1949-12-01

Mr. W. G. Weir (Poriage-Neepawa):: Before we begin today's proceedings there is a matter in which 1 know hon. members will be interested and which I should like to mention at this time. Today we have in our midst an hon. member who is celebrating the twenty-fifth anniversary of his election to the House of Commons. I am sure that all hon. members would wish that I extend, on their behalf, our congratulations to that hon. gentleman, and our best wishes for the future. He was elected for the first time in December, 1924, and I believe that he is among the three or four who have been continuously members of the House of Commons since that time. On behalf of hon. members I therefore wish to extend warmest congratulations and best wishes to our friend, Jean Frangois Pouliot, member for Temiscouata.


Some hon. Members:: Speech.


Mr. Jean Frangois Pouliot (Temiscouata):: Sir, I thank hon. members most sincerely.



CRIMINAL CODE


Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, when Bill No. 10, to amend the Criminal Code (portrayal of crimes) moved by the hon. member for Kamloops (Mr. Fulton), was before the house, I suggested, as reported at page 1041 of Hansard:
. . . that we approve of the principle of this bill on second reading. Then when it gets to committee we should leave it there until we have secured from the attorneys general of the provinces, who have the responsibility of enforcing this section, the invaluable suggestions of their prosecutors as to the form that this amendment should take in order to prohibit crime comics and also make the whole of section 207 more enforceable than it has been.
In addition I should like to get the views of our committee on the revision and consolidation of the Criminal Code. We have already had a subcommittee of that body working on this section, but I should like to have the views of the whole committee.
We have now received from the attorneys general all the provinces except one some very excellent advice and information. We have also received from our own committee the information required, and but for the fact that the hon. member who introduced the bill has been away for a while we would have brought this matter up before. Unfortunately the bill, which is now in committee, is a private bill, and therefore has no special priority. In view of all the circumstances hon. members might be willing to give unanimous consent that so far as this bill as concerned we should pass a motion to give it that priority which by common consent, when it was last before the house, we agreed it should have. Therefore I should like to move, seconded by the Minister of Mines and Resources (Mr. Gibson:
That on Monday, December 5, 1949, the order for house again in committee of the whole on Bill No. 10, an act to amend the Criminal Code (portrayal of crimes) be the first order of business after the conclusion of the routine proceedings of the house, notwithstanding the provisions of any standing or other order.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. Harkness:: 1.	Has the Department of National Defence adopted a plan to move No. 10 Repair Depot, R.C.A.F., from Calgary?
2.	If so, what are the reasons?
3.	If not, is such a scheme under consideration?


Mr. Blanchette:: 1.	No.
2.	Answered by No. 1.
3.	Such a proposal is being considered as an element in over-all planning on an interservice basis.


FOREIGN EXCHANGE-U.S. FUNDS
Mr. Argue:: 1.	What were Canadian earnings of American dollars for each month since January 1, 1947?
2.	What were Canadian expenditures of American dollars by months for the same period?
3.	What were Canadian reserves of gold and United States dollars for each month of this period?


Mr. Belzile:: The following figures show gross receipts and payments of U.S. dollars

Questions
and gold by the exchange fund and other government of Canada accounts. They do not include receipts and expenditures offset through authorized private bank and intercompany accounts. They include Canadian gold production and transactions in gold and U.S. dollars with countries other than the United States. They also include all receipts and payments of U.S. dollars on capital account except for U.S. dollars borrowed by the government of Canada and used or set aside for retirement of U.S. dollar debt.
Official reserves of gold and U.S. dollars at end
Months	Receipts	Payments	of month
1946		(Millions of U.S. dollars)	
December ....			1,244-9
1947			
January 	176-0	277-8	1,143-1February ....	147-1	332-5	957-7March	170-3	316-7	811-3April 	174-4	285-4	700-3May	244-6	234-5	710-4June 	209-8	254-3	665-9July	231-2	245-8	651-3August 	221-1	204-4	668-0September . . .	190-0	242-6	615-4October 	205-5	294-4	526-5November ...	186-6	232-9	480-2December . ..	240-4	218-9	501-71948	January 	208-0	198-7	511-0February ....	187-6	171-1	527-5March 	286-2	206-2	607-5April	292-7	231-8	668-4May	217-9	192-2	694-1June 	281-3	233-5	741-9July	249-3	222-5	768-7August 	248-7	203-2	814-2September ...	263-2	222-5	854-9October 	283-1	245-8	892-2November . ..	298-5	222-5	968-2December ...	285-6	256-0	997-81949	January 	237-8	213-7	1,021-9February ....	204-2	182-2	1,043-9March 	240-9	217-6	1,067-2April	202-5	278-5	991-2May	214-6	228-6	977-2June 	263-0	263-3	976-9July	230-5	234-3	973-1August 	212-9	198-9	987-1September ...	207-0	208-8	985-3


HOUSING
Mr. Hodgson:: 1.	Did T. A. Andre and Sons, Kingston. Ontario, receive a contract in 1948 to build houses for the army personnel at Barriefield?
2.	If so, how many houses were built?
[Mr. Belzile.l
3.	What was the total cost of this contract?
4.	What was the average cost per house?
5.	How many tenders were received for this project?
6.	What was the amount of each tender, and from whom were they received?


Mr. Mcllraiih:: 1.	Yes.
2.	50.
3.	$417,800.
4.	$8,356 each.
5.	Three.
6.	T. A. Andre & Sons, Kingston, Ont., $417,800; Schuett Construction Company, Kingston, Ont., $438,800; T. L. Smith & Sons, Kingston, Ont., $500,450.


ROYAL CANADIAN ELECTRICAL AND MECHANICAL ENGINEERS SCHOOL, BARRIEFIELD, ONT.
Mr. Hodgson:: 1.	Has a contract been awarded for the construction of the new mess building at the Royal Canadian Electrical and Mechanical Engineers school at Barriefield?
2.	If so, to whom has it been awarded?
3.	What is the amount of the contract?
4.	How many tenders were received?
5.	What was the amount of each tender, and from whom were they received?


Mr. Mcllraiih:: 1.	Yes.
2. Schuett Construction Company, Kingston, Ont.
3.	$133,594.
4.	Six.
5. Schuett Construction Company, Kingston, Ont., $133,594; T. A. Andre & Sons, Kingston, Ont., $141,167; M. Sullivan & Son, Arnprior, Ont., $147,947; Carter Construction Company, Toronto, Ont., $166,229; Hill-Clark-Francis Limited, Toronto, Ont., $184,476; General Steel Wares, Toronto, Ont., Incomplete tender.


DANISH BUTTER IN GOVERNMENT STORAGE
Mr. Caiherwood:: How much of the Danish butter imported last spring and the previous fall, if any, is still in the government's hands?


Mr. Mcllraiih:: None.


QUESTION PASSED AS ORDER FOR RETURN
OLD AGE PENSIONS
Mr. Knowles:: 1.	Has the government received at any time since July 1, 1949, representations calling for the elimination of the means test from the old age pension so as to make possible collective bargaining for industrial pensions along lines similar to industrial pension plans recently put into effect in the United States?
2.	If so, has consideration been given to such representations, and what is the result of such consideration?

Coal
IMMIGRATION	INDUSTRIAL DEVELOPMENT BANK ACT


COUNT JACQUES DE BERNONVILLE
[Stage Direction]
On the orders of the day:
Mr. Alistair Stewart (Winnipeg North):: I should like to direct a question to the Minister of Mines and Resources. What steps are being taken to ensure the deportation of de Bernonville?


Mr. Speaker:: Order. It occurs to me that this is not a question that should be asked on the orders of the day.


COLONIAL AIR LINES
[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: I should like to direct a question to the Minister of Transport. I am sorry I was not able to give him notice of it. Will he make a statement concerning the press report that the air transport board is going to ask the Colonial Air Lines to show cause why their licence should not be suspended?


Hon. Lionel Chevrier (Minister of Transport):: I do not know that I need make a statement in connection with it. The house is familiar with what has been going on in this regard in the United States. By virtue of the bilateral agreement, the air transport board has a perfect right to issue a show-cause order. I understand that the chairman of the board, or some member of it, has given the press a complete statement, which I have not seen, but I did see the report to which my hon. friend refers. All I can say is that the board, under the authority of the Aeronautics Act, has issued a show-cause order which I understand will be heard on December 12.



JUDGES ACT


Stuart Sinclair Garson: the third reading of Bill No. 65, to amend the Judges Act, 1946.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion?


Mr. Knowles:: On division.
Motion agreed to on division and bill read the third time and passed.



AMENDMENTS WITH RESPECT TO LOANS, EXPENDITURES, ETC.

Hon. Douglas Abbott (Minister of Finance) moved: the third reading of Bill No. 210, to-amend the Industrial Development Bank Act.
Motion agreed to and bill read the third time and passed.



ASSISTANCE TO PRODUCTION IN ATLANTIC MARITIME PROVINCES

Right Hon. C. D. Howe (Minister of Trade and Commerce) moved: the second reading of Bill No. 217, to assist producers of coal in the Atlantic maritime provinces.
He said:	Mr. Speaker, this bill provides
authority to lend money to producers of coal in the Atlantic maritime provinces for the purpose of increasing the efficiency of production through expanded and modernized mechanization.
The report of the royal commission on coal, submitted to this house on January 31, 1947,. gave considerable attention to coal mining methods in this area. The report stressed the necessity for extended mechanization, particularly in the largest producing area, Cape Breton, if the industry was to increase efficiency in production. The coal mining industry is one of the mainstays of the industrial economy of the maritime provinces, and consequently vital to our national economy. The coal produced in that area should supply a substantial part of the requirements of the central provinces.
It has been an established policy to assist this coal to find markets in the central provinces through the payment of subventions, and the assistance necessary has been based upon the costs of imported coals.
There has been an impressive advance in the efficiency of production and processing in the competitive foreign coal producing areas as a result of the mechanization of most of the operations of mining coal. This improvement has been reflected in the comparative costs and has made the competitive position of Canadian coal more adverse, as well as increasing the cost of assistance.
The physical conditions of our maritime coal seams have not permitted the rapid and comparatively easy development of new methods and machines that have resulted in such an improvement in the American fields. It is also not possible to develop as specific and certain information on the extension of the seams as is the case in the United States, since in Cape Breton, the

Coal
seams extend out to sea and cannot be proved by drilling in advance. It may be noted also that as coal mining advances further seaward, the labour and the cost continually increase.


Mr. Speaker:: Order.


Mr. Gillis:: I am interested in this statement, but the minister is making so much noise I cannot hear all the other conversation.


Clarence Decatur Howe: These facts have made it clear that, if this vital industry is to play its full part in our national development, or perhaps if it is even to survive, a program of modernization and mechanization is necessary. Such a program should result in a general reduction in the cost of coal production through the increased output of coal per man-day worked.
For some time the dominion coal board has been giving serious consideration to the provision of loans to assist the Canadian coal industry to improve efficiency. The board has recommended to me that loans be granted for mechanization and modernization to companies engaged in the production and processing of coal in Canada, if the operation of these mines is vital to our national economy. The provision of such a loan is in the national interest. The proposed bill will cover these recommendations.
The provision of this assistance will enable those operators who qualify for participation to increase efficiency, to improve their product and substantially to reduce their costs. These results will, in turn, improve the competitive position of these coals in the subvention area, and consequently should reduce the amount of annual subvention assistance.


Clarence Gillis: Mr. Speaker, this is one subject in which I am particularly interested. Were I not to make some comments on it, I could scarcely justify my presence here.
Coal mining is the basic industry of the province from which I come. Let me say that while I am not opposing the bill I should like to give the minister and the house some insight into certain aspects of this form of assistance, as I see them. I might easily rise in my place and say that I agree with the bill and that everything is fine. But was it not George Bernard Shaw who said some time ago that the way to get at the merits of a question is not to listen to some fool who has said he is impartial, but rather to develop a good argument on the subject, both pro and con. While I agree with the bill, I am not impartial, and I shall attempt to give the minister the other side of the story.

I am particularly interested in the mechanization of these mines; but before we go into that aspect of the matter I should like to emphasize the fact that the real problem, as I have known it in the past, has not been one of production from those collieries but rather one of marketing. That has been the problem in the coal industry of Nova Scotia for the last thirty years. To overcome that difficulty the government instituted a system of subventions. While they have been of some help, they have certainly never put the Nova Scotia product in competition with United States coal in either the Ontario or the Montreal market.
The steps taken by the government within the past few years were practical steps toward the solution of the problem. The subvention arrangement back in the thirties, while it did not solve the problem, was of considerable assistance. It was a practical step in the right direction.
One of the most important steps taken by the government toward finding a solution to the problem in Nova Scotia was the establishment of the coal board. I have said the question is one of markets. The provincial government, which has supervision over the industry, has no control over markets. When the coal board was set up it was given certain definite functions. Not only was it to administer subventions, but under the terms of reference under which the board was to operate, in addition to supervising the financial arrangements as between the federal government and the industry, it had also the responsibility of probing markets. So far it has not functioned as efficiently in that field as I should have liked to see it function.
Only recently the coal board held meetings in the coal producing areas that will be affected by this bill. The union, which maintains a first-class research department and keeps in close touch with all phases of the industry, presented a brief to the board which emphasized this question of markets. I am not going to read the whole of the brief, because no doubt the minister has seen it; but there are just one or two things I should like to bring to his attention.
As I said a moment ago, I have never considered this problem from the standpoint of production; I have always considered it from the standpoint of markets. The union made the following observation on page 3 of the brief:
As of course your board is aware, the Nova Scotia government informed the royal commission on coal that in its judgment Nova Scotia could produce nine million tons of coal annually, and that four millions of this output would have to be sold in Quebec and Ontario.

This bill is designed to increase production through mechanization, but the basic problem is not production; it is markets. The coal control that was set up during the war considered the problem in the same way. They considered that the problem is the means to be adopted to provide markets in adjacent areas, for surplus coal, but in discussing this matter with the union the coal board has taken the position that their function is not to provide markets; it is to attempt to find a solution to the problems of the industry from the standpoint of production.
Markets which this industry has had for years are being lost to United States coal. A return was tabled in reply to questions which had been asked by the hon. member for Royal (Mr. Brooks) with regard to markets for Canadian coal. The questions asked were as follows:
1.	What quantity of United States coal has been imported for use by the Canadian National Railways, Atlantic region, for (a) the calendar year, 1948; (b) the year 1949 to October 1?
2.	What quantity of American coal is on hand for use by Canadian National Railways at Campbell-ton, New Brunswick?
The following answer was given:
The Canadian National Railways advise as follows:
1.	(a) 272,625 tons; (b) 151,282 tons.
2.	The stockpile at Campbellton includes coals of Canadian and United States origin. Quantities are not separated, but United States content is estimated to be about 18,248 tons.
Those figures covered the present year and last year only. For a long time Canadian National Railways have provided one of the normal markets for Nova Scotia and New Brunswick coal. This return supports the contention I have been making, that additional financing to bring about increased production will not prove of any material value to the industry unless steps are taken to zone the normal markets in the section of the country we are talking about. I leave that thought with the minister.
This bill is to provide loans to aid in mechanization of the mines. I am not opposed to mechanization as such, but the term is used rather loosely. The mines in Nova Scotia have been mechanized ever since I have known them. Machinery cuts the coal, bores into the coal and transports the coal from the faces to the surface, but it is all operated by compressed air. The additional mechanization that is being talked about is in the form of heavy cutting and loading machinery located at the working face. I have no objection to taking the pan shovel from the man who works in a coal mine, because I broke my own back for twenty-six years using one. I will welcome the placing of
Coal
machines in the mines to do that type of work, but this same proposal to electrify the mines was made fifteen years ago.
I objected to that being done in mines such as we have in Nova Scotia. The company which operated the mine in which I worked fifteen years ago proposed to put in heavy cutting and loading machinery. We did not object to the machinery as such; we simply pointed out the problems that would have to be solved. The mines in Nova Scotia are the most gaseous of any mines on this continent, and there is great danger that a spark from one of these machines or from a broken cable might blow the cover off the mine. We felt strongly about the matter, and wanted some assurance that the equipment would be safe.
I took an active part in opposing the electric machines because of the danger entailed. We discussed the matter with the provincial government and asked that we be given assurance, first, that the electrical equipment would be reasonably safe, and second, that provision would be made to take care of the displacement of manpower that might develop. When you put in machinery of this type you are faced with the problem of safety underground, as well as the social problems above ground in connection with what is to happen to the investment in churches, schools and homes when men are displaced from employment.
We could get no assurance on these two points, and we would not permit the machinery to go in. That was fifteen years ago. We did not base our objections at that time on imagination only. We went back to what had happened in the British mines which had been electrified for a long time. We secured reports made by royal commissions which had considered the question of electrification underground. I have the report of one commission here, but I do not intend to quote from it because I have read it a thousand times. I used it at that time. This particular commission sat continuously for three years in order to ascertain the reason for the terrific fatal accident rate in the British mines as compared with the low rate in the mines of France. When this commission reported in 1938 it stated clearly that the reason was the electrification of machinery at the working face. The use of electricity within 300 or 400 yards of the working face is reasonably safe, but no one can say it is absolutely safe.
You have a different condition when you shove a huge electric machine that throws an arc right up to the working face. At that point there is the possibility of gas, and also dust, which will cause one of the worst explosions possible when ignited. By

Coal
doing that you create a dangerous problem. This commission reported that the difference between the French and English rates was that the equipment in France was driven by compressed air, whereas there had been an increased use of electricity at the working faces of the English mines. They did not withdraw the machinery. They wrote a lot of safety precautions into their act.
I know the minister is not responsible for conditions in any of the collieries, but under the bill the minister assumes the responsibility of seeing that as the result of these loans, the developments are sound from a financial point of view and also from the point of view of increasing production. The minister is taking that responsibility. In addition I think he should assume responsibility for the question of safety, in order that, where electrical equipment is to be installed, conditions in the colliery will be reasonably safe. Nobody can say they are absolutely safe, but they should be reasonably safe before money is used for that purpose.
The minister is not a mining expert, and I think he should have a mining engineer in his department who understands the whole problem, and who would be able to advise him as to equipment. There is a rush to improve production. The coal operators in Nova Scotia have a new general manager, and every time there is a new general manager he has to make a name for himself. In the rush for profits, and because of his desire to build up his prestige in the industry, he might overlook such little things as the safety of the man who actually produces the coal.
I am not too sure about the ability of the provincial government to handle the situation. They are a little too close to the operation. I think someone in the minister's department or on the coal board should be able to examine any colliery where electrical equipment is installed and be able to say to the'minister that the equipment is reasonably safe in that particular colliery. It is a responsibility and obligation that someone should assume. I have seen mine explosions, and they are not pleasant. I have gone through a war, and I would rather go through two wars than a mine explosion. It can happen very quickly and simply. Unless precautions are taken, we may find ourselves, in the rush to improve production, in the position of blowing the cover off one of these mines and possibly involving a thousand people with it.
At the present time there is some of this equipment operating in one of the collieries. I should like to bring certain points to the minister's attention with regard to the investigation in Great Britain. In most of
[Mr. Gillis.l
the cases where there was an accident because of gas or dust being ignited, it happened because of a broken cable. These cables are supposed to be equipped with safety switches a certain distance from the working face so that if anything happens to the cable on the other end the switch will blow and cut the power off. In most of the cases where they had difficulty in Great Britain the switch did not work. It is somewhat of a coincidence, but I noticed recently a press dispatch in a Sydney, Nova Scotia, newspaper dated November 8. On the sixteenth of last month the union was discussing the problem of safety in one of the mines where they have installed electrical equipment, and their approach to the problem was from the point of view mentioned in the report from Great Britain-the fact that the switches did not work. Let me read part of a dispatch from Glace Bay, dated November 18:
Investigation into the failure of safety devices to operate in connection with the mechanical equipment in No. 20 colliery will be conducted Saturday, it was stated at tonight's meeting of Phalen local.
That happens to be my own local of the mine workers union.
During the regular session of the local union members expressed alarm at a number of incidents that have occurred in the mine recently. The cable carrying electric energy to the mechanical equipment has been found burning on several occasions, it was said, and at times fires were found near the damaged cable. Andrew Conron, president of the local-
And so forth. Right at the present time there is definite proof that in the colliery where they are making the initial tests with that type of equipment they are having some difficulty with regard to the electrical power and the failure of the safety devices to work, just as was found in Great Britain in the period from 1935 to 1938. I am mentioning this to the minister so that he may have some understanding of the new problem of safety that is being created by mechanization. When they refer to mechanization now they merely mean they are replacing compressed-air-driven machinery with machinery powered by electricity. That is the only difference.
Gas conditions are bad in most of the collieries, but I can say that No. 20 is one of the worst I have ever been in from the point of view of throwing off gas. It is one mine where they could not afford to have a fire of any kind. They are just lucky that they spotted them and put them out. The type of mining has changed completely. For the benefit of the minister I want to say when these mines were mapped out the strata were developed for an entirely different type of mining. Places were driven sixteen or twelve feet wide, and two men would work in them. The pressure on the roof five or six miles

under the Atlantic ocean is terrific. You have to timber it close to the face. The roofing and pillaring operation was a technical job for two experienced miners. It could be made safe because the men who carried on the operation had only that space to look after. Now they are getting away from that, and the strata have been developed in such a way that the main supports are left in place to look after roof conditions and so forth; but when you start to install heavy machinery it means that the faces may be three times as wide. It means that the timbers cannot be kept within eighteen inches of the face. That is the way I had to keep them when I worked there.
Today that is done away with. I looked at that operation last December, and as a practical miner I would not work in or around it. It appeared to me they had cast aside all the safety conditions that it took us twenty-five or thirty years to achieve under the Nova Scotia Mines Act. If there is to be a different type of mining in the future, we must be prepared for the new conditions that will be created. The machinery will drive places forward a lot faster and will open up wider faces. With that comes the problem of the releasing of a lot more gas than there is in narrower places. Airways will have to be carefully looked after. When you pump air from the surface a thousand feet down a shaft and through one mine, it is really an underground world today in No. 2 mine. Harbour seam, No. 20, is about 450 feet above that again. A tunnel is drifted up on a one per cent grade, and there is another underground world opened up there. You have to drive all the air down the main airway, through the old mine and back up the tunnel, and it has to ventilate all these working faces. It is a problem which will have to be carefully studied, because under no circumstances is a mine reasonably safe unless a sufficient amount of air is pumped in.
I mention these things to the minister because the solution of the problem is not just as simple as making loans to the company to allow them to go ahead and increase production. The question of markets will have to be taken care of. If the Nova Scotia government is right, if the union is right which is doing research work on the problem, and if the figures are correct that were given a moment ago as to the displacement of Nova Scotia and New Brunswick coal on the Canadian National railways, then someone has to do something about the question of markets. At least we could have the markets that belong to us economically. I think we could compete with the Americans in that market, but evidently we are not doing so; somebody is falling down on the job.
Coal
In my opinion the matter of markets should be one of the main responsibilities of the coal board; and under the terms of the legislation setting up that board I believe it has that responsibility. But when I see the Canadian National using United States coal I am not satisfied that the matter has been handled properly. Mind you, at the time that happened our mines on the mainland of Nova Scotia were working only two or three days a week. If loans are to be made for the purpose of mechanizing and electrifying these mines, the question of safety must be considered. The minister should see to it that the social problems and hazards created by the new development are also considered by some competent person in his department.
I have said I favour the bill. I think it is an improvement on subsidies. I hope it will not interfere with or displace subventions; I do not think it will. The payment of direct subsidies on production without supervision, as was done during the war, in my opinion served no good purpose except to build up the balance sheets of the companies. I believe the loan arrangement is practicable; and if the coal board, with competent personnel, exercises some supervision and scrutiny in matters of safety and the social problems that will be created, on somewhat the same basis as that on which the financial arrangements are looked after, I believe this bill will be a step in the right direction and will help us get at least somewhere near competition with United States coal in the Quebec and maritime markets, which are normally ours. I do not believe the problem ever will be really solved, however, until the question of markets is dealt with by zoning those which are reasonably economical for our coal both east and west.


Mr. C. T. Richard (Gloucester):: I believe the minister is to be complimented on having introduced this legislation, which will be welcomed in New Brunswick where coal production, though small, plays an important part in our economy. We do not produce a great quantity of coal, probably not much more than half a million tons. The amount is insignificant, I know, when compared with the coal production of Nova Scotia; yet that small production provides employment to some six or seven hundred people.
That is not all, however. Coal produced in New Brunswick provides the only means by which we may obtain electric power, and that is the important part it plays in our economy. The New Brunswick electric power commission is the largest distributor of power in that province. It has a capacity of about 87,000 horsepower, of which only some three or four thousand horsepower are

Coal
produced by hydro, the remainder being produced by coal-burning units, one of which is located at the mines at Minto, another at Chatham, and another at Saint John. Today these three units consume over 200,000 tons of coal, or about fifty per cent of the coal produced in New Brunswick. It is the intention of the power commission to establish another unit at Grand Falls and to double the capacity of the unit at Chatham, which will mean that the commission will require some 400,000 tons or about four-fifths of the coal produced in our province. Naturally this will mean that the coal operators will have to increase their production in order to keep up with the requirements of customers other than the power commission.
I would hope that by modernizing and mechanizing the smaller mines in New Brunswick we might be able to reduce the cost of production and thereby reduce the cost to the power commission, thus enabling it to provide electric power to every section of our province. Today that power is expensive. The coal alone costs the commission about -6 cents per kilowatt hour; yet that cost is justified by the use made of that power in the rural districts and small towns and cities. As I said before, we have no potential hydro power to develop, and this seems to be the only way we can obtain the electric power which is so essential to our economy. This legislation will enable the operators to increase their production and at the same time increase the number of men employed. It will also give us an opportunity to obtain cheaper electric power from our coal-burning units.
I hope that we in New Brunswick will derive more benefits from this legislation than we have received under the subsidy system. Personally I do not believe in subsidies; I think this is the proper way to develop our industries. I note that the bill is to be proclaimed by order in council. I trust that proclamation will not be delayed unduly, because conditions in New Brunswick are none too good just now. We have been hard hit lately. As a result of the sudden devaluation of the British pound our lumber industry is not operating to the same extent as in former years, and we have lost our pit prop market. Unemployment is increasing, as the figures disclose; and we hope that legislation such as this will help maintain and increase employment and better conditions throughout New Brunswick.


Mr. T. L. Church (Broadview):: Mr. Speaker, this bill is based upon the doctrine of bonuses, subventions and subsidies for this very important industry. I am not going to discuss at length what has been done in the past, but

I should like to make one short reference. This bill deals with the producers of coal in the Atlantic provinces. The first session I was in this house I introduced a motion which was discussed for three days. At that time I said we were a very cold country. There were pictures in the New York Times showing Canada sitting as a Lazarus at the feet of the coal barons of Pennsylvania. Following the discussion of my motion a committee was appointed, of which the hon. member for Inverness-Richmond (Mr. Carroll) was chairman.
I always thought that if the maritime members had shown a little more co-operation on this question we would have had some redress years ago. This is an extremely cold country. The year before last, it was necessary to use coal for heating purposes for eight or nine months. As I said in 1922, why should we be sending about $56 million in wages, as the amount was then, to the Pennsylvania coal barons? There is an abundance of coal in the maritimes and Alberta. The province of Ontario wanted to use this coal, but since I have been a member of the house protection has prevailed in the form of bonuses, subventions and subsidies.
This bill will aid the producers of coal, and that is good. It exempts them from some of the provisions of the Income Tax Act. The bill contains a provision to allow the governor in council to pass rules and regulations, as to how and when it should apply. I do not believe that is a very good principle for us to follow. As 1 said, this bill is based on a policy of bonuses, subventions and subsidies. It is therefore a national question, and these provisions should be applied to the producers of coal in Alberta. There is no doubt about it, the provisions of this bill will serve a useful purpose by way of assistance to the coal producers.
The motion I proposed for a national fuel supply was that all coal should be mined under the British flag, whether from Wales, the maritimes or Alberta. When we have an abundance of coal in this country, why should we send all those wages to another country? The price of coal has gone up by leaps and bounds. In 1922 anthracite coal from Pennsylvania was $6 a ton. There was a demonstration of Welsh coal at the Canadian National Exhibition. In 1915 a boatload of coal came from Swansea, Wales, during the time of Stanley Baldwin, and the coal was dumped on the dock at Ashbridge's bay, which is in my constituency. This boatload of coal proved that it was an economic way to deliver it if we had the coking ovens for it. I believe this is a national problem. The object of the bill is to assist the producers of

coal in the Atlantic maritime provinces. My motion of 1922 provided an embargo on coal and a fund to aid coking ovens for coal mined and coked under the British flag. I believe the time is not far distant when we shall have to go further than we have gone. So far as possible, we should use coal from the other agencies I have suggested.
I remember when the hon. member for Inverness-Richmond first entered this house in 1922; he was chairman of a committee, appointed after two days' discussion of my coal motion, and he did a great deal along these lines. He has taken a keen interest in this matter. Do not forget that the doctrine on which this bill is based is a system of bonuses, subventions, and subsidies, and that is the only way we can solve our fuel supply problem. It does not matter where the coal deposits are in Canada, I believe the day is not far distant when further aid will have to be extended to coal producers and coking ovens.
Back in 1922, the hon. member for Inverness-Richmond made a splendid report on the coal problem. The only member who rose to support it here was Hance Logan, then a member of parliament, who was afterwards made a senator. I believe there were only two government members who rose in support of the principle of a national fuel supply at that time. Then the head offices of Dominion Coal were moved up to Montreal, for some reason or other, instead of being kept in the maritimes where the situation was so acute. During the first war, I travelled on a special train around lake Erie ports with Sir George Bury of the C.P.R. to inspect the coal depots. During the early days of the first world war there was a coal famine in our city, and the people were suffering a great deal from it. I believe you were overseas at the time, Mr. Speaker. It was a deplorable state of affairs. Even those who were ill found it hard to get a bag of coal during the winter of 1917. The winters are severe in this country, and this winter will be no exception. With the price of coal going up to $22.50, and giving indication of advancing to $25 and with the fourth coal miners' strike of the year in the United States, the winter will be even more difficult.
We want to use maritime coal in our city, and I believe the coking ovens should be adapted to it. I believe there are about
700,000	tons of anthracite coal in the ship channel at Ashbridge's bay now. The mild fall allowed the supplies to accumulate. Formerly that area was a marsh. We have used Welsh coal and Alberta coal in those coking ovens, but we also need maritime coal. The school board wants to use it, and the city
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wants to use it. Everyone wants to assist the minister with this program, because this is an important industry. I do hope something will be done at this session; otherwise it is going to be too late. There should be some direct and immediate aid to the producers in the manner indicated, and 1 believe the principle should be extended to the coal producers in Alberta. We should apply the doctrine that all coal should be mined under the British flag, whether it is in the maritimes, Wales, or Alberta.


