1956-07-09

Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, since I returned from London on Saturday morning I have given careful consideration, with my colleagues, to the situation which arose in the house on Friday, June 29 and on Monday, July 2.
I have also, as I am sure every hon. member would have expected me to do, seen Mr. Speaker and discussed the situation with him.
I think all of us can understand the desire of the Speaker to be able to answer fully and freely the criticisms levelled against him as a result of the position in which he had been placed by members of two of the opposition parties who supported the motion which was moved on June 4, and which asked this house to say that it no longer had any confidence in its presiding officer.
It is not hard to understand the reactions of any man, regardless of the office he may occupy, who feels he has been unfairly charged and has not, himself, been able to reply to those charges.
I am sure most hon. members will sympathize with the desire of the Speaker to place himself, as soon as possible, on a basis of equality with other hon. members so he will have freedom to explain the conduct, which was vindicated by the very large majority which rejected the motion I have just referred to.
And that, I understand, is the position Mr. Speaker wished to achieve when he stated on Monday of last week that he was placing his resignation before the house to take effect at the pleasure of the house.
Of course, all hon. members are aware that such a statement or declaration of intention does not constitute the formal action required as the actual resignation of a Speaker.
Because of my absence in London, Mr. Speaker refrained from taking any such formal action so that I might have the
opportunity to consider the situation, and for that I wish to thank him.
As Prime Minister I have the ultimate responsibility for the leadership of the house, and I do not intend to shirk that responsibility in any way.
I have had to ask myself whether the matter referred to by the Leader of the Opposition (Mr. Drew) and others on Friday, June 29, really has sufficient gravity to justify the resignation of a Speaker who recently received an overwhelming vote of confidence from the house.
I have no hesitation in saying I do not think so.
I share, and I am sure most hon. members share, the regret of the Speaker that any part of his personal letter was published. I cannot, however, share the view that because the Speaker had expressed in private the views he did express in that letter, he could no longer continue to be an impartial and competent Speaker. It does not seem to me that the publication by someone else of an extract from a private letter would justify me, or the majority in this house, in taking any formal action in consequence of what has taken place.
During the debate on the motion relating to his conduct and subsequently Mr. Speaker has discharged his duties in this house with dignity and impartiality.
My confidence in Mr. Speaker is unshaken, and I know of no other member better qualified than he is to preside over our deliberations; I believe that confidence is shared by an overwhelming majority of members, a majority by no means confined to the supporters of the government.
Now, as the one responsible for the leadership in this house, 1 have expressed that view to Mr. Speaker and I have found that he was willing to subordinate his personal feelings to his duty to parliament and the country, and to continue in the office in which he has served with great distinction. I am happy to be able to make that announcement to the house.


An hon. Member:: The Liberals are yellow.


Mr. Speaker:: Are there any other motions?

Inquiries of the Ministry



ALLEGED FALSIFICATION OF FACTS BY MEMBERS

[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo):: I should
like to direct a question to the Prime Minister. In view of the fact that a number of members of this house have been accused of falsifying facts for their own political ends, will the Prime Minister ascertain who those members are and in what respect they have falsified the facts?


Louis Stephen St-Laurent: I do not think that would be a very profitable undertaking for me, Mr. Speaker, and I would hope that no hon. member would knowingly falsify the facts.



INQUIRY AS TO EARLY DISSOLUTION OF PARLIAMENT

[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Rosetown-Biggar):: Mr. Speaker, we,seem to be getting information on different points that came up during the Prime Minister's absence. May I ask him one question? Has he given any consideration to the question which was raised several times during his absence as to an early dissolution of this house?
Right	Hon.	L.	S.	St.	Laurent	(Prime
Minister): Mr. Speaker, the question of dissolution of the house is one that, whenever it is appropriate to do so, I shall have to discuss with His Excellency the Governor General before I make any public announcement about it.



COMMONWEALTH CONFERENCE


[Stage Direction]
Right	Hon.	L.	S.	St.	Laurent	(Prime
Minister): Mr. Speaker, I should like to table the statement issued in London on Friday on the meeting of prime ministers at the commonwealth conference. For the convenience of hon. members, I would suggest that, by leave of the house, it be printed as an appendix to the Hansard of today.
Mr. Speaker:: Has the Prime Minister leave to have this document printed as an appendix to Hansard of today?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Some hon. Members:: Yes.


Mr. Speaker:: Agreed.
(For text of document referred to above see appendix, pages 5811-12.)


Louis Stephen St-Laurent: Mr. Speaker, I should like to make a short statement now on the matters discussed at the conference, which can be taken into account by hon. members who wish to discuss this subject upon the estimates of the Department of External Affairs which it is planned to discuss soon.
The statement of the conference-which, as always, represented a lot of work in achieving points of substance and forms of expression to which all could agree-indicates that the main subjects of discussion were in the field of international affairs. Problems of the commonwealth, as such, did not require very much attention. It is functioning as we expect it to function and adapting itself to changing conditions. It is primarily an association of nations having a common heritage of British parliamentary institutions, and many elements of common purpose in their approach to the problems of the day, despite the great differences in the geography, history and cultures of the various constituent nations.
The purpose for which we meet is the important and constructive one of exchanging information and opinions, in the hope that thereby the governments and parliaments of member countries can and will make wiser decisions. The conference does not seek to take any collective decisions or actions itself, but hopes to assist in bringing points of view closer together.
The commonwealth of today has not been the product of any political theory. It has developed from the practical response of sensible men to the desire for a continuing and close political relationship which adds to rather than detracts from the independence of its members. For most member countries, a common allegiance to the same crown is a link between us which we hold very dear. For the other, republican members, the Queen is none the less the head of the commonwealth. In discussion around the table, there is no distinction between members, and all prime ministers joined in frankly and fully setting their views in confidence before their colleagues, and in questioning one another.
I should like to lay special emphasis upon the value I find in having the prime ministers of the Asian members of the commonwealth at our conference table. The histories and cultures, the peoples and problems of these nations, are so different from our own that if is of great value in dealing with major international affairs to have the benefit of discussions with their leaders.
The development of Asian nationalism is one of the great historic movements of our time. Indeed, in some ways it is more comprehensive and significant than the rise of

militant communism. The wise counsel of the outstanding commonwealth Asian leaders of this great movement is something I find most helpful in trying to understand the perplexities of this complicated world in which we must now accept our share of responsibilities.
The London communique indicates the main subjects we discussed. They include our relations with Soviet Russia, the problem of security and stability in Europe, the current situation in the Middle East, the developments in southeast Asia, our relations with China, the economic position of the countries in the sterling area and the development of nuclear energy for peaceful purposes. In addition, there were many private talks on a variety of subjects, and those members of the commonwealth who are linked by special defence agreements, such as NATO, met to consider certain aspects of defence policy.
I cannot, of course, give a detailed account of the discussions which were held in confidence and on which we issued this agreed statement. I should like to take a minute or two, however, to say a little from my own point of view about several of the matters we discussed.
First, on relations with Soviet Russia, the communique makes clear that we all felt that the changes that have been taking place in the Soviet government, and its attitudes and policies, may have more than merely a feigned or superficial significance. Events will tell. This situation offers opportunities for improvement in our relations with Russia and perhaps opportunities for the settlement of outstanding difficulties between Russia and the western nations. All commonwealth governments plan to seek and use such opportunities and will welcome any improvement in relations with Russia which they may make possible. But the changes that have taken place are not such that we can have confidence that the danger of war has been removed. In view of this and of the tremendous Russian military power, and the evidence we have had in the past of the possibility of aggressive intentions, I believe we must continue to maintain an effective modern armed strength, primarily of course as a deterrent against attack. Such preparedness, however, need not prejudice an improvement in our relations and the development of a greater degree of mutual confidence which would be a more secure foundation for a lasting peace.
In the discussions on China we exchanged views, of course, on the recognition of the government on the mainland. While the views of most of us are already fairly well known,
I found the discussions both informative and
Commonwealth Conference helpful. I recognize the force of the arguments about the importance to Asia of having its largest country fully participating in the councils of the world. To that view, of course, we must give great weight and we shall. But there are other considerations as well which must weigh in determining Canada's policy and course of action. I see no reason strong enough to justify changing our policy on this matter at this time.
Our discussions in regard to the Middle East naturally centred on the danger of conflict between the Arab states and Israel. On the whole I was somewhat reassured by what I heard. We all recognize that the situation there is dangerous, but the danger has become a little less acute as a result of Mr. Hammarskjold's mediation. I feel that every effort should be made now through the security council of the United Nations to secure the collaboration of the Soviet union in helping to find a peaceful settlement of this Palestine issue. I think they realize the danger there would be to them as well as to the rest of the world from war breaking out in that area.
Our discussions of economic affairs were in the nature of interim reports and analyses of the situation in the sterling area members of the commonwealth. They were naturally of very considerable interest to us, for the situation of all these countries, particularly of Britain, affects our trade. I gave a brief resume of some aspects of our situation likely to be of interest to others. The United Kingdom government is persevering in its efforts to find solutions to its own economic problems that would permit an increasing freedom of trade between us and the continued elimination of discrimination against imports from the dollar area. We recognized and valued the progress made already in this direction and naturally we expressed the wish to see this progress continue. We were assured that the United Kingdom intended to persevere with this policy and I think the events and public statements in the United Kingdom in recent weeks make this determination quite evident. I am convinced that our policy should continue to be to seek the removal of the remaining restrictions on the imports of Canadian goods into the United Kingdom and elsewhere in the sterling area and to encourage the development of sound competitive export trade from the United Kingdom to Canada.
This trade remains under the detailed scrutiny of our continuing joint committee of senior officers which was established for that purpose and which met in London earlier in June.
5766	HOUSE OF
Commonwealth Conference
There was no discussion at this conference about the time or place of our next meeting.
I have been asked whether a meeting of commonwealth prime ministers might be held in Canada and to this I would reply that we should be glad and honoured to have a future meeting here but the time and place of any particular meeting must be determined primarily by the convenience of the busy men who are required to attend. London has proved to be a convenient site but this does not mean that the conference should not be held in other commonwealth capitals when that is the general desire.
I should like to take advantage of this jpportunity to express again the gratitude jf all the Canadians attending this conference for the hospitality and friendliness with which we were received by Her Majesty ;he Queen and by all those in the United Kingdom who joined in making the conference a success.


Hon. George A. Drew (Leader of ihe Opposition):: Mr. Speaker, I wish to direct a question to the Prime Minister in connection with this. Can the Prime Minister inform the house if in fact there was an invitation extended by Canada to the other prime ministers to attend a conference here in Ottawa along the line suggested before the Prime Minister's departure?


Louis Stephen St-Laurent: No. After our conversations there it was not felt that this would be an appropriate time for having an economic conference in Canada with the other members of the commonwealth countries.
[Later:1



REQUEST FOR FURTHER INFORMATION ON SUBJECTS DISCUSSED AT LONDON

[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: should like to ask one or two questions arising out of the rather abbreviated statement the Prime Minister gave. Would he say whether or not consideration was given by the prime ministers of the commonwealth to the need for the revision of the Statute of Westminster, having regard to the changes that have taken place since that statute was enacted in 1931?
Second, would he say something regarding the degree to which the fears of the people of the commonwealth have been aroused over the fact that Ceylon, in establishing itself as a republic, may deny the use of her airport facilities to the commonwealth and United States air forces?
Third, would the Prime Minister say what the reaction was, if not of the commonwealth


prime ministers, of himself, to the matter of the Middle East arising out of the request from the Israeli government for export permits for the shipment of some 24 Sabre aircraft, and when it is expected a decision will be made by the government.
Finally, would he say something regarding-


An hon. Member:: The shorter catechism.


John George Diefenbaker: As a matter of fact, my hon. friends may laugh, but the abbreviated nature of the report makes it necessary to ask these questions. The final thing is respecting the prospective settlement or terms of settlement being considered by Britain and Cyprus at the present time, and what are the possibilities if those terms are accepted of Turkey withdrawing from NATO? Those are a few of the matters that have received press attention recently and which the Prime Minister, in his report, did not have an opportunity of dealing with.


Louis Stephen St-Laurent: Mr. Speaker, the question of possible amendment to the Statute of Westminster was not discussed. Second, the fears of the people of the commonwealth with respect to the denial of the use of Ceylon bases to the United Kingdom and to the United States was not discussed at the general conference, and I was not in attendance when they were discussed between the Prime Minister of the United Kingdom and the Prime Minister of Ceylon; but we were informed that there was a genuine, sincere attempt to work out something which would allay such fears as may have been expressed previously about the situation there.
I will say I found that the new Prime Minister of Ceylon was desirous of maintaining good relations with the other members of the commonwealth and was anxious to consider their views in respect of all the problems in which the attitude of Ceylon might be of consequence. I was very pleased to have had the opportunity of meeting the new Prime Minister of Ceylon and in finding that he seemed to be sincerely desirous of maintaining the status of Ceylon in the commonwealth and of co-operating with the other members of the commonwealth.


John George Diefenbaker: And accepting responsibilities within the commonwealth?


Louis Stephen St-Laurent: Well, I would not care to go beyond that. Our impression was that, to the extent to which it went, he and Sir Anthony Eden had had a very satisfactory conference about that troublesome question.

With respect to the supplying of arms to either of the parties to the dispute between the Arab nations and Israel, there were very frank views expressed by several of those attending the conference, and I must say that I was not able to get anything from the conference that would assist the government of Canada in making a favourable decision on the request for the supply of those Sabre jet aircraft to the government of Israel. It is a matter that is still under consideration. The situation there, as the hon. gentleman knows, is one that has to be regarded as very delicate, and there was nothing that I brought back from the conference that would be an argument for me to put before my colleagues in support of a favourable decision on the request for jet aircraft at this time.
With respect to the terms of the settlement about Cyprus, I do not think I should go beyond the terms that are set out in the communique. I think the United Kingdom is making every possible effort to find a solution that will be a real solution of a very thorny problem that arises in respect of Cyprus I would not care to say anything that might make it more delicate or difficult for them to handle the situation, but we were convinced I think that they were doing everything that seemed to be possible in the circumstances to reach a settlement that would be a real settlement.



INQUIRY AS TO LATER DISCUSSION OF TRADE AND ECONOMIC QUESTIONS

[Stage Direction]
On the orders of the day:
['The government of Saskatchewan will be communicated with before the papers are produced.']
Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, may I ask the Prime Minister a question in relation to a statement he made earlier this afternoon concerning the proposed calling of a commonwealth conference on trade and economic questions. Did he mean that the subject was not introduced at the conference by the Canadian delegation or that it was introduced and as a result of discussion it was not proposed by the Canadian delegation that the conference should be held later?


Louis Stephen St-Laurent: No, it was not introduced by the Canadian delegation at the conference. Our conversations with other members of the delegations attending the conference were such that we did not think it was the appropriate time to introduce the subject at the conference.


Donald Methuen Fleming: May I take it from the Prime Minister's answer that this subject was discussed in conversations with other prime ministers attending the conference?
Motions /or Papers


Louis Stephen St-Laurent: There were discussions about the situation, and I know that there are some prime ministers who wished to have alterations made in their bilateral agreements with the United Kingdom, and were intending to discuss with the United Kingdom authorities the kind of alterations that were made many years ago in our bilateral arrangements with the United Kingdom.



[Stage Direction]
Motion No. 89-Mr. Argue:
For a copy of all correspondence exchanged between the government of Canada and the government of Saskatchewan, since January 1, 1956, regarding construction of the South Saskatchewan river dam.
Louis Stephen St-Laurent: The government of Saskatchewan will be communicated with before the papers are produced.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Motion No. 90-Mr. Dufresne:
For a copy of all payrolls and lists of materials used in connection with work done in (a) 1953: (b) 1955, at Petite Riviere au Renard, county of Gaspe, Quebec.
Motion agreed to.

[Stage Direction]
Motion No. 91-Mr. Dufresne:
For a copy of all payrolls and lists of materials used in connection with the work done on wharves and harbours, since January 1, 1956, in the counties of Charlevoix and Saguenay.
Motion agreed to.


[Stage Direction]
Motion No. 92-Mr. Fleming:
For a copy of (a) the list of strategic materials of which Canada prohibits export to Russia; (b) the list of materials which Canada permits to be exported to Russia only under licence; (c) the list of strategic materials of which Canada prohibits export to China; (d) the list of materials which Canada permits to be exported to China only under licence.
Right Hon. C. D. Howe (Minister of Trade and Commerce):: On Friday I undertook to table the public list of items under export control, which I do forthwith. In addition to this list, under our area control all commodities shipped to Soviet bloc countries require export permits. In order to facilitate the movement of non-strategic goods, general export permit No. Ex 2, effective on

Motions for Papers
July 16, 1956, which I am now tabling, exempts 118 items from the requirement of an individual permit on shipment to Soviet bloc destinations in Europe. This exemption does not apply to shipments to communist China. Hon. members will appreciate that I cannot table secret and confidential information exchanged with certain NATO and other friendly countries covering controls over the shipment of strategic goods to Soviet bloc countries.


Mr. Speaker:: Is it the pleasure of the house to adopt this motion subject to the limitations placed by the minister?


Donald Methuen Fleming: So far as the limitations are concerned, Mr. Speaker, I am not quite clear as to what limitations the minister is proposing to put upon the motion, because in the motion which appears on the order paper I simply followed the language of the question I put to the minister on Friday, when in reply he said he would be quite willing to table the lists.


Clarence Decatur Howe: I am tabling all commercial information that has been published, including information that will be published later this week. I find that there is certain secret information which I cannot make public. I was not aware of that when I spoke on Friday; but everything that can be tabled is being tabled. I think my hon. friend will find the information he wishes to have contained in the material that is being tabled.


Donald Methuen Fleming: May I ask one question, Mr. Speaker? Does the withholding of information on the ground of necessary secrecy apply only to the list of goods in relation to shipments to China, or also to Russia? Does it include that list?


Clarence Decatur Howe: The difference between the list for China and the list for Russia is that a great number of items can be shipped to the Soviet union under general permit. That is, a permit can be issued which allows any shipper to ship anything on the list. That provision does not apply to China. That is the only difference between the two situations.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion subject to the reservations made by the minister?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
IMr. Howe (Port Arthur).)


[Stage Direction]
On the orders of the day:
Major James William Coldwell: May
I direct a question to the Prime Minister. Has the Prime Minister joined other heads of governments and heads of humanitarian, social and political organizations in making representations to the Polish government with a view to seeking an assurance that the United Nations declaration of human rights will not be violated and harsh treatment will not be given to the accused persons who may be tried in Poland as a result of the recent riots?


Louis Stephen St-Laurent: I understand that the Department of External Affairs has dealt with that, and the Secretary of State for External Affairs can perhaps answer the question.


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, two questions were asked on this subject last Thursday and Friday, I believe, by the hon. member for Prince Albert (Mr. Diefenbaker).


John George Diefenbaker: And on Thursday.


Lester Bowles Pearson: Thursday and Friday of last week.


John George Diefenbaker: Yes.


Lester Bowles Pearson: I might make a short statement in reply to those questions and the point raised by my friend the hon. member for Rosetown-Biggar (Mr. Coldwell). I am sure that all hon. members of this house condemn certain methods which the Polish authorities have seen fit to use in suppressing the decent peaceful demonstrations of the people of Poznan, Poland, who have asked only for bread and freedom from their communist rulers. These methods of the police state are deserving of the strongest censure on the part of all nations and peoples who respect human liberty and dignity; all the more so because of the recent talks about "liberalization" and "democratization" in Poland. If the Polish government wish us to believe that there is any reality behind their use of these words, they will apply these principles to the people of Poznan, especially in regard to action taken against those who have been arrested and who are entitled to a justice which excludes, in the words of the hon. member for Prince Albert, "cruel and unnatural punishment".
It is a telling commentary on what communists call a "worker's paradise" that, in the midst of an international fair designed to demonstrate to the world the material progress of Poland since the war, the workers

should be driven by hunger and despair to demonstrate against food shortages and against the oppression of the regime. In spite of the steps being taken against the people of Poznan, and, in fact, because of my deep sympathy and great admiration for them -which is, of course, shared by all members of the house-it would, I am afraid, be useless and perhaps unwise to direct an official request to the Polish government as to how they should handle the situation. Such an official request would be taken by that government simply as unwarranted interference in their internal affairs, and the reaction in Warsaw might be directed against the people of Poznan themselves, whom we would be trying to help.
I am sure that no one in this house, and especially none of the people of Polish descent in Canada who are so rightly aroused by these events in their motherland, would want the Canadian government to take any action which might bring further suffering upon their compatriots in Poland who have shown us that the Polish tradition of courage and the Polish passion for freedom are still strong and vital. I can assure the house that I would have no hesitation in recommending such action if I thought it had any chance of achieving our principal aim, which is the alleviation of the lot of the people concerned.
We can, however, do this. We can make clear our condemnation of any cruel and police-state methods of repression used or contemplated by the Polish communist authorities. We can express our fervent hope that these authorities may learn that the ancient yearning of the people of Poland for freedom and a better material life cannot be indefinitely suppressed by force. Finally-and I assure the house that we will do this-we can see that this statement of our views is brought to the attention of the Polish government.


