June 1, 1931

The liabilities of the Dominion as of March 31, 1931, may be summarized as follows: Liabilities of Dominion on March 31, 1931 [DOT] Dominion Notes Outstanding $ 141,066,256 69 Bank Circulation Redemption Fund 6,788,162 46 Insurance and Superannuation Funds: Government Annuities $23,306,954 65Insurance Fund, Civil Service 6,373,647 19Insurance Fund Returned Soldiers 9,249,236 10Retirement Fund 6,271,610 87Superannuation Funds 35,056,489 12 80,257,937 93 The Budget-Mr. Bennett

Liabilities of Dominion on March 31, 1931-Concluded. Trust Funds: Indian Funds $13,764,581 06Common School Funds 2,668,449 17Contractors' Securities Deposits 1,712,817 35Other Trust Funds 2,473,324 90Contingent and Special Funds Post Office Money Orders, Postal Notes, etc., outstanding Province Accounts Post Office Savings Bank deposits Funded Debt-Unmatured $2,319,279,007 20 Matured but not presented for payment. .. 555,882 04 Interest coupons matured but not presented for payment. 20,619,172 48 1,285,406 40 4,135,347 92 9,623,816 77 24,750,226 97 2,319.834,889 24 2,427,700 58 Total liabilities

It may be 'well to make a brief explanation of these items. I may say, Mr. Speaker, that part of this labour is taken because this is a new parliament and there are a large number of young members who seem to take considerable interest in the financial structure of the country. Therefore I thought it desirable that they might have this record of the position as it existed on the 311st March, 1931, Although this has involved a very considerable amount of labour, I think they will regard the information thus afforded as being of value to them when they are considering the public questions of the country. Dominion Notes Outstanding At the close of the fiscal year, dominion notes in circulation amounted to $141,000,000. This is a reduction of $33,000,000 in the amount of notes outstanding at the commencement of the year. The decrease is more than accounted for by the reduced demands of the banks for notes under the Finance Act, which dropped from $50,200,000 at the commencement of the year to $6,500,000 on March 31, 1931. During the same period, the gold held as security for the redemption of the notes increased from $63,000,000 to $80,000,000, so that, while on March 31, 1930, gold reserves represented 36-30 per cent of the total notes in circulation, this percentage was increased to 56-90 per cent on March 31, 1931. Trust and Special Funds Each year the Dominion government derives a substantial amount of receipts from trust and special funds. These funds are not earmarked in any way, but are deposited in the general cash fund and are used to meet the current financial requirements of the government. These deposits create a liability which the government will be required to meet by future disbursements. During the past year the treasury received a net amount of $10,000,000 from these sources. The amounts standing at the credit of these accounts on March 31, 1931, were: Bank Circulation Redemption Fund $ 6,788,000 Government Annuities, Insurance and Superannuation Funds.. .. 80,257,000 Trust Funds 20,619,000 Contingent and Special funds.. .. 1,285,000 Post Office, Money Orders, Postal Notes, etc., outstanding.. .. 4,135,000

Province Accounts In the dominion books, a liability of $9,- 623,000 is carried representing the capital debt assumed by the dominion when the provinces entered confederation in respect of the assets taken over. The obligation is discharged by annual interest payments forming part of the subsidies. Post Office Savings Bank Deposits Deposits in the post office savings banks have continued to decrease. The reduction for the year amounted to $1,300,000, leaving deposits of $24,750,000 on March 31, 1931. Matured Funded Debt and Interest Unpaid As at March 31st, our accounts carried as a liability $555,000 for unpresented matured bonds and $2,400,000 for matured coupons outstanding. Unmatured Funded Debt The unmatured funded debt on March 31, 1931, was $2,319,000,000. This shows an increase of $92,000,000 compared with the debt on March 31, 1930, but in the issue that was floated in New York last October, provision was made for the retirement of the $25,000,000, 5 per cent public service loan which The Budget,-Mr. Bennett matured on April 1, 1931, after the end of the fiscal year. When allowance is made for this retirement, the increase is reduced to $67,000,000. Sinking Fund Provision is made for a sinking fund contribution of one-half of 1 per cent per annum on $254,000,000 of sterling debt payable in London. The annual contribution of $1,272,263.57, together with the interest derived from the bonds and stocks held, are invested each year by the Bank of Montreal, London, acting as fiscal agent for the government. There is no sinking fund provision for the remaining $57,215,000 of sterling debt outstanding. The total investments on account of sinking funds on March 31, 1931, was $59,- 700,000, of which $3,670,000 was purchased during last year. After the three 5 per cent domestic war loans were issued in the years 1915 to 1917, a sinking fund of one-half of 1 per cent per annum was authorized by the governor in council. Certain investments were made on account of this sinking fund but purchases were discontinued when the bonds sold above par. No sinking fund provision has been made for the remaining domestic issues nor for the issues made in New York. A statement showing the unmatured funded debt and the annual interest charges thereon follows: Date of Maturity Name of Loan 1931-April i... Public Service Loan 1916..Oct. i... War Loan 1916-31 1932-Nov. i... Renewal Loan 1922 Dec. i.. Two Year Notes 1933-Nov. i... Victorv Loan 1918 1934-June i... Loan of 1884 Nov. i... Victory Loan 1919 1935-Aug. i... Bond Loan 1915-35 1936-Feb. i... Loan of 1926-36 1937-Mar. i... War Loan 1917-37 Dec. i... Victory Loan 1917 1938-July i... Loan of 1888 July i... Loan of 1892 July i... Loan of 1894 July i... C.P.R. Loan 1940-Sept. i... Refunding Loan 1925 1943-Oct. 15.. . Refunding Loan 1923 1944-Oct. 15... Refunding Loan 1924 1946-Feb. 1... Refunding Loan 1926 1947-Oct. 1.. . Loan of 1897 1950-July 1... Loan of 1930-50 1952-May 1.. . Loan of 1942-52 1960-Oct. 1.. . Loan of 1940-60 Oct. 1... Loan of 1930-60 Demand... Debenture Stock School Lands late Where Payable Amount of Loan Amount Interest Charges% $ cts. $ cts.f5 New York 25,000,000 00 1,250,000 00f5 Canada 52,929,600 00 2,646,480 005§ Canada 73,323,150 00 4,032,773 254 Canada 40,000,000 00 1,600,000 00t-5l Canada 446,659,950 00 24,566,297 253* London 23,467,206 27 821,352 225i Canada 511,910,650 00 28,155,085 75|5 Canada and N.Y. 874,000 00 43,700 004i New York 40,000 000 00 1,800,000 00t5 Canada and N.Y. 90,166,900 00 4,508,345 00f5i Canada 236,299,800 00 12,966,489 003 London 8,071,230 16 242,136 903 London 18,250,000 00 547,500 003 London 10,950,000 00 328,500 0031 London 15,056,006 66 526,960 2341 Canada 75,000,000 00 3,375,000 005 Canada 147,000,100 00 7,350,005 0041 Canada 50,000,000 00 2,250,000 0041 Canada 45,000,000 00 2,025,000 0021 London 4,888,185 64 122,204 6431 London 137,0.58,841 00 4,797,059 435 New York 100,000,000 00 5,000,000 004 London 93,926,666 66 3,757,066 674 New York 100,000,000 00 4,000,000 005 Canada 33,129,000 00 1,656,450 002,378,961,286 39 118,398,405 34Payable in Canada Payable in Canada and New York Payable in New York Payable in London 1,711,252,250 00 91,040,900 00 265,000,000 00 311,668,136 39

