CANADIAN SPECIAL ARTICLES

Tariff Reduction in Canada Is a Necessity

E. C. Druary December 1 1910
CANADIAN SPECIAL ARTICLES

Tariff Reduction in Canada Is a Necessity

E. C. Druary December 1 1910

Tariff Reduction in Canada Is a Necessity

E. C. Druary

We reprint herewith an article from The Farmer’s Magazine by Mr. E. C. Drury, Master of the Dominion Grange, on the subject of Fie Tariff from the standpoint of the farmer. As such, it may not meet the views of the urban Canadian, But we feel, nevertheless, that it should be all the more interesting as placing the city man in possession of the facts, as the farmer sees them. Mr. Drury, as is generally known, is peculiarly able to write on this subject. He is in touch with both the city and the rural population. He is a graduate of Guelph Agricultural College and a son of the ex-Minister of Agriculture for Ontario.

WITHOUT doubt, the question of the tariff occupies the minds of Canadians at the present time more than any other question. Not since the inception of the National Policy in 1878 has it been so much to the front. Further, the Tariff Question now appears in an entirely new light. In times past, Protection and Free Trade have been the slogans of the two political parties in Canada, and, under the stimulus of election oratory, much interest in the question was at times aroused. But, when in 1896 the Free Trade party at length were returned to office, the people found that “men are April when they woo, but December when they wed,”—some reduction in the

tariff was made, the British Preference was instituted, but the system of Protection was still continued.

Since that time it has ceased to be a party question. The “moderate protection” of the party in power, and the “adequate protection” of the Opposition have no essential difference. But, during all these years the question has still heen alive in the minds of Canadians. Opinions have been formed, not on mere theories, but by the hard facts of practical experience in the working of the system of Protection, and now at last, unexpected by, and unwelcome to, either of the political parties, a great movement for the abolition of Protection in Canada has ‘begun. It is no longer

a party question, but rather a nonpartisan movement of the farmers, headed by the forty thousand members of the united farmers' organizations of Ontario, Manitoba, Saskatchewan and Alberta, and supported by the agricultural press, against a system which is working them great injustice and injury. Of other classes, in the country, the laboring classes without doubt view the movement with sympathy, while unable to actively advance it, and the professional classes are probably divided on the question. The one great, active and unscrupulous opponent of the movement is the Canadian Manufacturers’ Association, with only 2,6oo members, it is true, but with a command of money, and an influence over Press and Parliament, which makes it truly formidable.

CANADA MUST NOT BE HANDICAPPED.

The opponents of the movement are already endeavoring to misrepresent its origin and belittle its importance. One, in a published letter, states that he has been told, on good authority, that the leaders of the movement are British Free Traders and American immigrants, and are supported by American friends. All that can be said of this is that it is absolutely untrue. The leaders of the movement are, almost without exception, men of Canadian birth, and the only funds employed have come from the farmers’ organizations already mentioned. Again, there is a persistent attempt to narrow the issue to the one point of reciprocity with the United States. This again is a misrepresentation of the facts. It is true that the farmers have expressed themselves as strongly in favor of an arrangement which will allow free interchange of agricultural products and agricultural implements between the two countries, but any arrangement which would tie our hands in making trade treaties with other countries, would meet with unqualified disapproval. Rather, the farmers look for relief to a general

lowering of duties against all countries, and the further strengthening of the British Preference to a point where the Protective principle shall be entirely eliminated. Again, some have belittled the movement as one originating with a few theorists and supported by a “handful of grain-growers,” but, if we call the forty thousand organized farmers a “handful,” what shall we call the twenty-six hundred manufacturers? It is time this policy were dropped. Everyone who looks at the question fairly must recognize that the movement has originated with earnest, thoughtful, patriotic Canadians, that it is free from intrigue, and that it has the support of a large part of agricultural Canada. It shall be my task, in this article, to present the reasons which are behind the movement for tariff reduction, and to answer the objections raised by the opponents of the movement.

PROTECTION DOES NOT RAISE PRICES.

