June 20, 1936

CON

David Spence

Conservative (1867-1942)

Mr. SPENCE:

I did not say a word.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I am sorry, but I did not mention any name, so I do not see how the hon. gentleman can say I referred to him. At any rate, Mr. Speaker, the fact is that this great industry, the greatest in Canada, is financially sick nigh unto death because of two things principally, drought and weather conditions in one part of Canada and, for the rest, mainly the policies of my right hon. friend the leader of the opposition for the last five years. On the other hand here is a secondary industry, a subsidiary industry, which is very important to the primary industry of agriculture. It too is sick almost to death. Why any man who has the well being of his fellow men at heart and who has the well being of the primary or secondary industry in mind, should object to a searching, kindly, adequate inquiry into the causes underlying these high prices, which have made it impossible for the secondary industry to sell its goods to the primary industry, is beyond my conception.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Once more I rise to a point of order, Mr. Speaker. I did not object to the most searching inquiry being made;

I only indicated the tribunal that should make it.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I accept the words of the right hon. gentleman, of course, but let me say that he shows little faith in his fellow members of this house, which is not surprising to me because he has shown little faith or confidence in them for the past six years. He persists in reading lectures to them at every opportunity. I have listened to them and taken a great deal of pleasure out of them, because I have laughed at them within myself, and probably will continue to do so.

What does the right hon. gentleman want us to do? He wants us to stop looking at the underlying conditions with which the order of

Agriculture-Implement Prices

reference asked us to deal. He wants us to get away from that point and to confine the inquiry to the question of the tariff on implements- and to submit that matter to the tariff board. The right hon. gentleman knows more about that board than I do. He knows how its members were appointed; he knows the previous occupations of some of the members of that board. I am not going to mention any names, but it is well within the knowledge of members of this house that one of the gentlemen whom he placed on that tariff board was previously a valued employee, a salesman, of one of the companies that would have to be investigated. I do not say that that would affect his judgment, but I do say that- it would affect-

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I had no knowledge of that fact until now.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

My right hon. friend has less knowledge about the men whom he places in high positions than I should think would be desirable. I am not saying this should be held against the gentleman whom I have in mind and whose name I will not mention, for I have no desire to draw attention to him. But I do say that the farmers of western Canada who were induced to buy combines in districts where combines were not suitable or profitable, by the gentleman whom I have in mind1 and who is now a member of the tariff board, really could not be expected to have much confidence in the decisions arrived at by that same gentleman, knowing his bias in matters of tariff, implement companies and that sort of thing. Therefore I think the people of Canada, east and west, would have more confidence in a committee of members of the House of Commons, of whom my right hon. friend seems to have a lowly opinion as to their capacity as investigators of a question of this kind, than in the kind of tariff board that we have at the moment in Canada.

Now the leader of the opposition says that this matter should not be further investigated by a committee of this house because the implement companies should have a fair chance in their own country and their own market. That was a cry that was very popular five or six years ago-that the manufacturers in Canada should have a fair chance in their own market. The market for farm implements in this country, Mr. Speaker, is not the property of the implement companies of Canada. The farmer is the only one who owns that market. He is the one who has to buy, and to say that a few companies, employing a few men in this country, should have that market, that it should be their market, and

that it is to be treated as though they had a monopoly ownership of it, is most unfair.

Then the right hon. gentleman adds that they did not raise their prices because they agreed not to do so. Well, that is a most amazing statement. I am surprised that even the leader of the opposition, little a3 is the knowledge he has shown in the house at times this session in connection with some matters when he has lectured us so profusely, now makes it a virtue. I am amazed that he does not know more about this question than to try to make it appear as a virtue that the implement manufacturers did not raise prices between 1930 and 1932 or 1933. Everyone knows that the only reason they took lower prices was that they could not sell their goods.

I hold in my hand an official document which leads me to believe that they did not in fact lower their prices. The president of one of the companies, on the stand the other day, told us under oath that they had not lowered their prices during these years. In order to encourage sales and try to collect their money they gave a discount in addition to the cash discount. What they did in connection with collections was to give a small discount, and part of the same policy was to give a higher nominal price for wheat in order to collect more money in that way. But whereas many other companies were in a position to give and did give very large discounts, the implement companies limited themselves to something like ten per cent. I am not complaining of that at the moment, but when the leader of the opposition says they did so and so, it should be remembered that they did it because they could not help themselves. They could not raise their prices in those days because they could not sell their goods as it was.

