Canadian Industries, Preference and Reciprocity

Mr. Chairman and Gentlemen,-

I thank you very much for your kind reception, and I can assure you that I regard it not only as an honour but as a very great privilege to have been invited to address the Empire Club, and I say that in all sincerity because I have the very highest idea of the possibilities for good of such an organization as is represented here. In the first place I am going to ask you to give me your kind indulgence. I realize of course that the honour of this invitation is due to the fact that I fill the position of President of the Canadian Manufacturers' Association, and, being a believer in the old adage that the shoemaker should stick to his last, I have chosen as my subject today that phase of Canadian life with which I am identified, and I wish to speak to you on Canadian Industries, Preference and Reciprocity. I recognize, gentlemen, that this is rather a heavy dessert to offer you, and more particularly on a limit of thirty minutes time, so that all I can attempt to do will be to touch rather hurriedly and somewhat superficially on some of the outstanding features of these questions, and I will have to leave it to yourselves to evolve and develop the details. I trust that what I say, dry and matterof-fact as it must be, may prove sufficiently new to some of you to be interesting, and if it should be that, and if it should lead you to consider this question, and to start you seeking for a better and more thorough knowledge of these subjects, then I certainly will feel more than repaid for my labours in this connection.

I realize further that to an audience in Toronto such as this the propounding of the question: "Do you believe that manufacturing industries are beneficial to the country?" is quite unnecessary. I believe further that nowadays you could hardly find in any part of Canada an audience that would not answer that question in a vociferous affirmative. Yet I think at the same time that I am equally safe in affirming that comparatively few in this audience, or in any other general audience in Canada, realize how largely our manufacturing industries already bulk in the commerce of our country, and I am therefore going to quote you some statistics taken from the annual address of my predecessor in office, Mr. George h. Drummond, in Montreal, at our Convention which was held there a month or two ago, and I would ask you, gentlemen, to kindly bear in mind that these figures are official. They were compiled and furnished by Mr. Blue, the Director of the Census Bureau, and there is no possibility of doubt as to their comparative correctness.

From the last Canadian Census, that of 1900, we find that the output of Canadian factories (employing five hands or over) was for that year $481,053,375-00; while on the other hand for the same year the combined value of the production of the agricultural, dairying, mineral, forest and fishing industries was $511,666,306.00, or only about $30,000,000 more than the value of manufactured goods produced in Canadian factories. And remember, as I said a moment ago, that these figures are based on returns of factories employing five hands or over. If we should do as was done in the former Census, that of 18go, and take a record of the output of establishments employing less than five hands, Mr. Blue estimates that, if the rates established in 1890 held good in 1900, then the output would be $132,050,000 more, which would bring the total to over $100,000,000 in excess of the combined production of agriculture, dairying, mining, forests and fisheries. This last is of course merely an estimate, and may be discarded if you so choose, but I think the former is surely sufficiently striking to enable you, in future, if any one should decry to you the comparative unimportance of Canadian manufacturing industries, as is sometimes done, to tell him that he knows not whereof he speaks. So much for the relative importance of the manufacturing industries, and I have presented this to you, not for the purpose of detracting from those other and basic industries, but simply with the desire of giving to you a clearer idea of the real position which the manufacturing industries already hold in the commercial life of Canada.

My experience teaches me that almost every industry in Canada today is here on account of the measure of protection which has been afforded to it. And, gentlemen, if you will stop to consider it for a moment you will realize that that is so. In these days of easy communication and through transportation, when the factory in Leeds can lay down goods in Toronto at as low a freight rate as can the factory at Montreal; when the mill in Massachusetts can deliver goods in Winnipeg, Calgary or Vancouver, for less freight charges than can a similar plant in Toronto; I say, gentlemen, that you could neither establish nor maintain industries in Canada in the face of the fierce competition which they would have to encounter from either the cheap labour of Europe on the one hand, or from the tremendously developed, highly specialized, and thoroughly established industries of the United States on the other, unless you offset those advantages of our competitors by furnishing an adequate measure of protection to our Canadian industries. We believe that by a just and wise and fair revision of the tariff, bringing it up to present day necessities and conditions, a great increase and development could be made in Canadian industries which would be beneficial to all and burdensome to none.

There are some people who still talk of a tariff for revenue only. Gentlemen, let me say in my opinion for a country like Canada, young and richly endowed, but largely undeveloped, a tariff for revenue only would be the greatest folly. If the tariff was not high enough to be protective and thus lead to the establishment and development of home industries, it would simply increase the cost to the consumer by the percentage of the duty, without in any way building up our own country. It would keep neither our men nor our money at home. I had the pleasure of listening to the Right Hon. John Morley when he was here, and I heard him expounding some theories. And I see that he has also been expounding some theories in New York, and I read in the papers a few mornings ago that they " laughed at Mr. Morley " when he said: " I have seen nothing in your country to make me believe that you wouldn't have been just as great, just as mighty, just as prosperous as you are today if you had taken as your motto 'Tariff for Revenue only."' And we are told that his statement was received with roars of laughter. Do you wonder at it? Can you imagine, gentlemen, a man of his supposed ability and powers of observation being unable to see all around him evidences demonstrating the absurdity of that statement? He looked on the finished results and considered not the cause.