Less Bonds and Stocks of the above Loans held as Sinking Funds.. 59,764,439 00 fTax Free.

$ 2,319,196,847 39 REVISED EDITION

The Budget-Mr. Bennett

Of the funded debt 13.10 per cent is payable in London; 11.14 per cent in New York; 3.83 per cent in either New York or Canada, and 71.93 per cent in Canada. The following summary sets out the amount of debt outstanding at the different interest rates: $ 4,888,185 64 at 11% 37,271.230 16 at 3 % 175.582,053 93 at 3i% 233,926,666 66 at 4 % 210,000,000 00 at 4J% 449,099,600 00 at 5 % 1,268,193,550 00 at 51% . .$ 122,204 64.. 1,118,136 90.. 6,145,371 89.. 9,357.066 66.. 9,450,000 00.. 22.454 980 00.. 69,750,645 25

$2,378,961,286 39 $118,398,405 34 NON-ACTIVE ASSETS

The gross liabilities of the Dominion on March 31, 1931, were $2,610,700,000 as against which there were active assets of $349,180,000, to which reference has been made. The difference $2,261,600,000, commonly referred to as the net debt, but which is really the net debit balance in the accounts, is briefly accounted for under three heads. First, there are loans and advances made for various enterprises which are not presently realizable, yield no direct return to the treasury, and in the presentation of the accounts are treated as losses. These total $673,000,000, the chief of which are $614,000,000 to the Canadian National Railways, $15,- 500,000 to the Canadian National Steamships, $24,400,000 to the Quebec harbour commission and $16,600,000 soldier land settlement loans. The second division is comprised of the aggregate of capital expenditures made on canals, railways, public buildings and harbour and river improvements, which total $927,- 300,000. Another item of $88,000,000 is shown as "Railway Accounts (Old)", which refers to railway capital expenditures made in the early history of the country, the fruits of which were by legislation transferred to certain railway companies, hon. members will recall the transaction with respect to them during the Grand Trunk arbitration. Then there is the balance of $572,500,000 at debit of consolidated fund on March 31, 1931. This is the accumulated deficits since the commencement of the accounts, or since confederation. All expenditures arising out of the world, war have been absorbed in this balance. A tabulation of the non-active assets follows: Non-Active Assets on March 31, 1931 Canadian National Railways $ Canadian National Steamships Harbour Commissioners: Quebec $24,429,995 68 Montreal and Three Rivers 251,760 97 Seed Grain and Relief Advances Soldier and General Land Settlement Miscellaneous Advances, etc Capital Accounts: Canals $233,782,788 90Railways 435,687,262 93Public Buildings, Harbour and River Improvements 235,898,706 71Military Property and Stores 12,035,420 50Territorial Accounts 9,895,947 68Railway Accounts (old) Consolidated Fund, balance at debit of, March 31, 1931 614,406.239 42 15,550,748 55 24.681.756 65 1,128,829 50 16,648,957 95 995,678 82 927,300,126 72 88,398,828 78 572,497,150 33 Net Debt March 31, 1931


