1948-01-30

[Stage Direction]
(Right Hon. W. L. MACKENZIE KING (Prime Minister): Mr. Speaker, hon. members will, I am sure, have heard with deep regret the news of the assassination of Mr. Gandhi.
By all who believe in the democratic way of life, assassination has always been regarded as a most reprehensible crime. It is even more to be deplored when, at a troubled time in the world, it ends with violence a life which above all else has emphasized the avoidance of violence.
Upon receiving word of Mahatma Gandhi's assassination this morning I immediately sent the following message to our high commissioner for India to be transmitted to the Prime Minister of India, Mr. Nehru:
I desire to express to you, and through you to the government and people of India, the profound regret with which the news of the tragic death of Mahatma Gandhi has been received in Canada. It is particularly shocking that a life so selflessly devoted to the avoidance of violence should have been brought to its close by an act of violence. It is to be hoped that the principle of non-violence for which Gandhi stood will gain renewed strength as a result of his assassination.
May I add, Mr. Prime Minister, the expression of my profound sympathy with yourself and with the people of India at this time.
W. L. Mackenzie King
Prime Minister of Canada.
Mr. ANGUS MacINNIS (Vancouver East):: I think this house should approve the message the Prime Minister has sent to the Prime Minister of India. The thought that occurred to me when I heard the news this morning was the very one that the Prime Minister *expressed. It is really one of the ironies of life that a man who was the chief apostle of non-violence should have met a violent end. We have heard of the passing of one of the world's great men, and I think the house should commend the Prime Minister for his message to the Indian people.


Mr. JOHN BRACKEN (Leader of the Opposition):: Mr. Speaker, I am sure all hon. members will approve the Prime Minister's action in sending the message he has sent to 5849-46
our high commissioner with respect to the assassination of Gandhi. I am sure we were all shocked to hear of what had taken place in another part of the commonwealth. The action taken by the Prime Minister is entirely to be commended. We are pleased to associate ourselves with him in the message he has sent.
Mr. SOLON E. LOW (Peace River): I should just like to say we commend the Prime Minister for sending the message that he has just read. He has expressed our sentiments exactly, and our sympathies go out to the people of India who have suffered what is I think an irreparable loss.



CIVIL SERVICE


Mr. STANLEY KNOWLES (Winnipeg North Centre):: Mr. Speaker, may I direct a question either to the Minister of Finance or to the Minister of Public Works, notice of which I sent to both ministers? In view of the low rates of pay to women cleaners employed in federal public buildings and the fact that no increases were provided for them in the recent announcements of civil service salary increases, will either minister state whether consideration is being given to the matter with a view to action at an early day?


Hon. ALPHONSE FOURNIER (Minister of Public Works):: The government has under constant review the salaries of civil servants, and that applies also to women cleaners. Not long ago women cleaners did receive an increase in salary, although it was prior to the general increases given to other classes of civil servants. Not long ago also the local members from both Ottawa ridings made representations, and these representations, as those of other members, are taken into consideration.


Stanley Howard Knowles: The cost of living is still going up.



FOREIGN EXCHANGE CONTROL


[Stage Direction]
On the orders of the day:
Mr. J. M. MACDONNELL (Muskoka-Ontario):: I wish to address a question to the Minister of Finance, of which I have had no opportunity to give notice. The daily press
Inquiries of the Ministry

carries a report that Albert Edward De Palma has forfeited bail totalling some $50,000 in the United States courts, which I presume was paid in United States funds. Can the minister tell us whether this money was obtained through the foreign exchange control board?


Hon. DOUGLAS ABBOTT (Minister of Finance):: I shall have to look into the matter and give an answer later.



JAPANESE NATIONALS


[Stage Direction]
On the orders of the day:
Mr. W. R. THATCHER (Moose Jaw):: I wish to address a question to the Minister of Justice. Has the attention of the minister been directed to the recent order of a British Columbia government official which forbids further employment of Canadians of Japanese origin, on crown timber leases? If so, what action does the federal government intend to take to counteract such discrimination, and protect the rights of Canadian citzens?


Right Hon. J. L. ILSLEY (Minister of Justice):: My attention has not been drawn to the recent order to which the hon. gentleman refers; that is, it has not been officially drawn. I saw some reference to the matter in the newspapers. With regard to action contemplated by the federal government, anything of the kind is of course usually subject to the answer that matters of policy will be announced in due course; but in this case, if I understand the matter correctly, it would not appear that any action is open to the federal government.


Angus MacInnis: May I ask a supplementary question? This action by the government of British Columbia has put 800 workers out of employment. There are other restrictions on persons of Japanese origin. Would not this be a reason for removing these restrictions at once so as to enable these people to take their rightful place in the life of the community?


James Lorimer Ilsley: The hon. gentleman is making a suggestion as to action that the government might take in a somewhat different connection. All I can say is that I will bring his representations to the attention of my colleagues, if they have not already heard them.
I can only add, with regard to these matters, that if questions are being asked as to what the federal government will do, the policy of the government will be announced in due course.


Mr. CRUICKSHANK:: May I suggest, Mr. Speaker, that the new Premier of the province of British Columbia, whom we have the honour to have today in the gallery, is one in whom we have every confidence, and he will look after British Columbia.


Stanley Howard Knowles: Is he a Liberal or a Tory? Mr. GRAYDON: As long as he isn't C.C.F.



PETROLEUM PRODUCTS

[Stage Direction]
STATEMENT WITH RESPECT TO FUEL OIL SUPPLIES On the orders of the day:
Right Hon. C. D. HOWE (Minister of Trade and Commerce):: At the last sitting the hon. member for Winnipeg North Centre (Mr. Knowles) asked a question about the fuel oil situation and I gave a short reply which I feel should be amplified at this time.
I should like to make a statement in connection with the difficult situation that was raised in the house yesterday which has been created by the inability of a local company to assure continued delivery of fuel oil to its customers. The over-all situation is that we have at the moment, I am glad to say, sufficient fuel oil stocks on hand which, along with a reduced level of imports from the United States, should assure an over-all adequate supply of fuel oil for the remainder of the winter heating season. The position in respect to some individual companies, however, may not be as favourable. Increasing scarcity of fuel oil was foreseen some time ago, and on May 9, 1947,1 made a statement in the house warning against installation of oil burning equipment. Specifically I said:
I am bringing the matter to the attention of the house in order that the Canadian public may be warned of the situation that obtains. In our view any householder who is proposing to install an oil burner or an oil-burning space heater in his home should first make sure that he has a firm contract for the supply of fuel oil directly with the manufacturer or importer of fuel oil, or a contract that otherwise clearly ensures a supply of fuel oil from the suppliers.
None of the suppliers that heeded this warning and made no new or further commitments without assuring themselves of adequate oil supplies for their customers are or will be in difficulties. The Ottawa company in question, however, increased its fuel oil business from 400,000 gallons in the 1944-45 heating season, to 840,000 in 1945-46, to 1,758,000 in 1946-47. Of its 1946-47 purchases, 242,000 gallons were from other than its regular supplier, and it could consequently only be assured of 1,516,385 gallons for the 1947-48 season. This has now all been delivered, and I understand that the companys' requirements for its customers for the remainder of the

Inquiries of the Ministry
season is of the order of 600,000 gallons more. It has been possible to make a temporary arrangement to provide a more highly refined grade of fuel oil at a higher price in February. I must emphasize, however, the fact that in view of the serious and timely warning which was given by the government, and which has been heeded by the great majority of the industry, the present position of this company and of any others that may find themselves in a similar position is entirely their own responsibility.
I should like to take this opportunity to reiterate my warning of May 9, 1947, since the supply situation for the coming year promises to be equally stringent, and also to emphasize the need for the most vigorous measures by all consumers.



HONG KONG


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: On the orders of the day yesterday the Leader of the Opposition asked whether the Prime Minister would now table the Drew correspondence which the government had been asked to table on July 14, 1942.
The correspondence referred to was a letter from Mr. George A. Drew dated July 11, 1942 regarding the report of the Hong Kong inquiry.
Although I had said on July 14, 1942 I would table the letter the next day if the leader of the C.C.F. would, on his responsibility as a member of the house, ask to have it tabled, I subsequently felt, as I indicated on July 15. 1942, that, having regard to the nature of the Hong Kong inquiry, I should obtain legal opinion as to whether it would be proper for me to comply with the request. An opinion that it would not be proper was given by Mr. George A. Campbell, K.C., counsel for the government in the Hong Kong inquiry. The opinion was set out in Hansard for July 15, 1942 at page 4254.
The government will now have, among other things, to consider with the government of the United1 Kingdom, whether the reasons given in that opinion for declining to table the letter continue to be valid.


Mr. COCKERAM:: Would the Prime Minister be prepared to table the evidence taken in the inquiry in order that the people of the country may know whether Chief Justice Duff or Colonel Drew was right at that time?


John Bracken: May I ask the Prime Minister a question arising out of the statement he has just made? My question yesterday was prompted: by a release from the war office in London with respect to the Hong Kong incident. That release having been made, our view was that the Prime Minister might not feel it necessary to withhold any longer the tabling of the letter. Do I gather from his statement that he feels he is not released from any obligation to withhold the letter longer?


William Lyon Mackenzie King: The legal
opinion given contained a reference to some views the United Kingdom government might have on the matter. I have felt I ought to communicate with the government of the United' Kingdom and receive their reply before deciding what it would be advisable to do.


John Bracken: I take it, Mr. Speaker, that the Prime Minister, when he receives a reply, will advise us of the nature of it?


William Lyon Mackenzie King: I shall be glad to do that.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. J. A. GLEN (Minister of Mines and Resources):: Yesterday the hon. member for Temiscouata (Mr. Pouliot) asked the following question:
Will the Secretary of State be kind enough to inform the house of the answer that has been given to the ultimatum of the Indian government of Loretteville, Quebec, to the palefaces at Ottawa?
This is an extract from the Montreal Gazette of January 29 dealing with this ultimatum which was sent to Ottawa by Jules Sioui, who is secretary-treasurer of an organization called' the Government of the North American Indian Nation, with headquarters at Loretteville, Quebec. This gentleman had submitted a letter to one of my colleagues, the Minister of Justice (Mr. Usley), setting forth the views of this contemplated national Indian government. This letter was referred to the special joint committee of the Senate and the House of Commons which was dealing with Indian affairs, and was directed' to a subcommittee of that committee. The subcommittee ruled1 that Sioui should be given an opportunity of appearing before the committee when the delegation of the Quebec Indians was to be heard. On May 29, 1947, the committee wrote inviting him to attend
5849-46J
Inquiries oj the Ministry

for hearing, either on June 12 or June 13, when Indians from Quebec would be heard1. In a letter to the committee dated May 31, Sioui refused to accept the invitation on the ground that the national Indian government did not accept the committee as being a legal body.



FOREIGN EXCHANGE CONSERVATION


[Stage Direction]
On the orders of the day:
John Bracken: Two days ago I asked the Secretary of State for External Affairs whether the United States had made any official representation to Canada with respect to the part this nation should play in the European recovery plan known as the 'Marshall plan. He undertook to give it consideration and to answer later. Has he any answer to give now?
Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): I can answer at once that there have been no official representations from the United States government to the Canadian government in that regard. I would not say that there have not been discussions of what we have already done and of what some United States newspapers have held up as an example of the way Canada acts without fanfare in such matters, as an indication that if the United States wished to do likewise, having regard to proportion of population or proportion of national revenue, it would involve sums substantially larger than those which are now being considered. There have been conversations between members of our embassy in Washington and members of the state department, and the matter of what the United States government will do is now being considered by congress. But there have been no official representations. The conversations have been as to a subject matter that was of interest to all those who wished to see the economies of the devastated nations restored as rapidly as possible so that normal world trade may have some prospect of being carried on in accordance with the new arrangements worked out in this long Geneva trade conference.


John Bracken: May we take it that the United States has made no definite and specific representations as to Canada's part, in association with the United States or otherwise, with respect to this plan?
Mr. ST. LAURENT: Up to the present time no definite and specific representations have been made by the United States govern-

ment, and no official inquiry has been made as to what Canada might wish to consider with respect to this plan.



