Mr. Smallwood I have no intention of proceeding with any remarks. I concluded my remarks at
the time we rose the committee yesterday afternoon. One thing I would like to say
now: during
the debate a number of questions came before the
committee and were directed to the Government
of Canada. A number of replies arrived yesterday
and these replies were read. It seems to be
desirable that these be dealt with in somewhat
greater detail in committee of the whole than was
possible in formal session. Two of these were of
the utmost importance and need to be explained.
You will remember in the Grey Book, the
Government of Canada gave its estimate of what
revenue it would collect, and what money it
would spend in Newfoundland. Two questions
were directed to the Government of Canada on
that estimate: Major Cashin, feeling the Canadian
government had been conservative on the wrong
side, they would collect more, and on the other
hand Mr. Hollett, being dissatisfied with one item
showing what they would spend. We listed the
various headings under which they would expect
to spend money here. One of these headings was
departmental expenditures, $9.4 million. No
detail was given. Mr. Hollett asked for a breakdown. They gave it. He read it yesterday
afternoon. I fear few of us had the opportunity of
getting the details. I asked them to show us how
they arrive at the estimate of $20 million a year
they would expect to collect from the people of
Newfoundland. In their reply to me, which I read
out without comment, they gave details. While
the debate is on, it is highly desirable that both
answers be repeated, and something done by us
here to analyse and explain the meaning of the
two answers. I do not propose to do it at this
moment.
Mr. Chairman The answers are being mimeographed and will be distributed, and after
perusal and study members will be in a position
to debate the information contained therein.
Mr. Fogwill Since Christmas recess, I have concerned myself quite a lot with federal taxation,
in
the event of Newfoundland embracing union
with Canada. We have had quite a debate on
probable revenues and expenditures. I am not
concerned with that, although I realise in that
event we shall have to collect from the people
probably $6-7 million. What I am concerned with
is the different taxes imposed by the federal
government. It was laid down in the Black Books,
on which I received communications and
answers to questions making inquiry as to the list
of all the items coming under federal sales tax;
also regulations in respect of transportation tax. I
got the information and I have been informed
what items are covered by the excise tax of 1947.
During the Christmas recess, I applied the
general sales tax to all imports coming into Newfoundland in the fiscal year 1946-47.
I may be in
error, if so I will gladly admit it; if I am right, I
ask members to admit it. I am not intending to
quote all these taxes. Hams, salt beef, etc., sales
tax would be $369,000. You have canned beef
and other products, sales tax $65,458. Tea, sales
tax $81,366. On confectionery, $52,000. All
these are federal taxes; they go up the river.
Boots, clothing, rubber boots, etc., $78,000.
Tobacco, cigarettes, plug or pipe tobacco,
$102,000. And so on the sad story goes. The total
I arrived at, based on ourimports of last year, was
$3,818,000. That does not take in local manufacturing, which I shall come to by and
by.
I have here the excise tax act of Canada and I
want members to turn to page 136 of the Black
Book, Volume 1. Beer — I have not computed
that. Malt -we imported last year 2,233,000
pounds of malt, excise tax, 16 cents per pound,
$357,341. Whiskey, 45,461 gallons. In the past,
January 1948 NATIONAL CONVENTION 1051
we imported $31 million worth of goods from
outside Canada. It has been assumed that would
be reduced to one-third. l have transferred one-
third of the imports to Canada, making a total of
36,960 gallons of whiskey, $11 excise tax,
revenue to the federal government — $406,000.
Whiskey will give the federal government a
revenue of $100,812. But the importation of gin
has been alternating. The excise duty of $11 per
gallon will give a revenue to the federal government of $18,084. Now the other item,
rum. We
imported last year 123,740 gallons at a value of
$284,574. The importations of Canadian rum
amounted to 1,271 gallons, and if you add one-
third of the other imports you will get 42,096
gallons. If you impose the excise duty you get a
revenue to the Canadian government of
$463,056. Other imports of rum will give a
revenue to the Canadian government of
$989,728. Brandy imports would give a revenue
to the Canadian government of $9,459. Other
imports of brandy $24,876.
Now tobacco, firm pressed and manufactured,
total 149,041 pounds, multiplied by 77 cents per
pound, which is the duty, will give us a revenue
to the Dominion government of $114,761. Other
tobacco imports 157,000 pounds, import duty $1
per pound, will give us a revenue of $157,000.
On top of that there is an excise tax of 2 cents per
ounce. Now we have Newfoundland manufactured tobacco — 773,000 pounds; under federal
union at 77 cents per pound, it would give the
federal government $595,000. The duty on raw
leaf tobacco is 20 cents per pound, will give a
revenue to the Canadian government of
$300,000. Last year we had an import of cigarettes of 545,860 pounds, a total on imported
cigarettes of $1,402,551; and to that must be
added an import tax on cigarettes which will be
$568,000. Now then, we have our local manufactures. Last year we manufactured 159,962,000
cigarettes. The excise duty of $6 per thousand and
excise tax of 2 cents per pound equals 1 cent on
each cigarette, which will give a revenue to the
Canadian government of $1,589,620. Cigar imports: that will give a revenue to Canada
of
$30,846.
Letters and post cards, you will see in the
Black Book, 2 cents in addition to postage.... If
we leave it at $100,000 I think I would be fair.
Mr. Cashin As a matter of fact there is extra
taxation put on in the last six weeks that is not
included in that at all.
