Mr. Job Mr. Chairman, I made a few remarks some days
ago with regard to this Economic Report, but feel that I should supplement
them with a few additional remarks.... First of all, I would like to
say that the gloomy and pessimistic viewpoints so courageously and sincerely
expressed by Messrs. Starkes, Vincent and Banfield have
had the effect of slightly checking, but by no means obliterating my own
optimistic view of the future. The gentlemen named have been in
closer touch with conditions which are not so readily available to us
city delegates. I believe, and certainly hope, that their pessimism is not
justified. I can understand that the closer contact they have had with
those unfortunate people, who have had a bad experience this year in
connection with the fishery, has led them to adopt their defeatist
attitude, but the actual all-round facts do not warrant the conclusions they
have adopted. Their reference to lack of work in the woods,
November 1947 NATIONAL CONVENTION 767
which I did not expect, came to me as a check on
excessive optimism. It is evident to me that the Economic Report as
presented is too optimistic, and I can only regard it as an excellent sample
of a budget such as we might expect to come from an enthusiastic
finance minister in a responsible government.
In the remarks I made previously, I stated that
I agreed in a general way —please note the words
"in a general way" — with the concluding paragraphs of the report, by which I meant
those
reading as follows:
(1) That Newfoundland is at present a
self-supporting country based on sound
economic factors;
(2) That all the evidence available to us
indicates that this position of self-support
will continue in the foreseeable future.
[1]
I dislike this word of "self—support", mainly
because we have not been asked to say whether
the country is or is not self-supporting, nor is it
easy to understand the meaning of the term "self-
supporting", an opinion I expressed in the short
ten page economic report which I myself drafted.
In order to place on record my difference of
outlook, I would like to quote the concluding
paragraphs of the short report referred to, which
was rejected by the chairman of the Finance
Committee.
Mr. Cashin I rise to a point of order. It was not
rejected by the chairman of the Finance Committee.
Mr. Job Which I "thought" was rejected.
Mr. Chairman I understand it was rejected by a majority
of members. I understand there were two dissenting members.
Mr. Job I must confess frankly that the Major, as
chairman of the Committee, stated the Committee would not
introduce the report. If that is not a rejection, I do not know what it is.
Mr. Cashin While I was in the chair, I was only one
member — there were nine others.
Mr. Job You were voicing the opinions of the others.
Mr. Chairman Apparently the ideas incorporated in your report were not acceptable to the majority
of members.
Mr. Job The ideas were acceptable, but the report was
not. It was considered to be insufficient, I suppose. These
paragraphs, which as you will see were only conditionally optimistic, read
as follows:
Your Committee feels that
(1) Although the economy of Newfoundland has not changed from being an
export economy, it has gained considerable
strength since 1934 by diversification, and
there can be no possible doubt that at the
present time, Newfoundland's finances and
the earnings of the people are in a healthy
economic condition.
(2) There is good reason to believe that in
the foreseeable future, except temporarily
through a re-adjustment period, satisfactory
economic conditions will continue, always
assuming that no world-wide collapse occurs.
I would like to make a short reference to the
speech made recently by the member for
Bonavista East, in which he voiced a very
defeatist attitude towards the proposal to approach the USA in an attempt to secure
some
special tariff privileges. I consider my opinion on
this subject, which I have voiced on several occasions, is at least as good as his,
and on some
future occasion... I hope to discuss this matter at
greater length, and to be able to produce some
evidence to show that if we can get down to a
round table conference there is some chance of
arriving at some useful conclusion which might
be of lasting benefit to Newfoundland.
I would like to wind up these remarks by
suggesting to all pessimists and defeatists that
they read very carefully the last annual report
made by our distinguished and energetic fellow
citizen, Mr. Gerald S. Doyle, which was published in our newspapers a few months ago.
I considered it, when I read it, an excellent tonic and
cure for pessimism, and it deals with facts from
Mr. Doyle's personal experience and close contacts all over the island.
