flange. Apart from that the American mills guarantee the maximum weights of any particular section, whether it be a six inch I-beam or any of the larger sections of that character. When the contractor adopts a twelve inch American rolled steel section he knows that he "will have to pay for a certain amount of material. On the other hand, the English maker stipulates for a tolerance of 2J per cent either way; in some cases it is even 5 per cent. That means that the contractor buying the material cannot tell within 5 per cent how much material he may have to pay for. The result of these combined facts and our inadequate tariff regulations has [DOT]been to give the United States steel mills practical control of the structural steel requirements of this country.

How are we to meet that situation? A gesture towards meeting it is contained in the tariff brought down, but I submit that it does not go far enough and for that reason will not produce the results which we should expect to find from a general revision of the tariff such as this is asserted to be. I want to say that Canada cannot be put in a position of independence so far as iron and steel are concerned if the minister's proposals as to preferential tariff on steel products in Great Britain are adopted, as shown by the new tariff items 375, 377. 377b, 377c, 37Sb, 378c, 378d, 379, 380, 384 . 385, 386, and many others. Such proposals, if put in effect, will prove fatal to the supremacy of the Canadian steel industry. Consider for a moment the fact that these heavy forms of steel blooms, billets, slabs can be freighted from British furnaces and mills to Montreal for one third of the cost of rail transport from Nova Scotia to the same point. This transportation advantage, coupled with the preferential duty, will -enable the British steel masters to supplant and displace a large portion of our Nova Scotia furnace products a market for which it is suggested this new tariff will give us.

Mr. WOODSWORTH:

Why has there to

be rail transportation from Nova Scotia to Montreal?

Mr. CANTLEY:

For six months of the

year no other form of transportation is possible. The next point is that most of the material does not come to Montreal for consumption there; Montreal is the gateway to Ontario and the interior of western Canada. I took Montreal because it is a common

The Budget-Mr. Cantley

gateway used by the Nova Scotia, British or continental steel makers. I want to point out that up to or at that gateway point-Montreal

__t)he foreigner can freight his steel for less

than one third of the cost of 'bringing it from Nova Scotia for transport further inland or for sale in that city.

Equally unsatisfactory will be the position in which a very large portion of the products of our mills will be affected by the preference granted in this tariff to a wide range and important tonnage of small section steel rods and bars intended for the production of chain, wire and other steel irondary products, the makers of which are given very considerable preference as regards their raw material while enjoying most ample protection so far as their finished product is concerned. Let us take chains and wire and ask ourselves if there is any reason why these manufacturers should obtain free raw material and at the same time in many cases be given the widest range of protection under this tariff or under the old tariff. Let us take for an example the production of horseshoe nails. Thirty years ago we in Nova Scotia rolled rods for the production of horseshoe nails; then they put them on the free list in the interest of the nail makers and they have remained on that free list for a generation. If you will look at the tariff you will see the rate of protection which they have. The same objection applies in the matter of steel pipe. Steel pipe makers have been allowed to bring in skelp at 5 per cent, and they have been getting the advantage of the highest ranges of duty paid under any tariff which we have had in effect in Canada during the last thirty years. Not only that, but there is a lesser amount of [DOT] labour and machinery involved in the production of the common grades of steel pipe than in almost any other class of secondary iron and steel products. Over a long term of years some of these secondary businesses have had an unfair advantage ; and general dissatisfaction has existed for years. This government has known it, for the whole matter was discussed before the tariff board in the way I have described. Yet the difficulty and the outrage continue to be perpetuated in the tariff which was presented the other day.

Summing up the duties as affecting the iron and steel schedules the minister stated that tariff rates had been reduced on sixty-six items and increased on forty, that under the intermediate tariff the reductions number eighty-six, and the increases twenty-four while under the British preferential tariff the rates had been increased in eight cases and reduced or made free in one hundred and fifty-two. Here, Mr. Speaker, is where great

harm has been done, and I venture to suggest that the proposals of the minister as set out in his tariff schedule will prove vastly disappointing to the producers of primary forms of steel in Canada, and more especially so in the case of the products of the furnaces, mills and forges of Nova Scotia, which products I claim have in the past been and by this tariff will continue to be most unfairly discriminated against, and this notwithstanding the important fact that they alone are the primary producers of iron and steel in this Dominion who can be depended upon to supply the all-important national needs in times of stress such as this country passed through during the great war. Supposing we had trouble with our neighbours and our ships were driven off the sea. In such a time could we rely on iron and steel produced in the province of Ontario, which for the past thirty years has been absolutely dependent on American ores and American coal? That is the situation this country may some day face, and the day may come when it will be a serious situation. My point is that the eastern provinces of Canada alone are in a position to-day to meet national needs such as those to which I have referred.

