March 16, 1931

CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Would the right hon. gentleman permit a question?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

Certainly.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Will the right hon. gentleman explain how a tariff preference can be given in the English market for Canadian wheat except there be tariffs against foreign wheats entering that market?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

I do not know that I am called upon to explain the matter in just the way my right hon. friend has put the question, but I will say this to him: the trouble with my hon. friend and with those who think like him is this, they can only admit in their mind one kind of preference, and that of a tariff preference. They cannot understand that there may be such a thing as a voluntary preference.

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?

Some hon. MEMBERS:

Hear, hear.

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

Hon. members

may laugh at that, but they cannot understand any such thing as a recognition of good will or a recognition of the fact of our being part of one great British community. I repeat, they cannot understand how there can be such a thing as a voluntary preference.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

What does "voluntary"

mean?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

I am not surprised that my hon. friend asks what it means. It means exactly what it says, something that is done voluntarily from any motive, not as a result of bargaining but as a result possibly of offers, of proposals, of the adoption of an attitude which it is believed is merited or which it is hoped and believed will bring something in return.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Is it voluntary preference

which is given to Russian wheat in the British market?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

The voluntary preference I have referred to is the kind of preference which was introduced by Mr. Fielding in this parliament in 1897, a preference that time and again was extended in the Laurier and Fielding tariffs, a preference which was maintained by Sir Robert Borden and

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his government, and which has been endorsed by every government during the last thirty years.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

But is that not the voluntary preference, so-called by the hon. gentleman, which has not been reciprocated throughout those thirty years?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

That is where I differ entirely from my hon. friend. My hon. friend knows the figures with respect to trade between this country and Britain. He knows that Britain has been Canada's best customer and he knows that Britain has bought year after year more of Canadian goods than we have bought of British goods. Does he mean to say that none of that has been the result of the attitude which Canada has taken and which was so admirably explained by-

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

She never bought one dollar's worth of goods unless they could be bought cheaper in Canada than elsewhere.

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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

May I ask a question of

the leader of the opposition? Does not the right hon. gentleman believe that the Prime Minister made a great mistake in not taking the hon. Secretary of State (Mr. Cahan) to the old country with him?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

May I answer my hon. friend still further: there is another form of preference which is just as important as a tariff preference, and that is what is termed an administrative preference. What was the position when the former Liberal government came into office with respect to the shipment of cattle to Britain? Cattle were excluded from the British market due to an embargo which had been in force for some years. One of the first acts of the then High Commissioner for Canada in London, the Hon. Peter Larkin, acting under instructions from the government of the day, was to take up with the British government the repeal of that embargo against Canadian cattle. Our argument was in part on the score that when Canada had given to Britain a preference in her market, it was unfair for Britain to continue that embargo against Canada. The embargo was removed and Canadian cattle were given entrance to the British market, not as a result of bargaining, but as a result of a courteous attitude taken towards Britain, in our interests as much as her own, an attitude which was reciprocated in a courteous way. I am not surprised at my hon. friend of all men not understanding the effect of courtesy because he is one of the most courteous gentlemen I know.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I intended to be courteous

to the right hon. gentleman.

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CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

Does the right hon.

gentleman not know that the embargo was off before Mr. Larkin ever reached England?

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

My hon. friend is mistaken. I hapen to know it was not off. I happen to know the instructions given to Mr. Larkin and the proceedings that took place.

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CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

I was in Great Britain when the matter came up before the House of Commons and the right hon. gentleman has no right to take the credit to himself for having the embargo removed.

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

I maintain the accuracy of what I have just said, but whether it was off or not does not affect my argument; my point remains the same, that if the attitude of hon. gentlemen opposite had prevailed, the embargo would not have been off yet. There would have been no result; but because there had been a preference given voluntarily to Britain in our markets, so there was an additional reason afforded the British government that finally helped the entrance there of our cattle. If I am not mistaken, the Minister of Agriculture (Mr. Weir) within the last two weeks has been taking up with the British government some questions with regard to the provisions to be laid down concerning the shipment of cattle to Great Britain. If he expects to get his requests met, is it to be as a result of bargaining which will exclude British commodities from this country. May I say further: there may be voluntary preferences; there may be administrative preferences; there may be tariff preferences, but interimperial negotiation has been in large part the result of voluntary preferences.

