Mr. SLAGHT:

I do not suppose that all

hon. members read the debates in the other chamber.

Mr. WALSH:

Read the rules.

Mr. SLAGHT:

I thank my hon. friend.

Mr. WALSH:

Page 95.

Mr. SLAGHT:

The hon. member himself

so seldom keeps the rules that it is a treat to have him stand up for them. Now, Mr. Speaker, I think I have made it clear-

Clear as mud.

Mr. SLAGHT:

why I am opposed to those on the opposite benches who seek again to be entrusted with leadership. I do not know that any hon. member has said that they are asking to be returned to power, but I suspect from the criticism which they made of the budget that they would accept office if they could persuade the people of Canada to elect them, and therefore it is time we warned the people of the record which these gentlemen enjoyed.

May I conclude by summarizing the doctrine we have heard from the Conservative opposition? I do not want to include in this the two other groups, but the speeches from the Tory party on the budget are full of criticism, they are of the regular tear-down

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type, they are full of doctrines of despair and gloom. The party's course throughout the session has been consistent. The hon. member for Greenwood (Mr. Massey) trumpeted to the nations of the world that a thousand people in Canada had died from starvation.

Thousands.

Mr. SLAGHT:

Thousands of people had

died from starvation.

Mr. MASSEY:

On a point of order, I would ask the hon. member for Parry Sound (Mr. Slaght), if he wishes to quote me, to quote me accurately. I did not make the statement to which he referred. I said that thousands had died from exposure, illness, actual starvation and lack of care, and from accident.

Mr. SLAGHT:

I am glad to accept the hon. member's correction if I did him an injustice. But let me ask him if he thinks that by trumpeting that sort of thing to the nations of the world, letting the British people read it in the London papers, letting Hitler and Mussolini chuckle over it in Germany and Italy, he is serving either his country or his party in making extravagant statements of that kind?

Mr. MASSEY:

I was speaking for those people of Canada who are suffering.

Mr. DOUGLAS (Weyburn):

Does the hon. member for Parry Sound (Mr. Slaght) think it is better to hide it?

Mr. SPEAKER:

Order.

Mr. ROWE (Dufferin-Simcoe):

Better to hide it, before the elections.

Mr. SLAGHT:

Now, Mr. Speaker, let us remember that the doctrine laid down in that book-although perhaps I am regarding it almost too seriously-that oppositions should oppose, is the Tory viewpoint of their mission. Theirs is a very loose life in opposition; there is plenty of opportunity for criticism, but little real responsibility for the proper carrying out of national affairs. They have lived up to that idea. They do not "worry over-much about constructive suggestions, aiming rather to point out the blunders of a government, and rarely showing sufficient generosity to praise worthy actions." That is not my doctrine; it is the doctrine of the leader of one of the great national parties in Canada, plus the fact that he states on the hustings what he pleases, right or wrong, true or false in order to ride into office, and then brazenly admits it on the floor of the House of Commons.

Mr. W. H. MOORE (Ontario):

Needless

it is to remind this house at this late date in the debate that our country faces an extremely critical situation. The minister in his budget speech met the situation I thought very frankly. I congratulate him upon a masterly presentation of the budget. But the implications are not good. After ten years we have continued unemployment, and distress prices and unbalanced budgets, and the situation is the more serious because we have not located the cause.

The minister intimated that we were a part of a crazy old world. Well, I cannot help thinking that we have made a substantial contribution to the general lunacy, when one considers that we have in Canada a land of opportunity and that for ten years past under two administrations we have been an emigrant country. Since 1930 we have had a net loss of something like 80,000 people to the United Kingdom, and still 9 or 10 out of every 110 families in this country are incapable of sustaining themselves. I am speaking to-night very largely because of something that was said the other day by the hon. member for Kootenay East (Mr. Stevens), that it was our duty to get at causes, and I wish to mention to-night, and merely a mention, what I consider to be several basic causes of the world's depression and particularly of our own.

