Present Day Problems
The Empire Club of Canada Addresses (Toronto, Canada), 15 Dec 1938, p. 153-170

Hepburn, the Honourable Mitchell F., Speaker
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Saving Canada. The speaker's belief in one Canada, not nine Canadas. Canadians now passing through a transition period which is taxing the capacities of those charged with the responsibility of shaping public policy. Ontario's share of contributions to the national revenue: one-half. The inroads which are being made today upon the resources of Ontario, the central and richest province. Disparities in subsidies to industries in various provinces. The railway problem aggravated by overexpansion. The Hudson Bay Railway. The issue of guaranteeing a price for wheat. The prosperity of Canada and our ability to sell wheat. The folly of offering a bonus for wheat production when the markets are falling off. The demand of 67 million dollars by the West as compensation. The speaker's appearance before the Rowell Commission to put the case for Ontario. The issue of national unity. William Lyon Mackenzie King's allegation that the speaker is entering into a conspiracy to destroy Confederation, and the speaker's denial of such a charge. Defending Ontario's position. The need for a better understanding as between the different provinces. The issue of the right of succession duties. The speaker's charge that the Dominion Government, as a result of new taxation levied while the great problems were under consideration by an important Commission, has violated the spirit of the whole thing. Looking for solutions and answers. The fiscal situation in Ontario, with figures. Some of the things done by the speaker's government. The problem today a problem of money. Giving serious thought and consideration and study to the question of monetary reform. Ontario being unable to indefinitely carry the present burden of debt and taxation. Taking national stock and inventory. The speaker's prognostication: that while the ideas he enunciates in respect to monetary reform may not be popular, his sincere desire is to save the principal. Having the courage to do what is necessary. Living in a new era. Witnessing the demoralization of the morale of the people of Canada because of the inability of those in authority to settle unemployment problems. Facing the new problem of national defence.
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15 Dec 1938
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Empire Club of Canada
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Chairman: The President, J. P. Pratt, Esq., K.C.
Thursday, December 15, 1938

THE PRESIDENT: Mr. Prime Minister, Honourable Ministers and Gentlemen of The Empire Club: I am sure that each one of us has at one time or another heard a Chairman proudly and loudly declare that the guestspeaker needs no introduction, and then proceed to occupy five or seven minutes of the speaker's time by telling who he is, what he is, and why. Today, it will be amply sufficient for this Chairman to say that on behalf of the Empire Club we welcome for the first time as our guest-speaker, the Honourable Mitchell F. Hepburn, Premier of the Province of Ontario. The Honourable Mr. Hepburn has chosen as his subject, "Present Day Problems." I have much pleasure in introducing the Honourable Mr. Hepburn.


HONOURABLE MITCHELL F. HEPBURN: Mr. President, Gentlemen of the Empire Club: I want to avail myself of the first opportunity possible to thank you for the wonderful reception you have accorded me on this, the occasion of my first visit to your Club, apart from the time I was here listening to my old friend, Jim Curran, discuss whether Columbus or someone else discovered this country. Well, it was all very interesting. But I am not so much concerned as to who discovered the country. The thing I am troubled about now is who in the world is going to save the country.

Naturally, I will have to follow, to some extent at least the subject which has been assigned to me, that called, "Present Day Problems." I don't know whether you want me to discuss my own problems or yours. In either event, I am sure discussion on either would take most of the afternoon.

The last place in the world my detractors would suspect me of being at this moment is at the Empire Club, because just recently I have been accused of being in a conspiracy to rip this country asunder.

It reminds me, finding myself here at the moment, of the story of the lady's cow which was lost and everyone in the little village had tried as best they could to find her. Finally, they enlisted the help of the village nitwit. He said, "I will have the cow back in half an hour. You watch." They did and sure enough, he was back right on the dot with the widow's cow. This aroused the curiosity of a lot of people and they said, "Where did you find her?" He said, "I stood on the street corner and I said to myself, 'Where would a cow go to get lost?' I went there and there is where I found her."

Apropros of my remark as to whether this country is worth saving, it reminds me of a true incident that happened in the rural section of the country where I was born and raised, having to do with an Irish family. Of course we find a lot of Irish on the farm and a lot of pigs. The pigs had a wallow and the young Irish lad fell in the mud puddle. His father picked him out and handed him to his mother. His mother looked at the boy for a moment, held him up and said, "Pat, for Heaven's sake is he worth saving?"