Hon. members will recall I spoke of obligations direct and indirect. Having dealt with the balance-sheet position of the dominion, its direct liabilities and the liquid and income-producing assets offsetting these in part, there remain for consideration the contingent or indirect liabilities. As at March fMr. Bennett.] 3-1, 1931, these indirect liabilities, as represented by securities guaranteed by the dominion outstanding in the hands of the public, amounted to $954,892,779. If to this figure there be added that part of the funded debt of the Canadian National Railways which does not bear a dominion government guarantee, a total of $1,268,748,433 is reached, accounted for as follows:- The Budget-Mr. Bennett Securities Guaranteed by the Dominion Government: Harbour Commissions Montreal Harbour Bridge New Westminster Elevator St. John Harbour Improvements Canadian National (West Indies) Steamships Canadian National Railways 954,892,779 72,184,488 63,240,571 88.808.374 7,480,621 82,341,600 Total of which $1,237,513,315 is Canadian National Debt to the public.. .. $1,268,748,433 Total Securities guaranteed by Dominion Canadian National Railway Debt not guaranteed by Dominion:- but for which of course we are liable-otherwise the property would cease to function- Guaranteed by provinces Unguaranteed debt- Perpetual debenture stock Mortgage bonds and debenture stock Other miscellaneous indebtedness Equipment trust notes & certificates .$19,000,000 . 700,000 . 2,135,118 21,835,118 9.400,000 923.657,661 The operation of the Canadian National Railways as an amalgamated unit dates from 1923. In January of that year, the former administration, by order in council, declared the preference and common stock of the Grand Trunk Railway Company of Canada to be the property of the Minister of Finance in trust for His Majesty and thereupon the amalgamation of the Grand Trunk with the Canadian National took place. It may be well for us to examine briefly the results of these eight years of operation, having regard particularly to their association with and reflex upon the dominion's financial position. The period has been one in which a large sum of money has been made available to the system for capital investment, and there has been a corresponding increase in the debt of the company. In eight years some 400 millions of dollars have been added to the Canadian National Railways investment account for the construction and acquisition of lines, for terminals, hotels, new equipment, etc. This increase in debt has resulted in an addition to the annual interest charges on the system of almost 20 millions of dollars or about 55 per cent, so that when we consider the result of operations over the period, we must have in mind, on the one hand, the advantages expected to accrue from the assumption of a heavy additional obligation and, as an offsetting factor, the annual carrying charges resulting therefrom. The balance sheet of the Canadian National Railways, through the profit and loss account indicates a loss in the eight-year period of 346 millions of dollars. The first and largest item making up this loss consists of 253 millions of dollars charged in the railway accounts-but not paid-as interest on the sum of 604 millions of dollars of direct assistance by way of cash loans which the government has given to the company. As between the government and the system, this is only a bookkeeping item. The actual burden of this liability was taken over by the dominion and has been carried by the taxpayers of the country. The balance of the loss, totalling $93,000,000, is made up of $86,000,000, being the actual deficiency of earnings in the eight-year period after charging interest due the public, but leaving aside the interest due the government, and $7,000,000 representing the net debit of adjustments through profit and loss account. These figures leave out of consideration the operations of the eastern lines since the passing of the Maritime Freight Rates Act in July, 1927, from which date the government has contributed directly to operating losses on these lines, apart from the 20 per cent reduction in tolls, the sum of $17,500,000. The situation, therefore, is that since 1923 an additional capital liability of 400 millions of dollars has been assumed in respect of the railways, involving an increase in the annual interest charge of 20 millions of dollars. The system has failed to earn its interest charges during the period by a round sum of 86 millions, and the government has itself borne the carrying charges in respect of 604 millions of dollars contributed direct to the system, as well 'as, since 1927, operating losses of $17,500,000 on eastern lines. It is well known and fully realized that the difficulties of transportation systems are not unique to Canada or to the Canadian-owned 2160 The Budget-Mr. Bennett

