Newfoundland National Convention, 14 January 1948, Debates on Confederation with Canada


January 14, 1948

Mr. Chairman Order, please. Major Cashin?
Mr. Cashin Mr. Chairman, we are getting up towards the end of our business, and in order to properly facilitate it, I move that as the first order of the day the Report of the Finance Committee be received and adopted.
Mr. Chairman The motion is that the Report of the Finance Committee on the Economic Report be received and adopted. Is the Convention ready for the question?
[The motion carried]
[Mr. Cashin complained he had not yet received a reply to questions concerning the Savings Bank's position under confederation, and the Bank of Canada.
Mr. Fudge read a reply to a question on the sale of Labrador, which indicated that this was not under consideration.]
Mr. Fogwill In answer to a question which I tabled on November 21, I have had a reply quite a while now, but I have not read it because half the reply is not yet completed:
I give notice that I will on tomorrow ask His Excellency the Governor in Commission the following questions:
1. What pension (superannuation) rights have the employees of the Newfoundland Railway acquired under Newfoundland law?
2. In the event of the Newfoundland Railway being taken over and operated by the Canadian National Railways, who will be liable for the payment of pensions payable to employees of the Newfoundland Railway presently retired and receiving pensions?
And I got the following answer, sir:
Commission of Government Newfoundland
St. John's, Newfoundland, Dec. 2, 1947.
Dear Sir:
In reply to question No. 1 submitted by Mr. F.D. Fogwill, and forwarded to me with your letter of November 24, 1947, the reply is that employees of the Newfoundland Railway have no statutory rights to pensions. Annual allowances calculated on the basis established by the Civil Service Act, 1926, as amended, are allowed ex gratia to railway employees on retirement in accordance with the terms of a Minute of Commission of 1934.
With regard to question No. 2 submitted by Mr. Fogwill, as it is addressed to His Majesty's Government in the Dominion of Canada, enquiries are being made as to whether that government would be prepared to accept and deal with it.
Yours faithfully, W.J. Carew Secretary.
Capt. W.G. Warren, R.A., Secretary, National Convention, St. John's.
Mr. Higgins Mr. Chairman, on behalf of Mr. Hollett I beg to move the following resolution:
I move that immediately before the order of the day is called on Wednesday the 14th day of January, 1948, on resuming the debate on the motion, that the Convention resolve itself into a committee of the whole to further consider and discuss the proposals received on November 6 from the Right Honourable the Prime Minister of Canada, and the said debate shall not be further adjourned.
Mr. Chairman Mr. Higgins, while I am not rejecting the motion, my feeling is that, being a closure motion, it should be deferred; that is to say, that I should defer receiving and putting the motion at the present time. As you, Mr. Higgins, particularly, and perhaps members generally will be aware, there is not, nor has there ever been, strangely enough, any statute covering closure in Newfoundland. Now, standing order 54 reads as follows: "Whenever any matter arises in the course of the proceedings of the Convention ... which, in the opinion of the Chairman, is not covered by these Standing Orders, reference shall be made to the rules and orders of the House of Assembly in Newfoundland, and the matter decided in accordance with these rules, save that where the said rules are silent upon the matter the 1158 NATIONAL CONVENTION January 1948 question shall be decided in accordance with the rules of British parliamentary practice." Our rules, as you are quite aware, Mr. Higgins, are silent on that point ... and an examination of the rules of the House of Assembly would reveal a like defect. There is nothing to be found in these rules covering closure motions, and therefore, under the concluding portion of standing order 54 I am forced to decide the matter in the light of British parliamentary practice.
On that point I would direct your attention to Sir Erskine May, pages 450-51, in which he points out that the Chair should intervene in a closure motion where it is felt that it is an abuse of the rules of the house or infringes on the rights of the minority, and in the discharge of this duty the discretion of the Chair is absolute, and is not open to dispute. There is no appeal to the House on that point. As you are fully aware, it is purely a guillotine or knifing-off procedure, which is calculated to knife off and shut off debate when put and carried. Now, I should direct your attention to the fact that I got notice of this motion on Friday afternoon. Of course, Saturday and Sunday we were not sitting, and it therefore meant that I received notion of it two clear days ago. In further view of the fact that my attention has been drawn to the desire of some members to speak, Mr. Higgins, on this business, who have been prevented by illness and transportation and other defects from attending, and who therefore have not had an opportunity of addressing themselves on the business in question, I feel that a closure motion ought not to be put at this time... There must come a time when the responsibility for accepting this motion will rest with the House ... my tentative opinion is that I will in all probability put the motion at the beginning of Friday afternoon's session.[1] That would leave members the opportunity of speaking this afternoon, this evening if we sit, tomorrow afternoon and tomorrow evening. Beyond that I am not prepared to go ... I want to inform members now that it is my intention at the moment to put this closure motion to the House at the resumption of business at 3 o'clock on Friday, and I would ask members to take due notice and govern themselves accordingly. So if you don't mind, Mr. Higgins ...
Mr. Higgins I don't mind, sir. It is not my intention to close off the debate today, but it would be fair to ask you if the members speaking after Mr. Smallwood would conclude before Friday, and then you would be prepared to put it at that time.
Mr. Chairman Oh, quite definitely. You will recall that I assured Mr. Smallwood that he would be given the opportunity of replying once before the debate on the business terminated. Mr. Smallwood is now availing himself of that right. In addition to that there are other members who have not spoken, and I feel that a reasonable time should be given after the motion reaches me. As far as I know it is the desire of this Convention to complete its work by the 31st of this month ... and if we are to deal with the rest of the business on the order paper it follows that a decent interval between the debate now before the Chair and the 3lst of the month must necessarily be preserved; therefore the proposal of a closure motion at this time is not improper, in fact it is quite proper. The only thing we have to make sure of is that it is not jumped on any members that may be absent. The motion is quite fair, and I think the house will agree that in deferring it until Friday members are quite well informed in this respect and it cannot be argued that they had no opportunity.
Mr. Higgins Do you need it seconded now, sir?
Mr. Chairman No, I am deferring it until Friday.

Report of the Ottawa Delegation Proposed Arrangements for the Entry of Newfoundland into Confederation Committee of the Whole

Mr. Smallwood Mr. Chairman, I understood Major Cashin to say that 1,200 civil servants would be laid off under confederation. Now what are the facts? Our government at the present time employs directly 4,615 civil servants. Under confederation 1,947 of them will be taken over by the federal government, and lucky persons they will be. These 1,947 civil servants ... are as follows:
256 from Customs
1031 " Posts & Telegraphs
31 " Assessor's Department
15 " Defence
4 "" Consolidated Fund
19 " Home Affairs
26 " Justice
61 " Natural Resources
90 " Health and Welfare
369 " Public Works
1947 altogether... Now that would leave 2,688 civil servants still employed by the provincial government of Newfoundland:
40 in Finance
38 " Customs
33 " Home Affairs
90 " Education
445 " Justice
308 " Natural Resources
151 " Public Works
1542 " Health and Welfare
65 " Liquor Control
2668 altogether.
Now, out of that total left to the provincial government it is very probable that between 40 and 50 would no longer be needed, but they would have the first chance in the new federal offices that would have to open in Newfoundland.
While we are at it, it would be interesting to see just how many persons are employed by our Newfoundland government today, both as civil servants and otherwise. In the civil service we have 4,615, in the Railway system we have 3,700, in civil aviation we have 1,300, and of teachers we have 2,200, giving us a grand total employed by the Newfoundland government today of 11,815 persons, nearly 12,000 persons altogether. That is now. What would the position be under confederation? The federal government would take over 1,947 civil servants, 3,700 railroaders and coastal boat men, and 1,304 for civil aviation, a total of nearly 7,000, which would leave a total of 4,864 still to be paid by the provincial government The total number to be employed or paid by the provincial government will thus fall from nearly 12,000 down to just under 5,000, the rest of them, of course, becoming employees of the federal government.
I noticed that Major Cashin came back again to this question of what constitutes revenue for a government. It was in connection with my estimates of what the provincial government would spend and collect. I included in that estimate interest and repayment of principal on loans advanced to the Housing Corporation as revenue for the provincial government. He says it is not revenue. I say that every cent and every dollar the government receives is revenue ... and every cent of it has to go into the Consolidated Revenue Fund, to be shown as revenue. Within the Fund it can be sub-divided into various groupings, but it has to appear in the Fund as revenue I will tell you how far the United States government goes in this matter. If they lend money to another country then that entire amount goes into that year's account as expenditure, and if they receive back any interest or any of the principal then that goes in there as revenue. It is not a matter of quoting what Webster says about the meaning of "revenue", it is a matter of knowing what is the actual practice of governments such as the United Kingdom, Canada and the United States. I have followed their practice and I have done right. The Commission of Government did the same thing, and I for one would rather follow the practice of the Commission government in a matter like this than all the finance ministers we had put together in the days of responsible government.
Major Cashin says that confederation would mean the end of the clause in the Labrador Mining Company agreement with Newfoundland which requires the company to employ Newfoundlanders. That clause will go, he says, and French Canadians will take the jobs from our Newfoundlanders. There is not one word of truth in that statement. The agreement made with the Labrador Mining Company will stand, and every clause in it will stand. Confederation won't change it at all. It is true that under confederation French Canadians or any other Canadians may enter Labrador, but getting work with the Labrador Mining Company is a horse of another colour. There is nothing at all under confederation to stop any provincial government from making such an agreement with a company, as our government has made with this Labrador Mining and Exploration Company. If the Nova Scotia government, for example, makes an agreement tomorrow with some company giving that company special concessions, or any concessions, the Nova Scotia government can insert a clause in the agreement stating that nobody but Nova Scotians may be employed by that company. They have a perfect right to do it. Any government or any province can do that if it cares to do it. This argument is nothing but a political 1160 NATIONAL CONVENTION January 1948 dodge, a red herring, something put out to try and turn people from confederation. I think, sir, speaking to that point, a reply was received from our own government here by one of our own members who addressed a question as to what would happen to that clause, and our own government has replied that that clause would stand. I am right.
Major Cashin referred to the government Savings Bank, who would own it under confederation, what will the interest rate be and who will control it? Well, sir, who owns and controls it now? Who sets the interest rate now? The Government of Newfoundland. And they will go right on owning and controlling it, and setting the interest rates payable. Confederation will make no difference whatsoever to the Newfoundland Savings Bank, so the depositors don't need to pay any attention whatever to Major Cashin's advice to withdraw their money from it. Once before Major Cashin talked about the Newfoundland Savings Bank, and the governors of the bank had to come out with a denial to prevent a rush on it.
Mr. Chairman Now, Mr. Smallwood, just deal with Major Cashin's remarks.
Mr. Smallwood All right, sir, I will say merely this, that our depositors in the Savings Bank do not need to fear confederation. It will not affect the Newfoundland Savings Bank whatsoever.
Now Major Cashin, in referring to Canada's great old age pension scheme, and her pensions to the blind, says, in the first place, that the old age pensions are paid only to paupers, and second that before they can get the pension they must turn their property over to the government. Well, he is completely wrong on both points. The old age pension is not given only to paupers, but it is provided that a person may have his own private income of $240 a year, and still get the full pension of $30 a month, or $360 a year. A married couple can have a private income of $360 a year between them and still get the full pension of $720 a year between them, and even if a person has more than $240 a year of private income he can still get the pension. If he has $10 a year more than the $240 allowed, it only means taking the $10 off the amount of the pension. He is allowed a total of $600 a year altogether, putting the pension and his private income together.... As for having to turn their property over to the government before getting the old age pension, that simply is not true. Let me see if I can make this matter very simple, so that everyone in Newfoundland will understand. Let us suppose some old age pensioner dies, leaving his widow behind (I mean under confederation), and he has a little property. The property falls to this widow, and she goes on getting her old age pension of $30 a month as long as she lives. Then she dies. What happens to the property then? It can be left to anyone in the family or out of the family, anyone the pensioner wishes to leave it to, if the property is worth $2,000 or less. And remember this: the value is not what that property would be worth in St. John's, or Grand Falls, or Corner Brook, but right in the settlement where it is. That means that nine properties out of ten would fetch less than $2,000 cash. Maybe one out of ten might fetch over $2,000 cash. If the property is worth over $2,000, what happens to it when the pensioner dies? Well, if some relative or anybody else has contributed regularly to the pensioner's support the property can fall to him or her, and he would have a good right to it, or she would. It may be a grandson, son or nephew, or anyone else, who had contributed to the support of the pensioner for the last three years of the pensioner's life. But suppose that nobody has helped out the older person for those three years, and suppose it is worth over $2,000 net in that settlement, what happens then? The government steps in and gets back what it had paid out in pension before the pensioner's death. So if a man has an old father and mother getting $30 a month each in old age pension, and if the old people have property which would fetch over $2,000 cash in that settlement if sold, and he wants to come in for the property he knows what to do. All he has to do is to contribute regularly and reasonably towards the support of his old father and mother, and then if the property is worth over $2,000 it will fall to him, and as I said, if the property is worth $2,000 or less then the pensioner can leave it to anyone he likes, though of course under the law he must leave it to his widow if she is a pensioner as well, and as every member in this Convention knows just as well as I do, it's got to be a pretty good property in most parts of this country to be worth over $2,000 net.