I think this country is worth saving. We are going to save this country, notwithstanding the remarks of my detractors, and others who talk about Canada being broke and so on, and so forth. I believe in one Canada, not nine Canadas. (Applause) I so stated the position of the Province of Ontario at the time I appeared before the Rowell Commission. Now, many criticisms have been levelled against me as your Provincial Treasurer and Prime Minister, because of the attitude I took on that occasion. Now, Gentlemen, I want to take you into my confidence today and speak very frankly, and I am going to speak in simple, understandable language. We are passing through a transition period which is taxing the capacities of those charged with the responsibility of shaping public policy.

I read with great interest, prior to the sittings of the Rowell Commission in this Capital City of Ontario, the presentations which had been made by representatives of the various other provinces of the Dominion, and it appeared to me that those other provinces were appearing before the Commission with hats in hand, so to speak. They were demanding certain concessions from the central government and we must bear in mind, those of us who are citizens of Ontario, that we contribute about one-half of the national revenue. So, when these other provinces demanded something like 76 million dollars per year, as compensation from the central government for alleged grievances which they thought they were suffering from, it was my obligation and my duty, as your Prime Minister and as your Treasurer, to state Ontario's case fairly and fearlessly. That, I tried to do. I am not going to quote the words which I used at that time, except to say just this that I believe Ontario has paid its share with regard to Confederation, and I do not believe that Ontario should be asked to contribute any more.

I wonder if you gentlemen, who are leaders of thought in your own community realize the inroads which are being made today upon the resources of this, the central Province, and the richest province? I wonder if you realize that at this moment you are paying subventions for coal from Alberta, approximately one-half the freight rates on feeder cattle coming from the West to Ontario, and you are paying subventions for wheat going to both seaboards? With respect to the Maritimes you are paying subsidies to the extent of $2.00 per ton on Maritime coal coming to Ontario, you are paying subsidies on fish, you are paying subsidies on potatoes.

We have in Ontario a great industrial concern, located in Sault Ste. Marie, that is struggling along in competition with another great concern of a like nature, located in the Maritime Provinces, which concern derives approximately a million and a half dollars per year in the way of subsidies and our industry in Sault Ste. Marie has to compete, although, and this is the irony of it, it pays its share of taxation to subsidize a competitive industry in the Maritimes.

Now, we have our railway problem which has been aggravated in no small measure by overexpansion. We agree that we suffer because of our very geography. But the great contributions we are making now toward railway deficits have to do with overexpansion in the West. We put up a million dollars a week, or at least we add that to our debt, as the result of trying to maintain railway service for those in the sparsely settled sections of the West. That is a tremendous thing. It is more than the entire budget of the Federal Government at the beginning of this century.

Then we built the Hudson Bay Railway, at great expense. Seated next to me is my good friend, Jack Bickell, my co-Arctic explorer. That week that Jack and I were reported missing a lot of good Tories thought, "My Heavens, can it be true?" But like death and taxes, we turned up again, much to the discomfort of a lot of my detractors--not confined to my own political camp, strangely enough. And I see here from the other camp, my good friend, Earl Rowe, and my equally good friend, Howard Ferguson, who seems to have regained the elixir of life. When I get to his age I am going to figure out just how it can be done, too.

Gentlemen, I recall in going to Ottawa, many years ago as a young, inexperienced farmer member from the County of Elgin, I discussed with one of the Cabinet Ministers at that time the advisability of going on with the Hudson Bay Railway, and I said to him, "Can you conceive of any wheat trader storing wheat in a port to be frozen over for ten months of the year?" He said, "No, that just isn't in the cards. It won't be done, but we have to go on with the railway. The West is demanding it. It is a political railway and we have to carry it on to completion." Which we did. We have spent, I presume, fifty-some millions of dollars. (I have to be very careful about figures now, after being checked up so closely by the Globe the other day.) We spent approximately fifty million dollars and we have been paying interest on the money since the road was completed, and this year only two small vessels sailed into the Port of Churchill to take wheat out. That is a load that we of Ontario are carrying because of the West's demands.

