1950-09-12

COMBINES INVESTIGATION ACT


Hon. Stuart S. Garson (Minister of Justice):: I beg leave to lay on the table the annual report of the commissioner of the Combines Investigation Act for the fiscal year ended March 31, 1950.



UNEMPLOYMENT INSURANCE


Mr. Paul E. Cote (Parliamentary Assistant to the Minister of Labour):: In answer to a question put by the hon. member for Vancouver East (Mr. Maclnnis) on Saturday as to whether it was intended to print and distribute the report of the unemployment insurance advisory committee, I may say that the report has already been duplicated for distribution to organizations and individuals who have expressed a desire to have copies. A limited number of additional copies is immediately available, and if further copies are requested they will be prepared and sent out promptly. There is no intention of printing the report and of making a general distribution.



QUESTION AS TO GRADING OF 1950 CROP- SPREADS FOR INITIAL PAYMENTS

[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Lake Centre):: should like to direct a question to the Minister of Trade and Commerce arising out of the dissatisfaction among the prairie farmers with regard to the low grading of their wheat. Is the minister in a position to make a statement on this matter? I should also like to ask whether or not any investigation is to be made with a view to removing any unfairness that may now exist.
Righl Hon. C. D. Howe (Minister of Trade and Commerce): I think that I can do no better in answering the question, Mr. Speaker, than to read a copy of the report I made to the cabinet on the situation in western Canada. It is as follows:
The Canadian wheat board have secured through the elevator companies their country agents' estimates of the grading of the 1950 crop, as follows:
Estimated Farm Deliveries
No.	1	northern	
23,000,000No.	2	northern	
55,000,000No.	3	northern	
98,000,000No.	4	northern	
60,000,000No.	5,	No. 6 and feed	
124,000,000Total	
360,000,000
Of the above total only 49 per cent will fall in the usual milling grades Nos. 1, 2 and 3 northern, as compared with 84 per cent in these grades in last year's crop.
Because of the heavy increase in all grades below No. 2 northern, the Canadian wheat board are recommending a major widening of the grade price spreads on the initial payments to producers having in mind the probable prices necessary to sell the particular grades. The initial payments are fixed for the crop year, although the actual selling prices of the grades can be varied according to market conditions, and participation payments could reflect to producers the actual sales returns from each grade provided that the spreads are not fixed too narrowly to producers in the first instance. In making their recommendations on spreads for the initial payments, the board are indicating their judgment on the relative prices at which the quantities falling in the various grades can be sold.
I asked the wheat board to discuss the spreads with the pools after I received the board's report, as I wanted to have the judgment of responsible leaders of the farm cooperatives. They did so, and advised me later that the grades set carried the judgment of those leaders of the co-operatives who were consulted.
I would point out to my hon. friend that if the grades are too wide the correction will be made as soon as the marketing reception of the wheat is known; but I would also point out to him that with the great predominance of No. 3 and No. 4 northern as against No. 1 and No. 2 northern, unless the grades are wide enough to attract customers to the No. 3 and No. 4 northern we are likely to be in the position of having sold our No. 1

Essential Materials (Defence) Act
and No. 2 northern and being left with great quantities of No. 3 and No. 4 northern, which are not readily usable except with a proportion of the higher grades.


John George Diefenbaker: I thank the minister for that statement. Is the decision now made retroactive to the beginning of the marketing year?


Mr. Howe:: Yes. No payments were made or could be made until the spreads had been established.


Mr. Wright:: Can the minister place on Hansard a statement of the spreads of different grades?


Clarence Decatur Howe: I shall be glad to do that. It is as follows:
The Canadian wheat board has announced the spreaders for the crop year 1950-51 to be as follows:
Initial
payment
No. 1 hard and
No. 1 northern	$1.40
No.	2	northern	
1.37No.	3	northern	
1.30No.	4	northern	
1.22No.	5	wheat	
1.12No.	6	wheat	
1.06Feed wheat	
1.00
The spread on toughs is four cents under the grade.
Durum Wheat 1950-51
Initial
payment
No. 1	C.	W.	amber	durum	$1.40No. 2.	C.	W.	amber	durum	
1.37No. 3	C.	W.	amber	durum	
1.25No. 4	C.	W.	amber	durum	
1.22
The spread on toughs is four cents under the grade.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. G. R. Pearkes (Nanaimo):: May I direct a question to the parliamentary assistant to the Minister of National Defence? Are residents of Canada who are neither Canadian citizens nor British subjects entitled to enlist in the reserve army?


Mr. J. A. Blanchette (Parliamentary Assistant to the Minister of National Defence):: May I take this question as notice and give the answer later?



ESSENTIAL MATERIALS (DEFENCE) ACT PROVISION FOR CONTROL AND REGULATION OF PRODUCTION, DISTRIBUTION AND USE OF ESSENTIAL MATERIALS AND SERVICES

Clarence Decatur Howe: the third reading of 
Bill No. 5, respecting materials and services essential for the purposes of defence and national security.


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


Mr. W. F. Carroll (Inverness-Richmond):: In
rising to say a few words on the third reading of this bill, I wish to say that I am not prompted to do so by the request, if not the command, of the hon. member for one of the Toronto constituencies, who suggested in the house the other day-and it was not a mere suggestion; it was a command-that private members of this house should participate in this debate and express their opinions on this legislation. Well, that was, in effect, inviting this house to organize the House of Commons as a sort of debating society.
Again the hon. member suggested that private members of this house should read the bill and become acquainted with its contents. I do not think that the hon. member has any right to set himself up as the keeper of the conscience or the responsibilities of hon. members.
The principal reason why I have a few words to say now, Mr. Speaker, is that yesterday morning I had a letter from a businessman in Nova Scotia., and one of the lines in that letter was: "I hope you fellows will not undermine the confidence that this country has had in the past and has at the present time in the honesty, the ability and the administrative powers of the Minister of Trade and Commerce."
During the discussion on this bill, poison darts and poison arrows, and all the accumulation that could be brought forth, were aimed at the Minister of Trade and Commerce, who was called various names. He was especially called a dictator. There are different ways in which the word "dictator" could be explained, but, you know, dictators are sometimes a valuable asset to this country.
I do not think that the insinuations made by certain members on the other side of the house were made for the purpose of taking away from the people of this country and undermining the confidence that they have in the Minister of Trade and Commerce; but it all depends on just how these points were made. I do not think it would be of very much use for the ordinary member of this house to renew the confidence if it had been taken away or undermined, or for hon. members to get up and make eulogistic speeches about the Minister of Trade and Commerce. Because of that, and because Hansard circulates throughout the length and breadth of

this country, particularly among the younger generation who do not know the accomplishments of the Minister of Trade and Commerce in other spheres of action in this country, I want to place on Hansard an editorial which appeared yesterday, September 11, in the Ottawa Journal. I do not think the Ottawa Journal can be looked upon as a very strong supporter of the political attitude of this government.


An hon. Member:: The reverse.


William F. Carroll: No; I do not say the reverse. I think that down the years, and especially during the war years, they have been very independent and very fair to the government. The editorial reads:
Mr. C. D. Howe has been given the job of getting the materials and services for our military preparedness program, and is asking parliament for power to do the job adequately.
Parliament, we feel sure, will give Mr. Howe what he asks-"standby" authority to get whatever materials and services our defence effort requires, including authority to control all aspects of production, supply and distribution of war-essential goods. For if we believe, as we must believe, that this is an hour of urgency, that we are faced with much more than one minister recently described unfortunately as an "incident" in Korea, then somebody with the authority Mr. Howe asks for is vital.
We add, too, and heartily, that there is no man in this country better qualified than Mr. Howe to do the job that has been given him, testimony for that being the truly magnificent job which he did for this country as supply minister in world war II. Mr. Howe is accused sometimes of being indifferent to parliament (we have joined in the accusation), but that doesn't detract from the respect which goes to him from the country and from parliament itself for his great administrative ability, his energy and devotion to duty. Indeed, in contemplating Mr. Howe's new task and in its implications, the regret of many must be that the balance of Canada's defence plans seemingly are not in hands as vigorous or as competent as those of Mr. Howe.
And, whatever some may think of Mr. Howe's love of power, of freedom from parliamentary fetters, it must be said that, judging by his statement to the house last week, he seems to be approaching his task in good democratic spirit. Thus:
"It is possible that Canada will face greater difficulties over the next eighteen months. If that turns out to be the case we will bring the facts before parliament and ask for the additional authority to cope with the situation. But for the present we have no intention either of being drawn into or getting involved prematurely in a set of over-all controls."
I shall not read the last paragraph of the editorial, because the gentleman to whom it refers is quite capable of placing his views and opinions before the people.


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


Mr. Green:: On division.
Motion agreed to on division and bill read the third time and passed.
The Budget-Mr. Macdonnell BUDGETARY PROPOSALS



FINANCIAL STATEMENT OF THE MINISTER OF FINANCE

[Stage Direction]
The house resumed from Thursday, September 7, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, in commencing this debate on Thursday last, replying to the minister, I said that the chief impression made on my mind by the budget was of a sense of complacency and of entire failure to meet the gravity of the situation. The lapse of a few days has served to confirm that view. I think, as a matter of fact, that the Minister of Finance (Mr. Abbott) had his style cramped by other ministers, namely the Minister of National Defence (Mr. Claxton) and the Secretary of State for External Affairs (Mr. Pearson). They set the pace. I have said that I think it was a slow motion pace and the Minister of Finance has followed it.
Feeling as I do that the background of the budget at this time is almost more important than the budget itself, I propose to refer, briefly I hope, to that background, and to the general situation which brought us here.
This session was called as an emergency session, and during the debate on the railway situation there was a real sense of emergency. Since then it has been evaporating, and I think before now it has utterly and finally disappeared, flickered out. Instead of a clarion call to action we have had merely a faltering and uncertain lead; and now this budget comes as a fitting finale to the anticlimax of the situation. It is a limited liability budget -a limited liability budget in a world where, alas, the liability is not limited, but unlimited. We are operating on a basis of business as usual-subject of course to the Minister of Trade and Commerce (Mr. Howe).
The government's behaviour since last June reminds me of the behaviour of the British government in the months immediately preceding the war that began ten or eleven years ago. Ministers were then rushing to and fro throughout Europe, hurrying hither and yon. We had something the same in our own Secretary of State for External Affairs, although I am not sure that he carried an umbrella because we do not use umbrellas so much on this continent. Nevertheless we saw in that a good deal of the situation of eleven years ago.
In that connection I have an article from the Winnipeg Free Press which I should like to read from briefly. This article is headed

The Budget-Mr. Macdonnell "Unfinished Business", and, referring to the speech of the Secretary of State for External Affairs in the house, it says:
What was unfortunate in Mr. Pearson's speech was that it left the impression, probably without aiming to do so, that the policy of the western world was to wait passively upon the drift of events. As Mr. Pearson well knows, there is much hard thinking in the state department now on future policies in the Far East.
I say again that when we assembled here the Canadian public was ready to be called upon for effort and sacrifice. They were surprised when no call was made apart from Rockingham and his men who are getting ready, some day, to go to Korea. There is no call-no urgent call-to any kind of public duty. No one else is really inconvenienced in any way, so far as I can see, by the situation at the present time.
As a matter of fact the chief burden now is being carried by the children, although perhaps they do not know about the burden they are carrying. But the rest of us can go on in our usual way. As I say, we are behaving very much in the same way as the British government, the British people and we ourselves did in the months preceding June of 1940. We all remember it-and we are all responsible for it. We were all feeling a lethargy; we felt things could wait. During the first year of the war we took it easy; we said time was with .us, and then of course we all remember very vividly that in June of 1940 the rains descended and the floods came and the winds blew.
The Minister of Finance has even revised Bunyan's "Pilgrim's Progress". I was interested to know he had been reading the "Pilgrim's Progress", when he referred to the hill of difficulty. But I looked up "Pilgrim's Progress" and I found that Bunyan's hill of difficulty was a real hill; it was a steep and arduous ascent. But the minister evidently has a revised version because in his version the hill is not steep and arduous. He has smoothed it out so that even an octogenarian could walk up the hill without the slightest difficulty.


An hon. Member:: A bulldozer.


James MacKerras Macdonnell: I think it
is fair to say that hon. members arrived here ready for vigorous action. People often think we are not capable of vigorous action, but in that I think they do us an injustice. But we found we were all wrong. We found there was nothing to worry about. We found there were no troops ready to take the field, but we were told, "What of that?"-it was no part of the defence department's plan to have troops ready to take the field. Indeed it would appear that all the hundreds of millions were spent for other purposes-just 
what purposes is not clear, apart from providing adequate administrative personnel.
Then the Secretary of State for External Affairs told us, very finely and very firmly, that we have obligations, great obligations under the Atlantic pact, and that "an attack upon one would be an attack upon all." And then he said:
Each individual nation is pledged to take all possible measures to meet that attack, which would be an attack upon itself.
That sounds good. But as to the possible measures it seems to me we were left entirely in the air. Apparently that does not come under diplomacy, and so far as we can make out it does not come under the soldiers either. Truman, apparently, has a different idea. Perhaps we could get him to inoculate our ministers.
I should like to read in that connection a brief extract from a newspaper which has already been commented upon in the house this morning, with commendation. I read this extract from the Ottawa Journal of September 7:
The question posed by Korea and our token part in it was not where or when our forces should be pledged, but whether we had any forces to pledge.
Since world war II our government has made commitments to UN and commitments to the Atlantic community, and said that it was giving leadership to an Atlantic alliance, and upon the basis of such commitments and such talk parliament voted it one billion dollars to back up the talk and commitments-one billion dollars for defence.
The question now, therefore, the only relevant question, is not that our government didn't plan for Korea, or didn't contemplate what came in Korea, or didn't think itself pledged in some particular way in some particular area; the question is how it used the billion dollars given it to pledge itself anywhere.
The stark fact brought out in parliament in this debate is that neither the Prime Minister nor Mr. Pearson nor Mr. Claxton has been able to show that we had any effective force to pledge anywhere ... or even any effective force to meet attack at home.
In the light of this it makes rather ironical reading to have the Minister of Finance say:
Our policy on military security is plain. It is to be achieved by building up our own defence forces, by extending timely aid to our associates under the North Atlantic treaty, and by giving all support within our power to implement the principles upon which the United Nations is based.
Judging by defence and external affairs, nothing will come of it. I hope we will not have to quote those familiar words from Macbeth:
Tomorrow, and tomorrow, and tomorrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time.
The Minister of Finance, poor fellow, I suppose really has to accept the views of his

colleague in defence that every day "we are getting better and better" and again "that we have the fighting forces necessary to fight in Canada, and according to the advice we have those forces are adequate to meet present needs." We can forgive the Minister of Finance in those circumstances for falling back on the usual slogans of self-satisfaction, our "strong budgetary position", "our credit rating never stood higher" and that we can have national security, political and personal freedom and economic strength and stability.
All this and freedom too. All this on the cheap. What a comfortable world! What a comfortable war! We have all the thrill of feeling that we are acting on the world stage, that we are playing a leading part in giving Leadership in the Atlantic pact really without any effort or inconvenience. What a thought, if it could only be done in that way. One should really let Truman know, because he seems to have the silly idea that you have to back up words by actions.
In fact there must be people who feel that far from being an emergency the situation now is largely to be judged in terms of stimulation of employment and higher wages and profits.
Let me for a moment review very briefly the situation since Korea. The sudden attack in June really startled the world awake. It almost seemed before that the various nations had been gazing at Russia almost paralysed, almost like people transfixed by some wild animal. Then it seemed as though at last deeds and not words would be the order of the day. As so often happens, Churchill expressed the changing order very well, when, speaking in the British House of Commons on July 27, he said:
Only two months ago there was a very different atmosphere. All these matters quite wrongly seemed outside the range of ordinary politics and daily life. Now they dominate the mind of all thinking and patriotic men, and will increasingly do so as the months pass by.
What a pity that Churchill could not come and say that here! It might have some effect in stirring us up.
Nevertheless in some quarters deeds have been the order of the day. In the United States I think we can say the result was electrical and electrifying. They decided not to follow the fatal policy of 1937, 1938 and 1939; not to wait while each individual nation was struck down, but to act. It may be that in the years to come we will thank Truman for his courage even beyond what we can imagine now. At any rate the free world has acclaimed him, and1 no one can doubt that Truman has shown people how to follow through, especially with these last measures which we have heard of in the last day or
The Budget-Mr. Macdonnell two. I refer particularly to the indication that there is to be an international force to defend Europe. Anyone who has spent any time recently in Europe will not doubt the urgent need of that.
I should like to quote Mr. Churchill again. Referring to the United States atomic bomb he said:
Without it, we are more defenceless than we have ever been. I find this a terrible thought. In 1940, I had good hopes that we should win the battle in the air . . . and that if we won, the navy could stave off and repel invasion until eventually vast air power was developed here which would bring us out of our troubles, even if left alone. But now I cannot feel the same sense of concrete assurance.
Then he added, characteristically:
We must never despair, we must never give in . . . but I warn the house that we have as great dangers to face in 1950 and 1951 as we had ten years ago.
What about the continent of Europe? It does not need much imagination to enter into the minds of people who do not know overnight when they go to bed whether they may hear Russian tanks before morning. I heard a Dane expressing his alarm and saying that the Russians were only fifteen minutes away. I had the good fortune to spend two days at the council of Europe, which was really created by Churchill. It is a parliament of Europe, presided over by Spaak of Belgium, and is composed of the parliaments' representatives of different parties in various free nations. I heard the debate on the Schuman plan. The Schuman plan is full of practical difficulties. I mention it in order to quote one or two people who spoke in the debate and to show their state of mind. The plan has always appeared to us as being a measure for rationalizing the production of iron and steel, but in the minds of Europeans it is regarded as a new evangel, as a means of healing the age-old strifes of Europe, particularly the strife between France and Germany. While that may seem a dream to us, it is a dream which they are giving a great deal of thought to. An Italian spoke as follows of the plan:
A utopian idea, some might say, but at this juncture was not the choice between utopia and death.
Then the Dane I mentioned a few moments ago said this:
The vote for Mr. Churchill's motion-
For a European army.
-had showed that it was realized that an imminent danger could only be resisted by timely preparation.
And again:
The countries of western Europe must pool their common resources in order to prevent the annihilation of their common civilization.
I should like to say one word as to what Europe means to us, first of all from ties of
600	HOUSE OF
The Budget-Mr. Macdonnell kinship; secondly, economically, and thirdly, strategically. I suppose it is true to say that in this country there are many citizens who have ties of friendship and kinship in every country from the Atlantic ocean to Russia and from the Mediterranean to. the Arctic ocean. Those ties of friendship and kinship exist not only in France and the United Kingdom, but in Italy, the Scandinavian countries and in fact everywhere.
Economically, all I need to say is that we all know that a large part of our economy is based on the supposition that trade with Europe can continue. We realize that part of our economy would be largely meaningless if Europe were struck down and that trade came to an end.
Strategically, all I need to say is: consider what our position in North America would be if the manufacturing, particularly the steel capacity, of the nations of Europe were added to the communist strength.
In the face of this danger, what we are doing does not seem to make sense. I do not propose to traverse the ground we have traversed already, but I do suggest that 5,000 ground troops are not a serious answer to the problem. Even if another brigade were formed it still would not be a serious answer. We have no right to assume that our preparations are merely for a tip-and-run raid. We are hiding our heads in the sand as the ostrich is supposed to do-although I understand it is a slander on the bird-when it is in trouble. However, that is what we are doing. We can also remind ourselves again of our old friend Micawber.
I think our performance to date is disappointing. We have had weeks of indecision with regard to ground troops, and then a decision which cannot be effective for months. That is all we know. Of course, I am not forgetting what the hon. member for Ontario (Mr. Thomson) said about not dragging the ministers out into the open. We do not know what might have happened if we had been able to drag them out into the open, but unless it was very much better than what we got when they were under cover, it would have been very disappointing indeed.
I doubt very much whether the Russians will be greatly impressed. The Minister of National Defence says that we are getting better and better, but of course the validity of a comparison, as has been pointed out, depends on where you begin. If you begin from nothing, then anything creates a comparison which is infinitely better. If you begin with almost nothing, which is where we began and are still beginning, then it is very easy to make a good comparison. I think the man in the street has more common sense


than that. I think he is asking and will continue to ask where all these hundreds of millions have gone. What have we got? No one is ready to take the field.
Our only real achievement is in administrative personnel. What a thought! Fifteen thousand administrative personnel to 5,000 combatant troops. That is enough to terrify us at the thought of having any more combatant troops. Suppose we had 10,000 combatant troops and 30,000 personnel were required? That would not be fair, because I think the administrative personnel will not increase to that extent. As a matter of fact I think they are probably not very fully occupied now and would be able to look after a good many more troops when they are produced for operations.
Again, Mr. Speaker, so that people will not become too tired of my views, I should like to quote from a newspaper which I think can be regarded as not unduly critical of the government, although I will say that it has a measure of independence at times between elections which I should like to see more widespread. On August 4 the Winnipeg Free Press said:
The Korean crisis revealed the total inadequacy of our defences like those of the United States and other free nations.
On September 4 they said:
There is no easy way out of the dilemma caused by the western nations' disastrous mistake in disarming themselves while Russia used the last five years to modernize its forces. Strength to balance the present Russian preponderance will be obtained only by the maximum effort of every free country, and it is obvious that maximum effort is not being planned even now.
Then there is a final quotation from the Free Press to which I wish to refer. After speaking of the truly astronomical figures of United States military preparation, the Free Press points out that it involves nearly fourteen per cent of their total annual output. After making allowances for us, after saying that of course a rich nation can give a higher percentage than a small nation, nevertheless when all allowances are made the Free Press points out that it cannot be denied that "the Canadian program of defence in proportion to our means lags far behind that of our neighbour". That is a conservative statement, because even if we increased our defence expenditure to a billion dollars it would only approximate five per cent of gross national product as against fourteen per cent in the United States.
We need not be surprised if our attitude has not aroused great enthusiasm in the United States. Many things can be said and quoted, but I content myself with a quotation from a well-known writer, who I think will

toe regarded as a man not unduly favourable to our party, and perhaps not unduly favourable to either party. I refer to Mr. Blair Fraser. Speaking of the feeling in Washington towards us, he has this to say in Maclean's magazine of September 1 last:
I have talked to several men just back from Washington . . . They all report after careful inquiry that Washington was disappointed. Americans had regarded Canadians as the one people they could rely on; they feel we let them down.
He goes on to point out that one returning visitor said:
The climate in the two capitals is as different as the equator from the North pole. Down there everyone is working under extreme pressure. Up here the motto seems to be "holidays as usual." Americans just cannot understand.
I doubt very much that the proceedings in the house in the last two weeks have enabled them to understand us any better.
Feeling as I do that Churchill was right when he said, "Matters of national safety dominate the minds" of all thinking people, I find it hard to take the budget as a very serious contribution to the situation. It is really just a stopgap. The Winnipeg Free Press is inclined to feel that way too. On September 9 it said:
The weakest aspect of the budget is undoubtedly the measures proposed to counteract inflation. On this Mr. Abbott talked better than he acted.
It speaks later of reduction in unnecessary government expenditures as the most efficacious method of meeting inflation. It then goes on to say:
As long as the state is spending these large sums it is competing directly for labour and materials with the rest of the nation.
Of course the minister's immediate problem was lessened by his windfall of $180 million. I do not think it was superlatively good budgeting to be as far wrong as that; nevertheless the boom in the United States probably soared more than anyone expected, and incidentally bailed the minister out of his dollar problem in the same way as it is bailing out Cripps.
The minister's speech consisted very largely of an essay on inflation and an essay on the high cost of living. In that regard I would venture to quote the familiar words, "good sentences and well pronounced" and to add the following comment: "they would be better if well followed."
I do not propose to say very much about the new taxes. I have already expressed my approval of a pay-as-you-go policy. I have already said that I am sorry the new taxes have to hit the children and the homemakers, but I am not going to dwell on that because I am much more interested in what the budget does not do, which is much, than in what it
The Budget-Mr. Macdonnell does do, which is little. My serious criticisms of the budget are in connection with other matters.
First of all, I thought that the minister's whole attitude in speaking about the high cost of living was unsympathetic and offhand. There was want of any indication, except in so far as consumer credit is concerned, of any effective way of dealing with the situation. The minister very frankly said last night that it was hard to assess the quantitative effect of the consumer credit measure; nevertheless the house is agreed, and I agree, that it is a step in the right direction.
Apart from that, it seemed to me that the whole matter was dealt with in a feather-duster manner. There was nothing to indicate that the minister thought it a very serious problem. The minister is on rather treacherous ground when he is talking about such things, because in his position he has been in the unfortunate situation of having to make prophecies or express hopes. Of course what a minister hopes is very nearly the same as a prophecy. He has been in the position of making prophecies and expressing hopes which have not been very near the target. Let us see what he has to say to comfort the distressed consumer.
First of all he said in his speech, as recorded at page 420 of Hansard:
The root cause of any sustained inflation is the existence of a flow of spendable income that is greater than the flow of goods and services available at current prices.
The minister ought to know all about that. He ought to know about spendable income because that is what the government has been busy creating in the last four or five years. The creation of spendable income has been one of their great activities.
After indicating a policy of certain restrictions in home building and farm improvements he says:
The program as a whole will attack incipient inflation at its source.
I like the word "incipient". As I understand it, that word means something just beginning, just getting under way. Where has the minister been these last few years? Inflation has been growing all the time; there has been no recession of any kind, yet the minister tells us it is incipient.
I must not leave out the Prime Minister (Mr. St. Laurent), who had a word of comfort for the consumer. He said the price rise was not as great as in the United States, and that pressures were not going to be substantially increased by the expenditures now contemplated. I doubt if that will bring very much comfort to the consumer; but if that is not
302	HOUSE OF
The Budget-Mr. Macdonnell enough I might go on and quote the Prime Minister further. He said that in any event the expenditures could not be of the order of ten per cent of what is now being used for capital development.. Again I wonder if the consumer will be very much interested in this discourse on capital expenditures. After all, his problem is not capital; it is income. We all know the rhetorical question about asking for bread and being given a stone, but I have a feeling that some of the consumers might have welcomed a stone more than mere economic formulas. Stones may have their uses in certain circumstances, but an economic formula is not of very much use to the average consumer.
Furthermore, I can see no reason whatever for the Prime Minister's assumption that the pressures will not increase; it seems to me all the indications are exactly to the contrary. I should like to quote a distinguished United States economist, Slichter of Harvard who, in August last, wrote:
There is no assurance that the government can prevent the Korean conflict and its aftermath from pushing up the price level by ten to twenty per cent.
I should like also to quote briefly from the New York Herald Tribune of September 10:
Prices on just about everything but food either moved higher or got into position for an advance last week. . .
And again:
Within the week prices moved up on hundreds of items ranging from worsted cloth to ethyl for gas to roller bearings. Basic metals climbed in the wake of zinc and copper rises. Steel scrap cost more. Cement advanced. Throughout the western world, wartime inflation caused as much trouble as communism.
I might read more, but I shall spare the house. I confess that I am perturbed by what seems to me unwarranted complacency. My own belief is that unless something vigorous is done we shall be faced in the period of the cold war by a genuine hot wartime inflationary condition.
What should be done? Well, of course, the first answer given by every economist and thoughtful person when large war expenditures come upon us is that other costs must go down. Last March the Minister of Finance was very firm in saying that really expenditures could not come down. "We should not delude ourselves," he said, "with the belief that we can significantly alter the scale of the budget in this way"-that is, by improving efficiency and effecting economies in administration. Now, however, he speaks somewhat differently and says:
I expect we shall be able to cut down certain operating programs and make other economies.


That sounds like progress, but let us not cheer too soon. It is not to come now; oh, no. Listen to his next words: Next year a rigorous standard of essentiality will be applied. That is an interesting point; essentiality so far has not been regarded as the standard. Then what has been the standard, if it was not essentiality? I shall forbear to make any cynical suggestions such as the hon. member for Comox-Alberni (Mr. Gibson) probably would make. I shall simply say that perhaps when he replies the minister will tell us what the standard has been to date.
Now, in a spirit of co-operation, I want to offer two or three suggestions to the minister. I suggest that he find out what the defence department is spending on publicity. I understand that recently in Britain a committee rather condemned this form of expenditure. If committees were respectable here, which of course they are not, perhaps a committee might have given some consideration to this matter, but since that cannot happen I am just giving the minister this suggestion out of the goodness of my heart.
The second question is, how much is being spent by the defence department, which I understand has a large engineering staff of its own, on outside assistance in the field of engineering and design? I mention these matters concerning the defence department because of course we have been largely dealing with that department.
There is another department, however, I should like to mention in passing; it is a rather surprising department to be brought in under this heading, too. Apparently the Post Office Department has a publicity section. They have a selling problem, it seems; they are not sure their wares will be taken up. I suppose the truth is they feel they have to keep up with the other departments, and the minister might look into that as well.
Now I come back to consider the great corrective of high prices; that is, effective anti-inflation measures. A Washington dispatch of September 7 reports that at its fifth annual meeting the international monetary fund expressed fear that "defence spending will spark a world-wide wave of inflation." Later the report said:
The dangers of inflation will persist as long as government expenditures and private investment continue on the present scale.
The problem is grave and immediate, and I sometimes wonder whether the minister, who has been conditioned to inflation all these years so that I think he is virtually saturated with the spirit, is going to be really able to take anti-inflationary measures. I am sure he will not regard it as disrespectful if

I say it is like getting a confirmed drunkard to take the pledge. Worse than that, it seems to me that immediately after taking the pledge he had another drink, because one of the first things he did was indulge in another instance of the worst kind of inflation, bank borrowing; though the minister told us in his speech how bad it was. Of course he has explained to me privately that this is not really what it looks like-


Mr. Abbott:: Not privately; publicly.