Now, sir, in view of these considerations I regret that the minister has not adopted a more truly Canadian outlook, and one more calculated to establish dependable conditions which would not only bring about national security but would also provide the maximum of employment for Canadian miners, iron and steel operators and transport workers, who are among the largest consumers of the agricultural products of Canada and who are also the best customers for the manufactured goods produced within the Dominion.

Mr. Speaker, did time permit and the patience of the house suffice, I would dissect this tariff and show the many unsatisfactory features of it; I would direct the attention of the minister, were he in his seat, to many items with respect to which I think he would have to admit that the officers who prepared this tariff either did not have the requisite knowledge and technical experience for the work intrusted to them or were recreant to their duties as advisers to him. I might point out items which will work to the detriment of Canadian trade and under which [DOT]great disadvantage certainly will accrue to the workmen of this country who are dependent for their daily bread upon the iron and steel industry of Canada. I regret, sir, to have to say that this tariff, to the extent to which it deals with and affects the iron and steel industry of Canada is far from satisfactory to the most important interests involved.

The Budget-Mr. Woodsworth

Mr. J. S. WOODSWORTH (Winnipeg North Centre):

Mr. Speaker, I think I may congratulate the Minister of Finance (Mr. Dunning) on the clarity of his statement in presenting his budget. There was one expression which I was glad to note; I refer to the phrase with respect to visible exports and visible trade balance. It may be that the minister was driven to this by the change that has taken place in our trade balances in recent times, but whatever the cause I think it highly advisable that we should clearly recognize that all our exports and imports are not what economists term visible. In the past we have erred very greatly in suggesting that we must always pay directly for our imports by our exports and that an excess of exports is in some mysterious way an indication of greater prosperity. Very often we are paying debts and drawing credits, and now at this time of great tourist traffic we ought to realize that there are other ways of balancing our budget than by exports; therefore I welcome that form of statement.

I think everyone must realize that the budget was very carefully balanced'; in fact the trouble is that it professes to protect the manufacturer of the east at the same time it protects the farmer of the west, and it professes to protect the consumer as well as the producer. It was designed to please everyone, and in the end it may result in pleasing no one. What amused me in the earlier part of the debate more than anything else was the stealing of the flag from the Conservatives by the Liberals. It was very odd indeed to have the leader of the opposition protesting that patriotism is the last resort of a coward.

I think it used to be termed the last resort of a scoundrel, but the other word will do. It will be very interesting indeed to see the Liberals going up and down this country during the coming election, waving the flag, and meeting with processions of Conservatives who do not know how to march without the old flag and the old slogans.

The Minister of Finance said he preferred to deal with those who had a common heritage, kindred institutions and a common patriotism. That already has been translated as meaning those of our own kith and kin.

I do not think I have any very strong colour prejudice, but I would just as soon buy fresh vegetables grown by white labour in California or Oregon as vegetables grown by the negros in the West Indies. I do not know whether the latter may be said to be our own kith and kin; I do not know that they are altogether under kindred institutions even though they may belong to the British Empire. It seems to me that in regard to matters such iMr. Cantley.]

as this, there is great need of puncturing the sentimentalities in which we have indulged. As a matter of fact to-day there are as many people in the United States of British origin as there are Canadians living in Canada.

Mr. GEARY:

They are mostly Canadians.

Mr. WOODSWORTH:

There are a very great many Canadians, it is true, but in these matters there is no use getting ourselves into a great furor because after all the United States is composed very largely of our own kith and kin, and their institutions are not so very dissimilar from our own. On the other hand we have a very large number of American companies over here which will benefit by the so-called protection far more than will the ordinary Canadian workmen.

When I heard the speech of the Minister of Finance I could not but be reminded of an editorial which appeared in the Financial Post of December 19, 1929, just after Mr. Dunning became Minister of Finance. It stated:

Easterners may well regard the Dunning appointment without fear and trembling.

And again:

In fact, we would not be surprised if he were to lean far away from some of his former views in order to avoid any suspicion of still being a free trader and a westerner first and foremost.

.Once again, as usual, the big interests have won. I should like to read a paragraph from a very interesting article written by Mr. Grattan O'Leary of the Press Gallery, entitled " Holt versus Jones," and published in MacLean's Magazine of March, 1929. I think it well that we members of parliament sometimes should face the actualities of the situation.