Briefly stated, the farmers have risen in opposition to Protection because experience has taught them that it has. not the slightest influence in raising the price of what they have to sell, but has a very decided influence in increasing the cost of all they must buy, and in raising the wage of all whom they employ. The “home market” promised by advocates of Protection has proved a myth. Canadian farmers must still sell their Wheat, their cattle, their hogs, their dairy products, in short, all their farm staples, in competition with the world in a distant market. Nor is there any indication that this condition will cease, within a measurable time. We have but touched the fringe of our agricultural possibilities. Old Ontario is still the banner agricultural section of Canada, producing, in 1901, over half the agricultural wealth of Canada, but Old Ontario may yet be eclipsed by New Ontario. The Prairie Provinces have been referred to as the “granary of the Empire,”

but they have only begun to grow wheat there. The untold undeveloped agricultural resources of Canada render it very improbable that she will ever be an importer of agricultural products, at least under normal conditions of development, and with reasonable care in conserving her fertility. When we have reached the limit of our agricultural production, and our population has.increased beyond our ability to sustain it, the world 'Will be facing its last great problem of providing sustenance for its children. And, until that time, Which no man may foresee, the “home market” will have no value in fixing the price of Canadian farm products, for, so long ¡as there is an exportable surplus, the price received for that surplus must fix the price received for the whole crop. The farmers of Canada see this deafly, and, because they see it clearly, there is no agitation for protection on Canadian farm products. Once for all, Canadian farmers have renounced all faith in a Protective Tariff as a means of creating a “home market” that Will raise the price of their products.

TARIFF FAVORS COMBINES.

They have not, however, lost faith in the efficiency of a Protective Tariff in raising the price of all the manufactured products they must buy. They still see the article of foreign production sold on equal terms as to quality and price, 'with the product of home manufacture. Yelt the foreign product must pay a duty of 20 or 30, or 35 per cent. The home product has the advantage of proximity to its market, and the further advantage, in most cases, of importing all materials used in its manufacture either free, or at a much lower rate of duty than is charged on the finished product. They are aware of the fact that Canadian-made farm implements are sent to Australia and New Zealand, and there sold for less than in Canada. And the farmers of Canada are not altogether fools. They

have at last reached the conclusion that the manufacturers are not trying to lessen prices by Competition, are not trying to produce enough to supply the Canadian market. In fact, there is every reason to believe that by understanding and combines in every direction, competition and overproduction are carefully guarded against, while excessive profits are hid from the public eye under the mask of over-capitalization. Seeing these things, is it any wonder that Canadian fanners favor the abolition of the whole system of Protection ?

There is little doubt that the farmers are correct enough in their supposition that co.n 1 ¡ 'j ■. . whose object is to control production and eimorute co.nex.j_ v:rv widely among Canadian manufacturers. In the winter of igog a deputation from the Dominion Grange waited on the Government to ask for an investigation into the existence of combines in Canada. With that deputation went Mr. J. W. Curry, of Toronto, former Crown Attorney, and who had pursued a number of investigations into the existence of combines in Ontario. Quoting from Mr. Curry’s words on this occasion, words sipoken in public addressed! to the Finance Minister of Canada, publicly reported, and never contradicted1, we find the following amazing .statements :

“In one ease it was shown, I think, beyond the shadow of a doubt, that a combination did not exist for the purpose of restraining trade. This was the tack combine. The books produced on that occasion showed that all the firms united_ in it were limited to a fixed list of prices and terms of credit in selling. Not only this, but the people to whom they sold were divided into classes and more favorable terms were given to one class than to another. The agreement provided further that each factory should be limited to a certain volume of output, if it exceeded this volume only ten percent. of the returns from the excess volume should go for its own benefit, the other 40 per cent, going into a common fund. So far was this carried that one

factory, which dicl not run at all during one year, obtained its share of the profits earned by the operation of the others. The records went on to show that one firm withdrew from the combination and that the other firms remaining in then contributed a certain share of the output of each to be sold at prices low enough to put the independent rival out of business. They kept on cutting prices until the independent was forced to beg for mercy, and then the resolution in the minutes showed that the combine said: ‘Let him fry in his own fat’ and ‘take the medicine coming to him ! ’ Eventually the independent was driven out of business a ruined man.

“In another case a firm in Chatham began to import tacks from the United States. A meeting of the combine was called and arrangements were made to meet this particular competitor by cutting prices of their own output in the neighborhood of Chatham. They kept on cutting until the imported goods were shut out and then combine prices were put back again to the old figure.

