October 17, 1947[1]
Report of the Finance Committee:[2]
Committee of the Whole
Mr. Keough Before I present myself to the subject matter which is before us, I should like,
sir,
seeing that this is the first occasion on which I
have spoken since your advent to our midst, to
say a word of welcome to yourself.... It was a wise
choice that led to your selection, and it is with
considerable reassurance that we welcome you to
the Chair of this assembly. It is to a most important undertaking that you are committed,
to
preside with impartiality and with wisdom over
the deliberations of this House. The task to which
this assembly is committed is of much moment
to all the people. We are all little men sent here
to serve a great purpose. But because the purpose
is great, if we serve it worthily, some of the
greatness will descend upon us. But if we serve
this purpose unworthily, our names will stand
forever cursed, and our posterity will point to us
as men of little soul, who could not face the
supreme power of our faith when its challenge
came. I am quite confident that your guidance.
sir, will increase the measure of the illustrious
October 1947 NATIONAL CONVENTION 595
ness with which we shall serve the great purpose
to which we are dedicated. Notwithstanding all
the calumnies that have been heaped upon us by
those who have judged our work under bias, I
make the categoric statement that this Convention has functioned with advantage to
the people
of this island; and they have no doubt that in the
days of your chairmanship it will continue so to
function.... It is a moment of high destiny for
Newfoundland without equal since the first moment of our achieving responsibility
in government. In the crucial days that lie ahead, the people
of Newfoundland will be looking to you to guide
this Convention to the completion of its task with
despatch and with dignity. I offer you my sincere
wishes for your success in that endeavour, and
my assurance of full co-operation.
There is one other thing that I should like to
add. In the manner of his chairmanship, Mr.
Bradley can well afford to wait with equanimity
for the verdict of history, and undoubtedly the
most charitable thing to do about the incident that
provoked his resignation is also to wait for the
comment of history. The fullness of time has a
way of arriving at conclusions into which the
emotionalisms that harry in the heat of the day do
not enter. And I feel that could he but foresee it,
Mr. Bradley would find much cause for satisfaction in the verdict which history will
pass upon
his chairmanship. For purposes of such record of
the incident on Friday, October 10, which may be
preserved for the amazement of our posterity, I
should like to make the statement that throughout
the days of his chairmanship, Mr. Bradley did act
with impartiality, honour, and dignity — and that
he always had my confidence.
I was a member of the Committee responsible
for the report that is now before us. The report
makes a summary of what we did finally agree
upon as the facts of our national financial position. It could not be expected that
all the members
of the Committee would agree as to the personal
conclusions they would draw from the facts set
forth. So I have to say that I cannot subscribe
without question to the conclusion Major Cashin
intimated in yesterday's debate that he had come
to, namely, that the country is self-supporting
again. I regret that I have once again to voice in
this Convention a disagreement with Major
Cashin. I have a high regard for the Major, in
particular his consistency of purpose in pursuing
relentlessly the goal of responsible government
which he has set before himself. I say that in all
sincerity. I have always believed that when the
Major spoke he was calling a spade a spade,
according to his own lights. It so happens that I
have done exactly the same thing. And since our
lights have been different, our disagreements
have been inevitable. I would that it had been
otherwise.
I know that taken all in all. I have been a very
disagreeable person at this Convention, and in
consequence, I have come to be called everything
from a communist to a confederate. A confederate I gather is something that not even
the
grace of God could raise to the level of the depths
of degradation. I do think that attaching ulterior
motives to my actions has been rather uncharitable. I fail to see how insisting upon
the
importance of three square meals a day has made
me a communist, any more than insisting upon
hearing the terms of confederation has made me
a confederate, and in any case, irrespective of
what popular misconstructions may have been
put upon my views and upon my conduct, I have
the personal satisfaction of knowing that I have
always acted according to the dictates of my
conscience. If that has been improper, I prefer it
that way. And so I have come to the making of
this statement as a consequence of my examination of our finances and economy. What
I have to
say will not be well received, for it is not the
popular view. I know that again I shall be thought
of as seeking to further some dark design that I
am supposed to entertain. But a man should not
be turned aside from the statement of what he
believes to be true because he knows that he may
be misrepresented or misconstrued. This statement is as objective an appraisal of
our material
national position as I am qualified to make
Our first purpose here is to consider and discuss the changes that have taken place
in the
financial and economic situation of the island
since 1934. Before I pass on to consider such
changes, permit me to point out that there is
somewhat of a difference between the financial
and the economic. It is a difference of which
many appear to be unaware, or prefer to ignore.
At any rate, there is much confusion of the two,
with the financial being taken to indicate that our
economy is in good shape. Two examples will
serve to illustrate what I mean. Take the matter
596 NATIONAL CONVENTION October 1947
of our per capita debt. Every now and then a great
furor is made over the fact that our per capita debt
is comparatively lower than that of some other
countries. Thus the Finance Report notes with a
gleam in its eye or maybe with its tongue in its
check, that our per capita debt is $237, the per
capita debt of Canada is $1,387, that of Great
Britain approximately $1,900, and that of the
United States $1,853. So far, so good. But all that
is a lot of statistics, sound and fury signifying
nothing much in particular. Our per capita debt
has a certain significance when it comes to the
interpretation of our financial position. But the
fact that it is lower than that of some other
countries is of absolutely no significance as an
index of our economic power to provide for ourselves. Nevertheless, many Newfoundlanders
seem to derive some measure of economic assurance for the morrow from these facts.
That
comes very likely from the confused notion that
the average Newfoundlander is, in some mystic
way, better off than the average Canadian, because he has but $250 per capita debt
hanging
over his head, whereas his counterpart across the
Gulf has a per capita debt of $1,375 hanging over
his. However, the economy of Canada is much
more capable of carrying the burden of its per
capita debt than is the economy of Newfoundland
at carrying ours. I may add that in the instance of
Canada and the United States, the national debts
are to a large extent internally contained, whilst
ours is overwhelmingly an external debt. They
owe their per capita debts across the street. We
owe ours across the Atlantic. These are the essential considerations, and as I have
said the current
comparison of the per capitas signifies nothing
much in particular. Something of decided significance would be if comparative statistics
of
our per capita income were to show Newfoundland well out in front. However, such statistics
we rarely see, and I wonder if it could be
because they do in actual fact show Newfoundland well to the rear.
The second example I have in mind arises out
of the current protestations that Newfoundland is
self-supporting again. Now self-support is something decidedly in the province of
economics.
Yet the top arguments offered in evidence of
self-sufficiency are a balanced budget and a
treasury surplus, matters decidedly in the
province of finance. The current emphasis upon
a balanced budget and a treasury surplus as indication of self-support is the greatest
single non
sequitur that confuses this hour of decision in our
land. The financial proceeds from the economic.
It is upon the taxable capacity of its economy that
every nation depends for the wherewithal to
finance its sovereignty. So I shall turn first to the
financial changes that have taken place in this
island since 1934, and then endeavour to determine if they proceed from fundamental
change in
our economy.
If we consult the statistics of revenue and
expenditure over the years, we observe that
public finance in this island has fluctuated
through three phases — a period when we
managed to make ends meet; a period when we
didn't manage to make ends meet; and a period
when we more than managed to make ends meet.
We will more clearly appreciate the character of
this last change with which we are today confronted if we begin where responsible
government began.
We began responsible government on a shoestring. In the year when we set out upon
the high
adventure of being sovereign unto ourselves, the
revenue of Newfoundland was but a meager half-
million dollars. There may be some among us
who may be inclined to work themselves up into
italics at the thought that government in those
days could manage with so little, and who work
themselves up further into injunctions to the
government of these days to go and do likewise.
There are others, however, well inclined to
wonder, and I have heard them wondering so, out
loud, if, since there was a gaunt half-million
dollars to manage with in the first place, we
should have been granted responsible government at all. After all, they reason, to
undertake
responsible government is to undertake to provide the population with many more public
and
social services. We still had those 6,000 miles of
coastline in those days, even if there was only
120,000-odd people to spread along them; and
just how could it have been expected to serve in
any adequate manner or fashion, so little spread
out so widely? They are inclined to think that it
would have made just as much sense, perhaps
more, to have granted responsible government to
Ferryland or Bell Island. They wonder if the
founding fathers of this nation did not bite off
much more then we could chew. They do know
October 1947 NATIONAL CONVENTION 597
that ever since we have had to bleed ourselves
white in an attempt to provide the trappings of an
elephant on the back of a mouse; and that we have
never, until recently, quite succeeded. However,
those people are wondering with the hindsight of
history. In defence of the "great dead" who did
achieve for us responsible government, it must be
said that they could not be expected to foresee the
shape of things to come in this 20th century. In
the first place, practically all the territory they had
to think of providing the public services to in
those days was the Avalon Peninsula. And indeed, until the advent of Commission of
Government, democracy in this island was mostly a
matter of government of Newfoundland and
Labrador by Newfoundlanders for the Avalon
Peninsula. Then it must be remembered that the
mid-19th century was a nice, cozy time in which
to be alive. Every day in every way, things were
getting better and better. Mankind was going to
move right straight ahead to the conquest of the
universe. The spirit of laissez-faire was a
broadened world. Economic liberalism was the
order of the political day. The best government
was the government that governed least. The role
of government and the economy was consciously
kept down to the minimum. God was in his
heaven, all was going to be all right with the
world. The British nation would see to that. And
so in the brave new world of 1855 responsible
government looked like a safe enough bet, even
if there was only half a million dollars to pull and
haul on.