system. To realize that in 1980 the gross revenues of the system were less than in the year 1023, notwithstanding the addition of 400 millions of dollars to the investment in the property, serves only to impress the seriousness of the problem. The following is a statement of these indirect obligations: Bonds Guaranteed by Dominion Government as at March 31,1931 Date of Maturity Issue Interest Rate Sept. 1, 1934 Canadian Northern % 4 41 $ cts. 17,060,033 33 17.000. 000 00 25.000. 000 00 24.743.000 00 24.793.000 00 25.000. 000 00 700,000 00 667,953 04 9,359,996 72 50.000. 000 00 26.000. 000 00 9,400,000 00 50.000. 000 00 70.000. 000 00 65.000. 000 00 7,896,564 81 3,149,998 66 34,229,996 87 34.992.000 00 8,440,848 00 35.000. 000 00 60.000. 000 00 60,000,000 00 19.000. 000 00 18.000. 000 00 30,534,780 67Feb. 15, 1935 Canadian Northern Sept. 1, 1936 Grand Trunk Oct. 1, 1940 Grand Trunk Dec. 1, 1940 7 July 1, 1946 Canadian Northern 6i April 1, 1948 Aug. 1, 1952 July 10, 1953 Feb. 1, 1954 Sept. 15, 1954 41 Mar. 1, 1955 June 15, 1955 Canadian National 41 4i Feb. 1, 1956 July 1, 1957 Canadian National July 20, 1958 Canadian Northern 3i 3h 31 May 4, 1960 Can. Nor. Alberta May 19, 1961 Can. Nor. Ontario Jan. 1, 1962 Jan. 1, 1962 Dec. 1, 1968 Canadian National 4i July 1, 1969 Canadian National Oct. 1, 1969 5 Nov. 1, 1969 Feb. 1, 1970 By tenders or drawings... Canadian National 2 Various dates, 1932-54 City of Saint John Debs, assumed by Saint John Har- Serial- bour Commissioners various 1,467,164 96 Feb. and Aug. 1, 1931- 38 11,250,000 00 60,833,333 33 20,782,491 67 13,252,322 67 119,839,014 33 1,499,979 67 Perpetual (( (( ft M 954,S92,778 73 Now, Mr. Speaker, at this point I should like to point out that there is a tendency on the part of the press supporting hon. gentlemen opposite to allege that the government is opposed to the Canadian National Railways. May I venture to declare that no man is a good Canadian who does not take time to study and realize the extent of the obligations which are being laid upon this country by this parliament. The Canadian National Railways' management cannot be charged with responsibility for this. The Canadian National Railways Act provides that the governor in council takes the position of shareholders under the Railway Act, and when I point out the sums that have been expended and the obligations that have been created during the last eight years, I do so because it has been done at the initiation of the government which is now the official opposition. Bear that in mind. I do think there is a failure on the part of the Canadian people to understand and appreciate the extent and character of the obligations which have thus been placed upon them. There you have $86,000,000 of a deficit in interest earning power in the last eight years, in addition to which the people of this country paid interest on $604,000,000 advance for the running of the enterprise. Now, I submit, sir, I would be derelict in my duty, and I believe any hon. member would be derelict in his duty, if he did not analyze and ponder these matters. And the The Budget-Mr. Bennett blame must rest with the government of the day for the management of railway companies are always prone to submit requests for larger sums than they expect to get. Yet so far as I have been able to ascertain, not one single capital request made by the management of the Canadian National Railways during the last eight years was refused by the late government-not one. Is that so in any privately owned road? Go through the requisitions made on the Canadian Pacific Railway or on the Union Pacific, the Southern Pacific or the Santa Fe, and you will not find that state of affairs existing. Yet the late government, for reasons best known to themselves, have put the country in the position that I have just pointed out. And I do suggest that there is no business of the nation which should so concern hon. members-who represent the shareholders in a larger way than does the governor in council-as that resulting in figures to which I have just directed their attention. I certainly think, and this government certainly thinks, it is most unfair and unjust, and, what is more, inimical to the well-being of the enterprise itself, to say that because you direct attention to those figures and the effect of them that therefore you are an enemy of the enterprise. The best friend any business enterprise has is that shareholder who carefully scrutinizes the expenditures made by the directors during the year.

Canada at the close of the year 1930 again ranked fifth among the nations in the volume of international trade. There were substantial decreases in the dollar value of trade, as compared with the year before, but were a graph made by use of quantities it would present a jagged picture. The fiscal year 1929-30 closed with an unfavourable balance of visible trade amounting to 103 millions. In the year under review the unfavourable balance was 89 millions. The United States was the principal customer of Canada during the year, taking 44i% of our exports and in turn Canada purchased over 64% of its imports from the United States. In dollars, imports from the United States amounted to 584 millions, and the exports 364 millions. This left an unfavourable balance in the trade with the United States of 220 millions. In the pre ceding year imports had amounted to 847 millions and exports to 536 millions. Trade with British Empire Trade with the British Empire was unevenly affected during the year. On the import side, while there was a decrease from 252 millions to 204 millions, this decrease was largely in the imports from two countries-the United Kingdom and New Zealand. There was a 40 million dollar decrease in imports from the United Kingdom, $3,000,000 being in iron products, 8 millions in alcoholic beverages and 19 millions in textiles. The balance was spread throughout a wide list of articles. From New Zealand the decline was in imports of butter which decreased $9,700,000. The exports to the British Empire amounted to 295 millions, a decrease of 86 millions from the year before. The countries to which exports fell off the most were: United Kingdom (62 millions), Australia (9.6 millions), New Zealand (6.4 millions), West Indies (3 millions), and Newfoundland (1.5 millions). Naturally, the greatest falling off in exports to the United Kingdom consisted of food stuffs. The decrease in exports of grains amounted to- 41 millions, in meats to $3,- 900,000, in milk products to $4,400,000, in paper to $2,300,000, and in iron and its products to $2,800,000. The principal decreases in exports to other parts of the British Empire were in food commodities such as flour, paper and wood products, automobiles, farm implements, etc. The trade of Canada in the fiscal year, when calculated by means of percentage, was divided as follows: Imports Exports With- % %British Empire . 22.6 36.1United States . 64.4 44.5Treaty countries . 9.2 14.1Other countries . 3.8 5.3100. 100.Imports of Commodities Ten product groups make up in value the major part of the imports into Canada , and acomparison over the last five year period emphasizes the material reductions which took place. The Budget-Mr. Bennett