James MacKerras Macdonnell: -but that is inflation of the worst kind, and I pass that right back to him. Of course, ironically enough, the minister is one of the great beneficiaries of inflation at the moment; he has told us that nearly half the $180 million he got to sweeten his exchequer was the result of higher prices. I am not suggesting the minister is going to shove up prices so high that he will be able to provide his whole budget in this way, but it is interesting to see that he is one of the first beneficiaries.
Conversely I say there is not a sign of that healthy remedy, borrowing in the open market, which actually does lessen purchasing power. Frankly it is impossible for me to understand the minister's equanimity. I like tranquillity and equanimity, but not the tranquillity that comes from lethargy. There is no evidence that he is alive to the gravity of the situation, at least none that I have been able to see. Of course we may not have been able to drag him into the open; if we keep at it, it may be that we will get a great deal more enlightenment than we have had so far.


Douglas Charles Abbott: He is a very transparent
person.


James MacKerras Macdonnell: The plain fact is that one is shocked when the minister speaks of incipient inflation, because after all the fires of inflation have been burning merrily for years. The real danger now is that under this terrific forced draught those fires could easily burst into a conflagration which would be deeply injurious to all of us. I am not going to weary the house by recalling what I said the other evening, but within these last years, since 1938, the supply of spendable money, the means of payment, has multiplied four times while during the same period the goods available have multiplied less than twice. I point out also that we have gone ahead without a pause, increasing our money supply, whereas in the United States they have called a halt during the last two years, at least, and the amount has gone down.
The Budget-Mr. Macdonnell
This huge supply of money has been doing its job all these years. It has had unhappy success in keeping up prices. Production might have done infinitely more to bring down prices if it had not been for this supply of easy money. Just to mention one thing, the government, not content with the post-war boom, still further fanned and accentuated the flame; as has been pointed out, their accelerated depreciation policy was one of the great things that stimulated investment and, as I say, helped to keep up the boom. Of course the Bank of Canada has always been available, with its powers, to carry out the policy. The result is that we are facing a defence boom on top of a post-war boom, and I think this is a situation of terrific potential danger, of which we have had no sign of adequate recognition. I have referred already to what Slichter says about the danger in the United States.
In face of all this, I find it difficult to understand the minister's attitude. The measures to curb the post-war boom seem to me to be just about as effective as the 5,000 men, not fully organized, supplied by the Minister of National Defence, that are going to keep us all safe in this dangerous world. Surveying all of this, Mr. Speaker, and reflecting on the half measures, the best comfort I can get is to say, thank God for Truman.


Douglas Charles Abbott: The new slogan of the
Conservative party!


Mr. Sinclair:: The new Tory slogan: Forget Drew; thank God for Truman.


James MacKerras Macdonnell: You will know, Mr. Speaker, with what pain I make these criticisms. Only when things are bad and the situation is alarming would I venture to say the things I have said. But I do not wish to end on a wholly critical note. In spite of the government's total lack of consideration for our views, we must and we do pledge ourselves to do everything in our power to help, hoping that before long the government will realize the total inadequacy of what they have done and will improve the situation.
I cannot do better than to quote again from the concluding words used by Churchill in the same speech, in a somewhat similar situation. Hon. members will realize the feeling with which he uttered these words, and I think everyone will feel that he at any rate was entitled to say what he did. After the warning which I read to you a few minutes ago, he said this:
It is with deep grief that I have to say these things to the house, and to reflect that it is only
604	HOUSE OF
The Budget-Mr. A. Stewart
five years ago almost to the month when we were respected and safe. The whole burden does not rest on this country, nor upon the government of this country. . . . Nevertheless, I say they bear a fearful accountability. The Prime Minister and his party have had power, men and money never enjoyed before by any government in time of peace. If they had asked for more, parliament would have given it to them and we would have given it our full support. . . . That does not mean that we will not strive to help the government, in spite of their total lack of consideration for our wishes and point of view in every measure, however unpopular, which they may propose and which we recognize is aimed solely at securing national survival.
I do not think I could do better, Mr. Speaker, than to adopt those words. In spite of the fact that we have felt frustrated, that we have been disappointed, it is our duty as citizens to prove that notwithstanding all differences we have more in common than we have separating us, and to echo his words.
I have said enough, sir, to indicate deep dissatisfaction with these tentative measures, these half-in-half measures, this limited liability budget which takes us nowhere and settles nothing. I now move, seconded by the hon. member for Calgary West (Mr. Smith):
That all the words after "that" to the end of the question be deleted and the following substituted therefor:
"this house regrets that especially at this time when the people of Canada are suffering from the heavy burden of soaring prices for the necessities of life and are facing extraordinary expenditures for national defence, the government has failed to take effective steps to curtail non-essential expenditures and improve the general efficiency of government."


Mr. Alistair Stewart (Winnipeg North):: wish to join with others, Mr. Speaker, in congratulating the Minister of Finance (Mr. Abbott) on the ease and facility with which he presents budgets, good or bad. But if I congratulate him on the manner of his delivery of budgets, if I congratulate him on maintaining interest in what he has to say, I cannot do so upon their content.
Several times during the course of his speech the minister tried to persuade us that the government was paying anxious heed to the future. He told us that the government had things in hand and that the measures it proposes to introduce would be adequate to restrain the inflationary tendency which we see today. But despite his confidence that all was well, he made several significant admissions, some of which the previous speaker (Mr. Macdonnell) has already picked up. As reported at page 423 of Hansard the minister said:
. . . there can be no absolute assurance that there may not be some further increase in prices.
I suspect that this means that the minister is absolutely certain that there is going to be


an increase in prices. In 1947 he told us that he thought the price index would level off at about 145. In 1948 he expected a declining price level. In 1949 he hoped that prices would fall. Today the price index in Canada is in the region of 170, with the absolute certainty of its soaring even further. Yet he repeatedly told us the other night that the government was taking adequate measures to deal with the situation. As a statement of fact, that was no more accurate than were his prophecies. We were told:
... in seeking sources of revenue which are both fair and productive we have returned to soft drinks, candy and chewing gum.
The minister's opinion of what is fair is to tax youngsters again on some of the few luxuries which they enjoy. Some parents may approve; some will disapprove. The fact is that since these youngsters get their money from their parents, this imposition will be another drain on already slim and meagre incomes. His opinion of what is fair is to leave record corporation profits virtually intact, yet during the fiscal year some $18 million is to be raised from candy, soft drinks and chewing gum. As I said, this is another imposition on the family with a low income. The regrettable thing is that the money could have been raised, without undue hardship, from individuals and from industry.
We are in agreement with the minister in his analysis of the inflationary spiral. He knows the facts of life, at least in that regard, when he tells us that inflation occurs when there is more money available than goods. But having established a logical and sound premise, he blithely divorces old, barren reason from his bed and continues on his way. We are told that the defence program, which has the support of all parties in parliament, is going to lay claim to twice as much in the way of materials, supplies and manpower as we expected. He informs us that the addition to defence expenditures is likely to produce inflationary pressures unless they are counteracted. That is a truism. Of course they are. Doubling production for defence means that additional goods will be produced for war needs and not for consumption. I have no quarrel with that production, but it is surely obvious that what is spent on these needs will represent another sum of money in our economy, clamouring to buy goods which are not available and which is bound to add to inflationary pressures.
The minister asserts that this additional expenditure of almost half a billion dollars will increase those pressures unless they are counteracted. What are the government's proposals? In brief, to increase inflationary

pressures by some $500 million and to siphon off about $200 million in taxation. The most elementary knowledge of arithmetic shows the folly of such a program. It is deliberate inflation, and such a fiscal policy must lead to untold misery for people all across this country.
When the minister says that his program as a whole will attack incipient inflation at its source he may be deluding himself but certainly not the workers and the farmers across the length and breadth of this land; for there is nothing incipient about the inflation we see in front of us today. It is a harsh reality for millions. But it is going to be counteracted. The government has a plan; it has a policy. And how will the purchasing power be cut?-by taking candy from kids; by a paltry tax of five per cent on corporation profits, which will merely tickle the cupidity of industry, as we could see on the day following the presentation of the budget on the stock exchanges all across this country.
Of course the government has other schemes for curbing inflation. The pity is that they are as inept and unjust as those I have already mentioned. An additional tax of five per cent is imposed on automobiles. Does anyone believe that that levy will discourage the purchase of new cars? I am convinced that the present plans of individuals to buy automobiles will not be curbed by a fender, let alone a car, as the result of this tax.
Another proposal is that ithe buying of consumption goods on time is to be discouraged, but not in a way which is to be equitable to our entire society, as we pointed out yesterday. The great majority who are not earning enough today to get by will be prevented from purchasing goods on instalments, and yet those in a preferred position will suffer little hardship. We agree that consumer buying on instalments should be restrained and restricted, but not in this blatantly unfair way. If it is to be restricted properly, then the only thing to do is to stop it.
At page 422 of Hansard the minister was guilty of this bit of naivete:
Every corporation, organization, institution and individual can serve both its own and the common interest by following similar and consistent policies. We as a government will endeavour to keep our house in order. If others will do the same these new inflationary pressures can and will be neutralized.
I have accused the minister in the past of putting words into a certain order to form a pious aspiration, but now he transmutes his aspirations into facts. I believe that the majority of Canadians want to do what
The Budget-Mr. A. Stewart is right. Unfortunately in every society there is a minority who will take every advantage of a crisis to further their own ends. This situation will be no different, and I warn the minister now that his hopes are doomed to frustration.
The minister asserts that our enlarged defence program will conflict sharply with capital investment. He is going to stop the conflict. And how? He relies upon a hope, a prayer, and upon the Minister of Trade and Commerce. If capital investment should be curbed so that defence has priority, then the way to do it is to tax away the excess profits which industry is now making. We in the C.C.F. ask for greatly increased corporation taxes; we ask for increased personal taxes on the higher incomes, because we believe it is one of the best ways of restraining or restricting the inflation which confronts us. We will oppose now and next year any attempt to impose taxation on the low-income group because already the government has done a job on them with its inflationary policies.


Douglas Charles Abbott: Will the hon. member permit a question? I do not want to interrupt him, but what does he consider high income? As a matter of interest just at what point does he consider an income high?


Alistair McLeod Stewart: Above


Douglas Charles Abbott: Thank you.


Alistair McLeod Stewart: Or even $3,000. It can rightly be asked, what do we propose? Here I would like to repeat the position of my party at the time this parliament met. We asked for the reimposition of price controls on the necessities of life, with an adequate subsidy program where necessary.
We asked for the prevention of any further general increase in rents.
We asked for effective action to halt price fixing and other restrictive practices by monopolies and combines.
We asked for consultation with trade union representatives to devise an over-all wage program which will permit more effective action in holding the price line, while assuring the workers a fair and adequate income.
We asked for the closing of the Winnipeg grain exchange and the elimination of speculation in foodstuffs.
We asked for a minimum price program for farm products, with subsidies where necessary, to be worked out in consultation with representatives of farmer organizations to ensure to the farming population an equitable share of the national income.

The Budget-Mr. A. Stewart
We asked for further reduction of inflationary pressures through: monetary action by the Bank of Canada to reduce excessive bank credit; restriction of commercial credit and of instalment buying; increased taxation on corporations and in the higher income brackets; reimposition of a sharply-graded excess profits tax.
The minister of course does not have to accept our program; he has his own policies. Nevertheless the minister refuses to impose taxation which in our opinion is necessary to curb inflation. He refuses to tackle the obvious inflationary pressures which are mounting around us, and on that score the government can be accused of improvidence.
One of the favourite arguments advanced against controls is that they would increase taxation because subsidies would have to accompany them. The government forgets that the taxation of inflation is infinitely more burdensome. But let me quote Mr. Donald Gordon, whom on occasion I quote with approval, in his broadcast of November 4, 1946:
The payment of subsidies has meant a real saving to the people of Canada and has not been merely a transfer from one pocket to another. Under a price control system, a subsidy paid to the primary producer prevents merchandising costs from pyramiding as the produce passes through the hands of the wholesaler and retailer to the final consumer. The net result is that subsidies have cost the people of Canada, as taxpayers, far less than the additional prices they would otherwise have paid as consumers.
I accuse the government in its budgetary policy of being irresponsible, and, in part, that irresponsibility lies in not introducing price control and subsidies in view of the internal threat which confronts us now. On page 4150 of Hansard of the session of 1941-42, Mr. Ilsley quoted Mr. Bernard Baruch with approval. He said, quoting Mr. Baruch:
The second point I want to raise is that price control is essential if government salaries and appropriations are to have any meaning. What will happen to the teachers, war veterans, social security beneficiaries, policemen, firemen, all the hundreds of thousands of government employees, federal, state, county, and city, if prices are allowed to run wild? Will the federal, state, and city governments advance the wages of these people to meet increased costs of living? Or do they propose to leave them victims of fortuitous circumstances?
Again, with appropriations so much is voted for guns, tanks, and aeroplanes. Before they have been produced prices have jumped and to get the same number of tanks and guns and aeroplanes additional appropriations are needed. Many members of congress, worried over the size of government expenditures, have been urging economies in non-defence expenditures. I say to them that no action could effect greater savings in the cost of government than to prevent inflation. Billions, twenty per cent more of all appropriations, can be saved. There is no better form of economy than price control.
That was the belief of the government ten years ago. Mr. King, in his speech of October 18, 1941, announcing price controls, said:
We have entered the period of full employment. The upward trend of prices has become too widespread and powerful to be checked adequately by controlling the price of a few commodities.
This, Mr. Speaker, was after the cost of living index had risen to 115-8. Today it has risen to almost 170, and this all-powerful government is supine. Controls were deemed necessary in 1941 to check the trend then. Since the war ended controls have been relinquished so that there has been an increase in the cost of living of almost fifty per cent since 1941, but still the government refuses to act.

If further evidence be needed, the wartime prices and trade board report, submitted to parliament on May 1, 1943, states that the cost of administration and subsidies was about $78 million between November 1, 1941, and March 1, 1943. The cost of living rose in this country during that time by less than one point. In the United States it had risen by almost eleven points. The report goes on to say:
Estimating that each rise of one point in the cost of living index costs Canadian consumers as a whole about $35 million a year, it is calculated that if the price ceiling had not been imposed, about $350 million might have been added to the cost of consumers' goods in Canada during the last sixteen months.
Therefore surely there can be no argument about the cost of controls and subsidies at a time when inflation looms ominously before us.
The Minister of Finance seeks to find an excuse for inaction by telling us that we have to tag along behind the United States and do as they do. We had enough independence in 1941 to act on our own when the national interest was at stake, and we need some more of that independence today. We had controls in 1941, long before similar measures were enacted in the United States, and I see no reason why we cannot follow that pattern once more. To say that we must tag along behind the United States is quite irresponsible.
But another and equally invalid excuse is that people do not like controls. Let me tell the government that they like inflation even less, The minister has a conveniently short memory. In December, 1947, long before there was a crisis such as we face now, when prices were quite a bit lower and when the government was relinquishing controls, a question was asked and a survey made by the Gallup poll. The question was: Do you think the government should put price controls on again or not? Mark you, that was when prices were appreciably lower than they are today..

The answer of seventy-six per cent of those polled was yes. The people of Canada will accept necessary controls today without any reluctance. They are carrying the burden of the government's fiscal mistakes, and they know the price they have to pay.
And then the minister makes another statement which has little reference at all to fact. We are told that-
-direct controls on prices, wages, production and distribution are incompatible with a free society and a free economy.
I realize that a phrase such as that is not supposed to stand examination, but let us look at it for a moment. Our free economy is riddled with cartels and monopolies, with price-fixing and special agreements. Competition in the classical sense of the word does not exist. That which we do see is not amongst the giants of industry. They have learned their lesson. They do not waste their time in competition. They divide the market amongst themselves and fix prices amongst themselves. They found competition to be too expensive. But there is not one of their managing directors who does not constantly tell us of the value and beauty of competition in a free society-of course, for the benefit of others. It is the other fellow who is supposed to compete, the little man, the corner storekeeper, the small factory owner, the tradesman and the worker.
The idea of a free economy is a myth. The hopes expressed for it are nostalgic longings for dear dead days which are not only beyond recall but for days which never existed. And what about our free society? We have it substantially and we want to keep what we have, and improve it. Yet freedom is relative, as the member for Vancouver East (Mr. Maclnnis) pointed out the other day, with an argument which bears repetition. In our kind of society all that the worker has to sell, the commodity he has to sell, is his labour, but he is not free to increase suddenly the price he wants for that commodity. He is controlled. He has to negotiate; he has to arbitrate; he has to follow the due processes of the law. On the other hand his employer has no such restriction. He is free to increase the price of his commodity whenever he wants to. There is no control on him.
We have the same situation in agriculture. The farmer is ostensibly free, but not actually in an economic sense. He cannot charge what he would like to charge for his products. Formerly he had to sell his grain to the grain exchange and take the price he was told he would get. Today he sells livestock to the packing companies and takes the price he is told he will get from them, while the packing companies reserve to themselves the right to
The Budget-Mr. A. Stewart sell to the consumer at a price which the companies think is profitable. There is not very much control over that segment of society.
When ordinary men have no economic power they are denied economic freedom. To that extent freedom is absent from our society. Perhaps the minister should analyse the workings of our economy a little more closely before he makes such statements. He will find what we in the C.C.F. have found, that our democracy is definitely worth keeping, but equally definitely crying for improvement.
The government members have their own philosophy of politics, and they hold to it as sincerely as we do to ours. What distinguishes us is not the desire to achieve a common goal, but the steps which are necessary to arrive at it. It may be said that we shall achieve that goal in the long run, but as Lord Keynes said, "In the long run we shall all be dead", and I admit to impatience.
The great weakness of political Liberalism is its adherence to ideals which are usually ignored in practice. Again I agree that the ideals which we espouse are common to every member of this house. One of Cromwell's soldiers said in 1647:
Really I think the poorest he that is in England hath a life to live as the greatest he.
Perhaps archaic language, but perfectly true. That hope is not unique to England or to us, but is common amongst mankind the world over, the same mankind which is engaged today in a struggle with Soviet ideology. The ideology of communism succeeds where we fail, and the reason is clear. It uses phrases which have an appeal to the hearts of men in every clime. There is a deep and desperate desire for justice, for security, for the feeling of belonging, to be treated as human beings regardless of the colour of one's skin or the religious beliefs which motivate us. Communism has seized hold of these desires, and promises, no matter how falsely, to implement them. As I have said so often, communism battens on our social sores, on malnutrition, on slums, on poverty and on racialism. It does so for its own ends and with complete cynicism. Yet the underprivileged peoples of the world fasten to their promises as their only hope; for they know the difference between western protestations of virtue and western actions. Democracy has failed them.
Armaments alone will not win this struggle. The mightiness of treasuries alone will not win this struggle. We have to act with justice. We have to imbue men with the knowledge that they are not cogs in some vast impersonal machine to be thrown aside when they have served their purpose. We have to let them know that they are not miserable creatures whose sole end is to be exploited for. gain by

The Budget-Mr. A. Stewart others. We have to let them know that they are beings with dignity, the humblest of whom has to play an important part in society. But we must prove ourselves by action. Let me quote another figure of Cromwell's time, Gerrard Winstanley, who said:
I affirm (and challenge you to disprove) that the earth was made to be a common treasury of livelihood for all without respect of persons . . . This being the truth, as it is, then none ought to be lords or landlords over another, but the earth is free for every son and daughter of mankind to live free upon.
There is epitomized the eternal quest for justice, for fairness in our dealings with our fellow men, for equality of opportunity and equality of sacrifice.
But even if members opposite agree with me on these last few words there is still a gulf which separates us, and the minister drew pointed attention to it. We were told that an excess profits tax, particularly one at a high rate, becomes an invitation to extravagance and waste in corporate management. And then the minister expressed the belief that a high excess profits tax would curb maximum efficiency and production.
This is a critical time. Speaker after speaker from the Prime Minister down has emphasized that fact. We hang on in Korea by our eyelashes. No one knows where the next Kremlin-inspired blow will fall. We are being compelled against our will to change our whole way of life because of the threat of aggression. The western peoples will have to live on the razor edge of uncertainty for a long time to come. The prior need above all else is to ensure the security of our country. That should be paramount in the minds of all. Patriotism is not always the last refuge of the scoundrel, as Dr. Johnson said; it is also a cause which brings out the best in men. Therefore I would have thought when our country's needs are so urgent that even industry would have appreciated the necessity for greatly increased taxation without regarding it as an invitation to waste and extravagance. But the Minister of Finance says that is not the case. He says we shall not get maximum production if we remove the incentive of profit.


James Sinclair: What about Hugh Dalton?


Alistair McLeod Stewart: Did someone mention Hugh Dalton?


James Sinclair: Yes; what about Hugh Dalton?


Alistair McLeod Stewart: He was
speaking in years of peace; we are practically at war today.


James Sinclair: He was speaking as chancellor of the exchequer of the Labour government.


Alistair McLeod Stewart: I am speaking in a time of emergency. Here is an extraordinary assessment of the situation today, and yet I believe that it is accurate. It is here that the injustice and the fundamental immorality of the government's policy becomes clear. We have to give industry the incentive of profit to produce the goods which our fighting men will need to survive. We ask these men to enlist, to fight, and if need be to die for Canada. Their incentive is patriotism. We ask them to give everything they have for us, but we do not ask that of industry. Patriotism is the incentive to surrender life in one case, but it is not sufficient to impel industry to surrender a share of its profits in the other. Patriotism is the incentive to die for one group, but it is not a great enough incentive to permit industry to furnish the weapons which might let them live-unless sufficient profits are made. Capital is sacred; humanity is expendable.
The position taken by the government is immoral. It is one which is outrageously unjust. It penalizes the poor and protects the rich. It attacks the weak and defends the strong. It divides our people into two groups, the preferred and the non-preferred, those who have to pay the price and those who will take the profits.
Therefore, I move, seconded by the hon. member for Assiniboia (Mr. Argue):
That the amendment be amended by adding thereto the following words:
"We regret further that the government has failed to protect the people of this country from profiteering by the imposition of an excess profits tax."


Mr. Solon E. Low (Peace River):: Mr. Speaker, on the whole we in this corner of the house think that the Minister of Finance (Mr. Abbott) exercised commendable moderation in the preparation of the budget now before the house. In a good many respects I think the provisions of the budget are just about what the present situation calls for. I was particularly pleased to note the close similarity of various views expressed by the minister in his budget speech to some of those I expressed when I spoke in this house on September 5. In connection with five or six different financial and economic principles we seem to have put into words almost exactly similar thoughts-from which I gather, of course, that the genial minister is gradually becoming a Social Crediter.


Douglas Charles Abbott: Don't jump to conclusions.


Solon Earl Low: I feel sure it could not indicate that I am becoming a Liberal in my thinking. What a horrible thought that is! It would be too frightening, so I must not entertain it. Nevertheless I always feel that credit should be given where credit is due. Because

the minister was moderate and quite realistic in the tax measures that he thought necessary to impose at this time, I congratulate him sincerely upon that moderation. I am certain, as I have been ever since I became a member of the house, that the Minister of Finance is attempting to do his duty as he sees it, no matter what the situation might be that Canada is facing.
Of course we are trying to be realistic enough to see that the present budget is merely a shadow of things to come which will not likely be so moderate if there is no substantial betterment in the world situation within the next year. Therefore we have to look forward to times that may not be quite so easy.
In his budget speech the minister devoted a good deal of attention to the economic situation in Canada. I think I can justify mentioning the matter to which I am about to refer on the ground of its economic importance. What we are attempting to do-and I am sure what the minister was attempting to do in formulating his budget-is to make Canada as strong as she can possibly be to face the future and whatever the future may bring.
When I say "as strong" I refer more particularly to economic strength. I should like to deal with this subject briefly, because I think it must be considered as soon as possible if we are to achieve the economic strength that the country needs to do the job that is devolving upon us. I refer to the coal situation and the lack of a national coal policy. I should like the Minister of Finance to convey something of what I am about to say on this matter to the Minister of Transport (Mr. Chevrier) and the Minister of Trade and Commerce (Mr. Howe).
The railways have recently announced that they have cancelled the special freight rates on coal hauled from western fields to the Ontario market. It may not be common knowledge, but for quite a number of years coal has enjoyed a special rate of $8.40 a ton for transportation from Alberta to the Ontario market. This rate is about $4.70 less than the published rate for the same haul. I understand that the railways are now preparing to increase the rate by $4.70 a ton in two successive steps of $2.35 each. That would bring the rate to $13.10 and would come right up to the published rate for transporting coal from the Alberta fields to Ontario.
I should like to draw the minister's attention to the fact that nothing could be better calculated to destroy the Ontario market for Alberta coal than that particular move. With the oil and natural gas development now being 69262-39
The Budget-Mr. Low experienced in the west, it is only reasonable to expect that the mining of coal for that particular market is bound to suffer, and many thousands of miners may be thrown out of the kind of employment for which they have been trained. It is the only kind of employment for which many of them have been trained. It is estimated variously that 200,000 Canadian people will be adversely affected if such a thing should come to pass.
Since the Minister of Trade and Commerce in 1947, while he was minister of reconstruction, set up the dominion coal board, it seems to me to be important to develop for the coal board a national coal policy which will be realistic and will help to stabilize the coal mining industry in the interests of Canada's strength and security. It seems to me that a stable and prosperous coal industry within our country is of paramount national importance, particularly in these days when we face serious difficulties, and when it is necessary to make an all-out effort to build an economy that can withstand the stresses and strains of an emergency period. No one knows when Canada may be forced to depend entirely upon her own resources for fuel supply. That could quite easily happen, and I ask the members of the government where we shall be if we allow the coal industry to languish and the miners to scatter into other pursuits. That would be a serious situation.
It seems to me that it is a very shortsighted policy if the coal board and the board of transport commissioners allow a freight rate increase of $4.70 per ton on coal hauled from Alberta to the Ontario market. It also would certainly be very shortsighted if the government delayed the development and early application of a truly national coal policy. I appeal to the members of the government to give this matter the most serious consideration in the interests of a strong Canada and a successful effort in the present emergency situation.
I turn for a brief moment to the taxation provisions in the budget. We find that we have not much quarrel with the proposals. The minister felt it necessary to draw off some purchasing power, largely as an antiinflationary measure. It seems to us that he went after the money where the money was to be got. He did not place heavier burdens on the ordinary man in the street. He avoided taxes that would push up prices and therefore the cost of living, which, goodness knows, has been far too high for some time now, and largely as a result of the heavy taxes imposed at the different levels of manufacturing, processing, distribution and marketing of goods in Canada.

The Budget-Mr. Low
I think that the tax increases provided are not at all likely to discourage productive effort, the thing which we must scrupulously avoid, in the interests of an effective military effort as well as in the interests of the Canadian people as a whole. We are especially pleased that the minister did not impose heavier personal income taxes at the present time, because the great majority of the Canadian people are finding it difficult enough to make ends meet as the result of the abnormally high cost of living. But we do find it difficult to see any very good reason why the minister should increase the taxes on candy, chewing gum and soft drinks. He did not need the revenue from such taxation to balance the budget, because the amount expected to be taken in for the remainder of this fiscal year is almost exactly the amount of the surplus that he forecast for the year ending March 31 next. Therefore it appears to be a sort of nuisance tax designed as the foreshadowing of an austerity to come. I should like to reason with the minister briefly about that.
I have in my hand something I am going to send over to the minister. It looks more like Ichabod Crane trying to wear Goliath's coat than anything else I can think of. It is called a Molly-O milk chocolate bar, made by McCormick's of London, Ontario. It is really something to see. When this was purchased, the day after the budget was brought down, the storekeeper who had it on his shelf asked eight cents for it. When he was told that might be all right to try to put over on the kids, but that he could not put it over on the adult who was buying it, he let us have it for seven cents. I had it weighed. It weighs just a shade over an ounce, with all its dressing. My calculations show that McCormick's are exacting $1.12 a pound for this sliver of chocolate. When one compares that $1.12 a pound with the best Laura Secord chocolates at ninety cents a pound, it becomes evident that there is profiteering somewhere. I am not going to suggest that McCormick's are profiteering, but I am going to send this to the minister and ask him to have a good look at it. It is nothing but a sweet-tooth teaser, and I ask if the minister does not feel ashamed of himself for putting an extra cent tax on a miserable anaemic thing like that.


Douglas Charles Abbott: Well, Mr. Speaker, I had a tin of horse meat sent over once from across the floor; I think I shall enjoy this more.