I have been told many times during this session that the companies agreed to do certain things. I read here the words of my right hon. friend in which he says that the manufacturers of implements are of the opinion that the consumers of agricultural implements should not pay higher prices for them. And they are equally emphatic in the statement that if the Canadian market is secured to Canadian factories instead of opened to a volume of goods manufactured elsewhere they will not increase prices to consumers, with this important proviso:

Provided the factors entering into the manufacturing costs are not increased.

The promise was not worth the paper it was written on. This promise I find was signed' by seven companies. But the one large company, the company that sets the pace, the company that supplies a very large percentage of the implements in Canada, did not

Agriculture-Implement Prices

have its name on this promise. And when the vice-president of the parent company, the president of the Canadian company, was asked1 the other day who had made the promise and in whose name it had been made to the government of that day, he knew nothing about it. When the document was looked up it was found that the name of the largest producer of agricultural implements in this country was not there.

Now I pass to another matter. I say it is necessary that a certain inquiry be held into this matter by those who are in sympathy with the needs of the primary industry, to which the secondary industry is so important. The companies during the last few years, we are told, have lost large sums because of their ventures in foreign markets.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

David Spence

Conservative (1867-1942)

Mr. SPENCE:

Does the hon. member not believe it?

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

That is not the point. I am glad my hon. friend asked the question. The point is that companies enjoying twenty-five per cent protection under the regime of my right hon. friend, and having the advantage of many other forms of protection, which were not of value to but were a distinct detriment to the primary industry, were investing their money elsewhere, money they had accumulated from the Canadian primary industry; and they lost it elsewhere, not by hundreds of thousands of dollars, but by the million, on this and other continents. They lost money galore everywhere. Then they come back and say that the Canadian farmer, because that is the market in which the Canadian implement manufacturer happens to be located1, should be pleased to allow them all the protection that the high-minded tariff advocates of this country want to give them.

I want to say a word further about the success that came to the companies during the time my right hon. friend gave them such extreme tariff protection, protection which he himself acknowledges to-day was very high. In the four years from 1926 to 1929, when a reasonable tariff policy was in effect, the average number of employees in the Canadian agricultural implement factories was 10,844. In the four years of the high tariff regime, the regime of the leader of the opposition, the years 1931 to 1934 inclusive, the average number of employees in these same factories fell to 3,493 per annum, and the output was reduced from $40,000,000 to $5,000,000. The industry was sick almost to death financially, and it is time it was looked into and investigated by those who have the greatest interest in it. Let me quote one or two figures.

tMr. MacLean.]

During these years with which I have just been dealing, when the number of employees fell from 10,000 to 3,400 and the production declined from $40,000,000 to $5,000,000 a year factory valuation, I find that costs of certain kinds went up very greatly. I have here a statement of one of the largest companies in Canada, giving the average cost of six implements in 1913 and 1933. Some one might say, why bring in 1913 and 1933? But the prices of farm products to-day are comparable with prices in 1913.

I find several increases in cost, some reasonable and1 others unreasonable. For instance, the prices of material at the factory increased 77 per cent. Productive labour increased 105 per cent. Prime cost was therefore increased by 83 per cent. But listen to this amazing item: Other factory expense increased by 505 per cent during these twenty years. Most of that increase was incurred during the period 1930 to 1934; lack of sales, because of lack of flexibility of price structure that would enable the implements to be exchanged for a comparable amount of agricultural wealth, caused such a decrease in production that other factory expense was increased by the enormous percentage of 505, against 105 per cent for labour and 77 per cent for material, or an average increase of prime cost of 83 per cent.

Another Canadian company had an increase in this item of 247 per cent as against an increase for productive labour of 27 per cent. That is very striking. I would1 like hon. members to bear it in mind. During the years from 1913 to 1933 for this large Canadian company the increase in cost of materials was 64 per cent; the increase in productive labour was 27 per cent, the prime cost increase was 58 per cent, but the increase in other factory expense was 247 per cent. I submit that when conditions of that kind are found, something should be done about it.

Mark you, these conditions existed and were accentuated during a time when, because of two specific conditions I have mentioned particularly, one the climatic conditions in western Canada and the other the effects of the economic and fiscal policy of my right hon. friend opposite, the income of the farmers in the province of Saskatchewan-and I will take that province only because the evidence respecting it we have had before us recently-had dropped from the high mark of $333,000,000 to the low mark of $66,000,000 between 1925 and 1931. That income of $66,000,000 is spread over a million people who had formerly enjoyed an income of $333,000,000 from agriculture alone, leaving aside their secondary production. My right hon. friend knows that the prices of implements had increased to

Agriculture-Implement Prices

such an extent, in comparison with prices of agricultural products, that instead1 of taking 200 bushels of wheat to buy a binder, as it did in 1925, it took 1,500 bushels of wheat at the low of the 1932 crop price to buy the same binder. These are extreme figures, and I would not want anybody to think I am giving them to the house as average figures-not at all. But during those years when the income of the largest Canadian customers for the implement people was being reduced from $333,000,000 to $66,000,000 the cost of the implement was going up, in terms of goods that the customers of the implement people were producing, and in actual cost. Those costs were going up in some items at the rate of 505 per cent and 247 per cent as against a time in 1913 when the prices were comparable.

