Report of the Ottawa Delegation
Proposed Arrangements for the Entry of Newfoundland into Confederation
Commitee of the Whole
Mr. Cashin Mr. Chairman, when I concluded
my remarks yesterday afternoon I was about to
begin the breaking down of Mr. Smallwood's
proposed budget. But this afternoon, before I go
into it any further I must crave the indulgence of
the House and go back a little, and I don't think
it will be tedious repetition, but additional information. I now refer to the general
sales tax which
the Canadian government says they will collect
in amount of $4 million in Newfoundland should
we become a province.
I think I showed yesterday conclusively that,
by the application of a method which they themselves applied here the other day in
answer to a
question, instead of $4 million they would collect
$8 million. The simple reason is that in 1946-47
the Canadian federal government collected $328
million in general sales tax, that is 8%, and working it out on a per capita basis
it means $25 a head
for every man, woman and child in Canada;
applying the same yardstick in Newfoundland, it
would mean $8 million here. Now, sir, in speaking of these taxes, my attention has
been drawn
to a small pamphlet which probably contains all
the information that is in the Black Book and only
costs 25 cents, whilst our two Black Books and
the Grey Book cost nearly $30,000. If you will
turn to page 16 of this book you will find "Quick
Canadian Facts", and under the section "Hidden
Taxes" you will see this:
In addition to personal income tax,
Canadians pay a number of indirect or
'hidden' taxes in their normal purchases of
consumer goods. A pair of shoes, for example, carries 126 taxes, a gallon of gasoline,
from the crust of the earth until it reaches the
car, carries 205 different taxes. Medicines are
heavily taxed — some under as many as 328
headings — and the common milk of magnesia bears 178 separate taxes.
Other ordinary goods under multiple taxation are: a farmer's wire fence, 191 taxes;
a
loaf of bread, 52 taxes; a bar of soap, 154
taxes; overalls, 148 taxes; a cotton dress, 125
taxes; a suit of clothes, 105 taxes.
On men's and women's clothing, the 105
taxes are made up as follows: the rancher
who raises the sheep (and they have a few
ranches still in Alberta) pays ten taxes, from
country through to gasoline impost; transportation companies hand over 16 separate
taxes; raw materials handlers, ten; textile
mills, 15; the manufacturers of the garment,
l2; wholesaler, 16; and the retailer another
14. In addition, extra taxes borne by most of
the preceding number 11, and on top of it all,
the sales tax paid by the consumer -ie 8%.
Now we were told that we would have no
taxes if we went into confederation.
Mr. Cashin You did. You said it would not be
more than $75 per head, and I am going to tell
you that it will be $210 to $220 or $230 a head.
Now other taxes. Moving pictures — 25% on
admissions. I understand there is a gentleman
here in the moving picture business, or considering going into it. If a man or woman
or child
wants to go to a movie, in addition to the 30 or
40 cents they pay the man who operates that
house, they have to pay a 25% amusement tax.
Mr. Cashin I agree with you. You had an opportunity to do it, and what did you do about it?
Mr. Chairman If you don't mind, let's get the
position clear. Major Cashin has the floor and...
Mr. Cashin Yes, and I don't want to be interrupted.
Mr. Chairman Unless and until a member is
rising to a point of order or privilege, I don't want
any interruptions, please.
Mr. Cashin Well, you understand here and now
that when a gentleman slaps it at me about helping my country I am not taking it.
Mr. Chairman .Well, I want no slaps at any
member, or any interruptions.
Mr. Cashin ...tax on cheques. And Mr. Starkes,
who is a gentleman who no doubt writes many
over $100, he puts 5 cents on them. Telegrams —
January 1948 NATIONAL CONVENTION 1077
now if my memory serves me right again, there
is $87,000 on telegrams, which is not provincial
but federal revenue, but I am asking for contradiction, or to be corrected if necessary,
and if
I live till tomorrow morning I will know.... Furs.
We talked about furs yesterday. Co-incidentally,
Mr. Chairman, a party handed me this clipping
this morning. We are talking furs now, and this
comes from Ottawa, January 3. "Canada today
faces an austerity area much greater than that in
England...".
Mr. Smallwood Point of order. I have barrels of
clippings from magazines which I would like to
quote and if Major Cashin is permitted to do so I
will claim the same right.
Mr. Cashin All right. Mr. Starkes asked me
yesterday what the duty on furs was now. Restrictions have been placed on furs coming
in from
the United States and Canada, and would it be
information for him to know that there was $10.5
million worth of fur imported into Canada last
year from the United States?
Mr. Cashin 10-15% I think. Now in addition to
that there is a special 25% excise tax on the list.
These taxes are paid on the wholesale prices, so
that the consumer pays not only the 8%, but the
profits that the wholesaler and retailer adds to the
cost of the goods. The provinces of Saskatchewan
and Quebec have a provincial sales tax. Now
there is another tax, in addition to the 8%. For
example, in Montreal the purchase of a suit of
clothes involves 8% federal tax, and 4% provincial tax, and the purchase of a fisherman's
net —
I have been in this house and heard it all over the
country: "Lines and twines should be free", and
they are, in this country, but in Canada it involves
8% and 4% tax.... We were going to have no
taxes; it would make you sick!
Now another matter was brought to my attention since I left this chamber yesterday
afternoon,
and I am not permitted to read the document, so
I will give it to you to the best of my knowledge.
When I was talking in connection with the
balance of our surplus, I referred to the fact that
if the government has disbursed sterling because
of the sale of codfish this year, they would have
$4 million or $5 million left. I had the privilege
of a drive down to Bonavista, and I must say it is
beautiful country, the people are wonderful, and
along the way I find squid hanging up to dry.