For over 60 years, from 1855 to 1919, we
managed to make both ends meet. True, we had
often to scrape the bottom of the barrel to do so.
In the years when there was a margin to the good,
it was meager; and once or twice the budget went
into deficit. But by and large for 60-odd years we
managed to keep our heads above water. In the
economic sphere, however, almost every time the
fishery failed, a lot of people nearly starved to
death. Dole was not something unheard of until
the days of Commission. Substantial expenditure
on relief of the able-bodied poor had to be incurred within five years of the obtaining
of
responsible government. And the first eight years
of the 1860s were among the grimmest of our
history. Once indeed, even in the financial
sphere, it was touch and go, during the bank crash
of 1894. Involved in the crisis was the Union
Bank with which the Newfoundland government
had made arrangements to provide the half-yearly interest on the public debt due in
London on
January 1, 1895. The Newfoundland government
suddenly found itself with a first magnitude
crisis. It had to get its hands on a quarter of a
million dollars in a hurry. And so first, the Newfoundland government went to Britain
with its
hat in its hands. But Britain wanted to set up a
royal commission of inquiry as a condition of a
rescue loan, and the government of the day
wouldn't have that. And so it turned around and
went to Canada with its hat in its hands. But
Canada wouldn't bid high enough. Canada
pinched the pennies and lost the tenth province.
Bond finally negotiated the long-term loan in
England which saved Newfoundland from
default — for a little while, however. The Newfoundland government had appeared in
a role that
presaged the final financial disaster that came
upon it — the role of chasing around with its hat
in its hands in a frantic effort to borrow enough
to carry on. We were to see the Newfoundland
government in that role again, practically all
during the period from 1920 to 1933, the period
when we didn't manage to make both ends meet.
During those 13 years we incurred 11 budget
deficits, and borrowed $57 million. In other
words, we went behind at an average rate of $4.8
million per year. And so we came at last to the
end of our financial tether and passed into the
hands of a glorified receivership. Even the
receivership couldn't do anything to achieve
financial stability, and budget deficits continued
through the first seven years of Commission
government.
A careful study of what led to our financial
collapse in the early thirties leads inevitably to
the conclusion that it occurred because our
economy could not provide adequate revenue to
defray the cost of the public and social services a
western people demand. The Newfoundland
people are a western people. It was inevitable that
sooner or later they would begin to look to their
government to try to keep up with the Joneses on
the North American mainland. And with World
War I it began.
The 20th century began in Newfoundland in
the 1920s. Up until the time of the first world war,
Newfoundland slumbered along content with its
19th century lot. But when the boys came march
598 NATIONAL CONVENTION October 1947
ing home the first time, they came to a land
suddenly aware of the public amenities of the
industrial civilisation on the mainland Newfoundlanders were looking with envious
eyes at
the standards and services of the nations on the
other side of the fence, and soon they were wanting some for themselves at the top
of their voices.
Government did the best that it could with the
little it had. It managed to provide a few more
miles of road and a few other pathetic odds and
ends. But that extra effort was the last straw that
broke the camel's back. Notwithstanding all the
blame that has been heaped upon their heads, it
was not so much our politicians who failed us in
that hour as our economy. Came the Commission, and for seven years, it did little
better than
the politicians. I have always thought that the
Commission would have done much better if it
had acted as a commission. It had the power, had
in the beginning the goodwill of the people. Ithad
a better chance to do a more notable job than any
government this island has ever had. But it fell
short of what it might have accomplished. Somewhere along the line it seems to have
become
more concerned with heeding the dictates of its
ear to the ground, than proceeding with the
reconstruction paths to which it was committed,
and standing for no nonsense.
And then the seven years of plenty were upon
us. The phrase is more euphonious than exact, but
I have yet to be convinced that what the war
brought to this land may rightly be termed
prosperity. I still agree with myself in what I said
at the beginning of this Convention — that all that
came of the war jobs and the war dollars, was that
a few more Newfoundlanders than ever before
came a little closer than ever before to achieving
a decent standard of living. For the most part, in
most instances, where there was something over
and to spare it went to replace and to restore what
had rotted and mildewed away during the depression years.
In the matter of public finance, the last seven
years have been years of surplus. We have more
than managed to make ends meet. In each year
there has been a comfortable margin over and to
spare. However, as far as I am concerned it is an
open question whether we should have today a
$30 million treasury surplus. Granted, the Commission of Government acted in accordance
with
the first principle of modern cyclic finances to tax
to the hilt in periods of prosperity so there may
be a backlog to fall back on in times of depression. But the Newfoundland people had
endured
so much, and had so much to restore and to
replace — in many instances down even to bed
linen and kitchen utensils — that it is an open
question if that $30 million accumulated in the
treasury should not have been foregone in the
interests of a lower cost of living; if instead of the
preoccupation with a system of taxation — that
is the fine an of squeezing blood out of a turnip
carried to perfection — the authorities had been
more concerned to control living costs, Newfoundland might have been better served.
Government has latterly shown, and is showing
a belated and ponderous concern with the cost of
living. It was rushing around frantically to lock
the stable door after the horse was stolen, just
seven years and possibly $30 million too late.
Our continuing ability these last years to
balance the budget and have a couple of million
to the good is a new phenomenon in local public
finance. The phenomenon is all the more remarkable in that the budgets of these last
years have
provided for many new improved public and
social services. This continuing ability marks a
drastic change with all that has gone before. If
there is reason to expect that this intoxicating new
ability to more than make ends meet will continue
to be ours in the normal times of the future, then
are we saved indeed. Is there reason to expect
that? We must search our economy for the
answer.
In the past our economy was never equal to
the task of providing such revenue as could
finance the striving after public and social services that would in some measure compare
with
those on the mainland. In consequence we came
upon catastrophe. What we must look for today
is some fundamental change indicative of an
increase in taxable capacity to support the desired
social services. To look for less than that would
be to presuppose that the Newfoundland people
will be forever content with decidedly inferior
standards of public and social services than those
enjoyed by other British and American peoples.
I know of no good and sufficient reason why we
should be reconciled to a destiny so meager and
austere. I have yet to be convinced that we, who
stand at the crossroads of the Atlantic community, should be content to stand in sackcloth
October 1947 NATIONAL CONVENTION 599
and ashes, forever doing the penance of an
emaciated pauperhood for sins of history that
were not ours. It needs no more than a glance to
see that in its essential characteristics the
economy of Newfoundland has not changed. Historically our economy has always been
an export
economy. It still is. The dynamics that move our
economy today are, as always, the production of
staple products for sale abroad. For the most part
our production has no vested interest in serving
our own island. We have to import most of what
we need, even considerable quantities of
potatoes. We are geared, after some fashion, to
serve the world, not to serve ourselves. The
population upon which the whole market is
founded is so meager that it does not permit of
such mass production as would be essential to
any servicing of ourselves with manufactured
goods. And so the essential character of our
economy remains the same; it has not taken upon
itself any of the characteristics of an industrial
economy. Nevertheless, modifications have
come with the years.
For years the economy of Newfoundland was
almost entirely a matter of what came of the
export of dried salt codfish. When the fishery and
the world markets were favourable the people ate
— fish and brewis; when they weren't, people
tightened their belts and ate fish and hoped that
the winter wouldn't be too hard. In time the
economy came to be broadened out at the base to
the export of other fish besides cod; and still
further the economy came to be expanded in
consequence of the export of newsprint and some
minerals. In comparatively recent years, one or
two other odds and ends such as blueberries have
come to be exported; and then the expansion of
the economy at its base came to an end. We had
run out of natural resources. Thereafter there
could be room only for quantitative expansion.
The export expansion would have to be by way
of the seams. In the meantime our economy has
not shown any signs of going out at the seams.
There have been no indications of middle-age
spread. Rather has the shape of our economy been
mostly such as that induced by taking in another
notch in the belt.
Any expansion that has materialised since
1934 has been in quantity rather then variety.
