1946-04-16

RAILWAYS AND SHIPPING


Hon. LIONEL CHEVRIER (Minister of Transport):: I desire to lay on the table the annual report of Canadian National (West Indies) Steamships Limited for the calendar year 1945, in English and French. Copies of this report are being distributed to hon. members this afternoon.
By leave of the house I wish to move:
That the annual report for 1945 of the Canadian National (West Indies) Steamships Limited, tabled this day, be referred to the sessional committee on railways and shipping owned, operated and controlled by the government.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Mr. L. PHILIPPE PICARD (Bellechasse) moved for leave to introduce bill No. 55, to amend certain acts in respect to the labelling and marking of foods and drugs.
Some hon. MEMBERS:: Explain.
Mr. PICARD,: Mr. Speaker, at the moment the Food and Drugs Act provides, under section 3, subsection (b) of chapter 3 of the statutes of 1939, that the department shall have the right to make regulations concerning the labelling and packaging of foods and drugs. The aim of that section as it stands is to prevent the public or the purchaser, according to the text of the subsection, from being "deceived or misled" as to the character, strength, quality or quantity of the article, and so on. Uhder the Opium and Narcotic Drug Act there is a subsection providing that whenever there is any drug marketed there shall be printed on the wrapper or label the following words:
It is unlawful to administer this preparation to a child under two years of age as it contains (insert name of drug) and is dangerous to its life.
The object of the present bill is to provide, for people who understand only the French language, the same protection as is provided for those who speak English, under the Food and Drugs Act ' and under the Opium and Narcotic Drug Act, by providing that the labelling shall be printed both in English and in French.


Mr. POULIOT:: Jan de Kuyper gin should
be described as poison.
Motion agreed to and bill read the first time.



RADIO BROADCASTING


Hon. J. J. McCANN (Minister of National Revenue) moved:: That a select committee, the members thereof to be later named, be appointed on radio broadcasting to consider the annual report of the Canadian Broadcasting Corporation and to review the policies and aims of the corporation and its regulations, revenues, expenditures and development, with power to examine and inquire into the matters and things herein referred to and to report from time to time their observations and opinions thereon, and to send for persons, papers and records.


Mr. T. L. CHURCH (Broadview):: I wish to ask the mover of this resolution a question. This committee has been appointed periodically for many years, in fact since the Canadian Broadcasting Corporation has been in existence, and it seems to me that its meetings have been held to too great an extent in camera. Moreover, the reports presented to the house are never considered by the house. When the committee was appointed last year it was supposed to report on the question whether the $2.50 fee should be abolished, having regard to changed conditions. I would like to find out from the minister whether, when the present committee is appointed, it will meet in Ottawa, whether its proceedings will be open to the public, and whether its reports will be presented for consideration by the house, and presented in time to allow of such consideration.


James Joseph McCann: The committee is being set up at this time for the purpose of expediting the business of parliament, and we invite the cooperation of members of the opposition and of other parties in naming members who will constitute the committee in order that its work may begin immediately after the recess. In answer to the hon. member for Broadview, may I assure him that the sittings of the committee are not held in camera. They are open to the public, and the reports submitted are brought down in sufficient time to be acted upon by parliament if parliament so desires. It is within the province of any member of parliament to move that a report be concurred in, with a view to having discussion. The recommendations and reports of the committee for 1942, 1943 gnd 1944 have

Radio-Special Committee
in the main been aeted upon, and the government has put into operation as a matter of policy almost all the recommendations which these committees throughout the several years have submitted to parliament.
Mr. 'E. G. HANSELL (Macleod): I do not rise, to speak against the motion, because I am in favour of it. I simply wish to point out that the motion is for a select committee, and of course a motion is necessary if the committee is to be set up. But the select committee is to deal only with the annual report, and not "annual reports," in the plural. I am at a loss to know why the committee should be set up to deal with just one report. I presume that is not particularly what is in the minister's mind. What I wish to emphasize is my belief-and I shall present to you, Mr. Speaker, and your committee who are now revising the rules and regulations of the house, a submission in this regard-that a committee of this kind should be a standing committee in order that it may meet every year to consider not only a particular matter but other subjects which should be brought before it. In fact, I believe that all government institutions should come under review of this parliament annually and not merely when something may have arisen to necessitate a special sitting of a committee. I emphasize this at the present time. At a later date I shall discuss matters affecting radio.
Mr. MoCANN: It is not the intention of the government to have the committee confine its investigation to one single report. All the policies, the financial operations and the obligations of the organization may be reviewed by the committee when it sits, as has been the practice in former years in respect of the policies and operations of the Canadian Broadcasting Corporation.


[Stage Direction]
Motion agreed to.

[Stage Direction]
. EASTER ADJOURNMENT
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved
That when the house adjourns on Wednesday, April 17, it stand adjourned until Monday, April 29, 1946, at three o'clock in the afternoon.
He said: Mr. Speaker, since the motion to have the Easter adjournment until Wednesday of next week was carried I have received representations from all sides of the house indicating that the majority of the members would prefer to have the longer rather than the shorter vacation. The adjournment to Wednesday of next week would give only two and a half working days in the house next week. If the adjournment were fixed until
the following Monday it would allow hon. members a longer recess of four and a half days. I am putting forward this motion in the belief that the longer recess would better suit the membership of the house. With respect to this longer recess, the government intends to follow the same course it has followed in previous years when there has been a lengthy recess, and allow hon. members their actual travelling expenses. As to the method of transportation, hon. members are free to choose what will best accommodate them.
Mr. BRACKEN:: We are agreeable to the passage of the motion.


[Stage Direction]
Motion agreed to.
Mr. MACKENZIE KING:: May I say I received a note from the leader of the Social Credit group asking me to clarify the last part of the statement I made as to the members being free to choose their method of travel at the Easter recess. My hon. friend asked if that means by plane. It will be for hon. members to decide; they are free so to travel if they wish.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
John Bracken: A matter of some urgency has just come to my attention about which I would like to make an inquiry of the government. I am told that there are seamen employed on vessels operated by the Department of Transport and other owners who are working as long as eighty-four hours a week on the great lakes. What steps if any is the government taking to rectify this matter and thereby avoid a threatened seamen's strike?


Hon. HUMPHREY MITCHELL (Minister of Labour):: I wish to thank the leader of the opposition for giving me notice of this question. In so far as it refers to the operation of v'essels controlled by the Department of Transport I think I should leave it to my colleague, the Minister of Transport, to reply.
With respect to the privately owned and controlled companies operating vessels on the great lakes and the dispute with the seamen, my department has been endeavouring to get the parties into collective bargaining negotiations in accordance with the provisions of P.C. 1003. A preliminary conference was arranged for April 8 in Toronto, but the representatives of the Canadian saemen's union did not attend, claiming that it was their under-
Labour Conditions

standing that the conference was to be held in Toronto in the office of the Department of Labour, and that an officer of the department was to attend.. This was not the understanding of myself or the officers of my department.
At the present time the agreements between certain operators and the union call for a twelye hour day except for firemen, but when the last collective agreement was signed the question of hours of work per day was left open to further negotiations. For the present these negotiations have not yielded any result, and it is the view of the department that the conciliation processes of our legislation should be invoked by- the union or the companies. We are informed by the representatives of the companies concerned that a meeting of all operators of great lakes vessels is to be held in Toronto on April 24, and following that the operators will have a concrete proposal to submit to the union executive. It is our hope that the parties will then enter into negotiations looking toward a settlement of the dispute.


John Bracken: I did not send a copy of this question to the Minister of Transport. I wonder whether he could add anything to what the Minister of Labour has said.


Lionel Chevrier: Yes. I was advised by the Minister of Labour when we were coming down to the house that the hon. member intended to ask this question. I can say that so far as the Department of Transport is concerned we believe we have the equivalent of an eight hour day on the ships operated by the department, although it is true we do not pay overtime. There are seasons in the year when it is occasionally necessary to send out lighthouse supplies, and where it is deemed advisable for the crew to work more than eight hours. When that is done the men get time off as soon as they reach their home port. In fact there are seasons in the year when officers of these ships are on call. They have to go out at night and do certain work. There are seasons of the year when because of the weather it is impossible to move. When it is impossible to move and the men work only two or three hours, they are paid for eight hours. When they work over eight hours, they get, as I said a moment ago, time off at the home port. Therefore we consider that in effect we have the equivalent of an eight-hour day.


Mr. MacINNIS:: May I ask the minister a supplementary question? When they work only two or three hours a day in bad weather, are they on duty for the rest of the time, and on call?


Lionel Chevrier: Yes, they are on duty for the rest of the time.



ROYAL MILITARY COLLEGE


[Stage Direction]
On the orders of the day:
Mr. T. A. KIDD (Kingston City):: I should like to direct a question to the Minister of National Defence. Will the minister clarify the statement with regard to the Royal Military College, Kingston, which he released to the press in Cornwall yesterday?


Hon. DOUGLAS ABBOTT (Minister of National Defence):: I did not release any statement to the press. I was making a speech in Cornwall yesterday, but I do not suppose the house would care to have me repeat it.


Some hon. MEMBERS:: No.


Douglas Charles Abbott: Briefly, what I said with respect to the Royal Military College was this, that contrary to rumours, the military college would not be closed, but the question now under consideration was whether or not the character of the course, the syllabus and so on, would be that conducted before the war or a different one, and that that question had not yet been decided.


Mr. PEARKES:: Mr. Speaker, a question arising out of the previous question: Will the Minister of National Defence say whether the Royal Military College will be open for courses this year for young men without previous military training?


Douglas Charles Abbott: The answer is, it will not.



PEACE CONFERENCE


[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Peel):: I
should like to direct a question to the Prime Minister. In view of the fact that the house rises to-morrow for a lengthy Easter recess, will the Prime Minister be good enough to give the members such information as he has with respect to the probable date of the peace conference in Paris, and when he plans to meet the Prime Minister of the United Kingdom for a conference on commonwealth affairs?


William Lyon Mackenzie King: I wish I were able to inform my hon. friend as to the date of the Paris conference. As hon. members know, it was hoped that the conference might open on May 1; but I think I am correct in saying it is hardly probable that it will open for some weeks after that -date.

Timber Production
As the house is aware, I have accepted the invitation of the Prime Minister of the United Kingdom to meet in conference with him and others on matters of mutual interest.
I hope that that meeting may be arranged so that the time of it will be approximate to that of the meeting of the Paris conference, possibly a week or two before the conference opens in Paris, but up to the present I have not received exact information.



BRITISH COLUMBIA PRODUCTION-PRAIRIE REQUIREMENTS

[Stage Direction]
On the orders of the day:
Mr. J. O. PROBE (Regina City):: I wish to direct a question to the Minister of Reconstruction or his appropriate colleague. I sent a notice of this question to the minister. Will the Minister of Reconstruction please inform the house whether the 35 per cent of the British Columbia timber production being retained in Canada is being offered by the coast mills locally only, thereby denying the prairie trade a fair share of the British Columbia timber output? What provision has been made by the department-


Mr. SPEAKER:: Order. This is what may be called a lengthy question andi it should be put on the order paper.


John Oliver Probe: I did not understand your ruling, sir.


James Horace King: I said this question is a lengthy one and1 should be put on the order paper.


John Oliver Probe: Mr. Speaker, I must suggest that this is an urgent question. The reply need not be longer than any other.


James Horace King: I have asked the hon.
member to put his question on the order paper.



IGOR GOUZENKO


[Stage Direction]
On the orders of the day:
Mr. WILLIAM IRVINE (Cariboo):: I should like to direct a question to the Prime Minister in his capacity as Secretary of State for External Affairs. In view of the statement appearing in the press, alleged to have come from the Russian embassy, that Mr. Igor Gouzenko had stolen money from the Russian embassy, I should1 like to ask if the Secretary of State for External Affairs received any communication with regard thereto prior to the establishment of the royal commission?


William Lyon Mackenzie King: I assume the statement in the press to which my hon. friend refers is that which was issued by the Russian embassy some days ago. I may say to my hon. friend that a similar statement was received in the Department for External Affairs a day or two after Mr. Gouzenko had left the embassy.



NATIONAL HOUSING ACT


[Stage Direction]
On the orders of the day:
Mr. A. M. NICHOLSON (Mackenzie):: I should like to address a question to the Minister of Finance, notice of which I sent him the other day. Will he please indicate to the house the arrangements which have been made to enable farmers and1 residents of towns and villages to take advantage of part 3 of the National Housing Act?


Right Hon. J. L. ILSLEY (Minister of Finance):: I inadvertently left the answer to that question in my office, and I shall have to give it later. Will to-morrow be all right?


Alexander Malcolm Nicholson: Before the Easter
adjournment.



CANADIAN FORCES


[Stage Direction]
On the orders of the day:
Mr. M. J. COLD WELL (Rosetown-Biggar):: May I direct a question to the Minister of National Defence, notice of which I sent him. I would have put the question on the order paper were it not for the fact that there is some degree of urgency in view of the house rising to-morrow. Has the minister received a communication signed by Mr. N. M. Lee Rolfe, president, Veterans of Foreign Wars, Halifax, relating to serious allegations regarding the treatment of Canadian soldiers at Hedley Downs Detention Barracks, England? If so, is an investigation being undertaken, and will the minister make a complete statement to the house?


Douglas Charles Abbott: Yes, I did receive the letter referred to. I have ordered an investigation but I have not yet received a report. When I do I shall make the statement asked for.
Loan to United Kingdom



ELIGIBILITY OP FORMER R.C.A.F. AIRCREW FOR FLEET AIR ARM

[Stage Direction]
On the orders of the day:
Mr. L. W. SKEY (Trinity):: I should like to address a question to the Minister of National Defence, arising out of newspaper reports of new rates of pay in the armed forces, and shortages that are reported in the Royal Canadian Navy. Will the Royal Canadian Navy consider accepting former R.C.A.F. aircrew for entry into the new fleet air arm? I have particular reference to air force pilots, navigators, gunners and wireless operators already trained in naval cooperation.


Douglas Charles Abbott: (Minister of National Defence): It is very difficult to answer that question offhand. I was given no notice of it. I am sure that they would consider any applicant whose physical category, education and previous training qualify him for entry in the naval forces.



LOAN TO UNITED KINGDOM


[Stage Direction]
The house resumed, from Friday, April 12, consideration in committee of bill No. 2S, respecting the financial agreement between Canada and the United Kingdom signed on the 6th day of March, 1946-Mr. Ilsley-Mr. Macdonald (Brantford) in the chair.
On section 1-Short title.
Jean-François Pouliot: Mr. Chairman, I have done my best to summarize the speech made the other day by the Minister of Finance. I give him credit for his hard-working spirit, but when I read his speech I understood nothing from it, and it took me about two days to try to put his argument in order so as to understand something of it. I shall have to quote part of it before asking the minister a few questions which he may answer later. I have sent him a copy of his speech so that he may correct me if I happen to make an error.
In the first place the parliamentary assistant to the Minister of Finance declared on April 1, 1946, that since September, 1939, Canada had made to the United Kingdom only one loan, of 8700,000,000, under the War Appropriation (United Kingdom Financing) Act, 1942. The interest rate is nil. The loan is being repaid by proceeds of sales or redemptions of British-owned Canadian securities. It has since been reduced by repayment to 1538,000,000 odd.

In the second place temporary loans have been made under the Export Credits Insurance Act to eight countries. The interest rate varied from two per cent to 3'5 per cent, and the time of repayment also varied from 1950 in the case of Russia to 1977 in the case of China. The total commitments are $644,500,000. They include $30,000,000 for Norway aDd $65,000,000 for the Netherlands East Indies.
This information is not satisfactory. It is too broad, and I hope that the minister will be kind enough to supply information about the first loans that were made to those countries and also in respect to the further loans. In regard to Norway, for instance, I remember that one of the members from Toronto said that he was satisfied with the progress of the Falconbridge Nickel mines in Norway during the war. I have now the company's report to the shareholders, and when I showed it in the house some of my colleagues were surprised. I will tell hon. members where it comes from. It comes from a boy in the navy who has some stock in the company. He was dumbfounded to see that this Canadian concern was boasting of making a huge profit by dealing with Germany in German-occupied territory.
With regard to the Netherlands East Indies it is important to know if it has been supplied only with money, or with some ammunition and arms. With whom did the Canadian government deal, since there was no recognized government over there?
In the third place temporary advances have also been made to fifteen allied countries under section 3 of the War Expenditure and Demobilization Appropriation Act and previous war appropriation acts.
The Minister of Finance said at page 766 of Hansard that the British authorities have estimated that the deficit will be $3,300 million Canadian for 1946, and $2,220 million Canadian for the two years 1947 and 1948; that the deficit in 1948 should be small, and a balance should be achieved by 1950. This is what the British refer to as getting back to equilibrium, the minister said.
I would ask one question [DOT] of the minister at that point: What about the Canadian equilibrium? If we are so much interested in the equilibrium of the United Kingdom, we should have some information about the equilibrium of Canada.
Again the minister said, at page 766:
The figures I have given apply to Britain's total position and not her position vis-a-vis Canada alone.
He said at page 765:

Loan to United Kingdom
The losses incurred in shipping during the war have reduced, at least temporarily, the income from her merchant marine . . . British overseas earnings in respect of insurance and financing services, which also helped to pay for imports-
-have been interfered with by the war. Lloyd's, for instance, a powerful insurance society has never been taxed. I suggested to the minister that he tax them, but it was not done. I do not see how there can be a greater competitor dealing with the Canadian people, but it is not being taxed because it is a society instead of a company. Again the minister said, at page 766:
Britain is confronted with a very serious deficit in her international accounts which she is trying to keep down by the utmost economy in her purchases and expenditures abroad and by the utmost efforts in promoting her exports.
Nothing is said about reducing taxation in the United Kingdom. That is an example for Canada. I quote the minister again:
This deficit, however, must

*
The word1 "must" is used; it must be done.
*-must be financed by borrowing in one form or another.
Another question: From whom will Canada borrow to finance her own deficit? Will it be from the United Kingdom later on? I quote the minister again where he says that the British deficit for 1946, 1947 and 1948 will be $5,500,000,000 Canadian. Then he says, at page 789:
The United States loan will provide her with the equivalent of 4,120,000.000 Canadian dollars for future purchases.
Canada will provide her with $1,250,000,000 Canadian which would bring the total up to $5,375,000,000. The remainder, says the minister, $1,250,000,000 Canadian'-
-the United Kingdom will need to find elsewhere-
He uses the word "elsewhere".

together with such amounts as are required to discharge existing indebtedness, which, of course, is not included in the estimate of her deficit on current account.
What is the total amount of that deficit on current account, if it is different from the one reported by the minister? And does "elsewhere" mean all the other dominions and the other countries of the empire?
The minister referred to "a credit of this magnitude". He admits that it is considerable. Then, to quote him again, at page 765, he says with regard to Britain-

that her need for credits is huge in comparison with the other countries with which we have dealt.
And again, the same page:
There are special factors in the case of the United Kingdom . . . that necessitate and justify-
These are strong words.
-different terms from those we have offered as a matter of policy in other cases.
And again:
During the five years from 1946 to 1950, the United Kingdom will he going through a period of transition and reconstruction, both in its domestic and in its international economic affairs.
What will be our own period of transition and reconstruction in our international economic affairs? How will we do it? But the minister is concerned only with what will happen in England in the future. Nothing is said about Canada. He has his eyes there, and made the speech that Joe Chamberlain would have made at the beginning of the century.
I quote again, page 765:
It is necessary for Britain to do much more than to regain the pre-war levels, however, if she is to pay her way internationally. She has had to sacrifice many of the overseas investments she had made.
The income she previously had therefrom must be replaced by increased exports to help her pay for imports.
I quote again, where the minister states, page 766, that after 1948-
-she will be financing her deficit in Canada from other sources, for example, by selling us gold, or other foreign exchange that we require.
We shall be paid after 1948 only if Great Britain has the gold, or other securities. Why are they not given to us in payment now? Why should we wait until 1948? I quote further, from the same page:
The case of the United Kingdom is unique.
There the situation is

a special one requiring terms and conditions in a financial agreement that are quite different from those in our other loans. "In the financial agreement of December 6, 1945, the British agree to their removal within one year from the effective date of that agreement."
Then, what about our British preference in trade? That is another question. I quote the minister again-page 764:
If we are to he successful in our public finance, we cannot afford to he hesitant and halfhearted in promoting the foreign trade which is the basis of our prosperity.
Foreign trade is not our trade with Great Britain. Our trade with Great Britain is our external trade. The minister will not use the word "foreign" as applying to Great Britain. I remember an incident in the days of Lord Dundonald, when Sir Wilfrid Laurier used