Let me ask my hon. friend this question: What is occurring in the Argentine republic to-day? What is the significance of all that British officials are doing in the Argentine? Argentine has sought to create an atmosphere favourable to a market for Argentine wheat in Britain. Britain has taken an attitude in response to that taken by the Argentine people towards her, namely: If you are prepared to trade with us, we are prepared to trade with you. Why is there in respect to trade a closer drawing together of the Argentine republic and Britain-the sale of wheat on the one hand and the sale of *commodities on the other-while there is not the same drawing together of this country and Great Britain? My right hon. friend wants everything as the result of bargaining on a basis

The Address-Mr. Mackenzie King

laid down by himself, ignoring everybody else and not wanting to make what is in the nature of an agreement of mutual advantage on a voluntary basis.

I do not wish to take up any undue time in discussing the so-called "humbug" incident. As however there has been a great deal of discussion over the question whether this offer was humbug or not, it would be as well to know exactly what was meant by Mr. Thomas, the member of the government in Britain who used that expression in reference to the offer. Perhaps I cannot do better in this connection than to read to the house just what Mr. Thomas said to the British House of Commons and leave hon. members to judge whether under the circumstances the British minister was not more than justified in using that particular term. What was it that the Right Hon. Mr. Thomas said that occasioned all the furore? The record will be found in the British Hansard debates of November 27, 1930, at page 1550. Reporting Mr. Thomas, the following appears:

We are censured because we refused to consider the offer made by the dominions. What was the offer? I say clearly and definitely that if anv offer were made that would help the trade of this country, would give employment to our people, and not injure them, not only would we have considered it, but it would have been our duty to accept it. (An honourable member: "Why did you not do it? ') For the simple reason, I assure you, that there never was such humbug as this proposal.

Mr. Thomas went on to explain why the proposal was humbug. He said:

We were asked first, clearly and definitely, to agree to put a tax on foodstuffs. That was the first proposal made. There can be no mistake about it. (Honourable members: "Who did?") Mr. Bennett and the whole of the other dominions. ... I repeat that the first proposal made to us was that we, the British government, should agree to a tax on foodstuffs, and, in return for it, the Canadian government were prepared to put on an additional tax of 'ten per cent on the duties then in operation on foreign goods. They did not say to us-let me make it quite clear-"We will remove any tax at all where you compete with us." On the contrary, let me say in fairness to them-I do not complain: I am only stating the facts-they said, "No. So far as we are concerned we will give nobody a preference that is going to compete with the things that we ourselves can make." That was made perfectly clear. In other words, they said, "We want you to change your fiscal principles, but we will only change certain details of ours." . . .

Later in his speech (see page 1554), referring to his use of the word "humbug," Mr. Thomas said:

Obviously, I never said, never intended to say, that of any individual. I said distinctly the proposals were humbug.

In further explanation of what was meant, Mr. Thomas gave the following:

In exchange for ten per cent on foodstuffs, British soft coal, which is now taxed one shilling seven and a half pence per ton into Canada, would get a benefit of five cents per ton. Germany, the Argentine, the United States and the Netherlands all admit our coal free now. Railroad rails-and I am only choosing the big industries where there is unemployment-have a duty in Australia of two shilling four pence per cwt. The Netherlands and Argentine admit them free. The foreign rate is very much more, but let us see what that means. Suppose that a tariff rate is fixed that precludes the possibility of our competing, of what value is any preference? The whole thing becomes absurd. I could go through a long list, cotton goods, wool I en goods. I could show that sewing machines, not an unimportant manufacture in this country, have a preferential rate into Australia of 15 per cent against us, while Germany only imposes 9 against us. Cotton goods: 55 per cent in Australia, Canada

15 per cent, Germany 6, France 10, Netherlands and Argentine free. Cotton piece goods an important industry: Canada 31 per cent, Netherlands 8 per cent, Argentine 15 per cent. Woollen goods: Canada 37 per cent. Australia 61 per cent, Germany 22 per cent, France 12 per cent.

Finally in order to make quite clear that it was the proposals, the sorcalled offer, of Canada's Prime Minister that he was characterizing as "humbug," and in no sense the motives of the Prime Minister, or the Prime Minister himself, Mr. Thomas, referring to a previous speaker, said at page 1562:

If he says for one moment that I inferred that Mr. Bennett did not mean them as genuine, I must make that clear. I never said anything of the kind.