What has been involved has been increased
capacity to him out the same commodities as
before — in some instances in new forms. There
has been no production of new commodities
derived from the tapping of natural resources of
other categories than those previously worked,
production of such dimension as did materially
affect the economy of the country. Whether that
is a condition that will continue to obtain for the
duration of our time is anybody's guess. It is not
impossible that we might have some minor
developments in asbestos and coal. But whether
they would make a noticeable impact upon our
economy is imponderable. Also among the imponderables, is the impact we may expect
the
development of Labrador to have upon our
economy. There is reason to think that its
economic potential is considerable. The pertinent
question is, injust whose interest is that potential
to be developed, the people of Labrador or the
people of Newfoundland? It seems to me that
until now the people of Labrador have fared none
too well at our hand. We haven't gone out of our
way to provide them with even minimum public
and social services. I understand that luxury roads
of the type of the Topsail Road are few and far
between down that way. Indeed I understand that
roads of any type are as few and as far between
down that way as street lights and railways and
other public amenities. Come to think of it, in the
days when we did have responsible government,
we never even thought it worth our while to
extend to the people of Labrador the privilege of
a ballot. Indeed, we didn't get around to giving a
second thought to Labrador until it seemed as if
we might get something out of it. It would be
interesting to know the thoughts of Labradorians
when they hear some of our political pundits
raising the roof over the raw deal
Newfoundland's gotten from somebody or other.
It must sometimes occur to them that Newfoundland doesn't do so badly itself when
it
comes to dishing out raw deals. I have a hearty
dislike of that mentality that is concerned with
Labrador only to the extent that it may be exploited for Newfoundland's advantage.
The most
that we have any right to expect of the development of Labrador is the provision of
sufficient
revenue to support the public and social services
the Labrador people have every right to expect.
These we are in any case obligated to provide
even if Labrador should go undeveloped. If we
make no effort to provide them then I think that
600 NATIONAL CONVENTION October 1947
Labrador people would be quite justified in seeking to terminate their dependency
upon us. If
we're going to insist upon self-determination
let's not draw the line at the Straits of Belle Isle.
The people of Labrador too are surely entitled to
a voice in the disposition of their own destiny....
There is some promise of significant expansion of our economy for the future. The
increased
output capacity planned for Corner Brook's
paper mill will step up considerably the impact
of our chief forest industry. But we might as well
keep a tight reign on any great expectations with
regard to our forests and our mines. The most we
can ever hope to see come of their exploitation is
that a few will do pretty well and a few more will
manage to get along. But the number of Newfoundlanders who can ever hope to draw upon
our forests and our mines for a full and steady
livelihood is decidedly limited. Today, as ever,
for such period of the future as is in any way
foreseeable, the great mass of our people must
depend upon fish and what can be made from its
export. The gross national production of this
island is compounded of much more than what
comes of the export of fish. But the fishing industry is the only significant point
of contact that
most of our people have with the gross national
income — the only point at which they get to
share in it at all significantly; and if there is no
future in fish, then we had better vacate this
island, preferably by tomorrow sunrise.
The most significant development within the
structure of our economy since the days of Cabot
came during the war with the great diversion to
frozen fish processing on a large scale. This was
a more significant development even than the
coming of the paper mills. It touched with a
golden touch the lives of more people and
released many man hours for productive work.
We have had high hopes that this diversification
within the structure of our chief industry would
lead to greater stability of our economy, since it
would mean that we would have one more basket
into which to put our eggs. This year our frozen
fish trade has received a set-back at the hands of
our ancient enemy the foreign market, and we
have been salting away our fish almost as frantically as at any time since the beginning.
Yet there
is the decided difference that, in all the years
since the beginning, there is a greater measure of
centralisation. Even if we have had to salt much
fish that would under different circumstances
have been frozen, that salting has to a greater
extent than previously been done at central stations, with fishermen thus being able
to dispose
of their catch green and our economy has been at
the advantage of the extra man hours released for
productive work.
In the intensive development of our fresh
frozen fish industry lies our greatest hope for the
future. With regard to salt cod, I don't think that
we have any longer any grounds to hope for a
more spacious destiny there. In a little while,
perhaps the time is even now, world production
of salt cod is going to be in excess of a world
demand which those best qualified to judge admit
cannot be increased. I grant you that we shall
always be able to sell some salt cod provided we
are prepared to sell at a low enough price. In any
case, as I survey the totality of our economy, in
the light of all that l have learned at this Convention, I can see only in the intensive
development
of our fresh frozen fish structure any way of
coming by those three square meals a day, and a
decent suit of clothes on the back, and a tight roof
over the head, that I have been looking for my
last forgotten fishermen on the bill of Cape St.
George — and the last forgotten fishermen on all
the bills of all the capes of this island.
Will the condition of the world markets in the
years to come admit our proceeding with such
intense development? Your guess is as good as
mine. Our local fish processors are full of high
hopes and most anxious to make the effort. But
in the last analysis, the things that matter in fish
are out of their hands. The shape of things to
come in fish is the most uncertain thing in a world
loaded with uncertainties. At this moment we
must remain in the dark about our destiny because we must remain in the dark about
fish. It
has ever been thus, and there are no indications
it is going to be any different for a long time to
come. That means the historic vulnerability of
our economy will project into the future.
Another important respect in which our
economy has retained its essential character, is in
its mercurial reaction to the least change that
takes place in the markets of the world. Twice in
this year we have had reminders of how much our
economy is at the mercy of factors utterly beyond
our control. In the early part of the year the United
States terminated meat rationing, and in conse
October 1947 NATIONAL CONVENTION 601
quence of that action, plus loss of British war
contracts, our newly-erected frozen fish structure
was forced into considerable idleness and we
were reduced to salting much of this year's catch
of cod. At the end of August, Britain froze sterling convertibility, and in a day
or two all that the
fishermen of this island could obtain for their fish
were open receipts. We escaped a considerable
economic crisis by a hair's breadth, because
during the last several years we had accumulated
a little over and to spare. But without our war-
begot national surplus to fall back upon, we
should certainly at this moment he in the thick of
an economic depression of the first magnitude. In
this island the margin between ability and inability to make ends meet is a matter
of a few
million dollars, and were it not that at this time of
sterling crisis we had a few millions in the sock
we should now be on our uppers.
The point I wish to make is that overnight two
acts completely external to this country brought
into prejudice the very livelihoods of many of our
people, and we couldn't raise a finger to help
ourselves. There is nothing much that we can do
to lessen the vulnerability of our economy. The
devices that nations of greater economic power
may resort to, such as deficit financing and currency manipulation, are beyond our
means. And
already there has been done as much as could be
done. Until quite recently we used to put a great
deal of effort into cutting our own throats on the
world's fish market. The disastrous competition
among local fish dealers in the days of consignment shipping generated a considerable
internal
vulnerability in our economy. Fortunately an end
has come of all that, and now in the Newfoundland Associated Fish Exporters Ltd. we
have an instrument to prevent us from cutting the
ground from under our own feet in the foreign
markets. Our economy has retained its essential
characteristic of an export economy, but a new
element of considerable significance has nevertheless come to enter into it, the advantage
of
increased national income from the services
rendered by Newfoundlanders at the military
bases. Since these bases are likely to be long
maintained, unless some Newfoundland government of the near or next-to-near future
manages
to break the leases, that increased income may be
counted upon to continue. We may take it then,
that a stabilising influence of significant propor
tions has come to appear in our economy.
It is not possible at this moment to rate Gander
in the same category. The last report we had of
Gander in this Convention gave reason to believe
that it would be a charge upon the treasury for
some time to come. Under these circumstances
the increment to our economy from the earnings
of individuals at the airport must be viewed as
something for which this country pays through
the nose, so that those employed there may have
the privilege of earning what they do in that
particular way — whereas they might be
employed in other productive work that would
yield a similar income. Since the incidental income at Gander, by which I mean that
which
derives from purchases made by transients and
other than official services rendered to them for
which they tip and pay extra, is an unknown
quantity, the absolute value of Gander to the total
economy of the country must remain in question
until such time as the airport is paying its own
way. Maybe that time is now. I confess to no
knowledge of the latest figures, but I understand
that the number of daily flights through Gander
has increased considerably these last few months.
In any case, just to what extent the pay in Gander
could be depended upon as a stabilising agent in
our economy must ever remain in doubt. For
there could never be any certainty that planes
would not take to overflying the airport, in which
case Gander would become a ghost town and we
should find on our hands the greatest white
elephant in the world since the Maginot Line.
To sum up then, it may be said that our
economy would stand a fighting chance of supporting us in the manner to which we have
lately
become accustomed, given the right kind of
world conditions. But there's the hitch. Given the
wrong time in world conditions, and my last
forgotten fishermen on the bill of Cape St.
