1959-01-19

CANADIAN RADIO PATENTS LIMITED


Hon. E. D. Fulton (Minister of Justice):: As hon. members know, Mr. Speaker, concern has been caused in Canada by current United States antitrust action against parent companies of Canadian subsidiaries in respect of the participation of those subsidiaries in Canadian Radio Patents Limited, a Canadian company dealing in radio and television patents. The object of the action appears to be to force the Canadian companies to make important changes in commercial practice which we consider to be the concern of Canadian rather than United States law. Other United States antitrust cases have, in the past, raised similar cause for concern and some of them have been the subject of representations by the Canadian government to the United States government.
As a result of the current case I made informal representations to the United States embassy in Ottawa, which were followed up by a formal note delivered through our embassy in Washington to the United States government. The concern of the Canadian government was also expressed and discussed at the recent meeting in Ottawa of the joint United States-Canada committee on trade and economic affairs. The communique issued as a result of that meeting stated:
It was agreed that the general questions involved would be the subject of further discussions between the two governments at the ministerial level, and arrangements are being put in hand accordingly for a meeting.
I may now inform the house that arrangements have been made for discussions between the Attorney General of the United States and myself to take place in Washington on the 29th of this month concerning problems raised in Canada by the effect in this country of certain United States antitrust cases and the means that may be taken for dealing with such problems.



EXTERNAL AFFAIRS


Hon. Sidney E. Smith (Secretary of State for External Affairs):: I desire, Mr. Speaker, to table copies of the seventh annual report
of the consultative committee of the Colombo plan. This report is being released today. The report was approved at the meeting of the committee held in Seattle from November 10 to November 13, 1958. On that occasion I had the honour of leading the Canadian delegation.
The purpose of this annual report is to review the progress made by the countries of south and southeast Asia in carrying forward their economic development programs, and in this way improving the standards of living of their peoples. The report also summarizes the assistance in this important task that has been given to the countries of the area by countries outside the Colombo plan area. In a final chapter the report endeavours to assess the magnitude of the task that lies ahead.
The report shows that Canada's total assistance toward the economic progress of the countries of south and southeast Asia, from the beginning of the Colombo plan in 1950 to the end of 1958, was $288.2 million. This includes $56.5 million which has been made available to date to the countries of the area, in grants and loans outside the regular Colombo plan appropriations, for the purchase of Canadian wheat and flour.
Total economic assistance to the members of the Colombo plan in south and southeast Asia from other member countries since 1950 has been about $5 billion. The report points out that this external assistance has been a significant factor in the economic progress of the region, but emphasizes that by far the greater part of the economic resources devoted to development continues to come from the countries of the area themselves.


CANADIAN CITIZENSHIP ACT
Hon. J. W. Pickersgill (Bonavisia-Twillin-gate) moved: for leave to introduce Bill No. C-2, to amend the Canadian Citizenship Act.


Some hon. Members:: Explain.


Some hon. Members:: Agreed.


John Whitney Pickersgill: Mr. Speaker, I appreciate the unanimity shown by the house in support of this proposal. I was going to say that the effect of this amendment, if it were adopted by the house, would be to place the citizenship of naturalized citizens on a basis of complete equality with the citizenship of

Proposed Legislation
natural born citizens, something which the amendment we adopted at the last session failed to do.
Motion agreed to and bill read the first time.


INTEREST ACT
Mr. Hazen Argue (Assiniboia) moved: for leave to introduce Bill No. C-3, to amend the Interest Act.
Motion agreed to and bill read the first time.


FINANCIAL ADMINISTRATION ACT
Mr. Samuel Boulanger (Drummond-Artha-baska) moved: for leave to introduce Bill No. C-4, to amend the Financial Administration Act.


Some hon. Members:: Explain. (Translation):


Samuel Boulanger: Mr. Speaker, the purpose of this bill is to provide that every cheque, draft, traveller's cheque, bill of exchange, postal note, money order, postal remittance and any other similar remittance of any department as defined in paragraph (f) of section 2 of the Financial Administration Act or of any Crown corporation enumerated in schedules B, C and D of the same act shall be printed in both the English and the French languages.
This is in accordance with the principle established in the Bank of Canada Act where it is enacted (subsection (4) of section 21) that the notes payable to bearer on demand and intended for circulation in Canada issued by the bank shall be printed in both the official languages.
(Text):
Motion agreed to and bill read the first time.


AMENDMENT TO PROVIDE FOR PRINTING OF NEGOTIABLE INSTRUMENTS IN BOTH FRENCH AND ENGLISH
Mr. Theogene Ricard (St. Hyacinihe-Bagol) moved: for leave to introduce Bill No. C-12 to amend the Financial Administration Act.


Some hon. Members:: Explain.


J.-H.-Théogène Ricard: Mr. Speaker, the purpose of this act is to have all negotiable notes printed in French and English.
Motion agreed to and bill read the first time.
[Mr. Pickersgill.l


SMALL LOANS ACT
Hazen Robert Argue: for leave to introduce Bill No. C-5, to amend the Small Loans Act.
Motion agreed to and bill read the first time.


FLAGS OF CANADA
Samuel Boulanger: for leave to introduce Bill No. C-6, respecting flags of Canada.


Some hon. Members:: Explain.
(Translation):


Samuel Boulanger: Mr. Speaker, it will be seen in the explanatory notes that:
As it is desirable and urgent that Canada possess a distinctive national flag, this bill provides a method of obtaining a flag with the least possible delay. The method adopted is to have the Governor in Council prepare the design immediately upon passage of this bill and to submit the design for approval of the house and the other place at this session.
(Text):
Motion agreed to and bill read the first time.


INDUSTRIAL RELATIONS
Mr. Erhart Regier (Burnaby-Coquitlam) moved: for leave to introduce Bill No. C-7 to provide for pay for statutory holidays for employees and for pay for work performed on statutory holidays.
Motion agreed to and bill read the first time.


PROVISION OF MINIMUM RATE OF WAGES FOR EMPLOYEES
Mr. Arnold Peters (Timiskaming) moved: for leave to introduce Bill No. C-8 to provide for minimum wages for employees.
Motion agreed to and bill read the first time.


FINANCE
Mr. L. J. Pigeon (Jolieile-L'Assompiion-Montcalm) moved: for leave to introduce Bill No. C-9 respecting the printing of negotiable instruments in the English and the French languages.


Some hon. Members:: Explain.

(Translation):


Louis-Joseph Pigeon: Mr. Speaker, I should like to explain this bill in French, thanks to the simultaneous interpretation system, initiated by this government to promote national unity.
The printing of negotiable instruments in both the English and the French languages-
-and I take pleasure in moving that they be so printed.
-is in accordance with the principle established in the Bank of Canada Act where it is enacted (subsection (4) of section 21) that the notes payable to bearer on demand and intended for circulation in Canada issued by the Bank shall be printed in both official languages.
(Text):
Motion agreed to and bill read the first time.


CANADA ELECTIONS ACT
Mr. D. M. Fisher (Port Arthur) moved: for leave to introduce Bill No. C-10 to amend the Canada Elections Act (voting at advance polls).
Motion agreed to and bill read the first time.


AMENDMENT TO PROHIBIT PUBLICATION OF STRAW POLL RESULTS
William Arnold Peters: for leave to introduce Bill No. C-ll to amend the Canada Elections Act (publication of straw poll results).
Motion agreed to and bill read the first time.


AMENDMENT TO PROTECT VOTING RIGHTS OF INDIANS
Mr. Frank Howard (Skeena) moved: for leave to introduce Bill No. C-13, to amend the Canada Elections Act.
Motion agreed to and bill read the first time.


BRITISH NORTH AMERICA ACT
Douglas Mason Fisher: for leave to introduce Bill No. C-14, to amend the British North America Acts, 1867 to 1952, with respect to the readjustment of represensation of the House of Commons.
Motion agreed to and bill read the first time.
Inquiries of the Ministry FISHERIES IMPROVEMENT LOANS ACT


MEASURE TO PROVIDE FOR EXTENSION OF LEGISLATION
Hon. Donald M. Fleming (Minister of Finance) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to amend the Fisheries Improvement Loans Act to extend the application of the act from the 12th day of December, 1958 to the 30th day of June, 1962.


[Stage Direction]
Motion agreed to.
(Translation):


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, I wish to direct a question to the Minister of Labour (Mr. Start) concerning the current dispute between Montreal television producers and the C.B.C., a dispute which is crippling the whole national French network.
Does not the minister think that he should, in all fairness, intervene in this dispute, according to section 56 which states that, when the minister thinks it appropriate, he may, upon request or on his own, conduct or order an inquiry.
Under the circumstances, and in view of this statement and of this section, may I ask the minister if the present dispute-
(Text):


Some hon. Members:: Order. Sit down.


Mr. Speaker:: Order. I think the hon. member has completed a question, but I should like to ask him to give his assurance that this is not the same question which was asked on Friday, before I give the minister the floor.


Lionel Chevrier: No, Mr. Speaker, it is not the same question. This question is based on the wording of section 56(1) which I have just put on Hansard.
(Translation):
And, coming to the question itself, I wanted to ask the minister if, notwithstanding the section that I have just quoted, he still claims, as he did last Friday, that he is not allowed to intervene in the dispute.
(Text):


Hon. Michael Starr (Minister of Labour):: Mr. Speaker, in reply to the question asked today by the hon. member for Laurier, may I point out that even though he claims it is not similar to the one he asked on Friday, the answer is still the same.

Inquiries of the Ministry COMBINES INVESTIGATION ACT



INQUIRY AS TO RECOMMENDATIONS OF COMMISSION

[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I have a question I should like to pose to the Minister of Justice. I wonder if the minister could indicate what steps are being taken by the department or by himself with respect to the recommendations of the restrictive trade practices commission regarding the Zinc Oxide Company of Canada Limited and the Hudson Bay Mining and Smelting Company Limited?


Edmund Davie Fulton: Mr. Speaker, I thank the hon. gentleman for giving me notice of his question. In reply I wish to advise him that counsel has been retained and the matter has been referred to him to examine the evidence and report as to his opinion concerning whether or not the evidence warrants prosecution. We are expecting to receive the opinion shortly.


Frank Howard: May I ask a supplementary question, Mr. Speaker. Could the minister indicate who is the gentleman he has retained as counsel?


Edmund Davie Fulton: Mr. Speaker, I wonder whether the hon. member would mind if I take notice of his question. I am not aware of any objection, but I would like to make certain that at this stage it would be proper for me to disclose the name of counsel.


Frank Howard: Yes. I would like to point out that indications given in the press-


Some hon. Members:: Order.


Mr. Speaker:: Order.



BRIDGES


[Stage Direction]
On the orders of the day:
Hon. George H. Hees (Minister of Transport):: Mr. Speaker, on Friday last the hon. member for St. Ann (Mr. Loiselle) inquired about vehicular traffic on the Victoria bridge when changes to the structure have to be made in connection with the St. Lawrence seaway.
The management advises me that the St. Lawrence seaway project has necessitated certain structural changes to Victoria bridge to provide an alternative route for traffic so that it will be completely independent of vessel movement through the St. Lambert lock. Every effort is being made to coordinate, program and accelerate the work so
[Mr. Starr.)
as to minimize inconvenience to the travelling public. Beginning in May the downstream roadway will be closed to vehicular traffic for a period of eight to ten weeks. A double shift of workers will be employed on the construction to reduce the length of time the roadway will be out of service. Work on the upstream roadway will not begin until about April, 1960.
During the construction periods, in order to reduce delays, one-way traffic will be operated on the bridge between the hours of 7 and 9 a.m. and 4 and 6 p.m. The earlier hours will be reserved for Montreal-bound traffic and the evening hours for St. Lambert-bound traffic. It will be noted that one roadway will remain open at all times and the plan outlined is aimed at reducing the temporary inconvenience to a minimum.


Lionel Chevrier: Mr. Speaker, may I ask a supplementary question arising out of the minister's statement. In view of the fact that the work with reference to the railway aspect of the bridge is not nearly as urgent as that with reference to navigation, will the minister be good enough to ask the Canadian National Railway officials to delay this work until after the construction of the Champlain bridge?


George Harris Hees: Well, I will speak to the management and see whether that will be possible.



SHIPPING

[Stage Direction]
(Translation):


[Stage Direction]
On the orders of the day:
Mr. Maurice Bourgel (Levis):: Mr. Speaker, I wish to direct a question to the Minister of Transport (Mr. Hees).
Could the hon. minister state if his department has decided to maintain winter navigation between Quebec city and Montreal?


George Harris Hees: Mr. Speaker, may I take this question as notice? I will give an answer in French tomorrow.
(Text):



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Minister of Northern Affairs and National

Resources. I apologize lor my repetitious use of the words "in view" occasioned by my usual desire for procedural exactitude.
In view of the release given to the press by the Minister of Public Works on December 5, 1958 to the effect in part-
Steps are to be taken at once to complete an agreement with the United States which will make possible the co-operative development of the river based on co-ordinated operations but retaining Canadian ownership and control of projects built on the river in Canada.
-and in view of the repeated statements by the premier of British Columbia with respect to this Columbia river development, and in view of the tremendous importance of this question to the people of British Columbia, will the minister inform the house of the progress to date with respect to agreement between Canada and the United States on this important question?


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):: I wish to thank the hon. member for Kootenay West for having given me notice of this question. In reply I should like to say that in the latter part of last year the Canadian government concluded that so far as it could see the development of the Columbia basin which offered the best hope of more and cheaper power for Canada and the United States would be one resulting from a co-operative development of that basin.
Accordingly, as stated on December 5, 1958, steps were immediately taken toward negotiation of an agreement with the United States for the co-operative development of the water of the Columbia river. Discussions are now taking place between United States and Canadian officials with a view to expediting this matter. As negotiations are in train, it would not seem proper to say anything further about them at this time. In the meantime, officials from my department are discussing technical engineering aspects of the Columbia river development with officials of the British Columbia government.
(Translation):



DOMINION-PROVINCIAL CONFERENCE INQUIRY AS TO CALLING OF CONFERENCE ON FISCAL MATTERS

[Stage Direction]
On the orders of the day:
Hon. Paul Marlin (Essex East):: Mr. Speaker, I wish to ask a question of the Prime Minister. Could he state whether he intends to call a conference on fiscal relations with the provinces during the present session of Parliament, or before the end of the current year 1959?
Inquiries of the Ministry
(Text):


Righi Hon. J. G. Diefenbaker (Prime Minister):: I have nothing to say in that regard at the moment except that on January 15 I directed a letter to the premiers of the various provinces, which I might be allowed to read:
The speech being read by His Excellency the Governor General at the opening of parliament today contains two paragraphs which are of direct interest to provincial governments. I am therefore writing to advise you of them and to ask your co-operation in regard to the proposal in the second. They are as follows:
"My government will recommend an amendment to the Federal-Provincial Tax Sharing Arrangements Act to extend for another year the increase made last year in the provincial share of personal income tax revenue.
My government proposes that the entire subject of financial relations between the dominion and the provinces shall receive continued active co-operative study. All provincial governments are being asked to agree to the use, for this purpose, of the machinery of the existing federal-provincial continuing committee on fiscal and economic matters working under the direction of a committee consisting of the Minister of Finance and all provincial treasurers."
The Minister of Finance will communicate with your minister of finance with a view to arrange-ing a meeting of the proposed committee of ministers.


Paul Joseph James Martin: That means there will be no conference.



LIVESTOCK


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: should like to ask the Minister of Agriculture what steps his department is taking to curtail the increasing spread of rabies disease, and if he would consider seriously paying compensation for those animals lost. In my riding this dread disease has reached alarming proportions, and the number of cases is very serious.


Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, all reported suspected cases of rabies are fully investigated. Exposed animals are quarantined, and where human exposure has taken place medical authorities are immediately advised and given full details. All diagnostic work in connection with animal rabies is handled by the department's animal diseases research institute laboratories. Dog control problems are discussed with municipal authorities, who are urged to establish appropriate control measures. In infected areas free rabies vaccination clinics are held for all pets. Since April 1, 1958, 17 counties of Ontario have been covered by 333 free rabies vaccination clinics at which 92,000 dogs and cats have been vaccinated.

Inquiries of the Ministry
This control work, including the investigation, quarantine and free vaccination clinics, has prevented rabies from becoming established in the dog population to the point where there has not been one case of dog to dog transmission during the current outbreak. This is important as human exposure is usually through dogs.
The reservoir of rabies is established in the wild fox and, as peak fox populations are reached, the incidence of rabies rises proportionately. In order to aid in the destruction of foxes the Ontario government is supplementing various fox bounty programs. Departmental veterinarians supplement regulatory control measures with appropriate publicity and educational programs.
The Animal Contagious Diseases Act provides for the payment of compensation only when animals are ordered destroyed. This authority is provided to prevent the spread of animal diseases. The spread of rabies is dependent upon the introduction of the causative virus of the disease into the flesh of an animal, principally through biting by an infected animal. Because of this mode of transmission the spread of rabies cannot be prevented by ordering the destruction of infected or exposed cattle.
Compensation is normally paid for two classes of diseases, first, when it is necessary to destroy infected and exposed animals to stop the spread of serious animal diseases. Examples of this are foot and mouth disease and hog cholera. Second, compensation is paid in eradication programs for established diseases such as tuberculosis and brucellosis where there are adequate test procedures to identify infected animals. In order to curtail the spread and eventually eradicate such infection, these infected animals are ordered destroyed and compensation is awarded.
The nature of rabies, together with the lack of any diagnostic procedure to confirm the disease in living animals, does not support the destruction of cattle as a disease control measure.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I wish to direct a question to the Minister of Transport. Has the minister or his department received any representations to send an icebreaker to clear heavy ice off Pictou harbour in order to permit the shipping of prefabricated buildings from the New Glasgow plant of Eastern Woodworkers Limited and prevent a possible slow-down in operations? If so, what action is being taken in this regard?


George Harris Hees: Mr. Speaker, we received such a request, but the ice conditions in Pictou harbour are so severe that it would take two of our biggest icebreakers to perform the task. For the reason that our icebreakers are very heavily committed at the present time, we have suggested other means of moving the goods to the people concerned.


Hédard-J. Robichaud: At extra cost to the company concerned.



THE ROYAL FAMILY


[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: I should like to direct a question to the Prime Minister related to the announcement by the Toronto Star that it is to publish an intimate revelation of the activities of the royal household. Has the government considered any action analogous to that taken by the crown in Britain whereby the right of a British paper to publish this particular account has been challenged in the law courts?


John George Diefenbaker: The answer is no.



RUSSIA-REQUEST FOR STATEMENT RESPECTING EXTENSION OF AGREEMENT

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I should like to direct a question to the Minister of Trade and Commerce. Can the minister report the state of negotiations with the U.S.S.R. for the extension of the Soviet-Canadian wheat and trade agreement? Can the minister say whether the past quantity of approximately 15 million bushels a year may be provided for?


Hon. Gordon Churchill (Minister of Trade and Commerce):: I thank the hon. member for giving me notice of his question. The present Canada-U.S.S.R. trade agreement, which includes a commitment by the U.S.S.R. for the purchase of a minimum of 400,000 tons of wheat from Canada each year, or approximately the 15 million bushels mentioned, expires at the end of February. Preliminary discussions between officials of both countries are currently under way in Ottawa looking to a renewal of the trade agreement. We continue to attach great importance to wheat among the commodities which we wish to export to the U.S.S.R. Although I am hopeful that a satisfactory agreement will be reached,

I am not in a position to make any predictions about the outcome of the negotiations now under way.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: I should like to direct a question to the Minister of National Defence. While I recognize that it may not be desirable to give out precise locations of certain types of defence installations, having in mind the importance of the subject matter is the minister now in a position to confirm the Canadian Press story published from coast to coast last week that one of the two Bomarc anti-aircraft missile bases to be established in Canada is to be located near North Bay?


Hon. G. R. Pearkes (Minister of National Defence):: I thank the hon. member for sending me notice of his question, and would reply that several sites in northern Ontario and Quebec, including that mentioned by the hon. member, have been surveyed and soil analyses taken for various defence projects. Until all reports have been received and studied no decision can be made. In any event, it has never been the practice to announce the exact location and purpose of such defence installations.