John George Diefenbaker: Mr. Speaker, if I might do so, I should like to ask a supplementary question. With Canada being a member of the United Nations and the Polish government having accepted the international declaration of human freedoms, does the minister not consider that Canada, from its place of detachment, could let the Polish government know that the conscience of this country and of the free world resents the kind of thing that is happening there, without such action being interpreted as an invasion of national rights?


Lester Bowles Pearson: Mr. Speaker, I hope that the words that I have just used and which will be made known to the Polish government will have just that effect.
Inquiries of the Ministry STEEL


INQUIRY AS TO EFFECT OF UNITED STATES STRIKE ON CANADIAN PRODUCTION
[Stage Direction]
On the orders of the day:
Mr. Solon E. Low (Peace River):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. I apologize for not having sent him notice of it. In view of the effects which the United States steel strike has already had in Canada, has the minister taken the necessary precautions to ensure supplies for essential production and especially for defence materials and projects?


Clarence Decatur Howe: Mr. Speaker, the government of the United States has taken action in freezing all warehouse stocks of steel, the purpose being to protect defence production, and this government has been notified that those warehouse stocks of steel are available if required for the same purpose for Canadian defence production. Canada, of course, is at this moment more fortunate than the United States in that our own production of steel is proceeding normally and in that our position with respect to defence steel has been taken care of to the extent that the United States has been able to take care of her own production. I can think of no representations that Canada should make at this time.


BRITISH COLUMBIA
[Stage Direction]
On the orders of the day:
Mr. J. A. Byrne (Kootenay East):: I should like to direct a question to the Minister of Northern Affairs and National Resources who has, over the week end I believe, returned from discussions with the premier of British Columbia with respect to the Columbia river development. Can the minister make a statement on the progress and results of his discussions?


Hon. Jean Lesage (Minister of Northern Affairs and National Resources):: Mr. Speaker, my interview with the premier of British Columbia was very cordial. We had a full and frank exchange of views on various matters, especially on the problems relating to waters crossing the boundary which will be the subject of discussions between the government of the United States and the government of Canada. Following my meeting with the premier we issued a joint statement which would be somewhat too long to read at this time but of which I can send a copy to my hon. friend. Both Premier Bennett and I agreed that in the interests

Inquiries of the Ministry of British Columbia and Canada on the eve of our discussions with the United States it would not be appropriate to add anything to or to substract anything from our joint statement.
[Later:!
On the orders of the day:


Mr. F. G. J. Hahn (New Wesiminsier):: should like to direct a question to the Minister of Northern Affairs and National Resources supplementary to the one asked by the hon. member for Kootenay East. Would the minister consider tabling the statement that he referred to, a copy of which he is sending to the member for Kootenay East, because many of us on this side of the house are also interested in that statement?


Jean Lesage: If it is the pleasure of the house, sir, I will do so.


HOUSING
[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilton (Notre Dame de Grace):: I have a question I should like to direct to the Minister of Public Works. In view of the statement of the prime minister of Quebec on Friday last and the telephone conversation between the Minister of Public Works and the prime minister of Quebec recently, is the minister now prepared to finalize, for the purpose of the slum clearance and housing program in Montreal, the final agreement with the body authorized several months ago to represent the province officially?


Hon. Robert H. Winters (Minister of Public Works):: As the hon. member knows, I communicated with the premier of Quebec and told him that under two sections of the National Housing Act we need the approval of the government of Quebec. Under section 23, which is the slum clearance section, it is necessary to have the approval of the provincial government concerned; and under section 36, which is the applicable section for the subsequent housing development, it is necessary for the provincial government to enter into an agreement with the federal government. I asked the premier of Quebec if the government of Quebec is prepared to act accordingly and I have not yet received his answer.


William McLean Hamilton: As a
supplementary question, may I ask whether the minister did not discuss that matter in a telephone conversation with the prime minister of Quebec about two weeks ago-


An hon. Member:: The premier of Quebec.


William McLean Hamilton: believe Quebec enjoys the proud privilege solely among the provinces of Canada of having a prime minister. As a supplementary question, may I ask whether the minister did not have a telephone conversation with the leader of the Quebec government about two weeks ago when this gentleman was in Hull?


Robert Henry Winters: Yes, Mr. Speaker. The premier ministre of Quebec telephoned me on that occasion when he was in the city of Hull. I told him then what was in my letter of May 31, which he had not seen at that time because he had been engaged in other activities.
[Later:1
On the orders of the day:


Robert Henry Winters: Mr. Speaker, since replying to the question asked by the hon. member for Notre Dame de Grace I have had the following telegram handed to me:
Concerning the Dozois plan in Montreal and pursuant to your letters of May 31 and June 22 and also to our telephone conversation while in Ottawa on my way to attend a public meeting in Hull on June 13. The unavoidable delay in answering your two letters mentioned above is due to very very exacting demands upon my time. Furthermore the Quebec government would like to have additional and necessary information in regard to the attitude of the Montreal municipal authorities which information should be supplied by the end of next week at the latest.
Maurice Duplessis.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
George Alexander Drew: Prior to the Prime Minister's departure for London, he stated that during the time that he was there he would give consideration to the possibility of setting up a standing committee on defence expenditures. I should like to ask the Prime Minister if, in view of the discussions that he has had or as a result of such inquiries as he has made, he is now prepared to announce the establishment of such a standing committee which could perform a very useful service in an examination of defence expenditures prior to the present examination by this house?


Right Hon.  L. S.@: I am sure neither the Leader of the Opposition nor I would wish to change the record as to what was exactly the form of that suggestion before I left for London. I did have inquiries made in London, and I brought back copies of reports of some of the meetings of the subcommittee on defence

expenditures. I did not have time to give them careful consideration because they are voluminous records. I brought them back with the intention of having them carefully considered, but I cannot announce at this time the establishment of a committee.


George Alexander Drew: 1 wish to ask a supplementary question. In view of the fact that during the absence of the Prime Minister there have been further statements by senior defence officers in regard to the need for the effective reorganization of the department and an examination of the general plan of expenditure, will the Prime Minister give immediate consideration to the possibility of setting up a committee, which could still act during the current session of this house?


Mr. SI. Laurent (Quebec East):: I have not seen the statements which, I understand, were made while I was away by senior officers of the department. I will be glad to secure them and give them careful consideration.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. H. O. White (Middlesex East):: As the
Minister of Veterans Affairs did not make any announcement on Friday last when he introduced his estimates regarding the introduction of the five-day 40-hour week for employees of veterans hospitals, would the minister now indicate the government's intention of inaugurating such a policy with respect to Westminster hospital, London, and other veterans hospitals? Second, were assurances given last October that a decision would be made on this matter without too great delay?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: My hon. friend did not give me notice of this question, and I am not aware of any recent changes regarding the introduction of the 40-hour week in all veterans institutions. I know that we have introduced the 40-hour week in those localities where that was the practice in other civilian hospitals. I shall be glad to look into the situation with regard to Westminster hospital. I cannot, however, recall making any commitment whatever to anybody last fall.


George Alexander Drew: I wish to direct a question which is not directly related to that which has been asked, but which does relate to the responsibilities of the Minister of Veterans Affairs. Has the minister received representations from the Department of Veterans Affairs employees national association asking
Inquiries of the Ministry that all D.V.A. hospital employees be placed on a five-day 40-hour week in place of their present five and one-half day 44-hour working week, in line with the policy already adopted in such D.V.A. hospitals as those in Victoria, Vancouver, Calgary and Halifax?


Hugues Lapointe: I did, in fact, some time ago have the benefit of representations from that association. They are constantly in communication with the officers of the department and I am aware of their views. We have received such representation but the matter has not yet been given consideration by the cabinet.


George Alexander Drew: I should like to ask a supplementary question. Is it a fact that the salaries of D.V.A. hospital employees at present are the same, regardless of whether a longer or shorter working week is in force?


Mr. Lapoinie:: That is what has been
alleged in a letter sent by the association. I am having that looked into. I would not like to say yet that it is the case, because I am not convinced it is. I am having the officials of the department look into it, and I shall be glad to give the information to the house when I receive it.
(Translation):


Mr. J. Wilfrid Dufresne (Quebec West):: Mr. Speaker, to follow up the questions previously put by the Leader of the Opposition (Mr. Drew) to the Minister of Veterans Affairs (Mr. Lapointe), could the latter tell us whether it is his intention to recommend before his departmental estimates are passed, that all the employees of military hospitals coming under him be treated in exactly the same fashion as every other civil servant, in other words that they may be allowed a work week of five days or 40 hours?


Arthur-Joseph Lapointe: Mr. Speaker, I must say that the employees of those hospitals which come under the Department of Veterans Affairs are treated in exactly the same way as other civil servants. The policy of the government in this regard extends to hospital employees as well as to every other civil servant. My hon. friend knows that this policy consists in extending the 40-hour week to every civil servant in areas where it already is in force in most industrial or commercial concerns. Now then, I do not think that the 40-hour week has been implemented in any of the hospitals of the province of Quebec.


J.-Wilfrid Dufresne: Mr. Speaker, I should like to ask another question of the minister. Is it his intention to recommend that all employees of the military hospitals in the province of

Inquiries of the Ministry Quebec be treated in exactly the same way as the employees of the hospitals in the other provinces of Canada?


Hugues Lapointe: Mr. Speaker, if my hon.
friend reads the answer I have given to his first question, I believe he will find in it the answer to his second question.
(Text):



REQUEST FOR EXTENSION OF FIVE-DAY 40-HOUR WEEK TO ALL GOVERNMENT EMPLOYEES

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Minister of Finance, but actually it is supplementary to the questions just asked of the Minister of Veterans Affairs. Is it the intention of the government at an early date to extend the five-day 40-hour week to all its operating staffs?


Hon. W. E. Harris (Minister of Finance):: Whatever the intention of the government may be will be announced in due course.


Stanley Howard Knowles: May I ask the minister if such an extension is under consideration?


Walter Edward Harris: That is the sort of thing that is confided in secrecy to the cabinet from time to time.



SASKATCHEWAN-INQUIRY AS TO FURTHER PAYMENTS

[Stage Direction]
On the orders of the day:
Mr. E. G. McCullough (Moose Mountain):: Mr. Speaker, I should like to direct a question to the Prime Minister. Can the Prime Minister state what has been the total amount paid to Saskatchewan in connection with the 1955 flood damage and whether or not any further substantial amounts will be paid?


Louis Stephen St-Laurent: I cannot give at this moment the precise figures. I received the hon. gentleman's question just a few moments before I came into the house at 2.30. I understand that reimbursement has been made to the government of Saskatchewan with respect to at least one of the claims, but no very large amount, and that most of them are still unsettled. There is an item of $120,000 included in the supplementary estimates for the settlement of claims in Manitoba and Saskatchewan. I will endeavour to ascertain just exactly what the situation is at the present time and give the information to the house and the hon. member just as soon as I can obtain it.


Walter Edward Harris: that the house go into committee of supply.



MOTION FOR ADOPTION OF NATURAL RESOURCE DEVELOPMENT POLICY

George Alexander Drew: Mr. Speaker, we have been reminded today in some of the statements that have been made that we are living through a period of dramatic change which affects us and every other nation. It is my intention in the remarks that I shall make to discuss Canada and our own future in the changing scene.
The whole of Europe has marched ahead since the end of the last world war in a way that no one would have dreamed possible during the grim days of war itself. Not only have nations which were crushed under the impact of war found a new vitality and a new strength but nations which had not previously existed have taken form. New nations have emerged in Asia, Africa and elsewhere which will have a profound effect upon the course of our own life in the years ahead. Nowhere have those changes been more remarkable than within the commonwealth. Today we have had a brief report from the Prime Minister (Mr. St. Laurent) about the conference which has recently taken place in London. Following that conference a statement was issued which placed a very optimistic interpretation upon the meeting itself. I think it will be the hope of all of us that the optimistic expectations will be fulfilled. I must confess that we have little information before us now as to what the details are which justify those expectations. We regret very deeply that the government of Canada did not extend an invitation for a trade and economic conference here in Ottawa to be attended by the prime ministers of all the governments of the commonwealth. After all, the beginning of any meeting of that kind rests upon a positive invitation.
We have been stressing for years our belief that it is in the interests of Canada as well as the other parts of the commonwealth that every possible step be taken to vitalize the exchange of goods and to bring into as close harmony as possible those nations which are associated in this amazing fellowship. I would hope that the day is not too far distant when it will be possible for such an invitation to be extended in a manner that will leave no uncertainty that we in Canada desire the very fullest possible co-operation in every way with the United Kingdom and other nations of the commonwealth.

As we look forward into the distant years ahead not one of us can see what may happen in that future period. Let us hope and pray that in the uncharted course that lies beyond the immediate future the commonwealth may emerge as the great central core of international understanding and that the unique fellowship which found expression in London in recent days may give confidence to others for international harmony and good will and find living expression without weakening national sovereignty in any way.
Behind every consideration of the future must be a recognition of the reality of the Soviet empire. By steps which need not now be recounted in detail Russia has established a terrible sovereignty over the colonial system which by one of the strangest ironies of history has emerged at the very time that, by the voluntary acts of other great powers, colonial systems elsewhere have been disappearing. Only recently we have seen something of what that authority means in the steps that have been taken in Poland to suppress the expression in that country of the desire for freedom. The reality of Russian domination of nearly one-third of the world's people and the reality of the attempts of Russia to affect our life in so many ways, both in our internal activities as well as otherwise, impresses upon us the need for examining our position and considering how best we can strengthen ourselves not only for the immediate present but for the long years which lie ahead.
What will historians one hundred years hence record of the events which will occur during the lives of ourselves, our children and our children's children? Will it be told that freedom was engulfed in an ever-widening flood of communist oppression, or will the story be a bright narrative of spreading freedom which saw its beginning in such events as those which occurred in the last few days in Poznan or other similar events which have happened elsewhere in East Germany and other places behind the iron curtain? Of one thing we can be sure. The course will be determined in large measure by the degree to which freedom itself is cherished and protected in the countries which are still free and in the degree of unity which is maintained among the nations sharing freedom at this time.
As we read the history of the events which preceded the beginning of the dark ages- and they are set forth with dramatic colour and vigour in the recent history published by Sir Winston Churchill-we are reminded that the advanced civilization of the early Christian era almost disappeared because of complacency and uncertainty about the value of united effort to stem the tide of aggression 67509-367
9, 1956	5773
Natural Resources-Development which on every frontier threatened the survival of a civilization which in arts and letters even if not in technical development had equalled or even surpassed our own civilization of today. Our own part in maintaining this priceless freedom will be measured not only in our material advancement and our contribution to the joint defence of freedom but also by the extent to which we speak as a free and sovereign nation capable in every way of making our own special contribution to the common cause and making that contribution as a result of decisions that are entirely our own.
If one lesson comes to us more clearly than any other from the long history of the past it is that our best contribution in the international field as well as in the field of domestic development will be to speak as Canadians on behalf of Canadians with visions of a strong and growing Canada always before us in our thoughts. We Canadians have hardly yet grasped the full significance of what has been happening since the end of the second world war. We have seen things happening around us which had their beginning in that war itself. Because of the unparalleled use of resources during the war and the need to repair the awful destruction of those terrible years, demands on new resources of raw material and resources generally have become far greater than ever before. On top of this have come remarkable scientific and technical discoveries in so many fields which were stimulated by the demands of war itself.
It is in such a situation and under such conditions that we find ourselves in possession of enormous resources of so many kinds. We have all the resources in this country to support a large, prosperous and happy population. We have the agricultural land; we have the forests; we have the fuel; we have the raw materials for buildings; we have all the things that are needed for a really great development here within our own boundaries. With all this we have practically every mineral needed in this mineral age. The only important metal for which we have not the raw material in Canada is aluminum; yet in that case because of our huge hydroelectric resources we are importing bauxite from Jamaica and British Guiana on a scale which ranks us as the world's second producer of this immensely valuable metal, and there is reason to believe that we will soon be the first. It is a fabulous picture of opportunity which opens out before the people of Canada today.
I am not going to go into all the statistics to support the statement that at this time

Natural Resources-Development Canadians have a greater opportunity for the future than any other people in the world. The facts are there; there is the reality. What a story of rewarding adventure it has already been. Just let us think, as we look into the future, of the new discoveries which within so small a number of years have changed the whole picture here in Canada and in some measure changed the picture throughout the world.
It is only about 25 years ago that Gilbert LaBine in that romantic flight of his in the sub-Arctic saw the first signs of uranium and by the discovery which came later started a new phase in Canada's mineral possibilities when the reality of those uranium deposits became known. Before that the existence of this mineral had been unknown in Canada. Now it seems that we shall soon be the world's largest producer with the discoveries which have recently been made.
The same story is being repeated in so many fields of development. Ten years ago we were relatively small producers of iron and the fabulous deposits in eastern Quebec and Labrador had still to be proved. Our oil production was still small; and up until a few years ago natural gas was being used only by those fortunate enough to live near the actual sources of supply. Just in those few passing years, from the Atlantic to the Pacific vast new deposits of iron ore have been discovered, oil production is mounting by leaps and bounds and spreading over a wider area all the time, and huge reserves of natural gas have been added to our fuel supplies. It is a truly fantastic picture.
Not only have we almost every mineral in the calendar from antimony to zinc, we have them in large commercial quantities, we have them in amounts that make it possible for us to contemplate the industrial use of every one of them. The question we must ask ourselves is, what is this going to mean to Canadians in the years ahead? We have everything to make this a great and populous industrial nation. We have the resources, we have the industrial power, we have the fuel-producing capacity and the basic requirements for housing, clothing and heat for a very large population. We can grow vast quantities of food. We grow enough wheat for 100 million people. We can expand our food production to support a very large population by intensive agricultural methods throughout the whole country.
What lies before us is much more than the opportunity for growth which is taking place in other parts of the world today. If only we perceive the full possibilities now opening up before us we will find, not that we are at the beginning of a period of steady

advance but that we are just now at the threshold of one of those historic upsurges in the life of a nation which have carried one country after another to positions of commanding importance throughout the centuries.
But this is not going to happen just for the reason alone that we happen to have natural resources. That is a fallacy which it would be well for us to keep in perspective. The way that these resources will be used will depend upon positive decisions. We cannot emphasize to ourselves too often the fact that resources alone do not bring power and lasting prosperity. There are far too many stories in the pages of history which tell us of the temporary wealth, sometimes great wealth, of nations which lived on their resources without any thought for the future and then sank into relative unimportance after those resources had been exhausted.
On the other hand, many nations have become strong and prosperous with practically no raw materials in their possession. They overcame their difficulties by industry, technical skill and a great national spirit. Of all the nations which offer an example of what can be done, the United Kingdom stands supreme. With relatively few natural resources as we know them, they became the great trading nation of the world in the last century simply by the energy, productive capacity and skill of the people of those famous islands.
Let us look at other examples. One small nation which tells us what can be done even without resources is Switzerland. It has practically no raw materials of any kind except its forests, its soil and its streams, but the application of research and great technical skill combined with industry and a national determination has made it one of the most prosperous countries in the world today.
When that can be done without resources, think of what can be done with the resources we possess if in this country of ours, the third largest in the world, we apply the same principles, the same spirit and the same policies to the tasks which lie before us.
We have much reason for satisfaction here in Canada. We have one of the highest material living standards in the world. But we have no reason for complacency. We are not manufacturing all that we could manufacture from our own raw materials. We are not processing nearly as much of our raw material as should be processed by Canadians here in Canada. The simple and inescapable fact is that, while we can point with a great measure of satisfaction to many areas of concentrated industrial development, we have not been keeping pace with

many other countries in industrial development during recent years, in spite of our tremendous opportunities.
Another thing which has a great bearing on our own future is the fact that the discovery of the full extent of our mineral and other resources has come at a time when the United States has in a very substantial measure exhausted many of their own. Because of our geographical position there is a tendency to seek from Canadian sources raw materials for a huge industrial production in the United States. It is to our immediate advantage to ship much of our raw material to the United States, just as it is to our immediate advantage to buy certain raw materials from them; but it is also to our immediate and urgent advantage that, while the development of these resources is being opened up and these resources are being shipped to the United States, we also take appropriate steps to make sure that here in Canada we are giving employment to Canadians at the highest level of wages by processing just as many of those resources as we possibly can.
The thing that we must remember and that we are inclined to forget is that no raw materials are inexhaustible. The United States thought their raw materials were beyond any level of exhaustion; then suddenly they came face to face a few years ago with the reality of their situation. In the Paley report, which was the report of a very competent commission set up to examine the situation in the United States, they were told to the amazement of many of them, that in the case of a great many of the resources the United States was going to be a have-not country within 25 years.
According to the latest figures of the dominion bureau of statistics, the only mineral in Canada which might seem to be comparatively inexhaustible is iron ore. Even in that case it would not be wise for us to assume that there is not some point of exhaustion, if we discuss these problems in terms of history and not of the immediate present. If we become the main supplier of a tremendously expanded steel industry in the United States throughout the years ahead, and if they should be in a position to determine what the main end product of those resources will be and how those resources will be used, then we might find ourselves in the position that even with our huge reserves they could in time, with their enormously expanded production, exhaust our own resources of iron just as they have their own. That, however, is the one case where we have any reason to use the term "inexhaustible resources", except in the case of forest products, where there is a renewable resource 67509-3674
9, 1956	5775
Natural Resources-Development which under proper forestry methods could be kept intact for all time.
Let us examine the figures of some of our main minerals. Those figures are particularly revealing. These are the most recent estimates of the dominion bureau of statistics in regard to the number of years of supply of ore available at current rates of production in relation to what has already been proved. I would ask hon. members to think of these figures and what they mean when I repeat the fact that this is only at current rates of production and consumption:
Copper	
24	yearsLead	
26	yearsNickel	
30	yearsZinc	
30	yearsAsbestos	
64	yearsPetroleum	
22	years
Granted that there have been new discoveries since those figures were published, recent though they are, and granted that there will be new discoveries, what should be remembered is that these estimates are only based upon current rates of production. If the current rate is rapidly expanded to meet demands in the United States, then it will be seen that, far from having inexhaustible supplies, even the large supplies we now have could be fairly quickly exhausted. The United States has shown us that resources can be exhausted; these estimates demonstrate that it can happen here.
Once a country is fully opened up, it is opened up for all time; with new technical devices and new means of transportation we are well on the way to the real opening up of our country. As trustees for future generations of Canadians, we should make sure in every way we can, within the framework of our constitutional structure, that by the combined efforts of all governments and all the people of Canada the opening up of our country brings the maximum benefit to every part of Canada, not only for today but for future generations far into the years ahead.
We see many signs of great increases in industrial production in Canada, but again it is well for us to temper our satisfaction with statistics. In spite of new sources of industrial energy and great new supplies of raw materials for industrial production, we have not kept pace with the rest of the free world in industrial expansion, as I have already mentioned. The United Nations monthly bulletin of statistics for January 1956 reports that the increase of industrial production for the whole non-communist world was 37 per cent between the years 1948 and 1954 inclusive, while for the same period Canada's industrial expansion was 24 per cent. In the same period the industrial production of West Germany expanded 180 per cent. I, of course,
577S

Natural Resources-Development concede immediately that there are unusual circumstances which have produced that result.


