1960-01-18

Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, I should like at this time to make a report to the house on important meetings which took place last week in Paris on broad economic matters. As hon. members are aware my colleague the Minister of Trade and Commerce (Mr. Churchill) and I represented the Canadian government. It was a matter of regret to both of us that we were, for this reason, unable to be present at the opening of parliament.
Before describing the events of last week it might be helpful if I were to outline the events which led up to the meetings. May I ask the indulgence of the house for a rather long statement, necessitated by the complexity of the background and the rapidity of recent developments. In what I have to say, when I am referring to Europe, Mr. Speaker, I am including the United Kingdom in that designation.
Hon. members will recall that immediately after the war the United States made reconstruction loans to Europe; and Canada made, on a proportional basis, even greater loans to Europe. It soon became clear, however, that these loans were not enough to ensure full European recovery. We all recall the wave of hope and encouragement that ran through Europe and around the world when, in June, 1947, General Marshall announced the famous Marshall plan. Under that plan, with its massive economic aid from the United States, Europe carried forward its post-war economic recovery. While the Marshall plan was essentially economic it was, of course, of great political significance. It fostered closer relations between European countries, especially through a new body known as the organization for European economic co-operation or, more briefly, OEEC. Canada and the United States both became associate members of OEEC in 1950, reflecting the contributions that both made to European recovery and common membership in NATO.
Then came a development of a rather different nature. Six countries of Europe began
to lay plans for a very much closer form of association. They are France, Germany, Italy, the Netherlands, Belgium and Luxembourg. In these plans the establishment of strong ties between France and Germany was particularly important. In the succeeding years the six have agreed amongst themselves to form the European coal and steel community, the European atomic energy agency known as EURATOM, and the European economic community or common market. Hon. members will be aware that GATT permits the formation of common markets under specified conditions. Accordingly the six are, over 12 or 15 years, abolishing trade restrictions of every kind between themselves and developing a common tariff which they would apply to imports from the rest of the world.
While these developments were understandable, it is also understandable that the other European countries, which participated in the earlier post-war European initiatives but which for political or economic reasons were unable to join with the six, should regard the plans of the six with mixed feelings. If they could not share in all the political activities of the six, could they not at least share in the economic arrangements? Hence emerged the proposal by the United Kingdom for a Europe-wide industrial free trade area. Unfortunately, however, the two movements, one for a close association of six and the other for a much looser association of 17, reached an impasse at a ministerial meeting of the OEEC in December, 1958.
Faced with this situation, seven European countries including the United Kingdom, Sweden, Norway, Denmark, Switzerland, Austria and Portugal, quickly decided to form a free trade area among themselves. They did this partly for the benefits it would bring to its members but also in the hope that, in due course, the six might find the idea of a Europe-wide free trade area more acceptable, and in the fear that without such an arrangement the six, from a position of strength, might make separate trade arrangements with each of the seven individually. Thus, by the end of last year the 18 full members of OEEC were divided into "the Six" and "the Seven", and a remaining five have no special association with each other.
Since the breakdown of negotiations in OEEC in December, 1958, no common ground had been found for substantial discussions
26	HOUSE OF
Paris Trade Conference between the Six and the Seven, and growing concern was expressed about a possible split between European countries with effects running far beyond the economic field.
Politically as well as economically Canadians must be apprehensive of any division that emerges amongst our partners in NATO. We depend in no small measure for our common defence on the strength and solidarity of western Europe. Although, of course, the Paris meetings were not in any sense, and by their composition could not have been, NATO meetings, Canada naturally approached last week's meetings having in mind article 2 of the North Atlantic treaty requiring members to "seek to eliminate conflict in their international economic policies".
Our economic concern was twofold. We feared lest the situation developing in Europe should lead to trade barriers against outside goods more restrictive than were necessary or indeed justifiable. We also feared that some new form of discrimination against Canadian goods, some new European preferential system from which we were excluded, might emerge to the detriment of our exporters.
These concerns were voiced very clearly and very forcefully when, in the opening meeting last week, my colleague the Minister of Trade and Commerce spoke in part as follows:
I need hardly remind those present here of the great importance of international trade to Canada-We have large markets in Europe, accounting for 30 per cent of our total exports, and most European countries have large and expanding markets in Canada-Canada has been anxious lest the policies of the European economic community and the European free trade association be restrictive in their effects on world trade-All of us- have an obvious interest in maintaining generally accepted rules which provide reasonable and fair access to markets throughout the world.
Any protectionist or discriminatory development in Europe against imports from Canada would, in our view, be particularly indefensible in the light of the great increase of prosperity and economic strength in Europe during the past two or three years. This strength has brought with it the long sought for convertibility of European currencies and a rapid and welcome process of dismantling trade restrictions. Europe has built up its gold and dollar reserves to a substantial level, much of this inflow coming from the United States. Indeed, the situation is now such that European countries are in a position to review in a new light not only their trade and tariff policies but also their capacity to extend aid to the world's underdeveloped countries. This marked improvement in the balance of the world's economic strength was an important part of the background of last week's meetings.


Meanwhile the OEEC stood at a cross-roads, and the widest divergence of views existed regarding the roles which it ought and ought not to play in the future.
The growing concern over these matters that was entertained in Ottawa was entertained also in Washington. In November and December of last year the United States undersecretary of state, Mr. Douglas Dillon, visited Europe to explore the problems. His visit resulted in a more rapid crystallization of ideas and a more rapid series of events than he or anyone else had anticipated. It was not only clear that something should be done, but also that it should be done quickly.
Mr. Dillon was in Paris just before the NATO council meetings began in mid-December, and a week before the western summit meeting. Ministers on the Canadian delegation to NATO were able to discuss the rapidly evolving situation with ministers of the United States, the United Kingdom and other countries.
As hon. members know, the four heads of state and government on December 20 decided that an invitation should be issued to 13 countries, including Canada, and also to the European economic commission, to attend the meeting that began in Paris last Tuesday.
In the week before that meeting the Minister of Trade and Commerce and I went to Washington to hold preliminary informal discussions with Mr. Dillon and also with Mr. Anderson, the secretary of the treasury. These talks were most constructive. In the course thereof the United States secretaries assured us that they shared our concerns regarding access to European markets, not only for manufactured goods but also for materials and foodstuffs in which Canada is particularly interested.
Immediately the Canadian delegation arrived in Paris we had useful talks with the French authorities and valuable discussions with the chancellor of the exchequer and the president of the board of trade.
Thirteen, as we ourselves had feared, turned out to be an unlucky number. The thirteen were made up of two from North America, five from the Six, five from the Seven, and one so-called "European neutral". This left seven European countries off the invitation list, and very naturally most of them were dissatisfied and critical. The reason against a meeting of twenty was the feeling on the part of some European countries, who were dissatisfied with the recent role of the OEEC, that such a meeting would be considered as a meeting of the OEEC itself.
Nor were these seven the only countries in the world that were perturbed by the

course of events. As the date for Paris drew near the Canadian government received inquiries and representations from a number of other governments, some in the commonwealth and others outside. All of them were worried by the possibility that important movements were on foot, and important decisions were to be taken, in which their interests were involved but in relation to which they had no direct voice. These governments may rest assured that in the recent meetings the Canadian delegation did all that it could, and not without some success, to ensure that their interests were not neglected.
These representations served to remind us vividly of the dangers and damage that could attend restrictive regionalism, whether in Europe or elsewhere. Political and commercial interests go hand in hand. The most constructive, least divisive, solutions for commercial problems are to be sought not by one region of the world seeking insulation from the rest, but in arrangements that can encompass all free nations on a basis of harmony and equality.
It may simplify matters at this point if I explain that in Paris last week there were in fact three successive, and in a sense quite separate, meetings, and that three themes ran through all three of them. The first meeting was of the thirteen; the second was of the twenty, as independent equals; the third meeting was of the OEEC council where all twenty were present, but where Canada and the United States were only associate members, without voting rights and without obligations. This was the first occasion on which Canadian ministers had attended an OEEC meeting. In the past Canada's representation has been by officials rather than ministers.
The three themes of the meetings were trade, aid, and organization; that is to say, the reorganization of OEEC. Each issued in a resolution, which was first adopted by the thirteen, and then adopted without alteration by the twenty.
I now table the texts of these three resolutions, and suggest that, if it is the wish of hon. members, they may be printed as annexes to today's Hansard, for the assistance of hon. members.
[Editor's note: For texts above referred to, see appendix1
It is convenient to begin by reporting what developed in the field of organization. It quickly became clear that there was widespread support amongst European countries for a revision or reconstitution of OEEC that would fit it for the tasks of the 1960's,
Paris Trade Conference rather than the Marshall plan and the 1950's, and would at the same time make it suitable for adherence by Canada and the United States as full members.
This task of reconstitution is to be undertaken in two stages. First, four experts in their personal capacities are to compile a report with recommendations. After that there will be such meetings and discussions among the twenty governments as the matter may require. The first meeting will take place on April 19. The whole process of approval, including ratification by the United States congress, would inevitably last well into next year. One of the experts will come from the Six, one from the Seven, one from the United States, and one from the remaining countries. I shall be informing the house of the names of the four experts as soon as this information can be officially released.
During the meetings the United States representative declared the willingness of his government to join the reconstituted organization, subject to agreement on a satisfactory constitution and subject to congressional approval. As for the Canadian government, our wish would be that Canada would also find it possible to become a member. Europe has now fully emerged from the period of post-war economic difficulties and is an increasingly important force in world affairs. Hon. members will agree that in these circumstances Canada, with vital European and world interests engaged, should be prepared for full participation.
The second theme in Paris was aid, and on this I can speak briefly. European countries are showing not only an increased capacity but an increased disposition to provide aid, not only through multilateral organizations such as the United Nations and the international bank for reconstruction and development, but also bilaterally, just as we have done for nearly ten years under the Colombo plan and in other ways. It has been agreed that, pending reconstitution of the OEEC, eight countries should pool their experience and know-how with regard to aid programs. No financial commitments are involved, and no change in Canada's aid program, as included in the estimates for the coming fiscal year, is to be anticipated. The members of this group, in addition to ourselves, are Belgium, France, Germany, Italy, Portugal, the United Kingdom and the United States, together with the commission of the European economic community. The committee has power to add to its numbers. The group will consult the international bank, and thus avoid overlapping of activities with that or other international institutions.
28	HOUSE OF
Paris Trade Conference The third theme was trade, and for Canada, of course, this was the most important. There was general agreement that, at least pending reconstitution of the OEEC, some forum should be set up in which it would prove possible to discuss the problems of the Six and the Seven in their European and world-wide contexts. In the face of strong differences as to the precise terms of reference of the new trade committee and the number of countries to serve on it, the Canadian delegation put forward proposals which formed the basis of the resolution eventually adopted as the unanimous decision of the conference. A committee of 20, of which Canada is, of course, a member, with power to establish subcommittees was agreed on. The terms of reference, while according priority to the relationship between the Six and the Seven, are not confined solely to European aspects of trade relations. It was also decided that the committee should include the executive secretary of GATT. He will, I am sure, play a constructive role and his presence on the committee should, at least in a measure, allay the apprehensions of the many countries outside Europe who have been worried that the Europeans, preoccupied by their own difficulties, might disregard the interests and the rights of outsiders.
In regard to all three resolutions, but particularly in regard to that on trade, the Canadian delegation was successful in its attempt to promote acceptable solutions for general problems while protecting Canadian interests.
In the short time available, last week's meetings did not attempt to grapple with substantive issues of trade. What was required was agreed machinery which could come to grips with these issues. This will now be done in the trade committee and its subcommittees. It is now for countries involved to put this machinery to the best possible use in solving their problems without sacrificing the interests of others. It is the sincere hope of the government of Canada that all the countries concerned will effectively employ this opportunity.
In this regard we must recognize that the outcome of current economic issues in Europe will have significant effects throughout the world. Trade policies are not made in isolation, but through interaction. The commercial policies to be followed in Europe cannot fail to influence United States policies, and both are of critical importance to Canada.
The meetings of the past week may well prove to be memorable. At these meetings the United States displayed, once again, leadership of a very constructive nature; and this leadership involved the relationships between the United States, Europe, and the rest 

of the world. Since the war the United States, abandoning its historic isolationism, has been willing to recognize its own interest in the reconstruction of a devastated continent and in the defence of that continent against the danger of expansion and aggression from the east.
Last week European countries and the United States, together with Canada, came together as equals around a table to discuss common economic problems. Let it be remembered that there was not only the problem of the threatened trade split in Europe but there were also the problems of balances of payments and of enlarging the aid given by the more industrialized countries of the free world to the less developed. The countries participating were ready to concern themselves not merely with the responsibilities of the Atlantic community within itself but with its responsibilities in the world at large. No development could more closely serve the interests of this country.
Canada has been historically a north Atlantic country. Its history has been bound up with the United Kingdom, western Europe and the United States. We can expect to achieve our full stature only if Europe and the United States are in harmony. But Canada is also a member of the commonwealth and the free world with trading interests in every quarter of the globe. Just as we have urged that the European common market and the European free trade association should be outward looking, so we should hold to the view that all north Atlantic countries should be outward looking. With those thoughts in mind hon. members of the house can, I believe, accept the developments of the past week with satisfaction and with hope.


Mr. Speaker:: Does the house give leave to the printing of the resolutions mentioned as an appendix to Hansard today?


Some hon. Members:: Agreed.
Hon. L. B. Pearson (Leader of Ihe
Opposition): Mr. Speaker, I am sure that all hon. members of the house will have listened with great interest to the statement which has been made by the Minister of Finance (Mr. Fleming). Perhaps the house will permit me on behalf of the opposition to welcome him and his colleague the Minister of Trade and Commerce (Mr. Churchill) back to the house from their strenuous efforts of recent days in their attendance at a conference which, in the words of the minister, may well turn out to be a memorable one.
I hope it does, and in the right direction.
The minister's statement was a little longer than that which one usually gets on motions, but we on this side of the house have no

complaint on that score because he has been dealing with a highly important matter; and it was quite appropriate, I suppose, that on the day which is normally and traditionally called leader's day we should have heard from the minister at some length.
Perhaps I may be permitted to express my mild surprise that in view of the nature of the conference and its agenda we did not hear from the Minister of Trade and Commerce, but that is a matter of governmental division of business with which, of course, I am not concerned.
The minister has talked about the meeting in Paris, the conference of thirteen, and the difficulties already created by the fact that it was not a conference of twenty. I can understand the difficulties and I can also understand the difficulty in meeting those difficulties, but this does serve to underline the importance of consultation among all members of a group that are concerned with the discussions affecting any members of that group. The Secretary of State for External Affairs (Mr. Green) has been telling us recently that all the problems of consultation in NATO have been solved, but this is a difficult problem to solve indeed, and the statement made by the Minister of Finance illustrates how difficult it is.
The conference already seems to have had some interesting results. As the minister has pointed out, a committee of four, meeting, he said, in their personal and expert capacity-[DOT] that is not going to be easy in these circumstances-has been set up to report on how a new organization for international economic co-operation which will have its political importance, can be established-and in saying that I am paraphrasing, I hope correctly, what the minister said-which will include not only the members of the organization for European economic co-operation but Canada and the United States. This may turn out to be an extremely important report indeed and in so far as it will lead to that result-the conversion of the organization for European economic co-operation into an organization for Atlantic economic co-operation -it will certainly receive the support of every hon. member of our party. With respect to the importance of this matter, we on this side of the house have been talking about its importance for many years.
The minister says that the names of the members of this very important committee will be announced when it is possible to do so, but the New York Times seems to have done that already. I quote from a report by its Paris correspondent, found in the issue of Friday, January 15, as follows:
Paris Trade Conference
It was decided today that four experts would draw up a report on a new organization, probably a transformation of the OEEC, for a meeting of the 20 nations April 19.
The article goes on:
The four experts will represent, respectively, North America-
According to this report, and I hope it is not accurate, one of these experts will represent North America, which includes Canada; another will represent the European free trade association or outer seven, another the six-nation European economic community or common market, and the fourth will represent other European nations. The report goes on to say:
The North American representative will be from the United States, the outer seven member will be a Briton, and the common market delegate a Frenchman. A Greek will represent the others.
This report gives the names of the four members of the committee.
It is expected that the American will be W. Randolph Burgess, United States ambassador to the North Atlantic Treaty Organization. Others mentioned are Sir Paul Gore Booth, undersecretary for economic affairs in the British foreign office, Bernard Clappier, director of external finances at the French ministry of finance, and Xenophon Zolotas, governor of the Bank of Greece.
Apparently some progress has already been made with the appointment of this very important committee. I will have something more to say about this a little later. I must express regret that Canada, which has taken a very active and leading part in the past toward the conversion of OEEC into a possible OAEC, was not found worthy of membership in this group.
The minister has also pointed out that some progress has been made in broadening the basis of international economic assistance to include, I hope, the countries of Europe which have made such a splendid recovery in the last few years and which are now in a position to make their contribution to international economic assistance. I hope that result will also be achieved.
I concur with the minister in his analysis of the importance of Europe to this and other international economic matters, and the importance of these developments not only from the economic but from the political point of view. The minister paid a warm tribute to the leadership given by the United States of America in this and related matters, and I think we can all agree with him in that tribute. But perhaps it is also well to point out, as I think he perhaps did, that great leadership in this matter has also been given by European countries; and I hope that leadership, notably by the United Kingdom, our own mother country, combined with

Paris Trade Conference imagination and leadership on the part of the United States and Canada, will solve some of these international economic problems on an Atlantic basis, something that is now essential in view of the problems we are up against on a world basis.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, the conference which has just been held, about which the Minister of Finance has reported to us, is of course one of very great importance to Canada. We have noticed in recent months a very disturbing trend in Canada's balance of trade. Not only do we now have a very adverse balance of trade with the United States but we also have a deficit in our trade with overseas countries.
The development of the inner six trading community and the outer seven is not, of course, something that is new. It is something that has been developing and coming to fruition for some years. We feel that the action that has been taken to discuss this matter should have been taken long ago.
Much of the damage that could arise from the erection of barriers against Canada and the United States may have already occurred before the government decided on the kind of action that has recently been taken.
It has been stated often of late that Canada's export industries are getting into greater and greater difficulty. One reason our export industries are finding themselves in greater difficulty is the fact of the recovery of the European trading area and the economic offensive of the Soviet Union. Other industries in Canada which depend on both the domestic and export markets face great difficulty in competing when industries within the inner six, for example, can look forward to a consumer market of over 200 million people, and industries within the outer seven will have available to them to a growing degree a market of some 90 million consumers. We think the government should have adopted a policy, when the British offered Canada a free trade area-


Mr. Speaker:: Order. May I advise the hon. member for Assiniboia that this is not a debate, and he should confine himself at this stage to comments that are relevant to the statement which was made.