BUSINESS OF THE HOUSE


William Lyon Mackenzie King: Mr. Speaker, I should like to call the attention of my hon. friend the leader of the opposition to the discussion we had in this house on Monday with respect to the setting up of a special committee on prices. My hon. friend will recall that he urged emphatically that as little delay as possible should take place in the setting up of that committee. I replied to my hon. friend that I thought perhaps two weeks would be time enough, or I would make it one week. If I recollect aright, my hon. friend said he thought one week was too long a time. It was understood, however, that I would introduce a motion on Monday of next week to have the house establish this committee. I {minted out to my hon. friend at the time that the difficulty was not with regard to the matter of preparing this motion and in getting the names of government members on the committee. It was likely to be with parties opposite not giving the names which were required for the committee. Allow me just to read what was said at that time. It appears at page 542 of Hansard. I said:
That being so, may I say to my hon. friend that I can see no reason why that committee might not be appointed within a fortnight. If in his opinion that ds too long a time, I will make it a week.
Mr. Bracken:	That is too long.
Mr. Mackenzie King: The difficulty in part is getting the names of the members for the different committees. That may sound strange to hon. members, but I know that from this seat, week after week, in the past I have asked-
I was referring to asking the chief whip.
-at different times when we were going to get the names of members of the different committees and I was told that some names were in but others were not, and so on, from day to day.
This afternoon I am ready to give the Clerk of the House the motion which I should like to move on Monday. I am also prepared to give him the names of the members on this side of the house who are to be on the committee and also the name handed in by the Social Credit party. But I have yet to receive, or at least the whip tells me he has yet to receive, the names of members of the Progessive Conservative party, and also those of the C.C.F. If the debate is to go on on Monday, I must place that motion on the order paper today. I should like to have hon. gentlemen opposite give to

Business oj the House
the whip the names of their members for the committee today, in order to permit the notice of motion appearing in today's Votes and Proceedings and the motion on the order paper on Monday, so that we can proceed on Monday. As hon. members know, a certain time limit is required after notice appears in the Votes and Proceedings before a motion appears on the order paper. I would have to delay longer in proceeding if the notice does not appear in today's Votes and Proceedings.
I have heard it said that hon. members want a little more time to consider whom they should put on the committee. It is not for me to assist them by telling them how to carry out what they should do, but I would draw their attention to this fact, if they are in doubt about any particular name or names at the moment. It has been the custom to permit one name to be substituted for another even after a committee has been set up, if there were good reasons for so doing. I am anxious to proceed on Monday. The government is desirous of getting this committee on prices started just as soon as possible. I am ready now, and I will give the notice to the Clerk. But I wish it to be understood that we are not prepared to proceed with the motion on Monday, nor will I request that it be published in the Votes and Proceedings of today, until the names of the committee are made a part of the motion.


John Bracken: I am sure the house is pleased
to learn that the Prime Minister is prepared to proceed with the appointment of this committee on Monday. I suggest in all deference that while he will have the names from this section of the house this afternoon, any failure to supply them should not preclude the possibility of going on with that debate. It is a question of setting up a committee- the personnel of the committee is something entirely different. However, he will have no excuse for delay through failure of this party to supply the names of four members before it is necessary to present the motion.


Angus MacInnis: As far as the standing committees are concerned this group has had all the names in since the house was in session in December. As to the committee which has been proposed to look into the cost of living, we are doubtful as to the purposes of the committee, and we would like to see the terms of reference before deciding whether or not we should have members on it. If the Prime Minister will put the motion on the order paper, stating the terms of reference, which can be done without the
names of the members which will constitute the committee, we can decide whether or not we should act on such a committee. We are not going to act on a committee whose main purpose is to delay doing anything about the high cost of living.


William Lyon Mackenzie King: In this matter we intend to follow the rules of the house.
I have indicated that the government is prepared to proceed with notice of this motion as soon as it receives the names of those who-are to be members of the committee. If after my hon. friend sees the terms of reference he wishes to withdraw the names of the-members of his group he is perfectly at liberty to do so. As far as the government is concerned, however, we shall expect that the different parties in the house will supply the names before the resolution itself appears on the order paper. We wish to proceed with as little in the way of delay as possible.



FRIDAY EVENING SITTINGS-RULES AND PROCEDURE

William Lyon Mackenzie King: I have been asked by many hon. members whether the house is to sit this evening. Hon. gentlemen will recall that at the opening of a new session- it has been customary not to sit on the Friday evening of the first week of the session. When this session opened last December, however, because of the short period of time before the Christmas recess, we did not follow that custom but sat on the Friday evening. At the time I think I indicated, or at least it was in my mind to do so, that we might perhaps consider not sitting the first Friday evening after the house reconvened. I would say therefore, it is the intention of the government that the house should not sit this evening.
But may I add one word? The program of legislation before us, to say nothing of the work of committees and the like, is very extensive; I believe it will be to the advantage of every hon. member in the long run if from now on we- can make progress with the work as rapidly as possible. I would hope that we might justify our action in taking this evening off by concluding the debate, on the motion which will be considered this afternoon, and having a vote before six o'clock.


Mr. GORDON GRAYDON (Peel):: Since the Prime Minister has referred to the times of sitting of this house may I ask if he will again consider the suggestion I made at the beginning of this week, at least to bring before
Foreign Exchange Conservation

the house some suggestion whereby a small committee can get together informally and try out some of the experiments that have been suggested, for instance with respect to the time of sitting of this house, and some of the other matters that have been brought forward by other hon. members as well as His Honour the Speaker. The Prime Minister speaks of having the work of the house expedited. I do not know of anything that will expedite it more than trying to bring up to date some of the antiquated rules under which we are operating at the present time.


William Lyon Mackenzie King: I may tell my hon. friend that I shall be very pleased to give consideration to his suggestion for another committee; indeed I have already been doing so, but in my response to his suggestion I shall be governed by the possibility of making sure I am going to get the names of the members of the committee without undue delay.


Gordon Graydon: Not only can the Prime Minister have the names of the committee; we can have a committee meeting this afternoon if the Prime Minister says so.



FOREIGN EXCHANGE CONSERVATION


[Stage Direction]
The house resumed from Tuesday, January 27, consideration of the motion of Mr. Abbott for the second reading of Bill No. 3, respecting emergency measures for the conservation of Canadian foreign exchange resources.
Alan Cockeram: Mr. Speaker, on April 23, 1947, at page 2395 of Hansard, I asked the Minister of Finance (Mr. Abbott) this question:
In view of the fact that Dominion of Canada bonds are selling in New York at a discount of approximately 114 per cent, and unlisted stocks at a discount of 15 per cent, will the Minister of Finance inform the house what steps the government propose to take to cope with the increasingly adverse and critical exchange position as between Canada and the United States of America ?
The irresponsible and immature reply I received from the minister was in these words:
I do not think that is a question to he asked on the orders of the day, but appropriate 'action is being taken. I suggest that my hon. friend's friends sell their bonds in Canada.
Those same bonds are selling today at a 14 per cent discount.


Mr. SPEAKER:: Order. I am sorry to interrupt the hon. gentleman, but I must ask hon. members not to talk so loudly. There is so

much noise it is almost impossible for the Speaker to hear the hon. member who has the floor.


George Alexander Cruickshank: We are not missing anything.	.


Alan Cockeram: That was the attitude of the Minister of Finance as long ago as April 23 of last year. On May 13, speaking on the same subject, I had this to say at page 3098 of Hansard regarding the foreign exchange control report the minister had brought down in the house prior to the introduction of the budget:
If the minister had told us the whole truth, and explained the situation as it actually is, he would have said that we have about a year to go, as events have been developing up to date. *Our expenditures are higher in the United States by many millions and our receipts are very much lower.
The minister took no action at that time, and it was not until November 17 that he considered the situation serious enough to require that the people be told the facts. In view of all this the minister and the government cannot escape responsibility for having allowed the situation to become as bad as it now is. The essentials of our adverse exchange position with the United States have been known for a long time. It was pointed out publicly that we were facing trouble, in such documents as the report of the foreign exchange control board as well as in evidence before the senate banking and commerce committee. I should like to read from page 5 of the proceedings of that committee, under date of August 20-21, where Mr. Towers said:
Moreover, I think it is the case that in the years between the two world wars we usually had gold and U.S. dollar resources which were, inadequate for Canada. I think that the 400 million dollars with which we entered the war could have been criticized 'as a dangerously low position. We did get by, but it was due to circumstances which we had no right to anticipate before the war. Having in mind the higher price level today as compared with pre-war values, we must expect that even with the same volume of deficits in our trade with the U.S. dollars, the size of the deficit will be larger; in other words, 400 million dollars before the war would be represented by 600 million now.
And later on, at page 21, under questioning by the hon. Mr. Campbell, Mr. Towers said:
As I have already said, it is very dangerous to make predictions, but a loss of $600,000,000 in that respect over the next two years is by no means impossible.
That $600 million went by the board within a very few months. If action had been taken a year ago, before we had allowed our United States dollar reserves to fall so sharply, remedial action such as the minister

Foreign Exchange Conservation
announced on November 17 need not have been necessary, and certainly he would not have had to take such drastic steps.
As I pointed out in my speech on May 13, the minister was gambling on something turning up. What was one of those things on which he was gambling? He was gambling on the possible long-term effects of the Geneva treaties. Now he is gambling on the effects of the Marshall plan, which has not yet passed the United States congress.
In order to rectify the situation the minister brought down prohibitions respecting the entry of many types of goods from the British isles, goods which Canadians want to buy and which the British people wish to sell to us. The answer given by the Minister of Finance is that we must maintain a policy of nondiscrimination. The government appears to be following academic advice as to the merits of Canada adhering to high moral principles of trade, under circumstances where the international agreements which we have signed clearly recognize that such action cannot be expected, despite the fact that clauses are there to allow us to get out. I consider we are going beyond the terms of our international agreement to the disadvantage of this country and of the people of Great Britain. I believe it was only a few days before Christmas the minister stated that the value of the items affected from the British isles was only $15,000,000 or $20,000,000.


Douglas Charles Abbott: Less than that; $15,000,000 from all other countries.


Alan Cockeram: At the same time I should like to point out that today the British people have gone ahead and expanded their production to the point where they could sell us many times what they did in the years the minister had under review. It seems to me if we are to sell our goods to the British people, as we are and have been doing-and in many instances we have been giving them away-then we must allow the British people to export to this country the maximum of goods they are able to supply. That is the only way the people of Britain can get on their feet, and perhaps the only way in the long run in which Canadian- farmers and manufacturers can be paid for the goods they produce. So far we have been paying the manufacturers and farmers with money raised from the Canadian taxpayers.
Another extraordinary measure the minister announced on November 17 was with reference to excise taxes. He instituted taxes on goods produced in Canada for Canadians, his reason being that he wanted to discourage purchase of those items. The minister
doubted that the cost increases produced by devaluation of the dollar would discourage purchasing, in the present inflationary mood of the buying public, and with demand exceeding supply. Why then does he expect the excise taxes to do so? The minister criticized devaluation because it would place a burden of additional cost on importers of luxuries and necessities alike. The excise taxes apply to many items of undoubted essentiality, such as refrigerators, stoves and electrical appliances which are used around the house. Why are those excise taxes good taxes, in the mind of the minister? That is what I should like to know.
In December last, during the discussion on devaluation, I asked the minister what effect devaluation would have had on the import of capital into this country. In one of those smart replies which he so often gives, the minister stated, "I do not mind if it is coming in for bricks and mortar." Over a period of many years United States capital has come into this country, and what the minister has termed as bricks and mortar has been very great. I notice that United States capital invested in Canada in 1926 amounted to $3,196 million; in 1930 it was 84,659 million; in 1933, $4,491 million, and in 1939 there was a decrease to $4,190 million. Those were days when our money was at a discount and there were no government controls or foreign exchange control boards to interfere with the process of ordinary trade and commerce. When the minister indicates that that kind of money is not of much use to him, then I suggest there is something wrong. I say this because from 1936 to 1939 there was an increase of United States investment in this country amounting to $1,800 million. It is surprising to see the effect of devaluation on American securities and investment in this country. If we look at the figures for 1946 we find that in the month of January there was an excess of $24,700,000 in Canada's favour, while in February the figure was $39,200,000; March $23,100,000; April $17,100,000; May $13,200,000; and June $24,200,000.
Devaluation became effective in July 1946. United States investments in this country immediately dropped in that month to $9,600,000, and in December 1946 there was a debit of $1,000,000 more than the amount of American securities coming in. So we went on to 1947 and reached a point in March where there was a flow of money from investment in Canada to the United States of $8,000,000. I give these figures to show that when our money was at a discount the Americans were perfectly willing to invest in Canada. The last figures I have show that in November