Clarence Decatur Howe: You mean, from the paralysis following the second world war?


George Alexander Drew: I concede immediately that there are unusual circumstances that produced that result, and I was just going to say when the minister interrupted my remarks that these cannot be compared with our own figures, because Germany was rebuilding a great industrial structure after the destruction of the world war. Nevertheless, in the United Kingdom, where there also had been destruction, there has also been a greater percentage of industrial expansion than there has been in Canada. This is not something in regard to which we need to be unduly concerned, having regard to the future; it is simply, as I said before, something to temper our optimism and make us recognize that with the unique opportunities we possess, unequalled by any other country today of anything approaching a similar population, we have not done all that could be done in the way of industrial expansion.
There is also the fact that the improvement in personal income, which has been substantial, has not been equally distributed throughout our country. In terms of real dollar value there has been a surprisingly small increase in the maritime provinces and Saskatchewan, with some areas in the other provinces equally unbalanced. Large areas right across Canada have not participated fully in our recent growth and development. This government has failed to meet its obligations to those parts of Canada which are most in need of encouragement and financial support. The failure of this government to support sound projects like the South Saskatchewan power and irrigation project, the Beech wood project in New Brunswick and other similar developments which have been discussed here from time to time merely serve to accentuate the differences already existing not only in different parts of this country but in the way in which this government deals with the problems in different parts of the country.
The present government's policy for Canada's economic growth exposes this country to severe external dangers which could be reduced if greater encouragement were given to the building within Canada of heavy and light industry while at the same time increasing the size of our domestic market by well-planned immigration.
Our growth has been the result of a vigorous pioneering spirit over the long years amongst our own people combined with foreign investment in our development through the whole of our national history.

From Britain, France, Germany and now more particularly from the United States money has flowed into Canada because of the prospects offered for a sure return. That, after all, has been the inducement:	The
prospect of returns from the investment made.
We have always welcomed foreign investment and I am sure we always shall. But we should not exaggerate our dependence on foreign investment. More than 80 per cent of all capital investment in Canada still comes from Canadians. However, the important fact which we must examine and discuss from the point of view of government policy is the growing danger to our economy as a result of the ownership by residents of the United States of a very large proportion of Canadian industries and mineral production. The latest official figures available are those for 1952. According to those figures we are told that 38 per cent of the capital in Canadian manufacturing industry was owned in the United States, and 53 per cent in mining, smelting and the petroleum group of industries. That proportion has rapidly increased since those figures were made available. It has been estimated in the press recently that 90 per cent of our oil industry is controlled in the United States. It may not yet have reached that point. Certain it is, however, that the percentage of ownership in the vital industries which profoundly affect the course of our economic growth is rapidly increasing all the time. It is not enough to say that these industries and other producing activities must of necessity operate to the advantage of Canada because they are in Canada and under Canadian law. The fact is that this government has on different occasions answered people who have complained of certain difficulties that arise because of the foreign ownership of industry here, that they could not control the result of that ownership. Companies which are controlled in the United States, whether they be Canadian companies or United States companies, are controlled effectively outside Canada as to their plans of production, their pricing policies, their dividend policies and the policy of the company as to further extensions of their activities and the direction of their production. The laws of Canada do not affect their control over those fundamental and vital aspects of their activities. Already this represents a substantial loss of economic independence in many lines of production.
Our position is different from that of any other country in the world today. It is well for us to keep in mind the broad map of the world and the relationship of other countries throughout the world. Nowhere is there a situation similar to that with which

we are confronted. We live side by side with a great and friendly neighbour. No sinister purpose guides their attitude towards us. Over the years, right across Canada there has been a mingling of blood that extends family relationships with the people of the United States. Nevertheless, there is this unusual situation. We live side by side with a country which has a direct and daily impact upon our thinking through the press, over the radio, by television, through the periodical publications and by other means of communication. In this way the desire to buy things produced in the United States is stimulated in a manner that is perfectly legitimate for those who are selling and producing those products in the United States. Nevertheless, the reality is there. The steady pressure of financial expansion from the United States into Canada has created an interlocking economy in which the direction is swinging more and more to the head offices of companies in the United States which are operating on both sides of the border. It is as though there were two great bodies living side by side, with the arteries becoming more and more intertwined but the central control of those arteries moving more and more into the more populous of the two countries.
Let us examine these facts in the manner in which we are accustomed to examine them when we discuss situations of this kind with our friends in the United States. After all, it is to their interest as well as ours that Canada be a strong and vigorous nation, confident in its own right and in a position to build to the full stature of powerful nationhood under the control of our own policies in the years ahead. Here are some of the results of the situation which is developing:
1.	A heavy net outflow of interest and dividends increases the amount of goods which have to be shipped abroad to raise the necessary foreign exchange. In other words, the profits are drained out of the country and the amount of goods which can be imported at any given level proportionately reduced.
2.	Foreign interests control the pricing policies of their Canadian subsidiaries in a way that could be a great disadvantage to the Canadian consumer.
3.	Foreign financial control is in a position to decide the extent and the form of the operations of their Canadian subsidiaries, and they can use earnings from their Canadian subsidiaries to finance expansion of plants outside of Canada.
4.	In many cases senior positions in Canadian subsidiaries are held by other than Canadians.
Natural Resources-Development
5.	Foreign management may use its Canadian plant to manufacture goods for export only when the United States plant is too busy to handle its export orders. This creates undesirable fluctuations in production and employment in the Canadian subsidiary.
6.	A foreign-owned subsidiary can export scarce goods to the parent company's foreign consumers even if prices for the product are higher in Canada. That has already happened in cases that have been discussed.
7.	A foreign company may not give the Canadian public adequate information about the affairs of its Canadian subsidiary. A number of Canadian subsidiaries today are operating under laws which do not compel them to give the information which is essential for an understanding of their operation.
8.	United States interests doing business in Canada are subject to some laws of the United States such as the anti-trust laws. No matter how desirable the purpose of any of those laws may be, the result is that there can be an interference with business in Canada by the decision of the United States courts or other tribunals. I submit that business in Canada should be under Canadian courts and tribunals only.
9.	Industrial research for Canadian owned subsidiaries of foreign owned corporations may be carried on outside the country so that there may not be adequate inducement for skilled personnel to remain in Canada.
A number of these disadvantages could be met without in any way discouraging investment in Canada and with comparatively simple changes to Canadian laws. For example, there should be a Canadian law to compel the United States owners of substantial Canadian subsidiaries to publish properly audited balance sheets and income statements of their Canadian operations. If this were done the Canadian public would know how profitable those subsidiaries are and what the actual cost of production is in relation to price. Those are some of the obvious disadvantages that arise from a situation which has developed simply from the fact that Canada now offers a rich return for large scale investment.
We have gained a great deal from that investment. We all recognize that. We must recognize that we have also gained much from the association of Canadian business with large United States businesses, as we have from the association with British businesses, with French businesses, with German businesses and other businesses that have set up for operation here in Canada. We gained the advantage of their technical skill, their industrial experience and their elaborate
5778	HOUSE OF
Natural Resources-Development research facilities. On the other hand, carried to its ultimate conclusion, this could produce the result that we would not have adequate research facilities of our own; that we would not develop the necessary management skills and that our business methods, which in the end have such a wide impact upon our social conditions, would not be under our own direction.
Therefore, it seems clear that if we do believe it is important that we remain Canadians and have a distinct Canadian nationality, it is desirable that those steps be taken which are necessary to encourage our own management and expansion of our own affairs. This can be done without in any way discouraging legitimate investment of any kind in Canada. One of the most important things in industrial expansion is research. The amazingly successful industries of Switzerland and Holland, both tiny countries compared with the size of ours, are an example of what can be accomplished in that field. So also is the immense production of Germany and that, of course, is true of the United States. Therefore, the training of skilled men and women to take their part in research and technical development must be part of the national program consciously designed to advance our industrial expansion in Canada.
Without interfering in any way with the exclusive jurisdiction over education which rests with provincial governments, encouragement should be given to advance research and within the framework of our constitution research facilities should be expanded rapidly right across Canada in our universities and industries. This is something the government can do and should undertake right away.
This government has been strangely reluctant to make those changes in our laws which would end the very real discrimination against Canadian investors. It does seem a strange thing that a situation actually exists today that Canadian investors are in many respects at a disadvantage when it comes to investment in Canada as compared with investors from the United States or some foreign country. It is important that minority participation in foreign companies operating in Canada should be open to Canadians. There are obvious reasons why Canadians should be able to affect, to some extent at least, the operation and direction of affairs of all companies in Canada. The more companies that are controlled by Canadians themselves, naturally the happier we will be. But where that is not so, there certainly should be provision for participation by Canadians in all companies in this country.


Actually, at present minority Canadian participation in foreign controlled subsidiaries is discouraged by our own laws. These are recommendations which we have already discussed at different times in this house in detail. I want to summarize some of these subjects which have been discussed here and elsewhere because the impact of our own laws upon investment by Canadians in our own activities is one of the things that have a very great bearing upon the situation which has developed in this country. We have been told that Canadians are unwilling to take risks with their money; that is not so. It is utterly untrue. Canadians are prepared to take risks along with others. Canadians, however, have not found the same opportunities and the same encouragement as others because our own laws are not as beneficial to those who take risks of certain kinds.
May I review some of the ways in which the laws do act contrary to our own interests in this respect:
1.	Canadian tax laws should be changed to eliminate the tax penalty which a British or United States company must suffer when it allows Canadians to own a substantial minority interest in a wholly owned Canadian subsidiary.
2.	The incentive to non-residents to operate in Canada as foreign corporations rather than as subsidiary companies incorporated in Canada should be removed.
3.	There should be stronger incentives in the Income Tax Act for investment companies to invest solely in Canadian equity stocks.
4.	Succession duty laws should be amended to make it easier for Canadian families to maintain control of their businesses.
5.	The method of taxing Canadian oil companies should be changed so that the Canadian operator is not at a disadvantage in competition with United States operators in the Canadian oil fields, as he now is.
6.	Tax deductions should be permitted in respect of research expenditures which will encourage our own research in every field.
I do not intend to review these subjects in detail. It is not possible within the time at my disposal to do so. These cover a vast field. Certain it is, however, Canadian government policy should be designed to give Canadians as favourable a competitive basis for operation as is possible, and1 it should be extended to every possible case where Canadians invest. It certainly should be extended to Canadians as much as or more than it is to the foreign investors no matter where the investors may come from. That is the least that Canadians should expect from their government.

Now, may I speak, and only briefly, of this unfavourable trade balance with the United States which amounted last year to $839,996,794. This enormous amount is one that we cannot disregard. Figures released for the first five months of 1956 indicate that it is likely this unfavourable balance will exceed $1 billion for the current year; that is something to which the Canadian government must give attention. It certainly should be Canadian policy to balance our trade as much as possible and not place ourselves in so precarious a position in relation to any one nation, no matter how friendly that nation may be. We must not place all our eggs in one basket, either in regard to trade or in regard to any other aspect of our economy.
There are many aspects of this unfavourable trade balance which call for our consideration. It is only possible to support such an unusual situation because of the heavy flow of investment money into Canada from the United States. That has made it possible for us to buy many things that we require and undoubtedly many advantages have flowed from those purchases, but it has also limited some of the advantages of the investment which has been made.
Another subject which must be borne in mind is the upward trend in the export of raw materials since the end of the second world war. That has steadily increased. At the same time, the proportion of fully manufactured goods in our exports has been declining. In 1946, 51-8 per cent of all our industrial exports from Canada were in fully manufactured form. In 1954, they had been reduced to 39-8 per cent. At the same time the percentage of fully manufactured goods in our imports has been steadily rising. In 1946, 66-8 per cent of our imports were fully manufactured, while in 1954, 75-6 per cent were fully manufactured. This gives a picture of growing dependence upon outside manufacture which is not consistent with our remarkable position; it is not consistent with the fact that we have every one of the known sources of industrial energy in large quantity and that we have great resources of raw materials beyond the dreams of most countries of the world today.
Nothing that I have said is an argument against foreign investment on the one hand, or the export of resources on the other. It is an argument that in the laws which govern the results of investment, and in the use of our resources, Canadian interests should at all times be protected and encouraged. That will not limit legitimate investment in any way. At the same time our export policies should be related to our own needs
9, 1956
Natural Resources-Development for the future and the desirability of processing as much as we can of our own raw materials in Canada to give employment to new millions of Canadian workers.
These problems pose a question to which all Canadians must be prepared to give an answer one way or another. Do we believe in Canada as a national entity? Do we believe that it is worth while that the people living in this country in the years ahead shall continue to be Canadians with full and effective control over a strong, prosperous and vigorous country? I am sure that it is the wish of Canadians, and I am sure that Canadians want policies which will make that result certain.
We recognize the constitutional division of responsibility, but this government must assume responsibility for guiding policies in regard to international trade. Canadian expansion under as great a measure of Canadian control as is consistent with our national aspirations should be the policy supported by every one of us.
The question before us is simple but vitally important. Are we going to be satisfied with a quick cash return for capital assets which can never be replaced, or are we going to plan privately and publicly for the highest possible use of our own raw materials in Canada under long-term plans of development and conservation? Are we going to be hewers and diggers in large measure for a great and friendly neighbour who will then sell the finished products back to us after the most profitable employment has been created for their own people, or are we going to make the processed and finished articles that we need here in Canada in factories broadly based across the whole of our country to use the materials and resources which providence has entrusted to our care?
I think the answer to these questions is of vital concern to every Canadian. It is of equal concern to our farmers and industrial workers and investors, because the broad prosperity of the Canadian people will depend upon what we do. I have not spoken today about the great production of our agricultural areas. We all know of that. We know that one of our problems is the surplus production; we know that there is nothing so important to the farmer in Canada today as larger consuming markets within this country to provide the ready outlet for the goods that can be produced on our farms in far larger quantities than are being produced today. I think the appropriate answer is clear. I think we should decide that as Canadians we will process our raw materials to the greatest extent that is a practical possibility and in that way create highly paid
5780	HOUSE OF
Natural Resources-Development employment for many new millions of Canadians in the years ahead, that will create more markets for an extended production in Canada in every field.
We all share the satisfaction in the growth and development that has already taken place. But this is only a promise of what can happen. Government policies should encourage the development of our own resources, should promote the processing of those resources in Canada, should correct our unfavourable trade balance, should assure the participation by Canadians in the development and processing of our resources, and should assure opportunity and employment for all Canadians from the Atlantic to the Pacific wherever they may live.
Along with the bright picture that we see in so many centres in Canada today, there are unhappy pictures which no Canadian should ignore. I think many of us have seen the extreme poverty which exists in some parts of this country and which has not been alleviated by the developments that have taken place here. It must be the concern of all Canadians to spread this rich opportunity across our broad land and by the combined efforts of our people make sure that it is not only for some Canadians that these advantages accrue but that the development of those incredible opportunities is truly for the benefit of all Canadians wherever they may live, whatever their occupation may be and whatever part of Canada they call their home.
My firm conviction is that if we adopt a sensible Canada first policy which strengthens our own country we shall then be in a position to make our greatest contribution to international friendship and international cooperation. Upon our own strength will depend the value of our contribution to the joint efforts which are being made for the advancement of civilization throughout the world.
We are indeed a very fortunate people living in a very fortunate land. We are now at the dawn of one of the brightest days which ever opened out before the people of any nation. But it is not only of today but of tomorrow, and of the many other tomorrows, that we should be thinking at this time. We can gain much wealth in a short time for a limited number of people, or we can spread prosperity, security and happiness across the whole land, depending on the course that we follow.
We wish to be good friends of all nations; that goes without saying. But first of all we wish to be strong within our own boundaries and within every part inside our boundaries. With the right policies today Canada can have a population of at least 30 million people within the next 25 years,


and by the end of the century we should have at least 75 million people and be a great and prosperous world power.
I have said this before, but I repeat it from deep conviction. For the Canadians of today and of tomorrow this can indeed be the beginning of Canada's golden age. Mr. Speaker, I move, seconded by the hon. member for Eglinton (Mr. Fleming):
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
this house is of the opinion that the welfare of the Canadian people requires the adoption now of a national development policy which will develop our natural resources for the maximum benefit of all parts of Canada, encourage more processing of those resources in Canada, correct the present serious unfavourable trade balances, foster wider financial participation by Canadians in the development of our resources, and promote greater opportunity and employment for a steadily increasing population.