Hazen Robert Argue: With great deference, I think it is very relevant to the discussion of this subject to refer to the failures of the government in the past which have led-


Some hon. Members:: Order.


Hazen Robert Argue: Oh, I know the government is most sensitive about its failures.


Mr. Speaker:: The hon. member will probably find that the sensitivity of the house is due entirely to his infringement of the rules.


Hazen Robert Argue: With great deference, I do not feel that comments on the events preceding the trip of the Minister of Finance and Minister of Trade and Commerce are in any way out of order. We hope the steps that have been taken will prevent the erection of barriers against Canadian trade by the inner six or outer seven, because to Canada trade is extremely important. We shall hope that when the minister makes further statements on this subject in the future he will be able to report to the house a great deal more in the way of concrete progress than was contained in his statement this afternoon.


Donald Methuen Fleming: Mr. Speaker, may I clear up two points that have been raised about which I think there is a misunderstanding?


Some hon. Members:: Order.


Donald Methuen Fleming: On a matter of privilege, Mr. Speaker-


Some hon. Members:: Order.


Mr. Speaker:: Order. Unless there has been misrepresentation or misunderstanding of what the minister said-


Donald Methuen Fleming: Precisely that.


Mr. Speaker:: -it would be out of order for him to reply. If he will limit himself to the alleged misunderstanding I think the house might permit him to go that far.


Donald Methuen Fleming: That is precisely the situation. On the matter of the appointment of the four representatives, may 1 say to the Leader of the Opposition and the house that they have not been appointed. We have had confirmation this morning that one in particular may not be appointed for some days yet. As to the other point, I am sure it will not be expected that we should be held responsible for errors of the United States press. One member of the four will come from the United States only and in no sense will be a representative of North America. I want to make that abundantly clear so there will be no misunderstanding on this point. I said at the meeting of the 20 last Thursday morning, and these are my words-
It has long been a cardinal principle of Canadian policy that no one speaks for Canada but Canada.
[Later: ]


Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Minister of Finance arising out of the statement he made a moment ago. He read something like the following, which may be in

error in part because I paraphrased it in my notes: "Any protective measures in European trade might deal a serious blow to Canada."
My question is this. How can the minister expect a further liberalization of trade in the common market and the United Kingdom free trade zone when the government's policy is moving in the direction of protection?


Some hon. Members:: Order.


Mr. Speaker:: I think the hon. gentleman should reconsider that question. It seems to me it is not seeking information but rather making a statement as to what the government's policy is, and I would request him to frame it as a question for information if he can.


Donald Methuen Fleming: Mr. Speaker, on a question of privilege, it was not a statement but a misstatement.


Lionel Chevrier: Mr. Speaker, my question was based on the statement which the minister read for almost fifteen minutes. It is impossible in that length of time to retain everything that was said. There is no doubt but that, in effect, the statement was very much in line with my note-


Some hon. Members:: Order.


Mr. Speaker:: I am not quarrelling with the hon. member asking a question about something said by the Minister of Finance in his statement, but what I do suggest to the hon. member for Laurier with all respect is that in offering the information as to what the government's policy is he is only inviting a similar kind of statement in reply, and it is contrary to the rules of the house.


Lionel Chevrier: Let me put it in this way, Mr. Speaker. I ask the minister if he contemplates liberalizing the policy of the government to meet the position vis-a-vis the common market and the free trade zone in the United Kingdom in the light of the protective policies adopted by the present government.


Donald Methuen Fleming: Mr. Speaker, of course the hon. gentleman has not correctly stated the facts. The fact is that no country and no government has given more consistent support to the principles of multilateral trade as embodied in the general agreement on tariffs and trade than has Canada, and every step this government has taken in the field of trade since it came into office has been taken in complete harmony with GATT.


Mr. Mcllrailh:: The protectionist ideas of the old Tories.


Donald Methuen Fleming: Mr. Speaker, we hear again the quavering voice of the past lifting itself in mournful cadences.
Proposed Legislation


Mr. Pearson:: Mr. Speaker-


Mr. Speaker:: Does the Leader of the Opposition have a supplementary question?


Lester Bowles Pearson: No, Mr. Speaker.


Hon. J. W. Pickersgill (Bonavisla-Twil-lingafe):: I have a supplementary question, Mr. Speaker. I should like to ask the Minister of Finance if he offered to restore the Liberal tariff on wool.


Donald Methuen Fleming: Mr. Speaker, it escaped the attention of the hon. member while I was reading my statement that there was no substantive discussion on trade at this conference. The conference was devoted to a discussion of the procedure and an organization for trade purposes and for aid, but that escaped the hon. gentleman's notice.



INDIAN ACT


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration) moved: for leave to introduce Bill No. C-2, to amend the Indian Act.


Some hon. Members:: Explain.


Ellen Louks Fairclough: Under the existing law Indians ordinarily resident upon reserves, other than veterans and their wives, are disqualified from voting in federal elections unless they have waived the exemption from taxation on and in respect of their personal property situated on a reserve, conferred upon them by section 86 of the Indian Act.
It is proposed to give Indians the right to vote in federal elections free from the restriction which now exists. This bill provides for the necessary amendment to the Indian Act.
Motion agreed to and bill read the first time.



CANADA ELECTIONS ACT


Ellen Louks Fairclough: for leave to introduce Bill No. C-3, to amend the Canada Elections Act.


Some hon. Members:: Explain.


Ellen Louks Fairclough: Under the act as it now stands the privilege of voting is extended to Indians on reserves only if they are veterans of world war I or world war II, and their wives. Other Indians on reserves must sign a waiver of tax exemption.
The purpose of the proposed amendment is to grant the franchise to Indians without

Proposed Legislation
restriction if they are qualified as other electors, by repealing the present provisions of the Canada Elections Act which bar Indians on reserves, with certain exemptions, from voting.
Motion agreed to and bill read the first time.



EXPORT AND IMPORT PERMITS ACT


Hon. Gordon Churchill (Minister of Trade and Commerce) moved: for leave to introduce Bill No. C-4, to amend the Export and Import Permits Act.


Some hon. Members:: Explain.


Gordon Minto Churchill: This act would lapse unless renewed this year. It is the purpose of the bill to extend the act for another period, and there are no substantial changes contemplated.
Motion agreed to and bill read the first time.



CRIMINAL CODE


Mr. Frank Howard (Skeena) moved: for leave to introduce Bill No. C-5, to amend the Criminal Code (trading stamps).


Some hon. Members:: Explain.


Frank Howard: The bill seeks to redefine the definition of trading stamps in subsection (b) of section 322 of the Criminal Code to make them illegal and to plug the loopholes that now exist in the code.
Motion agreed to and bill read the first time.



AMENDMENT TO ABOLISH CAPITAL PUNISHMENT EXCEPT FOR TREASON

Mr. Frank McGee (York-Scarborough) moved: for leave to introduce Bill No. C-6, to amend the Criminal Code (capital punishment).


Some hon. Members:: Explain.


Frank Charles McGee: The purpose of this bill is to abolish capital punishment in Canada, except in certain cases of treason. If you will permit, Mr. Speaker, may I say that the rules of the house prohibit a member of the Liberal party from joining in the motion to second this bill. Had it been possible, the hon. member for Fort William (Mr. Badanai) would have seconded it jointly when it was introduced.
Motion agreed to and bill read the first time.



AMENDMENT TO ABOLISH IMPOSITION OF CORPORAL PUNISHMENT

Mr. Harold E. Winch (Vancouver East) moved: for leave to introduce Bill No. C-7, to amend the Criminal Code (corporal punishment).


Some hon. Members:: Explain.


Harold Edward Winch: The purpose of this bill is to amend those sections of the Criminal Code which permit the infliction of corporal punishment.
Motion agreed to and bill read the first time.



AMENDMENT TO ABOLISH CAPITAL PUNISHMENT FOR MURDER

[Stage Direction]
On the order:
Introduction of bills-Mr. Winch-Bill intituled: An act to amend the Criminal Code (capital punishment) .
Harold Edward Winch: Mr. Speaker, in view of the fact that the purpose of this bill is dealt with in another bill that has already been introduced and is therefore on the order paper, I would ask for the unanimous consent of the house to withdraw this bill.


Mr. Speaker:: Has the hon. member leave to withdraw this bill?


Some hon. Members:: Agreed.


Mr. Speaker:: Withdrawn.
Order discharged and bill withdrawn.



AMENDMENT TO ABOLISH IMPOSITION OF CORPORAL PUNISHMENT

[Stage Direction]
On the order:
Introduction of bills-Mr. McGee-Rill intituled: An act to amend the Criminal Code (corporal punishment).
Frank Charles McGee: Mr. Speaker, I ask permission of the house to withdraw this bill.


Mr. Speaker:: Has the hon. member leave to withdraw this bill?


Some hon. Members:: Agreed.


Mr. Speaker:: Withdrawn.
Order discharged and bill withdrawn.



INTEREST ACT


Hazen Robert Argue: for leave to introduce Bill No. C-8, to amend the Interest Act.


Some hon. Members:: Explain.


Hazen Robert Argue: The purpose of this bill is
to limit interest rates and discounts to a 12 per cent maximum.
Motion agreed to and bill read the first time.



INDUSTRIAL RELATIONS AND DISPUTES INVESTIGATION ACT


Frank Howard: for leave to introduce Bill No. C-9, to amend the Industrial Relations and Disputes Investigation Act (application to civil service).


Some hon. Members:: Explain.


Frank Howard: This bill seeks to so amend
the Industrial Relations and Disputes Investigation Act as to make it applicable and binding upon Her Majesty in the right of Canada and the employees of Her Majesty; in short, to apply it to the civil service, except those sections of the act which deal with strikes and also except that the present provision providing for the conciliation of industrial disputes shall, in so far as the civil service is concerned, be deemed to be ar-bitrational proceedings.
Motion agreed to and bill read the first time.



SMALL LOANS ACT


Hazen Robert Argue: for leave to introduce Bill No. C-10, to amend the Small Loans Act.


Some hon. Members:: Explain.


Hazen Robert Argue: The purpose of this bill is
to limit the interest rates that may be charged under the Small Loans Act to 1 per cent per month.
Motion agreed to and bill read the first time.



AMENDMENT REQUIRING STATEMENT OF TRUE INTEREST RATE CHARGED

Hazen Robert Argue: for leave to introduce Bill No. C-12, to amend the Small Loans Act (advertising).


Some hon. Members:: Explain.


Hazen Robert Argue: The purpose of this bill is to make loan companies set forth in their advertising and in their contracts the true rate of interest that is being charged on each loan.
Motion agreed to and bill read the first time.
Proposed Legislation CANADA FAIR EMPLOYMENT PRACTICES ACT



AMENDMENT TO PROHIBIT DISCRIMINATION BECAUSE OF AGE

Frank Howard: for leave to introduce Bill No. C-ll, to amend the Canada Fair Employment Practices Act (age discrimination).


Some hon. Members:: Explain.


Frank Howard: The act at the moment, Mr. Speaker, provides that no employer in regard to employment, and no trade union in so far as membership is concerned, shall discriminate against persons for various reasons. This bill seeks to add an additional reason, namely age, unless age is a bona fide disqualification for the occupation.
Motion agreed to and bill read the first time.



AMENDMENT TO EXTEND APPLICATION TO CIVIL SERVICE

Frank Howard: for leave to introduce Bill No. C-19, to amend the Canada Fair Employment Practices Act (crown bound).


Some hon. Members:: Explain.


Frank Howard: This bill seeks to make applicable to the crown in the employment of members of the civil service the provisions of the Canada Fair Employment Practices Act.
Motion agreed to and bill read the first time.



FINANCE


Mr. L. J. Pigeon (Joliette-L'Assompiion-Monlcalm) moved: for leave to introduce Bill No. C-13 respecting the printing of negotiable instruments in the English and French languages.


Some hon. Members:: Explain.


Louis-Joseph Pigeon: The purpose of this bill providing for the printing of negotiable instruments in both the English and the French languages is in accordance with the principles established in the Bank of Canada Act.
Motion agreed to and bill read the first time.

Proposed Legislation FLAGS OF CANADA



MEASURE TO PROVIDE FOR A NATIONAL FLAG OF CANADA

Mr. Samuel Boulanger (Drummond-Artha-baska) moved: for leave to introduce Bill No. C-14 respecting flags of Canada.


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


Samuel Boulanger: The purpose of this bill, Mr. Speaker, is to provide Canada with a distinctive national flag.
(Text):
Motion agreed to and bill read the first time.



FINANCIAL ADMINISTRATION ACT


Samuel Boulanger: for leave to introduce Bill No. C-15, to amend the Financial Administration Act.


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


Samuel Boulanger: The purpose of this bill, Mr. Speaker, is to obtain the printing, in both official languages of cheques and other negotiable instruments of the government of Canada.
(Text):
Motion agreed to and bill read the first time.



BRITISH NORTH AMERICA ACT


Mr. D. M. Fisher (Pori Arthur) moved: for leave to introduce Bill No. C-16, to amend the British North America Acts, 1867 to 1952, with respect to the readjustment of representation in the House of Commons.


Some hon. Members:: Explain.


Douglas Mason Fisher: This bill will permit the appointment of a commission to handle the redistribution problem.
Motion agreed to and bill read the first time.



DIVORCE


Mr.  M. D. Morion@Davenport: for leave to introduce Bill No. C-17, respecting procedure in relation to parliamentary divorce.


Some hon. Members:: Explain.


Mr.  M. D. Morion@Davenport: The purpose of this bill is to permit the Senate to deal with all divorce
IMr. Pigeon.]
bills without reference to the House of Commons, a procedure that was originally adopted by the House of Commons in England under circumstances similar to those now existing in this country.
Motion agreed to and bill read the first time.



INDUSTRIAL RELATIONS


Mr. Erharl Regier (Burnaby-Coquillam) moved: for leave to introduce Bill No. C-18, to provide for pay for statutory holidays for employees and for pay for work performed on statutory holidays.


Some hon. Members:: Explain.


Erhart Regier: The purpose of the bill is to make provision whereby all employees under the jurisdiction of the parliament of Canada shall receive pay and not be required to work on not less than eight statutory holidays a year. However, if they must work, they shall receive double pay for that work.
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-26, to provide for minimum wages for employees.


Mr. Martin (Essex East):: Explain.


William Arnold Peters: The purpose of this bill is to provide a minimum wage of $1.25 an hour for all employees falling under the jurisdiction of the federal government.
Motion agreed to and bill read the first time.



INDUSTRY


Mr. R. C. Coates (Cumberland) moved: for leave to introduce Bill No. C-20, to provide for the development of certain provinces by the distribution of industry and for the reduction of employment therein.


Some hon. Members:: Explain.


Robert Carman Coates: The purpose of this bill is to provide for special concessions in the establishment of industries in the Atlantic provinces.
Motion agreed to and bill read the first time.



FRASER RIVER


Mr. A. D. McPhillips (Vicloria, B.C.) moved: for leave to introduce Bill No. C-21, respecting navigation and salmon fishery on the Fraser river.


Some hon. Members:: Explain.


Albert DeBurgo McPhillips: The short explanation of this bill is that it is to provide for prohibiting the building of power dams or other obstructions on the Fraser river which would affect the spawning run of Pacific salmon or navigation upon the river.
Motion agreed to and bill read the first time.



SWEEPSTAKES


Mr. J. F. Browne (Vancouver-Kingsway) moved: for leave to introduce Bill No. C-22, to provide for the establishment of a hospital sweepstakes board.


Some hon. Members:: Explain.


John Ferguson Browne: The
purpose of this bill is to provide for the establishment of a hospital sweepstakes board with power to operate hospital sweepstakes on a national scale.
Motion agreed to and bill read the first time.