Foreign Exchange Conservation
1947 there was a loss of United States investment in this country of 81,400,000. When you see these figures you wonder whether the policy of the government is to keep out the United States investor who already has a total of $5,000 million'invested in this country. Is that what we want, or do we want United States citizens to continue to invest here?
It seems to me that the foreign exchange control board has powers which should never have been given to it. In this connection I should like to mention two incidents. I had a young niece from England who was staying with me for about a year. She went back to England last September. As she was a young girl travelling alone I decided to go to Montreal with her to see that she was settled properly on the boat. I approached the Canadian Pacific Steamship Company for a permit to go on board to see her on her way, but I was advised that I would have to get it from the. government at Ottawa. I thought the proper minister to apply to would be the Minister of Transport, whom I have always found most co-operative and easy to get along with. I wired him and described the situation, stating that I wanted to see this young girl off. He replied that unfortunately he could not grant the permit because it was a matter for the foreign exchange control board; he had been in touch with the officials of that board and they had refused to grant the permit. I think it is extraordinary that the Minister of Transport could not grant a permit in connection with transport matters. Surely the foreign exchange control board should not be able to overrule a minister of the crown.


An hon. MEMBER:: They can.


Alan Cockeram: Someone says, " They can." That is the trouble. Let me relate the other incident I had in mind. Only the other day certain royalties were paid in connection with a mining transaction which had produced United States funds. These were to be paid to a person living in the United States, and a marked cheque was handed to the bank to be deposited to the account of a United States citizen. Up to this time the bank has not been allowed to deposit that cheque to the credit of the United States citizen, notwithstanding the fact that it is his money and not the money of the Dominion of Canada.
I give these examples to show what the foreign exchange control board think they can do, in spite of what was said before the senate banking and commerce committee. The proceedings of that committee show that the governor of the Bank of Canada stated that none of these powers were sought and would

certainly never be used. Yet here we are giving them greater powers than those given to any department of government.
There is also wide ground for criticism at the administrative level. Civil service officials, working with the same secrecy that surrounds the preparation of a budget, prepared a series of controls without the benefit of consultation with business men or tariff experts of the government. Of necessity they made many mistakes. One has only to read the newspapers or listen to radio broadcasts to find out how every day some change is being made in these regulations. Items were placed under control when such had not been intended, and other items were inexplicably omitted.
I think possibly every hon. member who has spoken has told of some businessman who has come down to Ottawa to try to find out whom he should see, where he should go and how he should go about solving this problem. I am told by ninety per cent of those whom I know who have been down here that they cannot get anyone in any department to tell them what these regulations are all about. Those who have been able to find their way through the confusion to responsible officials and have put across their story, those who have been able to hire high priced counsel, have managed to improve their positions. But what of the small businessman who cannot afford high-priced counsel to come down to Ottawa? Can he get a fair deal? I do not think so. In the first place he will not be able to get near any official, and in the second place if he did he would not get anywhere anyway.
In the capital goods group of controls which come under the Minister of Trade and Commerce there are no rules at all. So far as I can make out it is just a free-for-all. For over two months industry has been kept in suspense as to what is to be done about its plans for capital expenditures. Industry does not know where it is headed. One day a statement is made by one official, and the next day it is changed. My own opinion is that the administration of this act should not be carried on behind closed doors where the large businessman can come down here with his expensive counsel and receive a satisfactory ruling at the expense of the little man.


Some hon. MEMBERS:: Oh, oh.


Douglas Charles Abbott: All the lawyers applaud.


Alan Cockeram: I know the Minister
of Finance thinks that whatever is said on that side is right, but those of us on this

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side of the house are just as honest as he is and we should not be ridiculed by him.


Douglas Charles Abbott: There was no intention of
ridiculing the hon. member, or of being discourteous. It was just good fun.


Alan Cockeram: If we are to be controlled in this way by government then it should be control without discrimination. That is why I referred to what the big businessman can do to the disadvantage of the small man. I think the minister should tell the people of this country what he proposes to do. Is he going to give everybody a fair break? Is he once and for all going to come out with rules and regulations that can be understood by everybody irrespective of the type of business he is in? These regulations cannot be understood, and it is up to the minister to clarify the situation.
Business in this country is entitled to know where it is headed. We should be told that there is to be a minimum of government interference with business. If there is to be interference, then business should be told now. and not six months hence, what that interference is to be.


Mr. E. D. FULTON (Kamloops):: Mr. Speaker, I had not thought to follow immediately another speaker on this side, because I believed-I am sorry if I was mistaken-that a measure of such importance as this would evoke further discussion than it seems to be receiving from those on the government benches and from other parties in the house. However, feeling as I do that it is a measure of such importance, although I regret that two speakers from the official opposition should be heard from in such quick succession, I have no course but to proceed without further apology.
Without taking to myself the responsibility of speaking for this party, I should like, if I may, to summarize some of the views which have been expressed by different hon. members outlining the reasons why we, the official opposition, cannot support this measure.
In the first place I should like to point out the fact, which we should constantly bear in mind, that the country would not be in the situation in which it finds itself today, it would not have been necessary for the government to introduce this measure or to place an embargo on imports of goods from the United States, to place excise taxes on tremendous numbers of essentials in the Canadian standard of living, were it not for the fact that the Canadian government is wedded to the theory that they can plan our lives, our economy and our finances much better than the House of
Commons or the Canadian people themselves. It is this mistaken theory which has led, as it must lead inevitably, to the assumption of arbitrary power by ministers of the crown. It is as a result of this belief that the government can do better than the people, and can decide better than the House of Commons, carried to such an extent as it is here, that we even get, following from these measures and from this situation, taxation -without representation. We had taxes imposed last November by order in council when parliament was not sitting, in violation of the long-established principle that there shall be no taxation without consultation of parliament.
I submit, Mr. Speaker, that the situation is not improved by the minister or the Prime Minister or the government, when it gets round to it, when it is ready, calling parliament into session and saying, "Now, ratify what we have done."
Not only is this bill and this whole procedure unusual, unconstitutional and undemocratic because it is taxation without representation, but it suffers from the same defects in the arbitrary and dictatorial powers that it gives to one minister, practically the only minister of the government now, the Minister of Reconstruction and Supply and Trade and Commerce (Mr. Howe).


Douglas Charles Abbott: Make a bow to the rest of us.


Edmund Davie Fulton: All the rest of you do not seem -to have any confidence in your own ability, therefore you dispose of all the portfolios of the government to that particular minister.
I am concerned, Mr. Speaker, about the state to which things are coming in this particular respect, and I thought it would be useful to look back through history for some examples of any other action of that type, and perhaps to some of the words of great statesmen in dealing with these situations. I came across the words of the great statesman and orator, Charles James Fox, when he was dealing with a course of action followed by the prime minister of the day, Mr. Pitt, who had taken the liberty of disposing of public moneys without consulting parliament. It is a principle which, as Fox said, hardly needs to be established at this stage, that the raising and the spending of the revenue of the country rests with parliament rather than with the executive, and furthermore that the control, -that, the welfare of the nation rests with parliament and not with the executive. The words he used on that occasion were so
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apposite that I thought I should read them to the house so that we may consider their application to our situation.
It was on December 14, 1796 that this first quotation was made. Fox was referring to the principle behind democratic government, a principle which laid down that it was parliament which controlled the expenditure and the raising of funds and the imposition of taxation. He said:
The grand principle to which I refer, sir, is, that this is a limited and not an absolute monarchy. and that it is the peculiar privilege of the House of Commons, not only to levy taxes and impose burdens upon the people, but to judge of the whole expenses of the state; as well of the mode in which they ought to be applied, as of the manner in which they ought to be raised.
And he went on to say that he found to an increasing measure that one or a few individuals felt themselves much more competent to manage and direct the pecuniary concerns of the British nation than the British House of Commons itself.
Then dealing with the defence which was raised to that criticism that the government, the cabinet, was better qualified to judge of the needs and exigencies of the moment than a large unwieldy body like the House of Commons, he had this to say^the defence consisted of two parts:
In the first place, that parliament was not so good a judge of the amount of the assistance to be granted ... as the right honourable gentleman; and, secondly, that from the discussions to which the publicity of the transaction would lead, considerable mischief might have taken place. With respect to the first, it takes the point at issue for granted, by supposing that an absolute is preferable to a limited monarchy; and that our free constitution would be much better were it transformed into a despotism.
That is the situation which we have here today under this bill; that it is much better that one minister should be given exclusive direction of the Canadian economy than that the House of Commons should be free to express its will in that regard.
Referring to the spending of this money, which is the same principle as the imposition of taxation without consultation, Fox said this to his colleagues in the house:
Did he consult you on the principle of it? He certainly did not. He suffered the last parliament to be dissolved, lie suffered you all to meet your eonstitutents with an assurance that no money wto to be advanced. For this conduct, I say, he ought to be impeached. He has had it in his power to consult you upon this subject long ago, as it was his duty. He has neglected to do so, by which he has manifested a determination to dispose of the money of the people of this country, without consulting their representatives. What reason can be assigned for this? In the name of God, what can be said but

that the minister thinks his judgment better than the judgment of the representatives of the people of Great Britain?
On this point I should like to refer to the words of a Canadian minister dealing with the same situation, the Minister of Reconstruction and Supply, as he then was, the Minister of Trade and Commerce as he now is, during the last session when he was dealing with the bill now before the house. Referring to the arbitrary powers which were given to him and the power to change regulations and to make regulations varying the terms of a statute he said in effect: How much better is it that these things should be entrusted to the live hand of ministerial discretion rather than to the dead hand of the law. It was saying in effect, if not in words, that the minister thinks his judgment better than the judgment of the representatives of the people of Canada; and that is the whole tenor of this course of legislation which we are seeing now. In the words of Fox, you are doing it for the purpose of establishing the principle that ministers are better judges of the manner in which public money is to be applied than the representatives of the people.
I should remind you, Mr. Speaker, and the house that these are the words of a great Liberal statesman of his day. In view of the efforts of the Secretary of State-the "prime minister apparent", if I may call him that; I am sorry he is not here-to impress the people of Winnipeg and of the western provinces that it is liberalism which is his guiding philosophy and the guiding philosophy of the government, I thought these words would be appropriate in connection with the matter now before the house.
Since we see this extraordinary departure from the principles of responsible government, the supremacs' of parliament and no taxation without representation, I suggest it is time that we had a bill of rights. The principle of no taxation without representation should be one of the first clauses in that bill of rights. Then perhaps it would be more difficult for us so lightly to have these powers, privileges and freedoms taken away from us.
The second reason, among others, why we cannot accept this legislation is that, in callous disregard of the situation now confronting the Canadian housewife, the consumer and the Canadian people generally, this measure directly and deliberately raises the cost of living. We have seen how the planning complex of the present government leads to the assumption by them of arbitrary powers; and also in this case it has done much, in fact more than any other single factor, to lay the

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governmental hand on the procedure and machinery by which the cost of living to the Canadian people is raised.
It does this in several ways, all of which can be seen in this bill. First, it sets the stage for speculation; because by this bill the importation of many articles into Canada which were regarded as essentials is now prohibited. This not only creates a shortage of these essential goods, thereby increasing inflation, but makes it possible for those so minded to speculate in such goods of that type as remain in Canada. It is very shallow hypocrisy on the part of the government to seek to attribute the whole cause for the increase in the cost of living to speculation and speculators, when they themselves are the ones who have set the stage for speculation, and made it possible and encouraged it.
I am not one of those who hold that speculation is the main cause of the increase in the cost of living. We are not like the ministers who go round trying to mislead people as to the real reason for the increase in the cost of living, like the Minister of Labour (Mr. Mitchell) who delivered himself of a fine sentiment, saying, "We will deal with speculators and profiteers as they should be dealt with". I would remind you that this government, who speak in that manner, have not yet brought one case before the courts for prosecution of any speculator so-called, although they do the talking. Although they talk in that manner they are the ones who by their policies make speculation possible Not only does the government set the stage for speculation, but by increasing the shortage of goods in Canada it thereby directly increases the inflationary pressure and increases the cost of living.
But there is another method by which this policy increases the cost of living in Canada. When asked why he did not devalue the dollar to 90 cents, the minister said that to do so would raise by 10 per cent the cost of everything we buy from the United States, and he said that for that reason, if for no other, he felt that the step taken in July 1946, when they raised the dollar from 90 cents to 100 cents American, was justified. But the extraordinary feature which is missed by the minister-I do not suppose he has actually missed it but he certainly did not bring it out in his argument-is that in order to preserve parity, which he says saves the country ten cents on the dollar, he has had to increase the cost of living not by 10 per cent but by 25 per cent.