Now, this year the West had sufficient political influence to force the Federal Government again to guarantee a price for wheat. Now, Gentlemen, the prosperity of Canada has to do with our ability to sell wheat. The whole basic foundation of Canada was predicated on selling wheat. Now, strangely enough, the consumption of wheat is falling off all over the world and we are feeling the effect of it. We are only on the fringe of what we are going to have to settle in the course of time, but even on this very continent, the great wheat producing continent of North America, the consumption of wheat in the last few decades has fallen off by one-third. Now, in the other countries of the world they are trying to apply policies of self-sufficiency, so they are not buying the same amount of wheat from us. We aggravated this situation ourselves, some years ago, when we formed the Wheat Pool, ostensibly for the purpose of orderly marketing, but it didn't work out that way. Greed asserted itself, with the result the Western Wheat Pool, instead of marketing wheat as the world's demands warranted, held wheat back from the market, with the hope of getting higher prices, and we stimulated production in competitive countries as a consequence. When we finally arrived at the conclusion we had to sell our wheat, we crashed the wheat markets to the lowest levels known in this century.

Now, following that, instead of taking stock and inventory, we foolishly bolstered up again the production of wheat by guarantees, and this year, as the result of the guaranteed price this country will lose approximately 60 or 70 millions of dollars. It is hard to estimate at this moment just what the loss will be. Yesterday, in Manitoba, there was a Wheat Conference, and it was frankly admitted by those in attendance, that there is a carry-over of over one billion bushels.

Now, does it seem logical or reasonable to you men who are students of public affairs, that we should bonus production of wheat at a time when our markets are falling off? Should we stimulate and increase the production of wheat when there isn't a corresponding demand?

I was talking not so long ago to a gentleman from Alberta, who told of the great irrigation scheme at Brooks, sponsored and financed largely with public funds, where they tried to get the farmers into diversified production, but as a result of the wheat guarantee all the alfalfa fields are being ploughed up, in order that they can grow more wheat next year.

I say, Gentlemen, when you see things like that you sort of wonder where we are heading. Politics! Politics, pure and simple. There is no other answer to it. It was a bid to get the votes of the West, but it is going to create a worse condition in time, than the one that obtains at this moment.

Now, the West demands 67 million, dollars, as I said, as compensation. I had to appear before the Rowell Commission, not as one prepared to tear down our Confederation, but as one prepared to put Ontario's case fairly and squarely before that august assemblage. That I tried to do, and because I placed Ontario's case before the Commission I was charged with being in line or in league with those who would tear down our Confederation. I want to say, my friends, there is no Premier of any province, nor any Prime Minister of this country, who could unscramble this Confederation of ours. We are linked together, but we are not going to get very far if we appear as other provinces have done, hat in hand, as I said, demanding more and more from the central government. But that sort of thing is more or less in line with the mentality of the people of today.

Now, there has been a great deal said about national unity. I am just going to make this one observation with regard to my friend, William Lyon Mackenzie King, and I want it made very clear here that when I drank the Toast to the King, a few moments ago, it was to Our Majesty, the King. They said all around me, "The King." I wanted to make myself clear on that point. This gentleman at this moment is charging me with entering into a conspiracy to destroy Confederation. Now, I deny the allegation most emphatically. There isn't a more loyal Canadian in this great gathering than myself. Why shouldn't I 'be? I was born and raised here. Like the rest of you I love this Canada of ours and I am proud to know that this Canada of ours is a link in the great British Empire. I am not only a Canadian, I am an Imperialist, if you want to call me that. Naturally you expect that, since I am of Scottish descent-Scottish and Irish. As a matter of fact, there is quite a controversy between the two peoples in my County. The Scottish people insist that I am Irish, and the Irish insist that I am Scottish. I just want to make this observation about the gentleman at Ottawa, and this will be pleasing to the ears of my good friend, Earl Rowe, I am sure. He, who today is charging me with entering into conspiracy to destroy our Confederation is the same gentleman who, in 1930, and I was there in the Dominion Parliament at the time, sitting as one of his supporters, got up and enunciated a policy which I think did more, in the way of endeavour, at least, to destroy Confederation than anything else, when he said--and I know my friend, Earl Rowe recalls the occasion, I could see the plunder in his eye after Mackenzie King made the speech, because he could see a great victory for his own forces as a consequence of that endeavour to destroy this Confederation of ours-Mackenzie King said, "Not a five cent piece for relief for any province with a Tory Government!" Just imagine, my friends, that man talking today about anyone else breaking up Confederation, and talking about leading a party, based on the policy of national unity. (Applause) My Gosh, I am glad there are some Tories in the audience. (Laughter)