George will probably starve again, only the next
time I hope he won't be so persistent about it. The
best formula ever put forward to stabilise the
economy of Newfoundland was put forward by a
citizen of the United States. He was Wendell
Wilkie. He had a plan for "one world". Only in
such a world, wherein the great currents of trade
and commerce would flow freely, could Newfoundland and all the other islands of the
sea ever
come to know any consistent measure of
economic security. And what are the chances for
602 NATIONAL CONVENTION October 1947
the emergence of such a world? At this moment
they appear meager indeed.
The breakdown of the multilateral trade system is taken as one of the realities of
the hour.
During his recent speech outlining Britain's new
export targets, Sir Stafford Cripps said Britain
would be forced into a large degree of bilateral
trading, and in consequence bilateral balances of
payments with various individual countries. The
political arrangements that would result in one
world seem as far away as ever. It will not be out
of order if I relate such conclusions as may be
drawn from the foregoing to the question of
whether we are or are not self-supporting. It's not
so directed in our terms of reference that we
should concern ourselves with that specific question, but the people have been led
to expect us to
come to some conclusion on the point, and that
makes it a legitimate question for us to take into
account.
The question of whether or not we are self-
supporting is one to which there are many facets.
For the most part emphasis has currently been put
upon the one side of the story, namely a balanced
budget and a treasury surplus. It so happens that
these things are not enough. Having considered
the matter seriously, dispassionately and at
length, I have come to the conclusion that I
cannot honestly accept less than this minimum as
evidence of self-support. We have come to where
we can, out of our resources, provide ourselves
with some view of the public and social services
that are the proper inheritance of a western people
in this mid-20th century. It is little enough that
we have advanced to, and no Newfoundlander
will willingly see a single one of those services
discontinued. And minimum evidence of self-
support is only this: reason to expect for a
reasonable period of the future, gross national
income of such dimension and distribution as will
ensure a decent living for all Newfoundlanders
and leave them with enough over and to spare to
maintain these services at not less than their
present level. If any one of us wishes to contend
that this last should not be attempted, maybe he
would care to name for me which of the cottage
hospitals he would close down if he were Minister of Health in our new government.
My emotions make me want to believe that the
future holds that minimum for us. And there is no
getting away from the fact that we have some
what more reason to be hopeful then ever before.
But neither is there any getting away from the fact
that the future is loaded with a greater concentration of imponderables and unpredictables
than
we and men everywhere have ever faced before.
If next year the fishery fails or we can't sell fish,
then we all know that many a family economy
will go, out at the elbows and down at the heels
overnight. It is all as simple as that. Fish in this
island is still a matter of life or death. As things
stand today, we find that our economy has
received such fillip as enables it to provide a
luxury living for a few of us, a frugal living for
some more of us, and a living on the margins of
subsistence for the rest of us. We find the taxable
capacity of our economy enhanced to such
proportions as to be sufficient to defray the normal costs of government, and yet
finance a better
number of public amenities and social services
than ever before, even though the number be
meager. And to whatever extent that may signify,
we may not avoid the possibility of self-support.
But it is, at its best, a hand-to-mouth self-sufficiency that may have come upon us.
If these were normal times — the world is no
nearer to the multilateral arrangements that
would make a bulwark against economic regression. And since we seem always to be able
to keep
ahead of the world when it comes to going
downhill, it may be wondered if economic
regression has not already set in, what with the
curtailment of our frozen fish enterprises, the
failure of the Labrador fishery, the unavailability
of dollars and all the rest of it. I am not prepared
to accept with good grace for the future anything
less than the minimum standards of living, public
and social services we now know, or to accept as
evidence of a condition of self-support less than
some assurance that we can maintain those minimum standards for a reasonable period
of the
future; and I know that at this moment nobody
can give me satisfactory assurance on that score.
So I cannot join in giving to the Newfoundland
people the categoric assurance that we are self-
supporting.
The whole question is impossible of satisfactory resolution. Your guess is as good
as mine.
Once again I am compelled to agree with myself
that the Convention is being held about five years
too soon, and that we could better make the
judgements we must make after the world has had
October 1947 NATIONAL CONVENTION 603
time to stop vibrating and the post-war pattern of
life time to become distinct. The final word, the
conclusion to draw from an examination of our
finances and economy is this. In the past our
economy was not able in normal times to provide
the revenue to support the public and social services that other western peoples enjoy.
There is
no evidence at this moment that would seem to
indicate we may expect that our economy will be
able to do the like for the normal times of the
future. Indeed, everything would seem to indicate
that our only hope of ever coming by such services would be by subsidy from the outside.
I say
that without seeking to prejudice the argument
for one form of government or another. I state it
as an inevitable conclusion to be drawu from our
history and our foreseeable prospects, and I do
urge that to whatever form of government we
now go forward, we do advance with our eyes
wide open on that score.
Mr. Smallwood I don't intend today to discuss
the subject that Mr. Keough has just discussed so
brilliantly and in such choice language — the
question of whether or not Newfoundland is self-
supporting and of what chance there is of her
being self-supporting in the years to come. That
I will leave for another occasion. But I would like
to review the Report of the Finance Committee
which Major Cashin is sponsoring here today,
and I think it would not be very courteous to the
Finance Committee or to Major Cashin if we
failed to show by our interest and by our debate,
how important we think that report is.
I have here before me, Mr. Chairman, figures
which I compiled in the past 12 months showing
for every year since Newfoundland got responsible government down to the present time
how
much taxes the various governments took from
the Newfoundland people; whether they have a
surplus or a deficit each year since 1855; what
borrowing they did; what was the amount of the
public debt; and what was the amount of the
country's total trade. I have these figures for
every year from 1855 down to the present year...
Mr. Chairman Could I ask the source from
which these figures were obtained?
Mr. Smallwood The figures are compiled by me
from official publications of the Government of
Newfoundland. I have no intention whatever of
using these figures for that long period of nearly
100 years. But as the Report of the Finance Com
mittee starts for the year 1909 ... I wonder, sir, if
you would bear with me if I extended the period
of review in my present remarks back to the year
in which I was born, 1900....
Mr. Chairman On that point I have to direct the
attention of the members to the fact that the terms
of your mandate restrict you to inquire into the
financial and economic position of the island as
and from 1934. Insofar as any figures prior to that
time might facilitate an understanding of the
financial and economic position from 1934 up to
the present time, I feel the time to be well taken....
If you feel that any period that you like is calculated to facilitate the House in
an understanding
of the financial and economic position as and
from 1934, then I have to hope that your remarks
on that account are proper and relevant. Other
wise I'm afraid I'll be reluctantly forced to take
the position they are immaterial and irrelevant.
Mr. Smallwood Thank you, Mr. Chairman, I
how entirely to your ruling and I assure and
promise you that the remarks I will make about
the period between 1900 and 1934 are only for
the purpose of throwing light on the period since
1934.
Now sir, I hope you will forgive me if I make
this a little personal because what I have in mind
is less the gentlemen who are present this afternoon visibly, and more our masters
— the people
of Newfoundland. I am attempting to deal with
one of the most difficult things, figures and statistics. So I am trying to make them
sound as interesting as possible by using personal allusions.
Sir, if I were 50 years old instead of 47 my life
would fall into five ten-year periods, from 1900-
1910 and so on.... But it falls into four ten-year
periods plus one period of seven years. When I
was born in 1900 the Government of Newfoundland spent that year in the public business
of the country $1.85 million. In that same year
the export of all the goods exported from Newfoundland amounted to $8.5 million, in
other
words, 21% of the value of all the goods exported
from Newfoundland went to the government for
the public expense. And the taxation that the
government placed on the people that year was
$8.50 a head, on 220,000 people....
Now, sir, I bring you down to 1910. For the
first ten years that I was alive in Newfoundland,
the Government of Newfoundland took from the
people a total of $24 million in taxes and spent
604 NATIONAL CONVENTION October 1947
that money on the public services.... But in those
same ten years, the total value of all exports came
to $107 million; so that the government took $24
million or 22% and for the first ten years of this
century, the average taxation put on our people
was $10.50 a head.
Now take the next ten years which would
bring us down to 1919. The total value of all the
goods exported from Newfoundland was $189
million. And out of $189 million the government
took $42.5 million or 23%. The percentage went
up a little. But here's what happened. For the first
ten years of the present century, the taxation on
the people of Newfoundland was an average of
$10.50 a head. But for the next ten years, from
1910-1919, it was $17 per head.
Now come on to the next ten years, 1920-
1929, and in those ten years the total value of all
the goods exported from Newfoundland was an
amount of $263 million. And out of that the
government took in taxes $108 million or 41%,
and the total taxation on the people was $39 a
head.
