Mr. THORSON:

I shall read the table. It

shows the exports of Canadian wheat to continental Europe, the United Kingdom, the orient and other countries. The average exports of wheat per year during the five year period ending March 31, 1930, were 155,000,000 bushels to continental Europe; 82,600,000

bushels to the United Kingdom; 16,400,000 bushels to the orient, and 11,100,000 bushels to other countries, making an average annual total of wheat exported in those years of

265.100.000 bushels. The second column shows that during the five year period ending March 31, 1935, the average exports of wheat per year to continental Europe were 103,300,000 bushels; to the United Kingdom, 71,800,000 bushels; to the orient, 9.100.000 bushels and to other countries, 9,000,000 bushels; making a yearly total average in those years of 193,200,000 bushels. These figures are significant. Out of a total average export of Canadian wheat of

265.100.000 bushels per year in the years prior to 1930, 155,000,000 bushels per year went to continental Europe as against 82,600,000 bushels per year to the United Kingdom. It will not help us in Canada to hold the United Kingdom market for wheat if at the same time we lose the markets of continental Europe. In the second place, this table tells an alarming story, for it shows that during the five year period ending March 31, 1935, our wheat exports averaged 71,900.000 bushels less per year than during the preceding five

year period, and that 51,700,000 bushels per year of this decline is accounted for by reduced exports to continental Europe. That market was lost to Canada largely as the result of the foolish tariff and fiscal policies of the previous administration of this country and, what is perhaps even worse, that market was surrendered to the Argentine, Canada's strongest competitor in the production and sale of wheat-Canada's greatest individual asset.

In 1929 the six main wheat importing countries of Europe were Germany, Italy, France, the Netherlands, Belgium and Switzerland. They took seventy per cent of the total European imports of wheat. In that year Canada had a favourable trade balance with these countries amounting to 8114,603,000, her exports to these countries amounting to $187,388,000, and her imports from them being only $72,785,000. These were good customers for Canada; indeed they were our best customers for Canadian wheat. How did the Bennett adminstration treat these good customers of Canada?

The treatment which Canada gave to Switzerland is perhaps the most striking example of the folly of the tariff policies of the former administration of this country. If an analysis is made of our imports from Switzerland as between the fiscal year ending March 31, 1930, and the fiscal year ending March 31, 1935, it will be seen that our imports from Switzerland declined from $7,314,840 in 1930 to $4,979,543 in 1935. Of this decline seventy-seven per cent was in fibres, textiles and textile products, our imports of these commodities having been restricted from $4,507,296 in 1930 to $652,010 in 1935.

How was this brought about? The Bennett administration proceeded to restrict the importation of silk from Switzerland, first by raising the ad valorem duty, and secondly by inflated arbitrary valuations for duty purposes. Let me give the house an illustration of how the previous administration acted. The chief silk product which Canada imported from Switzerland in 1930 is described in our trade returns as "woven fabrics, wholly or in part of silk, not to contain wool, not including fabrics in chief part by weight of artificial silk." In the fiscal year ending March 31, 1930, Canadian imports under this heading amounted to 1,259,836 yards, valued at $826,109. The average value per yard was 66 cents; the duty amounted to $242,602, and the average duty per yard was 19 cents. But in the fiscal year ending March 31, 1935, Canadian imports under the same heading amounted, to 2,582 yards, valued at $3,518. The average value per yard was $1.36; the duty amounted to $1,524, and the average duty per yard was 59 cents. These figures indi-

The Budget-Mr. Thorson

cate that the average ad1 valorem rate of duty on these items was increased from 29-4 per cent, as it was in 1930, to 43-3 per cent. But this was not enough: Although the price of raw silk was falling and silk prices in Canada were declining, the valuations for duty purposes were stepped up from 66 cents per yard to $1.36 per yard, thus increasing the actual duties that were collected on this class of silk fabrics by over 215 per cent.

Mr. EDWARDS:

Would the hon. member permit a question?

Mr. THORSON:

Yes.