I just want you to analyze that statement. Here was the national leader enunciating a policy with a club. In other words, he said, "If the Provinces do not elect the kind of government satisfactory to me, then those provinces will not get a five cent piece for relief." Well, I don't know, I thought that the government that I led was satisfactory to him for a while, at least, but he is getting so near that five cent piece, so far as relief is concerned, that I am questioning my own political affiliations at this moment.

Now, Gentlemen, I referred just briefly to the presentation of Ontario's case before the Rowell Commission. We have to defend our position. I believe Ontario has paid its fair share in the way of a contribution toward Confederation. This is the richest of all the provinces. We are not getting the full benefit of the revenues from our natural resources. Those revenues are going to the Federal Treasury. We are not complaining in particular about that. We pioneered in our North Country. We built roads, extended hydro lines. We even own a railway up there which was built, primarily, for the purpose of developing and opening up the great mining areas and we stand by, not complaining over the fact that three-quarters of the revenue derived in Northern Ontario goes to the Federal Treasury, and from there is dispersed for the purposes I have outlined to you. We are not complaining in particular about that. But not so very long ago, my friends, we found it necessary to import some aeroplanes for fire prevention purposes, only, not for commercial use, and the Dominion Government demanded from the Province of Ontario duty on those planes. We didn't complain about that then, but I take exception to this charge, continually levelled against Ontario, to the effect we are an exploiting province. If it were not for the riches of Ontario, I don't know what would happen to the rest of the Dominion.

What we want today is a better understanding as between the different provinces, and a better understanding, will not be brought about by Federal Ministers going around and levelling charges that Quebec and Ontario are conspiring against the rest of the Dominion. We submit to all these drains upon us because we want to maintain our Confederation, and we are going to maintain our Confederation. It doesn't necessarily follow that we should be the goats of everybody, and I think I would be derelict in my duty if I did not as your Premier, put Ontario's case, as I did, fairly and squarely before the Rowell Commission.

Now, so far as I am concerned, I have washed my hands of the whole business, because the Dominion Government did something which I cannot forgive it for. There are many things it hasn't done, more than it has done, as a matter of fact. This Commission was set up for the purpose of studying facts and problems as between the Dominion and the Provinces, and before the Commission had a chance to report to the Federal Government, new taxation was levied by the Dominion which invaded a field of provincial taxation. Now, remember, my friends, Confederation was brought about as a result of an agreement between the Provinces. We created the central government, the central government did not create us. But before this Commission had a chance to report the Federal Government, in the last session, invoked new taxation which invaded present provincial fields of taxation, and I refer particularly to the gift tax, which is a direct invasion of the field of succession duties.

I look with wonder in my eye at the many, many millionaires I see around here. There is Jack Bickell, and Sam McLaughlin and all the rest of the fellows. I can't help but think when I see chaps like that around of how we are going to collect revenue for the province. I keep enquiring about their health. In fact, I think I will circularize a lot of the millionaires, day by day, to find how they are progressing, in the hope that some time or other I can excel last year's all time high record of collection of succession duties.

That right of succession duties was conferred upon the provinces, and the drive today, emanating from the other provinces is to get control of succession duties and place all collections under the jurisdiction of the Federal Government. If that were to happen, I can tell you, Gentlemen, I would have to impose some new taxes upon you, because I inherited a debt. You know my friend, Howard Ferguson? Bless his heart, he is a, great fellow! He is a very astute man. You know he was the luckiest Premier this Province ever had. He blamed the debts which he inherited on his predecessors, he added to them and then handed them on to me. I have to meet the obligations which were handed down to me, and after I sat in his chair in Queen's Park, pinched myself a couple of times and took stock and inventory, I thought of the old adage, "Fools rush in where angels fear to tread," and some of you now who look upon me as the Tax Collector of the Province, probably use language in speaking of my methods of collection which I couldn't repeat before this august and important assembly. That is my responsibility, to meet the obligations of the Province of Ontario, to protect the interests of the Province of Ontario: That is what I am trying to do. That is why, as I say, I appeared before the Rowell Commission and tried to place Ontario's case before that body.