Douglas Charles Abbott: I would be interested if you would develop that and show how you arrive at 25 per cent.


Edmund Davie Fulton: If the minister will restrain his anxiety a moment I will go on to do so. These interruptions are so frequent and so light that they make it hard for anyone to follow the continuity of an argument.


Douglas Charles Abbott: I am very sorry.


Edmund Davie Fulton: The excise taxes which the minister has imposed are, as he himself admitted in his statement of December 19, applicable to many things which cannot be described as luxuries. They are necessities which enter into the standard of living in Canada, and this tax of 25 per cent cannot be said to do other than increase the cost of the article by 25 per cent at the minimum. That is how it increases the cost of living by 25 per cent, because you have to pay 25 per cent more for an article than you did before.


Douglas Charles Abbott: On every item?


Edmund Davie Fulton: There are two aspects to be considered there. First, the actual amount of the tax is multiplied many times because it goes through several hands and is increased at each stage of the process before it is sold. Furthermore, as the minister knows perfectly well, the cost of living index is not a thing that can be broken down into hard and fast divisions. When you have a number of items which might be classed as essentials and the cost of these items is increased, then the general cost of living is increased, because, as the minister said in his statement with respect to price control, you cannot control one thing or affect one cost without affecting another, and that is why the effect of the cost of these articles, many of which are basic ini the cost of living, is reflected in the whole cost of living.
I know the minister would like to sidetrack this-


Douglas Charles Abbott: I expect to discuss it ad nauseam.


Edmund Davie Fulton: The minister says we
revalued the dollar to save 10 per cent and we cannot devalue it because it would raise by 10 per cent the cost of everything we buy; but the maintenance of parity is costing 25 per cent and so the whole argument falls.


Mr. SINCLAIR:: Not the way you develop it.


Edmund Davie Fulton: It shows that the planning complex of the government has increased the cost of living by 25 per cent at least. The effects of devaluation, which the government so stubbornly refuses to contemplate, would be threefold. First, it would free our economy and help us to increase production, and


Douglas Charles Abbott: He would have to use
rose-coloured glasses.


Edmund Davie Fulton: Another reason why the
measure cannot be supported is that it is one of the most hasty and ill-conceived measures that has ever been introduced into the house. We are told that already a multitude of changes in the various schedules have been necessary; and I think that before we pass this bill, or even before we are asked to vote on second reading, we should be told how many and of what sort these changes are. The changes should be published. That very fact reminds one again that this, in effect, is a backward measure. It is a step back to the old days of planning and dictatorship, a step back from free democratic government towards government by decree when the minister can make overnight these changes in the Canadian economy without reference to the Canadian people or to their parliament.
The fourth reason why this measure cannot be supported is that it is unfair to our own people, and more particularly because it dis-

criminates against our best customer, the United Kingdom. I should like to refer briefly to the effect of this discrimination. In December 1947 the British government issued a list of goods which they were ready to supply for export in quantity to Canada in 194S. There were ninety-two separate items on the list which was reported in the newspaper I have in front of me. The minister was asked what would be the effect of the embargoes under this bill on the import of these items, and he said it would not affect them substantially because most of the items on the list were not on the schedules to the bill. If one takes the list and the schedules one finds that of the ninety-two items, thirty-two are in the schedules subject to embargo and eighteen are in the schedules on a quota basis; so that fifty, or well over half, of the ninety-two items are affected by this bill.
Let us consider one of them. One could take an enormous number, but let us just take one of these items which Great Britain is prepared to supply to Canada, namely, household electrical appliances. That is one of the items in which a tremendous trade might be built up, but that is an item which is under schedule I of this bill and is therefore subject to embargo. In that way we are making it exceedingly difficult for the United Kingdom to effect her recovery and to repay us for the credits which we have been extending to her.
There is no need for Canada to take these steps, although the government has sought to justify the imposing of embargoes against the United Kingdom on the ground that we are seeking to follow the non-discrimination policy laid down at Geneva and to observe sound trade practices. I think we should ask ourselves the question whether it is a sound trade practice to place an embargo on the goods of our best customer. I do not think that is a sound trade practice. I do not see that it can have any other effect than to make it impossible for that best customer to continue to be our best customer.
Furthermore, when the nations of the world were carrying on their negotiations at Geneva they realized the fact that non-discrimination could not be applied in the immediate future. In that connection I should like to read an excerpt from the proceedings of the senate standing committee on Canadian trade relations of last December. One of the government experts before that committee, Mr. Deutsch, dealing with that particular point when he was giving evidence before the committee on December 16, said:
The general purpose of this charter is to prevent discrimination. It was recognized, with

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the world as it is today, that for the next three or four years a lot of things may have to be done which are discriminatory, and for that reason the general agreement provides that under certain circumstances you may discriminate. Indeed, for the year 1948 there is a clause in the agreement that says that all the rules in the balance of payments sections having to do with discrimination are not in effect. So, for the immediate future, if we are using_ balance of payment restrictions, we can discriminate.
So the nations of the world at Geneva recognized the necessity for discrimination and absolved the member nations from adhering strictly to the policy of non-discrimination. Therefore it was not necessary to place an embargo on goods from the United Kingdom at the same time as we made embargoes effective on goods from the United States. In view of the fact that the United Kingdom is our best customer for export and can only continue to be so if we import from her, I do not think it was a sound trade policy to impose embargoes against her.


Douglas Charles Abbott: I know my hon. friend does not want to be inaccurate and I will take only a minute. The United Kingdom is one of our best customers; in fact the United States is our best customer and has been for some time.


Mr. GREEN:: For how many years?


Douglas Charles Abbott: I could not answer that question offhand, but for some time.


Edmund Davie Fulton: I think the minister, if he wishes to set the record straight, will realize that the use of the term "best customer" there was in the sense of the customer who takes more from us than she sells to us, which is the case with regard to Great Britain; whereas the United States sells more to us than she takes from us. So in that sense the United Kingdom is certainly our best customer, and I do not think even the minister can deny that. That fact itself should suggest what was the real reason behind this non-discrimination policy, and that suggestion is confirmed by the minister's own statement made last December when he was introducing the bill, which is to be found at page 95 of Hansard. He said:
The United States in particular attaches great importance to the non-discrimination principle.
As suggested by the hon. member for Vancouver South (Mr. Green) a couple of days ago, I think that is the real reason why nondiscrimination was followed in this bill and in the measures in effect. The minister can say with all the heat in the world that it is not so, and he may call it rubbish; that of course is the only defence he has. I think somebody remarked at the time that he should be the best judge of that particular commodity.


Douglas Charles Abbott: Very clever.


Edmund Davie Fulton: If he wants to deny it, I suggest he should deal with the facts of the case and not make categorical statements which are not supported1 by the facts.


Douglas Charles Abbott: The hon. member will hear some answers in a moment.


Edmund Davie Fulton: The fifth reason why we cannot support this measure is that it is full of the most impossible contradictions. The first and greatest contradiction, of course, is between the restrictive aspect of Bill No. 3 and the Geneva trade agreements themselves which are the avowed trade policy' of the government. On the one hand you have the long-range policy, as it is called, of producing more and selling more; and obviously this policy, if it is to be fulfilled, requires that we must buy from those countries to which we wish to sell. We need to purchase from them and we need to expand our own economy. That, as one understands, is the government's purpose under the Geneva trade agreements and under their long-range policy. Under this bill they' restrict both our purchases and our expansion. By discouraging the entry of capital they prevent the expansion of our plants and prevent increasing our production. Again I suggest that devaluation would at least partly cure that particular defect. It would encourage the entry of constructive capital.
Another contradiction, Mr. Speaker, is that while the government say's and repeats that our problem is to get American dollars, it takes direct action to prevent us from getting those dollars. Here again I want to refer to the speech made in Winnipeg by the Secretary of State for External Affairs (Mr. St. Laurent); and I refer to that speech because he was out in the west try'ing to persuade the people there that he, the future leader of the Liberal party, stood for free trade as against protectionism, and for an expanding economy. The whole tenor of his remarks on this particular subject was an attempt to justify the present restrictive measures as being temporary, to meet an emergency, which emergency would disappear as soon as we could obtain more American dollars. But he did not tell us how we were to get those dollars. Nor did he explain why the government, while saying on the one hand that we needed American dollars, on the other hand took action by means of embargoes on the export of agricultural products to prevent us from getting more American dollars than almost any other commodity would bring.


Douglas Charles Abbott: Taking them away from Britain.
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Edmund Davie Fulton: We have an exportable commodity there which would bring us a minimum of three or four hundred million dollars of American exchange each year, and would go further than anything else toward readjusting our unfavourable trade balance. Yet that embargo on the export of cattle and agricultural products to the United States is maintained by the same government that says we need more American dollars. I think this is another typical case of this government sitting on both sides of the fence. On the one hand they say this is not a measure of protection, that their desire is to expand trade and lift restrictions. On the other hand they say, "No, you cannot trade with the United States. You cannot get more American dollars in that way, and we cannot tell you when it is going to be possible to remove the restrictions". That is another example of facing both ways, another example of the crazy position in which this subservience to the idea of planning has landed us. We have one set of planners saying we must have restrictions because we have not enough American dollars, and another set saying we cannot export to the United States the one commodity which would give us the needed American dollars. That is planning gone crazy.
Finally, in our view the bill cannot be supported because of the restrictive, protectionist nature of its provisions. You do not necessarily have to be multilateral to be antiprotectionist, but we do want an expansion of trade, and we recognize that the greater general expansion of trade you have the better it is. But if it cannot expand in all directions at once, let it expand in at least one or two directions. One direction to expand which is open to us is our trade within the commonwealth. That measure prevents us from expanding that trade, and to that extent, plus the fact that it restricts trade with other parts of the world, it is not only protectionist but actually exclusionist. All the justification and all the talking in the world cannot change the fact that under this bill Canadian trade, the Canadian economy and Canadian industry are being hampered and fettered and sacrificed on the altar of the government's subservience to the theory of planning.


Stanley Howard Knowles: Mr. Speaker, in anticipation of the debate on second reading coming to a close some time today, I rise for a few minutes to sum up the reasons for our opposition to this bill. Most of what I have to say has been said already during the course of the debate, but it seems desirable that, as the debate comes to a close, our opposition should be stated clearly, one reason being that we

want it understood that the basis of our opposition is somewhat different from the basis of the opposition of our hon. friends to-the right.
In the first place, we are opposed to this measure because of the government's unwillingness to listen to the appeals of Canadians generally to lift the ban on fresh fruits and vegetables.


Some hon. MEMBERS:: Hear, hear.