Now, Major Cashin does not think very much of experts. These Canadian government estimates of what they would collect from us in January 1948 NATIONAL CONVENTION 1161 taxes, and what they would spend in Newfoundland, were made up by the financial and commercial experts of that government. Now I wonder if Major Cashin's contempt for experts is as real as he makes out? What is a doctor, Mr. Chairman, but an expert in the diseases of the body and how to cure them? What is a lawyer but an expert in the law? Do we despise these legal experts, or do we go running to them when we get in trouble? We are very glad to take their advice, and to pay them for it too, as no doubt you have found out, sir, in the past few years. What is a musician but an expert in music, and a motor mechanic and an aeroplane pilot, experts in those fields of human endeavour; can't there be experts in the field of public finance and trade and commerce? Major Cashin called Mr. Gordon Howell an expert in customs matters here in this country, and Mr. George Allan an expert in income tax matters. Is there anything strange in the Government of Canada having experts to assist them? Their Department of Finance is a great department of government, and as a matter of fact the Government of Canada is extremely lucky in the calibre of their experts, and it was those men who made these estimates of what the government would spend and collect should we become a province. These are the men who make up Canada's own budgets, and if we think that's a job that any slouch can do, then we had better think again. They have to know exactly what they are talking about, just as Mr. Walter Marshall in our own Finance Department has to know what he is talking about, and Mr. Herbert Russell has to know what he is talking about before he can run our Railway.
....What is the good of special training if there is no such thing as experts? There are experts, and it was experts who compiled these estimates. Some of them are experts in our Newfoundland trade, because it's been their business to study it, and know it inside out. Hundreds of millions of dollars of our trade has passed through their hands in Ottawa in the past few years through allocations and quotas and the like, and on top of that Canada has stationed here a trade commissioner in the person of Mr. Britton to study our trade and see what we import, and how our trade is conducted. It is his job to do that, just as it is the jobs of dozens of other Canadian trade commissioners scattered around the world. Do you know, Mr. Chairman, that these Canadian trade commissioners are obliged to visit the very factories and plants in Canada where they produce the goods that are sold in the countries where these commissioners are stationed? They have to secure samples of the products of Canada's competitors sold in the countries they are stationed, together with prices and similar trade information, and keep sending that type of information regularly back to the Department of Trade and Commerce. I spent many hours in the Department of Trade and Commerce in Ottawa, and I happen to know that it is one of the finest organisations of its kind in this world today. They know our trade inside out, and they were at the elbows of the financial experts when those experts were making up the Canadian government's estimates of what revenue they would collect here in Newfoundland should we become a province. There are about 6,000 men and women in that great department, and amongst them all you will find specialists and experts with very intimate knowledge of every country in the world with whom Canada trades; and you will find men whose specialty is the trade of our own Newfoundland. I hope we will hear no more of this contemptuous talk of experts, this attempt to sneer at them.
Major Cashin told us that the Bank of Canada had this very month withdrawn its support price for long-term bonds. I do not know just what we were supposed to infer from this simple fact, but I suppose it was intended to make us think that there was something wrong with the value of the bonds. What Major Cashin failed to tell us was that the Bank of Canada's action was taken exactly ten days after the United States Treasury had done exactly the same thing with regard to United States bonds. In both countries it was official government policy, and it was part of the mutual American-Canadian policy of anti-inflationary measures. And what Major Cashin did not tell us is that a few days afterwards the Bank of Canada resumed its support-price policy. Mr. Chairman, a lot of statements can he made that sound bad, that sound as though there was something wrong, but which are capable of a perfectly reasonable explanation. Truly, a little knowledge is a dangerous thing.
I was greatly interested when Major Cashin tried to make our blood run cold with his talk 1162 NATIONAL CONVENTION January 1948 about the terrible taxes they have in Canada ... federal taxes, provincial taxes and municipal taxes, income and corporation taxes, and estate, customs and excise taxes, amusement and liquor taxes, until he was almost out of breath reeling off the list. By the time he had finished he almost had us in tears for the poor, poverty-stricken Canadians, crushed beneath that awful burden. We wondered how the Canadians manage to breathe, let alone live. The one thing we simply could not understand is how Canada managed to exist at all during the five years of war, for if they have this awful burden of taxation today, what must they have had during the war, because since the war ended three different reductions have been made in Canada's taxes. The only trouble with Major Cashin's list is that by changing the names of some of them it is our own Newfoundland we would have thought he was talking about, for here in Newfoundland we have income taxes, bank taxes, excise taxes, mining taxes, lumber taxes, stumpage taxes, motor taxes, drivers' taxes, restaurant taxes, hospital taxes, harbour taxes, radio taxes, death taxes, accident insurance taxes, game license taxes, waterpower taxes, insurance agents' taxes, dog taxes, mining prospectors' taxes, boiler inspection taxes. We have our beautiful, our artistic, our delightful customs taxes which grab more out of us than all those other taxes put together. Mr. Chairman, let us not allow our common sense to become paralysed just by the mere mention of the word taxes. Let us keep our feet on the ground. There are taxes that fall heavily on the poorest of the poor, and taxes that fall lightly on the richest of the rich. For example, if you will turn to page 73 of vol. 1 of the Black Books, you will see something that should make you think. It is a table supplied us officially by the Tax Assessor's office and it shows us the profits cleaned up in the year 1945 by our companies and firms in Newfoundland. You will find that 105 companies declared a combined profit between them that year of over $15 million.... And what tax did they pay the government on those $15.5 million? Just a third — $5.5 million in taxes. That is not how they do it in Canada. But it is how we do it in Newfoundland. We allow 100-odd concerns to clean up $15 million in just one year, and the government takes only $5 million from them in taxes — but meanwhile our babies, our children, our old people, our fishermen, our labourers are taxed, the life is crushed out of them by the high cost of living, and the high taxes that help to drive up the cost of living. And then after all these huge and shameful profits have been gouged out of us, the government brings a man from England to hold an enquiry into the cost of living. After the horse is stolen the stable door is —is what? Is the stable door locked, even then? No! For all the enquiry tells us is that the high cost of living cannot be helped, we have to grin and bear it. Call me anything you like, but what I am saying is the stone, sober truth and the whole country knows it. Call me anything you like, but after you have done so, I will still come back and ask you to defend or explain how it is that in one short 12 months, $15 million are squeezed out of this handful of Newfoundland people by 105 concerns; $5 million of it taken in taxes, and $10 million distributed in dividends to a few shareholders. And then Major Cashin gets up and talks about taxes in Canada!
Major Cashin devoted himself also to the question of family allowances. He says they are held out as bait to Newfoundland. How can that be, when the fact of the matter is that family allowances came into force long before this confederation talk started at all, long before this Convention was even thought of? Major Cashin must think Canada wants us pretty badly if they are willing to pay out $250 million a year in family allowances to her own people just to provide a bait to Newfoundland. Then he gets off the prize one of all — he will never live it down as long as he lives — when he calls family allowances "immoral legislation". I think that is the most grotesque statement I have heard in this Convention since it began — to call family allowances "immoral". The churches in Canada have supported family allowances, the clergymen — and speaking of clergymen, it was Father Labelle who was the great pioneer advocate of family allowances in Canada — the trade unions, cooperative societies, social welfare agencies and organisations, and all political parties and leaders of Canada have supported family allowances, and do so today. All these and many, many others have hailed family allowances, and praised and supported them as the best piece of legislation so far introduced into the New World; but Major Cashin calls them immoral — à 1a Hitler, he says. January 1948 NATIONAL CONVENTION 1163 The sober truth is that never was there a more moral piece of legislation, for family allowances are a strong bulwark for the strengthening of family life. The family, sir, is the foundation of society and civilisation, and anything that fosters and strengthens the family is not immoral, but highly moral, and family allowances are the finest system so far developed by any government anywhere to strengthen and encourage the family. New Zealand has family allowances, Australia has family allowances, Great Britain herself has family allowances, but Major Cashin says family allowances are immoral. But, after working himself up into a lather of moral indignation against these immoral family allowances, Major Cashin cools down again and reassures us that we need not worry any more about these family allowances, and why? "Because", says he, "they are going to be done away with soon." What is his reason for believing this? He forgot to tell us. Why does he think they are going to end? He did not think we would need any more proof than his bare word.
Mr. Chairman, if I were to tell you that the Commission of Government were soon going to close down our entire railway system; that the United States government is soon going to do away with their army, navy and airforce; that the British government is soon going to invite Joe Stalin to come from Moscow to London and take over the governing of Great Britain; if I were to tell you that and ask you not to ask for proof, but to take my word for it, what would you say? But without any proof Major Cashin says that these family allowances are soon going to be done away with. Whether he meant minutes, days, weeks, months or years or decades, he did not say, but just "soon". Now, sir, people can talk till they are black in the faces against family allowances. They can call them immoral, and say they are à la Hitler, they can twist and distort them, and when it is all said the simple truth remains, that we have 120,000 children in Newfoundland today, 120,000 children, sir, under the age of 16 — over one-third of our whole population. Every one of those children, under confederation, would receive the family allowances — $5, $6, $7, or $8 a month, according to the child's age. The parents may be rich or poor, high or low, sick or well, working or unemployed, it makes no difference; all the children will get the family allowance every month of the year, rain or shine, winter or summer, good times or bad times. Into every nook and comer of this island and Labrador these family allowances will go every month, into 1,300 settlements to those 120,000 children. With confederation our children under 16 will get family allowances. Without confederation what will they get?
Sir, you will notice that up to the present time I am only replying to Major Cashin, that is because being the good speaker he is, being the experienced public man he is, and the ardent and enthusiastic anticonfederate he is, Major Cashin has for three days arrayed all the facts and arguments he could think of against confederation, and I, sir, one by one, am knocking these arguments on the head and throwing them under the table. That is why I am taking so long. It was worth a reply, it was a good speech. He is a fine fellow and I like him. Nevertheless, sir, he is an anticonfederate, God help him .
Well, he had a fling at the income tax in Canada, and was very careful to point out that here in Newfoundland a single person must earn at least $1,000 a year before any income tax has to be paid by him, whereas in Canada it is $750 a year. Now before dealing in any detail with this question of income taxes there is one general observation I want to make. Before the late war, the income tax in Canada was not very different from ours here in Newfoundland, but during the war Canada put up a very mighty war effort. Her taxes rose higher and higher and higher. That was during the war. But since the war ended Canada has reduced her taxes, not once, or twice, but three times, and it is believed throughout Canada that Finance Minister Abbott is bringing in further reductions in taxation when he brings down his new budget next month or the month after. Members of the Ottawa delegation will remember my joking attempt, at one of our plenary sessions, to draw Mr. Abbott out as to what reductions in taxation he is likely to bring down in his new budget this winter. He, being very well aware of the fact that a finance minister mustkeep that deadly secret till the last minute, refused to be drawn, but it is believed that there will be reductions again in the next budget a month or so from now.
Well, sir, to get back to that single person, that that means a person with nobody in the world 1164 NATIONAL CONVENTION January 1948 depending on him, what income tax does he pay? I mean now in Canada, and here if we become a province. If he makes $800 a year, $66 a month all the year round, he pays 42 cents a month income tax, and it is deducted from his pay ... but if his income is $900 a year, or $75 a month all the year round, he pays $1.33 a month income tax. If that single person makes $1,200 a year, $100 a month, he pays $5 a month income tax. Is that so terrible for a single person without a chick or a child to support? $5 a month out of his $100?
Now take a married couple with no children or any other dependents, just themselves. A married man making $1,800 a year, if we go into confederation, $150 a month all the year round, will pay $15 a month income tax out of his $150. If he makes $3,000 a year, or $250 a month all the year round, he pays $35 a month income tax out of $250. That is, remember, a married couple with no dependents, only the two of them. Now take a married couple with three children under 16. On any income that that man makes, anything up to $1,500 a year — $100, or $500 or $1,000 or $1,500, anything up to $1,500 a year — that is $125 a month every month in the year, he pays no income tax; not only does he pay no income tax, but he is paid money, $216 a year by the Government of Canada in family allowances. Now if his income is $2,000 a year, this same man with three children, at $166 every month of the year, he still pays no income tax, but instead the Government of Canada pays him $194 a year in family allowances. Now if his income is $2,500 a year, $208 a month every month, he still pays no income tax, but instead he receives $106 a year from the Government of Canada in family allowances, and of course the more children he has under 16 the more family allowance money that family receives. The simple truth is that at least 80 persons out of every 100 in Newfoundland under confederation will pay not a cent of income tax. God help us, their income does not bring them into the income tax group!
Again, Major Cashin tried to curdle our blood by telling us of the almost incredible and unbelievable number of taxes imposed on all kinds of products. For example, and this is one of the easiest ones, he says there are 52 taxes on a loaf of bread in Canada. There was one he mentioned that had 250 taxes on the one article. How do they live up there? Are they still alive, or are they all dead? Now about those 52 taxes on a loaf of bread. Supposing he is right, what does it matter to people if there are 52 taxes on a loaf of bread, and the loaf still sells for 13 cents? 13 cents a loaf for a 20 ounce loaf. In St. John's a loaf is what? 18 cents. How many ounces? What is the size of our loaf in St. John's?
Mr. Higgins It is a bigger loaf.
Mr. Smallwood I think it is 24 ounces. My wife buys the bread, which she won't bake. We should go out in the real Newfoundland where they bake their bread. I am not going to deny that there are all these taxes actually imposed on all these things, for the simple truth of the matter is that that is how it is all around the world. It is the same here. These taxes, sir, are paid on all our imports before we import them, and then we pay them back in the price we pay for what we buy, and besides paying all those taxes that Major Cashin mentioned, besides paying those in the price of the article when we buy it, we also pay customs duty on top of them all, and on the customs duty we also pay a profit, in fact a double profit to the wholesalers. You can take almost any article you would like to mention, and if you can trace it back far enough, and trace back all the various articles that go into that one article, you will find dozens and sometimes hundreds of taxes have been collected on it at one point or another, from one country or another, and the consumer pays it all.