Mr. E. G. Hansell (Macleod):: Mr. Speaker, I rise to say a word about this bill, which proposes to grant assistance to the coal mining industry of the maritimes by way of loans. I believe I can say that we support this bill, because the coal mining industry in Canada is in none too good a position. Any assistance that can be given to the industry generally should be looked upon with some degree of favour.
In introducing this measure, the minister indicated that it was in the "national interest" -that was the expression he used. I am at once reminded of the pleas that have been made in this chamber for many years for a national coal policy; that would be, indeed, in the national interest. Over the years, speakers in this house have urged a national coal policy, but it is not so easy to determine what that national coal policy should be. I must say that I have attempted to arrive at a satisfactory answer to that question, and just as I feel that I am on the verge of a solution, I find that I just do not quite make it. There is difficulty in arriving at what would be a good national coal policy in Canada, because there are so many intricate things involved. It is very easy to suggest that we should have a national coal policy, but it is another thing to suggest what that policy should be.
I do not want to be unkind, but during this session I have been waiting for the leader of the Progressive Conservative party to rise in his place and indicate what he would regard as a national coal policy. The reason I have been waiting is that we had the pleasure of welcoming the hon. gentleman into our part of the country a few months ago. I was fortunate in having him come into my own territory. I say I was fortunate because I believe his visit to my constituency had some effect on bringing me back to this house. When he came into our part of the country he was privileged to speak at a meeting at High River. I do not know whether someone had whispered something in his ear about the coal deposits in an adjacent territory; in any event he said in his speech that day, as reported by the press, that if the country looked with favour on

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his party, that party would tackle this coal problem and really do something about it. I have been waiting for him to rise, and I think I shall have to wait a long time before he will be able to make any concrete and acceptable suggestions as to how this problem can be tackled. It is not easy.
I have read a good many reports by commissions that have sat on the problem of the coal mining industry in Canada. I have tried to make a study of them. When I was elected to the House of Commons in 1935 I looked over my constituency. I was not a businessman; I was not a farmer. I was not anything, I suppose. But I found that in the southern part of my riding there was a tremendous coal mining industry. Another part of my constituency dealt with ranching, and another part of it was almost entirely wheat farming. I was not a rancher; I was not a coal miner, and I wondered why my constituents had ever sent me here. I thought: to be an efficient member I shall have to study some of these things. I got hold of all the material I could find, and began to do that. I tried to wade through the mass of material put out by the various commissions that had sat in days gone by, to determine what I might propose in respect to the coal mining industry. Perhaps I have gained some knowledge of the situation. I will say that not one of those reports concluded with a definite and satisfactory recommendation as to an overall national coal policy. If they could not recommend any real solution of the problem, who am I, or who is anyone else, to say that a satisfactory recommendation can be made? I simply say that the problem is a huge one.
The present bill will be of some assistance in relation to a fraction of the problem. In the past the government have met the problem of the coal mining industry by a sort of piecemeal method. I am not saying that in a derogatory way, because personally I cannot see that they could have done very much more than they have done. As I say, the problem is tremendously complex.
There are some questions I should like to ask about the present measure, but I shall reserve them until the bill is in committee. When this legislation is set up to give assistance to the coal mining industry of Nova Scotia I trust that it will not be a matter of putting money in a bag with holes in it. We must take a long-range view of this matter, and, in the assistance offered by this legislation, attempt to bring the industry to a point where it will be placed on its feet and enabled to resume operations over the years with confidence. If we do not do that, in a few years' time the industry will be
[Mr. Hansell.l
coming back to us for more help, or for something else, and a little more assistance will be added piecemeal to what has been done over the years.
I have some reservations in my thinking in respect to the way in which the coal mining industry of Nova Scotia has been carried on in the past. I wonder whether those who are responsible for the industry have done all they possibly could to keep the industry on a solid financial footing. Have they done all they could? If they have not, then the minister should make it perfectly clear to the industry that they must so manage their affairs that they will be worthy of assistance in times of emergency.
I have a coal mining industry in my constituency. In our area of southern Alberta and eastern British Columbia it is bituminous coal mining. The companies operating in these areas have not had the assistance that some other coal mining areas have had. It is true they have had some assistance. I must not forget to say that we have been assisted materially by the government's subvention program in respect to the transportation of coal. It has enabled the industry to reach a market that otherwise they would not have been able to reach. But even though they have been assisted by way of subventions, I believe I can say that the companies there have so managed their industry that they have been willing to take some of their profits and to plow them back, thus reducing what otherwise would have been a higher dividend to the shareholders.


Mr. Smith (Calgary West):: Do you not
think they have done that?


Ernest George Hansell: Yes, they have. That is what I am saying. I do not know whether that has been done in connection with the Nova Scotia coal mines. Perhaps it has been; I am not as familiar with the situation there. I do know, however, that the bituminous mines in southern Alberta and eastern British Columbia have reduced their dividends to a minimum. They have taken that money and plowed it back into their own company by way of capital expenditures, installation of more modern and efficient machinery, and the like.
The coal mining industry there is in a precarious position. I believe I could say that to a greater or lesser degree it is operating on a shoestring, and in a few moments I shall produce figures to show it. Other factors come into the picture which cause us some disturbance. The discovery of oil in Alberta on a larger scale has meant that much of the market that previously had

been available is now beginning to fade because much of the coal had been mined for the railways. The railways are now gradually converting from coal-burning to oil-burning locomotives, a fact that is giving the industry a good deal of concern, not only from the standpoint of the companies themselves being affected, but because of the possibility of its creating an unemployment problem. That is one condition now appearing on the horizon that is giving us a good deal of concern.
With the possible loss of this market they must turn to markets other than the railways. This means that the demand from consumers is for a higher grade of product. What does that involve? It involves the spending of many thousands of dollars for improved cleaning equipment. And before the story is completely told, large sums of money may have to be put into that industry.
I make these observations simply to remind the minister that since he is now proposing a bill for the assistance of the Nova Scotia coal mining industry, he may be called upon for similar assistance to help the coal mining industry in other parts of Canada-and I speak particularly of that portion of it which is in my own territory-when because of adverse circumstances in the industry they are confronted with financial problems.
I say to the minister, and because he is a reasonable man I believe he would agree, that since he has introduced this bill to assist the Nova Scotia coal mines-


Mr. Brooks:: May I interrupt the hon. member? He has repeated throughout his speech that this bill is to assist the industry in Nova Scotia. It is to assist the industry of the maritime provinces; and we have coal mines in New Brunswick which need assistance.


Ernest George Hansell: I assure the hon. member I did not want to leave New Brunswick out of the picture. I was thinking in terms of Nova Scotia, but I am sure New Brunswick is just as important as any other part of Canada. I thank the hon. member for reminding me of my error. My view is that it is a good thing to assist the coal mining industry wherever it requires assistance. In my further observations I shall try to remember to refer to the maritime industry rather than to the Nova Scotia industry. I am sure the minister will look with some degree of favour upon requests for assistance from the coal mining industry in other parts of Canada.
I should like to make some brief observations concerning the solvency of the coalmining industry in Canada. The figures I shall use may not be exact, but I use them
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in an effort to present a general picture. Figures are strange things. One can clutter up one's speech with so many figures that the subject matter becomes lost-indeed, even Hansard becomes lost when too many figures appear on its pages.
There may be some who would take the view that because a million-dollar coal mining company operates in some part of the country, the coal mining industry is making tremendous profits. In this respect the coal mining industry is no different from any other. When one reads a balance sheet and finds that a company has made so many thousand dollars in a year, or, if it is a large corporation other than coal mining, so many million dollars, he begins to say: What an industry! Just imagine those capitalists making so many millions of dollars in one year! But when one boils down the facts as to how much a company might have made on one unit of production, whether it be in the automobile industry, the textile industry, or some other, it presents an entirely different picture. A small slip one way or the other on the profit per unit may make the difference between making a million dollars in the year, or losing a million dollars.
We must look at the coal mining industry in a similar fashion. On their balance sheets they may be able to show that they make so many thousand dollars per year. But how much per ton do they make? Perhaps that figure would give a different picture. People in eastern Canada who burn domestic coal have to pay a high price for it. Some may say: Someone is making a pile of money on this coal, when we have to pay $15 or $20 a ton for it.
Let us look into that, so far as the bituminous mines are concerned. I have before me the report of what has come to be known as the Carroll coal commission of 1946. Anyone who wishes to familiarize himself with the coal mining industry would do well to read it carefully. It is a voluminous report, but there is an education wrapped up in it. I am not going to comment on the report itself, but I will say that if anyone takes the trouble to read it he will become acquainted with the coal mining industry.
On page 272 of the report, reference is made to profits that have been earned by the Alberta and eastern British Columbia bituminous coal mines. I have summarized these figures. Ten companies made an average profit of 23-5 cents per ton, but two of them made profits of from 30 to 53 cents a ton. Leaving those two companies out of the picture, the remaining eight companies made an average profit of only 16J cents per ton.

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Clarence Gillis: How many tons did they
produce?


Ernest George Hansell: I referred to that a little while ago. They may have produced a good many thousands of tons and in the end made some profit, but I think my hon. friend will admit that if the cost of production went up just 17 cents a ton they would be facing a loss of half a cent per ton on the thousands of tons they were mining. That is something we have to keep in mind, and that is the point I am trying to make.
It has been said that the cost of production in strip mining as carried on in western Canada has been tremendously reduced. I think it can be granted that the cost of carrying on this type of mining is less than the cost of other types of mining, but it is shown on page 274 of the report that the average profit per ton for strip mining was 20 cents, an amazingly low figure.
On page 279 of the report, reference is made to the ancillary operations of coal companies, and it is indicated that this is one thing that helped to keep the coal mining industry aboveboard. This paragraph reads:
A very large proportion of the revenue of most companies is derived from sources other than the actual mining of coal.
Over the fifteen-year period the combined net earnings on coal mined of all companies amounts to $790,088.35, or one-half cent per ton on all coal sold. From other sources the coal companies earned $21,671,440.72, or 12 cents per ton.
These sundry revenues arise from the operation of light and water utilities, through rentals of buildings, apartments, houses and hotels, sale of foreign coal, production of coke, briquettes and by-products, and from investment earnings.
Revenues included under this heading, however, are definitely connected with, and are attributable to, the coal operation, as they emanate from the townsites in which the mines are located and from the investment of reserve and surplus funds set aside or earned throughout the history of the companies.
I thought that would be an interesting paragraph to place on the record. I should like to refer now to page 281, and quote a paragraph which deals with the profits made by the industry. It reads:
The foregoing general review, supplemented as it is with related material on most of the mining companies in Canada, clearly indicates that the operations of the industry as a whole have not been too profitable. Involving an investment which at the end of 1944 amounted to approximately $83 million and in respect of sales of 180 million tons over the fifteen-year period, the Canadian coal industry has had a return of approximately 10 cents per short ton. While this is the over-all result, a geographical distribution of these figures shows that the eastern companies (maritimes) sold 52 per cent of the coal and only made a net profit of one-third cent per ton, while the western companies (Saskatchewan to British Columbia) sold 48 per cent of the coal and realized a profit of 191 cents per ton. These figures are before any provision for depletion.
(Mr. Hansell.]	_
The foregoing results are after including production subsidies paid by the emergency coal production board and other governmental assistance totalling approximately $15 million, of which approximately $13,800,000 was paid to the eastern companies and $1,200,000 to the western companies.
I skip just a small portion and continue:
It is only fair to observe that subsidies paid by the emergency coal production board were in considerable measure due to the wartime price ceiling policy.
Now I should like to put in a plug for private enterprise. Nowhere in this report is there any recommendation that the nationalization of our coal mining industry would solve the problem. If anything, the report would lead us to believe that the commissioners were adverse to the nationalization of the coal mining industry in Canada. Even the minority report by Mr. Morrison, one of the commissioners, indicates that the nationalization of the industry would not solve the problem.
I shall have a few questions to ask when the bill is in committee. We favour the measure because we believe the coal industry of the maritimes is in need of assistance. I repeat that we may ask the minister to look with some favour upon the taking of a similar step in respect to the western coal mining industry if the necessity arises.
Before I sit down I should like to compliment the hon. member for Cape Breton South (Mr. Gillis) for his able speech. He is from the maritimes, and he has spent most of his life in a study of the coal mining industry, having played a very important part in it. He speaks with some authority. No doubt the minister will take into consideration what he has said, and perhaps will also give a nod to what I have said.


Mr. J. H. Dickey (Halifax):: Mr. Speaker, I should like to say a few words on this important legislation. First of all may I compliment the Minister of Trade and Commerce (Mr. Howe) and the government upon the steps which they are prepared to take to improve and assist the coal mining industry of the maritime provinces. The industry is a basic element in the economy of the province of Nova Scotia. Any steps which are taken to assist it are of the utmost importance, not only to the actual areas in which the coal mining operations are undertaken, but also to the province as a whole. For this reason all hon. members from Nova Scotia, no matter what constituencies they represent, are interested in legislation of this kind, and are prepared to support it vigorously.
I do not think hon. members generally could appreciate the basic purpose of the present legislation without some further

comment on the question of production and markets which was raised by the hon. member for Cape Breton South (Mr. Gillis). He said that in his opinion the problem was really one of markets and not of production. He views the present legislation as attacking the question of production and not the question of markets. My view is that the two questions of production and markets are so completely interrelated and interdependent that they cannot be separated, and that the purpose of the legislation and its results will affect both production and markets. I think the truth of this is demonstrated when we consider just what a market is. After all, a market is simply a place where there is a demand for a certain commodity, and where you can sell your product at a price which is competitive with the alternatives available in the same area.
The purpose of mechanization and the improvement of production in the mines of Nova Scotia, New Brunswick and other parts of the maritimes is not only to increase the volume of production but also to reduce the unit cost. That has a direct relation to the ability of the maritime producers to place their product in the areas which they can serve, at a price which is competitive with the other coals and heating and power facilities that are available. It is my belief and contention that the purpose of the bill is to permit the production of coal in the maritime area at a lower unit cost so that the product of our mines will be available and will compete more readily with United States and other coal.
The hon. member for Gloucester (Mr. Richard) said something a few moments ago which illustrates the point I have in mind. He spoke of the production of electric power from coal in the maritime area. One of the drawbacks has been the high cost of the coal required to run steam plants. If the result of the bill is that coal will be available in sufficient quantities, and at a low enough unit cost to make the production of electric energy from steam power more economical, then the mines and the miners will benefit together with other users of electric energy in the maritime area.
I think that the bill is a basic and really constructive measure. Whether or not it will achieve its purposes depends upon a number of factors. The operators of the coal mines will have to take advantage of its provisions, and they will have to see that their operations are conducted on a proper businesslike basis. The coal miners will have to co-operate to see that the new facilities which are made available are used for the benefit of the operations generally and in the public interest. Last but not least, the operators and the 45781-161
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various governmental agencies interested in the production of these mines reaching markets must continue the necessary activities to see that the production is used to the greatest possible extent in the areas to which it can be properly transported and put to economic use.


Alfred Johnson Brooks: Mr. Speaker, I have spoken on this subject at different times in the house, not on the present measure but with respect to the coal situation generally in my own province. I was indeed pleased to hear the hon. member for Gloucester (Mr. Richard) champion our cause. I am particularly interested in the subject because the small industry which we have in the province of New Brunswick is partly in my constituency, and partly in the constituency of the Minister of Veterans Affairs (Mr. Gregg). As the hon. member for Gloucester pointed out, the coal industry of the province is small, and produces not more than 500,000 tons a year; nevertheless it is most essential to our whole economy.
The area around Minto has grown into a large and populous centre, and it depends entirely on the coal industry. To show how much the area has increased in size, may I point out that last year one of the largest schools in the province of New Brunswick was built at Minto. The Minister of Veterans Affairs was there to lay the cornerstone. The school cost over $1 million, and before that they had a large consolidated school which was one of the finest in the province. Both schools will be used to capacity. The area is very important; and it is necessary that the coal mining industry of this province be maintained in order that such communities as Minto may continue to be prosperous, and also, as was pointed out by the hon. member for Gloucester, in order that our whole economy may be maintained.
This morning the minister said this legislation was intended to assist in the subvention area. I assume he means the maritime provinces, and that New Brunswick will be included as well as Nova Scotia. Am I correct in that understanding?


Clarence Decatur Howe: Yes.


Alfred Johnson Brooks: We have not always shared in the benefits that have been given the maritime provinces, as I have pointed out on various occasions previously. We have been discriminated against when you consider some of the benefits that have been given to Nova Scotia-and that has applied particularly to subventions. In New Brunswick we have obtained very little if any benefit from coal subventions, since under the act only coal exported from a province receives that benefit. We export very little coal from New

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Brunswick, and as a result Nova Scotia coal, which receives the subvention, can be brought into our province to undersell our coal at almost every point. In Campbellton, Chatham, Bathurst and many other parts of New Brunswick, coal brought from Nova Scotia can be purchased for less than New Brunswick :oal, as a result of the subventions paid by this government. That is why I am anxious to see that this legislation does not discriminate against the New Brunswick coal industry.
I was interested to hear the hon. member for Gloucester say that an electric generating plant was to be established at Grand Falls. As I remember it, some land was cleared at that point last summer and the right of way for a railway spur was obtained, but nothing more was done, and I understood the project had been abandoned. I was pleased indeed to hear the hon. member say that the undertaking has not been dropped, but that the development is to go ahead, since that will mean a larger market for our coal, which in turn will benefit the coal producers and miners of my constituency.
I do not intend to say anything further with respect to this legislation except to point out once more that the market for New Brunswick coal is limited almost entirely to our own province; and, as was pointed out previously this morning, our whole economy, which is based upon the production of electricity, depends upon the success of our mining industry. I might add that our pulp mills obtain a great deal of their coal from the Minto mines. In past years we also sold to the railways; but as the hon. member for Cape Breton South (Mr. Gillis) pointed out earlier, quoting an answer to a question I placed on the order paper not long ago, United States coal was a strong competitor in the market provided by the Canadian National Railways.
If this legislation will help us hold the market in our own province provided by our electric plants, our pulp mills and the railways, and will give us some assistance which will enable us to produce our electricity at less cost, I am sure it will be a very great benefit to our people. I hope, as I said a moment ago, that we shall not be discriminated against in this instance as we have been in the past with respect to subventions, and as we were during the war with regard to other legislation affecting maritime coal mines.


Mr. W. F. Carroll (Inverness-Richmond):: 
William F. Carroll: When the house rose for the noon recess I was discussing production in the coal mines of the maritimes. I intended to make some reference to the production capacity of the United States mines whose products are in competition with maritime coal. Before doing that may I say that in 1937 the production of the mines of Nova Scotia amounted to 7,226,954 tons. In 1944 the production had fallen to 5,745,672 tons. That was not owing to the lack of markets, because in those days we were not producing sufficient coal to fill the markets of the province of Nova Scotia. Since that time our coal production has increased somewhat. In 1948 the coal production of Nova Scotia amounted to 6,430,991 tons, and of New Brunswick, 522,136 tons. The production in New Brunswick had increased from 361,184 tons in 1945 to 522,136 tons.
I want to say a word about man-day production. In 1945 the man-day production in the coal mines in Nova Scotia had fallen considerably from the pre-war average. In 1945 production per man-day in Nova Scotia was 1-58 tons. In New Brunswick it was 1'72 tons. In 1948 the man-day production rose to 2 * 19 in Nova Scotia, about 50 per cent, and in New Brunswick to 2-42 tons.
Perhaps it might be well to put the whole Canadian man-day production on the record. On Cape Breton Island, Nova Scotia, the man-day production in 1934 was 2-54 tons. In

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1939 it was 2'60 tons, and in 1944 it was 1-73 tons. I have indicated how it has risen since. In New Brunswick in 1934 it was 1-33; in 1939, 1-42 and in 1944, 1-47. In Saskatchewan in 1934 it was 5-12; in 1939, 5-85; and in 1944, 8-66. That tremendous production in Saskatchewan was due to the fact that it was mostly stripping operations. They have pretty deep seams to strip.
Here I want to recognize the fact that the little mines in southern Saskatchewan, I believe in Estevan, not only undertook to mine coal but established their own markets. They went into the city of Winnipeg. I do not know whether it was through their own company or through subsidiaries, but at their instance they created their own market by having installed central fire-heating plants, powered by coal. I believe that was one of the best things I saw in my trip through Canada a few years ago.
In the Drumheller area of Alberta, in 1934 the man-day production was 3-73 tons; in 1939 it was 3-94, and in 1944, 3-58. In the Mountain Park area in 1934 it was 3-75 tons; in 1939, 3-71, and in 1944, 3-87 tons. In the Cascade area of Alberta, in 1934 it was 3 09 tons; in 1939, 3-21, and in 1944, 4-34. In the Crowsnest area of Alberta, in 1934 it was 3-07; in 1939, 3-84 and in 1944, 3-67. In Crowsnest, British Columbia, in 1934 it was
3-	97; in 1939, 4-38 and in 1944, 4-23. On Vancouver island in 1934 it was 1-82; in 1939, 1-84 and in 1944, 2-03.
It will be seen that the man-day production in the western provinces is much higher than it is in the maritime provinces. The real difficulty there is of course markets and the availability of markets. I understand that even today the domestic coal users in northwest Ontario are supplied by Alberta coal, which I think is a very good compliment to subventions, because that is the only way that those western mines could be made competitive in that area.
I now turn to the situation in the United States so far as production is concerned. I refer to the states whose products are competitive with maritime coal-West Virginia, Kentucky, Pennsylvania and Ohio. In 1934 the man-day production in West Virginia was
4-	73 tons as compared with 1-97 in the mari-times. In 1939 it was 5-51, and in 1944 it was 5-61. Instead of their man-day production decreasing during the war, it went up. I think it is fair to say that it went up on account of the mechanization and the improvements in the underground transportation systems in these mines.
In Kentucky in 1934 the man-day production was 4-33; in 1939 it was 4-68, and in 1944 it was 5-08. In Pennsylvania in 1934

it was 3-98; in 1939 4-77 and in 1944 5-28. In Ohio in 1934 the man-day production was 4-23; in 1939 5-35 and in 1944 6-77. I do not think anybody is putting forth the contention or the argument that it is as easy to mechanize the maritime mines as it is the mines in these states to which I have referred.
I now wish to say something about the prices that are charged for United States coal coming into our Canadian markets. For some time there was a coal stabilization board which stabilized the coal output of certain states at a certain price. I understand that that board has gone out of existence. I think that some method, co-operative or otherwise, should be developed with the coal industry in the United States. For example, the mines there that have the greatest production per man-day can get their coal out at a very small cost, but they are allowed to set the price for coal that comes into Canada, instead of making the price uniform for that state, because there are many mines in those states in which it costs more to get out the coal. I do not know whether anything can be done about that or not, but it is something that I thought I should bring to the attention of the minister.
With reference to markets, there are other competitors of coal in this country so far as fuel and power are concerned. I think it is a good thing. I believe there are some people in this country who are concerned about our reserves of coal. What I do know is that there are enough reserves of coal in Nova Scotia to pay off this debt in the usual fashion.
Perhaps I have some old-fashioned ideas about the fuel problem; but it is my belief that the good God has placed on the earth, in the sky and in the sea all the natural resources that will be necessary for the use of man until the end of time. Of course those resources will have to be harnessed and made useful by the ingenuity and scientific experience of man.
In the old days in my province wood was the only fuel we had with which to warm ourselves. Occasionally power was produced through the use of windmills. Then wood became scarce, and coal was taken from the ground. Coal then became scarce, with the result that oil and hydroelectric power have come to the forefront. Now we are confronted with the greatest force of all. I understand that in about 1955 atomic power will be harnessed to a point where it can be used to do the work formerly done by coal, oil and all other means of power. Especially will that be true in our large industries.
After hearing the discussion in the house yesterday one could not help concluding that it is a great pity so much of our wood has

been burnt. Speaking about my own province I would hope that in a very few years every domestic consumer of coal would be able to use it as a fuel, instead of wood. In this way the farmers of Nova Scotia will be able to crop the old spruce tree and put it to some of the uses for which it was intended.
I have said that there are other fuels and power competing with coal. There are. I do not wish to be critical of any of the coal companies in Canada, particularly in my native province. I must say however that if the coal companies down there had paid more attention to the preparation of their product, especially for domestic use, their markets would not have to be extended or sought far afield. That is one respect in which they were lax, namely the preparation of their coal for domestic use.
It was about fifteen years ago that a small company down there, I believe it was the Bras d'Or Company, undertook a program of giving to the people of Nova Scotia a coal which could be used in their own homes. Not only did they clean it, but they oiled it. It was that action which brought the matter to the attention of other industries in that part of Canada.
This is not the first time that the Minister of Trade and Commerce (Mr. Howe)-but not as the minister of that department-has come to the rescue of the Nova Scotia coal industry. In 1945 the Acadia Coal Company was in distress and losing money. Mr. Gordon who was at the head of that company felt there was one procedure which would be helpful in that situation.
Formerly there was down there an old-fashioned town by the name of Thorburn. It was burnt-out, so to speak. However in that vicinity there was another good seam of coal known as the McBean seam. The Acadia Company came to the department headed by the present Minister of Trade and Commerce and placed their plan before him. They wanted to borrow money, and offered a plan indicating to the minister that if they were supplied with sufficient money they could open up and mechanize the mine so that the Acadia Coal Company would be placed in a position whereby instead of losing $100,000 a year they would make a small profit.
The Minister of Trade and Commerce is not susceptible to ideas unless they are well supported. In other words, if I may use a common expression, he is from Missouri. Not being satisfied, what did he do? He placed at the disposal of the coal company the services of an expert engineer from the United States who, after looking over the field, endorsed the soundness of the economics
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in the situation. Treasury board did not hand out money, but proceeded to guarantee a loan to the extent of $750,000 from the banks.
Let me assure the minister today that that action was greatly needed, particularly in the county of Pictou. Indeed I think the hon. member for Pictou (Mr. McCulloch), in the event of the passing of the minister before the hon. member, should constantly pray for the repose of the minister's soul.


Arthur Leroy Smith: How soon
should we start praying?