Stanley Howard Knowles: We think that action is downright silly, and it is inimical to the health of the Canadian people. For that reason we feel that we must register our protest by voting against second reading of the bill. I call attention again to the many resolutions and letters we have been receiving on this matter. I have in my hand a petition bearing a considerable number of signatures, signed mainly by housewives in stores in various parts of Manitoba, calling for the removal of the ban against fresh fruits and vegetables; and it is generally recognized by people interested in health and nutrition that this ban is indeed a mistake on the part of the government. The second reason for our opposition to this measure is the insistence of the government on applying immediately the principle of non-discrimination. If the purpose of these austerity measures is to conserve United States dollars we could understand the action of the government in restricting the import of certain United States commodities. But we cannot understand their attitude in placing any kind of restriction on the import of commodities from such countries as the United Kingdom.


Some hon. MEMBERS:: Hear, hear.


Stanley Howard Knowles: Our third reason for opposing this measure on second reading is the announced unwillingness of the government to impose price ceilings on goods in Canada of a class or kind subject to restrictions or embargoes when they are imported from the United States. What has already happened because of that policy is well known. It simply puts the Canadian people at the mercy of higher prices which push upward the already too high cost of living. We have asked for that action to be taken; we went so far as to move two amendments on second reading of the bill, seeking to express the opinion of the house that such price ceilings should be imposed. To our regret those amendments were ruled out of order. Still the government had the opportunity to accede to our request, but did not do so. We feel- and on this I do not hear my Tory friends saying, "Hear, hear"-that this is a gross mis-

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take on the part of the government, and that we cannot support the bill because of the failure to reimpose these price ceilings.
The fourth reason we give for opposing this -measure-and surely Liberals ought to understand this-is that we fear the damaging effects upon our economy of a restrictive trade policy. There is talk on the part of those who are advancing this measure of its being only temporary, just to meet the present emergency. I have heard it said that when Adam and Eve walked out of the garden of Eden, Adam turned to Eve and said, "My dear, we are living in a time of emergency." Emergencies have that tendency to last a long time, and we are afraid that these restrictive trade policies which are being proposed, even for a temporary period, will have all the damaging effects of any protectionist policy ever proposed by a Tory government in this country, and that those effects will be with us for a long time. One of the things the government does not seem to realize when it contends that this measure is only temporary is that the world has changed considerably from what it was in the nineteenth century, and indeed from what it was just before the recent war. The possibility of the world market sufficing to keep the economy of a country like Canada or the economy of the world, as a whole, in equilibrium is gone. These policies which are now being dictated to the government by conditions as they see them, will continue to be dictated by the disequilibrium in world trade until we reach the place where we realize that we have to go in for planned international trade, with export and import boards for various countries, and some integration of areas of the world, looking toward the better economy of all our people.
In our view the government is blind in thinking that this is just a temporary measure.
It has not looked sufficiently far into the future. It is the sort of thing that will stay with us; and the result will be that the cost of living in Canada will continue to go up and we shall have all the evils of a protectionist policy. That will result in a lowering of the standard of living of the Canadian people.
Speaking now, not as a socialist, but in terms with which hon. members opposite are familiar, I cannot understand Liberals supporting a measure like this, and not realizing the dangerous results which will follow in the years which lie ahead.
In this connection I have spent some time in the last few days reading Hansard between the years 1930 and 1935. We had in power at that time a government which believed in restrictive trade measures, a government which believed in protection. We had on the opposite side of the house at that time a leader of the
opposition who, according to his speeches, certainly did not believe in restrictive measures. In speech after speech the present - Prime Minister (Mr. Mackenzie King) at great length criticized the Bennett government of that day for its tariff and trade policies. Time and again he pointed out that simply to follow the practices which were then being pursued because of an emergency was not good enough, and that unless the restrictive measures of that day were done away with, they would for years to come seriously damage the Canadian economy.
I would not have time to quote in full from the speeches of the present Prime Minister during those five years, but I have seen, in going through Hansard, that it was the subject of greatest interest to him in those years. It was the subject on which he spoke most frequently and at greatest length, namely the need for freeing Canada's trade policy.
On January 31, 1935, as reported at page 383 of Hansard of that session, the present Prime Minister got down to something succinct, and put upon the record the views of the Liberal party with respect to trade. I quote from his speech of that date:
The Liberal party believes that trade is the basis of industrial and commercial development, and that Canada needs trade.
Now the government is cutting trade off. Further:
It will promote trade with all nations and negotiate trade agreements with any country willing to trade with Canada on a reciprocal basis.
Now we have the present government making trade arrangements in keeping with the wishes of Washington.
The next paragraph reads:
It will abolish the extravagant increases in the tariff made by the present administration which have had the effect of strangling trade, exploiting consumers and robbing our railways of business.
I submit that we now have in the form of excise taxes and embargoes a move in the direction of protection, together with all the evils against which the Liberal party stood on that occasion.
Again:
It will abolish all unwarranted extra taxes on imports, such as the exchange and dumping duties, as imposed by the present administration.
Now we have new excise taxes coming in, to make still more disadvantageous the tariff position of this country. And then comes this very short and interesting sentence from the Prime Minister's speech of 1935:
It will end the making and altering of tariffs by executive action.
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I have no defence for the executive action in which the Bennett government indulged in this sphere, but it looks pretty small when compared with the executive action in the field of tariff and trade policies that has been practised since, and is envisaged by this bill. And then one more quotation from the present Prime Minister in 1935:
It will substitute stability for uncertainty in the administration of customs laws.
I am sure if there ever was a time when business people, commercial interests, consumers and housewives in Canada lived under uncertainties, it is certainly the present time.
So, Mr. Speaker, because we feel that this whole bill is completely out of line with the policy which hon. members opposite are pursuing, and for the four specific reasons I have already indicated, it is our intention to vote against the bill on second reading. We contend that times have changed radically, and that there should not be any fooling around any longer. The time has come for export and import boards and for planning our trade in the light of the facts of today's world.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, I shall speak for only ten or fifteen minutes about the principle of the bill before the house. It is based upon the Geneva pact. Hon. members know that in the debate on second reading we discuss only the principle; but let us not forget that the principle of a bill is contained in every section, and a law court, when construing the principles laid down in a bill, must construe the bill as a whole, with its marginal notations, schedules and headings.
For many years I was one who supported consistently the principle of parliamentary control over government, and cabinet, constitutional and law reform. I am going to vote straight against this bill, because we have never heard a word about these things. What about this Geneva trade pact business? Why did we send representatives there-a whole carload of	them?	What	did	they	do?Well, they just met and hanged preferential trade, like John Brown's body, on the sour apple tree, forgetting all about the dominions and the empire. They met from February 7 to August,	and we were	not	told	one
word about the matter until November 17.
That is the first thing. The second thing I object to is that the private member has been forgotten. I am out to defend him today. We read the other day what was said about the great men who years ago were in the press gallery-Harry Anderson, Cahan, Dafoe, Jack Munro, Bob White, Bill Marchington and all the others. Today there is a much larger

number of them up there, and the public depends upon the press if it is to know what is going on. But for all that some of the columnists write, we might as well meet in secret.
Then, there is the radio, owned and controlled by the government. We heard a great blast from it about the Geneva pact; but we met here from February to July and they forgot all about us. Then they went down to the UNO and to Geneva, where the four big powers met, to Paris, and proceeded to treat the public with contempt, with the garbled reports of the Canadian Broadcasting Corporation from there and grand headlines.
The private member is and always has been the connecting link, in our parliamentary system. He is the connecting link between the government of day and the electors, and when he ceases to function, all parliamentary government is at an end.
What have we in this bill? As I say, at the present time the most important thing is constitutional, parliamentary, cabinet and law reform. What has the government done? It has just gone to sleep since the July sitting. Its members have made Cook's tours of the seven seas. Some went to Australia; some went to New Zealand; some travelled all over the seven seas. From the 17th of July last to the 17th of November nobody knew where they were, what they were doing or anything about them or about the Geneva trade pact or the austerity program.
I am going to vote against the bill because the Geneva pacts upset the whole economy of the country, from confederation right down to today. The minister came back and introduced these measures by order in council. It was all done, as a matter of policy, and not of law, at all. They had one or two legal opinions, but the government of the day just did this all as a matter of policy. The matter should have been referred to the supreme court under the Supreme Court Act, as to foreign exchange powers. They had no power to alter the Foreign Exchange Control Act in view of what parliament passed last year. They knew it, and their brain trust did this as a matter of policy, not of law. I am not here to speak disrespectfully of any official, because the government must take full responsibility. It is not for the opposition to make platforms for the government of the day as long as they are the government, it is their function, not ours.
The government have thrown out a life-line all the time to the left. Since they have been in power they have followed the hon. gentlemen to the left. If they continue to do that

Foreign Exchange Conservation
they are certainly going to hang as well Liberalism on the sour apple tree. They have already done so. They have used the hon. gentlemen to the left who were wrong before the two wars and between them. They said we could depend economically on Washington, we could depend militarily on Washington, not on London for our defence, and economically and socially on Washington; but what happened? In 1939 I quoted Jeremiah, chapter 37, to them:
Where are now your prophets which prophesied unto you, saying, The king of Babylon shall not come against you, nor against this land?
But he did come against it on September 1, 1939. For the first ten days of the war they did not know anything about it until we separately declared war with Germany.
The people of Canada want to know the truth, the whole truth and nothing but the truth about this so-called charter at Geneva. Nothing was heard about it and not even the House of Commons was informed until- this austerity program was announced on November 17 by the Prime Minister (Mr. Mackenzie King) and the Minister of Finance (Mr, Abbott). So far the government has not been able to sell its program to the country. Both here and in the United States we have seen, over the Geneva pacts and the dollar, the absolute collapse of all statesmanship in America.
I am not one of those who are in favour of bidding against the left and the socialists because it is impossible to carry out what the hon. gentlemen to the left proposed with regard to controls. In parliament last summer I proposed- controls to March 31, 1948, on milk and bread and coal. Apparently the government did not know what they were doing at Geneva then and drifted- until November 17, and I would have hoped that something would be done long before November 17 to take care of the conditions that have arisen this winter. I said- they were sure to come when I spoke here last June of this winter then to come.
As I say, I am not in favour of bidding against the socialists. They were wrong during the last war, for years before that and in the time between the two wars and since. They claim that they are the same as the Labour party in England, which has adopted the Marxian and totalitarian system which has failed in- Germany and Russia as well as in England. This policy has also created as in England, a class war in Canada, and the ruination- of free enterprise and the liberty of the subject. There has been an invasion by this type of Labour government from England into the Toronto district. They have been- speaking in some of the schools and in some of the pulpits. In a few pulpits there is more politics than- religion on Sunday.
The government has no mandate from the people of Canada for these trade pacts, and for that reason I am going to vote against this bill. I am sorry the Minister of Reconstruction and Supply (Mr. Howe) is not in his place at the moment, because I should like him to hear me say I regret that he has accepted this task. He did- a great deal of good- work during the war and he is always ready to work hard.
I was the only one on these benches who protested solidly and voted here in December, 1945, against the Bretton Woods agreement and the United States loan to Britain. I knew what was going to happen, that the British empire would- be liquidated, as Stafford Cripps said in 1934 and many times since, advocating the dissolution- and liquidation of the British empire.
The -permanent staff of our civil service contains some very capable, hardr-working and efficient officials. During the last war they did a great deal of good work, but to continue it for many years after the war is, m my opinion, a mistake. We need another Kipling, and we need Gilbert and Sullivan. They properly described the powers which have now been given to one minister. In the Mikado they describe the -powers given Koko, and to Pooh-Bah who was the first lord of the treasury, lord chief justice, commander in chief, lord high admiral, master of the buckhounds, groom of the back-stairs, archbishop of Titipu and lord mayor. Similar powers, not by this Bill No. 3, are given to one cabinet minister.
As I say, I am sorry to see the right hon. gentleman taking on this task. I am sorry also to see my young friend, the Minister of Finance, being placed in the position he is in today. It is proposed to appoint a committee to do something about price spreads, similar to the one which acted under Mr. Stevens. I cannot understand how the Conservative party ever lost Mr. Stevens. He was a most valuable man and he did much for the white-collar workers of this country in 1932, 1933 and 1934. He made a great success of that inquiry, and he got at the basis of dissatisfaction among the white-collar workers of the country and revealed a condition one would have thought would not exist in Canada.
The government has no mandate from the people of Canada for all these leaps-in-the-dark agreements, none whatever. They will have to stand or fall on them. We have tossed empire preferential trade to the four winds
Foreign Exchange Conservation