Loan to United Kingdom

I want hon. members to follow this very closely.
[DOT]-and the freedom of each country to use any currency that it has obtained through trade with another country in carrying on trade with any third country. This type of policy would make possible not only a high level of trade but freedom in the direction of trade.
Again, what about the British preference? I draw the attention of hon. members to the whole of pages 767 to 770 to make the comparison, and they may read the distinction which the minister makes between liberal trade and the other kind of trade. I cannot understand it. That is perhaps a defect of my intelligence, but he has been splitting hairs to make the distinction. I refer hon. members to Hansard. I cannot analyse it, it is beyond me. Now, the minister again, page 768:
The British are now worse off to the extent of about 20 billion Canadian dollars than they were when the war commenced.
So that if the loans are approved-
-she will end up with her international position worsened by the equivalent of over twenty-five billion Canadian dollars as compared with her position in 1939.
63260-58J
Some hon. members who had spoken and who were reared in England say that we want to improve the condition of England, but the minister himself has said that the financial situation of the United Kingdom will be worsened to twenty-five billion dollars if the United States loan and the Canadian loan are granted to them. Is that an argument to induce those who love the United Kingdom to vote for this proposal? I quote from page 768:
We must realize that Britain is no longer a wealthy country in international terms. She has sacrificed her international financial strength in meeting the costs of the war. Before the war Britain had substantial overseas assets that yielded her, on balance, an income of approximately a billion dollars a year.
We have come to the conclusion-
Says the minister.
-that the British government will be able to meet the terms of this agreement over the next fifty-five years.
Well, there will be water under the mill before we reach that date. Another question in passing is, what is the detail of the settlement of the war claims, which may be discussed, and which should be discussed? We have no information. The government says "We found it all right and we accepted it." What was	it?	AVhat were	the claims	ofCanada? What were the claims of the United Kingdom?	We	know nothing	about it; andthis is why I	have insisted	on having	an
expose instead of a mere plea for the ratification of the loan. The minister continues, at page 769:
In fact, as I have already indicated, the British deficit of Canadian dollars will likely be such that the total amount of this credit will be drawn before the end of 1948.
That is	most important.	The piece	of
legislation which we are studying now is not the last one, because before we start to receive interest, if any, in 1950 all the money which will be'lent to Great Britain by Canada and by the United States will have been spent.
The British representatives made it clear to us that they expected that Britain would need to finance additional purchases in Canada from other cash resources.
This is matter for thought.
She cannot afford to pay interest in this period without making additional credits necessary.
Is anyone who is considered solvent not able to pay at least the interest, if not the capital? What about the gradual and orderly repatriation of Canadian securities owned in the United Kingdom?
Now as to the British commonwealth air training plan, listen to this-page 771:
Loan to United Kingdom

It was found that the United Kingdom's share of the cost exceeded what she had contributed and paid by $200 million. Similarly, when the details for the second plan, ending at March 31, 1945, were worked out, it was found that the United Kingdom had paid or contributed an amount that fell short of her share of the costs by $225 million.
Instead of saying that the United Kingdom had failed to pay this, we are told that she had "paid or contributed an amount that fell short of her share ... by $225 million." How well said!
In agreeing to cancel this amount owing by Britain in respect of air training, the government has been motivated by a number of strong reasons . . . We came to the conclusion after much consideration-
Mark you, sir,-"after much consideration", -that repayment of this $425 million was beyond the United Kingdom's capacity to pay within any reasonable period.
How then can we expect any repayment of the billion and a quarter if the United Kingdom could not pay an indebtedness of $425 million, or about one-third of that amount, representing her debt in connection with the commonwealth air training plan? Again, what about the British preference in trade? What is the detail of the settlement of the war claim? The minister said at page 769:
In fact, as I have already indicated, the British deficit of Canadian dollars will likely be such that the total amount of this credit will be drawn before the end of 1948.
And it goes on like that. Well, sir, there is one thing that is forgotten in all this. It is that, though nations may unite to wage war, as soon as the war is over they become competitors in trade. That is an elementary truth that is known to all and we cannot consider any country our ally in trade. A country is a separate unit and must consider the interests of its inhabitants, and the idea of being under the yoke of the United Kingdom, in the matter of trade, is no better than the idea of being under the yoke of the United States. It is dangerous to consider these matters from a sentimental point of view.
The other night there were two or three members who made jokes at the expense of members of parliament who are not favourable to this measure. That is an old trick. It is not the first time it has been played. It is an effort to impress members, to frighten them and prevent them from expressing their opinions in this country, which is called a democracy. I remember when I was discussing some matters during the war there was a little arrangement of the kind and two Liberal members, one from eastern Ontario and the other from western Ontario, started telling me 
that I was taking up too much of the time of the house. That was my own business, and it was for my colleagues to decide whether they would listen to what I said or to disregard it. However, I was in no mood to take a calling down from any of those gentlemen and I told them to look at the bull moose over there, a little statue in front of the ladies gallery, and the bull buffalo over here, another statue. I told them to look well at those two statues, to fill their eyes with the bull moose and the bull buffalo, because they would never see them after the election. Well, I was right. One of them lost the convention and the other was defeated at the polls.
At the same time there was one member banging his desk, making a terrific noise in order to impress me, in order to show that I was wrong. He ran again and lost his deposit, thank God. Sometimes, some members have family links with the old country and they say, "We have relatives over there". That is true. But why do they not bring those relatives to Canada? Canada is the country of the future, but Canada will not be the country of the future if we pass this legislation and other measures of the same kind.
I warn my colleagues. Some of them have expressed themselves in favour of the loan. That is their business and I respect their views, but I tell them that every time Canadians ask for something which is denied by the government, every time they fill in their income tax returns, every time something goes wrong, from their own point of view, they will say it is because of this loan that has been voted to Great Britain. They will say it is because of this gift.
A country as poor as this cannot enter into that kind of finance. It is impossible. Think of it, sir. According to the figures of the British experts, at the present time the increase in indebtedness in Great Britain as a result of the war is twenty billions. If our national debt is at the present time sixteen billion dollars, only four billions less than Britain's debt in connection with the last war, how can we expect to lend money-lend, not give? We know very well that when the time comes for the settlement of the loan the Minister of Finance will reason with the government of Great Britain, as he has done with regard to the British commonwealth air training plan, and the Englishmen will only have to come here and say, "We cannot afford to pay" and that will settle the question.
All right. Very good. The Canadian taxpayer will pay for it. That is absurd, and I am sorry to say that to a Liberal government.

Loan to United Kingdom
How much, I would enjoy saying it to a government leading another party in the house. It is a shame to me to have to say that to my party, but I want to try to bring them to their senses, just as we throw a glass of cold water into the face of a fainting man.
But that is not all. There is more to it. There is something that the minister has not told us. How much have we given to Great Britain since the beginning of the war? Our debt now is sixteen billions. Our debt before the war was two and a half billions. That means that our war debt is thirteen and a half billion dollars. If we have not given to Great Britain ten billion dollars already we have not given a cent. We must know what has been done.
Do you know, sir, there are two different periods with regard to war finance? The first one was from September, 1939, to December, 1940, and the second was from December, 1940, until the present time, and1 perhaps until ten years from now if we go on like this. In the first place, the United Kingdom, for what she was buying from Canada, was sending gold. The business was dealt with normally, but since December, 1940-and the Canadian taxpayers will know about it-all that we have got from Great Britain has ben turned over to the United States to pay the United Kingdom debt. It was said by the minister-and I have it here on record just as I have recorded his speech of April 11-every time that we received something from England it took its way to the United States to pay for her. Nothing !was left here. Then the other day I had a question on the order paper about the fulfilment of the United Kingdom obligation with regard to the commonwealth air training plan. The question stood on the order paper for a long time, and then it was passed as an order for return and I have not got it yet. Why did I not get it? It was because it was showing precisely the fact that the United Kingdom had not fulfilled her obligation, that Great Britain had not fulfilled her obligation to Canada during the war.	_


Thomas Miller Bell: I do not propose to
follow the hon. member for Temiscouata (Mr. Pouliot), who has just spoken. I suppose the minister will reply to the series of questions that he has propounded. In all probability some of the things I shall say will have some bearing on the speech that has just been made. May I say, Mr. Chairman,' that when the resolution was before the house the other afternoon most of us understood that on that occasion the speeches would be short, and probably at this stage we would be discussing
the matter more fully. Consequently I am taking this opportunity of saying some of the things I might have said and did not say the other afternoon.
A great deal of the opposition to the loan in this house and in the country is based upon the idea that we are doing something for Great Britain that we are not prepared to do for other people, and that this is an indication that Canada is still in somewhat of a colonial stage of development. In my opinion and in the opinion of my colleagues, that view is erroneous. As a matter of fact I believe we can discuss this proposition from the point of view of cold economics and cool logic and show that what we are actually doing is something which is beneficial for our own country and for the world. The fact is that the recovery of Europe and, particularly as far as we are concerned, of the United Kingdom as a great trading area is essential to our own recovery, and indeed to the progress and peace of the world in the days to come.
As an exporter of foodstuffs and other raw materials, Canada has a selfish interest in the welfare of the people of the rest of the world, and in particular perhaps in the welfare of the people of the United Kingdom. If we had no political associations with the British commonwealth, our economic interests would compel us to consider this proposal favourably.
Those of us who know the history of this continent know that historically an important factor in the development, of North America has been its relationship to the economy and the economic policies of the United Kingdom. Once upon a time the ability to develop this continent was largely dependent upon the export- from the United Kingdom to this continent of all kinds of machines and of other materials: That was particularly true in the United States at the beginning of the last century, and toward1 the end of that century it was true of our own country.
The proposed loan by the United States to Great Britain is not a sign of the colonial association of the United States with Great Britain, but rather a recognition of the fact that the recovery of Europe and of the United Kingdom means, to a very large degree, the economic progress and prosperity of our great neighbour to the south. It is from that point of view rather than from the point of view, which perhaps some, of us share, of gratitude for what the British people did in withstanding the fascist and nazi aggression that we should discuss this proposal.
Loan to United Kingdom

The United States realizes, as members who are supporting this loan do, that year in and year out the United Kingdom has been, as is sometimes said, the world's best customer. The prosperity of the world, and particularly of Canada which relies upon British purchases of our products to enable us to pay for goods we import, not only from Great Britain but from other countries of the world, depends upon her ability to remain the world's best customer. Somehow then she must be enabled to regain an ability to pay for the things that she must buy.
In former days, as has so often been said in the house, and as the Minister of Finance so well said the other afternoon, Great Britain was able to pay for the supplies she needed from abroad, very largely because of her overseas investments-investments, of course, by her nationals; and she received interest in the form of goods, and goods in the repayment of the capital that she had formerly left in these countries. But in the common struggle-and I -use the words "common struggle" because it was a common struggle-against Hitlerism she was compelled to sell a substantial -part of these securities, not only in order to get food but also to get the necessary supplies of -munitions of war to enable her to put up the resistance against the aggressor. She delivered us from a greater evil than we perhaps apprehended at the beginning of the war. Therefore at the present time the position- is that Europe, and again particularly Great Britain, must expand her exports in order to pay for the goods that she needs to import. In other words, with her overseas investments depleted she must export in order to get the supplies she needs. Various economists have estimated that the United Kingdom will need to export in -the next few years from fifty to seventy-five per cent more than she exported before the war. In addition to this there must be a reconversion of her industries. She must rebuild her destroyed1 factories and machines; she must replace her obsolete machinery and at the same time provide food, clothing and shelter for her people. Therefore the bald fact is that if she is to regain her standards of living and continue to act not only as our best customer, but as the world's best customer, she must obtain goods either as gifts or on a deferred payment plan. In other words, somebody must give or make loans. We find that the United States, recognizing this, is proposing a large loan to Great Britain at the present time, and- we are proposing the loan which is now before us.
CMr. Coldwell.]
In my opinion this agreement negotiated between the two governments is not an agreement negotiated from the point of view of giving an advantage to the United Kingdom but a mutual advantage to both Canada and the United Kingdom- In the main this is, as has already been said-, a loan repayable in the future with interest. We wipe out certain other indebtedness, that on account of the air training plan and so on, which I take it is part of our war contribution and a recognition of our good fortune in escaping the devastation and physical destruction of war which Europe underwent. Again I say I approve of that proposal.
There is just one other thing I want to say in connection with another matter which is not settled by this agreement. Early in the war we did make a loan of $700,000,000, as -hion. members who were here at that time will remember, to adjust an accumulated sterling balance. That is to be extended- and we understand that it will be settled at some future date. May I suggest that that should be considered apart from what we are now discussing and should be settled) on a business basis, as was suggested when the loan was originally made, and when the time comes to settle the loan certain securities now -held in Britain might be considered in payment thereof. But I do not want to discuss that this afternoon, as I do not wish to introduce a side issue. I believe that the problem at this moment is a much more important one than the settlement of what remains oustand-ing of the $700,000,000 loan.
What we have to remember is this, that the economic plight in which this great purchaser of goods finds herself to-day is bound to be reflected in our own economy in the future unless something is done to rehabilitate Great Britain as a great customer. If we fail, and other countries fail, to render the aid that is necessary at this time-we are discussing mainly a loan to Great Britain, although this applies to other European countries and indeed other countries of the world as well-we shall ultimately suffer ourselves because we have not assisted in rehabilitating the world. It is often forgotten When we speak of a loan of this kind that we are not discussing money. We think in terms of money, but here we are not discussing money but goods, the ability of Canada to produce goods, the ability of Canada to ship these goods, and if we fail in this we shall find our own trade in a state of stagnation. I want to emphasize that our welfare depends -upon our ability to sell our goods, in the markets of the world and therefore upon the ability of th-e world to consume the goods that we produce. What is true of

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Canada is true of the world, of course. Canada cannot be prosperous apart from a prosperous world. In a depressed world, in other words, Canada is depressed too.
Now let us look at what this trade between our countries means. In 1038 four nations took 49-8 per cent, roughly SO per cent, of the total world exports. That is to say, of all the goods placed on the markets of the world, four nations took practically SO per cent and Britain, with only two per cent of the world's population, took 21 per cent of the exports available on the markets of the world. Germany took 10-9 per cent; the United States, with her great population, took only 10-9 per cent, and France took 7 per cent. It is clear I think to all of us that Germany will not recover her position in the world economy for some time to come. The United States with her rich resources and with the war developments in the production of synthetic materials, such as rubber, to take the place of imported raw materials, will in all probability find it very difficult, and particularly so because of the pressure groups within her own country, to take very much more than her present 10-9 per cent, but unless she does the world is headed for disaster. I think much depends on the ability of the United States to accept from the world a larger share of the exports available on the markets of the world.
There are two nations which remain, Britain and France, and the rehabilitation of both these countries as great purchasers on the world markets is of paramount interest to Canada and to the world. I am very glad indeed to be able to support substantial loans to both these countries in order to enable them to regain the position that they must take once more in the markets of the world. '
As has already been said, in the last year of peace, 1938-the hon. member for Temiscouata quoted 1939, when the figure was slightly less, , but I am taking 1938 because it was the last year of peace before the war-forty per cent of our total exports went to the United - Kingdom, or in round figures, $69,000,000 worth out of total exports of $172,000,000. Is that about right? I think it is. I looked up the figures, and those are the figures I found. I submit, Mr. Chairman, that the prosperity of our purchasers is inextricably linked with the 1 recovery not only of Europe but of Canada's own best customer, the United Kingdom. This loan therefore becomes to us a matter of economic interest rather than a matter of sentiment. I know that there is a disposition in some quarters of this house to consider that
those who are supporting this loan are supporting it because of a sentimental attachment to Great Britain or from some colonialism or imperialism. But I would point out that considering it purely from the point of view of Canada's selfish economic interest, what we are doing is a good thing for Canada, and it is because it is a good thing for Canada that I am warmly in support of it.
Let us bear in mind that during the war years there has been a very significant change in the exports that we have been making to Great Britain. In addition to being, as we were before the war, a principal supplier of cereals to Great Britain, we became during the war a principal supplier of meat and meat products to Britain. Coming as I do from western Canada I must say that our farmers are very anxious indeed to maintain the market we have built up for our pork and other meat and meat products in Britain, and they are anxious also, of course, to retain our market for cereals such as wheat, flour, and so on.
Again, if I may speak of the capacity of the United Kingdom to absorb meat products, the United Kingdom has always been a large purchaser of meats on the markets of the world, and the greatest purchaser of dairy products. Each year before the war-again I am taking the official figures-the United Kingdom purchased 81 per cent of the total amount of pork and pork products entering the markets of the world. Similarly she took 80 per cent of the beef and 78 per cent of the butter sold on the markets of the world. The United Kingdom before the war was a large importer of foods and raw materials, and she must remain so if the world is to prosper. It is true that during the war she has expanded to some extent her production of wheat and other cereal products. Anyone who knows the British isles knows perfectly well that that has been done very largely under the pressure of war, and that much of the production has been on land which otherwise would not have been cultivated because of its marginal quality.
As an exporter, then, of many of these raw materials and foods we are vitally concerned in anything we can do to assist in the restoration of her economy and in tiding her over a very difficult four or five years which now lie ahead.	[DOT]
I say, then, that if for no other reason than that of our own self-interest we should give support to this bill. What I have endeavoured to say up to now is this, that the prosperity of the world depends upon the ability of the
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world to exchange goods and that is in reality what we are trying to arrange, so far as we are concerned.
Nations do not .pay in currency, they pay in goods. In the old days, of course, deficits of usable goods were often made up by exports or imports of gold. As world trade expanded, and because of developments in recent years, the amount of gold became too little and became inefficient as a medium. Very properly, I think, it has been discarded.
The Bretton Woods agreement, which we discussed last December, the stabilization fund, and the international bank, which were parts of it-these were steps in the direction of providing the world with the necessary credits and currency in order to encourage trade between nations and to develop the more backward areas of the world. That is why we of this party supported the Bretton Woods agreement, recognizing as we did that, like all compromises in this far from perfect world, the Bretton Woods agreements were not by any means perfect.
There are still those, of course, who believe that we can get along as a self-sufficient nation. I do not share that view. Our policy must be one of an exchange of products. Obviously we do not produce all that we require to maintain our economy. We must import. And if we are to import goods in exchange for goods we send out, then they should be used to give our people a progressively higher standard of living than we have known in the past. But, again, that should be discussed on another occasion.
Some people say. there is an alternative, and that while Canada cannot live alone the British commonwealth of nations could. I do not believe that, either. If one looks at the goods produced within the commonwealth he will find that the commonwealth is by no means a self-sufficient unit, even if we could get agreement among the component parts and tried to live that way. Our prosperity, I believe, and the prosperity of every unit of the British commonwealth of nations, does not depend upon the relations within the commonwealth, but rather upon the state of the world itself. In other words it is not a commonwealth problem; it is an international problem.
The loan then, in my view, is one contribution of Canada to international action. And to that extent, as I have already said, is an indication of enlightened self-interest, on our part. The United Kingdom is our best customer. She is the world's best customer. If we contribute to her rehabilitation as a great consumer for goods, as well as a
	,
great exporter of goods, then we make our contribution to the rehabilitation of world economy and to a more prosperous world. But it is not, I repeat, a matter of sentiment. It is a matter of cold economics.
Last week I said, in discussing commonwealth relations, that the Ottawa agreements were restrictive in their effect. I believe they were. True, perhaps they were defensible, in a way, because of the Hawley-Smoot tariff of the United States, which about that time was put into effect. Nevertheless they contributed to the building up of self-sufficient nations in the world; and from that point of view were a detriment to our own country and the world. They increased barriers, rather than helped to remove them. It seems to me an attempt is now being made in the world, through the Bretton Woods agreement, the food and agricultural organization, the social and economic council of the united nations, the American loan and this loan, to break that vicious circle which constricted the world before the outbreak of the last war. Will these attempts be successful? I do not know that they will be; I hope they will be. Indeed, I believe they will be. They are worth trying.
But certainly, as part' of the great world, and depending upon world commerce to the extent we depend upon it, our prosperity depends upon the success of the economic experiments now being made in the world. I know there is one other consideration one cannot forget, and that is that if we fail now, and the world enters again upon a period of cut-throat competition-if we force the United Kingdom into cut-throat competition, so that she must buy again in those places where she can drive down the prices to the lowest level, then we shall be the sufferers, indeed. And since this agreement looks toward some measure of stabilization, some intelligent economic policies in the world, I believe it is indeed worthy of our support.
Speaking in Toronto on January 10 Mr. Morrison said this, indicating what the policy was, if they have a chance to follow it:
To eliminate fluctuation in international prices so that producers can safely plan future production and to reduce unnecessary distribution costs. We believe that the maintenance of a sound nutrition policy will give the great advantage of stability to overseas producers and will also help to earn a long-term market for our exports.
In other words, the advantages are mutual.
I have discussed this matter this afternoon purely from the point of view of Canada's economic advantages, but I would not have anyone think that I am thinking only in

Loan to United Kingdom
terms of economic advantages. None can have a deeper appreciation of the sacrifices made by the people of the United Kingdom during the war than those of us who had the privilege of visiting there during that time.
I was over there, as were you, Mr. Chairman and the hon. member for Rosedale (Mr. Jackman) who is in his seat this afternoon, and with the hon. member for Lethbridge (Mr. Blackmore) whom. I also see. That was in the autumn of 1941. We saw the devastation wrought by German bombing. We witnessed the steadfastness and courage of a great people in a great crisis. German troops were at the gates of Moscow. The United States was still a neutral country. The outlook was dark indeed. But the British people were determined that no matter what came, they would resist the German aggressor. One could only admire the courage with which they withstood those dark days in the autumn of 1941. With some other of my colleagues, one of whom was the hon. member for Cape Breton South (Mr. Gillis), who is in his seat at the moment, I witnessed the flying bombs in the autumn of 1944. Again the devastation; again the courage of the people who withstood those onslaughts of the German aggressor.
Out of the meagre resources she had at hand, during this winter Britain has contributed to the relief of starvation and disease on the Continent of Europe. These people have shown a remarkable degree of courage, in trying to do something for themselves and for others in distress. They have accepted the austerity programme with a courage which is the marvel of the world. While I am not speaking from a party standpoint now, merely as an indication of what the British people are thinking let me point out that despite the fact that the Labour government of Great Britain has had to institute even a greater degree of austerity since it was elected in July of last year, by-elections and, more recently, municipal elections, have endorsed that austerity programme at the polls.
So I say that to-day we have an opportunity, even if we put aside all the considerations which I have named in the last few moments, to contribute not only to the welfare of the United Kingdom-because that must not be our first consideration-but also to the welfare of Europe, of the world, and of Canada as a nation. In other words, in my opinion this is an opportunity for us to play our part in . the international sphere in order to bring about a greater measure of understanding and of world prosperity.