It was quite natural in 1929 that there should be confusion, and when the tower tumbled down, that we should talk in divers tongues. Some of our hon. friends in one section of the house maintained that it was the money that was wrong; others maintained that we had a cyclical dip, made unusually severe by conditions of war; others that we were in a wave of nationalism, the aftermath of war, which had become a tidal wave of autarky. Most people put the blame on the tariffs that had been erected after Versailles. We all know that there were more tariffs because there were more countries, and we all know that there were higher tariffs. But when one turns to the record one finds that between 1908 and 1913 there was an annual increase in world trade of 4-52 per cent, which about represented the total development or growth of trade; and between 1925 and 1929, when tariffs were high and tariff boundaries more numerous, there was an average annual increase of 4-85 per cent, or an increase in international trade in those years in which the tariffs were rising and tariff boundaries had increased.

I urge that a structural change has come over world economy, and when I speak of world economy I would remind some hon. members that it was an arrangement of trade between nations of the world of specialized

The Budget-Mr. Moore

production, according to relative costs, and exchange; something different from mere trade between nations. That system of trade, of world economy, was never generally adopted; but with the repeal of the Corn Laws in 1849 there came into existence a classification of industrial countries and agricultural countries. England, of course, is the outstanding example of an industrial country and Canada is largely an agricultural country. It is that system which came crashing down in 1929, and we must either restore it, or turn to a new distribution of national economies.

My time is limited and I wish to set out four or five reasons for the break-down. For years it was said that world economy means modern civilization. Recently Professor Ohlin, a most distinguished European economist, referred to world economy as extraordinarily successful and pointed out that within sixty years, after 1850, the trade of the world had increased ten times. But "extraordinarily successful" for whom? It was not extraordinarily successful for the farmer. It has not been extraordinarily successful for the agricultural countries.

Shortly after 1929, when we began to be critical, we examined the financial accounts between the creditor and the debtor countries. The main creditor countries were the United Kingdom, the United States and France. The main debtor country was Canada, the first of the debtor countries, the heaviest debtor country. The other day the minister referred with pride to the fact that this country had become the fourth exporting nation of the world. Well, in 1929 we were fourth or fifth In exports. We supplied a very high percentage of the world's imports then. In proportion to our population we were probably the world's greatest exporting country. In 1929 we had an annual deficit in our payments of $217,700,000 a year. And that condition had gone on for years. Argentina was next. Germany followed. It is not an agricultural country, and it needs a little explanation why Germany was a debtor country. Australia followed, and then the Netherlands. It is very easy for us to glorify primary production; I have done it, I am still prepared to do it. But in the exchange between the industrial countries and the agricultural countries we have failed to take into account the profitability of the respective trades. We have said we balanced our accounts; we have the theory of the balance of trade; but we are overlooking the fact that while $100,000 worth of wheat may pay for $100,000 worth of glass or some other industrial product, there is a difference in the respective profit to the producers. We may keep the thing

going, how? How have we kept it going? By reinvestment in the agricultural countries of profits made in the industrial countries. But there must come a time when debt has to be paid.

I want to mention another matter in respect to the disparity between the industrial and the agricultural countries. And this, it seems to me, is more serious still. International trade-modem international trade-has in recent years developed a contagion of depression. Depression is carried from one country to another. A local cause, say a strike in India against the products of Lancashire; we feel it. Or insufficient industrial production in France, or a social revolution anywhere; we feel it. And during these depressions the industrial countries pass on a portion of their burdens to the agricultural countries, by reason of the disparity of prices. According to a compilation made for the international labour office, Great Britain in the years 1930 to 1935 passed over 50 per cent of its burden on to the agricultural countries; Germany between 1930 and 1933, 15 per cent; France between 1930 and 1935 over 36 per cent. We have to realize that if we restore the old condition of world economy, it will only be to face that situation again.

The second cause I want to mention-and I want to avoid party politics so far as I can, but I am afraid this is going to bear on party politics, because I want to talk about the United States-is this. The world has a new international banker. In the old days when the United Kingdom was lending money and investing capital throughout the world, she allowed people to pay her in goods. But now we have a new banker. As a result of the redistribution of credit during the war and its aftermath it came about that in 1913 the United States was a debtor country on long term investment to the extent of $1,895,000,000. In 1930 the United States was a creditor country to the extent of $8,370,000,000. And we are her principal debtor.

But how can we pay our debts? We have had some meetings of the banking and commerce committee lately and have been discussing that very question. How can any country pay debts to the United States, except with exotic goods? The United States, according to a compilation of the League of Nations economic committee, produces 45 per cent of the world's factory goods. The United States produces as much in factory goods as England, Germany, France, Poland and all the countries of Europe together, with the exception of the European Soviet.