Major James William Coldwell: Mr. Speaker, in rising to participate in this debate in this circumstance, one is under some disadvantage. Not having had an opportunity to make preparation and marshal the necessary material facts, one is perhaps unable to do justice to a topic of this importance. However, I think the Leader of the Opposition (Mr. Drew) this afternoon in moving this resolution and in the address which introduced it has placed before the house a great deal of material and has advanced many arguments that will appeal to members on all sides of the house. I agree with him that Canada should be on the verge of still greater expansion.
When I say that we should be on the verge of still greater expansion it is because over the last half century or so we have seen a tremendous growth both in the development of our resources and indeed in our population. I can look back now over almost a half a century since I came to this country as an immigrant. I recall the prairies as they were then, wide open spaces, the homesteaders building their sod shacks and in many instances still breaking the land with oxen. When one sees what has developed in that agricultural area over the last 45 or 50 years one realizes what expansion can be achieved in the years to come in all parts of Canada.
One has only to move from one side of this country to the other to realize the variety of our resources as well as the beauty of the land in which we live and the diversity of the people who inhabit the land, people of diverse origins. Our English-speaking population today is not wholly Anglo-Saxon, but intermingled with the people who inherited the English language from their forebears are those who have come to us from other

countries and have been integrated into the English-speaking part of Canada. We also have the French-speaking population which has grown and expanded and assisted so materially in both the industrial and cultural development of the land in which we live. Consequently when one projects his mind 25, 50, 75 or 100 years hence one begins to see a picture of what this country may be in the years to come.
This afternoon the Leader of the Opposition has placed before us some considerations to which we should pay some attention in this parliament at the present time. It is quite true that the development-or shall I use the word "exploitation"-of many of our natural resources has fallen under the control of interests that are not Canadian, whose only thought in the exploitation of those resources is the making of a maximum amount of profit and return on the capital they have invested in our land. It seems to me that while we do welcome capital from outside the country to assist in the development of our resources, we in this parliament, and perhaps more particularly the members in the provincial legislatures, have an obligation to see that this development is planned in order that the maximum benefit may accrue to Canada today and to Canadians in years to come.
I noticed the Leader of the Opposition used words to this effect. He said what we need is a national program consciously planned, and I agree with him. We in this group have long held that if we are to develop this country along the right lines we must have sound national economic planning. By national economic planning I do not mean that it must be done by the central authority, but that under the leadership of the federal authority the provincial governments in cooperation with the federal authority should be planning the utilization of our resources not only for today but also for the years to come.
When we move across this country we can see the extent to which our resources are being not developed but exploited. I have our great forest resources in mind at the moment. Had I known this debate was to come up this afternoon I might have looked up some information I have at home on this subject. About two weeks ago a timber expert from a Scandinavian country made a statement as he departed from Canada. He had visited this country for some months, and in his investigation of the manner in which these resources in Canada were being utilized he had taken jobs at various lumber camps without indicating his real interest in Canadian forestry.
9, 1956
Natural Resources-Development
When he left he made a statement to the effect that he had been very interested in seeing the vast forest resources Canada has, he had been interested in having an opportunity to investigate the manner in which they were being exploited, and then he went on to say that he knew of nowhere in the world where the forest resources were being as wastefully denuded as they are in our country at the present time. He also went on to say, of course, that our vast forest resources were not inexhaustible, and that at the rate we are cutting down the trees and not replacing them under any conscious plan the time would come when Canada would be without these great forest resources.
One has only to remember what happened in the United States some 50, 60 or 100 years ago to be aware of what results from a lack of planning. One has only to travel through Minnesota, Wisconsin or Michigan, which at one time were the great forested areas of the United States, to realize that the heritage of scrub, sand and rock, in Minnesota particularly, has resulted because the people of that day and generation failed to safeguard and properly utilize the great resources which once covered those vast areas of the United States.
Coming in a little closer to home, one only has to drive up and down the Ottawa valley to realize that 100 years ago this valley was the scene of one of the finest stands of white pine in North America. One has only to go to the archives and other places to see pictures of the Ottawa and Rideau rivers of 75 or 100 years ago to see the rafts of mighty timber that were coming down. Today you can drive up and down this Ottawa valley and except for an isolated tree here and there you can find no descendants of those great trees which once covered the area.
What has happened in Michigan? What has happened in Wisconsin? What has happened in Minnesota? What has happened in this Ottawa valley, still beautiful indeed with the scrub bush which now covers it but denuded of the great forests which once added to its glory. Without conservation and planned use the same will happen in British Columbia, in the northern parts of the prairie provinces, in Ontario and Quebec and indeed in the maritimes, where already many great forests have been lost to this generation. Thus we can readily realize what may happen in the future. I think the generation which is exploiting our forests is doing an injustice to the generations which will follow.
What we need in connection with the development of our resources is a national

Natural Resources-Development plan to be applied as we use our forest resources. I give this as an example because they are replaceable, and are not like minerals where once you take them out of the ground you have nothing left but a hole. There are possibilities of replacing our forest areas so that future generations may have the resources upon which they can build industry of various sorts and types and thus be enabled to be happy and prosperous.
This afternoon the Leader of the Opposition spoke of other lands where once upon a time there had been great and prosperous cities. There had been cities in the Sahara desert, in Mesopotamia where according to tradition the garden of Eden was situated between the Tigris and Euphrates rivers. Until comparatively recent times, until indeed some new irrigation projects were undertaken, the valleys of these historic rivers were nothing but deserts of driven sand. The same thing applies, of course, to North Africa. Anyone who has visited North Africa will have seen the hillsides in Palestine which were once the vineyards of that area and which are now merely eroded terraces of rock. The soil has gone and nothing can grow there. One then realizes what human beings can do to the resources of a land if there is no proper policy of planning and conservation.
If we are to have proper water resources, if we are to have water to irrigate the parched lands of the prairies, then we must maintain the cover on the mountain sides so that water will flow, not in great floods sweeping everything before them but more gently during the season of the year when it is needed for irrigation purposes. Linked with the preservation of our forests is the conservation of water, for irrigation purposes particularly. That is linked again with the conservation of soil. I have already mentioned Mesopotamia, the Sahara desert and the Kalahari desert and indeed parts of India where teeming populations once lived and grew the necessary cereals and other crops to maintain themselves. They are now deserts because the soil was improperly tilled and improperly cultivated.
Many of us remember the drifting soil on the prairies of North America, and in referring to the prairies of North America I include the prairies of Nebraska and Kansas as well as those of Alberta and Saskatchewan, in those dreadful years of drought. I think we have learned a lesson that we shall never forget. I have been happy to note that the farmers on the Canadian prairies have taken note and have changed their methods of cultivation. Only recently during a very dry period with high winds on
[Mr. Coldwell.l

the prairies I saw very few spots where the soil was blowing as it would have done 25 or 30 years ago under the same circumstances. This was true because the agricultural population of that region had taken to heart the lessons of the windy dry years of the 1930's and changed their methods of cultivation so they conserved the soil for their own use and indeed for that of future generations.
As the Leader of the Opposition has said, not only have we forests, not only have we soil, not only have we water resources, we have resources in the water in our fisheries both inland in the great lakes and in the northern regions where numerous fishermen catch fish in the lakes to make their living, as well as along the coasts of Canada. The conservation of salmon on the Pacific coast, the replacement of salmon on the Atlantic coast and the general supervision now given to the fishing industry is a form of planning, a form of planned development which could be applied in another way, of course, in co-operation with the provinces to our forest and other resources of this country.
Then we have the tremendous resources of the Canadian shield. Almost every kind of mineral is to be found there. Then in the far north we have the huge deposits of iron ore to which reference has been made already this afternoon. But we must not forget that these are wasting resources. While perhaps we cannot foresee at the moment when the minerals of that vast area will be exhausted, one day perchance that may come about. As has been suggested this afternoon, we should try to do what we can as a parliament, co-operating with the legislatures of the provinces, to see to it that as much of those mineral resources as possible is utilized and developed for the building of Canadian industry and the prosperity of our Canadian people.
I am not suggesting that we should act like a dog in the manger and prevent the flow of raw materials to industry elsewhere, but I do suggest that that flow is greater than it should be, and that we should be doing much more of the processing of those raw materials and those minerals in our own country. When we think of the diversity of our mineral development over the past few years and the remarkable discoveries of oil that have been made in the province of Alberta and are now being made in the province of Saskatchewan, the province of Manitoba and indeed the province of British Columbia, we realize that there we have a great resource that should help to build up our Canadian economy.

It is quite true that because of the enormous amounts of capital that were required for the exploration and development of this oil resource, the control has fallen very largely under the domination of several great United States oil companies, but in the further development of this great resource we should do all we can to see to it that as great a control as possible is maintained in Canada, and certainly that no ^foreign corporation should be able to say to the Canadian people, "This is my oil" or "This is my gas, and unless you utilize it as I decree I am not going to allow you to utilize it at all." That has been said, and that is the kind of thing this parliament and our provincial legislatures should view with some misgiving and should seek by proper legislation to rectify and bring under the greater control of our own Canadian people.
We have tremendous resources newly discovered, which already are establishing great industries. When one goes, for example, to the city of Edmonton, a city that I knew nearly half a century ago-


Mr. Martin:: You are getting old.


Major James William Coldwell: Yes, and so is the Minister of National Health and Welfare. He is getting more interested all the time, I hope, in improving the lot of the old age pensioners, because he is getting along to that stage gradually himself-


Paul Joseph James Martin: Tempus fugit.


Mr. Stewart (Winnipeg North):: Do it before you die.


Major James William Coldwell: -and I congratulate him on giving more attention to that important group of people in our country.


Paul Joseph James Martin: I thank the hon. gentleman.


Major James William Coldwell: I am congratulating him
because I hope he is giving more attention to them. But as the years go by one realizes the extent to which this development has occurred. Edmonton is an example of a city far away from what one would consider to be the great centres of the world's population, far away from the normal outlets of navigable rivers and ocean and so on, that yet, because of the discovery of new resources, suddenly expands into a great industrial centre. I am convinced that other cities of the west, like Saskatoon and Regina and other cities that are adjacent to areas where probably similar resources will be found as exploration and development proceed, will also become industrial centres though a few years ago we thought of them purely as distributing centres for our great agricultural areas. So we need to safeguard these resources.
Natural Resources-Development
My hon. friend from Cape Breton South (Mr. Gillis) last Friday placed before the house some views regarding the coal industry and, as he has so often done, the necessity for the establishment of a national fuel policy so this great industry may be saved from extinction and the great resource it represents may be utilized over the years. Indeed, let us not forget that in all probability, when the oil wells begin to run dry the world will go back to coal again as a source of power; perchance also to water and atomic power, of course, but coal once again, with its great storehouse of chemicals. I suppose there is no mineral that has stored within it as many useful chemicals as coal. Our dyes, many of our medicines, and indeed extracts that we use for flavouring and all the rest of it


Mr. Gillis:: And nylon stockings.


Major James William Coldwell: As my friend from Cape Breton South says, nylon stockings originate largely in the coal fields of Nova Scotia, Alberta, British Columbia, Saskatchewan and other parts of Canada. So we have an obligation to the future generations of Canadians to safeguard these great resources.
This afternoon the Leader of the Opposition mentioned the human resources. Without adequate development of our human resources, of course, we cannot properly develop our mineral and other natural resources. I think Canada has not done nearly enough in the realm of education and in the encouragement of young men and young women to take various courses in our universities. I am not one of those who believe we should say to every young man and woman, "Take a scientific course or a technical course in our colleges and universities." Far from it; I would tell every young man and woman who wants to take a scientific or technical course in our universities first of all to take the arts course and get a broad picture of life that will serve them well in any field of endeavour they may undertake in the years to come.
We have not done enough in any of these fields of education. Of course I have often said that without interference with the control of education by the provinces this parliament should be making grants for education, should be encouraging in every possible way the expansion of our universities and giving encouragement to all our young men and women who have the ability to take a higher education. As I said some time ago, one of the great satisfactions I had when I was in the United Kingdom two years ago was to go back to my old college and to the other educational institutions in that country and be told that, contrary to what it was when
5784	HOUSE OF
Natural Resources-Development I was young, when my parents had to sacrifice tremendously to give me the education I got, today no boy or girl with ability would be denied higher education right through to the university in Britain, because of the scholarships and the bursaries and the grants to the universities made by the government of the United Kingdom. Of course it is a little simpler there because they have a unitary system of government, while here we have, of course, a federal system; but I think it could be worked out here between the provinces and the federal authorities to the satisfaction and the advantage of the country.
Stemming out of that, of course, is the need for research. Until very recently not a great deal of research was done in this country. I think the national research council has done a magnificent job. The national research council gave an impetus to research in this country. It was a public institution but, very fortunately, many of our great industries have followed suit and are now paying much more attention to research than they were a few years ago, although I do not think they are paying sufficient attention yet. More research must be encouraged in our country and that means, of course, that we must have more young men and women prepared to enter into the fields of research in all phases.
If we are going to do all these things we cannot adopt an attitude of laissez-faire. We cannot leave it merely to individual corporations and individual persons to undertake all this. We have to have some conscious planning, some conscious economic and social planning, in which we, of course, as a party believe. That does not mean that everything has to be done under public ownership and public control. I think we learned many lessons during the years of depression and subsequently. In a modern society leadership must be given by public organizations. But in a modern mixed economy there is room for private enterprise which will help to develop the resources of the country in order to give to our people a better standard of living; and most of all, of course, there is need for the organization of co-operative associations of various types and sorts to distribute as well as to produce many of the things that make life worth living.
I am therefore going to leave the matter at that, Mr. Speaker. I want to say that we agree that if we are to develop our resources intelligently, as the Leader of the Opposition said, there must be a national program consciously planned. If it is consciously planned, the federal authority must give leadership. It may not undertake it wholly itself but rather must do so in co-operation with the provinces, because the natural resources of the country
[Mr. Coldwell.l

are controlled by the provinces of Canada. If we do this, I am convinced that over the years we shall see developed in this country a vigorous and prosperous population which can look forward in the years to come to contributing not only to the welfare of the people of this country itself, but generally to the welfare of the world.
Let us not forget this fact Mr. Speaker. This can be done under the guidance of our democratic institutions. Today democratic institutions are being challenged as they have never been challenged before. The totalitarian countries tell us of what they are able to do in developing their resources. They are trying to demonstrate to some of the underprivileged people who one day will probably decide the fate of the world that they can do better than the democracies. I am certain that under our democratic institutions we can do better than they can.
However, the outcome depends on the energy we put into the doing of this job. If we want to win over these people of the world who are being told by the totalitarian countries, "We have achieved much in a short time", we too must achieve much in a short time in our country. We can do that. We can develop our resources. As the Leader of the Opposition suggested this afternoon, we can remove the spots-there are many of them, and some of them are quite large spots-where poverty, misery and disease exist. We have the resources. All we need is the will; and given the opportunity, I believe the Canadian people have the will to do this job.


Solon Earl Low: Mr. Speaker, I think it is to the advantage of Canada that occasionally the members of this house stop to take a look at the over-all policy that guides the development and growth of our great country. I think it is wise occasionally to place before the house a motion such as that which has been moved this afternoon by the Leader of the Opposition, which gives us all a chance to express our point of view. It helps to focus attention upon our resources and how best they can be developed in the interests of all the people of this country and of the country itself. I am therefore extremely glad to have this opportunity of saying a word in connection with the speech made this afternoon by the Leader of the Opposition and the amendment he moved.
I could not help feeling how great a change has taken place in the thinking of many members of this house in 10 years. When I came into the House of Commons 10 years ago, everybody seemed to be quite enthusiastic about internationalism and the prospect

of finding the answer to our local problems by surrendering our economic defences, giving them away. Now we have come around full circle to a degree of economic nationalism that I would not have believed possible in that length of time. I congratulate the members of the house who have already spoken on the fact that they have grown older and wiser and that, with their grey hairs, they have come to understand that there is no answer to our local problems in the surrender of our economic defences, that we cannot look to internationalism to solve our own problems.
I was interested especially this afternoon in listening to a good many of the statements made by the Leader of the Opposition, with which I agree. I am going to deal just briefly with some of them. To begin with, I must say that I would have been much more impressed with many of them had 1 seen some evidence a few years ago of an inclination on the part of his followers in this house to take a stand that was possible at that time, namely a stand for retaining our economic defences and against some pernicious things that have happened to lose those defences for us.


Mr. Rowe:: We took that position before you were in the house.


Solon Earl Low: You forgot about that. Afterwards you became very weak, I am afraid-


William Earl Rowe: No.


Solon Earl Low: -and you forgot that idea, because I did not hear your voice raised during some of the debates.


William Earl Rowe: You never listen to me.


An hon. Member:: You would not be worth listening to.


Solon Earl Low: I listen to my hon. friend and he often says something worth while. But he kept a very strange silence back in 1945, at a time when he should have been speaking up on something worth while instead of a lot of the piffle that he often talks.
My hon. friend the Leader of the Opposition said we are not manufacturing nearly enough here in Canada. I agree. I believe I am right when I say that last year Canada imported a greater dollar value of finished goods than any other country in the world, irrespective of its population. I think that statistic should soak in. If it is not true, I should like to have the facts presented. I believe it is true. It indicates that we in Canada have failed to develop our industries as they might have been developed.
Of course we have not done all we can in industrial expansion. I agree with that
Natural Resources-Development statement. But the question is, what is the answer? I believe that one of the great statesmen of Canada back in the late nineteenth century made the statement that the great need of that time in Canada was for transportation, and he repeated it; transportation, transportation, transportation.
We have our transportation fairly well developed now, Mr. Speaker. I believe the greatest need in Canada today is markets.
I believe therein lies the answer to this question of industrialization in Canada. However, we cannot expect the total market of Canada to be available to our industrialists until we make absolutely sure that our people have the purchasing power with which to buy what has been produced. There is no question about that. Of course many people will laugh and emit those funny cackles which indicate that they do not know much about the situation and have not given much thought to it.
The greatest problem in Canada today with respect to industrial inducement or encouragement is that of getting purchasing power into the hands of the people. Until we make certain that they have purchasing power that is equal to our productive capacity, we are not going to get the industrial expansion w* ought to have.
Now, we say that we are not manufacturing enough in Canada. But where are the markets; that is the big question. Our industrialists are asking that question. The Canadian people have got into the habit of buying in the United States. As the Leader of the Opposition pointed out last year they bought from the United States a billion dollars worth of goods more than the people of the United States bought from Canada. We have got into the pattern of buying in the United States. Why is that? The big reason, of course, is that the people of Canada find they can buy a good many things cheaper down there than they can buy them here. The Leader of the Opposition said in his speech, and certainly indicated in his amendment, that one of the reasons has been that in Canada we have not paid enough attention to this whole problem of taxes.
For a great many years we have imposed upon commodities not only sales taxes but also certain excise taxes. These taxes have increased costs and they have, to a very large measure, discouraged our Canadian people from buying things made in Canada. As a consequence a great many of them regularly go down into the United States and buy to the limit of the customs allowance. They bring those goods into Canada. The Minister of Finance ought to take a look

Natural Resources-Development some time at the possibilities in the purchases by the people of Canada in the United States. If a large proportion of them take it into their heads to go to the United States every four months, as they can, and buy and bring back into Canada a hundred dollars worth of goods duty free, then let the minister figure out how much it would amount to.
Our people, Mr. Speaker, have got into the habit of buying in the United States. The consequence is that we have a trade unbalance. The question I have to ask myself is, how in the world can this pattern be changed? There is one way in which it can be changed, and that is by making it more profitable for the people of Canada to buy Canadian made goods. I have in my hand something which is pertinent to the case. Here is a little column, a short one, which indicates something of the problem at any rate. I cannot say whether or not the figures are exactly right, but it indicates the extent of the problem. It is headed, "Hidden Taxes Chisel from Cradle to Grave", and is written by Fred Edge in Liberty magazine. This is what it says:
Not long ago a Winnipeg triend of mine bought an automobile for $2,600. "How much," he asked the salesman, "am I paying in taxes on the actual price of this car?"
The salesman had to admit he didn't know, and wasn't too interested. Like most Canadians, he accepted government taxes as a part of purchase-written into the price tag in invisible ink. My friend did some checking on his own. He found: Sales tax on his car was slightly more than $170. Excise tax was about $280. Approximate total tax: $450!
Each year, Canadians make out their income tax, mutter briefly over how much tax they pay on their salary-and promptly forget taxes until next year. Few people realize they pay staggering taxes every time they buy anything from shoes to toothpaste. The tax they pay makes the average man's income tax look minor.
Cigarette smokers who smoke just one package of cigarettes a day are paying $62.05 a year in tax to the dominion government-or 17 cents on each package. The man who buys a bottle of Canadian made rye for $4 is paying roughly 84 cents for the rye and $3.16 to the provincial and dominion governments. The sales tax alone on a pound of coffee or tea costing $1.10 is 6 cents; a pair of $15 shoes carries 95 cents sales tax; tax on a 40 cent tube of toothpaste is 2 cents.
The iniquitous hidden tax, borne by Canadians from the moment of birth-both pins and diapers carry an unseen sales tax-follows right to the grave. The government last year pocketed roughly $1,000,000 on the hidden sales tax on coffins.
Now, as I say, I have not checked the figures that were used in this article. What I do say is that the whole article indicates as least one facet of the problem. As long as we make it unattractive for Canadians to buy Canadian goods, then certainly they are going to seek their purchases elsewhere. It 

is only natural that they will go to the United States and buy as much as they can bring back duty free. Sometimes they are able to buy things in the United States, pay the taxes and still beat us here in Canada.
In his amendment the Leader of the Opposition mentioned something about taking action in connection with taxes so we can make things much more attractive in Canada. We have got to expand our markets, and it does not matter how much well planned immigration we attract into Canada; that will not solve the problem unless we are going to do something about prices. We do have an answer to this price problem, and we can get along without imposing these price-pyramiding excise and sales taxes that put us behind the eight ball when it comes to the question of competing with other countries in the matter of trade.
The Leader of the Opposition spoke of foreign financial control of a very large percentage of Canadian resources. I followed him as he spoke about those things and he failed to say anything about the answer to that problem, nor did he enlighten the house as to when and how the roots of that condition were put out. He did not say, for example, that beginning with the administration of Sir John A. Macdonald and right down to our own day, the governments of Canada and all the provinces have given away large blocks of Canada's resources, alienated them from the crown and alienated them also from Canadian control. In the old days it used to be the fashion to reward political heelers for services rendered to the party, and when a party got into power they would hand over large blocks of our resources to those people for exploitation. This has not stopped yet, Mr. Speaker, yet we talk about foreign control. We have seen something of this situation in our own province. I am going to say that the Leader of the Opposition was not completely correct when he said that foreign financial control has arisen simply from the fact that investment in Canada offers such rich returns.
I am sure that everybody is aware of the fact that the Canadian Pacific Railway, the C. and D. Corporation and the Hudson Bay Company, as well as other big concerns, were given outright very large blocks of our resources, our mineral rights. During the years they have taken control of those outside of Canada to a very large degree, removed them from the control of the government of Canada. I am not blaming this government for that. It happened that when we came into office in Alberta in 1935 we discovered that slightly over 50 per cent of the subsurface rights, minerals and oil, had