Solon Earl Low: In his speech the minister forecast a defence appropriation for the next full year of about a billion dollars. If that figure is required it will necessitate considerably increased revenues. As and when it becomes


necessary to increase our total budgetary revenues to or near the $3 billion mark per year, we strongly advocate that the minister follow a policy of tax bonds, or, as I mentioned the other day, compulsory savings, rather than increase the personal income tax and/or lower the exemptions under the Income Tax Act. These tax bonds or compulsory savings would have the advantage of effectively lessening excess or redundant purchasing power for the duration of the emergency, and afterward they could become a mechanism in the hands of the government for combating depression whenever it raised its head. Moreover it seems to me compulsory savings are much more effective than ordinary bonds, which can easily find their way into the effective or active money supply of the country. On the other hand tax bonds, or what we call compulsory savings bonds, cannot do so. So there is that advantage, and I mention this to the minister because I feel it is essential in the interests of Canada to encourage our people to an all-out effort by removing from them or keeping off their backs as much of the tax burden as possible.
At one o'clock the house took recess.
The house resumed at three o'clock.


Solon Earl Low: In this and other debates that have taken place during the present session, Mr. Speaker, a good many things have been said about the high prices of necessities and the cost of living. Some things have also been mentioned about profiteering. I should like again to record our views in this respect. Although we have already expressed our regrets that in its present program-that is, the program to meet the present emergency -the government has not included some provision or some mechanism for checking the rising cost of living, I think I should mention again in this debate one or two things which we think are extremely important in con-, nection with this rather serious matter.
Following up what I mentioned this morning about candy bars and things of that sort, may I say that I think the people of Canada could do a good deal for themselves in controlling the cost of living if, 'wherever they see evidences of profiteering or of prices out of line, they just would not buy the stuff. I have never heard of a business that could carry on for any great length of time without customers. While I am not suggesting a boycott of any particular commodity, I suggest this. If the Canadian people [DOT]as a whole would not be so foolish as to pay the prices that are asked, I am satisfied that in many

cases a salutary lesson would be taught and the cost of living would perhaps be adjusted downward.
We have a four-point program for dealing with the situation at the present time without the imposition of over-all controls. I followed what the minister said, and it seemed to me that his arguments were fairly sound, particularly in relation to a time such as that in which we are now living. Our first point is this. We believe that the compensated price discount mechanism-that is, the subsidy method-could be used with good results, especially if we were to select some of those things that are most frequently bought and1 used by the people. We feel that the effect would be to bring about a general lowering of the cost of living if such" a mechanism were to be applied to even a moderate number of things. As was pointed out in this debate before the lunch hour, the cost would certainly be small having regard to the widespread good that would be done.
The second point that we suggest is this. If we couple with the compensated price discount mechanism early government action to correct the faults in our trade policy and to bring our trade nearer into balance, we feel that much could be done to assist in a general lowering of the cost of living. It must appeal to anyone's mind that as long as we persist in a favourable-trade-balance policy, that of sending out more goods and services than we bring back into Canada, we are inevitably going to push up the cost of living by making goods somewhat scarce. For example, the various government bureaux report a favourable trade balance in 1949 of something over $260 million. As can be seen, that policy contributes on the one hand to a shortage of goods, in that it drains off an unusually large percentage of our best Canadian production. In peacetime especially that large proportion of our best Canadian production, of such things as lumber, beef, and so on, going out chasing after scarce American dollars, has that effect. Then at the same time, when we do not bring back goods in payment for our exports, we have of course contributed to the scarcity. We find such hon. members as the hon. member for Greenwood' (Mr. Macdonnell) stating that the real cause is an inflation of currency, when as a matter of fact it is a part of our trade policy that is at fault and that is contributing to this whole condition of inflation or high cost of living.
Before I leave that second point may I say this. If we were to bring our trade more into balance so that when we send exports out of this country we are prepared to bring back imports in full payment for them, we would have less difficulty in controlling the cost of 69262-39J
The Budget-Mr. Low living. We feel that the government has not taken full advantage of the opportunities that have presented themselves during these past few years to balance our trade, or at least to bring it more nearly into balance, and that therefore to a degree they are responsible for the measure of inflation we may have as a result of sending out more goods than we bring back.
I now come to our third point. It seems to me that the government should investigate most carefully the whole taxation structure in order to discover what effects the various taxes have on production and on prices. To follow up their investigation, it seems to me that those taxes which prove to have inflated prices should be abolished or at least modified in the interests of lowering the cost of living.
A fourth important point in the program would be this. Along with the minister who expressed himself so well in his budget address, we think that the government should proceed to remove every discouragement to all-out production and to offer every encouragement in order to see to it that Canadian production of all kinds of wanted goods and services is kept at the highest possible level. We need a commission similar to the one that was appointed by President Hoover in the United States in 1934,-and we have already made that suggestion-one which at one and the same time investigates the potential productive capacity of Canada and the reasons why the national income does not at any time equal the gross national production. When we have discovered these things it seems to me that the minister will be in a far better position to determine what the tax base is going to be in the years to come when he actually needs to get back the tremendous quantities of revenue to meet whatever the world situation may bring, in addition to continuing the services that Canadians desire. So we advocate most strongly a commission to discover our potential productive capacity, and along with it an investigation commission to look into the question of governmental economy.
The other day I was pleased to hear the minister, in giving his budget address, admit that there were places where the government could effect economy. I am satisfied that sometimes the ministers themselves get too near to the thing to be able to see clearly, and it would therefore be advisable to have someone who is not quite so closely associated with the whole business of government to make an investigation and report on economies that might be effected in government.

The Budget-Mr. Low
I am not going to say at this time, Mr. Speaker, that I know there are gross overexpenditures, but certainly everyone knows, from his ordinary observation, that there are places where the government could effect economies in order to prevent the necessity for such large expenditures on the ordinary services of the country.
We realize that adjustments must be made in our economy in times like these. It is quite clear to us that much of the adjustment must come from the field of finance. Certainly we have to be realistic in dealing with the factors that contribute to the inflation that has been mentioned so often. Perhaps no financial project is of more importance to the people-no more important one could be undertaken by the government- than one which would stabilize the value of the Canadian dollar. In general when there is more money than goods it becomes necessary to draw off the excess of purchasing power through taxation or the sale of bonds -preferably, in our way of thinking, tax bonds.
When there is a deficiency of purchasing power we advocate the use of government machinery to create and inject into the bloodstream of our country just enough new money to keep the value of the dollar stable. The value of the dollar has been allowed to deteriorate rather dangerously, and it is because of that deterioration in its value that so many people, such as those with fixed incomes, are now suffering; their fixed incomes do not in any way match the prices that they have to pay for their necessities.
While I am speaking of the money supply, Mr. Speaker, perhaps I should place on record some interesting facts. The hon. member for Greenwood (Mr. Macdonnell) very often has had things to say about the Canadian money supply. He had often indicated that the government should have long ago applied a policy of deflation to readjust our economy downwards. I heard him talk about that at considerable length this morning, and on other occasions he has done so. In this debate the hon. member has referred to the budget speech which was made by the former minister of finance, Mr. Ilsley, on September [DOT]12, 1939. At that time we were facing the necessity of making a real war effort. I have heard the hon. member, as well as the Minister of Finance, say that this budget speech of Mr. Ilsley was a classic of its kind. I want to quote two brief extracts from that speech, and I refer to those parts which are found on page 138 of Hansard for Tuesday, September 12, 1939.


In the first quotation Mr. Ilsley had been outlining the various ways in which the government could obtain revenues to make an all-out war effort, and this is what he said:
We can also divert our resources to war purposes by inflation. We can create additional supplies of money and use them to purchase what we need. In this case, just as in the others, what we take for war purposes someone else must do without. Instead of taking money from the individual citizen in the form of taxes or loans, we put our new money into competition with this old money and take the goods and services away from him by forcing prices up against him.
Further on he said:
All this is not to say that a small and carefully regulated amount of credit expansion may not be desirable in the early stages of the war in order to assist the increase of production and employment. It must be small and carefully controlled because its effects which may not appear immediately are cumulative and otherwise might get out of hand.	.
That ends the quotation I wanted to read, but you will note, Mr. Speaker, that Mr. Ilsley is very cautious about the use of what he is pleased to term the mechanism of inflation-that is, the creation by government of purchasing power and spending it into existence or into circulation to purchase what the government would need at the time, particularly for war purposes.
It is a fact that in 1939 the government did create and spend into circulation for the war effort, to get it started and to stimulate allout production and so on, about $200 million. That was not borrowed, and therefore no interest had to be paid on it.
I think it would be interesting to hon. members to find out just how far Canada has gone in this matter of expanding of credits, which Mr. Ilsley stated in 1939 would have to be handled very carefully; and the amount, he said, must be very small; we must discontinue expanding credits as soon as we get the machines of our economy turning again and employment figures going up. The facts and the figures that I am going to put in the record now are certainly not in accord with the opinion of Mr. Ilsley, as expressed by him in the speech from which I have already quoted.
Just how far Canada has gone in the matter of credit expansion since that speech was made? The best evidence that I have been able to find lies in the Bank of Canada's statements and reports, and I hold in my hand the one for May of 1950, from which I gathered these most interesting figures.
In 1939 the total of deposits in the chartered banks of Canada stood at $2,914 million. In April, 1950, the total money supply -that is, the total money deposits in the banks of Canada-stood at $8,137 million. There is indicated there an increase of

$5,223 million. We can account for this tremendous expansion that has taken place since 1939 in the following ways. First, the chartered banks purchased bonds with the expansion of credit, which has been done to a considerable degree by merely making available to the government new purchasing power after the government has deposited with them their bonds, on which the government pays the banks interest; second, by loans to government on treasury bills as security; third, through loans to producers through the expansion of credit, and fourth, through the accumulation of comparatively small amounts of foreign deposits.
Perhaps one of the best ways to show what has taken place in Canada since 1939 by way of currency and credit expansion is by quoting from this same Bank of Canada report for May, 1950, and particularly from a statement showing the total of general public holdings of certain liquid assets as they are set out at page 75 of that report. These liquid assets include currency, both notes and coin; active bank deposits; inactive bank deposits, and government of Canada securities-bonds and treasury bills.
On December 31, 1938, not long before the war broke out, the total of these forms of liquid assets was $5,788 million, which by 1950 had grown to $18,077 million. Those securities or those forms of liquid assets were not just picked up from the scrap heap; they were created during that period of time and showed an increase between 1938 and 1950 of $12,289 million.
This tremendous increase can be accounted for only by the action of the governments and banks of the country in creating new purchasing power. That is the only way in which it can be done. As I said, between 1938 and 1950, $12,289 million in new purchasing power had been created jointly by the governments and the banks'-the chartered banks of the country. I am not suggesting by any means that this could have been accomplished without the co-operation of the producers. Of course the producers got to work and made use of the loans they obtained to produce goods and services, and thereby helped to back the credit and currency which were expanded.
The $12,289 million expansion since 1939 it seems to me makes Mr. Ilsley's statement of September 12, 1939, look rather like the statement of one who is activated by fear rather than by knowledge. On page 140 of Hansard of September 12, 1939, Mr. Ilsley said:
However, as soon as the expansion of employment and production gets well under way and certainly
The Budget-Mr. Low
before it approaches its limits, further expansion of the supply of money and credit must be stopped if the danger of progressive inflation is to be avoided.
I do not mean to imply that all of that $12,289 million of increase in our public holdings of liquid assets represents active purchasing power. It does not, all of it. But it is true to say that the full amount of that $12,289 million has been created in the form of active purchasing power at some time since 1939, with which the securities represented in the sum I have mentioned were purchased.
And so it is generally true to say that there has been no less than $12,289 million expansion of currency and credit through the banking system since 1939. As I have already pointed out, to anyone with a mentality of abundance, a mentality geared to believe that this country can produce and deliver goods and services as, when ana where they are required to the extent of $12,289 million, that is not ah astounding figure at all. But most certainly the minister of finance in 1939 did have his mentality geared to scarcity and not to abundance.
In concluding this part of my remarks I should like to ask what would be the difference between the method of expanding the money supplied through the selling of bonds to the chartered banks, as was done largely during world war II, and the so-called inflationary method, through the creation by the government of additional supplies of money and their use to purchase what the government needs.
That is a good question, and it requires to be answered. As I see it, the only real difference is that in the end the Canadian people find themselves paying large sums in interest in perpetuity to the chartered banks, when we use the bond and chartered bank method of adding to the money supply. A considerable saving in taxation-that is, interest first, and taxation-could be saved for the Canadian people if the government would use its own machinery for the creation of any additional money supply that is required. I think that the supply could be kept much more carefully under control, and could be handled by a government agency so that we would not be constantly in danger of serious inflation or deflation.
Concluding my remarks I should like to add just a word or two about the interesting statement made by the minister the other day in his budget speech about government policy. He referred to the policy that was to be following during this period of emergency-and perhaps properly so. We Social

The Budget-Mr. Low Crediters were very much interested in what the minister called the pay as you go policy, which he defined in these words:
A pay as you go policy means that we as a government must fully and amply cover the whole of our expenditure by taxation and other budgetary revenues. In the present circumstances of high employment and active business this is the only honest financial policy. To plan to do less than this would be both irresponsible and a fraud on the public.
Both the Minister of Finance and the hon. member for Greenwood quoted from that same speech in 1939 by the former minister of finance, Mr. Ilsley. Both appear to think that that speech stands as a classic, particularly in so far as it expresses the pay as you go policy. The hon. member for Greenwood had this to say in an earlier debate of this session as it is reported at page 184 of Hansard for September 2:
The speech-
He is referring to the speech of the former minister of finance.
-goes on to say that when an economy is below its maximum a certain amount of credit inflation could be justified, and in fact they did have some in the autumn of 1939; but that was because things needed stimulating; that was because industry was at a somewhat low level, the absolute antithesis of the situation which we have now. This is the final quotation that I wish to read:
Then he read this from Mr. Ilsley's speech:
With an economy at full production and employment the only result of expanding money and credit is to raise prices without increasing production. At such a point commences the cumulative spiral of inflation with all its deadly consequences to the economy.
Having completed that quotation, the hon. member concluded with these words:
I suggest that those who made this decision seem to have forgotten September 12, 1939. It seems that this logic is irresistible. It seems to me that what I have read applies in the most inescapable manner to the situation of today. It seems to me quite clear that what has been done is exactly the opposite of what was considered to be the wise thing as set out at that time.
I like the hon. member for Greenwood. I have the highest respect for him. I think he is a nice fellow and I enjoy his company. I hope we shall always have the advantage of associating with intelligent men of that kind. But from what I have heard him say quite often in the house about financial policy, I can only get down on my knees and thank heaven he is not minister of finance. If he were, I feel certain that his capability long before this would have been turned to measures to reduce the amount of purchasing power in circulation among the Canadian people. In other words, I am satisfied that long ago he would have introduced a policy of deflation. Under our present system there is only one way of doing that kind of job and that is by deliberately imposing upon

the Canadian people a policy of unemployment. There is no other way. I hope my hon. friend will never become minister of finance as long as he maintains his present attitude, or at least until he releases his mind from the creeping scarce money philosophy that makes him ever to think in terms of bringing down the volume of money rather than bringing up the volume of production of goods and services.
I am persuaded that the present high cost of living cannot be said to be, in any substantial degree, the result of the volume of effective purchasing power in Canada. I am afraid I have wandered a bit from what I started out to consider, namely the rather mysterious policy called by the Minister of Finance the pay as you go policy.
Just what is it? I have been trying to find out. Mr. Ilsley is given the credit for enunciating the policy and hon. members can read what he had to say. I do not intend to take the time to quote his remarks, but they can be found at page 156 of Hansard of September 12, 1939. There are two ways of looking at this pay as you go policy. The first is from the point of view of the nation in relation to other nations. If we do not borrow from other nations, if we live within ourselves as a nation, then I suppose we can be said to be on a pay as you go policy.
The second way of looking at it is from the point of view of the government keeping its expenditures wholly within its budgetary revenue. The latter one appears to be the type mentioned by Mr. Ilsley. He had reference to a policy of financing the war effort by a combination of taxation and borrowing from the Canadian people and the chartered banks. The figures I have given show how far we have gone in that borrowing policy. Certainly that policy cannot truly be called a pay as you go policy. If Mr. Ilsley had really introduced such a pay as you go policy, then I ask this question: How come the national debt has increased since 1939 by something like $12,000 million?
The fact is that there has been no pay as you go policy by this government or by any government in Canada except that of the province of Alberta. I say that seriously. The government of that province has really kept its expenditures within its budgetary income. It has not borrowed a single dollar from anybody in the thirteen years since 1937, and in that time it has paid off $50 million of its debt. That in reality is a pay as you go policy.


Mr. Blackmore:: That was applied before we discovered oil.


Solon Earl Low: It is a policy to which I wholeheartedly subscribe. I should like to see the minister adopt such a policy.


Douglas Charles Abbott: They did not have to fight a war in Alberta.


Solon Earl Low: But this government has the mechanism to handle it without borrowing a dollar, and the minister knows that. I had a hand in establishing the policy in Alberta, and we had a war on there too-a war against poverty. Moreover, I am convinced that this government should and could operate on a real pay as you go policy if it would make use of the sovereign powers that have been given to it under the constitution to create for itself the new money that may be required to keep the economy of Canada strong and healthy and our people happy and busy and secure.
I say in conclusion that if that kind of policy were to be applied and faithfully followed, taxation in Canada could become an instrument very largely to be used to prevent inflation by drawing off redundant or excess purchasing power.


Mr. L. Philippe Picard (Bellechasse):: Mr. Speaker, as this parliamentary session is being pushed relentlessly forward to a speedy end the question arises in my mind, as it probably does in the minds of other hon. members, whether my duty is to be better accomplished by silently approving the decisions of the government in order to conclude our sittings expeditiously, or by expressing my views, for whatever they may be worth, on the momentous steps taken by the executive in the present crisis, steps which we have been asked to support and have already approved by our previous votes.
I for one would feel remiss in my duty to my constituents if I did not at a moment like this voice a few observations which come to my mind.
As for the executive, its duty was accomplished when after careful consideration, and evidently being in possession of more information than it cared or seemed able to give us at the outset, it introduced a series of measures to the house. We, the legislative body, have been asked to give the force of law to the implementation of such policies as the government has seen fit to adopt, and we are now being asked to approve the means of meeting the financial needs of the administration.
The desire of avoiding procrastination and of expediting the work of the house is commendable, and no one will find fault with it; but I am convinced that this desire had not as its object the curtailing in any way of the fullest expression of opinion on the part of
The Budget-Mr. Picard the elected representatives of the people at a time when such important measures are being submitted to them. Otherwise it would help to defeat the very aim we are professing to wish to achieve, that is, the protection of our democratic liberties.
It is therefore with a keen sense of carrying on the task which has been entrusted to me by my constituents that I shall make use of the time at my disposal with no remorse for contributing slightly to delaying perhaps the adoption of measures which will confirm the urgent steps already taken, and which will not be delayed or impaired even if the members of the executive are detained a little longer within the precincts of this assembly and not allowed to return immediately to the privacy of their departmental offices.
I shall not attempt to follow the previous speakers in their criticism of the resolutions introduced in the budget, nor shall I at this stage make extensive remarks as to what should be done next year to meet the expected vast expenditures we may be called upon to undertake. As it is, the budget has been well received in the country. It is a luxury tax budget. It is true, as some have said, that it is not enough to curb inflationary tendencies, but we should realize that it will take some time before the sums to be spent for rearmament reach the circulation stage. The effect on the national economy will not be felt before we have the opportunity to consider next year's budget.
My only suggestion for next year is that the income tax exemption levels be not lowered so that those who were not in a position to provide reserves for rainy days, or who experienced lower earning rates in the last two years, or even unemployment, may be given a chance in the years to come to recoup themselves and to average a reasonable income over a five-year period.
I intend today to consider the world situation that made this budget necessary and motivated in part our being summoned to Ottawa. I consider that I shall be following the tradition that in this debate a member may discuss any problem that influenced the introduction of the budget resolutions. Whether we like it or not, we cannot but face the fact that we in this House of Commons are taking positive steps today to embark Canada anew on military adventures. The dies are cast and we are preparing against the possibility of war. Of course we have done so, as always, with the loftiest ideal of maintaining peace, and simply applying the old principle, which we all learned at school, si vis pacem, para helium-if you want peace, prepare for war. It is, however, a well-known fact that preparedness has never prevented

The Budget-Mr. Picard war, but it may be noted that it has sometimes postponed it, and it surely has put nations who resorted to it in a better position when war came.
Nevertheless let us not delude ourselves. During the present session we are in the same position as the parliaments that sat in 1900, 1914 and 1939. The only difference is that at this time war is not to be declared, but our acts will have the same bearing upon the life of the country as those of the legislators who sat here on the eve of the South African and the two world wars. I think it would be rendering a bad service to the government and the country if we failed to realize the importance of our acts, and if our conduct could lead the government to believe that it is with enthusiasm and lightness of heart that we give our support to its decisions. It is with the greatest reluctance that I see Canada plunging ahead, abreast of the two great English-speaking empires and ahead of most of the other nations of the world, in the preliminary stages of a third world war.
I do not for one moment, however, support the views expressed by some members that we should not take the utmost precautions to ensure our safety, and that we should wait until our shores are threatened before we act. It is evident that it would then be too late. The lessons of the last war, as well as the march of events in Europe at the close of the war, should be enough to teach u* that our safety is tied to that of the other democratic nations. It is also evident that it is our duty to support all measures to strengthen our position and give evidence to possible aggressors that, in community with other free nations, we are determined to act jointly and with solidarity to resist any attempt from any source to gobble the world piece by piece, as was attempted by Hitler during the last war and as has been done in devious ways by the Soviet union since the close of the war.
With few exceptions-and fortunately they are remarkably few-we are all in agreement on that score. Where we differ is on the question how we should do it, by what methods we can better serve the common cause and ensure our own safety. How do we stand today? In a period of crisis when the world has nearly abandoned hope of ever seeing peace firmly established, when it is restless and worried as to what tomorrow may bring, Canada again must decide on the course it is to follow. This time the formal aims of the democratic nations are nearer their real aims than ever before. It is a well known fact that in any war, as well as in the acts of human beings generally, there are formal aims, those that you proclaim, and these are noble ones that may gain support. There are also the 
real aims that may not coincide with the others and may be less noble. In the South African war, for instance, the formal aims were very noble and the real ones less, as has been pointed out by many historians since the event; but in the present circumstances the formal aims, the defence of democracy and the defence of our liberties, are nearer the real aims, which are the defence of our own interests.
It is true that the survival of our own way of life is at stake, and that extends further than it may seem to. Our very standard of living, our economic welfare, is at stake because we are an exporting nation, and in a world dominated by Soviet Russia we may fare worse than in a world influenced by the United States. It is also true, and we must admit, that the struggle which threatens to engulf the whole world is one between two great imperialistic powers. While one aims at economic expansion and supremacy the other has a dual purpose, the spreading of communistic domination to help attain the soviet control of the world.
The dream that accompanied the birth of the United Nations five years ago soon vanished when Russia's lack of co-operation became apparent. But the weakness of the international organization goes back further to the concessions made at Yalta and Potsdam, and to the right of veto which was considered sacred not only by Russia but by each of the big five powers who enjoyed it. Let us be frank about it. The United States does not want to see its course charted by the small *nations any more than Russia does. If the United States felt that it would be systematically outvoted in the United Nations, it would not be any happier than Russia is, and might act differently.
In view of the fact that we cannot rely on the machinery of the United Nations to preserve the peace of the world, and in view of the evident resolution of the Soviets to extend their domination over the whole world, either directly, through the action of their satellites or through the action of the communist parties in other countries, subjected to the will of Moscow, more than ever we must realize that security can be assured only by collective action. To this end the government has committed Canada, and at the last election the people unequivocally approved of the actions of the government.
After a period of discussion in the United Nations we have come to the point where we must prepare to carry out our obligations. It has been said that there have never been any definite obligations on the part of Canada so far as the United Nations is concerned. It is quite true, as the Secretary of State for

External Affairs (Mr. Pearson) has admitted. Our more precise obligations are those we have assumed under the terms of the Atlantic pact; they also are not definite. Nevertheless moral obligations have been accepted in the name of our country. The fact that they are not definite gives even a greater responsibility to the government to decide on their scope. It is why the government should be all the more cautious in their approval of the proposals submitted to them, and in their approach to these problems as they come to the fore.
The discharge of their responsibility can be better effected by gearing the country for possible eventualities. This is why it would be folly to make too heavy commitments in this first flourish that has taken place in Korea. Canadians at large will all approve the extension of our armed services, and the sums of money intended for that purpose constitute the first premium on an insurance policy that may demand many more premiums in the years to come.
Acceptance of the principle of collective security involves the obligation to prepare for our own defence and for our share in the common task. That task may call for the presence of our troops in more than one spot if the whole pattern of Soviet expansion develops, as may be expected, at all points which we may forecast. Would it be wise, therefore, as has been suggested by some hon. members opposite, to commit too much of our strength at one point? It will be for those who have the responsibility to decide on our course of action. A word of caution therefore may not be out of order.
It is also within the realm of possibility that pressure has been exerted on our government by the government of the United States to obtain heavy definite commitments. The tone of many publications, both United States and Canadian, reflect this possibility. A few weeks ago Time magazine contained this statement:
The Canadian government yielded last week to a mounting clamour to send Canadian ground troops to fight alongside U.S. forces in Korea . . . Diplomatic pressure on Ottawa increased along with the public outcry. Requests for Canadian ground forces came so urgently from the U.S. embassy in Ottawa and the Canadian embassy in Washington that some touchy Ottawa officials got their backs up.
The Financial Times of Montreal on September 8 contained an article signed "V.A.B.", which contained the following statement:
The United States is not too pleased by the Canadian response to the Korean situation thus far. They are not saying too much about it. But the general feeling is that they are doing most of the ball carrying. And they don't like it, and who can blame them?
The Budget-Mr. Picard There will have to be a little something more than a token demonstration of assistance before this thing is done.


Mr. Gauihier (Porineuf):: Who said that?