AUTHORIZATION FOR SWEEPSTAKES FOR HOSPITALS AND UNIVERSITIES

Louis-Joseph Pigeon: for leave to introduce Bill No. C-23, with respect to hospital and university sweepstakes.


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


Louis-Joseph Pigeon: Mr. Chairman, the purpose of this bill is to amend the Criminal Code so as to authorize such provinces as may so desire to run lotteries for the benefit of their hospitals and universities.
(Text):
Motion agreed to and bill read the first time.



SENATE AND HOUSE OF COMMONS ACT


Frank Howard: for leave to introduce Bill No. C-24, to amend the Senate and House of Commons Act (Solicitor General's eligibility).


Some hon. Members:: Explain.
79951-0-3J
Proposed Legislation


Frank Howard: Section 14 of the Senate and House of Commons Act provides certain immunities and privileges to members of the cabinet, and this bill seeks to remove from those immunities the office of the Solicitor General, because we feel that the duties and responsibilities evolving from that particular office will not warrant a full cabinet position.
Motion agreed to and bill read the first time.



TRANSPORT ACT


John Ferguson Browne: for leave to introduce Bill No. C-25, to amend the Transport Act.


Some hon. Members:: Explain.


John Ferguson Browne: Mr. Speaker, the purpose of this amendment is to provide that representatives of the trucking industry shall have the right to make application to the Minister of Transport when they feel an agreed charge of the railroad unjustly discriminates against a motor vehicle operator.
Motion agreed to and bill read the first time.



PENITENTIARY ACT


Frank Howard: for leave to introduce Bill No. C-27, to amend the Penitentiary Act.


Some hon. Members:: Explain.


Frank Howard: The purpose of this bill is to legalize a practice which has been in existence for so many years now, and give authority to the Minister of Justice and the commissioner of penitentiaries to authorize the sleeping of inmates in penitentiaries in dormitories where it is deemed advisable.
Motion agreed to and bill read the first time.



CANADIAN SOVEREIGNTY


Mr. Maurice Allard (Sherbrooke) moved: for leave to introduce Bill No. C-28, respecting the sovereignty of Canada.


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


Maurice Allard: Mr. Speaker, in recalling to mind the historic development of Canadian sovereignty, this bill proposes that this

Proposed Legislation
sovereignty be expressed by external symbols, that is through a distinctive national flag, a distinctive national anthem and a national day celebrating Canadian sovereignty.
(Text):
Motion agreed to and bill read the first time.



RAILWAY ACT

[Stage Direction]
AMENDMENT TO PROVIDE FOR APPLICATION BY TRUCKERS TO TRANSPORT BOARD ON COMPETITIVE RATES Mr. J. F. Browne (Vancouver-Kingsway) moved for leave to introduce Bill No. C-29, to amend the Railway Act.
Some hon. Members:: Explain.


John Ferguson Browne: The
purpose of this amendment is to provide that representatives of the trucking industry shall have the right to make application to the board of transport commissioners for the disallowance of a competitive rate when it considers such rate has subjected motor vehicle operators to an undue or unreasonable prejudice or disadvantage.
Motion agreed to and bill read the first time.



IMMIGRATION ACT


Mr. L. D. Creslohl (Cartier) moved: for leave to introduce Bill No. C-30, to amend the Immigration Act (jurisdiction of courts).


Some hon. Members:: Explain.


Leon David Crestohl: Mr. Speaker, by section 39 of the Immigration Act an appeal to the courts against a deportation order is available only to certain people in Canada. The purpose of this bill is to make the right of appeal available to everyone in Canada.
Motion agreed to and bill read the first time.



BRITISH NORTH AMERICA ACT

[Stage Direction]
On the order:	Government notices of
motion:
January 14-The Prime Minister-The following resolution:-
That a humble address be presented to Her Majesty the Queen in the following words:
To the Queen's most excellent majesty:
Most gracious sovereign:
We, Your Majesty's most dutiful and loyal subjects, the commons of Canada in parliament assembled, humbly approach Your Majesty, praying that you may graciously be pleased to cause a measure to be laid before the parliament of the United Kingdom to be expressed as follows:
An act to amend the British North America Act, 1867.

Whereas the Senate and Commons of Canada in parliament assembled have submitted addresses to Her Majesty praying that Her Majesty may graciously be pleased to cause a measure to be laid before the parliament of the United Kingdom for the enactment of the provisions hereinafter set forth:
Be it therefore enacted by the Queens most excellent majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority of the same, as follows:
1.	Section ninety nine of the British North America Act, 1867 is hereby repealed and the following substituted therefor:
''99. (1) Subject to subsection two of this section, the judges of the superior, district and county courts shall hold office during good behaviour, but shall be removable by the Governor General on address of the Senate and House of Commons.
(2) A judge of a superior, district or county court, whether appointed before or after the coming into force of this section, shall cease to hold office upon attaining the age of seventy-five years, or upon the coming into force of this section if at that time he has already attained that age."
2.	This act may be cited as the British North America Act, 1960, and the British North America Acts, 1867 to 1952, and this act may be cited together as the British North America Acts, 1867 to 1960.
3.	This act shall come into force on the first day of September, nineteen hundred and sixty.
Mr. Speaker:: Pursuant to section 2 of
standing order 21 this government notice of motion stands transferred to and ordered for consideration under government orders at the next sitting of the house.



PROVISION FOR SHORT TERM LOANS TO GRAIN PRODUCERS

Donald Methuen Fleming: 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 provide, by way of a guarantee for bank loans made before the first day of June, 1960, for shortterm credit to grain producers in the prairie provinces to meet temporary financial difficulties arising from inability to thresh their grain; and to provide further that any amount paid to a bank under the act shall be paid out of the consolidated revenue fund.


[Stage Direction]
Motion agreed to.

Gordon Minto Churchill: 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 provide for the making of provisional payments to the producers for the 1959-60 crop year in respect of unthreshed grain in the designated area, as defined in the Canadian Wheat Board Act; and to provide for the costs, expenses and other financial

obligations required in the making of such advances; such measure to include such further related and consequential provisions as are necessary to give effect to the foregoing.


[Stage Direction]
Motion agreed to.


Hon. George H. Hees (Minister of Transport) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend an act to amend the Railway Act, chapter 40 of the statutes of 1958, to permit certain grants to be made from the railway grade crossing fund for a further period of three years beyond January 31, 1961.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Lionel Chevrier: May 1
direct a question to the Minister of Public Works and ask him if he has seen an article which appeared in the Vancouver Province entitled "A $3,200,000 contract. Why? Necessity of luxury craft questioned."


Hon. D. J. Walker (Minister of Public Works):: Yes, I have.


Lionel Chevrier: Would the minister be good enough to comment on the editorial if he has seen it?


David James Walker: I wish to thank the hon. member for Laurier for his questions, which I received at two o'clock today. May I be permitted to make a brief reply.
The government has been anxious to avoid the capital expenditure involved in building a dredge for use on the west coast, and had hoped that some plan might be worked out by which private enterprise could do the work involved, particularly at the mouth of the Fraser river, which requires constant, continuous and quick dredging for a great many months of the year in order to keep the shipping channels clear for navigation to and from New Westminster.
After months of deliberation in an effort to find an alternative to building a dredge for this purpose, this department decided that there was no alternative but to build a substitute for the 58 year old hopper dredge presently in use there, which is now obsolete and about to be condemned. I should add that in a tender which was open to bidders
Inquiries of the Ministry from all over Canada the contract was awarded to the low bidder, the Burrard company on the west coast.
I have here details with regard to our decision, but the general and overriding reason was this; a hopper dredge, and a hopper dredge only, is required to do the contemplated dredging at the mouth of the Fraser, and it was found that none of the private dredging companies had a hopper dredge. The best they had was a hydraulic dredge, and for this, among other reasons, a decision was made to have our own dredge built.


Lionel Chevrier: A supplementary question. Is it a fact, in accordance with the statement contained in this article, that of the contract, which is for $3.2 million, almost half, that is $1.5 million, will be for machinery and equipment purchased in a foreign country, when that machinery and equipment could be manufactured in British Columbia, as stated in the article?


David James Walker: I should think this was a question for the order paper, but so there may be no misunderstanding may I say that all the machinery and equipment which could advantageously be manufactured and bought in Canada was in fact included in the dredge. It is well known that the actual dredging machinery is not built in Canada, but that it is in fact built in the United States, Holland and one other country. Further, as to the engines to be used, the differential between the quotations from Holland and those from Canada was more than 30 per cent, which is a lot to get over in order to use Canadian material. We used Canadian steel and Canadian material wherever possible, but in the instance where Dutch material was used we were obliged to do so because there was no alternative.


Lionel Chevrier: May I ask a final question. Will the minister comment on the fact that there are to be 15 staterooms in the dredge, which will be more or less useless particularly since a large number of the men on the dredge live on shore? Does the minister not think this is an example of waste and extravagance?


David James Walker: I want to thank my distinguished friend not for the manner in which he has put his question but for having asked it. As a matter of fact, in a hopper dredge of this type we hope to save time by reducing the necessity to return to shore to pick up shifts and begin work again. It is necessary to have these-not 15-rooms in order to provide adequate accommodation and keep two shifts of men working effectively. For this reason, and this reason alone, this accommodation has been provided. I might add

Inquiries of the Ministry we were very careful to cut out any waste and extravagance such as the hon. gentleman has suggested-


Mr. Speaker:: Order. I suggest that the rest of this debate might be continued when the estimates come before the house.



COLUMBIA RIVER-INQUIRY RESPECTING AGREEMENT BETWEEN CANADA AND THE UNITED STATES

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: 1
wish to address a question to the Secretary of State for External Affairs.
In view of the great and constant interest of the people of Canada, particularly those of British Columbia, in the development of the hydro resources of the Columbia river; and in view of the keenness-I might even say the relish-with which they follow announcements made by the minister on this question, may I ask whether the Secretary of State for External Affairs is able at this time to make any further announcements with respect to developments in negotiations between the government of Canada and the government of the United States for the framing of a treaty that will provide for the mutually beneficial development of this great natural resource.


Hon. Howard C. Green (Secreiary of State for External Affairs):: Yes, Mr. Speaker. The United States government has indicated that a negotiating team has already been selected, and negotiations will probably commence about February 1. The Canadian government is also in a position to name its representatives with the exception of one from British Columbia. We have asked the province of British Columbia to give us the name of one person who might sit in with the Canadian negotiating team.


Paul Joseph James Martin: I take it we shall be given an opportunity in this house to ratify or not ratify any treaty before it is dealt with in the congress of the United States?


Howard Charles Green: The regular procedure will be followed. I am not in a position to say which legislative body would deal first with the agreement or treaty. The United States might be ahead of us or we might be ahead of them. Certainly both the Canadian and the United States governments are very anxious to get ahead with the negotiation of an agreement, and we are hopeful that it will be possible to reach a conclusion at an early date.



NOVA SCOTIA


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I wish to address a question to the Minister of Mines and Technical Surveys. Is the minister aware of the statement made last week by Mr. Frank Doxey, general manager of the Dominion Coal Company, to the effect that idle time in the Nova Scotia coal mines may be more severe this year than last year? If so, has he sought information with respect to this proposed lay-off and is he prepared to inform the house with regard to the action contemplated by the government to avert the proposed production cuts?


Hon. Paul Comtois (Minister of Mines and Technical Surveys):: I am not aware of that article, Mr. Speaker.


Erhart Regier: May I ask a supplementary question of the Minister of Mines and Technical Surveys. He indicated that he had not read the article in question. Will the minister report to the house the situation relative to the closing of the mines in Nova Scotia? Will he also indicate what immediate action the government is contemplating in order to avoid unprecedented unemployment in Nova Scotia?


Paul Comtois: Mr. Speaker, can the hon. member tell the house which coal mines he says have been closed?


Erhart Regier: Mr. Speaker, I do not take it to be my responsibility to give this information to the minister.


An hon. Member:: Sit down then.


Hédard-J. Robichaud: May I ask
a supplementary question. Is the minister aware of the coal situation in Nova Scotia? If so, what action is the government taking, or is the government waiting for the mines to close before taking action?


Mr. Speaker:: I think the hon. member asked that question earlier today.


Hédard-J. Robichaud: No.


Mr. Speaker:: Am I mistaken about that?


Hédard-J. Robichaud: Mr. Speaker, when I asked my question earlier I asked about the statement, and the minister answered that he was not aware of such a statement. I am now asking whether in his position as Minister of Mines and Technical Surveys he knows of the

proposed lay-offs in Nova Scotia, or is the government waiting until the mines close before taking any action.


Mr. Speaker:: The minister has taken the other question as notice, and I think he will be able to answer both questions at once.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I should like to ask the Prime Minister whether the government proposes to make any special provision for the discussion of the private member's bill on capital punishment, so this bill may be dealt with at the present session after due consideration has been given to it.


Right Hon. J. G. Diefenbalrer (Prime Minister):: No consideration has been given to that question as yet.



FINANCE


[Stage Direction]
On the orders of the day:
Leon David Crestohl: I should like to address a question to the Minister of Finance. My question is in two parts, and I have sent the hon. gentleman notice.
Will the minister tell the house whether the loan of $56,500,000 recently made to Egypt by the world bank, on which he represents Canada, I believe, was approved by him or by any other representative of Canada?
Second, as the loan was made to enlarge the Suez canal, was there any condition that the canal shall be open and available for use by all member nations of the United Nations?


Donald Methuen Fleming: The loan in question was approved by the board of directors of the international bank for reconstruction and development, and not by the board of governors. Canada's representative on the board of directors is Mr. Louis Rasminsky and he, with my full approval, voted in favour of the loan. I believe it was approved unanimously by the executive board of the bank.
As to the second question, may I say there was no formal condition respecting freedom of transit attached to the resolution approving the loan. After all, this was the world bank and not individual countries, nor was it the United Nations for that matter. The hon. gentleman is aware, I am sure, Mr. Speaker, that the views of the principal western nations, including Canada, in favour of freedom of transit in the canal are very well known.
Inquiries of the Ministry


Paul Joseph James Martin: Mr. Speaker, as a supplementary question may I ask the Minister of Finance if it is not a fact that the government of Canada gave instructions to Mr. Rasminsky in the situation outlined by the minister?


Donald Methuen Fleming: Mr. Speaker, the hon. gentleman is right. I said that a moment ago.


Paul Joseph James Martin: You said "approval". You were seeking to place the responsibility on the bank.


Donald Methuen Fleming: Mr. Speaker, the hon. member for Essex East said I sought to place responsibility on the bank. That is not true. I point out that Mr. Rasminsky cast his vote in favour of that measure with my full approval. I said that in the first place.



WHEAT, OATS AND BARLEY  INTERIM PAYMENTS

[Stage Direction]
on 1958-59 crop
On the orders of the day:
Mr. J. N. Ormiston (Melville):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce. In view of the serious crop conditions in many parts of western Canada, has the Canadian wheat board made any effort to expedite interim payments on wheat, oats and barley?


Gordon Minto Churchill: Mr. Speaker, I thank the hon. member for giving me notice of this question. I also received similar questions from the hon. member for Humboldt-Melfort (Mr. Rapp) and the hon. member for Moose Mountain (Mr. Southam). The answer is that each year the wheat board carries out a full accounting of the position of each operating pool as at December 31. This accounting is proceeding now and will be completed in a week's time. Following discussions with the board I expect to be in a position to make an announcement in regard to interim payments before the end of the month. It will be interesting to the house to note that interim payments authorized for wheat were made in February in each of the last four years.



REQUEST FOR SPEED-UP OF SHIPMENTS THROUGH VANCOUVER

[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, on Friday last I directed a question to the Minister of Trade and Commerce, who was then absent, with respect to the speeding up of the shipment of grain through the port of Vancouver. At that time the acting minister indicated that we might expect an answer today.

Inquiries of the Ministry


Gordon Minto Churchill: I have the answer to the question. The Canadian wheat board reports that as of Saturday there were eight ocean vessels loading grain at Vancouver and twelve vessels awaiting loads. The grain drying facilities at the terminal elevators in Vancouver are being used to capacity. In addition, shipments of dry grain of the grades required are being made from interior terminals at Calgary and Edmonton, and an increased movement of dry grain is under way from southern Alberta.



LAKEHEAD


[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: I should like to direct a question to the Minister of Trade and Commerce, notice of which was sent to him. Can the minister tell us what action, if any, the Canadian wheat board is taking or plans to take regarding the protests from several organizations at the lake-head, including the city councils, about the exceptionally slow movement of grain to lakehead elevators despite the considerable storage space available there?


Gordon Minto Churchill: The Canadian wheat board is giving priority to the situation prevailing at the lakehead. The difficulties there arise from the large quantities of tough and damp grain which have accumulated this year, and an extensive drying program is now under way.
At the close of navigation there were about 40 million bushels of elevator space available at the lakehead. In order to preserve space for the unloading of high moisture content grain and space for the storage of such grain after drying the board has for the time being suspended the shipment of dry grain to the lakehead. That accounts for the delay at the present time in filling up the capacity. It is due to the unusual difficulties prevailing this year with regard to tough and damp grain, of which it is estimated there are about 95 million bushels to be dealt with in the terminal elevators where drying facilities exist.


Douglas Mason Fisher: Can the minister tell us whether this will mean a reduction in the normal expansion of delivery quotas given western farmers throughout the winter?