William F. Carroll: A good deal has been said about markets. In what he said the hon. member for Cape Breton South (Mr. Gillis) was quite right: we do need markets. Our securing of markets however must always be premised on the assumption that we can secure cheap coal. That is the first important point. We see therefore that production enters into the picture of markets. We may have all the production in the world, but if we cannot have it at competitive prices, cheaper than we are getting it today, we shall not be able to secure the markets.
I say our markets will come when through our methods of production we are able to get cheaper coal. Only today I was informed that two months ago there was available in Ontario a market for 500,000 tons of industrial coal, but the maritime operators could not supply it. They were competitive, but they did not have the coal-and that is where production enters into the picture.
I can remember that in 1938 there was a tremendous cry throughout the country to get coal into Ontario. An industry in Hamilton gave a contract to the Dominion Coal Company in that very year-and with the possibility of future orders-for 15,000 tons. The company could not supply the order, because their production was not sufficient.
I say therefore that production must be the initial step in the situation-and it must be cheap production. Some years ago it so happened that a commission was set up in this country to look into the situation in connection with coal. I believe it was intended that its investigation should be purely factual, so that it might bring to the attention of the present Minister of Trade and Commerce-not so much to the attention of the coal industry-what was necessary to give us a satisfactory national coal program. This has something to do with the situation to which the hon. member for Cape Breton South referred this morning. Everything possible should be done in the mechanization of these mines to protect the lives of those who go down into the mines to dig the coal.
One of the first things that we attempted to find out was what could be done in the

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maritime provinces to safely mechanize the mines. The Minister of Trade and Commerce (Mr. Howe) said that we would have to get a man who knew something about safety measures as well as production. We did get a man who was recommended by a certain coal organization in the United States and by John L. Lewis, the head of the United Mine Workers of America, a Mr. Young. This gentleman went into the whole situation.
The minister of industries, not acting in the capacity of villain in which he was painted the other day but as a Canadian keenly interested in this country, obtained the services of Mr. Wheeler, a gentleman who had been loaned to the British coal control to see what could be done in the mechanization of mines over there. I do not know whether it was necessary to frighten the parliamentarians over there, but anyway this gentleman was brought to Ottawa and in conference with Mr. Young went into the whole question of mechanization as it affected production and safety. Their report does not appear in full in the report of the commission, but I imagine it can be found in the files of the mines department or some place down there anyway.
In the meantime a small-scale mechanization was decided upon in connection with these mines, what was called a short-term plan. This was concurred in by the engineers I have mentioned. The Dominion Coal Company anticipates that within five years 40 per cent of its daily output of over 7,000 tons will be from totally mechanized mines. The company estimates that the productivity of these mines will be increased by five tons per man-day and, with the return to pre-war productivity in the other mines, the over-all unit production will be 3 [DOT] 5 tons per man-day on an 18,000 tons daily output. The company considers that this program will cost about $2,500,000, excluding the necessary outlay for a preparation plant. Old Sydney collieries believe that its two mines can be totally mechanized and that their productivity can be raised to five tons per man-day. The company's plans anticipate that this will be accomplished within a period of five years at a cost of a little over $1,000,000 excluding provision for preparation.
That work has been undertaken in those two mines, and as a matter of fact, so far as the Old Sydney collieries are concerned, it was undertaken two years ago. Mr. Gordon, general manager of the Dominion Coal Company and its subsidiaries, I think is the most progressive, the most courageous man who has ever occupied that position. He is a man of great vision.


Arthur Leroy Smith: What is the production per man per day after the two years?


William F. Carroll: The last figure I got for 1948 was 2 [DOT] 6 tons.


Arthur Leroy Smith: No progress.


William F. Carroll: ' That is the over-all production. In those particular mines it is much more. Mr. Gordon was not satisfied with having to pay tremendous prices for coal loaders and that sort of thing which would have to be imported into this country and he went down to Washington and organized the situation so that this equipment will be manufactured in the Trenton steel industry at Sydney.
The other day I picked up a clipping which makes a reference to these mines I am talking about, the Old Sydney and the No. 1-B, which reads:
Dominion Coal Company has just installed a new 1,800 h.p. mine hoist for its No. 1-B colliery, Cape Breton island. The new hoist and another like it at the colliery are the most powerful hoists ever built for underground service in any colliery in the world.
The new 70-ton hoist will pull 17 full cars of a gross weight of 110,000 pounds on a fairly steep gradient at a speed of 1,350 feet per minute.
Then followed something that made me feel good and should make everybody in Nova Scotia feel good:
It took over a year to build the new hoist at the Trenton Steel Works of Nova Scotia Steel and Coal Company, another subsidiary of Dominion Steel and Coal Corporation. After tests, it was recently stripped down and shipped to Cape Breton for installation.
The giant hoists are required because of the increasingly greater depth at which subterranean mining is being carried out.
That is one of the things that Mr. Gordon proposed three years ago and it is one of the things that he has carried out in connection with the small plan. But a long-term plan has been submitted by the two engineers I referred to, it being prepared in consultation with the mining engineers of the coal company and with another engineer from the west who was there at the time. This will cost a tremendous amount of money. It will require the continuous efforts of a skilled staff for several years to develop the engineering data necessary to determine whether the erection of a full-sized cleaning plant is warranted. However, as I said a moment ago, I am not going into that overall plan. I have no doubt in the world that it is the intention of the company to go ahead with that over-all long-range plan.
This morning there was an item read by the hon. member for Cape Breton South (Mr. Gillis) who knows more about actual coal mining in this country than anybody else I

know. He has spent many a hard tiresome day in the mines, and many a hard tiresome hour walking back a mile and a half from the actual mining operation to the surface. He drew the attention of the house to the fact that at Campbellton in the Atlantic region there are tremendous piles of coal that have been purchased from the United States. I think there is something rotten in the state of Denmark so far as that is concerned, but there is no doubt about the facts. It is not as large a quantity as last year, but it is there because of the fact that certain coal was dumped in this country about five or six months ago- the practice may be continuous-and sold to the Canadian National Railways at a very low price. I do not want to contradict the hon. member for Royal (Mr. Brooks), but there are no subventions on maritime coal going into the Campbellton area. Therefore if the United States sells coal there at a much cheaper cost than Nova Scotia coal, or other maritime coal, the competition is not met by subvention. I do not know much about subventions at the present time, and as a matter of fact never did, but I do not think there is any subvention paid on Nova Scotia coal competing with coal produced in New Brunswick.


Alfred Johnson Brooks: Mr. Speaker, I think the hon. member is very much misinformed because ever since a subvention has been given there has been one on Nova Scotia coal coming into New Brunswick. I know that for a fact, and I think the minister will bear me out.


William F. Carroll: It was just about two years ago that I got the information. I do not know whether I am right, but in any event I am not contradicting the hon. member. We had a meeting in Fredericton a few years ago and that very question was raised. I am sorry, Mr. Speaker, to have overstepped my time, but particularly on behalf of the province of Nova Scotia and the island of Cape Breton I am very thankful to the government for the assistance they are offering to the companies. It is not an indication of failure on their part. It is a loan to the coal companies. I want to thank the government for that, but I feel down to the bottom of my heart-it is not out of my mouth yet-that the two gentlemen who are responsible for it are the Minister of Trade and Commerce (Mr. Howe) and our minister from Nova Scotia (Mr. Winters). A few years ago they were two in one. The present minister from Nova Scotia was assistant to the Minister of Trade and Commerce. They were two in one. I do not know whether it was at that time that the Minister of Trade and Commerce made his assistant aware of the
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interests of the coal industry in the maritime region, but we are indebted to these two gentlemen for the present measure.
The other day the Minister of Trade and Commerce was variously described as a hero and a villain. I do not care in what capacity he was acting in this regard so long as he has not hurt the government and the country. I do not care whether he was a villain or a hero. I think he was acting as a real business executive. He is following the same role that he carried on during the war when the production of Canada was taken from nothing to a place where it was the envy of the world. He may have been a villain in the eyes of Germany in those days because he took quick steps to put the Germans in their place, and to keep them there at least for some time to come.
I want to say one word more, and perhaps it should be addressed to the Minister of Mines and Resources (Mr. Gibson). I shall be at his door in a short time, and I hope that he will have his geological and survey officials co-operate with the mines department of Nova Scotia as to mining methods and everything else. I hope a complete survey will be made of the west coast of the island of Cape Breton which happens to be in the constituency that I represent. We have coal there, but the trouble in the past has been that the people who had control of the coal did not mine it properly. They were given too much leeway. That is why I am asking the Minister of Trade and Commerce to interest his friend, the Minister of Mines and Resources, in this matter, or whoever may be the new minister. I hope the result will be that they will put at the service of the mines department of the province of Nova Scotia not only geologists but also technical advisers to see if something cannot be done for the purpose of bringing the industry to life again in that particular part of the province.


Mr. P. C. Black (Cumberland):: Mr. Speaker, I represent the second largest coal producing centre in eastern Canada, the county of Cumberland. On behalf of the coal miners, business people and all other residents of that county, I want to express appreciation to the minister and to the government for introducing this legislation. I also want to express my appreciation to the members of the house for the good will they have shown towards the coal industry of the maritime provinces on the present occasion and previously. We are fortunate today in having the hon. member for Cape Breton South (Mr. Gillis) with us. He has as intimate a knowledge of the operations of the coal industry
<536

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in Nova Scotia as anybody. He has the advantage of having rubbed shoulders with the miners of Nova Scotia, and he knows their viewpoint. We are fortunate in this discussion in having in the house the hon. member for Inverness-Richmond (Mr. Carroll) who has lived in the coal mining areas. He made a study of the industry over Canada, and after two or three years of investigation his royal commission brought down a report, which contains a great deal of information. Nothing much of a practical nature has been done with respect to it as yet, though I believe this legislation is along the lines of that study and in accordance with the views of the people associated with the coal mining industry in eastern Canada.
This industry is faced with great problems, problems of production, freight and markets; and over the years there has been the problem of human relations. To have this industry built up and put upon a sound basis would mean a great deal to our part of Canada. The federal government is going to do some financing, but the money will be paid back because the loans are made to these coal companies on the basis of ordinary industrial loans, to enable them to make improvements and install equipment they might not be able otherwise to obtain. But even if this should cost the federal treasury ten or twenty or fifty million dollars, most of that money would eventually return to central Canada, because a large proportion of the purchases made by the people of Nova Scotia and eastern Canada generally are made here.
For a long time in Canada we have needed a fuel and steel policy; I think everyone agrees that this is necessary. I have been associated with this matter in one capacity or another for twenty-five years. Relations between the workmen and operators twenty-five years ago were about as hostile as they could be. The coal operators in those days were hard-hearted, and did not have the sympathy for the viewpoint of the workmen that they should have had. Efforts were made to break the unions and discourage the miners. I and those associated with me took the stand that the miners were entitled to belong to a union of their own choice; and we supported them in that respect. Legislation was passed and regulations were drawn up to protect and benefit the miners. As the years have gone by I believe the attitude of the operators has changed, so that today there is far more good will toward the workmen and their point of view than there was twenty-five or fifty years ago. I am sure we cannot make a success of that great industry unless we have the confidence and good will

of the workmen. Theirs is a hazardous occupation, and over the years they have paid a high price in accidents and fatalities in the operation of these mines. The protective measures have been greatly improved, but there is still much to be done; and no matter how much is done, there is always a great hazard in coal mining.
The coal mines of Nova Scotia are publicly owned by the people of that province. Years ago, in the days of Sir Charles Tupper, they were taken over from the then owners in England, and they have been leased to the operators. Personally I believe the areas leased were too large, and that it would have been much better for the industry and all concerned if this wholesale leasing had not been done. I believe with the government, that this is not an industry that should be operated by any government. It should be operated by private enterprise, under strict supervision.
The hon. member who preceded me spoke of the number of tons raised per man-day. A few years ago that figure was very much lower than it should have been, and I am pleased to note that there has been some improvement. The workmen were blamed for that condition, but they were not at fault. Perhaps there should have been a little more good will on their part at times; perhaps we should not have had some of the strikes that occurred. But many of the best workmen were attracted to other branches of industry, or were told that they should enlist in the services. For this reason many left their places in the mines, where they could have given better service even than on the field of battle. Inexperienced men took their places; the morale of the workmen deteriorated and the production per man was reduced. The workmen were not to blame for that situation, but it stands to their credit.
In recent years increased freight rates have made the delivered cost of the fuel higher, and the payment of subventions started in the early 1930's has been absolutely necessary to enable us to market the quantity of coal we are able to produce. That policy will have to be continued for many years, perhaps to an even greater extent than in the past. It is recognized in Nova Scotia that if we are to have full production in our mines it is necessary that we market yearly in central Canada from three to four million tons of coal. That cannot be done unless there is cheap water transportation and rail subventions. If the Chignecto canal were built and access given to Northumberland strait the shipment of coal would be made easier and transportation costs would be reduced.

There are in the county of Cumberland two of the large coal fields, Springhill and Joggins-River Hebert-Maccan-Chignecto-Fen-wick. Springhill is one of the best fields in Canada with the highest quality of coal, running over 14,000 b.t.u.'s. It has been operated for many years, and they have gone down from eleven to twelve thousand feet. One seam is nine feet thick, pure coal; another is six feet thick; another is four and a half feet; and there are other seams in that area. In Cumberland county we produce about six hundred thousand tons per year. In the Joggins-River Hebert-Maccan-Chignecto area there are several seams from sixteen inches up to three feet and more. There are experienced managers and workmen in those mines so that even with those thin seams, production per man has been higher than at any other mine in Nova Scotia. The b.t.u.'s of the coal from that field are not as high as the coal in the Springhill area, but it is splendid domestic coal. These mines should be equipped with washing plants in order to remove the impurities from the finer coal, and I believe that is a contribution which should be made by the federal government. This would increase the quality of the coal produced in that area and widen the markets.
Competition for markets has always been keen, especially during times of depressed business conditions. Back in the thirties, the mines were operating only one or two days a week. There was a surplus of hydroelectrical power which was not being used by the paper mills; and in industry that electrical energy was placed under boilers, and took the place of coal. In those days, there was also the competition of coal coming from overseas, which was brought to this country in the form of ballast. As business conditions improved, the market widened out. It is considered necessary to continue subventions, and to secure a market for three million or four million tons of coal in central Canada.
Maritime coal is now faced with competition from oil. Many domestic establishments are using oil today, whereas in previous years they had to burn coal. It is discouraging for the maritime provinces to find that the Canadian National Railways have been purchasing such large quantities of imported coal. This replaces the coal available in the maritime provinces, and the practice is one that should not be continued. The maritime provinces were disappointed also when it was found that the Prince Edward Island car ferry was equipped to burn oil. This replaced
25,000	or 40,000 tons per year, which it was considered the maritime producers should supply.
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There should be some development in connection with making chemicals from coal. So far, that has not taken place in Nova Scotia. Coal from the maritime provinces has been shipped in the roughest, cheapest form. Industries were built up in Germany, Great Britain, and to some extent in the United States, for producing chemicals, gasoline and oil from coal. As I have mentioned, washing plants should be established in the River Hebert-Joggins fields, in order to purify the coal, and get a higher percentage of carbon and more b.t.u.'s.
If the maritime provinces are going to compete for the coal market in central Canada they must receive assistance. A cheaper grade of coal might be used in the manufacturing of electric power. In the west, there is a cheap source of power in the form of oil and gas. This oil and gas was partly paid for by the maritime provinces when they contributed in purchasing the land from the Hudson's Bay Company. I believe the federal government should make contributions towards the utilization of cheaper grades of coal in the maritime provinces for the generating of electricity. This would provide that cheap power which is necessary if the maritime provinces are to compete with the other parts of Canada.
Another factor to be considered, Mr. Speaker, is the preservation of American exchange. The more coal we can produce in Canada, the less United States exchange will be required in Canada. I believe this country will be rewarded if the proposal to finance and fully develop the coal-producing mines of Nova Scotia is approved. This is a desirable and necessary proposal. No doubt it should go farther than it does, but I believe the plan the minister is undertaking is essential to the welfare of the maritime provinces. Once again, I express my appreciation to the minister, and to the members of the house, for what is being done.


Mr. Gordon B. Isnor (Halifax):: Mr. Speaker, I will be very brief. One of the western members told me that if I spoke on this question and took more than two minutes, we would not get this $10 million. I am most anxious to see this bill go through, and for that reason I am going to stay within the two-minute limit.
As one of the members from Nova Scotia, while not directly from a coal-producing area, I want to say that the effect of this bill will be felt throughout the whole province of Nova Scotia, as well as the other maritime provinces. For that reason we are certainly in favour of its early passage. It is a step which should have been taken years ago, as the member for Inverness-Richmond (Mr. Carroll),

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who is an authority on the question, and our friend from Cape Breton South (Mr. Gillis), mentioned.
The main factors entering into this problem are production and markets. Perhaps transportation is a third item, but unless you have production it does not do much good to have markets, as has been clearly shown. I believe we can produce the markets through the sales organization of the biggest company in the coal industry, which produces 87 per cent of the coal produced in our province.
I wish to touch on one or two items that have not been mentioned so far as I know. We have 19 coal operators in Nova Scotia, the largest of which is the Dominion Steel and Coal Company, which produces 87 per cent of the coal. As the member for Inverness-Richmond (Mr. Carroll) mentioned, the production per man-day is about 1-97 tons.


William F. Carroll: Two point one nine.


Gordon Benjamin Isnor: Two point one nine; that figure has gone up since I made a note of it. I mention that because it is estimated that with this new machinery there should be a daily production of something slightly over six tons per man. Production is the all-important question, because increased production naturally lowers your overhead costs and puts you in a position where you are able to meet the competition with which you have to contend. That is the one point, Mr. Speaker, that I wish to place before the house. We produce the second largest amount of coal in Canada. Alberta produced 8,826,239 tons in 1946. We produced 5,425,898 tons. We feel that that could be increased to eight or nine million tons a year at a lower price. If we did that we would be in a position to compete to a greater extent in the markets of central Canada. Someone has already told me that my two minutes have more than expired, and I shall take my seat.


Mr. George A. Drew (Leader of ihe Opposition):: Mr. Speaker, because of certain remarks that were made earlier I wish to make some comments on the bill and the scope of the provision contained in it. The purpose has been stated to be an improvement of the producing methods of the coal mines of the maritime provinces. The provisions are very wide. They simply state that the minister, with the approval of the governor in council, may enter into agreements with the coal producers to carry out undertakings designed to increase the efficiency of the operations of the coal producers by means of mechanization. Subject to the provisions as to how interest is to be computed and as to the time that repayment is to begin and the placing of a first charge

upon the assets of the producer, everything else is upon a wide-open basis at the discretion of the minister. For that reason I should like to point out what I do think we should begin to consider more seriously here in Canada in seeking the most effective use of the very large coal resources we have, and particularly those coal resources in the maritime provinces which have been causing some difficulty for some years from the point of view of economic production.
Speaking earlier in this debate one hon. member said that on another occasion outside this house I had spoken of the way in which the use of our coal could be increased. I do not intend to enlarge upon that statement at this time, because we are dealing now particularly with the improvement of producing methods in the coal mines of the maritime provinces by making it possible to improve mechanization in the coal production of these mines. I do suggest, however, that the hon. member for Cumberland (Mr. Black) has put his finger on one way in which a great deal of this coal could be used. Today a very large percentage of the industrial production of the world, and particularly in the highly developed industrialized countries, is based upon a supply of electric energy. The use of coal is still the basis of electric production to a very considerable extent in most countries. We sometimes forget, particularly in the central provinces, in British Columbia as well as in Alberta and Manitoba, that most countries do not possess the great water resources that we do for the production of electric energy. The fact is that in most countries of the world today electricity is obtained primarily from coal, lignite, peat, fuel wood or some other obtainable fuel, and not based upon water supply. The great producers of electric energy before the war, namely the United States, Germany, the United Kingdom, France and Soviet Russia, produced most of their electric energy from coal, lignite, peat, or other fuels. Therefore we should look to the use of coal for the production of electricity in the most economic way in those areas where there are no great waterfalls which can provide electric energy.
In Europe, and particularly in Germany and Russia, shortly before the war highly successful developments had taken place in the production of electric energy by burning low-grade coal under ground and producing gas from which electric energy was produced at costs almost comparable with hydroelectric energy. Whether coal be converted to electricity by an underground process of that kind, or whether it be carried into the great burning furnaces of electric plants beside coal seams through continuous chains of hoppers, or whether it be used in

any other manner, 1 do believe that in the maritime provinces there are great opportunities for the employment of coal for the production of electric energy which could then be carried easily to every part of the province for the purpose of industrial production as well as the various domestic uses which would add to the comfort of the people of every part of the maritime provinces through the possibility of obtaining electric energy at a lower cost than they pay today.
This is not in any way in the realm of theory. In the sub-Moscow area of Russia there is a tremendous electric power plant using low-grade underground seams for the production of gas, which is then turned into electricity at very satisfactory cost levels. When I say that I do not mean satisfactory on the evidence of the information furnished by Soviet engineers, but on the evidence of engineers from Canada who have visited that project.
What procedure is used is of course something to be worked out by engineers who will examine the possibilities in each particular area; but it does seem to me that when we are considering the use of public funds to improve the productive value of the coal that we possess, either in the maritime provinces or elsewhere, we should be at the very vanguard of research in this field. After all, Canada is today in the very forefront in the production of hydroelectric energy. With our enormous coal resources placed in areas which are in many instances distant from the points where the coal will be used immediately, it undoubtedly is desirable to reduce it to the most easily transported form of power that there is.
There is another field of research which I suggest should be contemplated when a subject of this kind is under consideration. In Europe, through pressure of necessity, science had found ways of converting coal into textiles and into many of the things in daily use in the homes, offices and factories. Doubtless there are a number of hon. members here who had the opportunity to attend the world's fair at Paris in either 1937 or 1938, and if they did they will recall that in the German building there were demonstrations of the use of coal for such an infinite variety of useful purposes that it challenged the imagination and opened wide the possibilities to every country which has resources of coal such as we have.
Perhaps we might remember that Germany, which came so close to dominating the world through the use of vehicles moved by internal combustion engines, relied almost entirely upon liquid fuels produced from coal. In addition to the possibility of converting coal 45781-162J
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into electricity there is also the possibility of liquefying coal and converting it into gasoline and oil, and other liquid products of that type. The German air force and tank force, which came so dangerously close to success in the last world war, relied almost entirely during the greater part of the war upon fuels provided in that way.
In the very nature of the expanding use of gasoline from crude oil obtained from the ground, and the steady consumption of existing supplies which within the measurable future will undoubtedly exhaust certain fields, the cost of that type of fuel is likely to increase to a point where we should be contemplating the use of coal for the production of fuel of that kind in the not too distant future.
I have mentioned these things at this time because the bill before us contains a wide-open provision for assistance to coal producers for the purpose of increasing the efficiency of their production by mechanization. I suggest that mechanization of that kind need not mean only mechanization in the actual hauling of the coal in its solid form, but also mechanization of another kind which would use coal for other purposes.
There is in the bill another feature which interests me, and that is that while $10 million is available as a total amount, the figure indicated as the limit to any one producer is $7,500,000. That would seem to be a large percentage of the total figure. It might be interesting to have the minister inform us if at the present time there is in fact any tentative arrangement in existence which indicates the necessity for single advances of that nature, in relation to the total of $10 million of advances to be made.
I am sure every hon. member supports the idea of mechanization in coal production. I should hope however that in supporting the idea of improving our coal production methods we might also urge that Canada lead the way in the scientific use of our coal resources in the best interests of our people.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Beaudoin in the chair.
On section 1-Short title.
Percy Chapman Black: May I have a copy of the bill before we proceed to discuss it?


The Deputy Chairman:: Does section 1 carry?


Percy Chapman Black: I should like to have a copy of the bill.


Louis-René Beaudoin: Shall section 1 carry?

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Some hon. Members:: Carried.


Percy Chapman Black: I do not think it is fair to carry this section until we have a chance to look at the bill.


Clarence Decatur Howe: The bill was distributed two or three days ago. I think the hon. member has it on his file.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Gordon Benjamin Isnor: Does paragraph (c) which defines "project" include the treating of coal, apart from the production of it?


Clarence Decatur Howe: Yes, it includes washing and polishing plants-the entire mechanization from the mine to the finished product.


Gordon Benjamin Isnor: Does it include the carrying out of research in the research centre at Dalhousie, which is paid' for by the company?


Clarence Decatur Howe: No, it would not. The purpose of the bill is to improve the efficiency of coalmining in Nova Scotia.


Alfred Johnson Brooks: And New Brunswick.


Clarence Decatur Howe: I meant to refer to the maritime provinces. The purpose is to prevent the maritime industry from being priced out of its market. The costs of mining are steadily going up, while the costs of competing coals are tending to fall. The gap is being met at the present time by subventions, but these are getting too large for comfort. We hope to lower the cost of producing maritime coal and to lower the cost of subventions now required to allow that coal to move to market.


William F. Carroll: If a coal operator wishes to have a preparation plant, might this loan be used for that purpose?


Clarence Decatur Howe: Yes. I have already discussed with the premier of New Brunswick, in a very general way, a preparation plant for the Minto area. That particular area seems to lend itself to that solution; which is quite within the terms of the bill.


Percy Chapman Black: How many projects will have the opportunity to get the loan?


Clarence Decatur Howe: We have received only one well-rounded project, and that is the project for the mechanization of the mines of the Dominion Steel and Coal Company. That company has spent three years in preparing its projects. It has brought in outside engineers to check the plans worked out by its own operators. An expert has been retained by the coal board to examine its proposals. We have today only one project, which runs to a total of some $15 million, and calls for the mechanization of all the mines of the Dominion Coal Company.
[The Deputy Chairman.]


Percy Chapman Black: That is the one
operation where you propose to lend $7,500,000.


Clarence Decatur Howe: Up to that amount.


Percy Chapman Black: Have any proposals been made with respect to other smaller operations?


Clarence Decatur Howe: We have received none, except that we have discussed in a very preliminary and tentative way a project for a treating plant for the Minto mines.


Percy Chapman Black: Would it be possible to have a washing plant for the preparation of the finer and poorer grades of coal, such as those produced in the Maccan area, which then could be made into briquettes? Has the department given consideration to the construction of a briquetting plant in which all the operators in the area could process their coal?


Clarence Decatur Howe: That would hardly come within the scope of this bill. There are many briquetting plants in Canada but all are privately owned. This bill is simply to improve the method of bringing coal out of the mine and preparing it for market.


Alfred Johnson Brooks: That would include strip mining.


Clarence Decatur Howe: Stripping is already a mechanized operation.


Ernest George Hansell: We have been told that this bill is to cover any coal mining operations in the maritimes, but is it not really to assist one company which is somewhat in financial distress?


Clarence Decatur Howe: I would ask my hon. friend to recall that that one company produces well over 80 per cent of the coal mined in the maritimes and for that reason it is logical that the relief for that operation would be somewhat in proportion to the size of its production. We have discussed, although only in a preliminary way, this matter of a washing plant with several of the small operators in the Minto area. We shall be delighted to discuss a project with any operator in the maritime provinces. The $10 million is sufficient for any operation that we have been asked to assist in at the moment, but if it should prove to be insufficient we will come back to parliament and ask that the appropriation be enlarged. The original figure was $15 million, but it was decided that the prospects for mechanization did not warrant an appropriation of that size at this time.


Alfred Johnson Brooks: What is the estimated cost of the mechanization in the Minto area?


Clarence Decatur Howe: That project has never really been studied. As I say, it was discussed only

in a preliminary way. My hon. friend will note from the terms of the bill that the money advanced has to be paid back and that there must be a private investment along with the public investment. Until such an arrangement can be worked out no estimate of the cost would be warranted.


Alfred Johnson Brooks: Are the operators or the provincial government negotiating with the minister?


Clarence Decatur Howe: There have been no negotiations. As I say, there were preliminary conversations no more than two or three weeks ago. I think the provincial government will follow up the matter with the operators and advise us if it is their wish that a project be undertaken in the Minto area.


Alfred Johnson Brooks: Nothing definite has been
decided?


Clarence Decatur Howe: No.


Mr. Wright:: Has some estimate been made of the extent to which this mechanization will reduce the cost of production? What saving will there be in the cost per ton?


Clarence Decatur Howe: It is difficult to know that with any certainty. My hon. friend will notice that the loan is to be repaid at the rate of 30 cents per ton on every ton of coal mined with mechanization provided by this bill. I should think that in the Nova Scotia area the savings will average from $1.50 to $2 per ton.


Mr. Johnston:: It is expected that with mechanization these mines will be able to produce coal at an economic figure and pay back the loan?


Clarence Decatur Howe: Yes.


Charles Edward Johnston: By reason entirely of
mechanization?


Clarence Decatur Howe: Yes.


Ernest George Hansell: Is it anticipated that there
will be new companies in Nova Scotia or New Brunswick which might be granted loans under this bill?