Louis-Philippe Picard: The article is signed "V.A.B." These, of course, are the assumptions and expressions of opinion of newspapermen; nevertheless they are logical assumptions and opinions which are entertained by many. Personally I can see no reason why this country should blindly follow the lead of the United States in all matters, any more than it should have previously followed the lead of Great Britain; and I do not for a moment believe this government would freely adopt that policy. Mind you, I do not say this because of any antagonism to the United States. On the contrary-and in this I may surprise some of my hon. friends-I would not have the objection that is entertained by many hon. members of this house to the Canadian provinces becoming states of the union. Economically I think we might fare better if all the people north of the Rio Grande were citizens of one great united nation. As things are at the present time we experience most of the difficulties that may befall the United States citizen, without enjoying all the same privileges. However, that is an altogether different subject; I came to it while considering the possibility that Canada might become a United States satellite.
If we are to keep our government institutions as they are now; if we are to remain a separate national entity, let us not do so only in words, but let us act accordingly. Or if we are to receive our directions from Washington, let us send our representatives there and become Americans.
Many citizens of that country, especially those opposed to the present administration, claim that Washington has had no precise foreign policy since the war; that at best theirs has been a policy of expediency. It is evident that the policy of the United States government has been vacillating, that its post-war policies in the Far East have been marked by many blunders.
Wherever the responsibility lies for the difficult position in which we find ourselves, it is clear that it springs from the expansionist manoeuvres of the Soviets and their satellites, which were not counterbalanced by proper precautions on the part of the United States. Be that as it may, today we are faced with a situation which leaves us no choice. We must embark upon a program of preparedness, and on this point we seem to be in accord, with few exceptions.
It is interesting, however, to note in Canada the same pattern of events that was followed
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The Budget-Mr. Picard in the previous wars; first newspaper propaganda, then the Tory press urging that we should go in ahead of everyone else. The same pattern has been followed this time, in the face of this new crisis. From the moment the United States government decided to interfere in Korea, and even before the United Nations accepted the United States proposal for intervention, the English-Cana-dian press advocated that we enter the fight immediately. Similarly, at the very first opportunity we heard the Tory leaders reproach the government for what they called the insufficiency of the measures taken, and the failure of the government to commit all our forces to the fight in Korea. Also true to fashion, all their supporters from Quebec, with the exception of one, have proclaimed the theory of non-participation, and have blamed the government for doing too much in the way of preparedness.
The same dual tactics adopted in the past by that party are again to the fore. In 1939 the only Conservative member in this house from Quebec, then member for Gaspe, Mr. Roy, took issue with his party, and also took the Liberals to task for doing too much, while his leaders accused the government of laxity, and of not doing enough. The same thing was done this year by the hon. member for Labelle (Mr. Courtemanche). I may say, however, that the general tone of the speech by his leader on September 1, and of the speech on September 4 by the hon. member for Three Rivers (Mr. Balcer), will bring more credit to his party than his own. But it is clear that once again, true to their traditions, the Conservatives from Quebec have a different policy from that of the Conservatives from the other provinces. The general trend of the party, however, has been to advocate plunging ahead into the melee, to a greater extent than anyone else.
As for the government, its position has been clearly stated by the Prime Minister and the Secretary of State for External Affairs. The government leaders, true to the Liberal tradition, have remained level-headed. They have considered and studied the steps that were advisable in the interests of the country, having due regard to our obligations under the United Nations and the Atlantic pact. We have ratified the decisions they have taken up to the present in this regard, and we are now called upon to give them the means with which to implement those decisions. I believe the speeches in this house by the Prime Minister on September 1 and by the Secretary of State for External Affairs on August 31 and September 4 should be widely circulated,

since they give such a comprehensive and clear idea of Canada's position and of the decisions of the government.
We have approved the sending of three destroyers and an air transport squadron, and of the recruiting of a certain number of ground troops, which up to the moment constitutes our commitments to the United Nations forces. These have been criticized by some opposition members as not sufficient. I for one prefer to accept the view expressed by the Secretary of State for External Affairs on September 4, when he said, as reported at page 222 of Hansard:
Among the countries that have responded effectively to the United Nations appeal, Canada takes a proud place and does not need to apologize to anybody for her action.
If we look at the commitments made by the other members of the United Nations who have answered the call of the secretary general we see that Canada, as usual, has done more than most others, of course with the exception of the United States, whose forces engaged in Korea are not included in the list I am about to give. This information has been extracted from reports and memoranda submitted by the United Nations secretariat as at the last week of August. These commitments are as follows: United Kingdom, 4,000 ground troops, plus two battalions already stationed at Hong Kong; Australia, 4,000 troops; New Zealand, 4,000 troops; nationalist China has offered three divisions, which up to the present have not been accepted; The Netherlands, two battalions; the Philippines, 5,000 men; Canada, 5,000 or 6,000, which figure has now been raised to 15,000; Bolivia, thirty army officers; Thailand, 4,000 men; Belgium, infantry forces not specified; El Salvador, volunteers to be trained in the United States; Panama, volunteer troops unspecified; Turkey, 4,500 combat troops; France, 800 infantrymen.
So far as ships or air forces are concerned, the commitments are as follows: United Kingdom, undetermined naval forces, including carriers; Australia, three naval vessels and a fighter squadron; Canada, three destroyers and an air transport squadron; New Zealand, two frigates; The Netherlands, one destroyer; Norway, merchant shipping, not specified; France, one sloop; South Africa, one fighter squadron; Belgium, air transport, unspecified; nationalist China, naval escorts and air transport, not accepted as yet.
So far as economic and medical aid is concerned we have the following: Denmark, medical ambulance unit; Nicaragua, foodstuffs and raw materials; Philippines, medical supplies and foodstuffs; Sweden, field hospital; Liberia, natural rubber to the amount of

$10,000; Israel, medical aid; Lebanon, $50,000 for war relief; India, ambulance and surgical units; Panama, training grounds and air bases.
This should serve as an answer to those who think we have not done enough, and should demonstrate that Canada, following tradition, has again taken the lead. I cannot but note that the 6,000 men we first undertook to train have been increased to 15,000. I trust that our strategists will not overlook the possibility that other situations may demand our co-operation elsewhere, and that it might be wise policy to gear our action not in relation to the United States alone but also in relation to the other fifty-three members of the United Nations.
The first principle of collective security is to provide a measure of defence for one's own country, especially when, in our case, it might be that our own country will be one of the sore spots.
In the financial commitments that we approved last week there is an item that I am inclined to view with a certain amount of apprehension. It is the sum of $300 million for help to North Atlantic treaty nations. Is this a first step in a new so-called lend-lease program of the same nature as the one that was carried on during the last war? On September 5 the Minister of National Defence (Mr. Claxton) stated reservedly, as reported at page 299 of Hansard:
I have not mentioned here, though I have included it in that estimation, something out of another vote which is covered by this resolution, namely $300 million to be appropriated for assistance in the provision of equipment, facilities, services and the like to the North Atlantic treaty nations.
I wonder to which country this equipment will be given. Will it be the more needy, those whose standard of living is lower and who have more trouble, or to the more insistent, those who have better speakers near Ottawa to voice their demands. I wonder also how many countries outside the United States will thus act as Santa Claus to other North Atlantic treaty nations. I wonder also if we are thus establishing a precedent that will be renewed from time to time. I wonder if we can afford to start anew on the path of generosity, and how our budget will be influenced in years to come by handouts of $300 million. Mind you, I support the principle of collective security and our obligations to share the burden, but I am thinking also of the burden the taxpayer of Canada will have to shoulder if we go on playing millionaire because our neighbour happens to be a real millionaire.
At this point, Mr. Speaker, I wish to refer to an unsigned declaration distributed by
The Budget-Mr. Picard mail and by hand and purporting to represent the views of a delegation of the youth of the province of Quebec concerning the Korean expedition and the attitude of the government in the present crisis.
I think it is advisable to caution the youth and the whole people of my province against this literature. It is a fine specimen of Moscow-dominated communistic propaganda, subtly drafted in order to misrepresent facts. Some of the very arguments leading to the conclusion that Canada should sit complacently and do nothing are the very arguments that would prompt me to support a program of preparedness. I quote:
We love our country, our province.
So says the declaration, and it continues:
We know that we have responsibilities: to devote our energies to make our country prosperous, to make life better and happier through our work.
This is the aim of all Canadians, but in order that everyone may thus accomplish his task, we must ensure the security of the country, and the best way is through collective action. The declaration goes on to say:
We do not think the best way to make our lives useful is to offer them on foreign battlefields for foreign interests.
It is true that it is a pity that the young, the strong and the healthy should have to be called for the defence of the country; but it is the masters of those who drafted this declaration who make this compulsory by their agitation everywhere, by their keeping millions under arms in Russia, and by their arming and training hordes of fanatical supporters in other countries. When they mention foreign interests they try to assimilate the present emergency to the South African war or the first world war, in which in the minds of many in my province, Canadian soldiers fought for, let us call them, foreign interests more than for national safety. Yet I am convinced that people cannot be misled today; they understand that if Canada must carry its share of the burden on foreign battlefields, it is because it understands that collective defence is today the only safeguard of individual security.
The conclusion of that declaration is such that I can agree with it word for word, but because I put the right interpretation or meaning on the words. The declaration says:
We ask today: No Canadian lives for Korea, but an independent Canadian policy that will help to maintain peace in the world.
"No Canadian lives for Korea"; I agree, because I maintain that if any lives are lost in Korea it will not be for Korea but for
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The Budget-Mr. Picard Canada, in order to make sure that what happened in Korea will not happen in Canada.
"An independent Canadian policy"; again I agree. It is in perfect independence that we must pursue our course of action, the same as all the North Atlantic treaty nations, the same as all the United Nations who up to now have answered the call, convinced as we all are that we shall be able to remain independent only if we are not subjected to the threats and the blackmail of the Soviets. "A policy that will help to maintain peace in the world"; again I agree, because I consider that the best chance the world has to avoid war is by showing to the Soviets that all the nations of the world still enjoying liberty will resist collectively.
A period of appeasement has brought no good results. Each new move to expand Soviet influence in Europe through their disguised intervention has been followed by more intrigue and the evidence of newer ambitions. Militarily, Russia is more powerful today than any other nation in the world, and their friends would of course like the other nations of the world not to be in a position to face and to repulse Soviet strength if it is ever used.
Mind you, this declaration has been circulated widely up to now, even though we received it in the mail only today. That same declaration has been distributed in our villages and elsewhere. My answer to these peace lovers is this. Let Russia admit within its borders United Nations commissions to check on her armaments. Let Russia give the world the assurance that it is disarming, and the evidence that it is, and the rest of the world will not talk about armaments; they will not talk about arming. Let Russia accept the principle of survey and inspection within her territory of her atomic research projects, and then the United States may accept the destruction of her bombs. Let us answer our apostles of peace that if Russia wants to remain just as disarmed proportionately as Canada is today, we will then believe in the good will of these Canadian apostles of peace.
I do not think it is advisable to justify our attitude in this present crisis solely on the question of ideology, although it may carry great weight in our minds. The maintenance of our security, and even of our standard of living and our ways of life, should appeal even more to every young man in this country. Also, to be quite frank, I do not think that the fight in Korea is waged mainly to ensure free democratic institutions for Koreans. As I said before, that may be one aim. If this is the sole aim of the destruction


carried on in South Korea now, it will fall short of its realization, because there will not remain much to be democratized once the fight is over.
The Russians could not choose a better spot in which to test the American reactions to their war by proxy. I am led to believe that barely a year ago the American authorities had never entertained the idea of defending South Korea. Were it otherwise, it would be hard to explain their lack of preparedness. That a change of mind came suddenly upon the Americans seems evident, and we are now all called upon to suffer for their earlier blunders; the sad thing is that we cannot avoid being brought into that mess.
American policy is all the more surprising with regard to Formosa. We all must admit that, although we are all sympathetic to them. While Chiang still controlled considerable proportions of the mainland of China, it became the right thing in Washington to discredit Chiang's government for its inefficiency, for the graft of some of its officials, for its lack of democratic practices and tendencies; and no help, or nearly none, was given to him when there was still hope that he could hold firm. Now that he controls only Formosa; now that the whole of the mainland is reorganized or in process of reorganization under Mao, the United States want to defend Formosa, and refuse to accept as a reality the changes that have occurred on the mainland.
On this score also let us not delude ourselves. What has happened in the Far East is more than a Russian-abetted manoeuvre. Little of what happened in the Far East since the end of the war could have been realized if the people had not been co-operating with it.
One should not be accused of accepting Soviet propaganda because he recognizes these facts. Walter Lippmann and many other unbiased students of international affairs have long entertained these thoughts and they cannot be accused of communistic tendencies.
If Canada's decision in this crisis had been motivated only by a single cause, the invasion of southern Korea, I would be far less inclined to approve of these measures. But no one can ignore the fact that the Korean incident is but a test case and may be the first of many such expansionist moves by Soviet Russia. What induces me more to approve of the measures submitted to us is that they are part of a program of preparedness that is unavoidable in the present world circumstances, and everybody will understand that.

I quite realize that some people might be tepid in their feelings about the Korean adventure if considered strictly in itself, but nobody can blind himself to the reality of the situation at large. All nations of the world who like and care for their present ways of life must take the necessary steps to try and defend them. That they should not be led blindfolded by befuddled United States officials is another thing, as I mentioned a moment ago; that all nations should have as their first object their own interests goes without saying, but it remains for those who have been entrusted with the conduct of the nation to consider, weigh and decide, as Laurier said in 1900; and I for one have more confidence in the Prime Minister and his principal colleagues than in the leaders of the Tory party not to lose sight of the true perspectives and not to embark Canada on perilous unjustified adventures. I have more confidence in the Prime Minister's decision as to what should be done to ensure the safety and the prosperity of Canada.


Mr. Rodney Adamson (York West):: Mr. Speaker, I do not propose to follow the hon. gentleman's arguments about Korea, and Canada's participation in that action. I have spoken before on this subject in this session, and what I said then stands. There are certain things nevertheless that he said that I should like to comment on. We must realize, and realize very clearly at the present moment, that the war in Korea is not something we have any choice about. If our signature as a free nation, and a member of the United Nations, means anything it means that our responsibilities demanded that we should play our part in putting down aggression in Korea.
There cannot be any escape from that responsibility for any Canadian, no matter where he comes from. It is a matter not only of our national honour but our very survival. The sad fact is that if we win in Korea we still may have a general war; but if we lose in Korea it is very certain we shall have a general war; and for that reason, if for no other, I feel the action taken by the government, while belated, and while in my opinion not resolute enough, was unavoidable. I cannot see any freely elected government in Canada reneging on its solemn obligations, or being foolish enough to believe that we had no responsibilities to preserve our very existence in putting down or helping to put down aggression in Korea. Korea is the erupting boil on the skin of the iron curtain, but there are approximately twenty thousand miles of frontier of the iron curtain countries, expanding from Korea right
The Budget-Mr. Adamson down through Asia and ending in Finland, which may erupt at any time. Large portions of this dangerous perimeter are the responsibility of the other free nations. Canada has undertaken nothing elsewhere in that large perimeter. We have no forces assisting our allies in the occupation of Germany, which is now not an occupation force, but a defence of Europe force. We have not assisted in any of the operations in southeast Asia and all along that frontier between the free and the slave world.
Unless we are prepared to play our part as an adult nation, not just by talk, but by action, our right to exist as a free nation will be taken from us, and I regret to say by force. There is no alternative. There is a saying which I think is a biblical one, and which I shall slightly paraphrase, namely, that when I was a boy I spoke as a boy, but now I am a man I put away childish things.


Mr. Fournier (Maisonneuve-Rosemonl):: am not so sure.


Agar Rodney Adamson: Well, the childish belief apparently held by the minister that we can live isolated to ourselves, without taking responsibility for preserving the collective peace of the world, is one of the beliefs which we must put away.
Less than a month ago a famous gentleman, the prime minister of Australia, made a speech in Ottawa. He spoke of the democracies,-or, preferably the free nations, because the word democracy has now been so prostituted, owing to the way it is bandied about by the communist party, that I prefer the expression "free nations", where the individual is assured of his freedom.
Menzies said there were three jobs to do. One was to prepare to resist aggression, the second was to expand our economy, and the third was to prevent inflation from destroying us. It is with this third problem I wish to deal today. The Minister of Finance (Mr. Abbott) has admitted the problem in what I shall call the carbonated beverage budget. He has imposed luxury taxes, taxes on soft drinks, and taxes on other certainly nonessential goods.
I thought he perhaps was reminded-if he was not I will remind him now-of a poem by the late G. K. Chesterton, two stanzas of which might aptly be quoted with reference to this problem. The first of these is:
Feast on wine or fast on water And your honour shall stand sure,
God Almighty's son and daughter,
He the valiant, she the pure;	[DOT]
If an angel out of heaven Brings you other things to drink,
Thank him for his kind attentions,
Go and pour them down the sink.

The Budget-Mr. Adamson
The last verse, which I shall slightly paraphrase, is this:
As for all the windy waters,
They were rained like tempests down When good drink had been dishonoured By the tipplers of the town;
When red wine had brought red ruin And the death-dance of our times,
Heaven sent us Coca Cola As a torment for our crimes.
I think we can regard these minor tax changes as temporary palliatives and view them in the rather light-hearted way indicated by G. K. Chesterton in his poem. But as a stop for inflation and as a measure really to meet the problems we are facing today, with all due respect to the minister, they are practically without effect.
Inflation is simply the relationship between the supply of goods and the supply of money. There can be no other way in which inflation takes place, except by the dislocation of this relationship. Despite what the hon. member for Peace River (Mr. Low) has said, if you increase your money supply and do not increase your supply of goods, you are always going to have inflation, anywhere in the world. If you have $10 and one hundred potatoes the relation between the $10 and the potatoes is so much. If you have $100 and a thousand potatoes, the relationship is the same. But if you have $20 and one hundred potatoes, then the relationship between the money and the potatoes changes radically. That, more or less, is what has happened to our economy since the war. The supply of money to the supply of goods has altered by about two to one so, instead of having $10 and one hundred potatoes we now have $40 and two hundred potatoes, with the hypothetical relationship betwen the dollar and the potato being now about five to one instead of the ten to one it was in 1939. Therefore, theoretically at least, the dollar buys less, by about one-half of what it did pre-war.
There are, however, slightly modifying factors. But if one will look at the supply of goods and the increase in the money supply and the increase in the cost of living he will find they bear the same close relationship as the theoretical case I have indicated in connection with potatoes. This simple example shows clearly exactly what has actually happened in Canada.
War always causes inflation because the goods produced are for destruction and not for use. That is the very essential feature of war: the goods are destroyed, but the money which went to produce them remains. Therefore money increases but the supply of goods does not.


The Keynesian theory of government spending to keep full employment going is progressive continuous inflation. The pursuit of that theory in the era of greater government spending for national defence has set up the impetus which will bring the whirlwind of inflation.
I shall make a suggestion to the minister in a moment. At the present time, however, we see our cost of living approaching 170, our money supply approaching four and a half billions and our production approximately twice what it was, giving a relationship of money supply to production of about two to one. We see the wages in industry approaching $1.50 per hour, and in skilled trades very much higher than that. We see meat at $1 a pound, and other goods increasing in price in about the same ratio.
This means that if we are not going to see the sort of thing of which I am most fearful, some drastic action will have to be taken. That will have to be done if we are not going to see wages approaching $5 an hour-and that figure is not out of the question because I saw where at one point in the United States skilled tradesmen were getting $4.50 an hour for their work.
As these prices increase there is a large segment of the population of the country that faces absolute ruin, and unless we can in some measure put a stop to inflation at the present time we are not going to be able to preserve the economic system which we call free. Unless the whole economy is controlled, controls do not give the answer. If the whole economy, which would include prices, wages and everything else we buy, sell or do, is controlled, then we are not living in a free world. That is one of the things we are fighting against. As I said, unless we can prevent inflation going to the utmost limit our free society is destroyed. Hon. members must know that the communist primer, Lenin's writings, states that one sure way of destroying the capitalist free world is through the use of inflation. Therefore, it is of the utmost importance that steps be taken now to combat this great danger and evil.
It is a two-pronged problem that we face. One prong is the necessity to reduce the supply of money. To impose taxation by forced savings and to raise the bank rate is certainly one method. But if you shrink the supply of money by such arbitrary methods you are going to cause great damage to the population, in fact no freely elected government in Canada could do it, and survive. By deflation you will bring about a dislocation of the economy, with devastating results,

particularly to the hourly wage earner. Therefore, the methods used in the dictator countries cannot be considered in Canada.
The second prong of the battle against inflation is to increase the production of the country. While we have increased our production the fact is that our productivity has not increased as fast as the money supply. The disparity between these two things is the measure of the inflation we are suffering today. These things must be understood. Increased productivity can be brought about only by greater efficiency, and harder work.
The reduction in the money supply can be achieved however in several ways. The international monetary fund has decided to keep the statutory gold price at $35 in terms of United States dollars. In my opinion that is a misguided attempt on the part of the international monetary fund to combat inflation. Nevertheless they have taken that step and in consequence the flight from the United States dollar during the last few months has been considerable. The flow of gold from Fort Knox may force the United States to abandon any pretence that they are related to gold and stop even the foreign holders of U.S. currency, either governments or individuals, from converting it into gold. In recent weeks American purchases on the Canadian stock markets, have amounted to very substantial sums. Tremendous buying of Canadian equities by United States nationals has been going on and there is evidence that this is another symptom of the problem facing that country.
We have relaxed our controls and curbs on the purchase of American goods. Owing to the present war, and for other reasons, our trade with the United States is becoming more and more in balance. We are having, and will have, progressively more of the raw materials and metals and other things that the United States must have for its economy. Therefore, I envisage the time when the balance of trade may run the other way and in our favour. The continued buying of materiel necessary for the preservation of peace will I suggest go a long way toward solving the problem of any dollar shortage we might have. Incidentally I was glad to hear the Prime Minister (Mr. St. Laurent) state the other day that the exchange rate as between Canada and the United States is not going to be altered by government action.
Coming now to my suggestion to decrease the money supply. I suggest to the minister that there be established a futures market in gold so that Canadian nationals could buy gold now which would be earmarked for
The Budget-Mr. Adamson delivery in 1952, on or after the statutory expiry date of the emergency legislation we have enacted this session, delivery of the gold to be taken in two years' time in the form of minted bullion with no restrictions upon what the owner did with it. The government would have the use of the money for two years without interest. The result would toe that those people who wanted security later on would pay money to the government in order to have the security that goes with the holding of gold. The government would merely issue a promise to pay so many ounces of gold on a given date.
The surplus money that is causing so much trouble at the present time would be used up in the purchase of futures certificates for gold. It would drain off painlessly the present surplus purchasing power which is exerting such a pressure on scarce consumer and capital goods. The receipts would be non-negotiable, and could not be borrowed on at the bank, as in the case of our present bank stock scrip. The effect would be to create a stabilizing force so far as our currency is concerned. The production of gold for the first six months of the year is 2,200,000 ounces. Therefore production is at the rate of about four and a half million ounces a year. If two million ounces of gold were earmarked for purchase at the statutory price of $38.50 per ounce it would mean that an immediate reduction of the money supply by voluntary means of between $75 million and $80 million would take place. In view of the consumer credit bill passed by the house last night, I suggest that would materially help to relieve the pressure.
If our trade with the United States is in balance the government could not put the gold to better use than to provide this safety valve against inflation. It would mean that in a two-year period, or within the period of emergency, the sum of over $150 million would be removed painlessly from our money supply if we used half of our annual production of gold. It would be done voluntarily and the government would have the use of the money interest free for the period of two years. The holders of the scrip would toe unable to borrow against it and by so doing increase inflationary pressure.
I submit that such a plan would be of tremendous assistance in relieving the pressure on consumer goods. The advantages to the individual are of course a hedge against inflation. It has been and is the present policy of Canada, and all other signatories to the international monetary fund agreement, to maintain the present price of gold.
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The Budget-Mr. Sinclair Therefore let us not go into the question of whether gold would rise or decrease in value, because it is the joint policy of this monetary body to keep gold at the present statutory price.
Another group of people who would benefit would be the holders of insurance policies. If the holders of such policies maturing two years or more from now could take advantage of machinery whereby when the policies were paid off they would be paid in gold, it would be of great assistance to them. Insurance company representatives came before a committee of the house during the last session and said that they had an obligation in dollars to their policy holders, and that obligation was in dollars irrespective of what the purchasing power of the dollar might be when the policies were paid off. Here again would be a safeguard against a decreased value of insurance policies at the time of maturity. I submit that the assistance to trade by freeing gold to Canadian individuals and corporations would be a very great advantage.
The suggestion I have made would only help to solve one part of the great problem. Productivity must be increased. The money supply must be restricted. If these things are not done there is no other answer than the destruction of our whole economic system through inflation. That is the communist goal. We can put ourselves into a complete strait-jacket by controlling wages, restricting purchases, controlling prices, and instituting control of our economy so rigid that we would destroy our freedom. We can risk the destruction of our economy by inflation or we can take voluntary steps now to avoid both the terrible courses facing us in the future.


James Sinclair: Mr. Speaker, I think it would be expected that I should speak briefly in this budget debate. The present session has been quite an unusual one in one way, the great number of opposition speakers and the comparative fewness of the government speakers. As the hon. member for Inverness-Richmond (Mr. Carroll) said this morning, that is not an indication of lack of interest but an indication that the Liberal party is solidly behind the government in their program at this time. Therefore there is no need for us to do other than support their policies by vote. However admirable that policy of restraint may be for most government members, I find that I chafe at the bit somewhat when I sit here and listen to some of the arguments which have been made because of this open season for opposition speakers. Today I am going to spend a 

little time on the speeches that have been made by the official financial Critic of the Conservative party and by the new financial critic of the C.C.F. party. I found, of course, as I am sure most hon. members found who heard the financial critic of the Conservative party, the hon. member for Greenwood (Mr. Macdonnell), speak after the budget was delivered on Thursday night and again this morning, that we had heard the speech before, because underlying it was his usual understandable sense of frustration. Here he was, having to put up a show of criticizing a budget which once again, in the interval between its presentation and his speech, had been clearly shown to be highly acceptable to the Canadian people. With that as a background one can understand that sense of frustration.
The hon. member in his speech used a baseball analogy as far as the minister is concerned. This is a great football town, I think the most enthusiastic in Canada, and perhaps I may be excused if I use an analogy taken from football. The hon. member is a great Monday morning quarterback. After the game is over, on Monday morning the experts from the offices sit around their cups of coffee, and they can always play the game over much better than did the quarterback of the home team out on the field on Saturday afternoon, especially if his team lost. We had that kind of Monday morning quarterbacking this morning from the hon. member for Greenwood, in his speech on the budget.
There is one note that has always interested me in his speeches. I listened to his speech this morning, and also refreshed my memory as to speeches he made in previous years. Hansard is a great thing in that way. I find that he always uses a very nice approach, an approach which I am sure is used by many of us at political meetings. He starts off by telling some little anecdote, and thus breaking the ice. In the case of the hon. member, just before making his budget speech he always meets some man who, in some simple way, with an innocent remark completely devastates the government. I often wish these men he meets would be elected as Conservative members, because if they were here and spoke as effectively as they do in his anecdotes I am sure we would have a much better opposition. However I am going to take a leaf out of his book and tell the house about a man I met not long ago who had a little anecdote to tell. He was a Conservative, and he was anxious about the future of the Conservative party. He met a Conservative member and asked, "What is the policy of the Conservative party today?" Like little Audrey, the answer of the Conservative member was to just laugh and laugh and laugh.

If hon. gentlemen opposite want examples of that sort of thing I can give them very quickly. They came in here with no policy for dealing with the rail strike and so struck out in all directions. Hon. members on this side of the house could watch the face of the leader of the opposition (Mr. Drew) as, during the debate and the votes in connection with the rail strike legislation, Tory after Tory announced that he had his own policy and that he would vote accordingly with the government. We felt it was worth while coming here if only to watch the expression on the face of the hon. gentleman as he heard these desertions but dared not turn around to see who else was leaving him. Then we had a Conservative, the hon. member for Labelle (Mr. Courtemanche), declare himself absolutely isolationist against aiding the United Nations in Korea. The two independent Conservatives from Quebec, the hon. member for Chicoutimi (Mr. Gagnon) and the hon. member for Beauce (Mr. Poulin), have also proclaimed themselves isolationists. They may not call themselves Conservatives, but certainly they ran against Liberal candidates and they vote and act like Conservatives. Then we have a new isolationist in this house, the hon. member for Kamloops (Mr. Fulton), who publicly urged no veterans to enlist for service in Korea. A moment ago I heard some comment by the hon. member for Eglinton (Mr. Fleming), who is one of the great constitutional lawyers in the house, or so he says. I have a little legal problem I would be glad to have him solve. What is the difference between another Conservative, the mayor of a city, who urges people not to register during a time of war, and who goes to internment camp as a result, and a member of parliament who urges veterans not to enlist to fight a war that is our common war?
To get back to finance, I said that the task of the hon. member for Greenwood was difficult. It was especially difficult because that morning the newspaper generally regarded across Canada as the official voice of the Conservative party, the Globe and Mail, carried an editorial in which it called upon Mr. Abbott to make no changes in the existing tax structure; to do no tinkering with the budget; to just carry on, even if it meant a small deficit. The evening the budget was delivered and again this morning the official financial critic of the opposition, giving the other Conservative viewpoint, gave the impression that what he wanted was to create a sense of urgency by having much bigger taxes at this time.
Here again I realize the advantage of having a good memory, as far as previous speeches by the hon. member are concerned.
The Budget-Mr. Sinclair I remember that two years ago, when the minister was continuing the wise policy of fairly heavy taxation following the war, when times were good, in order to siphon off excess purchasing power when goods were in short supply and in order to pay the debts we incurred during the war, the hon. member used very different words. Did he ask then for more and heavier taxation? No; he said the minister was mulcting the public out of money which was theirs. At that time the Tory press called this wise policy barefaced thievery. Today it is different, of course; the hon. member has changed his mind, just as the Conservative party changes its policy so often it is hard for us to keep track of the official line of the moment.
Then there is the economy cry; that was the next thing in his speech. I sat on the public accounts committee last session with the hon. member, the leader of the opposition and quite a number of other opposition members. A very careful scrutiny of the public accounts was carried on with all the ability and all the advice they could get; and the only practical economy move I heard suggested came from the hon. member for Moose Jaw (Mr. Thatcher), who said we could save $2 million every ten years by doing away with the prairie census, which is taken between the regular censuses. I must admit, though, that this morning the hon. member for Greenwood came up with a new economy measure. He would do away with the publicity branch of the Post Office Department. Well, I took time to find' out what is done by this publicity branch. It is a very small department, which gives the people of Canada information about postal rates, as to when they should mail Christmas parcels, as to what sort of mail can be sent airmail, as to what requires airmail stamps and what is carried by airmail at normal rates. Abolition of that sort of useful information service was the kind of economy measure which in his speech this morning the hon. member for Greenwood thought would solve many of our fiscal problems.
Of course the reason it is so difficult for him to find economies is the very tough job that has already been done by treasury board. I think all hon. members of this house at one time or another have run up against treasury board. Each of us at some time or other has had a desirable project in hand which would have meant so much to the people of our riding, but which we could not have carried out because treasury board put down its foot and refused to approve the expenditure. And despite this desire for economy I noticed that even after the Minister of Finance (Mr. Abbott) had announced
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The Budget-Mr. Sinclair that as an added measure we were going to have to do without quite a few capital expenditures that had ibeen planned, the junior member for Queens (Mr. McLure) and the hon. member for Winnipeg North Centre (Mr. Knowles) rose to say, "Yes, but I hope that will not affect the post office in my town." Economy always starts in somebody else's riding.
Then the hon. member went on to deal with the estimates in the budget presented by the minister last spring, in which he estimated that there would be a surplus of $20 million. The surplus at the moment is very much higher than that, of course. It will drop by the end of the fiscal year, because our taxation collections are early and all our large expenditures are late; but even at that it is estimated that we will finish with a surplus of something like $180 million. Estimates are always difficult. It is fairly easy to estimate our expenditures pretty accurately, as we have done, because they are matters within our own control. It is very difficult, however, to estimate revenues when the actual sources of those revenues are subject to forces beyond the control of this or any other government. Therefore the Minister of Finance did what any good businessman would do and does every year; he overestimated his expenditures and underestimated his receipts, to be on the safe side-a very prudent course.
Once again in this connection I went back in my memory and thought we surely had some forecasts by the hon. member himself, so I read back in Hansard. Sure enough, back in the spring when the minister announced his budget forecast of $20 million, the hon. member had something to say himself on that subject. Today he is accusing the minister of having been too cautious and as a result having a much larger surplus than he estimated in the spring. At that time, however, deriding the estimated $20 million surplus which was forecast, at page 1519 of Hansard the financial critic said:
... if unemployment does not rise too much and trade does not go down too much we may break even.
That was his forecast last spring; he didn't think we would even break even. Now one other thing before I leave the hon. member. He said that here in this country today we had not a sense of urgency, that we were too complacent, that things were so different in Washington. Again one of these men he meets had told him that a man from Washington was appalled by the difference in outlook between Washington and Ottawa today. Well, I am a Canadian, and I was educated in the United States. I like the