Now, sir, I want to address myself for a moment to this question of sales taxes. In my opinion a sales tax is not an ideal tax. It is not direct taxation, which I prefer, but indirect taxation, which I do not like. The sales tax is put on by the Government of Canada. How long it will be left on I don't know. It may be left on for two or three years yet. I don't know. The rate of the sales tax is 8%. How long it will remain at 8%, again I don't know. Before the Government of Canada abolishes the sales tax altogether they may reduce it to 4-5%. That is something I can't prophecy. Well, there it is — a sales tax of 8%. It is collected mainly from the manufacturer of the article. It is included in the retail selling price of the article. The consumer knows nothing about it, he simply buys the article in the shop and the price of that article includes the sales tax, if the article includes that. It is like our customs duties, and that's another reason why I don't like the sales tax. But the sales tax is not put on everything, and January 1948 NATIONAL CONVENTION 1165 when you take your total imports into Newfoundland for a whole year, and take off from that total the things that do not pay the sales tax at all it comes to a very large figure. Last night, until late this morning, after I went back at 11 o'clock from this chamber, I took up the Newfoundland Customs blue book for March, 1946. That happened to be the latest issue I had in the house, and I discovered that in the year 1945-46, ending roughly a year ago, Newfoundland imported nearly $66 million worth of goods. Out of that, here are the goods that would pay no sales tax, none at all.
Fresh foods, $1 million Flour, $2.5 million Animal and poultry feed, $600,000 Hay, $ 170,000 Fertilisers, over $100,000 Meat, beef and poultry, over $1.5 million Butter, over $200,000 Cheese, over $300,000 Milk, around $1 million Sugar, around $1 million Vegetables, around $1 million Eggs, nearly $500,000 Salt, over $500,000 Building materials, well over $1.75 million Solid fuel, nearly $4 million Animals and livestock, over $1 million
All that was imported last year, nearly $18 million in that list, and on top of that you can put another $3 million at least, because I could not get it all out of the book, and it shows a total of about $21 million worth of Newfoundland goods that would pay no sales tax at all — none. Now you take that $21 million from the total $66 million we imported, and it leaves $45 million worth of goods that would pay the sales tax; $45 million is subject to sales tax, but you can add to that another $5 million to cover locally produced articles that would also be subject to the sales tax, and it is a total of $50 million. Eight per cent sales tax on that $50 million would be $4 million altogether. Now, sir, turn to the Grey Book, and turn to the Canadian govemment's own estimate of what revenue they would collect from us under confederation, and what do you find? You find that their estimate of what the sales tax would bring them is $4 million.
Mr. Chairman Do you want a recess?
Mr. Smallwood No, sir. Is there only one steno grapher? I would like to save all the time possible, and I want to use up every moment to answer these points. No thank you, sir.
So you see, Mr. Chairman, it was no guesswork after all on the part of the Government of Canada, when they estimated $4 million revenue from sales tax; no guesswork, but highly scientific. accurate, knowledgeable facts.
Possibly I spoke too quickly there, sir. I have noticed that the members do like a recess for five or ten minutes, because it gives them a chance to get a breath of air and gives me a chance to get a smoke, so if you don't mind, I think I will take it.
[Short recess]
Mr. Smallwood Mr. Chairman, there is one statement by Major Cashin that needs to be cleared up, and that is his statement that the people of Newfoundland would be compelled to pay their proportionate share of running the Government of Canada. Just what did he mean by that? Take our own government here in Newfoundland for example, our present government or any past government, Does Major Cashin mean that the Newfoundland people were not compelled to pay their proportionate share of the cost of running our government? And what does he mean by proportionate? Take this very year. The present government are collecting $40 million from all of us in taxes, that is $120 a head, or say from a family of five, $600. That would be the proportionate share, $120 a head, or $600 per family. Now does every person pay his proportionate share? Does every family? Of course not, because those figures are only average. Some persons and families pay much more, some pay much less. The government does not send a bill to each person in each family each year for $120. Or look at it another way. Does it mean that every settlement in the country must pay its proportionate share? Does our government collect a certain fixed amount from every person or every family, or every settlement? Of course not, there just isn't any such thing as a proportionate share. That's just a word, and in this connection it means nothing. That simply is not the way the Government of Canada collects its taxes. It does not start off by saying, "Now, we will need so much for the next year to run the country; we will collect an equal or proportionate amount from every person and family in Canada." Do they do that? No, they don't. Do they say, "We have nine 1166 NATIONAL CONVENTION January 1948 provinces and we will collect so much from each province?" They don't. What do they do? They simply put on a number of taxes. They have a number of taxes, but the bulk of the revenue comes from income tax and the corporation tax. The bulk of their revenue will naturally come from those parts of Canada where most of the very wealthy industries and corporations, and wealthy individuals are. Those places happen to be the provinces of Quebec, Ontario and British Columbia. They pay 89% of all the revenue the Canadian government collects, and that leaves only 11% of the revenue to come from the six other provinces. This shows very clearly what truth there is in Major Cashin's statement, that we would have to pay our proportionate share of the Canadian government's revenue. In three of the provinces of Canada, the three I mentioned, the Canadian government collects much more money than they pay out; in the other six provinces the Canadian government pays out much more money than they collect — the same as they will do in Newfoundland. I have explained all this before, and it is very tiring to have speakers telling us that we will have to pay our proportionate share of Canada's revenue, but I suppose the anticonfederates must have something to use against confederation.
I come to a really important subject, a matter about which Major Cashin had a great deal to say. I refer to the present commotion with regard to the shortage of United States dollars in Canada. He summed it up with a sort of epigram when he told us that Canada had sent out an SOS to Uncle Sam for financial help. Now what is the truth in that matter? Last year the Government of Canada had a surplus of $352 million, nearly $1 million a day for every day of the year. That is, they met all their expenses as a government for the year and had $352 million left over. This present year does not end until the spring, yet already they have another surplus, but this time of over $500 million and still climbing. Does that sound like the Canadian government being hard up, or anything like that? I would remind you that during the year the Government of Canada gave Great Britain free, free, a gift, first of $800 million, then $1 million, and then $425 million. I would remind you that since the war ended Canada has loaned to Great Britain $700 million, and on top of that $125 billion. I would remind you that to other countries ... Canada has loaned another $3 billion. These figures hardly sound like poverty, do they sir? That is the Government of Canada; but what about the people of Canada, her industries, her general economy? Well, the answer is that never in history was Canada so well off, so prosperous, so booming as she is right now. Her industries this very year just past have set up new records for production. Her exports of goods around the world have established a new record, greater even than during the war. A record number of people is employed in Canada now, new records have been established in the past year. They will be broken again this year, but in 1947 new records were established in Canada for the number of brand new industries starting up. Do you know that there are in Canada today over 200 entirely new products more being manufactured than there were three years ago? In many parts of Canada today things are booming so much that there is actually a shortage of manpower, and Canada is bringing immigrants and settlers in by the tens of thousands. They are even flying them in, and they have plans to bring in hundreds of thousands of settlers from Great Britain and other parts of Europe.
Sir, this will interest you. In the first ten months of 1947, do you know how many people went into Canada from Newfoundland to settle down and become Canadians? Sir, I would venture to say that you have probably not seen the figure, and you are probably not aware of the number of Newfoundlanders who went to Canada in the first ten months of 1947. I have not got the figures for the last two months, but in the first ten months of 1947 how many Newfoundlanders moved into Canada to make it their home, from this little island of ours? 2,469 Newfoundlanders. Two of them I am sorry to say are brothers of my own; two others are sisters of my own. I don't like to see Newfoundlanders moving out of Newfoundland, I like to see them stick it out here, and try to make it better than it is.
Canada is immensely prosperous right now. In fact, her very prosperity is one of the causes of this shortage of United States dollars. What has been happening is that they have been bringing in too many goods from the United States out of their tremendous prosperity, and to make it worse, prices on everything in the United States have gone stark, staring crazy, and are still going January 1948 NATIONAL CONVENTION 1167 up. So Canada found that she was using up her supply of United States dollars at a rate that began to make them think, and scare them a bit, so what they have done is this: the government has selected a list of things that Canadians are not allowed to import from the United States, not things that you must have, but things that you can do without. For the next year or so Canadians will have to do without such things or make them themselves — vacuum cleaners, refrigerators, radios, motor cars, etc. In the second place, the Canadian government has made up another small list of things, which they have not exactly prohibited from being imported from the United States, but they have put a higher excise tax on them to discourage people from buying them in the next year or so until the US dollar shortage comes to an end. In the meantime, having adopted these temporary ways of saving the United States dollar supply, Canada has embarked upon what is perhaps the biggest program of home production and development in her whole history. C.D. Howe, the cabinet minister who did such a marvelous job during the war in controlling and stimulating all Canada's wartime production, has been given charge of that mighty program of increasing Canada's industries to enable her to produce for herself the things she has in the past imported from the United States.
The effect of the first World War was to turn Canada from an agricultural economy into an industrial country. The effect of World War II was to turn Canada into a very much greater industrial nation than she had been, and now this new programme under one of the greatest administrators in the world today, C.D. Howe, the man who built half the grain elevators of the United States and Canada, the man who built Port Churchill, one of the great engineers and administrators of the world, has been given tremendous power by the Government of Canada, almost like the wartime powers he had, to inaugurate and shape and mould and encourage the development of brand new industries in the Dominion of Canada.... There is one big way that Canada could adopt, if she wanted, that would very quickly end, her shortage of American dollars, and that would be to sell to the United States and other dollar countries a much greater share of what Canada produces, all kinds of products for which Canada was famous. But if Canada did that ... the old mother country would have to go short; the British people would have to pull their belts tighter, and British children would feel the pinch more than they do today, and Canada, which stood at Britain's back during the darkest days of the war, is still standing by her in these very trying days of peace. Canada has deliberately given up her chance to get $3.25 a bushel for wheat, for example, and is selling it to Britain this year for $2, and up to this year she only asked $1.55 for it. She could sell every bit of it for American dollars at $3.25 a bushel, and that would give her lots of American dollars. Instead of grabbing this opportunity to sell her vast products for American dollars, Canada prefers to continue her assistance to Great Britain, not only selling at lower prices than she could get elsewhere, but selling a very large portion of it on credit. It is not very helpful in this debate, not very helpful to try and paint this temporary shortage of United Stated dollars as a sign that Canada is poor, or that she is financially embarrassed, weak, that is not very helpful to any of us. It is not helping our people to understand confederation to put out such statements.
Canada today is one of the two or three countries in the whole world that has a stable and sound economy. Her banking system is the soundest in the world. Her insurance companies are, to say the least, as sound as any in the world. Her industries are booming, her trade is increasing every day, employment is growing every day. This temporary shortage of United States dollars is a mere drop in the bucket, a mere passing incident, a thing that sounds big today, but will be all forgotten about a year from now.
Now, but for the fact that it is against our rules in this House, I would like very much to read you some of the things said about Canada and Canada's economy in a special section of 14 pages devoted to Canada by the New York Herald Tribune a few days ago. That famous American newspaper paid a wonderful tribute to Canada's greatness. At one point that paper tells us...
Mr. Chairman Don't quote.
Mr. Smallwood No, sir, I am only summarising. At one point the paper tells us ... that democratic Canada and the United States are the only two important nations with the vitality and resources necessary to restore the world to economic 1168 NATIONAL CONVENTION January 1948 health. They alone among the nations produce more than they can consume. Together they are gradually integrating their economies into a North American pattern unmatched in a world of poverty and aggressive nationalisation. Again we are told that in 1947 Canada easily maintained her position as the world's largest trading nation. No nation with so small a population ever occupied so important a place in world trade. Like many other nations Canada has a United States dollar problem, but this did not result from any weakness in her own internal economic position. Again, if I were permitted to quote directly from a newspaper, which I am not, I would quote from a very recent issue of News of Washington.
Mr. Chairman Let me anticipate you, Mr. Smallwood.
Mr. Smallwood No sir, I will not quote it. This tells that to the world's end, in peace or war, Canada makes a great centribution, but she does it quietly and without fanfare, and it is a sturdy and noble people that they have to the north of them. Canadians are a bulwark of democracy and decency. They are fortunate in their neighbours. The whole world recognises Canada's greatness amongst the nations, but to listen to what you hear in this Convention, you would think not that our British cousin is a vast nation, but a poor, poverty-stricken nation, hungry to get Newfoundland in her claws to abuse us and save themselves from disaster. It is as grotesque a picture as was ever painted.
[1]Now sir, one thing that hurt me, the only thing that Major Cashin said that hurt me, was that in this budget ... these estimates I brought in of what I estimated the provincial government would spend and collect in Newfoundland, Major Cashin says that I've cutout this and I've cut out that. And when he did that, I turned to him and said, "Now be fair, be fair". He said, "All right, I'll be fair". And I thought that he meant to go ahead and say, "Yes, I know that these things which Smallwood has cut out of the provincial budget have been cut out because they've become federal expenditures" — that's what I thought he was going on to say. But he didn't. He went straight on to say that he supposed that what I had in mind was to put on special taxes, an education tax for example. A queer thing happens to a man very often when he stands up to speak. He says things that he's astonished afterwards when he reads them in the paper, or hears them on the recording. "Did I actually say that?" Now I dare say it's like that with Major Cashin, but I'm sure he couldn't have thought he was going to get away with that. He must have known that I was going to answer it.... The simple truth is that in my provincial budget I did cut out a whole lot of things, over half of it. I cut out the Railway system, because that system would come under the federal government of Canada. I cut out lighthouses and beacons and buoys and dredging, and public wharves and breakwaters and marine works generally — cut them all out, because they'd be federal. I cut down on the Department of Public Health and Welfare, because veterans' pensions and rehabilitation, which come under that department now, would not come under it in confederation. Those things would be federal. I cut out a lot of things from the provincial government for the simple reason that such things would not be handled or paid for by the provincial government at all. Would Major Cashin want such things to be done twice, once by the provincial government and once by the federal government? After cutting out the things that would be called federal expenditures, I also cut down on a few items that would be saved through ordinary economy. One example of that is the cost of supplies going into the public institutions. These things would come into Newfoundland duty-free and the provincial government would save quite a bit on duty which it pays today. My suggested provincial budget shows only ordinary expenses. That's all it shows, expenditure on ordinary accounts.