Group Sugar and products Alcoholic beverages Cotton and products Wool products Textile products, other.. . Iron products Non-ferrous metal products Coal and products Petroleum Chemicals 1927 1928 1929 1930 1931 (in millions) 40.4 38.8 31.7 27.9 25.129.3 45.9 48.8 45.0 35.454.1 58.2 63.2 54.0 35.250.5 48.8 54.4 46.6 33.678.9 79.8 88.7 84.5 61.8229.4 259.5 346.6 316.8 194.952.7 60.1 75.4 87.9 59.668.6 64.8 63.1 64.1 58.154.4 53.5 64.0 78.7 62.731.8 33.5 37.7 39.9 35.6 Exports of Commodities A study of the exports shows every activity to have been touched by the decline in values -the products of the farm, the mine, the Group Grains Flour Milk and products Lumber, logs, etc Paper Fish Rubber products Non-ferrous metal products Iron products Wood pulp forest, the fishery and the factory. Again summarizing under ten groups, the record of the past five years shows: 1927 1928 1929 1930 1931(in millions) 394.4 391.6 476.1 232.7 180.868.7 59.8 65.1 45.4 32.841.6 34.0 35.7 27.4 18.7107.8 99.3 91.6 89.7 60.7123.2 134.9 148.3 151.5 131.934.5 33.5 34.9 34.7 27.826.6 28.6 30.5 32.2 21.080.6 90.8 112.7 154.3 95.674.2 62.7 82.2 78.5 38.949.9 47.3 44.9 44.7 35.1 Imports of Certain Goods In the month of September, changes were made in the rates of over one hundred tariff items. A comparative statement is difficult because some divisions were previously incorporated into general items. With this reservation, the imports under the 129 items amounted to $112,271,000 in the period from Year 1927.. 1928.. 1929. . 1930.. 1931.. New Industries Established in Canada Since August, 1930, there has been a marked influx of new concerns from outside countries into the dominion. It will be some time before full details in regard to capital invested, number employed, etc., can be secured since some are still in process of organization, but eighty-seven such concerns have already been listed by the dominion bureau of statistics and the number continues to grow. Of the eighty-seven, seventy-four are United States manufacturing concerns, eleven are British- seven manufacturing and four non-manufacturing-and two are French. These firms represent considerable diversification in industry. United States firms in- October 1st, 1929, to March 31st, 1930, and in the same period commencing October 1st, 1930, and ending March 31st, 1931, the imports were $61,920,000. Summary of the Trade A statement of the world trade of Canada in the past five years follows: Imports

1,030,892,505 1,108,956,406 1,265,679,091 1,248,273,582 906,612,681 Total Exports % 1,267,573,142 1,250,598,034 1,388,896,075 1,144,938,070 817,003,048 Balance