Now when you come to 1930-1939, what you
find is this, that the total value of all the goods
exported from Newfoundland was $293 million;
and that the Government of Newfoundland in
those ten years took $121 million from the people
in taxation, or 43%. In those ten years the taxation
on our people was $41 per head....
Now, sir, when you begin at 1940 you can
only come down to 1947; and in those eight years
we find that the total value of all goods exported
from Newfoundland in the eight years 1940 to
1947, to the end of the fiscal year in March, was
$359 million....
Mr. Cashin Mr. Chairman, is there a quorum in
the House?
Mr. Chairman I was just about to ask to have
the members summoned. We just...
Mr. Smallwood Will I proceed, Mr. Chairman,
or will I wait until the...
Mr. Chairman I think it's better to wait, Mr.
Smallwood, we're not probably constitutional.
There are 13 members in the House.
Mr. Smallwood Thirteen years is the length of
time Commission of Government has been here,
you know.
[The members were summoned]
Mr. Smallwood As I was saying, sir, in the last
eight years of our country's history, the total
value of the goods exported from Newfoundland
was $359 million, and in those years the government took from us in taxes $169 million,
or 46%.
Let us look just at the last three years. In 1945,
the total value of all the goods exported from
Newfoundland was nearly $49 million, and the
expenditure by the government — taxes taken
from us — was $22.75 million or 46% of our total
expenditure, our total exports. Now in 1946, the
value of our exports was $61 million. It went up
a bit. But the government that year look or spent
$29 million or 48%. And in 1947, the total value
of our exports was $62 million, thus the government took $37 million or 60%. If you
average it,
for the last three years, you will find that over
51% of the total value of all the goods exported
from Newfoundland was taken by the government and spent on public service.
Mr. Cashin That is not correct. The ordinary
expenditure wasn't counted. You mustn't forget
that there was about $50 million each year on
capital account, and that's leaving the impression
that the ordinary expenditure of the country is
$37 million. That is not true. The ordinary expenditure of the country last year was
around $26
million.
Mr. Smallwood I appreciate the point that
Major Cashin has made. I understand why he has
made it, and if it comes to this, that the government should separate their expenditures
under
ordinary and extraordinary, capital and
reconstruction, I agree with Major Cashin completely. But he will not deny that in
the fiscal year
1947, the Government of Newfoundland did
spend $37,141,000.
Mr. Cashin Yes, and $13 million of that was
capital expenditure.
Mr. Smallwood But whatever it was. the fact
remains that in 1947 the Government of Newfoundland spent $37,141,000 and in the year
before they spent $29,087,000 and in the year
before $22,739,000.
Mr. Cashin Well, what did they spend the year
before?
Mr. Smallwood The year before, it was
$20,965,087. And the year before that, $14 million, ...
October 1947 NATIONAL CONVENTION 605
Mr. Cashin They spent much more than $14
million in 42.
Mr. Smallwood Well, Mr. Chairman, I give the
figure. If Major Cashin disagrees he can produce
the figures to show that I am wrong.
Mr. Smallwood The figures are in the Finance
Report. I have it open at the very page and I was
going to ask Major Cashin before this debate
finishes to justify these figures. Because according to my understanding, the figures
beginning in
the year l919-20 are wrong from there down to
the present year. And I was going to ask Major
Cashin to explain where he got these figures. But
if he doesn't mind, we'll let that stand over for
the present moment. I say that the figures I have
here are correct and if they can be...
Mr. Smallwood The years are 1940-41,
$15,688,596; 1940-41, $14,534,000; 1941-42,
$14,668,000.
[1]
Mr. Cashin These figures are wrong, Mr.
Smallwood. I'm sorry.
Mr. Cashin They are right here in the Finance
Report on page 113.
Mr. Smallwood I have that right in front of me,
and I don't accept the figures in the Finance
Report after the year 1919-20.
Mr. Cashin Well, you won't accept the Auditor
General's report, I take it.
Mr. Smallwood We're coming to that when we
come to it. I was going to raise the matter. That's
why I have it opened at that very page. I was
going to ask Major Cashin to explain why it is
that the figures showing the expenditure of the
government every year since 1919-20 are different from my figures.
Mr. Smallwood I got my figures from the public
accounts of the Government of Newfoundland.
Mr. Smallwood Over there — they're on file in
the office outside here. Some of them are, some
of them are not.
Mr. Cashin My point of order is that there are
no Auditor General's reports available up to
1919 in the government departments.
Mr. Smallwood The reply is simply this. I have
figures showing the revenue and expenditure of
the government every year from 1855 down to
the present year. These figures I got from official
publications of the Government of Newfoundland.
Mr. Cashin I want to see the official publications.
Mr. Cashin Well, bring them in here. I want to
have a look at them.
Mr. Smallwood ...large parcel. I'm afraid that
some of them are at the public library, some of
them are at the Department of Finance and Customs, some of them are in the office
outside here,
some of them are down in my own house, some
of them are in other places. But I have spent a
solid year, off and on, compiling the figures and
I know that these figures are correct. Here's the
table which shows you the revenue, the expenditure, the surplus, the deficit. the
public debt, and
the value of the exports and the population — this
one sheet of paper alone from 1865 to 1893.
Mr. Cashin Hold on a minute, hold on a minute.
Where did this come from? What department of
government did you get this out of?
Mr. Smallwood ....Whether I went in the public
library and did it, whether I went into the Department of Finance, or whether I added
to it from the
public accounts, or from documents I had in my
own private library, I don't recall at this moment,
but I can assure you. sir, these are accurate
figures.
Mr. Chairman If you don't mind, Mr.
Smallwood, there is before me a point of order
taken by Major Cashin. Now your point of order
is exactly what, Major?
Mr. Cashin My point of order is that my friend
opposite has just stated that he's taken these
figures from official documents.
606 NATIONAL CONVENTION October 1947
Mr. Cashin And my reply is, table the official
documents.
Mr. Chairman But I understood him to say that
there were no official...
Mr. Cashin I doubt if there's any official documents prior to 1919 regarding the Auditor
General's report, because I tried to get them and
I couldn't.
Mr. Chairman Do you make the positive statement they are not in existence, Major?
Mr. Cashin They may be in existence, but they
weren't obtainable to the Finance Committee.
Mr. Chairman ....May I ask you Mr.
Smallwood, please, have your figures been obtained from official sources, or are they
merely
figures and statistics prepared by yourself?
Mr. Smallwood The answer in reply, Mr. Chairman, is simply this. As you may know, 1 have
spent possibly the last 20 years of my life doing
research, historical research in this country. If I
had been a member of the Finance Committee I
could have told the committee where to get all
kinds of figures and statistics about Newfoundland... These I got, number one, in
the
public library, which is a government institution;
number two, in the vault of the Home Affairs
department; number three, in the Department of
Finance and Customs where I have spent many
days in the last ten or twelve months; number
four, in my own personal library; number five, in
the files of the newspapers which are on file
running back for 100 years. It is possible, not very
likely, that in copying them off I could be wrong.
But I hope to show before this debate is over, that
the figures in the Finance Report on page 112 or
113 showing from 1897-98 down to 1945-46
revenue and expenditure, that from the year
1919-20 these are not correctly entered there.
There's something left out.
Mr. Chairman May I anticipate you by asking,
is it your intention to address specifically any
questions to Major Cashin as chairman of the
Finance Committee based upon the figures which
you are now quoting?
Mr. Chairman Well in that case Major, may I
suggest that you'll have the opportunity....
Mr. Cashin Just one moment, Mr. Chairman.
Mr. Smallwood made a statement a minute ago
about the year 40-41 — what was the revenue and
expenditure you said there?
Mr. Smallwood I have only the figures for expenditure, not revenue.
Mr. Cashin Here's the Auditor General's
report, now we'll fix it.
Mr. Chairman At this stage Mr. Smallwood,
may I direct your attention to page 113 of the
Finance Report, which reads 1940-41 expenditure, $15,830,699.
Mr. Chairman That's what's there. That is correct. Here it is in the Auditor General's report.
Mr. Smallwood If you like, before I go on with
my own remarks, possibly this would be a good
moment to clear up this mystery about these
figures here.
Mr. Smallwood All right, I'll do that now. I
have checked carefully the figures here from
1897-98 on, expenditure. It was expenditure that
I was concerned with not revenue. I find them
quite correct from 1897-98 down to 1918-19.
But, starting in 1919-20 and coming on 1 find a
big discrepancy. And they do not agree, these
figures in your report, starting with 1919-20, with
any figures that are in any other reports, in the
Amulree royal commission's report or...