The Budget-Mr. Moore

Even if the United States took down her tariff walls we could not pay in factory goods. She will not let us pay in agricultural goods, because her farmers also are distressed. In 1S34 the United States passed a Trade Agreement Act and we had high hopes of it. I doubt if we should ever have held them, because that act was passed for the express purpose of expanding the exports of the United States. A creditor nation with people all over the world unable to pay their debts, yet still trying to expand exports! As to how far that has been done, apart from gold, let me give a brief statement. This is from Professor' Bidwell who was at one time with the tariff board of the United States. It was written in 1938. He says:

It cannot be said that the agreements thus far concluded have done more than modify slightly the rigorous protectionism of the Hawley-Smoot tariff. The reductions in rates have been confined for the most part either to specialties not directly competitive with any American product or commodities in which American production so dominates the home market that increased imports can have little or no effect on prices, or commodities of which the domestic supply is deficient, such as manganese. Whenever there appeared danger of a substantial increase in purchases from abroad import quotas or tariff quotas were imposed. (Tariff quotas do not limit total imports but only the amounts that may benefit in any year by lower rates.)

I am not going to prophesy-I have heard enough about predictions to-night-as to what the new treaty will bring forth. But if I were optimistic I would take a chance on a bit of prophecy.

There is a third cause of the structural change in world economy. Hon. members who were brought up in the school of Adam Smith and Thorold Rogers will recall that in the days of 1850 there was world competition of a large number of small producers. That condition has changed. Now you have exports that are not competitive. In industry you have cartels; in agricultural products you have pools. In 1923 our western wheat producers formed a pool, after the manner of the Australian pool, for the express purpose of the export trade. Importation was free, at the beginning of 1924, in eight out of twelve European countries, but by the beginning of 1929 the number of free markets had shrunk to four. If I had time I should like to go on-

Go on.

Mr. MOORE:

-and point out the statement made by the German agrarian economists, that they did not believe in the pool system, as far as agriculture was concerned, at that time. I should like to give the name of Professor von Dietze, who said that no selfrespecting country would allow its food products to come under the control of a foreign pool. I wonder if we would. I can remember that we resented the importation of butter into this country under the Paterson plan. Particularly would no foreign country- at least I doubt if any foreign country would -allow its supply of daily bread to come under the control of any foreign organization where there was a suspicion of state interference or intervention.

Now I must hurry on; I do not want to detain the house. There is a fourth reason for the break-down of world economy, and I believe it is a decisive one. It is a rediscovery of land as the breeding ground of all nations. I wonder how far hon. members-it seems to me we have not discussed it-have looked at England's reason for protecting her own food supply. In 1931 England had a gainfully employed population of only 5-6 per cent in agriculture, forestry and fishery, and in 1926 the birth rate in England fell below the replacement point. Doctor Louis Dublin put the implications of the birth rate in 1933 in this terse form: that if the birth rate decline continued, within two generations England would have only half its present population. That is the situation, practically, in all the industrial countries of Europe; and that is one of the reasons, although not the only one, why we and other countries have been closed out of their markets. The statement was made by Astor and Murray that in the United Kingdom to-day there are direct and indirect food subsidies amounting to forty-three million pounds sterling a year. In August, 1938, we announced a wheat subsidy. In November, 1938, only a few months later, England raised the amount upon which she would subsidize wheat from thirty-one and a half million hundredweight to thirty-three million hundredweight, which means a further increase in the production of wheat.

I shall not detain the house longer, Mr. Speaker, except to say that we are facing an agricultural revolution, a revolution in mechanization. It is not my opinion but the finding of the League of Nations that one-half the agricultural population of any country is capable of producing that country's food, compared with only a few years ago. How are we going to face that situation? That, it seems to me, is something upon which we have conveniently, if you like to put it in that way, turned our backs, something we have tried to put out of our minds. What is the solution? Well, I come back again to Adam Smith, and if you do not mind I will give just one short quotation, because it is a prediction. It was Smith who laid out a plan of world economy by which nations

J*

The Budget-Division

would specialize in industry and food and exchange their products. Then he goes on to say:

The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.

I can see no future for this country unless we face the condition of a readjustment of the economic activities of our people. We have in the world to-day 860,000,000 gainfully employed people, of whom 550,000,000 are trying to live out of the proceeds of the land. It cannot be done with profit to the agricultural population.