Squid are sold to the Chinese market, and these
people were led to believe that the squid would
be bought from them, but the Chinese buyers
were unable to find the necessary dollars to do so.
The point I want to make is this: if we have got
to go into business to convert sterling to buy
codfish, those people are just as much entitled to
be able to sell their squid, and the government
should convert the Chinese money into dollars.
But they did not, and there are instances in that
section of the country today where people are
very badly off, and I just bring that matter up this
afternoon, not that it means much in the confederation issue. But I think it should
be drawn to
the attention of the country and the government,
that if they are going to slap our money right and
left to help out one industry, they have got to do
it for the others.
There is a special War Revenue Act also in
effect in Canada — excise duty on playing cards
and wines. Now in this country we all play cards,
or a lot of us do. I am an expert. I think Mr.
Hickman and Mr. Crosbie will acknowledge that
I am one of the expert forty-fives players in
Newfoundland....
This morning I took up the Daily News and
read the statement made by Mr. Abbott, the
Finance Minister of Canada, and I read that
Canada has, at the present time, an adverse
balance of nearly $9 million, and they anticipate
that soon it will be $1 billion. What does it mean?
I pointed out yesterday that this $300 million, that
they got as a part loan from the United States the
other day, will have to be applied to that, and the
balance of that money has to be found in gold, or
else they have to restrict their trade with the
United States, and they are doing that and slapping embargoes on all kinds of goods
to come in
from the United States, and here's the country we
are asked to go into partnership with. In other
words, tomorrow, if we want into confederation
with Canada, my friend Mr. Starkes would not be
permitted to import a fur coat from the United
States, because they put on legislation a few days
ago to stop it.
When I finished yesterday afternoon, I think I
mentioned the various departments of government that would come under provincial administration,
and I repeat them: Education,
1078 NATIONAL CONVENTION January 1948
Justice, Natural Resources, Public Works, Public
Health and Welfare, the Liquor department,
Home Affairs and the provincial treasury. All
these departments, according to Mr. Smallwood,
would involve an annual expenditure of approximately (I am speaking in round figures)
$15.5 million. Let us see what these departments
are disbursing now in comparison with Mr.
Smallwood's estimates. Mr. Smallwood drew his
figures from the Economic Report. He pointed
out that our total expenditures were $25 million,
and he took off $11 million, and made it $14
million as a provincial expenditure.
First, the Department of Education vote for the
year 1947-48 amounts to $3,622,300. In the
forecast by Mr. Smallwood, this amount has been
reduced to $3,107,000 or a decrease in annual
expenditure of over $500,000 annually...
Mr. Cashin Listen to who is talking about being
fair! Mr. Chairman, if we turn to the Economic
Report which Mr. Smallwood took so much
trouble trying to destroy, we forecast an annual
expenditure for education of $5.75 million and
this did not include any capital expenditures. In
the report of the Education Committee given here
over 12 months ago — and, mind you, Mr.
Smallwood was a member of that committee —
the importance was stressed of an increased vote
for education, and it is generally acknowledged
throughout the country today that we must make
every effort to advance the education of our
children. Yet, right here in these estimates, under
a provincial government, Mr. Smallwood tells us
in so many words that we should decrease that
vote; that we should not build more schools for
our children and our teachers are not entitled to
any additional remuneration. Mr. Smallwood
may not have that programme actually in mind.
He might have this one: in Canada, in practically
every province, a school tax is imposed on the
people. Mr. Smallwood may have in mind the
raising of that additional $750,000 annually for
education through additional taxation. The
people must be taxed additionally, if we are to
keep up the present annual educational grant.
This would mean that in the various towns and
villages all over Newfoundland, unless the
people are agreeable to further taxation, they
cannot have their present educational facilities.
Now let us look at the Department of Public
Health and Welfare. The estimates of expenditure for the present year under our present
form
of government amount to approximately $6.25
million. In addition large amounts are being spent
in the construction of hospitals which will continue to increase our expenses for
upkeep. Mr.
Smallwood lops a cool $1 million off this amount
and makes his estimate something over $5.1 million. This Public Health and Welfare
Department
was one on which considerable controversy took
place. I have a personal interest not alone in the
country, but particularly in Ferryland; and in
recent weeks, I am informed, a very serious accident took place in that settlement
and there was
no nurse and no doctor there. If we go back to 40
or 50 years ago, Trepassey had a doctor, Ferryland had a doctor, Bay Bulls had a doctor.
Now
we have no nurse, nothing. I say now, as a former
representative of that district, that it has been
done deliberately by the Commission of Government.
If we turn again to the Economic Report, we
will find that in our proposed programme, which
Mr. Smallwood ridiculed, we forecast an annual
expenditure of $6.25 million; whilst, in addition,
we set aside from our anticipated surplus an
additional $1 million to be devoted to the purpose
of old age pensions, unemployment insurance
and additional social service.
If we turn to the Black Books again, we find
that the reductions in expenditure made by Mr.
Smallwood eliminate over $800,000 in the form
of assistance to indigents, allowances to widows
and orphans and maintenance of hospitals. Just
imagine, Mr. Chairman, our poor unfortunate
widows and orphans will be deprived of the mite
which they have been receiving under our own
government; the maintenance of hospitals will be
reduced, whilst we know it is increasing in cost.
Again, Mr. Smallwood may have in the back of
his head the idea of further taxation in the form
of hospital tax as well as municipal tax for the
poor. He certainly knows that in many provinces
of Canada the people are taxed specifically for
the maintenance of hospitals. In the city of
Montreal, a 5% tax is collected on all meals
served in hotels and restaurants for the purpose
of maintaining hospitals. Also the citizens are
specifically taxed to take care of the poor. Mr.