Mr. Smallwood All right, we're coming to it if
you like. I would like Major Cashin to tell us if
the figures he has in his report beginning 1919-20
for expenditure are complete figures showing the
expenditure of the Government of Newfoundland for each of those years...
Mr. Cashin Mr. Chairman, I'm glad that point
came up. The figures of revenues and expenditures shown here, and I refer now particularly
to
expenditures, are expenditures on ordinary account. They're not on capital account.
and in the
Amulree report, in order to make a rotten picture
October 1947 NATIONAL CONVENTION 607
they added our capital expenditure into the ordinary expenditure. To prove my point
that those
figures are correct, we'll pick the total expenditures and total revenues for the
50 years approximately down in this paper here. And I'd like
the members of this house to notice. The total
expenditures and total revenues — revenue
$464,531,403, total expenditures $469....so, so.
That shows a deficit there, doesn't it, of $5 million. One would imagine therefore
that our public
debt today was only $5 million, whereas it's
around $75 million. Consequently it goes to show
that these other expenditures, which prior to the
advent of Commission government were not included in ordinary expenditures, were included
as capital account. Now, where did that other $70
million go? Here's where it went. It didn't go to
pay the ordinary running expenses of the country
at all. We built a railway that has cost Newfoundland over $45 million up to the present
time. Since we took it over in 1923 it has cost us
roughly $30 million. But prior to that Newfoundland paid $15,000 a mile, if my memory
serves me right. We built all our public buildings,
all our lighthouses, a lot of schools around the
country. We paid $45 million in the first war
including interest up to the present time. And this
one we spent $10-15 million. Now what does that
mean? That means for 50 years that we operated
this country practically on ordinary expenditure
for nothing, and that those assets which we have
to our credit — forget the war — today represent
$36 million. I'll put it that way because, as I
pointed out yesterday, if we took the $35-36
million in cash we have at the present time, and
devoted it towards the reduction of our whole
debt, our net debt would be between about $36
million in round figures. Now that's entirely different. The Amulree report, yes it
shows it, but it
didn't show what was spent on capital and what
was spent on ordinary. They piled it all on to
ordinary expenditure. And I knew that's how Mr.
Smallwood was evidently misled.
Mr. Cashin You knew it but you were trying to
put it over...
Mr. Cashin Oh yes, yes. You were trying to put
it across that the ordinary operating expenses of
the country were more then they actually were.
Mr. Cashin Oh yes, by some millions of dollars.
Whereas in actuality we've taken the year, what
year? Any year you wish to pick out in the days
of responsible government.
Mr. Cashin Certainly we did. But in ordinary
operating of the country that's what we spent,
$12,898,000. Now how did we spend the other
money? It was on capital account. We re-railed
part of the railway. We charged it up to capital
account. We built roads charged up to capital
account... If you get the Auditor General's report
you'll find that he outlines what they actually
spent on capital account. But this here shows just
ordinary expenses, which is entirely different
than capital expenditures. And when Mr.
Smallwood points out we exported $45 million
worth of fish or whatever it might be, and that we
spent that year — they took out of the country
probably $25 million and he says that's 50% of
what we exported that we spent. He must remember ordinary account and what we spent
on capital account. Take this year, we spent $13 million
over this past year. How did we spend it? We
don't buy ships every year. We don't have to
replace a new ship that costs a million dollars
again next year. That's a capital expenditure, and
should be written off accordingly each year, in
the course of 20 years. Now that's entirely different from the way people have been
trying to
convey the expense. And Amulree was the worse
offender.
Mr. Smallwood Now we have Major Cashin's
explanation. But I would ask him this question.
Here is presented to the Convention the Report
of the Finance Committee. And on page 112 it
says, "We give herewith the annual revenues and
expenditures of the country from the fiscal year
1898 to the fiscal year 1946, both years inclusive." Then it gives it, revenue and
expenditure. Now what I want to ask Major Cashin is this,
whatever you call it, whether it's ordinary, capital, or whether it's reconstruction
expenditure,
whatever heading it falls under, it's all expenditure — I doubt if Major Cashin has
in this table
here any figures, I know they' re there throughout
the report, sure, year by year, but in this table I
608 NATIONAL CONVENTION October 1947
doubt very much if he's put in the government's
expenditures on the Newfoundland Railway.
Mr. Smallwood Exactly, exactly. And yet
Major Cashin, Mr. Chairman, is the very
gentleman who, standing roughly where I'm
standing now, was the first one — and I gave him
credit for it — to demand that the Railway
expenditures should be in the budget, should be
in the public accounts and should be included in
the government's expenditures. You, Major, advocated that.
Mr. Smallwood And he was perfectly right.
They can't be in this table.
Mr. Smallwood No sir, no, Mr. Chairman.
What the report does is this. It reviews each year
separately. It shows what the revenues and expenditures were for the Railway but,
when it
comes to telling us what the government spent
altogether, year by year, from 1898 down to date,
he leaves out the expenditures on the Railway. I
was going to raise that very point. It's not a
complete showing of the expenditure of the
Government of Newfoundland.
Mr. Chairman I would like to point out that if
the figures given on pages 112 and 113 are intended.... From your standpoint, Mr.
Smallwood,
they're incorrect. From Major Cashin's
standpoint however, and I must sustain him on
this point, a very fundamental distinction has to
be drawn between ordinary current expenditure
and capital expenditure. Capital expenditures,
you pay out the money, and the assets in which
the investment is made are there to be seen. They
may be ships, railroads, hospitals, cottage hospitals, or public buildings and other
public utilities,
as opposed to ordinary current expenditure which
simply means the cost of maintaining government over the period in question. It might
very
well be that the views of the members are reconcilable, if and when the distinction
between ordinary and capital expenditures is borne in mind.
Mr. Smallwood I accept your ruling on that, Mr.
Chairman, cheerfully and completely, and I accept through you Major Cashin's point
that a
distinction must be drawn in government expenditures between ordinary and capital
expendture, or reconstruction.
Mr. Smallwood I accept that. But, sir, when on
page 112 of the Financial Report...
Mr. Smallwood All right, you were back. Just
let me finish my statement.
Mr. Smallwood On page 112, there's a great
table given showing for 50 years, somewhere
around there, the annual revenues and expenditures of the country for each year, and
we turn to
the columns showing the expenditures, and discover that from 1919-20 on, the ordinary
expenditures on account of the Railway for example,
are not included.
Mr. Cashin You say they're not included where
... hold on a minute...
Mr. Smallwood Some years they are, some
years they are not.... In some years you've included Railway expenditure and in some
years
you have not. I've got to check very carefully on
these figures to see just what has happened.
Mr. Chairman May I suggest, Mr. Smallwood,
that is the conclusion which may or may not be
fair to the compilers of the report. I respectfully
submit that before any conclusions are drawn on
figures or anything else in the Report, the proper
thing to do is to address the question first of all
to the chairman of the Finance Committee, Major
Cashin, get his reply and upon the strength of his
reply, then of course you're quite naturally entitled to predicate any opinion which
in your
judgement you are conscientiously to take.
Mr. Cashin Page 109. He said we didn't show
anything about the Railway. We find that the total
cost of the Railway and each subsidiary, which
includes the purchase price of $2 million from
1920 to December 31, I946, amounts to
$29,8l0,88l — approximately 50% of this
amount was capital expenditure while the other
50% represents deficits incurred in the operation
of the entire system.
Mr. Cashin Incidentally Mr. Chairman, my
friend opposite was the chairman compiling the
Railway report. We got so little information out
of it we had to go over it ourselves in order to try
to fix it up.
October 1947 NATIONAL CONVENTION 609
Mr. Smallwood Well Mr. Chairman, I'm afraid
that if Major Cashin thinks that he put more
information into his Finance Report than we had
about the Railway in our Transporation Report,
he'll have to check it all over again. There's a
thousand times more information about the railway system in our report than there
is in the
Financial Report, and that's what you'd expect...
Mr. Chairman Now order, gentlemen,
please.... I suggest we proceed on the assumption
that however bad or however good it may be, the
members put their all into it, and to me it's a very
imposing document, and I'll need to hear a great
deal of argument before I can conclude otherwise. But I don't think it's proper at
this juncture
to make any comment upon the amount of work
which may have put in by any of the individual
members who were instrumental in composing or
compiling the report.
Mr. Smallwood Sir, I agree completely with
you and no one has praised the Financial Report
more then I have done.
Mr. Cashin I don't want to be half-accused of
misrepresenting...
Mr. Cashin You're trying to put across there
this evening.
Mr. Chairman Gentlemen, please bear in mind
that opinion is a matter of judgement upon which
men might reasonably differ. A man can be quite
erroneous but still honest in the expression of his
opinion. Any opinion that any member draws
from any document tabled in this house isn't
necessarily dishonest because he may be erroneous in the conclusions to which he arrives.