I say the Dominion Government, as a result of new taxation levied while the great problems were under consideration by an important Commission, has violated the spirit of the whole thing. So you can't blame me if I disassociate myself from any further sittings of that body, because they only made Ontario look foolish. We were sincere, we were genuine, we placed the fairest brief of all. We didn't ask for anything. We weren't there in a bargaining spirit. We just wanted to present the facts of the case. So I will leave that issue to one side for the time being.

Now, then, my friends, the question naturally arises, what are we going to do about this whole situation? The other day the Globe took me to task for some alleged statement of mine about cutting down interest carrying charges by 7 or 8 hundred million dollars a year. I, of course, at that time, was referring to all debt, public and private. Now, the public debt of Canada, which includes all municipal debt, all provincial debt, and the Federal debt, totals over 8 billions of dollars, and they are all increasing with great rapidity. In Ontario alone, we were able to show a corresponding asset for any increase in debt, and that is what it should be. If you as individuals were to increase your obligations without a corresponding asset, then you would be headed for bankruptcy, and that is the way this nation is heading at the present time because the Federal Government, in paying for those subventions, borrowing money to take care of 50 million dollars deficit on railways each year, losing 60 millions on wheat alone in this one calendar year, paying in some instances a hundred per cent of the relief cost of the West, and according to the Premier of Saskatchewan, who appeared before the Rowell Commission, three-quarters of the people of Saskatchewan last year were on relief, all of these charges are being built up, added to the debt structure without the corresponding asset. In the last seven or eight years the Dominion Government has gone in debt about a billion dollars, with no corresponding assets. We loaned some 140 million dollars to the West, not a dollar of which is recoverable. We know that. There is no use trying to fool ourselves. We know we can't collect that money.

Only the other day I had a visit from the Treasurer of one of the Western Provinces. He told me that debt charges in his province constituted one-half of the revenue, and he said, "We couldn't get along then unless we were able to borrow more and more from the Federal Government. The municipalities are paying a six per cent rate and they are all in bankruptcy."

We have saved our municipalities. Since this government took office not a single municipality has gone in default. We have done that at a great expense to the Province. We have taken over certain fixed charges formerly borne by the municipalities, to wit, the cost of old age pensions, the cost of mothers' allowances. We have paid the one mill subsidy. Only the other day we gave the City of Toronto $150,000 as its share of the one mill subsidy. We have taken over the entire cost of maintaining our indigent patients in our sanitoriums, our T.B. patients. All these things have been done by the Province in order to assist the municipalities which are struggling along at the present time, imposing an almost impossible tax rate on the owners of real estate. We are trying to ease that burden.

The thing seems impossible to me. I have never felt more discouraged about the situation than at the present time. Within the sphere of our own jurisdiction we are trying, as best we can, to meet our obligations, and to assist the overburdened taxpayers. It is like putting an ice pack on Mount Vesuvius. While here in Ontario we are trying to do those things, trying to give good government, trying to economize, doing things in the interests of the people, look at Ottawa and see the debt mounting, day by day, millions by millions, half of which is borne by Ontario, because we constitute, as I said, one half of all the Federal taxation.

The question arises, what are we going to do about it? Who .is the Moses who is going to lead us out of the wilderness? The other night when I was talking to a gathering of people I said, "What would I do if I were King?" I didn't mean Mackenzie King, either. I would face the issues frankly and fairly. I am speaking at this moment before a group of financiers, leaders in the political and economic life of our country, and I say you are faced with an obvious fact, why not be frank about the whole situation? Now, we are in debt so far-8 billion dollars-we are paying so much interest, over 400 million dollars a year, we simply can't carry on without increased borrowing and that is what we are doing. We are borrowing money, more and more each year, to take care of fixed overhead. The question of reducing overhead is one that has been cussed and discussed. I have done a few little things in the way of reducing overhead. I closed Ontario House in London, England. It was a miniature duplication of the service being maintained by the Federal authorities. When my friend, Howard Ferguson, was in England, I say this without any thought of flattery, he did more to sell Canadian goods and make the British people understand Canadian thought and sentiment than any other man who was ever there before him or, I can say, any man who will ever follow him. (Applause) I think you will agree with me that Ontario House was a very miniature duplication of the service which he was rendering at that time, as Canada's High Commissioner in England.