Canadians, concentrating attention upon politicians and parliaments, are oblivious to the meaning of such a conflict. They debate and appraise the virtues and defects of their political chieftains: follow their careers with interest; think of them as the arbiters of their destiny. It is all a divorcement from reality. For it is frequently behind the scenes, in the lobbies of Ottawa hotels, behind the green-baize doors of departmental offices, in the counting rooms of industrial palaces in Toronto and Montreal, that our economic destinies are influenced. Who can hold that industrial emperors like Holt and Jones, demigods of our financial ledgers, field-marshals of industry and finance, are not more potent in shaping our everyday economic lives than all our politicians put together?

It strikes me that Mr. O'Leary was endowed with almost prophetic vision in view of the duties on steel which appear in this budget.

At times the Prime Minister (Mr. Mackenzie King) has made a good deal of following the traditional Liberal practices. I

The Budget-Mr. Woodsworth

should like to read a paragraph or two from a letter written to the Prime Minister by a Liberal in British Columbia, of which I received a copy only a few days ago. It struck me at the time that there was a good deal of real common sense contained in the presentation. It reads:

There has been a common belief among Liberals that the most progressive and prosperous periods in Canada's history had been the direct result of federal policies inaugurated by the Laurier government and later continued during your own able leadership. Now, the soundness of such belief is questioned and many Liberals are seriously pondering whether Lau-rier Liberalism has been inadequate to meet the rapidly changing conditions, or whether, after all, fortunate circumstances and the swing of the economic pendulum alone, may not account for those years of wonderful development and expansion which have been experienced under Liberal rule.

Be that as it may, when speeches from the throne and yearly bank reports show a marked increase in the year's trade and commerce and, at the same time, there can exist an almost unprecedented condition of unemployment throughout the whole Dominion, surely there must be a very grave defect in our economic or political system somewhere.

And again:

Superpower and mass production have rapidly brought about new conditions which should be faced. Markets cannot be created or found to continuously absorb the ever accelerating output of our various industries. Because of this, serious periodical industrial depressions must inevitably occur with their attendant suffering and distress. If the wit of man cannot devise anything more equitable than the barbarous cut-throat system under which we live and if future trouble would be averted, then, in the name of justice and common sense, let something be done and done at once.

The writer after advocating a certain type of nation-wide insurance, concludes as follows:

No citizen would object except, perhaps, the man who had amassed wealth and had been brutalized to the limit of selfishness in the process, or he of inherited riches who assumes the rights and privileges of one who might belong to a special and superior creation.

Mr. IRVINE:

Whom is the hon. gentleman quoting?

Mr. WOODSWORTH:

I am quoting from

a private letter which presents a point of view which I thought would be of interest to the Prime Minister, if he has not himself already read the letter.

The Prime Minister may say that he is drawing away from Laurier Liberalism. I am inclined to think that he is, and with a vengeance. But where is he going? A few weeks ago the Prime Minister warned us in this corner to beware of too close an association with the Tories. I should say that the Prime Minister and his followers are much nearer to the Tories than are we in this comer; in fact, that is the trouble with some of us in this comer; we cannot very well distinguish, from a consideration of the fiscal policies of the two old parties, just where the difference lies.

I am inclined to think that during the coming elections a good many of the electors will be in that same position-they will not be able to discover from this budget any fundamental difference.

I do not profess to be in a position to follow the hon. member for Pictou (Mr. CantJey) in discussing in detail the steel duties, or the schedules contained in the budget. However, in addition to the protectionist policy there are two matters which stand out quite clearly in this budget. One is the British preference, and the other is the retaliatory policy-I think we may call it such-towards the United States. Last year we in this corner supported a motion to increase the British preference, but hon. members of the house will recall that we added the proviso that this should be but a step in the direction of freer world trade. I myself would not like to think of any other kind of British preference. I do not want any kind of British preference if it is to be that advocated by Lord Beaverbrook and his followers in the old country. I should like to call the attention of the house to the real position of Lord Beaverbrook on the British preference. In the pamphlet on Empire Free Trade, issued some time ago, I find the following on page 16:

1. The empire is to be regarded as a single economic group, and trade between the various parts, subject to the qualifications made above, is to suffer no restrictions.

2. The interests of this group are to be conserved by a tariff wall against the rest of the world.

Mr. THORSON:

We are against that.