Smallwood may not have the idea of decreasing
January 1948 NATIONAL CONVENTION 1079
the expenditure on such things as our hospitals
and legitimate poor, but he may have in mind the
imposition of such taxes as hospital taxes to make
up the deficiency and thus continue the present
social services our people are getting through our
present form of government.
Mr. Chairman I am making a ruling — I want
to repeat again now, that when a member is
occupying the floor, no other member may rise
in any circumstances unless he is rising to a point
of privilege or point of order.
Mr. Cashin If you go into a restaurant in
Montreal and buy a meal which costs over 35
cents, you pay 5% hospital tax on it. Mr. Smallwood might have something like that
in mind. If
so, he should have injected it in his own budget
and tell us where he is going to get that money.
Now we come to the Department of Natural
Resources, which we find has an annual ordinary
expenditure for the present fiscal year of
$3,646,700. To begin with, Mr. Smallwood
wipes out any relief to be given to the people of
Labrador, shown in these estimates as amounting
to $10,000 annually. I wonder what the Rev. Mr.
Burry thinks of this, particularly in View of the
fact that even though only $10,000 is voted in the
estimates this year for such relief, we find that
because of the stupid policy of the Commission
government and the Dominions Office, it will
cost the treasury in the vicinity of $50,000. The
extra relief was brought about because the United
Kingdom government refused to permit the
Labrador Development Company to transfer
from England some $200,000 for the purpose of
continuing its woods operations on the southern
end of Labrador.
Mr. Chairman You are out of order. What has
that got to do with the terms?
Mr. Cashin In the estimates there was $10,000
outlined for relief. That has been lopped off. I let
no man kick me around.
We find that Mr. Smallwood eliminates nearly
$40,000 in connection with the development of
handicrafts; that he cuts out over $300,000 in
connection with the development of our fisheries;
and that other important surveys, as well as financial help for rural development
have been
eliminated. He ends up by estimating that the
Department of Natural Resources should be administered at a cost of roughly $1.75
million
annually, whilst in our Economic Report we estimated an expenditure of $2.5 million
annually
on ordinary account, as well as an additional $1
million from our anticipated surplus for the purpose of encouragement and development
of
fisheries, particularly the fresh fish industry. In
all, under the Economic Report plan the sum of
$3.5 million was outlined as against $1.75 million under Mr. Smallwood's proposal.
Mr. Cashin I wrote two budgets. I was helped
to write the first one, and what little I know Sir
Patrick T. McGrath taught me. If you call this a
budget, then I say this committee should rise,
because it is not a budget. A budget outlines
expenditures and revenues and explains them.
This explains nothing.
But we must take into consideration at this
time that if we unite with Canada, we must agree
not to use any of our funds for the development
of any of our products that may in any way
compete with similar Canadian products. Therefore we see that it is proposed to save
substantial
sums of money in the administration of the
Department of Natural Resources, but on the
other hand we must realise that if we adopt such
a course, our products of the sea and forests must
be made to suffer for the sake of similar products
in Canada.
Now let us review the Department of Public
Works. Under the estimates of expenditure for
the fiscal year 1947-48, the total expenditures are
estimated to cost, together with $900,000
recoverable advances, approximately $8.7 million. Mr. Smallwood, after apportioning
$2,358,000 of this amount to be taken care of by
the federal government, proceeds to lop off
another $4 million which was voted during the
present fiscal year under the heading of Reconstruction. He tells us that there will
be no new
roads built, although in another breath he said that
he strongly favours the development of the tourist
traffic, which we all must admit is dependent
upon the expansion of our road system. Then he
also cuts out $15 million for the expansion of
hospitals and other buildings, many of which are
now under construction and which must be
finished. Whilst he leaves the staff of the
Geological Division intact, he cuts out $45,000
which was used for field work during the present
year.
1080 NATIONAL CONVENTION January 1948
Mr. Chairman, I have shown that unless our
accumulated surplus, consisting of some $16 million at present held in sterling funds,
is convened
to dollars, we would only have around $4 million
left to finish these hospitals, extend our road
system and perform other necessary capital
expenditure. The completion of these buildings,
like the sanatorium at Corner Brook as well as the
finishing of the St. John's General Hospital and
other institutions will take at least another $3
million. Therefore we would only have $1 million available for road expansion.
Under the programme outlined in the Economic Report, we forecast an annual expenditure
which includes $1.5 million for roads and general
public works — a total of $5.5 million. That
represented a cut in this particular department of
around $3 million. These cuts were made up of
the elimination of any deficit on the Gander
operations, together with capital expenditures
there, amounting to $1.15 million. Another $1.75
million was taken from the vote covering the
construction of new buildings and hospitals, as it
was our idea to complete these institutions from
our present accumulated surplus, or if we had
acquired more surplus than our anticipated $5
million, we could have continued the construction and allowed the accumulated surplus
to
remain intact, to be used, as we pointed out, only
in case of great national emergency. Mr.
Smallwood, therefore, has eliminated any requirements for new road construction or
the further expansion of buildings, which, in my
opinion, should require between the two, not less
than $2 million yearly. Therefore, I suggest that
the vote under the heading of the Department of
Public Works should not be less than $4 million
under a provincial form of government. We must
take into consideration that many roads have
been begun and the continuation of their construction is essential to the general
welfare of the
country, particularly from a tourist policy
angle....