But I got hell. You know I think I own a good portion of that other sphere. Coming over today I sat in the front seat with the taxi driver and he said, "Mr. Premier, how do you stand all the criticism you get?" I said, "There is one consolation, I usually get a spoonful but the other fellow gets a shovelful and I am quite thankful for that." He said, "You know, you are certainly going to have a big slice of hell before you even get there, aren't you?" (Laughter)

Then, we closed this architectural monstrosity, known as Government House, and again I got a little slice of that other region-plenty of it, as a matter of fact. Well, Gentlemen, it isn't any measure of disloyalty to close an institution of that kind. It was costing a lot of money and it was in need of repair. It would cost $100,000, at least, to put it in shape. Can this Canada of ours maintain provincial institutions like that?

I was down in Prince Edward Island. It is a very lovely place, but only a country, in effect. There they have a palatial Lieutenant-Governor's home. We have nine Lieutenant-Governors, receiving $10,000 a year in salary from the Federal authorities--$90,000 in all. Half of that is put up by the taxpayers in the Province of Ontario. We have one representative of the King. We have a very wonderful man in the person of our present Governor-General of Canada, and I think he can perform all the functions necessary in that regard. Closing the house, though we supplied the Lieutenant-Governor of Ontario with quite acceptable quarters in the Parliament buildings, closing that and saving you a little money brought down again the wrath of a lot of people upon my head.

So, I say, you can talk about overlapping in government and you try to withdraw some of those services, and watch where you get.

When I cancelled the appointment of all District Medical Health Officers, again I was attacked from all sides. The old order is changed. Thirty or forty years ago, in the days of horses and buggies, it was quite all right to have District Medical Health Officers. That situation has changed. We have Municipal Health Officers and if an epidemic breaks out, we can have serum there, by plane or otherwise, within an hour or two.

When you try to tackle the problem of cutting down the overlapping you bring down the wrath of people upon you.

That is, as I say, the unimportant part of government today. The whole question is, what are we going to do with the ever increasing interest carrying charge? One Treasurer told me, as I said to you, one-half of the revenue in his province was required to meet interest. They can't go on. You couldn't. go on as individuals. Let us face it frankly and fairly. You will have to have a national refunding scheme, taking into consideration the problems of the provinces and the Dominion itself. You have got to cut down overhead, whether you like it or not. They have done it in England voluntarily, yes. It is a compact little country, and it hasn't the geographical problems that we have. They have done it in Australia. It has got to be done here, and I wouldn't worry about the three-way bonds. When I converted the new issue, I would say, bonds repayable only in lawful money of Canada.

The problem today is a problem of money. The situation is such that it is necessary for us to give serious thought and consideration and study to this question of monetary reform. I know, when you advocate something of this kind you are looked upon as sort of a halfwit, and they call your ideas "crackpot ideas." I say, like Old Bill, "if you know of a better 'ole, let's hear about it."

I speak as your Treasurer, and I know in the richest province of all, we can't go on indefinitely carrying this present burden of debt and this burden of taxation. There has got to be equality of sacrifice all along the line. We have got to take national stock and inventory. I hear somebody say, "Hear, Hear." It was a wee, small voice, nevertheless I think a lot of you gentlemen are quite in agreement with what I am saying at the present time. (Applause)

It is somewhat like the story of the fellow who had been frequenting one of my beer parlours. I am not looking at anybody in particular, so don't feel guilty. He staggered into a church while an Evangelist was conducting a service. He went to sleep. The Evangelist said, "All those who want to go to Heaven stand up." Everybody stood up but the drunken fellow. The gentleman said, "All those who want to go to the other place, stand up." The noise awakened the sleepy chap and he stood up, and he said, "Parson, I don't know what in the world we are voting on, but I see you and I are in the darned small minority." (Laughter)

Well, Gentlemen, I am going to make this prognostication, that while the ideas I enunciate at this moment in respect to monetary reform may not be popular, my sincere desire is to save our principal. I believe in paying back for value received, and we are not going to be able to do that if we drift along much longer. I say it is time for us to take steps to save the principal. Never mind the interest. Let us save the principal. If we do that now, probably it isn't too late, but three or four years from now when this country is bankrupt, as my official organ, the Globe and Mail, already says it is, you will wonder why we didn't do something of this kind.