The Commission government this present year are spending nearly $40 million. But over $10 million of that is shown in their estimates as special or capital expenditures. Reconstruction is what they call it — over $10 million. Now, these items are capital expenditures and they are so shown. Under ordinary conditions the money to pay for those reconstruction expenditures would come out of capital account. The government itself expects that they'd have to pay for them this year — they expected to draw upon the accummulated cash surplus to pay for some of those capital expenditures. Because they didn't figure that they were going to take in enough revenue, January 1948 NATIONAL CONVENTION 1169 ordinary revenue, to pay these capital expenditures. So they figured they'd have to dip into the surplus to do it. But as it happened, they've been taking in enough ordinary revenue this year to meet those special costs or nearly enough. I'm told that they will have something of a deficit, I don't know. Now that fact does not change the situation. Those expenditures amounting to over $10 million are not ordinary expenditures, but capital account — reconstruction expenditures. One such item is $500,000 for building new schools, and repairing and equipping old ones. The government, you may remember, laid out a three-year plan to spend $500,000 each year on building new schools or helping to build them, and repairing old ones and equipping them or helping to do it.... And this present year is the second year of that particular three-year plan....[1]
Now in my provincial budget of ordinary expenditures I have shown exactly why it says ordinary expenditures. All the rest would be special reconstruction, or capital expenditures. Now that is reasonable. Because I have dropped this $500,000 from my list of ordinary expenditures it does not mean that that $500,000 would not be spent. Of course it would be spent, but it would be shown as capital expenditures, not ordinary, and this comes out of capital account, as it would have come out of capital account this very year had not the ordinary revenue kept up so high. I explained all this in clear simple language when Iintroduced my so-called provincial budget, and it is just downright misrepresentation, I will take that back, it was too bad for Major Cashin to make out that I was trying to do our school system out of the $500,000 merely because I did not show it in ordinary expenditure.
I am coming pretty close to an end of my reply to Major Cashin. He used up a large part of his speech dealing with the purely financial side of confederation. Now that's exactly what we would expect Major Cashin to do, he being the former Minister of Finance. He is interested in that more than anything else. I have detected in Major Cashin from time to time a sort of impatience at anything and everything that came into this Convention that was not financial. He took up a large part of his speech dealing with the purely financial side of confederation, but I don't think he did much to make the position clear to our people. On the contrary he was so hopelessly mixed up and muddled by his own figures, that I was at a loss to know which figures he meant us to accept. Let us see if we can rescue the simple truth from his conglomeration of figures. At one point he told us that the Government of Canada, the federal government, would take $75 million a year from us in taxes. Just remember that figure, please — $75 million, that is what the Government of Canada would take from us. But what does he do? A few minutes earlier, when he was examining the Canadian government's own estimates of the taxes they would collect from us — their estimate you may remember is $20 million a year, but that figure does not satisfy Major Cashin, so he ups it to $32 million. He says the Canadian government sent down this Grey Book, and if you turn to Annex IV in the Grey Book you will find that the Government of Canada estimates that all they will take from the people of Newfoundland in taxes is $20 million. Precisely. Foolishness, it will be more, it will be $32 million. Well, why doesn't he make up his mind? Major Cashin should make up his mind. Is it the $32 million he tells us in one breath, or the $75 million he tells us in the next breath?
Mr. Cashin Might I be allowed to interrupt?
Mr. Smallwood Certainly.
Mr. Cashin In those estimates in the Grey Book the Canadian government did not take into consideration the interest on their own public debt.
Mr. Smallwood ....I will come to that, in fact I think it's the next note I have. If that's it, it's really comical. However, the difference between his estimates of $32 million and $75 million is $43 million a year, surely too big a difference in any man's figures. It is simply delightful how Major Cashin flings around those millions upon millions. Now, how much would the federal government actually collect in Newfoundland each year? The financial and commercial officials of the Canadian government estimated it at $20 million a year made up in this way:
Personal income tax $3,200,000
Corporation income tax 7,500,000
Duties on inheritance, or succession duties 320,000
Customs 2,000,000
Liquor and tobacco taxes 900,000
General sales tax 4,000,000
Misc. excise taxes and other items 1,500,000
Post Office 750,000
These estimates were made by the Canadian financial officials upon the basis of their intimate knowledge of Newfoundland's trade and also their estimate of what our trade would be under confederation...
Major Cashin professed to scoff at them, but I tell you frankly that when it comes to choosing between the estimates of Major Cashin and the very able financial officials of the Government of Canada I do not hesitate a moment. However, when Major Cashin first tried to throw doubt on the Canadian government's own estimates I addressed a question to the Canadian government asking them to give us an idea of how they made their estimates, and what they based them upon. They came back with a detailed reply which satisfied every reasonable minded man in this Convention, everybody whose mind is not blinded against confederation and all its works.
Now the next point is what the provincial government, our own government should we become a province, would collect from us. You will remember that I brought in my estimate of what that would be — $15 million a year from the first four years, and over $15.5 million a year for the second four years, and also you will remember that my estimate was for eight years, because within eight years there is to be a royal commission to go into our financial position to see what additional subsidies, if any, we would need from the federal government. Mr. Hickman said my estimate is too low, it should be $17 million a year. Mr. Hollett said it should be $19 million a year. Almost like an auction, sir, and Major Cashin goes them one better, and drives it up to $19.2 million a year. "In my view", says Major Cashin, "this is the least possible." That is the lowest that the provincial government can get along on. I wonder, sir, if Major Cashin realised — I'm sorry he is not here just now, I would like him to hear this — what that did to his own proposed budget? You will remember under this budget, $25 million a year is what it would take, he estimated, for Newfoundland to carry on under Commission or responsible government— $25 million a year to pay all the ordinary costs of government, including interest on our public debt, sinking fund, operating losses on the Railway, the annual cost of lighthouses, fog alarms, beacons and buoys, public wharves, dredging, pensions and rehabilitation for all war veterans, both wars, the post office and telegraph system, the losses on Gander — and that reminds me, don't be surprised if you find that in the current year the losses on Gander will run to $1.25 million, not counting the capital expenditure of $500,000.... The Government of Newfoundland has to pay — what is it? — one-third of $1.25 million, but Major Cashin's budget of $25 million included the losses on Gander, and the cost of the Fisheries Department, and a large number of other services and expenditures which would not appear at all in the provincial government budget under confederation. Remember, his $25 million a year is supposed to cover all ordinary expenditures, including these items I have just mentioned. If his guess of $19.2 million a year for all ordinary expenses of the provincial government is correct, if that is what it would cost to operate Newfoundland's government under confederation, then without confederation the cost would be $11 million higher than the figure of $25 million he gives us in his budget. As the old saying goes, he is on the horns of a dilemma; either he has to agree with my estimate of $15 million or $15.5 million for the province, or else he has to stick another $11 million on his own estimate, and raise it from $25 million to $36 million a year. He can take his choice.
I hope I have made myself clear on that, it is simple enough, really. The danger of trying to make a thing simple is trying too hard to make it simple, but here are two budgets, one that I bring in and one Major Cashin brings in. The one that I bring in shows what the provincial government would have to spend each year, and Major Cashin shows what the Government of Newfoundland, if we do not have confederation, would have to spend each year. My estimate is $15.5 million a year, and his is $25 million a year. Now, if, if he will not allow me to take off from his $25 million those expenses which we would not have to pay under confederation, if he won't allow me to take that off his $25 million and bring it down to $14 million, then he has got to add $11 million on to his $25 million. He can take his choice, but whichever Major Cashin may choose, the result is clear and simple: under confederation the federal government of Canada will handle and pay for quite a number of costly public services January 1948 NATIONAL CONVENTION 1171 which, without confederation, our own government will have to pay for, and these services run to $11 million a year. With the federal government paying for these services it would be stupid and silly to include them in the provincial budget. I am not stupid or silly, so in my provincial budget I have taken those items of expense out, which brings the provincial budget down to $14-15 million a year. Not the estimate of $17 million of Mr. Hickman, or the $19 million of Mr. Hollett, or the $19.2 million of Major Cashin.
Now let's take it again. The federal government will take in profit $20 million, and the provincial government $5 million or $6 million, a total for the two governments of $25 million or $26 million a year — call it $26 million a year taken from all of us in taxes, and don't forget the coming budget of the Canadian government, which everybody believes is going to reduce Canadian tax rates still more next month or the month after. If the Newfoundland people have to pay $26 million a year in taxes to the two governments, what will they get in return? Let's look and see First, what will the Canadian government spend each year in Newfoundland? Under the tax rental agreement, $6.82 million. Old age pensions and pensions to the blind, $2.6 million; family allowances, $8.35 million; other departmental expenditures, $9.4 million; transitional grant, taking the yearly average, $2,843,000; interest on our sterling debt, that they will take over, $2,156,000 a year; Railway operating losses, at least $2 million a year. It is costing us $1-2 million a year, but it will cost the Government of Canada much more than that, because they will have less revenue. They have to reduce the Railway force, taxpayers' rates and freight rates, to bring them down to Canadian rates, and in some cases they have to increase the wages to the Railway men, and then on top of that, railway and other capital expenditures by the Government of Canada, $2 million a year. Remember, they have to spend $17 million for the first ten years, or they estimate that is what they will have to spend on the railway alone, so that is $2 million a year for capital account. That is a total of $36.5 million a year which the federal government would spend in Newfoundland — $36.5 million a year. Some of it will come to the provincial government, some direct to the New foundland people in social security payments, and some of it to pay for public services carried on here by the federal government. $36.5 million a year to be spent by the federal government, and $15.5 million a year to be spent by the provincial government, makes a total of $51 million a year to be spent in Newfoundland by the two governments together. So we pay $26 million a year in taxes, and receive benefits amounting to $51 million a year, clear gain for us as a people of $25 million a year for the first eight years of union. On a purely cash basis confederation would mean a magnificent gain for the people of Newfoundland. Confederation, during the first eight years of union, will cost the public chest of Canada over $16 million net each year: $16 million a year is what the entry of Newfoundland into the Canadian union will cost the Canadian public chest. That is, they will spend $16 million a year more than they will get from Newfoundland. It sounds like a lot of money in our ears, I admit that, for the Government of Canada to be out $16 million a year by taking us into the family, but, as Mr. St. Laurent said when the Canadian reporters pointed this out, "That is only chickenfeed to the Canadian government, where we are handling thousands of millions each year in these times."
Sir, that concludes a point. I have only one other point, I think, in connection with Major Cashin's speech, and it is a little too long to do at this moment before 6 o'clock. I wonder, sir, if I could have your indulgence and rise until 8 o'clock tonight? Would that be satisfactory?
Mr. Cashin To me anyhow, I don't know about the other gentlemen.
Mr. Higgins I think it would be all right.
Mr. Chairman Is the House agreeable? We will rise then, until 8 o'clock.
[The committee adjourned to 8 pm]
Mr. Smallwood[1] As I said before the recess, I have only one point left in Major Cashin' s speech with which to deal. And that is the question of Canada's public debt. Major Cashin has made a great deal out of the fact that Canada has what sounds like a very large public debt. I say sounds like a large debt, though actually it is not large at all. There used to be nothing easier than to confuse people about this public debt question. An awful lot of nonsense is still talked about it, and 1172 NATIONAL CONVENTION January 1948 there are many people who have very hazy and very often very strange ideas about it. Here in Newfoundland we look at public debt quite differently from other countries, because we have had a very sad experience with our public debt. Our public debt has everything wrong with it that it could have. It was too big to start with. It was a crippling burden on us, a millstone around our necks. In the second place, it was owed to people outside the country — practically all of it. Instead of borrowing it from ourselves, we borrowed it from people in other countries — no doubt because we couldn't borrow it from ourselves because we didn't have it amongst ourselves to borrow it from ourselves. In the third place, we paid too much interest on it. We paid out scores and scores of millions of dollars in interest on our debt, and we paid it out to people in other countries. It was a terrible drain to pay out all that interest. I think in the Finance Report there's a table showing the amount of money that this country paid out over a number of years in interest that it had to send out of the country. I don't remember that figure, but I do remember compiling it myself years and years ago, showing that up to that time we had paid out over $100 million of our hard-earned money in interest and we had had to ship that money out of the country altogether. In the fourth place, most of what we borrowed we spent for unproductive and often wasteful purposes. Yes, our public debt was the worst kind of debt a country could have. And it was very little credit to us that we had such a debt. Anyway, the day finally came when we found ourselves at the end of our rope. We couldn't find enough money even to pay the interest on our public debt. As a country we were bankrupt and insolvent. At that point Britain came to our rescue. She took over practically all our debts, guaranteed the principle and interest to the people we owed it to, and cut the rate of interest down to 3% per year. However, we still ... are draining our country, draining ourselves of millions of dollars just to pay the interest on our debt.
Now, Major Cashin says that Canada's public debt is $17 billion. Actually, their debt is $12 billion, because $5 billion is what's called self- liquidating, or is otherwise an asset rather than a liability. But, $12 billion or $17 billion, it really doesn't matter very much at all because the big point is that practically all of it is owed right in Canada herself — owed by the Canadian government to the Canadian people. The yearly interest on that debt is paid out to people living right in Canada. It hasn't got to be shipped out to people in some other country. The Canadian government has borrowed $12 billion net from the Canadian people. And back to the Canadian people that government pays around $400 million every year in interest. The money stays right in Canada where it can be used for capital to start industry, to employ people and produce still further wealth for Canada. Now that's one difference between Canada's public debt and our own, and a pretty big difference it is — the difference between a debt draining a country of its money and keeping it right in the country for further development.