Americans very much, but I want to say quite frankly that if this same man had gone from Ottawa to Washington in 1914 or 1915 or 1916 or in the spring of 1917, or in 1939 or 1940 or 1941, he would have been amazed and appalled at the very great difference in attitude between the capital at Ottawa and the capital at Washington. The Americans in their good time, in their way, did their part in those wars. We in our way with our own judgment shall do our part, because we have never failed in any war.
I now turn to the comments of the new financial critic of the C.C.F. party. This time I am going to use a baseball analogy like my friend the hon. member for Greenwood. He said about the minister that when he came to bat 'he had two strikes on him so far as the Conservative party was concerned. That was quite true. But fortunately the Conservative party in this country is not yet the government. However, the last financial critic of the C.C.F. party, their pitcher, has apparently been pulled out because he had taken too big a shellacking from the government side in previous years; and after the poor efforts of their new relief pitcher this morning, I think we will all agree that he spent too much time warming up in the bullpen. He had only three subjects, of which the first two had been mentioned endlessly on the hustings by the C.C.F. party: price control, excess profits tax, and a new one. He said personal income tax was too low. I am going to speak on that subject especially because that is a new official C.C.F. line.
I want to discuss these things, and I do not want to discuss them in the language of an economist because I am not one. I should like to look at them in the language of two members of the opposition who seem to convey more to their people about what goes on in parliament than any others: I refer to the hon. member for Calgary West (Mr. Smith) and the hon. member for Cape Breton South (Mr. Gillis) who have this great gift of talking in terms that ordinary people understand. Today therefore, if I can, I should like to imitate them by talking about price control and about excess profits taxes in a way that the people of my riding will understand; and my riding is principally an industrial riding.
First of all, let us look at prices. What makes prices go up? The C.C.F. always has the easy answer: profiteering. That is, when it is companies who are concerned. But of course when farmers get higher prices and sell their beef at 28 J cents a pound on the hoof, which' the hon. member for Calgary West last night translated into a dollar a

pound to the housewife, that of course is not profiteering, because the C.C.F. remember that these people are farmers. They therefore describe it either as taking advantage of the market or as making up for the money they lost in the thirties. There is, I think, a little better formed answer to the question, namely the economists' answer: prices go up because too much money is chasing too few goods. That may be true academically but it does not make much sense to the housewife in my riding who knows that she has not too much money and who sees on the shelves of the stores plenty of goods which she would like to buy.
Let us turn now to the reason that I at least see for the rise in prices in this last period. In the old days of course, under a free economy, it was quite different. If prices went up, consumer resistance began and unsold goods began to gather. Other manufacturers saw an opportunity to get into a profitable field and started extra production. The law of supply and demand worked and down came prices. But this is no longer a free economy, because of the economic strains of the last war; and our expected expenditures on war industry and war equipment in the next year or two are going to accentuate the fact that this is no longer a free economy.
When we are siphoning off so much labour and so much material in war effort that is unproductive in the ordinary sense of the word, with goods in short supply today, there are two forces at work. One is demand for goods in short supply, drawing up prices; and there is a second force pushing them up, and that is the force of labour, because of the reaction of high prices on labour. Naturally high prices make the worker and his wife seek more money to meet those high prices, and so you have this double-edged effect today forcing up the prices of those goods which are in short supply.
Let us now have a look at what makes commodity prices in Canada. First and most obvious is the cost of the raw material in the product; second, there is the cost of labour; and third, there is the cost of plant and equipment which bring that raw material and labour together to create the manufactured product. Then there is a fourth item. Sometimes it is a profit if the demand for the product is good; sometimes it is a loss. But these are the four items that make up the cost of our normal consumer commodities today.
I am going to speak principally about consumer commodities because they have a slightly closer connection with the Department of Finance, and the capital goods have been dealt with by the Minister of Trade and Commerce (Mr. Howe). Let us look at the
The Budget-Mr. Sinclair above items in turn. If any one of these goes up, naturally the price of the finished commodity is going to be shoved up.
Let us take material costs first. The Curtis report on prices had an interesting analysis of the materials that went into what we ordinarily call consumer goods in Canada. Thirty per cent of the material in the ordinary consumer goods in Canada are of foreign origin. The cost of those goods is something over which this government has absolutely no control. If they come from countries in which there is no price control, then of course those prices will be high. If inflation is apparent in those countries the prices of that thirty per cent portion will go higher and higher and higher. We have not much hope of controlling the cost of that thirty per cent of material cost unless those countries adopt price control too. That is why the remarks made earlier in this debate have so much point today. We in this country cannot hope to have an effective system of price control unless our great neighbour to the south also has it. That was the secret of our price control in the last war; and even more so today. The American economy, through their vast productivity and through the Marshall plan, has a dominant effect on world prices. And there today-because of that thirty per cent factor of materials mostly from the United States, partly from Britain, other parts from other countries, and those countries of course have still higher costs- we encounter our first difficulty.
Our next trouble is this. It is not only the price of foreign imports which hoists up our material costs. It is our own exports to those foreign countries. I can give you one good example, namely lumber in my own province. There is a tremendous demand for British Columbia lumber in the United States today at a high price; and it is natural that if we are going to have free trade between our countries, then the domestic price is going to follow the high export price. To go into the next province, namely Alberta, exactly the same story is told about beef. One thing that amuses me is this. Some of the very members who today are complaining about the cost of beef are the very same members who a year or two ago were thundering away to have the embargo lifted on beef shipments to the United States.
Then there is a third effect of our material costs, the first cost in commodity prices, and that is undoubtedly the effect of our tremendous capital investment program. Since the end of the war we have had in this country tremendous investment in new factories, new mines, new oil wells, new public buildings, new private buildings, all these things in our expanding economy which are so necessary to
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The Budget-Mr. Sinclair provide the added employment this country needs and wants in order fully to develop our resources. But these projects are competing not so much for the consumer goods but for the labour which would otherwise be used in producing consumer goods. I do not think there is a Canadian in Canada today who will say that where the rise in our prices is due to this great capital investment program it has not been worth while; because it has created great employment and as never before we are prepared on the industrial front.
The second principal cost in production I mentioned was this matter of labour cost. The first and most obvious cost is the direct labour cost. It varies. If I may use one of the principal industries in my own riding as an example, I will mention saw mills. After all, lumber is an important thing in Canada. The operators in my riding figure that about forty per cent of the cost of producing lumber in a saw mill is direct labour cost, but that is not the entire story. Other costs are the cost of materials and the cost of equipment. The material is logs. The cost of logs from logging camps amounts to a material cost to the saw mill man, but back in the logging camp the cost is broken down again into the costs of acquiring stumpage, and labour cost. My friend the hon. member for Comox-Alberni (Mr. Gibson), who should know, tells me that today in an up-to-date logging camp labour costs run fairly close to fifty per cent. There is also the labour involved in making the equipment used in the saw mills. I would say that if you added the direct labour costs in the factories, and the labour costs which are embedded in the material used and the plant and equipment necessary to produce, you will find that labour is generally at least half of the final cost of a product that is sold on the consumer market.
There are some, of course, who say that you can control prices without controlling labour costs. It is extremely difficult to prove to any thinking person, when labour costs are such an important part of the final commodity price, how that can be done. There are today two factors which increase labour costs. We have of course the spiral: higher prices make labour ask for more wages to meet those prices, which put prices up, and around it goes. It is like the chicken and the egg. It all depends on where you sit as to which came first. We know that, and the workingmen's families in this country know it especially well. Those in organized labour have been fortunate. They have shown their good sense in belonging to organized labour, because they have been able to bargain for


those necessary increases. But the more difficult classes of course are the white-collar workers and those on fixed incomes; they have not the same bargaining power and so they are alone on the end of the spiral.
But this is only one of the reasons why labour costs are being forced up. Internal and external demand for some goods also force up labour costs. Today in British Columbia, for example, because of the tremendous export market, our lumber mills, the logging mills and paper mills are doing very well, and the men who work for them know they are doing very well. If you believe in democracy at all, then you believe that capital and labour should both enjoy the fruits of that extra production. Labour therefore says to management, "All right, you are doing well; we want an increase in wages," something quite removed from their actual needs as compared, for example, with a person on superannuation. Because these companies are doing well and do not want strikes but want to keep in production, they do not put up the same resistance to wage increases as perhaps an employer would who was not making a profit. Therefore because of that export demand for B.C. lumber higher wages in this industry are obtained, and then in other industries the wage scale is pretty well set by the wage scale which the loggers, the sawmill workers, the pulp and paper mill workers have obtained. Other labour groups and other white-collar groups ask for the increases the loggers have received, and take it as their pattern, whether the company they work for is making money or not. So there again is another pressure shoving up labour costs and therefore commodity prices.
We find a similar pressure created because of internal demand here in the east. There is the demand for automobiles. The hon. member for Winnipeg North (Mr. Stewart) said this morning that there is still a great demand in this country for new automobiles. Because of that, the companies -are doing well and are anxious to stay in production. Then, for the same reason the employees of these companies say, "We should share in this extra money you are making"-as they should. Once again the pattern certainly for industrial labour here in eastern Canada is pretty well set by the increases won by the automobile workers because of the good profits made in that industry. These then are the two pressures forcing labour costs up: the natural desire to get more wages to meet higher prices, and the natural desire to share in good profits.
I know there -are people in this country who take all opportunities to advocate price

The Budget-Mr. Sinclair
control but make no mention of wage controls. An example of that was given in this House of Commons' not so very long ago and may be found at page 452 of Hansard. Hon. members would do well to look at this. The hon. member for Springfield (Mr. Sinnott), who is a farmer representing farmers, asked the leader of the C.C.F. party a very simple question. He asked whether it was the policy of his party to believe in at this time over-all price and wage control. Instead of a short yes or no there are two paragraphs of the finest pussyfooting and evasion that have ever adorned the pages of Hansard. And when it was all done our farmer from Springfield said, "you still have not given a yes or no", and the leader of the C.C.F. party said:
I am afraid I cannot help it if the hon. member does not understand me; it is not my fault.
It certainly is not his fault that he does 'not understand. The leader of the C.C.F. party took great care in this statement to see that he did not understand. He skirted around wage control by saying that during the war wage control was enforced by labour itself on a voluntary basis. You remember at the beginning of the war we had that fine no-strike pledge voluntarily offered by labour, but once it became necessary to impose price controls, wage controls had to follow. Labour did co-operate, but it was not voluntary, and the wage scales were administered by the national war labour board, on which labour and management and the people of Canada, through the government, had representation. Therefore when he speaks of price control and makes no mention of wage control, then I say he is kidding the Canadian people.
I say at the moment that it is extraordinarily difficult to have a practical workable price control, as we had during the last war, first of all because of the fact that we have no control over thirty per cent of the basic materials which we use in consumer goods, and secondly because the Canadian people apparently are not ready for wage and salary controls which must inevitably follow. We need more than this, however, to have effective price control. You may have good regulations, but you must have skilled people administering them, and we certainly had that during the last year. It cannot be done by our civil servants, no matter how able they are, because they have been too remote from the very technical problems of production and marketing.
When you enforce an arbitrary price control across the country you are trying to dam tremendous economic forces which until then have flowed freely and adjusted themselves in countless ways every day in every business
deal across the country. If you are to have an effective dam, you must have the machinery, you must have the people who are intimately aware of the problems of industry and the forces to be controlled. In wartime they came down here, some dollar-a-year men, and some served on government salaries. They did a splendid job on the wartime prices and trade board. But despite their knowledge and all that, there was continuous trouble. One that I remember is that of baby clothes. There was no baby clothing in Canada because the price set on baby clothes was out of relation to the price set on children's wear and adults' wear. And the manufacturer, with only so much cloth and so much labour at his command, found he could do better with what he had by making children's clothes and adults' clothes.
The second step for effective price control is to recruit a corps of these extremely trained and able men, who today are in industry across the country. They came here in wartime. I do not know that they would be so willing and anxious to come now in peacetime when every business across the country is faced with great problems with which it has to grapple as we approach a showdown with Russia. There is another reason why I think that some of them will be a little reluctant to come down here.
During the war we had Donald Gordon from the Bank of Canada doing a magnificent job because he had the guts to stand up against the manufacturers and say, "This is the price; this is what it is going to be, and that is it", and also because he had the confidence and respect of those businessmen who came in contact with him and who knew he would give able and fair decisions. Donald Gordon took another job, a job in which he was again going to try to represent the people of Canada, to try to make their Canadian National Railways a success, to try to hold freight rates so the consumers of this country and the farmers of this country would get a better break. When it came to the time of labour negotiations, the union leaders did the job they were picked for and spoke for the men, and Donald Gordon spoke for the job he was picked for, namely, to try to hold costs and so rates on the Canadian National Railways, which incidentally runs at a loss, the same job any other manager negotiating for his company would try to do. But what happened? He is abused and he is blackguarded in this house by members of the opposition, including the leader of the C.C.F. I think one of the finest things I have ever seen done since I have been in this House of Commons was when the hon. member for Calgary West (Mr. Smith) spoke up as he did
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The Budget-Mr. Sinclair and paid the brave tribute that he did to Donald Gordon. If people who are trying in their own spheres to do their job and hold the line against inflation-and it is a very difficult problem we have today-are to be abused and blackguarded in this House of Commons where they have no right of redress or reply, then I do not think we are going to find it so easy to get other people to come down here, the skilled and technical people we need to administer price control, as we did in the last war.
Then there is the third necessity for effective price control, and it is probably the most important of all. We may have legislation, good legislation modelled on that of the last war; we may have those skilled administrators; but unless we have public acceptance in Canada of the need and the urgency, then the program is doomed to failure before it even starts.
At times the Canadian people have been accused-especially by some of, our journalists who write learned magazine articles- of being people without much colour or imagination. However, there is one characteristic about the Canadian people. They will not be pushed around needlessly. There is no sacrifice that the Canadian people will not make for their country once they are convinced of the necessity of it. But a Canadian has an instinctive abhorrence and revulsion against unnecessary regimentation, unnecessary pushing around. One reason we were successful in the war was that the Canadian people knew these controls were imperative and that they were getting a fair break. We were all in that war together. I can tell you that from my own personal observation we were much more successful in complete public acceptance of these controls than either Great Britain or the United States, because we had, for example, very little in the way of black-marketing. It was the patriotic thing and the right thing to do to obey the law; no Canadian thought it smart to chisel. But today I have not noticed very much public acceptance of the fact that, with goods, though fairly high in price, still not in short supply, an over-all policy of clamping down controls, including, as it must, wage controls, is necessary.
Something has been said about the cost of living index standing at 168. Let us look at that for a moment. The 168 is based on what? It is based on the average cost of living between 1935 and 1939. Let us remember the conditions in 1935 and in 1939. In 1935 we had the worst unemployment the country had ever known. Even by 1939, according to a royal commission, 17 per cent of our working force were without jobs.

The Budget-Mr. Sinclair men over there, the hon. member for Yale (Mr. Jones) and the hon. member for Moose Jaw (Mr. Thatcher) who have had more experience with instalment buying than all the others have had, who know its faults and advantages, but those members did not speak.
What has the government done thus far to check inflation? I cannot do better than turn to the report of the royal commission on price spreads and recall what they said should be done, and then to point out what the government has done.
First of all, the government can levy high taxes, leaving less and less for the people to spend. We have done that. We should take more money from the taxpayer today according to the hon, member for Greenwood (Mr. Macdonnell) although the policy was "mulcting the people" two years ago. We have certainly done that, and we are doing it again to meet our requirements.
Then there is the recommendation that we should discourage borrowing and the raising of capital for investment. Well, of course, with our curbs on consumer buying, housing loans and farm improvement loans, we are taking a step in that direction.
It is said that we should encourage savings. We did that in the last war by the issue of victory bonds, and, because the people of Canada thus got the habit for thrift, have continued since the war with dominion savings bonds.
Then, there is the recommendation to defer capital expenditures, and we will do that despite the hon. member for Queens (Mr. McLure) and the hon. member for Winnipeg North Centre (Mr. Knowles), who think that their projects in Winnipeg and in Queens should be gone ahead with, and economies made in other ridings.
Then the final recommendation of an overall control of prices and wages. I say that when the time comes for that it will be done as it was done during the war.
I was in the library reading up a 1939 Hansard which is in great demand at the present time and I was interested in the speech made by the Hon. H. H. Stevens, who was the financial critic at that time. He made a very able and clever speech and he said that he hoped the government would profit by the experiences gained in the 1914 war. Of course Canada in 1914 had never waged war. We went into the thing green and the government made some very bad mistakes and there were a number of scandals. Of course the 1939 government could and did profit by studying that record.
We came out of this war with a great record. The people of Canada were proud


of the war effort, of their industrial and agricultural production. Today we are in a still different position. In 1939 we did not have a great industrial potential, but during the war and in the last four years there has been tremendous industrial expansion in Canada and so we are that much better prepared. Then as an added asset we have in this parliament today key men in this government who were key men in the tremendous war effort that was made, who have not no knowledge of war demands as in 1914, or academic knowledge as in 1939, but practical knowledge because they ran our last war effort.
First and foremost is the Prime Minister (Mr. St. Laurent), who was then minister of justice. Then we have our own minister, who served under Mr. Ilsley and handled the wartime prices and trade board work. During that period we improved our food production tremendously to help our allies and that was done under the great leadership of the indomitable little Minister of Agriculture (Mr. Gardiner).
Then finally one last great asset. This morning on my way to the library I met a prominent Conservative businessman, at one time a Conservative member of parliament. He said to me, "I am glad that parliament passed that bill of Mr. Howe's last night. Both business and the people of Canada have tremendous faith in Mr. Howe because of what he has done." With this combination we can face the future with hope.


Percy Ellis Wright: Mr. Speaker, I should like to compliment the hon. member for Coast-Capilano (Mr. Sinclair) upon the delivery of his speech, but' I cannot agree with some of the subject matters of that speech. I do not intend to deal with it fully but I should like to answer two or three of the things he said and which I think left an entirely wrong impression in this house. In dealing with the public accounts committee he said that every opportunity was given in that committee to hon. members to go into the public accounts. He knows better than that. He knows that the public accounts committee was not called by the government; it was called by the hon. member for Winnipeg North (Mr. Stewart), who in a letter to the chairman of the committee, the hon. member for Bellechasse (Mr. Picard), asked that the public accounts committee be called for the purpose of going into the defence spending by this government. The public accounts committee met and we were sidetracked most cleverly into considering-


An hon. Member:: Oh, no.


Percy Ellis Wright: -the form of the estimates. Ninety per cent of the time of the committee

was spent in determining the form in which the estimates should be presented at the next session of parliament.


Mr. Cruickshank:: No.


Percy Ellis Wright: The hon. member was in that committee and knows that to be a fact. He cannot deny it.


Mr. Fraser:: The hon. member was not there.


George Alexander Cruickshank: I was there more often than you were.


Percy Ellis Wright: Mr. Speaker, if you can curtail the hon. member for Fraser Valley (Mr. Cruickshank) perhaps I can proceed. The hon. member for Coast-Capilano dealt with the various factors that go into making up the cost of production. I agree with the three factors he mentioned, raw materials, labour and cost of plant and equipment. Then the hon. member went on to say that the tremendous cost of new plant and equipment which had been built in this country during the war was one of the factors which increased present prices. I agree with him. If the figures given by the Minister of Trade and Commerce (Mr. Howe) are correct, and I believe they are, during the war there was built in this country between $4,000 million and $5,000 million worth of new plants and equipment.
Every bit of that plant and equipment was paid for by the people. Any person who has read the contracts that were made to cover the production of war materials knows that they contained clauses whereby a sufficient price was paid for the material purchased to cover the cost of plant and equipment. This was allowed by way of special depreciation. The result is that all that new plant and equipment is entirely paid for, paid for by the people of Canada through taxes and loans made to the government. All that new plant and equipment, however, is owned by private interests.
Everything which has been produced since that time by that plant and equipment has carried a price which has enabled the private interests to get what they say is a fair return on their plant and equipment which in fact was paid for by the people of Canada. The men who went overseas and who tried to establish themselves when they returned have had to pay prices which enabled the private interests to obtain a return which they considered to be fair on the plant and equipment paid for by the people of Canada. As the hon. member for Coast-Capilano has stated, that is one reason for the high cost of living. I agree with him.
Then the hon. member for Coast-Capilano said that the hon. member for Rosetown-Biggar (Mr. Coldwell) had not answered the
The Budget-Mr. Wright hon. member for Springfield (Mr. Sinnott), who inquired with regard to our policy on wages. The hon. member for Coast-Capilano quoted part of what the hon. member for Rosetown-Biggar said, but he did not quote this, and I quote from page 452 of Hansard of September 8, 1950:
I suggest that the government should call together the producers of this country, whether farm producers or wage earners, and discuss with them the levels which they feel would be reasonable and proper for both farm production and wages.
In other words, domestic wage and price control. We do not believe in freezing wages or farm prices at levels which are unduly unfair to the wage earners or primary producers. We do believe in wage control. We do believe in farm price control. That is the only way in a civilized economy in which you can get equity between various sections of the country.


James Sinclair: It is a pity he did not say
that.


Percy Ellis Wright: That is what he did say; I am quoting his words.


Mr. Knowles:: Just the sentence before the one you quoted. Read it.


Percy Ellis Wright: I had not intended to make these few remarks but I felt I should make them in view of what the hon. member for Coast-Capilano said. Even though you may be a Rhodes scholar it pays to tell some of the other side of the story and-


George Alexander Cruickshank: That is the first time I agree with you.


Percy Ellis Wright: -if you are going to make a statement you should be ready to back it up with facts. I want to pay a compliment to the Minister of Trade and Commerce. I believe he is the only minister who has dealt realistically at this session with the facts in connection with matters which have affected his department. He has placed before this house a measure which recognizes the seriousness of the situation which exists today in the world. He has asked for power to impose the controls he believes may be necessary. Whether or not he is to use them, he has taken them so that if an emergency arises he can use them to do what should be done to meet the situation that exists in the world today. Let us read what the genial Minister of Finance (Mr. Abbott) had to say, as recorded at page 422 of Hansard. He said:
The increased defence expenditures being thrust heavily upon every country by these new manifestations of Russian imperialism, now open and unmasked, call for sound economic policies; and it is the duty of every country to deal promptly and effectively with the inflationary pressures generated within its own jurisdiction.

The Budget-Mr. Wright
He recognizes that inflationary pressures exist and will continue to exist. What is the position of the world today? Is the Korean situation just an incident, something that will be over in six or seven months? From my reading of the history of the past few years, I cannot be that optimistic. I think it is just another incident in a long train of events. If we are to deal effectively with that train of events it is going to be necessary to be prepared to deal with more than merely the Korean incident. The Secretary of State for External Affairs (Mr. Pearson) has told us that if we are to have peace in the world the democracies must show strength. We have heard that from the state department of the United States. We have heard it from the minister of war of Great Britain. We have heard it from practically every country that is at present in the North Atlantic pact.
What strength is opposing us? According to the Minister of National Defence (Mr. Claxton) and other military experts, Russia has some 175 divisions mobilized today. Last June the democracies had some twenty divisions mobilized. If we are to use strength as a means to peace, let us not think for one moment that the Korean incident is going to be the only one, or that by stopping that aggression we are going to secure effective peace in Canada. If I am any judge of the position in the world today, we are going to be engaged for the next ten or twenty years in strengthening our democracies both militarily and economically to meet any threat in the world. If we are going to do that effectively, then in my opinion we have to adopt the necessary controls and make the necessary sacrifices to do it.
Under the present budget I cannot see that sacrifices are being made by the people of Canada to any extent to meet the situation existing in the world today. At page 421 of Hansard the Minister of Finance, in defending his position against controls, stated:
Finally I would say, without detracting in any way from the magnificent wartime job done by Mr. Donald Gordon and his associates, that the success of the wartime prices and trade board would have been impossible without three things-
I want hon. members to mark these three things.
First, the fact that we pursued a vigorous antiinflationary policy of maximum possible taxation supported by intensive savings campaigns;-
If the situation in the world today is serious, why does the government not follow that policy?


Douglas Charles Abbott: It is following it.


Percy Ellis Wright: It is following it? I have not seen any indication of it in the budget. I have


not seen any indication of maximum possible taxation supported by intensive savings campaigns.


Douglas Charles Abbott: We are paying all our bills, and have a little over.


Percy Ellis Wright: The minister went on to say: -second, that the United States during the war years followed policies similar to our own;-
Yesterday the Minister of Trade and Commerce (Mr. Howe) indicated to us what is in the new bill passed by the congress of the United States giving certain powers to the president. Those powers are much wider than the powers with respect to the control of prices asked for by the Minister of Finance. Whether or not he uses them, or to what extent he uses them, remains to be seen, but the Minister of Finance has not even asked for the necessary controls. The minister went on to say:
-and third, overwhelming public support.
Apparently the minister thinks that there is not overwhelming public support for controls in Canada. Yesterday I read a report of the meeting of the trades and labour congress in Montreal on Saturday. They were asking for price controls. The Canadian Congress of Labour has asked for price controls.


Douglas Charles Abbott: Are the farmers in your riding asking for them?


Percy Ellis Wright: Yes. I am going to read a letter about that. Labour is asking for price controls.


Douglas Charles Abbott: I asked my friend if the farmers in his riding have asked for them.


Percy Ellis Wright: Yes, they have. I have a letter here from Mr. J. L. Phelps, president of the Saskatchewan farmers union.


Mr. Ferrie:: Oh boy, a labour fellow.


Douglas Charles Abbott: Does he live in Tisdale?


Percy Ellis Wright: Here is what he says with respect to price controls. This is the official policy of the farm organization in Saskatchewan, and if I am not mistaken the Canadian Federation of Agriculture has proposed price control.


Douglas Charles Abbott: They have not notified me if they have.


Percy Ellis Wright: Here is what Mr. Phelps says in his letter of August 25, 1950:
We feel the present situation has developed because proper policies were not adopted to provide the necessary stability. We believe that bold and decisive action must be taken by our government immediately. The Saskatchewan farmers union therefore urge, in the strongest possible terms, your immediate consideration for submitting a plan to the members of the House of Commons now summoned for a special session in order to lay before them a proposal to establish immediately a price stabilization commission, upon which industry,

labour and farmers will be adequately and proportionately represented. The duty of this price stabilization commission would be to proceed at once to fix the prices of manufactured goods, wages, hours, rents, profits and the price of primary products, including those of agriculture, used for Canadian consumption-


Gladstone Mansfield Ferrie: The same man was in the Saskatchewan lumber deal, and what a mess he made.


Mr. Speaker:: Order.


Percy Ellis Wright: If the hon. member will contain himself, he can make a speech if he wishes to do so. I know it will be a brilliant one. The letter continues:
-in fair relationship one to the other, and that this price stabilization commission be further charged with the responsibility of revising, from time to time, prices for the purpose of eliminating any inequalities as well as making the necessary adjustments, resulting from technological changes.
In other words, he is asking for price control.


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


Percy Ellis Wright: If the hon. member for Fraser Valley (Mr. Cruickshank) will just contain himself, he can ask his question when I am finished. That organization is asking for price controls. They are asking for equalization of our economy so that there will be a fair relationship. What about the consumers' organization, the organization which the minister's own department helped to organize during the war for the purpose of assisting in the maintenance of price controls? The other day they asked the minister for the reimposition of controls. You have the farmers asking for it. You have labour asking for it and you have the consumers' organizations asking for it. Who are opposed to it?


Mr. Bryce:: The manufacturers.


Douglas Charles Abbott: Everybody who is controlled, including the farmers.


Percy Ellis Wright: No. The manufacturers' association is not asking for it. The Canadian Chamber of Commerce does not want controls. The bankers' association does not want prices controlled. They do not want prices controlled because they are already controlling them, and they do not want the control taken out of their hands. But if the minister is sincere in saying that he is prepared to put in price controls when there is a request for them, I can assure him that there is a request. I am sure that if a Gallup poll were taken in Canada today on the question of price controls 75 per cent of the people of Canada would ask for them.


An hon. Member:: Not the farmers.
The Budget-Mr. Wright


Percy Ellis Wright: Yes. I have just read you the official view of the farmers' organization in Saskatchewan, and there are other organizations as well.


Douglas Charles Abbott: What should the price of beef be?


Gladstone Mansfield Ferrie: Would you ask the government to close the market to the south?


Percy Ellis Wright: The farmer does not care what the price of beef is as long as it has a fair relationship to the things he has to buy. Make no mistake about that. The same thing is true of the other commodities he has to sell. All he wants is a fair relationship; and let me tell the minister that during 1944 and 1945, when we had price controls, there was a better relationship as far as farm prices, labour and other parts of our economy were concerned than there has been since. Because of that we are getting this demand for the reimposition of price controls. These things are not to be laughed at; they are important if we are to do the job we must do today in order to bear our fair share of the responsibilities that are devolving upon the democracies. Unless we see that there are certain controls and adjustments in this country, we will never be able to make our maximum effort.
Now let me read something else the minister had to say. You know, this was astonishing; as I listened to him I thought he had turned Conservative. At page 422 of Hansard he had this to say:
These and such other indirect controls as may become appropriate will support our main policy of a fully balanced budget, and the program as a whole will attack incipient inflation at its source. In this way, and certainly at this stage in our affairs, a great panoply of direct controls with all their regimentation, bureaucracy and arbitrary decisions can be avoided.
I almost thought it was the hon. member for Lake Centre (Mr. Diefenbaker) speaking: "arbitrary controls; regimentation; bureaucracy". Was that what Mr. Usley, the minister's predecessor, introduced in this country during the war?