Mr. Smallwood Now at the point at which
Major Cashin interrupted me I was trying to
show the total expenditure of the Newfoundland
government from 1900 to 1947 each year. And I
put in those figures everything they spent,
whether it was on ordinary, special, reconstruction, capital or any other account,
the total of it
each year. And Major Cashin arose to point out
that I was lumping them altogether, all the expenditures, and in reply to that I say
yes, that's
exactly what I have done — the total amount
they've spent every year is the figure that I've got
down.... Sir, you wouldn't remember, because it
was before your time in this Convention, but I
moved that the Convention desired to get the
Government of Newfoundland to provide us with
the services of an expert statistician-economist,
so that we would have his services in compiling
certain figures and statistics about our country's
affairs. That motion unfortunately was defeated
and we never got the statistician-economist.... If
Major Cashin should ever become Minister of
Finance in Newfoundland, he can never be successful unless he has a certain kind of
information
which he hasn't got, which I haven't got, which
nobody has, because its not to be got in Newfoundland until the proper steps are taken
to get
it. And here it is. This present year we're told that
the government is taking about $40 million from
the people in taxes. Is that right?
Mr. Smallwood $38 million or $40 million the
government is taking from the Newfoundland
people this year. Could Major Cashin tell us, or
could anyone tell us, what proportion is that $40
million of the total wealth produced in Newfoundland in the year? Is it 10% of all
the wealth
produced forthe year? Is it 20%, 30%, or 40%?....
What proportion is that $40 million of the total
wealth produced by the people of Newfoundland
this year? He doesn't know. I don't know. No one
knows. Every other country knows this. The Minister of Finance, when he brings in
his budget, can
safely take say 12% of the total wealth produced
in his country for the year in taxation, and that
won't be too heavy a burden on the people of his
country, or it may be 15%, but he knows exactly
what percentage he can safely take in taxes out of
the total wealth produced in a year. Now we
haven't got that in Newfoundland because we
don't know the value.
Mr. Chairman Are you addressing a question
to Major Cashin at this time, Mr. Smallwood?
Mr. Smallwood Well sir, I'm afraid what I did
was address the question to him and then I
answered it for him.
Mr. Chairman Now, so that we know where we
are. is your question this? That you're asking the
chairman of the Finance Committee what proportion of the value of the productive economy
of
the country was exacted by the government in
taxation over that same year?
Mr. Smallwood Yes, that's my question. I
wonder would the Major answer that for me?
Mr. Cashin I should imagine that the total earn
610 NATIONAL CONVENTION October 1947
ing power of the country, or the export value to
the country plus what was manufactured locally,
plus our agriculture.... I should imagine we got
about $120 million plus interest on our investments. The people own in the country
their life
insurance and all that kind of thing — at least
$120-150 million.
Mr. Smallwood Mr. Chairman, I'm sure that
Major Cashin will take this in the spirit in which
I say it, when he tells me the value of the gross
national product of Newfoundland, when he puts
it at $120 million, he reminds me of the school
teacher who ... caught one of the students reading
a book when he should be listening. The teacher
was lecturing on electricity, and he caught this
boy and he said to him, "You weren't listening."
"Yes, sir," he said, "I was." "Well," he said, "tell
me what is electricity?" And the boy said "Well,
sir, I know but I've forgotten." And the teacher
said, "Well now, that's too bad — you're the only
one in the world who knows what electricity is,
and you've gone and forgotten it." And Major
Cashin is the only one in the world who knows
the value...
Mr. Smallwood of our gross national
product. Nobody knows it. It's not known, sir.
Mr. Chairman Mr. Smallwood, I'm afraid that
I'll have to ask you to come to order. I'm not
satisfied at all that personal recriminations at any
time are calculated to help anybody. On the contrary, it must redound to the prejudice
of the
Convention and in particular to the member indulging in personal recrimination.
Mr. Cashin Mr. Chairman, I have no objection
whatever what Mr. Smallwood says to me.
Mr. Cashin The more he says to me. the better
I like it.
Mr. Chairman The propriety of this chamber
will have to be determined by what I consider
proper.
Mr. Smallwood Well sir, I won't be facetious
with the Major any more. You're the Chairman
and we have to obey you, and that I will do at all
costs. Now to come back. I think it will be admitted that I haven't been very smooth
in this
because since I stood up, I don't know how many
interruptions there have been, but I'm going to
try to state my case anyhow if the chairman of the
Committee will permit me. Sir, what I have done
is this. I have taken the value of our country's
exports every year as being the nearest we've got
to showing the value of the wealth production of
the country. Now we haven't got accurate
figures. I'm afraid we can't get them.
Mr. Chairman In that case Mr. Smallwood,
may I suggest that members use approximate
figures. If there are no official figures or statistics
available, then I think one can't go wrong if he
gives his figures as approximate figures, bearing
in mind the fact that his figures are given to the
best of his ability and to his knowledge.
Mr. Smallwood Yes. Here is a country which
exports just about everything it produces. We
grow some vegetables and we produce other
things for our own use that we don't export. But
in the main, here is a country which exports to
other markets most of what it produces. So what
I've done is this. I've taken the value of the
country's exports every year from 1900 to 1947
as being the nearest we can get to a value of the
country's wealth produced each year. I've taken
the total expenditure of the government and compared it each year for the 47 years
with the total
value of all our exports. And I've reduced it to
percentages to show what percentage of the total
exports is taken by the government and spent for
public purposes.
Mr. Chairman Your position is this Mr.
Smallwood: on the one hand you take a national
income which is after all the monetary measure
of' the country's productive economy.... As
against that, you've taken figures over the same
period relating to the cost of government, and
then in the light of that, you've completed your
ideas as to the approximate cost of government
over the period taken by you.
Mr. Smallwood Yes, and I've reduced it to per
capita percentages. Here's the story. Here's what
it cost the people of Newfoundland to be
governed — from 1900-1934 by responsible
government, from 1934 to now by Commission
government. Here is the cost of government per
head, every man, every woman, every child, per
head:
| 1900 |
$ 8.50 |
1904 |
$10.50 |
| 1901 |
9.00 |
1905 |
10.70 |
| 1902 |
9.50 |
1906 |
11.00 |
| 1903 |
10.00 |
1907 |
11.25 |
October 1947 NATIONAL CONVENTION 611
| 1908 |
11.75 |
1928 |
40.50 |
| 1909 |
12.40 |
1929 |
41.40 |
| 1910 |
13.00 |
1930 |
16.00 |
| 1911 |
14.00 |
1931 |
48.25 |
| 1912 |
14.50 |
1932 |
43.25 |
| 1913 |
15.50 |
1933 |
40.50 |
| 1914 |
16.00 |
1934 |
36.00 |
| 1915 |
16.00 |
1935 |
36.50 |
| 1916 |
16.25 |
1936 |
40.50 |
| 1917 |
17.90 |
1937 |
41.00 |
| 1918 |
20.50 |
1938 |
42.40 |
| 1919 |
26.00 |
1939 |
47.00 |
| 1920 |
40.75 |
1940 |
51.50 |
| 1921 |
48.00 |
1941 |
47.25 |
| 1922 |
38.00 |
1942 |
47.00 |
| 1923 |
38.00 |
1943 |
47.00 |
| 1924 |
37 .00 |
1944 |
66.00 |
| 1925 |
36.00 |
1945 |
70.75 |
| 1926 |
39.00 |
1946 |
90.00 |
| 1927 |
40.75 |
1947 |
113.00 |
So that I have lived long enough, being born in
1900, to see the cost of government in Newfoundland rise from $8.50 a head of our
population up to $113 a head last year. In the same 47
years, I have lived to see the government expenditure rise from 21% of the country's
exports up
to 60%. Although it's true that the figure of the
value of our exports in any given year is not a tme
value of the wealth produced in the country,
nevertheless it does represent the money that
comes back into Newfoundland. The only money
that comes back into Newfoundland in any year,
with exception of a few dollars, is the money for
the fish, the iron ore, the paper and the pulp, and
the pit props we ship out, and the oils and the
other products of the country — our exports. And
we have come to the day when 61% of the total
value of all our country's exports is being taken
by the Newfoundland government and spent on
public services.
Sir, I'm sorry the Major was absent for a
couple of minutes while I was making that bit of
a speech. I'd like him to have heard it. However,
I guess he's heard it before. Let me take these four
decades and describe the condition of the country
for each of them. For the first ten years, from
1900-09, the condition of Newfoundland was
fair. I think Major Cashin would agree with that.
In those ten years, the average taken from our
exports by the government was 22%. The average
taken from the people was $10.50 a head. Our
condition was fair. Now let's take the next ten
years, 1910-1919, what was our condition then?