Mr. QUELCH:: I wish to make at this time a few comments and to ask the minister a few questions.
We are supporting this measure on moral grounds. We are not supporting it because we think it is a good thing for Canada, except in so far as it helps to maintain good relations with other nations. We feel that we owe a certain obligation, an obligation which we should1 meet; on the other hand, we look upon it as a sacrifice, but a sacrifice which should be made. We intend to support the measure because we feel that the situation which exists in the United Kingdom at the present time, which makes this loan necessary, is very largely owing to the fact that the United Kingdom fought the earliest, that she fought the longest, and in many ways I think it may be said that she fought the hardest, of any of the united nations; and she fought not merely for her own benefit but for the benefit of all peace-loving nations throughout the world.
I know it has been argued that we have made a number of contributions to the United Kingdom during the war. But we did not make those contributions in order to raise the standard of living of the people of that country; we made them in order to expand their war effort against the enemy for our own protection and for the protection of all the united nations which were fighting against the enemy. It might very well be argued that, had the United Kingdom thrown up the sponge after Dunkirk, there would not be a free France to-day, and it is quite doubtful whether or not we would be sitting here to-day as the parliament of a free people. Therefore we feel that there is every justification for making this contribution at this time.
It is well to remember that in the United Kingdom over three and a half million homes were destroyed, and that country's shipping tonnage was reduced from 41J million to 19i million, and that her foreign investments were practically wiped out. Her whole industrial plant was converted to war purposes; her standard of living was reduced to the bare necessities of life, and as a consequence there will be a long, hard road' of reconversion before the United Kingdom will be in a position to meet her obligations.
During the war the united nations to a very large extent pooled their resources for common use against the enemy. Every nation was expected to make its maximum contribution and to reduce its own standard of living to the bare necessities of life. I do not think anyone can argue for one moment that the United Kingdom did not go as far as or farther than any of the other united nations. It is just as well to remember that the cost of war does not cease with the end of hos-'
Loan to United Kingdom.

tilities. Heavy expenditures related to the war will continue for many months after the war. Those expenditures, will continue until the repatriation and demobilization of troops has been completed and until the reconversion of industry has taken place to the extent that will make it possible for the nations to rebuild their factories and to produce the goods needed to bring in the imports which they require. Therefore, I think, many nations were somewhat shocked at the indecent haste with which the United States of America cancelled their lease-lend help to the United Kingdom, and made further help dependent upon Great Britain becoming a signatory to the Bretton Woods agreement. I do not think it was to the credit of Canada that we joined with the United States in that squeeze play, and I think it is to the credit of Australia, of New Zealand and of Russia that they had not signed that agreement by the end of the year.
So that on moral grounds we are supporting this, motion.
However, when the Minister of Finance asks for our support on the ground that we benefit by the trade resulting from this loan I do not think his argument is so soundly based. What does making this loan at this time really mean? It means that we are going to have to make available to the United Kingdom goods which are at the present time, and will be for a number of years, in short supply. Whether or not we make this loan to Britain, there will be no difficulty in getting rid of any surplus goods we may have at that time, because they are actually in short supply throughout the world. What it will mean is that we shall take the repayment of this loan in goods at a time when they will be no longer in short supply, because we do not begin to take repayments until 1951 and wei shall continue to accept repayments for the next fifty years;
I dio not suppose there will be any shortage of goods in this country during that time. Therefore we are making goods available at a time when they are short and accepting payment at a time when there will be surpluses. To that extent, I think, it is unquestionably a sacrifice on our part: hut, as I say, it is a sacrifice we should be willing to make.
What is happening as a result of these large loans which we are making abroad? In Canada to-day there are many projects which people are asking to have carried out, but which we cannot attend to because we have not the necessary goods available, and these goods are not available because: we are fulfilling certain obligations which we have abroad. To-day there is a great demand for the expansion of 
social services such as pensions for the aged and the disabled, and many other social reforms, These also are being denied because we are having to make goods available to other nations where they are in short supply to-day, and we cannot satisfy the demand for the expansion of social services in this country until we are able greatly to expand production to take care of these demands. Therefore I say that this loan does represent a sacrifice.
The minister emphasized the fact that this loan was not merely to help the United Kingdom, but to help Canada expand her trade; and the hon. member for Muskolca-Ontario gave it the support of his party on this ground. Although he made it quite clear that he would also support it on moral grounds, he based his argument entirely on the economic good of Canada. The minister pointed out that the United Kingdom must do more than merely regain her pre-war levels of exports. He pointed out that they must expand that by a considerable amount beyond pre-war levels in order to pay their debts. I noticed1 in the speech made by the president of the board of trade of the United Kingdom that it was estimated that they would have to expand their exports by fifty per cent over pre-war levels. Some speakers put it as high as seventy-five per cent. In other words, the United Kingdom will have to maintain a very large" favourable balance of trade, and we in accepting payment will have to maintain an unfavourable balance of trade when the time of repayment takes place, in order to accept payment.
I realize thett the minister will put forward another argument, which I shall deal with very shortly. I should like to ask the minister: Will Canada be prepared to import more from the United Kingdom than she sells to the United Kingdom? Also, will the United States of America be prepared also to be paid likewise?


James Lorimer Ilsley: What is the second one?


Victor Quelch: Will the United States of America also be prepared to maintain an unfavourable balance of trade with the United Kingdom in order to make it possible for the United Kingdom to pay the United States? Perhaps the minister will wait until I finish and then he can answer my questions all together. I think the minister made it quite clear in his speech that that was not the intention, and I quote from page 764 of Hansard of April 11, 1946:
To accomplish this purpose we must be able to use the proceeds of our exports to the United Kingdom and the continent of Europe in paying our own bills and debts in the United States

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and in making purchases wherever we can best obtain the goods we need. We have a special interest in being able to use the currency that we receive for our exports, to obtain other currencies that we need for the payments we must make.
If we use the credits accruing to us in the United Kingdom to buy goods in the United States, how will the United Kingdom obtain United States dollars to pay the United States unless the United States is prepared to take it out of goods? I quite realize that under the Bretton Woods agreement currencies are convertible, but if that policy is continued for fifty years the quota of the United Kingdom will quickly be exhausted unless Canada and the United States are prepared to have unfavourable balances of trade with the United Kingdom. Further, the United States will be exporting goods to the United Kingdom and obtaining credits for them. The United Kingdom will not be in position to discriminate against United States imports unless she is prepared to discriminate against all other imports at the same time. The United States will also have credits from the loan that she is making at the present time. In addition, the United States will also have some of our British credits which we will trade to her.
Will the United States be prepared to accept payment in British goods for all those credits? Personally I doubt it very much. If she is not prepared to, if she is not prepared to balance her trade with the United Kingdom, and if we are not prepared to balance our trade with the United Kingdom, then it is bound to be only a question of time before the United Kingdom suffers default. She will exhaust her quota, and if she has not gold to meet her obligations she will have to take a further loan. I should like to ask the minister how long sterling will be convertible into dollars under such a policy. Britain's quota will soon be exhausted and for that reason she will require further loans. If the creditor nations fail to deal squarely with the United Kingdom, it seems to me the United Kingdom will be bound to default.
The minister goes on to say that he thinks the United Kingdom will be able to meet her obligations, and I turn to page 768 of Hansard where he states:
We have also come to the conclusion that the British government will be able to meet the terms of this agreement over the next fifty-five years.
And again:
They have been determined from the outset, and indeed they made this determination clear to us as early as 1944, that they would not incur debts which they could not honestly believe they would be able to discharge.
I do not doubt for one minute that the United Kingdom will desire to meet her obligations. Second, I do not doubt that the United Kingdom will be able to meet her obligations in goods if the creditor nations play the game. But the record of the past causes me great misgivings as to whether or not the creditor nations will be prepared to play the game.
I recall at the last session when Mr. Ras-minsky appeared before the banking committee. He admitted quite frankly that on the basis of the record of creditor nations in the past there might be some concern with regard to the success of the Bretton Woods agreement. He stated he believed that there had taken place a change of heart on the part of the creditor nations and he hoped that in the future the creditor nations would be prepared to play the game. Mr. Ras-minskv, and also the minister in the debates, emphasized the fact that the difficulties that we were referring to would, in his opinion, be a matter to be taken care of under trade agreements rather than under the Bretton Woods agreement.
I have here a copy of the proposals for the expansion of world trade which have been communicated to the United States. I understand that these are to be the basis for discussion when the conference meets. I turn to page 15, where the question of unbalance of trade is dealt with as follows:
2. Restrictions to safeguard the balance of payments. Members confronted with an adverse balance of payments should be entitled to impose quantitative import restrictions as an aid to the restoration of equilibrium in the balance of payments. This provision should be operative under conditions and procedures to be agreed upon. These conditions and procedures Then we go down to '(d), which reads:
(d) should provide for the full application of nondiscrimination in the use of such restrictions after the transitional period.
For example, take a nation that is suffering an unbalance of trade. Suppose the United Kingdom was able to maintain a balance of trade with the majority of the nations but had a serious unbalance of trade with the United States because the United States was not prepared to play the game, was not prepared to take Britain's exports in exchange for her own. Surely, in circumstances such as those, the United Kingdom would be absolutely justified in discriminating against imports from the United States in order to balance her own trade. Yet, according to this agreement, which is to take care of that very thing, we find that one of the great defences of debtor nations is removed and they are even worse off in that regard than they were before the agreement.
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I certainly feel that the Bretton Woods agreement, instead of expanding trade, may very easily have the opposite result unless, as Mr. Rasminsky says, the creditor nations have a change of heart and are prepared to be good creditors in the future instead of the bad creditors they have been in the past. If they are not prepared to accept goods in payment for their exports, what is bound to be the result? The result is bound to be that nations suffering unfavourable balances of trade will consider policies of economic nationalism.. The Bretton Woods agreement may very easily bring about an intensification of economic nationalism. Apparently that has already taken place in the United Kingdom, and I wish to quote the Prime Minister of that country in that regard. I should like to quote from the British Hansard, page 26, column 25, where a question is asked by Mr. Norman Smith as follows:
Mr. Norman Smith asked the Prime Minister whether, in view of the difficulties in paying for imports, he will direct scientific research to the substitution of home-produced for imported raw materials used in British factories.
The Prime Minister (Mr. Attlee):	The circumstances of war have already obliged us to do our best to substitute home-produced for imported materials within the limitations imposed by our natural resources. The government consider that these efforts should be continued both by the government and by industry, with the full support of scientific research, in such a way as will contribute effectively to the solution of our balance of payment difficulties.
The greater difficulty Britain has in balancing her trade, the more will that policy be intensified. The minister says that we do not need to use the proceeds of this loan only to buy British goods, that we can spend it in, the United States. That is certainly going to aggravate the situation, and that is why I am interested in knowing whether that is to be our policy, and whether the minister can intimate whether or not that will be the policy of the United States.
As I was saying, if the creditor nations fail to deal squarely with Great Britain, then Great Britain will be bound to default on this measure. I noticed when the chancellor of the exchequer, Mr. Dalton, praised the Bretton Woods agreement he concluded his remarks with the statement "Thank God there is an exit." That seemed a very funny thing for the chancellor of the exchequer of Great Britain to say when praising the Bretton Woods agreement. I think a person would be naive to suggest that you can sign an agreement in order to get certain benefits and, having got the benefits, you can withdraw. I do not think it will be quite so easy to withdraw. Otherwise, 
we shall have people signing the agreement, coming in one door and' going out the other as it suits them, just running around in circles.


James Lorimer Ilsley: Did not the chancellor mean that if the United States loan agreement did not go through the United Kingdom would have to get out of the Bretton Woods agreement?


Victor Quelch: He was not referring to trade agreements; he was referring to the Bretton Woods agreement. He was discussing the Bretton Woods agreement at that time and saying that if they came under the agreement and got into difficulty, they could always withdraw, that, thank God, there was an exit.
I am suggesting that if we wait until they reach the point where they have exhausted their quota and are not able to meet their obligations, then they are going to be in a far more difficult situation than they would have been in if they had refused to go into it in the first place and adopted measures within the sterling bloc. The hon. member for Temiscouata (Mr. Pouliot) stated the other day that we should have demanded security from Great Britain. I say to the hon. member that that would be altogether too crude. Public sentiment being what it is, there still being present the fervour of war, the people would not like it if we were to say to the United Kingdom, "We will give you this loan if you give us security, say in the form of some of your colonies or certain islands."
I would point out to the hon. member that that sort of thing is pretty well taken care of in the Bretton Woods agreement, but it is done in a more subtle way. If a nation defaults under the Bretton Woods agreement and cannot meet her obligations and has used up her resources, if she has exhausted her quota and cannot meet her obligations with gold, she will have to get a loan. When a loan is given to that nation security may be taken for the, loan. I suggest to the hon. member that that is the time that security will be demanded for the loan. That time would be several years after the war, and probably there would not be quite the same reaction throughout the world that there would be now if a nation demanded security.


Mr. BLACKMORE:: It would be ruinous to Great Britain.


Victor Quelch: I do not think the hon. member for Temiscouata was worrying very much about whether it would be ruinous to Great Britain.

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John Horne Blackmore: I am afraid he was not.


Victor Quelch: Personally I would be opposed to the giving of security. I have criticized some of the things the Minister of Finance said, but I should like to say now that I agree with him 100 per cent when he says that after this war the people of Canada should have a higher standard of living than they had before the war. The standard of living should be higher than they had or ever dreamed of. We have a much greater plant capacity than we had before tlie war, and we have far more skilled labour. It is merely a question of applying that skilled labour to our resources in order to give the people of this country the highest standard of living they have ever had. In this regard I should like to refer to a statement made by the hon. member for Muskoka-Ontario, and I quote from page 773 of Hansard of April 11, 1946. Speaking on behalf of the Progressive Conservative party and referring to this loan, he said:
We have become so accustomed to these fabulous and astronomical amounts that we are getting to feel they are just figures in books, and some people tell us that they are just figures in books.
I should like to interject and say that if he had us in mind he was wrong. At no time have the members of this group ever suggested that exports were figures in books. We have always criticized the policy of exporting without taking imports in return, because it means an absolute loss of wealth. We believe that the proper function of trade is the exchange of goods. We are not prepared to support international trade on the basis of making foreign investments in other countries which very often are later repudiated. The net result is that you have made a gift and have lost some of your wealth. To go on with what the hon. member said about the loan:
Why do we do that? Do we do that just to make ourselves good fellows, because we are generous-hearted? No. Why do we do it? All hon. members know why we do it. I ventured to say last autumn when the exports credits were up that we could not afford not to afford them. I say the same thing about this amount. Why do I say that ? What do I mean when I say it? All hon. members need to do is to look back over the last fifteen years. They do not need to go another step backward to see what foreign trade means in the life of this country. We remember the figures of 1929. Our exports amounted to something like $1,400 million. Then it went down in 1933 to little more than one-third of that amount. I believe it was $534 million.
I think the hon. member for Muskoka-Ontario was confusing effects with cause when he made that statement. It is true that our
trade was low in that period but prior to that falling off in trade we had a heavy restriction of credit, a deflationary policy was imposed. A statement was made by a former minister of finance, Mr. Cahan, that that restriction was somewhere in the neighbourhood of $900 million between 1929 and 1932. Certainly a deflationary policy was in operation throughout the world. People did not, have the money with which to buy goods and therefore imports were not brought into this country. Then the hon. member for Muskoka-Ontario went on to deal with the question of conditions in Canada. He apparently did not agree with the Minister of Finance. He had this to say:
We taxed ourselves to the extent of about two and a half billion dollars, and on top of that we borrowed almost another two and a half billion dollars. In various other ways the minister managed to raise about another $500 million. Altogether we took out of our pockets about $5,500 million. The result was we were all rich. We all had money in our pockets. There is great danger lest we feel somehow or; another that these good times with these fabulous amounts can just go on. The truth of the matter is that we are like a man who had an income of $2,500 and then borrowed $2,500 and spent the whole $5,000 in one year and said, "This is grand," and did not bother very much about what is to come afterwards.
The Minister of Finance smiles.
I certainly do not blame the Minister of Finance for smiling because a statement like that would be enough to make a horse laugh, let alone the Minister of Finance. Why do I say that? I say it for this reason. The condition of a man who borrows an amount equal to his income and then spends the whole amount is not in any way analogous to the position of Canada. For that to be analogous to the position of Canada would mean that this country would have had to [DOT]borrow the amount of its income of $9,000 million and then spend that in addition to its own income of $9,000 million.
Was that the situation? Not only did Canada not borrow externally; I believe she lent a small amount of money to other nations. But note her borrowings were internal. Therefore, after the war, if other nations repay us what they owe us we shall be able to spend our own income plus the income of those other nations which they pay us on account of their borrowings. I know what the hon. member for Muskoka-Ontario had in mind. He was thinking that Canada has borrowed large sums of money. But she has not borrowed externally. For the position of Canada to be analogous to. the case cited, Canada would have had to borrow from other nations. What is the situation? Canada borrowed in-
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James Lorimer Ilsley: Would the hon. member be good enough to repeat those questions?


Victor Quelch: Will Canada be prepared to accept goods from the United Kingdom in repayment of loans? How will the United Kingdom maintain convertibility of the pound if Canada and the United States do not provide the United Kingdom with dollars by purchasing British goods to the extent of the British credit?


James Lorimer Ilsley: As the hon. gentleman
pointed out, I indicated in my speech that we did not intend that there shall be in the forseeable future an adverse balance of trade, adverse to Canada as between Canada and the United Kingdom; but it is not necessary that there should be adverse balance of payments as between Canada and the United Kingdom in order to enable the United Kingdom to repay the loan. It is the essence of multilateral trade-


Victor Quelch: But how will she pay? She will have to obtain dollars from the fund and she can do so only up to a certain quota. If she exceeds the quota, what will she do? The only way in which she can replenish her supply of dollars will be to sell goods to Canada.


James Lorimer Ilsley: She can pay for Canadian goods by exports to other countries as wrell as to Canada. Under a multilateral trading system and convertible currencies-


Victor Quelch: She has to maintain a favourable balance of trade.


James Lorimer Ilsley: Yes, that is true. If Great Britain gets into a heavily indebted position, and she is now, she must expect to expand exports and have a favourable balance of trade, and the creditor countries, as the hon. gentleman has said, must recognize their obligations to take imports on a large scale.


Victor Quelch: Yes. Well, when she obtains funds from other sources she can exchange them for United States and Canadian dollars; but if the United States and Canada are not accepting goods from other nations in payment the fund will be short of United States
dollars and the United States will have to make loans. That means a further increase of debt. There should be some way whereby nations can liquidate debts without being forced into further debt to do so.


James Lorimer Ilsley: I do not follow the hon. gentleman at all. Suppose the creditor countries accept goods from other nations- not necessarily Canada accepting goods from Great Britain in great quantities-if countries like Canada and the Unted States, specifically the United States, which is really a creditor country, accept goods from other countries so as to make United States dollars available to the world, and the United Kingdom has a favourable balance of trade with other countries, the United Kingdom thereby acquires the necessary United States dollars to meet its interest payments to the United States, and the same may apply to Canada. The only point of difference that I can see is that the hon. gentleman seems is be tying it down to one country dealing with another.


Victor Quelch: After all, the only way for the countries to obtain United States and Canadian dollars is to have a sufficient quantity in the fund to enable them to replenish their supply of United States or Canadian dollars. If the United States is to continue to maintain a favourable balance of' trade, United States dollars are bound to become scarce in that event, and the United Kingdom will not be able to obtain them. When that currency becomes scarce that nation can apply for a loan.


James Lorimer Ilsley: Yes.