I do not think there is much more I need say at this time, except to point out that there are many factors entering into the question of cost, namely, conditions of sale, freight rate, methods of shipment, and methods of collection, which sometimes add a great deal. Then we must consider customs and valuation for duty purposes. I wonder what the leader of the opposition will say when I tell him that in the sworn evidence we found that a Canadian subsidiary of a great American manufacturing company was being charged $200 per piece more on an American tractor coming into Canada than the American selling agent- was being charged. I repeat that there was an additional charge of $200 per piece on the same kind of tractor.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

David Spence

Conservative (1867-1942)

Mr. SPENCE:

You heard the reason for it.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

Yes, I heard the reason. I am asking my right hon. friend what he thinks of his policy which made it necessary to have such a condition. And in addition to the increased value for duty purposes on tractors there were increases on other implements of around 134 per cent. The present mark-up as against what the parent company charges the American company is around 6| per cent. That is something which I am sure the committee will foe interested in looking into at the next session if a committee is appointed-and I hope it will be. Six and two-thirds per cent is too high to-day, but what do we think of 134 per cent and 25 per cent, amounting to $200 on a tractor sold in the days of the regime of the leader of the opposition?

What did that mean? It simply meant that the Canadian company was not able to make a profit at the prices they charged the farmer on goods they sold those farmers. Those very products were made by the owners of the same parent company; they were made

in one country. But my right hon. friend's administration which was so much embarrassed for money in those days was content to see those profits stay in the country to the south of us where a foreign government was collecting taxes due to them; it was content to see the Canadian company struggling along without making as much profit on these particular items as it would have made if it had not been for these charges for duty purposes.

We are told that the companies lost much money under these conditions. Of course they did. With a flexible production and an inflexible price structure I do not see how those companies could avoid losing money, and they will probably continue to lose money until the time comes that they are able to sell their product at a lower price in relation to the prices received by their customers for what they have to sell.

There is one observation I should like to make here before passing on, and that is as to the opinion expressed by the leader of the opposition that the agriculture committee has never been a useful body in respect to tariff matters. That is his opinion, and he is entitled to it. But I do not think he sat in on the agriculture committee to listen to the discussions. I would say that probably never in this house has a committee worked with a more sincere desire to obtain the truth first. Perhaps some of us looked for one thing and some for another, but the desire of the committee as a whole was to learn the truth in order that they might know how this question might best be approached. We cannot get at the truth by lowering the rate of duty on one particular line of implements. Back of that line it is important to know how much protection, how much privilege and how much added cost to the consumer of those goods in Canada went into the factories and machinery that built this implement, that went into the homes and into the cost of living of the man who had to produce it. I do not mean to say that those men working in Hamilton or Brantford are too highly paid for making implements; I do not suggest they are overpaid, but I do say that the cost of their living-not the standard of living -in this country, and particularly in the last five years, has been too high in comparison with the purchasing power of the people to whom they sell their products. That has resulted from the fact that for many years many artificial charges have been loaded on to everything that has been done in connection wtih the living which these men are able to obtain from their work in the plant. It is

Agriculture-Implement Prices

added on to the clothes that they wear, the roofs that shelter them, the furniture that surrounds them and everything that goes into their mouths. Everything that they use has been loaded up with undue costs, and that is passed on to the machine they turn out or any other wealth they produce. It could not be otherwise. The loaded cost or, as the manufacturers describe it, the added burden, is passed on to the primary producer who simply cannot pay these prices and compete with other people in the world market, where his competitors are free from such high costs. The attitude of the committee which has just made its report was to try to learn more about these things in order that they might more intelligently weigh the facts.

There are two large companies in Canada, and we are led to believe that they are not in good shape financially, and that something must be done for both of them before the situation can be improved. But when the leader of the opposition says that the agriculture committee has not been a useful body-

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I did not say that.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I took down his words at the time. These are the words he used, "The agriculture committee has never been a useful body in respect to tariff inquiry matters." That is what he said.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is different altogether.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I said that a

minute ago, and he denied it.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is not correct.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

There are many other matters in addition to direct tariffs which must be inquired into. There must be tariffs back of many articles which have led to an accumulation of costs, and that is a condition which must be investigated.