“This association imposed penalties on its members in case of violation of any part of the agreement by which the combine was bound. The secretary of 'the combine had access to all books and papers of each individual firm in it for the purpose of seeing if the agreement was being kept.

“Nor was this tack combine an isolated case. There were some thirty or forty other combinations organized in a similar way and for like purposes.”

Is it any wonder, when facts like these have become widely known among farmers, and when there is every reason to believe that these are but glimpses into widely existing conditions that there should be a general movement to abolish the system which makes this sort of thing possible ?

Then, there is official evidence to show that, in some cases at least, even where an industry was crying out for more protection, undue profits were being made. In 1908 the Dominion Textile 'Company, being engaged in an industrial dispute with its employees, which had resulted in several strikes, a Royal Commission under the Hon, McKenzie King, was ap-

pointed to investigate. Among many others, the following facts were brought out. That at the time of the strike, a circular issued to the employees stated that the necessity to reduce wages was due to insufficient protection, but at the same time this company, which has always been loud in its 'demand for protection, and which had just cut the wages of its employees by 10 per cent., had been able to make the following financial statement as to the year’s business :

“The net profits for the year, after paying current interest on loans, all mili charges, and writing off thé large sums of $218,186.96 for repairs and betterments, and $235.340.40 for new plant and machinery, amount to $900,805.89 ; to these profits we have to add $68,635, being a dividend of 2Ç2 per cent, on 27,454 shares of Dominion Cotton Mills stock, and $51,705.50, dividend of 3y2 per cent, on 14,773 shares of Merchants’ Cotton Co. stock, making in all $1.021,146.39. Out of this‘amount has been paid the following:

Interest on bonds .........$204,895.00

Dividend on pfd. stock...... 130,067.09

Dividend on com. stock..... 250,000.09

Rental Dorn. Cotton Mills Co. 322,678.77 Rental Mer. Cotton Mills Co.. 65,277.74 And after allowing for bad debts there is left a surplus for the year of $44,493.36. This will bring the amount at credit of profit and loss account to $568,335.41, against $523,842.05 last year. This, in the opinion of your directors, is very satisfactory, considering the large falling off there*has been in trade since last fall.”

Very satisfactory indeed i's this statement, when we consider that this company had capitalized its common stock at 10 cents on the dollar, so that the nominal dividend of 5 per cent, amounted to 50 per cent, on the money actually invested! And it is for concerns like this that the Canadian farmers are asked to tax themselves on all they buy! There is perhaps, some little reason back of the revolt against Protection.

There are two or three arguments that are being used for the continuance of Protection. The first, and

most widely used, is that Canadian manufacturers cannot stand the competition of the world, if the protective duties are removed. The reply is simple. If after thirty years of protection, an industry cannot stand, there is something radically wrong with it. It is quite possible, that, were protection withdrawn, some industries might have to shut down. But in these cases, one of two things is true, either they are unsuited to the country, and could never thrive, or, as is ui/.-.ubtedly true of some of our industries, their methods of manufacturing are obsolete. It would be unjust to expect our young and growing country to perpetually carry the burden of these industries. I have too much faith In the future of Canada to think for one moment that the withdrawal of Protection would snell ruin to our manufacturing industries. With abundance of raw material, unlimited power in our running waters, and a sober and industrious population, there is no reason why Canada, without protection should not be a great manufacturing country. To abolish Protection would undoubtedly interfere with the working of some of our combines, and might necessitate drawing' a little water from some of our dropsical manufacturing concerns, but the operation would, in the end, be wholesome even for our manufacturers, and of inestimable value to our farmers.

Another reason put forward for the continuance of a Protective Tariff, is that we need revenue to meet our great and growing expenditure. True, we need revenue, though there is some difference of opinion as to the wisdom of much of our expenditure. But our present Tariff is not a revenue Tariff. For every dollar which it puts into the coffers of the country it puts at least three into the pockets of protected manufacturers. The farmers of this country, through their organizations, stand for “Tariff for revenue only,” and if our present Finance Minister cannot frame one

along these lines it will be time to find another.