Fair plus, fair and better than fair. Why is it?....
Here's why. Number one, they built the branch
railways; number two, they started Grand Falls,
so there was construction work in two directions;
number three, the war. Now these three things in
that decade made the condition of Newfoundland
a bit better than fair, fair plus. Now come down
to the next ten years, from 1920-1929, what was
the condition of Newfoundland? Bad, and then
fair. We all remember it. I remember the rock
sheds, I remember the unemployment, I remember the riots, I remember the dole, I remember
the
hard times here in Newfoundland from 1920-
1929. It began bad and it ended up fair. Why?
Bad, because the post-war depression hit us in
1920-21. 1922, 1923, Humber started, the construction out on the Humber, and they
spent, if I
remember rightly, $45 million on the project.
Men worked, they poured out there from all pans
of Newfoundland. There was a tremendous
change and turnover of men, thousands got jobs
out on the Humber. So it began to be fair. Then
the Buchans mine started — and that made those
ten years not so bad — began bad but ended fair.
Now we take the next ten years, 1930-1939, what
have you got, the worst period in the whole
history of Newfoundland. And when I say that
I'm not forgetting the years of "injun" meal and
molasses. I'm not forgetting some of the hard
times in the 1850s and 1860s and 1870s in Newfoundland. But I still say that 1930-
1939 were the
worst in the history of this country. Why? Of
course the world depression, we all know that.
But, I suggest to you, mainly because in those ten
years there were no windfalls. Now what were
the windfalls? From 1910-1919 we had three
windfalls. The starting of Grand Falls, the starting of the branch railways, the starting
of the war
— these were the three windfalls that came to
Newfoundland.... 1910-1919, three windfalls.
1920-1929, two windfalls — the Humber and
Buchans. In 1930-39, no windfalls and the worst
times that Newfoundland has ever seen. But from
1940-1947, a lot of windfalls. The war, the base
construction which poured, what, $400 — 500
million into Newfoundland, in all these military
bases, Canadian and American and British — and
increased prices for our fish. You could sell anything, the only trouble was to be
a little fair to
612 NATIONAL CONVENTION October 1947
your customers, to parcel it out, give them all a
little bit, try to keep them going. Now what I want
to know is this...
Mr. Chairman Excuse me Mr. Smallwood, are
you going to address some questions now?
Mr. Smallwood Well sir, it is a question,
whether the chairman of the Finance Committee,
Major Cashin, cares or whether all the members
of the Convention care or whether the people of
Newfoundland care to answer it in their own
minds; it's an oratorical question, if you like. To
be satisfied in my own mind, what I want to know
is this. From 1900-1947, there is the story of
Newfoundland. From 1947-2000, or to 1997, for
the next 50 years, what are the prospects of more
windfalls? Are there any more paper mills, any
more Buchans mines? Are there any more branch
railways that can be started? Or if not, must we
wait for more world wars? Must the whole world
be deluged in blood so that we may prosper?
What windfalls may we fairly and honestly expect in the next 47 years to make us equal
our
condition in the last 47 years?
Mr. Chairman Mr. Smallwood, I am reluctantly compelled to remind you that we're now discussing
the Financial Report tabled in the House.
Prognostications as to the future economic potentialities of the country might properly
arise out of
the Economic Report. As far as I'm concerned,
there is no such report.... I must therefore request
you to confine yourself to the report itself, rather
then to go outside of it and ask questions which
are not covered, or not intended to be covered, by
the report. What the future holds for us is at this
time, not a proper matter for comment.
Mr. Smallwood I will abide by your ruling
there, sir. I would like to point out, a propos of
the finances of the country to date that in the
time that I've been alive, our population in Newfoundland has increased to be half
as much again
as it was the day I was born. It's increased 50%.
But in the same 47 years, our exports have increased six times.... But, and here's
the but, the
expenditure of the Newfoundland government is
now 19 times greater then it was the year I was
born. Let me repeat that. Our population has
increased half as much or more as it was when I
was born. Our exports have increased six times.
But our government, our government is taking 19
times as much from us in taxation as they took
from us 47 years ago. Now what I'm going to
suggest therefore is this: that we can't stand it.
They're taking too much from us. In the last three
years, they've taken over 51%, over half the
value of all our exports.
Mr. Chairman ... is that opinion predicated
upon the contents of the report itself?
Mr. Smallwood Indeed it is, sir. It's predicated
upon the figures and facts contained in the
Finance Report. I have summarised the statistics
given in the report and drawn from them a deduction. I've made an interpretation of
them. That
Newfoundland has now come to the point where
she must either reduce expenditure or she must
increase the value of her exports; that today
government expenditure is eating up too much of
the value of what we produce. That today in
Newfoundland the government is too heavy a
burden on us. We can't carry it. And either they
must reduce the burden of taxation, or they must
increase the value of our exports. Now can we do
that? That is a matter that will come before us, as
you have suggested, when the Economic Report
is presented. I don't propose to try to guess or
estimate what we can do in the future. But I do
pose this problem now that faces us, that must be
solved. Namely that Newfoundland is in what my
friend Mr. Keough would call an extremely vulnerable position when just this past
year 60% of
the total value of all our exports was taken by the
government and spent on public services. We
must reduce the cost of government or we must
increase the value of our wealth production in
Newfoundland. Now sir, I don't know what the
intentions are. All this talk...
Mr. Smallwood All that I have been saying this
afternoon is nearly one point. And it's a long
time, you may say. But in justice to me you'll
admit that Major Cashin wished to clear up some
of the observations I made as I went along. I have
another point to make, which I would not like to
make today and I was hoping that I would have
an opportunity of making it, an extremely important point which might take as much
as 20
minutes or a half an hour to make. Sir, I haven't got
my notes by me, and if I were to do it, we would
be in the position where no one else would have
October 1947 NATIONAL CONVENTION 613
an opportunity today to make any remarks about
the report, and in case there is, sir, I was going to
resume my seat and if no one else did speak to
this report, I propose then to move the adjournment of the debate, and let's try to
clean it up on
Monday, if it's humanly possible. But there are
important points yet to be made about this report
before the Economic Report comes before us.
Mr. Hollett Would you make clear, Mr. Smallwood, the point that you hope to make tomorrow,
which should take 20 minutes; could he make it
clearer, indicate to us what that point is?
Mr. Smallwood Well, I wouldn't mind indicating the general nature of it. What I proposed
doing was this: to take the period from 1920 to
1934 and deal only with the question of deficits
and surpluses. But I wanted to make it clear, and
if I'm not interrupted by Major Cashin on Monday, I would undertake to complete it
in 15 or 20
minutes.
Mr. Chairman I would like to remind members
that we're in committee and of course I'll bend
over backwards, as I must, to relax the rules of
debate. But I have to direct the attention of members to the purpose for which they
were
created... The language of the act is unmistakenly clear... The statute lays upon
members the
obligation to inquire into the changes that have
taken place in the financial and economic situation of the island since 1934 — since
1934....
There is a definitely described period. And that
is why, Mr. Smallwood, in reply to Mr. Hollett,
in View of the fact that you proposed the dealing
with the period ... 20-24? 34?
Mr. Smallwood I apologise sir, if I said that,
what I meant was, from 1920 to date, to now.
Mr. Chairman Anything that you might have to
say on the period from 1935 to 1947, has to be
relevant and is clearly within the scope and ambit
of the act. Any opinion expressed on the period
anterior to 1935 is irrelevant save and except if it
is calculated to enlighten us on any matters arising from this period of 1935 up to
1947 which
would otherwise remain ambiguous and in doubt.
We can't sit in this chamber and discuss what
happened in 1810 or 1762. There must be some
limit beyond which we can go because if there is
going to be undefined limits we're going to be
here until judgement morning.
Mr. Smallwood Would it be your ruling that
what we are permitted to do is discuss such
periods before 1934 as it may be necessary to
throw light on the period since 1934, and only so
far as it will do that?
Mr. Chairman After serious consideration, not
an opinion which is being expressed by the exigencies of the moment, it is my view
that members should not concern themselves with the
period of our financial and economic history
prior to 1934. Now I'm going to give this section
of the act the greatest possible latitude, save
insofar as any discussion prior to that time is
calculated to enlighten us on matters which have
arisen since that time.
Mr. Hickman I entirely concur with your ruling
on that point.
Mr. Cashin Mr. Chairman, I move the committee rise and report progress and ask to sit again
tomorrow Monday afternoon.
Mr. Chairman Motion is that the committee
rise, report progress, and ask leave to sit again on
Monday. The regular question — all in favour say
"aye", contrary minded "nay". Carried.
[The committee rose and reported progress, and the Convention adjourned]