Gordon Minto Churchill: Temporarily, yes; and it is quite understandable. The tough and damp grain comes from the northern areas of the three prairie provinces, and in order to move it out before spring comes, when damage may

occur, it will be necessary to retard the delivery of dry grain from other areas. However, I think the farmers of western Canada understand the situation very well, are sympathetic to their northern neighbours who have this problem of tough and damp grain, and will accept the circumstances and be prepared to accept a delay. For those who have to accept a delay in delivery we have available the cash advance legislation which permits them to get money prior to making delivery to the elevator.



FISHERIES


[Stage Direction]
On the orders of the day:
Harold Edward Winch: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. Has the minister received any request for assistance to enable the re-establishment of the herring fishing industry in British Columbia, which has now closed down? If so, what action is being taken or what action is contemplated?


Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, I shall look into the matter and reply to the question at a later date.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. John MacLean (Winnipeg North Centre):: Mr. Speaker, I should like to ask the Minister of Transport if he has any information he can give to the house with regard to when contracts may be called for an immediate start on the airport terminal building in the city of Winnipeg.


George Harris Hees: Yes, I have, Mr. Speaker. I wish to thank the hon. gentleman for advising me of his intention to ask this question.
Instructions have been issued to advertise for sealed tenders for site preparation, excavation and caisson work for the terminal building at the Winnipeg international airport. Tenders for this work will be accepted up until 3 p.m. on February 18 next. Notice of this call for tenders will be published in newspapers and trade journals in the usual manner in the course of the next day or so.


John Whitney Pickersgill: I should like to ask the Minister
of Transport if the plans for the Winnipeg airport terminal have been completed.


George Harris Hees: Yes, Mr. Speaker.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Erhart Regier: Mr. Speaker, I should like to direct a question to the Acting Secretary of State. Is it the intention of the government to table in parliament, or to otherwise make public, the recent report of the civil service commission containing reported recommendations for an increase in civil service salaries?


Ellen Louks Fairclough: Mr. Speaker, that question should be properly directed to the Minister of Finance.


Erhart Regier: Mr. Speaker, may I direct my question to the Minister of Finance. I notice that he has been very happy today to reveal information. Is the Minister of Finance able to tell us if it is the intention of the government to table in parliament, or to otherwise make public, the recent report of the civil service commission containing reported recommendations for an increase in civil service salaries?


Donald Methuen Fleming: Mr. Speaker, it is the intention of the government in this regard to follow the practice that has always been observed and not to table a report that comes to the government under the provisions of the Civil Service Act as a privileged and confidential document.


Erhart Regier: As a supplementary question may I ask if it is the intention of the government to provide an opportunity for parliament to debate this issue at a very early date?


Donald Methuen Fleming: Well, Mr. Speaker, if there is an issue as to the tabling of this document I am sure the rules of the house will provide opportunities for determining it. I have not digested as thoroughly as I shall when there has been more time all the matters on the order paper, but I believe there is a resolution on the order paper somewhat to that effect.


Paul Joseph James Martin: In the name of the hon. member for Ottawa West.


Donald Methuen Fleming: It will be up to the hon. member for Ottawa West to bring it before the house as soon as the work of the house permits.


Erhart Regier: I asked the minister whether an opportunity would be provided to parliament to debate the issue of civil service wages.
Inquiries of the Ministry


Mr. Speaker:: In view of the fact that this is a matter not under the administrative control of the minister, and because the house has control of what it will debate in the ordinary course under the rules of the house, I would point out that we are waiting now to get on to a debate that will open the door to discussions of that subject.



REPORTED INTENTION TO APPOINT COMMISSION OF INVESTIGATION

[Stage Direction]
On the orders of the day:
Mr. J. T. Richard (Ottawa East):: Mr. Speaker, I wish to direct a question to the Prime Minister. How soon may the house expect an announcement as to the terms of reference and composition of the commission to investigate the operations of the civil service and crown agencies, as announced in the speech from the throne?


John George Diefenbaker: I know of no announcement in the speech from the throne on any such matter.


Jean-Thomas Richard: In the press, rather. Is it the intention of the Prime Minister to appoint such a commission during this session?


Mr. Speaker:: Perhaps the hon. member has more optimism than the member who previously asked the Prime Minister about a strictly policy matter.


Jean-Thomas Richard: Mr. Speaker, this announcement has been made from time to time by those on the front benches opposite. We are entitled to an answer. There is nothing in the throne speech.



REPORTED STATEMENT BY U.S. SECRETARY OF COMMERCE

[Stage Direction]
On the orders of the day:
Lionel Chevrier: I should like to direct a question to the Minister of Trade and Commerce. Will the minister comment on the statement made by the United States commerce secretary that he favours a free trade area between Canada and the United States?


Gordon Minto Churchill: I doubt very much, Mr. Speaker, whether I should comment with regard to statements made in the United States. If the hon. member wishes to raise this issue in the course of the debate on the speech from the throne we might deal with it then.
42	HOUSE OF
Inquiries of the Ministry TRANS-CANADA HIGHWAY



INQUIRY AS TO PARTICIPATION BY QUEBEC

[Stage Direction]
On the orders of the day:
Mr. Maurice Bourget (Levis):: I should like to direct a question to the Minister of Public Works. Has the minister, since his accession to office, communicated by writing or otherwise with the Quebec provincial authorities regarding the trans-Canada highway? If so, is the minister in a position to say that the provincial government is now ready to join the other provinces in that important project?


David James Walker: Mr. Speaker, the answer is no, I have not had any communication.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: In view of the statement made today by the governor of the Bank of Canada and the Prime Minister's own exhortations with regard to the stabilization of prices and income return, may I ask the Prime Minister if the government will give favourable consideration to the suggestion made last Tuesday by Mr. Claude Jodoin, president of the Canadian Congress of Labour, when he spoke to the Toronto board of trade and urged the government of Canada to call a conference of industry and labour at once to deal with some of the important matters to which the Prime Minister and the Minister of Finance have directed the attention of the people of Canada from time to time?


John George Diefenbaker: Any matter such as that is a question of government policy which will be announced in due course.


Paul Joseph James Martin: May I ask the
Prime Minister, this being the second time Mr. Jodoin has made this request, if the government has given it any consideration at all?


John George Diefenbaker: The answer just given to the first question applies to the second.


Paul Joseph James Martin: The answer is no.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: I should like to direct a question to the Minister of Public


Works. Can the minister say what consideration, if any, is being given to getting the banks of the country back into N.H.A. lending?


David James Walker: Mr. Speaker, I would not wish to transgress on the time of the house except to ask my hon. friend through you, sir, to read the very adequate and lengthy statement I made on December 18 last, which is the answer to his question.



CORNWALL


[Stage Direction]
On the orders of the day:
Lionel Chevrier: I should like, Mr. Speaker, to direct a question to the Minister of Public Works of which I have not given him notice, but he may take this as notice if he so wishes. From information appearing in a Cornwall newspaper as well as from a telegram from the Cornwall and district labour council, sent to the Leader of the Opposition it would appear that a low rental housing plan approved by the Cornwall city council is being delayed by the Department of Public Works at the request of the hon. member for Stormont (Mr. Campbell) on the ground that a number of people have declared themselves against the plan, and also on the ground that the lowest tender was a Quebec contractor from Three Rivers.
My question is, have representations been made to the minister, and is it the intention of the minister to delay the housing plan which was approved by the city of Cornwall?


David James Walker: I want to thank my hon. friend for the question, which I shall be very happy to take as notice.



INDUSTRY


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I should like to ask the Minister of Trade and Commerce whether Eldorado Mining and Refining Limited, a crown corporation, is to continue to compete with private corporations in the production of uranium in the changed circumstances that now face the industry.


An hon. Member:: He doesn't know.


Gordon Minto Churchill: Mr. Speaker, the situation with regard to the uranium industry is going

ahead very well so far as the companies are concerned. I am not aware of any complaint with regard to any action undertaken by Eldorado.


Lester Bowles Pearson: Can the minister tell the house whether Eldorado Mining and Refining Limited is now competing with private companies in the purchasing of contracts from certain other private companies in the uranium industry which are now unable to carry on?


An hon. Member:: He still doesn't know.


Gordon Minto Churchill: Mr. Speaker, in answer to the mysterious voice that says I do not know may I say I happen to know quite a bit about this matter. I will inquire from Eldorado as to what the situation is at the present moment with regard to contracts which still remain to be transferred.



SPEECH FROM THE THRONE


[Stage Direction]
The house resumed, from Friday, January 15, consideration of the motion of Mr. Emilien Morissette for an address to His Excellency the Governor General in reply to his speech at the opening of the session.
(Translation):
Lester Bowles Pearson: Mr. Speaker, I should like first to congratulate the mover of the address in reply to the speech from the throne (Mr. Morissette). He has performed his function with ability and in a way which gives great satisfaction to the members of his party. (Text):
May I also, Mr. Speaker, offer my very warmest congratulations to the seconder of the address (Mrs. Casselman). I know, because of the reception which she received the other evening, she accomplished her task in a way which must have given great satisfaction to all members of this house, to her constituents, to her party and to herself. As she spoke so admirably, Mr. Speaker, I know that those who have been in this house for some years must have been thinking especially of her predecessor in her constituency and the hon. member for Dufferin-Simcoe (Mr. Rowe) who must have been a very proud man that afternoon. The hon. member not only spoke well, but she spoke in an objective, a fair-minded and responsible manner. She even was good enough to say some very generous and deserved things in tribute to that great Liberal undertaking, the St. Lawrence seaway.
Perhaps, Mr. Speaker, you will allow me to say with how much satisfaction we in the opposition see you back in your seat in your accustomed serenity, good nature and im-79951-0-4i
The Address-Mr. Pearson partiality. May I also congratulate you on your new assistant, the Deputy Speaker, who has been appointed with the good wishes and assurance of co-operation from all members of the house.
There have been important developments, Mr. Speaker, since we last met, important developments internationally and domestically. Some of these developments have been encouraging and some give us cause for anxiety. But it must be said at once that the speech from the throne, which is of course in substance but not in form the statement of the government, does not in any appropriate way reflect any of these anxieties. It is indeed as a state of the nation report a very unimpressive and superficial document and, as has been pointed out already in press comment dealing with it, is far more notable for what it omits that for what it includes. In fact, it reflects the satisfied and complacent attitude of this government.
In looking over the speech, and it is quite a long document, I notice that the word "unemployment" occurs only once, and then it is tied to the word "seasonal". The word "defence" does not appear in the document at all; nor do the words "fiscal" or "monetary policy" appear. In the absence of anything that would show a government understanding of these serious problems a waiting country, however, was told that there was to be an amendment to the Feeding Stuffs Act; a line about the Feeding Stuffs Act but not even a word for defence.
Now, Mr. Speaker, I want to begin what may, I am afraid, be a somewhat lengthy speech by saying something about foreign affairs and then defence. We have been informed by the propaganda agencies of the government that Canada's position in the world, Canada's prestige in the world, has been now restored-


Gordon Minto Churchill: Hear, hear.


Lester Bowles Pearson: -from the position which it had reached during the postwar period to 1957. It has suddenly been discovered by spokesmen or writers for the government that our position and prestige were so low in the world during those years. Well, Mr. Speaker, it will be news to a great many people in the United Nations, in NATO, in the commonwealth, that we had sunk so low and that our respresentatives in those years were despised and rejected among men. No doubt, in the eyes of the Prime Minister (Mr. Diefenbaker) himself the lowest point we reached in those years was at the United Nations during the Suez crisis when the Canadian delegation initiated intervention through the establishment of the United Nations Emergency Force. Speaking last November 3 in Toronto to a Conservative

The Address-Mr. Pearson meeting, and speaking not off the cuff but from a text a copy of which I have seen, the Prime Minister permitted himself to say this:
In our relations with the commonwealth I need hardly add that the action taken by the Liberal party in 1956 at the United Nations when they put Great Britain and France in the same bag as aggressors with the U.S.S.R., will never take place with a Conservative government in power.
What can one say about such a false and indeed malicious statement?
Perhaps that statement is best answered not by me but by the two prime ministers of the country that we were alleged to have placed in the same bag as the Soviet union as aggressors. I will therefore call on them and not on any liberal in Canada as witnesses to the truth. If we had in fact been guilty of that offence, if we had in fact lumped them together with the Soviet union as aggressors, these two United Kingdom prime ministers, of all people, would have had no cause to say anything friendly about Canadian policy at that time. Their words are sufficient reply to this false statement. The words of Mr. Macmillan, the prime minister of the United Kingdom, have already been put on record in Hansard and it is unfortunate that I am obliged to do so again. However, in view of what was said last November I do not hesitate to repeat what he said in March, 1957, not long after these events occurred. I quote the words of Mr. Macmillan, the present prime minister of the United Kingdom uttered at that time. He said:
1 think the service the Canadian government gave to finding good solutions and helping us at the critical moment at the United Nations assembly-
This was over the Suez business.
-was one of a most remarkable kind and will always be remembered by us with gratitude.
We are supposed to have condemned them as aggressors along with the U.S.S.R. and the prime minister of the country which we are supposed to have condemned said that he will always remember our service with gratitude. Sir Anthony Eden himself, who was prime minister at that time, in answer to a question addressed to him on this particular point of a few weeks ago by Blair Fraser on television, had this to say, and I quote from the text of the interview. It will be interesting to see whether he confirms this statement in his book which is now coming out by instalments, but on that occasion he had this to say:
If the United States had taken the line that Canada took, the position in the Middle East today would be very much better than it is.
I hope, Mr. Speaker, that we shall hear no more of these stupid and false allegations made to selected audiences for political purposes and which have no truth behind them.

I now wish to say a few words about the world situation because in the speech from the throne there are some paragraphs that deal with that subject. Of course, the search for peace and the effort to bring about a reduction of armaments is a policy to which every member of this house, to whatever party he may belong, can subscribe. Anything that the government can do in that regard I know will be given the warm support of every member of this house. We wish the Secretary of State for External Affairs (Mr. Green) well in the efforts he is making now towards that end, even though there will be times-indeed there will be perhaps such an occasion this afternoon-when I may not agree with all of the method, which he is pursuing toward that objective.
I think it is true to say that the international atmosphere is somewhat better than it was when we last met in this house and that there has been an easing of some tensions. I think it is also true that there has been a shift of emphasis in the conflict perhaps from the military to the political and especially to the economic; but I also feel that there has been no fundamental change. Certainly one cannot find any evidence of such a change in Mr. Khrushchev's latest and extremely important statement emanating from Moscow the other day. Hence there is no cause for complacency or indeed for any great optimism. The basic factors that brought about the cold war in the first place still remain. There is therefore no reason yet for the west reducing its strength or weakening what unity it has created. Indeed, it might be fatal to do so.
All of us who as citizens are interested in this most important of all questions are in a dilemma. We want to do what we can to create a better atmosphere for peace. We want to take advantage of any opportunity that might be given to us to negotiate peace. But we want to do so with our eyes open, with a sense of realism, not weakening ourselves in the process, something which might be what the other side would hope that we would do. In other words, we must be careful not to be either the prisoners of our fears or the victims of our hopes.
The Secretary of State for External Affairs has expressed himself in recent weeks very optimistically in these matters. According to the Ottawa Journal of December 24 he exudes optimism. I hope his optimism is justified. On that day, namely December 24- and I am quoting from the Globe and Mail, although the statement appeared in other papers-the Secretary of State for External Affairs is reported to have said as follows:
Our view is that we have to accept the honesty of Russian intentions in this (disarmament) committee.