Mr. Fogwill Motor trucks and buses, total tax,
$135,305. Tires, cycle tires, truck and auto tires,
$17,980. Chewing gum, $25,385. Confectionery,
a federal tax of $246,069. Soft drinks, Newfoundland manufacture, 16 million bottles
—
$360,000 for soft drinks, manufactured in Newfoundland, and this can go to the federal
government. Cameras, $1,891. Rolls of film and packs
and photographic apparatus, total tax $52,052.
Carbonic acid gas, which is used to make soft
drinks, will be a tax of $104,044. Cigarette
papers, tobacco pipes, tax will equal $29,541.
Furs, the tax will be $15,644. Fountain pens and
pencils, the tax will be $14,013, Matches — the
tax on these ordinary matches that we use every
last day will amount to $82,319. Radio receiving
sets and tubes, the tax will amount to $29,955.
Photographs $971, playing cards $9,439, slot
machines, phonographs, the tax will amount to
$12,132.
Toilet preparations $64,533. Glucose, $7,060.
Suitcases, bags and trunks, $12,103. Toilet soaps,
$5,511. Champagne, $1,390; wine, otherwise,
$10,729. Amusement tax, 20% on admission
price. I visited the municipal office and found
they are collecting approximately $50,000 a year
on a 10% tax, and the federal amusement tax is
20%. I figure in St. John's we will collect a tax
of $100,000, and in the rest of the country another
$100,000.
Mr. Fogwill It must be recently. Telegraphs and
cables, the tax amounts to 7 cents on each message. The total number of messages issued
and
transmitted in Newfoundland in 1946 amounted
to one million, which will amount to $77,000, and
that will go up the river too. Then we have a 3%
tax on imports.
Mr. Hollett I would like to get that other question straightened out. Mr. Smallwood said the
amusement tax was abolished. Have we any
proof of that?
Mr. Hollett Mr. Smallwood said it was abolish
1052 NATIONAL CONVENTION January 1948
ed and I want to know when it was abolished. I
am very interested in these figures.
Mr. Fogwill Well, I am interested now that you
bring up the point. When was it abolished, Mr.
Smallwood?
Mr. Smallwood The taxing of amusements was
done by the provinces and during the war by the
federal government, and now again by the provinces. That was one of the causes of
the dispute
between Premier Angus MacDonald and the
provinces about the tax agreement, and he would
not sign until the federal government decided to
hand it back to the provincial governments. He
would not sign until it was settled.
Mr. Smallwood I can't tell you the date of it.
Send a letter to the provinces if you want to know.
Forget it.
Mr. Fogwill If Mr. Smallwood is deliberately.
trying to break up the harmony of the house he is
not going to succeed as far as I am concerned.
(Cries of Hear! Hear!) Tax on imports. I have
applied the Canadian customs tariff to several
hundred items of Newfoundland imports and I
have arrived at the conclusion that the average
rate will be 15%, and 15% on $20 million, on all
imports except spirits and tobacco, which I have
done separately, are $19 million, Because of the
fact that I have taken some out, the excise on all
imports will amount to $600,000.
Transportation tickets. On the basis of the
tickets sold by the Newfoundland Railway,
which I believe was $6 million, and taking into
consideration the hire of buses and other means
of transport in Newfoundland, and the tax on
airways on people leaving Newfoundland, and on
water transport, I have concluded that the figure
of $400,000 is reasonable.
On clocks and watches I figure there will be a
tax of $36,064 collected; on jewellery and plated
ware, a tax of $49,478, and on ornaments a tax of
$2,481.
Mr. Fogwill All these excise taxes are commonly called luxury taxes.
Mr. Fogwill No, I won't. Well, Mr. Chairman,
I am prepared to challenge any one member of
the Ottawa delegation on the figures which I have
here. I did suggest before the Christmas recess
that we should have a committee going to work
on these taxes, and it was not accepted with very
good grace by the members at that private session. We had several answers to questions
by
members of this Convention, and even before the
Christmas recess I thought to myself that what
information we had at that time was all the information we were going to get, and
that's why I dug
down to try and get the facts myself, so that the
people of this country would know the facts of
the taxes they would have to pay under confederation. I have a total of excise taxes
and
excise duties of $7,916,000, and I have got to add
to that the excise duty on imported cigarettes,
which is $568,000, which makes $8,484,000.
Customs duties I have laid down $5,544,000,
sales tax local —in Newfoundland we have quite
a lot of local production. For instance we have
beer and tobacco and soft drinks, and those three
items, Mr. Chairman, amount to $4,334,000.
Then we have canned codfish, salmon, lobster,
rabbit, berries, pickles, jams and jellies, sweet
biscuits, etc., all comes under sales tax, and
household furniture, boots and shoes, soaps,
vinegar, confectionery products, lime juice and
fruit syrups etc.; newsprint etc. is free from sales
tax I agree, but the newsprint used here in our
printing offices is not free from sales tax. Head
stones and monuments, except for war veterans,
rope 1/2" in diameter, which is 1 1/2" in circumference.
Now, I did ask Mr. Smallwood a question
when this debate first started, whether fishery salt
was subject to sales tax. I believe now that it is,
and if so it means over $40 million which the
fishermen will have to pay on salt to process fish.
I think you will find that fishery salt is subject to
sales tax.
Mr. Fogwill I have laid down $3,818,000 to post
office revenue. Our estimates for this year in post
office revenue in the government estimates is
$1,700,000. I don't think it is reasonable to think
it would be reduced more than 40%, so I have laid
that down at $1 million. I have a total of sales tax
and miscellaneous taxes of $20 million. The
Canadian government estimate of the same is
$9,150,000. I have a difference of $10,896, and I
am prepared to challenge any one member of the
Ottawa delegation on these figures.