Mr. Fowler ....I have studied the report and I submit
that it is as honest and fair a picture of the situation as can reasonably
be expected under the prevailing circumstances. I feel that the
gentlemen responsible for this report are honest men who have the best
interests of this country at
768 NATIONAL CONVENTION November 1947
heart, and are not trying to fool the
people as some would try to have us believe. Due to the fact that
Major Cashin is chairman of this Committee, he is entrusted with the
unenviable duty of steering the report through the committee of
the whole. This, I feel, tends to leave the impression that it is his
report — in fact I have heard it referred to as such. They seem to forget
that this report is submitted over the signatures of seven other
gentlemen in addition to Mr. Cashin.... Now, regardless of to what extent
any of these gentlemen contributed to the report individually, it is
the result of their collective effort and represents the
considered opinion of each and every one of them. I realise that their
judgement is not infallible; that their estimates may not, in all
cases, be accurate; but I submit that if they have erred at all, the error
is on the conservative side. We have heard this report criticised, even
ridiculed in this House — this, gentlemen, is the easiest thing in the
world to do, and no doubt this is why some delegates indulge in it so
frequently. But do they offer any alternative? No! They just seek to
destroy the significance of this report for their own selfish purposes.
Mr. Smallwood Point of order. He says this report has
been criticised, even ridiculed in this House and that those who are doing
so seek to destroy the significance of the report "for their own
selfish purposes". Now, that is pretty low.
Mr. Chairman That is a conclusion. There seems to be
widespread here, for some reason or other, the unfortunate element of
dishonesty. I do not know why it should be here at all. Why cannot there
be an honest disagreement on any question? If it is the right of one man to
view something optimistically, then
a
fortiori it is the right of any other individual to assume the
contrary point of view. As far as I am concerned, Major Cashin and the
members of that Committee, all members inside or outside the Convention, as
far as I am concerned, are honest men.... Remember that criticism is a
very natural thing. It may be favourable or unfavourable, it may be
constructive or destructive; but I wish members would
refrain from imputing dishonesty or ulterior motives simply
because they find themselves in disagreement with opinions expressed by other
members of the Convention. I do not feel you are justified in drawing
that conclusion.
Mr. Hollett Does that apply equally to men who
say a certain report is not an honest report?
Mr. Chairman In my decision, there is no midway position, I particularly stated, between right
and wrong. As far as I
am concerned, it is not right and it is not proper for any member to impute
dishonesty to any other member simply by virtue of the fact that that
member happens to express some opinions on a subject which are not universally shared
by other members.
Mr. Jackman I think a lawyer can fool some of us and
can get away with some disgusting propaganda.
Mr. Chairman My ruling is not open to question or debate. Kindly resume your seat.
Mr. Fowler I respect your ruling. I did not impute dishonesty; I remarked it did appear that
way in some cases. I
contend that if any person or group of persons sees fit to destroy
something, they should be prepared to produce something better in
place of it. I doubt very much their ability to do so.
Now, I do not accept this report as a guarantee,
but I do accept it as a reasonable picture of our
present position, and a reasonable estimate of
what things are likely to be in the foreseeable
future. The Committee gave us a good review of
our industries and their future possibilities. They
tell us that the industries dependent on our forests
are expanding and that their products are assured
of a steady market. Our mining industries are in
full production and further development is even
now under way. That the great wealth of
Labrador will be developed in the not far distant
future is common knowledge. We know that the
timber resources and water-power of that vast
northern dependency are sources of potential
wealth which cannot be overlooked. I think that
our tourist industry is capable of big development
and that, given the necessary encouragement and
assistance, may well become one of our chief
sources of revenue. Our fisheries cannot be
judged by the result of any one branch of that
industry in any one season. We must take an
overall view of the whole industry and if we do,
we must admit that the fishing industry, as a
whole, is on a sounder economic basis than ever
before. It is more diversified. We are not so
dependent on salt cod as we were in the past.... It
is true that the Labrador fishery has not been good
for the past couple of years, and this is indeed
unfortunate for the men engaged. Had they
November 1947 NATIONAL CONVENTION 769
secured average voyages, they would have fared
well with prices ranging from $10.25 to $11.25
per quintal according to the grade. Those who
were fortunate enough to secure a fair voyage had
little cause to complain. I am not prepared to hold
the Finance Committee responsible for the failure
of this branch of the fishery. It is, in my opinion,
prosecuted on an uneconomic basis, to say the
least.