I will give you just one example (you could find hundreds of them), to illustrate to you how blind the Right Honourable gentleman was, and I use this one because I had some personal knowledge of the case in point; and also because it illustrates in a very concise and striking manner the difference in results achieved between a merely revenue tariff and one that was sufficiently protective. I lived in the United States for some years, and was at one time engaged in a business using a large quantity of tin plate. At that time there was no tin plate manufactured in the United States; it was all imported from Great Britain, and the imports in 1890 amounted to 750,000,000 pounds weight. There was a duty on tin plate at that time of one cent per pound. It acted merely as a revenue duty and increased the cost to the consumer without inducing the United States manufacturers to go into the making of tin plate in competition with the already established plants in Great Britain. There was considerable criticism from those to whom tin plate was a raw material, and a demand arose for the removal of the duty. But Mr. McKinley in effect said, " No, the trouble is that the duty is not high enough to produce the desired result"; and in the Bill which became famous under his name he more than doubled the duty on tin plate, making it a -2 cents per pound. What was the result? For two years the price remained practically stationary, and then as the American factories developed, the price went down, and from that time on the price has been lower than it was prior to the imposition of the higher duty; and the outcome is that instead of importing 750,000,000 pounds as they did fifteen years ago, they are now manufacturing a thousand million pounds annually, which is greater by several million than Great Britain's output, and represents a value of about $75,000,000 per annum, and gives employment to about 25,000 hands.

That, gentlemen, is I think a fairly striking example of the difference in results produced as between a revenue and a protective tariff. A great industry has been built tip; the cost has- been reduced to the consumer, and at least $75,000,000 per annum kept in the country. And yet Mr. Morley states that he believes that they would have been just as prosperous under a revenue tariff. Of course, gentlemen, there is one thing Mr. Morley could have pointed out to them. Provided that all the other items had remained stationary, there would have been a falling off in their total trade returns of at least $75,000,000 per year and, therefore, they would appear to be losing ground. Gentlemen, let me warn you against unthinkingly accepting comparative total trade returns as indicative of a country's progress or the reverse, as is so frequently done. It is a good deal like adding a man's income and his expenditure together as the volume of his total trade. As for instance: suppose that my income last year was $100,000 (I'll confess to you that it wasn't) and that I spent $50,000, my total trade returns, figured as the imports and exports are, would be $15o,ooo. Now suppose that this year my income was again $100,000, but that my expenditure was $150,000, my total trade returns would be $250,000, and the unthinking man would say: "Why you have made great progress, your total trade returns have increased from $150,000 last year to $250,000 this year, I congratulate you." But I think, gentlemen, that it would be progress of a kind that would land me in the poor-house. (Laughter and applause.) And so it will be with any nation whose imports constantly exceed its exports. Therefore, I say: " Do not accept unthinkingly total trade returns as an estimate of a nation's prosperity."

And now, gentlemen, regarding the Preference, I will repeat what I have said on a former occasion. "Our Association has been criticized extensively on account of the stand which we have taken in regard to Imperial Preferential Trade, and we have been charged with insincerity because we have advocated Preferential Trade on the basis that the minimum tariff should be protective to Canadian industries. We will stand by that declaration, and we contend that it is no visionary proposition. Any other basis would be injurious to Canada, and not only injurious to Canada, but for that very reason detrimental to the ultimate progress of the Empire. We believe that the greater and more prosperous Canada becomes, the better it is for the British Empire. Our critics base their conclusion on the false assumption that adequate protection to home industries prohibits all importation. Gentlemen, I ask you to look to our nearest neighbour for a convincing proof that such is not the case. In spite of their extremely high tariff they are still importing hundreds of millions of dollars' worth of goods. And so it would be with Canada, and as our country grows in population and in wealth, so would this commerce increase, and we wish to turn it as far as possible into British channels."

I received a Birmingham paper yesterday from that loyal Canadian who is representing his country truly and well in that city. I refer to Mr. Peter Ball, and I am going to read you some extracts from it, because it puts the position very clearly. The correspondent writes

"The Canadian manufacturer is no fool; he understands as well as anybody that Canada is still young as a manufacturing country, and feels that if she pulled down her tariff barriers Great Britain and the United States would with their bigger markets, cheaper production, and longer training, swamp Canadian manufacturers and never give them a chance to rise again. Therefore, the Canadian, wisely from his point of view, because he comes late into the contest as a manufacturer, guards himself with heavy tariffs. The British people should, therefore, clearly understand that, although the Canadian loves the Empire, though he is willing to make sacrifices for the defence of the Empire-a subject I intend to deal with in a later article-he does not intend to penalize himself to the extent of a single dollar for the benefit of the British manufacturer. 'And where will the preference to British goods come in?' is a question now to be legitimately asked. The answer is: ' On the surplus of articles needed in Canada, and which Canada cannot supply.' Canada spends millions of pounds in imported articles from foreign countries, chiefly the United States. She wants to raise her present high tariff against the States still further, and so as far as possible, make Canada, when she must buy from outside the Dominion, buy from Great Britain. We spend millions of money in the States every year, buying articles we are not sufficiently advanced to make ourselves. We want you to have those millions."