Now take the three departments of main expenditures under review, namely Public Health
and Welfare, Public Works and Natural Resources, which at present employ some 2,500
Newfoundlanders who are paid in annual salaries
approximately $2.5 million annually. We find
that under Mr. Smallwood's proposed provincial
plan several hundred would be stricken from the
payroll, whilst in addition, the hundreds of
workers on the construction of new roads would
be deprived of another $1 million yearly in
wages. Also, if we take into consideration the
curtailment of our educational system, we would
find that salaries of our teachers, long overdue for
adjustment, would remain unchanged.
Mr. Chairman, I have made a brief survey of
the four main departments of government which
would be affected under union with Canada.
With your permission, the permission of Mr.
Smallwood and the Ottawa delegation, I now
propose to give what in my opinion would be the
necessary monies to administer the affairs of
Newfoundland under a provincial government. I
give these expenditures under the various headings as follows:
*
It will be seen from these estimates under the
various departmental headings, that in my
opinion the cost of administering the affairs of
Newfoundland as a province of Canada would be
at least $19.25 million, possibly $20 million annually. This is absolutely the lowest
possible on
which this country as a province could be administered, unless we are compelled to
cut our
January 1948 NATIONAL CONVENTION 1081
social services considerably, as well as our
educational facilities. However, I feel that in
view of the present necessity for these various
services, that our people are not prepared to accept anything lower and again I express
the
opinion that the amount of $15.5 million forecast
by Mr. Smallwood is ridiculous.
Now let us see how this money can or will be
raised in order to pay these expenditures. Let us
review Mr. Smallwood's estimates of how this
revenue is to be raised and see what deficit will
accrue.
To begin with, let us set aside the $3.5 million
annual transitional grant, as it is not a continuous
source of revenue; but in summing up the eight
year period covered by Mr. Smallwood, we will
take this transitional grant into account. The
federal government of Canada agrees to pay to
the provincial government an irreducible minimum of, say, $6.2 million. In addition,
we would
collect approximately $500,000 annually from
various government departments such as Finance, Natural Resources, Post and Telegraphs,
Public Works and Public Health. Also the
Department of Liquor Control should show a
profit of $1 million, whilst the gasoline tax would
give us an annual collection of $1 million. Therefore our total revenue would be under
the various
headings as follows:
| Finance |
$ 175,000 |
| Posts and Telegraphs |
87,000 |
| Assessor |
20,000 |
| Education |
60,000 |
| Justice |
30,000 |
| Natural Resources |
300,000 |
| Public Works |
500,000 |
| Public Health |
300,000 |
| Board of Liquor Control |
1,000,000 |
| Gasoline tax |
1,000,000 |
| Can. govt. subsidy |
6,200,000 |
| Total |
$9,672,000 |
In addition to this amount of revenue aggregating $9,672,000, we are to receive what
is
called a transitional grant of $3.5 million yearly
for the first three years of union; thereafter reducing itself by $350,000 annually
until the grant
disappears at the end of the 12th year of union.
The Grey Book tells us that this particular grant
is given in order to help us along the road until
adjustment of our sources of provincial revenue.
However, it will be seen that, for the first three
years, when we add this $3.5 million annual
transitional grant to our revenue as outlined
above, we will have a deficit of over $6 million
each year; that consequently after the third year,
this deficit will increase by $350,000 annually.
These deficits for the first three years will be met
in part, no doubt, by the application of the one-
third of surplus which is to be set aside in trust as
outlined in the Grey Book, section 9, sub-section
(1)
[1] — unless extra taxation is imposed on the
people. Let us see what this will mean in the
period of eight years which Mr. Smallwood has
estimated his forecast to cover. It works out as
follows: eight years' revenues, as already
referred to, will amount to $77,376,000. in addition, we will receive an amount of
$22,750,000
in transitional grants from the federal government, making a total, in all, of $100,126,000.
Now, if we take eight years of expenditures in
administration of the affairs of the province and
at the rate of not less than $19.5 million, it will
amount to $156 million or a deficit of nearly $56
million. This deficit will be met from the $10
million trust fund set up at the beginning of union,
whilst additional taxation of $46 million will
have to be imposed on our people in the form of
direct taxation in order to pay our accounts.
However, Mr. Smallwood in introducing his
so-called budget tried to avoid, and did avoid any
reference to the introduction of any new taxation.
He pointed out that the repayment of our loans to
Britain would go against these deficits, but I want
to point out that the repayment of these loans and
the application of any other outstanding loans is
not revenue, and it has not been devoted towards
the repayment of loans which they borrowed, but
it has been stuck in as revenue to bolster up the
budget. When Mr. Hickman took Mr. Smallwood
to task for including the repayment of the Housing Corporation advances and other
advances
outstanding since they were not regular revenue,
and should not be shown as such, Mr. Smallwood
replied by pointing out in so many words to Mr.
Hickman, that whilst he was a good businessman,
he did not understand public finance, and that the
repayment of such loans would and should be
considered as revenue. I want to tell Mr.
Smallwood that he does not know what he is
talking about — that he himself has had no ex
1082 NATIONAL CONVENTION January 1948
perience whatever in either public or private
finance, and I now quote from Websterhis definition of the word "Revenue". It is as
follows: "The
annual or periodical yield of taxes, excise, custom duties, rents, etc., which a nation,
state or
municipality collects for public use. It also means
income from investments".
Mr. Cashin Investments, right — income from
investments. They are paying 3.5% on the Housing Corporation loan, and you credited
that to
your account certainly, but you don't take the $4
million and put it in as revenue that the Housing
Corporation owes you. If you do you are only
cooking the budget. Now that is Webster, and Mr.
Chairman I think he should know a little more
about it than either Mr. Smallwood, myself or Mr.