Mr. Higgins I did not quite get all the figures,
January 1948 NATIONAL CONVENTION 1053
Mr. Fogwill. Do you mean to say that you are
only taking now the excise tax and excise duties,
and the general customs duties? Is that what you
are adding up that figure on, and if so would you
give us the total figure of $30 million, I think it
was?
Mr. Fogwill The total figure I have is $10 million different from the Canadian government estimate.
In other words, $10 million higher. $30
million would go up the river.
Mr. Hickman That would be all federal taxes
instead of provincial?
Mr. Fogwill On that score, if these figures are
correct — they may not be — I am prepared to
back them up — in addition, there are some
increases in income tax which I am not competent
to assess. Then you have provincial government
tax which we have heard so much about these last
few days. It is estimated at $59 million. In addition, the increase in income tax
will probably
bring up taxes to $36-37 million separate and
apart from corporation tax, which may remain
substantial as it is now.
Mr. Higgins Your figures do not include income tax at all?
Mr. Smallwood I wonder, would Mr. Fogwill
mind telling me his basis for the figure arrived at
of $400,000 through the travel tax he thinks the
Government of Canada would get from Newfoundland? He says he applied, I believe, 15%
on
the actual value of tickets sold by the Railway last
year; is that what I understand? And he found out
the value of tickets sold on steamers and trains
last year, and having got the value of that he
merely applied 15% to that value sold by the
Railway last year?
Mr. Fogwill I applied it to your own Transportation and Communications Report. I did not
apply 15% tax to sleeping berths or parlour car
seats. I applied it to the amount of tickets sold by
the railway and steamers.
Mr. Smallwood I think we have it fairly clear
now. The Newfoundland Railway charges certain rates for passenger fares on trains
and boats.
I believe on trains it is 5 - 7 cents a mile. In
Canada, when you buy a ticket on a train or plane
or any kind of transport, besides the amount of
the ticket, the railway or airline collects 15% tax
from you, which they pass back to the Canadian
government. The fare and the tax, together,
comes to 3 1/2 cents a mile. If that is true, confederation would mean this: with
our transport
system operated by the CNR, and with the rates
being charged, we would pay 15% travel tax
when we buy the ticket and that tax and the fare
would come to 3.5 cents a mile, where now we
have to pay 5-7 cents a mile. If Mr. Fogwill would
take the total value of tickets sold last year by the
Railway, deduct from that what would have been
paid at the Canadian rate, then add 15%, instead
of $400,000, it would be half. He can cut that in
half. On top of that, our people would be
hundreds of thousands of dollars in pocket by
getting cheaper travel.
Mr. Higgins I think Mr. Fogwill's point was
merely the additional monies the federal treasury
would get, not the question of rates being
cheaper.
Mr. Smallwood Why not take the value of tickets and apply the Canadian rate to it?
Mr. Cashin Why was not the value of tickets
sold in Canada put in the report?
Mr. Smallwood It is not an Encyclopedia Brittanica — Eaton's Catalogue is not in it; Simpson's
is not in it. He estimates the Canadian
government will take $20 million in taxes. One
of the items he takes is travel tax, $400,000. I
asked him how he arrived at that figure. Now he
says, "Cut it in half."
Mr. Smallwood He said he added 15% to the
value of tickets sold last year by the Railway. But
that value was Newfoundland value — these
were rates charged by the Newfoundland Railway. The Canadian government is not going
to
take 15% travel tax from us unless we become a
province, and if we become a province, one of the
conditions would be that the rates charged on the
railway would be the CNR rates.
Mr. Smallwood 3.5 cents a mile, including tax,
as against 5-7 cents in Newfoundland. Mr. Fogwill says, "Cut it in half", and you
would collect
$200,000.
Mr. Fogwill I did not compute sleeping car
berths at all.
Mr. Smallwood All that boils down to is you
pay 15% on travel tickets and 15 cents for berth.
1054 NATIONAL CONVENTION January 1948
Mr. Smallwood All right; if Newfoundland railways become CNR and you have to pay less than
half what we are charged now, if you can get a
berth for half what we are paying now, you will
be glad to pay 35 cents tax. You are still saving
dollars and dollars. The other question is, Mr.
Fogwill has compiled a lot of figures with great
industry — I know what it is to pore over documents for hours and he must have worked
hard.
He has prepared a table showing to his own
satisfaction where the Government of Canada
would take from us $20 million. One of the
figures he has to make up that $20 million is
completely wrong. Another basis for his computation is, he figures the average Canadian
duty
as being 15% as applied to Newfoundland. Let us
agree, for the sake of argument that that is correct.
I think I know his reasoning, and there is a certain
amount of common sense there. In Canada, the
average is 10%. That is because of the large
quantities of raw materials transported to go into
their industries, which beings it down to an overall rate of 10%. Whereas, in Newfoundland,
we
have mostly consumable goods coming in.
Mr. Smallwood It may be 17% or it may be
12%. I think that is a nice job for some Customs
man to work out; I doubt my ability to do it and
Idoubt Mr. Fogwill's ability to do it. He has made
a stab at it. I agree it would be more than the
average in Canada, which is 10% and in Newfoundland 25%. Under confederation it would
be
something over 10%. Mr. Fogwill insists it would
be 15%. I daresay if Mr. Howell were assisted by
some of his officials and were to spend several
weeks, dropping everything else, they may be
able to work out the figure for us.
Mr. Smallwood He says 15% the Government
of Canada will collect on all goods we get in from
countries other than Canada. He is on reasonably
safe grounds there. What grounds has he for
saying only one—third less would come into Newfoundland from countries other than
Canada
under confederation?