The last argument used to bolster up Protection, is that its abolition would mean the reduction of wages of the laboring people, with consequent hardship and privation. If this were true, it would be an argument before which every good man should pause. But there is nothing to show that it is true. It is true that wages here 'are higher than in FreeTrade England, but not more than is necessary to make up for increased cost of living, due to Protection. If it were not for our great undeveloped resources, which are able to take care of an unlimited number of unemployed, there is nothing to show that labor conditions here would be one whit better than in England. Our manufacturers, who are such sti ff protectionists, have always favored not only free trade in labor, but Government-aided immigration. They have paid their employees in most cases no more than they can help. The following quotations, from the 'Cotton Strikes Commis'sion report, above referred to, show something of the attitude of the manufacturer to'ward the laborer.

“As to the hours of labor of all these two classes—women, and children under IS years—it was asserted that in normal times under normal conditions, work should begin on week days at 6.15 o’clock in the morning and continue to 12 noon, resume at a quarter to 1, and continue till 6, with the exception of Saturday, when there was work only in the morning. It was stated by many of the witnesses. and the accuracy of the statement was not challenged, that operatives were obliged to be at their places of work a little before the time fixed, though a like practice did not exist in regard to leaving it. This is a work week of 60 hours and over.”

“It is distressing to be obliged to record that, though the minimum age at which children can be employed is fixed by the Quebec law at 14 years, several children were brought before the Commission • from among those working in the mills who admitted that they had

entered upon employment under the legal age. Some of these children were so immature and ignorant that they were unable to tell the year of their birth, or their age. One little girl did not know the meaning of the word ‘holiday,’ and when it had been explained to her, stated that the only holidays she had known were Christmas and Epiphany. She had never received a week’s vacation.”

These quotations represent the conditions of the employees of a highly prosperous Canadian manufacturing concern. They may show the manufacturer in a slightly different light 'to that of the working man’s friend. On the other hand, the interests of the farmers and the workingmen are one. Both, as producers of wealth, must be on their guard against oppression and fraud.

“But” it will be urged, “the farmers are already prosperous, mortgages are being paid off, prices are good, What more do they want?” Is this true? Are farmers prosperous in the widest sense? It is true that mortgages are being paid, and bank accounts opened. How much of this is due to prosperity, and how much to increasing thrift and unwearying industry? Before the Tariff Commission in 1905 many farmers gave evidence that after allowing themselves a laboring wage their farms were not paying 5 per cent, on their actual value. I believe this is true generally, even where up-to-date methods are followed. It is unjust to accuse the farmers of Ontario of not making use of their opportunities. Agriculture is a slow business, necessitating a year’s time for the repetition of most operations. and when we consider what has been done in Ontario during the last fifty years, since most of the country was a wilderness, and in the West during the last few years, we cannot fairly consider the farmer unprogressive. He is showing a great desire for knowledge, as witness the popul'ar’ty of our Agricultural College, and our Farmers’ Institutes, and is progressing wonderfully in me'hods of up-to-date agriculture. But

in spite of all this, he is not Folding his own. The burden of Protection is too heavy for him. Since its inception in 1878 farm population has been steadily decreasing in all the older provinces, in Ontario to the tune of 6,500 per year, while town and oity population has rapidly increased. Even in the new agricultural West the urban population is increasing at a faster rate than the rural. Tin’s is the best comment on the effect of Protec.ion on the farmer. The withdrawal of population from the farms is due to lack of comparative prosperity. The young people leave the farms because in many cases they must do so if they hope to have homes of their own in a reasonable time. Further, this withdrawal of populations means retrogression in many lines of agrculture. due simply to lack of labor to till th° land and carry on the many branches of modern mixed farming. If agriculture is to progress as it should in Canada, with all that it means to our nation of material and social wellbeing. it is evident that the farmer must be relieved of the burden imposed upon him by our present fiscal system. The farmer does not object to carrying his full share of our national burdens, but he does object to paying a heavy tax for the benefit of avaricious manufacturers, and to the injury of our young nation.

Some time during the early part of the next session of the Canadian Parliament, a g:ant deputation from the farmers’ organizations of Ontario and the West will await upon the Government at Ottawa to prp'ent their views on this question. They will do so in a manner open and above-board, free from the suspicion of intrigue or corruption. They believe their demands to be just and patriotic, and in this faith will appeal not only to the great farming class of Canada, but to all her citizens who believe in justice as the true foundation of national greatness, and who take a thoughtful and unselfish interest in her future.