That is a new committee of ten that had been set up. He is also reported as having said this:
The time has come for the west to accept Russian protestations of sincerity at face value in order to find a way to end the armaments race.
It seems to me, Mr. Speaker, that optimistic speculation about Mr. Khrushchev's or the Soviet union's honesty and sincerity in disarmament talks is irrelevant and might be dangerous because of the confusion that it might create. Mr. Khrushchev's sincerity, as indeed the sincerity of the west, can only be tested by concrete proposals and his and indeed our reaction to them. Mr. Khrushchev can be perfectly sincere in advocating disarmament on his terms but that may not help either peace or disarmament very much. Mr. Khrushchev can be perfectly sincere at New York at the United Nations in advocating total disarmament in four years and equally sincere in arguing that the reduction of armaments cannot be conditioned on the kind of control and inspection which alone would make any agreement either effective or safe.
We are beginning a new move for disarmament through a new agency. I can only hope that this disarmament initiative will have more success than unfortunately the previous one had. The Secretary of State for External Affairs is quoted as saying in Paris on December 22:
Canada is going to have a heavy responsibility in connection with the discussion on disarmament.
That is true. But I would point out that Canada has had that heavy responsibility for years, most recently perhaps in the work of a United Nations subcommittee of five which did its best, without success, before this new committee of ten was set up. This preparatory work of disarmament has been going on for decades. There is nothing new about it. It has been going on for fourteen years in the United Nations, and for many, many years before that in the League of Nations.
Therefore, we cannot help but wonder what new steps can be taken. Has the Canadian government any new proposal that can be put forward, any new idea that can be advanced, or any new approaches that can be made?
The experience of the last twenty five or thirty years-and I have, in one form or another, been connected with this disarmament movement ever since the first League of Nations conference on disarmament-has shown that it is the basic political attitudes that determine the progress, if any, that can be made in regard to the reduction of armaments. It is not easy to find anything in basic political attitudes which would justify at the present time any reduction of the west's defensive strength which is not met by a
The Address-Mr. Pearson similar reduction on the other side, and which is not policed effectively by some international agency.
It would be unwise, indeed very dangerous *-Mr. Khrushchev's speech in Moscow the other day underlined this-if we took any unilateral action in this field. There is no room, I think, for that kind of reduction; but that does not mean that there is not a desirability for some change in the form of the defensive military strength of the west, and I may have something to say about that, Mr. Speaker, a little later. The Secretary of State for External Affairs put it to the Canadian Press on December 16 in this way:
There is no inconsistency between the maintenance of a high degree of military preparedness and Canada's strong desire to reach an acceptable disarmament agreeable with the Soviet bloc.
Then he went on, and I agree with him:
The west must not let its guard down.
He also said, according to the Canadian Press of Ottawa, on his return from Paris on December 23 that our military commitments in Europe would be reduced. I suggest, Mr. Speaker, that thought certainly is required as to whether the nature of our defence commitments should not be altered. I would go further and say that the continuance in their present form of our NATO military commitments in Europe should depend, first, on whether, after careful examination, they might not be changed so as to make them more effective for peace and collective security and, second, on developments inside the NATO alliance itself, which certainly might affect, as I see it, our NATO commitments.
Mr. Speaker, it seems to me that there is ground for real anxiety on this score, and that that anxiety has not been removed by the recent meetings of the NATO council in Paris. Again the minister is full of optimism with regard to the importance of those meetings, I might say an optimism which is not shared by a lot of other people. For instance, the minister said on December 18, according to the Canadian Press, that NATO worries, particularly among the small powers, about consultation have been met. I hope the minister is right, but he will forgive me for being a little sceptical, after a good deal of experience myself with NATO, whether finally, for all time, our worries with regard to consultation have been met.
Mr. Speaker, I think the time has now come when Canada should make clear that if she is to continue to participate in Europe in a defence coalition of balanced collective forces-and it should be just that-then the same collective obligations should apply to every member of the coalition, all of whose

The Address-Mr. Pearson forces, not merely some of them, should be integrated under collective control which should extend to all weapons and to every sector of the coalition front, including North America. In my view, Mr. Speaker, in the light of circumstances which face us at the present time, although I know they are changing rapidly, nothing less than that will do to hold this coalition together.
I would go further and state my opinion that there are two things which Canada should categorically refuse to accept. One is that of any one member of the alliance, however powerful, exercising a special custody and control over any special category of weapons in possession of Canadian forces. In my view, we should insist on the same Canadian custody and control of these weapons as of any others that our forces may have, always, of course-and I do not want to be misunderstood on this score-within the collective arrangements assumed generally and which I have suggested should be more far-reaching even than at present.
If I may reduce this to concrete terms, Mr. Speaker, it means that we should not accept what are sometimes called "baby nuclear bombs" for R.C.A.F. planes which could be dropped, or any nuclear missile which could be used, only on orders from the United States rather than from a NATO authority. I suggest that is now the situation in which we find ourselves today. It seems to me that the continued refusal of the United States to make any concessions of any kind to collective authority over nuclear weapons, as she has done over other weapons-and the same attitude is adopted by the United Kingdom-will prejudice the whole NATO collective defence idea. Indeed, we have evidence that it has already prejudiced that idea.


John George Diefenbaker: What was my hon. friend's reference to the United Kingdom?


Lester Bowles Pearson: I suggested, Mr. Speaker, that the United States and the United Kingdom should accept the same collective authority and control over nuclear weapons in the possession of NATO forces as they do over other weapons, and that if they refuse to do, either of them, that they will prejudice the collective idea of NATO as, indeed, is happening now in the case of France.
The second proposition which I would make is that Canada should reject, although this is bound to affect the nature of our participation in NATO forces-


John George Diefenbaker: Before the hon. gentleman continues I am sure he knows the difficulties in connection with this matter; my hon. friend has experienced them for a number

of years. If the United States or the United Kingdom refused, what should Canada do then?


Lester Bowles Pearson: Mr. Speaker, I am suggesting that this proposition should be put up to the United States and the United Kingdom. I know that it has been put up to the United States in the past, and I have had some experience with this. However, I would also point out to the Prime Minister that in the past, up to four or five years ago, nuclear weapons consisted only of hydrogen bombs; strategic weapons, weapons of nuclear destruction for strategic purposes.
But in recent years that situation has changed. We now have tactical nuclear weapons. They may soon even be in the possession of platoons. If the United States in these circumstances is going to insist on control of every tactical weapon in the hands of every NATO force it will be difficult to keep this defensive alliance strong. The proof of this is surely the attitude adopted by a very important member of the alliance-France- at the present time.


John George Diefenbaker: I do not want to keep interrupting, because I know we are having the benefit of the hon. gentleman's ideas, but if it is not accepted by the United States, then what should Canada do? That is the question I asked.


Lester Bowles Pearson: Our responsibility is to do everything we can to get it accepted, and if the government does that and then finds it cannot get it accepted, then it is the responsibility of the government to report to the house and decide what should be done. The Prime Minister knows perfectly well that I would be the last man in the world to do anything which would weaken or break up the NATO coalition. It is because I feel that this attitude of the United States is at present weakening the coalition, and might even break it up, that I want to see our government and other members of the alliance try to bring about the collective control of these weapons if they are to be used at all-and I hope they are not going to be used at all.
The second proposition which I suggest that Canada should reject and which, if it is maintained by others, is bound to affect our participation in NATO forces, is that anything less than complete integration of these forces under a NATO command will suffice.
Perhaps the Prime Minister underestimates the power and influence of the Canadian government in these matters, and perhaps at the present time our government could exercise a decisive influence in bringing these matters to the attention of the council in a way which would bring about a satisfactory solution. I am now thinking about the



I960

[Stage Direction]
other proposition, which is the complete integration of the forces of NATO under a NATO command. Here it seems to me that the attitude of the French government, though it is of course perfectly sincere, gives ground for anxiety. But before we go overboard in condemning France-and I am glad that the minister has acted with wise discretion in anything he has said on this matter-we should remember that there are other members of the NATO coalition-the United States and the United Kingdom, and perhaps others-who are just as reluctant as France to accept the full defence and foreign policy implications of the NATO pact; that is, full integration militarily and much closer political and economic consultation and co-operation that we now have. The head of the French government, who has done so much for France and, therefore, for western civilization and western security, has been reported as saying-and I quote from the report-that it is inconceivable that the time should come when France would not be in command of her own forces, and that the French government could not surrender to a military commander over whom it did not have control the right to open fire over France.
If the other members of the coalition take that position, that will be the end of NATO as we know it. Therefore we should do everything we can to persuade the French to modify that position, and one of the best ways of doing that is to exercise influence in the direction I have just mentioned. The fact is that if NATO is to survive it must move further away from, rather than back to, the concept of an old-fashioned military alliance based on co-operation alone and also on exclusive sovereign control over every aspect of such co-operation. If we cannot do this- and I know something about the difficulties in the way-and if we cannot develop closer and more unified collective control rather than less-and this means far more than a North American continentalism under United States domination-then the Atlantic alliance will eventually disappear as a genuine collective system based on political and economic, as well as military, unity. I know that is something, which every member in this house wants to do his best to avoid.
We shall have an opportunity shortly, I hope, to debate fully in this house these questions of defence and foreign policy, because the two really hang together and it is hard to discuss one without the other. I hope therefore that defence, especially, will be given early and full consideration by this parliament. There are questions of vital importance to our very existence to which the nation demands an answer, yet the government ignores these questions and meets the anxiety
The Address-Mr. Pearson of the people with meaningless cliches. I intend to ask some of these questions, and perhaps the Prime Minister will deal with them when he speaks. These are specific questions, and there are many others which could be asked. These are specific questions on defence policy.
Is there any defence policy that takes into account the situation of today, which is so basically different, as Mr. Khrushchev pointed out in Moscow last week, from the situation which existed only three years ago? Are we content in the face of this new strategic situation merely to be an appendage of the United States, tied to its continental and, indeed, its global strategy which is increasingly coming under criticism even in its own country? Are we, for instance, to spend millions maintaining out of date aircraft- worthy aircraft, as the Minister of National Defence (Mr. Pearkes) called them the other day, and indeed they are that-or are we to replace them at a cost of hundreds of millions of dollars by new United States aircraft, having sunk without trace the aircraft designed and built in Canada for the purpose? Are we to spend millions on missiles and then watch the United States abandon them? Should we accept without further investigation the new role of the R.C.A.F. division in Europe from high level interception to strike reconnaissance or strike attack while United States planes are carrying nuclear weapons which can be used only on instructions from United States commanders, because that is United States law? Does the Minister of National Defence still believe that you cannot use defensive tactical nuclear weapons without starting a chain reaction leading to a nuclear holocaust? What is the status of the agreement negotiated with the United States to cover nuclear weapons? We hear much about this now in the press, but on March 10 last, as reported on page 1775 of Hansard, the Prime Minister said that his government did not anticipate concluding any such formal agreement in the immediate future. What is the position now, because nothing could be much more important at this time than an agreement of this kind which deals with nuclear weapons and I take it, the political conditions governing the use of nuclear weapons?
Another question: Has the time not come to examine from the very foundation our whole defence policy through a small committee in order to find out where we should be going and how we can best get there, and to work it out if we can on a nonpartisan basis so as to do everything we can to make defence policy national defence policy? It may not be possible to do that.
[Stage Direction]
The Address-Mr. Pearson There may be strong differences of opinion and indeed there are at this time-but perhaps a committee of this kind would serve a purpose not only in getting the information before the country but in resolving the differences in parliament in this important matter. A parliamentary standing committee of more than 50 members which has been told by the Prime Minister himself that it must not discuss policy questions is not in my view suitable for this kind of examination.
John George Diefenbaker: Does the hon. gentleman suggest that any committee under our system should discuss policy?


Lester Bowles Pearson: It certainly could, Mr. Speaker, if it were set up for this purpose. It could bring in recommendations, get advice on policy and ask the minister about policy questions. It certainly could discuss policy.


John George Diefenbaker: That is not what Mr. St. Laurent said.


Lester Bowles Pearson: There is one standing committee which by tradition, and indeed I think by order now, does study policy, and that is the committee on external affairs. The Prime Minister knows this because he has discussed many policy questions before that committee. If it can be done in the committee on external affairs it could be done as an exception to the general rule at this time and in these circumstances with respect to defence.
I do not want to be misunderstood. I am not suggesting that even before this kind of committee any serving officer of the defence forces could be asked any questions that have anything to do with policy because that is a tradition we would not wish to see broken before any committee. We do not do it in the committee on external affairs. But the Secretary of State for External Affairs in the standing committee certainly discusses policy and so do the members of the committee. I suggest that perhaps the same procedure could be adopted in relation to this committee which, however, should be much smaller in number than the committee on external affairs.
I ask the government what it proposes to do to show that it is aware of the seriousness of the situation beyond hinting that we are likely to have disarmament shortly, and perhaps intimating we can knock off two or three million dollars from our defence estimates, or beyond offering us the comforting thought that if the tragedy of war were to occur the west would knock the stuffing out of the Russians.


I wish now to leave the question of defence and foreign policy and deal as briefly as possible, although it is an important and complicated subject, with some of the economic conditions that we face in this country and some of the problems that arise from this.
We on this side were accused in the last session of parliament, we have been accused during the recess by the Prime Minister and his colleagues, and no doubt we will be accused within the next couple of hours of being prophets of doom and gloom.


John George Diefenbaker: Is that a guilty conscience that is speaking?


Lester Bowles Pearson: No, Mr. Speaker, I am just anticipating the Prime Minister's normal gambit. The Prime Minister attempts to buttress this kind of attack, of course, by attributing to us statements we have never made and I refer particularly to some of the broadcasts of his public speeches where the facts as he states them are so far removed from the true facts as to be hardly recognizable. It is his tactic to attribute to us-and he will do it again later, I am sure,-[DOT] statements about unemployment, inflation, tight money and trade which we have never made. He delights in setting up straw men and then knocking them down with great verve and vigour. To him, I am sure, this is a very satisfying performance but it is not very significant.
Let us look at the record, not the record, I hasten to add, as it appears in the blue book, that comic strip put out by the Prime Minister's party, but the record of the facts. I shall begin by saying at once that we had a year of recovery in 1959 for which all Canadians should be joyous.


John George Diefenbaker: That was not your prediction last January.


Lester Bowles Pearson: I shall come to our predictions of last January and show how much more correct they were than the Prime Minister's. I might assure the hon. gentleman who I observe is reaching for his brief case that he will have ample opportunity to get his documents out because I will continue to speak until six o'clock.
I believe all Canadians may take satisfaction in the recovery that took place in 1959. As a matter of fact, the progress we have made merely confirms the words of the Minister of Public Works (Mr. Walker) who I wish was in his seat because this is the first time I have referred to him in debate since he became a member of the cabinet. The progress we have made merely confirms the words of that hon. gentleman uttered in Quebec as recently as January 11 last as quoted

in the press when he said, "The strength of Canada as a nation does not depend on a vigorous central government."


An hon. Member:: Quote the whole text.


Lester Bowles Pearson: That seems to be the part of the minister's statement that appealed most to the press.
It is true that the past year, 1959, has underlined the resilience and strength of our economy but it has also underlined the importance to our economy-if it needed underlining-of the economic situation of other countries and the effects of their condition on our own position which emphasizes, of course, our vulnerability. During this year the economies of the United States, the United Kingdom, and western Europe particularly were expanding and that had an important and very good effect on our trade. That made a most important contribution to the good results achieved in Canada during the year. But there are problems which have not been dealt with and which remain. The record shows-if the Prime Minister will look it up-that we were justified in our criticism last session, notwithstanding the current hosannas of the government propagandists or, as they put it in a nutshell in their blue book from which I quote, "The battle of the recession has been spectacularly won."
I am glad to have confirmation of that statement from hon. members opposite. There has been progress, of course, as I say, but in the cold and objective language of the report of the dominion bureau of statistics in the statistical review which came out a few weeks ago-


Donald Methuen Fleming: Do you not have a good word for the Martin bureau of statistics?


Lester Bowles Pearson: -recovery and expansion have been less vigorous in Canada that in the United States. In that forecast the bureau indicated an increase in our gross national product during the year of 5 per cent in volume. To get it into perspective I should point out that in 1955-another year of economic recovery-the increase in the gross national product was 8.5 per cent and in 1956, 8.6 per cent.
I should also point out that there has been no increase in the third quarter of 1959, so it is a little premature to say that the battle has been spectacularly won.
What about unemployment in that connection, from which no one in this country was to suffer? Again I quote the dominion bureau of statistics which indicates that the number of persons without jobs and seeking work as a percentage of the labour force for eleven months in 1958 averaged 6.6 per cent and
The Address-Mr. Pearson for eleven months in 1959 averaged 5.6 per cent. That is a drop of 1 per cent in which we can also take satisfaction, of course, but it should not be an occasion for a drop into complacency because this is the second highest average rate of unemployment since the great depression of the thirties, and it seems to be going up.
The Prime Minister on more than one occasion in recent weeks has made some misleading and inaccurate assertions about our gloomy predictions. I told him I would come back to this matter and I do not want to disappoint him. He did that so he could then, having made these inaccurate assertions, follow up by saying, "They said it could not be done and we did it". One of the things we are supposed to have said is that we would have a million unemployed in this country. I made a statement on this matter on behalf of our party in the budget debate and hon. members can find it at page 2914. I said during that debate, as found on that page, that "during the current year"-that is, 1959 -"we would have, on the average, more than 300,000 people unemployed." That was the statement I made. Was that too gloomy? It was too optimistic. The fact is that the average is 348,000, and it is going up. The recovery has not been very spectacular, for these 348,000 unemployed on the average during 1959, are more than in Great Britain, are more than in the United States, are more than in the countries of western Europe. The remedy that has been put forward to solve this problem is to share winter works payments with municipalities who are finding it more and more difficult to raise the money to meet their own share. Why are they having that difficulty?
That brings me to my next subject, tight money and interest rates. I am very glad that the Minister of Finance (Mr. Fleming) is back from Paris because I would have disliked very much making this part of my speech without him in his seat. I would miss his interjections which I know are bound to come from now on. They will not be novel but as usual they will be interesting.


Donald Methuen Fleming: You are trying to head them off.


Lester Bowles Pearson: Mr. Speaker, in the last two or three years we have had the unemployment evils of a recession while at the same time acquiring some of the worst monetary evils of a boom, with tight money and interest rates at unprecedented levels. If we are going to avoid this sort of thing in the future we had better try to find out what happened to bring it about in the immediate past.
The Prime Minister had said more than once and the Minister of Finance has echoed

The Address-Mr. Pearson him-or the other way round, I am not sure which-that the situation has arisen because of a conscious, planned policy of expenditures at the end of 1957 to halt the recession. The only word I can find to characterize that argument is one which is so dear to the heart of the Minister of Finance, "rubbish". It is obviously a rather stupid argument because at the end of 1957 the government was insisting at that time, before the election of 1958, that there was no recession at all, so how could they have had any planned and conscious policy to stop a recession which they would not admit existed?
We know what the real reasons are for this period of tight money through which we are passing, if we are passing. The first reason is election promises to increase expenditures without increasing taxes, promises even to cut taxes and increase expenditures, with the result that we have had huge deficits and great loss of confidence.