Victor Quelch: Does the minister really feel that the policy of Canada and the United States in the future is to be as Mr. Razminsky pointed out, one that shows a change of heart? Is the minister prepared to recommend a policy of real trade? Are we to accept goods in payment for goods, or are we more interested in exchanging our goods for foreign securities?


James Lorimer Ilsley: I cannot answer for other nations; but certainly the United States has been following a very much different policy in recent years, not so much a different policy, as expressing different views, liberal trade views, in recent years, as compared with a number of years ago. That is set out in the speech that Lord Keynes made in the House of Lords. I have not it here but he expressed it very well.


Victor Quelch: Let us take Canada alone. Will the minister say that the future policy of Canada would be one of trying to balance
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trade rather than one of maintaining a favourable balance of trade? I realize we have t'o maintain a favourable balance of payments for a while in order to meet certain foreign obligations. Will the policy be one of a balanced trade rather than one of maintaining a favourable balance?


James Lorimer Ilsley: We have repeatedly said that we must look forward to a policy of increased imports. Of course Canada is still a debtor country. It is not a creditor country yet even if we count these loans. The important fact that puts Canada in that position is the heavy United States investments in Canada, the large amount that our citizens owe United States citizens.


Victor Quelch: Does the minister contemplate that Canada will be a creditor nation? On page 8 of the white paper entitled "Employment and Income" I find the following:
In the interest of Canadian and world prosperity and of peaceful collaboration among nations, the government endorses these plans and hopes that parliament will in due course approve the draft agreements. In reaching this view, the government is mindful of the possibility that Canada might, as a member of both institutions, occupy the position of a "creditor" nation.
The minister emphasized the fact last session when he discussed the Bretton Woods agreement that many obstacles which we were bringing up would be corrected by the trade agreements. What is his view regarding that matter? Does he think that when a nation has an unfavourable balance of trade it should have the right to discriminate against imports from nations that refuse to buy from ifi it? The only alternative under the agreement is for it to impose that discrimination against all imports, not just against one nation. Surely it should have the right to discriminate against the nation that is not playing fair with it, rather than have to discriminate against all nations.


James Lorimer Ilsley: The scarce currency provision of the Bretton Woods agreement permits such discrimination, if I remember correctly.


Victor Quelch: Under this agreement they cannot do it.


James Lorimer Ilsley: What agreement is that?


Victor Quelch: Proposals for expansion of world trade and employment to be submitted to the international conference. I understand that this is to be the basis of discussion, and on page 15 it states:
Restrictions to safeguard the balance of payments. Members confronted with an adverse balance of payments should be entitled to impose quantitative import restrictions as an aid to

the restoration of equilibrium in the balance of payments. This provision should be operative under conditions and procedures to be agreed upon.
These conditions and procedures are as follows:
(d) should provide for the full application of non-discrimination in the use of such restrictions after the transitional period.
It can only discriminate against imports so long as they discriminate against imports of all nations. They must not discriminate against imports of any one single nation.


James Lorimer Ilsley: I think that must be read with the provisions of the Bretton Woods agreement. As a matter of fact it is pointed out to me that it expressly must be read with the provisions' of the agreement. On the next page of the document from which the hon. gentleman read appears this statement:
Scarce currencies and currencies of territories having a common quota in the monetary fund. Members should not be precluded by this section from applying quantitative restrictions-


Victor Quelch: Quantitative. That means imports of all nations.


James Lorimer Ilsley: I continue:
- (a) in pursuance of action which they may take under article YII of the international monetary fund agreement, relating to scarce currencies, or (b) in a manner designed to maintain the par value of the currencies of territories having a common quota in the monetary fund, in accordance with article XX, section i (g) of that agreement.


Victor Quelch: Quantitative restrictions?
My contention is that it should read as discrimination against any one nation where that one nation is the nation that refuses to balance trade with another nation. There is a difference. If nations have an unbalance of trade, then they can discriminate against imports coming into the country, but they cannot discriminate or place restrictions against the imports of any one nation, even though it is only one nation -that is not playing the game. We believe they should be allowed to place restrictions against the imports of that nation, and that nation alone, but they are not allowed to.


James Lorimer Ilsley: They are, in accordance
with the scarce currency provision of the Bretton Woods agreement. The language is so clear I do not see how my hon. friend can persist in the position he is taking. This is the language:
Members should not be precluded by this section from applying quantitative restrictions (a) in pursuance of action which they may take under article VII of the international monetary fund agreement, relating to scarce currencies.

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Nothing could be clearer than that. The next thing is to look at the Bretton Woods agreement and consult the scarce currency provision. But my recollection is that discrimination is permitted against the country whose currency becomes scarce.


Victor Quelch: But the nation has to
wait until the situation has developed before it is allowed to try to protect itself against that situation. Why should it have to wait until that situation has developed? Surely it should be allowed to protect itself against that.


James Lorimer Ilsley: There has to be some little provision against wholesale and promiscuous discrimination, and that is what the Bretton Woods agreement provides.


Victor Quelch: There should be some way for a debtor nation to have a little control on the actions -of a creditor nation. I do not see why a creditor nation should be allowed to have it all its own way. Could the minister tell us now when the conference on international trade that we heard so much about when the Bretton Woods conference was discussed will be held? Could the minister give us any idea how many delegates there will be from Canada, who they will be and whether the agreement will be presented to parliament before it is ratified?


James Lorimer Ilsley: I cannot answer these
questions. I do not know when it will be held, or who the delegates will be. It is expected that the final conference will be held within the next twelve months, perhaps much sooner than that, as I said in my speech.


Thomas Miller Bell: The minister mentioned liberal trade policies. I presume "liberal" is spelled with a small "1"?


James Lorimer Ilsley: Yes.


Thomas Langton Church: I wish only to endorse the principle of the bill. The minister gave a very fine and detailed description of the aims and objects of this particular agreement. We are now dealing with the short title. I support the bill because I understood the other evening that the resolution was to be adopted. I hope that this bill will be passed by six o'clock. The main point which appeals to the opposition, although I cannot speak for the opposition, is that this bill is giving aid to the mother country. The hon. member for Temiscouata the other night took occasion to tell the opposition a few things, but he forgot that the opposition has adopted the principle of this loan to the mother country.
I have always had a great deal of sympathy with the Minister of Finance for his sincerity of purpose and his ability for hard work, but
I think the finest remark he made was that this lo'an is not charity but an investment with our best customer with whom we want to trade. In the years to come I think it will redound to the credit of the present Minister of Finance and those associated with him in making this agreement. I cannot go so far with him in what he said about other matters in connection with this bill, about the Bretton Woods agreement, for instance, and the Anglo-American loan. The minister said he hoped that these three together would lead to a better world and all that kind of thing, and that a body would be set up by the United States to deal with international trade balances. I have never been a believer in these new worlds to come after the war and all their blueprints. They were to come also after the last war.
So far as this loan to the United Kingdom is concerned, she is our best customer. She has never defaulted. She has invested, not millions, but billions of dollars in this country before we were able to take care of ourselves. Therefore, apart altogether from any sentimental feeling, this loan is good business. Look at the amount of money which Great Britain invested in public works in this country in days gone by, on the Rideau canal, for instance, right here running past the Chateau Laurier. That is only one of the large public works in which Britain invested, millions of dollars in this country. In the same way, after the war between the north and the south in the United States, Great Britain invested millions in the eastern and central States to help them build their state and municipal institutions, their public works, and their railway systems. Consequently this loan is in no sense charity but a good business investment because we are dealing with a country that always meets its obligations.
Something has been said by one of our speakers on this side about Lord Keynes, who was called the greatest economist of our time. He started this Bretton Woods scheme; it was an idea of his, and the Minister of Finance and others here and in London and Washington have told us that this loan is interlocked with Bretton Woods and the Anglo-American loan. But Lord Keynes' idea was not carried out in the final act of Bretton Woods. It was an amendment to his idea. Lord Keynes will not be called a great economist twenty-five years from now, because I remember reading a book that he wrote when I first entered parliament in which he expressed views directly the opposite of those he expressed on the Bretton Woods agreement, the success of which is very doubtful, tied up as it is with
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the abolition or curtailment of preferences and other impossible conditions. I look on the United States loan to Britain as one of the most unfortuiate things in the history of international finance. It will lead) to untold disputes between the United States and Britain and it imposes the harshest terms that I ever heard of. It is worse than the treatment in terms that Germany got after the last war, treatment which she properly deserved.
I should have liked to see the government go further and get all the dominions, Canada, New Zealand and Australia, to shoulder this Anglo-American total loan together. One of the great mistakes that we made in the war was to surrender too much of our political, financial, economic and military power to Washington. That is where we made a great mistake.
But this particular loan dealt with in bill No. 28 stands on its own feet as a good business investment for Canada to make, and will make for employment in Canada. There are, as the Minister of Finance said, other matters interlocked with it. I want to say this of the Bretton Woods agreement and the Anglo-American loan, that they mean the end of preferential trade within the empire. I know one of our hon. members said that nature has placed us on the North American continent, but that is what they said between the two wars. We would hear people asking why we should depend upon Great- Britain, upon London and Glasgow for defence, and they wanted to reduce the estimates for defence and have us depend on Washington; but I say that Britain and1 the dominions are an economic unit and if we developed preferential trade between the empire we should be far superior to Russia and the United States as an economic power. Let us start this brave new world we are talking about by building a strong economic unit within the empire itself. We know from past experience what preferential trade means. It increased Britain's trade with Canada by 42 per cent and Canada's trade with Britain by 44 per cent, and as well increased international trade by leaps and bounds. We have had in the past this new internationalism in the favoured nation treaties with many foreign countries, but we find that over 84 per cent of all our business was done with the mother country and the United States and only 16 per cent with foreign countries. We have tried this international racket and these dreams of a new world to come before. I have no confidence in it; I do not believe in it. We should stick together within the empire as an economic unit. If we do not hang together we shall hang separately, for none of our dominions
fMr. Church.]
are able to "go it" alone, and Britain without the dominions will be only a second-class power.
There are many things to consider about the Bretton Woods agreement. It is not a scheme of governments but a scheme of economists. I do not believe that it will do what we are told it will. Under it, economic sanctions, if any of us fail, can be applied against Britain and the other dominions; do not forget that. It is only a half-baked international currency scheme which will lead to trouble between Britain and the United States. It is only a half-baked international currency bill, which can never work.
We want full employment-, as far as possible. We want cheap money and stable prices. But we shall never get them under the Bretton Woods, Anglo-American loan. I stand by the Ottawa agreements and empire trade first, but they should be brought up to date, so as to meet changed conditions. United with the other dominions we are strong; divided we shall fall. We. are not strong enough for any of us to go alone.
I believe the present government, and those which have preceded it, men who held office in the days of Laurier and Fielding, deserve great credit for their pioneering in the matter of preferential trade, and for giving us the six-cent preference on wheat-which was afterwards revoked in 1938 by the. United States treaty. But they were the pioneers.
Do not throw it all to the wolves for the sake of a so-called new thing, this dream of a new world, called internationalism. As I have said, the final word of the Bretton Woods agreement is not found in this plan. The final act has been changed, from first to last. They would have Great Britain throw away the only real assets she has, namely her purchasing power in her own home market. She will have to trade that way, and without these two loans will have to regulate and control her export trade and imports. Through the development of consolidation within the empire, Great Britain can build up an economic unit, pledge full employment, and raise the standard of living. All that will be killed by the Bretton Woods agreement. It brings us back to the laissez-faire doctrine of the twenties and the thirties, to -the status quo of 1929 and 1939. I want an economic system which, in the circumstances of 1944, 1945 and 1946 or 1960 can help mankind toward a goal of increasing production. The Bretton Woods scheme and the Anglo-American loan will hand over world economic power, and with it world domination, because of the $28 billion of gold in the world, $23 billion are held by the United States.

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Great Britain cannot recover unless she is permitted to assume her place in the trade of the world. This trade is not exclusive. The Bretton Woods agreement and the United States loan do not constitute an exchange of goods and services for an exchange of goods and services. It has to be paid back some time, with interest. The United States loan is an exchange of gools and services for what? It is for debt, or for gold. I believe the conditions of the Anglo-American loan are very harsh and a surrender to the money-lenders who do not consider the money was spent to save their shores from invasion for over two years.
If anyone believes the United States will have lower tariffs, then just let him read the recent record's of the senate and house of representatives in Washington. There will always be tariffs, so long as there are countries. There will always be nations, and patriotism is the cement that holds nations together. For us to blind our eyes to all this, and go roaming around the world looking for brave new worlds and international agreements is something beyond belief.
In conclusion, let me refer to the speech made this afternoon by an hon. member who spoke first, and who is not at the moment in his seat. He is a fluent, most informative and interesting speaker. But he has forgotten some of the figures, which are set out in a table issued from Washington which shows the principal international credits or loans, either extended or awaiting approval to France by Canada and the United States. This publication is by the National City Bank of New York, April issue, dealing with the subjects of economic conditions, governmental finance and United States securities. At page 44 there is a review of what was done at Savannah recently regarding Bretton Woods. They found that they will have to mark time, and do something. This is what is stated'.
There is general approval of the apparent trend toward postponing starting the monetary fund until some time after the international bank begins operations. This is what many people have advocated all along, for successful operation of the fund is possible only in a reasonably stable world.
I refer now to the table which shows the credits given or to be sanctioned. The amount extended to Great Britain by the United States is $660 million, while that extended by Canada is given as $1,136 million. The credit extended to France by the United States is $895 million, and by Canada, $220 million. The other figures are given for other countries.
In this connection may I point out to hon. members from the province of Quebec what
was said by the new Prime Minister of France, Felix Gouin, who is a socialist. This is what he said when taking over from General de Gaulle:
France has always reacted with the marvellous power which belongs to her and which is made up of moderation, reason and profound political wisdom.
Everybody hopes that under the loan the minister has made available to France-and it will reflect to his credit in years to come, in the minds of the French-speaking people of Quebec-France will soon thus be able to rebuild accordingly. She is in great need of financial assistance at the present time. Her civil and war expenses are much greater than they should be, and will have to be reduced. However, it is our hope that she will get past this critical time. Canada's loan will help greatly. Everything she needs will be made available to her . from the people of this country, under the loan announced by the Minister of Finance. I believe the minister deserves the thanks of the country for this transaction, although I would qualify my remarks by making the references I did to the Bretton Woods agreement and the Anglo-American agreement, and the cause and effect of it. I do this because I am a real believer in the future policy of Great Britain and her dominions for imperial preference as an economic unit along the lines I have suggested. Under an empire system we would have preferential trade; the Ottawa agreements could be brought up to date, to meet changed conditions.	.


James Lorimer Ilsley: Mr. Chairman, the hon. member for Acadia asked me a question about the chances of the United States and Canada pursuing a liberal trade policy in the future. I said I thought Lord Keynes, in a speech delivered in the House of Lords, had made reference to the prospects of such a policy being followed in the United States. I now have excerpts from that speech which I believe are worthy of a place on the record.
This is what he is reported to have said at page 791 of the debates of the House of Lords for December 18, 1945:
Questions have been raised-and rightly anil reasonably raised-about the willingness of the United States to receive repayment hereafter. This is a large subject to which I have given a great deal of thought, but I shall not have time to develop it fully to-day. I am not, as a result, quite so worried as most people. Indeed, if nr the next five or ten years the dollar turns out to be a scarce currency, seldom will so many people have been right. It is a very technical matter, very emphatically within their past experience, but not so easily the subject of future prediction. I am afraid I must content myself with a few headlines. First, it is not a question of our having to pay the United States by direct
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exports; we could never do that. Our exports are not, and are not likely to be as large as our direct imports from the United States. The object of the multilateral system is to enable us to pay the United States by exporting to any part of the world and it is partly for that very reason that the Americans have felt the multi-laterial system was the only sound basis for any arrangement of this kind. Secondly, all the most responsible people in the United States, and particularly in the state department and in the treasury, have entirely departed from the high tariff, export subsidy conception of things, and will do their utmost with, they beileve. the support of public opinion in the opposite direction. That is why this intternational trade convention presents us with such a tremendous opportunity. For the first time in modern history the United States is going to exert its full, powerful influence in the direction of reduction of tariffs, not only of itself but by all others.
Thirdly, this is a problem of which to-day every economist and publicist in the United States is acutely conscious. Books on economics are scarcely written about anything else. They would regard it as their fault and not ours if they fail to solve it. They would acquit us of blame-quite different from the atmosphere of ten or twenty years ago. They will consider it their business to find a way out. Fourthly, if the problem does arise, it will be a problem, for reasons I have just mentioned, of the United States vis-a-vis the rest of the world and not us in particular. It will be the problem of the United States and the whole commercial and financial arrangement of every other country. Fifthly,-and perhaps this is the consideration which' is least prominent in peoples' minds- the United States is rapidly becoming a high-living and a high-cost country. Their wages are two and a half times ours. These are the historic, classical methods by which in the long run international equilibrium will be restored.
With regard to the questions put to me by the hon. member for Temiscouata, perhaps I should give them a little more thought and answer them at eight o'clock. I could start on them now, perhaps, but I would like to discuss them. Perhaps I shall have to ask him to repeat some of the questions, as I have not notes of all; but following the notes I have here, perhaps I can deal with them.
There is one point I wish to make clear, which I tried to make clear the other day. I referred to Great Britain getting back into a state of equilibrium, and the hon. member said, "What about Canada getting back into equilibrium?" The point I wanted to make was that when I was talking about deficits and about equilibrium I was not talking about an internal situation at all. When I said the United Kingdom went back, or that the United Kingdom's financial position deteriorated by $20,000 million in Canadian funds up to the time of these loans, I was not talking about the internal debt of the United Kingdom, how much the internal debt was or how much it had increased. The internal debt of the United Kingdom is over $100,000 million, so that we are not comparing likes

when we compare an external position with the internal position of the Dominion of Canada. What I meant was that as a result of the war, by loss of foreign assets, by loss of liquid reserves and by debts incurred to foreign countries, the United1 Kingdom had gone back, had worsened its position by an amount equivalent to $20,000 million in. Canadian funds.
The Dominion of Canada did not do that at all. As a result of the war the Dominion of Canada slightly bettered1 its external position. It incurred a large internal debt, but on balance it lessened its external debt. The same applied to the United States of America; I think the same applied to every other one of our allies. The United Kingdom alone among the victorious allies suffered this terrific deterioration in its external position as far as foreign indebtedness, foreign assets, foreign currencies and liquid reserves were concerned. That is why I said in my speech that the case of the United Kingdom is unique, a special case. That was not an expression of sentiment, or something coming from an imperialist. I was saying simply, and almost in the same words, what was said in the United States of America by the national advisory council, consisting of the secretary of the treasury, the under-secretary of state and so on. They recognized the fact, which cannot be escaped, that the United Kingdom case is different from the case of any other country in the world. The United Kingdom occupies a key position. Either we must write it off and say that it is hopeless, that the place is bankrupt and we might as well forget them; or we have to take the other line and do what we reasonably can, within our resources, to get them into a position where they can carry on as they have in the past, as a great trading nation.
Perhaps I am emphasizing the currency end of this a little more than the trade end of it, but the main reason I desire to see this loan go through is that I want sterling once more to be real money, instead of a currency which is not convertible into other currencies. When I was young, and in fact all during the previous war, when we sold goods to Great Britain for sterling that sterling could be converted into United States dollars; not, as during the last war, simply sold by the Canadian exporter to the government of Canada, which could not do anything more with it unless it made some arrangement with the United Kingdom. So that we must get sterling back to the position of convertibility; and the success of these North American loans, the one from the United States and the one from Canada, is necessary if sterling

Judges Act
is to 'become a stable and convertible currency once more. Unless it is, we cannot carry on ths huge trade that we have carried on with Great Britain and upon which our wheat exporters, our bacon exporters, our cheese exporters, our apple exporters, our metals exporters, and so on, absolutely depend. We shall not be able to carry that on; we shall have to reorient ourselves entirely, change our economy completely, reduce our exports enormously and try to make ourselves over into some kind of self-sufficient nation.
Great Britain can very well take that other line. She has an area there, the sterling area. By living within that area and pursuing very restrictive trade policies, not buying from any country unless that country will buy from it, by making these bilateral trade * agreements they can, and in order to live would have to, do these things, being in the position they are in, unless the North American nations show a little imagination and do something to get Great Britain into the position where in future she can carry on the kind of trade policies which are essential to the interests of the Dominion of Canada.
The hon. member for Temiscouata is entirely wrong when he said my eyes were on Great Britain all the time during my speech. I made the speech from the point of view of the Dominion of Canada. I agree with the approach of the leader of the C.C.F. party and the approach of the financial critic of the the opposition. I disagree with the approach of the Social Credit party, because I do not think the Social Credit party is right in the position it takes that this is purely a moral obligation and not a good business proposition. That is based upon a short-run view.


John Horne Blackmore: I do not suppose the minister would remember when I spoke, but he may recall that I did not follow that line, so that perhaps he should be a little less sweeping in his denunciation.