Mr. Chairman, I accept the conclusions of the
Finance Committee as being fair and honest,
based on sound judgement, good knowledge and
experience. The critics say it is too optimistic. I
do not subscribe to that belief. What right have
we to instill fear and pessimism in the minds of
the people? The order of the day is "nothing for
nothing", and we should face the future with
optimistic determination.
Mr. Jackman I have listened for the past eight or nine
days to the arguments pro and con regarding the Economic Report.
First of all, I want to put myself on record as agreeing with it. The
people who made up this report are good Newfoundlanders, out to
try and do the best they can for Newfoundland. They have no crystal balls to
peer into the foreseeable future, as the term has been bandied around
here. In fact there is only one country today which possesses that crystal
ball, and that is Russia. In Russia today they know what they are
going to do for the next five years. I know something about communism. I do
not agree with it. I believe in democracy, but I do not think
democracy should be put on the spot just because democracy cannot foresee
what is going to happen in the next year or two. I heard some of the
critics of this Economic Report refer to our finance ministers of the past
and their budgets. In 1929 I saw people fall out of windows on one of
the richest streets in the world, in one of the richest countries, because
of false forecasts.... I had to walk with 14 million of my brothers in the
richest country in the world, looking for work. Mr. Chairman, I want
to be very brief. I have no wish whatever to retard the session. I want to
get it over with. I am fed up with so much of what has been said here.
There has been a lot of hot air. Let us get down to facts. I believe that
Newfoundland is self-supporting. I will go further and
make the belief stronger, and say that right here in this Convention there
are men who are satisfied to put their money into Newfoundland.
They
have faith in Newfoundland, then why should not we? 1 think that as
regards our own economy, it is based on a false foundation. I am sure it can
be changed. I have to agree with the member from White Bay — there has
to be a reorganisation, if you like, of our whole economy. I have faith that
the people who employ labour today in Newfoundland are
satisfied to do so. In other words, I have faith in labour, in the employer
and in all our people, and I am sure we can make Newfoundland a much better place
to live in than it was in the past.... I
will tell you that there are 42,000 people in Newfoundland today who are
thinking out their problems. I believe in responsible
government and I believe these people want it. And I believe...
Mr. Jackman I believe in our economy, our people, and I
will be a Newfoundlander as long as I draw breath.
Mr. Hollett Just one or two remarks relative to
something said here yesterday. There was one thing said by Mr. Bradley in
speaking on the Economic Report, he said, "We are not here to espouse
any particular cause". I thought we were here to espouse the cause of
Newfoundland. We have heard it from Mr. Bradley, we are not here to
espouse any particular cause. I would ask members of the Convention to note
that. Whether he was referring to any particular form of government or the welfare
of the people, I know not. But, according
to Mr. Bradley, you must not espouse any particular cause.
Then in his analysis of the figures brought in
by the Finance Committee, he did not elect to take
1897-1947. He thought it would not be fair to take
in six years of war when Newfoundland enjoyed
this false economy. So he put it back seven years,
1890-1939, and by so doing, instead of working
out a surplus as the Finance Committee had done
over that period of years, of $20 million ... by
some manipulation or juggling he made out that
this country had a deficit of $20 million. There
was one particular statement which I expected
Mr. Bradley to say, but which for some reason he
did not say. (I wish Mr. Bradley was here today,
I don't want to say anything behind anybody's
back.) He did not elect to say anything whatsoever about a little war fought between
1914 and
l9l8, which war, up to the present time, has cost
this country up to $40-50 million. It would have
770 NATIONAL CONVENTION November 1947
been very nice if Mr. Bradley had drawn our
attention to that fact. I presume everybody in this
country knew there was a war in those years.
One other statement in reference to the bases.
Mr. Bradley said, "The base agreement was
signed under no compulsion whatsoever". In the
first place I would like to point out that the base
agreement was signed before the people of Newfoundland knew anything whatsoever about
it.
And we have been informed by people who were
very close to things in those days, that when a
couple of our Commissioners, very patriotically
I thought, objected to signing these agreements
on the grounds that something should have been
put into it having reference to a future date when
they might be considered, they were bluntly told
by the Rt. Hon. Winston Churchill that he would
have none of it — sign on the dotted line, or else.
If that is not compulsion, I don't know what else
to call it. More than that, they were signed
without any reference at all to the people of this
country. I just wanted to draw these facts to your
attention, Mr. Chairman, I don't want them to go
undisputed.