Gordon Minto Churchill: Loss of confidence in the Liberal party.


Lester Bowles Pearson: The second reason is that wrong methods were adopted to fight the recession when it was finally recognized and as a result while not out of that recession we are still in the tightest money period in our history. I wish the minister would read an article to which I am about to refer if he has not already done so. He has been so busy these days and doing so much travelling that perhaps he has not had a chance to read it although there is no better place to read than on a trans-Atlantic airplane, especially a government one.


Mr. Starr:: You used them all the time.


Donald Methuen Fleming: Nobody would
know better than you.


Lester Bowles Pearson: I have travelled on them but not as often by T.C.A. when I was in the government and never, like the Minister of Transport, have I gone to what was called an official function with two government airplanes. Anyway, perhaps the minister has read this article by a man who certainly cannot be accused of any political affiliation or political or party prejudice. I refer to the article by Professor Neufeld in the Canadian Banker last autumn, and he is a real authority on the subject. Professor Neufeld said, and I am going to quote from page 663, if the Prime Minister is looking it up-I want to do what I can to help him in his reply:
The move toward large government deficits in late 1957 was soon interpreted by the market as a move toward higher interest rates. Indeed, interest rates began to rise in mid-1958 well before the Bank of Canada imposed its brake on the money supply.


The result, I repeat, was the highest interest rates, the tightest money in our history and recession. With this approach to monetary policy, Mr. Speaker, what can be expected in terms of interest rates and tight money when the economy reaches a period of full recovery and perhaps boom? This monetary crisis, because it certainly was that as the minister will admit-


Donald Methuen Fleming: Admit what?


Lester Bowles Pearson: -through which we have gone, as the minister undoubtedly will admit-


Donald Methuen Fleming: Speak for yourself.


Lester Bowles Pearson: -was worse confounded by purely partisan and misleading exhortations by the Prime Minister with his purely political explanation of cause, effect and punishment and his rather blustering threats to punish the evildoers, who were the big, bad bankers, of course, and, if necessary, even to change the Bank Act. At that time there was no trace, no sign of the leadership which might have helped to restore confidence. As Professor Neufeld said then, and I quote again from the article:
Unhappily heavy political overtones still pervade official pronouncements on economic policy.
This government, boasts the Prime Minister about his government, unlike its wicked predecessors has no tight money policy.


John George Diefenbaker: Is that a quotation? The statement was never made at any time.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Mr. Speaker, I do not know whether that is conscience speaking. I never referred to wicked predecessors.


Lester Bowles Pearson: I would refer the Prime Minister to his speech in Lethbridge and to sundry other speeches in which he talked about the tight money policy of the previous government and said that the present government had no such tight money policy. As I have characterized it before, it is tight money without any policy, which is worse. If there was tight money and if there is still tight money today, which members of the government admit-the Minister of Finance admits it-


Donald Methuen Fleming: Admits what?


Lester Bowles Pearson: -the explanation of the Prime Minister and his colleagues as to why we are having tight money is to say the least misleading. Why, the Minister of Finance, who studied economics at university, should know that a first year student in the pass course would have more sense than to make these explanations for the tight money policy of the government at this time.

Here are the explanations. First, the Bank of Canada is restricting the money supply and the government has no responsbility for that. The second reason is that the increased private demand for funds was responsible and that is due to increased economic activity. A third reason, as the Prime Minister said himself in that interesting television performance of his, last November, I think it was, is that is was due to the arbitrary credit practices of the big bad banks who favoured the big bad borrowers at the expense of the good little man.
Let me give the facts about the situation in regard to money supply and who is responsible for that situation. The supply, as the minister will admit, has been stable since October, 1958. The governor of the Bank of Canada said in his last report, explaining this and throwing some light on what is happening now:
A sufficient degree of expansion of the money supply had taken place to make possible the financing not only of full recovery from the recession but of a considerable degree of renewed economic growth thereafter.
This is the opinion of the governor of the Bank of Canada. Why, then, was there this rapid monetary expansion in 1958 which, according to the governor of the Bank of Canada, was sufficient to finance a considerable degree of renewed economic growth after 1958? Well, the reason is a simple one. It is because of the government's huge deficit and the government's decision, no doubt because of this deficit, to expand the money supply so that their conversion loan in that summer would not be a complete flop.


Donald Methuen Fleming: You do not know what you are talking about. This is pitiful distortion.


Lester Bowles Pearson: I am glad the minister is returning to form. The result of this policy, I think the minister agrees, is that from September, 1957 to October, 1958 this period of expansion, the increase in the public debt was $1,253 million and the increase in money supply during that time was $1,747 million. It became quite clear, even to the government, that could not go on without a major crisis, so the expansion of the money supply was stopped in October, 1958. Is that not a correct statement of the position?
Why, Mr. Speaker, even if this stabilization of the money supply were the only cause of tight money, which it was not, it was the responsibility of this government which has been trying to run away from its responsibility ever since and put the blame on others. The evidence of that responsibility, Mr. Speaker, is clear and most of it comes from the other side when the ministers were in
The Address-Mr. Pearson opposition. I know it is embarrassing, and perhaps it does not always have the same constructive results it should have in their minds, but I am going to quote from some of their statements when they were over on this side of the house. The Minister of Finance in 1954 before the standing committee on banking and finance insisted, and I can see with what vehemence, vigour and determination he insisted, that no monetary policy measures be initiated by the Bank of Canada apart from those concerted with the government.


Donald Methuen Fleming: Page?


Lester Bowles Pearson: I believe it was page 23 of the proceedings, but I am not positive and I do not want to make even a minor inaccuracy in my statement, so I shall have to look it up.


Mr. Palleti:: They are all major ones.


Lester Bowles Pearson: The governor of the Bank of Canada agrees with the Minister of Finance and his words will be found on page 25 of these proceedings. The governor, Mr. Graham Towers, said:
There is no alibi possible for the government.
Later, in answer to another question from Mr. Fleming, as he then was and as he still is-this is on page 27-the governor of the Bank of Canada said:
They (the government) must be parties to everything the central bank does unless they signify to the contrary.
I can just see the Minister of Finance rising in his place and saying, a Daniel come to judgment. We are using the judgment against him now because the governor of the Bank of Canada was right then and he is right now. At that time the government of the day did not try to duck responsibility for this matter as the government is trying to duck responsibility now.


Donald Methuen Fleming: They were so befuddled they did not know what they were doing.


Lester Bowles Pearson: I shall give the minister an example of the befuddlement of the minister of finance of that day. I am quoting from page 511 of the proceedings of the standing committee on banking and finance. The minister of finance at that time, Mr. Abbott, said this:
The issue of money in the final analysis is the responsibility of the government of the day.
If the management of the central bank is unable to concur in government policy, then the management should resign.
That was a true and courageous statement of the situation at that time. I wish we could hear that kind of statement from over there. Joint responsibility between the bank and

The Address-Mr. Pearson the government, with ultimate authority with the government, is the only possible principle in our democratic, parliamentary society. When the Prime Minister and the Minister of Finance reject that principle they are acting in an undemocratic, unconstitutional, and indeed in a hypocritical way. Why do I use the word "hypocritical"? Well, I shall show you.
The Prime Minister, on August 26, in an extraordinary interview with Mr. Charles Lynch, dealt with these complicated matters and had this to say-I have the newspaper here:
In the fall of 1958, we increased the money supply by 12 per cent-
This is a very interesting statement because it reveals, among other things, the characteristic inaccuracy of the Prime Minister when he deals with figures because it was not 12 per cent, it was closer to 16 per cent. While the Prime Minister was saying that on August 26, the Minister of Finance, only the week before, denying everything he had said in the House of Commons when he was in opposition, had this to say, and I quote now from the August 18 edition of the Citizen- this is the Minister of Finance speaking, this is the other voice of government:
The government has no control whatsoever over the money supply.
Now, on August 26 the Prime Minister said that in the fall of 1958 we increased the money supply by 12 per cent, but on August 18 the Minister of Finance said the government had no control whatsoever over the money supply. Later there was a double reverse on this play and they both altered their position to a point where the minister is closer to realism than he was at that time. It is the bank that has been consistent and correct in its statement on responsibility. However, additional confusion was added to the bank's statement by the Prime Minister when he spoke before the Lethbridge chamber of commerce in August last. He said then that there had been no freezing of the money supply by the government. Mr. Speaker, the money supply was frozen in October, 1958 when it amounted to $13,347 million, and on December 30 of this year it amounted to $13,124 million. In other words, when it is freezing, we did not do it, says the Prime Minister, but when it is melting, we did it.
I suggest that in this serious financial and monetary situation it is time to have an end of this partisan nonsense. Let the Prime Minister, when he speaks tonight, show enough courage and understanding of the position to accept the responsibility of the government in these matters instead of trying unfairly to throw the blame on others for the policies of his own government.


The second alleged reason-that is to say, alleged by the government-for tight money was the demand for funds due to economic expansion. But, Mr. Speaker, we have had in the past-and I may say in the recent past-much greater demand for funds for much greater expansion under Liberal administration without such high interest rates and with less scarcity of funds. Let the Minister of Finance deny that statement if he can.


Donald Methuen Fleming: I will say again that the hon. gentleman does not know what he is talking about.


Lester Bowles Pearson: That is a very shallow comment. I suggest or in fact I state that the increased money supply of 1957-58 could easily have met private demand. It could easily have met private demand as indeed the governor of the Bank of Canada has made quite clear. But where has the greatest demand for this money come from? Who has hogged the money supply? It has come not from the bankers, not from the private borrowers but from the federal government, with $2 billion cash deficits in two years. In the 15 months from March 31, 1958 to June 30, 1959 federal government issues took 58 per cent of all new money provided by the bond market. Let the minister deny that statement. One result of this situation was that it forced the provinces and the municipalities to go to New York and other foreign markets for their money. That situation kept the dollar premium up and the government, we are told, can do nothing about it.
Then there is the third reason, and it is the last reason that they give. I have already alluded to it. It is that tight money is due to the big, bad banks. But with government and the Bank of Canada directly responsible for curtailment of expansion of bank credit and with the government the biggest borrower, the comercial banks have no alternative, of course, but to restrict their lending. "Oh, but," says the Prime Minister, "they were discriminating against the little fellow and we will stop that." However, the governor of the Bank of Canada, who knows the situation, has said that the policy of the chartered banks in this situation is right and inevitable. In making his charge the Prime Minister was merely playing politics, something which merely added to the confusion in the country and lack of confidence. Discrimination has been exercised against the small borrower, he said, and we must stop it.


John George Diefenbaker: Just quote that statement


Lester Bowles Pearson: That was in a broadcast "The Nation's Business".


John George Diefenbaker: Quote the statement.


An hon. Member:: We heard it.


Lester Bowles Pearson: Does the Prime Minister deny that in that broadcast and on other occasions he has given the impression that discrimination was being exercised by the banks against the small borrower?


John George Diefenbaker: I asked for the quotation-


Lester Bowles Pearson: The quotation will be found.


John George Diefenbaker: -and not the Pearson interpretation.


Lester Bowles Pearson: It is not difficult to find the quotation. We have plenty of time. If there has been any discrimination against the small borrower, as alleged by the Prime Minister and the Minister of Finance, let them produce evidence to show that discrimination. If they cannot do so, perhaps they would keep quiet at least on that point, especially as they represent the biggest borrower of all.
If the small borrower has suffered more than the large one-something which nearly always happens because the small borrower has not the resources with which to cushion himself against the impact of government policy-the blame is not to be put on the banks but on the government and nobody else. But three years ago, said the Prime Minister-and perhaps he wants me to quote his exact words-it was all different, we had really tight money under the Liberals at that time. I hope I am not misquoting the Prime Minister when I say that he has said that on more than one occasion, namely that there was really tight money under the Liberals, that it was different then.
It was different then, all right, in a good many respects. In the first place at that time -and when we were in power we did put into effect monetary restrictions in a period of boom-interest rates in a period of boom were much lower than they are now. Restrictions were imposed in a period, not of recession but of boom. In the third place, fiscal policy working with monetary policy resulted in very large surpluses, which were essential as anti-inflationary measures and which were bitterly attacked by present ministers. Certainly the situation has been much different in the last two years.
From January 1956 to June 1957, in a time of boom and full employment, the Liberal government of that day, far from making demands on the money supply, redeemed through surpluses over $1 billion worth of its direct and guaranteed securities. But from June, 1957 to October, 1959 this government, at a time of recession, increased them by $1| billion. As I say, it was different all right in those days.
The Address

Mr. Pearson
What about the immediate future? In 1960-61 the government-and the minister will correct me if he thinks my predictions are bound to be wrong-


Donald Methuen Fleming: If I start to correct the hon. member, he will never finish.


Lester Bowles Pearson: In 1960-61 the government will likely have a cash deficit and if our economy were to reach the stage of boom- something which the ministers told us is going to happen-the total demand for funds will further increase; then the credit squeeze under the policies of this government will become unbearable or we will get real inflation. If we have to face a recession by the end of 1961, as many economists, including some government economists, are predicting, and if the government decide to fight that recession in the same way they fought the last one, then we will not be able to avoid a much more serious financial crisis than the one which has developed in recent years.
The governor of the Bank of Canada had something to say in this connection in his speech on November 16 and perhaps I may be permitted to read one paragraph from that speech. He said this:
In preparation for the next cycle, perhaps it is not too soon for careful examination of how best to take anti-recession action while minimizing inflationary potentialities.
The governor made a speech today on the same subject in Winnipeg and I have just had a chance to read that speech this afternoon. In that speech he has one extremely important paragraph which has an important relationship to this subject and to what I have been saying. Mr. Coyne had this to say today:
There are not one but several major requirements for the prevention of inflation,-


Donald Methuen Fleming: What page?


Lester Bowles Pearson: It is page 4 of the text I have of Mr. Coyne's speech given in Winnipeg today. I have only one page here with me. It is a press release of his speech. The quotation continues:
-the maintenance of sound and steady growth and the prevention or mitigation of fluctuations in the level of unemployment. One requirement, certainly, is the maintenance of a sound monetary policy, which means restraint in the process of expanding the stock of money. Another is moderation in spending and borrowing by governments and public bodies. A third is the development and maintenance of appropriate fiscal policies and public policies of various other kinds designed to promote sound expansion in private business but to discourage excessive spending throughout the economy.
Mr. Speaker, our party, the Liberal party, has given careful consideration to this problem over all the months that we have been

The Address-Mr. Pearson in opposition and we have put forward our views on this subject. We put them forward at the beginning of 1958. A study of those views I think will be sufficient answer to the question: What would you have done? But unfortunately the government at that time did not accept them. Indeed, I do not even know that they studied them.


Donald Methuen Fleming: Neither did the people accept them.


Lester Bowles Pearson: Our advice at that time was clear enough. It was to the effect that in an economy like ours, which is in constant fluctuation, moving from conditions of recession to those of inflation, fiscal policy-that is, the government's program of spending and taxation-must always be flexible so that deficits, balanced budgets and surpluses can be produced on as short notice as possible, according to the requirements of changing economic conditions. The Minister of Finance talks a good deal now about flexibility. Indeed, he mentioned this with great emphasis in his state of the nation address on finance and economic conditions to an audience in Toronto, before he announced it to the House of Commons-


Donald Methuen Fleming: And in his budget speech last April.


Lester Bowles Pearson: -when he gave the kind of review we all expected him to give first in the House of Commons. I wonder what his leader, Mr. Drew, would have said if he had been in the house on that occasion, had he listened to this speech in Toronto. The Minister of Finance made an appeal for flexibility.


Donald Methuen Fleming: I mentioned that in the budget speech last April.


Lester Bowles Pearson: I would point out to the minister that in the last two years of his financial administration fiscal policy has not been flexible. The government has produced huge deficits, mainly by increasing its long term financial commitments, including increased interest charges on the national debt-over $100 million a year-by its bolstered billion dollar program of public works and other expenditures, with the inevitable result that the level of public expenditures cannot now be reduced when economic conditions change and when a deficit becomes undesirable, as it is at present. That is the main source of our current financial and monetary troubles.


Donald Methuen Fleming: Would the hon. gentleman permit a question? Was the deficit undesirable in 1958, under the conditions prevailing in 1958?


Lester Bowles Pearson: I would say to the Minister of Finance that a budget was desirable in the fall of 1957, in order to attempt to meet that

situation. But instead of making a financial accounting in 1957 and providing a policy which would have dealt with the recession at that time in a flexible way along the lines we put forward, the government was not interested in the recession; all it was interested in was the next election.


Donald Methuen Fleming: Now would the hon. gentleman answer the question?


Lester Bowles Pearson: To give the minister his due, I think that if he had had his way there would have been a budget, but he was overruled.


Donald Methuen Fleming: Is the hon. gentleman answering the question or running away from it?


