Mr. BENNETT:

All you have to do is

to read, and I will tell my hon. friends where they will find it-in Sir Arthur Salter's last book. Those were the conditions. What were we to do?

Mr. BOUCHARD:

What you promised.

Mr. BENNETT:

Exactly, and that is what we are doing, and what is more, what we propose to do. There are men in this house who will not permit their intelligence to work lest the conclusions might not be favourable to their own party. There are those who will not exercise their reason with respect to these matters. They must endeavour to make political capital out of a situation that is beyond the control of themselves and of their party and of parliament.

There is just one comment I should like to make upon the address which was made this afternoon by the right hon. leader of the opposition (Mr. Mackenzie King). He said: There are some matters which this parliament cannot control. A modest expression of fact, but that is so. Confronted with that situation what would you have had your country do? We did the only thing that a government similarly situated could do, and I am going to point out to you that the authority that was cited in this very seat by the ex-Minister of Justice (Mr. Lapointe), when the League of Nations in 1924 indicated that tariffs were standing in the way of the world's progress, advised Hungary in 1931 that she should use tariffs to lessen her imports. Why? You get back to the old question. Some hon. members here smile or laugh or giggle when you talk about the adverse balance of payments. I wonder if they have paused for a minute to understand the full significance of what is involved in that. Here you have two things to consider, what a country buys and what it sells. The balance of what it sells over what it buys is the visible evidence of its having a balance on the right side. If on the other hand it buys more than it sells, there is a visible balance against that country. Sir Arthur Salter puts it very clearly, and he himself is .a pronounced free trader, as I shall presently point out. Then there are invisible things that go to counterbalance these matters, such as the interest payments that come to Canada from her investments abroad-and we have some investments in every part of the world;

the tourist trade that comes to this country to the amount of 8250,000,000 a year, and which when you deduct the $76,000,000 that Canadians spend as tourists abroad gives us a favourable balance in tourist traffic alone of

8175,000.000, a very large item in making and shaping the commercial credit of this Dominion.

What did we find when we came into power in 1930? It was the proud boast of the late government that Canada of all the countries of the world had been the only one to lower her tariff since the war.

*Some hon. MEMBERS: Hear, hear.

Mr. BENNETT:

Hon. gentlemen say,

"hear, hear". Well, I will tell you what you did by that: You made it just that much easier for Canada to have an adverse visible trade balance.

Mr. DONNELLY:

That means nothing.

Mr. BENNETT:

I suspect that that is true in the hon. gentleman's case, but I am presenting my argument to those to whom it means something.

Let us proceed a step further. The house will remember that in 1929 the then Minister of Finance, in introducing his budget, explained that the Dominion of Canada had a favourable trade balance of over $120,000,000. That was a matter of proud boasting on the part of the hon. gentleman. He said that we had a favourable trade balance of $123,000,000, representing the excess of what we had sold over what we had bought. But what had happened by March 31, 1930? The hon. gentleman was still in power then. What happened was this, that in that twelve months the favourable balance of $123,000,000 had been lost and there was an unfavourable or adverse balance of $100,000,000. In other words, the imports were $1,248,000,000 and the exports were $1,144,000,000, or an adverse balance of over $103,000,000. Just think what that meant. From Canada being in a position where she had over $123,000,000 of free credits coming in from the excess of exports over imports, by the end of March, 1930, she found herself in the position where she bought during that year $103,000,000 worth more than she sold.

Mr. YOUNG:

What caused the decline?

Mr. BENNETT:

The very conditions to which I have alluded, and the fact that during the period following the war the then government had lowered the tariff of this country so that it became a dumping ground for the other nations of the world. But what happened?

Nothing.

The Budget-Mr. Bennett

Mr. BENNETT:

Mr. MACKENZIE KING:

Will the Prime Minister permit a question?

Mr. BENNETT:

Yes.

Mr. MACKENZIE KING:

Is it possible for all countries to have a favourable balance of trade at the same time?

Mr. BENNETT:

I am coming to that. This afternoon the right hon. gentleman was greatly interested, apparently, in other countries. My concern for the moment is for the country I have been elected to govern. When he asks the question which he has just now put-"is it possible for every country to have a favourable trade balance?"-I say that is not a matter about which I am concerned at the moment, so long as I can see that my country is properly attended to. That is my point. That is what Hon. Walter Runciman said when he imposed tariffs against importations ranging from 50 to 100 per cent. That was his position. That is what he is doing for England, and what he is doing for England we are doing for Canada. The only difference is that we did it first.

I ask any hon. member of this house to go and tell his constituents that he is in favour of a policy which will commit Canada to larger obligations abroad, which will have to be paid either in goods or in services, or with gold. When the goods and services fail, as they do, there is only one way payment can be made, and that is with gold. Gold can be got only by borrowing or by fresh capital coming into the country. Go back and tell your constituents that. Go back and tell them that you sat through a session of parliament and voted and worked for the purpose of seeing that your country owed more money abroad, and in the end became insolvent. Go and tell them that.

Mr. SANDERSON:

We will tell them what the right hon. gentleman said during the campaign of 1930.

Mr. BENNETT:

I will admit there are some hon. gentlemen who are incapable of understanding that, but for the moment I am not addressing them.

Oh, oh.

Mr. BENNETT:

I have now indicated the position of this country in 1930. I have shown the position that other countries have adopted. France accepted that principle and adopted it. Here is the real crux of the problem: if every country imposes tariffs against the other the difficulty to pay obligations that are due abroad becomes increasingly great.

41761-151 j

Hear, hear.

Mr. BENNETT:

That is true. But we

have no power to control the tariff of the United States, nor that of France, nor of Spain, nor of Italy, nor of other parts of the world. We know they have imposed tariffs against our goods and that they are competing with our production by making the same goods that we ourselves are making. Now, what happens? If they raise their barriers against our goods going into their country we cannot pay in goods for any goods we buy from them; we have to pay them with the proceeds from the sale of our goods elsewhere.