Mr. Bradley gave an excellent address yesterday, delivered in a masterly style for
which he is
well noted. I am not trying to make any defamation of his speech, but I wish to draw
your attention to these little things, which may be very
important to the future of our country.
Our friend, the Rev. Burry of the Labrador;
with all due respect, I think he is more or less
what we call half and half, or as we say in
London, "an and awf'. He is half in favour of
the report and he is half against it. He did say this
though, and I got it down: "Those people who
drew up this report and agreed with it, were not
treating the people in a fair way". Now that
compares so closely to a statement which has
been made here before, that it was not an honest
report, that I have, sir, to draw your attention to
that also. "The people who drew up that report
gave such a rosy picture that they were not treating the people of this country in
a fair way." Now
whether Mr. Burry meant to put it in that way or
not I don't know, but that's exactly as he put it,
and then he did go on to the homes in his own
district, in Labrador. He deplored the fact that
everybody on the Labrador has not got a Chesterfield instead of a home-made bench
to sit or lie
on. I think I ought to draw your attention to that
because these chesterfields come after many,
many years of civilisation, and when they do
come I don't know that they add very much to the
economy, or peace and happiness of the people
who possess them. That is in the offing I thought,
as far as Newfoundland is concerned, and as far
as Labrador is concerned.
He did speak about unemployment insurance
also, and I would like to point out that that unemployment insurance, as I understand
it in a
neighbouring country, does not touch the fishermen; so that if we are going to have
unemployment insurance in this country, get something
which is going to be of some help to the fishermen. I grant you that our fishermen
have always
had a pretty rough time of it, but they were always
honest and rugged, and any time when a call
came to fight for our King and country, they were
the first to enlist. So the hardships and battles of
life did not prevent them from being patriotic
when it came to the point of defending that which
they do enjoy, be it rough and tumble, be it
sometimes hunger or whatnot. They did not
hesitate at the call to arms, and they did not
hesitate when it came ... to lay down their lives....
So I do not think that even the rough times that
our people had, have in any way undermined
their moral attitude towards life and Christianity,
and that is much better, much greater than having
a chesterfield in your front room....
I refer you to a statement made by Mr. Banfield yesterday, in which he referred to
the people
of Fortune Bay. I know a good many people from
Fortune Bay, and I know you have not any better
fishermen in this country than in Fortune Bay,
and that nine times out of ten they make a good
voyage, and a pretty good living. I am not saying
all of them. In such a precarious trade as the
fishery there have to be some failures. There have
to be men who get sick during the voyage, and
men who don't seem to run into the fish — even
neighbours. They make trip after trip and don't
strike the fish on the Grand Banks, but when they
do they know how to catch it. And the Fortune
Bay fishermen are some of the best we have. All
right, they have poor years, but is there any
reason why, in considering the future of this
country and the general aspect of the economy,
we should bring up isolated cases of this nature,
and try to tell the rest of our people that this is a
pretty rotten country to live in? I tell you it is
November 1947 NATIONAL CONVENTION 771
highly unfair to the intelligence of our people to
bring up these matters. Everybody knows that in
this country, as in every other country, there are
people out of work. I am told that last fall in the
Maritime provinces there were 30,000 people out
of work. They had some work in Ontario and
Quebec, and as a result 3,000 workers in the
Maritimes had to migrate to Quebec to get work.
You have it there, in the USA, in Great Britain,
and all over the world. Let us look at the general
aspect and not pick out a few isolated cases. It is
unfortunate that we have those isolated cases, but
you will have them under whatever form of
government you have to rule this country. You
are bound to have them. If the Finance Committee were unfair in painting what has
been called
too rosy a picture of our economy, if they were
not honest in that, does that smack more of
dishonesty than getting up and picking out a few
isolated cases, and holding them up to our people,
and trying to persuade them that this country is
rotten at heart?
That's all I have to say, Mr. Chairman. Major
Cashin and his Finance Committee have done a
good job. The things that were not in the report
they left to the imagination of this Convention.
They did not think they were talking to a crowd
of children. Everybody knows about these isolated cases, and it is much more dishonest
to bring
in isolated cases, and try to convince our people
that all is not right with the world.