Lester Bowles Pearson: On the other hand, if, in fighting recessions, you rely among other things on temporary tax cuts, that helps to preserve the flexibility of fiscal policy. They are an effective weapon to combat a recession, and because of their temporary character you are soon in a position to balance the budget, or even to have a surplus when the recession ends.
If that course had been followed in 1957 when the government had the power to do it, we would have avoided the lack of confidence created by the prospect of a series of huge deficits created by the government bond market. Interest rates on government bonds would have been kept within reasonable limits, fiscal policy would have made a positive contribution to the fight against current inflationary pressures, and under such conditions we would not have had the kind of tight money which we now have and which is so hard on the small borrowers, and which seriously threatens the forward development of our country.
That leads me to the only other phase of this subject which I want to touch on for the moment, and that is the danger of inflation. Before I get to that, however, I would like to deal with the Prime Minister's intervention, when he said I had accused him of saying something which he never did say.


John George Diefenbaker: I said that "wicked predecessor" was never said.


Lester Bowles Pearson: I have found the quotation from the Prime Minister's broadcast over the C.B.C. television network of October 1. I could find other quotations, but perhaps one will do. On that occasion he said:
I want to make this clear, and abundantly clear; it is not the intention of the government to stand by and see small businessmen, and farmers, and home-builders, and small borrowers denied their opportunity to share in the new prosperity of Canada by reason of arbitrary credit practices.

It is obvious that if we make more credit available to small borrowers, it can be done in one of two ways: either a greater money supply must be created, or what is available must be more equitably apportioned.
If that does not indicate that the Prime Minister was stating that there had been unfair practices adopted by bankers against small borrowers, I would like to know what does. Then there was another headline to the effect that the Prime Minister said banks would give the small man a better break. Then there are quotations to show that the big bad bankers were not doing that, and that the Prime Minister was going to see it was done. That would restore confidence in the monetary condition and faith in the banks. Is it a fact that the bankers had discriminated against the small borrowers in this situation? If so, would the Prime Minister produce the evidence to support that statement?
Now a few words about inflation.


Michael Starr: Defender of the banks.


Lester Bowles Pearson: I knew somebody on that side would say it was political prejudice and that we are defenders of the banks. A good many millions of people have deposits in the bank, and when we defend the banks they are the people we are defending.
Now, Mr. Speaker, with much unemployment persisting, and in emerging from a recession we have, as I said, the highest interest rates and also a real creeping inflation. Believe me, Mr. Speaker, that reality exists at the present time. The Prime Minister made a statement on November 12 over the television network, and on that occasion he said:
We have met the problem of inflation.
What proof does the Prime Minister give for the statement that the problem of inflation has been met? The proof he gives is that the figure for the first nine months of 1959 shows that the dollar has lost only 1 cent in purchasing power. That is a period of some nine months.


John George Diefenbaker: When did I make that
speech?


Lester Bowles Pearson: November 12, on "The Nation's Business" television broadcast. During that broadcast the Prime Minister kept saying, "They said we couldn't do it, and we did it. This is one of the things they said we couldn't do, cure inflation, and we have met the problem of inflation".
The fact is that in two and one half years of recession and slow recovery, not a boom period of post-war decontrol such as we had in 1945-46 when all controls which had been
The Address-Mr. Pearson in existence during the war were removed and we were attacked by the Conservatives because we did not remove them sooner, not in a period of quick rearmament expenditures during the Korean period, but in a period of recession and slow emergence from a boom, from July 1957 to December 1959, the consumer price index increased 5 per cent. From 1952 to 1956, during a comparable Liberal period as far as outside pressures were concerned, it was kept steady. This year, according to the dominion bureau of statistics in their bulletin of December 21, our over-all prices will go up 2 per cent. In a period of recession and recovery without boom, that is creeping inflation. What will happen if and when our economy is fully operating? The Prime Minister says we have met the problem.


An hon. Member:: On the street where you live.


Lester Bowles Pearson: Now I wonder if I can trespass on the patience of the house in order to say a few words about agriculture-not the vision, but the reality. The vision, in the words of the Prime Minister, was "parity not charity". The vision in the words of the Minister of Agriculture-and I quote from Hansard of January 23, 1959, page 255, was "the cost-price squeeze has been finally halted." In the words of the Minister of Northern Affairs, speaking at Davidson, Saskatchewan, last autumn, it was "a great charter for agriculture giving the farmer a fair share of the national income".
Let us look at the cold reality behind all this visionary exuberance. The Minister of Agriculture, at the dominion-provincial economic conference on November 23, had this to say in his speech to the conference:
Agricultural industry shared in the economic recovery that began in 1958 and continued into 1959.
But what does the minister's department say in its publication "Current Review of Agricultural Conditions in Canada" which was issued on the very same day the minister spoke-and it was a most unfortunate piece of timing that all the public relations and press officers in the department-more than we have ever known in our history-could not have done better than to issue this report on the same day when the minister said that the agricultural industry shared in the economic recovery.


Mr. Marlin (Essex Easl):: Mr. Grosart was away that day.


Lester Bowles Pearson: In that report published by the department we read this:
In 1959-realized farm net income is expected to remain close to the 1958 level.
56	HOUSE OF COMMONS
The Address-Mr. Pearson
But we are told by the government that the gross national product is going to increase by 7 per cent. Is that the way the farmer is to share in the recovery? The outlook for 1960-this is the hope-is that conditions will further improve in the industrial sector of the economy, and the minister says we are going to have an increase of 6 or 7 per cent-in value-though if that happens there will be dangers ahead as I have pointed out. But if that does happen and we do get an increase of that kind, then what about agriculture? Is agriculture going to share in this increase? The departmental publication has this to say on page 8:
Farm net income in 1960 will likely be lower than in 1959.
That is the verdict on agriculture by those ministers who are boasting about a possible increase in the gross national product of 15 per cent in those two years. The cost-price squeeze had been ended, they claimed, and the farmers now enjoy a fair share of the national income. And only two years ago the Tories were shouting: "They say we can't do it; give us a chance and watch the cost-price squeeze go."


Mr. Harkness:: Is the hon. gentleman aware of the fact that farm income increased in 1958 some 20 per cent over 1954 and 1955, some 7 per cent over 1956 and 10 per cent over 1957, and that 1959 saw the highest income farmers have ever had in the history of Canada?


Lester Bowles Pearson: I am aware of that. I am also aware of this, that while farm income increased in 1958 over 1957 and some years before by the amounts the minister indicated the farm income of that year, which he has singled out, was over $100 million less than the average of the 10-year period before that.


Donald Methuen Fleming: Is that another from the Martin bureau of statistics?


Lester Bowles Pearson: Does the minister deny it?


Douglas Scott Harkness: I deny it absolutely. You had better have your staff look at the figures, because they have made a terrible error.


Lester Bowles Pearson: It is no wonder in the light of that reckoning that the speech from the throne talks about agriculture this year in very muted tones, and that the bright vision of two or three years ago has now become the gloomy forecast of 1960. There will be an opportunity shortly to deal with the details of agricultural policy; in fact there may be an opportunity to deal with more than just one aspect of this subject.

But I should like to say a few words at this time, because these are matters which are very much in our minds and in the minds of farmers all over Canada, about the policy of the government with regard to wheat, pork and eggs. It is not hard to recall how members opposite, when they were on this side, used to attack the United States for its wheat surplus disposal program and used to attack us for not doing something effective about it. On March 5, 1958, during the election campaign, the Prime Minister said at Chatham, Ontario:
We will not allow the Canadian farmer to be sacrificed by dumping of agricultural products by the United States.
Two years later it was estimated in Washington-and the minister will probably correct me if I am wrong in this figure, but I do not think I am any more than I was wrong in the other-


Douglas Scott Harkness: You are bound to be right some time.


Lester Bowles Pearson: Two years later it was estimated that 68 per cent of all United States wheat exports last year were "give aways" and the remaining 32 per cent subsidized. Meanwhile, what has happened to our exports? In the 1958-59 crop year our wheat exports declined by 26 million bushels or more than 8 per cent. And the Department of Agriculture on page 22 of the "Current Review of Agriculture Conditions" which I have mentioned, estimates a further reduction in 1959-60. What has happened to this international wheat disposal program this "food for peace" program that we heard so much about last session? What has happened to the NATO food bank put forward by the Minister of National Defence, so we were told, a couple of years ago? What has happened about the aggressive sales policy which the Minister of Trade and Commerce (Mr. Churchill) was going to put into effect? In fact, Canada's share of the world market declined from 37.4 per cent to 31.5 per cent last year.


Gordon Minto Churchill: Does the hon. gentleman realize that our exports are 10 million bushels more than they were last year at the same time?


Lester Bowles Pearson: I am quoting from a publication issued by the Department of Agriculture, and if the hon. gentleman does not agree with it he should get together with the Minister of Agriculture.


Douglas Scott Harkness: Are you aware of the fact that our cash exports have increased. You are talking about sales.


Lester Bowles Pearson: The trouble with hon. members opposite is that I am aware of too many

things to please them, one of which is that our share of wheat exports has declined from 37.4 per cent to 31.5 per cent.
Now let us look at this matter of deficiency payments for hogs and eggs. This is a wonderful example of confusion, uncertainty, fumbling and bumbling in the administration of government. On October 1 of last year -I am now talking about the minister's egg policy; his scrambled egg policy-


Donald Methuen Fleming: That is so original.


Lester Bowles Pearson: I am quite sure, Mr. Speaker, that it is not original but it is extremely apt. On October 1 the minister announced that the price support system for eggs would be replaced by a system of deficiency payments on a maximum of 4,000 dozen annual production of grade A large eggs. This deficiency payment is to be determined by the difference between the support price and the national average market price for the year. I do not know whether or not the minister calls that forward pricing, a system he promised to bring into effect a year or two ago. For the current year the deficiency payment will not be known until October, 1960 and the producers who do qualify-although not all of them will, of course,-will receive the same deficiency payment whatever price they may have received for their eggs. In other words if the basic support price is 33 cents per dozen and the national average price during the year turns out to be 30 cents the deficiency payment would be 3 cents and the producer will get that, if he qualifies, whether he sold his eggs during that period at 25 cents or 35 cents.


Paul Joseph James Martin: Charity, not parity.


Lester Bowles Pearson: This is neither charity nor parity. The same principle has been applied to hogs. On October 1 the support price was reduced from $25 to $23.65 which is the minimum under the act. On January 11 that reduced price support program was replaced by a deficiency payment system similar to that which has now been put into effect on eggs with producers eligible for payments on 100 grade A and grade B hogs per year based on the same averaging procedures as applied to eggs. There is no guarantee with respect to hogs or eggs that with such a payment producers will receive the minimum support price of $23.65 for even the 100 hogs maximum. It is not difficult to understand why these changes caused so much alarm and anxiety among the producers in the agricultural industry concerned as the Prime Minister himself discovered when he was out in Saskatchewan at Christmas time.
It is interesting to examine why these changes were made. It was, of course, due to the over-production and the surpluses that
The Address-Mr. Pearson occurred under the previous policy of price support as administered by this government. The Department of Agriculture Current Review, page 41, estimates that 201 million pounds of pork had accumulated at December 31, 1959 and the government is now frantically trying to give it away to anybody who will take it. The figure I have cited represents an increase from 47 million pounds in 1958 and from the 39 million pound average that obtained between 1947 and 1956, when we were in office.


Mr. Cardiff:: Under your policy.


Lester Bowles Pearson: Yes, under a Liberal policy that was maladministered by the present government, the surplus of pork has increased from 39 million pounds to 201 million pounds. The government now has a surplus of 201 million pounds of pork-


Lewis Elston Cardiff: Under your policy.


Lester Bowles Pearson: -and the taxpayer is going to suffer for it. All of this, Mr. Speaker, in spite of a 20 per cent increase in domestic consumption and greater exports.
What brought about this startling increase? Last year the Minister of Agriculture was not saying that this was brought about under a Liberal policy. Instead he was taking every credit for bringing about this 201 million pound surplus. The increase was brought about because of the fact that on April 1, 1958, without consulting farm associations, the support price was increased to $25 for purely political reasons.
The result of that increase was obvious. Existing producers increased their production, put more capital into their production, and new producers came into production, thus giving us an over-production caused by government policy to the point which we now have reached which requires some kind of alteration of that policy because the hogs, like the chickens, have come home to roost.
The government in a panic is now rushing to the other extreme and withdrawing all effective support. I can easily demonstrate that. We now have no support price on any kind of commodity sold in excess and we have no assurance that any individual producer will receive the guaranteed support price within a quota. As I have said, some will get more and some less. I suggest that in his statement to the house last session the Minister of Agriculture was misleading the house on this matter although, of course, he did not mean to do so. I refer the house to what was said by the minister last session as reported at page 2581 of Hansard of April 10, 1959:

The Address-Mr. Pearson
We will pay the farmer the difference between what he gets in the market place and the price support announced.
Is the minister doing that under the deficiency payment scheme announced for hogs and eggs?


Douglas Scott Harkness: Yes. We are paying the farmers as a whole.


Lester Bowles Pearson: That is wonderful explanation. The government is going to pay the farmers as a whole. That is going to be a great help to the individual farmer who finds that when he sells his eggs for 20 cents he will receive 3 cents more, bringing it to 23 cents. The minister believes that this carries out his promise that the farmer would be paid the difference. He said the government would pay the farmer, not the farmers, the difference. Let me refer again to what he said:
We will pay the farmer the difference between what he gets in the market place and the price support announced.
If that means anything, it means the individual farmer.


Hazen Robert Argue: And that will be paid only on grade A large.


Lester Bowles Pearson: Yes.


Mr. Speaker:: I think this would be a convenient place to adjourn.


David James Walker: Mr. Speaker-


Mr. Speaker:: Order. I have called it six o'clock.


David James Walker: On a question of privilege, Mr Speaker.


Mr. Speaker:: If the minister will take his seat I will explain my point of view. When it has been called six o'clock it is incompetent for the house to enter upon any business. It is true that a question of privilege may be raised at any time but it must be raised while the house is in session. I will hear the hon. gentleman's question of privilege immediately after recess. It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.
David James Walker: Mr. Speaker, may I correct a statement attributed to me by the Leader of the Opposition in his speech by reading from the text?
The strength of Canada as a nation is not dependent upon strong centralized rule. It is

dependent upon respect for our democratic forms of government and on the constitution as laid down by the fathers of confederation.


Lester Bowles Pearson: Mr. Speaker, the quotation which I attributed to the minister was textually correct as it appeared in the Quebec Chronicle-Telegraph. He has now corrected that report as it appeared in the press from which I was quoting. I did the minister no injustice in quoting him from a newspaper which textually reported him and which report was not denied subsequently to the speech. If that was an incorrect quotation, and he has suggested that it is, I am sorry that the newspaper did not get him correctly.
Mr. V/alker: I appreciate that my friend did so inadvertently.


Lester Bowles Pearson: Mr. Speaker, while we are on this question of misquotation and misinterpretation perhaps I ought to clear up one or two matters which were raised during the course of my remarks this afternoon. The Prime Minister took exception to the fact that I quoted him as saying in a broadcast that his government had no tight money policy unlike its wicked predecessor. He took exception to the word "wicked". I have the text of the broadcast and it is quite true that although he had a few observations to make about the Liberal party and the preceding government he did not use the word "wicked". But what he did say was this:
A question has arisen over individual commercial bank credit. Some call it "the tight money situation."
Let me make this clear. There has been no government "tight money policy" as there was in 1955 and 1956, when tight money was the policy of the Liberal government.
It is quite true that he did not put the word "wicked" before "Liberal government", no matter how he may have felt.


John George Diefenbaker: No, that is not the way I think and the hon. gentleman had no right to say that.


Lester Bowles Pearson: Mr. Speaker, I paraphrased what the Prime Minister said at that time and now I am quoting the text. The Prime Minister also took exception to the fact that I suggested that in this broadcast he gave the impression that the banks were discriminating against small borrowers. The Prime Minister went on to say in this broadcast, from the text of which I now quote:
There is no such policy today.
That is, a tight money policy.
What has happened is in consequence of natural economic forces, resulting from the demands of the phenomenal economic recovery.

A phenomenal economic recovery, I might interpose, which has left 5.6 per cent of our working force out of work. Then he went on:
Interest rates have gone up. The commercial banks have restricted their lending operations with the result to the average man that money is harder and more costly to get than has been the case heretofore.
Then he said a little later:
Well, now you ask me what should be done. A dynamic economy can never stand still. Growth must be the watchword. Reasonable demands for credit must be met fairly.
I want to make this clear-
I quoted this this afternoon.
-and abundantly clear. It is not the intention of the government to stand by and see small businessmen, and farmers, and homebuilders, and small borrowers denied their opportunity to share in the new prosperity of Canada by reason of arbitrary credit practices.
If that is not a suggestion that the banks are indulging in arbitrary credit practices to the prejudice of the small borrower I do not understand the meaning of the words. That is how it was interpreted in the press throughout the country, and the Minister of Finance made the same suggestion. We had headlines the day after the broadcast such as in the Toronto Star, "Dief Warns Bankers 'Throttling' Little Man" and a Canadian Press story in the Ottawa Journal, "P.M. Suggests Banks Give Small Man Better Break."
This afternoon the Minister of Finance also took exception to an observation of mine about his remarks to the banking and commerce committee in 1954 because I could not actually quote from the page. I have the page reference here and I assure the minister, or I would assure him if he were in his seat, that it abundantly bears out what I said this afternoon about his determination at that time, with the help of the governor of the Bank of Canada, to pin responsibility for monetary policies right on the government of that day and, incidentally, the government of that day accepted it.
Now, Mr. Speaker, the Minister of Agriculture was really quite vigorous in his denial of some of my statements this afternoon and took strong exception to a statement which I made that the average net farm income for the period 1946 to 1956 was over $100 million more than the net income in 1958.