Douglas Charles Abbott: Yes, during a war.


Percy Ellis Wright: Well, I heard the minister
himself rise in this house and say that it was not bureaucracy or regimentation.


Douglas Charles Abbott: My hon. friend never heard
me say any such thing. I said it was regimentation, and I said bureaucracy must be used under those circumstances. You could not do anything else. If my hon. friend can find where I said anything else I would be glad to have him read it.


Percy Ellis Wright: If it was bureaucracy, at
least it produced results and gave us a united

The Budget-Mr. Wright war effort. If today the minister thinks we do not need a united effort, or we do not need unity in the democracies, then let him just go on fiddling as he is now. If the other democracies follow his example we will soon find ourselves in the hands of Uncle Joe.
I do not want to deal further with this subject, but I would like to refer to the statement made in the house by the Minister of Trade and Commerce concerning the prices to be paid and the spreads between the grades of wheat. The minister indicated that in all probability this year we would have some 23 million bushels of No. 1 wheat, 55 million bushels of No. 2 wheat, 99 million bushels of No. 3 wheat, and 184 million bushels of No. 4 and lower grades. That is a total of some 361 million bushels, of which approximately 49 per cent will be No. 4 or lower. The minister also gave the spreads between the grades, and I think those spreads are quite realistic, considering the amount of low grade wheat that will have to be sold during the coming crop year. The fact that these spreads may be realistic, however, does not alter the further fact that it is going to mean a tremendous drop in the purchasing power of the wheat producers of western Canada. I have done some figuring on those spreads. Last year the initial payment on No. 1 wheat at Winnipeg was $1.75; this year it is to be $1.40. Last year the initial payment on No. 2 wheat was $1.72; this year it is to be $1.40, the same as for No. 1. From there on down, however, the spreads widen. Last year the initial payment for No. 3 wheat at Fort William and Port Arthur was $1.70; this year it is to be $1.30. For No. 4 Wheat last year the initial payment was $1.65 at Port Arthur; this year it is to be $1.22. For No. 5 it was $1.55; now it is to be $1.12. For No. 6 it was $1.51; now it is to be $1.06. Feed wheat was $1.49 last year; this year it is to be $1. In other words the spreads in the lower grades have widened so that this year there will be a considerably lower price paid for those lower grades as compared with last year.
As I said, I believe that these spreads are realistic, in view of the quantities of these lower grades that will have to be sold. However, it means that as far as the western farmer is concerned the average price he will receive for the wheat he has to sell, because of the lower grades and the greater spreads, will be approximately 25 cents a bushel less than last year. The initial payment will be 35 cents less, which means a drop of 60 cents a bushel in the initial payment he will receive when he delivers his crop this fall. A difference of 60 cents a bushel on


361 million bushels means a drop in purchasing power of approximately $216 million as compared with last year. Then last year the western farmer also received payments on past deliveries. I have before me the report of the wheat board for 1948-49, which states: During the crop year 1948-49 the payment division was concerned with the 20 cent adjustment payment authorized on wheat delivered to the board between August 1, 1945, and March 31, 1949, as well as in connection with previously authorized payments. During 1948-49 the payment division issued 1,365,559 cheques to producers with a value of $220,681,269.95.
So we have a decrease in the initial payment of $216 million. We have only one other payment due, which I shall deal with later. We also have a drop of $220 million in receipts on certificates, which means a total drop of some $436 million in the amount of money available to western farmers to purchase goods and services this fall.


Clarence Decatur Howe: If 1 may interrupt my hon.
friend, he will appreciate the fact that because the initial payment is lower it does not mean the sale price of the wheat will be very much lower. He will also keep in mind that the crop this year is much larger, so I would say the return to the western farmer from the crop this year will be considerably more than last year.


Percy Ellis Wright: Yes, I was coming to that;
I have those figures. At the moment I was dealing with the amount of money that will be available to the farmers of the west this fall.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Percy Ellis Wright: When the house rose at six o'clock, Mr. Speaker, I was indicating to it the cash position of the western grain growers with respect to this year's crop, owing to the severe frost which occurred in western Canada and owing to the reduced prices and reduced grades this year. The Minister of Trade and Commerce (Mr. Howe) had interrupted me to point out that it was estimated that the deliveries this year were going to be larger than those of last year. I had pointed out to him that at the present time I am giving the deficit side of the picture and that I would later give the credit side and show the balance in losses to western agriculture as a result of the present prices and the present condition of the crop in western Canada. I had pointed out the difference between the prices at Fort William as compared with last year; and I should like to give the average price which the farmer

receives in western Canada, as represented by the figures showing the price of the various grades of grain at Regina which is a twenty-cent freight rate point in western Canada, and represents about the average price which the farmer would receive.
At Regina this year the farmer will receive $1.23J for No. 1 wheat as compared with $1.57J last year. But as I pointed out before, most of the crop this year will be No. 4 or lower, according to the figures given by the Minister of Trade and Commerce this morning. No. 4 wheat is selling at $1.05J as compared with $1.48J last year while feed wheat is selling at 83J cents this year as compared with $1.32J last year.
As I have stated, this represents a loss in purchasing power, when taken along with the payments which were made last year, of some $436 million less cash in the hands of western grain producers. That is just the wheat picture.
If we take barley, we find that last year most of the western crop was of an extremely fine quality and graded malting barley, and was mostly sold at $1.40 a bushel or over. As a matter of fact, in a letter from my own farm received today I note that, whereas last year our barley averaged 40 bushels to the acre and sold at No. 2 C. W. this year it is going at No. 2 feed and will sell at less than 70 cents a bushel, or just about half. There will therefore be a loss in coarse grains of approximately $50 million as compared with last year.
Then last year in western Canada there was a part of an area in Saskatchewan and Alberta in which P.F.A.A. payments were made. There was a crop failure in that area and $22 million was paid under P.F.A.A. to the farmers there. This year very little will be paid under prairie farm assistance, even though the value of the crop may be quite low. As hon. members know, prairie farm assistance is paid on the basis of the number of bushels grown. If the average number of bushels in any given township is over eight to the acre, there is no P.F.A.A. payment. This year there will be little in the way of payments under the Prairie Farm Assistance Act.
If you add together those figures that I have given it will be found that there will be in the hands of the western farmers this year approximately $508 million less purchasing power on the basis of the initial payment this year and the initial payment last year and the other factors I have mentioned. I can therefore assure the Minister of Finance (Mr. Abbott) that, as far as the western agriculturalist is concerned, there is not going to be a great deal of pressure on his price
The Budget-Mr. Wright ceiling when it comes to purchasing the various needs of the agriculturalists in western Canada.


Douglas Charles Abbott: The inflationary pressure is not going to be as great this year?


Percy Ellis Wright: As the Minister of Trade and Commerce has stated, there is an increased production this year. Last year there were delivered to the wheat board approximately 318 million bushels. This year it is estimated that 361 million bushels will be delivered, or approximately 40 million bushels more. At $1.05 a bushel, that amounts to approximately $45 million.
Then there is also whatever payment the government may intend to make on the five-year pool. According to the wheat board reports which I have here in my hand it is quite evident, from the figures that are given in it, that from 5 cents to 6 cents would be the amount that is left in the pool for payment. If it were 5 cents, there are approximately 1,400 million bushels of wheat on which that amount will be paid, which would mean approximately $70 million. We therefore have $101 million to put over against the figure of $508 million or, in round figures, approximately $400 million less purchasing power in the hands of western agriculturists this year as compared with last year.
I think those figures should indicate to the government that they should do one of two things. They should see that the final payment on the five-year pool is substantially larger than the amount indicated as being in the pool, and they should see that the initial price paid on this year's crop is increased. The initial price indicated by the government is $1.40 per bushel. The government should act on these suggestions or they should see that the things the farmer has to buy in order to produce this crop are held at a reasonable price level and in fair relationship to his prices.
Anyone who wants to do a bit of figuring can compare the cost today of the things the farmer has to buy and that in the 1935-39 period. The cost index today is approximately 200. It was 196 according to the last figure I saw, and it has been increasing since then. In other words, it costs twice as much for the farmer to produce a bushel of wheat today as it did in the 1985-39 period. According to these figures, however, the average price we are going to receive for that wheat this year is $1.05 per bushel. It therefore does not take much figuring to see that in purchasing power that $1.05 today equals only 60 cents in 1939. Therefore the western producers of grain are back this year to the position they were in in 1939.

The Budget-Mr. Wright
The minister asked me if I thought the farmers in my constituency believed that we should have controls. I would say certainly they believe we should have controls. The position they are in today is the result of the removal of controls. In 1944 and 1945, when we had controls in this country they were in a much better relative position with regard to purchasing power than they are today. Their position is becoming just a little worse all the time; over the last two years it has gradually become worse than it was in 1944 and 1945.
I would say that the report I read of the united farmers of Saskatchewan is a genuine opinion of the majority of the farmers in western Canada. They believe in an economy in which there is some fair relationship between the purchasing power of the farm product, the wages paid to labour and the returns to industry in this country. They have indicated that. They have indicated it by their support of the government's policy with respect to the wheat board; they have indicated it by the support of the international wheat agreement. They have indicated it on every occasion on which they have had the opportunity to show that they believed in an economy in which there are the necessary controls, because they know, as I stated before the dinner adjournment, that if the government removes controls somebody else takes them over, and that somebody else operates them not in the interest of the economy as a whole, but in the interest of his own particular sector of the economy. That is one of the major reasons why I am convinced that if we are to get a maximum effort to create conditions in this world which will produce in the democratic countries the results which will give them the strength that is needed in the world situation today, the only way in which we can do it is to be wise enough to adopt the necessary controls to get the maximum production in this country. I am sure of this: if you leave western agriculture in the position in which it finds itself today as the result of this year's crop, it will not be able to produce as efficiently as it should, and no other sector of the economy can produce unless it is in the position where it is in a fair relationship with the other sections of our economy. That is the policy of this group. We ask only for a fair relationship. We are not asking for regimentation; we are just asking for the imposition of controls that are necessary in a democratic economy to produce the best results for all of the people in that economy.


Mr. J. S. Sinnoti (Springfield):: Mr. Speaker, before I refer to the main notes of my speech

I should like to pay tribute to the hon. member for Coast-Capilano (Mr. Sinclair) on what I believe to be one of the best speeches he has delivered. He has shown this house that he has knowledge; he has a clear brain, and be understands the working of his department. I think it is a tribute to his constituency to have such a man here to take care of their affairs.
We have heard the armchair and street-corner critics of our system of democracy and of this government complain that parliament moves too slowly, lacks efficiency and is incapable of speedy action. I think it can and should be said that, in addition to other important matters, this emergency session of the house has flatly proven that that is not so and given the lie to that sort of carping criticism. This government and this house have shown that since August 29, when parliament convened, it could move and has moved, with speed and efficiency equal to that of any government of any country.
It is true that we have had to sit three times a day, and that many of us have been hard pressed for time on that account; but I must say that these three sittings a day have advanced the business of the public at a time when it was so vital to move swiftly. In settling the matters of vital importance now before this house the government has cleared the way for the dominion-provincial conference and for the over-all plans for social security which we all trust will emerge from that most important conference.
There is not a single member of this house, I am sure, who does not deplore the fact that a nation-wide transportation system was tied up by the railway strike. Since management and labour both floundered on the rocks of disagreement, it was left to this House of Commons and this government to take action whereby trains again are on the move. In my opinion the Prime Minister (Mr. St. Laurent), the Minister of Labour (Mr. Gregg) and their colleagues-not forgetting the Minister of Justice (Mr. Garson) and the Minister of Transport (Mr. Chevrier)-rendered a notable service to this country through the action which was taken in bringing the strike to an end, and paving the way for new negotiations between the railway unions and the railway management.
I was at a loss to understand the tactics of the opposition, which if followed would have settled nothing and which would have had the result only of prolonging this extremely grave situation and interruption of the economy of our country.

I am proud to join with other members in congratulations to our Minister of Finance (Mr. Abbott) on the emergency budget which he submitted to this house last Thursday evening. In that budget he found means by which he could raise funds to meet Canada's obligations under the United Nations charter and the North Atlantic treaty with a minimum of interference with the productive capacity of this country.
We can truthfully say that all our constituents are both pleased and thankful that there was no increase in personal income tax in the budget which was recently brought down. Any increase in income tax would have met an understandable refusal of people to work overtime and hence work themselves into a higher tax bracket. You all remember world war II, when because of heavy taxation some workers declined offers to work overtime on the ground that they "would not work for Ilsley." This I am convinced certainly did curtail some production during world war II. I am sure that withholding an increase in personal income tax will mean increased production of all materials, when such materials are demanded.
Many people of course will deplore the fact that new taxes have been added to chocolate bars, candy, gum, soft drinks, beer, liquor, and other beverages, and while I say nothing against any of these items, I do not believe it will do any harm to any of us either to pay the additional tax or to cut down our consumption of the taxed items.
I believe most of the Canadian people will agree with the Minister of Finance in taxing corporations, increasing the rate of taxation from ten to fifteen per cent and from thirty-three to thirty-eight per cent.
Housewives across this country, and even more the brides and engaged couples, appreciate the consideration given by the Minister of Finance in exempting such household essentials as refrigerators, electric stoves and washing machines from additional taxes. Those items certainly are not a luxury and are needed in every home. These people can now go ahead with a minimum of disturbance in their plans for the future. We have heard appeals from the other side of the house for setting up of price controls such as we knew [DOT] during world war II, and we have heard reasons given by both the Minister of Finance and the Minister of Trade and Commerce (Mr. Howe) why these controls are not reimposed at this time.
I feel these reasons are sound, and more so because they are the considered opinion of
The Budget-Mr. Sinnott men who have had years of experience in administering price controls. They know the advantages and the faults of a controls system, and I am satisfied to be guided by their opinion-as, I am sure, are the Canadian people.
I asked the leader of the C.C.F. party on Friday, September 8, if his party was prepared to endorse controls of prices and wages and I received so long and vague a reply that it is clear that the socialist party in this House of Commons is not prepared to commit itself to an over-all system of price and wage control, but is following a wait and see policy.
This matter was referred to in the house just before the dinner adjournment. I should like to refer to page 452 of Hansard where I asked the following question of the hon. member for Rosetown-Biggar (Mr. Coldwell), leader of the C.C.F. party:
I listened attentively to the hon. member for Rosetown-Biggar, and I should like to ask one question. Does he propose that the government should impose over-all control on wages and prices?
The hon. member replied-and I am going to read all that he said, not just part of it:
I suggest that the government should call together the producers of this country, whether farm producers or wage earners, and discuss with them the levels which they feel would be reasonable and proper for both farm production and wages. During the war there was very little difficulty about the wage earners coming to an understanding and controlling their own wage levels. We were free from strikes and major dislocations. I notice that hon. gentlemen opposite share with us the view that if you can get something without compulsion it is better to do so, and I have no doubt that the unity of labour, in view of the necessity for preventing aggression at tile present time, would enable us to come to suitable arrangements with them for the voluntary control of the wage situation.
So far as industry and other factors in the economy are concerned, the situation is somewhat different. You cannot get together the thousands of people who are producing and distributing all sorts of things, in the same way that you can get the organized groups together, the organized farmers and the organized wage earners. However, in that way X think we could arrive at a decision which would be beneficial to the whole country.
Then I said:
Even after the question I asked and the lengthy answer of the hon. member X still do not understand whether or not he proposes over-all wage and price control.


Stanley Howard Knowles: What was the answer?


John Sylvester Aloysius Sinnott: I read the speech of the leader of the C.C.F. party from beginning to end, and I never found in any part of it whether he was in favour of wage and price controls. When he is asked the question he says, "I suggest that the government should call together the producers of this country." That

The Budget-Mr. Sinnott is not his policy; he is just suggesting it. But it is not the policy of his party. He is just suggesting it to the government, as political bait.
The policy of the official opposition on this matter of a price control system is even more vague than that of the C.C.F. The Tory party, that was hammering at the government all during the post-war years to remove controls faster and faster, now seems to be snuggling up to the price control theory, and when I saw just a few days ago the leader of the opposition (Mr. Drew) shaking hands with the hon. member for Cape Breton South (Mr. Gillis) just after he had finished speaking on controls, it made me wonder-what strange bedfellows. The very people who were dissatisfied with an orderly decontrol policy which the government followed from 1945 to 1950 are now clamouring for restoration of the very policy which they have been so violently opposing. We wonder what their supporters scattered around in a few parts of this country will think of this reversal of form. Or perhaps the leader of the opposition and his colleagues have finally decided to tear up that party's program-


An hon. Member:: Again?


John Sylvester Aloysius Sinnott: -and give it the new look, the same as the C.C.F. has done from time to time.
The measures introduced during this emergency session and which we have been discussing are clear-cut, realistic and meet the needs of the very serious international situation which all of us are now called upon to face.
In the past, Mr. Speaker, I have never hesitated either on the floor of this house or in the councils of this party to oppose legislation in which I did not have confidence. I disagreed with a government policy on oil and gas plans and said so, until our Prime Minister (Mr. St. Laurent) gave us assurance that if it was at all possible to build the line within Canada, this would be done.
The interruptions and noises coming from hon. members opposite can be considered in the same light as they are given. If you tap an empty beer barrel, all you hear is a hollow sound.


James Sinclair: The voice of experience.


John Sylvester Aloysius Sinnott: I consider that the legislation announced in the speech from the throne, and presented to us in the various bills now before the chamber, is of a character that no right-thinking Canadian can oppose.
I recognize and respect honest differences of opinion, but it would be a shabby thing indeed if after binding ourselves to international agreements both under the United

Nations charter and under the North Atlantic treaty we reneged on these obligations.
The defence appropriation act deals with conditions as they are and the means to be taken to meet these conditions. Canada's name already enjoys a proud position through the operations of our destroyers in Korean waters and the flights of our planes on the Japan-Korea airlift, and if the government was seeking any endorsation of its policy in creating the Canadian Army special force, it certainly received it at recruiting offices from Newfoundland to Vancouver island. Strong, capable and patriotic young men flocked to those offices to take up arms in the defence of the freedom won for this country in the last two great wars. They are prepared to fight for that freedom in any country in the world where acts of aggression are committed. They realize also that while they are absent from Canada's shores it is essential that a highly skilled and trained force remain in this country to defend it against possible acts of aggression against our own territory; and all of us, I am sure, will support the government's action in strengthening our over-all national defences to meet the changed conditions and the deepening emergency that now confronts us.
While following the debates in the house for the past week I have found a curious lack of consistency in the criticism put forward by the official opposition. It sounded to me as if, rather than follow any fixed path of criticism, they followed the old slogan, "Every man for himself and devil take the hindmost".
We hear the hon. member for Nanaimo (Mr. Pearkes) striking out in one direction and the hon. member for Kamloops (Mr. Fulton) heading down the road to conscription. We hear the leader of the opposition (Mr. Drew) approving of Canadian military intervention in Korea and the hon. member for Labelle (Mr. Courtemanche) walking down Isolation street. We see some members of the Conservative party taking halting steps towards price control and others remaining grimly silent.
We hear the clamour of the opposition for a committee on national defence composed of members from the whole house. What would the Canadian people think of their elected representatives to whom they have given trust to administer their affairs if they were to succumb to the clamouring of the opposition to take part in a committee of national defence and who would do their utmost to muddle the affairs of the government?


An hon. Member:: They do not need any more muddling.


John Sylvester Aloysius Sinnott: That is only in the opinion of the empty beer barrel. In my opinion the Minister of National Defence (Mr. Claxton) is to be commended for his restraint against accusations of failing to give information when he is constantly giving all the information at his command. His very patience in the face of these rather absurd charges assures us that a cool head is directing the expansion of our defence forces, a head that will not be diverted by political baiting or stampeded into rash procedure.
In the course of this debate we have heard one or two members from the maritimes, and one I believe from my own province, urge a course of decentralization of manufacturing for war purposes. In an all-out war, I believe decentralization of war industry is very essential in the event of large-scale enemy air attack. Of course Canada is not mobilizing her industrial resources for an all-out war any more than she is mobilizing her manpower for that purpose. Hence it may well be that such requests made to the Minister of Trade and Commerce are premature. If, however, in the days to come it should be our misfortune to be forced into another total war [ would commend decentralization of war industry to the minister's attention. It can be said no man in Canada is as fully aware as he is of the location of this country's resources and the best means of developing them for either peace or war purposes.
In the province of Manitoba in world war [I we had a large explosive plant at the adge of my constituency at Transcona. This plant was second to none in its efficiency and productive capacity. Should circumstances ae such that similar plants will be required .n the future, I can assure the minister that ny province can provide the necessary hydroelectric power and also the men and women reeded for that operation.
I would not wish to take my seat without paying tribute to the Prime Minister. No man .n Canada has worked harder or as unselfishly ,n the interests of the Canadian people. When ;he last session came to an end most of us rad an opportunity for a holiday or if not a roliday at least a change of scene and a :hange of work. It has been his misfortune ;hat when a vacation was most needed he was lalled time after time to Ottawa from his summer home. Finally he had to abandon altogether the idea of a few days' well-earned relaxation. On his shoulders fell the final lecision in the railway strike and the final lecision of calling parliament back to meet the Korean situation. Those two delicate lecisions were of the most difficult and complex nature. I believe, and Canadians in general believe, that he not only reached the best possible decision in both cases but recon-
The Budget-Mr. Hansell ciled conflicting opinions so as to advance the great cause of national unity in this country.


Mr. E. G. Hansell (Macleod):: Mr. Speaker,
I once read a rather interesting article which stated that you can always determine the spirit of the age by the phraseology it uses.
I do not now refer to the speech of the hon. member who has preceded me, but I do refer to some of the phraseology used by the Minister of Finance (Mr. Abbott) when he brought down his chocolate bar-pop bottle budget the other night. I fancied I could detect the spirit of government policy in the phraseology used. It is possible to becloud important issues by charming phraseology but to more keen-minded students phraseology is nothing but a dead giveaway.
In reading over the minister's speech and after listening to him the other night I find that there are one or two phrases I should like to comment upon briefly. I trust that, pointing out these phrases and using them as a basis for what I say, will not be considered as a weak argument. The minister talked of . the necessity of maintaining peace by force. A phrase of that kind or similar phrases have been used over and over again this session. When one analyses that phrase he finds that it just does not mean a thing unless it means war.
It is impossible to maintain peace by force. Force is an element of warfare. The only basis for proper peace is the contentment of nations, and you cannot force contentment. When you are dealing with peace and war you are not dealing with materialistic principles, you are dealing with certain life principles and life principles cannot be forced. I hope the minister will follow my philosophy. It is just the same as a husband using a club on his wife in an attempt to beat her into loving him. You just cannot do that; it just will not work. Perhaps some hon. members have tried it. If they have, I am sure they have met with sad disappointment. Contentment of nations and the peace of heart and mind among nations cannot be maintained by force.
Another phrase used by the minister was that there has been "a new manifestation of Russian imperialism, now open and unmasked." Surely the minister did not mean that when he said it. If he did then he exposes himself to one of the greatest weaknesses of which any public man has ever been guilty. Surely the minister does not mean that the outbreak of the skirmish in Korea is the new manifestation of Russian imperialism, and that now it is open and unmasked. Surely he has known that for a good many years. Any student of Marx, Lenin, Engels

The Budget-Mr. Hansell and communist world strategy knows that there is no new manifestation, that it has not been recently opened and unmasked.
Before the war and throughout the war years we in this corner of the house stood up time and time again to warn of the dangers of communist aggression in the world. Over and over again we stood in this corner of the house and warned about the communist fronts that were being set up in Canada and elsewhere throughout the free democratic world. We warned over and over again of thesa things. Surely no one in such a responsible position as that now held by the Minister of Finance could possibly have been misled. Yet we find that some of the great men of the earth were inveigled into certain positions, perhaps by force of circumstances-I do not know-where they made mistakes and pursued certain policies that have brought us to the present dilemma.
I was reading the other day about an incident that happened in England. The leader of a certain communist front known as the European liberation front, Anthony Gannon, stood up and reminded Mr. Churchill of some of the things he had said about Russia during the war. It may be an alarming thing for us to review some of the phraseology that Mr. Churchill used then.
, Here is what he said: "God bless you, Stalin." "Stalin the great." "This great rugged war chief" "My heart bleeds for Russia." "Their word is their bond." These are not the words of communists. They are none other than the words of Mr. Winston Churchill in days gone by. It is a startling thing, is it not, that some of the greatest leaders of the nations should say such things in times of crisis knowing full well that the day would come when communist aggression would have to be dealt with by the free nations of the world. The communists have to remind us of what we said; a sad, sad picture, indeed.
Therefore I say to the minister: Whom does he think he is fooling when he says that this new manifestation of Russian imperialism is now open and unmasked?
There is another phrase that he used. It has been mentioned before during the past few days. I think it is a phrase that contains perhaps the crux of the discussions that have taken place throughout this special session of parliament. The minister said, "of course we are not in a state of war but at a hill of difficulty on the path of peace". Once again I should like to ask him whom he thinks he is kidding. It is a nice thing to say that in order to get around some sort of little technicality. We do not want to declare


a war, it would be dangerous to do so, but we will mobilize a force and send it to the war front to stop communist aggression.
It is all very well to put together phrases that will let the people of the country down easy. Therefore the minister says that we are not in a state of war but at a hill of difficulty on the path to peace. I do not think these verbal gymnastics fool anyone. Just ask the United States soldiers in Korea whether or not we are at war. When the 10,000 or 15,000 Canadian troops get over there, just ask them whether or not we are at war. I know that a verbal battle has been going on between the opposition, particularly our Conservative friends, and the government as to whether or not the government should declare a state of emergency. The government have said that they will not declare a state of emergency because if they did so it would of course indicate that we are at war. So what happens? They like to say that we are not at war, that we are marching over a difficult hill toward peace, but we will send our troops over there to slug it out with the enemy. It just does not add up.
If I may, I should like to give the house my own analysis and diagnosis of the situation. As I see it, this is the picture, and it is based partially on the fact that we now have a wartime budget of some $3,400 million, including in round figures a billion dollars for defence alone. Is anyone going to say that it takes that much money simply to send 10,000 or 15,000 troops to Korea? We have been debating a bill that puts unlimited controls into the hands of the Minister of Trade and Commerce (Mr. Howe). Will anyone say for a moment it is necessary to do that in order to send a mere ten or fifteen thousand troops to Korea? And why have we voted certain commitments to meet certain possible eventualities?
As I see it, Mr. Speaker, the picture is something like this: When the government decided1 to send some troops to Korea, in view of the promise by the Prime Minister (Mr. St. Laurent) that no troops would be sent unless parliament was called, naturally the government had to call parliament. They had to decide whether the people of Canada would accept a wartime economy for the purpose of backing up the efforts of the United Nations. In other words they had to decide whether or not the people had sufficient confidence in the United Nations to accept the internal position of a nation at war. That was what they had to decide. The other day the leader of the opposition (Mr. Drew) was very determined in stating that the great principle at stake was not confined to Korea, that we were

fighting a great world struggle. If my notes are correct he said, "It is a great principle that free nations will unite to preserve their freedom." In another place he said^ "It has to be a free system or a slave system." I think the Minister of Finance will agree with those statements. But now I ask: is that great struggle between the free nations and those other great forces which would impose upon the world a system of slavery confined to what I would describe as a sort of sideshow now going on in Korea? The answer, to my mind, is easy to find. My personal opinion is that the legislation we have been called upon to pass this session, together with the budget of the Minister of Finance, constitutes the initial step in preparation for what in future may become a world struggle. It seems to me that to say anything less is to understate the possibilities.
Now I should like to go on to deal with another matter which I feel should be raised again. I am not going to criticize this budget too harshly; in fact I think the minister has shown a good deal of common sense in bringing down such a budget at this time. I will say, however, that members of parliament may as well get themselves set for their return next January, because unless things change in the world we are going to be given much harsher budgets than this. Of course, as I have said before, whether the people are prepared to stand for the internal economy of the country being placed upon a wartime footing is something we may doubt at the present time. The Korean struggle, what I called a sideshow, has not come home to us too forcibly as yet.
It has been said over and over again in. this house that the cost of living is going up. I am not going to particularly labour that point; we all know it. We in this corner of the house have proposed over and over again a monetary policy that we believe would manage the country's economy so that prices would not rise unduly; but I say that where prices rise as the direct action of profiteers, then those profiteers should be punished severely. When the railway strike was on a little while ago some industries in Canada took advantage of that strike and deliberately raised consumer prices, in spite of the fact that there was no shortage of the commodities with which they dealt. That can .be done also when a national crisis comes upon us, such as a period of conflict.
Some time ago I was reading an article by a United States economist dealing with the inflation of the United States dollar. I cannot say just where I read this; I do not have 69262-Hi
The Budget-Mr. Hansell time to mark and file everything away. We are not given sufficient help to permit us to do that sort of thing, so we must trust to our memory. In any case, this economist said that if the inflation of the American dollar continued as it had gone on since the pre-war years, by 1999, or at the turn of the century, the American dollar would be worth less than five cents. I do not know what the United States government is going to do about it. If that is the case a suit of clothes which now sells for $50, at the turn of the century will cost $1,000. A shirt that may cost $5 today will cost $100. We may say "oh, well, in fifty years we will not be here". Reduce the period to ten years; at the present rate that suit of clothes will be worth $200, while the shirt will be worth $20.
That is a problem for the United States, but I might come a little closer home. The other day we picked up the Ottawa Citizen and read how a reporter had dug up some rather interesting information from an old Citizen some considerable number of years ago. The item was from the Citizen of 1879. That is just seventy years ago. I think perhaps all hon. members read that article. He said that shirts were selling at 75 cents and coats were selling at $4.25. If you figure that out properly at today's prices and note the inflation that has gradually taken place over the years, right here in Canada at the turn of the century we shall be paying $410 for a suit of clothes and $132 for a shirt.