+ 236,680,637 + 141,641,568 + 123,216,984 -103.335,512 - 89,609,633 elude eight in the vegetable produots groups- such as foods and rubber-two animal products, eight textile, eight wood and paper products, twenty iron and steel, twelve nonferrous metals, three non-metalldc minerals, nine chemicals and allied products, two mining and two miscellaneous. British firms include three textile, six iron and steel, one chemical and one miscellaneous. The two French firms are textile manufacturers. List of New Concerns Establishing in Canada since August, 1930 United States A. Vegetable Products: 1. Campbell Soup Co., Ltd., New Toronto, Ont. 2. Fine Foods of Canada, Ltd. (Minnesota Canning), Windsor, Ont. The Budget Mr. Bennett A. Vegetable Products-Cone. 3. Hill Nut Co., Ltd., Toronto, Ont. 4. Liberty Cherry Co. of Canada, Ltd., Toronto, Ont. 5. Newton Products, Toronto, Ont. 6. Stedfast Rubber Co., Granby, Que. 7. Stedman Flooring Co., Farnham, Que. 8. Teabury Chewing Gum Co., Sherbrooke, Que. B. Animal Products (Exceipt Textiles): 1. Cantilever Shoe Co. of Canada, Ltd., Toronto, Ont. 2. Sohwegler's Hatchery, Bridgeburg, Ont. C. Textiles: 1. Aero Corp. of Canada, Kitchener, Ont. 2. B. Edmund David, Hawkesbury, Ont. 3. Dominion Webbing Co., Ltd., Kingston, Ont. 4. Donahue Corp. of Canada, Ltd., St. Hyacinthe, Que. 5. Henry Hamer & Sons, Ltd., St. George de Beauce, P.Q. 6. Esmond Mills, Ltd. of Canada, Granby, Que. 7. Herbert Hosiery Mills, Ltd., Toronto, Ont. 8. Westminster Hosiery Ltd., Mount Denis, Ont. D. Wood and Paper Products: 1. Belleville-Sargent & Co., Ltd., Belleville, Ont. 2. Brown & Bigelow Ltd., Toronto, Ont. 3. Dixon Pencil Co., Newmarket, Ont. 4. Eagle Pencil Co. of Canada, Ltd., Drum-mondville, Que. 5. Hardware, Woodenware and Toys, Ltd., Coaticook, Que. 6. Schaeffer Ross Co. of Canada, Ltd., Toronto, Ont. 7. Schlegel Co. of Canada, Ltd., Toronto, Ont. 8. Venus Pencil Co. of Canada, Ltd., Toronto, Ont. E. Iron and its Products: 1. A. B. C. Washer Co., Granby, Que. 2. Burr, Patterson & Auld Co., Walker-ville, Ont. 3. Castings of Canada, Ltd., Smiths Falls, Ont. 4. Cross Coal-O-Matie Co. of Can., Ltd., Montreal, P.Q. _ 5. Dominion Hoist & Shovel Co. 6. Dominion Motors Ltd., Toronto, Ont. 7. Fedder Mfg. Co., Toronto, Ont. 8. Heaters of Canada, Oakville, Ont. 9. Hump Hairpin Co., St. Hyacinthe, Que. 10. Hupp Motor Car Corp., Windsor, Ont. 11. Johnson (S. T.) Oil Burners of Canada, Ltd., Montreal, P.Q. 12. Lodge Motor Co., Ltd., Walkerville, Ont. 13. Lynn Canadian Products, Ltd., Brock-ville, Ont. 14. Metal Textile Corp., Hamilton, Ont. 15. Radiator Specality Co. of Canada, Toronto, Ont. 16. Reo Motor Co. of Canada, Toronto, Ont. 17. Taco Heater Ltd. of Canada, Toronto, Ont. 18. D. D. Terrill Saw Co., Pembroke, Ont. 19. Tower Oil Burner Co. Ltd., Montreal, Que. [DOT] 20. Stewart Truck Corp. of Canada (Assembling), Fort Erie, Ont. F. Manufacturers of Non-Ferrous Metals: 1. Curtis Lighting Co. of Canada, Ltd., Toronto, Ont. 2. Dennison Electric Co., Toronto, Ont. 3. Dictograph Co. of Canada, Ltd.,(Assembling), Toronto, Ont.4. Eastern Power Devices, Ltd. (Formerly Sales Office), Toronto, Ont. 5. Hammond Co. of Canada, Ltd., Toronto, Ont. 6. International Resistance Co. Ltd., Toronto, Ont. 7. Leland Electric of Canada, Ltd., Toronto, Ont. 8. Noma Electric Co. of Canada, Toronto, Ont. 9. General Railway Signal Co. of Canada Ltd., Toronto, Ont. 10. Packard Cable Co. of Canada, Ltd., Toronto, Ont. 11. J. P. Seeburg Corp., Toronto, Ont. 12. Wheeler Reflector Co., Toronto, Ont. G. Manufacturer or Non-Metallie Minerals: 1. Messrs. Bundy Insulators Co., Oshawa, Ont. 2. Master Builders, Ltd., Toronto, Ont. 3. Tranco Manufacturing Co. (Canada) Ltd., (formerly sales office), Leaside, Ont. H. Chemicals and Allied Products: 1. Canadian Bitumels Co., Ltd., New Toronto, Ont. 2. Everett & Barron of Canada, Ltd., Toronto, Ont. 3. Fyr-Fyter Co. of Canada, Ltd., Hamilton, Ont. 4. The A. W. Higgins Co., St. John, N.B. 5. Mallinckrodt Chemical Works of Can., Ltd. (formerly sales office), Toronto, Ont. 6. Mum Mfg. Co. Inc., Windsor, Ont. 7. Ober Fertilizer Co., Welland, Ont. 8. Sheffield Bronze Powder Co., Ltd., (formerly sales office), Toronto, Ont. 9. Summers Fertilizer Co. Inc., St. Stephen, N.B. I. Miscellaneous Industries: 1. L. G. Balfour Co., Sherbrooke, P.Q. 2. Film Laboratories of Canada, Ltd., Toronto, Ont. J. Mining and Metallurgical: 1. Northwest Stellarene Co., Coutts, Alta. 2. Parco Oil Co., Ltd., Calgary, Alta. List of New Concerns Establishing in Canada since August, 1930 Great Britain C. Textiles: 1. Hield Bros., Kingston, Ont. 2. G. H. Hirst &* Co., Carleton Place, Ont. 3. Hiram Leach & Co., Huntingdon, Que. E. Iron' and Steel Products: 1. Imperial Typewriter Co. (Canada), Ltd., (Non-Mfg.), Toronto, Ont. 2. Quasi-Arc Co., Ltd., (Non-Mfg.), Toronto, Ont. 3. Taylor Instrument Co. of Canada, Ltd., (Non-Mfg.), Toronto, Ont. 4. Warwick Time Stamp Co., Toronto, Ont. 5. Wright's Canadian Ropes, Ltd., Vancouver, B.C. 6. Zanogen Steel Co. of Canada, Ltd., Toronto, Out. H. Chemicals and Allied Products: 1. British Drug Houses (Canada) Ltd., (Non-Mfg.), Toronto, Ont. I. Miscellaneous: 1. Bovil & Hood (Canada), Ltd., Montreal, P.Q. The Budget-Mr. Bennett

France C. Textiles: 1. Canadian T.S.R. of Lyons, Ltd., Cap de la Madeleine, Que. - 2. Henry Potez of Canada, Ltd., Cap de la Madeleine, Que.


William Lyon Mackenzie King (Leader of the Official Opposition)



They are

practically all in Ontario and Quebec, are they not?


Richard Bedford Bennett (Prime Minister; Minister of Finance and Receiver General; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)


With the exception of

two, I think. Now, may I just meet a few words of criticism in advance, although perhaps it is unnecessary. The extent of investment in Canadian industry by United States, other foreign countries and Great Britain is a subject of far-reaching importance. All young or undeveloped nations have been dependent on large capital investments by outside countries for the development of their natural resources and for assistance in the establishment of the diversified industry necessary to all-round national development. Without such assistance industrial progress would be slow and desperately difficult. The hardships being endured by the Russian people to-day exemplify the sacrifice which an undeveloped nation would be called upon to make, not for five but many times five years, if that nation were to strive to become industrialized through its own savings of capital. Canada has for many years received large investments from other countries. Fear has sometimes been expressed that these outside nations by starting industries in this country or investing their capital in various Canadian enterprises, commercial, governmental, financial or other, are obtaining a menacing position in our economic life. The facts of the case reveal these fears to be entirely unfounded. A recent bulletin of the bureau of statistics shows that in January, 1930, there were located in Canada 1,199 British, United States and other foreign branch, subsidiary and affiliated firms concerned with manufacturing or production. Of these, 1,023 were from United States, 162 from Great Britain and 14 from other countries. The capital employed in these concerns amounted to 11,818,000,000, ownership of which in individual firms ranged from less than 50 per cent to 100 per cent. In all, 68 per cent or $1,239,000,000 was owned in the United States, 17 per cent or 8317,000,000 was owned in Canada, 14 per cent or $257,000,000 in Great Britain and $6,000,000 or less than 1 per cent in other countries.