for a song, just at a time when business, both wholesale and retail, is hamstrung. We launch this wave of internationalism and totalitarianism without any mandate from the people, and no one, not even the Canadian government, knows where it all will lead to.
The people, like parliament, are in the dark with all this maelstrom of countless agreements and petty meddling with business and trade and commerce. Business has not been consulted, and I for one will not agree to make such a leap in the dark at a time like this. No one knows where it is all going to lead to. Our main mistake has been surrendering too much military, economic, social and financial initiative to Washington. Canada has become simply the economic slave of the United States. Preferential trade which did so much for the dominion has passed out of existence.
The minister went to Washington to arrange a loan of $300 million from the export-import bank. We should have been told the text of this loan before the bill was even presented. As the house knows, these export-import loans are issued with strings and riders attached, and one rider is that there shall be no discrimination against the United States as a result. We cannot discriminate. If we want to get some vegetables from the West Indies in the sterling area we shall find we cannot do so because Washington will immediately claim that that is discrimination.
Away back in 1923 I had a program to reduce imports from the United States. I suggested that there should be a national policy in connection with coal, oil and hydro power. It was proposed that there should be a national fuel supply, so that all fuel used in Canada would be mined under the British flag, whether in Wales, in the maritimes or in Alberta. The same thing was proposed for oil. I suggested that a pipeline be built to bring oil from the prairies, and Sir Adam Beck and I addressed meetings all over Ontario and the west on it.
I suggested also that there should be a national policy in connection with hydro electric power. We saw the Beauharnois gang come here and get vast rights and heritages in 1927. My proposition for a national policy for coal oil and power was revived by others last May, June, July and August. But the government of the day fought it for ten years before they adopted it in 1929-30. Two million tons of coal were brought to the head of the lakes from the maritimes. The first year the new harbour board at Toronto was set up in 1915 a shipload of coal was brought in from Swansea, Wales, in a ship owned by Stanley Baldwin. That was the first lot of coal that came into that harbour from Wales.

Why does the government of the day not do something as to a national policy and save dollars? The government of this day did nothing about it for many years and the result is that we now have this situation. The details of the policy I proposed are set out in Hansard of March 19, 1923 in an all day and all night debate. We were developing only one-seventh of our potential hydro electric power. We had 42,000,000 horsepower in Canada and we were developing only 7,000,000 horsepower, some of this only seasonal. At that time I called for a national policy.
I can only say that the people back in the constituencies know just as well as, and better than, we do where this is all going to lead us. I can tell you that we are just throwing our best customer, the mother country, overboard.
James Thomson, the Scottish poet, author of "The Seasons", wrote "Rule Britannia". When I matriculated at Parkdale and Jarvis oollegiates, that was one of the greatest things. He wrote that Britons never shall be slaves. He said:
The nations, not so bless'd as thee,
Must, in their turn, to tyrants fall;
While thou shalt flourish great and free, The dread and envy of them all.
Britain will turn out to be that again. Britain will again be a great nation. She saved the world in two great wars. She saved the world in the fourth oentury in the days of Philip of Spain and Louis XIV and Napoleon, also twice in our generation, in the Kaiser's day and again in the war just ended. She is not going to allow small statesmen to cripple her much longer. A retired United States admiral said recently that the United States had obtained command of the sea. They did not have it at Pearl Harbor. Britain still rules the waves, notwithstanding what this retired admiral said. I am one of those who have always greatly admired the people of the United States; in both wars they helped save the world; but they would much more appreciate us if we spoke up and told them our side of the story, and the truth, the whole truth and nothing but the truth. The mother country has not become a second-class power. During the last war everything looked impossible, but things came out all right. I remember what was said here in this parliament when the hon. member for Bonaventure (Mr. Arsenault) spoke of the governor general. We talked here about the enemy on the St. Lawrence and the governor general. The enemy sailed up the St. Lawrence in the last war as far as Riviere du Loup. At that point the river is as wide as from Niagara falls to Toronto harbour. Had the enemy been successful in landing there in Quebec, thousands of people would

Foreign Exchange Conservation
have been carted away to work in the mines in Europe, and that is the truth. We would have had the horror of war on our own soil.
I am very much surprised at what the government has done for the people of this country in these Geneva pacts, and that we should have this discussion in the house. I am speaking for myself alone and not for any others. I am opposed to any action that affects adversely the mother country, such as the removal of preferences.
In conclusion, I wish to say that these Geneva pacts were founded on the Bretton Woods agreement and the United States loan, which I apposed here. They met at Geneva for six months. All we heard about it was the announcement over the radio on November 17. I for one do not intend to see the economy of this country so changed that the trade with the best customer we ever had, Britain, will be lost. The mother country has been our best customer for grain, bacon, eggs and other products. I am not going to see it thrown away to the four winds of heaven for any Geneva pact, because we have had hundreds of these. The gentlemen are now meeting down in Havana. In his own name Mr. Wilgress made an announcement over the head of the government, saying what the government was going to do. It is time for us to recover our responsibility as private members. If we do not resume our responsibilities the day of parliamentary government will be gone.
M*. J. H. FERGUSON (Simcoe North): Mr. Speaker, I cannot see my way clear to vote for this bill; first, because I do not believe that the present government is capable of entering into international negotiations based on such a bill which will produce anything but terrible chaos. The example set by this government in Canada is comparatively poor, and the effects comparatively small, compared with what might result from the signing of the Geneva convention. This country is in the mess in which it finds itself because the present cabinet were imbued with the idea around election time that, if elected, and appointed by the Prime Minister (Mr. Mackenzie King), their duties were to sit in certain offices and do their job as they saw fit. These men were elected and appointed, and they sat in offices. From the conditions we find in Canada today in practically every walk of life it is obvious that they have not handled their positions and their offices with any semblance of business practice or intelligence.
Probably two months ago while attending a protest meeting of a thousand hog raisers in Ontario I listened to apparently a champion and great supporter of the Minister of Finance
(Mr. Abbott). He tried to take the rightful blame from the Minister of Agriculture (Mr. Gardiner). He tried to show the audience that the Minister of Agriculture was not to blame for the non-notification that the price of hog feed might go up. He tried to show that the Minister of Finance was entirely to blame. I might say I followed the speaker and emphasized1 the fact that they could not place this muddle on the shoulders of the Minister of Finance; that the blame should go where it should1 be properly placed, namely, on the shoulders of the Minister of Agriculture.
It now appears that all ministers of the crown are attempting to bring in the old saying, "Let George do it." The Minister of Reconstruction and Supply (Mr. Howe) is the greatest "George" I have ever seen or have ever known. He is now being the "George" for the Department of Finance. He is the one man that the Minister of Finance prays and hopes cam help him out of the muddle in which he and his department, through his efforts, have placed Canada, for the first time in its history, namely, borrowing money from a foreign government. The people of Canada must love the position in which they find themselves. No longer are our securities being sought by private investors.
I hold in my hand a label from a lowly can of pork and beans. Beans are grown abundantly in Canada, and our hogs are second to none. Yet the purchasing public of Canada must buy on the grocery shelves pork and beans which are grown and canned in the state of New York in the United States. Here is another label of a can of corn. The corn was grown in the state of Maryland. Here is another label from a humble bottle of catsup grown and canned in New Jersey. I say that this is all brought about by the fact that during the war Canadians were made leaners to some extent by having to rely on the guidance and control of the present government, instead of this government aiding the manufacturers, the farmers and the labour people to get back on their own feet, work and get themselves out of their difficulty. The government have made no effort to do that. They have kept them in the dark. They have gathered statistics covering every phase of Canadian life by the bureau of statistics in Ottawa, and they have imparted none of the findings of these research men.
Recently a friend of mine made a small addition to his home. I will show the house how far these statistics go. I hold in my hand a sheaf of literature in which they asked the gentleman in question fifty or sixty questions why he built his house; how much it cost
Foreign Exchange Conservation

him; whether he intended to build any more; and who supplied the materials. He was told that if he did1 not answer these questions he was liable to a penalty of S100 or three months in jail. I feel quite confident that the same kind of questionnaire goes to every supposedly free Canadian, and when this literature is compiled' by these experts, it is kept in the archives in Ottawa. I am sure it never brings any benefits to the people of Canada, whom this government is supposed to represent. No one who during the war was desirous of producing for the benefit of Canada, the empire and the world at large ever received the vaguest information, as to what he should produce to the maximum, or in what commodity there would likely be over-production and on which he should go easy. The same tendency has been evident in Canada since the war. The farmer has never been warned by the statistical branch through the ministers of the crown, that he might be over-producing in wheat or some other commodity in the light of any facts which the government might see fit to put before him. The farmers have been ignored by the government. They have never had the slightest intimation that hog feed was becoming scarce, either in consequence of a drought or owdng to other conditions in the western provinces or throughout the world. They have never had the slightest intimation that higher prices would be asked for so far as farmers products are concerned. The farmer did not know what to do with his brood sows, and the net result will be that the government will be on its knees crying for bacon for the Canadian people, to say nothing of the export trade.
Let us hope that this is not the last straw that will break the camel's back, which straw the cabinet ministers are now putting on the shoulders of "George" Howe-


Douglas Charles Abbott: Clarence Howe.


Mr. FERGUSON:: -in their determination to " let George do it." I have no doubt he will make an effort which will far surpass the efforts of his colleagues in the cabinet; but whether the results will be satisfactory to the people of Canada, whether the right hon. gentleman as a one-man cabinet will produce the results that the people of Canada are looking for, is another matter. At any rate, apparently he is receiving very little aid from the other ministers. They do not appear to be carrying out the functions for which they were appointed and for which they are well paid.
I have never yet heard the Minister of Finance come out and tell the people who sent him here exactly why he put the Canadian

dollar on a par with the American. Is that something which is above and beyond the Canadian citizen? Is the Canadian citizen not capable of appreciating the facts and understanding why these things are done? Are Canadians generally to be ignored regarding the reasons for these moves? Is there any item in regard to which this government has informed the people?
Apparently the government thinks it does not need to consult parliament, and there is far less need, in its opinion, to consult the people of Canada or to give the people any information whatever until it has accomplished its desires. I suppose the ministers say to themselves, "Why tell the people of Canada the facts; why enlighten them as to the course the ship of state is following?" If the ship follows the course it is now pursuing, I can only say that it will inevitably go on the rocks, and this will be due to the mismanagement by virtually every cabinet minister of the Liberal government.