Mr. Smith (Calgary West):: You will not have even a shirt.


Ernest George Hansell: That-is all right. Keep your shirt on. Even in ten years' time we shall be paying $130 to $140 for a suit of clothes; that is, at the rate of inflation since 1879. The strange thing to me is this, and here is where I blame the fiscal or monetary policy of the government. With the advent of the power machine, when machines take labour off the backs of our workers and should produce goods much more cheaply than hand labour would produce them many years ago, we have to pay a tremendous amount more for the products of these machines. Will you tell me why that is so? Physically, there is no answer to it; it cannot be answered. It can only be answered in terms of government monetary policy.
I wish to say one other thing, Mr. Speaker, and then I shall be through. I do not know how the present crisis which this nation is facing and the present policy of the Minister of Finance is going to affect that which we have all been looking forward to. I refer now to the social security legislation which

The Budget-Mr. Hansell this house has been working on and expecting for some considerable time. We have already been told in the last session of this house that it would cost in the neighbourhood of half a billion dollars to put into operation a sufficient or, shall I say, partially-sufiicient old age pension scheme. I hope that in the present crisis we have not lost sight of that objective. Should the Minister of Finance reply or should the Minister of National Health and Welfare (Mr. Martin) speak in this present debate, I believe he should give us some information as to whether we can expect the government to continue to pursue their proposed policy with regard to bringing in proper social security legislation. Is this social security legislation now at a standstill or can we hope to see it introduced in the not too distant future?
Once again right here I want to say a word for our friends, the many incurable people in Canada. The minister is aware of their plight, as we all are. I am sure the minister himself will recognize the fact that their need is even greater than the need of the old age pensioners, great as their need is. I do not know whether we can hold out a great deal of hope for those unfortunate people. I urge that at the earliest possible moment this present administration consult with the provincial administrations and determine right soon that they are going to do something for these unfortunate people.
I do not know what is on the entire agenda for the forthcoming dominion-provincial conference. Perhaps a good deal of time will be taken in trying to unravel and to agree on some constitutional .changes. I do not know whether our incurables are greatly concerned with the constitutional exactitudes that these governments may be fighting about, but I say this: If the government has any responsibility at all, surely it has a responsibility to those who find it impossible even to help themselves. I again urge them to place on their agenda for the forthcoming conference the plight of the incurables in Canada. If that is impossible, and if they cannot place that subject on their agenda for this coming conference, I urge them to bring down, not later than next session, legislation that will give these poor unfortunate people at least a break.
Over and over again, Mr. Speaker, we have said that there is a great deal of money for war but no money for these great needs in time of peace. Are we going to repeat that mistake? Surely not. Surely we have proved that this nation is able to make the necessary provision if only the government is willing to bring down legislation that will benefit those who cannot possibly help themselves.
[Mr. Hansell.)

I do not think I have any more to say at the present moment, Mr. Speaker. I am not going to be harshly critical of the minister's budget. I feel that within his budget there is an element of strategy; which is to let the people down easy for a while; we will sort of creep up on them; but eventually, of course, if a great struggle develops between the two great forces, one of which is clamouring for world power and the other for its survival, the going will indeed be tough.
I hardly know how we can visualize the future if we think of it in terms of a great world struggle. We hope it does not come. We hope that government policy-here, in Great Britain, and the United States-will be such that we shall be able to avert this possible tragedy between these two great forces. We hope it can be averted. Let us pray that Divine Providence will prevent it. Let us one and all do our best and, putting politics aside, let us do all we can to preserve the peace among men.


Mr. G. C. Nowlan (Annapolis-Kings):: Mr. Speaker, as a freshman member of this house I could not be expected to answer the force of the speech delivered earlier by the hon. member for Springfield (Mr. Sinnott), nor the eloquence of the hon. member for Macleod (Mr. Hansell). If I do not attempt to answer either of them I trust it will not be taken as an indication that I subscribe to the arguments which may have been advanced. As a matter of fact, if I heard the hon. member for Springfield correctly, I think he in a moment of exuberance referred to one of the outstanding teetotallers in this House of Commons as "an empty beer barrel". Possibly the soundness of his arguments may be gauged from that. I also noticed that he inferentially, at any rate, criticized the leader of the opposition (Mr. Drew) for having spoken to, associated with or shaken hands with the hon. member for Cape Breton South (Mr. Gillis). I do not need to assure you, sir, or certainly any of the people of the province from which I come, that the hon. member for Cape Breton South is recognized as one of the spokesmen of the maritime provinces. Possibly the stature to which he has attained is due in no small part to the fact that he has uttered sentiments and1 voiced desires which should have been better expressed by hon. members on the government side of this house.
Without subscribing entirely to the sentiments expressed by the last speaker I am sure that we all, recognizing the financial problems of the moment, echo his desire that everything possible be done for that class of people to whom he referred in the latter part of his speech. I am sure that all of us have

received letters daily from hopelessly crippled and incurable people who present pathetically pleas which wring the heart of every hon. member. We hope and trust that sometime in the near future, if not now, this government will be able to advance measures which will be of assistance to that class of people.
I do agree with him that there is somewhat of an atmosphere of unreality about this debate and about the budget. During the last few days, as I have sat here and watched the Minister of Finance (Mr. Abbott) and the Minister of National Defence (Mr. Claxton) and recalled the days in which we were associated in great undertakings when we together shared certain responsibilities and certain risks, I thought of the question that we then rhetorically asked: "Daddy, what did you do in the great war?" We thought then that the greatest and the highest answer which could be given was to say: "I served in the artillery".


Douglas Charles Abbott: Hear, hear.


George Clyde Nowlan: This time I suspect that the generations coming up will be asked by their daddies: "Son, what did you do in the third war or the Korean war", or call it what you will, and they will say: "Daddy, 1 paid ten cents for a chocolate bar". That seems to me to be the measure of the-


Some hon. Members:: Oh, oh.


George Clyde Nowlan: I heard the remarks from
the other side, but I do suggest this, sir, however lightly they may be taken: there are some who question the wisdom of taxing the chocolate bars which are associated with our children's lives in this country today. The taxes on chocolate bars and soft drinks have been increased thirty per cent whereas spirits have been increased ten per cent. I think that is part of the atmosphere of unreality to which reference could be made at this time.
We have had a great picture of a buoyant economy. The Minister of Finance, I think with some justification, has pointed out the fact that we have had a prosperity almost greater than ever before. He said that there is great employment, high wages and a buoyant income throughout the Country. So great is it that yesterday we were forced to deal with legislation restricting credit purchases of people, many of whom, I suggest sir, are not in particularly affluent circumstances. That may be, and undoubtedly is, one way in which to deal with the pressures which we see rising around us.
Like the hon. member who last spoke, I have not a filing system and I do not remember just where I saw it, and the figures may
The Budget-Mr. Nowlan be inaccurate, but I know I took it from an editorial which appeared within the last few days in one of our national papers. It said that the wages paid by this government in 1949 were $313 million; whereas the wages which were paid in 1939, ten years before, were but $77 million. There, sir, you see inflationary pressure. I suggest this is a matter in which economies could be effected and inflationary pressures reduced.
Dealing with buoyant economy, I also noticed in the press yesterday that the dairy farmers of Canada received in June, 1950, over $3,500,000 less than they received in June, 1949. There is no great buoyant economy there, sir. I wonder how much their costs have increased over June, 1949. I know naught about the dairy industry of central Canada, but I do know of it in the east. I know that those people in the extreme distances of this dominion pay a higher cost for freight and the rest of it, and are farther away from markets than the other sections of the country, and they are faced continually with the pressure of increasing costs and decreasing returns. These things are threatening that industry to such an extent that many of those now engaged in it may be forced out of it in the very near future. If that happens I do not have to suggest to anyone here what the effect will be upon the dairy industry of Canada as a whole.
Tonight I am not going to discuss general matters. I want to refer to one particular matter, namely, the situation that in my judgment exists in or applies to eastern Canada, and particularly to Nova Scotia and my own constituency. It is undoubtedly true that in many places in Canada there is a buoyant economy. It is undoubtedly true that because of increased government expenditures, because of expenditures which are going to flow necessarily from wartime production, money will increase in central Canada and in other places throughout Canada. But, sir, I am suggesting to you that in the east we are not going to benefit from this wartime or so-called wartime expenditure.
The situation is entirely different from what it was in the years that followed after 1939 when great convoys of ships sailed from the eastern Canadian seaboard, and when one could drive over the roads in my own province and see 200, 300 ships in convoy lying in "an eastern Canadian seaport" waiting to sail for overseas, and the shipyards and the dockyards and every other industry in eastern Canada were working day and night in order to keep those ships equipped and supplied with provisions. Those days are not going to return during the

The Budget-Mr. Nowlan crisis while we surmount this hill ot emergency to which the minister referred the other night.
We are going to have to bear our part of the costs. We are not going to receive from these wartime expenditures any corresponding benefit whatsoever, if one wishes to call it a benefit. I am thinking particularly now of an industry in my own constituency, namely, the apple industry which has existed in the Annapolis valley for over a century, which but a few years ago was the largest within the British empire, and which even up to the outbreak of the last war exported more apples than did any other fruit-growing district in the entire British commonwealth. What is the condition there today? Once there was an outbreak of war, that industry became a wartime casualty. The government recognized that fact and dealt with it in many ways, and on the whole in a fair and adequate manner.
Then came the end of the war. It was hoped that the industry could be re-established. But what followed? Owing to the exchange situation and the dollar problem that industry is once more deprived of the markets which were its traditional heritage, and practically its only outlet. So that today the growers in the valley are facing a situation wherein, owing to increased freight rates, they are prohibited from delivering to other parts of Canada, and because of exchange controls they are prohibited from exporting outside of Canada. The result is that we are now restricted to that small market in the maritime provinces, with some slight access perhaps to the market in eastern Quebec and in the city of Montreal.
The growers there tonight, sir, are facing a very grim situation indeed. The crop is on the trees. To pick or not to pick is the question. If they pick, then who supplies the cost? Who supplies the labour cost of picking, the cost of containers, the cost of storage? If they do not pick, then the crop is destined to freeze on the trees within the next few days or, at the outside, within the next few weeks. As I said, only a proportion of the crop can be sold locally. It is a decision the growers have to make-and I suggest it is a decision concerning which they should receive some assistance and some direction from the government of this country.
I am not for one moment saying that critically. All of us who have been here in the last three weeks realize the pressure which has been borne by all members- a pressure which, may I say in parentheses, I hope will not be experienced again in any future session of parliament, because members of parliament cannot do their duty working under such


pressure as this. And if there has been pressure on the ordinary member, I realize just how much greater must be the pressure upon the ministers, the members of the government.
I do say however that some decision must be made, and that some decision must be made soon. Last year the Minister of Agriculture (Mr Gardiner) said, in response to a question in the house, that the fruit-growing industry was entitled to price support. I think that is a matter which is established by legislation by the law of this country. We need to know soon, in the east, what lead is to be given, in order that a decision may be made as to whether all of this crop is, or is not, going to be harvested.
The Secretary of State for External Affairs (Mr. Pearson) has emphasized on various occasions the necessity for and the importance of exporting goods to those countries more depressed than our own. I believe we all subscribe to that view. We all realize that, go over the hills of difficulty as we may, we will not defeat communism nor will we eradicate it by battalions or by bayonets. This can only be done by improving the living standards and living conditions throughout the world.
The export of food is one way-perhaps a small way-in which that can be done. In the area to which I have been referring there will be within the next few weeks hundreds of thousands, perhaps millions of dollars worth of food which may be lost. My suggestion is that action should be taken whereby a substantial portion of that which heretofore we have exported to Great Britain might be processed, put into cans and shipped overseas-if necessary it should be shipped to those depressed areas, and given away, where communism is now rampant. Because I can assure the house that communism does not thrive on full stomachs-and particularly if one has his stomach full of apple pie composed of Nova Scotia canned apples. Certainly that would be true if the apple pies were anything like the ones made in my home.
I do not want to enter into a discussion of local problems. I realize the danger of engaging in a discussion of local issues, and the possibility of starting a sort of chain reaction throughout the house. It is not my wish to do that at all. But I have attempted in discussing this matter affecting my own district to speak not only for the farmers there but for those in the east, generally. We are prepared now to pay, and in the past have paid our full cost to build and maintain this Dominion of Canada, and those costs have borne heavily upon us.


An hon. Member:: Ontario and Quebec.


George Clyde Nowlan: Ontario and Quebec-your central waterways, and all the rest of it. There are costs, and they will not be insignificant, lying ahead of us. But I do suggest to the Minister of Finance (Mr. Abbott)- and I know he appreciates the situation-that if he is going to maintain the balanced economy throughout this country that is so essential, if he is going to fight in depressed areas, and if he is going to have the people loyally working behind him, climbing these hills to which he referred the other night- because there is more than one hill on the way-then he must build up the economy of the country so that those in the east who did not benefit at all from defence or wartime expenditures may receive money in some other way. One of those ways-and I know the Minister of Agriculture recognizes this fact-one of the important ways in which this must be done is to assist the agricultural industry in the east along lines I have suggested tonight, and in other ways which I could suggest if I were so inclined.


Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, first of all I should like to thank the hon. member for Annapolis-Kings (Mr. Nowlan) for coming to my rescue.


James MacKerras Macdonnell: You don't need much rescuing.


Clarence Gillis: I did not think it was such a great crime for the leader of the opposition (Mr. Drew) to shake hands with me. We do that quite often, and I hope the time will never come in the House of Commons when, despite differences of opinion on political matters, we cannot do that.
Neither am I surprised when the hon. member for Annapolis-Kings comes to my rescue. He does that for two reasons: first, he is a Nova Scotian, something that goes deeper than politics; secondly, twenty years ago we did a lot of work together trying to untangle the economic bear traps in which veterans were being caught. We have a good deal in common.
I shall not detain the house long, but I have risen this evening to try to straighten the record a bit, because I think it was badly tangled this afternoon by the hon. member for Coast-Capilano (Mr. Sinclair). I know the Minister of Finance (Mr. Abbott) and the hon. member for Coast-Capilano want to keep the record straight. This is not the time, in my opinion, to tangle it up needlessly. It is tangled badly enough as it is, but when we see a deliberate attempt to put another twist in it, then I think that is unpardonable. First I would straighten out the hon. member in
The Budget-Mr. Gillis his criticism of the speech made this afternoon by the hon. member for Winnipeg North (Mr. Stewart). I thought the criticism was quite uncalled for, because I felt the hon. member for Winnipeg North was trying to be helpful. In this party we have no experts, no financial critics as such. Most of the members of this group graduated from the school of hard knocks. But the party itself is a logical protest against the inactivity of the old political parties-because if they were doing a good job there would be no necessity for our being here. The fact that we are here is proof-positive that a large section of the Canadian people are not satisfied.
I would have been quite prepared to let stand the analysis of the budget made this afternoon by the hon. member for Winnipeg North. I have no desire to go further with it because I think on careful examination of the speech of the Minister of Finance (Mr. Abbott) it will be found that in his analysis of the picture as it is now and as it may be in the future he has given the house a lot of thought-provoking information. But, as I said, my main purpose in getting up this evening was to straighten the record.
I do not think the hon. member for Coast-Capilano (Mr. Sinclair) did himself justice this afternoon. He told us that he had gone to the library to dig carefully into the history of excess profits taxes, and had come to the conclusion that there was no room or need for it in this country. He based his argument upon a statement made by Hugh Dalton some three years ago when he was chancellor of the exchequer in the British government.
The hon. member did not dig back very far. I suppose he found what he was looking for but when you look hard enough for a thing you are apt to find it regardless of whether it is right or wrong. I was reminded of a story my mother used to recite when I was a small boy. Two men were in jail together in the same cell. When the one looked through the prison bars he saw mud, but when the other looked through he saw stars. It depends on what you are looking for. I think the hon. member for Coast-Capilano was in that position this afternoon when he was in the library. If he had wanted to seek for the truth in his examination of the record it was there to be found. But regardless of the merits or demerits of the present situation he was simply looking for something to use in a political way against the hon. member for Winnipeg North (Mr. Stewart), who I think tried to do an honest job. In order to put the record straight I am going to quote from an analysis to show whether there is room in Great Britain for an excess profits tax and whether there is


Douglas Charles Abbott: That is the federal tax only.


Clarence Gillis: The over-all picture in Canada as far as the federal government is concerned is a tax of 35 per cent on corporate profits as against 55 per cent in Great Britain. In my opinion there is a lot of room for some kind of tax on Canadian corporate profits. I merely wanted to set the record straight on that point because of what had been said by the hon. member for Coast-Capilano, who is the minister's assistant. I believe the minister wants to be fair. I do not think the hon. member did himself justice when he got up and tried to prove to the house that we were crazy, irrelevant and all that kind of thing when we suggested that there was room for an excess profits tax in Canada in order to help hold down inflation.
The next point in connection with straightening the record has reference to the imjfosition of price control. I think the record is a bit tangled up in this connection. Some think that there is no necessity for it now. The Minister of Trade and Commerce


tMr. Howe) has asked for stand-by legislation which can be put into operation at any time conditions in the country warrant. He may not have to use those powers for some considerable time.
I think the field in which there is the greatest emergency is the field of runaway prices. I doubt if there is a more disturbing factor in the country. Reference was made this evening to the railroad strike and I shall not refer further to it because it is partially settled and I hope it will not be resurrected. I think the underlying factor of that strike was the runaway prices together with the fact that no attempt was made to deal with them. There were prolonged negotiations but I am pretty sure that the men who took that step did it as a gesture to bring attention to the seriousness of the uncontrolled cost of living.


Arthur Leroy Smith: No doubt about that.


Clarence Gillis: The minister has stated
emphatically that it is not intended to impose price control. What would have been wrong with the Minister of Finance taking the same step as that taken by the Minister of Trade and Commerce and asking for stand-by legislation which could be imposed if people did not keep their prices in line? If we had the machinery it could be put into operation overnight. But the minister has no stand-by legislation and he is powerless to do anything about inflation in the country without invoking the War Measures Act. I submit that he should have taken the precaution of enacting stand-by legislation.
Let us look at what happened to the cost of living in the United Kingdom as compared with Canada between June, 1945, and June, 1950. The official figures are as follows: Taking the index for the United Kingdom at 100 for June, 1945, it went from 100 to 114 in June, 1950. Taking the Canadian index for the same period, in June, 1945, it was 119.5, and by June, 1950, it had gone up to 165.4. The increase in Great Britain was 14 points or 14 per cent. The increase in Canada of 45.9 equals 38 per cent. There is a terrific difference there. They have price control machinery in Great Britain, and they also have wage control machinery. There is no doubt that in that country there is pressure for wage adjustments, but Great Britain has had many more difficulties to contend with than we have had. They have had to dig themselves out of the rubble of the last war. Nevertheless the figures I have just given show that, by using the control machinery they had in force during the war, they have equalized the problems, spread them over the

general public as a whole, and succeeded in holding down the cost of living. The figures surely indicate that they have been successful in holding prices within reason and at the same time enacting an excess profits tax as another measure for holding down inflation.
I know that the Minister of Finance (Mr. Abbott) is a much better economist than I am, and knows the mechanics of finance much better than I do. If he puts the amount of money we have appropriated for defence purposes into circulation, and at the same time converts 25 per cent of our plants, let us say, to war production, thus curtailing the production of consumer goods to that extent, the only thing that can happen will be that prices will be shoved up.


Douglas Charles Abbott: If we have that much you will have a lot higher taxes than you have now.


Clarence Gillis: I believe the minister should at least have stand-by legislation so that he may clamp it on if the necessity warrants. If it does not, if everybody is good, if everybody recognizes the problem and tries to hold prices within reason, then he will not have to use it. There is another point I should like to make before I finish. I think the hope of the world of the future depends on the United Nations. I visualized-and I think almost everyone did who took part in the setting up of the United Nations-that some time in the future it would be the nucleus for world government. I think everybody also recognizes that the world has shrunk to the point where that will be necessary in the future. While we pay a great deal of lip service to the United Nations and what they are doing, we do not accept our commitments to that organization very realistically. We do not do much about them. For example, there is a report entitled "National and International Measures for Full Employment" by a group of experts of the United Nations. It deals with the whole question of raising living standards and what should be done. If you will look at the bottom of page 64 and the top of page 65, you will find that this committee of experts of the United Nations decided that one of the most essential things in the world today to maintain full employment, raise standards of living and prevent aggression and the rise of communism, was for each country to enter into a long-term investment program in the backward countries. They set that out very clearly as something that must be done.
The situation in Canada, the United States and every one of these countries today is merely a symptom of the disease. You do not cure a disease by treating the symptoms. That is exactly what we did in the last war, and we seem to be headed in the direction of war again. You have to get at the 69262-42
The Budget-Mr. Gillis disease itself, and the disease is malnutrition. Millions of people in the world have not enough to eat. They are much worse off today than they were when the last war took place because most of those countries had some kind of production, some kind of standard of living. Today they have been devastated, smashed and torn to pieces. They are filled with maimed children and people with broken minds. There is not much to work with. If there is any hope for peace and sanity in the world of the future, I think it has to come from the North American continent. As I pointed out in the house before, we have only 7 per cent of the population of the world and we are producing 45 per cent of the production of the world. I believe the potential figures are about 57 per cent of the world's productive capacity, and some time in the future about 10 per cent of the population. Then again I do not think you can sell the people of Canada and the United States the idea that they should give stuff away. Everybody gets their back up at that suggestion and says that they have to pay taxes. If you can make it an investment that will pay returns directly to this country in the future, then I think you can sell the idea to the people of Canada and the United States. Then I do not think that the devastated countries want to go on relief. I believe they want loans or investments from this continent, but they want to decide for themselves, with technical assistance from us, what they are going to do with the money, and how they are going to build for the future.
Unless something like that is done, I think we are just going to keep on treating the symptoms and not get at the root cause of the disease. So far as I can ascertain, I think one of the most practical propositions was made by Walter Reuther, president of the United Auto Workers. On behalf of his organization Reuther suggested that the United States should make $13 billion a year available to the United Nations for the next one hundred years. He recommended that they set up an economic commission within the structure of the United Nations to use that money for the purpose of developing backward countries. He pointed out further that such an amount of money seems like a staggering sum, but it is only about one per cent of the total amount spent by the United States on the last war, and nothing was solved. If the United Nations is going to be the kind of body that we hope it will be in the future, it must have something to work with, and you must have some honesty among the people who carry on that administration.
Just a couple of weeks ago the British Labour party also made a similar proposal for a global assistance plan. It was pretty much

The Budget-Mr. Gillis along the lines of Reuther's proposition, but they do not spell out in terms of dollars the amount that they figure should be put into the United Nations. They have made that gesture. The British Labour party recognizes that something like that must be done. I think it would not be a bad idea for the Secretary of State for External Affairs to bring before the house a concrete figure representing the amount of money that Canada can afford at this time. We cannot afford not to take that kind of action. We will show that we are ready to recognize such assistance as one of the main weapons with which to prevent wars in the future. We would show that we are ready to co-operate with Great Britain in this global assistance plan, that we are willing to examine the proposal of the auto workers, and are willing to abide by the recommendations of our own experts on the United Nations commission; and we are prepared to participate at any time, through machinery set up by the United Nations, in a long-term investment program for the development of the backward countries.
I think something like that has to come if we do not want to continue on the road we are following now, and perhaps bring about another mess such as we had the last time. Now we have the United Nations to work through, and I believe we should work through that agency. In spite of the obstruction of Russia since its formation, I believe the United Nations has done a good job. You can imagine what the tension would be in the world today, disorganized, messed up and mixed up as it is, if we did not have a body like the United Nations at least trying to iron out these difficulties at that level.
Then I want to say that while the Marshall plan was a good stopgap move which provided a great deal of assistance, at the same time it was actually relief. I have heard some very strong criticism by some of the countries to which Marshall aid was given to the effect that the administrative machinery was not good, that very little aid actually seeped through to the man in the street who was starving and half clothed. That period is over, but through the Marshall plan and UNRRA I believe we have gained sufficient experience at the international level to be able to set up machinery within the United Nations not only to prepare to make money and goods available but also to send in technicians who would help develop these countries from the grass roots along democratic lines.


Arthur Leroy Smith: Would the hon. member permit one question? I assure him I am asking it merely for information. According to the scheme he has enunciated and having regard to population, the cost to Canada


would be $1,300 million per year for this period of years. What would be the difference between providing that amount of money in this way and the moneys provided under the Marshall plan? What different treatment would be given it?


Clarence Gillis: The difference is that there is a limit to Marshall aid; within a year or so it will end completely. What I am talking about now, what Walter Reuther is talking about and what the British Labour party is talking about, is a global plan to replace Marshall aid once it ends. As I said before, Marshall aid was relief; it was given away. I think the time has come when through the United Nations and supervised by the United Nations the countries within that organization should make funds available, on a per capita basis, to the backward countries where communism is flourishing and will continue to flourish unless we get in there and do something for them. By investing in such countries they become tied up with us. We have trained personnel we can lend; and if it is honestly carried through in my opinion it would bring about the sort of thing many people are discussing. I refer to all the talk we hear about one world, the brotherhood of man, help thy neighbour, and all that kind of stuff. Unless we get around to that we will just continue as we are now, and we are not getting anywhere. We fight a war; we think it is all over, but the shooting has never stopped since 1939. It is still going on, and in my opinion it is only by machinery of this kind at the international level that we can hope to cure the ills from which we suffer.


Arthur Leroy Smith: I am not quarrelling with the hon. member; I am inclined to agree with him, but I am just trying to find out the difference in treatment between this $1,300 million and the billions spent under the Marshall plan.


Clarence Gillis: I thought I had explained that a moment ago. I really do not want to go into the mechanics of the Marshall plan, because a fellow might say a lot of things he would not want to say about it. The Marshall plan and UNRRA were brand new experiences. That is what we are up against today in all the mechanics of society. I have said before in this house that in 1939 we closed the old book. There is no history to guide us through this period. We are tackling the problem of developing world organizations. It is no longer an internal problem; it is the external pressures on this country that are disturbing us so greatly. We may make mistakes. Many mistakes were made under the Marshall plan; nevertheless all these

efforts give us some guide tor the future. The United Nations has something to work with, and in my opinion it is a good organization. But it requires funds and personnel.
To realize that we have only to think about Korea. The United Nations had the responsibility of stopping aggression, but when they were definitely up against aggression they did not have much to work with. This report indicates that those who prepared it have thought the problem through. They have decided on certain mechanics, but the fifty-nine members of the United Nations will have to make the wherewithal available to the organizations they have set up and departmentalized to do the kind of job they visualize as having to be done under that charter. Unless we make funds available to be invested through them in the backward countries the United Nations will not be able to perform the function it can perform. In my opinion it is only through that body that we can hope to relieve the tensions and calm the disturbances outside this country that are causing the unrest and trouble from which we are suffering.
I merely rose to say these things because I thought it was time someone began to think about them. I do not know all about them. The Department of Finance and other departments of the government have experts. If by voicing these opinions in the house, opinions gained by reading the statements of others who specialize in these matters, we can cause these experts to think and prepare legislation to be brought into this house along the lines we have suggested, perhaps not in these exact terms but steps in this direction, I think we will be fulfilling our duty in this house.


George Alexander Cruickshank: Mr. Speaker, I think I can truthfully say I have not taken up too much of the time of the house this session, so perhaps I may be permitted to speak for five minutes this evening, to express through you to the minister my disagreement with some features of this budget.
In the first place, Mr. Speaker, I most emphatically disagree with the tax on pop and chocolate bars. I understand this tax is expected to bring in some $18 million. I also believe that if you put a tax of 50 per cent on the fifty million pounds of axle grease that is sold under the name of margarine, you would realize the same amount of money. I should like to hear from any rural member from Ontario or Quebec who would disagree with that suggestion. Put the tax on at the source. There are only five grease companies that have a monopoly in this business of 69202-421
The Budget-Mr. Cruickshank importing oils, fish offal and so on in order to produce this substitute for pure butter. Let the government put a tax on that, instead of taxing the children of Canada.


Mr. Ferguson:: How about the tax on
whisky?