There's another very important point. It's this. That a country's public debt is big or small according to the resources developed and undeveloped of that country. That is, according to whether the total amount of wealth produced in the country is enough to pay the interest on the debt without feeling it. On this test, Canada's public debt is a small one, for to find around $400 million a year to pay the interest on their debt is scarcely anything at all out of the vast yearly wealth produced in Canada. They're producing over $12 thousand million worth of wealth a year in Canada now — over $12 billion a year. We must not forget that Canada is the third largest trading nation in the whole world. And out of all that fabulous wealth, to find $400 million a year for interest is no burden at all worth mentioning, especially when we remember that the $400 million is paid right back to Canadian people living right in Canada... The national debt of Canada is owed to the Canadian people. It was borrowed from the Canadian people and corporations, and the interest on it is paid to the people and institutions of Canada. All the people owe all the money making up the national debt to some of the people of Canada. Interest on that national debt is paid to some of the people and collected from all the people generally....
President Roosevelt once said, when he was defending his policy of increasing the national debt of the United States, that it made no difference how high the national debt of a country is so long as it is owed to its own people. The Canadian people are well able to add a few more billion to their national debt before they'll have January 1948 NATIONAL CONVENTION 1173 cause for worry. I remember myself very well, living as I did at that time in the United States, when the public debt of the USA was something of the order of $42 billion. They came out of World War I with a public debt of something over $20 billion, and it rose to something around $42 billion. Franklin D. Roosevelt, started his New Deal. He spent fabulous amounts of money he borrowed, the government of the USA borrowed fabulous amounts of money, and there were economists who said that when the USA reaches $100 billion public debt, she's finished, that's the end of her. Well, sir, Congress passed a law that the public debt of the USA must not rise above I think it was $75 billion. They put a limit on it — $45 billion, Major Cashin says, anyway they put a limit on their public debt. Now, what happened? They borrowed and they borrowed and they borrowed and they borrowed. And today the USA has a public debt, I think, of a billion dollars for every day in the year. Somewhere around $350 or $360 billion — a fabulous amount, we can't conceive that amount. But the USA doesn't mind that public debt at all. They take it in their stride.
Now, there's one final point that needs to be made on this question of a public debt. It's not the size of a country's public debt that matters, if it is owed to its own people. Not that, but the total amount of taxes a man pays. A government collects a certain total amount of taxes from its people. It spends that money. Some of that money it spends to pay the interest on the debt — but only some of it. What really matters, therefore, is the total amount of taxation that the people pay, or to boil it down still further, what matters to each individual is the total amount of taxes that he pays. A part is never as great as the whole: the interest on the public debt is only a part, whereas the total taxes a man pays is the whole.... You see, we mustn't imagine that if we go into confederation the Government of Canada will then send each one of us a bill as our share of the public debt, or the interest on that debt. It's not done that way. We pay our taxes mostly according to our income or our earnings, and out of what they take from us in taxes, they use so much to pay the interest on the public debt. We don't need to worry about the public debt. If we need to worry about anything, it's about how much taxes we will pay, for those taxes will include something towards the public debt or the interest on the public debt. We'll pay our share of the total taxes, and when we do, we can forget about the public debt because our taxes will help to take care of the public debt. And one of the really big things about confederation in my view is that most of our people, the great bulk of them, will pay less in taxes than they are paying now. That's all I wanted to say about this public debt question just now. It's nothing to get worried about. The Canadian people are not worried about their public debt, and we won't need to be worried about it if we go into confederation. The people of Canada are living well in spite of their public debt. I can guarantee you, Mr. Chairman, that there's more talk here in Newfoundland about Canada's public debt in one day, one day, then there is in Canada in a year....[1]
Now this afternoon Major Cashin explained what he meant when he said that Canada would take not the $32 million a year that he told us at one point, but $75 million. He explained that he was referring to our share of the public debt. Now, when a country owes a public debt, it's the interest on that debt that matters. And the interest on the public debt of Canada is around $400 million a year. Three provinces of Canada — Ontario, Quebec and British Columbia — three provinces pay the Canadian government 89% of all the revenue that the Canadian government gets. That means that these same three provinces, if they pay 89% of all the revenue of the Government of Canada, then they pay 89% of the interest on the debt. Because the interest on the debt is only $400 million a year, whereas the whole revenue is three, or four, or five times as much as that. So therefore these three provinces pay 89% of whatever it costs to service the public debt — 89% of that $400 million.... That leaves only $40 million to come from all the rest of Canada. What would our share of that $40 million be? Pretty small. But whatever it is, it'll come out of the total taxes that we pay to the Government of Canada, which would be $20 million a year. Now, where does Major Cashin get his figure of $75 million? We're still in the dark on that, at least I am — still in the dark. I don't know where he got that figure.
Well, sir, that's Major Cashin's speech — what's left of it. He spoke for part of four days. He spoke many thousands of words. He's getting 1174 NATIONAL CONVENTION January 1948 almost as bad as I am. He made many hundreds of statements, but amongst them all there's really only one statement that deserves attention, for that one statement stands out above all the rest of his speech — I quote his exact words: "I like Canada, she's a great country." Now, sir, why shouldn't he like Canada? Why shouldn't he think she's a great country? He worked in Canada. He travelled right across Canada. He fought in the Canadian army. He's an ex-officer of the army of Canada, retired with the rank of major from the Canadian army. For the past eight or nine years he has made Canada his home, although within that period he has managed to visit us here in Newfoundland a few times. His home is in Canada now, in Montreal. When the Christmas recess came a year ago, and again this year, when we all trooped off to our homes, Major Cashin did the same thing. He went to his home in Montreal. Evidently Major Cashin is not so scared of all those terrible Canadian taxes that he's been telling us about. He can't be so very scared of them when he has his very home in Montreal at this very minute. I sometimes wonder to myself, I sometimes wonder what would have happened if Major Cashin had been the first to think of advocating confederation instead of myself. I sometimes wonder if he isn't just a bit sorry that he didn't come out for confederation in the first place. What a fine champion he would have made for the great cause of confederation. In his heart he must know that confederation would be the best thing that could happen for the great mass of our Newfoundland people. But he started by boosting responsible government and now he's stuck with it. He's stuck with it, and finds that he can't very well change before the referendum. But I wonder, I wonder if there will be a happier man in all Newfoundland when the votes are counted in the referendum this spring and he finds that confederation has won with a thundering great majority? Will there be a happier man in Newfoundland? I leave Major Cashin for the time being. I leave him, sir, with an invitation to come over with us, an invitation to become a confederate right out in the open — drop this nonsense about responsible government. The people are not going to vote for it anyway, so what's the use of wasting time over it? Let Major Cashin join up, let him enlist, let him enrol right now in the great and growing army of confederation in Newfoundland.
I turn, sir, to Mr. Higgins. There are really only three or four points in his speech that seem to call for attention. Mr. Higgins told us that a lawyer often takes on a case that he doesn't especially like and sometimes acts for a client that he isn't a bit fond of. But he takes it, he takes the case and he does his best. I know that's true, and Mr. Higgins has demonstrated that truth very well in this Convention. When Major Cashin made that early speech of his, a few days after the Convention opened, Mr. Higgins got up and attacked what Major Cashin had said, and in very trenchant language told Major Cashin that he disagreed absolutely and completely with him. We all remember Mr. Higgins' speech on that occasion. It was eloquent, logical and persuasive. Then two or three months later Mr. Higgins gotup and took it all back, apologised to Major Cashin and in effect said that he now agreed with him. We all remember another occasion when Mr. Higgins delivered a trenchant and eloquent speech, the best speech that he has delivered in this chamber, when Mr. Jackman introduced his motion to send a delegation to the United States to discuss Newfoundland's pulling down the Union Jack and running up the Stars and Stripes to become a part of the USA. Mr. Higgins spared no words. He hit that motion and he hit it hard, and he told us we weren't going to be like rats deserting a sinking ship. His speech made an excellent impression at the time. But now he gets up and tells us he's changed his mind again. Now he thinks, after reading about the expanding American imperialism that he told us about in his speech, that Mr. Jackman's motion wasn't so bad after all.
Mr. Chairman Well Mr. Smallwood, lawyers have a right to do that.
Mr. Smallwood Yes, sir, that's what I'm finding out. Now, now Mr. Higgins has attacked confederation. But I wonder What will happen a few weeks or a few months from now — will he be out supporting confederation? "While the light holds out to burn, The vilest sinner may return." Sir, the people, the people...
Mr. Chairman Well, if you don't mind Mr. Smallwood, since we all occupy the same state as Mr. Higgins...
Mr. Smallwood The people of Newfoundland may be prepared to listen to advice from some of January 1948 NATIONAL CONVENTION 1175 their public men, such as Major Cashin and myself, but they'll pay precious little attention to weather vanes that are blown every direction by every wind that blows. Mr. Higgins says in his speech, here's Newfoundland sitting with a pat hand. That's a term used amongst card players. It means holding all the cards you need in your hand, you don't have to draw.... Here's Newfoundland, says Mr. Higgins, sitting with a pat hand. I wonder if Mr. Higgins is aware of the fact that we have nearly 1,200 veterans of the late war out of jobs and unable to get jobs right here in St. John's tonight. I wonder if he's aware of the fact that we have thousands on the dole. I wonder if he knows that the price of fish fell last year and that tens of thousands of fishermen are wondering what's going to happen this year. Why, Mr. Chairman, just let the price of fish take a serious fall and this country would be on the broad of her back. Would he call that situation one in which we hold a pat hand? He may, but I certainly don't.
I turn to my good friend Mr. Bailey. Now I won't take much time replying to Mr. Bailey. He's got it in his head that because most of the provinces of Canada go in heavily for municipal or town councils, therefore Newfoundland must if she becomes a province. He knows that towns or municipal councils have their own local taxes. So, from this he can't be persuaded that we won't have to have local taxes, whether we want to or not. It's no use my arguing with Mr. Bailey, because "A man convinced against his will/Is of the same opinion still." Mr. Bailey has his mind made up that whether we like it or not, we must have all our 1,300 little settlements governed by town councils or county councils. And why? Because that's the way they do it in most of the other provinces. Now, in a way Mr. Bailey is a shrewder opponent of confederation than all his friends in this House put together. I pay him that compliment. He's shrewd enough to realise that the only way, the only way to turn our people from confederation is to convince them that they'll all have to have these town or county councils, that they'll have to pay taxes on their little spots of land, on their homes, houses and so on, even their fishing gear. If he can convince them of that, they're not going to vote for confederation; and he knows it, so that's why he always talks about that. But incidentally, sir, it's time for Mr. Bailey to make up his mind on one point. In the one breath he tells us that we'll be taxed to death if we go into confederation and in the next breath he tells us that we'll be wards of Canada living on the people of Canada. Which of these two statements does he want us to believe? Or does he want us to believe both? Perhaps he has one eye on the people in Newfoundland who are scared of all those terrible taxes. For them, he has a lot of talk about how we'll be taxed to death, and the other eye he keeps on the proud people amongst them; for them, he has a lot of talk about our being too proud to live on Canada. Now which does he mean? We'll be wards of Canada, living on Canada, or does he mean that we'll be taxed to death by Canada? He can't have it both ways. Both these statements can't be true and Mr. Bailey really should make up his mind. Oh, I'm sorry, I got Mr. Bailey mixed up with Mr. Higgins. I got my notes mixed. I'll come back to Mr. Higgins. I'm sorry if he felt neglected.
Sir, Mr. Higgins tells us that an elected government would get better terms for Newfoundland, better terms then the Ottawa delegation got. Now, would the members of a delegation to Ottawa be better men merely because they had been elected to a government before they went to Ottawa? Would they be smarter because they were members of a cabinet? Would the Government of Canada take them more seriously then they took the Ottawa delegation? The answer to all these questions is, "No". Let's look at this Ottawa delegation. Mr. Bradley is one of the greatest lawyers this country ever produced - an eminent King's Counsel, a former Solicitor General, a former member of the cabinet — would he have been a better man? Would he have been treated with greater respect if he had gone there as a cabinet minister? Mr. Higgins himself is a practising barrister and solicitor, a King's Counsel, incidentally. Would Mr. Higgins become automatically a better man, merely by becoming a member of an elected government? Mr. Ashbourne is one of the best known and most widely respected businessmen in this country. He's a former member of the House of Assembly, a university man, an ex- army officer of World War I. Would it make him a better man just to become a member of a government? About the Reverend Mr. Buny, I will say nothing more than the fact that he is a university graduate, and the man who is probably 1176 NATIONAL CONVENTION January 1948 better informed, certainly better informed, about one great part of Newfoundland, namely Labrador, than any man who ever sat in this chamber. Mr. Ballam is a veteran of World War I. He's a major of the CLB.[1] He's a businessman. He has had a long and honourable record as a trade union leader. He was the second president of the Newfoundland Federation of Labour. He has represented Newfoundland at several international trade union conventions in Canada and the United States. His own international union selected him to represent Newfoundland on a tour of the principal paper mills of Europe just before the late war broke out, and he travelled widely on that continent. Would it make Mr. Ballam a better man than he is just to make him a member of a cabinet? Mr. Crummey is a businessman, a former teacher and a former inspector of schools. He is just as good a man now as he would be merely by entering a government. Well, there you have the Ottawa delegation and in intelligence, ability, integrity, that Ottawa delegation would be the equal of any delegation that a government would send up there. They were absolutely as competent to ascertain the terms of union as any cabinet committee or delegation. There's nothing very special about a cabinet or a government. Men do not become smarter or abler or more intelligent just by entering a government. And what real difference would it have been made in our talks with the Canadian government if we had had some of the government officials along with us? We have some able men in our civil service. But all they would have been able to do, if they had gone with us, was to supply information to the Canadian government. Well, we supplied them with all they needed. Is it suggested that the permanent officials would have been better able to understand and assess these terms then we are? If the officials were not needed for the purpose of giving information to the Canadian government, and if they are no better fitted to understand and explain these terms than we are ourselves, what purpose would there have been in taking them along, or what did we lose by not having them? There were seven of us on the Ottawa delegation. If we had an elected government, and that government sent a delegation to Ottawa, then that government delegation would not have numbered more than seven. And I have never known a government in Newfoundland that could have produced a seven-man delegation possessing a higher average of intelligence, ability, integrity and knowledge of Newfoundland than our Ottawa delegation. Now, let Mr. Higgins write himself down all he likes. Let him dismiss himself, if he desires, as being less intelligent or knowledgeable than a cabinet minister or a civil servant. But let him not underestimate the abilities of his colleagues on the Ottawa delegation, and I'm sure he doesn't. They not only did a good job, as he himself has told us, but they did as good a job as any cabinet or elected government could do any day. We got the very best terms that the Government of Canada can offer. No Canadian government could possibly offer Newfoundland better terms, not even if an elected government fought for it. It may be smart tactics to say as Mr. Higgins has said, "Yes, the terms appear to be fair, but an elected government would get better terms." That may be smart tactics, it may even be smart politics, but it has this serious point against it. It just is not true.