Dealing with the agriculture committee the right hon. gentleman referred to the preconceived attitude of mind of those who deal with such matters on the committee, and he went on to read the lesson that the committee could not deal with the matter fairly because of that preconceived attitude of mind. I want to tell him that the members of the committee, as a composite body and as individuals, are more open-minded, to say nothing of their intelligence, than some of the appointees he made to the tariff board to whom he would have this matter referred.

I just wish to add one word in answer to the statement of the hon. member for Rose-town-Biggar (Mr. Coldwell). I am glad to

[Mr. McLean.J

see he is supporting the motion, even if he had to support the leader of the opposition to a certain degree in connection with the tariff board. He said that the tariff board has the confidence of the people to a greater extent than any previous board has had their confidence. That is a matter of opinion, and he has a right to express it. I do not want to go into detail in the matter, but I would say that within the past few months the people of Canada have shown whether or not they have confidence in the tariff board as at present constituted.

In conclusion, Mr. Speaker, I would say that this inquiry, which was commenced but not completed because of lack of time, should be carried on by those who are sympathetic and know something of the difficulties of the primary industry, and who are inclined to look without prejudice upon a secondary industry that is most important to the primary industry. The inquiry should be committed, in short, to those who will carry on the sort of investigation which the agriculture committee has carried on. It is a matter of record that the implement people who came before us assured the committee that they were highly pleased with the courtesy and consideration and kindliness with which we endeavoured to get the information that was desired. There was no misunderstanding. They were asked to give certain information, and a great deal more information will no doubt be required. But as to the manner of securing the information that was placed before the committee, the implement people expressed themselves as highly pleased. I have great pleasure in supporting the motion.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

David Spence

Conservative (1867-1942)

Mir. DAVID SPENCE (Parkdale):

Mr. Speaker, it is unfortunate, when the Prime Minister (Mr. Mackenzie King) and other members of the house have been trying to conclude the business of the session, that we should lose so much time having to listen to a tirade of abuse from a member of the agriculture committee, one of the 'worst kinds of political speeches that we could hear at this stage of the session.

I am quite satisfied that the committee were sincere in their viewpoint, but their viewpoint was different from mine in many instances. I do not criticize the committee for that. We started to investigate the price of farm implements, which meant implements all over Ontario and all over Canada, and finally we wound up with nothing accomplished, nothing but talk about Saskatchewan, Dakota and Montana. That is all that was talked about. On two or three occasions highly technical men from the departments

Agriculture-Implement Prices

gave us lectures that I do not think five per cent of the committee understood, and in the end we wound up by sending out questions to the fawn implement people, who told us they thought they would not be able to answer them for two months, and so the work of the committee was held up for a considerable time.

I am of the opinion that an investigation is not needed at all. I am not in favour of these royal commissions. All they do is spend money and the only result is that we are poorer and poorer. We had the International Harvester people before the committee and the evidence they gave was satisfactory. No one can doubt that Mr. Russell of the Massey-Harris Company gave his evidence in such a way that only a suspicious mind could come to any conclusion other than that the Massey-Harris Company were doing their very best for the farmer, and doing a great deal more than they were getting credit for. He showed that the losses in the farm implement business were very heavy, and that bad debts were very heavy. That is one of their great difficulties, that they have to get the money somewhere. It is like going to a specialist on one particular disease. My friend might go to one and take so long that he would be charged $1,000, while I, because I am poor, might be let off with $100. The same sort of thing applies in the farm implement industry. They have to try to make up their losses through bad debts; they have always got to figure that in their overhead.

Some hon. members should get a training in the business world and then they would be better able to criticize men in the business world. The wheat industry is not the only industry in the world. I am sorry it was interfered with, and it would be better off if it had not been interfered with, but the only way to get it back to where it should be is to make up your minds to play square with the consuming public and give the buyers in Great Britain and elsewhere a square deal -give them what you are purporting to sell to them, without mixing grades and deceiving them. There is too much interference in business.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

Hear, hear.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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CON

David Spence

Conservative (1867-1942)

Mr. SPENCE:

You want to be a Mussolini, a dictator, like you did on the committee.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

I have no desire to prcrtong the proceedings, Mr. Speaker, but my hon. friend has just done the very thing of which his leader complained so bitterly 12739-253

a few days ago. He has called me Mussolini, and I know that he will be pleased to withdraw that remark.

Topic:   AGRICULTURE AND COLONIZATION
Subtopic:   AGRICULTURAL IMPLEMENT PRICES-RECOMMENDATION THAT INQUIRY BE CONTINUED NEXT SESSION BY SPECIAL COMMITTEE
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June 20, 1936