Mr. RODNEY ADAMSON (York West):: There is no satisfaction in saying "I told you so", when a calamity has happened, and it is only worthwhile to go over past history in the hope that the trend may be altered and the greater calamity which faces us may be prevented. I am, therefore, going to retrace briefly the history of what has taken place with regard to our exchange position, dating from the very great mistake of putting the Canadian dollar at par on July S, 194&. At that time the situation was that we .were completely out of debt, or at least our federal government was completely out of external debt. It was out of foreign debt, and we had a surplus of gold and hard currency amounting to about one billion and two-thirds; I believe the amount was approximately SI,600,000,000.
Since then, as is known, we have incurred, for the first time in our history, I believe, an obligation on the part of the federal government to another government. We have dissipated virtually our entire stock of hard currency and gold, and we are running into the red in our trading position at the rate, before the recent embargoes were put on, of approximately one billion dollars a year. Since this has happened there has been an improvement, but that improvement is not great enough to put our position in balance with regard to our trading position with the United States.
More measures will have to be taken or more debts incurred. There is no other way out of the impasse in which this country finds itself. I have frequently warned the government that it would have to take three steps. Of these they have taken two, and the third

Foreign Exchange Conservation
they will, in my opinion, be forced to take. They have taken the step of imposing tariffs by embargo. They have taken the step of imposing wartime restrictions as to the export of United States or hard currency, and recently they have even tightened up the export of gold bullion in semi-manufactured state. They were forced to take these steps.
The other step which they have not taken and which, in my opinion, they will be forced to take is devaluation. No matter what they may say; no matter what announcements may come from the Department of Finance, devaluation will eventually be forced on the government.
On July 5, 1946, the parity move was made. At that time I suggested that that move was brought about by pressure from the Washington government. This was denied in the house by the then minister of finance. Subsequently to that, a motion was brought forward by this government to bonus the production of gold, which would have had the effect of currency devaluation. The United States government immediately raised the most strenuous objections, so much so that, together with the objection raised by the mining industry, the plan was dropped. We must accept the word of the government that no pressure was brought on them in 1946. But it is extremely strange, Mr. Speaker, that if no pressure had been brought on in 1946, how vehement and how violent was pressure from Washington with regard to a similar measure a few months later.
The next thing that happened was that in July of last year I again warned that this government could not meet its external balance of trade. A great deal of confidence was put on the convertibility of sterling. I warned that the convertibility of sterling was a myth. The chancellor of the exchequer, Mr. Dalton, said that sterling would be made convertible and he was sure that it would be made to stick. That, just like our parity action, was purely wishful thinking. Sterling was made convertible, and within a few days the drain on the British economy was so great that sterling had to go back to its inconvertibility. Today we see a similar pressure being built up. The first country to devalue some months ago, while not a member of the international monetary fund, was Italy. Immediately Italy put its currency on a more realistic basis, despite the chaotic condition within that country, prosperity began to return, factories began to work and production began to increase. As I have said, that was despite the chaotic political internal condition in the country.


Douglas Charles Abbott: The hon. member does not suggest that those conditions prevail here, does he?


Agar Rodney Adamson: They might quite easily.


Douglas Charles Abbott: I just wondered.


Agar Rodney Adamson: Then we come to France. On the last day of the short session before Christmas I warned that a wave of devaluation would sweep across the countries of the world and that it might start before we came back to this house. Quite conveniently it started on the day we actually came back. France devalued and put her currency on a realistic basis. I predict that the result will be prosperity, increased production and that we shall begin to see French goods and French textiles becoming a factor again in the world market.
Today England stubbornly refuses to devalue because of a socialist ideology. For the same reason that the ex-chancellor of the exchequer, Mr. Dalton, refused to admit the dangers of making sterling convertible into dollars, today Sir Stafford Cripps is saying that the pound will not be devalued. It is just like trying to tell water to run uphill, as to say that the pound will not be devalued. When it will happen, I do not know. But let me say this: today the cost of English goods in this country, aggravated by this measure, is so great that last week in Toronto a textile salesman from one of the largest houses in Great Britain was unable to sell any of his goods because he could not meet the prices at which we were able and willing to buy. That is a sign of what will happen.
I am informed that steam turbines from England are now offered at a price that is as much as thirty to forty per cent higher than the competitive price in the United States. Furthermore, British shipbuilding is now so greatly inflated that it is impossible to buy a ship in England, without government assistance, and charge rates for freight and passengers which would ever make the investment worthwhile; that is, pay the carrying charges. There is, of course, government assistance to replace ships sunk during the war, and for other war damage. But there is a great and intolerable price rise on goods from England.
To say that the pound is worth $4 when it can be bought for $2.25 and $2.40 at most banks in Canada, if they have any, is just one of those terrific fallacies that all money planners fall into. It is unreal and untrue, and is doing the economy of the United Kingdom incalculable harm, having regard to the trading position between us. Had we taken a realistic view in 1946 and set our dollar free instead of tying it to the United States dollar

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we would still be in possession of a great deal of that valuable nest-egg of hard currency and gold which has been dissipated.
Every time an attempt is made to peg a currency above its real worth, drain is inevitable. It happened in England in 1926. When Winston Churchill put the British pound back on the 1914 gold standard, the drain on British gold wits so great that the measure had to be abandoned within a few years, nearly wrecking the economy of the United Kingdom. We are doing virtually the same thing. Had we devalued or left our currency at 90 cents, United States, it is said that our oil and our coal would have cost us more. Since 1946 our oil and our coal have gone up, depending upon the location, as much as fifty per cent. I understand that in some places they have gone up considerably more than that. To say that devaluation of ten per cent would have materially affected the over-all price of coal and oil, even assuming that it would have put it up ten per cent more than it has already gone up, is to lose sight of reality with regard to the actual price people have to pay for those two vital commodities.
I want to say here, Mr. Speaker, that we on this side of the house have for years pleaded with the government to allow oil drilling and exploration as a 100 per cent deduction from taxation to the companies which were prospecting and drilling for oil. Had that been done, every oil well that we could have got into production in Canada would now have been vital not only in the safeguarding of our exchange position but in the production of essential fuel in this serious crisis.
I do not propose, Mr. Speaker, to prolong the debate at this moment. I merely say that the present situation is dangerous and unreal; that our trading position is still in imbalance. We are still going into the red in our trade with the United States at an alarming rate, despite the improvement in December; and unless the minister uses the third weapon at his command, that of devaluation, in six months or a year more severe, more vicious and more unpleasant restrictions and regulations are in store for the Canadian people.


Mr. H. W. HERRIDGE (Kootenay West):: Mr. Speaker, I shall not detain the house very long at this late stage of the debate.


Some hon. MEMBERS:: Hear, hear.


Herbert Wilfred Herridge: I think I have been quite patient in awaiting my turn. I wish only to express my opposition to this bill, briefly, opposition based on the attitude of a goodly number of my constituents who have expressed their opinions through labour organizations, farmers' organizations and co-operatives, and

as individuals. While I am not unmindful of the necessity for foreign exchange conservation, I intend to oppose this bill for the following reasons.
The first is the unwillingness of the government to consider the widespread demand for the importation of some fresh fruits and vegetables. On this question I am sure the minister and the government have overlooked the necessity for such fresh fruits and vegetables, particularly on the part of men engaged in heavy industry, in the lumber industry, in mining and the smelting industry.
The second reason is because of the application of the principle of non-discrimination at this time. On this point a great deal was said by the hon. member for Vancouver South (Mr. Green) and the hon. member for Acadia (Mr. Quelch) with which I agree, but I am not going to repeat what they had to say.
Then I represent a riding in which a large part of the population strongly resents the fact that apparently the policies of this government are being dovetailed with United States opinions and ideas. Many of my people have the opinion, and feel very keenly about it, that our financial, fiscal and trade policies are being patterned more and more to suit the needs and wishes of the United States.
In addition, Mr. Speaker, I intend to oppose this bill because of the government's actions in the whole sphere of conservation and regulation and quotas. There is a definite sense of insecurity among producers. The farmers of my district are not able to plan their production because they do not know how long these regulations will remain in effect. Under present conditions, in the next twelve months there will be a greatly stimulated demand for such vegetables as lettuce, celery, cabbage, carrots and so on, but because of their lack of knowledge of what the future may hold, and that sense of insecurity, the farmers do not know what to do in the planting of certain crops.
Again, I wish to express my opposition to this bill because of the failure on the part of the government to reimpose price ceilings on items under quota and to bring into effect some degree of justice as far as purchasing in this country is concerned.
In conclusion, I must make reference to the excise tax, which has had a serious effect on a good many farmers in my district as well as on many people who are building and furnishing homes. I want particularly to emphasize the effect it has had on various co-operative transportation societies in my riding. In the Rossland-Trail section of my riding we have a number of successful transportation societies, one or two having a large

Foreign Exchange Conservation
capitalization and owning fleets of buses and trucks. I know from personal experience that all during the war these organizations co-operated with the government in every way in refraining from purchasing new vehicles, parts, equipment and so on. Now all their equipment is in poor condition and run down because they conformed to the wishes of fhe government and co-operated in every way. Today they wish to buy new equipment, but they are penalized by this twenty-five pet cent excise tax.
For the reasons I have briefl3r stated, Mr. Speaker, based on complaints presented to me by a large number of my constituents, I intend to oppose this bill on second reading.


Douglas Charles Abbott: Mr. Speaker

*


James Horace King: I understand the minister will close the debate.


Douglas Charles Abbott: A good deal of territory has been covered in the course of this debate, and a good many matters other than those that relate to the bill before the house have been discussed. That is perfectly proper because at the outset, before the Christmas recess, I think it was agreed tacitly, at any rate, that on second reading we would discuss all aspects of the government's exchange conservation program. However, in my remarks in closing the debate I propose to restrict myself as far as possible to this bill. In particular I want to emphasize that, as all hon. members know, in this matter we are voting on the principle of Bill No. 3. That principle is very simple; it is the use of import restrictions in order to conserve United States dollars. One may quarrel with a good deal of the detail; one may consider that this or that article should not be prohibited, this or that article should not be placed under quota and this or that article should not be placed under import permit, but the principle of the bill is simply, do we or do we not use the import restriction method of conserving United States dollars. I consider it important that this should be realized, because that is the principle hon. members will be voting for or against.
I do not think I shall attempt to deal with all the matters that have been raised by hon. members in the course of the debate. A number of them can be more appropriately handled when we are in committee. But there are one or two main points with which I wish to deal, taking first the points raised by the official opposition. All their speakers have said they intend to oppose the bill.


Mr. FLEMING:: Hear, hear.


Douglas Charles Abbott: Their attitude has been consistent in that regard. They did not indicate on what grounds they opposed the principle, but at least some of them did advocate or suggest an alternative, namely -the devaluation or depreciation of the Canadian dollar. The hon. member for Trinity (Mr. Skey) suggested a devaluation of ten per cent, and the hon. member for Rosedale (Mr. Jackman) interjected, "More if necessary." I have already dealt with this question of currency depreciation, when I introduced the bill, but I think I had better say a word or two about it again and of necessity, to some extent repeat what I said at that time.
I said then that currency depreciation may be helpful to a country which is in balance of payment difficulties because its costs and prices are too high to enable it to compete effectively in the export market. Unquestionably a number of countries are today in that position, but Canada is not one of them. We are not precluded1 from exporting our goods to any other country because of price. As a matter of fact, we have, kept our costs relatively low, and at current rates of exchange our staple exports can be and are being exported to any market of the world in competition with any other exporter. In my judgment, inability to export is the only real justification for currency depreciation on the part of any country. Otherwise we would be attempting to obtain an unfair advantage in some export market at the expense of somebody else.
Hon. gentlemen opposite have dealt with this question of currency devaluation in broad, general terms. They have been assertive, but none of them has been able to convince me, and I doubt if they have been able to convince the people of Canada, that a ten per cent currency depreciation would accomplish the restriction on the expenditure of United States dollars which is necessary under existing circumstances. There are only two ways to cure our present position. One is to export more to dollar markets and the other is to import less. The bill which we are now considering deals with the restrictive side of the program, the method whereby the government is proposing a restriction of dollar imports. The constructive side of the program has not been touched upon in the course of this debate, and at this hour I am not going to repeat what I have said on other occasions with respect to that aspect of the government's program.
The bill which we are now considering deals solely with the restrictive side of the program, the method whereby we shall restrict our use of United States dollars. The obvious

Foreign Exchange Conservation
inference from the devaluation idea is that it would cause people in Canada to spend less for United States imports, in other words, to reduce their purchases. Well, as I have said before, an increase of some forty to forty-five per cent in the cost of United States imports over the last eighteen months has not produced any appreciable reduction in the scale of our imports.


Mr. JACKMAN:: But our own price levels went up, too.


Douglas Charles Abbott: Oh, not that much.