Clarence Decatur Howe: The bill is not intended to provide for new companies. I doubt if there is room for any new companies as the better seams are already under development. The purpose of the bill is to improve present mining operations.


Ernest George Hansell: I believe that in other parts of Canada companies have been organized but because of certain difficulties have not started operations, and I was wondering how they would fare with this bill. Will they have a right to come to the government for similar assistance? I do not know the
Coal
maritime coal situation as well as I do that of the west, but is it anticipated for instance that loans will be made for the construction of railroads?


Clarence Decatur Howe: No.


Gordon Benjamin Isnor: A moment ago the minister stated that this bill was intended to assist only privately-owned coal companies. The Inverness Coal Company in Nova Scotia is operated by the province and I should like to know if they would come within the terms of this bill?


Clarence Decatur Howe: We have not been asked to consider that and I should not like to give an answer until such a request is received.


Gordon Benjamin Isnor: It is possible that that company might be taken over by private interests. Would it come within the terms of this bill as a continuing company?


Clarence Decatur Howe: My hon. friend will note that before a contract is entered into the coal board and the minister must be sure that the company can put up at least one-third of the expenditures and be able to refund the debt on the due date. If the mine in question can meet those specifications, it might be considered, but perhaps that is a big "if".


Ernest George Hansell: Has the minister been
approached in the last year or two by any company with respect to the building of a railroad into a coal mining area?


Clarence Decatur Howe: That question is hardly necessary, because I remember a rather merry evening in the house when that whole subject was before us and when the applicant was sitting in the gallery. I think my hon. friend took part in the frolic, so I can say "yes".


Mr. Bryce:: When you talk about mechanization do you mean that the coal-cutting machinery which is operated by compressed air is simply to be changed to electrical operation, or is entirely new machinery to be installed to work wider and deeper seams?


Clarence Decatur Howe: Mr. Chairman, I am not as well able to explain this as my hon. friend's deskmate, but great strides have been made in the process of mechanizing coal mines in the post-war years. The hon. member knows that it was thought before the war that the mines of the United Kingdom were not subject to mechanization, and he will also know that great sums have been spent on mechanizing English coal seams with a consequent considerable reduction in the cost of mining. He also knows that new mechanization methods have been introduced into the United States mines within the last two years. New types of cutters and loaders have come into

Coal
use. It is my understanding that the mechanization of the Nova Scotia mines will follow the latest technique that has been developed in the United States and the United Kingdom since the last war.


William Scottie Bryce: I want to thank the minister for that information. I am only drawing on my own experience. I never was a coal miner, but I did a lot of work in the pits in connection with coal-cutting machinery and that sort of thing. Quite recently I was speaking to some of those connected with the British mines, and the machinery there is quite different from what it was in my day.


George Alexander Drew: Mr. Chairman, I should like to ask the minister a question. As I understood it, a moment ago the minister in response to a question which had been asked said that the loan would be available if it was approved by the minister and the dominion coal board.


Clarence Decatur Howe: And by cabinet council as well.


George Alexander Drew: So far as I can see the dominion coal board is not called upon to approve the loan.


Clarence Decatur Howe: That is technically true, but the coal board advises the Minister of Trade and Commerce in all matters affecting coal, and the authority of the minister is exercised through the agency of the dominion coal board.


George Alexander Drew: The only reason I mention it is that I want it to be quite clear that the bill gives the authority to the minister to make an advance, and the only place where the dominion coal board comes in is in determining the cost for the purpose of fixing the terms of repayment.


Clarence Decatur Howe: I think it is usual in cases of this kind that the minister and cabinet council shall have authority to decide on the project; but, as I say, the coal board is the agency of the minister in this matter.


Percy Chapman Black: I should like to ask a question as to what the situation will be if coal producers mining the smaller seams agree to install a washing and briquetting plant in order to remove impurities and increase the b.t.u.'s of the coal. Nothing they could do would tone up the whole coal operation in that area to a greater extent than the installation of such a plant so that the poorer grades of coal might be improved and made marketable for domestic purposes. If they agree to undertake such an operation either singly or jointly under this legislation, would it be practical for the department to co-operate with them?


Clarence Decatur Howe: The coal board will certainly study a proposal of that sort, and if it is found to be within the limits of the act I
think it will qualify. I mentioned briquetting. That is a little different from the mining operations that the bill is intended to assist. Most briquetting plants are built with private capital and are operated as a separate industry, but nevertheless I am sure the coal board would be glad to study any proposal put forward from the maritime provinces, and if it can be fitted into the act it will then qualify.


[Stage Direction]
Section agreed to.
On section 3-Loans to producers.
Mr. Ashbourne:: While the bill is before the committee I should like to point out to the Minister of Trade and Commerce that considerable delay has been experienced by schooners and auxiliary craft at North Sydney in procuring cargoes of coal for Newfoundland, and possibly also for other parts of the maritimes. I should like to point out the seriousness of this at all times, and particularly during the latter months of the year when it is most important that stocks of coal be provided especially for the northern part of Newfoundland before the close of navigation. As 1 understand it, the practice is that these vessels arrive at North Sydney, book their cargoes, and then if a large steamer arrives the smaller auxiliaries have to wait.
There may be half a dozen or a dozen of these smaller craft which will carry 200 to 250 tons of coal each. They have to wait while a large steamer comes in and fills up with possibly 3,000 tons. I think this practice needs to be investigated. I heard of a case recently where one of the prominent firms of Newfoundland had to take off a boat from the coal-carrying run in order that another charter it had to carry fish south might not be prejudiced. On account of the delay which this vessel would likely experience at North Sydney, they could not take a chance on sending her back there for a cargo of coal. It may be that additional loading facilities are required, and perhaps another pier, but I should very much like the Minister of Trade and Commerce to look into the matter and see whether or not greater dispatch cannot be achieved so that the expediting of these cargoes of coal can be speeded up. I am sure the people of Newfoundland would be most thankful for his attention in that regard.


Clarence Decatur Howe: The problem mentioned by my hon. friend is squarely within the responsibilities of the dominion coal board. Now that it has been called to my attention, and to the attention of the board, I assure him that an investigation will be made and steps taken to ensure that adequate supplies of coal can move to Newfoundland.


Percy Chapman Black: I should like to ask the minister what will be the terms of the loan. For how long a period will it be and what will be the rate of interest?


Clarence Decatur Howe: My hon. friend is now referring to section 4.


Percy Chapman Black: Section 3 deals vith the loan.


Clarence Decatur Howe: Section 4 mentions the rate of interest and the term of the loan.


Ernest George Hansell: I think section 3 is a good one. It would seem that those charged with the administration of it are going to see that the coal mining companies are run on a sound and efficient basis. If those in charge of the granting of loans find that companies are not so organized, I fancy they will not get a loan. The section looks good if it works out properly. A lot can happen to a company of this kind to render it inefficient. Subsection 2 (d) reads:
That the coal producer is following sound and reasonable policies as to dividends and will repay the loan and interest as provided by the agreement.
Would the minister care to say what he thinks would be a fair rate of dividend? I think that information should be given because there are companies operating without assistance which are cutting their dividends in order to operate efficiently. Would the minister care to give us an answer?


Clarence Decatur Howe: A fair dividend depends entirely upon the current earnings of the mine and the extent to which those current earnings depend upon subventions or other government assistance. Generally speaking I would think that if the government is co-operating to finance improvements, dividends certainly should be limited to preferred dividends, and preferred dividends should be paid only if they are well earned under normal conditions, without government assistance.


Ernest George Hansell: Would the government have anything to say as to what the amount of those dividends should be? Would the government insist that they be reasonable during the time of amortization? What would be the position?


Clarence Decatur Howe: The government has the right to determine the conditions on entering into the agreement. It is one of the conditions of this bill that the dividend policy shall be reasonable in the light of all the facts, and the agreement made is bound to touch upon the matter of dividend payments.


[Stage Direction]
Section agreed to.
Coal
On section 4-Terms of repayment.
Ernest George Hansell: It appears to me that the rate expected to be applied to the repayment of loans, that is 30 cents per net ton, is pretty optimistic. This morning I placed on record from the report of the Carroll commission the approximate figures with respect to profits per ton in the coal mining industry of Canada. In its conclusion that report placed the profit per ton for the entire coal mining industry at about 10 cents. I should like to know how this figure of 30 cents is arrived at. I do not mind that figure being in the bill, because the sooner they can pay off the loans the better; but I do not see how it can be expected that the operators are going to be able to pay dividends, pay interest on the loans and still show a profit of 30 cents a ton to be applied on the principal, unless unusual circumstances prevail in connection with a particular company. What this means is that the assistance they are given by way of loans in order to mechanize and modernize their mines is expected to enable them to sell coal at a profit of something considerably more than 30 cents a ton. To me that appears rather optimistic. Suppose they are not able to meet that payment of 30 cents; what happens then? Are we going to write off the loan as a bad debt eventually? Would the minister inform the committee just how that figure of 30 cents was arrived at? It could not have been a guess; actuarial genius must have been at work in order to arrive at that figure.


Gordon Benjamin Isnor: Perhaps before the minister replies I might ask a question along the same line. I had my finger on that figure of 30 cents, and wanted to get some information about it. Taking the main operator, who is entitled to borrow $7,500,000, with an output amounting to 87 per cent of the total, if my quick calculation is correct that company would have an average production of roughly
4,500,000	tons, and would repay the loan in something like six years. My figures may not be correct, but if they are this would appear to be quite a burden upon the company, bearing in mind that they should not increase the price to the consumer in order to make up this 30 cents.


Clarence Decatur Howe: The 30 cents is fixed as a reasonable part of the saving that mechanization will produce, to be used for amortization of the government loan. This is not the first loan of the kind to be made in the maritime fields. Back in 1944 or 1945 we were asked to guarantee a bank loan to mechanize the McBean seam at New Glasgow. The hon. member for Pictou was very active in promoting that proposal, and the loan was made. We guaranteed a loan of $730,000, and the terms of repayment provided that

Coal
the loan should be liquidated in quarterly instalments of $36,500 over a five-year period which I believe works out at the rate of roughly 25 cents per ton of coal now being produced from the seam. Those payments have been made on the due dates, and by this time I rather think the loan is pretty well retired. Generally speaking, unless mechanization effects substantial savings in the cost of mining coal we had better not go ahead with the bill. If this legislation will not produce savings that will permit amortization of the loans at the rate of 30 cents per ton, I would not bother with it. My hon. friends speaks of paying this amount out of earnings. That is a little different to paying it as amortization. Earnings are subject to taxation and are quite different from amortization provided for under the terms of the bill.


Percy Chapman Black: I agree with what has been said by some hon. members. In our area, with the smaller seams, I believe they rarely make a profit of 30 cents per ton on their operations, and that figure would seem to me to be excessive. The operations the minister has referred to are financed by a wealthy company, Dominion Coal Company, which has great assets of one kind or another and is able to meet such charges in its ordinary financial operations. It is much more difficult for some of these smaller companies to do so. While I know they would be glad to get the loan paid off as quickly as possible, it seems to me that it will be a pretty severe hardship on them if a profit of 30 per cent is to be taken as a first charge on their operations.
The minister says he would not be interested in a loan of this kind unless the companies were prepared to meet this condition. I want to point out to him that in carrying on coal mining operations there is continuous development and continuous expense in connection with the replacement of machinery, the sinking of deeper shafts, putting in new workings and so on. While a certain tonnage may be taken out on which a profit will be realized, that profit is put back into new machinery or further operations; so it would seem to me that 30 per cent-


Clarence Decatur Howe: It is 30 cents per ton.


Percy Chapman Black: It seems to me that is a pretty heavy burden to impose on many of these operations that will be looking to the department for financial assistance.


Alfred Johnson Brooks: I should like to ask the minister a question concerning subsection 3. From what he said about the Minto area I rather gather that there it would be a joint undertaking of the different operators, who are all

carrying on in a rather small way. The minister said he had discussed the matter with the premier of New Brunswick, and I thought it might be a joint operation.
Subsection 3 provides:
A loan shall be secured by a first charge or mortgage in favour of His Majesty on the mine and equipment in respect of which the loan is made or on other property of the coal producer or by such other security as the minister may approve.
Suppose that this is a joint operation, and one operator's mine was clear while another was encumbered; is there some way that is being worked out with the local government? When it says "other security", I take it that means that the local government might give security for the operator in that area? Frankly, I would be afraid that the coal mines in the Minto area were not clear of encumbrances. Is there some way this could be made to apply to them?


Clarence Decatur Howe: The recommendations that have been made for improving the Minto field include a washing and cleaning plant. This would probably be a custom plant. By that I mean a plant that would take in anyone's coal, and clean it at so much a ton. The mortgage could only be on the plant itself; the mines could not be involved.


Clarence Gillis: The hon. member for Macleod put on the record the amount of the per ton profit. Those figures did not impress me very much.


Ernest George Hansell: I got them from the commission's report.


Clarence Gillis: They still do not impress me. The major portion of this money will be lent to Dosco, which is a $29 million per year corporation. I believe the minister's audit department ought to consider the fact that this company has 29 subsidiary operations hooked on to the coal industry. It is so easy, with such a large organization, to divert profits from one company to the other, and hide them. I believe the minister will have to watch that no items, except those entering into the cost of producing coal, are considered in the current year in relation to this 30 cent charge which the bill contains. As the member for Cumberland suggested, development work and other such things should be charged as a capital cost, and not be charged against the cost of producing coal.
In the past, if a million dollars was spent on development, instead of charging that as a capital cost over a period of years, it would be charged against the cost of producing coal in that year. I do not think there is going to be any difficulty with the bill. The minister has handled subventions and subsidies for coal for the past eight or nine years, so I believe he is familiar with the policy of

those who will be borrowing the money. He will know their methods of manipulation. I do not believe there will be any difficulty on that score.


[Stage Direction]
Section agreed to.
On section 5-Depreciation allowance.
Mr. Low:: Will the minister give us an example of what is meant by that clause 5? I believe I know, but I should like to make sure.


Clarence Decatur Howe: The repayment of the loan is to be treated as accelerated depreciation. In other words, when the payment is made for any year, the portion of the earnings which represents the repayment of this loan is not subject to taxation. So far as the funds that are advanced privately by the company are concerned-that must be at least one-third of the expenditure-those funds are not subject to the accelerated depreciation. So far as the funds representing the repayment of the government's loan are concerned, such funds will be allowed accelerated depreciation.


Solon Earl Low: Am I correct in assuming that holds good only in so far as the portion of their original investment that has not been written off is concerned?


Clarence Decatur Howe: Yes.


Solon Earl Low: I am wondering where the companies stand who have made provision out of their earnings for mechanization improvements and so on? In the past, some of these companies have put sums into a reserve, on which they have had to pay taxes under the Income Tax Act. Is the minister not making a provision here which might be looked upon as discriminatory by such mines as have made provision for their own mechanization?


Clarence Decatur Howe: Frankly, I believe the answer is yes. We admit that this is discrimination in favour of the Atlantic maritime mines. The reason for it is that we do not see any other way of providing for the future of the maritime mines. These mines are in jeopardy today by reason of the constantly rising costs and the competition from lower-cost United States coal. United States coal is dropping in price. As I said, the gap is being bridged presently by subventions from the government.
In order to make it possible for these mines to remain solvent, we are extending a privilege to them which has not been extended to the western mines, except in the war period. During the war we did allow accelerated depreciation on new developments and equipment installed in the western mines. Perhaps when this job is finally completed there will not be much difference in the treatment between east and west.
Coal


Solon Earl Low: Now that the minister had introduced these principles, with which I agree,- I think it is a splendid thing, even though it is discriminatory-I think the minister should consult with his colleagues the Minister of Finance and the Minister of National Revenue to have this privilege extended to other mines in Canada. It is the only way they are going to be able to meet their situation in the years to come. In many western mines, we know there is a need for further mechanization in order to cut down costs and enable them to compete in central Canadian markets. This is an excellent way of helping them do it, by extending this same principle of accelerated depreciation to these mines in other parts of Canada.


Clarence Decatur Howe: Mr. Chairman, I cannot quite agree with my hon. friend as to the perilous state of the western mines. I believe the latter have built themselves into a good financial position, and are operating profitably. In normal times, accelerated depreciation is a privilege that must be granted sparingly. It is a form of discrimination, if you like. To my mind it is not a great concession, because after a mine has written off all its depreciation it has no more to write off, and the owner has to pay taxes on all his earnings. Whether it is a good thing for a company to accept accelerated depreciation, and use up its depreciation fund in a short time, rather than to pay normal depreciation and draw on the fund for a longer time, is a matter upon which companies have their own views. Some take one view and some another. Nevertheless, it is government policy to keep the depreciation practice of all industries in Canada on the basis prescribed in the Income Tax Act. This maritime provision is a deviation from that principle.


Mr. Hatfield:: I should like to ask the minister if this loan is to be used for production machinery only, or can it be used for grading machinery or something of that nature?


Clarence Decatur Howe: This can be used only for mechanization that will improve the efficient production of coal.


[Stage Direction]
Section agreed to.
Sections 6 to 8 inclusive agreed to.
On section 9-Annual report.
Ernest George Hansell: I have a point I should like to raise. We had a discussion some time ago in respect to the submission of reports. I note that this clause says that the report shall be laid before parliament within three months after it has been prepared or, if parliament is not in session, within fifteen days after the commencement of the next session.

Surplus Crown Assets Act Three months is quite a little while. Perhaps we could shorten that up considerably. Why should it lie around for three months? Would the minister care to comment on it?


Clarence Decatur Howe: Frankly, I am wondering that myself. I think it could very well have been three weeks, but whether it is worth while amending the bill I do not know. If my hon. friend insists we may put through an amendment. It is pretty late in the session.


Ernest George Hansell: Since I have never had the glory of having an amendment accepted in parliament I may just as well not insist that this amendment be made; it isn't that important.


[Stage Direction]
Section agreed to.
Section 10 agreed to.
Bill reported, read the third time and passed.


Clarence Decatur Howe: the second reading of Bill No. 195, to amend the Surplus Crown Assets Act.
He said: In my opinion this is a bill of no great importance. It is a tidying up bill. In June, 1944, the house passed the Surplus Crown Assets Act to set up a corporation to dispose of surplus war materials. The corporation was formed and it has carried out its work. It has sold goods producing a gross revenue to the crown of $462 million. The disposal of war equipment surplus as a result of the war is pretty well finished, but the corporation is still receiving declarations of surpluses at the rate of about 280 a month from various departments, and from the armed services. The corporation controls a good deal of real estate acquired during the war, which it has not yet been able to sell, and it still has to collect some $31 million of accounts outstanding. It is quite obvious that the corporation must carry on for a considerable period, but it does not need all the machinery that was used when it was carrying out its war duties.
The purpose of the bill is to simplify the corporation, to dispense with the crown assets allocation committee, which is required by the present act, and to streamline the act to allow it to carry out its duties to the extent that is required under present-day conditions.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Beaudoin in the chair.
[Stage Direction]
On clause 1-Definitions.
Mr. Lennard:: Mr. Chairman, I have one or two questions to ask. I shall first of all be a bit critical because the public accounts committee was not set up this session to give us an opportunity to call witnesses in connection with the War Assets Corporation. The procedure and practices of the corporation were criticized by the Auditor General in the report of March 31, 1949, in which he said:
I have examined the accounts of War Assets Corporation for the year ended March 31, 1949, and have obtained all the information and explanations I have required. The procedures and practices of the corporation were not of such a nature as to permit establishing by examination of records maintained that all assets received for disposal had been fully accounted for.
There is another matter that I should like to bring to the attention of the committee. Why cannot the Canadian Commercial Corporation look after the selling of these surplus assets as well as do the buying? It has an organization already set up. It is true that in industry there is a purchasing department and a sales department, but they more or less deal with the commodities of one industry. Here we have to purchase for eighteen departments or more, and it would seem reasonable that the sale of surplus goods could be handled by the same agencies. In industry the products are related, but in this instance the products are unrelated and cover a wide range of articles. I feel that it would be better business, and the government would do a better job, if it were handled by one government agency, and if the buying and selling were done under the one head.


Clarence Decatur Howe: That is not the experience of the department. The buying is one job, and selling the vast accumulation of unrelated products is another job. At one time the War Assets Corporation had over ten thousand employees located in all parts of the country Its staff has been reduced to about 169 employees today, and the volume of work is decreasing; nevertheless the new sales that will be made in this current year represent a return to the crown of some $11 million. It is big business, business for a staff that is specialized and used to evaluating the kind of second-hand material that this corporation deals with. That is totally different from the experience required by the staff of the purchasing corporation.


Stanley Howard Knowles: This first clause does some of the things which the minister referred to when he outlined the purpose of this bill. For example, it gets rid of the surplus crown assets allocation committee and makes one or two other administrative changes. I see, Mr. Chairman, that you are looking at the clause and trying to see where these things are.

If you take this clause and compare it with the section of the bill for which it is a substitute you will find that it leaves out such an important part of the machinery as the surplus crown assets allocation committee. If the purpose of the bill is, as the minister indicated, simply to tidy up the work of surplus war assets, it would seem reasonable to eliminate some of the machinery and get things on a more simplified basis. On the other hand, as indicated by subparagraph (b) of this clause and the other clause to which it refers, the name of the organization is being changed. The word "war" is being left out and it is being made to appear as a more permanent organization. In fact, the minister has just said that there are still 280 declarations of surplus per month.


Clarence Decatur Howe: Yes.


Stanley Howard Knowles: It does look as though this body will stay in existence for some time. As a matter of fact the very change in the name makes me wonder whether, instead of its being an organization merely for the disposal of surplus war assets, it is becoming an organization that can dispose of crown property at any time and on any terms.
That being so, I confess frankly-although the minister may be able to set aside my fears-that there are one or two things which concern me. Section 1 (e), when compared with the corresponding paragraph in the original act, gets rid of the necessity of orders in council in certain cases. The minister is aware of that; I need not read it. In other words this bill puts more power directly in the hands of the minister himself.
The minister has already said that this bill gets rid of the crown assets allocation committee. Formerly there were three bodies connected with this matter, namely, the corporation, the committee and the minister. The committee was a body to advise the minister. Now the committee will be gone, with just the minister and the corporation remaining. And later on we shall find that the minister has power to delegate his authority to the corporation.
As I say, all this is reasonable, if this job is just about over, or if it is a case of just tidying up. But if what we have here is the setting up of a peacetime crown assets disposal organization, it seems to me we should ask why the necessity for orders in council is being done away with, and why more power is being put in the hands of the minister, and this minister in particular. I have other questions relating to other sections.


Clarence Decatur Howe: This is intended to be a permanent disposal organization.


Stanley Howard Knowles: It is permanent?
Surplus Crown Assets Act


Clarence Decatur Howe: Yes, permanent. Prior to the war there was a disposal agency centred in the Department of Finance; but in effect each department of government had its own disposal arrangements, subject to the approval of the disposal officer.
The problem has grown a good deal with the years. As I say, the war itself has created problems which will be with us for many years, collections being made representing some $31 million. Some of these payments are not due for several years. The government has decided to make the surplus crown assets disposal agency a permanent instrument of government; and this bill is for that purpose.


Stanley Howard Knowles: That being so, I feel I should press my question as to why a change has been made doing away with the necessity for orders in council in certain cases before property can be declared as surplus crown assets.
Section 2(f) of the act, of which section 2(e) in the bill is the amending section, states:
(f) "surplus crown assets" means property that has been
(i)	included in a report made to the minister under section three; or
(ii)	declared by the governor in council to be unnecessary to satisfy the requirements of the government department by which it is kept, administered or controlled; and
has not been subsequently deleted from the report with the consent of the minister or disposed of pursuant to the provisions of this act.
The new subsection 1 in the bill before us amends section 2 of the act by getting rid of paragraph (f) and substituting the new paragraph (e) which reads as follows:
(e) "surplus crown asets" means the property that is included in a report made to the minister under section three and has not subsequently been deleted from the report with the authority of the minister or disposed of pursuant to this act.
The principal difference between those two paragraphs is the elimination of the necessity under certain circumstances for orders in council in order that goods be declared surplus. Would the minister tell me why the orders in council are being done away with and why greater power is being placed in the minister's hands?


Clarence Decatur Howe: I think my hon. friend has overlooked one word.


Stanley Howard Knowles: The word "or"?


Clarence Decatur Howe: Yes, the word "or". As a matter of fact all the surplus has been declared on the report made to the minister under section 3. We have never used orders in council to declare surplus, and it is not necessary under the old act. Departments could do it that way if they wished; but it

Surplus Crown Assets Act was so much simpler to do it the other way that that is the way we always followed. And since declaration by the governor in council has never been used in the past, there is no use perpetuating the method.


Stanley Howard Knowles: The minister may not always see eye to eye with me, and he may think I always want to fight with him, but I accept that as a satisfactory answer-


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: -even though there seems to be some amazement at my doing so. Another question has to do with paragraph (c) in the amending bill in which a number of crown corporations or other bodies are exempted from the definition of "government department". I notice that the Polymer Corporation is not mentioned here. Is there any significance in that omission?


Clarence Decatur Howe: No. The corporations mentioned are self-contained corporations owning their own assets, and the sale of whose assets would normally go into the funds of the corporation concerned rather than into those of the receiver general. My hon. friend will appreciate that all the moneys recovered by crown assets corporations are paid over to the receiver general. However, in the case of the Canadian National Railways, the railway is a separate corporation and would naturally recover funds arising from disposal of its property. The same is true of the Canadian Broadcasting Corporation, the Bank of Canada, the Industrial Development Bank and Trans-Canada Air Lines. All are self-contained corporations.
May I say, Mr. Chairman, that I believe I have overlooked a duty-and I hope the committee will bear with me in my omission. I had intended introducing an amendment to section 1 of the bill which would include among the corporations excluded the national harbours board. Again, it is a trustee of certain funds as a self-contained corporate body. I would ask my colleague to move this amendment.


Mr. Fournier (Hull):: I move:
That section 1 of the bill be amended by adding the words "or the National Harbours Board" immediately after these figures "1937" in line 21 at page 1 of the bill.


Clarence Decatur Howe: I hope my hon. friend will not tell me I am breaking the rules-because I think I am.


Mr. Graydon:: That applies to paragraph (c).


[Stage Direction]
Amendment agreed to.
Stanley Howard Knowles: I have no objection to the amendment. What I have to say can be said

now as well as back on the clause, so may I return to the point I raised earlier, using Polymer Corporation as an example.
Section 2 (c) states that "government department" shall mean a department of the government of Canada or a board, commission, corporation or other body that is an agent of His Majesty in right of Canada, but does not include-and then it sets out the Canadian National Railways, The Canadian Broadcasting Corporation, the Industrial Development Bank, Trans-Canada Air Lines and, after this amendment, the national harbours board.
The point I am trying to make is this: Should not Polymer-which is a government corporation-be added in the same way as the minister has added the national harbours board to the other exceptions, such as the C.N.R. Is not Polymer, like the C.N.R., a self-contained corporation?


Clarence Decatur Howe: There is a difference. The Polymer Corporation is really a management corporation. The capital assets of the Polymer Corporation are owned directly by the crown; it has no capital assets of its own.


Stanley Howard Knowles: That being so, the Polymer Corporation might qualify as a government department, under this amending section.


Clarence Decatur Howe: Sale of its production would come under section 3, subsection 2, paragraph (b).


George James McIlraith: I think the hon. member is thinking of the production of Polymer Corporation. If he will look at section 3, subsection 2, paragraph (b), I think he will find that the point is covered. The corporation is responsible for the disposal of capital assets, but the production is excluded from the Operations of the Crown Assets Disposal Corporation.


Gordon Graydon: I should like to inquire about the difference in status of the Canadian Broadcasting Corporation and the Polymer Corporation. A moment ago the minister indicated that one reason why Polymer was not included in the excepted corporations along with C.B.C. and C.N.R. was that the title to the assets of Polymer was in the crown. Is it not true that the title to the assets of Canadian Broadcasting Corporation is also in the crown?


Clarence Decatur Howe: The assets of Canadian Broadcasting Corporation are vested in the corporation itself. As my hon. friend will remember, that corporation obtains from the public purse loans which are subject to repayment. The shares of C.B.C. are owned by the crown, but C.B.C. owns its own assets.


Gordon Graydon: I am glad to be corrected on that point because I thought the crown held title to the C.B.C. property.


Clarence Decatur Howe: My hon. friend will recall the tax disputes that have occurred as to whether the property is crown property, and I think the courts have held that it is the property of the corporation and subject to taxation.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 2 agreed to.
On section 3-Repeal.
Stanley Howard Knowles: This section repeals sections 5, 6, 7 and 8 of the original act and does away with the crown assets allocation committee, which formerly advised the minister in connection with these matters. Why does the minister feel that that committee is no longer necessary?