Hickman, with all due respect to the latter.
Now sir, I have shown that for a period of eight
years, under union with Canada, and administering this country as a province, that
we would have
to find in extra money $46 million after using up
the $10 million trust account. That means that an
annual average amount of almost $6 million will
have to be found. How? What form of taxation
has Mr. Smallwood in mind through which he
could collect this extra money? However, let us
suppose that Mr. Smallwood was in a position to
cash in the money now held in sterling funds,
amounting to some $16 million, and let him also
take the $4 million cash surplus held in dollars,
he would find that he would have to find at least
$26 million. That would leave nothing in the
treasury. It would leave no new hospital completed at Corner Brook; there would be
no new
roads to encourage the tourist traffic. What would
be our position? The Province of Newfoundland
would be bankrupt. Then what happens? What
happens to any bankrupt concern? The creditors
step in and wind up the business. And so we find
on referring again to the Grey Book, section 14
under the heading of Reassessment of
Newfoundland's Financial Position. I will now
read this particular section for the information of
all concerned:
In view of the difficulty of predicting with
sufficient accuracy the financial consequences to Newfoundland of adjustment to
ProvincialStatus the Government of Canada
will appoint a Royal Commission within
eight years of Union to review the financial
position of Newfoundland and to recommend the form and scale of additional financial
assistance, if any, which may be required
by the Government of Newfoundland to
enable it to continue public services at then
prevailing levels without resorting to taxation more burdensome, having regard to
capacity to pay, than that of the Maritime
Provinces.
[1]
What does this section really mean? It means
that when the Canadian government experts
compiled these proposals and forwarded them to
us, they knew that as a province, Newfoundland
would be unable to balance its provincial budget
without the imposition of extra taxation on our
people, and that it would be necessary for them
to make further arrangements as to our continued
existence as a province. The Canadian government knows that if and when we enter union
with
them, we can never recover our former status.
The British government knows this also.
Everyone knows the result of investigations by
royal commissions in this country, and for that
matter in Canada. New arrangements would have
to be made so that Newfoundland would be able
to carry on. Either the people would have to find
additional revenue in the form of direct taxation,
or a deal would have to be made, possibly forced
upon us, whereby the 110,000 square miles of our
Labrador possession would be mortgaged or
taken over on a rental basis by the Canadian
federal government or by the French Province of
Quebec.
We all know that the future supply of high
grade iron ore necessary for the manufacture of
high grade steel both in Canada and the United
States is to be found in Quebec and Newfoundland-Labrador. We know that Newfoundland,
because of her ownership of the great Grand
Falls waterpower, capable of developing not less
than 1.25 million horsepower controls the future
development of both the Newfoundland and
Quebec mineral areas. We know that legislation
has recently been enacted here in Newfoundland
giving the Labrador Mining Company the right
to build about 150 miles of railway through Newfoundland territory on Labrador. We
know that
efforts are now being made by the promoters of
this mining company to rush the development of
January 1948 NATIONAL CONVENTION 1083
these iron areas in Labrador. We know that
during the present session of Congress in the
United States legislation is being brought before
the House of Representatives to facilitate the
passing of the St. Lawrence waterway project,
designed for the purpose of deepening the canals
leading from the St. Lawrence River into the
Great Lakes, so that ships which carry 10,000-
12,000 tons of cargo and draw 30 feet of water
can navigate safely. We know that Canada is
under control from the United States, that her
finances are controlled from there, that her
military policy is controlled from there, and that
right at the present time the Canadian military
authorities are making preparations for military
emergencies. This high grade steel necessary for
military purposes, as well as the high grade ore is
obtainable in Labrador. If Canada could control
the iron ore industry of North America she would
be in a position to dictate terms to the USA, as
America uses 100 million tons of iron ore annually.
In all this planning the hand of the United
Kingdom is seen. We see the concessions given
the Labrador Mining Company being changed to
suit the purpose, and we see the financial terms
of this Labrador agreement giving Newfoundland absolutely nothing. For instance, we
find that this great water-power in Labrador is
handed over to the Labrador Mining Company
for nothing — its development ultimately would
bring Newfoundland only 15.75 cents per
developed horsepower, whilst similar projects in
the Province of Quebec pay to the Quebec
government not less than $1 per horsepower, and
in this instance the Quebec Labrador pays in
rental to the Quebec government $100,000 a year
gratis. Let me point out that the hydro-electric
development at Deer Lake in the Humber area
does not pay anything in the way of royalties to
the Newfoundland treasury. On the other hand,
the Buchans mining company is paying the
Bowater company at the rate of $4 per horsepower for the necessary electric energy
to operate
their industry, and that the Buchans mining company pay all told to the Corner Brook
company
almost $50,000 yearly for electric power. In view
of this experience, are we, as a people, justified
in standing idly by and permitting the Commission government to sabotage our assets
in this
respect, whilst they are at the same time hand in
glove with outsiders to take away the control of
our country and hand it over to Canada?
Mr. Chairman, I have repeatedly stated that
the only interest from an economic standpoint
that Canada has in Newfoundland is to obtain by
either fair means or foul our Labrador possession.
Proof of this statement has been frequently given
by both Premier Duplessis of Quebec, and former
Premier Godbout of the same province. When I
brought this matter up sometime ago, Mr.
Smallwood got up and abused Premier Duplessis.
He termed him a Nazi and a Fascist, and I don't
know what else. Well I have just come from
Canada, and I venture the opinion that the provincial election in Quebec will return
Duplessis by
a larger majority than ever, and that there is a
great probability of the reform of the Liberal
party in Ottawa. Prime Minister King is about to
retire, and his successor is very difficult to find.