SPEECH FROM THE THRONE


[Stage Direction]
The house resumed, from Friday, January 16, consideration of the motion of Mr. W. H. Jorgenson for an address to His Excellency the Governor General in reply to his speech at the opening of the session.
Hon. L. B. Pearson (Leader of the Opposition):: In rising to take part in this debate, Mr. Speaker, my first words as the house would expect, must be those of congratulation to the mover (Mr. Jorgenson) and seconder (Mr. Fortin) of the address in reply. I say this very sincerely indeed. It seemed to me that the mover, the hon. member for Provencher, spoke thoughtfully, with restraint and with as much objectivity as one could expect in a situation of this kind. I do congratulate him very sincerely for what was a good initiation of this debate.
I should like also to congratulate the hon. member for Montmagny-L'Islet, especially since this was his maiden speech. He spoke with conviction and with eloquence, and in the concluding part of his speech made an appeal for national unity which I think moved every member of this house. I think, and I am
The Address-Mr. Pearson confident, that every member of this house of every party is inspired by the same ideal of national unity to which the hon. member made such eloquent reference.
Perhaps, Mr. Speaker, I may be allowed also on this occasion to congratulate the Prime Minister (Mr. Diefenbaker) on his return to Canada in full health and vigour from a world tour which must have been to him as stimulating and valuable an experience as it was, I am sure, exhausting. We remember, Mr. Speaker, how great a strain such a tour was on his predecessor, Right Hon. Louis St. Laurent. Mr. St. Laurent, of course, made his tour after the wear and tear of six years as prime minister which were bound to make the physical stresses of such a tour even greater than they would otherwise have been. The speech from the throne makes a reference to the Prime Minister's visits throughout the commonwealth, and I have no doubt we will be receiving from him, perhaps as he follows me, a report of this trip, which in the words of the speech from the throne served to vitalize our close relations with the commonwealth.
I,	Mr. Speaker, intend to use the speech from the throne on this occasion, as the house would expect me to do, to survey and criticize some aspects of government policy. Obviously I cannot cover that very broad field on this occasion, but there will be other opportunities. Today, though I am afraid I shall be speaking at some length, I shall still be selective. The speech from the throne is a list of government proposals and a not very subtle praising of government policy put in the mouth, as is customary, of Her Majesty's representative in Canada by the government of the day which takes the responsibility for the substance of the speech. It gives a most misleading impression, in some cases by giving no impression at all, of the state of the nation in January, 1959, with a very perfunctory reference indeed to some of the most difficult and dangerous situations that have confronted this country for many, many years. You would never know it, Mr. Speaker, from the words used in the speech from the throne.
As was the case last year, the speech is more understandable for what it leaves out than for what it contains. Mr. Arthur Blakely, the columnist for the Montreal Gazette, commenting on the speech the other day referred to the unmentionables that did not appear in it. They are not unmentionables, Mr. Speaker, but they were certainly unmentioned. We on this side of the house, Her Majesty's loyal opposition, propose to mention them during the course of this debate. I begin the process of repairing that omission right now.
32	HOUSE OF
The Address-Mr. Pearson
The speech begins by a reference to the forthcoming visit of Her Majesty and Prince Philip. As I said the other day, when the Prime Minister mentioned this matter, I am sure we all, on every side of this house, share in the pleasure of this forthcoming visit, and we will participate in the welcome the Canadian people will be delighted to give Her Majesty and Her Majesty's consort. Perhaps at this point I might mention Prince Philip's short visit last autumn. Though it was a short and crowded visit, he managed at that time to visit Springhill and to express on that occasion the shock and grief that all Canadians felt at the disaster which had struck that coal mining town, a disaster which also filled us all with admiration at the indomitable courage shown by those people who were again stricken. The sympathy of all Canadians has gone out to that community, which I once ventured to refer to as "this George Cross community". However, sympathy alone will not be enough. It must be converted, by this parliament, into action which will restore and maintain the economic life of this community.
Then, Mr. Speaker, the speech has a few paragraphs devoted to international affairs. There will, I hope, be an occasion soon to discuss these matters more specifically, because the state of the world at the present time, and the relations of Canadians to that state, would seem to me to warrant as soon as possible a debate on the international situation. The references to that situation in the speech from the throne are so general indeed as to mean very little in relation to the concrete problems that face us, and Canada's position in respect to them.
There is a reference made, of course, to the need for enduring peace. We all appreciate that. It is perhaps realistic to say that during the year there has been little progress, unfortunately, in realizing that need for enduring peace. Certainly the evidence of progress in this regard which is given in the speech from the throne is rather unimpressive. There is some reference to progress in the field of disarmament, but the only illustration given of that progress is the drafting of an agreement for discontinuance of nuclear weapons tests, which is referred to as a hopeful beginning. I take it, Mr. Speaker, that that is the drafting of the technical agreement by the conference of experts at Geneva; but when that technical agreement was discussed on a political level it soon became apparent that it was far easier to reach that kind of technical agreement than it is going to be to reach political agreement, without which technical agreement does not mean much.


There is also in the speech from the throne reference to the desirability of some form of international agreement for the control of outer space. As we look ahead now into dimensions which were hardly considered a year or so ago, I agree that there could be nothing much more important facing us internationally than the persistent and constructive effort made by the United Nations -which is perhaps the only place where it can be made-to bring this new dimension of time and space under some form of international control before the opportunity escapes us. The Secretary of State for External Affairs (Mr. Smith) and those of his colleagues who worked so hard for Canada at the recent assembly of the United Nations, I think will agree with me that the effort which was begun at this assembly to reach that objective does not warrant-and I am trying to put my words in a responsible way-too much optimism that it is going to be easy to achieve. We on this side of the house will wish them well and will support them in every possible way in any endeavour they can pursue to bring about this result.
As has so often been said in the house, these over-riding questions of peace and war must, if we can possibly bring it about, be discussed and decided in this house on as non-partisan a basis as possible. That does not mean that we shall not have disagreements, because we shall; and I will mention some of them, perhaps, before I finish this afternoon. But we must always at least try to agree, and I am quite sure that we shall be able to agree on objectives even if we are not always able to agree on methods. If we and our friends cannot settle these over-riding questions, as I have called them, of peace and war, none of the other things which I am going to mention this afternoon, immediately important as they are, in the long run matter very much.
I now want to mention some of the domestic problems, questions and issues which arise in our consideration of this speech from the throne and the attitude or lack of attitude of the government toward these problems. This government has now had about a year and seven months in which to show what it can do. It is a time long enough for its method and its manners to become clear, if not its policies. In our view on this side of the house it has shown a genius not for following a straight and steady course but for confusion and contradiction, for wavering instability and, if I may add, a determination to lean positively on one man and negatively on the previous government. Its oscillating and uncertain moves, its lack of steadiness and sureness-and I will have a great deal of

documentary evidence to support that statement this afternoon-are in startling and depressing contrast to the vigorous, confident and crusading words which used to pour, if at times a little bit incoherently, from the mouths of its members.
We think now of the ringing declarations of the electoral campaigns, the massive undertakings given so carelessly then to every section of the country and every category of people. We think now of the promises tossed about in those carefree days with such reckless abandon but of which they are now the prisoners. They were promises that ranged all the way from immunity from suffering caused by unemployment to the liberation of the subject peoples of eastern Europe; promises easier to make than to keep, as the hon. member for Restigouche-Madawaska (Mr. Van Horne) reminded them recently in a most interesting broadcast he gave in his constituency. I do not know whether or not that broadcast has resulted in his translation from his former seat in the house to his present one at the far end of the chamber.


An hon. Member:: He is now in the front row.


Lester Bowles Pearson: We think also of the violent and unrestrained attacks by hon. members opposite in those days on the previous administration for budgetary surpluses, for anti-inflationary measures, for those fiscal and trade and monetary policies which helped to make Canada's economy in those days the envy of the world.
As you will remember, Mr. Speaker, all that was to be ended. It was ended, but not in the way my hon. friends hoped. Taxes were to go down; services were to stay up. How? It was to be done out of the half billion dollars or so which could be saved by eliminating waste and extravagance. Social security payments, provincial grants, farm prices, wages, employment, Canada's prestige in the world, all these things were to go up, without the value of a dollar going down, or, perish the thought, without any trace of that terrible tight money policy, a legacy from the Liberals.
What have we now, Mr. Speaker? This debate will begin the process of making that matter clear and revealing the truth behind the rosy but fanciful words in so many statements issued by members of the government as they greeted the new year. In truth, things are now very different indeed from the vision of Paradise Regained so joyfully proclaimed by the Tories on April Fool's day less than a year ago. Confusion and contradiction, bumbling and fumbling, are the most noticeable features of the activity of
33
The Address-Mr. Pearson the present government, as I hope I shall be able to show in a way which will perhaps convince even some hon. members opposite.
Most of the evidence I shall produce bearing on this statement will deal with economic, financial and defence matters. But there is one matter on which I should like to touch first. As hon. members know, we now have before us a draft bill of rights. It deals with the subject of human rights, in the protection and promotion of which I am sure everyone in this house without exception is united, though we may have strong differences of opinion as to how this can best be done. Certainly no Liberal can be anything but a champion of the rights and liberties of the free man against dictates and pressures, from whatever source they may come. That is what Liberalism has meant through all the years and in all countries; it has fought unjust privilege and power, and in no country more vigorously or more effectively than in our own. The whole record of Canadian history is proof of that fact.
This bill has also now been given a first reading in this house and, indeed, a second reading by public opinion in the country. Its provisions have been scrutinized by a great many highly qualified people with no political interest, in a partisan sense, to disturb their objectivity, and in its present form it has been found wanting. Third, Mr. Speaker it is now clear even from the consideration which has already been given to this bill that in its present form it will not do, just as I hope it is clear that any bill passed on this fundamental matter should in all its terms receive the broadest and most non-partisan support possible in this house.
I hope, therefore, that this draft bill, this bill which was given first reading, may be sent to a joint committee of both houses, as was done previously when this matter was under consideration, so that a report with recommendations can be returned to us by that committee.


John George Diefenbaker: When was the bill under consideration before? When was a bill under consideration before?


Lester Bowles Pearson: The right hon. gentleman knows perfectly well that this matter has twice in recent years been referred to a joint committee.


John George Diefenbaker: This matter.


Lester Bowles Pearson: What I have said is that this bill, which raises the whole question of how this can possibly be done, should be referred to a joint committee so the committee may report and make recommendations which will enable this house and this parliament to take

The Address-Mr. Pearson more effective action for the purpose we all desire to achieve than we could ever hope to take through the particular bill which is before us now. I make this proposal in the hope that it may commend itself to the government, and in the hope that this matter may receive broad and non-partisan support in this and in the other house.
I wish now to say a few words, or indeed more than a few words, about the economic picture as it faces us in this country today. It is a picture of recession and unemployment. It is a picture also of inflation and rising prices becoming more and more dangerous. It is, thus, a picture which reflects a dual danger. I do not think it is an exaggeration to say that we are facing the most serious situation since the end of world war II, and perhaps the Minister of Finance will agree with me in this respect.
The Minister of Justice in a speech made a couple of weeks ago, showed once again that this government, which took office in June of 1957, is still hoping in January, 1959 to transfer the blame for its own sins of omission and commission, for its own inadequacy, to the policies of the previous government. No doubt the Prime Minister when he follows me will try to do it too in his usual vigorous, rhetorical way. No doubt he will say, "What did you do in 22 years?"


Gordon Minto Churchill: That is right; what did you do?


Lester Bowles Pearson: I can answer that. It is a good question, and it does not embarrass me a bit. This device has been used by the Prime Minister just to get himself off the hook. He no doubt will say, "Your policies are to blame for everything; we are struggling gallantly against this vile inheritance."


An hon. Member:: Hear, hear.


Lester Bowles Pearson: Somebody says "Hear, hear". I will have some reference to make to this "vile inheritance" in a moment. However, while the Minister of Justice talked as he did, and as the Prime Minister will be talking soon, the Minister of Trade and Commerce in his year-end review argued that our present economic problems-and I quote-are "due to international causes". And the Prime Minister said himself, when he made his report over the air on December 21, that they are part of-and I quote again-"a worldwide economic slow-down". Hon. gentlemen opposite had better make up their minds what is the source of this trouble. I am sorry that business has taken the Minister of Justice out of the house, because I do not like to refer to him in his absence.


An hon. Member:: Here he is.


Lester Bowles Pearson: I am very sorry indeed to deprive the Minister of Justice of that cigarette.


Edmund Davie Fulton: Just finished it, anyway.


Lester Bowles Pearson: No doubt the minister in his speech the other night at the Chateau Laurier had the young Conservatives pale with agitation at the distressing picture of the awful mess inherited by this government.


An hon. Member:: Hear, hear.


Lester Bowles Pearson: The hon. gentleman says hear, hear-


An hon. Member:: The Beacon Arms.


Lester Bowles Pearson: Very well, the Beacon Arms. Now, as to this "awful mess", how did the associate deputy minister of trade and commerce describe it last November 10? The associate deputy minister of trade and commerce holds an appointment made since the election by the right hon. gentleman himself; he is a gentleman-and I say this in no political sense at all-who is very friendly indeed to the present government at this time, and this is how this appointee of the government, the associate deputy minister of trade and commerce, described the "awful mess" inherited by the government. These are his words:
The 1950's have been years of tremendous development in Canada. In the seven years from 1950 to 1957-
I am amazed that he stopped at 1957; I hope he has not lost his job because of it.
-Canada's gross national product rose from $18 billion to $31.5 billion, an increase of 75 per cent and in our last boom period of 1955 and 1956, the Canadian economy experienced the most rapid increase in over-all physical output yet achieved in the post-war period.
Well, that is the situation which hon. gentlemen opposite inherited. Perhaps the Minister of Justice ought also to be reminded of the words used by the Minister of Finance in Toronto a year before that, not long after the inheritance was so joyfully received. This is what the minister said not long after this "awful inheritance" was received:
If this is a national emergency, all I can say is that practically every country in the world would like to have a national emergency like it.
So the national emergency had begun to appear after November, 1957. This desperate device of trying to blame everything on the Liberals has become stale and worthless, and perhaps gentlemen opposite could discard it from now on. Even if their charges were true, and of course they are false as I have shown from the mouths of hon. gentlemen opposite-


Donald Methuen Fleming: You have not.


Lester Bowles Pearson: -the government has now had more than a year and a half to do something about them.


Mr. Fullon:: And we have.


Lester Bowles Pearson: They will be judged by their actions-


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: -in the last year and in the year ahead, and not by ours ten years ago. I am sure they would like to be judged by our policies ten years ago, but it will not work.
The Address-Mr. Pearson there was practically no change in the cost of living. I also know that in the middle of 1956 the cost of living really began to go up. When we were in power at that time and took steps through credit restrictions and budgetary surpluses to meet that danger, what was the attitude of hon. gentlemen opposite who formed the opposition of that day? They sneered and jeered at us. And then during the summer of 1957, when the signs of a parallel and serious danger from recession also became clear, what was the new government's attitude toward that danger? Its approach was to get ready for the next election.


George Randolph Pearkes: That judgment has been
handed down.


Lester Bowles Pearson: Since the present government insists on continuing to condemn the policies of the previous administration we should perhaps recall what the policies were. It might help the government to follow the right policies in the future; and I offer a review of the policies of the previous administration, as Mr. Humphrey Mitchell used to say, "in a kindly way".
While we were in office, Liberal fiscal, monetary and economic policies were sound,' steady-and steadiness is pretty important-flexible and successful. They made it possible for this country to combine startling economic expansion and reasonable monetary stability. They were indeed a contrast to the rock and roll actions of the present government, and as I have already said they helped to make Canada the envy of the world. The previous administration did not hesitate to budget for a deficit when there was a threat of recession. We did not hesitate to tax for a surplus when inflation was the greater danger. How hon. gentlemen opposite roared when they were in opposition, and during elections, against the inequity of a surplus and the immorality of an unbalanced budget, but what they would give now for some of that inequity and some of that immorality.


John Whitney Pickersgill: And some of that surplus.
^r* Pearson: We had then an amazing prosperity in this country with inflation held in check. Indeed, for four and one half years after 1952-and before 1952 because of rearmament in this country and the Korean war, prices did go up but I also know and the figures will show it was not nearly as bad as it is now and is going to be unless the policies of the present government change-
^r- Fleming (Eglinlon): How can you say
such things?


Lester Bowles Pearson: But I also know that for four and one half years after 1952 in a period of great and booming national development
66968-9-3i
This meant in the fall session of 1957 a flat refusal to produce a budget or give a national accounting. It meant also that these people who were later to charge us with ignoring and concealing the recession and with responsibility for it. at that time refused to admit that there was anything seriously wrong. They accused us of exaggerating, for instance, the seriousness of the developing unemployment problem, a charge which now rings hollow and purely partisan. They charged us with not recognizing the recession when it did not exist, those men who later could not see it when they were in the middle of it.
It was only after January 1958, a year ago, when they could not escape the danger any longer that they did admit the recession did indeed exist. But they were far more interested then in distorting and exploiting the facts in order to pin responsibility for it on the Liberals than in doing anything effective to meet it. They alternated between blaming us for the trouble and assuring the electorate that the trouble was not there.
Finally, after the election in June of 1958, the Minister of Finance reluctantly gave an honest account of the recession and its origin. But this was after the election. But at that time he did not give nor did the Minister of Labour (Mr. Starr) or the Minister of Trade and Commerce (Mr. Churchill) give, a true picture of business and employment as it was likely to develop in the next year. Indeed, in his budget speech in June of 1958-and not until then, did we get a national accounting-the Minister of Finance had no hesitation, he said, in budgeting for a gross national product of $32 billion or 2 per cent above the previous year and, I quote from his speech, "assuming normal crops and stable prices." And now the minister has the effrontery to claim that his forecast is being confirmed.


Donald Methuen Fleming: Exactly.


Lester Bowles Pearson: He has the effrontery to make this claim although any increase in the gross national product will be due entirely to higher

The Address-Mr. Pearson prices, according to the bureau of statistics. The minister should know that. If prices have gone up by more than 2 per cent and the gross national product has gone up only 2 per cent, where is the increase? "Subject to stable prices," he said. Why does the minister continue to make these statements which have no relation to the economic facts?


Mr, Martin (Essex East):: Wholly irresponsible.


Gordon Minto Churchill: You ran away from it all last year.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Hon. gentlemen opposite can laugh now at the situation I am attempting to describe, but it is one that requires action, not laughter.
As for employment, we propose to give the facts in this regard in so far as they are available to us, and we are not going to be deterred now as we were not deterred last year by the rather childish charges on the part of hon. gentlemen opposite that in doing so we are spreading gloom and doom. We are spreading facts, something we cannot obtain from hon. gentlemen opposite.
Misleading statements have been and are still being made to obscure the seriousness of the picture. If you relied on the speech from the throne for information about this problem you would be justified in concluding that it did not exist. This omission is consistent with the statements and attitudes of members of the government, and fits in with the Prime Minister's extraordinary electoral declaration that as long as he was prime minister no single Canadian would suffer from unemployment.
A year ago, before the election, the country was being told that the situation was much better and soon all would be well. The Prime Minister assured the people of this country last March that in regard to unemployment- and I quote from one of his speeches-"we have gone over the top and are on the way down." But the Minister of Labour in December 1958, speaking in another election- but it was a by-election-could only tell people on that occasion, though he was more optimistic in some of his other references, that by the middle of next year, 1959, "we will be well out of the woods." In other words, last March we were on the way down into the woods, and we are still in the woods and we are waiting for some indication from the government as to how to get out of them.
Here is another before and after contrast in the words of hon. gentlemen opposite, Mr. Speaker. The Minister of Labour again

speaking in Winnipeg on March 5,	1958
said-and I quote from the press account of his speech:
It is our duty to see that no Canadian suffers a single loss of a job this year.
Well, how many Canadians have lost their jobs this year? The minister said the other day -and indeed he repeated the encouragement of some of his colleagues in similar statements; this is certainly quite a retreat from last spring-that the situation would not be worse than last year. If that is the best we can hope from a government which talked so cheerfully a few short months ago about being over the top, and about the crisis of unemployment being over, where is that great billion dollar public works program which, just about a year ago, we were told, was going to put so many people to work. Remember, that was an emergency employment program, not a development program. As such it was put forward to the Canadian people for electoral purposes in eloquent and even evangelistic terms. As such it was criticized by us, as an employment program, as the greatest political hoax in our history, which it was.
Perhaps we will learn in due course exactly how many men have been put to work under this program, especially in the Arctic, by this billion dollar braggadocio. But, said the Minister of Trade and Commerce in his press conference performance a couple of weeks ago:
Employment is up, even if unemployment is up also.
Well, it certainly should be but it is not, at least according to the last figures. This was the question addressed to the minister by the chairman of this panel:
But there are still more Canadians out of jobs, walking the streets today-or at least in November- than there were in November a year ago?
This is taken from a verbatim report of the press conference, and it was taken down as it was reproduced over the air. I continue:


Gordon Minto Churchill: And there were more Canadians employed in November of fifty-eight than in November fifty-seven.
The chairman, who was Mr. Fraser, said:
The number of employed was a bit lower.