Clarence Decatur Howe: In the early days of disposal certain assets that were declared surplus by one department could be used by another department and the purpose of the crown assets allocation committee was to make sure that there was not a use within the government for articles declared surplus. Certain procedures were set up on the recommendation of the crown assets allocation committee which are no longer necessary for the type of disposal carried on today. Further advice on the procedures is not necessary as the procedures are well established. The work of the crown assets allocation committee had dwindled to the point where no one would attend its meetings because there is nothing of interest going on. This results from a definite change in the character of the assets being declared surplus.


Stanley Howard Knowles: It is all being left to the minister.


Clarence Decatur Howe: The minister does not worry about that particular problem.


Howard Charles Green: What is the reason for the exceptions that have been made? It is provided that the Department of Mines and Resources may dispose of some of its own lands and properties, and the same with regard to the Department of Transport.


Clarence Decatur Howe: The operations of the Department of Mines and Resources in the Northwest Territories are exempted. Those operations have been carried on by the department for a great many years and the department has a staff there capable of handling problems of disposal in that area. Similarly, the Department of Transport has been dealing with surplus lands acquired in the building of canals, particularly the Welland and the
Surplus Crown Assets Act Soulanges canals. The department has outstanding leases on properties and it was not thought well to disturb operations that have an historical background.


Gordon Graydon: What proportion of government assets will be covered by this particular legislation and what proportion will be beyond the purview of this legislation.


Clarence Decatur Howe: I think it will be at least twenty to one in favour of operations within the act. I do not know what the future will be. Certain patterns of sales are excluded, but they do not amount to any great sums. There are a number of small transactions which require a particular staff and a particular background to handle efficiently.


[Stage Direction]
Section agreed to.
On section 4-Renumbering.
Stanley Howard Knowles: The minister has just given the reasons for doing away with the crown assets allocation committee which formerly provided the machinery for transferring surplus assets from one department to another. Do I take it that this whole business will now rest with the minister? This section provides for a new paragraph (d) which is listed under the powers of the minister and reads:
(b) approve the transfer of surplus crown assets from one government department to another, subject to such terms and conditions as he may consider desirable.
If you look back to the enacting section you will see that the "he" in that section is the Minister of Trade and Commerce. Does this section mean that from now on all deciding as to how goods will be transferred from one department to another will be done by the minister? "He" is Howe.


Clarence Decatur Howe: I am told that transfers between departments are not current at the moment, but if one seems desirable it can be done simply by a resolution of the board of directors of Crown Assets Disposal Corporation. The class of material being declared surplus today is largely worn out and discarded material which is not likely to be required by another department of government. If it is required, it can be transferred by ministerial action without calling the board together.


Stanley Howard Knowles: That answers my question The power to effect these transfers will now reside in the minister.
I have another question on this clause Paragraph (e) is being reworded to read:
(e) authorize a government department to dispose of surplus crown assets in such manner, upon such terms and subject to such conditions as he may consider desirable.

Gold Mining
Here again it is the Minister of Trade and Commerce who may do this. The old paragraph read:
(e) empower a government department to sell surplus crown assets upon such terms and subject to such conditions as he may consider desirable.
The section is being changed so that the minister may approve of the disposal of surplus crown assets in such manner as he may consider desirable. Does that mean that things may now be given away rather than sold?


Clarence Decatur Howe: No, Mr. Chairman, it does not mean that. We will say the Department of Public Works declares something surplus that the corporation believes has no sale value. The amendment empowers the minister to authorize the Department of Public Works to dispose of it themselves, and the same with any other department. It simply gives the minister responsible for the Crown Assets Disposal Corporation the right to authorize another minister to carry out his own disposal in a particular case.


[Stage Direction]
Section agreed to.
Sections 5 and 6 agreed to.
On section 7-Delegation of minister's powers to corporation.
Stanley Howard Knowles: Mr. Chairman, this looks like another of these tidying-up clauses. What is envisaged in the authority that is given the minister to authorize the corporation to do all of the things now provided for under the act, remembering that the committee is gone and there are no more orders in council? All we have now is "he"-the minister.


Clarence Decatur Howe: What is my hon. friend's conclusion?


Stanley Howard Knowles: I think my implication is clear. It seems to me that through the whole of this bill our good friend, the Minister of Trade and Commerce, is just getting more power than he had before-and that was a lot. Here is one place where it seems that, in addition to the power he gets himself, he now has authority to delegate his power to a board. It is quite a piece of tidying up, isn't it?


[Stage Direction]
Section agreed to.
Sections 8 to 14 inclusive agreed to.
On section 15-Coming into force.
Stanley Howard Knowles: Can the minister give percentage figures as to the war assets the corporation is disposing of compared with the peacetime goods it may be disposing of?


Clarence Decatur Howe: It is difficult to say, because one merges with the other. The principal source

of material handled by the corporation is the Department of National Defence. It is difficult to say whether its surpluses are war material or material acquired since the war. Considering worn-out clothing, it is bard to say whether it was worn out in the war or since the war. My hon. friend will appreciate that it is very difficult to make a division.


Stanley Howard Knowles: But the bill has no other purpose than to continue the necessary job which arose because of the war and prompted the setting up of War Assets Corporation?


Clarence Decatur Howe: That is correct.


[Stage Direction]
Section agreed to.
Schedule agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the said bill be read a third time?


Stanley Howard Knowles: Next sitting.


Some hon. Members:: Now.


Stanley Howard Knowles: Next sitting. I think we should abide by standing order 73 once in a while.


Mr. Deputy Speaker:: Next sitting of the house.



GOLD MINING


[Stage Direction]
The house resumed from Friday, November 4, consideration in committee of the following resolution-Mr. Gibson (Hamilton West)- Mr. Beaudoin in the chair:
That it is expedient to present a bill to amend the Emergency Gold Mining Assistance Act in respect to the manner of calculating the amount of assistance that may be paid operators of gold mines, as prescribed by the act; also to empower the governor in council to prescribe by regulation, in the case of a mine producing gold in concentrates during one period and not producing bullion from such concentrates until a later period, the time when the gold shall be deemed to have been produced and the manner in which the cost of production thereof shall apply.
Alphonse Fournier: This morning I spoke to the members of the different opposition parties to see if we could allow the resolution to pass in order that the bill may be introduced and come up on Saturday. The members most interested told me they had no objection, and that they could speak on Saturday or the next time we take up second reading of the bill.


Gordon Graydon: That is also my understanding, with one qualification. We expected that the Minister of Mines and Resources would make a statement on the resolution stage.


Alphonse Fournier: He did make a statement when it was first introduced. The minister made a statement on the resolution at that time.


Gordon Graydon: There is no further statement to be made by the minister now?


Alphonse Fournier: Not at this time.
Resolution reported, read the second time and concurred in.
Mr. Fournier, Hull (for Mr. Gibson, Hamilton West) thereupon moved for leave to introduce Bill No. 219, to amend the Emergency Gold Mining Assistance Act.
Motion agreed to and bill read the first time.

The house in committee of supply, Mr. Beaudoin in the chair.
DEPARTMENT OF TRADE AND COMMERCE 413. Departmental administration, $468,107.


Mr. Blackmore:: Will the Minister of Trade and Commerce make a statement to the house on the international situation with respect to trade and commerce as it affects Canada?


Clarence Decatur Howe: Mr. Chairman, it is customary from time to time for the Minister of Trade and Commerce to discuss the present economic situation and forecast the future. I have been doing both every year since 1944, and in the process I have been accused of being Canada's No. 1 optimist. However, at the moment I have no particular regrets about any statement I have made throughout that period. The statement I am going to make now represents, in my opinion and that of the officers of the Department of Trade and Commerce, a fair estimate of the situation we are facing today and expect to face during the next calendar year.
The Canadian trade picture for 1949 has, on balance, been favourable. While there has been some decline in sales to traditional markets, Canada's exports in terms of dollars will be about as high as last year, while imports will be slightly higher. In a period of readjustment following the abnormal conditions of the last decade, we have been able to maintain our export trade at an extremely high level and to dispose of our major surpluses. The necessary adjustments so far have been made without any real dislocation of Canadian industry; in fact the general level
Supply-Trade and Commerce of economic activity in the country as a whole has continued to improve. The year 1949 has been a prosperous one for Canada, and national production, income, employment and consumption will be higher than last year. The strong domestic market that has developed from our recent industrial expansion and high level of domestic prosperity has been an important factor in offsetting to some extent the loss of overseas markets. For example, exports of motor vehicles have been reduced sharply with exports this year at some $40 million below 1947. Yet the home market is now absorbing close to the maximum output of this industry, with the increase in domestic sales about double the fall in exports. In cotton textiles and in electrical equipment the story is similar.
Our exports are a major factor today as they always have been in the past, and Canada's prosperity is dependent to a large extent on the state of world trade and more particularly on our trade with the United Kingdom and the United States, our two largest suppliers as well as our two largest customers. I should like to deal first with these two countries before going on to some of the broader issues of international trade.
During the past year a concerted effort has been made by the Canadian government, as well as that of the United Kingdom, to help Britain and the rest of the sterling area earn enough dollars to remain large-scale customers for Canadian goods. Because of the lack of other sources of dollar revenue that were available in pre-war years, these countries depend more and more on their direct sales to dollar countries to pay for their imports from those countries. In other words, the United Kingdom's exports both to Canada and to the United States have become a most important determinant of what she can afford to buy in these two countries. The success of the measures taken to increase our imports from Britain is apparent from the trade figures. In 1947 our exports to the United Kingdom exceeded our imports from there by $564 million. In 1949 the deficit on merchandise trade will be reduced to about $375 million. For the sterling area as a whole, the gap will have been cut by over 40 per cent.
In terms of dollars, the increase in our purchases from the United Kingdom has been substantial. In 1946 we were importing about $140 million worth of goods. Imports for 1949 should be in excess of $300 million. While some of the rise has been due to price changes, there has also been a definite increase in volume. In relation to our population, I think these figures are significant. During the past year, on a per capita basis, we were

Supply-Trade and Commerce buying British goods at the rate of $24 for every person in Canada. The comparable figure for the United States is only $1.40.
Turning now to our trade with the United States, we find that our imports from that country have been increasing, an indication of the continuing high level of business activity in our own country. The unbalance in our trade is not, however, as great as it was in 1947. In that year the unfavourable balance amounted to nearly $1 billion. In 1949 our adverse merchandise balance will be larger than last year but will only be about half the 1947 figure. Increased exports to the United States have played an important part in improving our American trade picture. Nevertheless an excess of imports over exports amounting to $500 million is a matter of some concern and creates a problem for us. In 1949 over 70 per cent of our import requirements came from the United States.
I think we will all agree that a high level of imports is an essential part of Canadian foreign trade. This does not exclude the possibility of increased Canadian production in a number of items. In recent years we have found that we are able to produce many goods that we had formerly imported. At the same time a very large volume of imports is necessary to maintain the flow of raw materials to our factories, to help provide the building materials and machinery and equipment for our record investment program, and to satisfy the high demands of the Canadian consumer. A substantial volume of imports is associated with a high level of prosperity in this country. We are therefore interested from the point of view of our exchange and dollar problems, not in reducing the amount of our imports, nor necessarily increasing it, but in changing the source from which some of these goods are obtained.
We have attempted by every means at our disposal to accomplish the necessary adjustments in our external trade balances by means which will expand the total volume of our trade. I have on many occasions explained that Canada's trade policy is to sell more to the United States and to buy more from the United Kingdom and other European countries. There is an important aspect of this policy which I wish to stress, and which is of great importance to domestic industry in Canada. It is no part of our policy to increase over-all imports as such. Canada's normal level of imports is sufficient to provide the outside world with enough Canadian dollars to buy our exportable goods. What we need is a redirection of our trade so that we shall approach closer to a balanced position both with the dollar countries and with the sterling area.

Our own position in this regard may perhaps be explained most clearly by contrasting it with that of the United States. Much has been said in recent weeks by our friends in the United States about the traditional lack of balance between their exports and their imports. It is their avowed intention for the future to accept a higher level of imports from other countries so that the outside world can afford to buy their goods. There is no counterpart of this problem in the Canadian situation. Our problem, to repeat, is one of redirecting our trade to achieve better regional balances. If we could buy more of the commodities we need from the sterling area and from the countries of western Europe, the benefits would be twofold. First, we would improve our United States balance of trade; second, we would help our non-dollar customers to earn more dollars with which to maintain their purchases of Canadian products. A better bilateral balance in our trade with individual countries would help to stabilize Canada's exports.
During the past year, Canada has participated in a number of international efforts to deal with the problem of world trade. Together with thirty-two other nations at Annecy we took part in the second round of negotiations under the general agreement on tariffs and trade. The concessions gained, as they become effective, help to improve our trade with a number of countries in such commodities as wheat, forest products, hides and leather goods, codfish, aluminum, lamps. As you know, the three major trading countries of the world met last September in Washington. As a result of these discussions, the foundation has been laid for a co-operative approach to our mutual problems on the part of the United Kingdom, the United States and ourselves. One important development has been the American government's firm stand in support of increased imports into the United States and the need to get rid of the obstacles that now exist. Only recently, Canadian officials took part in discussions on specific difficulties in customs administration, which were a followup of the tripartite talks.
In the period that lies immediately ahead, numerous changes may take place in our foreign trade as well as on the home front. Individual exporters are already encountering difficulties. We are, however, in a strong position to meet any adjustments that may be necessary in our economic life. The Canadian economy is operating at an exceptionally high level. It is a flexible economy, and can adjust itself to new situations.

Canada has the resources, the equipment, and the skills needed to produce goods that are needed in the markets of the world.
By any standard, 1949 has been a good year, and the outlook for 1950 is also good. It is too early to forecast, with any degree of accuracy, the general level of activity that will prevail in 1950, but there is every reason to believe that it will be not very different from 1949. We can, of course, look forward to some falling off in foreign trade totals. There will probably be some easing of price, coupled with some reduction in physical volume. Agricultural crops are, on the whole, lower this year. For example, wheat is down from 393 million bushels last year to an estimated 367 million bushels this year; oats from 359 million bushels to 316 million bushels; and barley from 155 million bushels to 120 million bushels. Agricultural items bulk large in our trade totals. However, assuming a continuation of a satisfactory level of general business activity in the United States, it is a' reasonable expectation that we shall be able to continue to dispose of the surpluses of our primary production.
It must be acknowledged that our exports of a variety of manufactured products will be reduced but, as in the year 1949, this should in most cases be offset by the continuing high domestic demand.
The other main pillar of the Canadian economy is capital investment, and here again, while it is too early to forecast in terms of dollars, it is clear that capital investment will continue at a high level-probably not much different from that of 1949. To realize the truth of this, one has only to think of the tremendous investment now being undertaken in connection with western oil, and the transportation of that oil; of the extension of iron ore operations in Steep Rock and of the plans for the development of Labrador iron ore, the beginning of which may well take place next year. Then there is the continuation of the very substantial development of hydroelectric projects in various parts of Canada; the titanium development in Quebec, as well as public projects such as the trans-Canada highway. Some adjustments will undoubtedly have to be made; some production patterns may have to be altered, but the underlying strength of the two main pillars of our welfare-exports and domestic investment-show promise of a satisfactory level of employment and income in Canada in 1950.


Mr. Argue:: I listened with interest to the statement of the Minister of Trade and Commerce. I hope that the prophecies that he has made will be fulfilled next year. While we can point out with some justification that
Supply-Trade and Commerce our world trade position is satisfactory now, nevertheless I feel that our trading position is anything but satisfactory to certain sections of our population.
The problem Great Britain and the other sterling areas have in attempting to reduce dollar purchases has resulted in a severe reduction in the sale of many Canadian commodities to Great Britain and other European countries. That reduction in markets will be felt most keenly by certain segments of our population. We do know we are finding it increasingly difficult to maintain markets in Great Britain for fish products, timber and tobacco. I do not wish to deal with those matters at length, because I feel that there are many members in the house who are better qualified to discuss those particular aspects of our trade position than I am.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Hazen Robert Argue: I am sure the committee listened intently to the statement given by the Minister of Trade and Commerce this afternoon. I am glad that the minister is still optimistic about our trade situation for the coming year, but I am afraid that that optimism cannot be shared to the same extent by large sections of the Canadian people. We do know that at the present time we are finding difficulty in marketing many Canadian products. The timber industry is finding difficulty because Great Britain is short of dollars with which to purchase her normal supply of timber. We know that the fishing industry is having difficulty at the present time in marketing its products. We know that the tobacco industry has lost the British market to a very large extent. Statistics show that within the first eight months of the year 1947 exports of flue-cured tobacco from Canada to Great Britain amounted to eighteen million pounds; but for the same period of this year the export of flue-cured tobacco has dropped to eight and a half million pounds.


Clarence Decatur Howe: Mr. Chairman, I am sure my hon. friend wants to be accurate. Exports this year are $8,500,000.


Hazen Robert Argue: I will accept the minister's correction, but I can tell him that I got my figures from the dominion bureau of statistics publication on Canadian exports and I was very careful to check for their accuracy. It spoke about pounds in the first eight months of this year.


Clarence Decatur Howe: I am sorry; perhaps the hon. member is right.

Supply-Trade and Commerce


Hazen Robert Argue: If the minister knows he is right I will accept it.


Clarence Decatur Howe: I was giving the figure for the full year. I noticed that the hon. member mentioned only the first eight months. I daresay the figure for the full year would be twice the amount he mentioned. The price of flue-cured tobacco is about 50 cents a pound. I daresay the hon. member's figures are correct for the first eight months.


Hazen Robert Argue: The first eight months of 1947 and the first eight months of 1949.
This afternoon the minister made the statement that he was reasonably sure Canada could dispose of surplus agricultural products in 1950. I hope he is correct. I think he and the Minister of Agriculture should have conferred because the statement made by the Minister of Agriculture at the FAO conference would lead anyone to believe that he feels that indeed Canada is facing a very grave situation in respect to markets for agricultural products. I shall quote from page 2 of the speech of the Minister of Agriculture, which reads as follows:
Our monetary difficulties today threaten to reproduce the situation which existed twenty years ago; a lack of that free movement of food from those with food to spare to those in want . . .
Again:
We, in turn, must find some other natural markets for these products or shrink our production of them because the United Kingdom has not the dollars with which to buy.
All through the speech he spoke of increasing agricultural difficulties. Certainly the Minister of Agriculture has in mind the fact that today Canada has large surpluses of many agricultural commodities, and we may indeed face great difficulties in trying to obtain markets for them.
The situation in respect to agricultural products is not greatly different from the situation in respect to timber and fish products. I saw a report in tonight's Ottawa Journal from Pembroke, Ontario, which read:
The Canadian Splint and Lumber Corporation, one of Pembroke's largest industries, will be forced to close down on Friday, December 16, because of the British dollar shortage, the Journal learned today.
Therefore we are indeed facing grave difficulties in finding markets for many of our products. We have difficulty in finding markets for apples. We know that we have a surplus of cheese, and according to press reports while we may expect a contract with Great Britain for another fifty million pounds of cheese next year, the price will be reduced from thirty cents a pound to between twenty-five cents and twenty-seven cents a pound.

We know that we have on hand in Canada a huge quantity of evaporated milk for which there is no adequate market.
I do not feel that in the future we can look with any surety to the United States taking our surplus products. According to figures published by the United States Department of Agriculture, in 1947 the United States farmers had a net income of $18 billion. The net income of United States farmers is running at approximately $14 billion for the present year, so it would appear that there is likely to be a drop in agricultural income in the United States within that two-year period of some 22 per cent. If the United States farmers are having difficulty maintaining their net income, surely we cannot have any real expectation of being able to market increased quantities of agricultural products in the United States in the future. Already we have observed a trend in which the prices of agricultural commodities in Canada are dropping.
The Canadian index for farm products was 263-9 in August, 1948. That index has dropped to 249-3 in September of this year, a drop of 14-6 within that time.
I believe that markets for livestock and dairy products are essential for more reasons than keeping the farmers' income high. An adequate market for livestock and dairy products means that farmers can engage in diversified agriculture, and diversified agriculture is necessary if we are to maintain agriculture on a permanent basis, and if we are to maintain the fertility of our soil. But while we are facing a surplus of some livestock and dairy products and while I do not believe that we are facing an imminent surplus of grain, nevertheless in the grain situation throughout the world there is already apparent a trend which should lead us to give this matter a great deal of consideration.
The Minister of Trade and Commerce quoted the crop yields for this year. It seemed to me that he was taking some satisfaction from the fact that we had reduced yields of our various grains because it would likely prevent a surplus appearing with which the government would have to deal. If we look at our carryover stocks of grain we find that the carryover of wheat was 98-7 million bushels, 21 million bushels higher than the year before.


Clarence Decatur Howe: Mr. Chairman, I am sure my hon. friend wishes to be accurate. What did he say the carryover of wheat was last year?


Hazen Robert Argue: I said 98-7 million.


Clarence Decatur Howe: He is entirely mistaken. I do not mind his quoting the party line, ascribing

motives and talking of depressions and one thing and another, but I do wish he would be accurate in his figures.


Hazen Robert Argue: These figures were taken from the quarterly statement on grain, issued by the dominion bureau of statistics.


Clarence Decatur Howe: It is not true. They are not correct.


Hazen Robert Argue: I shall give the committee the figures as I have them, and the Minister of Trade and Commerce can correct me where they are wrong. The carryover of wheat was 21 million bushels larger this year than at the same period a year ago. The carryover of oats was 59-1 million bushels as compared with 47-9 million bushels a year ago, an increase of 11-2 million bushels. The carryover of barley was 29 million bushels, a decrease of 2-4 million bushels; the carryover of flax was 10-7 million bushels, an increase of 7-3 million from the year before; the carryover of rye was 12 million bushels, an increase of 11-1 million from the year before.
The general picture with regard to our carryover on July 31 of this year in relation to our carryover of grains a year ago was that while our carryover did not constitute a huge surplus, nevertheless it was above the average as compared with the year before.
If we are going to have adequate markets for grain, then the British market in that regard is most important. The domestic policy the British are following in relation to the production of grain in that country is certainly of vital interest to the farmers of Canada. The British are following a policy of producing more and more of their own food at home. I hope the minister will accept these figures, because they were taken from a United Kingdom information office publication.


Mr. Cruickshank:: Would the hon. member permit a question?


Hazen Robert Argue: Yes.


George Alexander Cruickshank: I shall take it for granted that the figures he has given are correct. Has he any remedy or suggestion to offer to correct the situation?


Hazen Robert Argue: I am glad the hon. member has asked that question, and I shall answer it later.


George Alexander Cruickshank: Yes, in about an hour.


Hazen Robert Argue: Do not be so impatient. Great Britain is increasing agricultural production at home. In the year 1948-49 she produced 37 per cent, by calories, of the food she consumed, as compared with 31 per cent pre-war. Bread-grain production in Great Britain in
Supply-Trade and Commerce 1948-49 was 44 per cent above the pre-war figure. Her production of other grains was 98 per cent above pre-war.
So in addition to an increase in the carryover of grains in Canada we find Great Britain increasing her own production of grain. Along with that she has undertaken bilateral agreements with other countries for the purchase of large quantities of grain. For example a year ago she signed a bilateral agreement with the U.S.S.R. for the purchase of 750,000 tons of coarse grains. According to a speech made in February by Mr. Harold Wilson, president of the British board of trade, the U.S.S.R. delivered that quantity on time -indeed delivered a quantity slightly in excess of the 750,000 tons. A press report since that time tells us that Great Britain has entered into a bilateral agreement with Russia for the purchase this year of a million tons of coarse grains.
In addition to the bilateral agreements Britain is making for the purchase of coarse grains outside Canada, the countries of Europe taken together are importing less grain now than they did pre-war. May I quote to the Minister of Trade and Commerce one paragraph from page 29 of the FAO publication entitled "World Commodity Problems": Europe, which normally took 90 per cent or more of the world coarse grain exports, took less than 7 million tons in the past two years as compared to 11 million tons before the war. Stocks of coarse grains in the four export countries were 24 million tons larger than a year earlier.
Thus Europe is now taking greatly reduced quantities of grain as compared with the quantities purchased before the war. The chief exporting countries have had on hand this year 24 million tons of coarse grain more than they had on hand a year ago. The United States does not provide us with a market for increased quantities of grain, in my opinion, since in that country they have a large carryover.
According to an article in the Christian Science Monitor of September 15, stocks of corn in the United States amounted to 550 million bushels and stocks of wheat to 150 million bushels. We find an increased average carryover of all grains in Canada this year, with Great Britain increasing her domestic production of grain and entering into bilateral agreements for the purchase of grain from countries other than Canada. We find too Europe is now buying less grain than she did before the war.
If this trend continues I am fearful lest we may have a surplus of grain in this country in the not too distant future. The farmers are interested in knowing at the earliest possible moment what the government's policy is going to be for the 1950 crop

Supply-Trade and Commerce in relation to wheat prices, and the prices of oats and barley. The Canadian wheat board operates under the Minister of Trade and Commerce. There has been a five-year pool with an initial price now paid to producers of $1.75 a bushel. Throughout a large part of that period our farmers were selling wheat to be processed into flour and baked into bread to be sold in Canada for less than the amount our wheat was bringing in many other countries of the world.
During part of that period we were selling large quantities of wheat to Britain at prices less than those at which we were selling wheat to other countries. Farmers feel they have made a real sacrifice during that five-year pool. Nevertheless they have welcomed the pool. They believe in stability and they are now asking that the government maintain the wheat board legislation and that they be given another pool period. I would hope the Minister of Trade and Commerce can maintain the same initial price next year. In view of the sacrifices our farmers have made I say they should be guaranteed the present initial price for another five-year pool period.
We come now to the government policy in relation to coarse grains. We know that year in and year out farmers have advocated the closing of the grain exchange, and have advocated that the wheat board handle oats and barley in exactly the same way it handles wheat. Certainly in June, when the announcement was made, farmers believed that oats and barley would be handled by the wheat board and would be completely taken off the speculative market. They were disappointed to find that while the wheat board is the sole buying agency for oats and barley, the grain exchange is still being used in the sale of oats and barley.
The Saskatchewan wheat pool convention meeting at Regina in November, according to an article appearing in the Leader-Post on November 7, passed a resolution asking the federal government to place oats and barley under the wheat board in exactly the same position as wheat. That resolution was passed unanimously.
I would suggest that when the Minister of Trade and Commerce is deciding upon an initial price for oats and barley next year he should keep in mind establishing a price which bears a fair relationship to the initial price for wheat. At my own elevator point the farmer gets an initial price for the wheat he delivers of $1.58J per bushel, but for barley he receives only 67 cents and a fraction per bushel. Those initial prices do not bear reasonable relationship one to the other.

I believe the initial price of barley should be two-thirds the initial price of wheat, while the initial price of oats should be one-half the initial price for wheat. Unless there is a fair relationship between these initial prices the farmer is going to have a hard time determining what to seed because he has no way of knowing what the final payments are likely to be.
We are not at all sure that we will have adequate markets for our grain. At the present time our wheat market depends to a large extent upon United States dollars being made available to Great Britain for the purchase of Canadian wheat. There is no assurance that those dollars will continue to be made available. Despite all that was said by ministers of the government during the election, that the C.C.F. were talking more blue ruin and that there was not going to be a trade crisis, we found that just a few weeks after the election there was a real trade crisis. Great Britain announced that she would be cutting her purchases in the dollar area by 25 per cent. That was important to Canada. A British dollar crisis means a Canadian trade crisis. When Great Britain is short of dollars then the Canadian farmer may well face a market crisis in the not distant future.
Britain has been entering into bilateral trade agreements with many countries. Up to the present she has signed almost forty such agreements and has established sources of supplies of food outside the dollar countries and outside of Canada. The permanent loss of the British market will mean serious difficulties for Canadian agriculture. We are facing difficulty in marketing cheese, in marketing apples, and we have large stocks of evaporated milk on hand. I ask the Minister of Trade and Commerce to check the figures I am going to give because I believe they are right.
As of October 1, 1947, we had on hand 16-4 million pounds of evaporated milk; on the same date this year we had on hand 56-6 million pounds, an increase of 40-2 million pounds. We have stocks of butter amounting to approximately 70 million pounds. It would be nice if we could sell our butter surplus to Great Britain, but we are not likely to be able to do that. Great Britain has bilateral agreements with other countries for the purchase of butter. She had a contract with Denmark for the year ending September 30, 1949, for the importation of 130 million pounds. Denmark has agreed to deliver to Great Britain 75 per cent of her butter surplus up to a maximum of 330 million pounds per year. If we had the chance to ship to Great Britain only a

small fraction of the butter that she is buying from Denmark under a bilateral agreement there would be no talk of a butter surplus in Canada.
We are not just losing, we have already lost the British market for a great many of our agricultural products. I admit that the British market has been reasonably good for wheat and cheese, although there is some talk of difficulty in getting a cheese contract for 1950 of the same size and at the same price. But let us consider our bacon exports to Great Britain, and the figures I give are taken from the dominion bureau of statistics publications. Exports of bacon sides and hams in the first eight months of 1947 to Great Britain amounted to 168-6 million pounds; for the same period this year the exports amounted to 28 million pounds, a drop of 83-4 per cent.