Mr. Chairman I wish members would clearly remember that
I am not going to permit imputations of dishonesty towards the
Finance Committee, any member of the Finance Committee, or
any member of this House.... I can express no opinion on the merits or
demerits of the report, but in fairness to the compilers, I have to say that
it certainly represents an honest to goodness endeavour on
their part to present the potentialities of this country as they see them,
and the fact that their conclusions may not be universally agreed to
by no means lays the foundation for the allegation that they were
dishonest in the discharge of what may fairly be regarded as a very onerous
duty, to say the least. I hope that I will hear no more suggestions of
dishonesty, or imputations of dishonesty....
Mr. Burry Mr. Chairman, I just want to make one short
comment in reply to Mr. Hollett. I don't see by what stretch of his
imagination he could
charge me with even thinking that the Finance Committee was
dishonest.... I think Major Cashin and his Finance Committee did that work
with all honesty, sincerity and patriotism. I give them that credit,
and I only hope that they can give me the credit of being honest, sincere
and patriotic in my criticism.
Mr. Smallwood Mr. Chairman, I said last night that I
had no intention of making any further contribution to this debate, and I
don't intend to make a speech now. There are just two points made by
Mr. Hollett in comment on the speech delivered here yesterday by Mr.
Bradley, upon which I would like to offer my own interpretation. Mr. Hollett referred
to the fact that Mr. Bradley took a period of
50 years of the government's history, beginning 1890 and ending 1939, leaving the
war, this late war, out of the picture altogether.
Surely it was clear to everyone who heard that speech that Mr. Bradley
did that for a purpose, that he named his purpose, he described his purpose;
he was examining the contention of the Economic Report that our
present revenues are due to anything but the war.
Mr. Chairman As a matter of fact, on that point Mr. Miller
rose to a point of order and I ruled on it, and said that it was obvious that
he was setting out to prove that very thing, or trying to prove it.
Mr. Smallwood Yes, he pointed out how the Economic Report
was claiming that our swollen revenues are due to anything but the war....
That was the whole point he was making, to show that the report was
wrong in its conclusion, he giving his conclusion that the war did swell
these revenues.
I would not be attempting, Mr. Chairman, to
make any comment whatever on Mr. Bradley's
speech if it were not for the fact that he is not here.
He had not been out of doors for two weeks when
he came here yesterday. He came here, delivered
his speech and went back immediately to his
room and had to change every stitch of clothing
— he was soaking wet. He is not at all well.... Just
this point about the government in 1941 signing
the bases agreement with the United States
government. Mr. Bradley said they had not done
it under compulsion. I remember that he did say
that, and I remember also that I got this impression from what he said: that it was
not under the
compulsion of the United States government, and
I agree with him completely. The Government of
772 NATIONAL CONVENTION November 1947
the United States did not compel Newfoundland
to sign that bases agreement. That is all I want to
say in comment on what Mr. Hollett said. But a
few days ago I gave notice of two questions to
His Excellency the Governor in Commission.
The replies have just arrived, and have been
placed on my desk by the Secretary.
Mr. Smallwood Oh entirely, sir. If you remember,
I gave notice on Thursday past that I would ask His Excellency the Governor
in Commission to furnish the Convention with a statement showing the amount of the
accumulated cash surplus of the Government of
Newfoundland, up to 31 March, 1947. You will remember my reason for
asking that question. Mr. MacDonald from Grand Falls drew the attention
of Major Cashin to the fact that whereas in the Economic Report it was
stated that our surplus is $35 million, there were other statements appearing
in print saying that the surplus was $28 million. Major Cashin explained
why he put the figure in the report, or why his Committee put it in the
report, at $35 million. He hoped that the house was satisfied with his
explanation. Apparently it was, with one exception. I was not satisfied, and
I said so. I therefore gave that notice of question to the Governor in
Commission, to ask what is the amount. Is it $35 million? Is it $28 million?
Or what is it? Here is the reply, sir.
Mr. Chairman May I see it first? I am not questioning that,
but is there a covering letter?
Mr. Chairman This is in reply to the question forwarded on
my instructions under rule 39, by letter of November 15 to the Secretary of
Finance. All right.
Mr. Smallwood I will now read from the reply: The
accumulated surplus revenue at 31 March, 1947, was $28,645,800, distributed
as follows:
*
That is cash at St. John's, and cash at the Crown Agents invested in
sterling securities, provisionally earmarked for the redemption in
1950- 52 of sterling debt amounting to $3,200,000.