And then I find that Mr. Higgins said that it's often used as an argument against responsible government, where do you get the men? Where do you get the men to run the country? But I think that Mr. Higgins was merely putting up a man of straw to knock him down. Nobody that I ever met has used that argument. I know that we're told that the argument is used, but nobody ever tells us who uses it. Newfoundland has the men all right. She has the men to run Newfoundland and she has men who could run Canada herself. It's not any lack of men that's in the way. It's a lack of means. That's what Newfoundland lacks — not men, but the means to do the things that those men would like to do.
And now I turn to Mr. Harrington. I have already privately complimented Mr. Harrington on his speech. To me it was the best speech that he has delivered in this chamber.... I don't agree with all of it, I don't need to do that, but I can still think it was a fine speech. I don't know if Mr. Harrington was aware of the fact, but at one point in his remarks he put his finger right on the nub of this whole question.... He said this: the Grey Book only represents the application to Newfoundland of the regular features of confederation. That's absolutely true. These proposals or January 1948 NATIONAL CONVENTION 1177 terms of confederation are the regular, the normal terms of confederation. These are what the other provinces get. These are the things which are laid down in the British North America Act, Canada's constitution. Sir, what else could they be? Canada has only one constitution and so far as financial terms are concerned, that is what binds all parties to confederation.
We hear a lot in this debate about going up to Ottawa and negotiating better terms. The man who put forth that argument about negotiating showed plainly that he just doesn't understand. He doesn't even begin to understand confederation. Such a man probably has in his mind a picture of confederation something like this— of a couple of shrewd bargainers meeting and haggling and dickering and bargaining, each trying to get the best of the bargain — each trying to get the better of the other. And somehow, for such a man it seems likely that an elected government would get better terms. But nothing, nothing could be further from the truth. Whoever the Canadian government are, and whoever it is that they may be dealing with, the Canadian government is tied hand and foot in this matter. They cannot go outside the British North America Act or outside of any special regional financial arrangement made with a group of provinces. And even any such regional arrangement must have its basis in the BNA Act. That's the hard fact that knocks on the head the idea of an elected government going up there and negotiating better terms. To start with, it's not a matter of negotiating at all. It's a simple matter of going up there and ascertaining, learning, finding out what the terms are. In the second place, the Government of Canada are bound by the constitution of Canada known as the British North America Act. So, when Mr. Harrington complains about our not having been offered special terms, he put his finger right on it. We had not been offered special terms because no Government of Canada can offer special terms. And drat's why all this talk about an elected government going up there and getting better terms is completely beside the mark. It's off the track altogether. Here are the terms, and on the financial side, as the Prime Minister tells us in his letter, they go as far as Canada can go under the circumstances. What circumstances? The circumstances that I have just mentioned. They are bound by precedent, bound by what is done for other provinces. They'd soon hear from the other provinces if Newfoundland were offered special financial terms that they hadn't been offered themselves. In 1864 we were not offered special terms; in 1895 we were not offered special terms; although on both occasions an elected government went up there seeking better terms, or special terms, terms better then any other provinces had been given. We've already had two elected governments that went to Ottawa looking for terms. And what did they get? The same terms as the other provinces. And now we're told if we'll send an elected government up there, that elected government will get better terms. That's the final, the unanswerable answer to those who tell us that an elected government would get better terms: the fact that already two elected Newfoundland governments have gone to Ottawa and neither government got them. If, instead of the Ottawa delegation that went from this Convention, members of a government had gone up to Ottawa, the terms they'd have brought back to Newfoundland would be what? They would be exactly these terms that we have before us today. I thank Mr. Harrington for bringing this matter to our attention.
Now Mr. Harrington told us that old age pensions were introduced into Canada in 1927, which he says was years after old age pensions were introduced here in Newfoundland. I'm sorry, but Mr. Harrington is all astray there, all astray. Old age pensions were introduced into Canada 20 or 25 years before 1927. What happened in 1927 was merely this, that the federal government began to pay part of the costs of old age pensions. Up to 1927 each provincial government paid its own old age pensions. The federal government paid nothing towards the costs. The trouble with that arrangement was that the richer provinces could and did pay bigger old age pensions than the other provinces could afford to pay. So in 1927 the federal government stepped in with a plan to pay part of the amount. What they did was to pay half the cost of old age pensions, leaving it to the provincial governments to pay the other half. Then around 1934 the federal government stepped up its contribution and began to pay three-quarters of the full amount. The full amount was then $25 a month. Last summer the Canadian government raised the pen 1178 NATIONAL CONVENTION January 1948 sion to $30 a month, and of this amount they paid $22.50 and the provincial government pays $7.50. In a year or two, as Ihave said, the federal government is going to pay all of it, the full $30 and make it universal to all persons reaching the age of 70 without any means test at all — universal, an old age pension of $30 a month to all persons of 70 and over without regard to their means or lack of it.
Now, touching on the matter of the old age pension, Mr. Harrington quoted a statement made in the House of Commons by Mr. John Bracken, leader of the opposition, in which he referred to the Canadian government's plan to wipe out the means test in giving old age pensions. I'm very glad that Mr. Harrington mentioned this. What Mr. Bracken was talking about was something else altogether. The Government of Canada has a plan to take over the old age pension completely for all persons of 70 or over.... And then on top of that there would be a pension for all those who needed it between the ages of 65 and 70. In other words, there'd be a means test for those between 65 and 70 and the Government of Canada would not pay all of it but only half, the government in each province paying the other half. That's for persons between 65 and 70 who needed it. But all who reached the age of 70 would receive it without any means test and the Government of Canada would pay the full amount. That's the plan to which Mr. Bracken referred in his speech and that plan has not yet come into force. It's expected to be put in force within the next year or two. Mr. Chairman, as we have only one stenographer, perhaps we might have a short recess.
Mr. Chairman I'll leave the chair for ten minutes.
[Short recess]
Mr. Smallwood Mr. Harrington, in discussing the confederation election of 1869, tells us we did not have the secret ballot in 1869 when our people voted on confederation. But then, neither did the people anywhere else on this side of the Atlantic at that time. But what's that got to do with it? The fact is that there was no secret ballot 80 years ago when our people voted on confederation. Every voter had to walk into a booth and in a loud voice declare whom he was voting for. There was nothing secret about it. The local merchant or his agent was right there in the booth. He was the agent for Charles Fox Bennett, the biggest merchant in Newfoundland, who was the leader of the anticonfederates. And it took a pretty brave fisherman in those days long ago, to go against the local merchant. Now, what actually happened in that confederation election 80 years ago, what did happen? Thirty members were elected to the House of Assembly. Ten of them were confederates, 20 of them were anticonfederates. But that does not tell the story at all. One thousand votes more for confederation in that election, just another 1,000 votes, and it would have been 20 confederates and 10 anticonfederates elected. If only 1,000 of those who voted in that election had voted the other way, we would have become a province in 1869. Just a few hundred votes more in Bonavista Bay and three confederates would have been elected there. Just another couple of hundred votes or so, and three confederates would have been elected in Trinity Bay instead of the two confederates who were elected.... And so it was in most districts. A mere thousand votes more for confederation in the whole country and confederation would have won. You see, Mr. Chairman, I too have read the whole story of that famous election.
And while we are at it, I noticed that Mr. Harrington did not tell us anything about the famous and patriotic Newfoundlanders — as a matter of fact Lady Squires was kind enough, a few months ago, to tell me of the last interview Sir Richard Squires gave before he died. It was given to the Winnipeg Free Press in 1938. In that interview Sir Richard Squires declared — it was the last thing he ever said to the public — that confederation was the only hope for Newfoundland.
Sir, Mr. Harrington touched on the question of education and referred to the clause about education in the terms of union. There's really only one point in his remarks on this subject that calls for any cement. He will not, I think, deny that the education clause protects all our rights as they are now. Every denomination with its own schools at the time of union will go right on with its own schools just so long as it wishes to. That right is guaranteed in the terms. Not only that, but each denomination is guaranteed its rights, to its share of the public money spent on education. Then again, if any two or more denominations should ever wish to unite or amalgamate their schools, January 1948 NATIONAL CONVENTION 1179 that right is guaranteed also together with their right to their share of the public funds spent on education. In other words, sir, all rights are guaranteed. We have in Newfoundland what is known as denominational education. Confederation does not change that one bit, not one bit.... Mr. Harrington does not deny this. But what he does suggest is that under confederation this guarantee might be upset or cast aside. And what reason does he suggest? The Manitoba school case, which was one of the most famous cases of its kind in North American history, about as famous as the Oregon school case. The Manitoba school case brought the Government of Canada toppling down when it happened And that case taught all the governments of Canada a lesson they'll never forget. It taught them this lesson — not, not to meddle in educational matters in the provinces. Why, you couldn't dynamite the Government of Canada today into getting itself mixed up in educational matters. They won't touch it... In our clause on education all denominational rights are guaranteed and our provincial government is not allowed to make any laws or changes that would prejudicially affect the rights of any denomination. But suppose some provincial government ever tried to do so. What then? Would the denomination concerned have to go to the Government of Canada seeking redress? No, they would not. The Government of Canada wouldn't be in the picture at all. They would go to the Supreme Court of Newfoundland, and there they would get justice. The Supreme Court would have to carry out this clause, which guarantees the rights of all the denominations. And if by any chance, if by any remote chance, our own Supreme Court failed to carry out this clause, that would not end it either. For then, the case could be appealed to the Supreme Court of Canada itself. That, sir, is a vast improvement over the Manitoba clause. It's not with governments or cabinets or parliaments we'd have to deal, but with the very seat of justice — the Supreme Court itself. Mr. Harrington can rest his mind in this matter. I can tell him this. I for one would not be so foolish, so short-sighted as to advocate confederation if this education matter had not been fixed up to the satisfaction of all concerned. Not for one split second would I waste my breath advocating confederation if this education matter had not been thoroughly and absolutely fixed up. I know my country, sir, believe me. I know the deep and unshakeable loyalty of our people — all our people — to their denominations. I know the loyalty of our people to their various school systems. We have a school system which is a Newfoundland system, that has grown up out of our Newfoundland ideals, our Newfoundland outlook on life. It is a system that has grown up naturally, and I am the last person who would upset it or allow it to be upset. Believe me, I went to Ottawa with that thought uppermost in mind. I cared not what material advantages there might be for us in confederation. My mind was made up. I was detemiined not to advocate confederation unless and until all denominational rights were fully guaranteed. Sir, it's bad enough to have to fight prejudice, but the one thing I will not fight is the deepest loyalty of our people. Thank God I do not have to do it, for the school rights of all our denominations have been fully protected and guaranteed. All education matters under confederation have been left just where they belong — right here in Newfoundland. So that's one question that won't turn our people against confederation.
I turn to Mr. Butt. I am frankly puzzled to understand what Mr. Butt was getting at when he mentioned the Sacco-Vanzetti case. He was speaking at the time about the Privy Council's Labrador boundary award, and the impression I gathered from his remarks was that he was trying to make out that maybe the Privy Council award is not binding and final seeing what happened in the Sacco-Vanzetti case... I agree with you, sir, it is a matter for smiling. What the Sacco-Vanzetti case in Boston has to do with the Privy Council of Great Britain, is frankly more than I can see. Sacco and Vanzetti were sentenced to death by a court in Massachusetts in the United States. It was admittedly a terrible miscarriage of justice But what has that got to do with the character or the nature of the Privy Council, or with a decision of the Privy Council of Great Britain? Instead of hinting, why doesn't Mr. Butt come right out and say definitely that he places no dependence on the decision of the Privy Council?
Mr. Butt says if you give away your control over your communications, if you give away your right to control your fishery, if you give away your right to set your own system of taxation, if you give away these rights you're in a bad way. 1180 NATIONAL CONVENTION January 1948 Now, just what does that mean? What does it boil down to? Mr. Butt could possibly mean that the federal government will operate our postal telegraph system, that the federal government will spend hundreds of thousands of dollars on the protection and encouragement of our fisheries, and that in place of our present unfair, unjust, and oppressive system of taxation, which crushes the life out of our producers, we'd have the very much fairer taxation system of Canada, which places the greatest burden on the people best able to bear it. That is, in place of taxation which puts a terrible burden on our basic industry, we'd get one in its place that would lift a great portion of that burden off our producers. Mr. Butt is welcome to the belief that this would be bad for Newfoundland I believe that it would be the best thing that ever happened to our country.