Mr. Smallwood No. We had quite a debate on
that, Mr. Crosbie and myself. That is what they
have not done. I pointed out in the debate, the
total amount the government collects is 4.28%. I
said two millions is actually 10% of twenty mil
lions. That was my estimate, not the Government
of Canada's. Mr. Fogwill applied Canadian tax
to our imports — to what they were before confederation. He applied the Canadian rates
to two-
thirds. I quarrel with that.
Mr. Fogwill I applied the Canadian taxes to
3-400 items and I arrived at 15%. If you want to
refute it, get down and try and work it out.
Mr. Smallwood It would be more than 10% but
far less than 25%. What has he done? The average
duty he says is 15%. What is he collecting 15%
from? Two possibilities — (1) To collect 15%
from all the imports shown in the Blue Book--except from Canada. (2) In theory, he
could es»
timate how much goods, under confederation,
would come in from Canada; then apply 15% to
the goods coming in from countries other than
Canada. He has made an estimate. He says we are
collecting "X" amount of goods from the world;
so much from Canada, and the rest from the rest
of the world — two-thirds.
Mr. Fogwill We are talking about the average
tax. Take rum — we imported last year 123,740
gallons. Under confederation we would have to
pay $12 per gallon — right there you have 400%.
What are you talking about?
Mr. Smallwood I object to the little elements of
sauce that Mr. Fogwill gets off. Let us take the
15% figure. What is he going to apply the 15%
to? He says 75% of what we are now importing
is from non-Canadian countries. Why not say
50%? How does he know it will be only one-third
of what we import from the United States, British
West Indies, the United Kingdom and the
Mediterranean? Of the total of all the countries
we are now importing from, not Canadian, how
does he know in the future what we will be
importing from Canada? Let us get down to brass
tacks. I am interested in this confederation. If we
become a province, no doubt there will be a
change in our trade. Goods coming in from
Canada will be duty free; and if you can get the
goods from Canada, will not more be bought
there rather than from other countries when you
would have to pay duty? You will buy as much
as you can from Canada, if Canada has it to sell.
You cannot buy what she has not got. In some
cases you may buy from other countries and pay
the duty and still save money, compared to what
you would have to pay in Canada. There will be
cases like that. What these cases are, I do not
January 1948 NATIONAL CONVENTION 1055
know. The United States is famous for producing
certain kinds of products; the United Kingdom is
famous for producing other kinds of products. If
we become part of Canada, we will be importing
all we can from Canada. On the things we import
from the United States and the United Kingdom,
we will pay Canadian rates of duty. But what I
would like Mr. Fogwill to tell me is how he
figures customs duties on what we will import
from countries other than Canada; how does he
know what we will import from other countries
under confederation?
Mr. Fogwill I do not know any more than you
do. I know what we are importing now.
Mr. Fogwill Page 123, Volume 1, of the Black
Book, there is a chapter on indirect taxes. On that
point we, in this country, import most of our
clothing, food and machinery from abroad. Last
year we imported from other countries, apart
from Canada, $31 million worth of goods. I have
assumed that our imports will be reduced from
other countries other than Canada, and I have
assumed that the figure of $20 million will be
reasonable After all, we have got to sell our
produce in the world. We have got to sell it to
England and Spain and Italy, and to Portugal and
the West Indies and the United States. Surely
goodness, you can't expect Newfoundland to sell
all her goods to other people and import all her
needs and wants from the mainland of Canada.
We can't expect to sell everything to other people
and import everything from Canada. I think our
reasonable imports from Canada would be $20
million.
Mr. Smallwood Now we are getting somewhere. Last year we imported $30 million worth
from other countries, and $40 million from
Canada, was it?
Mr. Smallwood No, from the latest book, what
is the figure Mr. Fogwill'?
Mr. Smallwood That's as it is now. Now under
confederation. On the $43 million worth of goods
we imported from Canada, we paid customs duty
on some of them, and some came in duty free.
Well, all goods will come in duty free if we are
into confederation.
Mr. Fogwill It won't all come in duty free, it will
be
customs duty free.
Mr. Smallwood Yes, import duty free. What we
usually call customs import duty, ad valorem and
specific rates when they come into the country.
There will be none of that on goods coming in
from Canada. On that $43 million that we brought
in last year, or $86 million if you like, it will be
without paying any import duty. Mr. Fogwill says
when he was working out this table, "Yes, that's
true, therefore as everything would come in duty
free, we will bring in more than we have in the
past", and he begins to figure how much more.
He says, "Last year we brought in $30 million
from the rest of the world, I wonder how much
we would bring in under confederation?" He says
he will lop off $11 million. He says we will bring
in $20 million from the rest of the world, and $1 1
million of this $31 million we will bring in from
Canada. So that it will be this: $54 million we
would bring in from Canada, and $20 million
from the rest of the world. Now what I want to
know is, and he has based his table on that 50%
and the $30 million, what I want to know is this:
is that a guess, and if so, is it based on something
fairly concrete? Because I will confess that I am
absolutely stumped when I come to try and figure
exactly what the proportion of these imports
under confederation will come in from Canada,
and what proportion will come in from the rest of
the world. I am not sufficient of a trader, I don't
know the trade of this country. I can't, for instance, say, "Microphones, where do
they come
from — Canada or the United States?" I can't say
whether it would pay to bring them in from the
United Kingdom, or Canada or the United States.
I don't know enough about the trading practices
of our country. I doubt if Mr. Fogwill does. He
says last year we brought in $31 million worth
from the rest of the world, but under confederation it will be $20 million. How does
he get that?
Otherwise we can't accept his figure. How does
he arrive at that?