Gordon Minto Churchill: Well, we haven't the figures in front of us here and I'll accept your word for it.
We have the figures here, Mr. Speaker, the cold, official figures. During the first eleven months the number of unemployed seeking work, in relation to the total labour force, was on the average 61 per cent higher than in the preceding year, which is pretty close to the forecast of 67 per cent made in the so-called hidden report of last year. What is perhaps even more impressive is the fact

that during the first eleven months of 1958 total employment was lower than in 1957 on the basis of a month to month comparison except in one month, namely April. Indeed, average total employment for the eleven months was 27,200 below what it was in 1957. I suggest that before he goes on the air again the minister get his facts straight. If he wants them we shall be glad to give them to him.
Moreover, Mr. Speaker, the problem of unemployment will continue to be serious during the coming months. In 1958, on the average, about 6.5 per cent of the labour force in this country was unemployed and seeking work. In 1959 our labour force should increase by about 2.5 per cent. This means that on the average approximately 9 per cent of our labour force will be unemployed unless the volume of our national production increases. Therefore a rapid upsurge in that production will be required in 1959 to reduce the volume of unemployment to what is considered a normal level. The economic outlook for 1959 presented by the ministers does not contemplate any such rapid pick-up.
On that basis, therefore, we can expect- no one gets any pleasure out of saying this- that unemployment will remain a serious problem in 1959. Yet the speech from the throne barely mentions the problem; it shows no realization whatsoever of its seriousness as a human as well as an economic problem. Because of the seriousness of this problem I would hope that the Prime Minister would consider interrupting this throne speech debate and producing at once in this house the measures which the government proposes to put forward to deal with this matter. The throne speech debate is important, but it can be postponed so that we can receive at once, without delay, the government's proposals to deal with this serious and continuing problem and all the matters that will be related to it.
So much for the unemployment aspect of this problem. What about the parallel danger of inflation, which was also barely mentioned in the speech from the throne? That danger, Mr. Speaker, with all that it means to the welfare of every man and woman in this country, is becoming more and more serious. The consumer price index rose from an average of 121.9 in 1957 to 126.2 in December of 1958, a 3.5 per cent increase, not in a time of boom and development but in a time of recession.
In one year, Mr. Speaker, the old age pensioners have lost about $2 of the $9 increase granted them by this government, and soon that increase will all be gone. I can see the Prime Minister scribbling away.
The Address-Mr. Pearson I know what he is going to say. He is going to say, "You did not grant them $9; you gave them $6." The Prime Minister gave them $9, but they are going to lose it all before the next election.


Michael Starr: Is that a hope on your part?


Lester Bowles Pearson: Certainly it is not a hope, but it is a calculation based on facts, and it is a warning to the government to do something about it.


Michael Starr: You said it with glee.


Lester Bowles Pearson: If my hon. friend and his government will do something about the cost of living then perhaps the possibility will be avoided. If they do not, in the light of what happened last year, and if that continues, what I have suggested unfortunately may come to pass, will come to pass.


Michael Starr: Why do you not offer something constructive, then?


Lester Bowles Pearson: That is your job.


Michael Starr: You have not got anything; you did not have anything in 1954 and in 1955 and you have nothing today.


Lester Bowles Pearson: I would remind my hon. friend that he now belongs to the government, and under the British system of parliamentary responsibility the government of the day is responsible for making proposals to deal with this matter. I, Mr. Speaker, am pointing out the facts of the situation, which the members of the government apparently do not understand, in the hope that if they get possession of the facts perhaps they will do something about correcting it.


Mr. Green:: Have you any proposals?


Lester Bowles Pearson: Have you none?


Michael Starr: You are just as empty as you
ever were.


Lester Bowles Pearson: Mr. Speaker, in the face of
this serious situation the government seems quite unable to decide what to do or even to make up its mind which is the greater danger, inflation or recession. The Minister of Trade and Commerce (Mr. Churchill), however-and I must be fair to him-has certainly made up his mind. He saw fit to make this quite extraordinary statement, and I refer it to the Minister of Labour (Mr. Starr) too. He will find it interesting. Over the air on January 8 in the particular program I have already mentioned the Minister of Trade and Commerce was asked this question by the chairman of the press conference program:
Now, which of these two, unemployment or inflation, do you regard as being the greatest threat to our economy during 1959?
38	HOUSE OF
The Address-Mr. Pearson
The minister replied:
I don't think either will be a threat to our economy in 1959.


Gordon Minto Churchill: I am an optimist.


Lester Bowles Pearson: The minister certainly is an
optimist. The Minister of Finance (Mr. Fleming), in his speech in Toronto on January 5, 1955, took about the same attitude. He did, of course, mention the fear of inflation but he went on to say, and I quote from the text of his speech:
Inflation has been defined as "too many dollars chasing too few goods."
In the present circumstances, in the light of the experience of recent years, I wonder how many of his experts in the Department of Finance would agree with that as a definition of inflation?


Donald Methuen Fleming: Go on. In fairness, read the rest of it.


Lester Bowles Pearson: I am going to read it. The
minister went on to say:
There is, however, certainly no scarcity of goods in Canada. The problem with respect to most products and commodities is that we have surpluses of them.
That is right. He continued:
One would also expect to find inflation reflected in the wholesale price index. However, the general wholesale price index is the same as it was a year ago.
That is what the minister said. If he has his speech before him and will look at it he will find those words: "the general wholesale price index is the same as it was a year ago". Well, once again the minister is out in his mathematics and his economic calculations.


Donald Methuen Fleming: Would the hon.
gentleman read the next sentence?


Lester Bowles Pearson: I am quoting now from
bureau of statistics figures.


Donald Methuen Fleming: Will you read the next sentence?


Lester Bowles Pearson: I will be glad if the minister will read the next sentence if he has the text of his speech.


Donald Methuen Fleming: The next sentence, referring to the present general wholesale price index, was:
It is also 16 points or 7 per cent below the 1951 figure.
That was when my hon. friend was in power.


Lester Bowles Pearson: I am glad to have that on the record but the minister's statement that the general wholesale price index is the same as it was a year ago still stands. That is the


statement he made and it has nothing to do with 1951. That statement is contrary to the facts. In December, 1957, according to the bureau of statistics figures, the index was 226.1 and in December, 1958, it was 229.1. Moreover, between October and November, 1958, it increased from 226.9 to 228.5. In announcing that increase the bureau of statistics said, and I quote from its report, not the minister's speech, that it was "the largest increase between these two months since 1950." Surely that is enough to make my words quite accurate that the minister's statement was inaccurate and misleading.
The Minister of Finance and the Minister of Trade and Commerce may not know it, but during this period of abnormal unemployment and of recession there is more and more anxiety being displayed and less and less confidence being shown in the stability of our dollar. Listen to what the president of the Royal Bank had to say on this point a couple of weeks ago. His viewpoint, which I suggest is shared by practically all non-political experts on this matter, is certainly not prejudiced against the government. He had this to say:
This chronic inflation is the greatest single threat to Canada's economic development.
I can hear hon. members opposite say, what would you have done about it? What would you have done about these things had you been in office? What would you have done about recession, unemployment and inflationary dangers? In 1945, Mr. Speaker, we made public a white paper on trade and unemployment. That white paper laid down the principles of economic and fiscal policy by which we were guided during the years when we were in office and which we followed with great success and good results. I ask if there is anything comparable to that guide from the present government.
Under the policy in that white paper which we would have followed-indeed, we mentioned this during the election campaign- there would have been a special budget introduced in September, 1957, with a planned and co-ordinated program of tax reduction to deal with the recession in its earliest stages, following the anti-inflationary measures that we had taken previously and which were condemned in such violent terms by hon. gentlemen opposite.
Perhaps the foremost United States economic expert in this field-I am sure the minister is familiar with his writings-is Dr. Arthur Burns. He has pointed out recently that government action in a situation such as that which we faced in the autumn of 1957 should be quick, co-ordinated, confidence-inspiring, flexible and adequate. These criteria

do not apply to anything that has been done by the government in this connection.


Donald Methuen Fleming: Oh, such rot!


Lester Bowles Pearson: The Minister of Finance does not like it. He will have the opportunity to get up in this debate and challenge the soundness of my conclusions and the soundness of the conclusions I am putting on the record from non-political economic and financial experts. Dr. Burns also stated-and this confirms the wisdom of the approach our party advocated-in an article he wrote in the Reporter, which is also included in a book he wrote entitled "Prosperity Without Inflation" -if my hon. friend has not read he should- that:
The emphasis at the start of a recession should ordinarily be on the easing of credit conditions, later on tax reductions for both individuals and businesses, still later on re-scheduling of federal expenditure within totals set by long-term considerations and. only as a last resort, on large public works programs.
Elaborating on this in his article he went on to say:
It may be useful to observe that a tax reduction would avoid some of the difficulties that often go with a public spending program. Both involve, of course, a deficit but it can make a considerable difference to our economy how the deficit is achieved. A broadly based tax reduction is likely to have prompt effects on private spending during a recession, while the effects of public spending may not come until the recession is over.
The president of the Royal Bank, whom I have already quoted, agreed with this and by inference condemned, as we condemn, the government's approach to recession and inflation when he said in his January statement:
Last year, as in previous recession years and while the economy was still on the down grade, I urged tax cuts by government and price cuts by business. Instead of tax cuts last year which would have encouraged business activity while reducing pressure on prices, we got increased government spending. Instead of an immediate deficit last year, timed to coincide with the depth of the cycle, we find ourselves today with a delayed deficit which has timed itself to coincide with the present recovery and the emergence of a new inflationary potential.
Mr. Speaker, surely that is the answer to those who say that there would have been no difference between our approach to this problem a year and a half ago and that taken by the government. Those are the principles on which we would have operated and they would have been far more effective in the situation, I believe, than anything the government has tried to do. Anti-recessionary policy based on early tax reductions can be quickly adapted to changing conditions and altered when necessary with very little longterm inflationary effect when the recession ends. It
The Address

Mr. Pearson puts the government in a position to balance its budget or to make a surplus as soon as conditions improve. It maintains confidence and minimizes the danger of inflation.
What did this government do? Had they any consistent views or principles or policies to deal with the situation? I suggest, Mr. Speaker, that they had not.
Having finally recognized, or some of them having finally recognized the dual and serious nature of the economic problems, they have tried to solve it in a confused, piecemeal, unsteady manner through policies economically unwise but politically, they hoped, popular. This has resulted, not in the end of abnormal unemployment-far from it-but in placing an inflationary time bomb right in the midst of our national economy at the very time when they admit-or some of them do-that inflationary dangers are growing. To the extent that they have consciously followed anti-recession policy, it has been based on longterm permanent expenditures rather than tax cuts, planned and co-ordinated at the early stages of the recession which, as the recession lifted, could have been modified or made to apply retroactively without changing current tax rates.
This would have been sound and sensible economic and financial policy. The government, however, preferred a political approach with unco-ordinated public expenditures which when added up reached a much higher figure than any expert would have said was wise-including, I believe, a lot of experts in the minister's department-and which cannot now be altered, once inflation replaces recession as the major danger. No wonder the government is divided and floundering, wondering which course to follow and meanwhile exhorting everybody else to hold the line. As Mr. Bruce Hutchison pointed out in the current edition of Maclean's magazine, and I quote:
It is vain for the government to exhort the nation to safe courses, ridiculous for it to tell everybody else to 'hold the line' so long as it is breaking the line itself and generating the very inflation which it solemnly deplores.
So, we ask ourselves that question. Is the policy of this government generating that kind of inflation?
What is the prospect? The prospect is for increasing government expenditures with unemployment still high; deficits not only for this year but for years ahead unless- and this is how the government can get out of it-taxation is sharply increased; expenditures greatly reduced; or inflation is allowed to take its course. Now, there it is. While the government took the decision in the fall of 1957 to increase government expenditures, federal outlays during the fiscal year ended

The Address-Mr. Pearson March, 1958 were not greatly in excess of the previous year under the minister's predecessor. The estimate given by Mr. Harris in 1957 amounted to $5,018 million and the preliminary figures given by the Minister of Finance for 1958 amounted to $5,086 million, and that represents an increase of only 1.2 per cent, in spite of the fact at that time we were in the middle of our recession.
I think, therefore, we are justified in saying that even in the application of their own theories for anti-recessional and non-inflationary policies they were not successful because they acted without vigour at the right time, and that the approach they made at that time along lines which they advocated themselves

and which we still think were wrong lines-meant delayed action. The consequences of this delayed action are now facing us in terms of inflationary pressure.
The Minister of Finance having announced last June in his budget speech that the recession was over, which was not the case, and having recognized last June as I have stated the danger of inflation, and having begun to look for a new course, is now faced as a result of that budget with budgetary expenditures 8.1 per cent higher than in 1957-58 or a minimum of $5,500 million, having regard to that defence budgetary account of which he took advantage last year. Federal cash expenditures, which include non-budgetary disbursements and charges, are expected to increase by 17.3 per cent to a figure of $6,640 million. This is a greater increase than is planned for in the United States, where the increase planned is of the order of 13 per cent. We will have a deficit of hundreds of millions. The minister says he accepts a budgetary deficit of somewhere around $700 million, but there are a lot of people who think it may be more than that. Whatever it may be, it will be hundreds of millions of dollars, and the result of this is that there is now decreasing confidence in the country, in the stability of our dollar, and this means danger. Steps should be taken to remove that danger.
One indication of that fact is contained in the figures for the holding of government bonds by the public. At the end of the year 1958 the Canadian investing public held less government bonds than at the beginning, $7,953 million as against $8,628 million. This occurred in spite of all the exhortations of hon. gentlemen opposite. Far too much money had to be borrowed from the banks, therefore, to meet the deficits which were piling up every month and that has added, as the minister knows quite well, to the inflationary pressures on our economy.


The financial editor of the Montreal Gazette, no member of a political opposition, put the position clearly last autumn when he wrote that the evidence points to a disturbing conclusion that the bond buyer no longer has any confidence in the government. In their preference for corporation bonds, investors are saying in effect that they no longer have confidence in the government to redeem its commitments. The integrity of Canada's credit has never been questioned before as it is being questioned now.


Donald Methuen Fleming: Does my hon. friend share that view?


Lester Bowles Pearson: I think there is a real danger-


Donald Methuen Fleming: Will my hon. friend tell me whether he shares the view expressed in that article?


Lester Bowles Pearson: I am giving my view in this speech and the words will be on record in Hansard.


Donald Methuen Fleming: You dodged the question.


Lester Bowles Pearson: I say, Mr. Speaker, that these are impressive and serious words coming from the editor of a publication which has no reason to adopt anything but a friendly attitude toward the government in a matter of this kind. If that kind of evidence is available, is it not well that it should be made clear so the government will do something about it and so that next year this particular gentleman may be able to write something else?
But, says the minister, look at our amazingly successful conversion operation. Well, I have looked at it, as many others have. I have looked at it long and hard, and with others on this side I shall have something to say about it later as the session develops. I shall content myself with saying now that it certainly was not the dazzling success the minister thinks it was.


Donald Methuen Fleming: What are you waiting for? Why don't you say what you have to say about it now?


Lester Bowles Pearson: The minister says, why don't I deal with it now? The fact is I am trying to deal with the inadequacies, the sins of omission and commission of this government, and if I deal with all of them at this time I shall have to go on for about a week. Furthermore, some of my friends on this side of the house would like to take part in this debate. They will have something to say on the conversion loan so that my hon. friend will not be disappointed.


Donald Methuen Fleming: The Leader of the Opposition pointed at the C.C.F.


Lester Bowles Pearson: Some of my friends on
my right do not belong to the C.C.F. I have no doubt also that the C.C.F. members will have something to say about it. In this respect we may find ourselves in some measure of agreement.
The hard fact is that government credit has fallen, financially-and these are my views; the minister asked for them-as well as politically. If the government does not take strong and steady action soon-fiscal action primarily-to restore the position, to renew and strengthen faith in our financial future, we may well reach a very dangerous situation, a "crisis of confidence", with rising prices, rising costs, rising deficits and, along with these, rising unemployment. At present the only thing going down is the credit and the prestige of the government which promised its way into power and now is wondering how to offset the deficit which has followed its promises and policies by the most painless fiscal means.
The Canadian people and the Canadian parliament have the right to know in what direction the government is moving on the economic front. In order to clear up the confusion which exists in the country at the present time, ministers should stop making the kind of contradictory and irresponsible statements which they have been making up till now and which indeed destroy public confidence.
Moreover, the government must decide to live up to its responsibilities for more than is indicated in the speech from the throne. As I have said previously, the speech from the throne hardly mentions the problem of unemployment and makes only a vague reference to the steps that might have to be taken at some date in the future to preserve the value of our currency. The only inference that can be drawn from this fact is that according to the government as well as the Minister of Trade and Commerce in particular Canadians are not going to suffer either from unemployment or from inflation in 1959. That is certainly not a realistic assessment of the current economic situation.
The responsibility of the government, however, is not limited to the presentation of a proper and serious appraisal of present economic conditions. That is only part of its responsibility. We are also entitled to get an authoritative statement on the broad policy principles that the government intends to apply in order to achieve a greater degree of economic stability. Perhaps the Prime Minister (Mr. Diefenbaker) will favour us with that kind of statement when he rises to take part in this debate.
41
The Address-Mr. Pearson
On September 4, 1958, in this house I urged the Minister of Finance to issue such a statement which would have greatly contributed, I would have hoped, to the restoration of public confidence. The minister did not see fit to do anything like that. Perhaps the Prime Minister will now do so. Surely this is the time for him to put his vision to work. Labour leaders, the financial community, businessmen and the whole Canadian people have the right to expect from him, and now, a formal declaration on employment and prices. What are the major objectives that he and his government are trying to achieve in the field of economic stability? Are they in favour of full employment? Are they determined to preserve the value of our dollar, not only in some distant future but now? How does the Prime Minister intend to achieve those objectives? Is he still in favour of increasing longterm government expenditures in order to fight unemployment? What has he in mind to restore the confidence of the public in the value of government bonds? Is he prepared when inflationary pressures are threatening to accept monetary and credit restrictions, higher interest rates, budgetary surpluses and higher taxation? These are questions which I am putting forward to the government and which I think are justified by the seriousness of the situation. I am hoping that when the Prime Minister rises to speak he will answer them.
The Prime Minister owes to the Canadian public immediate and specific answers to these questions. He surely would be the last person to deny that there is at the present time a deep concern in our country over these basic issues. He cannot delay his answers on behalf of his government without contributing to the worsening of public confidence; and once that confidence is destroyed, it will be extremely difficult indeed to restore it. In other words, Mr. Speaker, I urge the Prime Minister-and I want to emphasize this matter in the strongest way possible-to make now a formal declaration on the economic rights and responsibilities of the Canadian people at this time and, more than that -because without this such a declaration would not be of any great importance-on what they can expect and are entitled to get from their government in terms of employment and price policies. The Prime Minister cannot escape that most important responsibility because no one else now can speak with authority for his government. I suggest that it is up to him to speak.
Closely related to what I have been saying-


Donald Methuen Fleming: Before my hon. friend deals with another subject would he permit a question?

The Address-Mr. Pearson


Lester Bowles Pearson: Yes.


Donald Methuen Fleming: Would he be prepared to answer the question to which he alluded during the course of his remarks as applying to my colleague? Which in his view is the more serious problem facing the Canadian people today, unemployment or inflation?


Lester Bowles Pearson: Mr. Speaker, that is a very easy question to answer when he introduced it by referring to my reference to his colleague. His colleague indeed answered it. His colleague said that neither would be a threat to the Canadian economy in 1959. I say that both will be a threat to the Canadian economy. Of course, it is quite ridiculous to make that kind of a mathematical comparison as to which is the more serious, and say one is 57 per cent and one is 43 per cent.


Donald Methuen Fleming: Then why did my hon. friend raise it?


Lester Bowles Pearson: The Minister of Finance ought to know that both are serious.


Gordon Minto Churchill: You did not approve of the loaded question I was asked.


John Whitney Pickersgill: The minister said neither was important.


Gordon Minto Churchill: I did not say that neither was important.


John Whitney Pickersgill: Yes; you did.


Lester Bowles Pearson: The Minister of Trade and Commerce said that I misquoted him.


Gordon Minto Churchill: No, I did not say that; I said you did not approve of that loaded question.


Lester Bowles Pearson: We will let the matter stand at that. Now may I say a few words about the trade position.


Donald Methuen Fleming: Does my hon. friend not think his treatment of the question is rather misleading in view of his answer?


Paul Joseph James Martin: An amazing
question from the Minister of Finance.