Mr. EDWARDS:

Would he mind telling the house the number employed in 1930 as against those employed1 in 1936 in the textile industry of Canada?

Mr. THORSON:

I have not those figures.

Mr. SPENCE:

Because you do not want to have them.

Mr. THORSON:

I will deal with the general question a little later on. I have indicated the manner in which the Bennett administration proceeded to deal with Switzerland's trade in silk fabrics with Canada. It succeeded in killing that trade, for it reduced it by 99-8 per cent.

The next most important decline in Swiss imports into this country was under the heading of-

Mr. BAKER:

May I ask the hon. member a question? Did the reduction by ninety-nine per cent of silk importations from Switzerland to Canada give more employment in Canada?

Mr. THORSON:

I doubt it; I do not think it did.

Mr. BAKER:

It certainly did.

Mr. THORSON:

I will answer that in a moment.

Mr. BAKER:

It certainly did to hundreds and hundreds of people.

Mr. THORSON:

The next most important decline of Swiss imports into Canada was under the heading of non-ferrous metals and their products, a decline from $1,795,578 in 1930 to $880,844 in 1935-eighteen per cent of the total decline in Swiss imports. We treated time-pieces from Switzerland somewhat in the same manner as we did silk fabrics.

Now, what did Switzerland do, in return, to our Canadian exports of wheat into Switzerland? She was patient for a time, but at the close of 1931 she passed legislation which empowered the federal council of that country bo limit imports by means of quota restrictions. By a decree which became effective

on May 12, 1932, wheat was placed under this law, and since then importations of wheat have been allowed only under permit from countries specified by the authorities. What happened to the sale of our Canadian wheat? it should be noted that from 1926 to 1930 Switzerland took 57-4 per cent of her imports of wheat from Canada. Relatively she was our best customer for wheat in continental Europe. Even as late as 1932 she took 52-7 per cent of her wheat imports from Canada, but after the governmental decree went into effect for wheat the picture rapidly changed. In each year since 1932 Canada's share of the Swiss wheat market has declined until in 1935 it amounted to only twelve per cent of the total Swiss imports. This market did not disappear, for Switzerland decided upon a policy of buying from countries that were willing to buy from her; and the Argentine, Canada's most dangerous competitor in wheat production, gained the market which Canada by her shortsighted tariff policy had lost. In 1931 the Argentine supplied only 9 per cent of the wheat import requirements of Switzerland, but in each year since then she has gamed an increasing share until in 1935 the Argentine's share of the Swiss wheat market amounted to 45-7 per cent, whereas Canada's share had dropped to 12 per cent. The previous administration of this country was highly successful in accomplishing its purpose of restricting imports from Switzerland, but in so doing it lost a market for Canadian wheat amounting to over 7,000,000 bushels per year, and surrendered that market to the Argentine. Surely the time has come for a change of policy.

The time ait my disposal does not permit me to deal in the same detail with the other European countries, but basically the story is the same. Our total imports from Belgium declined from $13,019,000 in 1930 to $3,613,000 in 1935, the chief decline being in textiles, iron and iron products, and non-metallic minerals and their products. Tariff changes in respect of glass have resulted in a marked decrease in the importation of this commodity from Belgium. Our wheat exports to Belgium have actually increased, but when the United States went out of the wheat export business, her share of the Belgian wheat import requirements went to the Argentine, instead of to Canada, the Argentine's share of the Belgian market increasing from 23-6 per cent in 1930 to 58-5 per cent in 1935.

The story of our trade with the Netherlands is similar to that with Belgium. Our imports from the Netherlands have been restricted from $9,432,000 in 1930 to $4,343,000 in 1935, the chief declines being in textiles, and agri-

The Budget-Mr. Thorson

1&13

cultural and vegetable products. Imports of artificial silks declined from $1,051,000 in 1930 to $148,000 in 1935. As in the case of Belgium, our exports of wheat to the Netherlands have slightly increased; but as also in the case of Belgium the former United States share of the Netherlands wheat import requirements went to the Argentine, instead of to Canada, the Argentine's share of the Netherlands' market increasing from 10-4 per cent in 1930 to 59-8 per cent in 1935.