Even in such branch or subsidiary firms Canadians held nearly 20 per cent interest, and it is a well known fact that the Canadian proportion tends to increase. There have been many instances of firms established in

Canada by outsiders eventually passing into Canadian hands.

To see such facts in their proper perspective, however, it is necessary to compare the figures with those of the geographical distribution of ownership of all capital employed in Canada. It is estimated that the amount is $17,500,000,000. This sum includes the bonded indebtedness of Dominion, provincial and municipal governments, investments in railways, manufacturing concerns, mines and metal industries, public utilities, trading establishments, finance, insurance, etc. It includes private capital in domestic enterprises such as farms and homes. Of this sum it is estimated that 65 per cent or $11,500,000,000 is owned in Canada, 20 per cent or $3,500,000,000 in the United States, 33 per cent or $2,200,000,000 in Great Britain and 2 per cent or $300,000,000 in other countries. It is obvious that the control of our enterprises is very predominantly in our own hands. If the basis of comparison be our total national wealth, foreign and British investments are still less significant. Our national wealth is now probably in the neighbourhood of $30,000,000,000; British and foreign investments of capital in Canada are $6,000,000,000 or just 20 per cent. Even of this 20 per cent many millions of dollars are represented by bonds which do not ordinarily carry with them direction or control of industry.

I believe, sir, that any member of this house reading these figures must be impressed with the resource and courage and enterprise of the Canadian people in industrial, agricultural and manufacturing fields of endeavour. Of sums so vast, I do not believe there is any record on the part of any other population equally small and scattered over an area so great.

May I point out now that Canada carries on its business at home and abroad by the application of principles that vary with the administrations of the day. So far as this party is concerned, it directs, and will continue to direct its operations from three angles: first, we believe that we have, been entrusted with great resources which it is our duty to develop to the greatest possible extent; secondly, that Canadians are entitled to carry on that development, enjoying an equal opportunity with the other peoples of the world engaged in the development of their respective countries; and, thirdly, that Canadians are entitled to fair competition in carrying forward that development. We meet the last requirement by dumping legislation; we meet the second requirement by tariff legislation; and we meet the first requirement by the courage and enterprise of our people.

The Budget-Mr. Bennett

Now it has been customary, in the course of very many centuries, for trading peoples to negotiate agreements or treaties with others who are engaged in commerce; and in this regard the Canadian people have not been unlike others. But may I point out this: that Canada, by reason of being a part of the British Empire, has treaties applying to our trading enterprises somewhat different from those that exist in other parts of the world. For instance, Canada has treaties which were made direct by this dominion. That is fact No. 1. We have a treaty with France made on December 15, 1922; one with Italy made on January 4, 1923; one with Belgium made on July 3, 1924; one with the Netherlands made on July 11, 1924; one with Czechosla-vakia made on March 15, 1928; and one, modus vivendi, made, with Cuba, November


Then Canada has a second kind of treaty -a treaty made by Great Britain on behalf of the British Empire but which provides that this part of the empire is bound by it only when we accede thereto. Of this kind of treaty we had two, one with Japan, made on April 3, 1911, to which we acceded on May 1, 1913, and one with Spain, made on April 5, 1927, to which we acceded on August 1, 1928.

Again, we have another, a third form of treaty, namely, that which contains a clause providing that the most-favoured-nation terms shall be accorded to Canada if similar treatment is given by this dominion to the country with which the. treaty is made. Such treaties we have with Finland, Esthonia, Hungary, Jugoslavia, Latvia, Lithuania, Portugal and Roumania.

Lastly, we have that class of treaty which was made by Great Britain before we became a confederation, or before we negotiated treaties on our own behalf-treaties that bound every part of the British Empire when they were made by Great Britain, long years before we became a dominion. The list is interesting. Of such treaties, there is one with Argentina, made on the 2nd day of February 1825; one with Colombia, made on the 16th day of February 1866; one with Denmark, made on February 13, 1660; one with Norway, made on March 18, 1826; one with Sweden -the oldest of all-made on April 11, 1654; one with Switzerland, made on September 6. 1855; and one with Venezuela, made on April 18, 1825.

These trade treaties exist for the purpose of extending trade and commerce on mutually advantageous terms. For instance, the late government made a treaty with Australia which was extended to New Zealand by order

in council on October 1, 1925. It was withdrawn by order in council on October 12, 1930, after it had been in force a little over five years.