Lester Bowles Pearson: My hon. friend will have an opportunity to take part in this debate.
On the matter of trade, may I say this. It is quite true that exports are holding up and that is an encouraging feature in the present situation. For the first eleven months exports have, of course, declined but the decline was only about $5 million. But one of the important things about this matter, Mr. Speaker, is that we cannot maintain prosperity and employment in this country on a basis of stability in exports. They must keep going up. A decline of $5 million is only a small [Mr. Fleming (Eglinton).l
amount but it is a decline. Exports must expand if we are to maintain economic prosperity in this country.
The other thing about this figure-and it is worth putting on the record-is that while exports have held up, the nature of the statistics with regard to the export trade will show that if it had not been for a few commodities we would have been in trouble there. The most important commodity perhaps is uranium where there was in 1958 over 1957 an increase of exports of $132 million, practically all to the United States. This was because of an arrangement, a contract, made by the previous government with the United States government under which uranium exports are going into that country. That arrangement comes to an end if it is not renewed and the option taken up in 1962, I think it is. I certainly hope that this will be done; I know the government is doing everything it can to have the option taken up.
Couple the increase in cattle exports, which is about $50 million, with the increase in wheat sales due in substantial part to the fact that the Canadian taxpayer financed more wheat exports this year than ever before in history, and the value of aircraft exported which increased from $21 million in 1957 to $100 million in 1958, due again, I suppose-and the minister will correct me if I am wrong-largely to the Mutual Aid shipments of aircraft to Europe, which is also being financed not by the importer but by the Canadian taxpayer, and one finds that these sources alone which I have mentioned showed an increase of $330 million in our export trade, and we would be in a bad way without this increase.
The Minister of Finance and the Minister of Trade and Commerce have been boasting in recent statements about the decline in our trade deficit in 1958, especially with the United States. They have not given any particular reason for this decline, or explained how it was brought about, and I will be glad to repair that omission now. Without such an explanation many people relying on election promises will undoubtedly have thought that this reduction in our unfavourable balance of trade with the United States was due to government policy. The real explanation, of course, is quite clear. In the first place, the reduction in our trade deficit is not due to an expanding trade; it is due to the fact that our imports went down far more than our exports. Our imports dropped for the first nine months of 1958-and I understand from figures that came out today which brought the period up to 11 months that the picture is not changed-show that the import drop is 11.3 per cent, whereas the export drop

was very small. Our unfavourable balance with the United States was reduced because, and only because of that fact.
It is interesting to see how this reduction in imports is distributed among our various markets. According to the dominion bureau of statistics, imports from the United States went down by almost 15 per cent. Could that possibly be the diversion, the ill-starred and ill-begotten diversion, promised once by the Prime Minister? I do not think so, as the figures will show. During the third quarter of 1958 imports from the United Kingdom declined by 7.6 per cent and for the first nine months of that year they were 1 per cent lower than in 1957. Imports from the commonwealth fell by about 15 per cent for the first nine months of 1958 and by 20.8 per cent in the third quarter of that year. That is strange. We diverted 15 per cent of our imports from the United States. They did not go to the commonwealth, because the commonwealth countries received almost 15 per cent less-to be exact 14.4 per cent.
Where did our imports increase most? From Arabia and from Japan-petroleum from Arabia and textiles from Japan. That is the only group of countries which showed an increase in sales to Canada, and the improvement in their position is very impressive indeed. Was this the direction-to Japan and Arabia-that the so-called diversion was supposed to take? And while we lost 15 per cent of our imports from the United States, which helped to reduce our unfavourable balance, did we receive more imports from the United Kingdom? The answer is: no. But did the United States? The figures which came out a week or so ago showed that United States imports from the United Kingdom increased by about 15 per cent. What a strange result of the diversion of trade policy of the present government.
I think all this justifies my saying that the trade policy of the government, like other aspects of its policy, is wavering and uncertain and in no respect is this better shown than in the way this 15 per cent figure has worked itself out. It has also shown itself in the government's tariff policy. During the last session the government moved in the direction of greater protection. Some tariff increases were effected, especially on wool products, our main item from the United Kingdom, to make clear, no doubt that the diversion policy had been abandoned. Moreover, substantial amendments to the Customs Act were made which gave wide arbitrary powers to the cabinet and to the Minister of National Revenue to establish and increase the valuation of imported goods for duty purposes.
The Address-Mr. Pearson
The United States government, we know now, vigorously and formally protested against this legislation. Its first note of June 26th, as we know now, was not even acknowledged. Its second note of protest, dated September 3, was not answered until October 24. In the debate in the House of Commons on this very subject last September 3, the minister had before him, I presume, one note or two notes of protest from the United States government bearing on this very piece of legislation.


Mr. Nowlan:: The minister had no notes before him when this was brought up.


Mr. Mcllraiih:: His colleagues had.


George Clyde Nowlan: His colleagues had not either.


Lester Bowles Pearson: Mr. Speaker, these notes have since been published. One is dated June 26 and the other is dated September 3 and they both deal with anti-dumping legislation which the Minister of National Revenue brought before this House of Commons. The minister says now that he did not have those notes of protest before him. Surely a government which, according to its own words, is so careful about its relations with the United States, so insistent on consultation on questions of interest between the two countries, especially with regard to trade questions, should get around to answering a United States note of this importance within four months; and surely this government could refer such notes to the minister who is introducing legislation in the House of Commons dealing with this subject. But now the minister says he never had the note. I was going to complain because he had not put it before the house when the bill was before us, but I understand now that he did not know.
In the reply which it eventually made in October, this government gave a clear undertaking to the United States, four months later, after the bill had passed. I wonder what would have happened if the United States had treated us like that down in Washington. The government gave a clear undertaking that the new section 38 of the Customs Act would not be used against the United States. But how is it to be used? Is there to be discrimination in the application of that particular clause? Is there to be discrimination against the commonwealth in its application? It is not to be used against the United States. But if it is to be used against anybody else, then there is discrimination.
This brings me to the question of the commonwealth conference held last September in Montreal. This conference, I might interject at this point, was one of a number of commonwealth conferences held since

The Address-Mr. Pearson world war II but this was not on the prime ministerial level. There was nothing unique about it in its assembling or in its results. It included in its communique the following paragraph which I know the house will listen to with great interest because they may have forgotten it, and it also appears in the speech from the throne:
"A large measure of agreement was reached on trade and economic matters. This has lead to far-reaching decisions on the part of the United Kingdom and other countries to restore convertibility of their currencies and to remove restrictions on imports.
In other words, it was the commonwealth conference in Montreal that impelled the French government, the Belgian government, the German government and the governments of various other countries to restore convertibility. That, Mr. Speaker is another grossly misleading and inaccurate statement.
The conference in Montreal was, of course, a useful meeting as commonwealth meetings always are. For one thing, as the chairman is reported to have said, "It is useful that we ministers have got to know one another." When we were in power we had more commonwealth conferences including prime ministerial conferences in a period of ten years than were ever held in all our previous history.


Donald Methuen Fleming: And you dragged your feet at every one of them.


Gordon Minto Churchill: You scarcely mentioned the commonwealth.


Lester Bowles Pearson: While this recent conference was a very useful one indeed it had about as much to do with recent European convertibility developments as had the revolution in Cuba. If this conference-in the words of the speech from the throne-"led to" recent European convertibility moves why did the Canadian-United States conference communique issued on January 7, only a couple of weeks ago-a little more honest in its assessment of the commonwealth conference in its assessment of the relationship of the Montreal conference to convertibility-merely state that the Montreal agreement foreshadowed moves toward convertibility which is a very different thing from saying it led to convertibility developments.
We were told for months before the commonwealth conference assembled that it was to be a great commonwealth trade meeting.


Donald Methuen Fleming: A trade and economic conference.


Lester Bowles Pearson: It was to be a great commonwealth trade conference primarily for the purpose of expanding commonwealth trade.


John Whitney Pickersgill: And recovering markets.
[Mr. Pearson.!


Lester Bowles Pearson: Yes, and for the purpose of recovering markets that had been lost after ten years during which export figures in Canada reached the highest peak in the history of this country. As a result of this meeting these markets were to be recovered and commonwealth trade was to be expanded.


Donald Methuen Fleming: It is.


Lester Bowles Pearson: At this particular meeting, in fact, very little was accomplished in the field of trade. As a commonwealth problem, according to the reports, it seems to have been given extremely inadequate discussion. Certainly the British made no effort at this meeting to repeat their earlier free trade offer. They had been bitten once and were shy a second time. I know that when the Prime Minister or the Minister of Finance speak they will probably point out that some United Kingdom import controls were removed with respect to newsprint, canned salmon and machinery from all dollar countries. But as the Ottawa correspondent of the Financial Post pointed out at the time, September 27:
Undoubtedly a good thing for Canada and the United States and Britain; but no bold leap into the unknown. It was more like tidying up the books since salmon quota had been set high at $4,500,000 and licenses for newsprint and most machinery had not been refused for some time.
And what did the Canadian delegation do at this conference to show its devotion to the removal of trade barriers? It promised not to increase the British preferential tariff rates on many products which were bound under GATT procedures. Moreover, and I consider this most important, it is reported that the Canadian government have undertaken not to use the new anti-dumping clauses in the Customs Act against British products although the Prime Minister refused to make such an assurance public because of the implications it would have in the United States. If this report is inaccurate perhaps the Prime Minister will take this opportunity of denying it. If it is true that the British have been given any assurance whatever that the anti-dumping provisions will not be used against them then the amendments we made to the Customs Act last session mean nothing at all because with respect to the recent meeting between United States and Canadian cabinet ministers held a couple of weeks ago the following paragraph appeared in the communique:
The United States representatives set out the grounds for their concern as to the amendments made last year in the Canadian Customs Act. They were assured by the Canadian ministers that it is not intended to apply the new provisions of the act in either a discriminatory or an arbitrary manner and that consultation would be held wherever feasible before applying the new provisions.

If these provisions are not to be applied against the British and if they are not to be applied against the United States in a discriminatory way, they cannot be applied against any one.


Donald Methuen Fleming: That is silly.
Why do you go on building up straw men and knocking them down?


Lester Bowles Pearson: Will the Minister of Finance rise to his feet and deny that any arrangement, of any kind, formal or informal, was reached with the United Kingdom at this conference which affected the application of the provisions of the Customs Act against the United Kingdom? We are interested in knowing if any assurance, formal or informal, was given concerning the application of this law.


Donald Methuen Fleming: Mr. Speaker, of course there never was any thought at any time of giving discriminatory or arbitrary application to the provisions that were introduced by way of amendment last session. That was stated in this house at the time by my colleague, the Minister of National Revenue (Mr. Nowlan) and if it had not been for misleading statements uttered in this house by the Leader of the Opposition (Mr. Pearson) it never would have entered into the minds of the ministers of any other government that those provisions would have been given or would have been capable of being given any arbitrary or discriminatory application.


Lester Bowles Pearson: That is a most interesting statement but it has nothing whatever to do with my question. I will repeat my question and perhaps the minister can set our minds at rest on this matter. I asked him whether at that conference in Montreal through a letter, a conversation, a note or in any other way formal or informal, any assurance or undertaking was given to the British government that the anti-dumping provisions of this act would not be applied against them? I am not talking about discrimination. I am talking about the application of the provisions.


Mr. Crestohl:: Especially section 38.


Donald Methuen Fleming: Mr. Speaker, there was not and could not be any assurance given to anybody that the provisions of the act would not be applied according to their terms. They were not directed against any country. They are not to be applied against any one country, nor is any country absolved from the application of them in any case that falls within the terms of the act. It is perfectly clear.


Lester Bowles Pearson: I would hope that in view of the interest that has been created in this
The Address-Mr. Pearson matter the minister at a very early opportunity would table any communications that might exist between himself and any member of the British delegation. He would remove all doubts by tabling any documents that might exist. I am sure he would be able to obtain permission from his opposite numbers in London for this purpose.
I can conclude my remarks on the subject of trade by saying the government started with a policy of diversion, and then moved in the direction of a policy of protection and is now reaching toward a policy of confusion. As for us, we remain firm and faithful to the one trade policy which has been Liberal from the beginning, a policy of expansion.


Gordon Minto Churchill: How many more sections have you?


Lester Bowles Pearson: I have a great deal more; I am sorry, but after all, if the ministers will make those contradictory and confusing statements we must take advantage of the very first opportunity we have to try to clear the air.


Gordon Minto Churchill: You are not being very successful.


Lester Bowles Pearson: I am now coming to a matter where the air certainly needs to be cleared, namely defence. Where do we stand on this question? Nobody knows. However, we will be told before March 31 whether we are to proceed with the CF-105 project. That is all we know. Before March 31 we will be told. Let us look into this Mr. Speaker. The decision to initiate this project was made some years ago by the previous government. According to the Prime Minister's statement-it was a government statement but it was issued in the name of the Prime Minister; most government statements are-


George James McIlraith: One man government.


Lester Bowles Pearson: According to the Prime Minister's statement of last September, and I quote from it:
Since the project began, revolutionary changes have taken place.
He meant, of course, changes in defence strategy and concepts. That is true. Furthermore, the previous government, when it decided to initiate this project, decided also to review it every six months and to decide, in the light of that review, whether to proceed further. So far as we know-in fact, it is quite obvious-there has been no such decision-if there has been we have not heard about it-one way or the other by the present government in the last 18 months. Perhaps I should not be sure about this because the confusion and the contradictory statements of spokesmen for the government have been

The Address-Mr. Pearson such that no one knows where the matter stands. I call to witness as impressive evidence of this confusion and, indeed, as one cause of it, the statements of the Minister of National Defence (Mr. Pearkes) himself. Before the estimates committee of this house on July 4, as reported on page 325 of the minutes of that committee, the minister said:
There are. however, important factors necessitating the continued use of manned interceptors in the air defence system for many years, indeed-*
And I repeat this:
-indeed for as far as we can see into the future.
Apparently the minister could not see as far as September. Certainly at that time in July before the committee the minister visualized the Royal Canadian Air Force interceptor squadrons on this continent being re-equipped with Arrows, when he said, as reported at page 338 of the minutes of the estimates committee on July 7:
Some time this fall-
That was last fall. I continue:
Some time this fall-
Not March 31, 1959-
-the government must reach a decision as to whether or not it is going to go ahead with the CF-105 or look elsewhere for the type of aircraft which can carry out the function which the CF-105 was developed to carry out. That decision will have to be taken some time this fall.
That is when it should have been taken. I go on:
I am convinced, in my own mind, that we are still faced with the threat of the manned bomber, and that with the developments which we believe the Russians are doing in perfecting, or improving, their manned bombers-we understand that the Russians are building manned bombers-an aircraft of the CF-105 type will be required.
Having just said, I think the day before, as far as he could see into the future it would be required, then for some reason or other the minister's timing and his views both changed. As far as timing is concerned all we know is that nothing has happened. As far as his views are concerned, according to the Vancouver Province, the minister told an audience in Chilliwack on October 17-I will be glad to send him the newspaper reference if he would care to have it-that the CF-105 

this was only October-had outlived its usefulness before it was fully developed.
There was, however, another double reverse play on November 25 when the minister told reporters that he agreed with the conclusion of Air Marshal Slemon that the air force would require a manned interceptor for some years to come. That could only mean the CF-105 or an United States machine for which the Canadian plane would be scrapped, and the minister indicated at that time he did
not think very much of that alternative. Perhaps the minister's change of heart in October and his confusion in the matter go back to the Prime Minister's statement of September 23, which certainly made the minister's observations in July to the parliamentary committee meaningless and misleading. I suggest the Prime Minister have a good look at it.
On this September date the Prime Minister issued an important, if somewhat cloudy, statement on the revision of the Canadian air defence program. Included in that statement was this paragraph:
The government has concluded that missiles should be introduced into the Canadian air defence system and that the number of supersonic interceptor aircraft required for the R.C.A.F. air defence command will be substantially less than could have been foreseen a few years ago,-
And then, these words:
-if in fact such aircraft will be required at all in the 1960's, in view of the rapid strides being made in missiles by both the United States and the U.S.S.R.
The Prime Minister in September said that it was doubtful whether those aircraft will be required at all in the 1960's. The Minister of National Defence told a committee of the House of Commons that they will be required in the future as far as he could see. The Prime Minister's statement went on to say that the government would not put the CF-105 into production at this time but would not discontinue its development-and I quote:
-with the international outlook as uncertain and tense as it is.
It is very hard indeed to believe that this current tense international situation was responsible for such an ambiguous and merely delaying decision, especially as, according to the Prime Minister:
Even under the best of circumstances (the CF-105) will not be available for effective use in squadrons until late in 1961.
That same September statement announced the termination of the contracts for the development of the fire control system and the missile system which were to be part of the CF-105, and announced their replacement by United States equipment.
This September statement, though ambiguous, was widely and naturally interpreted as the end of the CF-105, a lingering death, if you like, but a death. It caused uncertainty, bewilderment, disappointment and the loss of some experts to the United States of America. It also caused the deputy commander of NORAD, an air marshal of the Royal Canadian Air Force, to intervene in November in the matter, in vigorous public defence of the CF-105, and take strong issue with the policy that had certainly been read into the government statement. I wonder what would have

happened to that official of the Canadian government if he had been an official of the Department of Mines and Technical Surveys and had been criticizing the United States government's choice of a missile. He would have been reprimanded, but not so in this case. Air Marshal Slemon's statement was widely interpreted as a contradiction of government defence policy on this matter, and that is to us a reasonable interpretation to come to. The government, or at least the Minister of National Defence, seemed at least to welcome the statement. Confusion is now worse than ever, and therefore this plane, which the minister stated in October had outlived its usefulness, basing his observations no doubt on the Prime Minister's statement, suddenly became something else again.
We were again told by the minister in November that a manned interceptor would be required for years to come. So A. V. Roe and Company took heart and the workers at A. V. Roe and Company took heart even though another part of the minister's statement on the same day when he was talking to the press emphasized that there was no change from the policy in the September statement made by the Prime Minister which was interpreted as meaning the end of the CF-105.
Mr. Speaker, no wonder people wondered what was going on and were baffled by all this confusion in a matter of such vital importance. What then should be done about defence and particularly about the decision, the implications of which will be so far-reaching, to go ahead with or to abandon the CF-105, a decision which has strategic, technological, economic and the broadest political implications, especially in the bearing it will have on our relations with the United States of America and on the future of our aircraft industry? The sole responsibility for the policy decision in this matter, as in defence policy generally, remains in the hands of the government, and they should have met it before now. That is the tradition of British parliamentary government and we on this side do not wish, as we did not wish when we were in office, to depart from it in favour of making policies through parliamentary committees.
Nonetheless, decisions made by the government have to be submitted to parliament for approval or disapproval. Every member has his own responsibility in this regard and, not least, members of the opposition. This is especially the case when we face decisions of such far-reaching importance as those which are facing us now in the realm of defence policy. Surely, therefore, it is desirable, surely it is essential that we
The Address-Mr. Pearson should be in possession of every fact that bears on this matter, subject, of course, to the overriding claims of security. We have had little or no information from the government up to the present but the press is full of statements from officers, active and retired, from industries and unions and from experts and non-experts dealing with this matter. The confusion that has resulted has not been cleared but, as I said, has even been confounded by official statements by spokesmen of the government.
Therefore I suggest to the government that there should be set up as soon as possible a special but small parliamentary committee-it could be a subcommittee of the committee on estimates; perhaps that would be better-to give this question the kind of searching and complete examination which it has not yet received, and give it immediately. I know that the minister would have to give up a good deal of time to a committee or subcommittee of this kind because he is the one on whom we would have to rely most for information and views, although other witnesses should be available as well. This, Mr. Speaker, would not be a delaying action because the decision is not going to be given to us until March 31. When this decision is made, surely members of the house, before they are called on to consider this matter with all its far-reaching implications and eventually approve or disapprove the decision, should have possession of those facts, and surely the best way to get possession of them is through the kind of parliamentary committee or subcommittee I have mentioned which I would hope would begin to meet almost at once.
I know that you will say that this is an unusual procedure. It is, but the situation is unusual. We are reaching, if we have not already reached, a cross-roads in our defence policy. The developments of the past year or two have been very important indeed. Surely this parliament, representing the Canadian people, cannot afford to consider policy in this matter except within the context and the compulsion of these developments in the last few years. That is why I suggest we must have the facts if we are to find the best and the broadest-based solution for a problem which is of vital importance to our whole national future. The responsibility is on the government. We as the House of Commons cannot take that responsibility even if we desired to do so. It is our responsibility in making up our minds as to the rightness of the government decision to know the facts, and I suggest that perhaps the best way of getting them is by the procedure I have mentioned.

The Address-Mr. Pearson
You will be glad, Mr. Speaker, to know that I am getting towards the end of my bill of indictment but I cannot forego the pleasure and responsibility of giving the house some other examples of confused and muddled policies. Turning to agriculture and fisheries, I hope we will have an ample and adequate early opportunity to discuss agricultural matters. All I will do on this particular occasion in dealing with the confusion with regard to this particular aspect of government policy is to compare the emotional appeals of yesteryear of the Prime Minister for "parity, not charity" with the disillusioning warning of the Minister of Agriculture (Mr. Harkness) in Ottawa and in Springfield, Manitoba, a few weeks ago that if the farmers did not reduce their own production in the face of mounting surpluses, down would go support prices.
Then there are freight rates, so vitally important to agriculture and to all producers, indeed, to all Canadians. On November 25 the government announced its approval of a 17 per cent increase in freight rates to take care of wage increases and we were told that this was necessary to avoid a crippling railway strike. That was a crisis all right but how did it become a crisis?
The question of wage increases for railway employees did not arise last November when a strike threatened and when the provinces appealed to the government against the increase in freight rates which then seemed one way of avoiding it. That problem arose on November 12, 1957, when the demand for a wage increase was first made by the nonoperating unions. It assumed a definite form in July, 1958, when the conciliation board recommended a specific increase in wages.
During the whole long period when these negotiations were going on the government must have been aware that ultimately it might be called on to take some positive action to settle the matter. However, nothing was done and the matter was allowed to drift. That drifting converted a problem into a crisis which the government has postponed by granting the kind of horizontal increase it had refused previously and against which the Prime Minister had inveighed during the election campaign a year ago.
Then, having got themselves into this contradictory position, they sought to escape from its economic and political consequences, because this decision would have a discriminatory effect against certain parts of the country, the west and all the Atlantic provinces. They hoped to escape from this consequence by promising-it is in the speech from the throne -some form of subsidy to alleviate this discrimination. So now we have a horizontal

increase plus a proposed subsidy, plus another application from the railways for a further horizontal increase. Where do we go from here?
It is not possible for me to mention freight rates without a reference to one industry-I wish I could refer to many others-which is languishing largely because of freight rates. I refer to the coal industry. Apart from unemployment caused by the Springhill tragedy, we now have a lay-off beginning in February of 4,000 other miners in Nova Scotia owing to lack of orders for coal. We on this side, Mr. Speaker, repeatedly warned the government last session of this unhappy possibility but our warnings went unheeded.
Then perhaps I should not omit to say one word about the Minister of Citizenship and Immigration (Mrs. Fairclough). There has been contradictory thinking between ministers regarding immigration policy, and indeed confusion within the mind of the minister who should be clearest about it. The Minister of Justice (Mr. Fulton) boasted the other night that his government, amongst other things, has saved us from all kinds of trouble by cutting down immigration, but he did this at the very time the minister of immigration was quoting with approval the view that there is little or no connection between immigration and unemployment. They had better get together on that.