Jean-François Pouliot: Your case was like that of England; it was unique.


James Lorimer Ilsley: I accept the statement of the hon. member for Lethbridge. Perhaps the members of the Social Credit party were speaking individually, each expressing his own opinion. But while quite a bit of what the hon. member for Acadia says is true, namely that this has an inflationary influence, that it is taking goods out of the country at a time when they are in short supply here, and that goods may be coming back at a time when they are not in short supply here, nevertheless these disadvantages are all outweighed by the paramount advantage of getting Great Britain in a position, not during
the next two or three years but in the next half century, where the United Kingdom will be a trading nation with a stable, convertible currency, taking large quantities of our goods and sending us back goods and currency that we can use to buy goods from the United States and other countries. Therefore, from that point of view, we regard this loan as highly in the interests of thd Dominion of Canada.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.



JUDGES ACT


[Stage Direction]
Mr. T. L. CHURCH (Broadview) moved the second reading of bill No. 13, to amend the Judges Act.
He said: I do not wish to delay the minister in getting along with the matter which was under discussion before six o'clock, and I shall speak for only four or five minutes. But I wish to commend this bill to the attention of the house. I have suggested through the acting leader of the house that the minister might consider this bill on his estimates, so as to save time to-night.
The time has come when judges should be paid properly, and no doubt that will be looked after. But, as is generally known, some judges have been absent from their duties for one or two years. That is not in the interests of the administration of justice, because the frequency with which the judges are drafted for all kinds of such work impairs the efficient administration of justice and causes congestion in the law courts. As they are largely only fact-finding commissions when appointed, they duplicate the efficient powers and functions of parliament, of the committees thereof, and of the many outside boards of recent innovation in war work. Furthermore, they are a costly adjunct to good parliamentary government; they cause delays, and interfere with parliament's right to immediate solution of social and economic problems or urgency to good government. Thus a system of "judicial commission government" is slowly being built up in Canada.
While they are appointed by federal authority they are also provincial officers. No doubt on some commissions they have
Criminal Code
[Stage Direction]
done good work, but I urge on the minister that he should consider this matter in connection with his estimates.
As regards the second section, namely that judges should be bound by the decision of the court of last resort, by the privy council or whatever is the court of final appeal, it reasserts the well known legal doctrine.known as stare decisis, namely that decided cases which lay down a rule of law are authoritive and should be followed. Decisions of the privy council should be binding on all courts. In all the provinces, Quebec excepted, they haye now what they call divorce courts. In my opinion, this jurisdiction in Ontario should be transferred to the county court judges. There were hundreds upon hundreds of cases standing at the York assizes; the list is nearly as long as the clerk's table; I urge that something should be done.
As hon. members know, there is a divided authority between the federal authority and the provinces. The provinces have certain jurisdiction in respect of the solemnization of marriages, an act which is generally performed by the clergy. In one province decisions of the privy council on the marriage law have been upset, and much trouble has been unnecessarily ' caused thereby. It is true that the spiritual bodies represented respectively in the Lambeth conference and the canon law of the province of Quebec are unfavourable to the principles of divorce. Nevertheless, it is there, and one must admit that the way * divorce has been handled throughout the country indicates the need of a change. When all is said and done, it must be remembered that by Roman law marriage was a contract, and a province can pass an act by which such contract can be registered before a mayor, a sheriff, a warden, or a municipal clerk. I do not raise that point in any controversial spirit; no doubt large numbers of people wish to be married by a Christian minister or a minister of some other faith, but I urge that some remedy should be taken along the lines I suggest. If the minister in his estimates will consent to have these two matters discussed at the proper time, I shall be glad to move the adjournment of the debate.
Motion agreed to and debate adjourned.

[Stage Direction]
FATAL ACCIDENTS AND INjyRIES FROM HIGHWAY TRAFFIC AND LEVEL CROSSINGS
Mr. T. L. CHURCH (Broadview) moved the second reading of bill No. 27, to amend the criminal code (motor cars).
He said: Prior to the last war we used to have a day called "motor accident day".

In 1938 there was a long debate in the house on a motion I introduced with reference to road accidents caused by motor cars. Nothing has contributed more to the education of the people than the motor car, and the proper use of cars is to be commended. But, as in the case of every other invention, its use is one thing and its abuse is another. In the city I come from there were ninety-eight persons killed last year and 7,000 or 8,000 badly injured in consequence of reckless driving. A return was brought down in this house on April 3 giving the number of people killed or injured in traffic accidents on highways during the period of the war, accidents from drowning, accidents at level crossings and so on. Many persons have been killed as a result of fires in small houses and in other ways. In Ontario a member of the forces murdered a girl and was convicted after two trials, but the province spent nearly $70,000 in connection with those two trials. Here we have a record showing 9,038 persons killed and 149,000 badly injured, and no one knows who will be the next victim. There have been some miraculous escapes from the consequences of wild driving at excessive speed contrary to law, but such driving goes on all the year round and apparently no one can stop it.
I would urge the government, when the minister's estimates are up for consideration, to have this matter discussed. There is a real danger from the hit-and-run driver. In the city I come from not a few people have been killed and no one has ever found out who committed the crime. One of our most prominent citizens was killed by a motor car near the York club some years ago and the perpetrator of this dastardly deed was never discovered. It is a cowardly sort of murder, ten times worse than any other. I have seen the headless body of an infant in my constituency, and the people have appealed to me and to one or two other members to see if something cannot be done about it.
I am going to move the adjournment of this debate, but before doing so I suggest to the government that, now the war is over, proper steps be taken to check or to put an end in part to this sort of thing. It takes two persons to make an accident. Reckless drivers wall go past the secondary schools at speeds of from forty to sixty miles an hour in spite of signs warning them to drive slowly. It is the duty of parliament to step in and do something. In New York they have adopted certain modern provisions which I have embodied in this bill. I am suggesting an amendment, the purpose of which is to define the powers of the jury in cases of manslaughter arising out of the operation of

Loan to United Kingdom
motor vehicles, and there is also a section providing that the jury shall decide whether a person charged is guilty or not guilty. It is desirable that the functions of the jury should not be curtailed or abolished. The jury are required to take the law as given by the judge; but, owing to the many cases that are withdrawn by order of the judge, trial by jury in those cases is negatived, and there are at present so many loopholes in our law that many persons guilty of gross negligence get off. The increased number of accidents require that the law with regard to reckless driving should be brought up to date to meet changing conditions, while preserving the liberty of the subject, and there should be a stiffening of the penalties as to drunken and hit-and-run drivers.
I move the adjournment of the debate, and I trust that when the minister's estimates come before the house at the proper time this matter will be disccussed.
Motion agreed to and debate adjourned.


[Stage Direction]
The house resumed consideration of the motion of Mr. Ilsley for the second reading of bill No. 28, respecting the financial agreement between Canada and the United Kingdom, signed on the sixth day of March, 1946.
Mr. W. R. THATCHER (Moose Jaw):: Before this bill is carried there are a number of comments I wish to make on it. With the first feature, the loan of $1,250,000,000 I am heartily in accord. In the light of Britain's extreme and disproportionate war-time sacrifices, most Canadians are pleased and proud to give her a hand with her heavy reconversion and rehabilitation problems. Sentimentally and for humanitarian reasons, I think the proposal has a great deal of merit, and I am inclined to agree with other members who have suggested that the loan would be good business for Canada. I definitely favour this part of the bill.
With regard to the second feature of the bill, however, which proposes to cancel a debt owed to Canada by Great Britain of $425,000,000, I cannot agree. I think that this is tantamount to an outright gift for such an amount. It may be that I am inexperienced in political matters and therefore do not see the problem in the proper light. I am' willing to concede that. I come from British stock and am very proud of the fact; but as a Canadian member of parliament, circumstances being what they are in Canada to-day, I do not see how I can
vote for a gift of such magnitude to another country, even though that country is Great Britain.
In the first place, as nearly as I can ascertain, we have already given Great Britain in the past three or four years, directly or indirectly, over three billion dollars. Over and above these gifts we have sold fann produce to Great Britain in many cases under market levels, and we are still doing so. For instance, wheat on the world market is selling at about $2 a bushel, and yet England is buying wheat at $1.55 f.o.b. Fort William, which means in a nutshell that every time a farmer in western Canada sells a bushel of wheat to Great Britain he is making the mother country a gift of from thirty-five to forty-five cents.
I do not think there are many who begrudge these past gifts, but there are a great many Canadians who are beginning to wonder how long we can fit such vast commitments into our post-war budgets. The war is over and Canada herself faces tremendous problems of reconversion and rehabilitation. Everyone of these projects will require large sums of money.
Everyone admires the magnificent war effort of Britain and is glad to give a helping hand; nevertheless I do not see how we can give away such a huge sum as $425,000,000 when so many of our own people are in actual need.
Only last week there was before this house a resolution urging decent old age pensions for elderly Canadians. Hon. members from all political parties on both sides of the house spoke in favour of that resolution; yet it was not passed. I suppose the reason it was not passed was that the government felt that funds were not available for such social services at the present time. A few days before that, there was before the house another resolution which eventually would have resulted in large_ irrigation projects in western Canada. Despite the fact that these projects are vitally needed, we saw that resolution also talked out, though we heard members from all sides of the house speak in favour of it. I believe it was talked out because the government felt that funds were not available for it at the present time. My home city, of Moose Jaw has a population of almost 25,000 people, and we have been short of water for about forty years. During the past winter our water supply was cut off about half of every day. If a housewife wanted to cook in the daytime she had to fill the bathtub with water the night before. Industries were closed down and men laid off because there was no water. Sanitary facilities could not be used. The people in my constituency will think it strange that parliament can give hundreds of millions of dollars to Great Britain, and yet
Loan to United Kingdom

cannot find a few million dollars to improve living conditions in the cities of Moose Jaw, Regina and Weyburn in southern Saskatchewan. A few million dollars would give them an adequate water supply.


James Lorimer Ilsley: Would the hon. gentleman permit a question? I assume he would like to answer his friends in Moose Jaw who are [DOT] worried about this. Would he explain how we can use any part of the $425 million for old age pensions or for any water improvements or for irrigation projects?


Wilbert Ross Thatcher: I cannot tell the Minister of Finance how he should run his department, but I do say this: Surely, if we can find so much money to give Great Britain we can find a few million dollars for that purpose. Probably that is not the answer he would like, but I shall be glad to listen to the minister in a few minutes if he will give me several more. To-day there are thousands of returned veterans who are looking for work. Why cannot we find a few projects on which to employ them? I cannot see how this parliament can justify, on the one hand, being so generous with Great Britain, and, on the other, being so niggardly in many respects to our own people.
I have received no mandate from my constituents to vote for a gift which amounts to about $1,750,000 for every constituency in Canada. I cannot refrain from objecting to this measure, and if the bill comes to a vote in its present form I shall vote against it.


James Lorimer Ilsley: Let us deal with this matter now, because I see the trend of the speeches that are going to be made by certain members and one of the oppositions against this bill.	[DOT]


Thomas Miller Bell: Just a minute; I do not want the minister to misunderstand. The hon. member for Moose Jaw is speaking entirely for himself in this particular, and I dissociate myself completely froiri the point of view he expressed.


Jean-François Pouliot: That is a mistake.


James Lorimer Ilsley: Let us deal with that, because I think the hon. member for Moose Jaw wants to be fair about this. I have not given this aspect much thought in advance because I am surprised that that line of argument should be used. H any writing-off of this $425 million will enable us to balance our budget or reduce taxes or pay off any of our debts here in Canada or spend any money on anything that we needed in Canada there would be some validity in the argument.

The capacity of the United Kingdom to pay is limited for the reasons that 1 gave in my speeches to the house. We satisfied ourselves that by the time Great Britain repays the $1,250 million, which will take them until 2000 A.D., it is just nonsense to think about trying to ask them for another $425 million some time in the next century. If we are wrong about our appraisal of Ihe capacity of the United Kingdom to pay, the situation is perhaps a little different; that is, we might get goods of some kind from Great Britain. We could not use the goods to pay old age pensions; nevertheless it would add to the wealth of this country.
The United States made a very careful appraisal of this situation, just as Canada did, and having in mind the fact that the United Kingdom has gone back, as I said this afternoon at six o'clock, by over twenty billion Canadian dollars as a result of this war, and having in mind the fact that we cannot see how Great Britain can meet her deficits-I do not mean her deficits at home, not her budget deficits; I mean her international deficits- how can she pay for the goods that she has to have upon which to live and keep herself going and at the same time even pay interest on the $1,250 million for the first five years, or any more than a low rate of interest for the next half century? What is the use of talking about attempting to collect S425 million? I am taking this in a hard-headed way; I am talking about this as if we had to get it if we could, and I think perhaps that is correct. But bear in mind that this $425 million is a war debt. It was the costs of Great Britain's participation in the air training plan. There is nothing there; it does not represent anything; there is nothing represented by this $4.25 million which enables the United Kingdom to earn a single dollar with which to pay the Dominion of Canada. The reason that we are lending the money to Great Britain as the hon. member for Rose-town-Biggar says; perhaps we confuse it by talking money rather than goods-the reason we are sending Great Britain $1,250 million worth of goods or thereabouts during the next three or four years is to get Great Britain on her feet so that she will be a solid, enduring, permanent and expanding market for the Dominion of Canada. This whole deal is an investment in the future of Canadian trade. This deal is for the benefit of these very people about whom the hon. member for Moose Jaw is talking. We are not taking money away from them and giving it to Great Britain. We are now giving money to them as a result of this deal that* we are entering into by this United Kingdom loan.

Loan to United Kingdom
I do not like this arguement that if we can give money to people across the sea, surely we can give more money to people at home. That is not the true nature of the transaction at all. So far as the write-off of the $426 million is concerned, it does not affect one way or the other our ability to do anything along the lines mentioned by the hon. member. I put the question to him a little while ago. I said), if we do not put this loan on the statute books how can we use any part of the $425 million to pay for old age pensions or to pay for Moose Jaw improvements or to pay for irrigation projects in Saskatchewan? How can we do it? There is no answer to that question; there is no way in which we can do it.


John Bracken: The bill before us is
bill No. 28, respecting the financial agreement between Canada and the United Kingdom signed on the 6th day of March, 1946. This bill has had second reading. Presumably the main principle of it has been approved by a large majority of the house. We are, now in committee of the whole. At this stage I do not propose to repeat the arguments that have been used by any hon. members who have spoken in the previous stages of the bill. I take it that our job at the moment is to deal with the details of the measure.
I have just two or three things to say. I shall sum up the main items in the bill, and state briefly where we stand on it,-although it has been stated before-and to ask the minister to answer a few practical questions relating to it. It will help us all to understand better the implications and the cost of the measure we are now considering.
Let me say this in passing. I conceive this measure to be one of the most far-seeing this government has introduced, in recent years. It is not a measure for to-day or for to-morrow but for the long distant future. I put it in a class with the lend-lease proposals brought forward by the President of the. United States a few years ago, without which the war would not have been won by us. So that I commend the government most highly on the bill. At the same time we must realize that to a considerable degree we are by it making a considerable contribution to an ally in the war.
What is the substance of the bill? It is outlined in sections 2, 3, 4, 5 and 6. We are asked to approve the financial agreement entered into some months ago between this country and Britain. To do what? To adVanee $1,250 million to Britain by way of loan, to bear interest after five years at the rate of two per cent; second, to continue for five years more the interest free provisions of the loan
to the United Kingdom made in 1942, which I understand in the beginning amounted) to $700 million and now, I believe, stands at about $500 million. Perhaps the Minister of Finance will tell me if that is right.


James Lorimer Ilsley: Yes, about.


John Bracken: That is, we have about $500 million still owing on an interest-free loan made in 1942. Under the terms of this agreement no interest is to be paid on this loan for the next five years. At the end, of that period discussions may be held to decide what shall be done about it.


James Lorimer Ilsley: It may be paid off by that time. It is being paid off.


John Bracken: In three years some $200 million has been paid.


James Lorimer Ilsley: Yes.


John Bracken: Probably you do not
expect much in the way of repayment of that loan when you are making another loan of $1,250 million.
The third provision has to do with the cancellation of the amount owing by the United Kingdom to Canada with respect to the British commonwealth air training plan, totalling $425 million. This is an obligation owing to Canada by Britain which is being written off. Then the government is given power to borrow the amounts of money required for this loan under the provisions of the Consolidated Revenue and Audit Act.
We support this bill, Mr. Chairman, chiefly for two reasons. The first is that in our judgment it is essential to the preservation of the Canadian economy as we see it to-day. Ours is an export economy; we are more than any other country dependent upon foreign nations for a market for our products. Three out of every eight people in Canada make their living through enterprises directly or indirectly related to the export business. Our best customer has been Britain. To-day, because of sacrifices made during the war, Britain is unable to pay for the goods she requires from us. As the minister said, this is an investment in trade for the future, to try to keep a good customer going until later on, when she can pay for the imports she will take from us. This measure is essential to the preservation of the Canadian economy. If we lose the British market the farmers will lose a market for a large proportion of what we export. If that should happen we would be in the position of having to let possibly one-third of our Canadian farms be abandoned. We have 30,000 farms abandoned now, and if we have another 250,000 aban-

Loan to United Kingdom

doned, we shall have a job on our hands. If the farmers cannot sell their products they "annot buy the products of industry. Business then becomes demoralized, and we find ourselves with mass unemployment. These things follow one after the other: loss of export markets, demoralization of industry, mass unemployment and a low national income. As the Minister of Justice is reported to have said a few days ago, a low national income means inability to maintain social services at their present standards. These consequences follow one another if we lose a major portion of our export trade. I have said, we support the bill because it is essential to the preservation of the Canadian economy as we know it to-day. It would demoralize our whole economy if the one-third of our people making their living in export industries had to find some other employment in Canada. That is not any sentimental reason for supporting this measure; it is a purely logical, economic reason.
Our second reason for supporting the loan is that it is a necessary prerequisite to the accomplishment of world peace. If we lose our export trade with Britain, Britain will be forced into a sterling bloc, and in this western world we shall have two competing economies, each using the devices of the inter-war period, each sowing the seeds of another war. This is an investment in possible durable peace. These are two important reasons for supporting this measure.
I wish now to ask the minister a number of questions bearing directly on the sections of this bill. What is the understanding or undertaking on the part of Britain that any portion or all of this money will be spent in Canada? My understanding is oiat there is no commitment, but that it is the expectation that an amount equal to the loan will be spent in this country. I should like the minister to make that point clear, for I am sure he would want the Canadian people to be in no duobt about it.


James Lorimer Ilsley: Yes, I will do that.


John Bracken: Second, what are the circumstances under which payment of the interest on the loan may be waived? Under this agreement no interest is payable for five years, after which interest is payable at two per cent per annum. But in certain years the interest may be waived, and the interest so waived will be written off. I think the house and the country would like to know the circumstances under which interest would not be payable to Canada.
Third, what will the annual payments to Canada be if the interest and principal payments are made in full? The reason I ask that is this: We are making a loan of $1,250 million to Great Britain. The United States has made or is contemplating making a loan three times as large. Great Britain will owe on both of them, according to my calculations, $180 million a year. I would like the house and the Canadian people to understand what the obligation is that Great Britain is taking on her shoulders, when taking these two loans. Perhaps the minister has the figure for the United States as well. The interest rate and the terms are exactly the same; only the amounts are different.


James Lorimer Ilsley: That is correct.


John Bracken: Perhaps the minister
could also give us an estimate on this question. What interest rate will be payable by Canada, on the money raised here to be advanced to .Great Britain? We are lending it to Great Britain at an interest rate of two per cent. What interest shall we have to pay our own people for the money they lend us to re-lend to Britain? What is the difference in dollars between our interest payment and the payment we will'receive from Great Britain? The difference between what interest the government will pay us and the payments we receive from Great Britain would be our contribution under that particular section of the agreement.


James Lorimer Ilsley: It will be the taxpayers' contribution-not the country's contribution. It will be the taxpayers' contribution-the contribution of the Canadian taxpayers.


John Bracken: And what did I say?


James Lorimer Ilsley: The hon. gentleman said "our" contribution.


John Bracken: Well, I did not confine it to this party or to that party, or to any particular individuals. I thought I was speaking in this instance for Canada.


James Lorimer Ilsley: But there is a difference. There is a way for the country to lend wealth, as distinguished from the taxpayer paying somebody else in the country. When the government borrows money from the taxpayer, the taxpayer pays money and the bondholder gets money. The country has not borrowed on any of the money. Therefore the contribution works out as a contribution of the taxpayer as distinguished from a contribution of the country.
fMr. Bracken.]

Loan to United Kingdom


John Bracken: Quite frankly I do not see what the minister is driving at. However, this government borrows money from the people at a certain rate of interest?


James Lorimer Ilsley: Yes.


John Bracken: Lends it to Great Britain at two per cent interest?


James Lorimer Ilsley: Yes.


John Bracken: Then the difference
between the rate paid the people and the two per cent received is the contribution of somebody in Canada.