Now, the difference between my hon. friends opposite and ourselves is this: we believe in trade treaties that are mutually advantageous to the parties to the treaty. And we believe that the only method by which you can understand and appreciate just what the effect of treaties will be is to have a clear conception of their possible implications; for nothing could be more ruinous than what has transpired during the last few months in connection with the treaties with Australia and New Zealand. We negotiated a treaty with Australia. I may say for the information of the house that that treaty was never signed. That probably was merely an accident or an oversight. The treaty consisted of so many pieces of paper-some twenty-five in all, I believe. Difficulties were experienced; differences arose, parliament was in session, and it became necessary to complete the matter before the rising of the house. And so we passed the statute that ratified that Australian treaty, and made provision therein whereby, by order in council, it might be extended to other countries. On October 1, 1925, it was extended to New Zealand. The right hon. member opposite who leads the opposition to-day (Mr. Mackenzie King), shortly before that, in Woodstock, Ontario, declared that he could not conceive it possible-and he honestly so believed-that the extension of the treaty to New Zealand could be inimical to the trading interests of Canada. But let us see what happened. At that time New Zealand had no channel of trade with Canada for butter. Now, a channel of trade is like any other channel that may be created: it is something which once created cannot as a rule be changed without injury. That channel not having been established in 1925, they began just as an individual would do, to widen and deepen such a channel by sending forward their butter under that treaty at 1 cent per pound. By that means they began to create a channel of trade. That channel grew in size until the imports into this country year by year expanded, reaching at last so colossal a figure as to amount to several millions of dollars for butter alone.

There you have a well-defined, well-established channel of trade between the sister dominion of New Zealand and Canada, with the result that this trade was injurious to the Canadian producer. And the government of the right hon. gentleman opposite- not this government-gave notice terminat-

The Budget-Mr. Bennett

ing that treaty. They gave notice in April of last year while this house was in session, because the right hon. gentleman was himself convinced that the treaty should be denounced, and he gave six months' notice under the terms of the treaty, terminating that arrangement with New Zealand. With what result? With this result-that when we came into office New Zealand bitterly complained of the situation; they said that they could not entertain the idea that their butter should not continue to come into this country as it had done before. We endeavoured to explain to them that Canada believed that this dominion should also be on an export basis for buter. We pointed out that we were a dairy country and that they must not think that they could displace Canadian produce for their own, excellent though it is. Having pointed that out to them, we continued in our efforts to make some arrangement, some modus vivendd, by which we could carry on reciprocal trade. But for some reason, best known to its government, New Zealand believed that Canada must-I use the word advisedly-buy butter from New Zealand. Either to-day or tomorrow the parliament of New Zealand will refuse the British preference to Canada and they will do so because we are not in a position to let their butter come into this country practically free to supplant our own product. Who is to blame for that? Who is to blame for the unfortunate difficulties which exist between the two great dominions? The gov-vernment that did not foresee the implications of the treaty it made, and the government that terminated that treaty thereby creating the condition to which I have referred. Let there be no shaking of heads-did or did not the former government terminate that treaty? If it did, then it must accept responsibility. The result is that New Zealand says-very properly so, I suppose, from their standpoint, thinking of themselves alone- that they are not going to permit Canada to have a British preference in their markets unless we allow their butter to come in here.

I cite that for the simple and obvious reason that it becomes necessary to realize that when treaties are made there should be a clear understanding and appreciation of their implications. That is one of the reasons why we endeavoured while in England and since, to arrive at some arrangement with our great sister dominion, Australia, which would not make it necessary to destroy channels of trade and bring about the hard feelings which no doubt would prevail and have prevailed in connection with New Zealand. During the last few months, while he has been in health,

the Minister of Trade and Commerce (Mr. Stevens) has been engaged constantly in endeavouring to insure that a reasonable treaty may be made between Australia and Canada. I trust that in furtherance of the unanimous view expressed by the overseas dominions at the Imperial economic conference last year we may be able to negotiate an agreement which will be mutually advantageous to both countries. It is my earnest hope and my confident belief that before this house rises we will submit such a treaty or agreement for the consideration of this house. I cannot permit this opportunity to pass without stating that we are really under an obligation to the government of Australia for the manner in which they have treated us during the last year in connection with butter and its products. They have made it possible for the channels of trade not to be destroyed in such a way as to bring about that condition of mind on the part of their country which now prevails in New Zealand. We are under a great obligation to them for what they have done in that regard.

I mention also another treaty which stands in a somewhat similar position, namely, the treaty negotiated with France. The French treaty provides that a fixed and definite rate must prevail and that we cannot grant to any other country a different rate without violating the provisions of that treaty. In the budget presented to this house in May last there was an interference with the provisions of that treaty, to which the great republic very properly directed our attention. A treaty containing provisions such as that cannot, I submit, ever be a sound treaty because it disregards the fundamental rule which must always obtain in connection with trade treaties and which we propose to continue so far as we are concerned. That rule is this: Treaties must be mutually advantageous; if they are not they fail, and unless there is a clear appreciation of that fact there cannot be other than failure. This rule was stated very clearly the other day by the president of the United States Steel Corporation. Speaking to the National Foreign Trade Convention on May 28, he said: It is a sound economic principle to sell in markets where the product is needed for consumption and where there is no surplus of the same commodity

May I point out to the house that all the domestic trade of this country which represents imports is foreign trade to some other country. If hon. gentlemen opposite will only get in their minds that fundamental thought they will realize that this government on the one hand, desires to maintain the

The Budget-Mr. Bennett

economic principle to which Mr. Farrell referred and on the second hand, to realize to the full that every import brought into this country from abroad represents foreign trade to some other country. Our business is to see that we do not expand the foreign trade of any other country when we ourselves are producing or can produce the goods so imported.


June 1, 1931