Clarence Decatur Howe: Was that from a lack of contracts?


Hazen Robert Argue: No, that was from a lack of government policy. The farmers of western Canada will produce 160 million pounds of bacon for Great Britain if the government will establish contracts over a period of years instead of from one year to the next, and leading to one crisis after another. In that same period in 1947 we shipped 8-8 million pounds of dried eggs to Great Britain; in the same period this year we shipped 3-8 million pounds, a decrease of 56-8 per cent.


Clarence Decatur Howe: Was that from a lack of contracts?


Hazen Robert Argue: I suppose that will be a periodic question. Our farmers are willing to produce bacon and eggs and milk and apples and almost any other commodity for Great Britain if they can be assured of a market year in and year out. The policy this government has followed has brought about a reduction in the British market to the point where our farmers have entirely lost confidence.


George Alexander Cruickshank: Is it not true that the socialist government in Great Britain have not been able to finance the purchase of our goods?


Hazen Robert Argue: In my opinion, we have lost our markets in consequence of the policies followed by this government and the United States government, and not because of the policy followed by the British government. I should like to go on and quote more statistics to show how this government has maintained our British market, and I can tell hon. members opposite that the figures get worse instead of better.
Supply-Trade and Commerce
Our exports of shell eggs in 1947 amounted to 29-7 million dozen; in the same period this year we exported 8-7 million dozen, a drop of 70-7 per cent.


George Alexander Cruickshank: Why?


Hazen Robert Argue: We have a surplus of milk in Canada at the present time. Our exports of whole milk powder to Great Britain in 1947 amounted to 232,000 pounds; this year we shipped exactly nothing.


George Alexander Cruickshank: Why?


Hazen Robert Argue: A drop of 100 per cent.


George Alexander Cruickshank: Why?


Hazen Robert Argue: I could tell the hon. member for Fraser Valley but I do not think he is capable of understanding.


George Alexander Cruickshank: Maybe not, but why?


Hazen Robert Argue: In 1947 we shipped 16-9 million pounds of evaporated milk, while this year we shipped no evaporated milk at all, another drop of 100 per cent.


George Alexander Cruickshank: Again why?


Hazen Robert Argue: I tell my hon. friend that in 1947 we shipped 16-3 million pounds of salmon; this year we shipped 922,000 pounds, a drop of 94-4 per cent.


George Alexander Cruickshank: Again why?


Hazen Robert Argue: In 1947 we shipped 448,000 barrels of apples to Great Britain, and this year we shipped not one barrel, a drop of 100 per cent.


George Alexander Cruickshank: Again why?


Hazen Robert Argue: Our shipments of dried apples to Great Britain dropped 100 per cent. Our shipments of canned apples dropped from 11-3 million pounds in 1947 to 2-6 million pounds in 1949, a drop of 76-8 per cent. We shipped to Great Britain in 1947 2-6 million bushels of potatoes, and this year we shipped no potatoes in that period, a drop of 100 per cent.


George Alexander Cruickshank: Why?


Hazen Robert Argue: In 1947 we shipped 12 million pounds of poultry, and in the same period this year we did not ship any.


George Alexander Cruickshank: Why?


Joseph-Alfred Dion: Order. I would ask hon. members to allow the hon. member for Assiniboia to make his speech.


An hon. Member:: He said he was going to tell us why an hour ago.


Hazen Robert Argue: I do not mind how much noise hon. members make on the other side of the house. These are cold statistics, and I would

Supply-Trade and Commerce ask my Liberal friends from the province of Saskatchewan if they do not think that is a serious drop in the British market. I should like to read a press report of a statement by the Minister of Agriculture, which is to be found in the Leader-Post of June 24, 1949. The article reads:
"There is no evidence to support the contention of M. J. Coldwell, C.C.F. leader, that Canada is losing the British -market for food," Agriculture Minister Gardiner said here Thursday night.
The Minister of Agriculture said we are not losing the British market. If we take the average drop in the last two years for all these commodities with which I have dealt, we have lost the British market to the extent of more than 90 per cent.


Some hon. Members:: Why?


Hazen Robert Argue: I might ask hon. members opposite why, since the Minister of Agriculture said that we are not losing the British market.


An hon. Member:: Remember New Zealand.


Mr. Sinclair:: What did New Zealand do?


Hazen Robert Argue: The British people have not wanted to reduce their purchases in Canada, and they have only reduced them because they are short of dollars. They have proceeded to negotiate bilateral trade agreements with many countries. While their purchases of bacon in Canada have dropped precipitously in the last two years, nevertheless in the last ten days the British Labour government was able to announce an increase in the bacon ration from three to four ounces per week.


Some hon. Members:: Election.


Hazen Robert Argue: Because they have been
developing other sources of supply.


An hon. Member:: Denmark.


Hazen Robert Argue: This year they have proceeded to get 20 million pounds from the Netherlands, 40 million pounds from Eire, 40 million pounds from Poland and 100 million pounds from Denmark, a total of 200 million pounds.


Mr. Knight:: It is not a joke.


Hazen Robert Argue: It was not a joke to the hog producers of western Canada when they found hog prices from August until September, a period of four weeks, dropped by $4 a hundred. You cannot blame that drop on the British government.


Some hon. Members:: Oh, oh.


George Alexander Cruickshank: Whom are you going to blame it on?


Hazen Robert Argue: I blame it on Canada Packers and some of the other packing companies.


George Alexander Cruickshank: What a joke!


Hazen Robert Argue: I am sure there is no employee of the British Labour government buying hogs in the province of Saskatchewan. In that province, as in every other province, there is just the packing industry, which is controlled by a few large corporations.


An hon. Member:: What has that got to do with it?


Hazen Robert Argue: Let us look at the British purchases of eggs. In spite of the fact Mr. Strachey has announced that Great Britain may not renew the egg contract with Canada, the British are not going without eggs. This year they have bilateral agreements for the purchase of 21 million dozen eggs from the Netherlands, 13-5 million dozen from Poland, and 81-3 million dozen eggs from Denmark, a total of 115-8 million dozen eggs. We would like to have the British egg contract renewed, but whether or not it is, Great Britain has been able to develop other sources of supply.


George Alexander Cruickshank: Will the hon. member permit a question?


Stanley Howard Knowles: This interruption will give him another forty minutes.


George Alexander Cruickshank: I have only asked if he will permit a question.


Mr. Maclnnis:: He does not mind answering anyway.


George Alexander Cruickshank: I should like to ask a question, but if he does not want to permit me to do so-


Hazen Robert Argue: I am ready to answer the question.


George Alexander Cruickshank: Did the government of Great Britain decrease the horse meat contract in any way, shape or form?


Hazen Robert Argue: That question is one that you would expect from the hon. member for Fraser Valley.


Percy Ellis Wright: That is what he was raised on.


Donald MacInnis: Ask the member for Leeds about evaporated milk.


Hazen Robert Argue: In spite of the interruptions, the fact remains that Canada is facing serious marketing problems.


Some hon. Members:: Oh, oh.


Hazen Robert Argue: Hon. members of the house may laugh if they want to. I do not mind, but the farmers of western Canada do not think that the present market prospects for agricultural products are a laughing matter.


George Alexander Cruickshank: Hear, hear.


Hazen Robert Argue: I should like to suggest to the government that it undertake a different

policy. I was hopeful, from a statement the Minister of Trade and Commerce made this afternoon, that perhaps the government would make some changes in its trade policy. If I understood him correctly, he said that a better bilateral balance of trade would mean a better over-all balance of trade. In other words, if our exports to and our imports from the United States, and our exports to and imports from the United Kingdom are more nearly balanced, it will be a good thing for world trade. I suggest to him as a positive measure that he should do for the government of Great Britain exactly what he is asking that government to do for Canadians. Our government is asking the government of Great Britain to sign bilateral agreements for the purchase of Canadian agricultural products. I suggest that we as a nation should be prepared to sign bilateral agreements with Great Britain for the importation of British manufactured products. I can tell the minister that in western Canada there is an organization which I believe might be of some help to the government in this regard. I refer to Canadian Co-operative Implements Limited.
We have a huge market for agricultural implements in western Canada, and at the present time a great percentage of them must be imported from the United States. If we could change our imports of agricultural implements from the United States to Great Britain, I believe it would not only help Great Britain to solve her dollar problem but would also help our agricultural producers to maintain the British market. I believe if this government would sit down with officials of the British government and officers of Canadian Co-operative Implements Limited arrangements might be made under which a considerable quantity of British agricultural implements could be brought to Canada and sold by C.C.I.L. throughout the western provinces. Our farmers are interested in purchasing British implements, because they believe that to be to their own advantage; and I believe everything possible should be done to facilitate the importation and distribution of such implements.
We have all read the statement the Minister of Agriculture made to the FAO conference at Washington. The minister realizes that Canada, together with other major exporting nations, is likely to be facing agricultural surpluses in the near future. Such references are made time and again throughout his speech; but while eighty per cent of his remarks dealt with the surpluses that may be imminent, he had very little in the way of concrete proposals to remedy the situation. I know the FAO proposals may have their shortcomings; but I believe any international
Supply-Trade and Commerce arrangement which would enable us to get rid of our surplus products should receive the full support of this government. So, if other nations agree, I hope this government will be prepared to advance its share of the money required by the FAO for the purchase of agricultural surpluses.
If the government does not do any of these things, and even if it does, I believe there is need for a further extension of price support legislation. If we do not get another egg contract with Britain our poultry producers are going to need assistance through a price support arrangement. The Saskatoon Star-Phoenix reports that within the last two weeks the price of grade A eggs in that city has dropped by 11 cents a dozen. So I say that if we do not get an egg contract with Great Britain the government should support the price of eggs in order that our poultry producers may be assured at least a minimum standard of living.


Joseph-Alfred Dion: Order. The hon. member has now spoken for forty-five minutes.


Some hon. Members:: Go ahead.


Joseph-Alfred Dion: Order. I gave the hon. member a few minutes more to make up for interruptions, but I believe he has now exceeded his time.


Some hon. Members:: Unanimous consent.


Hazen Robert Argue: I believe I am quite in order, but in any case I shall conclude in just a moment.


Mr. Adamson:: On a point of order, Mr. Chairman, is it not a rule of the house that if an hon. member speaking in committee is interrupted he has a further forty minutes?


Joseph-Alfred Dion: If he resumes his seat; but the hon. member has not resumed his seat; he has only forty minutes.


Agar Rodney Adamson: I thought when the hon. member for Fraser Valley interrupted, the hon. member who is now speaking did resume his seat.


George Alexander Cruickshank: Just a moment; I did not interrupt, if I may correct the junior member from the mining district. I requested permission to ask a question.


Agar Rodney Adamson: But during that question-


George Alexander Cruickshank: Go back to the stock market.


Agar Rodney Adamson: -the hon. member did resume his seat.


Mr. McCusker:: May I suggest that the hon. member from Toronto be given a private hearing.

Supply-Trade and Commerce


Donald MacInnis: I do not believe the interruptions were such as would give the hon. member a further forty minutes, but I suggest that the committee give him an opportunity to finish his remarks.


Some hon. Members:: Hear, hear.


Arthur Leroy Smith: On a further point of order I would suggest that the hon. member for Regina City make his interjections from his own seat.


Hazen Robert Argue: I thank the committee for this indulgence, and I shall be through in a moment. I was just saying I believe it is of great importance that the government should establish price support legislation for the most important agricultural commodities. If there had been a guaranteed price for bacon at the local delivery points we would not have seen a_$4 drop in the price of grade A hogs within the period of a few weeks.
Since we are experiencing difficulty in selling many of our agricultural products, and probably will continue to experience that difficulty, and since the government have not taken the necessary steps to move our agricultural surpluses to the hungry people of the world, I suggest there is something else they might do that would be of great benefit to the Canadian people. I believe there is a place, in respect to certain commodities, for what I might term a consumption subsidy. We have large stocks of milk and butter on hand. We may have great difficulty selling our eggs before very long. These are protective, highly nutritious foods, and certainly it is in the best interest of our nation that Canadians should consume as much butter, eggs, cheese and milk as possible year in and year out. At the same time, in the interests of agriculture it is necessary to have adequate support prices; and a consumption subsidy would permit people especially in the lower income groups to make increased purchases of those commodities and at the same time guarantee our farmers a decent income.
At the present time we see huge surpluses of farm commodities looming on the horizon. The Minister of Trade and Commerce has said that a better bilateral balance of international trade would help world trade, but the fact is that the government has not taken adequate steps to bring about that balance. So I hope that the government will now take the necessary steps to increase our purchases of British products so that a market for Canadian timber, fish and agricultural products may continue to exist in the United Kingdom throughout the years to come.


Mr. Fleming:: Mr. Speaker, trade, the subject which is engaging the attention of the committee at the moment, is of the highest importance to all Canadians. The prosperity of Canadian agriculture is a matter of concern not simply to the Canadian farmer but to everyone in this country. The strength and buoyancy of our exports are likewise matters of concern to all Canadians. There is no country the wide world over whose people have a greater interest per capita in the maintenance of export trade than Canada. It has been said times without number that one out of every three Canadians-sometimes it is put as high as three out of every eight- depend directly upon the exports of this country for their livelihood and employment; and in passing it might be observed that of the other two-thirds a goodly number depend for their livelihood upon the purchasing power of the one-third who owe their employment directly to our export trade. I add, Mr. Chairman, that this is not a new situation. It has always been so in Canada.
I begin with this general observation, sir, that the approach of all thinking Canadians, the approach of this House of Commons, and the approach of the government to this subject should be characterized by a sense of realism. The time has long gone by when this House of Commons, or the Canadian people, are going to be cajoled into a sense of unending security by bland statements from the Minister of Trade and Commerce at Ottawa. We who have heard statements from the present Minister of Trade and Commerce in times past will be on our guard against easy optimism.


Clarence Decatur Howe: The country was on its guard, too.


Donald Methuen Fleming: What country?


Clarence Decatur Howe: The country was on its guard during the recent elections.


Donald Methuen Fleming: I am going to have something to say about the recent election, Mr. Chairman, and the way in which some ministers were responsible for the Canadian people forming conclusions that were not based upon facts. I am not referring only to the deliberate suppression of reports oh the part of the government that the Canadian people ought to have had, although that was a factor. The Minister of Trade and Commerce, of course, played a leading part in that act of suppression.


Joseph-Alfred Dion: Order; that statement is out of order.


Donald Methuen Fleming: The same Minister of Trade and Commerce played a leading part in

certain statements in reference to the trading position of this country, which I propose to mention now.
I begin with an incident that occurred in this house on April 25 last. At page 2520 of Hansard, you will find a statement by the Minister of Trade and Commerce in reply to a question. It reads as follows:
The present state of our markets in the United Kingdom is quite normal.
It was on that statement, a statement that could not possibly be made to harmonize with the facts, and on similar statements during the campaign that the minister and his associates won the election.


An hon. Member:: It is a good statement.


Donald Methuen Fleming: A good statement? It is a statement that cannot be harmonized with the facts. If a good statement is one that serves the purposes of the government, regardless of the facts, no matter how far that statement flies in the teeth of the facts, then of course it was a good statement. It served well the partisan interests of this government but, sir, it did the greatest violence to the facts. It was not a matter of more than three weeks-


Mr. Ferrie:: Our wheat is all gone, anyway.


Donald Methuen Fleming: Your wheat is all gone, anyway? If the hon. gentleman is interested in wheat, I am prepared to tell him it is high time he worried about the wheat markets of this country.


Gladstone Mansfield Ferrie: I am not a bit worried.


Donald Methuen Fleming: The hon. member is not worried. There is a typical remark coming from a government supporter. Is it any wonder that this gentleman, and others of his political stripe, are not worried when they hear airy statements from the ministers opposite, which are intended to create a sense of optimism but which do not fit the facts.
A few weeks after the Minister of Trade and Commerce made this extraordinary statement in the House of Commons on April 25, I heard the minister's opposite number in the government of the United Kingdom, the Right Hon. Harold Wilson, president of the British board of trade, make a comment in the city of Toronto on the state of Anglo-Canadian trade. This was the very thing the Minister of Trade and Commerce was talking about on April 25, when he said that the state of our markets in the United Kingdom was quite normal. What did Mr. Wilson say? These are his words:
We have reached a critical situation in Anglo-Canadian trade.
Mr. Wilson did not make that statement merely in this country, but on his return to
Supply-Trade and Commerce the United Kingdom he delivered a radio broadcast on Anglo-Canadian trade. In the course of that broadcast, he made this statement:
Nineteen forty-nine is a year of crisis in our trading relations with our sister country across the water.
The Minister of Trade and Commerce said there was no crisis, yet within a couple of weeks thereafter the president of the British board of trade says Anglo-Canadian trade has reached a critical condition, and that 1949 is a year of crisis.


John Ewen Sinclair: Labour government.


Donald Methuen Fleming: Yes, and what about this government?


An hon. Member:: Good government.


Donald Methuen Fleming: It was a party to telling the people of Canada that there was no crisis when, in fact, there was a crisis of emergent proportions, sir. Hon. members opposite know well that, by some strange coincidence, there were emphatic denials right up until June 27, from the Minister of Trade and Commerce and others of his political ilk opposite, about the existence of a trade crisis in the United Kingdom.


George Alexander Cruickshank: What did the people say?


Donald Methuen Fleming: It was not more than 48 hours later, that the full impact of the crisis was exposed to the view of the Canadian people. You will remember that it was only a matter of two or three days after June 27 that the British government made its announcement of the forthcoming drastic curtailment of imports from Canada. There may be some gullible members, sir, following the government in this house. There must be a good deal of gullibility, if you take the sum total on the government benches; but is there any one of them, sir, who is gullible enough to believe that that trade crisis was created after June 27? They know quite well, sir, that the trade crisis was existent throughout the spring and the election campaign, but this government managed-as it did in connection with other matters-to suppress it until after June 27.
It will be remembered that Sir Stafford Cripps made this announcement in the early days after June 27. I refer to a comment by an official of the Department of Trade and Commerce in Ottawa on July 15 concerning that announcement, which is reported as follows:
He estimated on the basis of Sir Stafford Cripps' announcement in London cutting the United Kingdom's 1949 dollar purchases by 25 per cent, Canada would lose by $60 million to $80 million this year. "If the slashes continue, then next year-1950-will be the crucial year,'' the official said. A continued

Supply-Trade and Commerce 25 per cent cut next year in Canadian exports to the United Kingdom would mean the loss of more than $100 million.
You will remember, sir, that the full purport of the statement by Sir Stafford Cripps was that the reduction of purchases from Canada and the United States, which he found it necessary to make, amounted to no less than $400 million per annum. This is a matter that no Canadian dare contemplate without the gravest misgiving. I say, therefore, sir, that this whole question must be approached, not in the airy sense of optimism and jaunty complacency of the Minister of Trade and Commerce, but with adequate knowledge of the hard realities of the situation-for hard realities there are in this trading situation facing Canada. It is of the most momentous concern to all Canadians.
Sir, it is in that spirit of realism that I approach this problem, not in the spirit of unwarranted optimism, and certainly not in a spirit of unwarranted pessimism, because I am a great believer in the future of this country. I take second place to no man in my faith in the future of my country; but I think it is the first duty of every Canadian who loves his country to be a realist in appraising the strength of the forces that' confront Canada today. Among her trading problems-


George Alexander Cruickshank: And holding up pipe-line legislation.


Donald Methuen Fleming: Mr. Chairman, I have only this comment to make on the reference made by the hon. member for Fraser Valley to the subject of pipe lines. If he were at one end of that pipe using his lungs and his voice there would be no need of pressure anywhere else in that pipe.


George Alexander Cruickshank: A very good comeback, if I talked as much as the hon. member for Eglinton. He is talking all the time.


Donald Methuen Fleming: What is the present situation?
I make no apology for giving these figures to the committee. I know that statistics make a speech seem rather dry. Perhaps mine does not need the figures to make it dry; but I can appreciate the great desire of some hon. members opposite to avoid facing these figures. I wish to give some comparisons to the committee. These are government figures, of course.
(Merchandise only)
Nine Months' Period ending September 30 (Figures in millions of dollars)
Imports from
1948	1949
United Kingdom	
217	240All commonwealth countries	
363	380United States	
1,323	1,470All non-commonwealth	countries .. 1,559	1,693Grand total	
1,923	2,074

Exports to
1948	1949
United Kingdom	
516	526All commonwealth countries	
747	769United States	
1,040	1,024All non-commonwealth countries	1,410	1,376Grand total	
2,158	2,146
Trade Balances
1948	1949
United Kingdom (favourable)	
299	286All commonwealth countries (favourable)	
384	389United States (unfavourable)	
283	446All non-commonwealth countries (unfavourable)	
149	317Over-all (favourable)	
225	72
You will understand, Mr. Chairman, that I am referring only to our commodity trading account figures. In 1948 our trading deficit with the United States was $283 million. In 1949 it has risen to $446 million.


Clarence Decatur Howe: How much was it in 1947?


Donald Methuen Fleming: For the first nine months, which is the period I am comparing, our trading deficit with the United States in 1948 was $283 million. In 1949 it is $446 million.


Clarence Decatur Howe: I was asking what it was in 1947.


Donald Methuen Fleming: I have not brought the 1947 figures down with me. I should be glad to give them to the minister-


Clarence Decatur Howe: I think they would spoil the hon. member's story.


Donald Methuen Fleming: Oh, no, not at all, Mr. Chairman. The minister would very much like the committee and the country to forget the situation that we are confronted with today. He would be very happy if the minds of the people of Canada could dwell away back two or three years ago when the trading situation of this country was not nearly so serious as it is today. I am concerned about the situation today, and I wish the minister were more concerned about it, or more candid in voicing his concern about it.
The unfavourable trading deficit with all non-commonwealth countries in 1948 was $149 million; in 1949, it is $317 million. Our favourable balance with all countries in 1948 was $225 million; in 1949, $72 million. I think the most significant figures among those that I have just read are first of all the increase in our trading deficit with the United States. It has risen in the first nine months of this year compared with the first nine months of 1948 by $163 million. It rose from $283 million to $446 million. That in itself presents a problem of staggering proportions. And, sir, our position with the United States in respect of trade is a problem that must engage the attention of this house as it is

engaging the attention of those in Canada who have been studying the outlook for our foreign trade.
These figures alone do not tell the whole story, because while to commonwealth countries we shipped more than we purchased from them to the extent of $389 million, our deficit on trading account with non-commonwealth countries was $317 million. This favourable balance, sir, to which I have referred, of $72 million in the first nine months of this year is significant not alone in the fact that it represents a very substantial reduction as compared with 1948-actually it is less than one-third of our surplus on commodity trading account in 1948. But, sir, let us also consider how the purchases of the commonwealth countries-I am speaking now particularly of the United Kingdom- are being financed at the present time.
Thanks to the European recovery plan there is in these figures of purchases by commonwealth countries from Canada a total of $293 million in round figures, all provided out of funds supplied by the United States. That represents in itself practically our whole :rading surplus with the United Kingdom. In other words, our favourable trading position vith the United Kingdom is due entirely to ;he European recovery plan financed by the Jnited States. How long we may expect that ;o continue no man dare prophesy, but the noment it is withdrawn, as we can see from ;hese figures, immediately our trading sur-alus with the United Kingdom vanishes.
Along with that, loans provided by this aarliament are being used by the United kingdom at the rate of $10 million a month. \.nd these same figures for the nine months nclude $90 million provided by this parlia-nent for financing purchases by the United kingdom in the Canadian market.
It would be very well at the same time o put due emphasis upon the fact that the igures I have quoted are figures of com-nodity trading. In measuring the over-all :ituation we must also take account of the act that this country is paying interest and lividends to persons in the United States, figures in the last Canadian calendar year how that $230 million was sent out of this ountry on that account.
We must therefore so devise our trading >olicies and so create a favourable trade >alance elsewhere that we may be in a losition to continue to make those payments in our obligations in the dollar area.
And, sir, we will do well to remind our-elves also, in considering these figures of Canadian export trade, that while we are lad to see every dollar which appears in hese Canadian export figures, these figures
Supply-Trade and Commerce are on the basis of inflated dollars. And we should remind ourselves more directly than did the minister in his remarks this afternoon. These figures do not represent volume increases in proportion at all. I should like to quote a paragraph to the house from the October issue of the Canadian Statistical Review at page 5, where it states:
The value of gross national product, according to an estimate recently published by the bureau-
That is, the dominion bureau of statistics- -was $15,450 million in the year 1948. This is 137 per cent above the $13,591 million for the year 1947 which, in turn, was 13-8 per cent higher than the
1946	figure of $11,936 million. Price rises were more influential than volume in these increases.
The same applies with equal force to the figures on export trade. As a matter of fact that was recognized by the department several months ago when it cautioned against treating 1949 current figures as being capable of direct comparison with the figures of earlier years, because the current figures are in inflated dollars which do not represent corresponding volume increases. And incidentally the minister would do well to remind himself of that fact when he is talking about
1947	figures. "Price rises were more influential than volume in these increases."
What are the policies of governments abroad? What are the policies particularly of our two principal fellow-traders, the United Kingdom and the United States? Their policies are of the most direct interest to all Canadians. The policies of the United Kingdom government, whatever may be the circumstances facing that government which in their view justify the course they are taking, are nevertheless policies that must fill us all in this country with grave misgivings as to the future of our markets in that land.
I have already referred to the drastic curtailment of imports from Canada which was announced by Sir Stafford Cripps just after the election in this country. What has happened since? We have seen the United Kingdom government announce devaluation -a very drastic devaluation which necessarily makes it more difficult for the United Kingdom to purchase from Canada because their pounds are exchangeable for fewer dollars to purchase our products.
That was one factor. But there are other factors in the situation. One of these is the policy of bilateral agreements which the socialist government in Great Britain is pursuing. It is true they have expressed regret in doing so, but the fact remains that they have been pursuing policies of bilateral trade which are harmful to Canadian interests. Canadians would do well to remember that the commodities that are the subject