been alienated from the crown and the people, by deed of gift, by sale or by some other means that we have not been able to find out. That left us less than 50 per cent controlled in the interests of the people.
Well, we sat down and thought about the situation for some time, and tried to figure out means by which we could see that the rest of the resources that remained unalienated could be developed in the interests of all the people. I believe we succeeded in laying down a policy that would do it. We decided then and there that one of the important points that we had to observe was that not one square foot of any of those resources remaining in the possession of the crown for and on behalf of the people should be further alienated, and we have stayed with that policy to this day. Not one square foot has been sold or given away.
We adopted a policy of leases, rentals and royalties under which we sought to attract people who would come and invest their risk capital in a lease controlled by the crown. The ownership of those resources was to remain vested in the crown and be administered for and on behalf of the people. Always the control, in a circumstance like that, will be in the government, not outside. As a consequence we have gone forward in the development of our resources in the province of Alberta. That portion which remained unalienated has been developed for the people. They own it. But the development has taken place under a process of private enterprise, and there have been no alienations in the last 21 years.
That is one way by which these things can be accomplished, by which we can establish the foundations for a true Canada first policy; but we cannot establish a Canada first policy if we are going further to alienate our resources from the crown and give them away to others to exploit, under which plan Canadians will find themselves under the complete domination of foreign countries.
Well, we dealt with the situation and we started this, Mr. Speaker, in an effort to build up our industrialization. We had as our objective the bringing about of a balance as nearly as possible between our agriculture and our industry, and I think we have fairly well succeeded; but we had to resort to some very interesting means. One of those means was to intensify the effort to sell our Alberta people on the purchase of Alberta goods. We did so by using a very interesting form of local purchasing power and a process of bonusing Alberta made goods. It did intensify industrialization; it did succeed in focusing the attention of the people of Alberta on the need for buying Alberta goods. While we
Natural Resources-Development were not trying to discriminate against any other province or any other country, we felt the absolute need of doing what we could to build up industry in Alberta, and I think we have fairly well succeeded in that.
I believe we have to start there; we have to start on a broader scale to see to it that our resources are kept in the ownership and control of the people of Canada. That is perfectly correct. It can be said, of course, that the oil industry to a very large extent is financed by people outside of Canada. I do not know whether it is 90 per cent, 80 per cent, or what it is; nobody knows. But, Mr. Speaker, let me point out this fact. It does not make any difference, or not so much difference at any rate, where the investment risk capital comes from so long as the ownership remains vested in the people of a province of this country, and so long as control is exercised by the governments of the provinces to see to it that the development takes place for and on behalf of the people and they get the benefits. There is no question about that. That is what we have tried to do, and I think we have succeeded to a remarkable degree.
While there are people who inveigh against the big oil companies, yet the big oil companies are not in a position to dictate what shall be done with the oil, the gas or any other of our resources in the province. The policy we have followed does not allow that, and I think it can be demonstrated without question that this is so.
My hon. friend the Leader of the Opposition spoke briefly about the trade deficit of a billion dollars with the United States last year. That trade deficit, Mr. Speaker, has developed very largely as a consequence of our failure 11 years ago to stand up against the pernicious international arrangement that was advocated and adopted in this house. At that time we in this corner of the house pointed out that if Canada became a party to the Bretton Woods agreement it would throw our whole trade arrangements into complete-well, confusion, to say the least. We point out then, Mr. Speaker, how Bretton Woods favoured creditor nations like the United States, and how it did not place upon the United States, or upon any other creditor nation, the responsibility of balancing its trade by the acceptance of goods from other countries. But it did place upon the debtor nations that responsibility. It introduced an international gold standard, and gave the creditor nations the right to sit back and demand gold or United States dollars in payment of trade balances. Now, where in the world is the gold to come from?
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My hon. friend was not in the house at that time, it is true. He was in Toronto as leader of the government of Ontario. Had he been here I am interested to know what he would have done about it. His followers here did not do anything. They joined with the government of the day and with the C.C.F. in voting us down, in steamrollering us because we stood out against this pernicious international agreement under which we gave away our economic defences and made possible the very thing that now takes place, where the United States refuses to balance her trade, or even to try to balance her trade, by buying from other countries with United States dollars an equal amount or nearly equal amount of what those countries buy from the United States.
Canada sits back today complacently and allows those trade deficits to pile up. We do have an inclination on the part of people having capital in the United States to come in here and invest in our resources; otherwise we would be in a pickle. What in the world we would do about those trade balances if we did not have this investment I do not know. Therefore 1 say I would have been much more impressed with what the Leader of the Opposition said this afternoon if he had said we ought to set out at once to correct this situation. There is an escape clause in the Bretton Woods agreement. It would be possible for us to get out of it, and I think we should be talking here about the necessity-in fact it is a moral obligation- on the part of the United States to try to balance her trade by buying in other countries an amount equal to what other countries buy in the United States.
How can they get the dollars to balance their trade if they buy in the United States and the United States does not buy from them? And so we suffer this terrific trade imbalance very largely as a consequence of the developments of the last 10 years, and my hon. friends over here have nobody to blame but themselves, along with the other parties in this house.


Mr. Blackmore:: They cannot even see it yet.


Solon Earl Low: May I refer for a few moments to the terms of the amendment which, it seems to me, consists of four different propositions. The first is:
. . . the welfare of the Canadian people requires the adoption now of a national development policy which will develop our natural resources for the maximum benefit of all parts of Canada.
I think that is quite correct, Mr. Speaker.
I think we all agree with it. I believe even the government would agree that that is so. They may say, "We already have it". I do


not believe they have. I do believe that through dominion-provincial taxation, financial arrangements and conferences of various kinds we might develop such a policy so that our natural resources will be developed for the maximum benefit of all the people in Canada, but you cannot do it until you lay down a policy similar to that which we have adopted and have used so successfully for 21 years in the province of Alberta.
The second important thing he suggests is the adoption of a national development policy that will encourage greater processing of our natural resources in Canada. Again may I say I agree with that, but I would point out that until such time as we clear away the taxation and other disabilities that militate against the popularity of Canadian goods, until we see to it that our people have the purchasing power with which they can buy what we produce, then there is not much use talking about encouraging the processing of these resources in Canada. We have to make it possible for our industry to compete with other nations in the world of trade, and we cannot do it by any pious statements of hope.
He suggests that we should correct the present serious unfavourable trade balances. I have already said I would have been much more impressed by that part of his amendment if the hon. gentleman had told us where they stand with respect to the Bretton Woods international agreement and the things it has done for Canada.
He also suggests we have to foster wider financial participation by Canadians in the development of our resources. Once again that is a very desirable thing to do, but how it can be accomplished is another question. You cannot force people to do this. Instead, it has to be done by other processes. Certainly it is a desirable goal.
His last suggestion concerns a policy to promote greater opportunity and employment for a steadily increasing population. Yes, that is perfectly correct.
In closing, Mr. Speaker, may I say again all of that depends on whether or not we succeed in bringing our purchasing power into balance with our productive capacity. If we do that I think we will have laid the foundation, but until we do all the rest of these things are nothing but pious hopes.


Donald Methuen Fleming: Mr. Speaker, the amendment submitted by the Leader of the Opposition this afternoon is of high importance and it is not without significance, it seems to me, that while all the parties in opposition have been heard from, no voice had yet been heard from the government side of the house.


Walter Edward Harris: Politeness.


Mr. Hodgson:: Tired.


Donald Methuen Fleming: The Minister of Finance says "later".


Walter Edward Harris: No, he said "politeness".


William Earl Rowe: Complacency.


Donald Methuen Fleming: Well, if it is politeness it is a new departure in this house on the part of the government. I think the politeness might have been better demonstrated by the government in acquainting the house with its views on this very important amendment and the policy it enunciates and invites the house now to pass upon. I suppose the government is waiting to be furnished with speeches to be read after they have been prepared for them by their officials. One would have hoped that they would have had something to say at this stage of the debate before a second round of opposition speakers should have commenced.
Mr. Speaker, the subject matter of this amendment is not just a passing issue. This amendment states an abiding objective of policy of Her Majesty's loyal opposition, and it touches upon subjects to which all Canadians-and not least of all this house

need to devote some hard thinking and serious attention. We approach this question not on a negative or merely emotional basis but on a positive and constructive basis. We are advocating a national development policy.
At the outset I wish to touch on two aspects of this matter to set our approach to this question in perspective. The first relates to the role of government. We consider that the function of government in relation to national development policy is to create a climate favourable to individual enterprise, and it is within the sphere of government or public enterprise in carrying forward its public works, enterprises, projects, expenditures and policies to do so with goals in view such as those stated in the amendment.
The second general observation relates to the constitution of this country. Under our constitution the development of our natural resources falls within the jurisdiction of the provinces, but in the development of those resources there is a fruitful field for co-operation between the dominion and the provincial governments; and then, of course, there is the vast field assigned by the constitution exclusively to the federal authority, namely jurisdiction over trade and commerce of an interprovincial or international character.
The development of our resources, sir, is a subject to stir the imagination of any Canadian. Providence has blessed this country with a vast store of natural resources.
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Natural Resources-Development In the custody and use of those resources we Canadians must have due regard for the need of conserving them and for the need of replacing wasting resources; and there are important fields in which the federal authority has an opportunity of contributing in a significant measure to the development of our resources. I mention in passing just two great projects which we of Her Majesty's loyal opposition have long advocated against the determination of the government not to have any part of them.
I refer, of course, to the South Saskatchewan irrigation dam against which the Prime Minister and the Liberal party have firmly set their faces notwithstanding what the Minister of Agriculture continues to say on the subject out in the west, and also to the Beechwood project in New Brunswick, which promises great benefits to that part of Canada and which the federal government refused to assist even to the very limited extent of guaranteeing the bonds of the province of New Brunswick issued for the purpose of financing that beneficent project.
We wish to see measures of that kind undertaken by the federal authority, measures that will be of benefit to all parts of Canada. The Leader of the Opposition this afternoon referred to the fact that the postwar increase in purchasing power in Canada has not been evenly distributed, and pointed out that in the maritime provinces purchasing power has not kept pace with individual purchasing power in other parts of this country. There is a need of development of secondary industry in the Atlantic provinces and in the west.
The federal government had a glowing opportunity to carry forward that process of development of secondary industry during the war and in this period of building up our defences during the past six years. That opportunity has been largely thrown away. A valuable opportunity has been lost, an opportunity that would have contributed much to repairing the disadvantage under which geography has placed those parts of the country and thereby could have helped to distribute the benefits as well as the cost of confederation.
There is a fruitful field also for the processing of more of our natural resources within the boundaries of Canada. We as a Conservative party do not regard the development of our resources as the equivalent of the export of those resources in raw form to other countries. Today Canada is exporting heavily from her raw resources and those resources, we need to remind ourselves, are not inexhaustible. In a measure we are depleting our storehouse of resources. We

Natural Resources-Development are not doing it as we might in order to provide opportunities to Canadians in the processing and fabrication of those materials into the finished products in Canada.
The Paley report in the United States had an extremely sobering effect in that country on those who thought that the be-all and end-all was the development of raw resources. That report, in drawing attention to the threatened exhaustion of many of the natural resources in the United States, has a lesson for Canada. It is not only that our resources may be depleted, but that between 1950 and 1975 the United States will need to quadruple its imports of industrial materials. The materials which the United States is going to require in that period and later happen to be largely the kind of resources that we have in Canada. To an increasing degree therefore the United States is going to be obliged to look to Canada as a supplier of raw materials for the great industrial machine of the United States to process.
We are exporting those raw materials to the United States and are buying back from the United States to a considerable degree the same goods in finished form after United States labour has been expended on their manufacture with benefit to United States workmen. Canadian workmen should have the opportunity to do that work.
We should also remind ourselves that the United States tariff is constructed with the idea of not putting any obstacles in the way of the importation of raw materials for fabrication in the United States, but it does aim to exclude either partly or finished manufactured goods. Generally speaking that tariff rises notably as the degree of manufacture increases, and the duty is low or frequently non-existent on raw materials or some of the simply processed items. The duties are very substantial and sometimes extremely high on manufactured goods. The United States tariff structure is a serious barrier in the way of a natural and desirable avenue of Canadian development, that is to increase the extent of processing and fabrication of our own basic resources.
I wish just to throw out a word of caution on this subject before I go further. Let it not be said that what we are advocating is an embargo upon the export of raw materials to the United States. No, that is not what we are advocating. Indeed, the production of some of our extractive industries-nickel is an example-is such that Canada will not be a consumer of very much of the production, and certainly not a total consumer. As nearly as one can see there will always be a vast production of nickel available for export


which would not be required in the fabrication of manufactured goods in Canada.
In the second place, we do not propose any repudiation or sudden reversal of policies which will deny to those who have entered into contractual arrangements the rights to which they have thereby become entitled. We are not unmindful of the need at the present time to maintain our volume of exports in the face of the very high excess of imports over exports, but we have to consider as a nation what are our objectives in this regard.
A few months ago there appeared before the Gordon royal commission a very eminent Canadian, Mr. Robert Fowler, who is a well known and distinguished Liberal and who spoke for the pulp and paper industry. He submitted to that royal commission that the role for which Canada by nature and destiny was best suited was, as he put it, to be "a hewer of wood and a drawer of water". In other words, he submitted that Canada's economic role was to carve out of our forests and extract from our soil products which should be then exported to the United States. This is what was advocated by a prominent Liberal whose position is recognized by his having been appointed as chairman of a royal commission. I ask, is this government policy?


Walter Edward Harris: Of course not; it is his personal opinion.


Donald Methuen Fleming: We should like to have something more in the way of concrete evidence that this is not government policy than simply an offhand remark by the Minister of Finance, who has not chosen to make a speech in the course of this debate. I think it would be a very good thing, now that the Minister of Finance has allowed himself to utter the one sentence he has in this debate, that he should rise and tell us what the government's policy is, because we wish to know. The time for it has come and we do not propose to be put off on this subject any longer.
If you want proof of what can be accomplished in this regard you have only to look at what was accomplished by my leader when he was premier of the province of Ontario by insisting that forest products should be processed in that province instead of being exported in raw form to the United States. The development which has resulted has been remarkable, and is a tribute to his far-sighted policy. There are in Ontario whole communities which owe their existence today, not to mention their prosperity, to the farsighted policies of this kind which he put into effect when he was premier of the province of Ontario.

Let me give another example of commodities in connection with which a good deal could be accomplished, and we have a very recent experience to point to. I refer to aluminum. Canada is a very large producer of aluminum, and much of the aluminum consumed in manufacturing in the United States comes from Canada. Last year there was a serious shortage of aluminum in Canada and the United States, but did the Canadian processors enjoy any benefit from the fact that this is a Canadian product? Did Canadian fabricators and manufacturers have first claim upon the Canadian production of aluminum? No, they did not. They were seriously curtailed. Here is a very apt example of the sort of thing which could be accomplished to the benefit of all Canada if some regard were had for the desirability of fabricating and processing these natural products to a much greater degree in Canada.
I wish to speak on the subject of trade. Our unfavourable trade balance has reached most serious proportions. Indeed, I think it is not too strong to say that it has reached alarming proportions. In 1955 Canada in its trade with the world incurred an over-all trade deficit for the third year in succession. It amounted to $360 million. In 1956 the situation has become more serious still. The daily bulletin of the dominion bureau of statistics of July 6 tells us that Canadian commodity imports in the first five months of this year amounted to $2,359,100,000, up $551,800,000 or 30-5 per cent over last year's figures for the same five months. Canadian exports rose only 11-6 per cent, to $1,874,900,000 from $1,680,000,000 last year. For the five months January to May inclusive, the import balance this year aggregated $484,200,000, as compared with an import balance of just $127,300,000 last year. In other words, in our commodity trading with the world our import balance in the first five months of this year was four times as much as it was in the first five months of 1955.
Those are the figures of our over-all trade with the world. What about our trade with the United States? I have drawn attention to the fact that our commodity trade deficit with the whole world is amounting to $100 million per month. We are buying from the world at the rate of $100 million per month more than we are selling; but what about the United States? Here the situation is much more alarming still.
Last year in our commodity trade with the United States we incurred a deficit of $840 million, a deficit greater than any in our history with the exception of one year, namely the year 1947. It was an increase of 40 per cent over the deficit with the United States
9, 1956
Natural Resources-Development in the year 1954. But in the first five months of the year 1956 we are increasing that same deficit with the United States at an alarming rate. Indeed, it is just about double what it was last year for the same period. To an alarming degree we are placing our trading eggs in one basket.
In 1955, continuing a process that was evident in preceding years, Canada drew from the United States 73 per cent of its total imports and only 11-6 per cent from the United Kingdom. Of our exports, 60 per cent went to the United States and only 18 per cent to the United Kingdom. It is evident that we as a country are being drawn more and more into the trading and economic orbit of the United States, and the government seems to be quite indifferent in the face of these facts.
Consider these figures of our trade with the United States for the first five months of this year. In the five months our purchases from the United States amounted to $1,765 million, up 31 per cent from $1,349 million in the first five months of 1955. The result was an import balance for these five months of $625 million as compared with $352,800,000 in 1955. Our excess of purchases from the United States over our sales to the United States is running at the rate of $125 million a month. I think it is time this house and this government took stock of this alarming disproportion in our trade. But when I asked the Minister of Trade and Commerce several months ago what the government proposed to do in the face of this situation, which was then becoming apparent, his answer was a glib "nothing". The government has done nothing about it and apparently continues to do nothing about it.
It is facts like these that have led an eminent Canadian economist, Mr. Douglas Gibson, in delivering his presidential address to the annual meeting of the Canadian political science association a few weeks ago, to say:
Certainly in the economic sphere the United States constitutes the only real threat to Canadian independence and it will remain our chief economic preoccupation as far ahead as one can see.
Further on he added:
Even the briefest examination of the facts makes it clear that our ties with the American economy have become closer and more important during the past decade than ever before.
It is an unchallengeable fact, yet the government faces this fact without concern.
Another kind of trade ought to be giving us more concern. We are buying back from the United States processed goods while our exports to her consist largely of raw materials.
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The United States is a good neighbour. Let no one misunderstand anything we have to say concerning our trade with the United States. We recognize the burden of leadership that the United States is bearing in the world today. We recognize the burdens that she is carrying for the benefit of all the western world. But Canada's trading relationships with the United States ought to be a matter of very serious concern to every Canadian, as they face us at this time.
We are the best customer the United States has in the world, but we do not always see appreciation of that fact on the part of those who are shaping either administrative or legislative policies at Washington. It is always difficult for other countries who deal with the United States, because of the separation of the administration from the legislative branch of government there.
We Conservatives as a party have supported the principle of GATT on the several occasions when GATT has come before this house in its original form and in the form of later agreements based upon it, but we have not been able to close our eyes to the fact that in recent years, while the United States congress did vest in the administration the powers under which that administration signed the general agreement on tariffs and trade, nevertheless that congress turned around later and enacted legislation that violated not only the spirit of GATT but indeed its letter as well. I refer to the Andresen amendment of several years ago and the succeeding moves on the part of congress to erect barriers against the importation of Canadian dairy products.
We have seen a succession of attempts to raise tariffs and apply quotas and restrictions on the import of Canadian grains into the United States, recent attempts to apply tariffs upon the importation of fish sticks, hardboard and other Canadian products. No one can view the extent to which Canada is being drawn into the trading and economic orbit of the United States without very serious misgivings and a feeling of insecurity. To top it all, we see the United States proceeding to dispose of its farm surplus by putting $2 billion at the disposal of the administration in order that exports of agricultural produce by the United States may be subsidized, creating thereby very unfair competition for the Canadian farmer to face.
Let me just say this in conclusion on this particular subject. We as a party in Her Majesty's loyal opposition have supported GATT. Canada has lived up to her obligations under GATT; but we call upon the United States to do as much. We are not unmindful of the fact that eight years ago the GATT


signatories agreed that they would simplify customs procedures. Canada fulfilled her obligations in that respect. However, after eight years much remains to be done by the United States to fulfil her obligations in that regard. We have seen instead quantitative restrictions and other devices, the use of escape clauses and other provisions that GATT contains, to obtain for that country benefits that other signatories to GATT have not obtained for themselves.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Donald Methuen Fleming: Mr. Speaker, the baffling maze of the United States custom administration has been referred to as "the commercial war of nerves against importers". The conclusion from these factors is that under the way the GATT agreements are working out the United States is deriving the advantage.
I come now to the subject of wider financial participation by Canadians in the development of our resources. Canada needs capital, particularly in this period of rapid development. We all must acknowledge the extent to which United States capital has contributed to the development of Canada's resources. What is Canada's investment position at the present time? It has been thus described in the daily bulletin of the dominion bureau of statistics of April 6:
Canada's gross liabilities to other countries rose to $14,500 million at the end of 1S55, including nonresident long-term investments in Canada of $13,200 million, . . . The largest part was direct investment in companies controlled outside Canada, amounting to $7,500 million. In the 10 years since the end of the war these foreign direct investments in Canada increased by $4,800 million and other foreign long-term investments in Canada by $1,300 million.
Canada's gross assets abroad at the end of 1955 totalled 7 billion including $4,800 million of longterm investments. The net balance of Canada's international indebtedness at the end of 1955 reached $7,500 million, having doubled in six years. The new study shows that Canada is an even larger debtor in respect of equity investments.
Sir, we should like to see more opportunity for British investment in this country. About $80 million has come into Canada from the United Kingdom in each of the last two years, but it is hardly to be expected that under present conditions Britain is going to have a great deal of capital to invest in Canada.
What are to be the sources of the capital that Canada needs for the development of her resources? At the present time 80 per cent of the capital comes from Canadian


This policy of national development is one born of the invincible confidence of the Conservative party in Canada's future. We are optimists for Canada, but we are realists as well. This great patrimony that a beneficent providence has given to this country is in our hands now. We can be worthy or unworthy custodians of it.
Canada holds a high position in the world, and that position is going to become of increasing importance. With it come increasing obligations, and to discharge those increasing obligations Canada needs to be strong. If Canada is strong, strengthened by the kind of policy we are advocating here today in this amendment, we shall at the same time strengthen this continent, the commonwealth, the free world and the entire cause of freedom. We cannot do that unless Canada enjoys a proper measure of economic independence.
Sir, we are not dogmatic on this subject. We have never said Canada can be selfsufficient, but we say there is a great opportunity here for the application of this policy of national development. I wish to quote this extract from the speech by Mr. Gibson:
Much as we would at times like to invoke it, British influence on the economic side of our national life is not very great. Thus to maintain a degree of economic independence we have to develop our own economic policies.
This implies that we have economic objectives which can command agreement across our rather diverse country. In my opinion, the fundamental objective on which there seems to be the widest agreement is not economic at all-it is that we in Canada wish to remain an individual and developing national entity and not to become a part or a mere satellite of the United States. If we accept this fundamental conclusion, which I can think most Canadians would, certain economic conclusions appear to follow. The primary one is that the Canadian economy should be an economic reality and not merely a series of tributary areas whose orientation is largely toward adjoining parts of the United States. Political independence in any real sense needs a material basis and would scarcely be practicable in a divided and dependent economy. If Canada is to remain an economic reality, it further follows, as it always has in the past, that Canada must have a national policy of developing east-west communications across her country and east-west lines of trade.
We do not advocate waving any big stick at our friends in the United States, but we do assert that it is not the destiny of Canada to be the trade satellite or the dumping ground of any country in all the world. We think much can be done to shake our United States neighbours out of their complacent attitude toward Canada and toward Canada's economic interests.
The Canadian people are the greatest resource of this country. We wish, sir, to be good neighbours, staunch allies, helpful

friends, unwavering supporters of the free way of life. I close with these words from Mr. Gibson:
Our choice in practice is rather between having some national economic policies of our own and becoming a divided and ineffectual satellite of the United States.
Then further he says:
If we wish to retain and strengthen our national identity we must develop more cohesion in our economic life and objectives.
This policy we advocate will help Canada develop that cohesion in our economic life and objectives which is needed. So I say, sir, that the destiny of Canada as a good neighbour, as a staunch ally, as a helpful friend, as the unwavering supporter of the free way of life, will best be served by the policy of national development which was set forth in the amendment of the Leader of the Opposition.