I predict that you will find in 18 months or two
years another leader of the federal opposition in
Ottawa, and I think Colonel George Drew will
head the Conservative party, and together with
Duplessis will lead the party at the next general
election. Mr. Smallwood laughs and thinks he
knows all about it!
During the past year the Quebec government
has issued an official map of that province showing the entire Labrador, including
the 110,000
square miles of Newfoundland territory, as part
of the Province of Quebec. Quebec has been
disappointed ever since the judgement of the
Privy Council in 1927 gave Newfoundland this
particular territory. They are disgruntled because
they did not avail of the opportunity given them
in 1925 by our Monroe government. I think Mr.
Smallwood said that no efforts were made, but I
know that Prime Minister Monroe, Sir John Bennett, Mr. Justice Higgins, and Mr. Patrick
McGrath went to Quebec as representatives of
Newfoundland, to try to settle it out of court as it
were; and if my memory serves me right — if I
see Mr. Monroe tomorrow I will ask him — they
offered to settle with the Quebec government that
they could take the Labrador, and we would only
retain our fishing rights on it, and Quebec would
pay the Newfoundland government $15 million.
Mr. Cashin Well, that's worse. Quebec thought
they had the case sewed up. They have been sore
ever since. One of the greatest crimes in this
1084 NATIONAL CONVENTION January 1948
country was that this original discovery of iron
ore was made by a Newfoundlander in 1933, he
was unable to finance it, and in 1935 a company
called Weaver Minerals Ltd. got this concession.
They had to spend $50,000, were given the right
to explore 20,000 square miles, and when the
time arrived and the mine went into production
they would pay to the Newfoundland government 10 cents a ton royalty. The gentleman
who
practically financed the entire part of that promotion nearly broke himself. When
the Timmins
interest in 1940 took it over they associated themselves with the Hannah interest
of Cleveland.
They control many of the steel mills, and with
Canadian and American backing they have spent
many millions down there on this project. But the
original discovery was made by a Newfoundlander....
Mr. Monroe and his colleagues visited
Quebec to try and effect a compromise in connection with the Labrador boundary dispute,
and
offered to settle the matter with former Premier
Taschereau for a payment to Newfoundland of
somewhere in the vicinity of $15 million, and
then the action would be called off. Newfoundland was merely to retain the fishing
rights.
Taschereau and his government turned down this
proposition, with the result that the case was
heard before the Privy Council in 1926 and
judgement was given in favour of Newfoundland
in the early part of 1927. Now that case started
around the early part of this country, when
Dickie, who owned a mining claim and a waterpower claim on the Muskrat Falls started
an
operation, and the Canadian government stepped
in and claimed it; Dickie went broke, and it was
not until 1909 that efforts were made to settle this
case.... We won 100,000 square miles, and now
they are trying to take it from us.
Did not former Premier Godbout, prior to the
advent of the Duplessis government, write Prime
Minister King at Ottawa urging him to use his
efforts to secure Newfoundland-Labrador for the
Province of Quebec? Has not Duplessis on more
than one occasion since his assumption of office,
stated publicly that Canada and Quebec should
be handed Labrador in return for the services
rendered by Canada in the defence of Newfoundland? Duplessis conveniently omitted
to
tell the world that Newfoundland servicemen
were sent overseas to fight for freedom and for
the continued existence of the British Empire,
whilst in many cases Canadian conscripts were
sent to Newfoundland to guard our shores!
Yes, Mr. Chairman, I still hold that the only
inducement there is in Newfoundland to make
Canada anxious for us to join them is because of
the wealth of Labrador. Let me quote for you an
extract from a despatch by the British United
Press at Ottawa on December 29, 1947, with your
permission Mr. Chairman, because I don't think
this is out of order.
Mr. Chairman Yes, all the documents emanating outside the House are out of order.
Mr. Cashin Well, I will have to summarise it,
and it will probably be longer than the other way,
and I hate to give you tedious repetition, but the
country should know.
Dr. J. A. Retty was employed by the Labrador
Mining Company at the outset, and took a party
into Labrador in 1935-36, after this concession
was granted. He did all the preliminary exploring
of that area. He is still employed by the Hollinger
interests, and ... at a convention of North
American geologists.... Dr. Retty stated and the
geologists agreed with him, that the future of the
Labrador Mining Company, the future of
Labrador was to keep the steel industries, to keep
Canada and the United States going. No doubt
some of you have read it. He went so far as to say,
and I don't agree with him, that efforts were being
made to bring that place into production in ten
months. I think that should have been ten years,
but I do know they are going to have it in production in five or six years, and I
further do know ...
that the only interest Canada has in Newfoundland is the Labrador iron ore.
Furthermore we have acquired 50 million
cords of wood in Labrador, roughly. Do you
realise, Mr. Chairman, that in the huge Province
of Quebec, which is the largest manufacturing
province of newsprint, the timber is becoming
depleted; that in that province and a couple of
places in Ontario, nearly 12 million cords of
wood are cut and manufactured annually, and
that they have considerable forestry programmes
on hand, no doubt to rehabilitate the forests? But
I do know that even at the present time they are
looking at Labrador. We have 50 million cords
of wood down there. That should keep two mills
of 500 tons capacity going indefinitely, and it is
not far up the St. Lawrence River to Québec, and
January 1948 NATIONAL CONVENTION 1085
when the St. Lawrence waterway goes through
these larger ships can go right up to Fort William
and Port Arthur, to Cleveland, which has the
largest steel manufacturing plant, and Iowa and
Pennsylvania. She is after the Labrador because
she wants American dollars.