Supply-Trade and Commerce of these bilateral trade agreements are in many cases commodities that we in Canada are producing and would gladly sell to Great Britain.
Let us remember that three years ago this country had twenty-three contracts with Great Britain for the sale of food to that country. Yet today we have only four, three of which expire at the end of this year. Our wheat contract expires next July.
In 1948 United Kingdom purchases from Russia increased by $79 million, her purchases from Poland by $30 million, her purchases from Hungary by $15 million, her purchases from Denmark by $61 million, while at the same time her purchases from Canada fell by $67 million. Can Canadians sit back and contemplate this situation with any measure of equanimity? Dare the government contemplate that situation and remain idle in the face of it, or refrain from pursuing more effective measures than they have been following?
It is with the greatest regret that I find it necessary to comment upon some observations made by socialists in the United Kingdom concerning purchases from Canada. Unfortunately these utterances have been increasing in number in recent months. It was in September last that Mr. Wyatt, a socialist member of the United Kingdom parliament, undertook to say in the House of Commons at Westminster that the United Kingdom was paying for Canada's dollar deficit in international trade. He told his people that the United Kingdom parliament should insist upon Canada accepting payment in sterling for her sales to the United Kingdom. Presumably he meant blocked sterling. Other socialist members in the old land have taken up the cry, and similar statements have been emanating from socialist members of parliament at Westminster from time to time since. Those statements however reached a sort of climax when probably the most radical member in the cabinet of the United Kingdom, the Right Hon. Aneurin Bevan, undertook only a month ago to say, during a debate at Westminster on the subject of devaluation, that if the United Kingdom stopped buying from Canada-and I am quoting his words-"what is a British financial crisis would become a Canadian crisis".
With all due respect to the sources from which those statements come, I think it is well that some should remember-and I am sure no Canadian likes to refer to these facts -that Canada has sought to be generous in her trading relationship with the United Kingdom during and since the war. Our Canadian wheat farmers have accepted prices

under the wheat agreement which were substantially below the price brought by wheat on the world market. We have made substantial gifts and have provided substantial loans to the old land.
We do not mention these things in any invidious or carping spirit. We say this only in the hope that those who are responsible for shaping the trading policies in the old land today will bear in mind that Canada has sought to do her part to rehabilitate the trading ability of the old land. At the same time we ask those who are shaping those policies in the United Kingdom to remember what Canadian food producers strove to do for the British market during and since the war, and that it would be a betrayal of the Canadian food producer to close the door to the entry of Canadian food products into the United Kingdom today. That is a fair attitude for Canada to take in trading approaches to the United Kingdom, and it should be recognized as of first importance in shaping the policies of the Canadian government.
This parliament would like to know the outcome of the conference held in the United Kingdom in October in which the deputy minister of trade and commerce and the deputy minister of agriculture participated. We want assurances that the Canadian food producer is not going to lose that market which he has served so well. We would like to know what steps are being actively pursued at the present time to preserve that market for the Canadian food producer.
An amendment was introduced by this party on a recent occasion-I am not going to refer to the debate-which asked this government to pursue steps to bring about a conference of commonwealth countries to consider trade. That proposal was rejected by this house. But another opportunity is offering. There is to be a meeting of ministers of the commonwealth countries in Colombo, Ceylon, in January. When his department's estimates were being discussed in the standing committee on external affairs recently I asked the Secretary of State for External Affairs if trade matters would be discussed. His answer was that po decision had been reached about the discussion of trade matters. I urge upon the government that there is nothing more important which that conference could take up, no subject of more lively concern to the whole commonwealth and certainly to this country, than our trading relations with the commonwealth countries.
The situation is fraught with the gravest dangers for Canada if we continue to place more and more of our trading eggs in the United States basket and fewer and fewer in

the baskets of the commonwealth countries. Warnings have not been lacking. Warnings have been offered to the government by those to whom the government should have been glad to listen. Months ago the Canadian Exporters Association made a submission to the Minister of Trade and Commerce containing this statement:
Since the beginning of this year the foreign sales representatives of our member firms have reported a very serious drop in sales in their long-established British empire markets. This falling-off of export sales, in many cases right down to zero, is so alarming-
That was months ago.
-that the association deems it advisable to bring the matter to the immediate attention of your department.
Urgency is the keynote of that statement. Here is another statement in the same submission, and I remind you that this was made to the minister months ago:
Canada finds herself today in the peculiar situation, as the sole member of the British commonwealth unable to trade more or less freely in empire markets, which have become increasingly important to Canada in the development of her world trade. Canadian firms have spent a great deal of effort and huge sums of money to develop markets in these countries. They have become dependent upon these markets for a considerable part of their production and many thousands of Canadians have relied upon them for their livelihood. Unless some action is taken with alacrity Canadian exporters feel that they might be faced with the permanent loss of the empire markets, which would inevitably mean distress and unemployment in Canada. As a matter of fact, some of our members already report that it has been necessary to lay off some employees because of the present unfavourable situation in sterling area markets.
The Canadian Exporters Association went on to say that they feared unemployment was beginning among the dock workers at Halifax and Saint John; today we are seeing Canadian bottoms sitting idle in those Canadian ports. Today's issue of the Ottawa Journal contains a dispatch from Pembroke stating that the dollar shortage will force the Canadian Splint and Lumber Corporation, one of Pembroke's largest industries, to close on December 16, because of the British dollar shortage.
So far as our trading relationships with the United States are concerned, we will not forget that this government stood by passively and watched the flight of dollars to the United States in the long months before November, 1947, when they finally moved to put into effect their austerity program. The same Minister of Trade and Commerce who sits opposite tonight in his airy, optimistic way said that those restrictions would be in effect only a matter of months. When he was asked later what he meant by months, he proceeded to tell the house that that meant a year. The fact is that those restrictions have already been in effect for over two years and we have
Supply-Trade and Commerce no indication that the government proposes to demobilize them. The indications are that they will be intensified because of the existing situation.
I wish there were time to develop some of the thoughts I had hoped to bring out at this time, but as I have but five minutes left I should like to point out the danger of counting on the United States as a market for our exportable surpluses and the danger o'f trifling with the growing loss of our markets in the United Kingdom. So far as our markets in the United Kingdom are concerned, I remind the committee that for the past 80 years goods having a high labour content have predominated in Canadian exports to other British markets. At the same time Canadian exports to the United States have consisted uniformly of goods of low labour content. In 1946, 77 per cent of Canadian exports to the United States had a low-job value, while at the same time 85 per cent of Canadian exports to the sterling area were in the high labour-content category. In this way the sterling area provided direct employment for approximately 1,250,000 Canadians, while the United States provided employment for probably one-fifth of that number.
My concluding remarks will be in the form of a warning of the danger of relying, as we are today, on United States markets, and I ask the committee to bear these facts in mind.
1.	The Canadian and United States economies are similar and, therefore, competitive. They are not complementary, and therefore there can be no thought of integration of the Canadian economy with that of the United States. That would be fraught with the greatest economic and political danger for all Canadians.
2.	The United States cannot purchase the goods and services formerly taken by the sterling area except in the particular circumstances of very great world-wide shortages which would allow them to sell abroad their own surpluses of the same materials.
3.	The United States soon will be in the position of having unsaleable surpluses on the domestic market in nearly all lines. United States productive capacity has increased an average of 60 per cent in ten years while its population has increased only 12 per cent.
4.	The United States cannot increase the purchases of the materials which she does take from Canada on a scale sufficient to compensate Canada for the loss of employment in the industries exporting to the sterling area. If the United States were to double the purchases made in Canada in 1948 and if we were at the same time to lose all

Supply-Trade and Commerce our sterling area markets, Canada would be left with unemployed that some have estimated might come close to one million.
5.	Integration would end all reason for the maintenance of the vast majority of the United States branch plants in Canada which now have a capital value of over $2,000 million.
6.	"Integration", therefore, would be accompanied by a de-industrialization of Canada and the emigration of profession and industrial classes.
7.	If "integration" were finally completed, Canada would be left with a primary-products economy which would be required permanently to maintain a position similar to that of the United States of seventy-five years ago.
The situation is fraught with the greatest danger. What is needed on the part of the government is a sense of realism, of candour, of honesty with the Canadian people, and above all a sense of pressing urgency.


George Alexander Cruickshank: Mr. Chairman, I shall be very brief. Strange to say, I agree with something the hon. member for Eglinton has said. The only difference between myself and the hon. member for Eglinton is that I do not feel capable of speaking for forty minutes every day on each subject that comes before -the house. I do not feel that I have a knowledge of all subjects that come before the house, but apparently he does. I do not have the privilege of speaking for the minister, but I can speak for the private members of British Columbia and say that we believe in the hon. member for Eglinton's argument as to a trading balance. We believe that where you want to sell you must be willing to buy. I want to bring to the attention of the hon. member for Eglinton, and of the people of Ontario, the fact that he came out to the province of British Columbia and tried to sell-


John Ewen Sinclair: When?


George Alexander Cruickshank: Prior to the 27th of June.


John Ewen Sinclair: Nobody bought.


George Alexander Cruickshank: They were not willing to buy. I want to say to the hon. member for Eglinton that in each and every riding where he spoke in the province of British Columbia the Liberal doubled his majority. I am informed the same form of salesmanship took place in Ontario. I do not want to delay matters, but when the hon. member for Eglinton has what I would call the audacity to criticize the policy of this government, with the mandate it received in his own province on the 27th of June, I think he has gone one step too far. So far as I am

concerned, I will be delighted to contest my riding or his any day that he wants to ride on the record of the present government.


Hazen Robert Argue: I rise on a question of privilege. The Minister of Trade and Commerce disputed the carryover figures I gave in relation to wheat. I want to say to him that those figures came from the Canadian Coarse Grains Quarterly Review of August, 1949, published under the authority of the hon. gentleman, and the figures are to be found on page 9. The paragraph containing them reads:
With the exception of barley, stocks of Canadian grains in all positions at July 31, 1949, were well above the totals at the end of the 1947-48 crop year. Total stocks of Canadian wheat at the end of the 1948-49 crop year were 98-7 million bushels, an increase of 21-0 million over the July 31, 1948, revised carryover total of 77-7 million bushels.


Mr. Quelch:: I do not intend to speak at any length, but there are a few points I want to deal with concerning our international trade problems. There is no doubt that today a great deal of concern is being felt by people in different parts of Canada as to the international trade situation. Statements made by responsible ministers of the crown and officials add to that fear and increase the confusion in the minds of the people regarding our problems and their solution. I want to congratulate the hon. member for Assiniboia upon the very constructive speech he made in dealing with these problems. I noticed that hon. members opposite did not seem to appreciate his speech, and I want to point out to them that they cannot hope to laugh off a problem. You cannot find a solution by laughing it off.
Statements appearing in the press at the present time show that once again, as in the 1930's, we see on the one hand surpluses of goods piling up and on the other hand masses of people starving for the want of those goods. I should like to quote one or two press dispatches. There is one in the Manitoba Co-operator which reads:
At the same time leading economists of member countries will wrestle with what FAO director general N. E. Dodd describes as the "terrible paradox" which finds farmers in some lands threatened with ruin by plenty while millions in other lands are oppressed by hunger and poverty.
Then again:
On one side of the gap stand consumers, many of them desperately hungry, eager to have more of the things they need, eager to earn more to pay for them as fast as they can. On the other side stand producers, afraid that if they produce as they can and would like, they may drown themselves in unsold surpluses.
I also think the speech made by the Minister of Agriculture before the 5th session of the FAO conference on November 24 should be carefully read by all members. I

congratulated the Minister of Agriculture upon a speech that he made before the Canadian chamber of commerce in London, England, in December, 1948. I thought it was a very fine speech. I only regret that he did not make a similar kind of speech during the election campaign. I must admit I helped him out by quoting it quite profusely in my constituency. Again he has made what I consider to be another fine speech, and again I say it is a pity the speech he made before FAO was not made during the June election campaign. I want to quote briefly from the speech, starting on page 1, and reading as follows:
The review of the world food situation prepared by the council of FAO presents a disturbing picture. Parts of it, in fact, must raise the question in the minds of many as to whether FAO's goal of a better nourished world is likely to be realized, at least in the foreseeable future. The picture presented in that report shows that, while total world agricultural production has regained pre-war levels, it has not kept up with increasing world population, and that the supplies available per person are still below pre-war levels. Even more serious, however, is the tact that although production gains by countries are unevenly distributed, monetary difficulties are threatening to prevent freedom of movement of foods and other necessary products from "surplus" to "deficit" areas. This, in turn, might easily lead to a slackening of the productive effort in some countries and an increase in cost which may deny food to the people of other countries.
Further down:
This threat of accumulating food supplies in some parts of the world while people in other parts of the world are underfed must evoke unpleasant memories in many of us . . . Our monetary difficulties today threaten to reproduce the situation which existed twenty years ago, a lack of that free movement of food from those with food to spare to those in want. And unless some way can be found of solving this problem we cannot hope for that "all-out" effort by exporting countries that is needed if the people of the whole world are to be adequately fed. In other words, it is difficult to persuade a farmer to produce more food for the hungry in some other land if he sees no likelihood of its ever getting to the people who need it-if, in short, it is likely to remain on his hands.
Further on there are these words:
Unless a concerted effort is made to restore trade and payments equilibrium, the persistence of present difficulties threatens to reverse the trend towards freedom from want. It would compel some of the largest surplus producing countries to restrict their agricultural output and deficit countries to expand their production at any cost.
It seems to me that is the great danger at the present time. In spite of the fact that the production of food is insufficient to meet the needs of the world today, surpluses are starting to pile up already; and of course, as the Minister of Agriculture points out, if surpluses start to pile up in a great producing nation the producers of that nation are bound to begin to curtail production. No
Supply-Trade and Commerce industry can continue to expand its production unless it has an expanding market. If it did it would simply mean that it would be headed for bankruptcy.
I do not think anyone would try to argue that farmers in Canada today are making an all-out effort to expand production. No one could reasonably expect them to do so, because they have no assurance that in future they will have a market for their production at reasonable prices. Then statements made by the Minister of Agriculture, the Minister of Trade and Commerce and by the FAO tend to put a doubt in the mind of the farmer as to whether or not he can afford to expand his production, because no farmer is going to increase production in order to create a surplus which will force down the price of his commodity. But as long as we have starving people in the world, as we are told there are today, there can be no justification for reducing production; and it would be an act of criminal folly on the part of any government to encourage any lessening of the production of food while at the same time there are starving masses of people in various parts of the world.
As my reason for saying the farmers have grounds for fear that their markets may be limited, let me quote one or two press dispatches. First I refer to a Reuters dispatch of last month:
British bacon imports from Canada in 1950 will depend on the dollar situation and on the volume of goods and services Britain can sell for Canadian dollars, food minister Strachey told parliament yesterday . . .
At Ottawa it was learned that the Canadian government already has been informed that the United Kingdom will buy less bacon from Canada in 1950 than she did in 1949.
Statements like that appear day after day in the Canadian press. I quote another:
The British chancellor of the exchequer told a London press conference that Britain is considering switching over to European sources of supply for some of the foodstuffs she formerly purchased from Canada. He specifically mentioned eggs.
Then in the Wheat Pool Budget of November 8 I find this statement:
John Strachey, British minister of food, in the course of a speech made at Coventry, England, stated that the British government may reduce its purchases of wheat from Canada after July 31, 1950. He is reported to have said the reason therefor is that Britain cannot buy with dollars it hasn't got.
Whether or not we agree with those statements we must recognize that as long as these statements continually appear in the press they are bound to have a depressing effect upon agriculture; and when the Minister of Agriculture makes such a statement as he delivered before the FAO conference it is bound to give rise to a great deal of concern. I want to congratulate the

Supply-Trade and Commerce Minister of Trade and Commerce on the speech he made recently before the export association at Montreal, in the course of which he clearly pointed out Canada's international trade problem. I quote from his statement, as it appeared in the Montreal Gazette:
If Canada, without further loans, is to hold her current trade status with Britain after the termination of Marshall plan aid in 1952, then Canada must increase purchases from that country by an annual $365 million.
That is approximately the trade balance in Canada's favour. In the year ended last September, Canada bought from Britain $325 million worth of goods and sold $691 million.
Then further down:
On the other hand Canada's balance was adversely affected by trade with the U.S. While Canada shipped $1,550 million worth of goods in the same twelve-month period, she imported about $2 billion. The $450 million deficit was collected from the rest of the world through Marshall aid dollars.
"Obviously, our policy must be to export more to the U.S. or alternatively to buy less from that country.'1
I think the question people are interested in having answered is, just what is the government doing to bring about that balance, the need for which the minister pointed out? In that speech he went on to say that in Canada we have a shelf of projects under consideration by the government for the purpose of helping to maintain or build up effective demand in this country, but of course on the other hand we must realize that building up effective demand in this country will not provide a market for our wheat. Therefore we must be prepared to accept imports from other countries in payment for that wheat. Of course if we maintain a high effective demand in this country there will be a demand for the imports that can be brought here in exchange for our wheat. But, as the minister pointed out, we have something in the neighbourhood of another $365 million of imports we will have to bring in from Britain, before we establish a balance and we will either have to sell more to the United States or buy less from that country. That is one of the reasons we in this group have not opposed the idea of exporting oil and gas to the United States once our own needs are satisfied. We need dollars in the worst way, and certainly that would help relieve the difficult dollar situation we are now facing.
The point the government do not seem to appreciate is that the situation which has developed today is the inevitable consequence of the international trade and financial policies which they fostered immediately after the war. Time and again in 1944 and 1945 we of this group stressed the fact that if we wanted to sell to the nations of Europe we

must be prepared to accept payment in the currencies of the European countries, and then use that currency to buy their goods. Yet every time that matter came up in the house we had the minister of finance of that day insisting that when we exported to Europe we must be in a position to obtain dollars in payment, in order to meet our debts. Just let me quote from Hansard for April 11, 1946, at page 764. Mr. Ilsley said:
. . . we must be able to use the proceeds of our exports to the United Kingdom and the continent of Europe in paying our own bills and debts in the United States . . .
Then on April 16, 1946, at page 919, I asked this question:
Will Canada be prepared to accept goods from the United Kingdom in repayment of loans? How will the United Kingdom maintain convertibility of the pound if Canada and the United States do not provide the United Kingdom with dollars by purchasing British goods to the extent of the British credit?
Mr. Ilsley replied:
... it is not necessary that there should be adverse balance of payments as between Canada and the United Kingdom in order to enable the United Kingdom to repay the loan . . . She can pay for Canadian goods by exports to other countries as well as to Canada. Under a multilateral trading system and convertible currencies-[DOT]
If that is the solution, why do we not adopt it? If it is so simple that all you have to do is maintain a multilateral system and you can balance your trade, why after four years is this multilateral system not in operation? The government know very well that you cannot have a multilateral system of trading when you have an unbalance as between the dollar and sterling areas amounting to something in the neighbourhood of $6 billion; and it is nonsense to talk about the convertibility of currency as long as that situation exists. At that time the minister of finance was thinking in terms of those years before the war when Britain had large credits she could draw upon from India, Egypt and other countries. Those nations had surpluses in their dealings with the United States, and they paid their surplus dollars to Britain. Those days are gone. Today both India and Egypt are heavy creditor nations of Great Britain, so that actually Britain is having to pay pounds to those countries instead of receiving dollars. So it will be quite evident now, even if it was not evident to the government at the time, that the only solution is, as the Minister of Trade and Commerce said in Montreal, to expand our imports from Europe and, on the other hand, to either sell more to the United States or buy less from the United States to make up our deficits with that country.
Now, the Marshall plan has been helping to balance international payments for the last few years, but the Marshall plan ends

in 1952. Everyone is wondering what may happen after 1952. ECA reports that Europe will not be in a position to balance her trade by then; she will still face large deficits. We are being warned now by the European nations that they will have to drastically reduce imports from this country, not because they want to, not because they do not desire our goods, but simply because they have not the dollars to pay us. Just so long as we insist upon payment in dollars instead of accepting goods from those countries, they are bound to take that action.
I was somewhat interested in a statement that appeared in the Wall Street Journal of November 18 as to what will likely be the successor of the Marshall plan. If this proposal is put in operation, then I believe Canada will be facing an even more serious situation than she is facing at the moment. The article reads as follows:
Aim to finance over million tons of grains, tobacco, cotton and fruit yearly.
The state and agricultural department are evolving a large scheme to get rid of America's mounting farm surplus by shipping them abroad at a loss . . .
Barter U.S. commodities would be traded at cut price valuation for foreign, strategic material. Permission to do thus has already been voted by congress.
Under this proposal private exporters would sell certain over-plentiful commodities abroad, accepting payment in foreign money. The U.S. government would then give the exporters dollars for his alien paper.
I point out, Mr. Chairman, that if the United States does that, and we refuse to do likewise, then we are going to be left holding the bag. This group has been advocating that plan for the last five years. We have insisted that, if we are really interested in putting international trade upon a sound basis, then we must be prepared to accept payment in the currency of the importing nation. That would be absolutely justified, because international trade is the exchange of goods. The only thing we need with which to buy European goods is their currency. If we really intend making international trade what it should be, we do not need to get dollars from Europe; we can accept their currency and buy their goods with it. Then there will be no difficulty in balancing our trade with Europe, and Europe will not have to curtail purchases from this country because she has not got dollars.
The former minister of finance would have argued that we must receive dollars to meet our deficit with the United States. I would say it is not the responsibility of Europe to make up our deficit with the United States. It may be argued that there is a large dollar content in the goods we ship to 45781-164
Supply-Trade and Commerce Europe, but there is also a large dollar content in the goods that Europe ships to Canada, because Europe has to buy a great deal of raw material from the United States. The one would balance the other. I would say it is our obligation. At Montreal, the Minister of Trade and Commerce pointed out that was the situation, that we would have to balance our trade unilaterally with the sterling area and unilaterally with the dollar area. In the future, we could not expect to get dollars from Europe to make up our deficit with the United States.
I only wish the government had recognized that fact back in 1944-45 because, had they done so, they would not have been so keen on signing international monetary agreements such as the Bretton Woods agreement, and the non-discrimination clause in the Geneva trade agreements. I am not attacking the Geneva trade agreement as a whole, but I do strongly attack that so-called non-discrimination policy which denies a nation the right to determine its own source of supply.
In this group, we have always felt that international trade should represent a reciprocal, and mutually agreeable, exchange of goods and services between nations; not an exchange of goods for money. Hence, creditor nations must, in the future, be prepared to accept goods and services in exchange for credits held by them in other countries. We feel that, until such a system has been adopted, nations must have the right to determine their source of supply for imports, in order to protect their own balance of payments. We also oppose any attempt to bring about the free convertibility of currencies, or the adoption of the gold standard.
In order that a balance of international payments may be achieved, we advocate the following procedure: An exporting country should accept payment in credits in the importing country, which it would have to clear directly or indirectly, by purchasing that country's goods or services. If it failed to do this, then under a statute of limitations, any credits still outstanding after a specified period would be cancelled. It is interesting to note that that suggestion, that a statute of limitations should be invoked, has been made by the London chamber of commerce, a body of men who have probably had more experience in international trade than any other body in the world.
It is interesting to note also that Maynard Keynes, in his original proposals, recognized the need for some method of forcing a creditor nation to accept payment in goods, or alternatively to forfeit the payment of those

Supply-Trade and Commerce credits. We feel that this will make international trade an exchange of goods and services, and will place the responsibility for achieving a balance upon both parties trading together. I know that many people will argue that a system of trading of that kind would be bilateral and, therefore, undesirable. It would be a simple thing, however, to put that on a multilateral basis by establishing an international exchange upon which credits held in one country could be traded for credits in another.
We feel that this trading should be executed at a fixed rate of exchange, based upon the relative value of the currencies as determined by their purchasing power internally. For example, if this country exported a million dollars' worth of goods to Britain and only needed half a million dollars' worth of goods back, we could then trade that half million dollars' worth of goods through the international exchange to France for half a million dollars' worth of goods from that country. Then, France would accept the goods we had coming from Britain, and that would put the trading on a multilateral basis. It would be an exchange of exports for imports instead of the currency of the exporting nation. In that way, it would be a comparatively simple matter to maintain a balance of trade.
Any nation that refused to accept imports in exchange for the credits it had established would be making a gift to that nation because, if over a period of time they refused to accept imports, under a statute of limitations that credit would be wiped out. That was one of the main arguments we had against the Bret-ton Woods agreement; it had a strong procreditor bias. It placed the full responsibility for balancing trade upon the debtor nation instead of placing it equally upon the creditor and debtor nation. If a proposal such as I have outlined were adopted, it would be placing pressure upon the creditor nation as well as upon the debtor.
I noticed that the Minister of Agriculture refers to the proposals put forth by the FAO in his speech delivered before that organization. At page 5 he says:
Canada, therefore, is prepared to give serious consideration to any international action designed to attain production and distribution of food. From this point of view we are interested in the proposal advanced by the director-general for an international commodity clearing house. While endorsing the principle underlying this proposal we are not in agreement with the means which, it has been suggested, are necessary to reach the objectives.
Then, the minister concludes with these words:
In conclusion, we in Canada agree with the United States and the United Kingdom that suggestions

should be considered by a working committee. The Canadian delegation will co-operate in every possible way on such a committee.
We hope that out of this conference will come a suggestion that we can all agree on.
It is very unfortunate that so far nothing has come out of that conference. There were proposals for setting up a world pool of food in order to get food from surplus countries to needy countries, but as the Minister of Agriculture said, in so far as Canada was concerned, they were not prepared to agree to the proposal. There was one very interesting feature in the proposal, namely, that surplus food could be sold from that pool to countries and payment accepted in their own currency. I look upon that as a forward step, and there does seem to be a growing recognition of the fact that if we want to expand international trade we must make it an exchange of goods to the mutual advantage of all, and therefore be willing to accept payment of our exports in the currency of the importing nation. We have had that suggestion from the London chamber of commerce of Great Britain. According to the Wall Street Journal that is going to be done by the United States after the end of Marshall aid. The FAO are suggesting such a proposal. Therefore I would urge upon the government that they give careful consideration to that suggestion because if after Marshall aid ends the United States exports her surpluses and receives payment in part in the currency of the European nations she will take markets away from Canada and we are going to be left holding the bag. I hope the government will take action before the situation gets any worse.


Clarence Decatur Howe: For the information of the new members who may be bewildered by this debate I may say that opposition parties have been making these speeches since 1944 in every successive session, and if they will go back through Hansard they will find no change in the nature of the speeches.
An hen. Member: Nor in the attitude of the government.


Clarence Decatur Howe: Perhaps not.


Donald Methuen Fleming: And the government has learned nothing.


Victor Quelch: And our prophecies were borne out.


Clarence Decatur Howe: Just to bring the position of our trade with the United Kingdom into perspective let me give the committee the trade figures back over the years. Take the year 1929, the most prosperous year between the two wars: our exports to Britain in that year

were $290 million. Take the year 1933, which is perhaps the worst year in that period. Our exports to Britain were $210 million.


Victor Quelch: Marshall aid is helping now.


Clarence Decatur Howe: Never mind what is helping us now. Perhaps I can put these figures on Hansard without too much interruption. Take 1938, the most prosperous year in the thirties. Our exports to Britain were $339 million. In 1939 they were $328 million; in 1947, they were $751 million; in 1948, $686 million; and in 1949, which is not completed, they will be well over $650 million. This is the way in which we are losing our exports to the United Kingdom.


Victor Quelch: The minister will agree that Marshall aid is providing the dollars.


Clarence Decatur Howe: My hon. friend has the idea that we should go back to the primitive days and exchange goods instead of using money as a medium of exchange.


Victor Quelch: No. I said that we should accept the currency of the importing nation, which is a totally different thing.


Clarence Decatur Howe: The hon. member said a lot about, exchanging goods. Modern civilization has found that a good way to exchange goods-


Louis-René Beaudoin: Order. May I
remind hon. members that they must not interject or ask questions of an hon. member who has the floor unless they first obtain his consent.


Clarence Decatur Howe: Mr. Chairman, so much for the over-all situation. Judging from these figures I have quoted one would hardly reason that we are losing our trade with Britain. Let us take the individual commodities. What about wheat? I think we are in grave danger of being oversold on wheat from this crop. After the first of the year the government s going to start advertising to farmers asking :hem to please deliver all the wheat they possibly can as early as they can for the balance of this crop year so that we can deliver that wheat on commitments already made.
What about oats and barley? There again our sales are getting ahead of deliveries, and we are rather worried that we may be getting into an oversold position on oats and barley. What about flax? An hon. member spoke of the great surplus of flax from last year. We did have an unusually heavy carryover. That flax is moving out, and we are just wondering whether we shall have enough flax to run us through the current year and take care of the export commitments.
45781-164^
Supply-Trade and Commerce
What about bacon? I am not too proud of our position in bacon. We contracted with Britain to furnish a quantity of bacon in the year 1949, and we are actually delivering a pretty small proportion of that contract. There are two sides to a contract. Some people may say that Canada is in a very happy position, but I do not think that the United Kingdom, which holds the other end of the contract, is so pleased with our deliveries on the bacon contract; and that also holds for the egg contract we made for 1949. That contract is still current, and we are still in a very serious deficit position in our delivery of eggs.
No one has said anything about beef. The beef prices in the Winnipeg livestock market reached the highest point within the last two or three weeks that they have reached for many years. Speak about other products. If there are large unsold surpluses I do not know what they are. But what is our trade position today? The Minister of Trade and Commerce cannot sell products that we have not got, and I do not know of any unsold surplus products that we have. Someone may mention dried milk. Perhaps we have dried milk. If we have an oversupply of dried milk, perhaps the remedy would be to sell milk in some other form which is readily saleable today.
We speak of butter, and compare the figures for butter this year and last year. The Department of Agriculture tells us that the stocks of butter on hand at the present time are just about enough to see us comfortably through the winter. May I remind hon. members who compare these figures with the figures of last year that last year we had to go abroad and import butter to carry us through last winter. That is the position of our exports today. Anyone who finds in them a great threat to the future of this country must view the situation with very jaundiced eyes indeed.
I hear hon. members speak of realism. Well, my experience with that phrase is that it is a synonym for pessimism. It is a great phrase used along St. James street and Bay street. The realistic view is always the pessimistic view. I am accused of being a great optimist, but I believe in making statements according to the facts which are laid before me. I have done that consistently and I have done it again this evening. I think that when next year rolls around and we look back upon the statements I have made tonight it will be found that they will be in just about the same position as they have been ever since 1944. In the past I think my predictions have been found to be fairly accurate.