Clarence Decatur Howe: As I listened to the want of confidence motion moved by the Leader of the Opposition it seemed to me he must be speaking of some country other than Canada, although he did mention Canada. What did he say? He said the welfare of the Canadian people requires the adoption now of a national development policy which will develop our national resources for the maximum benefit of all parts of Canada.
May I call his attention to the fact that we started that policy on an exceedingly active scale back in 1940. The progress from 1940 to 1945 was stimulated by the urgency of producing weapons of war. However, let me point out that after 1945 there was no pause in that policy. No country has ever witnessed the national development, the development of our national resources and the increase in processing of those resources in this country to the extent that the people of Canada have witnessed it during the past decade and a half.
We speak of the present unfavourable trade balance; fostering wider participation by Canadians in the development of their resources and promoting greater opportunities of employment for a steadily increasing population. I am going to discuss those matters as we proceed, but I can say that all those things are being attended to and have been attended to over a very considerable period.
First, as the result of a balanced economic growth, financed largely by Canadian savings but assisted materially in certain key industries by foreign capital, know-how and enterprise, Canadians have enjoyed the benefit of prosperity unparalleled in the history of the country. Jobs are more plentiful; incomes are
9, 1956
Natural Resources-Development higher and so are living standards. I submit, Mr. Speaker, that the economic policies pursued by the Canadian government, designed to encourage the development of our national resources and our secondary industries, have been sound and eminently successful.
I am sorry that I did not have the advantage of members of the official opposition in knowing what we would be discussing today and therefore I am meeting a prepared speech with a speech I have attempted to put together with scissors, largely from speeches I have made over a period outside this house.
I shall first discuss the trade situation. It is not surprising that this remarkable record of expansion and rising standards of living should be accompanied by equally remarkable levels of foreign trade. Indeed, it is not too much to say that the present economic activity could not be sustained without record exports and record imports. A high level of export demand is essential to the economic health of the Canadian economy. Rising exports have, in fact, been one of the main reasons for the rapid recovery from the mild recession of 1954. On the other hand, larger imports have been equally essential to meet the rising demands of Canadians for consumer and capital goods. The greater the prosperity, the more rapid the expansion, the higher the level of imports. Exports rose by 10 per cent in 1955 above the previous year. In the first five months of this year the increase over 1955 was 12 per cent, and in January, February and May the increase was between 17 per cent and 18 per cent over the same months of 1955.
We are undoubtedly on our way to a new record for exports, both in volume and value, well beyond anything that a year or two ago would have seemed attainable in 1956. As hon. members are aware, wheat exports have contributed substantially to this remarkable showing. After a slow start last fall, demand began to pick up about October or November. Then followed a period of sustained buying unique in my experience as minister of this department. Within the last few months we have seen wheat moving out of all our ports in steady and large volume. Exports of wheat and flour will probably reach, and perhaps exceed, 300 million bushels during the crop year 1955-56, an increase of 50 million bushels over the previous year when exports were at about average or normal levels.
As far as our other main exports are concerned, with a few exceptions we are exporting about as much as is available for export. In most important areas the limiting factor is supply, not demand, a fact which
5796	HOUSE OF
Natural Resources-Development is responsible for many of the larger expansion projects now under way in Canada. Further increases in exports can therefore be expected to follow upon completion of new capacity for the production and distribution of such items as aluminum, copper, iron ore, petroleum, uranium, pulp and paper and various types of chemicals. Canada is particularly fortunate to be an efficient supplier of those raw and processed materials so much in demand in the neighbouring United States and throughout the world.
There are exceptions, of course, even in a year of such phenomenal over-all results. Exports of lumber, for example, are now running a little below last year's unusually high sales, mainly as a result of the drawing down of defence stocks in the United Kingdom; but, by and large, our export trade is flourishing.
As hon. members are well aware from the comprehensive reports issued by the bureau
of statistics, there have been even greater increases in imports. In the current year, to date, imports have been nearly one-third higher than in the same period last year. As I said at the outset of these remarks, these extraordinary imports reflect the extraordinary levels of economic activity now prevailing in Canada. In particular they reflect the unusually rapid pace of development now under way.
Twice a year my department makes a survey of investment intentions of private industry and governments. At the beginning of 1956 this survey indicated a 21 per cent increase in capital expenditures to the highest levels on record. The department is just about to publish its mid-year survey. To my astonishment this survey indicates an upward revision in 1956 plans which now involve outlays 28 per cent above actual outlays in 1955. A major upsurge in imports would seem to be the natural consequence of such a situation. Many of the goods normally produced in Canada are simply not available in sufficient quantities to meet the present level of requirements.
For example, even though Canadian steel mills have been operating at capacity since early in 1955, imports of rolling mill products in recent months have been running at about double the rate of a year ago. As for cement, more than the normal volume of supplies from abroad will be needed this season notwithstanding greatly increased domestic capacity. Apart from this increase in over-all size, the changing composition of this year's investment program is also contributing to larger import totals. Most of the increase in capital outlays this year is for industrial expansion involving extensive purchases of machinery


and equipment, much of which can be obtained only from foreign sources.
In consumer goods, some of the sharpest increases are to be found in new types of goods not yet available in quantity from Canadian plants. It is apparent, therefore, that a very large proportion of the increased volume of goods coming into Canada has been necessary to supplement domestic supplies. While imports of goods which compete directly with Canadian products have also increased, this increase has not prevented higher production levels in the domestic industries concerned.
With very few exceptions activity in Canada's secondary manufacturing industries is now running well ahead of the levels prevailing in 1954. These considerations suggest that in the circumstances now prevailing in Canada a rapid rise in imports is not to be deplored. On the contrary, it is highly desirable. In the first place, it helps to speed industrial expansion while market opportunities are still present. Second, it helps to ease the pressure on domestic resources and thereby prevents inflationary tendencies and unhealthy speculative excesses which might benefit individual groups but would react to the disadvantage of the community at large. Even those who are prone to deplore the rising level of imports would, I am sure, be concerned if a prolonged steel strike in the United States were to bring about a reduction of imports at the expense of those great projects which depend upon the availability of structural and other types of steel produced in United States mills.
A much sharper rise in imports than of exports has resulted in a substantially increased deficit in merchandise trade. It is customary for Canada to run a deficit on nonmerchandise transactions, and when this is added to the imbalance on trade the resulting deficit on all current account transactions amounted to $345 million for the first quarter of 1956. In other words, Canada's international balance of payments on current transactions is at the moment showing a deficit amounting to about one-quarter of total receipts from abroad.
Balance of payment deficits sometimes occur when countries, in one way or another, attempt to maintain living standards out of line with their productive potentialities. For this reason adverse international balances are often associated in the public mind with financial weakness. In fact, for most countries a current deficit of the same relative magnitude as that now being encountered by Canada would mean serious trouble.

In Canada's present circumstances, however, this deficit is not a reflection of weakness but of strength; it is the direct result of rapid industrial growth and rising living standards which are no more than commensurate with the nation's productive capacities. In fact, as I have indicated, a major portion of current investment is for additions to capacity in export industries. In other words, the very strength of Canada's export prospects is one of the principal reasons for the current import surplus.
Present expansion plans also involve substantial additions for the production of goods now being purchased from abroad. Both these types of expansion will primarily affect trade with the United States. Further increases in the production of forest products, minerals and chemicals will tend to boost our future exports to that country. At the same time the round of expansion now taking place in steel, fuels and various chemicals will replace goods now being purchased from United States suppliers. It is important that the present deficit with the United States be considered in the light of these underlying developments.
The most conclusive evidence of the basic strength of Canada's external position is the fact that despite the large deficit on current account, we are not encountering balance of payment difficulties. The increasing rate at which investment funds are coming into the country giver ample proof of the confidence placed in Canada's position and future prospects. So far this inflow of funds has been sufficient to match the rising deficit on current account, with but an inconsequential decline in official holdings of gold and United States dollars and with continuing firmness in the external value of the Canadian dollar The Canadian dollar is stronger now than it was for some time in spite of the large trade deficit.
There might be some reason for concern about the present situation if foreign investors were shying away from Canada, if they were worried about Canadian economic or political stability. There might be some reason for concern about the present situation if we were living beyond our means or were building up uneconomic industries. But this is not the situation. Foreign investors all over the world have confidence in Canada. They are confident that this country will continue to be in a position to meet its obligations. They are strengthened in that belief by the evidence that a great deal of the new investment is going into industries which help to increase exports or reduce imports, thus adding to Canadian financial and economic stability for future years.
Natural Resources-Development I am astonished when I listen to criticism oi the current trade deficit, which is so essential to our current phase of expansion and development. Perhaps, however, the opposition is really opposed to the development of the country but hesitates to say so, since this point of view would not be popular with the people of Canada. Certainly they would find themselves unpopular with the provincial governments of this country which, without exception, are promoting the development of their respective territories and are encouraging industries from outside the country to establish in Canada.


Donald Methuen Fleming: That wasn't very funny.


Clarence Decatur Howe: I would now like to say something about the processing of raw materials. Most of the complaints we hear about the lack of processing of domestic raw materials in Canada are based on two premises: (1) that by using more of these materials at home we would be providing more jobs for Canadians, and (2) that if we cannot use these resources at home or cannot sell them abroad in processed or fabricated form, we should let them remain in the ground, the forest or the sea, to protect the national heritage of future generations of Canadians.
Let me say right from the start that the Canadian government is just as much interested as the members on the opposite side in seeing that a high level of employment is maintained in our country, and that the national interest is safeguarded for the benefit of the present as well as future generations of Canadians. In fact many of the Canadian government's economic policies are directed to this very end; and I submit, Mr. Speaker, they have been eminently successful, as the post-war record of economic achievement in Canada shows very clearly.
The main point to remember is that in many fields if it were not for our export markets, Canadian production would have to be cut back severely and costs of production would rise materially. In wheat, for example in a good crop year we export up to two thirds of our output. In nickel we export some 99 per cent of our production, in asbestos 96 per cent, in newsprint 93 per cent, in aluminum 87 per cent, and in copper 66 per cent. As to iron ore, we exported last year about 84 per cent of our total domestic production, and this proportion may rise further over the next few years as production is likely to expand at a considerably more rapid rate than domestic consumption.
The point has been made that by keeping raw materials at home, processing them here and then fabricating finished products,

Natural Resources-Development employment will be increased in Canada. Well, I submit, Mr. Speaker, it we were to stop exports of a number of our important industrial materials the opposite would happen. We would have less employment, incomes would fall, and the standard of living of Canadians would drop. Obviously we cannot use some 100 times as much nickel as we are in fact doing, nor 25 times as much asbestos, 14 times as much newsprint, 7J- times as much aluminum, six times as much iron ore, and three times as much copper, as we would have to in order to make use of all these raw materials we are producing. Nor can we eat three times as much bread and cake, which we would have to do to use up all our wheat at home.
Two things could happen if we stopped exports of this or that important raw material: (1) our customers could turn to alternative sources of supply. Don't let us fool ourselves. There are plenty of natural resources available in the world. They may not be as conveniently located as they are in Canada, or they may be in countries with a less stable economic climate and government than we have here in Canada. But if our customers abroad could not get the raw materials and foodstuffs they urgently need and in the form they wanted them from us, I am sure they would develop sources of supply somewhere else, or they might turn to alternative materials that in the end might serve their purposes just as well. (2) Since we could not possibly use all the materials at home, we would have to close some of our mines, mills and factories. People laid off in these industries would spend less, affecting people employed in our fabricating industries and in our service industries. Unemployment would spread and the country would be going down instead of up.
I hardly think even the members on the opposite side of this house would want to see this happen in Canada. But this is what could happen and in my considered opinion would happen if Canadians resorted to artificial measures on a broad scale to interfere with the forces of the market, and in the process disturbed the balanced economic growth which Canada has been undergoing in the more recent period. In the present buoyant state of the Canadian economy the argument that keeping raw materials in this country increases jobs is not only academic, it is also fallacious.
One of the most noteworthy developments in Canada is the high degree of industrialization of our economy. Every fourth person working in our country is now employed in manufacturing industries, and approximately one out of every three dollars of our national


income is earned in Canadian industrial plants. No wonder, then, that Canada has become an important importer of industrial raw materials and fuel, including bauxite, cotton, wool, coal and crude oil. Last year, for example, we imported $530 million of industrial materials in raw form. We exported a total of $3-25 billion of industrial materials. But of this amount $2-8 billion represented materials sold abroad in processed form. Only about $425 million went out in raw form. Hence in our trade in raw materials and fuels used by industry, Canada was a net importer of industrial raw materials, to the tune of some $105 million in 1955.
This situation, of course, is not static. We are likely to export more iron ore in the future. But then some of our other industrial materials which are now exported in raw form may be moving into the category of materials processed at home in some form or another; for example, pulpwood, copper, etc. It is well to remember when we complain about exports of our raw materials that we import raw materials to the value of $105 million in excess of the value of the raw materials that we export.
I have heard the question asked, why are we exporting so much iron ore? Why are we not using more at home? Well, hon. members will be interested to hear that out of 5-1 million tons of iron ore used last year by Canada's five largest steel mills, 3-8 million tons were imported. In the midst of Canada's greatest surpluses of iron ore, our steel manufacturers are presently using almost three times as much imported ore as domestic ore.
There are good reasons for this. Steel makers need different types of iron ore for mixing purposes. Some types are not available in Canada or only at much higher prices than they can buy these types of ores, say, in the United States. Why should a Canadian steel company pay higher prices for Canadian iron ore if it can get that iron ore at a lower price somewhere else? Would opposition members recommend that Canadian steel companies be forced to pay more for Canadian ore and thus price themselves out of the market? Does it not make more economic sense to buy the iron ore in the cheapest market to enable the Canadian steel industry to remain competitive? Or in a broader national context, does it not make economic sense for Canada to sell iron ore, crude oil or any other industrial raw material to the United States where this can be done competitively, and to bring in the same or similar materials from the United States where these materials can be bought more

cheaply than Canadian products, which because of added transportation costs might be higher priced?
Incidentally, one of our largest Canadian steel companies has substantial sums of money invested in United States iron ore mines. If Canada stopped the export of iron ore to the United States or made it difficult for such ore to get to the United States, could Canadian importers of iron ore rightly expect any different treatment? May I remind the house that Canada depends quite heavily on imports of industrial materials in both the raw and processed forms from the United States. It is not just iron ore; we also buy from the United States oil, coal, cotton, sulphur, brimstone, phosphate rock, etc.
The United States has traditionally protected Canada's supply of raw materials in times of shortage, and the Canadian government appreciates the co-operative attitude of the United States administration. You will recall how our friends to the south continued to supply Canada with such scarce items as steel during world war II and during the period of rearmament which followed the outbreak of war in Korea, even though that meant cutting down the domestic consumption. Canada did the same with such materials as nickel, copper, aluminum, etc. North America has a good deal to gain from the efficient development of these resources and from a continuously expanding exchange of such materials. Our hope, of course, is that more and more of the materials we supply as our part of the exchange will be processed at home. We have made a good deal of progress in this direction, as I shall elaborate later, and we believe we will continue to make good progress.
The Leader of the Opposition says we are not processing enough of our raw materials in Canada. What does he mean by enough? I have already pointed out that it just does not make economic sense to smelt in Canada every ton of iron ore we are capable of producing, or to refine every barrel of oil that comes out of the ground. If we look at the actual achievements in the growth of our processing industries they are remarkable indeed, and are perhaps the best answer to those who want to give the impression that our processing industries are shrinking violets and are making little progress.
Increased processing of raw materials in Canada is reflected in substantial expansion in the production of a number of our major industries in the post-war period. For example, the value of manufactures of primary iron and steel rose three times over the last decade, reaching a total of half a billion dollars last
67509-368J
9, 1956	57gg
Natural Resources-Development year. Non-ferrous metal production reached a peak of $1 [DOT] 1 billion dollars in 1955, some three times the value ten years earlier. Pulp and paper production chalked up a record of $1J billion last year, three and one-third times the 1945 value. The chemical industry for the first time in its history joined the billion dollar club of Canadian industries in 1955, more than doubling the value of its 1945 output.
The chemical industry is perhaps an outstanding example of the rapid industrial progress and diversification the Canadian economy has been experiencing in the more recent period. World war II transformed a rather modest industry into a mushrooming giant, one that produced many of the chemicals needed to win the war. After the war's end much of these gains were consolidated, with new chemicals being produced in Canada as accessibility of raw materials and the growth of domestic and foreign markets warranted.
A large number of chemicals have been produced for the first time in Canada since the end of the war, or have been produced by means of new and more efficient processes. They include petrochemicals such as acetone, formaldehyde, acetic acid, acetic anhydride, isobutanol, methanol, normal proponal, pen-taerythritol, normal propyl acetate, and propylene glycol. Other products include synthetic resins such as polyethylene, polystyrene and polyesters. Then there is ethylene glycol, used widely for antifreeze. Carbon black is now being produced in Canada, and demand is so heavy that output is being doubled in the near future. Pharmaceutical products produced in Canada for the first time in the post-war period are too numerous to mention, but perhaps an outstanding example is the production of poliomyelitis vaccine by the Connaught laboratories and the University of Montreal. There are too many hard words in that paragraph.
I could go on and tell you similar stories of the achievements and programs of our other major processing industries, but perhaps I have said enough to indicate that there is no lack and I repeat-no lack of processing of Canadian raw materials in Canada. On the contrary, our processing and advanced manufacturing industries are expanding rapidly. This expansion is well balanced and is accompanied by growth in our resources industries which cater to both Canadian and foreign markets.
As a result of Canada's rapid process of industrialization our country now occupies a position second only to the United States in terms of output per capita of manufacturing industries. 1 am sure hon. members will be gratified to hear that in relation to our total
5800	HOUSE OF
Natural Resources-Development labour force employed there are about as many people working in manufacturing industries in Canada as there are in the United States, about 25 per cent in both countries. Approximately 16 per cent are in what is known as fabricating industries or advanced manufacturing industries, that is, motor cars, railway rolling stock, typewriters, etc., and 9 per cent in processing industries, pulp and paper, aluminum, primary iron and steel. The United States proportions are similar, 17 per cent and 8 per cent. Surely if a country with only about one-tenth the population of the United States has achieved a structure of industry that is not too different from that of the world's leading industrialized nation it is something to be proud of.
With your permission, Mr. Speaker, I would now like to put before the house a few key facts about foreign investment in Canada and Canadian investment abroad. I propose to show:
First, that Canadians are financing out of their own savings an increasing proportion of the capital expansion of their country and that, if present trends continue, Canada is likely to become a creditor nation within the next quarter of a century.
Second, that in relation to our growing productive capacity the burden of foreign investment is declining, while Canadian investment abroad is increasing by leaps and bounds.
Third, that Canadian ownership of capital employed in Canadian industry has increased more rapidly than non-residential ownership. The trend in over-all terms is toward the Canadianization of Canadian industry.
I shall conclude with a few observations about the benefits accruing to the Canadian economy from the inflow of foreign capital into Canadian resources and industrial development, and I shall mention some of the difficulties that are being encountered.
The free and unhampered flow of foreign investment into Canada has brought so many benefits to this country that it certainly is entitled to a fair and unbiased hearing from the Canadian people. We do not want such discussion to be carried out in an atmosphere of emotionalism and ignorance, but rather in one in which common sense and good will prevail. I am confident, Mr. Speaker, that after considering the facts Canadians will continue to endorse the policies of this government.
What are the government's policies in the investment field? The principal objectives of our policy are to create an economic climate in which private enterprise thrives and businessmen and capital, whether domestic or
IMr. Howe (Port Arthur).!

foreign, are encouraged to take risks to contribute to the rapid development of our country to the benefit of Canada and all others participating in our development.
We expect foreign investors in Canada to respect our laws as Canadians do. We expect them to show a sense of responsibility in financial, managerial, resources use and trade methods. We expect them to take an interest in the long-term development of their enterprises, to give Canadians opportunities to participate financially and managerially in the growth of these companies and generally to justify the confidence that Canadians have placed in foreign-controlled companies operating in this country by treating them in the same way as they treat their own companies. It will be useful for foreign-controlled companies operating in Canada to remember that they are expected to behave in most matters like Canadian-owned companies do, and that their success or failure must tie in with the ebb and flow of Canadian economic expansion.
Now, what are the facts?


