Newfoundland National Convention, 8 January 1948, Debates on Confederation with Canada


January 8, 1948

Mr. Penney On a question of privilege, I would like to say something in regard to an attack which was made on me at the last session that I was able to attend in December, 1947. On Tuesday after January 1948 NATIONAL CONVENTION 1075 noon Mr. Higgins had about the same complaint as I had, and I thought one dose of that stuff for one afternoon would be sufficient; but with your permission I would like to refer to it.
....I was personally attacked by the delegate from Bonavista Centre in language that was as dirty as could come from the slums of St. John's, rather than from a leader of this Convention. The words used to describe my person, as I understood them at the time, and all delegates present could hear, were that I was acting as a clown, a brainless thing with some money, and an old fossil, who thought that his money gave him some privileges. This dirty stuff was snapped across the floors of this assembly just before the committee rose for adjournment, written into the records of this Convention and broadcast to the country, before I had a chance to say a word. I presume, sir, it was the desire and intent of Mr. J.R. Smallwood to blast a man's character because he dared to disagree with him. It is not my proposal to reply to what I believe to be scandalous charges, because I am not looking for recommendations of character from Mr. Smallwood or anyone. Imuch prefer to leave that to the people of the District of Carbonear, and the town of Carbonear in particular, where I have lived all my life. They sent me here to represent them, and as far as I am concerned, unsolicited According to Mr. Smallwood, however, they sent here a brainless thing, unfit to represent anything; yet it is a fact that the majority of the people of Carbonear did this with their eyes open, and I submit that the people of the community and district of Carbonear are as intelligent as any other community in the island.
Mr. Chairman I think that's beyond question, Mr. Penney.
Mr. Penney The language used in this vicious attack was as much applicable to them as to their representative. It was also an attack on the dignity and honour of this assembly, as well as every delegate present who regards decency and fair play as a gentleman's code of honour. It is very distasteful and unpleasant to me to be put in a position at the beginning of the New Year to have to refer to this at all. I would not do this, only it is the first time that I have been able to attend sessions since the attack was made, and such a dirty scroll should not be left inscribed on the records of this Convention. May I ask you then, Mr. Chairman, that the words complained of be deleted from the records, since, as I understand it, the rules and regulations of this assembly may afford protection....?
Mr. Chairman Mr. Penney, I recall generally the incident to which you refer, but have you any recollection as to the date on which the language was used?
Mr. Penney I believe it was Friday afternoon, November 28, for the next day I was obliged to go home.
Mr. Smallwood Mr. Chairman, I have no comment whatever to make on the remarks of Mr. Penney, beyond saying this: that what I said to Mr. Penney that day was I believe at that time, and I believe now, to be fully merited because Mr. Penney, possibly he was unconscious of the fact and unaware of it, but Mr. Penney was most grossly and inexcusably rude to me on that occasion, and what he got was tit for tat. Any time that Mr. Penney presumes to be insulting to me, whether he realises it or not, he is going to get just as hard as he sends. Now I want to add one word. WhatI said was to him and not to the people of Carbonear. I know the people of Carbonear, and have been connected with them for 20-odd years, and for them I have the greatest of respect and admiration....
Mr. Penney Mr. Chairman, the statements I made at that time I can prove, and I am willing to prove before you in a private session, or in your room, but I decline to say it over the microphone.
Mr. Chairman I have tried to emphasise time and time again the maxim that "words are dangerous things"...it is very distressing that I should be put in the position of trying to vindicate the honesty and integrity, the intelligence and dignity of members of this chamber, to which they must surely have been entitled, otherwise they would never have been sent here by the respective constituencies. In View of the fact, Mr. Penney, that this thing occurred some considerable time ago, I wonder if you would have any objection to my deferring a ruling until tomorrow, because I would like to get the transcript and the exact remarks before me, rather than to deal with the matter in the abstract now.... Would you have any objection to this?
Mr. Penney None whatever, Mr. Chairman. I much prefer that you would take time to think it over. It is on the records, sir.
Mr. Chairman In that Case, Mr. Secretary, will you make it a point to see that that portion of the transcription to which my attention has been drawn will be taken off with all possible speed?....

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. Smallwood Who said that?
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. Starkes You should help your country.
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. Chairman You need not quote it, Major Cashin.
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. Higgins What is the tax?
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. Smallwood Nonsense. Why do you not be fair?
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. Smallwood Point of order...
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. Smallwood Is this the budget?
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.
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. Smallwood 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. Smallwood $10 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. Smallwood Half.
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. Smallwood I know; but I did not say 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.
[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:

  • *
    Department of Finance (Administration) $ 200,000
    " " (Pensions) 202,000
    " " (Interest and Sinking fund) 375,000
    " " (Prov. legislature) 200,000
    Assessor of Taxes 10,500
    Dept. of Home Affairs 300,000
    Dept. of Education 3,750,000
    " " Justice 1,100,000
    " " Natural Resources 2,500,000
    " " Public Works 4,000,000
    " " Pub. Health & Welfare 6,500,000
    Board of Liquor Control 135,000
    Total $19,272,500
  • [1] Volume II:512. [Volume II is not in The Confederation Debates Collection]
  • [1] Volume II:513. [Volume II is not in The Confederation Debates Collection]

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