Mr. Fogwill I am not asking anybody to accept
it. I have done these figures for my own personal
information, and I don't have to prove it to you
or anyone else; but it is on this that I will make
up my mind in this Convention, and not on what
anyone else is going to say.
Mr. Smallwood Mr. Chairman, he is perfectly
entitled to do that, but when he brings in figures
and lays them before us in this Convention, he
goes beyond the point of doing them for his own
1056 NATIONAL CONVENTION January 1948
satisfaction. In my consideration of it, I am merely asking the perfectly reasonable
question: how
does Mr. Fogwill figure, how does he estimate
that if we imported $31 million from the rest of
the world with no confederation,
under confederation, with everything coming in duty free
from Canada, how does he figure that we will
bring in $20 million from the rest of the world?
Mr. Chairman I think the point is well taken by
Mr. Fogwill. I know that I never advance an
argument in the Supreme, or any other court, until
I am satisfied myself that the argument is as it
should be. Having satisfied myself, then I endeavour to try and satisfy the judge
and the jury
that my argument is sound. Mr. Fogwill has
broken down these figures, and assigned certain
reasons, and in the course of his observations, if
I understood him correctly, he stated that from
that $31 million imported from countries other
than Canada last year, his estimate would be,
having regard to the type of article, where it
comes from, etc...
Mr. Chairman Well, he estimates that the $31
million figure, having regard to all these circumstances, would be $20 million.
Mr. Chairman You may think it is unscientific,
but he says it is to his satisfaction, and I presume
that is as far as he wishes to go.
Mr. Smallwood Not quite. His act of giving us
these figures implies that he wishes us to consider
these figures. Every man who stands up here, he
naturally expects that his remarks are going to be
analysed and broken down and examined. The
net result of his speech is that he disagrees with
the Government of Canada. He doubles it, and
surely it is fair to ask Mr. Fogwill to explain the
basis of his argument. At one point he has explained it. He is taking 15% average
duty coming
in from other countries than Canada. OK, we will
accept that. He is not far out, but we will say it is
15%. Now the next question is, so that he can
build up his table, what will the Canadian government collect that from? How much
other imports
apart from Canada? So Mr. Fogwill lops off $11
million, and still says we will import $20 million
from countries other than Canada, and from that
he collects 15% duty. I am asking on what basis
does he figure that the trade of this country, under
confederation, will change to this effect ... that
where we imported $31 million from countries
other than Canada, we will now import $20 million What is the basis of that estimate?
If he is
not prepared to tell us, for instances if he were to
admit that it is a pure flat guess, his whole table
comes tumbling doWn, On the other hand, if he
says it is worked out realistically, the best country
to get this and that from, and that there we could
definitely import $20 million, then he is in the
right. How can he do that?
Mr. Fogwill Mr. Chairman, I don't have to
prove it, but I have been here 45 years, and in fact
I know some of the people's taste, and a lot of
people in this country like to wear English
clothes, and like to use Spanish goods, or
Portuguese goods...
Mr. Fogwill They like to use things that are not
entirely manufactured in Canada. American
cigarettes for instance — some people smoke no
other. I won't be able to smoke at all if they get
them from Canada I don't see the point of Mr.
Smallwood asking me the basis on which I express the opinion of $20 million imports.
I don't
see the point, and I think it is only labouring this
debate and has no purpose at all.
Mr. Fogwill I know you have something in
mind there, but I am not going to be caught. I
don't care personally if Mr. Smallwood wipes out
the $20 million, and says that everything we
import will come from Canada. It will only make
a difference of $2 million in the total, because the
general sales tax will be applied to the great
majority.
Mr. Cashin Mr. Chairman, before I proceed
with my remarks in connection with this proposition now before the Chair, I want to
express my
congratulations to my friend, Mr. Fogwill, for the
effort he has put into building these various statistics. With regard to Mr. Smallwood's
request,
asking him to give some concrete basis for his
estimate, we have witnessed in this House, since
this thing was placed on the table six weeks ago,
January 1948 NATIONAL CONVENTION 1057
that the Ottawa delegation themselves have not
been able to explain one figure of what is contained in the Grey Book —
not one figure.
Now Mr. Chairman, in rising to make a few
remarks on this confederation issue now before
the Convention, I must confess that I do so with
a sense of some discouragement and even disappointment. For when I consider the political
situation which exists in Newfoundland today,
the bewilderment which has been created in the
minds of some of our people, the disgust and even
the bitterness in others, it proves to me beyond all
doubt that far more harm has come out of this
Convention than good. It tells me that neither
myself nor any other delegate can take any great
pride in the position we have helped to create. It
is said that sometimes good comes out of evil, but
such has not been the case of this Convention.
When I look back over the long period that we
have spent in fruitless discussion, wasting our
own time and the people's money, in trying to do
something which we should not have been asked
to do — in allowing ourselves to be diverted into
this political cul-de-sac — I honestly feel that we,
all of us, owe an apology to the people who sent
us here. For months, I think about 16 months, we
have been engaged in what I regard as a wasteful
task of finding out the economic condition of this
country, when the truth is that we could have been
told every last detail concerning our financial and
economic condition on the very first day this
Convention opened its doors.
For months we have been squabbling over
matters which have already been decided by
those who control this country — seeking solutions to questions, the answers to which
were
already stored away in the files of some government office. But even more regrettable
than the
useless friction and bad feeling which has been
created in this Convention, is the manner in
which this present set-up has affected and upset
the temperament of the people of the country.
This mock parliament, it is obvious, has spread
its harmful influence of political controversy to
every town and settlement in Newfoundland.
Through the government radio broadcast the
people have been invited, even encouraged, and
given ringside seats at this political burlesque.