And so the story goes. Canadian imports from France decreased from $25,158,000 in 1930 to $6,443,000 in 1935, 47-9 per cent of this decline being due to reduced imports of textiles. In the case of Italy, Canadian imports declined from $4,963,000 in 1930 to $2,714,000 in 1935, 64-4 per cent of this decline being due to reduced imports of textiles. Similarly, in the case of Germany our imports from that country declined from $21,505,000 in 1930 to $10,474,158 in 1935, 75 per cent of this decline being due to reduced imports of textiles, iron and iron products, and miscellaneous products.

In 1929 the six wheat importing countries of continental Europe had unfavourable trade balances with the rest of the world, and those unfavourable balances were largely with the four wheat exporting countries of Canada, the United States, the Argentine and Australia. When the crash of 1929 came, and the invisible items of trade upon which they had relied disappeared, they were forced to rely to a greater extent upon their commodity balances. The action taken first by Australia in 1929, and then by the United States in 1930, and later by Canada, made it impossible for these countries to maintain their exports, and they were forced therefore to restrict the volume of their imports.

The effect upon Canada of her mistaken policies in dealing with these countries was disastrous. I wish I had time to tell the story in detail, but briefly it is this: By prohibitive tariffs the Bennett administration succeeded in restricting Canada's imports from these six [DOT] continental European countries from $72,785,000 in 1929 to $16,524,000 in 1935; but during the same period our exports to these countries fell from $187,388,000 in 1929 to $30,154,000 in 1935. Canada restricted her imports by $56,261,000 per year, but in so doing she sacrificed $157,234,000 per year in her export trade. There was almost $3 of exports lost for every $1 of imports restricted. Forty per cent of the restriction in imports was in respect of textiles, and included in the loss of exports was 51-7 million bushels per year of Canadian wheat. What a heavy price the Canadian wheat producer has paid for the protection of the textile manufacturer!

Surely such policies must not be allowed to continue. The primary production of Canada constitutes her basic wealth; surely our tariff and fiscal policies ought to be so designed as to ensure the best circulation of that basic wealth. If we are anxious to increase our total wealth, we ought to be prepared and we must be prepared to buy the manufactured goods of other countries. In order that they may be given the necessary purchasing power to buy our primary products, our tariffs must be reduced on the articles they have to sell. This would be good business for the whole of Canada. I do not think of tariff reductions as tariff concessions; I consider that they constitute good business for Canada. If this were done the whole of Canada would benefit; for the increased volume of our export trade would increase the purchasing power of our primary producers, and those engaged in the secondary industries of Canada would benefit as well.

An increase in our total wealth, which can come about only by the expansion of our external trade, will not solve all our problems, for the problem of the equitable distribution of that wealth will still remain with us. But I submit, Mr. Speaker, that an increase in our total wealth constitutes our best hope for solving the problem of unemployment. Since the beginning of the industrial revolution industry has always depended upon agriculture and the other primary industries that produced food and raw materials. There is no country in the world equal to Canada in its potentialities for the production of real wealth. We ought to be the wealthiest country in the world, and we could be the wealthiest country if our leaders had the vision and courage to put into effect the policies that will best ensure the circulation of our basic wealth, the primary production of Canada.

Mr. EDWARDS:

Is the hon. member

suggesting that the textile industry of Canada should be scrapped in order to assist in the export of wheat?

Mr. THORSON:

By no means. My view is that if we used our primary production as it ought to be used, benefits would accrue not only to those engaged in that primary production but also to those engaged in the secondary industries.

Mr. EDWARDS:

What will become of the 63,009 workers in the textile industries?

Mr. THORSON:

If we adopt the policies I have suggested I think there will be more workers engaged in the secondary industries of Canada.

Mr. BAKER:

That is only a theory; it does not work out in practice.

The Budget-Mr. Douglas

Mr. THORSON:

I think we have demonstrated that it is a fact.

Mr. T. C. DOUGLAS (Weybum):