Supply-Trade and Commerce


Percy Ellis Wright: As a farmer I certainly hope that the Minister of Trade and Commerce is right in what he has just predicted. However, that is not the feeling that prevails in most rural areas in Canada. Certainly it is not the feeling out in Saskatchewan when just within the last month the price of eggs dropped 11 cents a dozen and the price of pork 4 cents a pound.


Clarence Decatur Howe: Was that drop due to a lack of outlets for the pork and the eggs? Was it not because the price of eggs got very far above the floor set by the British contracts, and the same with bacon?


Percy Ellis Wright: A farmer out there is receiving at the present time about 28 cents a dozen for No. 1 eggs, and I do not think that is a price at which he can produce eggs at the present time. The minister gave certain figures with respect to our exports to Great Britain; I believe the figures were $648 million worth of exports. He did not point out that the price of those exports today as compared with the earlier period-in the twenties or thirties-is about twice as much. He did not give the volume. Certainly the volume is not as great now as it was then.
Let us look at the period between the two wars. We tried for years to build up our markets with Great Britain on pork products and dairy products. We established a grading system in this country for bacon. We established a grading system for our dairy products, and we tried to produce an article which would be acceptable to the British market. We tried to build continuity of supply for that market, because there are two things the British market demands: one is continuity of supply and the other is quality of the product.
We were reasonably successful. By 1939 we had built up a reasonably good market for cheese, bacon, apples, honey and certain other products of our farms and our fisheries. Then the war came along, and we found suddenly that that market was tremendously increased. We had become the only supplier. Encouraged by the government, the farmers of this country went into increased production so that they doubled and trebled their production of those agricultural products for the market in Great Britain.
I do not think anyone expected we were going to be able to maintain all of the market we had established during the war, or that we were going to be able to continue to supply the quantities we supplied during the war. But we did expect, and certainly the agricultural industry in this country had a right to expect, that we would retain at

least the major portion of that market. But when the war was over we found that the market slipped away from us.
Someone asks why. Liberal members across the way were shouting "why" only a few moments ago. The reason is perfectly obvious. When the war was over we found that the market we had created there had been created through loans we had made to Great Britain. We had given away a billion dollars' worth of our products produced in this country. When the war was over those loans were cut off. I do not think it was good policy to cut them off as quickly as the United States did-and we followed closely in her footsteps.
Great Britain had not the money with which to make purchases. She could have bought on a time basis, if we had been prepared to continue to give her credit. But, knowing well enough that she would never be able to repay those credits, she did the only honourable thing and tried to get in on a cash basis. She tried to get goods where she could exchange goods. But we refused to enter into a bilateral agreement with her on agricultural products.
It is only two months ago that our Prime Minister went down to the United States and speaking at Troy, I believe it was, he offered a bilateral agreement with the United States in the matter of arms-war materials. Surely if we can make a bilateral agreement for the purposes of war we should be able to make a bilateral agreement with Europe to feed the people. If we are going to have peace in the world, and if we are going to build a world which we can hope to improve and from which we hope to eliminate communism, then we had better get wise to ourselves.


Clarence Decatur Howe: I would suggest to my hon. friend that we have had bilateral agreements in bacon and eggs for several years-and for several years we have not lived up to our part of it.


Percy Ellis Wright: We did not have a bilateral agreement; that was the trouble. What were we taking back from Great Britain? If we had been taking back goods from Britain we could have been exporting to Britain.


Clarence Decatur Howe: We had a bilateral agreement in which we agreed to exchange bacon and eggs for money. The money was forthcoming, but the bacon and eggs were not.


Percy Ellis Wright: And why were they not? They were not because we never had any agricultural policy in this country under which the farmers had known for more than one year at a time what they were going to have to

produce. I am certain that if we had had contracts for a period of four or five or six years, with any feeling of security, on the part of those engaged in agriculture in this country, they would have produced the goods to meet that market. When they were told during the war that they would have a market at such and such a price for their goods, they produced the goods in this country; and we can continue to produce them.
Agriculture does not wish to shut down shop. We want to continue in production. Every farmer is anxious to produce. He does not like to see his buildings lying idle when he has spent hundreds of thousands of dollars to create those buildings. He would like to see them filled.


Clarence Decatur Howe: Why does he not fill them?


Percy Ellis Wright: But so long as he has not the assurance of markets he is not going to produce. He is not just foolishly going to produce in abundance, knowing that if he does he will get no price for the thing he produces. That is what happened in the past.
I have here an editorial taken from the Rural Co-operator, and it says, "Must we farmers march on Ottawa again?" That is the feeling in rural areas of Ontario with respect to the marketing of our agricultural products. They say in this article that we should be exchanging our goods with Great Britain, giving her an opportunity to ship to this country.
I believe it was the hon. member for Fraser Valley who only a few moments ago asked a question about the price of goods that could be shipped to this country. Well, British tractors are selling here today for $200 to $400 less than our own tractors produced in this country. Someone may say, "Well, why are they not being shipped here? Why are we not buying more of them?" But to establish a market for tractors or farm machinery in this country you have to build up an outlet for that machinery. You have to build agencies to supply repair parts. No company will come to this country and spend millions of dollars to establish those agencies unless they have some security for a number of years. They will not come unless this government is prepared to guarantee that they will be protected in this market and that they will have long-term agreements.
If we want long-term agreements we can get them in Great Britain. Make no mistake about that. But let us remember that, as regards our markets in the United States for agricultural products, they are not worth the snap of a finger. If tomorrow the United States were to adopt the Brannan plan with respect to floor prices under agricultural
Supply-Trade and Commerce products, what would happen to us in Canada? Under the Brannan plan they propose to guarantee prices to their farmers according to the average price in the ten-year period from 1938 to 1948. Then they would put their agricultural products on the market and sell them at whatever they would bring. Our agricultural products going to the United States would sell, not at the floor price guaranteed to the American farmer, but at the competitive price at which those articles would sell on the American market. It would knock the bottom right out of the market in this country for agricultural products so quickly that we would be back to where we were in the thirties, and we would be back there inside of three or four years.
Those are the problems facing agriculture in this country. It is all right for the minister to get up and say that we have no problem, that they are not only Canada's problems, but that they are world problems. That is not good enough. It is not enough to say that because they are world problems we cannot do anything about them. That is what we said in the thirties. We said they were world problems and that we could not do anything about them. The result was that we went through ten years in which we sat here and starved in the midst of plenty, and the world starved.
This is just plain common sense. We have to meet our own problems. We cannot wait for the rest of the world to solve our problems for us. Our country must do something for itself. The Minister of Trade and Commerce has the ability; he is familiar with these problems. But I do not think he is justified in getting up and giving us such an optimistic story when he knows that conditions are serious, and that world trade today is in a serious condition. The minister knows that.


Clarence Decatur Howe: My hon. friend reads too many newspapers.


Percy Ellis Wright: Well, perhaps I do read too many newspapers. Perhaps that is the only way the people of Canada can get their information-through the newspapers. And if we are wrong, then it is the press of this country, the minister says, that is to blame for the feeling of doubt in people's minds as to whether there are markets for all the agricultural products we can produce in the next few years.
He says we have a market for wheat. Yes, we have a market for wheat as long as the British agreement lasts and ECA funds last. When the world agreement comes into effect in 1950 and we have to sell our wheat to Europe and other countries for dollars, where are they going to get those dollars? They will be available only if by that time we are

Supply-Trade and Commerce buying sufficient of the goods they produce to supply them with dollars. Either that, or we shall have to make credits available to them.
I do not think these problems can be solved by any one method; a variety of methods will have to be used. We shall have to work along every possible line in order to try to solve these problems and create trading facilities throughout the world. I think the hon. member for Acadia outlined some good ideas in the speech he just made with respect to credits. I do not pretend to be a financial expert, but I do know something about conditions and I do know that in the world today there is a need of trade. I am sure the minister will agree with that.
We will not get that trade by being optimistic, by sitting down and saying that everything is lovely. The only way we will get it is by working at it. I think the minister would be doing a service to the country if he told us what was being done in an effort to solve the problems that face the world today so that those people who might be depressed will have a better idea of things as they exist and not just accept everything as being lovely. There is an old saying that everything is lovely and the goose hangs high. Unfortunately the farmers of Canada have been the goose and have been hanging high for too long and something will have to be done about it.


Mr. Charlton:: Mr. Chairman, the seriousness of the problem facing agriculture is almost beyond description. Back in the days of 1937 and 1938 we had just arrived at the position where we had a fairly decent market in Great Britain. As previous speakers have said, we had graded our products to the high standard that we thought the British people wanted. We were getting that business up to the point where we thought we were doing a good job.
When the war occurred everybody across the country thought that prices were going to go up, because that is what had happened in the previous war. The farmers prepared themselves to increase production, granted with some idea of making a little more money, but mainly to be patriotic and supply the food needed by our soldiers and by Great Britain. The farmers of this country were proud and happy to do that.
But what happened in 1941? At that time the government brought in its price control policy before farm prices had had a chance to rise to a level comparable with the rest
[Mr. Wright.3
of the economy. The prices of agricultural products were frozen at a low level. It was then found that in order to get production up to the point where we could supply a certain amount of food to Great Britain subsidies would have to be paid. Subsidies were necessary in order to encourage the production of more food in order to supply the hungry nations of the world. Production was increased accordingly to a point higher than it had ever been in the history of this country. Farmers were working with half the help they had before and producing twice the quantities of food. That just shows what can be done in this great nation when our farmers are encouraged to do it.
Then what happened? In 1946 and 1947 the subsidies were taken off, and the farmers were blamed for the increases that occurred in the prices of food. The consumer thought he was being gypped. He had become used to low food prices during the period of price control and when the subsidies were taken off the farmers were blamed for the increases that occurred.
There was a complete lack of foresight on the part of the government in not making contracts for more than one year and in not signing them until November or December. The farmers did not know what they were going to receive for their products until November or December in the year previous to the contract year. Did that make for increased production? I contend that it certainly did not. All the farmers had before them as an incentive to produce was a big question mark. They were given no encouragement. They were not told until the last minute what they were going to get for their products and production began to decrease because of this uncertainty.
Then in addition the farmers were being followed to the abattoirs, to the elevators and to the creameries by the income tax officials to find out what they were getting. Many farmers in the west had not been used to doing too many chores. Production was increased during the war by farmers increasing their hours of labour, but the time came when they began to stop working overtime to look after their pigs and other animals because no consideration was given for the long hours they worked on their income tax. They said they were not going to do that when they did not know what they were going to get for their produce, and the result was lowered production.
That is the position our farmers have been in for the last four years. No encouragement

was given to them. They were told that if they would take less than world prices for their agricultural products during the war, which most of them were happy to do, they would be guaranteed the English market after the war was over. We were guaranteed that by the Minister of Agriculture and the Minister of Trade and Commerce. Actually those lower prices were paid in order to maintain the government's price control program. We took those lower prices on being promised that at the end of the war and following the war the contracts with England would be maintained at a reasonable level.


Mr. Murray (Cariboo):: Have the farmers of Canada ever been as prosperous as they are at the present time in the whole history of Canada?


An hon. Member:: What has that got to do with it?


John Alpheus Charlton: That is the same sort of question as was asked a few minutes ago when it was said that the farmers' income was higher than it had ever been in history. It was said that our exports are worth more in dollars than we have exported for years, but no mention has been made of the volume of exports. The value of goods today is practically three times what it was in those years. No wonder we are getting more money. But are we getting more net income? Of course not. There is a tremendous difference between gross and net income. It is more in gross income but the gross does not pay off the mortgage.


George Matheson Murray: Then the hon.
gentleman-


Louis-René Beaudoin: Order.


John Alpheus Charlton: You will have a chance to make your speech after I am finished.


George Matheson Murray: I asked a question and I should like to get an answer.


Frank Exton Lennard: He does not have to answer.


Louis-René Beaudoin: It is up to the hon. member who has the floor to decide.


John Alpheus Charlton: What has happened as our production has gone down? England, in order to get enough food, was forced to make bilateral agreements with various other nations, even nations behind the iron curtain. She was forced to buy where she could sell her products. If we were able to supply England with as much bacon, for instance, as we supplied previous to the war, we would have maintained the bacon contract; but owing to the fact that the government
Supply-Trade and Commerce did not have the foresight to look ahead a few years, instead of just considering the situation at the moment, our production was allowed to decrease to a point where we could not supply what they wanted. England had to go elsewhere to get her food. There has been some controversy about the word "top-heavy" being in front of the word "surplus". Whether or not a surplus is top-heavy, it is a surplus, and if there is a surplus in the country then it is bound to affect the domestic price.


Clarence Decatur Howe: A surplus of what? What have we surplus? I should like to know about it so that I can sell it.


John Alpheus Charlton: I ask the minister what these surpluses are.


Clarence Decatur Howe: You tell me what they are.


John Alpheus Charlton: I do not need to tell you. I think you should know.


Clarence Decatur Howe: I do not know of any.


John Alpheus Charlton: According to your own publications there are various surpluses, and I think probably it will be important to ask the Minister of Trade and Commerce the question which I intend to do later on. As I said, there are surpluses, whether or not the Minister of Trade and Commerce and the Minister of Agriculture think there are. The Minister of Trade and Commerce answered a question of mine the other day and said there were surpluses. Is he now going to say there are not?


Clarence Decatur Howe: I made a difference between surpluses over domestic requirements and unsold surpluses. I asked the hon. member which he meant, and I do not know yet. Perhaps he will tell me now. Which is it, a surplus over home requirements or unsold surpluses?


John Alpheus Charlton: What is your definition of a surplus?


Clarence Decatur Howe: There are two definitions of "surplus".


John Alpheus Charlton: What is your definition of a surplus?


Clarence Decatur Howe: I think my hon. friend is an artful dodger on that question.


John Alpheus Charlton: I am asking you that question. What is your definition of "surplus"?


Clarence Decatur Howe: My definition of an unsold surplus is a surplus that remains unsold. My definition of a surplus in excess of domestic requirements is something quite different. If

Supply-Trade and Commerce my hon. friend will tell us which surplus he is talking about, we can follow him. I cannot follow him at all. I have been trying to make sense out of his remarks up to this point, and I have failed totally.


John Alpheus Charlton: That is one man's opinion.


Clarence Decatur Howe: I think it is generally accepted.


John Alpheus Charlton: I do not care whether or not the surplus is unsold. It is a surplus. How long are you going to hold it? What about the surplus of skim milk powder you are holding? Is that not a surplus? Are there not surpluses of apples?


Clarence Decatur Howe: I do not know of any.


John Alpheus Charlton: Is there not a surplus of cheese?


Clarence Decatur Howe: No.


John Alpheus Charlton: Why did the government buy 14 million pounds?


Clarence Decatur Howe: The government bought it because we needed a little aged cheese to sell in markets that were accustomed to being furnished with it.


John Alpheus Charlton: Has that not been done previously?


Clarence Decatur Howe: Not for several years.


John Alpheus Charlton: Have we not sold aged cheese to Great Britain?


Clarence Decatur Howe: Not in the last several years. We sell it right out of the creamery.


John Alpheus Charlton: I think there has probably been quite a bit of aged cheese going to England in the last few years. I will say this much, that our cheese exports this year will be less than they have been at any time in the last fifty years, and a good deal less than they were in 1938 and 1939 just previous to the war. The same thing is true of bacon. I want to ask the minister a question now and I will be finished. I want to ask him to give us the export figures for various agricultural products in 1938 and 1939, and again in 1948 and 1949. I think the pre-war and post-war figures will provide a fair comparison. I think he will find in various instances the figures for 1948 and 1949 are less than they were in 1938 and 1939. I do not want dollar figures; I want volume figures. Until the government takes a much more serious attitude than apparently many members on the opposite side of the House of Commons took tonight, during a previous speech, when they apparently thought this was all very funny-
	.


George James McIlraith: It was not the problem we thought was funny; it was the speaker.


Louis-René Beaudoin: Order.


John Alpheus Charlton: There were humorous
remarks and laughter from various places in the house; as a matter of fact I thought it was disgusting.


An hon. Member:: Get a soapbox.


John Alpheus Charlton: I should like to have the minister give me the figures for the various agricultural products in the years 1938 and 1939, and particularly cheese and bacon, because they are two of the most important products, apart from wheat, that are exported to Great Britain. They are two of the products which we could export in sizable quantities to that country, especially cheese. The government has bought surpluses of some products and is holding them in storage, particularly powdered skim milk and butter.


Clarence Decatur Howe: We own no powdered skim milk.


John Alpheus Charlton: I did not hear what the minister said.


Clarence Decatur Howe: I said we have no powdered skim milk.


John Alpheus Charlton: Tell me how much powdered skim milk is being held in the country. You should have those figures.


Clarence Decatur Howe: I don't know.


Clovis-Thomas Richard: What is this, a quiz?


Clarence Decatur Howe: Carried.


John Alpheus Charlton: The minister should have those figures.


Clarence Decatur Howe: My hon. friend is making the speech. Why does he not get the figures? They are a matter of record. I have not the record here. If my hon. friend wants to use the figures he knows where to get them.


John Alpheus Charlton: I have them upstairs.


Clarence Decatur Howe: Then why not use them?


John Alpheus Charlton: I think it would be well to have the minister put them on the record. That is why I ask for them. If he cannot give us those figures now, I think he should get them.


Louis-René Beaudoin: Order. Perhaps we should not carry on this discussion. The minister can consider the request of the hon. member and give an answer later.


John Horne Blackmore: It is regrettable that the large numbers of members who were here

not so very long ago shouting "why" and "what are you going to do about it", have all disappeared. We are now probably getting to the time when we might find out something to do about it. In the first place, in a general sort of way it looks like the sheerest kind of common sense, if there is an abundance of goods in the world and an abundance of productive capacity, that it ought to be possible to let everybody enjoy some of that abundance. There must be a solution somewhere if only the person rises who has the idea what to do, and if only the rest of us will have sense enough to listen to him. There must be a solution somewhere.
There is something we can do about it beyond what we have been doing up to the present time. That ought to be obvious, especially when you bear in mind that the United States, for example, is deliberately planning to limit production on so wide and systematic a scale in respect of so many commodities by actual limitation of acreage in the coming year. Bearing that in mind while there are at least a billion people in the world on the verge of starvation, one must be struck with the fantastic grotesqueness of the whole situation. That ought to make everyone in this house and in every other legislative assembly rather humble about the matter, so that at least they would be prepared to listen.
This debate, I think, has taken a rather unexpected turn. We have been debating something we hardly expected to discuss under this item, but I am rather glad. I was just telling my seatmate that all the things I came here prepared to prove have been acknowledged, and what we have done is to go on from there.
I think the first thing it would be well to spend a moment on is this question of why we in Canada now have shortages in agricultural production, about which the two previous speakers had a good deal to say. At the risk of repeating some of their statements may I give what I think is the reason.
In the first place during the war, in 1943 and 1944, my constituency was literally covered with hogs. The people of my constituency can produce hogs today just as well as they did in 1943; and they are just as willing to produce them now as they were then. Why is it that you can hardly find a herd of hogs from one end of my constituency to the other today, whereas it swarmed with hogs in 1943? I should like the hon. member for Fraser Valley and some of those other smart boys over there on the Liberal side
Supply-Trade and Commerce to tell me why it is we do not find the hogs that we saw in 1943 and 1944. When they finish explaining that they will have the answers they were shouting for and laughing because they did not get. What was it that caused the hogs to be produced in 1943 and 1944? In the first place everyone was pretty certain there was going to be a tremendous demand for hogs for an indefinite number of years; they were reasonably sure of a market. Everyone was fairly certain that because of the war there would be a relative scarcity, and that prices would be reasonably good. The third point was that in 1943 and 1944 we had not learned that a government of the Dominion of Canada could be so unutterably stupid as to tax people for additional production. We actually had not had it forced upon our attention that you could get in charge of a country a group of men so completely lacking in intelligence as to do that very thing; so that if a man worked all day producing wheat, and spent two hours in the morning before going out to produce that wheat, in milking cows and taking care of chickens, and then spent two hours after his work producing wheat, to produce butter and eggs and hogs, the government would penalize him for performing that fine service. But we had that forced upon us by example after example, by stupid ministers of finance and national revenue standing up in this house year after year defending that sort of procedure and being rather proud of it.
Well, in those days we Social Crediters told them just what they were going to get; and they got it.
They finally convinced the people there was not a bit of use working overtime to milk twelve or fourteen cows; that all they would be doing was producing butter for Ilsley, or for Abbott, or for whoever happened to be finance minister in charge. Human nature is just about the same in this country as in England or the United States. No man is going to wear himself right out producing extra goods if he gets nothing in return.
By the way, I am only too happy to answer questions if I can hear them, but I would ask hon. members not to be so cowardly as to mutter them just loud enough so they can be heard by Hansard but not loud enough so I can hear and answer them.


Clarence Decatur Howe: I had not asked the hon. member a question, but I shall do so now. Were the farmers very much bothered with income tax back in the early thirties?


John Horne Blackmore: We did not have income tax in the early thirties. The trouble then
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Supply-Trade and Commerce was that the more hogs and cattle you produced, the poorer you got. I will give the minister an actual example. My own family were in the business of producing beef and hogs. I grew up to that kind of thing; I am quite accustomed to it, and I know what it takes to make a little money. In 1932 one of my brothers came in and said, "We have sized up the whole situation as far as our year's work is concerned." At that time we had about 150 head of good cattle, pretty well bred Shorthorns. He went on to say, "We have made allowance for everything that goes into the production of cattle, and we are just $5 worse off for every cow we have on the range"; and all the cows had calves.
What was the reason for that? The reason then was that we were in a depression. We have not now got into a depression yet, but we are going to get into one if we keep on with the stupid practices in which we are engaging now. If that is done there will be a depression very soon; then we will have Liberals across the way asking, "Well, what caused it? What are you going to do about it?" Yet they will not listen when we try to tell them. That was why in 1930 people were not doing the very best that could have been done; but they were doing very well in my area, producing at a loss as long as they could stand it. I hope that answers the minister's question in that respect.
And now I come back to the question of why we are having shortages.
In the first place, we have had uncertain markets. In the second place, we have had uncertain prices. Then we have had an income tax structure that has penalized men for doing the things the country wanted them to do, that is, for producing hogs and milk and eggs and butter and all the other good things we needed. Those are the main reasons we now do not have the production.
We must recognize, of course, that we have nad some bad years. This year, for example, we had crop failures over a considerable area of the prairie provinces. We lost tremendously in the production of wheat and in many other lines of agriculture; but taking the country from coast to coast in a broad sort of way, generally speaking we could have produced pretty well, if only we had not discouraged our producers by utterly lunatic systems of finance.
That is the first thing. Now I think I shall pass from that aspect of the question after saying only this: If the government of Canada wants production it must do the things that any person fourteen years of age,


with common sense, would say should be done. That is, make it possible for a man to earn and keep a little money if he produces something extra. We have not had enough sense even to give a farmer an allowance for the work of his wife in milking cows, feeding chickens, and so on. We have not had enough sense even to make that provision under our income tax laws, so close have we come to the borderline of imbecility in following a financial course that is fantastic and incomprehensible.
Now I wish to turn to another aspect of the question. It has been well brought out in the quotations read by the hon. member for Acadia from the speech by the Minister of Agriculture at the FAO conference that the minister recognized that ours was a monetary problem. I wonder if the Minister of Trade and Commerce will recognize now that our problem is monetary. Will he recognize that our main problem is a monetary one, as his colleague the Minister of Agriculture said in speaking to the FAO conference? Will he recognize that the problem facing the world today is a dollar problem?


Clarence Decatur Howe: I will admit that the main obstacle to the kind of trading we would like to do is the inconvertibility of currency. Does that answer my hon. friend's question?


John Horne Blackmore: Very well; the convertibility of currency is a monetary problem, though fundamentally there are other considerations underlying it, such as the production and sale of goods and all that sort of thing. We need not go into those, though I believe I know them and could name them without trouble. The first thing for us to recognize in approaching this problem of international distribution, getting the goods that we can produce in such abundance on this continent into the hands of people on other continents who cannot produce abundantly, is that the fundamental problem is one of money.
Now then, what can we do about money? Where are we going to get the dollars? In order to point up the need for money, let us turn for a moment or two to what Canada did for Great Britain during the war. I am quoting figures which I believe are correct, because they appeared in the report of the Canadian Press from London dated November 26, giving the details of Sir Stafford Cripps' speech. In 1942, he says that Canada gave Great Britain a billion dollar gift. If we could give Great Britain a billion dollar gift during the war, why can we not give

her a billion dollars to help win the peace? We shall let any Liberal man who thinks he can answer that question think about it tonight, and answer it tomorrow. If we could give Great Britain a billion dollar gift during the war to help her buy our goods, is there any reason why we cannot give her a billion dollars today? If a billion dollar gift helped solve the problem of getting rid of our surplus goods during the war, then it is conceivable it would help to get rid of our surplus today.
In 1943 Sir Stafford Cripps says Canada gave Great Britain a $700 million interest-free loan, together with Canadian supplies valued at more than $2 billion. Then, after the war, we gave Great Britain a credit of $1,250 million. That is what we were doing to help Great Britain buy the goods we could produce during the war. Why is it that we have decided, now that peace is here, we cannot do anything like that? I invite every Liberal in this house to be ready to answer that question tomorrow. Why is it we have the idea we cannot advance loans like that to Great Britain any longer? We could do it when we were under the stress of war. It is a question that needs serious thought, and a serious answer.
If that was the way to solve the problem in war, then it is probably the way to solve the problem in peace. Immediately a question will be raised as to where all the dollars will come from. I do not want to become involved in a lengthy discussion, but before I make my next statement, I should like to say that the world is up against a crisis. The minister can be as optimistic as he wishes in the house-I do not blame him for being optimistic before the country. May I say that I have the highest regard for the minister. If there is any man in Canada who should be given the greatest measure of appreciation and gratitude, it is the Minister of Trade and Commerce. While I am on this little aside, I may say that if the Conservative members of this house want me to respect them, they will have to stop making insinuating and sneering comments against the Minister of Trade and Commerce. This man has done too many great things for this nation to have anyone make insinuations or slurs against him. I may say that anyone who wants to debate that question can get on the floor and I shall deal with him.


Stanley Howard Knowles: A little while ago you said he was stupid.
Supply-Trade and Commerce


John Horne Blackmore: I am not saying that he was the one that was stupid; there are other people having to do with finance who just take the cake for stupidity at every turn they make.
While the minister can be optimistic just as much as he desires in the house, we should recognize that that is not the opinion held by people who are well-informed; who are not speaking politically or desiring to cheer up the country. I should like to refer hon. members to the interim commission of the international trade organization, reporting on the Geneva agreements on tariff and trade, signed in Geneva in 1947 by 23 nations. In a report called "Attack on trade barriers", it says:
World trade is today facing a crisis of perhaps unprecedented gravity. Even now, four years after the end of the war, there is no sign, of a restored equilibrium, and present indications point to a deepening of the unbalance and a sharpening of the issues involved.
Hon. members who are interested can get the Christian Science Monitor dated September 6, 1949, from the library and read that in an article entitled "Continued aid for Europe seen possibility until 1952". It is a Reuters dispatch from Geneva. I believe we can accept that as definite. Let us not try to put the picture in beautiful colours, but face the actual situation which confronts us. What are we going to do about this unbalance?
The only nations in the world who are in a position to do something about it are the "have" nations. Two of the greatest "have" nations in the world are Canada and the United States. I believe all hon. members will agree with me in that respect. If those two are the great "have" nations, then they have it within their power to do something about the dollar problem, while nations like Great Britain, Greece and Turkey are helpless to do anything really effective about it. It will rest upon us as an inescapable responsibility to do something about it. What are we going to do? Are we to sit here idly talking about our inability to take care of our own affairs, in a nation pouring out abundance, while letting less fortunate nations in the other parts of 'the world continue to suffer?


Louis-René Beaudoin: Order. It is eleven o'clock.


John Horne Blackmore: I shall continue from this point tomorrow, Mr. Chairman.
Progress reported.

Business of the House BUSINESS OF THE HOUSE


Alphonse Fournier: The first item tomorrow will be third reading of Bill No. 195, the Surplus Crown Assets Act; the second item will be Bill No. 145, an act respecting the acquisition of the Temiscouata railway; third, the four small bills under the name of the Prime Minister, Bills Nos. 211, 212, 213 and 214, which relate to the setting up of the
three new departments and appropriations for salaries. There is a small bill, No. 218, an act to amend the Veterans' Land Act, and then we will go into supply to take up the estimates of National Health and Welfare, the Post Office and Mines and Resources.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, December 2, 1949