An hon. Member:: What have we heard so far?


An hon. Member:: A very good speech.


Clarence Decatur Howe: I listened patiently this afternoon to some of the greatest rot I have heard in my life, so please listen to me this evening. Canada has always been dependent on a substantial inflow of capital to develop the country, to expand industry, to build a transportation network and to create the many other facilities which a rapidly expanding economy requires.
In the 89 years since confederation there has been an important change in the pattern of financing Canadian investment. In the nineteenth century the overwhelming proportion of our capital expansion was financed by capital coming from the United Kingdom and the United States. Then during the first two decades of this century the rapid settlement, urbanization and industrialization that took place made it possible for Canadians to accumulate a more significant volume of savings, which found its way into Canadian investment. While statistics of this type are scarce, what information we have suggests tha'. something like two-thirds of Canadian investment was financed by funds from abroad during this period. The years that followed saw a further improvement, and by the late 192U S about one-half of gross capital formation in Canada was financed from Canadian savings, the other half through non-resident financing.
During world war II Canada herself was able to finance almost wholly the capital

expenditures on facilities required to turn out munitions of war, to train the armed forces, and to keep the civilian economy going. After the war's end foreign investors started sending capital to Canada again to participate in our economic expansion. Still about 80 per cent of all of Canada's gross capital formation was financed from Canadian savings and 20 per cent through direct foreign financing in the period 1946 to 1949. In the last five years the inflow of foreign capital has been stepped up, and the ratio of Canadian to foreign financing of gross capital formation has been about three to one.
In fact, nowever, Canadian savings available for investment were much greater than these figures would suggest. A good portion of these savings were invested abroad. From 1946 to 1949 and for some years before that, and again in 1952, Canada was a net exporter of capital. So if one allows for Canadian investments abroad and the use of foreign resources as a percentage of net capital formation, it turns out that not more than 6 per cent of Canadian investment in the post-war period depended on foreign resources.
To look at foreign investment in Canada in its proper perspective, we must see it in the light of what Canadians are doing abroad. I have noticed that some hon. members on the opposite side have been quoting from a recent publication of the dominion bureau of statistics, "Canada's International Investment Position 1926-1954". I have noticed how careful they have been in not bringing to light any facts or figures which would bring out the positive achievements of Canadians in this field of foreign investment. The reasons are fairly clear, since most of the trends are favourable to the Canadian position. Instead of being proud of that, opposition members prefer to pick on a few figures, and out of context at that, to support their claim that Canadian industry is going to the dogs because of foreign domination.


Donald Methuen Fleming: That is utter rot.


Clarence Decatur Howe: Thank you for that contribution. Before the war Canadians had gross liabilities to other countries of $7 [DOT] 4 billion. Their assets abroad amounted to $1-9 billion. Their net indebtedness amounted to $5-5 billion. In other words, for every dollar Canadians had invested abroad they owed about four to other countries.
By the end of 1955 gross liabilities to other countries had risen to $14-5 billion, amounting to about double what they had been in 1939. Canada's gross external assets had risen to $7 billion, or about four times what they had been in 1939. Currently for every $2 Canadians owe abroad, $1 is due
9, 1956	5801
Natural Resources-Development them. If this trend continues I would not be surprised to see Canada in the next quarter of a century move from a position of a debtor to that of a creditor nation. In fact, as I said earlier, in some years we already have been making available to other countries more capital than we have been bringing in. In a way, then, one can say that for some years Canada has already been a creditor nation. But this trend is likely to become even more clearly apparent as our economy gathers strength and savings continue to accumulate in Canada at a rapid rate.
We hear little complaint about foreign investment in Canada other than that directed at investment by United States residents. Now, out of the $14-5 billion of money Canada owes to other countries, about $13-2 billion is foreign capital invested in Canada and the remainder is Canadian dollar holdings of non-residents and shortterm assets. Of the latter amount some three-quarters is United States investments.
More detailed figures available for 1954 enable us to compare the long-term investments of Canadians in the United States with those of United States residents in Canada. Hon. members will be interested to learn that at the end of 1954 the average Canadian had invested $121 in the United States, while the average United States investor had invested less than half that amount in Canada, $59. To suggest that the average Canadian investor is a timid soul, as I have heard it said, while the United States investor is bold and venturesome, is not quite supported by the facts, if we consider Canadian and United States investments in each other's countries on a per capita basis.
This is in no way intended to disparage the importance of the large United States stake in Canada, or the enterprise and imagination shown by some of the large United States companies in participating in Canadian resources and industrial development. But the point I would like to make is that for a country as small as Canada with only about one-tenth the population of the United States and one-fifteenth of its national output, Canadians have made substantial investments abroad. The bulk of it is in the United States, but fairly sizeable amounts are also invested in the United Kingdom and other commonwealth countries, Latin America, western Europe, Africa and Asia.
Now, to come to the role of foreign capital in Canada, let us consider for a moment what foundations there are for the scare stories which are being spread by some members of the opposition, which have led the hon. member for Broadview to use the picturesque phrase of Canada becoming an "economic

Natural Resources-Development vassal" of the United States, or the hon. member for Three Rivers to revive the ghost of economic colonialism, which I thought was buried 89 years ago.
Foreign investors have shown preferences for investment in certain sectors of the Canadian economy, particularly oil and natural gas, mining, and certain branches of manufacturing such as motor cars, appliances, electrical and electronic equipment. In these fields in which they have concentrated they have invested large amounts, and in some sectors they frequently own or control the bulk of the assets. But we have to see foreign investment in Canada in its proper perspective, and that is in relation to the growth of capital owned by Canadian residents. The fact of the matter is that Canadian capital has been expanding over the last decade and a half at a rate about twice as great as that of foreign capital in Canada. This is illustrated by the growth of resident-owned capital in selected Canadian industries from $7'4 billion in 1939 to $17-2 billion in 1953, an increase of 132 per cent. During the same period non-resident capital rose from $4 [DOT] 5 billion to $8 -3 billion, an increase of 84 per cent.
There is the further point that Canadian business has relied more and more on domestic sources for the capital needed for this expansion. As a result foreign direct investment in Canada has been expanding at a much slower pace than has outlay by private business. Over the period 1939 to 1955, for example, foreign direct investment in Canada more than tripled while outlay by private business increased to nine times the 1939 level.
I have heard it suggested that the growth of foreign investment in Canada is putting unbearable strain on the economy of the country. Those who make this suggestion want to give the impression that our foreign investors are interested in nothing but making a quick profit. The fact is that a large proportion of the Canadian earnings of foreign investors is reinvested in Canadian development. Further, Canada's economy has been growing at such a rapid rate that the role of foreign investment in relation to our productive capacity has diminished and will continue to do so.
You will recall that I mentioned that our gross liabilities to other countries have about doubled between 1939 and 1955. Over this same period our gross national product has risen to four times what it was before the war. Obviously as our productive capacity continues to grow more rapidly than the inflow of foreign capital, the burden of carrying this foreign investment is reduced.


Mr. Lennard:: Now I have heard everything.


Clarence Decatur Howe: Did you listen carefully?


Frank Exton Lennard: I certainly did.


Clarence Decatur Howe: One thing about it, you will keep it to yourself. You will not tell the house about it.


Frank Exton Lennard: Mr. Speaker, on a question of privilege may I say that when I speak in this house I speak without notes, and nobody writes my speech for me.


Clarence Decatur Howe: There were other matters referred to by the Leader of the Opposition. Reference was made to the growth of research in the country. We have a very good story about the growth of research. Last year we spent over $100 million in research. We appointed a committee to investigate research in Canada and on their findings I think that no one would mention Canada being deficient in research. However, I shall leave that matter for another hon. member of this party to elaborate on.
It has been suggested that we have unlimited fuel resources. That is true. We have hydroelectric power probably in greater proportion in relation to our industry than any other country. We have great resources of coal. We have recently developed great resources of oil and we have built a pipe line to convey that oil to markets. I would point out, however, that with all the development of oil, we have not improved our position as far as imports of oil are concerned. We are importing as much as ever, Canadian production only keeping pace with the increase in consumption of oil. We have recently discovered natural gas, and I am happy to report that as a result of the worst battle I have ever seen in this parliament we have succeeded in beginning the means of distribution of that natural gas to Canadian consumers.
We have a great country in Canada. It has been developing in a way that is marvelled at by other countries in the world. I am happy to find that each year shows a pyramiding of that development. We are not developing at a steady rate; we are developing at an accelerated rate. I really believe that anyone who cares to examine the financial position of this country, its rate of growth and its rate of industrialization will conclude that the government does not need to begin now to adopt a policy for the development of Canada.


Mr. A. J. Brooks (Royal):: Mr. Speaker, I am pleased to take part in this debate this evening and to support the resolution introduced this afternoon by my leader, which

advocates a national policy for this country. I listened with great attention to the remarks of the minister and, as he was speaking, the thought occurred to me that his remarks could very well apply to certain limited sections of this Dominion of Canada. However, I am of the opinion that they do not apply to all of Canada. I do not believe that the people in western Canada, for instance, who have not been able to sell their wheat in the last two or three years, would agree with what has been said by him this evening. I am also satisfied that if the people in the eastern provinces of Canada could have heard the remarks made by the minister tonight, very few of them would agree with what has been said.
In speaking tonight I wish to say that my remarks will relate to that particular part of the country from which I come, namely the maritime provinces. By the minister who just took his seat and by other hon. members we have been told-in fact we do not need to be told of this-of the great wealth of resources we have in this dominion. We all realize that fact. There is no other country in the world that is so blessed with resources as is the Dominion of Canada. The minister mentioned the fact that we were selling, for instance, 84 per cent of our iron ore. I do not believe that the future of Canada is going to depend upon the selling of our raw materials to the extent of 84 per cent or, as is the case down in my own province of New Brunswick, our base metals to the extent of 100 per cent. I do not believe that Canada or any other country can be built on such a policy as that.
The minister spoke tonight as though a Canadian policy was something for immediate attention. Policy is something that is devised not for immediate use in a country but for the building of a country in the future. I believe that role would be fulfilled by this policy mentioned in the resolution, if it were carried out. If Canada is blessed with great resources and great assets, we in the mari-times-and I hasten to say this-also have our blessings. We in eastern Canada feel that there is no finer section of Canada in which to live. We depend mostly on primary production, farming, fishing, lumbering and mining.
So far as our farming is concerned, it is well known that our dairy products are surpassed by none in Canada. Our potatoes, one of our great crops, are one of the finest crops, of course, in this Dominion of Canada.


Walter Edward Harris: And you are getting a good price for them, too.


Alfred Johnson Brooks: As I said a moment ago, we in Nova Scotia are not living in the present
9, 1956
Natural Resources-Development alone, and I am going to speak of the past as well as the future. Nova Scotia apples have been the finest of those to be found in any section of this Canada of ours. Speaking of our fishing I remember being told some years ago that the north Atlantic fisheries were the finest in the world because of the cold water in which we caught our fish. Our lumber is another of our great assets. The fastest growing lumber to be found anywhere in Canada is found in my own province of New Brunswick.
We also have our mining industry. Up to the present, except for Nova Scotia where they have great coal fields, mining has been very limited. However, I am proud to say that in my province of New Brunswick we have in recent years discovered great fields of basic and other metals. If I were not too modest I should like to mention the people of New Brunswick. A few moments ago the minister spoke about the men who had developed Canada. I want to say this. I believe no people in this dominion have played as great a part in building up this country as have those who have come from the eastern provinces.
Now, having mentioned the assets with which we are blessed, the question might very well be asked, if we have so many blessings in eastern Canada why is it that we are complaining? Well, take our agricultural products, for instance. We want no imports in the maritime provinces today. A few minutes ago the minister said it was a splendid thing for a country to have many imports. I want to point out to him that in the maritime provinces at least, and I believe in the rest of Canada, what we need now is not imports but exports. We want to export our apples, for instance, from the Annapolis valley. We want to have an export market for the fish we produce. We want to export our potatoes. The minister said we were getting a good price for them now. We may be getting a good price for them now, but last fall the farmers were not getting a good price for them. A good many farmers sold them at a very low price, and many other farmers had to destroy their potatoes. That is not the sort of export market we want in this country.
Then, our income in eastern Canada has been about 30 per cent below the national income. It is all very well for the minister to get up in this house and say that everything is fine in Canada, the people are all prosperous. In this country or any other, unless you have a balanced economy from one end of the country to the other there is something wrong with the policies which are inaugurated and being carried out by the

Natural Resources-Development government in power. This is the situation in our country. It is nothing new. Perhaps it is because Canada is a new country and has not had time to get certain matters ironed out. Nevertheless it is a fact that there are very prosperous sections of this dominion under present policies, and then again there are other sections of Canada which are not prosperous.
Another factor besides the fiscal policy of this country which has reacted against the eastern provinces has been that of geography. We are more or less at the end of the line, you might say. Canada is a great country which stretches from the Atlantic to the Pacific. It has been very difficult as a result of the transportation problem for the eastern provinces to sell their goods in central Canada. Before confederation we were the most prosperous section of the country. I am not going to go into history now. As a matter of fact that was many years ago, and I do not think history is of any practical benefit so far as economics is concerned.
For these reasons, Mr. Speaker, the economic policies of this government and previous governments as well as our poor geographical position, the economy of eastern Canada has for a long period of time been in a depressed state. The forces which have caused this condition, as I said, are beyond the control of the different provinces. I have mentioned geography, national policy and the monopolistic competition from other parts of Canada as well as the United States, which have been the chief basic contributing factors. Except for a brief period during the depression when the prairie sections were particularly hard hit, the per capita income of the maritime provinces was the lowest in Canada. It still is the lowest. While our internal situation improved during the war, since the war it has not improved. There is nothing to indicate that our relative position is any better. A more equitable share of the national income is for us a vital matter.
This statement of our position is in line with the views of the royal commission on dominion-provincial relations some few years ago, which were expressed as follows:
New Brunswick shares with Nova Scotia the unhappy distinction of the longest unfavourable economic history of any Canadian province.
This extract will be found in book II, page 91 of the report. Earlier in the report the commission pointed this out:
The general effect of national policies has been to accelerate the natural shift of industry and finance, and of concentration of wealth and income, to central Canada.
This quotation is found in book I, page 190. The remedies for such conditions lie primarily

with the federal authorities which, under the constitution, have exclusive jurisdiction in all matters of national importance, including such items as tariffs, freight rates, international and interprovincial trade, credit, exchange and monetary policy. These are subject matters of fundamental concern to the primary industries upon which the welfare of the people of the eastern provinces chiefly depends.
Now, Mr. Speaker, speaking of our development policy the Prime Minister gave an address in Edmonton in September of 1955, and he had this to say:
Canada stands at the threshold of expansion unequalled in our history. We believe that if we can maintain a vigorous and expanding economy, and if we can create the conditions under which Canadians can avail themselves of the great opportunities that this country presents, then none of us need fear for his future or for the future of the nation.
We have no quarrel with that statement. Truly we have great opportunities in this country from the east to the west, but most of the opportunities today are concentrated in central Canada. What is the government doing to promote great expansion in Canada? Well, the Prime Minister in this same address spoke of the St. Lawrence seaway. He had this to say:
This project seems to illustrate a truth that is too often forgotten-that any contribution to the Canadian economy is a contribution to all of Canada and not just to the area immediately concerned.
There is a question in the eastern provinces as to whether the St. Lawrence seaway does contribute to the economy of all Canada. We will not know until the seaway is built. However, we are not objecting to paying. We are willing to pay our full share of the cost of development of the St. Lawrence seaway. If it will be of benefit to other parts of Canada we are willing to share in the cost of construction for such benefits. But why is the St. Lawrence seaway the only project in which the government is engaged at the present time, outside of the pipe line which the minister mentioned a few minutes ago?
We believe, Mr. Speaker, that all Canada would gain if assistance were given to the development of hydroelectric power on the Saint John river. We feel that we are entitled to this consideration just as much as a United States company is entitled to assistance from this government in building a pipe line in western Canada. We believe that all of Canada would benefit if the Passamaquoddy were developed in New Brunswick, if it is found that it is a feasible development for electric power. We believe that the Chignecto canal would be of benefit to all other parts of Canada, just as the St. Lawrence seaway is, if it also proves to be

practical and feasible. This government has never undertaken to find out whether the Chignecto canal would be practical and should be constructed.
I could mention the South Saskatchewan power and irrigation project. I believe this project would be of great benefit to the people of western Canada. We of the maritime provinces are anxious and willing to do our part in the development of something which will be of benefit to this country. We believe that a policy for the sale of Nova Scotia coal, something which is so necessary to the economy of that great province, would be a great help. We feel that more could be done by policies such as were mentioned by my leader in his amendment this afternoon for the development of coal in Nova Scotia.
I could also mention the Columbia river and other things which are just as important, I believe more so, to the people in that section of the country than would be the St. Lawrence seaway to British Columbia, or to Newfoundland, or even to New Brunswick and Prince Edward Island. It is public investment in the types of projects that I have mentioned that would encourage private investment, domestic and foreign, that we need for our expansion. It is on the firm basis of things like the St. Lawrence seaway, natural gas, electric power, irrigation and reclamation that people build homes, offices and factories. These are the sort of things that keep our people at home; these are the things that bring industries to our country and, through industry, we bring in immigrants and help to build up a country, not in one particular section as is happening in Canada today, but in the east as well as in the west, so we shall have a well-balanced country from one end of Canada to the other.
This only emphasizes that we need a great national development policy which will assist provincial governments to develop projects which can be demonstrated to be both practical and capable of expanding their economy. It is also through such a policy that we can develop potential sources of cheap power across this country. My leader today well said that this government has failed to assist the parts of Canada where the need is the greatest. Any fiscal policy of this country must take into consideration the weaker sections of the dominion. A policy which does not do that is not a national policy.
I could refer to the $45 million Beech-wood project on the Saint John river in New Brunswick. If we are not to export all our raw basic metals from the northern part of our province we need 250,000 kilowatts of electric power in and around
Natural Resources-Development Bathurst; we need 100,000 kilowatts at Woodstock, where 200 million tons of manganese has been discovered, a metal which is very rare not only in Canada but on this North American continent. We would like to have the power there to process this manganese in our own section of the dominion. It is estimated that in a short time we shall need 420,000 kilowatts. We have not got that, and it will tax our resources to the utmost. I doubt whether the province of New Brunswick, without some financial assistance by way of lending money, can develop its resources. We are not asking for any handout. What we want is a policy under which money can be lent to those provinces which need it to develop electric power in order that we may process the metals and the raw materials we have.
We also have a pulp and paper industry in New Brunswick. It is the greatest industry we have. Today we are exporting a lot of raw pulp from the province of New Brunswick. If we had more electric power in New Brunswick we could build more pulp mills. I understand there is a concern which is going to build a mill in the southern section of the province if sufficient electric power can be obtained. Power is the key to success not only in Ontario and Quebec, but in other parts of this dominion.
We have often spoken of decentralization in the Dominion of Canada. There will never be decentralization of industry in Canada unless assistance is given to those provinces which need assistance so much. I wish to repeat, Mr. Speaker, what we must do to strengthen our economy and to increase employment in the country. What we must do is process far more of our primary products right here in Canada. Despite what the minister says, we in the eastern provinces must process more of our raw materials if we are to have anything like the prosperity which exists in the provinces of Quebec and Ontario.
Today we seem perfectly content to ship most of our vast supplies of natural resources out of the country in their raw state to feed mass producing machines of the United States and other countries. There is no reason why a far larger proportion-I do not say all; no one on this side of the house says that all our materials must be processed here in Canada-of our raw materials should not be processed into finished articles by Canadian workmen in Canadian factories. If United States and German workmen can turn primary products into manufactured articles which find a ready sale in export markets throughout the world, there is no
5806	HOUSE OF
Natural Resources-Development reason why Canadian workmen cannot do the same thing in Canadian plants.
What is needed is for the federal government to give a lead to industry by sponsoring a greatly expanded industrial research program. The minister mentioned research tonight. There is no question that there is a considerable amount of research being done in Canada, but there is not sufficient being done. More could be done to the great advantage of industry here in Canada by revising our taxation policies to encourage new industries to get started and present industries to expand. We have within our borders everything needed to make Canada into one of the greatest industrial nations of the world. Upon the federal government lies the great responsibility of seeing that we make the most of our great opportunities, and that our industrial progress is as rapid as possible. This, I repeat, is something the federal government must do. The provinces are not in a position to do that either through the fiscal policies of this government or in any other way.
When I spoke here some time ago I quoted from a former premier of the province of New Brunswick. He was speaking before the dominion-provincial conference in Ottawa in 1946, and was dealing with the situation in the maritime provinces at that time. He said:
Let it be remembered again that the control of all matters national in their scope and which affect most vitally the social and economic well-being of the people in the provinces is now vested in the central government. I have already mentioned the main items. The chronic unbalance in the Canadian economy with the heavy concentration of industrial, commercial and financial power in certain favoured areas, is due to the play of forces under the control of the dominion parliament and government since confederation. That situation is capable of being remedied, and only remedied, through national policy-
-a national policy, Mr. Speaker, such as is outlined in this resolution which was presented this afternoon. We who have read the history of the United States know that after the civil war and until just a few years ago the southern part of the United States was very poor. They exported their raw cotton to the north and out of the country. A few years ago it was decided by the federal government in Washington that they would give assistance in the development of electric power in the southern United States. They set up the great T.V.A., built the Tennessee valley dam, and they built other dams and hydroelectric plants in the southern United States, with the result that today that section of the United States has developed as a great manufacturing part of the country. They also did the same thing in the western United States along the Columbia river. What should 