Gentlemen, those extracts give you a somewhat concise idea of our conception of a Preferential Tariff which will be beneficial to Britain without being detrimental to the advancement and development of Canada. Whether that Preference is to be met with a Reciprocal one from Great Britain is another question, and that must be answered by Great Britain from her own standpoint. We want it clearly understood that if Great Britain decides that it is not to her advantage to give it, then we don't want it. We are begging no favours, and asking no sacrifices. Canada has progressed without a preference in the past; she is prosperous without it in the present, and the lack of it in the future cannot prevent her onward march. It is, as I have said, for them to say.

They tell us that it would necessitate their abandoning Free Trade, the policy under which they are so prosperous. Again I repeat, it is for them to decide; but as an onlooker I sometimes wonder if they as a country really are so prosperous under Free Trade, and I am led to that wonderment especially when I read such statements as one made by a High Priest of Cobdenism who was lately here. I refer to the Rt. Hon. James Bryce, who, when speaking in opposition to the proposal to put a duty of one shilling and three pence a quarter on wheat -which has been computed to equal a tax of eighteen pence per head per annum on the population of Great Britain-stated that: " While it would be a heavy tax on a great proportion of the people, yet when you came to that lower strata, that one-third of the population of the British Isles which is constantly living on the verge of starvation, to them it means reduced subsistence, frequent want, weakness of body and susceptibility to disease." That surely is an unhappy picture of a prosperous country, and for my part I would like to think that it was to some extent at least only an outburst of theoretical rhetoric. I think you will acknowledge that he was well answered by Col. Denison, when in reply he said that " In protectionist Canada and in protectionist United States there was no man who worked who could not, and very few who did not, spend more per week on amusements than the sum which per annum was going to reduce one-third of the population of Great Britain to a condition of reduced subsistence, frequent want, weakness of body and susceptibility to disease."

Gentlemen, once more I repeat that it is for them to decide. I can only say that if it was in Canada, long before we could have reached that condition, there would have been an outcry of " anything for a change " which would have demolished several old idols. While I do not say whether or not Great Britain should enter into reciprocal preferential arrangements with the Colonies for her own local betterment, yet I do say that I think that she should for the sake of the Empire. Gentlemen, neither you nor I need any incentive to our loyalty to the British Empire. We have never known any other allegiance, and we never will. (Applause.) But as our country fills up-attracting as it undoubtedly will millions of people from foreign lands-we will find that a large proportion of our population knows no sentimental tie for British connection. They will be loyal Canadians -there is no doubt of that-but there is no reason why they should be loyal to the Imperial connection, and for the maintenance of the Empire I believe it is vital that these newcomers should realize that there is a material advantage to them from living under the British flag. Show them that, and you will very quickly generate a kindly feeling which by the next generation at least would become one of loyalty. That may appear a materialistic way. I believe that it would be a practical way. I believe that it would be an effectual way. If a better way can be suggested, I am ready to receive it. I have no doubt, as I said, about our newcomers being loyal to Canada, I have no doubt of, Canada's future as a great and prosperous country, but I want it to ever remain loyal to and a part of that Empire which will not only enrich but dominate it for all that is best for humanity.

In reference to United States Reciprocity all I can now say must be very brief. I do not believe that there is any general sentiment in Canada today in favour of Reciprocity with the United States. (Loud applause.) Canada has learned that her material prosperity does not depend upon reciprocal trade relations with the country to the south of us. She knows that she has in her worldwide British connection markets for all her surplus products, and markets which would be much safer. I do not believe that our friends to the south would enter into any treaty with us which did not give to them the long end of the stick. And there would be dangers. I am not so much afraid of it leading to absorption, though I think that some of them have that in mind, as I am of the disastrous effect on our commerce which might some day result. It would be an artificial market, and it might be swept away at a moment's notice by the caprice of the rulers in the States, and that would be a most unfortunate condition after our channels of trade had been established.

I would like to quote from what our friend, the Hon. G. W. Ross, has said on this matter: " I prefer looking to a market that is natural, that is almost inexhaustible in its demand upon whatever we have to sell; a market where our friend stands and takes toll, not an opponent; a market where no natural or artificial condition that we can see is likely to be impaired at the caprice of either of the parties." Gentlemen, if the United States wants more of our goods they can very easily get them. They can take off their tariff if it suits them without our entering into any entangling or disastrous alliance with them. My time is fully up, I see. I thank you very sincerely for the kindly hearing which you have given me.