Then Mr. Butt gave us a homily on the subject of morale — of faith in ourselves, pride in our country. I listened with a great deal of interest to this dissertation because he was expressing the view that I happen to share. Is it too much for me to say that more perhaps than any other man in this country, I have pointed to the desirability, indeed the need, for pride in one's country? I was on the air every weeknight for nearly seven years, and I don't think I ever tired of driving home the importance of taking legitimate pride in everything that's good about our country and about ourselves. I delved into our country's history to bring out examples of the fine things our people have done. I roamed all around the world in my mind to find examples of Newfoundlanders who had made good in other lands. As Florenz Ziegfeld was said to glorify the American girl in his famous follies, so I tried to glorify Newfoundland and Newfoundlandcrs nearly every night for seven years. I take back none of that. I still think we are a fine people and we can hold our heads up with the best of them. I still think we have very real possibilites of greatness within us. But here in this Convention we are not theorists, we are not here to spin fine theories, however true and however beautiful. We are here as elected representatives of the people. We are here for a particular purpose....[1] A practical purpose. We would be false to our people if we allowed ourselves to be carried away by fears, if we failed to keep our feet planted firmly on the ground. I like to think of the remark Major Cashin made to Mr. Neill, the Commissioner for Public Utilities, when, a committee interviewed Mr. Neill about Gander. When we tried to find out definitely who was going to pay the operating loss on the airport, Mr. Neill made the remark, "I have faith, I have faith". "Yes," said Major Cashin, "we all have faith, but you can't balance a budget on faith." I've never forgotten that. Neither, sir, can you put food in your childrens' stomachs, or clothes on their backs, just by faith in a theory of national pride. What good would national pride have been to the 90,000 men, women, and children who suffered and starved on the dole in this country? When the icy blasts of world depression strike us again, when our fish is once more a drag on the market as it will be, when our income dwindles to a shadow of what it is today, our people will want something more substantial than pride of country. This very winter there are thousands of our men who can't find a day's work, many hundreds of them veterans of this late war, who risked their lives for the brave new world they were promised. They demonstrated their pride of country but they can't live on it this winter. They can't balance their family budgets on it. Let's be practical about this thing, Mr. Chairman. We all know our Newfoundland people are as fine a race of men as you'll find in Canada or the United States or any other country in this world. They have magnificent qualities of heart and mind. They have courage and endurance. They know how to work and they're not lazy. The thing that's wrong with this country is not our people; but there is something seriously wrong.
The thing that's most wrong about our country is that there just are not enough of us. We're only a handful of people, 327,000 souls scattered about the island living in 1,300 separate little towns, settled villages — the population of only one small city, if we were all put together. A mutual friend of Mr. Butt's and mine said that if he took a week off, and practised hard, he could learn off by heart the names of our entire population —— if not their Christian names, then certainly their surnames. It's a hard country to govern, for which to provide all the varied public services that are needed, because we're so small in number and so scattered, scattered. And we have January 1948 NATIONAL CONVENTION 1181 punished ourselves as a people, or we've been punished, with a system of taxation that makes decent living absolutely impossible except when there's a global war raging.
Above everything else, what's wrong with our country is the fact that we have persisted and insisted on acting as though we were a nation, or as though we thought we could be a nation. Whereas the fact is we're only a large family. Most of our trouble stems from that misguided policy. Sir, you could bring Winston Churchill and Ernest Bevin and Herbert Morrison to Newfoundland, and along with them Mackenzie King and Franklin D. Roosevelt if he were alive, and Lloyd George too if he were alive, and you could put those men at the head of affairs in Newfoundland, They could do their best, and their best would not be good enough. They would fail. They would be licked before they started, because it's impossible to make things right for the people of this country so long as we hold out stubbornly against the one thing that can make a prosperous Newfoundland really possible. They would fail so long as they tried to run Newfoundland as a separate independent country pretending that it was a nation. They would fail so long as they failed to link Newfoundland onto a much greater, at much larger, a much more stable unit. That's the first lesson we all need to learn when we come to figure what's wrong with our country and what the cure might be. To stay isolated from the great continent besides which God placed us, to persist in a mistaken and hopeless independence, to continue our vain hope of paddling our own canoe, that way has produced untold misery for our people and will produce more misery if we don't wake up to our mistake. And it is also needless, Mr. Chairman, so needless. A great British nation is asked by us, asked by this Convention, to receive a delegation. They received the delegation, and they say, "We invite you to link up with us to make one great strong British nation stretching all the way from St. John's to Vancouver." And what do we do? What do we do? We look suspiciously at them. We thought it was a land full of Hitlers, Hitlers trying to gobble us up, trying to rob us of our little store of natural resources, trying to get rich out of us. We pick holes in the terms and conditions they offer us. The moment we receive their invitation to join up with them, we get suspicious and put up every trumpery excuse we can think of for not accepting. Yes, by all means let us have national pride, but let us also have national common sense. Now, sir, I turn to Mr. Northcott. Just two points. He tells us he wants out Newfoundland people to know how the burden of taxes under confederation would compare with our burden of taxes today. He asks the question, "Would federal, provincial and town council taxes all put together he more or less than we're paying out now in taxes?" That's a very fair question — a very practical question and a very useful question, and I thank Mr. Northcott for asking it. Today our taxes amount to about $40 million a year, not counting municipal or town council taxes. That's what we're paying the Commission of Government, $40 million a year. Under confederation we would pay taxes to both the federal government of Canada and the provincial government of Newfoundland. What would these amount to? That's what Mr. Northcott wants the people of Newfoundland to know. The Government of Canada estimates that they would collect $20 million a year profits in federal taxes. That is if the present rates of taxation continue as they are in Canada, if they don't fall ... and if the present level of economic activity stays as it is now in Newfoundland. Very few of us expect it to do that, for already it has started to drop. $20 million, the Government of Canada would take. The provincial government of Newfoundland would collect $5 million or $6 million a year from us in taxes. At least it would for the first eight years of union. Well, that's a total of say $26 million a year between the two governments. Mr. Northcott can add to that if he likes. He can add a couple of million to the provincial budget and he can add a couple of million to the federal budget and get a grand total of $30 million. Even then, our total taxation would fall $10 million short of what we're paying now. We're paying $120 a head to our government now. We'd pay at the most $91 a head under confederation, a saving of $29 a head. Mr. Northcott may or may not be willing to accept my figures. So I'll stretch the thing all out of shape to see how he'll like it then. Let's say the Government of Canada are as much as 50% out in their estimate — 50% out. They say they'll collect $20 million from us. Let us say they'll collect $30 million from us. I say the provincial government will collect $5-6 mil 1182 NATIONAL CONVENTION January 1948 lion from us. Let's say that I'm out as much as 50% in my estimate. Let's say it would be $9 million a year that the provincial government would collect. In that case, stretching it like that, the two governments between them would take $39 million from us a year, or still $1 million less then we're paying now. Mr. Northcott may say that in that case, we'd only be $1 million dollars better off under confederation, just $1 million dollars a year better off. But that is not so. Besides that $1 million a year, 120,000 of our children under the age of 16 would be getting $8.5 million a year in family allowances, and 10,000 of our senior citizens would be getting $2.5 million a year in old age pensions. Our railroaders would be better off, our civil servants would be better off, our cost of living would be lower than it ever could be without confederation, and our people would have the satisfaction of knowing that their country was linked up with that great British nation we call Canada.
Mr. Northcott asks me to say something on the question of divorce...[1] I am trying to fathom why Mr. Northcott is so interested in the question of divorce. I know Mr. Northcott is happily married, and that's why I've been trying to figure why he's been so interested in having me say something about divorce in case we go into confederation. I'm sure that he has no motive except a perfectly good one. And so for that reason I'm going to say something about divorce in case we become a province of Canada. Sir, we have no divorce laws in Newfoundland. We never did, and 1 hope we never will. Those provinces of Canada that are in the union now, some of them had divorce laws before confederation was started in 1867. They took their own laws into the union with them.... I don't think that any other province since then has passed any divorce law of its own. If Newfoundland goes into confederation, I would give it as my opinion that it's very unlikely, highly unlikely, that we'll ever get a House of Assembly elected here that will pass a divorce law, I don't think that's likely to happen. If Mr. Northcott was a member of that provincial House of Assembly, I don't think he'll vote for any law to grant divorce in Newfoundland. I know I won't. I don't think Mr. Starkes or Mr. Vincent or Mr. Harmon or Mr. Jackman or Mr. Watton or any of us who should happen to be in the provincial legislature of Newfoundland, will ever vote to pass a divorce law. That's very unlikely. But even if we don't, we might still be able to get divorced, that is true. We could do as the people do in the Province of Quebec. Quebec has no divorce law — never did have one and I don't suppose she ever will have one.... There are only two possible grounds for divorce — adultery and desertion. And if a person in Quebec wishes to get a divorce, what he's got to do, or she, is this: go to the Parliament of Canada, the Parliament mind you, and get the Parliament to pass an act for him or for her, one law for him or for her, not a law for everyone or for a lot of people, just for him or for her. First of all the application is put before the Senate of Canada. There's a committee of the Senate — they're poisoned with it, they hate it, it stinks, they don't like it, this committee — but it has to go before that committee. The committee passes on it, like a court. And if the committee agrees that the evidence that's produced is good enough, they will pass a law in the Senate, then from the Senate it goes to the House of Commons and if they agree with it, the Governor-General of Canada signs that bill, and that one person is divorced. Or rather, I should say those two persons are divorced. If we become a province we can do that. A person in Newfoundland wishing a divorce can hire a lawyer, and the lawyer can prepare his case. If he can prove to the Senate of Canada either adultery or desenion, the Parliament may pass an act divorcing that one person from his spouse. That costs from $1,000 to $1,500. So while I am not prepared to guarantee that under confederation there would never be anyone divorced, I am firmly convinced that if you have one or two or three people getting divorced, it's as many as you'll have. If you take this country in the last number of years you'll find this, that although we have no divorce law there are still Newfoundlanders who get divorces. Oh yes, there are Newfoundlanders who get divorces, not in Newfoundland, and they marry again. We have people who have been divorced from their first wives and who are now married to a second wife although we have no divorce law. So under confederation there might be one or two or three cases. I don't think we need to worry about it. We needn't lose any sleep.
I'm sorry that Mr. Hillier is not present January 1948 NATIONAL CONVENTION 1183 tonight, because there is just one point in Mr. Hillier's very fair and honourable speech of yesterday, one point on which I wish to offer a word of comment. It was what he said about Canada's old age pension scheme. Now I happen to know that Mr. Hillier is deeply interested in the subject of our senior citizens, our old people. I agree with Mr. Hillier absolutely when he says that the pensions should start before a man or a women gets to be 70 years of age. I think he's perfectly right. And I'm sure that he'll agree with me when I say that 75 is a criminal and shameful age limit to place on our senior citizens before they are entitled to the old age pension. And that's the age, 75, an elderly person has to reach in Newfoundland today before we pay him the pension. At least Canada is five years better off in that way than Newfoundland because she gives the pension at 70. And I agree with Mr. Hillier that $30 a month is not a cent too much to pay to our worn-out toilers, but surely he'll agree with me when I say that $30 a month for one is a lot better then $30 a quarter for two. That's what we pay here in Newfoundland for two elderly persons, $30 a quarter for the two of them, $10 a month. Just compare two elderly persons in the two countries. In Newfoundland they have to live to be 75 before they get the pension, in Canada 70. In Newfoundland we pay two persons $30 a quarter between them, in Canada they pay $30 a month to each of them. What's the difference? The old people in Canada get $60 a month between them, whereas two old people in Newfoundland get $10 a month between them. The old couple in Canada are $50 a month better off than our old couple, and that's $600 a year.
I won't go over the question of a pensioner's property again. I've already explained that several times. It's enough now to say this, that if that bit of property is worth $2,000 net or less, the pensioner is free to do whatever he likes with it, give it to whoever he likes. It covers the vast quota of the 10,000 old people who would receive the old age pension if we go into confederation. I would ask Mr. Hillier to cast his mind over his own native home, and the other settlements he knows in his district, and ask himself how many persons of 70 and over have property that would fetch over $2,000 cash if it had to be sold. For that matter, I would ask all our members, apart from those from the capital city and perhaps Grand Falls and Corner Brook and one or two other places, I'd ask all our members to cast their minds over their districts and ask themselves the same question. And don't forget, Mr. Chairman, that if an old age pensioner has property that would fetch over $2,000, the sons or other relatives still have a way to get that property when the old age pensioner passes away. They can contribute regularly and reasonably to the support of the old age pensioner for at least the last three years of his life. That's fair enough, isn't it?