be done here is that a similar policy should be adopted for Canada. England has done the same thing in developing certain areas that were not in as good an economic condition as others.
We have been told at different times- and it is something we do not mind being told-that we should do something for ourselves. I do not think there is anyone here who believes that the maritime provinces have shirked either in trying to do something for themselves or for other parts of Canada. If the history of the industrial development of Canada were written I think it would be found that the people of the maritimes have done more than their part in developing the west and north and other sections of this dominion.
As far as helping ourselves is concerned, an organization called the Atlantic provinces economic council was recently formed in the Atlantic provinces. This organization is making great efforts to assist in the development of industry in these provinces. I think I might mention the premier of my own province of New Brunswick, Hon. Hugh John Flemming. He has advocated a policy of expansion under a ten-year program. He wishes to develop hydroelectric power on the Saint John river which will cost approximately $211 million, which is a lot of money for a province such as ours. His intention is that through the development of power he can bring smelters into the province to look after the smelting of the metals that have been discovered there. He wants to have more pulp and paper mills built in the province of New Brunswick. He also wants to bring in other industries from outside, and he knows the only way they can be encouraged to come is through providing cheap power.
The Prime Minister gave us some advice not very long ago. We have had lots of advice from other parts of this country concerning what we should do. Speaking before the labour convention in Toronto a few months ago with reference to the economic development of the Atlantic provinces, the Prime Minister had this to say:
.	.	. economic redevelopment of the Atlanticprovinces deserves consideration. .	.	. special
measures should perhaps be taken to improve the economy of the Atlantic provinces.
The Prime Minister should not have said special measures "should perhaps be taken" to improve the economy of the Atlantic provinces; I think as prime minister of this country he should have said "special measures must be taken" to improve the economy of the Atlantic provinces. He went on to say:
This merits and is receiving attention from many of us. However, the initiative and the ideas, the energies and the determination to accomplish

this redevelopment cannot originate in other parts of Canada; they must come from the Atlantic area.
That was looked on as a challenge by the people of the maritime provinces and eastern Canada, and I might say the challenge has been accepted. It has certainly been accepted by the four premiers of the maritime provinces of Nova Scotia, Newfoundland, Prince Edward Island and New Brunswick. They are meeting today in the city of Fredericton, and I can assure the Prime Minister and this government they will come forward with plans and schemes-they will not be altogether new, because they have been recommended time and time again before dominion-provincial conferences-which if put into effect will greatly benefit these provinces in future.
I should like to quote briefly from some of the remarks our premier made at the dominion-provincial conference in 1955. When speaking of the processing of natural resources in my own province, Mr. Flemming said:
The government of New Brunswick will not stand idly by and allow these natural resources to lie dormant. Your government is determined that our mineral wealth shall not be dug up and carted away from this province to be processed elsewhere.
That should be the policy not only of the province of New Brunswick but as far as possible it should be the policy of the whole of the Dominion of Canada. He continued:
The aim of the government is to supply the mining companies with power cheap enough to insure the economic processing of our minerals in New Brunswick.
As I said, this same policy could very well be followed for the whole Dominion of Canada. I might also say it is the same policy which was followed by our leader when he was premier of the province of Ontario. It was practised in Ontario at that time, and I am satisfied it will be practised in the Dominion of Canada when the leader of the Conservative party becomes the prime minister of this country. At the royal commission on Canada's economic prospects Mr. Flemming, speaking of the industrial and economic growth of Canada, said:
As a matter of fact, for nearly one hundred years the relative economic level of this province_
He could have said the same thing for all the eastern provinces.
-has been steadily declining, as tables in our brief will indicate. Since 1952 there have been signs that this trend may be reversed. Foremost among them has been, of course, the discovery of huge mineral deposits here. But unless we can supply adequate amounts of low-cost electrical energy this great wealth will only be dug up to be carted away and processed elsewhere. New Brunswick will be destined for years to come to 67509-369i
9, 1956	5807
Natural Resources-Development
remain the hewer of wood and the drawer of water that it has been for years past. But, gentlemen, this province is no longer content to remain one of the weakest links in the confederation. If need be, we will fight for our place in the economic sun.
He went on to say:
Whenever they have been called on in the past, our citizens have been more than prepared to accept the sacrifices and responsibilities of Canadian citizenship. The time has come when they must be accorded all the rights and privileges of such citizenship. We cannot accept anything less than this.
Mr. Speaker, I see that my time is about up. I am satisfied that if the principles set out in this resolution now before us are adopted and become the policy of Canada, the future of this country is assured, not only that of certain favoured sections; because when the minister was speaking tonight we who come from other sections could not take any other idea from his remarks than that he was speaking for certain favoured sections of the Dominion of Canada. He was not speaking for the whole dominion. If we are to be the great nation that we should be and that we are destined to be we must have a policy which will look after the interests, the rights and the development of the provinces in the east and in the west, and also the rights and further development of the provinces in central Canada.
I have nothing further to say. I am 100 per cent in favour of this resolution which has been brought forward. 1 believe that if it is adopted and carried out by any government in this country it will react greatly to the benefit and the development of our country in the future.


Mr. Elmore Philpoii (Vancouver South):: Mr. Speaker, I listened most carefully this afternoon to that hour-long speech by the Leader of the Opposition. I think for 50 minutes of his speech I wondered how he could ever come down to any point of criticism of the government, because in that 50 minutes practically everything he said was at least by implication eulogistic of the government which was responsible for the very prosperous conditions in Canada to which he was referring Therefore 1 make it quite clear at the outset that I have certainly no quarrel to pick with at least nine-tenths of the speech made this afternoon by the Leader of the Opposition, nor for that matter with the speakers from other parties on that side.
However, I must say that I was a little surprised when the Leader of the Opposition got down to his actual motion of want of confidence in the government and itemized the particular reasons why he thought that motion should be adopted. As I see it the two most important points he made were first
5808	HOUSE OF
Natural Resources-Development that Canada had a huge adverse balance of trade with the United States approaching $1,000 million last year, and second that Canada was not developing her own natural resources sufficiently in this country, that we were simply hewers of wood and drawers of water for the United States, that we were exporting too much of our raw materials and that the United States was getting the benefit.
I must confess that when I thought over his argument about the heavy adverse balance of trade with the United States, running to several hundred millions of dollars a year, I was really astounded at everything that has happened in this house this year; because most of the time of this house, and certainly most of the energy and most of the speeches of the Conservative opposition, have been devoted to trying to obstruct, to trying to prevent the one great change that has been made in the Canadian economy in recent years which would help to correct the heaviest item in our adverse balance of trade with the United States.
What were the Tories-excuse me; I understand that the Tories do not like that word any more-the Conservatives trying to do when they were trying to block the natural gas pipe line? Certainly they were lining up with John L. Lewis and the Pennsylvania coal barons on the side of Pennsylvania coal against Alberta natural gas. Surely if we are sincere about wanting to cut down our heavy adverse balance of trade with the United States one of the items we should look to is the importation of United States coal, in view of the fact that we have been importing up to $148 million worth of United States coal per year in more recent years. I should have thought that if the Leader of the Opposition really meant what he said about wanting to reduce this adverse balance of trade he would have been the foremost advocate in this chamber of the natural gas pipe line, which was going to reduce United States coal imports and give to the gas now wasted in Alberta the market of central Canada which now goes to south of the border.
When I heard the Leader of the Opposition bemoaning the heavy influx of United States capital it made me think of my boyhood in Hamilton. I see the hon. member for Hamilton West (Mrs. Fairclough) is present. I grew up in her constituency and I got some of my early political education in a hall which I imagine she will remember, a diehard Tory hall called the Twentieth club on Locke street. The first election I remember -I realize that this will date me-is the election of 1911 when some of my good
[Mr. Philpott.l

friends won the election with the cry, "No truck nor trade with the Yankees".


Mrs. Fairclough:: That was before my time.


Elmore Philpott: Of course it was long before the time of the hon. member for Hamilton West but not before my time, because I have a good long memory about some of these old Tory tricks. I see that some of the really old Tory tricks which were played in 1911 are being tried out again, if you please, in this year of our Lord 1956. I have no doubt that two years hence when we have a federal election the main election issue, if the Conservatives get their chance, will not be "No truck nor trade with the Yankees" but certainly they will call it, "Send them Yankee dollars home". Already they are bringing forth that issue for the next election.
I think before we send them Yankee dollars home, before we fasten on any such loose catch phrase or slogan for the election which we will get about August, 1958, we should take a good long look at the wisdom of this sort of thinking. I wonder if my hon. friends have read an admirable volume published by the dominion bureau of statistics. I hope my hon. friends will note that I put on "dominion", something which they discussed the other day. This is 100 pages for a dollar which is enough to warm the heart of any Scotsman in the country, because it is the best one dollar's worth of reading matter that any politician who hopes to fight an election issue on "send them Yankee dollars home" is likely to read.
This deals with Canada's international investment position in the years 1926 to 1954. I am not going to go into the whole 100 pages of statistics, because my own idea of statistics is something like that of the first minister of finance I can remember operating in this chamber, which was a long while ago; the grand old miller by the name of J. M. Robb. He used to say, "There are three kinds of lies; lies, damn lies and statistics." So I am not going into the whole 100 pages of statistics. However, as I read these statistics of the changes in Canada's investment position in the international world from 1926 to 1954, I note that there was a great increase in United States investment in the last few years. But why did we have the so-called great adverse balance of payments over the years? We had the great adverse balance over the years-and it is made very clear in this book as well as in all other authoritative publications-for the simple reason that the Americans were pouring in the tools for capital investment; they were pouring in the tools for the development of this country.

I for one would not say that it is always unwise to kill the goose that lays the golden egg, but I would submit to this country that before we should get ready to plunge into an election on the issue of "send those United States dollars home" we should take a close look at how we got all those United States dollars over the past few years. This vast sum of money that has come into this country has come into Canada for the development of Canada, and I submit that it would be possible to scare off United States investors. Of course we would not need to have the Leader of the Opposition parading around with a stick and a cardboard placard reading, as in Iceland, "Yankee, Go Home". All we would need is the suggestion that United States dollars were not welcomed in Canada any more, and you would not need to pass any laws to get the Americans to keep their investment dollars at home. The Americans would look after that for themselves.


Donald Methuen Fleming: How silly can you be?


Elmore Philpott: Mr. Speaker, if you are in earnest about wanting to know the net change in Canada's investment position, and if you refer to page 14 of this official publication I mentioned, "Canada's International Investment Position, 1926-1954," you will read this:
Taking the period from 1926 to 1954 as a whole, Canada's external liabilities have risen by somewhat under 3 per cent per annum, in contrast to a growth of over 6 per cent on the assets side. The over-all increase in net indebtedness from $5-1 billion to $6-7 billion is equivalent to an annual rate of less than 1 per cent. Considering the great expansion of productive capacity and the changes in price levels which have occurred in the past quarter of a century, it will be apparent that the relative burden of Canada's debtor position has been greatly decreased.
So if our friends in the Conservative opposition are really looking for an issue on the question of Canada's indebtedness to the United States, I think they had better take a second look at the facts. The plain facts are that Canada's net credit and debit position has been greatly improved during the whole 21-year period of the lifetime of this government, but more particularly in the past five or six years.
9, 1956
Natural Resources-Development
Now I want to spend just a few minutes on that other argument which we hear, and I am sorry to say I thought we heard a little of it this afternoon from my old friend the hon. member for Rosetown-Biggar; that is the suggestion that Canada is not developing enough of her own raw resources. As I see such a solid phalanx and such a 100 per cent representation of C.C.F. Saskatchewan wheat farmers opposite me tonight, I should like to know whether there is a single Saskatchewan C.C.F. wheat farmer who would cut off the export of Canada's wheat, provided we could not develop that wheat to the point of flour before we could sell it. I submit that it is absolute nonsense to talk about 100 per cent development of all our natural resources before the people agree to export it.


Alfred Johnson Brooks: Nobody suggested that.


Elmore Philpott: You have to use your common sense about export. I submit that of all the countries in the world that should never be so foolish as to cut off its own nose to spite its face, and put an embargo on exports on raw materials, that country is our Dominion of Canada.
I think of my own province of British Columbia. I am glad to see my neighbour and good friend the hon. member for Van-couver-Quadra there, and I ask him and any other member in this house whe -e British Columbia would be if we cut off the export of our raw materials. Where would the town of Kitimat be if we were so foolish .'is .to talk economic nationalism and say we would not export or import raw materials? Where would our country's aluminum industry be if we did not bring in the bauxite from the West Indies and other countries thousands of miles from our own shores? I submit that what is sauce for the goose is sauce for the gander. As you say Canada should not export any raw materials, then other countries should not export raw materials either; and God help us if other countries should ever adopt that foolish policy.
On motion of Mr. Philpott the debate was adjourned.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Question

[Stage Direction]
The following answer, deposited with the Clerk of the house, is printed in the official report of debates pursuant to standing order 39:

Mr. Diefenbaker: How many bushels of wheat of all grades was in storage in Canada on (a) June 30, 1954; (b) June 30, 1955; (c) June 30, 1956?
Answer by: Mr. Dickey, Parliamentary Assistant, for the Minister of Trade and Commerce:
The number of bushels of wheat of all grades, including Durum wheat, in storage in licensed elevators in Canada and in transit in great lakes vessels, and in railway cars on: (a) June 30, 1954, 349,007,133; (b) June 29,	1955, 348,488,948;	(c) June 27, 1956,
335,100,213.

Commonwealth Conference



APPENDIX


[Stage Direction]
During the past ten days commonwealth prime ministers have together reviewed the current state of international affairs. Their discussions have again revealed a sense of common purpose in their approach to the major problems of the day. The peoples of the commonwealth all share the common heritage of parliamentary democracy. They respect aspirations for freedom and selfgovernment, and they take pride in what they themselves have done in helping to fulfil those aspirations.
This meeting has been held at a significant stage in the development of international relations. A new element has been introduced by the growing recognition of the devastating power of thermonuclear weapons. Other developments of importance have taken place in the world, including changes in the Soviet union. The common understanding which the prime ministers have reached in their review will form a valuable background which will assist each government in the formulation and pursuit of its national policies.
Despite the high hopes with which the world emerged from the last war, new international tensions developed. These have given rise to increasing fears and suspicion. They have resulted in vast expenditures on armaments and economic distortions which have delayed the full development of the world's natural resources for the common good.
The governments and peoples of the commonwealth are united in their desire for peace. They seek friendly relations with all the peoples of the world and have no aggressive intent or design. War would bring disaster for many; world war could mean destruction for all. The policies of all commonwealth countries will at all times be devoted to preserving and consolidating world peace. The prime ministers emphasised the importance they attach to the search for a comprehensive disarmament agreement.
The commonwealth governments will strive for a progressive improvement in the standards of life of their own peoples and will assist in similar efforts in other parts of the world. Since the end of the war, in addition to furthering their own economic development, they have done much to assist the development of other countries, through the United Nations and such organizations as the Colombo plan, the commission for technical co-operation in Africa south of the Sahara and by other means. They will continue in
their efforts to secure prosperity as well as peace for all the peoples of the world.
In the course of the meeting the prime ministers reviewed the significant developments in the Soviet union in the context of international relations and world affairs. In this assessment they were helped by the reports made by those ministers who have recently visited the Soviet union or have held elsewhere personal discussions with the new Soviet leaders. The prime ministers considered the recent decisions of the Soviet government to reduce the numbers of their armed forces, their willingness to facilitate increased contacts between the Soviet union and other countries, and their expressed desire for improved relations with other governments. They welcomed these developments. A progressive improvement in the relations between the Soviet union and the other great powers would help to remove the fear of war and serve the interests of world peace. They believe, however, that the removal of the causes of tension and the creation of mutual confidence and goodwill are essential if peace is to rest on secure foundations. The governments of the commonwealth countries will persevere in the search for just and lasting settlements of outstanding international problems. Unless such settlements can be reached, resources which might otherwise be used to improve the lot of man will continue to be devoted to armaments; and the fears which impel the peoples of the world to accept the burdens of defence will continue to distract and weaken mankind.
The prime ministers noted with regret that, since their last meeting, no progress had been made towards German unity. They were informed of current proposals regarding the political and economic activities of the north Atlantic alliance and the development of closer economic co-operation in Europe.
The prime ministers considered the situation in the Middle East. They reaffirmed their interest in the peace and stability of this area. They welcomed the efforts of the Secretary General of the United Nations to ensure observance of the terms of the armistice agreements between Israel and the neighbouring Arab states. They agreed that all practicable steps should be urgently taken to consolidate the progress thus made and to seek a lasting settlement of this dispute.
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Commonwealth Conference
The prime ministers were informed of the situation in Cyprus, and welcomed the unceasing efforts of the United Kingdom government to find a solution acceptable to all concerned.
The prime ministers reviewed the situation in the Far East and southeast Asia. They noted the part which was being played by certain commonwealth governments in seeking to maintain peace in Indo-China. They looked forward to a continuing relaxation of tension in the Formosa area, and expressed the hope that unremitting efforts would be made to this end. Peaceful settlements of the problems in this area are imperative for stability in the Far East and for removing the dangers of conflict which would frustrate the hopes of peace. The prime ministers heard with interest a report from the Prime Minister of New Zealand on his recent visit to Japan. They were informed of the progress of constitutional advance in Malaya and of the negotiations on constitutional development in Singapore.
The prime ministers noted with satisfaction that Ceylon and certain other countries had recently been admitted to the United Nations. They recognized the important part which members of the commonwealth had played in securing this extension of the organization. They expressed the hope that its membership could be broadened still further so that it might command a wider allegiance throughout the world.
The prime ministers agreed that it was of first importance for their countries to maintain and increase their economic strength. Each country, through sound internal economic policies and steady development of its resources and earning power, could help to strengthen the commonwealth and the sterling area, and move steadily towards the agreed objective of the widest practicable system of trade and payments. The prime ministers noted with satisfaction the United Kingdom's determination to maintain and improve its capacity to serve as a source of capital for development in commonwealth countries. They received reports on the development program of Certain members of the commonwealth.
The prime ministers exchanged views on the development of nuclear energy for peaceful purposes. They agreed that the civil use
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of nuclear energy constituted a valuable new sphere of co-operation within the commonwealth, as well as with other countries, and they noted with satisfaction the progress already made in this field. The commonwealth countries are already a major source of world supplies of uranium and thorium, and their resources in these materials are increasing. In most of these countries research organizations have been established to develop the use 6f nuclear energy as a source of power.
During the course of the meeting, the Prime Minister of Ceylon stated that, in accordance with their declared policy, the Ceylon government proposed to introduce in due course a republican constitution for Ceylon. He also stated that it was their intention that Ceylon should continue to be a member of the commonwealth. The other prime ministers took note of this statement, and expressed their agreement to Ceylon's remaining a member of the commonwealth.
The prime ministers considered the particular position of the Federation of Rhodesia and Nyasaland in relation to meetings of commonwealth prime ministers. Taking into account the 20 years' attendance first by the Prime Minister of Southern Rhodesia and now by the Prime Minister of the Federation of Rhodesia and Nyasaland, they agreed that they would welcome the continued participation of the Prime Minister of the Federation of Rhodesia and Nyasaland in meetings of commonwealth prime ministers.
Apart from the consideration of matters which are of common concern to all commonwealth countries, these meetings also afford opportunities for discussions outside the formal sessions. Advantage has been taken of these opportunities on this occasion. The continuing exchange of views on matters of common concern is an important element in the relationship between the member countries of the commonwealth. It is of the utmost value that this should be supplemented at intervals by personal contacts between the political leaders of the commonwealth countries, and in a rapidly changing world the need for these direct consultations has assumed a new importance.
London,
6th July, 1956.
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Tuesday, July 10, 1956