James Lorimer Ilsley: The taxpayers.


John Bracken: In this particular proposal?


James Lorimer Ilsley: Yes.


John Bracken: Well, who else is there to pay it but the taxpayers?


James Joseph McCann: The hon. member is taking it for granted that everybody takes part of the loan.


John Bracken: I do not see any point in what the minister has said. However, if there is something in it I have not understood, he might develop it later on.


James Lorimer Ilsley: There might not be.


John Bracken: The point is that the
difference comes from the Canadian people.
The other day the minister gave some reasons why there should be different rates of interest and loans of different lengths to different countries. Perhaps he would dteal with that briefly also.
Why did the government cancel the British debt to Canada of $425 million owing as a result of the commonwealth air training plan? I believe I know the answer, but I think the minister should place it on record, because it is related to another item which is continuing. If the government cancels one debt of $425 million, why does it continue the 1942 interest-free debt of $500 million? My reason for asking that is this: The United States in its proposed settlement with Great Britain of its lease-lend operations has written off certain amounts which., I believe, approximate $25,000 million, and has asked Britain for payment of only $640 million. We wrote off one debt of $425 million and maintained another of some $500 million. I would suppose the minister's answer will be that he thought Great Britain could pay part of the total, but coyld not .pay all of it.
Those are some of the questions I wished to ask. Speaking for this party, may I state again 63260-591
we are very glad to be able to give the government our unanimous support on this measure.


James Lorimer Ilsley: Perhaps I had better answer these questions now. The first one was: What understanding is there that Great Britain, will use the proceeds of this loan for the purpose of purchasing goods in Canada? It is true that it is not provided in this loan that the $1,250 million must be spent in. Canada. It was considered that in the case of Great Britain this restriction was neither necessary nor desirable.
It is not necessary because we know that Britain's purchases in Canada, requiring t.o be financed, by some means other than its current receipts from Canada during the period in which they can use this credit, will exceed substantially the amount of credit. If they use the credit for other purchases, they will need to use other funds for purchasing here, funds derived, for example, from selling to Canada gold or foreign exchange that Canada requires.
It is not desirable because in the agreement, through the operation of article Y, we require the United Kingdom to provide Canadian dollars to countries in the sterling area and to other countries in return for sterling which these countries acquire from their trade with Britain, in order that these other countries may be able to trade with Canada. If we are imposing this obligation on Britain to provide Canadian dollars to other countries which need them for buying in Canada, then we should make it possible for Britain to use the Canadian dollars we lend, her for this purpose.
It should be noted that this will not mean that other countries are getting any special advantage from the credit, but merely that they will be getting the same advantage of convertibility of sterling into Canadian dollars that we wish to obtain by having sterling convertible into United States dollars.
It should also be noted that the credit provided by the United States is not restricted to purchases in the United States and, in fact, it is expected, as Lord Keynes told the House of Lords in England, that only about one-half of the United States credit will be needed to cover Britain's deficit with the United States. We considered that when the United States was prepared to provide Britain with dollars that she can and will transfer to other countries, we should not restrict our credit from being used in this way.
It should be noted that when and if Britain transfers these Canadian dollars we lend her to some other country, the other
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country in turn will use them in Canada. Our exchange control would prevent these dollars from being converted into foreign exchange and taken out of Canada in this way.
The fact is that we know from the demand for goods during the next three or four years that Great Britain will require more than the amount of this loan for expenditures in Canada. It is different from the United States, because it is not expected in that instance that Great Britain will need the whole amount of the United States loan. Great Britain will need more than the amount of the Canadian loan.


Gordon Graydon: What part of the United States loan do you figure she will need?


James Lorimer Ilsley: I think I have it here somewhere. They would not need the whole amount to meet the deficit with the United States. I do not think I can add much to that explanation.
The second question referred to the circumstances under which interest would be waived. The circumstances are set out in article IV of the agreement. They are a 'little technical and perhaps I had better read that article:
In any year in which the government of the United Kingdom requests the government of Canada to waive the amount of the interest due in the instalment of that year, the government of Canada will grant the waiver if:
(a)	The government of the United Kingdom finds that a waiver is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves; and
(b)	The international monetary fund certifies that the income of the United Kingdom from home-produced exports plus its net income from invisible current transactions in its balance of payments was on the average over the five preceding calendar years less than the average annual amount of United Kingdom imports during 1936-38, fixed at 866 million pounds as such figure may be adjusted for changes in the price level of these imports. If waiver is requested for an interest payment prior to that due in 1955, the average income shall be computed for the calendar years from 1950 through the year preceding that in which the request is made; and
(c)	Interest payments due in that year on any credit made available to the government of the United Kingdom to which a similar provision for waiver of interest applies are also waived.
I just want to put in my own language the substance of that article. To begin with, we can waive when the United States waives; the provision is the same as in the United States agreement. We are not obliged to waive unless the United States also waives under the similar provision in their agreement. The simple way to put it is that unless Great Britain's exports, including balances on invisible transactions, are, of a sufficient volume and value to pay for her post-war
[Mr. Ilsley.l
volume of imports, that is to say, imports from 1936 to 1938, we shall consider that Great Britain has not the capacity to pay and we shall waive payment of the interest. That is the simple way to put it and I tried to put it in that way in my speech.
It means that Great Britain's volume of exports must be very considerably greater than before the war. It was stated in the House of Lords' discussion that they must be sixty per cent greater than they were during those years-perhaps it was 1939-during that period before the war. Therefore the United States and this country and Great Britain look forward to an expansion of Great Britain's export trade. There must be a substantial expansion of Great Britain's trade or Great Britain cannot pay for her imports.
How can she pay for her imports? She has a huge population in a small island without many resources. She has lost so many of her investments and her shipping is down, as I said, by about two-thirds. That great volume of investments which she had and which supplied her with large annual payments which she could turn around and use to pay for imports is gone. The result is that Great Britain has to build up a substantial export trade in order to meet the balance of payments. There is just no other way a country -I do not need to go into elementary principles-can pay. A country cannot by taxing its own people get money with which, to pay another nation. In some way or another they have to get reserves; they have to get. the currency of other countries with which to pay other people.


John Bracken: The minister does not need to sell us on that idea; we are already sold on it. I just wanted to know the circumstances under which England might not be required to pay interest.


James Lorimer Ilsley: I knew it was not necessary to argue my hon. friend into that idea, but I thought there were some other hon. members in the house who perhaps would be interested in it. I understand there is not a willingness on the part of some to support this measure and therefore I was talking a little for the benefit of those who are opposed to it.


Victor Quelch: Will the amount paid by Great Britain on account of sterling balances accumulated to the credit of overseas governments, banks, et cetera, before the date of this agreement be considered as income under article IV? I think I read in the London Economist that they apparently would not be considered as income.

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James Lorimer Ilsley: There is a sentence in the United States agreement which covers that point. It reads:
Any amount in excess of 43,750,000 pounds released or paid in any year on account of sterling balances accumulated to the credit of overseas governments, monetary authorities and banks before the effective date of this agreement shall be regarded as a capital transaction and therefore shall not be included in the above calculation of the net income from invisible current transactions for that year.


Victor Quelch: Does that apply also to Canada?


James Lorimer Ilsley: That point was considered very carefully, and it was thought that the provision in the United States agreement completely protected Canada because we do not waive unless the United States waives. That is specifically provided for in our agreement.
The next question was as to the interest rate if there is no waiver. The rate depends upon the rate at which credit is drawn upon. That determines the length of time it is outstanding before 1951. Assuming that credit is drawn in equal quarterly instalments from April 1, 1946, to December 31, 1948, and that no waiver of interest occurs, the effective rate of interest for the whole period would be 1-73 per cent. It is generally considered, I think, that the United States interest rate is 1-62 per cent, although the provisions are exactly the same in the two agreements. The effective rate would depend upon the times when the amount was extended, but the best calculation we can make is that the rate will be 1-73 per cent.


John Bracken: That is the rate. The question I asked was the amount Britain would be paying in Canada and approximately the amount Britain would be paying in the United States. I understand the figures are respectively $40 million and $140 million a year, or a total of $180 million.


James Lorimer Ilsley: The amount payable to
Canada is approximately $40 million a year. The exact figures are $39,778,750. To the United States the amount payable is about $140 million in U.S. currency. The exact amount is $140,021,200.


John Bracken: An annual payment by Britain to both of $180 million?


James Lorimer Ilsley: Yes, that is right.
I think there are some other questions I have to answer. The next one was, the average rate of interest on our borrowings, the amount that we expect to be paying our own people. The average rate of interest on our outstanding debt is now 2-7 per cent.
On our long-term bonds the yield to-day is only slightly over 2i per cent. The rate for which the leader of the opposition is asking will depend on the average terms for which we borrow during the next three or four years. If we borrow a good deal of short-term money, or if the average term of our borrowing is, say, not over ten years, the differential between what we pay and what we receive will be very slight.


John Bracken: That is, after 1951.


James Lorimer Ilsley: No, the average; the average was 1-73 over the whole period from now on, and the difference between what we receive from the United Kingdom, assuming there is no waiver, and what we pay, will be very slight under the conditions I mentioned; that is, if there is a fair amount of shortterm borrowing or borrowing for periods of less than ten years.


John Bracken: Is that as accurate as the minister would care to be?


James Lorimer Ilsley: I do not think I can be any
more accurate than that.


John Bracken: I just want to be completely fair with our own people. This money will cost us more than we shall get for it from Britain, and I think it is due the people that they should know as nearly as possible what that contribution will be.


Mr. DORION:: Mr. Chairman-


James Lorimer Ilsley: I think there are some other questions.


Mr. FRASER:: The minister has not
answered all the questions.


Frédéric Dorion: Yes, but the Chairman gave me the floor.
I would not have risen at this stage of the debate had my absence from the house last Friday not given rise to some misunderstanding. I was called to Quebec to appear before the superior court, and that is the reason why I could not be here. However, as I owe my constituents a Clear and definite stand on so important a question I should like to say just a few words.
I must state first that if I had been here last Friday I would certainly have voted against the second reading of the bill. Since this measure was announced by the government, even before the beginning of this session, I have endeavoured to find some sound arguments in favour of this bill. Much has been said for and against the bill. I believe that the only true reason for the passing of this measure is found in the speeches delivered by the hon. member for Kootenay-
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West and by the hon. member for Maeleod. The hon. member for Kootenay-West, as reported at page 847 of Hansard, said:
But I am rising to express support of the bill on the ground that we have a moral obligation to assist those who have suffered in the defence of democracy.
And the hon. member for Maeleod said, as reported at page 848:
The only reason remaining for the loan, as far as I can see, is from the moral aspect.
I believe those statements to be true. I believe that there is much more sentiment than anything else in this transaction, and I say that the government should not have once more tried to side-track the question by endeavouring to show the people that this loan was a good businesslike transaction when everybody knows that it is not so. If it were true that this loan will contribute to maintain our export trade, which is supposed to be vital to our country, one thing which is certain is that this transaction will cost the taxpayers of this country $37,500,000 a year. Furthermore, an arrangement was come to between the Canadian government and the French government which provides for a loan of $242 million with interest at three per cent. I cannot see any reason why the same principle should not apply to the present loan and that interest of at least three per cent should not be charged. We must also keep in mind the fact that the gift of $425 million forms part of our national debt, on which we have to pay three per cent interest, that is to say an amount of $12,750,000 a year. There is also the extension of the loan made in 1942 of $700 million, which, according to figures given by the Minister of Finance, has been reduced to $538 million, which costs us in annual interest $16,140,000. These three figures give a result of $66,390,000 which we are called upon to pay each year to be permitted to sell our products to the United Kingdom.
According to statistics, I understand that nearly one-half of this amount will be paid by those who have an income of less than $2,500 a year. I have in my hand a statement which was given by the government in answer to a question I put on the order paper. The question was, what amount was received by the government during the last five fiscal years from taxes on incomes of $2,500 a year or less; and the answer was-1 take the year 1944-$308 million. I have here a handbook entitled "Canada, 1946", and I see at page 190 that the total tax on incomes for the year 1944 was $756 million. Therefore one must conclude that, of this $66,390,000 already mentioned, those who have an income of $2,500 a year or less will pay, as their share of this

interest, about $30 million a year. I should like to quote from an article written by Mr. P.. M. Richards in Saturday Night of March 23, entitled, "The Cost of the British Loan". This is what he says:
What it's going to cost us-if we dont produce a good deal more efficiently and abundantly than we ever have before-is a part of our "normal" standard of living. Because Britain is not in a position to pay cash for either goods or loan interest at the present time, Canada will pay about $30,000,000 a year in carrying charges on the loan until 1951 and about $12,000,000 a year thereafter the latter being the estimated difference between the two per cent Britain will then pay and the three per cent the loan is expected to cost Canada.
This we may reasonably regard as being by no means an excessive price for the benefits in prospect-the maintenance of British economic health as well as the British market for our products. But, clearly, it does impose a new burden on us, particularly over the next five years when we ourselves will be feeling the strains of social-economic readjustment. We shall bear this burden, now added to all the other burdens (such as family allowances) we have taken upon ourselves, best if we recognize it for what it is and do not make the error of supposing that the cost of carrying it comes from anywhere but our own pockets.
Those are the reasons why I oppose the bill.


James Lorimer Ilsley: I should like to continue to answer the questions asked by the leader of the opposition. He wanted to know why different rates of interest were charged to different countries and on what principle those rates were fixed. Different rates of interest are charged to different countries under the Export Credits Insurance Act because of the different lengths of the various loans. Our policy is to base the rate on the rate payable by the Canadian government on loans for a period equal to the average period of the credit and to add a very slight margin to cover overhead costs of our borrowing. Of course, this British loan, for the reasons already given, is treated as a special case, and the interest rate has been determined on other grounds. But if the hon. gentleman will look at the rates of interest charged to other countries and the average length of loan to other countries, he will find that they are completely consistent and are based on the rate that the Canadian government pays for money it borrows here.
I have already answered the question as to why we thought it desirable to cancel the $425 million debt. The supplementary question was why we made any distinction between the $425 million debt and the balance of the $700 million 1942 loan. It is just a matter of adjustment. The question is how far a country ought to go. The $700 million loan was a

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settled matter covered by an agreement back in 1942 and being slowly but steadily liquidated as securities were sold in Canada; and we thought it desirable to allow that transaction to proceed just as it was doing. We did not begin to charge interest because it did not seem sensible to be asking for interest in the next five years when no interest was being charged on the main loan when capacity to pay was so slight. A similar loan was made in the United States which was not disturbed at the time the loan agreement was made. That is, this loan was secured by what was called a negative pledge of securities. The United States loan was secured by a positive pledge of securities, and that loan is being liquidated by disposition of securities there, while this loan is being liquidated by disposition of securities here. As they did not disturb their pre-existing transaction we did not disturb ours.


Mr. HACKETT:: The United States loan bore interest?


James Lorimer Ilsley: Yes.


John Thomas Hackett: Ours did not?


James Lorimer Ilsley: No.


John Bracken: Two related questions and I am through. Can the minister say what the United States government wrote off in its lend-lease advances to Britain in its adjustment with Britain? The figure I have in mind is 825 billion.


James Lorimer Ilsley: It would be over $20 billion after reciprocal lend-lease is allowed for. It may be $25 billion, but it would be over $20 billion at any rate.


John Bracken: I am glad to have that confirmation from the minister because in this country there is occasionally criticism of the United States for advancing only three and three-quarter billions to Britain at this time and for charging two per cent interest on it. Such criticism does not show a full appreciation of what the United States has so generously done in the past in its contribution through lend-lease. On other question: What undertaking or undestanding, if any, is asked of Britain with respect to future trade as a result of this loan to her at this time?


James Lorimer Ilsley: The only provision is found in article V:
The government of the United Kingdom and the government of Canada agree that in respect of (a) the operation of exchange controls and arrangements, and (b) quantitative import restrictions. each- will grant to the residents and products of the other, treatment not less favourable than that provided for in any instrument
of agreement with the government of any other country signed prior to the date of this agreement.
That brings into our agreement the undertakings given to the United States in their agreement, and if it would be of any interest I could put them on the record.


John Bracken: All I was interested in was this, whether as a result of this loan to Britain Canada will be placed in any more favourable position with respect to futifre trade with Britain than we otherwise would have been.


James Lorimer Ilsley: Oh, yes, very much so, definitely. On can hardly talk about the Canadian loan apart from the United States loan, but I dealt with that in the speech I made. I put it as concisely as I could in the speech in which I introduced the resolution. The United States gets certain important stipulations. The most important is this provision for the convertibility of sterling within about a year or fifteen months, and non-discrimination in exchange arrangements and non-discrimination in quotas. These are the most important provisions. It may be said that we would have got these provisions whether we had entered into this loan or not, but we got certain others as a result of entering into the loan, and they are set out in the speech I made to the house.


Mr. PICARD:: Before I go on with the
remarks which I propose to make, I wish to note one of the arguments brought forward by the hon. member for Charlevoix-Saguenay against the measure. He says that we shall have to pay about $30 million a year in taxes if this goes through. Those who believe that the measure will enable Britain to get a better stabilization of the pound and allow us to exchange our credits in England to balance our debits in the United States, think it would be worth while even to pay the $30 million we might have to pay, because it is better to give part of what we shall earn than earn nothing and return to an era of scarcity, which would be the consequence if we lost our British markets. It reminds me of the men who before the war were penniless or unemployed. They received a high salary during the war and were called upon to pay a eftrtain amount in income tax. Some complained bitterly, but others realized that it was better to give part of it than have nothing and be in the position they were before the war. Whether this measure will mean in the end a gift or a loan is quite immaterial. It is the purposes and the results that will count. In some ways
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it can be considered as a shot in the arm to invigorate Britain and stimulate her world trade, help her to take her place in the industrial life of the world. The purpose is to strengthen the pound and promote a healthy basis of exchange between the dollar area and the sterling area.
The reaction upon Canada is expected to be the balancing of our external trade, which is of vital importance to us. If the British pound becomes exchangeable for dollars we can cover our unfavourable United States balances by our surplus of British pounds; therefore the loan is a necessity to us more than it is to the United States which is granting $3,750 million. The argument has been used before, and I think it is well to repeat it, that we cannot compare the $3,750 million which is the United States share with their wealth on one hand and the $1,250 million and our wealth on the other hand. We should integrate this with the importance attached to our country's export trade. The United States are relying on export trade for between seven and ten per cent of their production, while Canada's economy is counting on an export trade of about fifty per cent.


Mr. MacNICOL:: About twenty per cent.


An hon. MEMBER:: Forty-two per cent.