Edmund Davie Fulton: It is because we are cutting down; that is why.


Lester Bowles Pearson: They seem to be a little remote from the practical difficulties and dangers of the times.
May I just say one word about art, about this ill-starred venture of the government into the field of art which has brought a measure of humiliation to our country and some very bad publicity. The question here is not whether it is wise or unwise to buy certain pictures for the national gallery; that is not the point. The question is the permitting of a responsible official of this government, and he must surely have had cabinet or at least ministerial approval, to make an offer which was later repudiated. As I have said the results look pretty humiliating in the columns of not only the Canadian press but of the foreign press and did no good for the reputation of this government.
There are other things of the same kind at which I should like to take a look. There is external affairs, but I shall have another opportunity to do that. I cannot, however, refrain from mentioning at this moment the welcome given by the Secretary of State for External Affairs (Mr. Smith) in Seattle to the presence of Red China at a summit conference at a time when the Prime Minister

in Karachi and the Minister of Finance in Tokyo were throwing cold water on any change of Canadian policy regarding that government.
This leads me to my Anal subject for this afternoon, United States-Canadian relations. I want to touch on this matter, and I can only touch upon it because it is a question of the greatest possible importance. I do so at this time only in the context of government fumbling and indecision in policy. There will be other opportunities, I hope, for a discussion of the more general and substantive aspects of those relations about which so much is being said these days. I will content myself now with the general aspect of the question and by expressing my own hope that we, in Canada, should always consider and discuss this vital relationship with a mature sense of responsibility, and with a full realization of the fact that the destinies of our two countries on the same continent, in a dangerous world, are inseparable. We may wish that it were not so, but wishing will not alter the facts; yet the facts should influence and, perhaps at times, govern both policies and words.
When in opposition my hon. friends opposite had some hard and harsh words to say about these relations. They referred to "Texas buccaneers"; "U.S. domination"; "sell-out to Washington"; "the menace of American financial control"; we were becoming hewers of wood and drawers of water for our neighbours; that we were being throttled and sold out. We remember that talk. Then came the realities and the hard facts of official responsibility, and the talk changed overnight, as well it might. In fact, the Minister of Trade and Commerce in Chicago last November, in one of the first indications of the sober second thought that has come from a member of this government, admitted, and I quote:
The misunderstanding that has arisen over this matter can be traced to speeches made in election campaigns for the express purpose of embarrassing political opponents.


Gordon Minto Churchill: I was referring to your speeches.


Lester Bowles Pearson: The minister never made a truer statement. He must have been reading some of his old speeches.


Gordon Minto Churchill: I was referring to yours.


Lester Bowles Pearson: The minister must remember that we were on the receiving end of that kind of talk from him and his colleagues, that we were selling out Canada to the United States, and when we tried to put this relationship into perspective as befitted the importance of the subject we were the victims of some pretty vigorous and bitter assaults
The Address-Mr. Pearson from the hon. member and others. They ought to go back and read their speeches in Hansard.
Now, what does the minister say? He said this in Chicago:
There is neither alarm nor fear in Canada over the growth of U.S. capital.
Did he talk like that four years ago? The Secretary of State for External Affairs, speaking at Seattle on the same day, was even more expansive. He had this to say:
For the United States, Canada has no fear, no jealousy, no suspicion. On the contrary, we have the positive attitudes of co-operation, fairness, justice and freedom.
The first sentence in that statement might be difficult to prove to every Canadian's satisfaction. He might have difficulty in persuading everybody in Canada that we have no worry about some aspects of United States policy. I am glad he put it that way. However, the second sentence which he said, and which I have quoted, seems to me to be entirely admirable. It is an admirable sentence which expresses sentiments in which we on this side of the house share and upon which I congratulate the minister. I wish he had been in this House of Commons during the debates of two or three years ago.
Even more interesting were the political words used in New York by the Prime Minister at the non-political Pilgrims dinner on October 28 last. Here is what they are according to the text of his speech as circulated by his own office:
Beneficial changes have taken place in these relations (between Canada and the United States) since I spoke at Dartmouth fourteen months ago. The plants in the garden are being more carefully nurtured;-
I enjoy these interruptions and that applause, Mr. Speaker, makes my next observation so much more implicit.
The plants in the garden are being more carefully nurtured; they are being trained up and guided, not left to grow jungle wild.
Well, what evidence did the Prime Minister give of this spectacular change from Liberal times when the flowers in the garden were growing jungle wild? Here is the evidence that he gave. Mr. Eisenhower and Mr. Dulles have visited Ottawa. Well, they have done that before. It is true that the President had not previously made a speech criticizing diversion-Conservative policy-and praising expansion-Liberal policy-as the essential foundation of wise trade policy. This was the first evidence that the gardening was being more skilfully done.
The other evidence that he offered to his audience was that there were now three high level Canadian-United States legal committees. One of these is the parliamentary-congressional committee, proposed first by the

The Address-Mr. Pearson Hays-Coffin committee of the United States House of Representatives, taken up by the Canadian government and approved by this parliament. I hope that committee, which has had its first meeting under your distinguished chairmanship, Mr. Speaker, so far as the Canadian delegation is concerned, will prove to be a useful and valuable piece of machinery. I understand that the first meeting was a preliminary one and that the next one will take place six months from now in Ottawa. We wish this committee well.
The second committee referred to in this gardening activity was a defence ministerial committee which I believe has not yet met at all.


Donald Methuen Fleming: Oh, come up to date.


Lester Bowles Pearson: Or if it has met-and we have not been brought up to date on this matter by the minister-it was a meeting in Paris in connection with the NATO council meeting between the Canadian Minister of National Defence and the United States secretary of defence. If there has been any meeting at all, that was the meeting, or the minister will perhaps correct me if I am wrong. I would remind the minister that that kind of meeting has taken place every year that we have had a NATO annual meeting.
Then there is a third indication of this more efficient gardening, namely the Canada-United States ministerial trade committee set up by the previous government but which met more recently in Ottawa in January. When the Prime Minister speaks I hope that he will have some more impressive evidence of his gardening to produce than the communique of that particular meeting. I have read that communique very carefully. I have had some responsibility and some experience in drafting communiques after international meetings. As I understand it, it took three hours to write this one. I have never seen a communique from an international meeting which was emptier in content than was this particular one or fuller of words. All it did was to promise that in so far as it is possible, neither government will do anything to hurt the other-and that is all right -or, in the case of consultation, there will be consultation whenever feasible, on these matters. Consultation is to be held only when it is feasible, according to this communique. I suggest to the ministers concerned with this particular committee, that they worry less about the three hours' time devoted to the communique and more about dealing with some of the great problems that arise in the

relationships between them. The Prime Minister may feel complacent about Canada-United States relationships, but that complacency is not shared in certain non-political reports. One from a high level but unofficial Canada-United States businessmen's committee, which met last autumn, urged -that no further deterioration in commercial relations be allowed to occur.
In other words they wanted better gardening than the spasmodic digging of the previous sixteen months. The fact that this Conservative gardening has not been as productive as the Prime Minister told the Pilgrims is shown by United States restrictions on imports of zinc, lead and ore; by new ill-judged and inadmissible interference by the United States government on the purely Canadian business of United States subsidiaries in Canada to which the Minister of Justice referred this afternoon; by new United States wheat barter programs; the shocking omission which I have already mentioned of the Canadian government to answer the United States note on the anti-dumping bill for four months, or until after the bill had been passed in this House of Commons. All this would indicate that the gardening, on the Canadian side of the line in the last 16 months, has not been very efficient and certainly has been no improvement on Liberal methods of previous years.
I had thought, Mr. Speaker, that I had reached the end of my specific indictments but there is one other matter on which I will now touch. I should have mentioned it earlier but I omitted it. I refer to federal-provincial relations. In that field we certainly find the same indecision and uncertainty, in spite of the specific undertaking made by the Conservative party before the elections. No federal-provincial conference has been held except that one a year ago which did so little. At that time the country was led to understand-and a specific commitment was given to that effect-that there would be a subsequent meeting which would deal in a more effective way with fiscal relations with the provinces. In a speech made in Winnipeg in May 1957 the Prime Minister, according to the report, said that under the fiscal arrangements proposed by the Liberal government the provinces had been "forced into a starved condition" and that the municipalities were the "forgotten people". On another occasion during the same campaign he is reported to have stated that a conference would be called after the election "in order to assure fairness to all".
We know what happened. The government has not yet called any such meeting. We know now, because of the speech from the

throne, that the government has no intention of calling such a conference. We know that instead the government has announced to the provinces the extension of the existing temporary arrangement. That arrangement was made about a year ago on an ad hoc basis. Since that time several premiers have indicated that they were not satisfied with it as carrying out the government's promise. On September 30 Premier Douglas in a radio broadcast said that the dominion-provincial conference should be reconvened "with the least possible delay". During the opening debate of the current session of the Quebec legislature Mr. Duplessis is reported to have reasserted his government's stand on provincial rights in the field of direct taxation. Finally, on September 24, 1958, Mr. Frost, in a speech in Etobicoke, renewed his campaign to secure a more equitable division of tax revenue from the federal government and to get another $80 million annually from the direct tax field. He is reported to have concluded his remarks on this subject by saying this:
It would be a great mistake for us all-federal and provincial-not to strive for an early resolution of this most important matter.
Is the government striving for an early resolution of this most important matter? The government has ignored these representations. There is to be no conference. Instead the government, as I have just said, has announced, without consultation or conference, its decision to maintain for this year the arrangement which it made unilaterally last year without conference. The speech from the throne and the telegraph company have now become the new lines of communication with the provinces. The provinces read about this new offer in the press and they read about the new offer last year. I am not quite sure, but I believe some of them did not get the telegrams at all. What a startling improvement this is on the take-it-or-leave-it method of that federal despot, Right Hon. Louis St. Laurent who, while he was prime minister, when he or his government wished to make in the speech from the throne a reference which affected the provinces, had the courtesy to let the provinces know about it beforehand. But the government is doing something. In the speech from the throne there is a paragraph which reads as follows:
My government proposes that the entire subject of financial relations between the dominion and the provinces shall receive continued active cooperative study.
The subject is to receive, not only study but continued active co-operative study. Was there ever a better example of an adequacy
The Address-Mr. Pearson of words trying to make up for an inadequacy of action? The paragraph continues:
All provincial governments are being asked to agree to the use, for this purpose, of the machinery of the existing federal-provincial continuing committee on fiscal and economic matters-
They are going to be asked to agree that this committee should continue to do its work. That is all it amounts to. That is the new deal with the provinces. I understand a letter was sent to the provincial governments suggesting that perhaps the ministers of the provinces might exercise supervisory jurisdiction over these people, something which presumably they have been doing all along.
I think I have produced sufficient evidence, Mr. Speaker, to support our bill of indictment. All that remains now is for me to draw the bill to a conclusion and to move the amendment. I think, perhaps, Mr. Speaker, that the government will have realized by now that the honeymoon is indeed over, and the wedding trips too. Now the hard, unglamorous drudgery of housekeeping has descended on the happy party. In fact, the domestic sink is filled with dirty dishes while argument goes on as to how to clean them economically without breaking any politically.
To return to more prosaic prose, Canada, I repeat, is faced with more problems, more difficulties and more anxieties than at any time since world war II. This government has failed to face up to these anxieties, these difficulties and these problems; its own major difficulty lies in getting away from the habit of looking at everything from the narrow viewpoint of political advantage which, perhaps, accounts for so much of the confusion, delay, contradiction and uncertainty of so much of the present government's administration. Mr. Speaker, they have elevated expediency into a national policy. I will give the Prime Minister time to take all this down. I will repeat it at dictation speed. When confronted with a situation which demands action he will make a broadcast or a speech, or appoint another commission. The favoured formula, as I have already shown, is to wait for a problem to become a crisis and then, cheerfully ignoring any commitment previously taken or promise made, to deal with it by hand-out or hold-off. That is not good enough, especially at a time when wise, steady and consistent action is necessary to help us solve our national problems and realize the great destiny which lies ahead of us.
It is a time not so much for ringing declarations of freedom-we have an abundance of them, including one of the noblest of all in the United Nations charter-as for policies of government which will make freedom

The Address-Mr. Diefenbaker work for the welfare, security and progress of men and women. Bread without freedom may be a stone, but freedom without bread and work to earn it is a mockery. If we cannot make the freedom we have work, then no declaration of words, however inspiring, will help us much or save us from some other form of government which will have far more of compulsion than freedom about it.
We on this side have no confidence in the ability of this government to give us this kind of leadership at this particular time of need. Indeed, this is a government of confusion, contradiction and unsteadiness; a government which thinks and acts primarily in terms of short range, narrow political advantage, gyrating from one move to another with all the circular sensationalism of a hula-hoop performance. As the hon. member for Restigouche-Madawaska (Mr. Van Horne) pointed out in his New Year broadcast, Canada needs something better than this, something better, to use his words, than mediocrity-and he was referring to the present government-which, he says, cannot be tolerated. We feel that way, too, Mr. Speaker, and because of that feeling I move, seconded by the hon. member for Laurier (Mr. Chev-rier), that the following be added to the address.
We respectfully affirm that Your Excellency's advisers, by reason of contradictory and confused policies; as well as lamentable indecision in dealing with grave national problems such, for example, as those concerned with mounting unemployment, no longer merit the confidence of this house.


John George Diefenbaker: Mr. Speaker, may I begin my remarks by congratulating the Leader of the Opposition (Mr. Pearson) on the multiplicity of the topics with which he has dealt. He has spread himself out. He has repeated all the speeches which he has not been able to use with much effect in the country.
This speech has been delivered in more or less divided form throughout the recent pilgrimage he made across this country. As long as we have as many members as we started with the answer is given to much of that criticism. I recall almost a year ago in this chamber the amendment moved at that time, done with all the forcefulness that is apparent here today and done with all the effectiveness which was apparent today. But until the hon. gentleman described that speech himself I thought it represented his thinking. What did he say himself in describing what he had done in the amendment that he moved-for in the House of Commons you do not try to put over fast ones-the words he used dealing with the amendment he moved were these: "I tried to slip him


a fast one, if you will excuse the expression, but he belted it out of parliament."
We have had another of those fast ones today. I intend to analyse just parts of it and will leave to my colleagues the task of answering those remarks made by the hon. gentleman on this occasion regarding matters relating to their various departments. We heard from the hon. gentleman cascades of verbosity and torrents of denunciation but I shall deal with the facts without employing the attributes that he gave to his remarks.
I was particularly interested in the attempt of the hon. member to paint a picture of Canada as a place fearful in its prospects and frightening in its future. This is a picture not borne out by the facts and one that is not in keeping with the kind of attitude that one expects on the part of those who hold responsible positions.
During the course of his remarks the hon. gentleman quoted the report of a Canadian bank. I am going to refer to the monthly review published by the Bank of Nova Scotia, November issue, in which it is stated in effect that the recession was much less sharp in Canada than in the United States, which the bank suggests is indicative of the fact that what had happened was largely due to the energetic counter-cyclical measures taken by this government. The report of the Bank of Montreal is to a similar effect.


Paul Joseph James Martin: What did the president say?


John George Diefenbaker: 
Some hon. Members:: That is true.


John George Diefenbaker: The hon. gentleman can endeavour to smile it off but in this article he was telling the truth.


John Whitney Pickersgill: It was equally true in 1956.


John George Diefenbaker: Today, however, the hon. gentleman endeavoured to paint a somewhat different picture. I wish to repeat the words he used in the article to which I have referred:
Many of Canada's current problems are similar to those that are troubling other free democracies;


George James McIlraith: But they have governments that are trying to meet them.


John George Diefenbaker: Mr. Speaker, interruptions such as that are not helpful. We on this side sat and listened without interruption.


John Whitney Pickersgill: What about the Minister of Finance (Mr. Fleming)?
The Address-Mr. Diefenbaker


John George Diefenbaker: He asked a question.


John Whitney Pickersgill: He made a speech.


John George Diefenbaker: The article continues with these words:
Many of Canada's current problems are similar to those that are troubling other free democracies: dealing with inflationary pressures and recessionary trends at the same time; reconciling the demands for more governmental intervention to advance social welfare with the preservation of individual rights and the encouragement of initiative.
Today the hon. gentleman tried to leave the impression that we in Canada were in a different position. When he wrote this article he realized the situation in other democratic countries of the world. He realized, for instance, the fact that the United States finds itself in a similar position to that which we are in, with some 4 million unemployed and with trade difficulties. But nowhere in the United States does one find an attitude such as was revealed here today with such apparent relish, as the hon. member referred to circumstances to which I shall also shortly refer as being in large part the inheritance of this government.


John Whitney Pickersgill: I thought it was "world
conditions".


John George Diefenbaker: The article goes on to state:
Canadians do not underestimate the difficulties ahead especially for a country that has given a formidable hostage to fortune in the form of such a heavy dependence on foreign trade for her prosperity. There is, however, a strong spirit of optimism among the people, and a feeling that Canada's destiny is as bright as that of any country in the world.
Between November 24, 1958 and January 19, 1959, what a change of viewpoint has occurred on the part of the hon. gentleman. Not satisfied with having said that he continues in the article to depict Canada's national pride and concludes by saying:
Canada is growing up in troubled and dangerous times, amid persistent and complicated problems, domestic and international. But what is important is that she is growing up-
Oh, Mr. Speaker, that is true. The article continues:
-she is becoming stronger and more mature as a nation. It is the desire of Canadians to use this strength and maturity not merely to build a sturdy nation as the northern half of the American continent, but also to play a worthy and useful part in the achievement of the goal on which all humanity's hopes now rest in this nuclear age-international peace and security.
Mr. Speaker, those were not pious words; they were facts. They were not debating points; they were the truth. In so far as the major portion of his remarks is concerned in connection with the economic situation in Canada, I give, to begin with, the Times of