And, like the spectators at any street brawl, they
have been infested with the spirit of animosity,
argument and abuse which has been broadcast
from this very chamber. What isthe result? It is
that which I forecast on the first week this Convention assembled. Settlement is divided
against
settlement, district against district, neighbour
against neighbour. Everyone has been infected
with his own particular political ideas, irrespective of whether they understand what
they are
talking about or not. I say, Mr. Chairman, that this
was the preconceived idea of the United
Kingdom government and the Commission
government, when they jointly brought about this
Convention idea.
Now Mr. Chairman, this setting of our people
at one another's throats is one of the things for
which those who have set up this stupid Convention should never be forgiven. There
is no excuse
for it. But what makes this even worse is the fact
that there are indications, strong indications, that
the whole thing was deliberately planned to create political disorder in our country,
to muddle
the people's minds with a hotch-potch of ideas.
And this, remember, in the case of a people which
has been kept in political ignorance for 14 years.
To expect them, the average man or woman in
this country, to understand and separate the
qualities attaching to such varied forms of
government as responsible government, Commission government, confederation with Canada,
union with the United States of America and what
have you — to expect I say, our people to have a
knowledge of these forms of government, to understand the multitude of debatable issues
which
go with them, to be able to say to what extent we
would benefit or suffer by attaching themselves
to any one of them — I say, to set this Convention
and the people of the country to such a task, I
regard as being inspired either by a sense of
stupity or with the deliberate desire of injuring us.
To repeat what I have so often stated before: was
there ever such a farce perpetrated on an innocent
people? It is my personal opinion that it is all
simply the working out of a shrewdly conceived
plan. First Newfoundland would be divided
politically, and then it would be destroyed politically.
I remember I was one of those who went on a
wild-goose chase with a delegation to England,
half expecting that we would be able to do something on behalf of the people. But
when I look
back now, my feeling is that if I were a wealthy
man I would repay to the treasury of this country
1058 NATIONAL CONVENTION January 1948
the amount which our trip cost the taxpayers of
Newfoundland. I would regard it as conscience
money. Because the fact is that that delegation,
in addition to being coldly received and treated
as children, was simply wasting the people's
money, and I am now convinced that the same
situation applies in the case of the delegation
which went to Ottawa this past summer. What did
we get for that three month trip? What have we
got, I ask, to justify hanging up this Convention
for more than 100 days? What have we got to
justify the spending of around $30,000 of the
people's money? As far as I can see, all we have
got for all this is two books with black covers and
another one with a grey cover. And as far as they
are concerned, it is my opinion that you could go
into any bookstore in Ottawa and for about a
dollar get a book containing the Canadian facts
and figures. The Newfoundland part of the book
could have been obtained locally for the expenditure of another 50 cents. Yet, the
three books in
question cost us nearly $30,000. Why Mr. Chairman, if the collectors of rare books
knew that we
were in possession of such valuable volumes,
they would come running to have a glance at
them. You wouldn't have to pay that amount for
a first edition of Shakespeare.
But these famous books we are asked to regard
as containing the terms upon which Canada
would be prepared to adopt us. Of course they are
not called terms. That seems to be a dangerous
word, and they are called proposals. The Ottawa
delegation, by the way, was neither entitled to
negotiate nor to arrange terms, but it is quite
obvious that they have done both these things.
Now my first impulse, and that of many other
delegates to this Convention when these terms
were introduced here, was to have nothing to do
with them — to throw them out the window for
the worthless things they were. But we did not do
this, for the simple reason that if we did, some
people might think that we were trying to hide the
wonderful offering which Canada was making to
us. Or they might think we were afraid to discuss
them. They might think we were afraid of the
effect they may have on our people. But sir, it was
not for these reasons that I did not favour them.
My attitude was then as it is now, that the contents
of these books were worthless, for the simple
reason that they only give us half the story, they
are half-truths, what they tell us is what the
pro-confederates want us to know. I condemn
them because the information they should give us
is not to be found, because the things we should
know are kept from us, because the estimates
they contain are the wildest kind of guesswork,
because the figures in these estimates are false.
Because, in a word, these three books represent
the biggest fraud that was ever perpetrated in the
history of our time.
I am not going to weary you by dealing in
detail with the contents of these Canadian
proposals. For there is not an item, not a figure
which is not open to correction, criticism and, in
many cases, suspicion. Let me give you an example: when I received my copies of these
books,
the first thing I set out to look for was the present
Canadian national debt. I felt that if we were to
go into partnership with Canada, it was proper
that we see how our prospective partner stood
financially. I therefore went through the books,
page by page, from cover to cover and from
beginning to end. And did I find what I looked
for? I did not, because it was not there. It had been
left out. I asked myself why it had been left out.
I became suspicious. I concluded that it must be
in the interest of the pro-confederates to leave this
out, or it would be there, lined up with all the
other attractive items. Well, I finally did dig it up
in another way. I got it by discovering that the
Ottawa delegation had brought home other documents which they had not produced, some
of
which, I understand, were labelled "secret" in big
red letters. It would appear that the people of the
country were not supposed to know about these
secret documents, even the Convention was not
supposed to know about them. But murder will
out, and so what I looked for, I found. I found
that, according to this secret information given
the Ottawa delegation by the Canadian government, the total federal debt of Canada
amounts to
over $18 billion, or a per capita debt on every
man, woman and child in Canada of $1,492.