In other words, Mr. Thomas was prepared to say of the proposals that my right hon. friend meant them as genuine, but they were discovered to be humbug when he came to see what they really amounted to so far as Great Britain was concerned.

Let me give to my right hon. friend the view of a very eminent authority on preference with respect to proposals on preference based as this one is on a tariff that is already so high that the preference really means nothing in effect. The Prime Minister is, I am sure, a great admirer of the Right Hon. Joseph Chamberlain. No doubt he sees himself as a second Joe Chamberlain, the Joe Chamberlain of the dominions of to-day who is going to inaugurate this policy of the new empire unit. I have before me a statement made by Mr. Chamberlain at the conference held in 1902:

The very valuable experience which we have derived from the history of the Canadian tariff shows that, while we may most readily and most gratefully accept from you any preference which you may be willing voluntarily to accord

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to us, we cannot bargain with you for it, wre cannot pay you for it, unless you go much further and enable us to enter your home market on terms of greater equality. ... So long as a preferential tariff, even a munificent preference, is still sufficiently protective to exclude us altogether, or nearly so, from your markets, it is no satisfaction to us that you have imposed even greater disability' upon the same goods if they come from foreign markets.

That was exactly the nature of the proposal as made by my right hon. friend. British goods had already been excluded from the Canadian market. There was as a consequence very little satisfaction to Great Britain in the offer made by my right hon. friend when its only effect was to impose even greater disability upon the same goods if they came from foreign markets,

I think I have made clear wherein the proposals were humbug in so far as Great Britain was concerned. Let us now look at the situation from the Canadian point of view. 1 ask hon. members could anything, so far as Canada is concerned, more closely approach humbug than the proposal which my right hon. friend made on our behalf. What was that proposal? First of all it provided that no goods were to be permitted entry into Canada from Great Britain if they were already being produced and manufactured in this country or could be produced or manufactured here. It further provided that if tariffs did not already exist to keep goods out, such tariffs were to be set up. Would that procedure be of advantage to this country? I do not hear the hon. members opposite say, yes; I do not hear one of them. Well, that was the proposal of the right hon. gentleman, and in my opinion it was humbug in the purest sense of the word.

What was the proposal when viewed from another standpoint? Great Britain is already our best customer. We have experienced difficulty in reaching the overseas markets in other parts of the world. The proposals of my right hon, friend would make it still more difficult to get many of our surplus products into the British market, because Britain was to change her fiscal policy; she was to put on a tariff, and our preference was to come as a result of that tariff. Where would that have led with respect to the importation of wheat? Could anybody expect that once a tariff wall went up in Great Britain with respect to manufactured goods to help certain interests, the agricultural interests of Great Britain would remain silent? Does anybody suppose that with tariff walls on all sides the British agriculturist would not ask for a tariff wall to protect his agricultural produce? When in such circumstances will there be a government in Great Britain which could resist such demands

on the part of agriculturists? And if the tariff wall were raised to protect the British farmers, where would we be in the British markets with respect to the sale of our wheat? The last condition would be infinitely worse than the firsit, and so I say that from the point of view of Canada as well as of Great Britain the proposals of my right hon. friend amount to the greatest humbug conceivable.

If anything more is needed to show the humbug of this proposition may I state that not merely the Labour government in England to-day, but no government in England could negotiate an agreement with the government of Canada on the basis proposed by my right hon. friend. This is a most important fact, because the conference is scheduled to meet her again next fall and unless my right hon. friend changes his proposals in the interval nothing can then be done, even if there were a change of government in Great Britain during the interval as he might desire.

Let me review the situation. So far as the Labour government is concerned, we know there can be no negotiations with the Labour government on the basis set out by my right hon. friend. That government may or may not foe in office next fall, but at any rate if it is in office no negotiations could be made with it as the offer at present stands. So far as attempting any agreement it would be better to call off the conference right now- that is the point I wish to emphasize because it has been already made clear in Great Britain that the British government will not change its fiscal policy. The proposal of my right hon. friend involves a change of the fiscal policy of Great Britain.

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March 16, 1931