Loaned free of interest to His Majesty's
Government in the United Kingdom,
$7,300,000. Advances to finance dollar expenditure by His Majesty's Government in
the United Kingdom, $200,000: a total of
$28,600,000.
And then there are two notes, Mr. Chairman:
Note No. 1: The figure of $28,789,000 given
in the budget speech was subject to audit. The
figure of $28,645,000 now given is based on
audited figures.
The second note has to do with the loan free of
interest to His Majesty's Government in the
United Kingdom, that is $7.3 million dollars. The
note on that reads:
Note No. 2: In addition to this loan made out
of revenue, a sum of $1,800,000 derived
from the proceeds of the sale of savings certificates has been lent free of interest
to the
United Kingdom government.
I asked, you may recall, for the figures for the 31
March last, and also for the 31 December last, and
their reply is that the figures for 31 December are
not available. I don't know if Major Cashin has
had a copy of this sent him or not.
Mr. Cashin No, I don't need it. I don't require them, I
know all about it.
Mr. Smallwood The accumulated surplus at 31 March was
$28,645,800. Now the sinking fund. I was rather shocked by the statement of
Major Cashin that Newfoundland has been plundered of an amount of
$1,750,000 on our sinking fund. If that can be shown to be true, the persons
responsible must go to gaol. If anyone has plundered
Newfoundland of $1,750,000, the guilty parties should go to gaol or
there is no justice.
Mr. Smallwood So being shocked and surprised by that rather
startling statement I gave notice of another question to His Excellency the
Governor in Commission, to give us an account of the creation, nature
and operation of the sinking fund against the guaranteed stock, that is
against our sterling debt, the debt that is guaranteed by the mother
country. The answer reads as follows:
The Sinking Fund, Newfoundland 3%
Guaranteed Stock, was created under Section
November 1947 NATIONAL CONVENTION 773
3, Sub-section 3, of the Loan Account, 1933,
which reads as follows: 'A sinking fund
equivalent to 1% per annum of the total
nominal amount of stock shall be established
under the control of trustees to be appointed
by or with the approval of the UK Treasury.
The first payment to the fund shall be made
at a date to be approved by the Treasury, not
being later than the first day of July 1938, and
the Sinking Fund monies and the income
arising therefrom shall, subject to payment
thereabout of the expenses of management of
the fund, be applied for purchases of stock,
or be invested in such of the securities as may
from time to time be approved by the
Treasury.' Under these provisions, trustees,
the holders for the time being of the post of
Permanent Secretary to the Treasury, Permanent Under-Secretary of State for Commonwealth
Relations, and Governor of the
Bank of England, were appointed by His
Majesty's Treasury in the United Kingdom.
The annual payment to the Fund was established at £178,000 sterling, the first payment
being made in June 1938.
Nature of Fund: The Sinking Fund is a
cumulative fund which will provide for the
redemption of a substantial proportion of the
stocks at maturity.
Operation of the Sinking Fund: Payments of £178,000 sterling have been made
in each year since 1938 for credit of the
Trustees' Account. The total amount of these
payments up to 30 September, 1947 is, in
sterling, £1,780,000, which is being applied
in purchase of the stock.
Mr. Smallwood No sir, it does not mean that. I will explain
in a moment. None of the stock has been redeemed. Under the covering statute,
income arising from the income of the stock is held by the
trustees. This has been applied in purchase of the stock. The total nominal
amount of stock held by the trustees at 30 September, 1947, was, in
sterling, £2,071,477. At $4.04 to the dollar that is $8,368,000. That last
figure is not my own computation.