When I appeared before the Interprovincial Conference at Ottawa three years ago I advocated this very thing, and I was looked upon as some kind of a bandit. Three years have gone by, we have added hundreds and hundreds of millions of dollars to our provincial, municipal and federal debt, and if we had taken the steps then the process might have been not quite so painful as it will be a little later on. So I say, let us have courage and backbone to do the things we know are necessary, do the things which are very obvious, because there was never a time when we needed to straighten out our financial house more than at the present. I notice I have only got four minutes left, and I think probably a lot of you people are very thankful for that.

We are living in a new era. I was out on the Pacific Coast, not so very long ago, with my friend, Jack Bickell. You know, I get criticized for travelling with millionaires, but I was doing something for the province. I had two of them with me. If we had crashed, just think of the income you would have had. Two millionaires in an aeroplane with a tax collector! (Laughter) What a sacrifice for one's country! Out there, my friends, they are worrying about Pacific defence. The world is getting nearer together. Now, I say it is time for us to take stock and inventory, to put our house in order, because we are facing a new problem entirely, that of national defence, and the democracies of the world have got to stand together. There is no doubt in my mind, and I am not kidding myself about it, three nations have agreed upon the conquest of the world. The rest of us have got to stand together and resist inroads from the dictators. We can do that much better if we have our own house in order.

Today I witness the demoralization of the morale of the people of this country because of inability of those in authority to settle our unemployment problems. You can't feed and clothe and house and shelter people indefinitely without breaking their morale. (Applause) That is what we are doing at the present time. We might as well realize that, too. (Applause) The most tragic thing I have witnessed at this moment is the demoralization of the young men of this country. My friends, just think, only a few weeks ago, we witnessed this terrible spectacle of physically fit, single, unemployed men, sheltered and clothed and fed and given medical care out of the pockets of the taxpayer, actually refusing to work seven hours a week beautifying their own city in the way of repayment. Now, years ago those men would have been ashamed to even accept charity but today the situation is changed so completely that these men are even prepared and did picket the City Hall, identifying themselves as those who wouldn't give back to you taxpayers seven hours of work in a whole week, for what you are doing for them.

So, I say, we witness now the demoralization of the youth of this country because of failure on the part of those in authority in Ottawa to deal effectively with this great national problem of unemployment, and there was never a more urgent need of a settlement of this problem than at the present time, because we are faced, as I say, with a new problem, that of national defence.

I don't know, Gentlemen, whether I have trespassed too long upon your time, or jarred the sensibilities of those who think opposite to myself, politically, but at least I have been frank and fair. I have stated exactly what I have in my own mind and I welcome the opportunity of appearing before such a representative group of citizens of Toronto, the city of my adoption. I welcome this opportunity and my friend, the Chairman tells me this is one of the largest gatherings ever assembled under the auspices of the Empire Club of Canada. Now that I have been here and have enjoyed your hospitality, I hope you will extend to me an invitation to return on another occasion. I have enjoyed this event very, very much and I repeat again, I hope I have not jarred the sensibilities of those of the opposite political faith. I hope I haven't said anything that will injure the good feeling so manifest here. After all, I can see that the spirit of good fellowship permeates in the minds of all and, Mr. Chairman, if you are so kind as to invite me again I will be only be too happy to return. I feel very like Harry Lauder. When I heard him in London, Ontario six or seven years ago, he said, "I am now on my fourth farewell tour of Canada, and I will be back again next year." (Applause-prolonged)

THE PRESIDENT: Mr. Prime Minister, on behalf of the Executive and the members of The Empire Club of Canada, I place before you this piece of paper and hand you a pencil, and ask you to fill in your own date. (Applause)

I am sure that we have all been delighted with the interesting and enlightening remarks of the Prime Minister. It is the first time that I have heard him address a gathering of this size and the fact that he has addressed it with a minimum of notes speaks for itself. We can only hope, Sir, that you will return to us at a very early date and I can assure you that you will have at least as large an audience as you have today.

Before adjourning the meeting, may I on behalf of the Executive extend to all present, and to our radio audience, our best wishes for a very Merry Christmas and a Happy New Year.

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