I admit that I have strongly stressed on more
than one occasion in this Convention, and before
this Convention ever met, the importance and
value to Newfoundland of the potential wealth of
Labrador.... During my recent two weeks in
Canada I made enquiries about this whole business, and was invariably told by mining
men and
other business interests that all Canada wants
Newfoundland for is for the iron ore of Labrador,
as well as the 50 or 60 million cords of timber
which is available there for the manufacture of
pulp and paper. Canada today, even though she
is in serious financial straits, has great national
ambitions for the future. Canada is struggling to
be one of the future powers of the world. Canada
is sparsely populated. Her per capita population
per square mile is less than that of our country.
Canada carries a huge national debt, far too great
for its present population of something over 12
million people. There is only one redemption for
this Dominion to the west of us, and that is
increased population. In order that Canada may
continue to expand, and equitably place the cost,
she must increase her population to not less than
20 million. That is necessary if Canada hopes to
survive and develop as a nation. By the inclusion
of Newfoundland in the Canadian federation,
Canada would be in the position of controlling
the steel production of the entire North American
continent. This would be her salvation from an
economic standpoint. I say that our Labrador
possession must be guarded for the future generations of Newfoundland. I realise that
strong influences are at work, both governmental and
financial, to rob from Newfoundland her God-
given rights. We, as a people, owe it to the future
generations yet unborn, to guard those interests
handed to us by a kindly Providence.
This whole Labrador business looks to me
something like the deal made between Russia and
the United States when Russia sold Alaska for
about $7 million. Like Labrador, Alaska was
considered a barren wasteland. and the Russians
thought they were making a good deal; but hardly
was the ink dry on the contract when Russia had
the bitter experience of seeing their former territory becoming a land worth billions.
Will we,
by accepting these proposals made to us by the
Canadian government, be guilty of a similar
folly? Will we grasp at a few dollars and live to
see French Canada take to herself the millions
which should be coming to us — and which
would have made us one of the richest little
countries in the world? What a bitter pill that
would be for our children to swallow — what a
remorse to carry to our graves — to sacrifice
hundreds of millions for a baby bonus!
Before concluding my remarks on this budget
presented by Mr. Smallwood, let us see what
would be our total revenues and total expenditures for the period of 12 years, by
which time the
transitional grant will have been eliminated and
the Province of Newfoundland would be expected to administer its own affairs and balance
its accounts through the avenue of further taxation.
At the rate of $19.5 million annual expenditure, we would have spent at the end of
12 years
the enormous sum of $234 million. During the
same period, our revenues derived from subsidies
and other sources based on Mr. Smallwood's own
figures would amount to slightly over $116 million, exclusive of transitional grant.
Now if we
add the transitional grant for 12 years on the basis
outlined in the Grey Book, we find that Canada
would pay the province an additional $26.25
million. These two amounts would total $142.5
million, which would leave a deficit on ordinary
account of over $90 million. This means that if
we were to be in a position to balance our provincial budget, we would have to impose
taxes of
an additional $7-8 million per year. However,
Mr. Smallwood has compiled this budget of his
to include all our surplus as revenue. In this case,
we would be in the position of having to raise, in
extra taxation, over $60 million for the 12 year
period, or an annual increase in taxes of $5 million annually. On the other hand,
if we adopted
this sort of policy, we would not be able to extend
our roads to foster the tourist business, we would
have to leave our hospitals and other buildings as
they are today, and the construction of same
incomplete.
[Short recess]
Mr. Cashin Speaking as many of us have during
the past 16 months of closer economic union with
1086 NATIONAL CONVENTION January 1948
the USA, it might be interesting information for
all of us to know that even at the present time,
Canada herself is seeking closer economic union
with Uncle Sam. Canada finds herself, despite the
fact that she shows a balanced budget, in the
unfortunate position that for a period of nine
months her adverse balance of trade with
America comes to the huge sum of $800 million.
She has paid some of this indebtedness by the
borrowing of $300 million in America, the
balance must be taken from her reserves of gold
in the Bank of Canada, as well as the strictest
carrying out of the present austerity programme
— the increase of taxation on imports from the
USA, all for the purpose of restricting the spending of money in America — in which
programme
Newfoundland is included through the Canadian
banks doing business in our country.
Now, Mr. Chairman, after reviewing these
Black Books and this Grey Book, and after reading Prime Minister King's letter to
the Governor,
that these are the best financial terms that the
Government of Canada can offer to Newfoundland; I want to say to Prime Minister King
and to the Ottawa delegation that these proposals
are fraudulent; that, in short, they do not constitute a fair and equitable basis
for union of our
two countries. In order to make a fair and equitable basis for union it would be necessary
that
the debt question be properly adjusted; that
Canada would pay to Newfoundland the difference between the per capita debt of Canada
and the per capita debt of Newfoundland. In this
instance it is approximately $1,200 per head for
every man, woman and child in our country. This
would mean that Canada should pay to Newfoundland not less than $300 million in cash
before we could go into national partnership on
a fair and equitable basis. We have been told by
Mr. Smallwood that this debt matter was discussed at Ottawa, but there does not appear
in
either the Black Books or the Grey Book any
reference to the matter. As a matter of fact, the
national debt of Canada has been deliberately
omitted from both, which to me, at any rate, is an
indication that the purpose of these proposals is
to deceive our people, and through the avenue of
the proposed baby bonus, to lure our people into
union with Canada, the representatives of which
have not properly given us their own present
financial position. It should have been unneces
sary for the delegates to this Convention to have
to direct questions on the financial position of
Canada to our own government for replies from
Ottawa. Answers to all these questions should
have been available to us from the Ottawa delegation. But no, it has been proven beyond
the
shadow of doubt that the Ottawa delegation
failed in its duty to this country, failed miserably.