From information taken from the Report of the
Auditor General of Canada, we find that the total
interest charge on Canada's national debt is close
to $450 million annually, or at the rate of $35 for
every Canadian. But just compare this with our
own country's finances. Our national debt is
roughly $70 million as against Canada's $18
billion. Our per capita debt is $213 as against
Canada's $1,492. Our total interest charge,
January 1948 NATIONAL CONVENTION 1059
together with sinking fund payments, is
$3,375,000 or slightly over $10 per head, as
against Canada' s $35 per head. Therefore we find
that the difference between the national debt of
Canada and that of Newfoundland on a per capita
basis is approximately $1,200 in excess of ours,
which means that if Newfoundland were to become a Canadian province upon the terms
offered
us, our country would have to become responsible for this extra debt, which would
amount to,
in all, nearly $400 million as Newfoundland's
proportionate share of the entire debt of the
Dominion of Canada. It would mean that every
man, woman and child in Newfoundland would
pay in annual taxes, directly and indirectly, about
$230 instead of $120 which is our present per
capita tax annually. In all, the people of Newfoundland would have to pay an additional
$38-
40 million each year in taxation.
But that is not the worst of it. Canada, we are
told, in the event of confederation will be generous enough to take over our sterling
debt, which
amounts to approximately $64 million. On the
face of it, this would look like Canada was giving
us something for nothing, but in actuality it is
nothing like that. It means that for this $64 million Canada will buy Newfoundland
— our railways, public buildings, wharves, lighthouses,
telegraph system, docks, steamers and harbours,
everything for a paltry $64 million. Why, Mr.
Smallwood himself gives the Canadian government the valuation of our railways and
its subsidiaries, just one item, as being $72 million. If
ever there was a one-sided bargain, this is it. If
ever there was a pig-in-a-bag transaction, this is
it.
And speaking again of our railroad, these
Canadian proposals make much of the deficits
incurred by our Newfoundland Railway. But they
say nothing about the losses incurred by the
Canadian National Railway system. Now,
anyone who knows anything about the history of
the Canadian National Railway system, operated
by the Canadian government, knows that they
have been a continual political headache. They
have lost and cost Canada not millions, but billions of dollars. True, the Newfoundland
Railway
has cost the country a deficit each year since it
was taken over by the government in 1923 at a
cost of $2 million. Now, when the Ottawa delegation were discussing this railway matter
with the
Canadian government, it would appear that they
did not ask any embarrassing questions about the
Canadian National Railways — what they had
cost the taxpayers of Canada, or what was the
average annual loss sustained. Although we have
not this information officially, it is general
knowledge that the Canadian National Railways
originally cost the Canadian government in the
vicinity of $1 billion and they have cost the
Canadian taxpayer uncounted millions since it
came under government control. Indeed, it is a
matter of record that the Canadian government
actually defaulted on the preferred stock out.
standing by the Grand Trunk Railway system
when the government took it over — which action, by the way, caused great concern
and displeasure to the English investors holding these
securities amounting to millions and millions of
dollars. Incidentally, with regard to the CNR and
CPR, it was a story of graft from beginning to
end. The directors looted the Bank of Montreal
in order to finance the CPR and then went to the
Prime Minister and asked him to keep them out
of jail. They told him the story of what they had
done to complete the transcontinental railway.
The CNR was taken over in 1919 or 1920.
Originally, a great portion of this system was
called the Canadian Northem Railway, the construction of which was begun by two Toronto
financiers, Mackenzie and Mann (Bill and Dan),
who received vast concessions from the
Canadian government for the purpose of building
another line across Canada. They operated this
system for a short period and then got into financial difficulties. In addition, the
Grand Trunk
Railway and the ICR got into difficulties. These
two systems were operating in the eastern part of
Canada. Why I mention this, sir, is because we
have been told by Mr. Smallwood that the Newfoundland Railway is nothing more or less
than a
heap of scrap. Well, I wonder what Mr.
Smallwood and the Ottawa delegation thought of
that part of the Canadian National system that
runs from Sydney to Truro. I tell you, that from
what little knowledge I have of railroading, that
this particular part of the system is a disgrace to
Canada. I will go further, its rolling stock, its
roadbed and its general administration are most
inefficient. I have travelled from one end of
Canada to the other — take the Prime Minister's
own constituency, the line from Moose Jaw into
1060 NATIONAL CONVENTION January 1948
Prince Albert. I would like the Ottawa delegation
to have a look at that and then come back to
criticise our own. Then if we take the whole
Canadian railway system, we find that the roadbeds from the Atlantic to the Pacific
have been
overtaxed, particularly during the period of
World War Two, and like our own Newfoundland Railway which is now being reequipped,
the Canadian systems require
hundreds of millions of dollars capital expenditures in order to put the roadbeds
and rolling
stock in proper shape. Again, I say, it would be
interesting to know also, what the deficits of the
Canadian National Railways have been since
1919, what capital expenditures have been incurred on them, and then compare these
deficits
and capital expenditures on a per capita basis
with similar ones on our own Newfoundland
railway system. I venture the offhand opinion
that our own Railway, with its various subsidiaries, has been operated on a more economic
basis than those of the Canadian National system.
These are matters on which the Ottawa
delegation should have been informed during
their three months' stay at Ottawa. But it appears
to me that instead of this delegation meeting the
representatives of the Canadian government on
equal, if not superior grounds, that they approached the Canadians in a more or less
subservient manner. It would appear from information
dragged from Mr. Smallwood during the course
of this long and somewhat tiring debate, that the
Newfoundland delegation to Ottawa went there
not as representatives of a proud and independent
people, but rather did they talk as a delegation
from a bankrupt country and a pauperised people.
Mr. Cashin You did not ask them anything
about their own affairs. You tell us nothing about
the CNR. I want to know what is behind their
money. Before we go into partnership, we have
to know what is the standing of the Bank of
Canada at the present time.