I would like to say a word or two about that
sinking fund. To begin with I want to say this:
that in all the many years that we had a government in this country down to 1934, we borrowed
many millions of dollars, but in all those years
such a thing as a sinking fund, judging by their
actions at least, never entered the minds of any of
our governments. They just borrowed year after
year, hoping that when each of the loans was gone
through, either there would be a windfall or a
stroke of luck, or else that they could go out on
the market and borrow more to pay off the old
loan as it came due; but there was no sinking
fund. The first sinking fund was established in
1933 by law, and came into operation, as this
reply tells us, in 1938. Now the idea, as I understand it, of a sinking fund is this:
if a government
goes out and borrows $5 million or $10 million,
or any amount, for 20 years, or 25, or 30, or 50
years, they have to pay interest on that loan every
year until it matures. But when it matures there
should be some other money accumulated, saved
up, in a pot or a sinking fund, to meet the loan
when it comes due. If not all of it, then as much
of it as is humanly possible. If you have 20 years
to go, then in that 20 years pour into your sinking
fund as much as you can scrape together, so that
when the 20 years are up and the loan falls due,
you will have something saved up to pay on your
principal. And so in 1938 a debt of some £70 or
£80 million sterling, held in England, was
guaranteed by the government's own sinking
fund. The loan comes due in 1963. Newfoundland has got to pay off that loan in 1963;
she has to go out on the market and buy more
money to pay off the old money, or she has to
have a sinking fund.
Now Mr. Chairman, when you come to create
a sinking fund there are two ways to do it. You
can set aside so much a year, say 2%, or 5% of
the principal, and every year you will pay it to the
sinking fund.... What they did in this case was
make it 1%. But 1% from 1948 to 1963 when the
loan would fall due would be what?.... You pay
1% into the sinking fund every year for 20 years,
from 1938 to 1963, and all you have saved up in
our sinking fund to go against your debt when it
falls due is 25%, and there is 75% left. So here is
what they did. They appointed these trustees — one man from the Bank of England,
one man
from the British Treasury, one man from the
Dominions Office. They are a board of trustees,
representing whom? Representing the Government of Newfoundland and the bondholders,
774 NATIONAL CONVENTION November 1947
trustees for both, and their job is to administer
that sinking fund. What they do is this: the
government pays the 1% — £178,000 sterling — into the sinking fund. The trustees
take that
£178,000 and they go out on the market and go
to John Jones and Thomas Smith or John Brown
in England. John Smith is a man who has a
Newfoundland bond. He owns that bond, he has
paid for it, but he now wants to turn that bond into
cash — he wants to sell it, so the trustees buy the
bond from him, and they buy all the bonds they
can get every year, up to the value of over
$750,000, up to £178,000 sterling. In other
words, when the Newfoundland government
pays the trustees that 1% every year into the
sinking fund, the trustees use the money to buy
those very bonds. Now when they buy them, they
own them, and the position today is that the
trustees have bought year after year more and
more of our Newfoundland bonds. But these
bonds were not cancelled.
Mr. Smallwood Yes, sir. They were never cancelled. They are not going to be cancelled until 1963,
when they will all
be cancelled. They will all be cancelled then, but until then the trustees
every year take that 1% and use it to buy Newfoundland bonds
in England from anyone who wants to sell them.... Every year when the Newfoundland
government pays interest on that £17 million
sterling of our guaranteed stock, the interest goes to the
bondholders. Who are the bondholders? No. 1, all the public of England
who happen to buy those bonds. No. 2, the trustees of the sinking
fund. There are two classes of bondholders now — the public and the trustees
of the sinking fund. The trustees receive their interest every year.
What do they do with that interest? They don't put it in their own pockets.
They use that interest to buy still more bonds. All that income from
the sinking fund, whether it be the 1% they get from the government, or the
3% interest on those bonds that they buy, all that income goes to buy
still more Newfoundland bonds, so what is happening? What is happening
is this: the sinking fund is growing every year. It is growing on the one
hand, and on the other hand the number of public bondholders is falling year
by year. Carry it on long enough, and finally our whole public debt
would be owned by the trus
tees, because they will have bought
it in from the public. Is that good for Newfoundland or bad? That is
the crux of the matter.... I claim it is a good thing to build up a sinking
fund as much as you can, and have so much saved up to meet the whole
principal when it comes due in 1963. Let us say they could have adopted half
a dozen other ways of handling that sinking fund. The question is not
whether that the right way, the best way, the question is who is doing the
plundering, and how is the plundering being done?.... I for one am
heartily sick ... of hearing statements made that the government — whom I do
not like — is plundering and looting when it is not true and cannot be
proved. I challenge any man to prove to us ordinary, simple-minded
Newfoundlanders that the sinking fund of $1.75 million was plundered
out of this country. I say now, on the authority of this document which is
the official answer of the government, that every year since 1938 the
trustees of that fund have used that money to buy in Newfoundland bonds. The
Newfoundland government is paying interest on the bonds
the same as they pay any other bondholder, and that interest is used by the
trustees to buy still more bonds and pile up the sinking fund and make
it grow as fast as possible, so when it comes due in 1963 they will have a
good sizeable amount accumulated in the sinking fund to pay over. I
say not one cent has been robbed. Not one cent has been plundered. The
statement has been made that Newfoundland has been plundered of
$1,730,000. It is a shocking statement.... If that kind of statement is
allowed, and it has been going on for two years, you cannot blame the
people for believing it, if it is not contradicted. There is as much truth
in that accusation as there was in all the wild crazy statements that
have been made in politics in the last 25 years about plundering, looting
and graft. It is not made surely, without any sense of responsibility;
surely not made in calm, reasoned tones or feelings, surely not. If
Major Cashin can prove to us — he does not have to prove it, all he has to
do is to give us a good case.