The Address-Mr. Diefenbaker London supplement of November 24, 1958, which bears out in every degree the viewpoint of this government and the feeling of the Canadian people.
I do not intend to traverse the points one by one, but I have lined up some of them as they have been delivered. I am going to commence with the general remarks that I have made by joining with him in one thing with which I agree, namely in the congratulations extended to the hon. member for Provencher (Mr. Jorgenson), an outstanding farmer, and to the seconder, the hon. member for Montmagny-L'Islet (Mr. Fortin), who, he was able to say, is a third generation Canadian occupying the position of a member of the House of Commons. He was able to speak of the Canadian unity that we are bringing about in Canada and which is the desire and objective of each and every one of us.
I think I ought to say a word of congratulation to the hon. member for Grenville-Dundas (Mrs. Casselman), another lady member of the House of Commons and the daughter of the hon. member for Dufferin-Simcoe (Mr. Rowe) and herself a widow of the former dean of the House of Commons. I would also like to add a word of congratulation-and all these arguments were used in the constituency of Springfield-to the new member for Springfield (Mr. Slogan), and also to the hon. member for Trinity (Mr. Hellyer), a former member of the House of Commons and a member of the Privy Council. I say to him in his capacity as a member of the House of Commons my hope is that he, and also the hon. members I have mentioned, will make his contribution to a better Canada and to the highest possible standard of the House of Commons.
Having said that, I wish to mention one other thing which was very interesting. Today my hon. friend used a kind of buckshot speech in which he shot at everything, but he left one or two questions to his cooperative friends to the right. That was very interesting indeed because it has been very obvious lately that that co-operative spirit between the Liberal party that he now leads and the members of the C.C.F. has grown to such an extent that when the Liberal party had its federal national meeting, the postmortem, a few weeks ago, they called in a leading member of the C.C.F., namely, Mr. Dodge, to tell them what was wrong and what had happened. There was that kind of co-operation, Mr. Speaker, but nonetheless I noticed today the great desire of the Leader of the Opposition to pass on


to his hon. friends to the right certain problems which were left for them to discuss. That co-operation is certainly even apparent here.
Now, sir, may I speak for a moment on the international situation, and I would only say a word in that regard because, as the Leader of the Opposition said, my hope is that an opportunity will come shortly for a discussion of these questions. In particular, I will then have the opportunity of being able to say something regarding the trip which I took, and the visit which I made, not only to four NATO countries of Europe but also to the countries of the commonwealth in Asia, and to Australia and New Zealand.
While I have seen that some of my hon. friends have expressed doubts as to this world tour, I would remind them that when my right hon. predecessor went on that tour the members of the opposition of that day joined to a degree which is unusual in parliament and pointed out in unanimity the fact that it was a necessary trip to be taken, one that would be helpful and beneficial not only to Canada, but generally. That happened on January 29, 1954, when the right hon. gentleman spoke of his proposed trip. He was followed on that occasion by the then leader of the opposition, the Hon. George Drew, who used these words, as reported at page 1583 of Hansard:
As he has said, understanding, a feeling of cooperation and a deep and close interest in the countries of Asia are today an essential part of the building of the kind of free world in which we all believe. Naturally the first concern of all of us will be the development of any closer and more effective association which may be established with the nations of the commonwealth that are found in Asia at this time.
Mr. Coldwell went on to join with him in words of approbation. He pointed out that:
The people of Canada will be well served by the Prime Minister as their ambassador, not representing any party and not even in the capacity, shall I say, of our Prime Minister, but rather in the capacity of a Canadian ambassador of good will making a tour of the world.
My hon. friend has done this, and so has the hon. member for Essex East (Mr. Martin). I found wherever I travelled in Asia that he apparently had been there before, and I found the same with regard to the Leader of the Opposition. They left behind them a legacy of good feeling and gained a knowledge which was shown in the debates in the House of Commons thereafter, which again was beneficial not only to those who have honoured them but also the house in general, in consequence of the visitations which were made.
As far as what my hon. friend said on the international situation is concerned, with the

exception of the fact that today representatives of the U.S.S.R., the United States, the United Kingdom and other countries in the free world are at least talking things over together, there has been no act in recent weeks which would indicate any major amelioration of the attitude of the cold war which has prevailed. Indeed, as I came back to Canada I began to realize the great danger today to the Asian countries and finally to us in this economic offensive launched against Canada and the United States. Because the defences of the free world have been maintained the only way in which freedom can be undermined is through the economic influences, detrimental as they may be, that may be launched on the part not only of the U.S.S.R. but also of communist China. Indeed, it is very striking in this regard that in connection with cottons-and I digress merely for a moment in this-which the British, and the United States, can supply at $1, in the various parts of Asia they are being supplied at 60 cents by Japan and at approximately 33 cents or 34 cents by communist China. In other words, there is an offensive in trade that is bound to be one of the most challenging dangers of the days ahead.
It is because of that, if we in Canada are to meet it, dependent as we are so greatly on trade, that every consideration must be given to the end that the expanding trade of the past shall be continued. One of my prides in the administration springs from the fact that in spite of the tremendous competition in 1957, particularly in wheat and the like, Canada exported more wheat than in the previous year and greater than the average at any time in the preceding five years.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.
John George Diefenbaker: Mr. Speaker, at the time of adjournment I had just commenced to refer to one or two general matters and I intend to continue on that course for a few moments. Then, at the end of that time, I shall meet certain phases of the arguments advanced this afternoon by the hon. Leader of the Opposition.
I was somewhat surprised at the jocular manner in which he dealt with Canadian-United States relations, an attitude of jocularity which I did not regard as in keeping with the responsibilities which he had discharged for so long as Secretary of State for External Affairs and also as ambassador to the United States. He indicated that there
The Address-Mr. Diefenbaker was little change in the relationship between Canada and the United States. I would point out that when he referred to some of the economic acts of the United States during the last year and a half, he might have referred also to a series of acts throughout the years on the part of the United States in respect of which it was quite clear, and I have the evidence here, that the then government of this country raised little or no objection. Indeed, on two occasions protests were made, and while this afternoon he exhibited shocked surprise that there had not been any reply to one or two of these casual objections raised by the United States, I might say that I well remember the Right Hon. C. D. Howe saying on occasion, we sent them a couple of notes but we did not get any reply; we did not expect any.
So far as our relations with the United States are concerned, there has been something in the nature of a change in that regard. As a matter of fact, the visit of the members of the Canadian parliament to the United States congress was one of the most successful pilgrimages on behalf of our common dedication between these countries that has ever taken place. In that connection, I should like to refer to the Financial Post of January 17, the heading on which is, "Canada gains Congress Ear". I quote:
A major improvement in Canada-U.S. economic relations may have occurred with the agreement on a Canada-U.S. interparliamentary group.
This was the solid accomplishment of the Washington conference of nine Canadian senators and m.p.'s and congressional members of the new house and senate Canada subcommittees.
Then, there is another article in the same issue which reads:
A "Massive Demonstration" of U.S. Attention to Canada.
History was made in Washington with the visit of the nine Canadian parliamentarians to the U.S. capital.
Washington rolled out the reddest red carpet it has ever displayed for a visiting group of fellow legislators.
More fuss was made over the Canadians than over any group of visiting firemen in decades.
They got almost as much attention as did Queen Elizabeth or Anastas Mikoyan on their Washington stopovers.
Rather than being met by words of ridicule, I would have thought we would be met with words of appreciation of the fact that, while we have our differences, those differences are not insoluble; that each of us owes it to our respective countries to ensure that the stand of our respective countries be made known.
As a matter of fact, my hon. friend made a speech in the United States in November, and when he speaks of harsh words I must say that some of the words he used on that

The Address-Mr. Diefenbaker occasion respecting the fact that the United States had, for too long, taken Canada for granted would have, if spoken by any member of this house, been subject to his condemnation. Even today, there is a step forward in that relationship. We Canadians have been most anxious to assure the maintenance and preservation of our sovereignty in northern Canada. Those areas are of maximum importance, not only from the point of view of defence but also from the point of view that they hold vast mineral resources.
Well, the D.E.W. line was built and little consideration was given to Canada. The hon. gentleman was secretary of state for external affairs when this was done. Today, we moved a step forward. The major stations on the D.E.W. line have been, in the past, manned by United States officers with a Canadian liaison officer. We have now reversed that and Canadian officers will man these stations and there will be one United States officer as liaison officer. What is more, we asked for that when in opposition and the answer invariably given was one of indifference. Now that the hon. gentleman is in the opposition he suddenly sees that in all the years he was a member of the government there were attitudes taken toward the United States which were not in keeping with Canada's sovereignty or the responsibilities of Canadian nationality. Furthermore, of the civilian personnel on these stations, 645 of the 790 are now Canadians and these civilians are paid by the United States. This is a step in the direction of ensuring that in the northern territories there shall be no misunderstanding as to whom those areas belong.
Today, a joint announcement was made by the Minister of National Defence (Mr. Pearkes) and the secretary of defence of the United States along the lines that I indicated. Now then, I come to one other subject.


Paul Joseph James Martin: That announcement should have been made in this house.


John George Diefenbaker: Mention was made today of the Arrow. I have before me the vacillating record, if I may say with great respect, of the Leader of the Opposition with regard to this matter. I am sure there was not that measure of agreement between him and the hon. member for Trinity (Mr. Hellyer) during the by-election in that constituency in connection with this subject which one might have expected. Defence today is costly. I think this was well summarized by the President of the United States when he said this:
The over-all cost of introducing Atlas into our armed forces will average $35 million per missile on the firing line. This year we are investing an


aggregate of close to $7 billion in missile programs alone. Other billions go for research, development, test and evaluation of new weapons systems.
Our latest atomic submarines will cost $50 million each, while some special types will cost three times as much. We are now ordering fighter aircraft which are priced at fifty times as much as the fighters of World War II. We are buying certain bombers that cost their weight in gold.
In other words, there has been a fabulous increase in those costs. In so far as the Arrow is concerned, in the month of September I made a statement on this matter. The responsibility to act rests on this government. The hon. gentleman suggests that a committee be set up for the purpose of determining this question.


Lester Bowles Pearson: I did not say that.


John George Diefenbaker: He suggests that a committee be set up. If it is not to determine, it is to recommend.


Lester Bowles Pearson: I never said that.


John George Diefenbaker: Oh, it is just a committee to be set up. He just wants the committee to sit, Mr. Speaker. As far as we are concerned, we made our position clear in the month of September. The views then expressed have not been changed in the intervening months in consequence of the consultation that has taken place in this regard. It is the kind of decision that is not to be taken lightly. It has caused lengthy, almost endless discussions and consultations. What did the hon. gentleman say with regard to this matter? I have here a few quotations as to what he would have done. He starts off by a speech in Edmonton on the subject and he says this:
We decided when in office two and one-half years ago to go ahead with the CF-105 and review it year by year in the light of developments.
Then here is the statement that he made a little bit later on during the course of his tour:
Mr. Pearson said when previous Liberal government decided two and one-half years ago to authorize work on the CF-105 Arrow, the intercontinental ballistic missile seemed then to be "many, many years away."
The Liberal government had reviewed its decision every six months. Had the Liberals been in office when the first I.C.B.M. was fired Mr. Pearson said, "this would have been a major factor in possible revision of our decision."
Then he said this:
The Conservative government should have cancelled the Arrow production order this fall instead of waiting until next spring.


Some hon. Members:: Oh, oh.


John George Diefenbaker: That is the statement that he made. That is from a Canadian Press dispatch.


Lester Bowles Pearson: That is a Canadian Press account of what I am supposed to have said which I corrected the next day with the Canadian Press, and then the correction was reported.


John George Diefenbaker: Mr. Speaker, I have the entire record here.


Lester Bowles Pearson: The right hon. gentleman has not it all.


John George Diefenbaker: May I say, Mr. Speaker, that I doubt whether the press can keep up with the perambulations of the hon. gentleman. Then he comes along and makes his statement today, and I doubt if you or anybody else, Mr. Speaker, can come to any conclusion as to what he means on the subject. He is on this side and he is on that side. There are difficulties in the way. He asks a question on one occasion. Again he may rise if he wishes to deny that he made the statement, that it should have been concluded in the fall. In other words, a decision should have been made in the fall.


Lester Bowles Pearson: When you said it was going to be made, the minister said it was going to be made in the fall.


John George Diefenbaker: This is after the event. It is made perfectly clear that we are going to have the support of the Leader of the Opposition in the event that there is a finalized decision in this regard. All the way along he says, "Are we moving out of our own league?" In Edmonton he says, "Are we getting in too deep?" He also said: that the United States had to keep up with each new costly defence development, but Canada should not have to follow suit.
Then again we find another Canadian Press dispatch quoting the Leader of the Opposition as saying that the decision to cancel the Arrow production order should have been made in the fall instead of waiting until March.
The hon. gentleman now says that he corrected these statements next day. As far as we are concerned in connection with this matter we made our decision clear on September 23, 1958, in the statement which I made at that time. At the time the statement was made the situation was particularly dangerous in Quemoy and Matsu islands and in the straits. At that time there were those who felt that a major war might very well break out, that it was within the realm of possibility. If the decision had been made then, it would have brought about the demobilization of the technical men who, in the event that hostilities came about, would have purposes other than the production of the Arrow which would be found necessary
The Address-Mr. Diefenbaker in Canada. That was the reason for the stand which we took and made clear. No one who makes a decision such as that can possibly do so lightly.
Since the ICBM's and latterly, the launching of lunik, it is apparent that there has been a tremendous change in the techniques of potential war. It is a disagreeable course. Let me make this matter perfectly clear. Lobbies will have no effect on the decision that this government makes on the question of defence. That statement applies generally. While the government will at all times welcome suggestions, ideas and arguments, I think the experience generally has been that the stronger the lobby, the weaker the argument.
I am now going to deal for a moment with one or two matters in the speech from the throne. I am not going into the detail into which the hon. gentleman went this afternoon but I am going to meet one or two of the arguments which he advanced and which are somewhat threadbare and tattered. They have been used over and over again with the effectuality that the hon. gentleman must realize unless he is getting his opinion from the grass at $25 a dinner.
In the speech from the throne we have set forth the legislative program which includes various fields of legislative enactments and amendments to existing legislation. There is one matter to which I want to refer and to which the hon. gentleman did not refer, namely the item dealing with the setting up of an energy board. We have the recommendation of the Borden commission in a preliminary report. So that there will be no mistake or misunderstanding, let me say this. No prior knowledge of the contents of this report were in the possession of any member of the government. The facts that reports by royal commission are made does not indicate or mean that in every or in any particular they will be carried out, when in the opinion of the government, which accepts this responsibility, those recommendations are detrimental in any way.
I want to make that perfectly clear at this time relative to the various recommendations contained in that report. We will deal with that question when this particular matter comes before the house in the form of a bill.
Now I am going to return to the speech of the hon. gentleman-a speech consisting for the most part of lamentations but with no indication of what suggestions the opposition have to offer, excepting the inference that taxes should be raised, higher interest rates secured and credit restrictions imposed-a speech full of colourful language-jeremiads usually are-and full of forebodings, not uttered with the usual smiling face, except

The Address-Mr. Diefenbaker when the hon. gentleman neared the end of his speech, but in lachrymose and funereal tones, spoke about paradise regained. As I listened to his speech I thought of what concerned him most was the paradise lost.
A year ago I had the pleasant duty of congratulating the Leader of the Opposition on his first speech following his election as the leader of the Liberal party. However, I cannot congratulate him to the same warm extent on the speech he made on this occasion. The amendment this year was apparently not drawn up by the brain trust. It is an interesting amendment; it deals with one matter in particular, after a kind of buckshot attack in every direction. I am going to meet it in a very few words at this point.
Last year there was discussion of an economic report. I produced the economic report, as we produced the report for 1957, at exactly the same time and on almost the same date in the year following. What did they do? They had the report but they did not act; they concealed the situation from the Canadian people. Over and over again they tried to disavow themselves of having done that, though without too much success. The record spoke. We found ourselves approaching a recession. The government had been warned, yet the remedies which the hon. gentleman suggests by inference today were entirely omitted in 1957.


George James McIlraith: Because the Tory government was not competent.


John George Diefenbaker: I want to say to the hon. member that this is the third or fourth time he has made interjections. I spoke once of the cuckoo repeating himself and not being listened to.
In the year just ended, Canadians worked more, earned more, spent more and saved more than in any comparable year in the history of this country. The economic report of 1957 contained a clear and cogent warning of the recession to come. The opposition does not like to hear this, but they acted contrary to what the economists said was the proper action to take having regard to the circumstances. They ignored the recommendations; they seemed to be paralysed by deep-rooted complacency; they budgeted for a surplus at the time when the leading business indicators such as residential construction were plunging down. What is worse, they made no plans to meet the recession of which they had been warned.
What of the economic report of 1958? That report predicted a continuing recession. We took that warning to heart. We planned the budget accordingly, accepting a deficit as the answer to unemployment. It is because
[Mr. Diefenbaker.l
we acted in that way that the 1958 forecast and report proved to be more pessimistic than the actual events warranted. That it will be significantly better than the report forecast was not due to faulty forecasting but to energetic action taken by this government. I should like to go into a little more detail in this connection. I can see the dilemma in which the hon. gentleman finds himself. When he was asked the question: is it unemployment or is it inflation which is the serious problem today, he answered by a multitude of words but refused to place himself firmly on one side or the other. When he came to draw up the amendment he made sure that he was not in any way taking one side or the other. A terrific problem was facing the government, as the hon. gentleman so frankly admitted in that article in the London Times -not necessarily one of whether to formulate economic policies to fight unemployment or inflation but rather to develop a set of policies adapted to changing economic circumstances that appear to be in the offing.
The Leader of the Opposition charges the government with complacency and wastefulness. He dealt with the fear of unemployment, and then he spoke of inflation, which is a Janus-faced approach. On the one hand he said: eliminate unemployment, and on the other side he said: do not have a deficit, no matter what the cost may be, in order to alleviate the situation. During last year's election, where was he then? He advocated a deficit over and over again. He said this was the proper type of financing to meet a recession, and at the same time he advocated multitudinous dollar expenditures, tax cutting amounting to several hundred million dollars, tax holidays. Oh yes, we admit there is a problem, and one that has not arisen before, where there is unemployment while price levels generally are rising. The immediate problem was one of recession, which we inherited. We acted with regard to this matter with energy and vigour and all objective analysts agree that we achieved success.
What did we do? We budgeted for a deficit and at the same time we increased welfare payments. Did hon. members ever hear anything to equal the lachrymose concern which the leader of the Liberal party showed today over the increase of $9 in old age pensions? But they would not do anything about it when they had an opportunity. He said that the old age pensioners $9 had been reduced by $2 as the result of inflation. Taking his own figure of 4 per cent, where does the $2 come in? It is just another example of the kind of exaggeration in which the Leader of the Opposition indulged today. We reduced taxation; we provided effective support for

the housing industry; we increased public works and public investment, and the figures in this regard when they are placed before the house will once more reveal that we have produced tens of thousands of jobs in consequence of that policy.
According to the 1958 report it was felt that the gross national product would remain almost unchanged with a possible increase of .7 per cent. In point of fact it increased by 2 per cent.


Lester Bowles Pearson: Through inflation.


John George Diefenbaker: The hon. member
says "through inflation" but I would remind him that the previous year and the year before it was in the same position when he and members of his party were boasting on this side of the house.
The 1958 economic report predicted that total wages and salaries of Canadians would decline as compared with 1957 by 1.1 per cent. Instead of that wages and salaries increased by 1.6 per cent or some $300 million. Disposable personal income increased in 1958 by 6.3 per cent or approximately $1.3 billion largely I will admit, by the marked increase in welfare payments. Personal direct tax declined by 7.8 per cent during the year. Agricultural cash income to which reference will be made at length, as it was in the opening speech of the hon. member for Provencher, was up in 1958 by 8 per cent. Net farm income increased 22.4 per cent although it was predicted in the report the increase would be only 3 per cent. In view of this, why these doleful statements on the part of the Leader of the Opposition describing the situation in Canada as though it were one wrapped in gloom?
Interest dividends and net real income rose by 6.5 per cent or some $200 million in round figures. Other disposable income rose by 4.5 per cent.
The Leader of the Opposition today mentioned Mr. Muir of the Royal Bank of Canada. If I read the annual report correctly profits for the year for the Royal Bank, after providing for depreciation and income tax, amounted to $15,868,329 as compared to something just over $13 million in 1957.


Mr. Benidickson:: With a conversion loan, they could not lose.


John George Diefenbaker: I mention that, Mr. Speaker, simply to illustrate how serious things are based on the measurements supplied by the Leader of the Opposition. As I have said, these increases added up to an expansion of disposable personal income in 1958 of $1.3 billion which translated into real per capita purchasing power reveals
The Address-Mr. Diefenbaker an increase in 1958 of 1.6 per cent compared to a 1 per cent decline in 1957. The large increase in disposable income was not all spent. Consumer spending did increase by about 4 per cent in 1958 but personal savings increased to about 9 per cent of disposable income as compared with 7 per cent in 1957.
I have before me the record from my own province of Saskatchewan which I wish to read in answer to the professional gloomsters. I shall read from the sales record of the Saskatchewan retailers for the year 1958. Retail sales reached an all time high amounting to $883 million in round figures compared to $848 million for 1957. Purchases per person increased by approximately $43. Grocery and combination stores in Saskatchewan gained almost 9 per cent in sales in 1958 over 1957 while general stores had estimated sales amounting to $83 million in round figures in 1958 as compared to $80 million in 1957. Automobile dealers had sales in 1958 amounting to $181 million in round figures as compared to $177 million in 1957. The income of service station operators went down by about $2 million to $50,600,000. The hardware stores had a good year. I could continue to cite illustrations of increases from this record.
The Christmas season is not long past and everyone knows that not for years has there been the kind of spirit displayed on the part of Canadian consumers as was the case this year. Christmas sales increased this year beyond anything that has heretofore been recorded.


John Whitney Pickersgill: Tell that to the people of Newfoundland.


John George Diefenbaker: With the inheritance we had of the recession and realizing there would be a certain decline in private investment, I mentioned a moment ago that this government undertook an increased program of public works and provided a massive stimulus to the housing industry, the result of which is as follows. The report predicted that new residential construction would increase by 13 per cent and largely because of this government's initiative and the action of the Minister of Public Works (Mr. Green) the amount of the increase was 23.7 per cent. These are the facts, not the type of statements that are based on generalities that are the product of the thinking of what my hon. friend calls the grass.
Carloadings are always a singularly useful indicator of changes in the economy. Car-loadings made strong gains in the year and continued the upward turn taken in mid-December.
60	HOUSE OF
The Address-Mr. Diefenbaker


John Whitney Pickersgill: What about railway earnings?


John George Diefenbaker: In the last ten days of the year ending December 31, 1958, car-loadings jumped 23.2 per cent to 81,325. It was less during the year and carloadings were down 6.6 per cent but in the latter weeks of the year they reflected the same stimulus that is taking place everywhere and to which reference was made today by the President of the United States in his message. While automobile production was down in 1958 by 2.6 per cent there was a 51.1 per cent rise in December.