Instead of going to Ottawa as representatives of
a proud and prosperous people, they went in a
subservient manner, so to speak with their hats in
their hands, begging from a country which at
present has found it necessary to increase its
taxation substantially and inaugurate an austerity
programme, and which has been forced to appeal
for financial assistance to the United States.
Now let us see where we would finally land
ourselves from a financial and taxation
standpoint, if we were to accept these so-called
terms and become the tenth province of the
Dominion of Canada. Mr. Smallwood has told us
that our per capita tax would not exceed $75 per
head. Let us work this out properly. To begin
with, the Canadian government would expect us,
they would compel us to pull our weight in the
entire Dominion boat. This means that the people
of Newfoundland would be compelled to pay
their proportionate share of the cost of administration of the federal government.
I repeat
again now, that the cost for every man, woman
and child in Newfoundland, to pay their share in
administering the affairs of Canada, would mean
that each individual would be taxed directly and
indirectly to the tune of over $200 per head
annually. It would mean that instead of the people
of Newfoundland having to find, as at present
under our own Commission or responsible
government, some $40 million in annual taxation
to pay the cost of administering our country, or
at the rate of $120 per head, that we would have
to find as a people an additional $35 million in
annual taxes or a total of $75 million each year
in taxation.
In addition to this taxation, we would have to
find for the next ten years on average another $8
million to pay for the administration of the
proposed province. This money, we are told by
Mr. Smallwood, will have to be collected by
direct taxation. He has not explained what kind
of direct taxation. As a matter of fact, he has not
told us how these taxes are to be collected or from
January 1948 NATIONAL CONVENTION 1087
what source of direct taxation. In some large
cities the police department is not a provincial
responsibility; it is municipal. In Montreal they
have the provincial mounted police and the
municipal police. I imagine we will have Mounties costing $500,000 a year.
[Short recess]
Mr. Cashin Before I proceed, I want to say that
I understand His Excellency the Governor is
leaving for England tomorrow on official business. I want to take this opportunity
through the
avenue of this Convention to say to His Excellency with all respect, in view of the
statements I
made yesterday, that before he returns to resume
office as representative of His Majesty, he might
ask the United Kingdom government to let us
know why Great Britain failed to carry out its
obligation or contract with the people of Newfoundland, and fulfil its agreement between
the
Newfoundland government and the United
Kingdom in 1933.... There are others besides
myself who think that this Convention which has
been going on for some time — two and a half
years ago I said this Convention was a farce and
there are others now who have come to the conclusion that I was right. This Convention
has been
a failure and some have appealed to the government to have it called off. I would
suggest therefore, with all due respect, that His Excellency
ascertain from the United Kingdom government
during his visit why they have not carried out this
agreement. In view of the fact that this Convention has been termed a failure, the
1933 act should
be carried out.
Speaking again on taxation in Canada at the
present time, I notice Mr. Smallwood pointed out
that practically all the taxes are paid by Ontario.
Mr. Cashin Where do the raw materials come
from? Ontario makes the profits on the raw
materials from Saskatchewan and the lumber
business of British Columbia. All that is controlled in Toronto and Montreal. These
people have
a right to pay these taxes direct and indirect
because these people are located there. In some
Maritime Provinces — take the Dominion Steel
Company, their profits are distributed in
Montreal, Toronto and New York. Even at the
present time the DOSCO people have adopted a
plan whereby some new American capital is to
be brought in, and DOSCO steel will be control
led from the United States. True, Ontario pays
and Québec pays, but the raw materials come
from British Columbia, Alberta and Saskatchewan — oil from Alberta, wheat from
Manitoba and Saskatchewan; Ontario reaps the
reward.
As I said, with regard to direct taxation, Mr.
Smallwood has not told us how these taxes are to
be collected or from what source. No one has told
us how they expect to collect these monies. Mr.
Smallwood has not told us. Why? Because there
shall be extra taxation to go on. Every man,
woman and child will be taxed; an extra $8-10
million will have to be inflicted and do not let
anyone fool you to that effect. Mr. Smallwood
stated on occasions that the wealthy will have to
pay this taxation. I think I heard him one time say
that Mr. Job and Mr. Crosbie and some others,
because they are merchants, they will have to pay
it...
Mr. Cashin You are banking on the baby bonus.
Next thing, you will have a baby farm. I say to
you, that the rich will pay their share, but the
ordinary man and woman of this country will, in
the final analysis, pay all these taxes. Mr.
Smallwood in his abortive budget has not indicated in what way these taxes will be
collected.
He has refused to do this, because he has been
trying to convey to the country that there will be
no such thing as additional taxation, when he
knows quite well that there will be. Plenty of it.
There are many kinds of direct taxation; property
tax, which could be imposed on people owning
property and homes. There is education tax,
whereby people in the various outports would
have to pay the increased cost of education for
their children. There is also sales tax in force in
some provinces, which means that every time one
makes a purchase of goods in any store, one
would have to pay a provincial sales tax. In
Quebec it is 4%. If you want to buy a present, you
have to pay 25% luxury tax. If you want to buy
an alarm clock, you have to pay 25%. There is
such a thing as a hospital tax effective in Canada,
a 5% hospital tax in Quebec. There are many
forms of direct taxation, many of which will have
to be imposed on our people in order to collect
$8-10 million a year in provincial taxes in order
to balance the provincial budget. I move that the
committee rise.
1088 NATIONAL CONVENTION January 1948
[The committee rose and reported progress, and the Convention adjourned]