Louis-Philippe Picard: If it is forty-two per cent, then I am not very far off. This loan will permit us to maintain a productive economy instead of a curtailment economy. To the people of my province as well as to the people of all Canada I sincerely believe it will mean a market for their agricultural products for a good many years to come. It will help to maintain decent prices for the fruits of their labour. Therefore I cannot do other than support the measure even though there are aspects to it which may not be all that we may hope for. I believe this is a necessity. We cannot afford not to make the loan unless we consider the possibilities that remain open to us. As I said a moment ago, unless we grant the loan we shall have a scarcity era, which means that we can produce only for ourselves and our small market outside Britain, or we must take a chance now on building a different type of external trade in the years after the war by diversifying our clients. If we do that, we might dispose during a few years of all our surpluses and' keep the wheels of industry turning by accepting the trade of certain other countries that are clamouring for our goods to-day and are able to pay for them in a way that would enable us to equilibrate our trade deficit with the United States. Can we take that chance of establishing long-
term contracts with such countries and maintain enough of these markets afterwards to replace the loss of the British market? Although I personally think it would be a much saner position for Canada to put herself in, to have a much more diversified external trade, I cannot authoritatively say that it can be easily done.
Our position at present is such a false one in a way that we should try to enlarge considerably our world markets on long-term contracts or by treaties so as not to be permanently in the ridiculous, I might say unsanitary, condition of depending on one client. Any store depending for its success on one client is doomed to failure because it is at the mercy of that client and' must accept his terms. That is the position we are in now because of our trade policies, which were to a certain extent unavoidable at one time. Had we not had the British market we might not have had the onward advance of our Canadian economy. But is it a sanitary condition to be in permanently? I do not think so. I have not given enough study to the possibilities of our building a peace-time market among a number of clients to share with Britain our surplus production in order that we may not be entirely dependent upon one client, to give a definite opinion on the matter. I imagine, however, that the position can be greatly improved. However, it may be that in normal times many of the countries willing to trade with us now may be self- sufficient in most of our sources of export. England has a population of nearly forty-eight millions and cannot feed probably more than ten millions. We have an outright market there. The fact that we have only one client remains unsanitary. But how can we replace that market? Can we find another market for the products that compose our exports? How can we find any place to replace that market? I think we should endeavour to find new markets. Our department of external trade should endeavour to find new markets. However, I believe it would be dangerous to rely on .that at the moment unless we have financial arrangements or engagements with these countries over a long period to come. It would be unwise to turn down the British loan which is our hope-and I sincerely believe it-of balancing our external trade under the same method as we did before the war.
I am sure that, concurrently with maintaining our British market which calls mainly for food products, we should have a more aggressive trade policy with countries that are apt to maintain their payments to us in goods and services or in notes exchangeable

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on the United States market. Therefore we should meet the present emergency by the loah and try to correct our false position by extending and diversifying our foreign markets. Our industrial production should compete with that of the United States and the United Kingdom in many countries with Which we have an interest to trade.
Let us not have a back-seat to the United Kingdom and the United States in a search for new markets. We have done enough in the last war to deserve to be given now a share of the world markets in order to be able to maintain employment and production at a high peak, but we must go and search for them.
We are in a favoured position compared with formerly industrialized countries like Germany. Let us make the best of it while we can. Another aspect of the British loan is that it is intended to try to restore Britain to its former position in world trade. There are two sentimental reasons to this question. Probably there are other reasons that may be invoked. There are two sentimental reasons for Canada giving this loan. British solidarity appeals to the sympathy of some people because of the sacrifices made in England during the war. I do not think that is a reason sufficient to warrant the loan. We should think of our own interest. Our own interests are enough to warrant it, but I think this is a reason that can be considered. It does enter into the minds of many who support it. I shall not undertake to describe to the committee the conditions I saw when I was over there. I admit I was greatly impressed by what the British people suffered during the war, the ordeal that they have gone through. I saw something of the destruction that has taken place. I learnt something of the sacrifices they made and are still making. That is certainly in the minds of many Canadians at the moment, as probably it was in the minds of those who had to consider this matter. Regardless of how great that sacrifice may have been, I do not think that would be sufficient reason for us to endanger our own economy; but it is a reason that exists just the same.
There is also the necessity of helping Britain to maintain on the continent of Europe the prestige of a democratic nation. I do not want to enter upon a speech on the necessity of counterbalancing the nefarious influences of totalitarian states; far from it. Yet, if we want to show the people of Europe in a certain way that our system of government is good we must make sure that the one country in Europe with a democratic government which stood throughout the war can yet regain its place in international trade, and can still be of great support and great help 63260-60
to many nations on the continent. Mind you, Mr. Chairman, ninety per cent of the population of Europe are underfed or starving. All these people are subjected to subversive propaganda of one sort or another. The only help they can look for is from Britain, the United States and ourselves. We can help in only a small way, but it is worth while to try because it is my personal belief that you cannot fight the propaganda which is being spread among, those people who have nothing to eat just with nice words and empty hands.
I believe we have to give them something; we have to give them confidence, and start them on their way to trade. I think Britain, with the help the United States and Canada are giving, is bound to regain, to at least some extent, the position she occupied before the last war in connection with trade on the continent of Europe.
One argument brought forward by sympathizers with Britain, in favour of the measure, is that it will certainly help Britain to regain her lost supremacy in world trade. Personally I think this is an illusion. Britain gained her industrial supremacy during the eighteenth century, when the invention of the steam engine gave her a chance to use her vast coal resources. Britain thus got an advance as well as an advantage over other nations. With the advent of electrical power and the needs of modern industry for oil, Britain had lost her industrial lead before the first great war. She remained the money market of the world up to the beginning of the second war, but the drain on her financial resources has been such as to change Britain from a creditor to a debtor nation. She came out of the war with a debit balance, we are told, of $13,000 million; not counting the $3,000 million of Canadian aid and the $29,000 million of United States lend-lease. Is it possible that these present advances of $5,000 million can permit her, as we hope, to regain her balance and get on the way to recovery? I sincerely hope so, but without being a prophet of doom I think it will be just a shot in the arm. I may be wrong; I hope I am, but even after having reached that conclusion it is not sufficient to deter me from supporting the bill, because I think we must take the chance that it will have the expected result. That is my first reason for supporting the bill.
In the second place, no matter how wrong I think it is to depend upon one client, I think we must face the facts as they are and must help Britain stabilize the pound sterling in order that we may equilibrate our world trade balances by using, to pay for our excess imports from the United States, the payments received for our excess exports to Britain.

938	COMMONS
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In the third place I think it is better to lose the yearly interest on our money for five years and then the difference between the borrowing rate and the rate paid by Britain, than to reduce our industrial activities and curtail our production. It is better to have ahead of us what I might call a period of artificial prosperity than, a period of depression; and even if this should prove to be a gift, as some people have said, because of the possibility of Britain's inability to meet her obligations, I think it is better for our economy in the next few years to go ahead with the measure just the same. I repeat, however, that it is high time we considered means to restore to Canada saner methods of external trade than that of the one client system. We should now gain new markets for our industrial production. In the past we have been exporters of raw materials and wheat. During the war we became a highly industrialized country, turning out ships, planes, tanks and heavy equipment. Let us carry our industrial recovery into the peace era and better equilibrate our external trade by seizing new markets for our industrial products. It is imperative that we do so unless we want our industrial and economic fate to be tied indefinitely to that of Britain. Canada is a young nation. She must look ahead for new fields to conquer. Let us not be limited by sentimentalism or a false method of world trade.
I am far from being enthusiastic about burdening the Canadian people with more charges, and I would not consider sentimental reasons only as sufficient to warrant this measure. It is not with pleasure that I see this provision for the cancellation of the British debt to our country, which is estimated in the present bill at $425 million. But if we consider the aim and purpose desirable; if we consider that it is imperative for the benefit of our Canadian economy to see Britain resuming her capacity to trade with the world, and if we consider it desirable to strengthen and support her currency in relation to the United States dollar, then we have no recourse but to cancel the debt, and I think the minister made the point quite clear a moment ago.
In short, I think in our present position we cannot act differently from the United States at the present time, and we must try to help British recovery, not only or not even because she deserves it on account of her contribution to the freedom of the world, but because in our present position a measure of British recovery is an economic necessity for the welfare of our own country.


Mr. LACOMBE (Translation):: Mr. Chairman with your permission I should like to read one of the numerous protests I have received from our young people against the bill now under consideration:
Val D'Or Junior Board of Trade .	April 15, 1946.
Mr. Ligouri Lacombe, M.P.,
Parliament Buildings,
Ottawa, Ont.
Sir,-
We are enclosing herewith copy of a protest which our organization feels bound to submit in good faith, for the public weal and in the best interests of our country.
We hope that it may be possible for you to use it, thereby proving that the young people of this country can still find the time to deal with matters that directly concern them.
Trusting that you will kindly let us know your personal views on the matter, we remain,
Yours truly,
The Val D'Or Junior Board of Trade, By Camille Desehenes,
Secretary
Here is the text of the resolution:
Copy of a resolution unanimously agreed to by the Val D'Or Junior Board of Trade, at its monthly meeting held on April 12:
Whereas the dominion government intends to lend to England a further sum, which in our opinion is enormous;
Whereas this loan will be at a rate of 2 per cent . . .
After 1951.
. . . while the dominion will have to borrow money at a rate not lower than 3 per cent in order to make that loan;
Whereas the country to which we lend money is itself making loans to other countries at a rate much higher than the one at which we would extend that loan;
Whereas it is recognized that by that loan England in no way undertakes to spend the money in our country;
_ Whereas the exchange is against us every time we borrow funds outside this country;
Whereas that loan is extended under conditions that are very little to the advantage of our country, as is being shown by some newspapers, which have been seriously discussing the matter during the last few days;
Whereas that loan will be" extended at the expense of Canadian taxpayers;
Whereas the country to which we shall make that loan available has already decided to eliminate or considerably reduce the income tax, and to lighten materially the burden which the people in the lower salary brackets have to bear;
Whereas our government meanwhile takes no efficient action with a view to lightening our immediate burden;
AVhereas the young people of this country are the ones who sooner or later will have to bear the burden of all such loans;
Whereas small wage-earners already consider themselves too heavily taxed;
Be it therefore resolved unanimously that our board should ask the authorities of tkis country and the members who will discuss the proposal not to pledge our financial resources unduly in a loan that would mortgage our future far too much.

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An hon. MEMBER:: Thank you.


Mr. RINFRET:: Have they read the bill?


Liguori Lacombe: It is all very well to claim that this loan will increase employment and stimulate industry in Canada. By whom has this statement been substantiated? Experience has taught us that nations, whichever they may be, are interested in one another only in so far as it serves their own interests. Self-interest is the motive behind the actions of individuals and peoples. This state of mind has existed since the beginning of time, and will ever remain the primary motive of any actions. It scorns conventions and statistics. The self-interest of individuals or nations overshadow^ the object of a loan. The purposes of a loan, its very object vanish before the interest of an individual or a nation because nothing will stop them if they think that that loan is going to prove a sound business proposition.	.
The principle of a free loan is wrong in itself, and more so when it is combined with an outright gift of $425,000,000 to England. It is a ridiculous policy, an essentially colonial policy. Some may be pleased thereby; it is their right. Self-interest is the motive behind all actions. One seizes an opportunity when it offers. Why worry? Let us help ourselves; it is the people who will foot the bill. Such seems to be the thought which gave rise to this bill, as shown by section 7 of the agreement which reads as follows:
The government of Canada agrees to cancel the amount owing by the government of the United Kingdom to the government of Canada with respect to the British Commonwealth Air Training Plan, which amount the two governments agree is $425,000,000.
Why this agreement? The amount is or is not $425,000,000. This is a further compromise.
In another part of the bill, reference is made to the multilateral trade of the United Kingdom. Why not call a spade a spade? Have we got anything to hide? This multilateral trade of England which we are called upon to boost at the tune of $1,250,000,000 is what I would call financial imperialism. How costly it is for us! Canada is indeed an inexhaustible milch-cow. The British colossus owns one-fifth of the total area of the world. I do not knOw why fatality drags us into every military and financial venture of the United Kingdom. Just take cognizance of this surrender of a so-called sovereign state, as recorded in section 3 of the bill:
For the purpose of carrying out the obligation of the government of Canada under article one of the said agreement, the Minister of Finance, out of unappropriated moneys in the consolidated revenue fund, may, from time to time, prior to the thirty-first day of December, nineteen hundred and fifty-one, pay to or pursuant to the order of the government of the United Kingdom at its request amounts not exceeding in the aggregate one thousand two hundred and fifty million dollars ($1,250,000,000).
And, finally, section 5:
The indebtedness of the government of the United Kingdom to the government of Canada with respect to the British commonwealth air training plan, as agreed upon in article seven of the said agreement, is extinguished and the Minister of Finance may take such action as may be necessary to write off in the public accounts of Canada the indebtedness so extinguished.
If this is not unadulterated colonialism, words must have lost their meaning. What has become of the statute of Westminster, this electioneering hoax? What about our constitutional evolution? By this financial agreement, the government is surrendering Canada in a strait-jacket to the United Kingdom authorities. At one stroke, they mortgage our national economy for over two thousand million dollars, if all the clauses of the agreement are taken into account. They make lavish gifts to the mother country, because they refuse to consider Canada as a major nation. This constitutes a set-back of over a hundred years in the evolution of our prerogatives. Do you not hear the sighs of relief from our contented imperialists and colonials at the realization that this loan will go through? Just imagine Canada, the child, makes its small annual gift to its mother. How unworthy of a sovereign nation all this seems! We must revert to the time before the Union to find a similar surrender of our prerogatives. Never have Lafontaine and Baldwin, Macdonald and Cartier, Laurier or Borden so bound Canada's future or so shamelessly flouted our sovereignty. The foundations laid by those statesmen are now crumbling under the weight of the commitments of a government which, since 1939, has increased the national debt by more than twenty billions. While young men by the thousands go begging for employment, the Government is handling out gifts at their expense. I know of veterans who are homeless and jobless through the very fault of a government which refuses to launch large-scale programmes of public works. Thousands upon thousands of those veterans are vainly seeking jobs worthy of the seerifices they made. But what is the Government doing to help them out? It gives and loans to others the funds required for their civil re-establishment. But, you will say, the United Kingdom will be a customer for our goods. You make me laugh. England will buy where she wishes and,to suit her own convenience. Just read section three of the agreement. She is the one in command here.
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Mr. LANGLOIS:: It is section two.


Liguori Lacombe: The original document of our constitution is in London. In fact, when the federal government, some years ago, wished to take the Alberta legislation to the supreme court, and had to produce a copy at the court's own request, they had to go to 10 Downing street to make a copy of the original document.
I remember the good constitutional joke of 1926 about Lord Byng's alleged interference. I was then a member of the House of Commons. Memory brings back this tempest in a tea-pot. Elections had to be won. If the constitutional joke had not existed then, it would have been made up. Then came the statute of Westminster, a pretty bubble which has pricked the fancy of many public men since 1931. This mock golden age has started Canada on the way back te colonialism. The government has sanctioned this climb-down by authorizing this new tribute of the colony to the mother country. If there is a vote, I shall oppose this financial agreement by voting against it, as a protest against any infringement of our sovereignty.
During the debate on the address, I explained my stand on this loan of $1,250 millions to England. I would have refrained from taking part in the debate, had not some hon. members, particularly the amazing member for Labelle (Mr. Lalonde), credited me with feelings and designs I have never held. The hon. member should gain neither dignity nor prestige from such unfounded assumptions. I have preceded my hon. friend in the house by a decade. Never have I, directly or indirectly, allowed discussions to sink to the level of race quarrels. When the hon. member, without any reason or justification, launched an attack against nationalist and dissident or independent Liberal members, bn April 12, he made statements he knew to be false. If he is a man of honour, as I still believe him to be, he will withdraw the following words spoken in the house on April 12, 1946. I quote the statement of the hon. member for Labelle-


J. G. Léopold Langlois: Fortunately he is not here.


Liguori Lacombe: -as reported on page 812 of Hansard of April 12, 1946. My hon. friend says that fortunately the party concerned is not here! The absent are always in the wrong.
Mr. LANGLOIS.: You Were not present when he spoke.


Liguori Lacombe: I was absent Friday; might is right, but I will not allow myself to be fleeced. I quote the hon. member for Labelle:
I noticed that most of those who are against the proposal-I say most of them, because there are noteworthy exceptions-base their argument on a matter of sentiment and revive, in support of their claims, old race squabbles. The government have announced their intention of lending nearly 250 million dollars to France. Have any protests been voiced by nationalists? Not to my knowledge. They have kept silent because they have no other protests to advance about the loan to England than arguments based on race squabbles. This is clearly evidenced by a letter I have received from a Social Credit supporter, and from which I wish to quoth some significant excerpts:
This is still the hon. member for Labelle speaking.
March 28, 1946.
You will note, Mr. Chairman, that he did not read the whole letter, but only the main extracts.
Mr. Maurice Lalonde, M.P.. for Labelle.
Sir,
I have read the statement you have made about the Social Credit in the province of Quebec. I believe that your are not well informed on this country's economic problems.
Alberta is in favour of the loan to England because the majority in that province is of English descent. Here in the province of Quebec, the people oppose the loan because the majority is French.
J. B. Bureau,
37 St. Bernard Street,
St. Malo, Que.
According to the rules of the house, the hon. member for Labelle (Mr. Lalonde) should produce that letter and table it instead of merely quoting the main passages, in all justice to the writer, to himself and to us. The hon. member went on:
I am giving that for the prime consideration of hon. members across the way.
This individual unknowingly puts in concrete form the opinions of nationalists and dissenting Liberals, whose good faith and intent I respect.
He hugs them the better to smother them.
However, protests always have and always will come from a noisy minority which does not speak for the majority, in my province. The last federal elections have amply proven that the majority of my fellow-citizens can distinguish between constructive Liberal policies and a demagogic and impassioned appeal by a group of Quebec nationalists.
I do not fear to say, Mr. Chairman, that I have always supported constructive policies.
The hon. members for Beauharnois-Laprairie (Mr. Raymond) and Laval-Two Mountains (Mr. Lacombe) remember their experience of June last, when, after having been elected as Liberals for many years by large majorities, they only succeeded in retaining their seats by very small margins.

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That statement contains two untruths. In the first place I have been elected not by a small margin, but with a majority of 300.
In the second place, I have been elected not as a Liberal candidate, but despite the opposition of the Liberal party.


Some hon. MEMBERS:: Oh, oh.
An horn. MEMBER: As the leader of the Canadian party.


Liguori Lacombe: The hon. member for
Labelle was himself elected in 1935 despite the opposition of the Libera) party. I remember quite well that the hon. the Minister of Justice, Mr. Lapointe, had then sent a letter to the electors of the constituency of Labelle, asking them to elect Mr. Henri Bourassa as their representative, when the hon. member for Labelle was running against him.
Does my hon. friend want me to remind him that his leader, the right hon. the Prime Minister (Mr. Mackenzie King) did not barely escape defeat, but actually suffered it in his own constituency of Prince Albert. The hon. member for Labelle always renders such valuable services to his party and the government that he places the right hon. the Prime Minister in an exceedingly awjkward and humiliating position.
For my part, I oppose this loan and this financial agreement, because our economic condition forbids us such generosity. I shall not repeat all the arguments I expounded to the house in opposing this loan in the debate on the address. However, certain hon. members, only a very few indeed, feeling as the representative from Labelle, have for too long a time tortured our texts, misrepresented1 the facts and our true attitude in this house. It is about time that things be put to right.
Only his boldness allows my hon. friend to compare the loan granted to France at 3 per cent interest to the .interest-free loan offered England. I certainly commend the loan to France, amounting to slightly more than two hundred million dollars. I would likewise have supported a 1,250 million dollar loan to England had the government only demanded a reasonable rate of interest. Let us at least keep the sense of proportions and the proper appreciation of facts. We want to see all countries that have been weakened by the war recover from that disaster. However, we are strongly opposed to bleeding the Canadian taxpayer white so as to allow England or any other country, for that matter, to lower taxes at a time when our fellow-citizens are carrying on under a heavy burden of taxes of every kind.
(Text):


Angus MacInnis: I hesitate to take part in this debate, but I have been so appalled at the lack of understanding of world affairs on the part of some who have opposed this loan that I thought I should say something.
We should approach consideration of this loan having in mind what happened to ourselves and others during the years of the war, the purposes for which the war was fought, and how we are to achieve those purposes. In my opinion, this loan is a step in achieving the purposes for which we fought the war. I am not supporting the loan because Britain is the borrower. I have favoured and have given my support to the various loans and credits which have been made by this government during the past few years. I am not supporting the loan on the ground that we have a moral obligation to help the people of Britain. I am supporting it, as I have said, because I believe that it is a part of the process of building the new world for which we fought the war.
We were together in the war. I have heard it stated in this house that we were in the war to help Britain. I have always objected to that because I felt that the war was Canada's war as well as Britain's. Canada had as much at stake as Britain had. Fascism was as much a danger to Canada as it was to Britain. Consequently we were in the war because the factors associated with the war were such that we could not be true to ourselves and keep out of it.
The Minister of Finance pointed out, I believe this afternoon, that Britain came out of this war much poorer than she went into it. I have before me the monthly letter of the Canadian Bank of Commerce for February, and I note there the statement that Britain lost about $30,000 million of her national wealth during the war. As the minister said, Canada has come out of the war richer than she went into it; at least our real and potential capacity for the production of wealth is somewhat greater than it was when the war began. This is not only indicated but proven by our war production. So that I think we should be glad that we have this opportunity of helping an ally and of restoring peace in the world. If the loan did not have any other purpose than that, even if we felt that the amount could never be repaid, if it can accomplish something for the building of a peaceful world the loan is worth while.
It seems to me that those who oppose the loan must fundamentally oppose it for at least two or three reasons: First, that Britain does not need it, that she is what might be
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called panhandling in asking for the loan at all. I do not think anybody in his senses would believe that.
A second reason may be that they believe that Britain can survive and continue to play the part in world affairs that she is playing to-day without any economic or financial assistance from us. I do not think she can.
There may be another reason. The opponents of the loan may consider that it does not matter whether Britain can survive as a great power or not. I am convinced that no greater calamity could befall this world to-day than that Britain should fall from the position she now holds. In my opinion, she holds a key position, and if she is not able to maintain that position the possibility of an enduring world peace is, by that very fact, so much the less. It is because I feel that for Great Britain not to be able to hold the position she is now in would be a loss to Canada as well as to the world that I am in favour of this loan. I favour it not only because it is a good business proposition; I am quite willing to leave that part of it to the Minister of Finance; I favour it because it is as much our duty to help to build the peace as it was our duty to help to fight the war. In my opinion, that is the way in which we must approach this bill.
I was amazed to hear, I think it was on Thursday last, the hon. member for Richelieu-Vercheres say that Canada could go it alone.


John Ritchie MacNicol: He would not understand a thing like that.