Paul Joseph James Martin: And more unemployment than at almost any other time.


John George Diefenbaker: As a matter of fact the hon. gentleman who interjected will remember he has always been taxed with unemployment in his particular locality and has often referred to it.


Paul Joseph James Martin: That is not true.


John George Diefenbaker: Oh, yes it is.


Paul Joseph James Martin: There are 14,000 unemployed in my constituency.


John George Diefenbaker: Mr. Speaker, I have been pointing out that we have passed through difficulties but I remind hon. gentlemen that we inherited difficulties. Oh, they cannot deny it. The people heard the story, and they had the facts and they knew.


Lionel Chevrier: The people are getting tired of this story too.


John George Diefenbaker: I do not wish to convey the impression of placing more reliance on Gallup polls than is proper but I might point out to the hon. gentleman that our position has gained by 3 per cent over what it was on election day.


John Whitney Pickersgill: Well, it has not in Springfield and Trinity.


John George Diefenbaker: I cannot hear these interruptions, Mr. Speaker.


John Whitney Pickersgill: They are just facts.


John George Diefenbaker: Pardon?


John Whitney Pickersgill: I just said you were not up in Trinity and Springfield.


Mr. Fraser:: And you are up a pole.


John Whitney Pickersgill: And those are the polls that matter.


John George Diefenbaker: With the indulgence of the house perhaps I may be permitted to ask the hon. member for Bonavista-Twillin-gate if he has been out there in Springfield?


John Whitney Pickersgill: Oh, no.


John George Diefenbaker: And he was not in
Trinity?


John Whitney Pickersgill: Oh, no.


John George Diefenbaker: Next time, I suggest that the hon. member go and visit them.


John Whitney Pickersgill: But then neither was the Prime Minister.


John George Diefenbaker: I now want to deal with the question of exports. The Leader of the Opposition simply juggled figures today. Let me make that very clear. Exports in 1958 have held close to the record $6.4 billion level of 1957; he admitted that. On the other hand, imports declined by 10 per cent. The result is our trade deficit has been cut very sharply. With the United States the trade deficit in the last two years of the Liberal administration mounted and mounted. The hon. gentleman himself admitted that that condition of affairs could not be allowed to continue. Such deficits would ultimately bring about in Canada a situation detrimental to this country.
Our commodity deficit with the United States in the first ten months of 1958 declined to $589 million from $983 million for the same period in the previous year and from a total of some $1,190 million for the whole year of 1956. Britain's share of Canada's imports has increased from 9 per cent to 10 per cent and our purchases from other major overseas trading areas have been reasonably well maintained.
I mentioned this afternoon the question of wheat export. There is no problem more difficult than maintaining our markets abroad for wheat. In the year 1958 wheat exports reached 316 million bushels, up from 267 million bushels the year before. Beef exports -I am going down the line because the hon. gentleman did not tell the story today-increased markedly and the export value surpassed $100 million for the first time in a period of seven or eight years.
With respect to agricultural income, of which one hears so much, I have already referred to the net income and also to the cash income. Earlier I said more was earned in Canada last year. Personal income increased by some 5 per cent.
As far as the gross national product is concerned, it now amounts to more than $32 billion; in volume terms it is about the same as in 1957, but it is still some 7 per cent above the 1956 level, compared with the United States gross national product which was only 2 per cent above the 1956 level.
Why should there be such a picture of Canada in the doldrums, with fear in the hearts, when the facts are that while we have

passed through difficult times, we are now moving upwards? That is, in large measure, owing to the action taken by this government.
I mention housing. Housing starts reached 163,000, 30 per cent above last year. The Leader of the Opposition asks, "What have you done?" As a matter of fact, it is chiefly owing to this remarkable expansion in housing that the decline in non-residential construction, in plant, equipment and so on, was almost completely offset. In 1958, total capital outlays, private and public, were about the same as in 1957. All of these things are indicative, not of Jeremiahs such as the Leader of the Opposition but the facts that will give to the Canadian people some realization of the fact that while there have been difficulties, and there are conditions that have yet to be met, we are starting back.
As a matter of fact, in tonight's issue of the Ottawa Journal-


Lionel Chevrier: Will the Prime Minister permit a question?


John George Diefenbaker: Yes.


Lionel Chevrier: Will he give the house the latest figures on unemployment?


John George Diefenbaker: I will give the latest figures I have; in just a moment I will come to that. Even in tonight's Ottawa Journal there is an item which is in answer to Jeremiah's lamentations.
Montreal, January 19.-The trend towards more construction In Canada should continue this year, with a total of perhaps $7,500,000,000, Harold J. Ball, of Kitchener, Ontario, president of the Canadian Construction Association, said today in an address to the association's annual meeting.
This would be a record, somewhat ahead of 1958's Sgure of more than $7,000,000,000.
Mr. Ball added:
"This means the employment of over 625,000 Canadians in construction operations and an even greater number in manufacturing, transporting and merchandizing construction materials and equipment, or supplying services dependent upon construction activity."
Then, on the same page I find the following:
Toronto, January 19.-Construction contract awards in 1958 established a new record of $3,593,709,200, says Hugh C. MacLean Building Reports.
The total is $699,541,100-or more than 24 per cent-higher than 1957 and $166,803,700 higher than the previous record year, 1956.
Just one further reference to the question of trade; some mention was made of the imports to Canada and Canada's balance of trade. In connection with the table on trade for 1958, as I said a moment ago, there has been a very striking decline in the Canadian trade deficit. The decline was largely the consequence of the change in our trade position with the United States. It goes on to point out in that report that the
The Address-Mr. Diefenbaker situation is improving in so far as our trade deficit with the United States is concerned, which the Leader of the Opposition, If he is going to be true to what he said last year and two years ago, will agree was a situation dangerous in its import if continued for any length of time.
Then, you say to me, how about a comparison between Canada and the United States? No amount of argument or equivocation on the part of the Leader of the Opposition can answer this fact, namely that the recession began here in Canada and was under way before it was under way in the United States. I want to compare the course of the recession in those two countries. It can be done very simply. If one wants the facts he should read the reports. Here is a booklet entitled, "Recession in Canada and the United States". It is a statistical comparison issued by the queen's printer, a special reprint from the Canadian Statistical Review of October, 1958. This brief study shows that, aided by large scale support from the government, the Canadian economy came through the recession much more smoothly than did the United States. Canadian industrial production fell only one-half as much as United States industrial production during the recession, namely 7 per cent as against 13 per cent. I mentioned a moment ago Canada's gross national product. At the same time there was an increase of 7 per cent in 1958 over the 1956 level, the United States gross national product was only 2 per cent above the 1956 level.
Housing; I have already mentioned the record in that regard in Canada which, compared with the United States, indicates that in the United States the total expenditures for housing were nearly 10 per cent under the level of 1956, and 13 per cent under the record year of 1955. In the United States downward pressures existed in both residential construction and private investment.
What do other countries say about us? The New York Times on January 14, 1959 reported the following statement by the chairman of the committee of Canadian investment companies:
The speed and effectiveness with which Canada has moved to counter most of the recessive trends of late 1957 and early 1958 continue to demonstrate the high calibre of leadership which Canada has available to foster her long term economic growth.
Wails and lamentations from the Leader of the Opposition! What about the Financial Post? There is a remarkable demonstration of confidence to be seen when one compares business leaders' forecasts in the survey of December 1957 with the similar survey in December 1958. The last survey of December 1958 showed a completely changed mood on
62	HOUSE OF
The Address-Mr. Diefenbaker the part of business leaders that was almost general in viewpoint whereas a year ago recession was uppermost in their minds. I think a fair summary of that issue of the Financial Post and the views of these leaders is that we may confidently expect moderate expansion this year. Whereas last year they anticipated no growth in the national product, this year they expect moderate growth but no boom.
These are but a few examples of what I am trying to place before the house, and the Leader of the Opposition does no credit to himself in building up a picture that is sombre, fearful and awesome, destructive as it must be coming from a person holding a position such as his.
I am going to refer to inflation for a moment now. The Leader of the Opposition just discovered it today. Let us see what the record is in connection with inflation. He spoke of inflation as a time bomb and he may be right. Set by the former government! Yes, he indulged in post mortems today. I am going to look at the record over the years and let him see why it is that I found it difficult to understand when he painted this sordid picture of the tremendous inflationary trend today.


Lester Bowles Pearson: With a recession.


John George Diefenbaker: One would expect to find that inflation reflected in the consumer price index. The index in December showed a slight reduction. Over the last year it has risen only 2.5 per cent. How modest this rise is may be seen when it is compared with the rise of 6.3 per cent in 1945-46. From December, 1946 to June, 1948 a period of 18 months, the increase was 21.2 per cent. From June, 1948 to December, 1949 the increase was 4 per cent; from December, 1949 to June, 1951, 13.1 per cent; from June, 1951 to December, 1952, 1.8 per cent; from December, 1952 to June, 1953 a decrease of .8 per cent; and from June, 1953 to December, 1954 an increase of 1.5 per cent. All of this indicates that the inflationary trend has been with us in abundant measure since the end of the last war and long before.
As a matter of fact when you look at the purchasing power of the consumer dollar, taking 1949 as the base year, we find that in 1936 the 1949 dollar would have had a value of $1.64 and in 1937 $1.59. Down it went and by 1939 it was $1.58 and by 1945 $1.33. In 1949, when the new base was established, it was $1.00. In 1950 it was 97 cents, 88 cents in 1951, 86 cents in 1952, 87 cents in 1953, 86 cents in 1954 and 1955, 85 cents in 1956, 82 cents in 1957 and 79 cents in 1958. It has been continuing this trend all along. I ask
fMr. Diefenbaker.]

you to average these figures throughout the years and simply ask yourselves this question. Why is so much being said at this time in respect of a problem that has been ours throughout the years?
There is something else that was interesting. The hon. gentleman found deficits. He had never heard of deficits before. Well, I have the record of the deficits too. I do not want to put them all on the record but I think it is only fair that the people should know what the actual situation is. There have been budgetary deficits in 21 of the last 36 years.


Lester Bowles Pearson: How many years of war?


John George Diefenbaker: Today a deficit is a terrible thing. From 1935 when the Liberal party came into power to 1957 there were 14 deficits, part of them in wartime from 1940 to 1945. I subtract those but I point out the number of times there were deficits throughout the years while the former government was in power.
I come to the matter of unemployment. I mention these things just to keep the record straight rather than to have it befogged by extravagant statements made in exaggerated language. I realize the situation and the seriousness of it. I realize the need of action being taken and I have pointed out the action that has been taken. It is one of those positions in which we find ourselves. In the event that we place money into the stream and expand credit, there is an inflationary trend. If we do not, we allow those who are unemployed to suffer. There is one of the major problems that economists have not been able to answer today, the unusual position with which we are faced. I think it requires action on the part of all of us.
I am deeply moved by what Cardinal Leger did yesterday when he called for the creation of mixed commissions of management and labour and asked responsible people everywhere to do their part to meet the situation. But I think it is only fair to refer to the figures throughout the years because one would think that this situation had just arisen recently. Going back to 1945 and taking the number of persons without jobs and seeking work as a percentage of the civilian labour force, we find that on November 17, 1945 the figure was 3.8 per cent. In February, 1946, it was 4.7 per cent.


John Whitney Pickersgill: Would the Prime Minister permit a question? Are these labour department figures or D.B.S. figures?


John George Diefenbaker: These are D.B.S. figures.


John Whitney Pickersgill: Were D.B.S. figures kept that far back?


John George Diefenbaker: It continued on and off until 1949, when in March it was 4 per cent; March 4, 1950, 6.1 per cent. Then, we go through a period of years and you find this, again in February and March of 1954, it was 6 per cent and 6.1 per cent; in January, February, March and April of 1955, it was
6.7	per cent; 7 per cent; 7.4 per cent and 6 per cent; in January, February, March and April of 1956, it ranged between 5.2 per cent;
5.5	per cent; 5.3 per cent and 4.6 per cent; again, in January, February, March and April of 1957, it was 5.3 per cent; 5.6 per cent; 5.9 per cent and 5.3 per cent.
I realize this fact, that we have in Canada a winter problem, and in order to meet that winter problem a municipal plan was launched under the auspices of the Minister of Labour (Mr. Starr), with which he will deal in particular. Let me point out that in the latest figures for October and November the percentage in October was 5.1 per cent and in November 5.9 per cent.


Lester Bowles Pearson: Give the figures for the first four months of 1958.


John George Diefenbaker: The figures for the first four months of the year were placed on the record several times last session, but I have no objection to doing so again. They were
8.8	per cent; 9.4 per cent; 10 per cent and
8.6	per cent. This indicates that, with the exception of that recessional movement which is present everywhere in the free world, the percentage of unemployment, while high and definitely challenging and worrisome, is nonetheless now, I believe, giving way to the end of this recession. The president said that today in the United States with some 4 million unemployed. My hope is that we will be able to meet this by further action to be taken.
The winter works projects I have already mentioned-


John Whitney Pickersgill: I wonder if the Prime Minister, before he leaves these figures, will permit a question?


John George Diefenbaker: Certainly.


John Whitney Pickersgill: Can he give a comparison of the latest month this year with the latest month last year, the latest month in 1958 with the corresponding month in 1957?


John George Diefenbaker: When the minister speaks he will give the full record. I am just indicating that-


Hédard-J. Robichaud: You are picking your own month.


John George Diefenbaker: -at a time when so much is being said about the situation in this country one should compare it with the
The Address-Mr. Diefenbaker United States. The figures, when compared with United States unemployment, indicate that we in this country are making the return from the difficulties in that connection. My hon. friends may speak of inflation, and of the effects, but I believe our first responsibility is to do everything we can to meet the problem which we, I repeat, inherited from the Liberal government.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: Will the Prime Minister permit a question? I understood the Prime Minister to say that the situation was worse in the United States than in Canada. Does he think that the United States inherited the situation from the Liberal government of Canada?


John George Diefenbaker: You cannot have it both ways.


John Whitney Pickersgill: That is exactly the point I was making.


John George Diefenbaker: I am very glad my hon. friend brought that up because, as I pointed out earlier, we went into the recession first and since then have been affected by the degree of United States unemployment. I am glad the hon. member brought that up.
I am not going to deal tonight with the question of agriculture except to say that we have taken action, and that action will be set out in detail by the Minister of Agriculture (Mr. Harkness) when he speaks. When I spoke in this house on August 30, 1958 I set forth a long term policy on behalf of agriculture. I pointed out the action we intended to take. Today we are taking that action and intend to introduce legislation at the present session to bring about something which, since the earliest days in Saskatchewan and western Canada has been requested, namely a system of crop insurance. In addition to that, we intended to meet a problem which, during the years, has been one upon which agriculture has demanded action, namely expanding credit.
Mention was made by the hon. gentleman of freight rates. He wrapped himself up in inconsistencies and he said, why was not something done? This is not a new problem. In 1948 the former government instructed the board of transport commissioners to proceed with an investigation into discriminatory freight rates to the end that equalization should be brought about so that those in the western provinces and maritime provinces should in no way unnecessarily be discriminated against; that is 10 years ago. They also set up a royal commission, the Turgeon commission. It met and in 1951 it

The Address-Mr. Diefenbaker made recommendations, but with the exception of one small change, as I recollect it, the $7 million subsidy in respect of the bridge in the lake Superior area, no action was taken thereon.


Lionel Chevrier: On a question of privilege, Mr. Speaker, that statement is entirely wrong.


John George Diefenbaker: That is not a question
of privilege.


Lionel Chevrier: The statement the Prime Minister has made is absolutely inaccurate.


Mr. Speaker:: The hon. member will have an opportunity to make an explanation.


John George Diefenbaker: My hon. friend will be able to establish that, if he can.


Lionel Chevrier: I will, very easily.


John George Diefenbaker: It is not a question of privilege. I am saying they did not do anything effective during those years. They did one thing. They talked about inflation. They cried over it. During the period between 1945 and 1957, freight rates increased by 120 per cent.


An hon. Member:: Better check that.


John George Diefenbaker: In any event, I am low enough at 120 per cent. They talked about inflation, but they took no action. They allowed freight rates to be raised. Last spring, when we met this problem-


Mr. Caron:: Before the election.


John George Diefenbaker: Who made that observation?


Alexis Pierre Caron: I did.


John George Diefenbaker: It is apparent the hon. member for Hull does not know the facts. Let me tell you it was not before the election.


George James McIlraith: It was during the campaign.


John George Diefenbaker: No, not during the election; freight rates were raised and Bell telephone rates were raised. We postponed any action thereon until


Hédard-J. Robichaud: Until after the election.


John George Diefenbaker: -until after the election, and then we acted.


Hédard-J. Robichaud: It is even worse; playing politics.


John George Diefenbaker: There are none so blind as those who will not see. We disallowed that increase because we said it was based on a wrong principle. It was based on a principle regarding depreciation into which I am not going to go now, but on that basis we said the increase was not permissible.

In so far as the last application is concerned, there was no other course open to the government on the hearing of the appeal than to do as it did. A report had been made by a conciliation board. It was a majority report. That majority report indicated that there must be a major increase in the wage level which would have meant an increase in freight rates, if entirely allowed, of 19 per cent.
There are inequities in the freight rate structure. They have been aggravated through the years. We find ourselves in western Canada and in the maritimes subject to two pieces of legislation, namely the Crowsnest pass agreement and also the Maritime Freight Rates Act. We find ourselves, by horizontal increases, placed in an ever more difficult position. The Leader of the Opposition says "Why do they not act?" For 12 years the increases went on and the government of which he was a member did nothing. They simply gave instructions. We find ourselves in a position in which action had to be taken. As far as the Borden commission report is concerned, it refused to consider additional subsidies. Although it was contended before the commission that the Crowsnest pass rates were non-compensatory, no decisions were made in that regard. I am not in any way accepting the view that they are non-compensatory. However, the position which we took was this. We could do nothing else than take the action which we took. According to the statement made by the acting prime minister at that time in the month of November, we undertook to act as we are now intending to act as set out in the speech from the throne.
There is only one thing I want to make clear at this time so that there will be no misunderstanding in this regard as to the action we are taking. As far as the Crowsnest pass rates are concerned, from the time that I was a boy in western Canada in 1903 and all through the years those rates have been regarded as the Magna Carta of western rights. Those rights shall not be interfered with to the detriment in any way of western agriculture or western people in general.
We now come to the amendment. Last year's amendment was much more massive and contained many more terms. This one is much more simple. The hon. gentleman says that we have lost the confidence of the people. He smiled when he said that. He always does so when he makes statements like that. As far as we are concerned, the action that we are taking is based not on contradictory or confused policy. Those words would be descriptive of the government of another day. We have with decisiveness met the problems

as they have arisen. We intend to continue to do so. We realize the unemployment problem as it is. We have acted. We are now criticized for having acted in effect because, having placed $750 million in one stream, namely the housing plan, naturally there would be inflationary influences. I believe our first responsibility is to assure that everything will be done in order to meet the situation of those who, by reason of condition over which they have no control, find themselves unemployed. That is what we have done. We did it in connection with unemployment insurance. We extended the period. We did it in connection with the winter plan. We have done it in connection with housing, with public expenditures and with public works. That course we intend to follow in the days ahead.
As far as the Canadian economy is concerned, I have already told the story of the recession coming earlier than in the United States. We have had deficits. There is no suggestion of over-expenditures anywhere. We were obliged to meet the heritage of unemployment and worsening economic conditions which was left to us. The problems we face, as I said a moment ago, are unusual. No economist has an answer for them. I refer to unemployment and at the same time rising costs and inflation. Inflationary fires have burned since 1945. They have burned more rapidly than at any other time during the last year and half. The unemployment insurance fund has been reduced.


Paul Joseph James Martin: It has been almost depleted.


John George Diefenbaker: We are obliged to do
that. We must meet a situation today that among other things contributes to a deficit. But I believe the people of Canada as a whole want us to make the necessary expenditures to meet the spectre of unemployment as it is found. As I said a moment ago, and as the President said today, we are on the way out.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Oh, not in that way. We are on the way out of these difficulties. Recovery has been slower than had been anticipated because of the effect of the United States economy on ours. But as the President said in effect, we are on the way to a new plateau of full recovery. What we need today is not the kind of picayune attitude exhibited by the Leader of the Opposition but more hope and less fear. This amendment is one that was conceived in fear. Fear engenders fear. We on this side of the house have confidence in Canada, her present and her future.
I simply conclude where I began with the
The Address-Mr. Diefenbaker words of the Leader of the Opposition when in that article in the London Times he expressed the situation in a way that any one could understand.


Lester Bowles Pearson: Would the Prime Minister permit a question?


John George Diefenbaker: I am finishing now.


Lester Bowles Pearson: I wanted to ask the Prime Minister if he would deal with one point before he finishes.


John George Diefenbaker: I know the Leader of the Opposition does not like this. I do not think it is good sense to endeavour to fill the hearts of people with fear. It is all right to make fair and strong criticism and to make suggestions as to what should be done. That is what parliament is for. The speech today was a sorry catalogue of the planting of fear in the hearts of people. You cannot build the cornerstone of political hopes for the future by endeavouring to place people who today have fear in a position of having greater fear, those fears created by the kind of speech that was delivered here today by the Leader of the Opposition.