Harry Rutherford Jackman: But, will the minister-


Douglas Charles Abbott: I am trying to say what I have to say in as short a time as possible, because the hour is late.
I repeat what I said earlier, that I do not believe a ten per cent devaluation of our dollar would produce any appreciable effect upon our imports from the United States. That is my belief. Hon. gentlemen opposite have been suggesting that it would, but I make the assertion that it would not-and I think I am borne out by what we know of the last eighteen months-and it would unquestionably raise the cost of many goods we have to import from the United States, because in effect we would be placing an additional ten per cent tariff across the board.
The second main criticism made of the government's program by hon. members both of the official opposition and of the C.C.F., and I think of the Social Credit group, was that we should have adopted the discriminatory principle, and that, in adopting the nondiscriminatory basis, we were jeopardizing the position of Great Britain with respect to sending us exports.
I, for one, attach great importance to the principle of non-discrimination. I believe it is a sound principle for any country to follow, and I think the government was right in adhering to that principle. I am sorry to say; no, I am not sorry to say, but in actual practice of course our policy is not nearly so non-discriminatory in fact as it is in form, because in selecting the articles to be prohibited, and the articles to be placed on quota, we have paid particular attention to those which come to us from sterling area countries.
May I say that explains why some articles, seemingly luxury articles, are included in the quota list, where in the majority of cases the source of supply is in non-dollar countries.
I asked for the figure this afternoon, and I am told that the prohibited list now covers only about two and a quarter million dollars

of United Kingdom imports. That is less than It per cent of the total imports from that country to Canada.


Howard Charles Green: What about Australia?


Douglas Charles Abbott: I make this assertion, and every hon. member will see in due course that it is borne out by the facts, that this program, instead of hindering imports from the United Kingdom, will stimulate them, because of the quota basis. Let us take textiles, as an outstanding example. Imports from the United States will be cut down to about one-third of last year's exports to Canada; whereas Great Britain can export 200 per cent of her last year's exports to this country. And that will apply, hon. members will find, in the case of a great many commodities.
The question was raised as to the protectionist feature of this legislation. Of course it is protectionist; it cannot be anything else. I have repeatedly said in my radio speeches, and I said it here, that is one of the things which the government regrets. But it is a necessity. I used the words, in speaking in Montreal, that these restrictions are an unmitigated evil, but a necessary evil.
There has been talk in this debate of economic domination by the United States. Let me say this, that a nation which loses its exchange reserves loses its independence. Let there be no mistake about that.
What we are considering in this bill is a method of preventing such an exchange reserve loss. My hon. friends opposite advocate a currency depreciation of ten per cent or more-"Take the exchange controls off, and let her rip". I do not subscribe to that at all. If we were to permit exchange depreciation to any substantial extent, the increase in the cost of living would be something that would make your hair curl. Anybody who says that in a country operating at full capacity, as we are today, even a ten per cent currency depreciation is not inflationary, is living in a world of fantasy.
I do not wish to take up too much of the time of the house. As I have said, I am not going to deal in detail with a number of the suggestions which have been made by hon. gentlemen opposite. For instance the hon. member for Nanaimo (Mr. Pearkes) suggested that we might start a Canadian stud book in Canada, and that this would bring in some United States dollars. I am not a racing man, but I shall look into the matter. However, I doubt very much if it would cure our exchange situation.
The attitude of the C.C.F. group I find a little harder to understand. The hon. member

Foreign Exchange Conservation
for Winnipeg North Centre ((Mr. Knowles) outlined five reasons why' they think they should oppose this 'bill. The first was that it excludes certain articles of nutritional value. I suggest that that is a question which is one of detail as to why articles which are prohibited should not be prohibited. But that does not affect the principle of the bill.
Then, he referred to the adoption of the non-discriminatory principle. I have already dealt with that.
The third reason he gave for voting against the bill was that we do not propose to impose price ceilings on articles which are prohibited, or placed under quota. There, again, I say that does not strike at the principle as to whether or not we should resort to the restriction of imports as a means of conserving United States dollars.
The fourth reason was the fear that the effect of these restrictive measures would create a highly protectionist position which it would be difficult to get out of. I can say this-


Stanley Howard Knowles: You are afraid of it yourself.


Douglas Charles Abbott: I have repeatedly said that I regret the necessity of placing this highly protectionist measure upon the statute books; but I think it would be folly to fail to recognize that this is an emergency. It is not a situation which has been created by Canada.


James MacKerras Macdonnell: Yes.


Douglas Charles Abbott: There is nothing wrong with our economy. We are operating at low cost and efficiently.


Some hon. MEMBERS:: Oh, oh.


Douglas Charles Abbott: We are operating at low cost and efficiently. As I said a minute ago, we can export our primary products to any market in the world, in competition with anybody else.
I would hardly recognize this country of ours if I listened to and accepted the picture that has been painted in the course of this debate by hon. members opposite. They have been picturing this country as a country on the verge of disaster, a country in a condition of chaos, when in point of fact the level of employment and the efficiency of our industry has never been greater. We have never been more prosperous.
Our difficulties are not due to any weakness or any failing on our part; they are due to the inability of some of our best customers in other parts of the world to pay us goods 5849-47
or convertible exchange for the goods which we send to them. It is not their fault, but is due to the consequences of a disastrous war. That is the reason for this country being in the difficulties with respect to the balance of payments in which she is today, and that is the only reason.


James MacKerras Macdonnell: That and unwise government policy.


Douglas Charles Abbott: I can counter that by saying that a wise government policy has maintained us in the position in which we are. Argument by assertion never convinces anyone.


William Lyon Mackenzie King: Will the house give its consent to my interrupting the proceedings? It is understood that we are to have a vote at six o'clock. The present speaker may, however, wish to continue his remarks until the moment of six o'clock. If the house would allow me, I would move, seconded by Mr. St. Laurent:
That Mr. Speaker do not leave the Chair this day at six o'clock and that standing order 6 be suspended in relation thereto.


John Bracken: I understand that the minister does not intend to speak very much longer. We on this side will accept that suggestion, but we expect to call for a vote and we will expect the house to stay that much longer in order that the vote may be recorded.


[Stage Direction]
Motion agreed to.
Douglas Charles Abbott: During the course of this debate there was some discussion as to what our exchange reserve position is today, that is to say, what are our official holdings of gold and United States dollars. I think it was the hon. member for Parkdale (Mr. Timmins) who requested that I give up-to-date figures as to that matter. Let me say at once that, while I think it is only fair that v'hen this matter is before the house details of our position should be made clear to hon. members, for reasons which I have stated on previous occasions, I do not think as a general principle it is desirable to give too frequent statements of our exchange holdings. I believe the publication of these figures at too frequent intervals would serve only the selfish interests of speculators. It could not serve the public good. I propose now to give the details of our actual position and the trend in the last couple of months.
The house will recall that in my broadcast speech on November 17 last I pointed out that at the close of business on the previous Thursday, that is at November 13 or 14, our exchange holdings were down to slightly over $500 million. While we were imposing import
Foreign Exchange Conservation

restrictions of a reasonably extensive nature we realized that those' restrictions could not become effective overnight. We knew also, from the experience of other countries which had had to adopt similar measures, that because of the recognition of some existing orders and commitments the country's exchange reserves would probably fall for some time after the import restrictions were imposed. For those reasons we thought it was likely that our exchange reserves would fall to a figure approaching $400 million following the imposition of these import restrictions before they could become effective.
I am glad to say that actually the results have been a great deal better. At the end of November, as I think I have already reported to the house, our reserves had fallen to approximately $480 million, and the decline was then continuing. On December 17 the low point was reached of just under $461 million. However, we ended the year 1947 with total holdings of $502 million, and at the close of business yesterday, that is Thursday, January 29, our total holdings of gold and United States dollars were approximately $514 million, the exact figure being $513,884,563. As I have already said, I believe that that record is a very encouraging one.


Mr. HACKETT:: How much is gold?


Douglas Charles Abbott: I could not give that offhand.
That is nearly all I have to say in closing this debate. During the course of the debate there has been a great deal of talk of the hardships that are being suffered by the Canadian people as a result of these restrictions that are being placed on them. There has been talk about the chaotic conditions which have resulted and so on. The hon. member for Waterloo South (Mr. Homuth) referred to the fact that I had been over in England. I was over in Great Britain in September and I went to France and Germany where I had not been for twenty-five years.
If the people of this country who talk about hardship when they cannot get a head of lettuce or a dish of imported strawberries or some of these, other pleasant but somewhat unnecessary things would spend a week or two in enjoying the no doubt nutritious but singularly uninteresting diet they have in Great Britain or the still more uninteresting diet in many other places, I do not believe they would lay such strong emphasis on the hardships we are being asked to undergo in this country in order to live within our means or within our customer's means.
This measure is one to enable us to continue to play our part in assisting in the recovery of some of those countries to which I have referred. It is important that the people of this country should know the purposes of this measure and the reasons why it is being introduced.


John Thomas Hackett: Would the minister get that?


Douglas Charles Abbott: I shall be glad to. I would not wish to suggest that this rise in j^ur reserve position which has been going on since about the middle of December would continue without interruption, or that we have as yet reached a level which would be regarded as satisfactory. Undoubtedly there will be periods when our reserves will fall off for a time. I do not venture to prophesy how long it will be before we shall be able to build up our reserves to what I would call a satisfactory or comfortable level as a result of the various long run measures we are taking to get our economy into a better balance with that of the United States. In that connection I want to say that in order to increase our holdings of actual cash reserves to a more satisfactory level we may later this year deliberately draw upon the loan which we recently negotiated with the export-import bank at Washington. I say that now in order that hon. members and the country may not jump to misleading conclusions when and if we actually begin to draw on that loan.


Mr. WINTERS:: I was paired. Had I
voted I would have voted for the motion.


Mr. JOHNSTON:: I was paired with the
hon. member for Halton (Mr. Cleaver). Had I voted I would have voted against the motion.


Mr. DANIEL:: I was paired with the hon.
member for Parry Sound (Mr. McDonald). Had I voted I would have voted against the motion.


Herbert Wilfred Herridge: I was paired with the
hon. member for Richelieu-Vercheres (Mr. Cournoyer). Had I voted I would have voted against the motion.


Mr. MALONEY:: I was paired. Had I
voted I would have voted for the motion.
Adamson
Archibald
Argue
Ashby
Bentley
Blaekmore
Blair
Boucher
Bowerman
Bracken
Bradshaw
Brooks
Burton
Campbell
Case
Castleden
Charlton
Church
Coekeram
Fair
F erguson
Fleming
Fraser
Fulton
Gillis
Graydon
Green
Hackett
H ansell
Harkness
Hazen
Henderson
Hlynka
Irvine
Jackman
.Taenicke
Jaques
Knight
Messrs:
Knowles
Kuhl
Lennard
Low
MeCuaig
McCullough (Assini-boia)
Macdonnell (Muskoka-Ontario)
Maclnnis McKay McLure McM aster MacNiool
Matthews (Kootenay East)
Menary
Miller
Moore
Nicholson
Pearkes
Probe
Quelch
Ross (St. Paul's)
Ross (Souris)
Skey
Stewart (Winnipeg North)
Strum. Mrs.
Thatcher
Timmins
Townley-Smdth
Tustin
White (Middlesex East)
Wright Zaplitny-70.


Mr. JEAN:: I was paired with the hon.
member for Waterloo South (Mr. Homuth). Had I voted I would have voted for the motion.


Mr. ISNOR:: I was paired with the hon.
member for Colchester-Hants (Mr. Stanfield). Had I voted I would 'have voted for the motion.


Mr. MANROSS:: I was paired with the
hon. member for Brantford City (Mr. Macdonald). Had I voted I would have voted against the motion.
(Translation):


Mr. GAGNON:: I was paired with the hon. member for Levis (Mr. Bourget). Had I voted, I would have voted against the motion.
(Text):


Mr. HARRIS (Grey-Bruce):: I was paired. Had I voted I would have voted for the motion.
Bill read the second time and the house went into committee thereon, Mr. Golding in the chair.


The DEPUTY CHAIRMAN:: Shall section 1 carry?


Douglas Charles Abbott: I move that the committee rise and report progress and ask leave to sit again.
Progress reported.



BUSINESS OF THE HOUSE

William Lyon Mackenzie King: Mr. Speaker,
I move that the house do now adjourn. I am happy to say that I have now from all parties the names of the members of the select committee on the investigation of prices. The motion with respect to this committee will be the first order of business on Monday. When we have concluded discussion on the appointment of the committee the next item will be the taking up in committee of the clauses of the bill the second reading of which we have been discussing this afternoon.
Motion agreed to and the house adjourned at 6.20 p.m.
5849-47J

Monday, February 2, 1948