Newfoundland National Convention, 17 October 1947, Debates on Confederation with Canada

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. Cashin An unlucky number.
Mr. Smallwood Thirteen years is the length of time Commission of Government has been here, you know.
Mr. Cashin No, it's nearly 14 now.
Mr. Smallwood Well, it's lucky or unlucky.
[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, ...
Mr. Cashin What year was that — $14 million?
Mr. Smallwood 1942-43 — the year ending...
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. Cashin The figures are in the Finance Report.
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. Cashin What year, you say, 41-42?
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. Smallwood Well, they may be wrong but I'd like...
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 You don't?
Mr. Smallwood I don't accept them.
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. Cashin Well, where did you get your figures?
Mr. Smallwood I got my figures from the public accounts of the Government of Newfoundland.
Mr. Cashin Where?
Mr. Smallwood Over there — they're on file in the office outside here. Some of them are, some of them are not.
Mr. Cashin I rise to a point of order.
Mr. Chairman Please state your point of order.
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. Smallwood Well, they would make quite a large...
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 Let me have a look at it.
Mr. Smallwood There is another one which shows...
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.
Mr. Chairman And your reply to that is?
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. Smallwood Yes sir, it was my intention.
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 expenditure not revenue.
Mr. Cashin Well, what is the revenue?
Mr. Smallwood I have only the figures for expenditure, not revenue.
Mr. Cashin Well, what is the expenditure?
Mr. Smallwood The expenditure 40-41 ... $14,534,237.
Mr. Cashin Here's the Auditor General's report, now we'll fix it.
Mr. Smallwood All right.
Mr. Cashin Before I look at it I'll tell you....
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. Smallwood Well, that's on page 113?
Mr. Chairman 113, yes. Under the caption "expenditures".
Mr. Smallwood Right, yes, that's what's there.
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. Cashin You just ask me the question.
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. Cashin Now we're coming to it...
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. Smallwood I wasn't misled.
Mr. Cashin You knew it but you were trying to put it over...
Mr. Smallwood Oh no...
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. Smallwood Oh no.
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. Smallwood Take 30-31.
Mr. Cashin We'll take 30-31.
Mr. Smallwood $12,898,000.
Mr. Cashin Yes, we spent much more money.
Mr. Smallwood Surely.
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. Cashin They are in the report, yes.
Mr. Smallwood In this table? On page 112?
Mr. Cashin No, they become part of our deficit.
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. Cashin You say they're not in...
Mr. Smallwood And he was perfectly right. They can't be in this table.
Mr. Cashin They are in some 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. Cashin Well, turn to page 109.
Mr. Smallwood All right. Let's turn to 109.
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. Chairman Very definitely.
Mr. Smallwood I accept that. But, sir, when on page 112 of the Financial Report...
Mr. Cashin I said, turn to page 109.
Mr. Smallwood All right, you were back. Just let me finish my statement.
Mr. Cashin Go ahead.
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. Smallwood Yes, I have of course read that.
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.
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. Smallwood No, no, there's not a case of...
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. Cashin No, about $38 million, I suppose.
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'll give you an approximate idea.
Mr. Smallwood Well, how approximate?
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. Chairman Now, Mr. Smallwood...
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. Chairman Well, I have to preserve the...
Mr. Cashin The more he says to me. the better I like it.
Mr. Smallwood I'm just the same as that.
Mr. Chairman The propriety of this chamber will have to be determined by what I consider proper.
Mr. Cashin I agree.
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
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?
Mr. Smallwood It's opinion, sir, yes.
Mr. Chairman ... is that opinion predicated upon the contents of the report itself?
Mr. Smallwood Yes sir, indeed.
Mr. Chairman It is predicated upon the report?
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. Cashin Carry on to 6 o'clock anyhow.
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. Chairman Mr. Smallwood...
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. Chairman Thank you Mr. Hickman, I stand relieved.
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]


Newfoundland. The Newfoundland National Convention, 1946-1948 Vol 1: Debates. Edited by J.K. Hiller and M.F. Harrington Montreal: Memorial University of Newfoundland by McGill-Queen's University Press, 1995).



Selection of input documents and completion of metadata: Gordon Lyall.

Notes de bas de page:

  • [1] The proceedings for October 17, 1947, were taken from the recording of the debate.
  • [2] Volume II:369. [Volume II is not in The Confederation Debates Collection]
  • [1] These are Mr. Smallwood's numbers.

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