Lester Bowles Pearson: Mr. Speaker, I wonder
whether the Prime Minister would deal with a point I raised in my speech in good faith when I asked him if he would consider interrupting the throne speech debate in order to bring forward the legislation with respect to unemployment which the government proposes to bring forward this session.


John George Diefenbaker: Having regard to the trend of the mind of the Leader of the Opposition today I will have to give the fullest consideration to that, because I would suspect that the purpose would be to instil greater fears in the hearts of the Canadian public.


John Whitney Pickersgill: Legislation is not ready.


Hazen Robert Argue: Mr. Speaker, I should like to join the others who have congratulated the mover and seconder of the address on having presented very excellent arguments based on a very difficult and weak case. I do want to say to them most sincerely that I feel each one of them did a first class job in carrying out that important duty, which the Prime Minister had assigned.
Most of my remarks will refer to domestic problems-problems facing the Canadian nation-but before proceeding I want to say that I believe the conquest of outer space which we see going on at this time is the most important thing which is happening in the world to-day and that as people look back on this time I am certain the actions of the free world in this regard will be very

The Address-Mr. Argue important for our destiny. I suggest that at this session of parliament arrangements should be made to allow members to go into this question most thoroughly to see what attitude Canada should adopt, to determine what program we should follow and to decide whether or not, as a first choice through the United Nations or, as a second choice, through cooperation with other free nations, we may develop a joint effort in this regard.
I listened to the Prime Minister (Mr. Diefenbaker), and I listened to the Leader of the Opposition (Mr. Pearson) and each one of them made a good speech-a speech to infuse their followers and to put some fear-
I heard that word very often-into their opponents. But those same speeches could well have been delivered in this house two years ago by the same persons sitting on opposite sides, except they would have had to exchange their notes.
We have a government in office at this time which has presented its third speech from the throne. This government, I think, came to office because of two main reasons. First, the Liberal administration had not dealt with certain very grave problems facing the Canadian nation, and secondly, the present Prime Minister and the men around him had been able to put forward very strong arguments and been able to capture the imagination of the Canadian people and persuade them that if they were given the powers of office they would solve the problems which the former administration had not been capable of solving.
What were these problems, and what were the arguments on which the Conservative government came to power? One of them, of course, was that this government would deal with inflation; that the erosion of the Canadian dollar would be stopped and the continual eating away of the value of social security benefits would be arrested. The Minister of Finance (Mr. Fleming) and the Prime Minister helped the government to come to power by pointing out evils which they attributed to the former government's tight money policy and high interest policy. That is one of the reasons why they sit where they do today.
How the government, when in opposition as the Conservative party, wept for the provinces; how they wept for the financial position of the provinces and how they said that the government of that day was allowing rising interest rates to make municipal financing more difficult. How they said: if we are given the reins of office we will call a federal-provincial conference. The Minister of Finance in January of last year said he would call a second federal-provincial conference to make certain that these problems would be solved.

The government appealed to our elderly citizens and said that if they were returned to power, not only would our elderly citizens have a higher pension but immediate steps would be taken to bring about an expanded social security program. They promised a cure for unemployment. The Prime Minister even promised a cure for every individual unemployed. He said no person in Canada would suffer because of unemployment if he were returned as prime minister of this country. The latest figures we have-and there will be new ones tomorrow-show that upwards of 400,000 Canadians are out of work.


Paul Joseph James Martin: More than twice
that.


Hazen Robert Argue: The government came to power by saying they would solve the farm crisis; that they would meet the difficulties faced by the farmers by instituting parity prices and by deficiency payments, thereby removing the farmer from the effects of the price-cost squeeze.


John George Diefenbaker: On a question of privilege, any reference to a promise of deficiency payments is not based on fact.


Hazen Robert Argue: I have the facts here and it
wifi not be the first time I have placed those facts on the record.


John George Diefenbaker: They are not facts.
Argue:	They have not been disputed
and I will attribute them to the appropriate minister when I come to that part of my notes. The Prime Minister has said:	no
deficiency payments. We will let the people of western Canada judge on the basis of the record whether or not such a commitment was made and such a hope held out.
What has been done to deal with the problem of inflation which is a very important and serious one? Inflation does not strike the strong, particularly; it strikes the weak. Inflation eats away the value of the old age pension and of the family allowance; it eats away the value of pension plans to which people have contributed for a lifetime. I am not going to say it is the greatest economic problem facing the people of this country today, but certainly the problem which faces the greatest number is the problem of inflation and the way in which it is eroding the income, savings and credit of the people of this nation. I have here some tables which show the reduction in the purchasing power of the old age pension since 1949. A person who began to receive an old age pension in 1949 would, from that date to the end of 1958, have received a pension amounting to $4,914. But in terms of 1949 dollars a pension over that period

of time would amount to just $4,273, a loss of $640 in purchasing power. Inflation has reduced the value of family allowances with respect to the higher payment made of $8 to a present value of just $4.75 in terms of 1945 dollars. It has reduced the value of the $6 old age pension to just $3.56. These are some of the results of inflation.
The Prime Minister's general attitude toward all problems this evening appears to be, "well, we have problems but we have had them before. We have a deficit but we have had a deficit before." Surely the reason the Prime Minister sits tonight where he does sit is because he held out the hope that some of these problems would be solved. In the seventeen months the present Prime Minister has been in office the consumer price index has increased from 121.6 to 126.3, an increase of 4.7 points, and in the previous seventeen months the index went up 4.8 points. In other words, the increase in the consumer index in the seventeen month interval the present government has been in office has been almost the same as the increase that occurred in the consumer index under the previous administration.
Do we have inflation today? Yes, the same kind and almost the same degree of inflation as we had under the previous administration.
What about the tight money policy? We heard a lot about the iniquity of the tight money policy under the Liberal government and we expected that under this government it would have been abolished. Here is what the present Minister of Finance said on August 11, 1956 as reported at page 7462 of Hansard when referring to the increases in the central bank rediscount rates:
The effect of these repeated increases in interest rates, five in a period of one year, has been a tremendous increase in the burdens cast upon provincial governments with respect to their borrowings and upon municipal governments with respect to their borrowings, and upon business, and punishing losses upon the holders of Canada's obligations. What the government should be directing its efforts toward in facing the threat of inflation is to seek an increase in productivity.
Those were words uttered on August 11, 1956. The Bank of Canada rediscount rate for August 10, 1956, the day prior to this statement being made, stood at 3J per cent and the bank rediscount rate on January 15, 1959, stood at 3.61 per cent. And so we see that the tight money policy, the high interest policy, of the Liberal government has become a tighter money policy and a higher interest policy on the part of the Conservative government.


Donald Methuen Fleming: Rubbish.


Hazen Robert Argue: The Prime Minister spoke about the efforts of his government to stop 66968-9-5J
The Address-Mr. Argue inflation and he referred to freight rate increases. I wish to give the Prime Minister full credit for having removed the 3.6 per cent increase in freight rates, the last one, after the election. They talked about it a good deal during the election and the Prime Minister held out the expectation that it would be done after the election. We were happy that the 3.6 per cent was removed. But when the government was faced with a grant of a 17 per cent increase did the government say, "No, we will not allow this to go into effect?" After all the government was very brave when it came to disallowing a 3.6 per cent increase. But no, although the
3.6	per cent increase was not allowed the 17 per cent increase has gone into effect.
The speech from the throne does not say the government intends to take steps to remove the burden of the 17 per cent freight rate increase from the Canadian people. It merely says that steps will be taken to alleviate the burden. Will the Prime Minister say that the steps the government is going to take will remove the discriminatory effect of the full 17 per cent increase?


Howard Charles Green: Mr. Speaker, may I ask the hon. member a question? Was he opposed to the wage increase?


Hazen Robert Argue: Now we hear from the Minister of Public Works (Mr. Green). I may say to that hon. gentleman I was not opposed to the wage increase and I do not think anybody in this house was opposed to it because it was recommended by a majority report of the conciliation board, but each of the ten provinces asked the government to take steps to prevent the 17 per cent increase from coming into effect by providing a subsidy.


Howard Charles Green: Would the hon. member permit another question? Were any of the provinces opposed to the wage increase?


Hazen Robert Argue: Not that I know of. But what is the record of this government in this regard? The 3.6 per cent increase was disallowed right after the election but shortly thereafter the 17 per cent increase was permitted to go into effect. Even if this were the end of the freight rate increases or the prospect of additional increases, that would be bad but apparently this is just another one along the line. There is an application before the board of transport commissioners at present for an unspecified increase in freight rates. Mr. Ian Sinclair says he expects it to be from 12 to 15 per cent. Does the Minister of Public Works suggest the government will take steps to remove the discriminatory effects of such an increase should any part of it be allowed or should

The Address-Mr. Argue it be allowed in full? No. With respect to the 3.6 per cent increase the government was fearless but when it came to the 17 per cent increase it acted in a different way. With regard to the prospect of an additional 12 or 15 per cent increase we shall see what the government will do.
What was the government going to do for the old age pensioner? It appointed a royal commission. Dr. Robert Clark was the commissioner and he was to report within three or four months. Twelve months have now elapsed and we do not know when we are going to get the report. Before the election there was agitation in the ranks of the Conservatives for an old age security system like that obtaining in the United States. Time was of the essence and the report was to have been brought in within three or four months. Now there is no telling when the report will be published and the most disappointing fact is that the speech from the throne contains no reference to action to be taken with respect to providing an improved old age security system. The actions of the government indicate that it has one way of talking prior to the election and another way of talking after the election.
No one was to suffer because of unemployment. In November of 1958 there were 398,000 unplaced applicants seeking jobs and unable to find them, just a little more than when the Liberals were in office.


Paul Joseph James Martin: Twice as many.


Hazen Robert Argue: Someone said, "Twice as
many". The previous administration was bad in this regard but the present administration is a little worse.


Some hon. Members:: Twice as bad.


Hazen Robert Argue: It is not just the unemployed people themselves that we have to consider because they have families and there is suffering among them.
This government was also going to help the farmer. Oh, yes, the Prime Minister said I was not being sufficiently careful in what I said, but let me remind hon. gentlemen of what the Prime Minister himself said in this house would be done for agriculture under a Conservative administration. On March 12, 1956, the Prime Minister had this to say, as reported at page 2021 of Hansard:
The squeeze which the farmer suffers results from the disparity in the relationship between the prices of farm products and the prices the farmer has to pay. When they are in proper relationship parity is established, and it is parity that the farm organizations across this country are asking for today. Not charity but parity.
There is no parity. Last session there was a little charity, namely $1 an acre, but apparently this session there is to be neither
IMr. Argue.]
parity nor charity. The Prime Minister said that no one has ever promised deficiency payments. I quoted an article from the Leader-Post in this house a number of times. I have quoted it before and I have never heard it challenged, and I have never heard it said by the man who made the statement that the quotation was inaccurate. I refer to the report of the Regina Leader-Post of March 21, 1958, in which the Minister of Northern Affairs and National Resources (Mr. Hamilton) is reported as follows:
Future steps included a revolutionary farm credit program, crop insurance, tax reductions, deficiency payments on western grains and many other important reforms.
"Let's get moving on the big things. Let western Canada give a western leader their support, John Diefenbaker is trusted by all people. He will not betray the trust."
The Minister of Northern Affairs and National Resources has said that the government will provide deficiency payments. This is what the statement says, but I have heard no indication from the government that deficiency payments are to be provided.


Francis Alvin George Hamilton: Mr. Speaker, on a question of privilege, this is the same statement that the hon. member made last session. When I spoke on other occasions across Saskatchewan I made it very clear that I was not in favour of deficiency payments but that they would be given consideration. When the proper time comes in this debate I will give a full answer to the hon. member for Assiniboia (Mr. Argue).


Hazen Robert Argue: Long after the quotation in the newspapers we get an apology from the minister that he has been misquoted. The Prime Minister said that he was going to give the question sympathetic consideration. These were the words used. Well, sympathetic consideration or otherwise, there is no action.


John George Diefenbaker: Mr. Speaker, that is just a statement by the hon. gentleman. I make the statement that at no time did I say that I would give the question sympathetic consideration. I made it very clear consideration would be given to this question. Make no mistake about that.


Hazen Robert Argue: Mr. Speaker, I quoted it before. I do not have the clipping with me now but the report was made from a speech that the Prime Minister made in the city of Moose Jaw.


Mr. Speaker:: I think the hon. member will have to accept the statement made by the Prime Minister in his place that he did not use the phrase.


Hazen Robert Argue: I do accept it, Mr. Speaker, and I will at a future date quote from the article

that I referred to so that the Prime Minister will understand that I was not endeavouring to mislead the house. I take it that now he is correcting the newspaper account. Well, the Prime Minister used to say in this house, "Parity, not charity." But there is no parity. There is no parity price in the legislation of the Minister of Agriculture (Mr. Harkness). Why, he has been one of the greatest opponents of parity prices.
The Minister of Agriculture made a speech before the federal-provincial conference in Ottawa on November 12. I want to congratulate the minister on having presented to that conference a very forthright statement of his views. The minister did not mince words. Here are some of the references he made to agriculture. In the second paragraph he said this:
The difficult position of agriculture in the national economy is a matter of grave concern not only in Canada but in practically every other country in the world.
A little further on he had this to say about cereals:
Cereals are likely to present a particularly serious problem.
Then he went on to talk about no export outlets for surplus dairy products. A little later on he talks about a mounting surplus of butter.


Douglas Scott Harkness: The hon. member just passed over the page which says our prices of most products are better than almost any other country's.


Hazen Robert Argue: It is a strange result of those wonderful prices, is it not, that agriculture is in this very serious position. Then, the minister saw fit to deny his own figures, and he said this about the increase in broiler production:
It is quite apparent that rates of increase such as this will create in the very near future an impossible marketing and price situation with consequent distress and bankruptcy for many producers.
It used to be parity; now it is distress and bankruptcy for many producers. Well, the Prime Minister has said that he never promised deficiency payments. Many people in western Canada think deficiency payments should be made. There are many people in western Canada who feel that in asking for deficiency payments they are asking for only a small part of what they would be entitled to if they were asking for parity and not charity, in the words of the Prime Minister. The Prime Minister quoted, hon. members will recall, increases in one statistic after another in the province of Saskatchewan to show that in his province and in my province everything is well, the province is
The Address-Mr. Argue booming, business is on the increase. But asking for deficiency payments, asking this government to do something about inflation which caused the farmer's cost of production to increase in this country while this government has been in office, resulted in a meeting of farmers and businessmen to the number of 600 people in the city of Prince Albert. They filled the Arcade hall to hear Mr. Wesson of the Saskatchewan wheat pool and vice-president R. R. Atkinson of the Saskatchewan farmers' union. This was on January 9. The people of Saskatchewan are aroused; they are aroused not because they are angry with this government, but-


Mr. Horner (Acadia):: Because the Saskatchewan wheat pool is spending millions publicizing it.


Hazen Robert Argue: That is not true; that is a very misleading and inaccurate statement.


John (Jack) Henry Horner: Read it.


Hazen Robert Argue: And if my hon. friend wants to subscribe to this newspaper he can pay his subscription.


John (Jack) Henry Horner: I do not have to subscribe to it; they send me one.


Hazen Robert Argue: I do not get mine gratis; I pay for it.
The Saskatchewan wheat pool held a meeting in the city of Saskatoon and there were 1,900 people at it. They overflowed the ballrooms in the Bessborough hotel. They were asking for deficiency payments.
I said the farmers were not angry with this government particularly. This is a problem that has not come about in recent months; this is a problem that has been growing for a number of years. They have expected action from the government, but we have no action. Last year, when the speech from the throne was presented some hope was held out that something more would be done. When the mover of the address in reply to the speech from the throne spoke about the question of deficiency payments and the action of the Saskatchewan wheat pool he had this to say as found on page 20 of Hansard for January 16:
The contention on the part of the Saskatchewan pool is that farmers cannot wait for the results of a long-term policy. That statement has been made on numerous occasions in the past and perhaps explains why a national policy has never been implemented.
He blames the wheat pool for no national agricultural policy.
The stated policies of this government are known and generally have the support of the farm organizations. They are intended to remove the root causes of instability in agriculture. True, some of these difficulties will yield only to long-term measures. But any effort to jeopardize or prolong
70	HOUSE OF
The Address-Mr. Argue the early implementation of a truly national farm policy will be performing a disservice to the farmer.
I would suggest that the responsible wheat pool organizations and the farmers' union are not doing a disservice to agriculture but are doing a very great service by pointing out to the people of Canada and to members of parliament the very serious situation in which agriculture finds itself today.
We had expected that the government would do something to help small business. The Prime Minister is always being misquoted but, as found in the Charlottetown Guardian of February 28, 1958, the Prime Minister is reported as having made this statement:
He announced that if his government is re-elected it is their intention at the first session of parliament to give consideration to a system whereby small business may be able to expand on reasonable terms and have available to it a system of financing which is being considered to enable a small business to meet its responsibility in expanding and assuring extra jobs.
Small business was promised that a credit system would be provided for small businessmen so that they could expand their businesses. They were promised a new system of financing, but the speech from the throne is completely barren on this question. The government has turned its back on its election promises. Instead of a speech from the throne full of forecasts of new steps being taken to provide full employment, to arrest the present inflation, to provide an old age security system as had been promised, to provide credit for businessmen, to provide parity and not charity, we have a speech from the throne that is completely barren in relation to the many promises that have been made. We have an anaemic speech from the throne. We have a policy on the part of the government that is a repetition of the policy of the former administration which led this country into so many difficulties.
I have not the advantage or otherwise of having unlimited time, and in view of some very agreeable interjections and the clock moving on I only have time to make a few further points. I have talked about the government's promises and its failure to implement those promises. But I call on the government at this time in the session to take emergency steps to help those who are unemployed. The government should bring forward immediately legislation to deal with this very serious problem.
The Pi'ime Minister is a capable debater. He is usually able to handle any argument put forward by anyone in the house, but I was most disturbed when he said of the Leader of the Opposition, and I took down


his words, "I must point out that the speech he delivered today is not in keeping with his responsibilities as Leader of the Opposition at a time when world conditions are difficult and trying, when the communist world attacks the free world economically as never before, and at a time when one hears remarks such as those made by Mr. Mikoyan last evening when answering questions on a press conference."
I heard nothing said by the Leader of the Opposition to warrant a statement like that by the Prime Minister. This is a free parliament in a free nation and there should be no suggestion that statements made in this house on inflation, unemployment and all these great difficulties are statements that should not be made because they may provide some aid or comfort to communists.


Paul Joseph James Martin: Or embarrass the government.


Hazen Robert Argue: Of course, it is an inconceivable thing that we should embarrass the government.


Paul Joseph James Martin: The government must not be embarrassed.


Hazen Robert Argue: I should like to refer at this time to a report in the Montreal Gazette of last Saturday dealing with the question of unemployment which had this to say:
Cardinal Leger today called for the creation of mixed commissions of management and labour leaders to cope with the "terrible affliction" of unemployment.
That is what he thinks of the situation, a terrible affliction.
In a pastoral letter, which will be read in all parishes of the diocese tomorrow, the Roman Catholic archbishop of Montreal says the situation requires the intervention of government to "take new and audacious steps." . . .
A "just and lasting" solution to unemployment, the Cardinal goes on, involves respect for man's natural right to work, encouragement of a high and stable level of employment, and "a more salutary direction" for the economy.
Here are the words of a very highly placed person in our Canadian life in referring to the great, growing and terrible problem of unemployment. Surely no one can say that any Canadian is not discharging his duty when he puts forward in very strong language his opinion on these very grave issues facing the Canadian public today.
We in this group believe that an economic policy, economic planning and government expenditures in the development of natural resources are necessary if we are to cope with unemployment. Before I sit down I should like to move, seconded by the hon.

member for Kootenay West (Mr. Herridge), the following amendment to the amendment: That the amendment be amended by inserting alter the word "policies" the following words: "caused by the absence of social and economic planning",
and by inserting after the word "unemployment" the following words:
"and their failure to provide agriculture with a fair share of the national income, and their further failure to take effective steps to combat inflation".
The amendment of the Leader of the Opposition referred to one very important problem facing the Canadian nation, namely unemployment. By the amendment to the amendment we have added two further problems that we consider of great importance, the necessity of providing agriculture with a fair share of the national income and the necessity to take effective steps to combat inflation.
Business of the House
During this session the C.C.F. party will keep prodding, pushing and pressing the government for action on these three problems.
On motion of Mr. McGee the debate was adjourned.



BUSINESS OF THE HOUSE

Lionel Chevrier: I take it tomorrow we will go on with the speech from the throne?


Howard Charles Green: Yes, Mr. Speaker.


Lionel Chevrier: May I ask the leader if it is the intention to go on with the throne speech until it is completed?


Howard Charles Green: Yes, it is, Mr. Speaker.


[Stage Direction]
At 10 o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Tuesday, January 20, 1959