Now, I have only two more points. Ever since the confederation terms were laid before us, speaker after speaker amongst the anticonfederates has harped and harped and harped on the matter of taxes. It's been almost the second word in every speech. The impression aimed at is that our people would be smothered by taxes, that they'd be taxed to death if we enter confederation. There may be a country somewhere in this world where they have no taxes. If there is, I've never heard of it, unless it's a country without a government. All countries have taxes, as we know so well here in Newfoundland. They say there are two sure things for all mankind — taxes and death. I certainly don't say that if we enter confederation there'll be no taxes. Now there are many principles of taxation, but the greatest principles are these two. First, that there should be equality of sacrifice in paying taxes. The second principle is that it's not so much how much taxes you pay, as what you have left after you have paid your taxes. These are the two greatest principles of taxation. I know of no country in the world that offends against those two principles as much as our own Newfoundland does. Our chief way of raising taxes in Newfoundland is through the customs tariff, the customs duties on our imports. This is called indirect taxation. Of course there are other kinds of indirect taxation as well as customs duties, but what do we mean by indirect taxes? If a government sends a bill to a man for a certain amount of money as his share of paying the cost of running the country, and if the man knows exactly how much it is and puts his hand in his pocket and pays the government himself, then that is direct taxation. It is paid directly by the person who is supposed to pay it. It goes direct from the taxpayer to the government, so to speak... But with indirect taxation you have something altogether 1184 NATIONAL CONVENTION January 1948 different. In this case, the taxpayer doesn't put his hand in his pocket and hand over the taxes to the government direct himself. With indirect taxation somebody else puts his hand in his pocket, takes out the money and hands it over to the government, not the man who pays it at all. In fact, the man who really pays it doesn't know just what he is paying, because it was taken out of his pocket by somebody else. And that somebody else forgot to tell him how much he took out for taxes. If a fisherman goes into a shop and pays $50 for a bedstead, he pays $50 for it. Does the shopkeeper tell him how much of that $50 goes to the government in tax? No. And all the fisherman knows is that he paid $50 for the bedstead. He knows that he probably paid some tax on it, that some part of that $50 went to the government, but how much? He doesn't know. If he had a copy of the customs tariff he could look it up and find out that the duty on that bedstead is 50%.... But not only does some of that $50 go to the government in tax, but the shopkeeper has made a profit on that duty — I don't mean a profit on the bedstead itself now, but a profit on the duty that was paid on the bedstead. He doesn't tell the fisherman that and there's no reason why he should. The shopkeeper has already paid the duties to the government. He has paid out that money and he, the shopkeeper, is entitled to make a profit on the money he puts out, whether it's put out to buy the bedstead in Canada in the first place, or to pay the government the 50% duty on it. It's all the same to the shopkeeper. He's invested the money and he's expecting to make a profit on it. And that's how it goes, all the way through, wherever a customs duty is paid on an article. A profit is made on that duty as well as on the article itself. Two profits — and they both come out of the customers' pockets. Even when the customer has some idea of this, he usually doesn't know how much more the article cost him because of the duty and the profit on the duty. That's what we call indirect taxation. And that's how the bulk of our govemment's money is made in Newfoundland.
Suppose the wholesale merchant here in St. John's imports $100 worth of goods from Canada. He pays $100 wholesale for the goods in Canada. The goods are all at the wharf, but can he go and take it off to his own store? No, not till he pays the government say $40 duty. So they cost him $140 landed in his store. So he puts his profit on the $140.... Say his profit rate is 20%, that's $28. So he sells the goods to a retail shopkeeper for $168.... The government has its $40 tax, the wholesale merchant has his $100 back and his $40 back, together with his profit on $100 and his profit on the $40 duty. Now the retail shopkeeper has the goods. They cost him $168. So he puts on his 20% profit, and that makes the goods worth $201. The retail shopkeeper sells them to the public, to the fishermen, and loggers, and miners, and everybody else, for $201. Now what's happened? The wholesaler pays the duty tax to the government and gets it back with a profit from the retailer. The retailer gets it all back, together with his own profit from the public. The customer, the consumer, the man who finally forks over his money across the counter, he pays it all — a tax to the government, a profit to the wholesaler on the tax, and the retailer's profit on the wholesaler's profit — profit piled on profit. And the customer pays it all and wonders why the cost of living is so high. Yes, and some of them shiver when they're told in this Convention about the awful taxes they'll have to pay if we go in with Canada. That system of taxation is one of the most unjust, yes, one of the most vicious in this world today. It's bad enough to have to pay taxes to the government, but a lot worse when private individuals, private businessmen, are able to make their own private profit on those very taxes. That's what we get when we raise the bulk of our taxes through customs duties.
Last year we paid the government, all of us Newfoundlanders, around $20 million in customs duties. That was bad enough, and it certainly drove the cost of living up high enough, but on top of that $20 million we paid at least another $5 million to the wholesale and retail merchants between them as profits on that $20 million duty. You see, sir, the merchants paid the duty to the government. They laid out their money to pay the duty and they were fully entitled to make a profit for themselves on that money. I'm not saying one word against the merchants on this point. We can't blame them a bit. They have got to do it if they're going to stay in business. But the fact remains that the general trade of the country last year took at least $5 million out of all of us, to compensate themselves for collecting the January 1948 NATIONAL CONVENTION 1185 government's revenue for them. They're agents for the government, collecting the government's revenue... That's indirect taxation. That's customs duties. That's how the system works, and that's one of the biggest reasons why the people of this country are suffering the way they are today from the high cost of living, and always did. You can take note of this fact, Mr. Chairman, the higher the prices go in the countries we buy the goods from, the worse this position becomes. I told you what happens when the article costs $100 abroad, and the profit is made on the duty, but if the price goes way up, say to $150 in the States or Canada, then the duty is no longer $20 but $30, and the profits made on the duty are no longer what they were in the first case, but that much higher, half as high again. The higher the prices in the countries we import from, the more duties we pay, and the more profits we pay on the duties, and so it goes until the ordinary man can't live at all. His dollar shrinks and shrinks and shrinks. It'll buy less and less all the time. And who feels it worst of all? The poorest of the poor. Not the family that can afford two or three motor cars, or a couple of trips away every year, or life insurance policies running up to a $100,000, or even $2-300,000, not the family that can send its children to school in Canada, England or the States, certainly not the family that can afford to spend $4-5,000 a year just on ordinary household expenses, because to such a family another few hundreds or even another thousand a year won't make or break them. No, it's the family that has to watch every cent. The family that has to stretch the last penny, that has to go without and never knows anything year in and year out but penny- pinching economy. They're the people who feel the pinch where it hurts most — in their children's stomachs and on their children's backs. The great majority of our population, those tens of thousands of our people who ache and yearn for a square deal and don't know where to turn for it, those are the people who will be helped by confederation. Oh yes, confederation will tax them too. But not in the same way — not so heavily, not so harshly and above all not so unjustly.
Mr. Chairman, this is the fifth week since this debate began, and for all of that time we've been discussing and debating the details of these confederation terms. I am afraid that more than once we haven't been able to see the forest for trees. We've wrangled and disputed so much over the details that we've failed altogether to give the people an intelligent picture of the whole thing in the round. It would be useful therefore, if before this debate closes, I should try to give a general picture of confederation as these terms describe it. The first fact is that confederation means that Newfoundland would join the family of Canadian provinces. Where there are nine provinces now, there would be ten if we joined up. Newfoundland would have all the rights, powers, privileges and responsibilities of a province of Canada. We'd no longer be on our own — no longer would we be trying to paddle our own canoe, trying to get along by our own unaided efforts. We'd be part of the family of Canadian provinces. The second fact is that the Province of Newfoundland would consist of 152,000 square miles, 42,000 square miles in the island of Newfoundland and 110,000 square miles in our territory of Labrador. Labrador as defined by the award of the Privy Council in 1927 would be part and parcel of the Province of Newfoundland, and the boundaries separating Newfoundland-Labrador from Quebec-Labrador could never be changed except with the full free consent of Newfoundland. The third fact is that the Government of Canada would take over our entire external public debt — the debt of $60-odd million we owe in Great Britain. Canada would relieve us of this debt and would pay the yearly interest on it, and would pay it off when it fell due. Newfoundland would be left with a public debt of around $6 million, which amount we really owe to ourselves. That is, it's an internal debt borrowed by our government from people here in Newfoundland. The interest on it would go to the people in Newfoundland.
The Government of Canada would take over and operate at their expense our railway and coastal boat system, the Newfoundland Hotel if we want them to take it over, the post and telegraph system, Gander airport, all lighthouses, fog alarms, beacons and buoys, public wharves and breakwaters, what we call marine works; the pensions and rehabilitation of all veterans of both wars, the protection and encouragement of the fisheries, the geological survey and the topographical, geodetic and hydrographic surveys. The civil service employed in these public 1186 NATIONAL CONVENTION January 1948 services would also be taken over by the Government of Canada. They would become federal civil servants and they would suffer no loss in wages, salaries or pension rights. The employees of the railway system would also be taken over without loss of salary, and they would be guaranteed the same continuity of employment as other employees of the Canadian National Railways.
The Government of Canada would provide family allowances to all children under 16, old age pensions and pensions to the blind, old age beginning at 70, blind persons at the age of 21. They would provide unemployment insurance benefits, sick mariners' and fishermen's benefits, and assistance to housing. The Government of Canada would place a new ferry on the Cabot Strait. This boat would be specially fitted to carry motor cars, but it will not be put there until the road from Comer Brook to Port-aux-Basques is finished. The Government of Canada would also bring Newfoundland under the Maritime Freight Rates Act, which act provides a 20% reduction in freight rates on all goods moved by rail, moving within or going outside of the Maritime region — that is, the whole region this side of Point Lévis, near the city of Quebec.
On the financial side the Government of Canada would pay to the government of the Province of Newfoundland the following amounts of cash: $180,000 each year, and 80 cents per head of our population each year, and $1.1 million cash each year as a special subsidy for all time, and $22.75 million in the first eight years of union — an average of over $2.5 million each year as a special transitional grant. These amounts, together with the amount which the Government of Canada would pay under the tax rental agreement, would average $9.5 million a year. Then in addition to that, the Government of Canada would pay back to us the amount which we will have paid them for the purchase of their rights in Gander — $666,000. And the Government of Canada will also pay back to Newfoundland the cost of these two new boats that are still in Scotland to be delivered over here to us. The Government of Canada within eight years after we entered the union would appoint a royal commission to reassess our whole financial position as a province. That is, to see if we need any additional subsidies, and if so how much to enable our provincial government to carry on without imposing taxation too burdensome for us to pay, compared with taxation in the Maritime Provinces, and having regard always to our capacity to pay tax. And within two years after we entered the union, if we wished to institute an economic survey of Newfoundland — which of course includes Labrador — the Government of Canada would provide the services of technical personnel and agencies to make this survey for the purpose of finding out what resources we have that may profitably be developed, and what new industries may be established, or what existing industries may be expanded.
Our accumulated cash surplus will remain our own. The Government of Canada would be willing to receive it on deposit for us and to pay us 2 5/8% interest on it each year. One-third of our whole cash surplus would have to be set aside to be spent, if we like, on the ordinary purposes of the provincial government. And the other two- thirds of the surplus would have to be set aside by us to be spent on the general development of Newfoundland. The provincial government would have the right to lend money out of the surplus to industries or fishermen or other producers, but it would not have the right to subsidise industries which were in competition with similar industries in the rest of Canada.
Education is left entirely and absolutely with ourselves. The Government of Canada would not and could not interfere with our school system. All the denominational schools existing at the time of union would have their rights guaranteed. That is, they could keep right on as they are, and they would continue to be financed out of the public chest. Any two denominations that wanted to unite or amalgamate their schools would have the right to do so, and if they did so they would continue to receive their full share of public money spent on education.
Newfoundland would be entitled to have six members of her own in the Senate of Canada and would also be entitled to elect seven members of her own to the House of Commons. So far as our own House of Assembly or provincial legislature is concerned, we could elect any number we like, ten or 15, 20 or 30, or whatever number we decided on ourselves.
The Government of Canada would collect about $20 million a year from us in taxes, these are income tax, corporation tax, excise tax, sales January 1948 NATIONAL CONVENTION 1187 tax, liquor tax, customs tax and tobacco tax. They will collect $20 million a year from us and they would spend on an average about $36 million a year in Newfoundland, about $16 million more then they would take from us. In addition to the $20 million a year that the Government of Canada would take, the provincial government of Newfoundland would take another $5-6 million from us in taxes. The two governments between them would take perhaps as much as $26-27 million a year from us, which is $12-13 million less then our own government is taking this present year.
These terms, Mr. Chairman, would make a new country of Newfoundland. They would make a new country for the people of Newfoundland — a new country where the poor man would have a chance. A country where the poor man would have a chance to live and breathe, a chance to bring up his family decently. These terms would give our people a chance, and that is something they have never had yet. And when I say our people, I mean the toiling masses of our people, our fishermen and loggers, our miners and millworkers, our railroaders and teachers, our clerks and labourers, all our people who toil by hand or brain to make a living in this country. I do not mean our great masters of trade and industry. I do not mean our millionaires, our half-millionaires, our quarter-millionaires—I do not mean the people with two or three motor cars. I do not mean the people with $1,300 rugs on their floors. I do not mean the people who can take their holidays in Canada and send their children to Canada to school. I do not mean the people who have done very well out of Newfoundland, I mean the great masses of our hardworking people, those tens of thousands of our workers and fishermen who never got a break, the vast bulk of our population who have been kept down all through the ages, the people of Newfoundland. These terms would be a new charter of happiness for our children. Never as children would they know hunger or nakedness, never would they know the pinch of extreme poverty under confederation. Newfoundland would be a happier and a healthier land for our junior citizens. For our senior citizens, those men and women of 70 and more who have passed their toil, those worn-out toilers, whose earning days are over, for them these terms would bring a little sunshine in the evening of their years, a little holiday from the grinding poverty they have known most of their days — a last gentle stand of comparative ease and comfort. For the people of Newfoundland these confederation terms would mean a happier land, a land of hope and progress. The people would come at last into their own. For the country in general, these terms would mean hitching Newfoundland's wagon to the rising, shining star that we call the great British nation of Canada. It would mean linking our own dear Newfoundland to the third largest land in the world — a land where the common people get a break, where they get a decent chance to live and rear their families. For Newfoundland these terms mean security and political freedom. I support them with all my heart. I commend them to my fellow Newfoundlanders for their serious and solemn consideration. God guard thee Newfoundland.
[The committee rose, reported progress, and the Convention adjourned]


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



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

Notes de bas de page:

  • [1] January 16, 1948.
  • The Following section of Mr. Smallwood's speech is taken from the recording of the proceedings.
  • [1] End of section taken from the recording.
  • [1] The following section is taken from the recording of the proceedings.
  • [1] Church Lads' Brigade.
  • [1] Gap in the recording.
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