Angus MacInnis: I believe I met the hon. member for the first time in 1928. I had known him by repute a long time before that; and I have always heard him spoken of as an astute politician. I know that the word "politician" sometimes has an unsavoury connotation, but as one politician to another I do not mean anything sinister when I use it. The hon. member, however, did make this statement:
I am not afraid of the future of my country, even if my country is left alone. Even if my country is left between the sterling bloc and the United States I have enough confidence in Canada to feel that Canada is capable of coming through her difficulties and achieving a prominent place among the important nations of the world, even though she is not assisted by the one side or the other.
That, I maintain, is not quite the position to-day. I maintain that there are only two countries in the world to-day that perhaps can stand alone. One is the United States and the other is the U.S.S.R., and God forbid that we should come to the day when either

of these nations will say that they are going to "go it alone." That is the reason why we should support everything that will help to restore the economy of the world and keep the world as a whole so that we can carry on as one world.
We could, I suppose, impoverish ourselves as a country by being over-generous in giving away our wealth, but here again I am not afraid of that as long as the present Minister of Finance is head of that department. I doubt, however, if there is any danger whatsoever there. Great Britain will buy from us with this loan goods and services, or perhaps primarily goods. These will come out of the soil, out of the forests, out of the mines, out of the waters of our country, and out of the labour of our people. If we are careful, if we know how to conserve these things, we can, with the exception of our mineral wealth, restore to the soil and the sea the wealth we take out, and the country can be kept productive. That is the way nature operates. But if we lose this opportunity that we now have to help to build an orderly world it may be a long time before we have that opportunity again.
Let us not try to live in the past; let us not even attempt to return to the years before 1939. The world has altogether changed in the last six years. We are living in a new world in which, I am quite satisfied very few natiofis can stand alone. Let us support this loan. As has been said, it is a good business proposition; but it is also an opportunity for Canada and Canadians to give of our riches, which were maintained intact when other nations suffered grievously, and which were, moreover, enhanced. Let us do that, and we can do it without impoverishing our country but, instead, greatly benefit ourselves and help others on to a better world.
(Translation) :
Mr. MARQUIS.: The question before the committee gives rise to different opinions. I wish to say at once that several hon. members do agree on some facts and reasons brought forward in the House. The difference is mainly one of conclusions. I do not in the least agree with the hon. member for Laval Two * Mountains (Mr. Lacombe) who claims that the stand taken by more than two hundred members is ridiculous because they do. not happen to think as he does. As far as I am concerned, I respect his opinion and that of those who spoke on this measure. This matter is sufficiently controversial to allow expression of various opinions. Like earnest, sincere and enlightened men. we must come to a conclusion, after serious consideration.

Loan to United, Kingdom
If I rise to-night to take part in this debate, it is because I would consider myself remiss in my duty if I refrained from expressing my views on so vital an issue. Certain reasons have been brought forward against this loan. For my part. I must admit, at the outset, that I have not been, at first, favourably impressed. However impressions always proceed from feelings. I have had to look into every aspect of the problem and to trace information back to its source. If I come to the conclusion that I must approve this loan, it is because, in all conscience, I believe it in the best interest of the Canadian nation and not of the British Empire; it is because after laying aside my personal feelings and having considered only the immediate and remote future of my country I deemed it proper to endorse this measure.
It is as useless to stir up passions against the loan in any part of our province as it is to appeal to prejudice in. other parts of the country in its favour. We must judge it on its merits.
I wish to commend all the speakers who have discussed the matter from an objective point of view, and all newspapermen who have dealt with it as a business. proposition based on figures, whether they approved of it or not.
It seems to me that we should consider this important problem in the light of the extraordinary conditions of the1 post-war period. We should not view it from a provincial angle or from the standpoint of a close economy, but in relation to existing world conditions. There is no use repeating, Mr. Chairman, that 'part of Europe, and part of the Orient now lie destroyed and in ruins; that millions of soldiers and civilians have fallen victims of murderous gunfire; there is no point in recalling that the natural resources of those countries were damaged as were also their lands, their oil wells, their coal mines which cannot now be put into production because all such property has been utterly destroyed by repeated bombardments. Need we mention too that these countries'- production and economy have been completely disrupted? Need we add that business is at a standstill ?
More than ever, we are now living in "one world" and when part of the world trade is paralysed, the effects of this stoppage are bound to be felt here indirectly; we are bound to feel them ourselves and our business will feel the consequences. Am I wrong in thinking so? I don't believe I am. Such is the opinion of many enlightened economists and such the teachings of past experience.
Fortunately, under such conditions, our *country is perhaps in a better position than
others. Our farms and factories are producing mightily. Production has increased and we have good reasons to think that, in the current year, it will remain at a very high level. Agriculture has taken a special impetus. Canada is to-day the storehouse of part of this famished world, the storehouse of part of devastated countries. It was ordained by the Almighty that Canada, which escaped bombings and destruction should occupy a strategic position in the western hemisphere, so that she could help in the recovery of overseas countries. I am considering that matter from that sole standpoint, and that is the only position that we Canadians can take.
Our objective is to maintain our production, to ensure continuous employment in this country and to guarantee to our farmers a substantial income as well as a high standard from the moral, religious, physical and economic standpoints. That is our objective; therein lies our ideal.
If we remain confined within our own borders, if we Tefuse to trade with other nations, I sincerely fear that Canada, instead of forging ahead will undergo a decline and that the countless efforts we put forth during the recent war will be of no avail whatever.
Mr. Chairman, should we not ask ourselves whether in refusing to support an agreement like this which was first concluded between the United States and the United Kingdom, if by refusing to ratify that agreement, we would not jeopardize our commercial and economic relations with our powerful neighbour. We are now facing a risk involving some 30 million dollars per year for five years and approximately 10 million dollars yearly for fifty additional years. But if we were deprived of economic relations with our neighbours, the United States, we would stand to lose much more than 30 millions for five years and ten millions for the remaining years; indeed we might be affected in our economic relations to the extent of billions within a few years.
Some lion. MEMBERS: Hear, hear!


Mr. MARQUIS:: We are told that the interest rate has been set at 2 per cent, while it could have been set at 3 per cent. I quite realize, like all the other hon. members, that this interest rate has not been set by Canada. This rate was arrived at by the two nations who concluded the first agreement, which provided that in the event that we refused the same interest rate no agreement could be entered into. Is it necessary to add that the United States has agreed to make that loan even though they were not very interested in the agreement? They agreed to make that loan and they have accepted that interest rate
Loan to United Kingdom

believing that it was the only way to re-establishing international trade. I would not be prepared to accept the responsibility of sabotaging the agreement concluded between the governments of the United States and of Great Britain, and thus cause an economic upheaval which might be much more detrimental to us than the agreement now under consideration.
I must say, Mr. Chairman, that I have for Great Britain and the United Kingdom that sympathy which we feel for another country with which we deal on an equal footing, and nothing more. I do not agree with the hon. member for Macleod (Mr. Hansell) when he claims that this agreement is practically valueless but that morally we must assume this obligation; but I agree with the government when they say that it is a matter of national interest, a purely Canadian matter. I may be mistaken, but I take the facts as I see them; however I respect the views of others and I ask those who rise to speak in this house to respect the views of all hon. members, especially when those views are based on sound reasons.
It has been stated over and over again that the British market is our most important outlet. We have made heavy sacrifices to develop this market and it is the only large outlet which will be able to absorb our surplus production of the next few years.
I understand quite well that France and other countries need some of our products. I feel that we must ship some of our products to other countries but that we cannot and must not send them solely to those other countries. In fact, within a few years, France will be producing enough foodstuffs to be selfsufficient in that respect. The same may be said of Belgium. Then, Mr. Chairman, what will happen to us, in Canada, if we have no export markets for our surplus goods?
During the transition period, we must create good outlets in other countries if we are to distribute ou'r surplus production to the four corners of the earth. But, for the present, we must not drop the substance for the shadow, because a bird in the hand is better than two in the bush.
The United Kingdom can feed but a quarter of its population; and it is from Canada that that country buys the greatest quantities of foodstuffs and which will always find a steady market there.
Were France to enjoy the same advantages, as the beneficiary of this loan rather than the United Kingdom, I wonder if the same arguments would, prevail in certain quarters.


Mr. HAMEL:: Surely.


Eugène Marquis: To draw a fair and just conclusion, it is our duty to consider the problem as if France were involved rather than the United Kingdom. Such is my attitude Mr. Chairman, and I think it is logical.
This year, we shall export to the United Kingdom $764,000,000 worth of goods, while our exports to other sterling countries will amount to $255,000,000. A moment ago, I heard the hon. member for Laval-Deux-Montagnes (Mr. Lacombe) say: "But we are going to pay $30,000,000 this year". Maybe so, and then, maybe not. I shall come to that later on. I must say, however, that if all fhis costs us $30,000,000 this year and if we vote to send one billion dollars worth of goods to the United Kingdom and the other sterling countries, we must take into account the profit to be made on that billion. We shall make a profit of at least $300,000,000 and the farmer will be the chief beneficiary, because that revenue will be produced by his work; consequently, his profits will be a net. If he does not sell his goods, he will lose them. I understand that, between a payment of $30,000,000 we shall have to make and the profit of $300,000,000 that will accrue to. us, there is a surplus of $270,000,000 which callg for thought and the realization that the stakes are worth going after.
I also support this measure because I believe we must endeavour to maintain our exports at a high level and develop our international trade. We are now going through the most difficult period. War has swept over the world, leaving a trail of destruction, woe and ruins everywhere. Canada is a prosperous country, having a good income, a thriving agricultural set-up, factories to be converted from a wartime to a peacetime footing. Our country needs trade expansion, and it has the duty of contributing to the re-establishment of this hemisphere's economic life and the right to work for the restoration of Christianity and freedom in the world. If we get a billion dollars, if, through our sales of goods we put this amount in circulation to encourage production in our factories-we shall be promoting employment and fighting unemployment, at the same time. We will help to keep our young men on the farm and to set up veterans in the same calling so as to further the development of agriculture.
As I represent a farming community, to my mind the agricultural viewpoint matters more than any other. We must remember that agriculture is the cornerstone of our national economy. Nowadays, farmers enjoy profitable prices which accounts for an almost 50 per cent increase in farm production and

Loan to United Kingdom
they must therefore find outlets for the marketing of their goods. Many are now welcoming back from overseas their sons who will contribute to the expansion of our national heritage in the field of agriculture. Thus, in spite of the apparent drawbacks apparently involved in the plan, I believe that in the final analysis, setting aside any electioneering prejudices and considering the interest of our country, we are in duty bound to approve the bill now before the house.
May I 'be allowed a further remark, Mr. Chairman, in the matter of national income and taxation? We are told in certain quarters: "If you're going to make a loan, how can you cut down taxes?" My reply to this, sir, is that, if national income is reduced fifty per cent, how can taxes be cut down? Unless our national income remains at the present level, namely 8 or 10 billions, and unless we keep on exporting at the rate of about 3 billions a year how can we raise the money required to meet government commitments and reduce the taxpayers' burden? I shall not attempt to argue, paradoxically, that the more we lend, the more we shall borrow, the more we spend, the more we shall cut down taxes. No, it is my belief that, because of peculiarly post-war conditions, because of conditions which com-,pel us to step up industrial production and keep agricultural production at a very high level, we must develop our world trade as much as is practicable to preserve the national prestige so dearly bought during the last war at the price of so much effort and money.
To-day, there is no other solution for expanding our trade and securing a market for our goods. This is one more reason for approving the plan. I do not claim, Mr. Chairman, that we will consolidate our position by perpetually granting money and advances and by launching a loan program reaching into astronomical figures. We are told of our wartime contribution, but the cost of the war is a different matter. I cannot discuss the attitude of those who felt it necessary to take such a part in the last war. The allied nations the world over agreed to put all their strength, their funds and efforts in order to ensure the defeat of nazism and barbarism. Now, all that pertains to the war, all the expenses incurred to conquer the enemy no longer stand for capital; we are left as an aftermath of the war with nothing but a promise of survival and of safeguarding our freedom.
Mr. Chairman, thanks to our past expenditures, we have the right to carry our heads high, to face the world squarely and not to be considered as anything but slaves. I do not think we take into account those former
expenses, which are totally different from the disbursements now proposed. Those expenses resulted from the war. We had to choose between slavery and freedom, between Christianity and atheism. We fought for Christianity, we fought for freedom. The cost was enormous, even fabulous, but it was the burden of war.
And now, Mr. Chairman, we have no other duty, no other aim but to go through life with our debts, our burden, our difficulties. It is our duty to face our responsibilities, as it is our duty to expand our trade, develop our agriculture, ward off unemployment, fight and work to restore our economy in the years ahead. If there are drawbacks to this measure, there are also certain advantages. We, Canadians, cannot avoid the unfortunate and terrible consequences of war. After the trials we went through with the rest of the world, we cannot say that it is all over, that we wish to go on our own and resume our advance towards progress as if we had never had a war. We must carry our share of the burden. Since world economy is completely upset and practically on the rocks, how could we expect to get a share in the benefits that could be derived from it, without contributing sacrifices and money, such is the situation. If I were to take stock of certain facts and opinions expounded by those in a small group around me, I might think that this transaction is bad; but we take the longer view, if we cast a glance on the future of Canada, and particularly the necessity for us, at the present time, of trading with the whole world, no one in this house could believe for a moment that our country may now remain aloof while a powerful nation like the United States has found it impossible to resort to isolationism. To-day, the interdependency of nations is a well-recognized fact.
There is another question we must ask ourselves. Were this measure to be set aside by the house, were we to sabotage the Anglo-American agreement, what would be the result? If the United States who have laboured for a period of two months toward the implementation of a plan for restoring the economy of the western, hemisphere, if the United States thought that we did not want to make an efficient contribution to the reestablishment of the world economy, do you not think that this would not entail for this country the loss of a trade involving an amount ten or twenty times larger than the amount ventured in this measure? The interest of 3 per cent, as an honourable member said a few moments ago, might cost us a sum of about 30 million dollars during five years and 10 million dollars during the fifty addi-
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tional years. This represents $3 per capita during five years and 75 cents later on. But this calculation serves only as a basis of my argument, taking for granted that we are going to make up the difference ourselves.
Before I resume my seat, Mr. Chairman, may I make a suggestion which might soothe the conscience of many and also throw a ray of hope and gladden the hearts. If it should be possible for the government to obtain that money from the banking or credit institutions at the rate of interest provided for in the . agreement, I think it would be a splendid arrangement and that such an operation would be welcome by all. I would not think, Mr. Chairman, of opposing the views of people more experienced than I am, who do not share my opinion. The fact is that every one of us is free to express his own point of view. It is impossible for me to discuss every aspect of this question but I have endeavoured to indicate briefly a few points.
After the recent war we must all help in the economic restoration not only of Canada but of the whole world. Canada has waged war in all parts of the world and must trade with all parts of the world. We have invested tremendous amounts of money in war, I am now prepared to support the investment of a much smaller amount to ensure our country's continued freedom and happiness and to safeguard its opportunities and future prosperity.
(Text):	f
Sections 1, 2 and 3 inclusive agreed to on division.
On section 4-Continuation of interest-free provision of act of 1942.


The CHAIRMAN:: Shall section 4 carry?


Jean-François Pouliot: No. I want an answer to my questions. The minister answered only one of them. Besides that, I want the story of our transactions with Great Britain. I want to know what has been given foy Canada to Great Britain and what has been given in return by Great Britain to Canada, during the war.
If it is a question of business, then let us have the information. The minister has said that he took some notes while I was speaking.
I thank him for that. He has those notes, but he has answered partly only one of my questions, when I had asked many of them. They were serious questions. The leader of the C.C.F. party has acknowledged them, although he does not share my views. We are not going to railroad this piece of legislation through to-night; and if 'there is only one 
member who will oppose it, I will. And I am not going to receive any lecture from anyone.
I listened to the hon. members who spoke to-day, and noted that they adopted a much better tone than some who spoke the other day. We are in a democracy, and yet all we hear is "carried," "carried," "carried". It is scandalous to think that an amount like this is passing, without any questions being answered by the Minister of Finance. As a member of parliament I have a right to expect answers from the minister-and complete answers.
The whole story he has told us is a story of lamentations. The parliament of Canada has become the wailing wall of the Department of Finance. Isaiah, Jeremiah-all the prophets, major and minor, were not so eloquent as the Minister of Finance. This afternoon I compared him with Joe Chamberlain, but to-night I compare him with Jeremiah and all those other major and minor prophets. I was surprised that tears were not flowing from his eyes. I thought he was dreaming, because he told us something that he could have said only in a dream-"I am not an imperialist". If the minister had been awake he would never have said anything like that. If he is not an imperialist, then the word "imperialist" does not exist.
I have been against Arthur Meighen from the beginning of my political career-since I was a little boy,, ftnd when the hon. member for Bellechasse was still at college. I was going with Ernest Lapointe and with all the other Liberals, denouncing the Tory party and denouncing the union government because they were imperialists. It was the success of the Liberal party. The Liberal party has pitted itself against Toryism, not only in the province of Quebec but in other provinces. Quebec was the pioneer and banner province of Canada. It was because the Liberal party was preaching the same doctrine east and west; it was because the Liberal party was denouncing imperialism that Mackenzie King came back to power in 1921 after defeating the Union government. That was due to the preaching of that same doctrine of liberalism and liberty, the same doctrine of patriotism that had been preached, by the Liberal party from coast to coast. The answer of the Canadian people was, "We believe in you; we are fed up with those who have two doctrines, who have one doctrine for the imperialists of the province of Ontario and another doctrine for the people who have followed another line of thought, in the province of Quebec; we are fed up with

Loan to United Kingdom	___
the duplicity, we want earnestness, we want sincerity and we want patriotism-we will try the Liberal party."
The Liberal party was elected on that very ground and on that particular policy. No one else would have thought that we would have such a policy as this enunciated by the Liberal party. If I denounce it to-day I do not denounce it as a French Canadian, I do not denounce it as a man who has been elected by a constituency in the province of Quebec. I denounce it as an old time Liberal; I denounce it as a supporter of Sir Wilfrid Laurier; I denounce it as a supporter and very close friend of the late Ernest Lapointe. Hon. members who were here when Mr. Lapointe was in this house will remember that.
Do you think a man who had made the campaigns I have made when the Liberal party was suffering defeat could stand for treatment like that? Some members may find it extraordinary that I speak with a little animation, but I am being careful about the words that I use at the present time. It is inconceivable. I ask the leader of the opposition, who was siding with the Liberal party at the time, if what I have said is not true. I will ask the Minister of Finance, who was not in politics at the time. The Minister of Veterans Affairs was probably not in Canada at that time in 1917. He was in the army; he has a fine record and I congratulate him upon it. Then there is the Minister of Agriculture who was in politics at the time. He must remember that. Then there is my old friend, the hon. member for RichelieuWercheres (Mr. Cardin) who was insulted the other day by a new member to this house.
Mr. BEAUDOIN; I do not think the hon. member who is speaking has a right to say that I insulted the hon. member for Richelieu-Vercheres just because I said to him a few things which I think he deserved to be told under the circumstances. I ask the hon. member to withdraw what he has said.


Jean-François Pouliot: If the hon. member for
Richelieu-Vercheres had not made the speeches that he made throughout the province the Liberal party would not have been strong enough to elect the hon. member for Vaud-reuil-Soulanges.


Mr. CARDIN:: He would not be here.


Jean-François Pouliot: He would never have been here. The Liberal party would have fallen to pieces before.


Mr. GARIEPY:: What section are we on now?
Mr. DORION; Liberal section.


William Ross Macdonald: We are on section 4.


Jean-François Pouliot: When I spoke at three
o'clock-


William Ross Macdonald: I believe the hon. member for Three Rivers has raised a good point of order. I would refer the hon. member to standing order 58 which provides:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
I would ask all hon. members to observe that rule.


Jean-François Pouliot: I agree perfectly with you. Is it section 4 or section 5?


William Ross Macdonald: Section 4.


Jean-François Pouliot: This reminds me of the man who had never been on a train before, who was making his first trip. He was surprised when the train stopped at a station because he thought the train had enough speed to go two stations further along. What is section 4? It reads:
Notwithstanding the provisions of section four of the War Appropriation (United Kingdom Financing) Act, 1942, no interest shall be payable in respect of any period prior to the first day of January, nineteen hundred and fifty-one. under any obligation of the government of the United Kingdom delivered to the government of Canada under that section.
When did this United Kingdom financing start? The minister told us the story on March 18, 1942, when he asked us to look at the record of the past. At that time he said:
Vrhen we are proposing to open a new chapter in our financial relations (with Great Britain and United States), the record regarding the past should be made quite clear.
That is the statement which was made by the Minister of Finance on March 18, 1942, when the house was considering for the first time the billion dollar gift-United Kingdom financing. The minister continued:
To the United Kingdom alone our shipments increased from $331 million in 1939 to $532 million in 1940 and $702 million in 1941. To the rest of the British empire, including Egypt, our shipments rose from $104 million in 1939 to $157 million in 1940 and $300 million in 1941. But notwithstanding some increase in our imports, the empire as a whole had an aggregate merchandise deficit with Canada of $445 million in 1940 and $723 million in 1941.
He did not mention the amount of our imports. I worked it out myself in pencil and I sent him the result of my work in order to verify my calculation.
Progress reported.
At eleven o'clock, the house adjourned, without question put, pursuant to standing order.
The Earl of Athlone

Wednesday, April 17, 1946.