Mr. Chairman I want to remind members that we are not
sitting as a court of judicature. We are a fact-finding body.
Mr. Smallwood I agree with your remark ... we are a
fact-finding body. One of the facts is, has Newfoundland been plundered of
$1.75 million
November 1947 NATIONAL CONVENTION 775
in our sinking fund? I say that statement is not
true on the basis of the reply. Not a cent has been plundered, and in common
fairness that statement must be proved or it must be retracted. We
must draw a line somewhere with these charges of graft, of corruption
and plundering. Talk of faith — how can we have faith if $1.75 million
can be robbed and nothing done about it? Or if we can sit back and smile, as
if the amount plundered is so much chickenfeed, and is so commonplace
that we can afford to take it in our stride and forget about it? I am not
going to forget about it.
Mr. Chairman What steps can the Convention take in the
matter? If there has been any suggestion of criminal libel, that
is a matter of no concern to me or to the Convention. The person
or persons who made it, if called upon to prove it or otherwise, would
have to go before a jury of peers. We are not sitting as a court of trial. I
am Chairman of a fact-finding body. I wish all reference to
libel would be dropped, as there is no suggestion that we are going to try
it.
Mr. Smallwood I am not suggesting legal action, I am suggesting this: Major Cashin made the statement
in public
session ... that Newfoundland has been plundered of $1.75 million in our
sinking fund — a most serious, grave, shocking statement, calculated if not disproved,
if accepted as truth, to
undermine all confidence and all faith in Newfoundland. Therefore what I
suggest is either Mr. Cashin should proceed to prove his statement or
withdraw it.
Mr. Vardy I see absolutely no reason whatever for Major
Cashin to prove his statement. Mr. Smallwood has not proven that Major
Cashin was incorrect. He has not shown us how much of the sinking fund
was spent in England to redeem or
buy up Newfoundland bonds. That document does not state that.
Therefore he has not proven whether or not we lost money. Mr. Smallwood
has not proved that Major Cashin was wrong when he said we had lost
$1.75 million.
Mr. Chairman Again I want to remind members
that as far as I am concerned, so long as the proprieties of debate are
observed, no member is going to be placed in a position where he has to
defend his opinions. Major Cashin has expressed an opinion. If he
chooses to defend that opinion, that is a matter for his discretion.
Certainly as far as I am concerned, the question as to whether or not
he proves it or disproves it is entirely up to himself. Again I want to say
the proof of any statement made here, libellous or otherwise, is a
matter with which I have no concern as a Chairman of this
Convention.
Mr. Miller I wonder if each member will be supplied
with a copy of the government's answer? I would much prefer to read it
myself.
Mr. Chairman I will have them tomorrow. I am assuming that
Major Cashin will wind up the debate by dealing with questions directed to
him during the course of the debate. Therefore ... I would like it to be
understood that if no member occupies the floor, I will assume that no member
desires to address himself further on the Economic Report. I will
thereupon call upon Major Cashin to wind the matter up. If any member has anything
to say on the Economic Report, I wish he
would take the floor.
Mr. Cashin In view of the fact that there are several
questions outstanding to which I have not received answers, I am not in a
position to go ahead and finish this aftemoon....
[The committee rose and reported progress and
the Convention adjourned]