With respect to this railway situation, the point
which concerns our people is, that should we go
into confederation we will have to shoulder our
share of the losses incurred by the Canadian
National system. How much greater this will be
than our own, no one can tell us, not even Mr.
Smallwood. You will not find Mr. Smallwood
telling us anything about such drawbacks. Are
these important particulars contained in either of
the Black Books or the Grey Book? Not at all!
Mr. Smallwood has everything painted a rosy
pink. He apparently ran out of all his black paint
when he was trying to smear up our Economic
Report and our Financial Report.
There is mention made of the Newfoundland
Airport which was bought by us from the
Canadian government at a cost of $1 million. We
are, it seems, supposed to throw this into the
Canadian jackpot as a present to Canada. Here
again is a case of our being deprived of a possible
source of future income. This airport is valuable,
not alone because of its commercial possibilities,
buteven more so because of its strategic position.
And it is my firm conviction that, properly
operated and properly managed, it could be a
source of permanent national worth.
Again, this precious Grey Book tells us that,
under confederation, we will have to set aside one
third of our accumulated surplus, which would
amount to roughly $10 million, in trust with the
Government of Canada — to be used only, so the
orders run, only for expenditure on current account of the Province of Newfoundland.
The rest,
we are told, we can use in the development of our
local resources. But there is a string to this. We
must not, and we will not be allowed to use our
own money to subsidise our own sources of
production if they compete with similar
Canadian products. In other words, Prime Minister King says we will not be allowed
to assist
with our own money our fisheries, our forests or
such other Newfoundland industries. This we are
told we must agree with before we are granted the
priceless privilege of being allowed to call ourselves Canadians. Is not this, I ask
you, an example of unmitigated gall? For 14 years the
agents of the British government have been doing
what they like with our treasury, and now the
Canadian government proposes to step in and do
the same thing. In short, we are asked to exchange
one form of dictatorship for another. Miss Newfoundland seems to be in a position
of a wealthy
heiress these days, who is being wooed, and the
matrimony business seems to be a matter of
money. Let us look a little closer at John
Canuck's proposals: let us see if he can keep Miss
Newfoundland in the style to which she is accustomed! Let us see what we can find
out about his
financial standing.
January 1948 NATIONAL CONVENTION 1061
Now, of course, it is no good in our looking in
the Grey Book or the Black Books for this information. But there are other places
we can look,
fortunately, and what we see there is not so good.
For instance, we find that in 1931 Newfoundland
had to go off the gold standard in order to save
the Canadian chartered banks from bankruptcy.
We know that Newfoundland depositors in these
banks lost some $20 million through the raising
of the price of gold in 1933, and that the central
bank of Canada made this large profit at the
expense of Newfoundland depositors. We know
that during World War Two, the same Bank of
Canada had the advantage of having the use of
hundreds of millions of American dollars spent
in this country, and though the people of Newfoundland made nothing, it is estimated
that the
Bank of Canada made upwards of $150 million
from such sources. We know that this same
Canada is at this very moment sending an SOS to
Uncle Sam for financial help, and that the
Canadian people are being forced to take the first
steps on the hard road of austerity, that road
which the people of Great Britain have travelled
so long. Is it any wonder then, that in view of
these things we fail to be able to see Canada as a
land of milk and honey, which Mr. Smallwood so
enthusiastically described and to which he wants
us to come? Is it strange that we feel like asking
such questions now, as what is the exact financial
position of the central bank of Canada? What is
the total of Bank of Canada notes now in circulation? What amount of gold is in reserve
as
security against this paper currency? In short, we
want to know, and I say we are entitled to know,
what is the actual financial position of this
country that wants us to go into partnership. We
want to know and we must know if Canada today
is a solvent country. Is she financially sound?
And we also want to know before we consider
union with Canada, what would become of the
$110 million in our local Canadian banks? What
would happen to the Newfoundland Savings
Bank and to the money of our Newfoundland
depositors in these banks and in Canadian bonds?
Incidentally, speaking of Canadian bonds, when
I took up the morning paper today, the first thing
I saw was that Canadian bonds had slumped a
couple percent. Canada's financial position
might not be so hot.
These are vital questions, Mr. Chairman. They
should be known to this Convention, to the
country and to the Newfoundland people. They
represent the very basis of this whole discussion.
But we do not know them. They are not to be
found in either the Grey Book or the Black
Books. I have asked these questions in this Convention, but as yet I have received
no reply.
Yesterday I received an evasive answer,
deliberately evasive. Mr. Smallwood has not told
us. No member of the Ottawa delegation has told
us anything about them. To all appearances, Mr.
Chairman, the Ottawa delegation has absolutely
failed in its duty, in not getting this information
for us while in Canada. Do they think, does
anybody think, that we Newfoundlanders are
going to allow ourselves to be dragged into this
sort of a transaction and buy a pig in a bag?
At the present time Canada is all out trying to
bank itself to the future on the Marshall Plan. If
the Plan does go through, it will mean expenditures by the United States for $67 billion
worth
of goods a year for European countries, and some
of these purchases will be made in Canada and
will be paid for in American funds to Canada. If
the Plan does not go through, none of us knows
what might happen.
Now, Mr. Chairman, in moving the adjournment of the debate, I might say with regard
to this
broadcasting — I want to make it known, as far
as having the debate broadcast or not, a lot of
people want to hear themselves over the radio. I
am not one of those. What talking I have done, I
have not gotten it gratis from the Newfoundland
Commission of Government over the radio.
[The committee rose and reported progress, and
the Convention adjourned]