George Alexander Cruickshank: I am all in favour of it. I do not hesitate to say I buy a little myself, even though Hansard is listening; but any man who can afford to buy it can afford to pay any tax, whatever it is, or he should not buy it at all. I am going to be very brief; I am not going to be like the Toronto member who spoke three times, for forty minutes each time, in the most boring tone, the most monotonous voice and the most useless manner. He spoke three times. I am going to take only about five minutes. There is one thing I want to suggest to you, Mr. Speaker. I have suggested my objection to the Minister of Finance (Mr. Abbott), and I know he is not going to pay a great deal of attention to what I say. Nevertheless he will live to regret, having regard to his Quebec rural constituents, the fact that he is putting 500 dairy farmers out of action by allowing five grease companies a monopoly in the manufacture of this so-called substitute for butter. The Ontario members from rural ridings will also remember that.
The Minister of National Defence (Mr. Claxton) is not here, but there is one thing I should like to suggest. In my riding there happens to be what I believe is the finest army camp in the Dominion of Canada and, I believe, one of the finest on the North American continent. I believe we can get a greater enlistment in our armed forces -and I am speaking of the regular armed forces-by increasing the accommodation for the married men. Even though I am sorry to see a few around here who have not seen the light, it is the ambition of most men to get married, particularly if they want to serve in the armed forces. At Chilliwack within this last year we built about 165 houses, I believe, or in that neighbourhood. I believe that number should be doubled.
Through you, Mr. Speaker, 1 should like to say this to the Minister of Finance because, after all, the Minister of National Defence has nothing to do with it; it is the treasury board which has the say. The rentals are far too high. I believe you would increase your enlistment tomorrow in the regular Canadian army of these young men who are married or who desire to get married if you cut the ridiculous rentals you have by 50 per cent tomorrow. After all, the government of Canada are not in the business of renting houses in order to make money; or, if they are, they should not be. We are not in that

The Budget-Mr. Cruickshank line of business. I would suggest to the Minister of Finance that these rentals to these married men be cut 50 per cent as of tomorrow.
I do not read these 40-minute speeches from notes every day as does one of the members from Toronto. But in today's Ottawa Journal, I find this headline:
War widow and six children eke living from $31 monthly.
That sort of report is not particularly conducive to enlistment in the Canadian army or in any other army. I am presuming that the press report is correct. When we can talk about the millions and billions that we have to expend on other matters-some of it spent in my own riding and which I am pleased to have spent there-we have nothing in Canada to be proud of when a war widow and six children eke out a living from $31 monthly.
I do not want to take up any more of the time of the house, Mr. Speaker. I entirely disagree with the budget with regard to the tax on soft drinks and chocolate bars. I think the minister knows exactly where I stand on that matter. On behalf of a riding that I happen to represent, I particularly do not agree with that taxation.


Solon Earl Low: Which one is that?


George Alexander Cruickshank: I seldom mention the name of Fraser Valley in this house. But when you sell at $87 a thousand No. 3 common lumber that you cannot pick up in your hand -and there are a few hon. members within this house who know something about lumber, as I do-and with No. 1 common at $106 a thousand, and that is exactly what it sold for in British Columbia today, and we produce over 50 per cent of the lumber produced in the Dominion of Canada, then when I am told that we have to tax the kiddies' pop bottles or the kiddies' chocolate bars to the extent of an extra cent in order to raise $18 million; when 50 million pounds of axle grease are produced in the Dominion of Canada this year in competition with 500 dairy farmers; and when No. 1 common lumber is sold at $106 a thousand: I cannot agree with that budget, I am sorry to say. I think that the young minister and his young parliamentary assistant have done a marvellous job. There has been some criticism tonight of my colleague the hon. member for Coast-Capilano (Mr. Sinclair). I am not worried about that because the hon. member for Coast-Capilano is capable at any time of taking care of himself in debate with any member of this house on either side. I want to be emphatic in saying through you, Mr. Speaker, that I think the government or the minister made a tremendous mistake in this stupid and useless

tax when they are allowing this axle grease to compete with the dairy farmers and to wipe them out of business in Canada, and when they are allowing No. 1 common lumber to be sold at $106 a thousand without an excess profits tax on it. I did say on a previous occasion, Mr. Speaker, I have never read, nor will I read, a speech.


Mr. G. F. Higgins (St. John's East):: Mr. Speaker, the last time I had the honour of joining in a debate in which the hon. member for Fraser Valley (Mr. Cruickshank) was engaged was one which he himself described as the pipe lines filibuster. This is no filibuster in any way, I can assure you, Mr. Speaker. I am quite certain that most hon. members feel that the job has been done here and that it is time for us to finish the speeches and go home. I believe that has been the general feeling. But, Mr. Speaker, do hon. members really agree with that situation when we see the news as outlined in tonight's Journal, when we read the news containing the speech of Right Hon. Winston Churchill as contained in a Reuters dispatch of this evening in the Journal, and as further outlined in the Canadian Press dispatch which has not yet been published? For the benefit of hon. members who felt, as I must confess I did, that it was time to go home, that all the work we had been brought here for had been finished or practically finished and that we could book our passages on Thursday quite happily, I ask this question: In the light of this item in tonight's newspaper, are they prepared to change their views in any way? I do not intend to read the entire article by any means, but this is the dispatch in the Ottawa Journal, from Reuters news agency, dated London, September 12:
Winston Churchill appealed in parliament today for "a European army of at least 60 to 70 divisions" to make "some sort of front in Europe." He was speaking in the debate on Britain's new three-year rearmament drive . . . "our approval is not a vote of confidence in the government-least of all on its handling of military affairs."
"We have to form as fast as possible a European army of at least 60 to 70 divisions to make some sort of front in Europe and to close what I have called the hideous gap in the protection of western Europe from the Russian communist onrush to the sea," he said.
Churchill suggested that three divisions in Germany and one and a half or two available in Britain did not seem to be a proportionate contribution on Britain's part, even allowing for the fact that she still had important overseas obligations.
"If an army of 60 to 70 divisions can be deployed on our gaping eastern front, the greatest threat of world war in the next three or four years will be substantially diminished if not indeed removed," Churchill said.
"This will undoubtedly give the western democracies the best chance of securing a return in the normal relationships of states and nations. Whether we shall have time or not no one can tell."

Those are the remarks from Mr. Churchill, according to a Reuters dispatch, Mr. Speaker.
I saw a copy of the Canadian Press dispatch which said that he called for two or three divisions from Canada for Europe. In view of that, Mr. Speaker, and in view of the other statements that appeared in this evening's Journal such as "Europe may hold house", hon. members should be told what the situation is. Let me quote further from the Journal:
Members of parliament, who expected to get away from the capital some time this week, may well be held here to deal with legislation necessary to give effect to the sending of arms and men to Europe, a source close to the cabinet said today.
Older parliamentarians have told me that that may be a reporter talking to himself, but I have no knowledge of that. The report continues:
Washington reports have indicated the United States will ask Canada for probably one division to bolster western union defences in Europe.
While no formal request has been made as yet it is expected to come at the meeting of foreign ministers to be held Friday and Saturday.
If that is a clear exposition of the facts, Mr. Speaker, and if there is likelihood of a request being made on Friday or Saturday, then I for one have no hesitation in saying tonight that in so far as being delayed is concerned, we should be delayed. I feel that parliament should not adjourn until some definite decision has been made, if a request of this kind is to be made, because we have not yet had any plans whatsoever for the enlisting of manpower, other than the taking care of what the government calls the Korean episode. No plans are envisaged for a general manpower mobilization of any kind. In view of the stirring remarks of Mr. Churchill, and in view of the request that may be made this week, it is going to be very difficult for hon. members to reconcile themselves to the fact that they will be satisfied to go home at the end of the week.
I merely make those remarks; it is up to parliament. I have no say whatsoever in the matter, nor would I want to have any say in it. We should have a statement on the matter from somebody who is in the know as to whether or not this request is to be made, and whether it is likely or not that Canada will be asked to recruit three divisions to go into the field. It does appear improper, to say the least, that hon. members should not know the situation and should not be given advice as to what is to be done. I believe the Prime Minister (Mr. St. Laurent) must indicate what is to be done. I have read, and I have heard him say, that in such an event parliament would make the decision,
The Budget-Mr. Higgins and that would mean the recall of parliament. It would appear to me to be a ridiculous situation to adjourn one day and be recalled a matter of three or four days hence.
I submit that we should stay in session until this particular request, which is likely to be made, is answered one way or the other.
That may not be the view of all hon. members. In fact they may not agree with me at all on it. I am quite certain that in so far as this particular budget is concerned the view of most hon. members is not expressed at all. I feel that deep down in their hearts they were very glad that the demands were as little as they were, but the reason for that is obvious. It was a selfish and personal one, namely, that the individual would not have to meet any worth-while increased taxation. But, Mr. Speaker, if we are honest with ourselves in this matter, if we really want to be honest, and say what we think about this budget, the only thing we can say has been said. I am not making any remarks that have not been made in this house before. I am sure it is merely a pop bottle budget, if you like. It is nothing more or less than that. It is a bit of soothing syrup for the people of Canada.
The Minister of Finance (Mr. Abbott), in his wisdom-and I do not decry his wisdom; far be it from me to do sudh a thing-may feel that it is quite ample for the purpose; but is that a fair position to take? Is it a fair position to put to the people of this country today, in view of the situation that we are facing? I do not care what the government of this country says. You have heard it from this side of the house right through this debate and through the days of this session. This is by far the gravest emergency that this country has ever faced in its history.
I am no wizard, financially or otherwise. There are only two ways of making more money: one is by earning more and the other is by saving more. I think it is an admitted fact that we must have more money to meet our commitments. We are merely skimming by to get the money that we have to get, and which this budget calls for. We are merely skimming by on our commitments. We are not living up to what we think we are as a nation. We are not doing any more than we should if we were merely a little colony.
If the Korean war is merely one episode in the life of this nation today, then we have to meet our commitments to our partners in the Atlantic pact, and we have to meet our commitments to our partners in the United Nations. I repeat, with very little knowledge of finance, but having listened carefully in the house and having read what I had not listened to, we have not the money

The Budget-Mr. Higgins in this country today in government pockets to meet the commitments that we have. There are two ways to obtain it. The first is by increasing taxation. And, Mr. Speaker, much as we may like the budget as it is, we cannot help saying that it has been tempered very definitely to the political winds.
Do not let us fool ourselves in this matter. Too many responsible ministers of the crown have told us what our danger is. We have too many warnings as to the intentions of the people on the other side of the world in the U.S.S.R. Nobody denies the fact that Russia's intention is to dominate the world by hook or by crook. There is no question whatsoever in anybody's mind as to that fact. What is holding back Russian domination? Chiefly it is the western world powers. The only contribution that Canada can make in the way of real help is by increasing her armaments in every way possible, and by increasing her manpower to the limit that she can.
I have heard many criticisms of the remarks made by the hon. member for Kamloops (Mr. Fulton). I am not making any comment one way or the other but I would suggest that hon. members come back to the House of Commons six or seven months from now and ask themselves this question: Was the hon. member for Kamloops right, or was he wrong?
I say this budget has been much too small. What should be done about it? As I said earlier, we have been fed this soothing syrup in the budget to too great an extent altogether for the people in the country to realize the situation. What is needed is a jolt, a real jolt in thq arm by way of greatly increased taxation. Otherwise, if we are not going to have that increased taxation our people are being permitted to go through a period of *twilight sleep in this twilight of peace.
We will have to face an increased budget next year; there is no question about that at all. Why could we not have had some increase at this time? Why could we not have been prepared now for the great difference between this time and what we may expect next March?


An hon. Member:: There is a by-election coming off.


Gordon Francis Higgins: The hon. member may be right. I do not yet know enough about the political game in Canada to be able to say whether that is so or not. But surely the Minister of Finance (Mr. Abbott) and the cabinet would not be influenced by a by-election! I could not believe that possible-coming from an honest little province like Newfoundland. It is hard to realize that things like that could happen in the world, although I suppose they could.


Be that as it may, I suppose the longer we live the more we learn. It is my honest view that, in so far as increased taxation is concerned, in the words of the old expression we used to have in Newfoundland: Force put when the devil drives. The devil is certainly driving in this case, and we have got to do something about it. There is no one in this country today so blind as to fail to realize the amount of money being spent on luxuries. None of us is so blind as not to realize what these luxuries mean by way of making the people of our country soft. I do not mean that they become foolish, but they want to follow a soft way of living. That soft way of living may be very quickly changed if by any chance-and it is not impossible-a country like Russia were dominating Canada. Our whole way of life would change immeasurably if such a thing were to happen.
With all due respect to the government and its supporters, that is why I am afraid that, while the budget was welcome, it does not reflect the situation we have before us. It does not face up to the situation we have to meet today. There can be no question about that in any way. I say, and I believe it has been said before, that the only way we can avert what is in store for us is by making preparations now, before it is too late.
There can be no question, to use a trite expression, that it is later than you think. I think it is later than most of us think in this western democracy of ours-very much later than you think. The only solution is to do all we possibly can to get as well prepared as we can in the time we have left.
Members of the official opposition and of the other two opposition parties have been criticizing, and properly so, expenditures in the past for defence. I do not think there is any doubt that current and future expenditures for defence will receive the support of the House of Commons. The real cause for complaint however from members of this party and, I believe, the other two parties, has been that there is too much waste, and that non-essential expenditures are constantly taking place. I would refer particularly to the amendment of the hon. member for Greenwood (Mr. Macdonnell) in this connection.
Hon. members are fully aware of one way of making money, and that is by economizing. The same principle applies to government administration. I am entirely in accord with the proposal to cut back public works projects which are not necessary for defence or not productive of any wealth for the country. It is in this connection, and using the phraseology which, I admit, I read in the newspaper today, that I introduce two more points which I feel should be brought to the attention of the house.

Thus far the debate has been kept at a high level and, with the exception of the remarks concerning apples a short time ago, nothing of a provincial nature has been discussed. I have in mind two subjects which, although provincial in their nature, because of the defence situation and the necessary expenditures in that regard, I feel should be brought to the attention of the house.
Since I have been a member I have drawn to the attention of the minister concerned the necessity for the lengthening of the runways at Gander. On each occasion neither the Minister of Transport (Mr. Chevrier) nor the Minister of National Defence (Mr. Clax-ton) seemed to think there was any necessity for any action. It was only yesterday that I received an answer to my question in connection with lengthening the runways at Gander airport. These inquiries have been going on since last November. As reported at page 529 of Hansard, my questions were:
1.	Have any arrangements been made to lengthen the runways at Gander airport?
2.	If so, by how many feet, and when is the work to begin?
The answer by the Minister of Transport (Mr. Chevrier) is as follows:
Plans and specifications are being prepared for the lengthening of one runway to 8,600 feet, with a bearing capacity of 150,000 pounds. It is expected the work will get under way as soon as weather permits in the spring of 1951.
I cannot believe the minister is serious in that answer, when he says there will be only one runway lengthened, and that the work will not begin until next spring. That is a most extraordinary statement in view of the necessity for defence measures at the Gander airport. One runway is not sufficient; there should be at least two cross runways to take care of wind changes-because, like the changes of wind in this honourable chamber, we also have changes of wind at Gander.
What brought the matter particularly to my attention tonight was an article appearing in that great newspaper, the Ottawa Journal, stating:
Handle Biggest Aircraft Vast Airfield On Par With Dorval
Notice has been filed with the Ottawa registry office for expropriation of 3,800 acres-about six square miles of land-south and east of the present Uplands airport.
The expropriation will expand the airport to ten times its present size and make it one of Canada's largest.
It will be on a par with Dorval, Goose and Gander, and will be able to handle the biggest aircraft now flying.
And then further down:
One of the key proposals is the lengthening and strengthening the runways at Uplands to allow accommodation of the largest planes now in operation.
The Budget-Mr. Higgins
These include the giant DC-6, the Boeing Strato-cruiser, and planes of the North Star and Constellation type which are too large for scheduled landings on the existing air strips there.
It says that the cost is to be $5 million. There is quite an extensive plan accompanying the article and in the description it states that the new airport will be ten times the size of the present airport and will accommodate a fighter squadron for the protection of the capital. I am a newcomer to this house and to Ottawa; I appreciate the importance of Ottawa and I know it is a lovely city, but is there any necessity of having the airport at Uplands increased to this extent while an airport so vital to defence as Gander is to have only one runway extended, and that not to be done until 1951? If that makes sense then maybe I am as crazy as most people think I am, but I cannot see it. That is just another example of unnecessary expenditure of government funds.


An hon. Member:: Liberal management.


Gordon Francis Higgins: It may be Liberal in the sense of being made by a Liberal government, but it certainly is not liberal in extent. I am glad the Minister of Public Works (Mr. Fournier) is in his seat because there is a matter I want to bring to his attention. This also relates to expenditures that should be made for defence purposes. As the minister knows, and as many hon. members know, at Wabana, Bell island, we have the largest iron mine in the British empire. This mine has been in operation for fifty years and has turned out a tremendous tonnage of iron ore. It is still continuing to turn out a great tonnage. This fact has been brought to the attention of the house on previous occasions, but it is in connection with our present defence measures that I am bringing it again to the attention of hon. members.
I have asked repeatedly that the pier which provides the only connection between Bell island and the mainland should be repaired. On June 16 last I outlined the reasons why repairs should be made and the Minister of Public Works said that they would be done. But nothing has been done. In August Premier Smallwood of Newfoundland made a statement to the press and blamed the resident engineer of the department for the work not having been done. He said that that engineer should be removed because he was simply a hindrance to work being done. The minister was away and I do not blame him for this but I feel sure that there were at least one or two assistants in his department. I hold no brief for Mr. Miller, but I must say that I have found him most co-operative and interested in his work in Newfoundland. I think the accusation was unnecessary and uncalled for.

The Budget-Mr. Higgins
Yesterday I obtained an answer to a question I had asked, which was somewhat similar to the one I had asked on June 16 when the minister said that repairs would be made. I had asked what steps were being taken with respect to repairs to the wharf at Portugal cove. The minister's reply, to be found on page 530 of Hansard, was as follows:
No steps are being taken by this department for repairs to this wharf. It serves as a wharf for the ferry plying to Bell island, which is entirely within the province of Newfoundland, and the dominion government does not accept responsibility for the upkeep of such ferry wharves.
Will the dominion government accept responsibility if there is a bogging down in the production of iron ore? Or is that to be the responsibility of the provincial government? Is it going to be the responsibility of the Minister of Public .Works or of the poor unfortunate Mr. Miller who has been blamed for a lot of things? I make no apology for bringing before this house a matter which may be considered provincial in character during a debate which has been on so high a level.
In my opinion these matters are vital to the defence scheme for this country. Definite steps should be taken with respect to Gander airport and the wharf at Portugal cove, which is vital to the existence of ten thousand people on the island who are now producing iron ore for defence purposes. The excuse that this is a. wharf for a provincial ferry is not enough. The ferry may hold water, but the excuse certainly does not.
It may be right to say that public provincial ferries do not come under dominion jurisdiction but the two little boats that ply between Bell island and Portugal cove would not fit that description. I ask the minister to reconsider this matter and see if he cannot do something for the Portugal cove wharf.


Alphonse Fournier: I am doing something for everybody.


An hon. Member:: Or doing everybody?


Gordon Francis Higgins: No, the minister does not do everybody.


Alphonse Fournier: I am not that capable.


Gordon Francis Higgins: I think I have said as much as I can say and I probably have exasperated a number of hon. members. I do not make any apologies for doing that. I have said what I set out to say and I am grateful to hon. members for having listened to me. I think it is time we should have a forthright discussion of these matters.
I do not think it hurts anybody to be told the truth that there is a real emergency in


Canada. From my knowledge of the Canadian people, which perhaps is a bit new although I have not been befogged by being in the woods too long, I know that if they are told the facts they are prepared to stick with those facts and do their utmost to help this country make a real contribution to the British commonwealth of nations, to our partners in the United Nations and to the countries of the North Atlantic pact.


John Horne Blackmore: Mr. Speaker, it is again my misfortune to be the last speaker this evening, when hon. members are desirous of seeing the debate come to an end. That does not deter me from saying what I intend to say so long as I can get anyone, including yourself, to listen to me indulgently.
I am not going to say very much in commendation of the minister's budget speech.


Douglas Charles Abbott: I shall stay anyway.


John Horne Blackmore: Therefore I may appear to be somewhat at variance with a good many hon. members. Before commencing to say what I feel I should say i should like to echo the remarks made this afternoon by the hon. member for Peace River (Mr. Low) who indicated that he felt like getting down on his knees to thank the Lord that there was not a Conservative government in power today endeavouring to fight a war according to Conservative principles. Every one of those hon. gentlemen, including the hon. gentleman who has just taken his seat, has got up to tell the house that what we need to do is to tighten our belts and have more restrictions in the country. 1 would imagine that, as it is already, probably eighty per cent of the people in Canada today are under the gravest anxiety as to how they are going to finance their domestic affairs during the next year. I do not think there is a doubt about that. If hon. members will be quite frank with the people of their constituencies when they go home, I think hon. members will soon discover, when they start talking to them, how they feel about paying the exorbitant prices they are paying for coal and many many other things which they have to buy. They will discover how they feel about the extortionate rents they are paying, and the almost inconceivable amount of money that it costs to build a house nowadays in a land where I imagine housing material is produced as abundantly as it can be produced in any nation on the face of the earth.
These are just two or three of the little things. For a man to rise as the hon. member for Greenwood (Mr. Macdonnell) has done, and as other members have done, and tell us

that we should tax our people more and that we should have deflation in the face of that sort of situation, is almost to insult the intelligence of the Canadian people and strike despair and dismay into their hearts. It is so tragically, fantastically and utterly unreal. That is the point. Shortly I am going to quote some passages from the excellent speech of the Minister of Trade and Commerce (Mr. Howe) the other day to show how unreal it is that Canada at the present time should have anything like deflation, tightening belts, scarcity, austerity, which seem to obsess the minds of the hon. gentlemen among the Progressive Conservatives.
Their leader did not say anything specific about this matter. He does a lot of beautiful talking, but I find it very hard to pin him right down to a definite commitment on any particular item in Canadian public life. It may be that I am not skilled in interpreting his language, but that is how it is. I regard the Conservatives with every kind of respect.
I understand the Conservative attitude.' It is exactly the attitude that our grandfathers had. But what a difference between the world of today and the world in which our grandfathers carved their homes out of the forests. With none of the machines, technological skills, modern appliances and the advantages which we possess today, it was utterly necessary for them to be scarcity minded at every turn of the way, and to be severely economical.
It is the inability of a great number of people of our time to realize the necessary impact on the civilization in which we live of the discovery and employment of machines, solar power and technological skills that has put this nation, together with so many nations of the world, in such grave danger as now threatens it.
Therefore I say quite frankly, with the very best of good feeling toward the minister, that as an orthodox scarcity-mentality budget speech there is little to find fault with in his speech and much to commend but as an age-of-abundance budget speech there is plenty to find fault with and very little to commend.


An hon. Member:: Louder.


John Horne Blackmore: You do not realize what you are asking for down there.


An hon. Member:: Give it to them.


John Horne Blackmore: Here is a general statement which I commend to the members of the house with the utmost solemnity: The policies of the minister cannot possibly render financially possible what is physically possible in this nation. I would imagine. that
The Budget-Mr. Blackmore every member of every party would say in general terms that what is physically possible must be financially possible. It was repeated and repeated by the members of the cabinet in world war II, but never once did the cabinet in world war II approach within a short distance of making what was physically possible in Canada financially possible. They judged what was financially possible by the amount of money they could wring out of people through taxes on chocolate bars, ice cream cones, all sorts of little things, and then the big things too. They thought that was what was financially possible. But what was in reality physically or financially possible in Canada we did not once approach in the last war, nor have we yet approached what is actually physically possible.
We shall examine four or five things that exist right in Canada today and see whether the minister does not agree that after all there is something strangely wrong. I recall to the house one fine instance which the hon. member for Peace River (Mr. Low) gave this afternoon. He pointed out that in the Dominion of Canada from 1939 until 1950 somebody or some agencies have created outright $12 billion of money, and the policies of the Liberal government have saddled that $12 billion on the backs of the Canadian people today as a debt. Unless the financial policies of this country change, their children and their children's children forever will be called upon to bear that burden and pay interest thereon.


An hon. Member:: Shame.


John Horne Blackmore: Will anyone in his saner moments, and within the sound of my voice, tell me that a war that was fought with blood, sweat and tears by virtually every family in this nation was not paid for with blood, sweat and tears? When we took our natural resources, changed them into vast fighting machines and with them overwhelmed the enemy, will anyone tell me that wa>
did not pay for that war? Looking at this matter from the standpoint of the simplest elementary common sense, in addition to paying for the war with the four fearful prices of blood, sweat, tears and natural resources, is it reasonable that we and our children's children be saddled with a $12 billion debt?
Will anyone tell me that it was not physically possible to avoid that in Canada? They did not make what was physically possible in Canada financially possible. Dear me, when the Indians roamed over the plains and hills and among the forests fighting wars they won their wars with blood, sweat, tears
658	HOUSE OF
The Budget-Mr. Blackmore and the natural resources they found at their disposal, but they owed no debt when they were finished.


Solon Earl Low: They had no ministers of finance in those days.


John Horne Blackmore: With all our intelligence and civilization, with all the machines at our disposal, why should we not be able to do as well as the savages did?


Stanley Howard Knowles: There was no Indian branch then either.


John Horne Blackmore: Let us face that fact as responsible members of parliament in this most portentous hour. There seems to be plenty of levity, but we have had too much levity for twenty years. It is time now to cut out the levity and get right down to common sense. When we find a question we cannot answer, let us not try to laugh it off. It is not a laughing matter, and it is not going to be a laughing matter in the years to come. With another $12 billion or $20 billion added to the debt of this nation in the next five years, where shall we be? The policies of the Minister of Finance will put this nation into debt to the extent of $20 billion exactly as the same policies in the hands of Mr. Ilsley put the nation into debt to the extent of $12 billion. That was to fight a war, for which we had already paid. I think hon. members will agree that in a general sort of way, though I have not set out the technicalities, I have pretty well established my point, that the policies of the minister are not capable of making financially possible what is physically possible in this country. We should have had $12 billion worth of credit in this nation instead of $12 billion of debts. We should have had $12 billion of financial assets, just as we have the billions of dollars' worth of assets in our great industrial plants throughout the nation. They are assets; but this financial handicap which has been hung about our necks renders it almost impossible for us to enjoy the good things that are available as a result of our efforts*
So I say the budget speech by the minister was not a success from the standpoint of an age of abundance and modernization. It would have been bad enough seventy-five years ago; it just is not good enough today. Now, of course, we are going to hear a lot of foolishness about funny money, just as though the dollar with which we fought the last war was not funny.


An hon. Member:: That was because of what was done by the premier of Alberta.


John Horne Blackmore: I know all about what the premier of Alberta did, so you are not telling me anything new.


An hon. Member:: Then don't be surprised at an interjection like that.


John Horne Blackmore: I pick them up whenever I hear them, because they indicate something wrong with the mentality of the person making them; that is all. I sympathize and pity you, and I want to put you right before you make too many mistakes. Let me point out that your own dollar with which you fought the last war has lost more than half its value in ten years. You do not think that is a funny money dollar, do you? In addition to the debts, in addition to the blood, the sweat, the tears and the loss of material resources in the last war, we have our dollar cut by more than fifty per cent of its value.


Solon Earl Low: That is sound money.


John Horne Blackmore: And you call that sound
money, as if anything could be funnier than that! That is worth considering; I would recommend that everyone give it very careful thought because we are on the threshold of another colossal financial blunder such as we committed in 1939. That is as obvious as can be.
I want to give an example of just one of the deficiencies of our system. Every hon. member knows the tragic situation prevailing throughout this country in respect of housing. What is the cause of the tremendous increase in the cost of housing? Why is it that today we think in terms of $7,000, $8,000, $9,000 and even $10,000 for a new house when ten years ago we were thinking in terms of $2,500 and $3,000? What is the cause of that? If it is not your financial system, tell me what it is. The raw materials are here; the human resources are here, just as they were ten years ago; and we have machines and skills we did not have then. If this exorbitant increase in the cost of everything pertaining to housing is not the result of the financial system, directly and completely, just figure out what it is the result of; then get up and give a talk on it, and explain to us.
Here is an illustration of the sort of thing that has had to be faced in Canada even since parliament met in this special session. It is the case of a soldier with a splendid record in world war II. He is a young man, a sergeant with a wife, a baby and a three-year old child. He was born in my own city of Lethbridge, and therefore I am particularly interested in his case. Here is his situation: He has been transferred from an air station where he had some kind of a house; and here is a letter written by his wife about September 7. I am going to use the name "Tim" so no one can find out who this boy is; and

instead of giving the name of the city I will say "X". The letter reads:
Tim got an auto camp for us-$5 a day, at city X, and we have been here a week. Nobody wants you with children-it is a heartless situation-and rents are extortionate. Tim found a house, fully furnished, seven miles out of city X-rent is $75 per month.
You do not need any more, do you, than to hear that a sergeant who within a month may give his life for his country, who is trying to raise a family to fight the next horrible war your policies will bring on, cannot find a house when he is transferred, and who finally has to pay $75 a month for a house seven miles from the city, while the defence department pays no attention. You do not want any more than that, do you? Will anyone pretend that such things are physically necessary in Canada? They have
The Budget-Mr. Blackmore been rendered financially necessary by the methods pursued by the Minister of Finance and the Liberal and Conservative parties in this country.
Not only do we find such difficulties confronting our married service personnel. Similar perplexities are facing civilian people from coast to coast in this country right now. Let us not pretend that the people who have been managing this nation financially have known even the elements of what is necessary to rule a country like Canada in an age of abundance. I shall have more to say tomorrow, Mr. Speaker.
On motion of Mr. Blackmore the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, September 13, 1950