Douglas Scott Harkness: Mr. Speaker, if the hon. gentleman will permit me, we were talking at that moment of farm income, not net farm income.


Paul Joseph James Martin: No, we were talking about net farm income.


Lester Bowles Pearson: If the minister had been following what I was trying to say he would have known what I was talking about all right.
The Address-Mr. Pearson I said that the net income-I am quoting from my own text-was over $100 million less in 1958 than the average of the ten year period, 1946 to 1956. The minister then intervened and said, "I deny it absolutely." Your staff, he said, has made a terrible mistake.
I must apologize to the house with regard to these figures, Mr. Speaker, because I may have given the impression that the difference was only slightly over $100 million when I said "over $100 million." If I misled the house I ask for their forbearance. I checked the figures during the dinner interval as they appear in the "Handbook of Agricultural Statistics, Farm Income, 1926 to 1955". Having checked the average of the ten years to which I referred this afternoon from this official publication and the farm net income in 1958 as found in the official statistics, I admit I may have misled the house in saying "over $100 million" because the difference was well over $100 million, it was $181 million. In fairness to my staff, I must say that they did not make a "terrible mistake." They had the figure of $181 million in their notes prepared for me but as I did not have those notes before me I wanted to be very conservative in my use of figures. So I merely said "over $100 million." I suggest that the minister take another look at his statistics before he interrupts in this way.
I said to the minister this afternoon that in discussing deficiency payments for hogs he had misled the house when he spoke in this chamber in April 1959. I did not accuse him of doing so deliberately. In fact, I said I was sure he did it by inadvertence. However, as found at page 2581 of Hansard for April 10 last he said:
We will pay the farmer-
Not farmers all over the country, not the agricultural industry but the farmer.
-the difference between what he gets in the market place and the price support announced.
I said that is not the effect and will not be the result of the new deficiency payment scheme which the government has introduced and that under that scheme all that the producers will get is the difference between the national average and the support price. That is a very different thing from what the minister said last spring in the house. I tell the government that this new scheme defeats the purpose of the Agricultural Stabilization Act, that it represents a complete reversal of previous government policy and that it is a repudiation of Conservative promises to agriculture previously made.
The fact is, Mr. Speaker, that the situation on the agricultural front is not bright. We know very well that before the elections the

The Address-Mr. Pearson government had promised-I mentioned this this afternoon-that agriculture would receive a fair share of the national income, that the cost-price squeeze would be halted, and the minister said last January that not only was it halted but it had been reversed.


Douglas Scott Harkness: That was correct.


Lester Bowles Pearson: Mr. Speaker, it is very difficult to overcome this invincible ignorance displayed by the minister.
Finally, Mr. Speaker, the Prime Minister said that agricultural policy would be based on parity not charity. At that time, that was the vision, that was the charter for agriculture. But today, the farmers of this country are left with the sad reality of the present situation. They have been fooled once by demagogy disguised as evangelism. They now know that they have been fooled, and it is very difficult to fool farmers twice. I do not mind these interruptions, Mr. Speaker, but they are cutting into the Prime Minister's time.
I should like now to say a few words about our trade situation, and begin by discussing very briefly, in relation to the importance of the subject, our increasing balance of payments problems. The dominion bureau of statistics, upon whom we rely for so much for our information, reports that the balance of international payments in the third quarter of 1959 shows a deficit in this country from current transactions in goods and services of $1,119 million, which is an increase of 42 per cent over the same period in the preceding year. Of that amount of $1,119 million the merchandise deficit is $426 million. Of course, this is the figure for third quarter, and it has gone up again since.
More disturbing perhaps than anything to be found in these figures is the fact that we have now or we had during this period a current deficit of $200 million with overseas countries, including the United Kingdom. In the past our deficit on international payments has been held in balance by our credit position in regard to overseas payments. This has now gone and we have a deficit on overseas payments of $200 million. This is a striking and worrying contrast with the large overseas surpluses we used to have, even at times when the deficits with the United States were very large, and I am sure this is worrying to the Minister of Finance and his officials.
Now, about 80 per cent of the deficit is with the United States; in fact, the figure for our deficit in international payments for the first nine months of 1959 was $919 million. This, of course, is profoundly disturbing, and made more disturbing by the way in which this deficit is being met. It is being met, of


course, as it has been in the past by the net inflow of capital, a net inflow of capital from the United States which is keeping our dollar well above par in spite of the adverse trade balance about which I shall have more to say later.
Of this inflow of capital, 80 per cent is now coming from the United States and only 5 per cent from the United Kingdom, though in the preceding year, 1958, that figure was 15 per cent. There is a change in the wrong direction. We also have a change, not only in the geographical distribution of this inflow of capital, we have a disturbing change in the pattern of this inflow because now there is relatively less coming into this country for direct investment and portfolio securities and more of what we have perhaps the right to call "hot" money. As the dominion bureau of statistics points out, the unfavourable balance cannot now be financed by direct investment or portfolio security investment with the result that nearly 29 per cent is now financed by inflows of other character, mostly of a short term character. This, as I have said, is "hot" money attracted to this country by exceptionally high interest rates, and that is saving us from the consequences of our balance of payments position. I suggest that the way we are being saved, with almost 30 per cent of the inflow coming in that form, is very dangerous to our financial stability in the future.
Furthermore, in this capital inflow which is coming in new issues sold by levels of government in the United States have played a very important part. This government financing in the United States represents a built-in addition to our deficit which is not likely to decline in the future, even if we had a period of recession. It is another rigidity introduced into our financial and economic system. I ask, then, for how long can we maintain this increasing rate of international indebtedness now due not so much to economic growth, as it was in the past, as to the monetary and financial policy of the government with high rates of interest enticing dollars in from the United States and forcing Canadians to borrow outside in the United States.
The result of all this is that we have a hard dollar; indeed, a dollar that is hard on our exports. This is only one of the things, but it is a very important factor which is playing its part in pricing us out of world markets and creating long term balance of payments difficulties.
Mr. Speaker, let us look at the trade figures. We can examine them, not just for the first three quarters of the year, but we have the figures for the 11-month period of 1959. During this period exports are up 4.7 per

cent, by $214 million, something from which all of us can take satisfaction, to a figure of $4,693 million. Imports are up by 9.1 per cent, by $438.5 million, to a figure of $5,205 million. For the 11 months we have a merchandise deficit of $512 million, that is an over-all merchandise deficit. We have a merchandise deficit with the United States of $609 million. Last year for the same 11-month period we had a merchandise deficit of $288 million, so that has gone up and that is profoundly disturbing. Indeed, one of the things from which the government took the greatest satisfaction last year during a period of strong recession was the fact we had cut down our adverse balance of trade with the United States. Well, it has now gone up to $609 million. Not only the amount but the distribution of this deficit is disturbing because it certainly shows, if anything can show, that this diversion policy to which the government committed itself some years ago, that is diversion from the United States to the United Kingdom, is not working.
Looking at the export figures. We find our exports to the United Kingdom are up only $6 million, although during this period of 11 months the United Kingdom has increased its total imports by $606 million of which, as I say, only $6 million came from Canada. Our exports to other commonwealth countries and to other major markets are actually down during this period. The United States has saved us from a general debit balance on our exports because our exports to the United States are up $280 million, a situation which might not persist during 1960. We hope that it will do so, but there are some extremely dangerous spots on this particular horizon because this year we shall have included in those exports to the United States which are largely responsible for this increase of $280 million, perhaps $300 million worth of uranium. How long is that item going to appear in our export figure to the United States? The result of all this is that in 1958, while 58 per cent of our exports went to the United States, in 1959, in 11 months, 62 per cent of our exports went to that country.
We have the same story, even more alarming, in connection with our imports. We had an increase, as I pointed out, for the 11 months of $438.5 million. Of this increase in our imports, surely we might have expected-in view of the determined policy of the government, so we were told-that the major part of that increase in our imports would come from the United Kingdom, because that is where the diversion was going to take place. Our imports have gone up $438.5 millions. A 15 per cent diversion
The Address-Mr. Pearson from the United States would be about $400 million. But much of that increase of $438.5 millions came from the United Kingdom? Of those increased imports 14.5 per cent came from the United Kingdom. How much came from the United States? Of this increase in imports, 56.2 per cent came from the United States.
We on this side-those of us who have served in government-know the difficulty about interference with the pattern of trade on this continent or indeed in the world. It is an extremely tricky, difficult and complicated problem. But hon. gentlemen opposite knew all about it. They were going to turn this situation right around and bring in 15 per cent more from the United Kingdom and 15 per cent less from the United States. They said they could do it. That was, of course, their policy; 15 per cent diversion. Of all our imports, 10.5 per cent of them come from the United Kingdom and 68 per cent from the United States, with the result that we have now in this field, as in so many others, increasing integration of our national society in all its activities with our neighbour the United States of America. We have increased integration in trade, in defence and in development, as we shall find out when we see who is getting the franchises up in the north for exploration and development. We have increasing integration in energy resources because they are moving north and south instead of east and west, as the Prime Minister said they were gomg to do when he was out in Kitimat a few months ago. We have increased integration in communications and indeed in almost every phase of national growth.
Mr. Speaker, we were to have been saved from all this by the present government. I can remember so vividly the Minister of Justice who I am sorry to see is not in his seat tonight, talking with great vigour and verve about the domination by the United States of our economy when we were discussing this matter some years ago. I remember him saying in this house at that time:
That economic domination by the U.S.A. unless stopped would lead to political domination.
Mr. Speaker, it is not being stopped.
There are some other trade questions that I should like to ask. What will be the effects on our trade of the new trading arrangements such as the common market and the European free trade area? The Minister of Finance had something to say about that matter this afternoon and I shall have something to say about it in a minute or two. What about the new challenge of the Soviet bloc? Will western Europe be inclined to increase its trade with that bloc at our expense,

The Address-Mr. Pearson as there is some indication will happen? Will increasing United States investments in Europe have an adverse effect on our markets and our long term growth? I hope during the course of this debate we shall hear on these subjects from the ministers who during the recess have been touring the world and acquainting themselves with these economic problems. Perhaps we shall even hear from the Solicitor General about his representation of the government at the GATT meeting in Tokyo when he made such a fervent plea to our friends in GATT to liberalize trade and remove obstructions. Perhaps we shall hear from the Minister of Trade and Commerce in this debate.


Gordon Minto Churchill: You heard from me last year and you did not like it. However, you will hear from me again.


Lester Bowles Pearson: We shall be glad to hear from the Minister of Trade and Commerce. We always like to hear his defence of the government in the confusing and contradictory trade policies which they are following at the present time. As a matter of fact, the Minister of Trade and Commerce is one of the more optimistic ministers of the government along with the Secretary of State for External Affairs. He stated the other day-and I hope he will not think I am misquoting him when I paraphrase this statement-that he was not too worried about our trade deficit because it was just an indication of expansion. I may say that he was worried enough about it when he sat on this side of the house. Indeed, the Minister of Finance has expressed a great deal more worry in this matter than has the Minister of Trade and Commerce. He is so worried that he has been lecturing our friends that their trade policy must become more liberal or they may acquire the enmity of the Canadian government.
But what have these preachers been doing at home while they have been preaching to our friends abroad? Mr. Speaker, they have been worrying the Japs. Perhaps I should be a little more respectful and say that they have been worrying the Japanese government, at present our third largest customer. We shall have something more to say about this matter as the debate progresses. They have, of course, already ignored the United Kingdom approach for freer trade arrangements with Canada. They have invited retaliation by subsidizing exports. The Minister of Agriculture must be a little worried about that matter, I take it, at the present time. They have been raising tariffs and they have been imposing arbitrary valuations. Meanwhile they minimize new dangers and are hoping for the best from European developments.

For two years now they have been entirely passive toward these new international trade developments which are now emerging and in which they are now displaying an intense interest. There is not, however, much anxiety on the part of the Minister of Trade and Commerce because as he left the other day, I think it was to Washington or to Paris-it is hard to keep track of him these days, and I am not criticizing him on that account because I know that in his position a great deal of travel is required-he said, and I hope he will accept this quotation:
The situation is not quite as serious as some people have been led to believe.
What are we going to do? Are we going to tag along with the United States, let Mr. Dillon go across and visit these countries and then go to Washington and get his report on what is happening?
We on this side of the house have called the attention of the government more than once to the developing importance and indeed the dangers of this move in Europe toward economic integration. I said in Vancouver as far back as January, 1958 that we should immediately explore the possibility of free trade within the Atlantic community as being the best solution to our trade problems. Because so much is being said about this matter now, even by the Prime Minister who made a fervent plea for Atlantic freer trade in Halifax, some weeks ago, perhaps I can put on Hansard what I said about this subject for my party in January, 1958. I said this in Vancouver:
In Europe, six continental countries are prepared to form a customs union to be complemented by free trade arrangements with the U.K. and probably also the Scandinavian countries and the rest of continental Europe. When these arrangements are completed, there will be a tendency in some parts of this large area to aim at European economic isolationism. These countries have tried to gain easier access to the U.S. market without any substantial degree of success and they may now feel that the only other alternative is a larger economic unit of their own, as self-sufficient as they can make it. That would be an unhappy development.
Indeed it would be tragic, politically and economically, if the free world should now divide into separate economic blocks while the Soviet world-remained a massive, single trading unit.
There is increasing evidence that Soviet leaders are more and more interested in conquest by economic methods, used and controlled by the same means and for the same purposes as are the diplomatic and military arms of that government.
The west is gradually-too gradually-recognizing this major shift in Soviet policy, and the necessity of taking steps to meet it. If declarations of interdependence from Washington and Paris mean anything, they must mean closer coordination of our economic and scientific activities in NATO. It will not be possible, in the long run, for allies to work together in close defence cooperation and grow increasingly apart in economic conflict.
If, then, we do not wish to weaken the western coalition, and if, in Canada, we do not wish either to face the United States alone or become too

dependent economically on it, then surely the best policy for us is to seek economic interdependence within the North Atlantic community through freer trade-
For Canada a North Atlantic area with the freest possible trade would certainly mean a much greater export market in the United States and in Europe; lower costs of production for many Canadian industries-and lower living costs, I would hope, for Canadian consumers-
Perhaps-
And this was January 1958-
-this is an appropriate time to present and push this proposal. Western European countries have wanted freer trade with North America and have felt that NATO could not survive as a military alliance without becoming a far more closely co-ordinated economic and political community than it is now. However, once these countries have started to readjust their respective economies within the framework of their present arrangements for a customs union and a wider but purely European free trade area, it might be too late then for North America to try to participate in these arrangements.
Since I made that speech in Vancouver I have repeated that suggestion on every occasion which presented itself to me, both inside this house and outside this house. I have found no reaction of interest on the part of the government until recent months. I can only welcome, as I did earlier in the session this afternoon, the steps that are now being taken to take this matter seriously. I hope it is not too late.
Perhaps, this is the time for it. I have read, and the minister may also have read, a report in the New York Times of December 13, a report from Stockholm by the correspondent of that newspaper, Edwin Dale, who had this to say:
Here in Sweden, for example, in Holland, and to much the same extent in Germany, there is every wish to extend free trade, not only Europe-wide but to include the United States and Canada as well. There is alive in much of Europe a genuine spirit of free trading that is new to this century.
Then referring to the position of the United States, Mr. Dale had this to say:
It seems highly probable that words alone from the United States will not achieve as much liberalism in these decisions as the United States wants and needs. The United States will have to be prepared in negotiations to lower its own tariffs as well.
That applies to us too.
The solution to the whole new trading problem urgently backed by many men all over Europe Is adoption of a free trading system incorporating all of the industrial countries of the west, including the United States and Canada. In self protection, the United States may one day have to consider that radical idea.
I hope that the United States is considering it today in the light of what has happened in Paris, and I hope we are too, because it is even more important to Canada than it is to the United States.
The Address-Mr. Pearson
Why, Mr. Speaker, even the Ottawa Journal has suddenly discovered what it calls a "revolutionary thought", this Atlantic freer trade, although the Liberal party has been developing it now for some years. In an editorial dated December 23, 1959, the Ottawa Journal had this to say, and it is a very good, if somewhat belated, recognition of the importance of this matter:
But is there not enough of imagination in NATO countries to think in terms of an Atlantic community supermarket-an Atlantic community trading area that would include both Canada and the United States?
This, difficult though it might be-
And it certainly would be difficult-
-destructive of a lot of trade traditionalism-
And it certainly would be-
-would at least not be out of line with the economic clauses of NATO.
Perhaps it is a revolutionary thought-the thought of freer trade among all the Atlantic community nations, including the NATO lands of North America.
But it is a revolutionary world we are living in- not the world of the old controversies over free trade and protection.
From the Journal that is really revolutionary; but this idea was included in the platform of the Liberal party at its last convention in January 1958, and we have adhered to it ever since. So I ask the government what it is doing about it.
The minister told us this afternoon about the committee set up in Paris to discuss how to convert OEEC into OAEC, and that four members, in their individual and expert capacity, would be sitting on that committee. But that does not go far enough. I hope that this quartet, who I suppose will be called the wise men-as any small group of international experts are now called wise men, however little they may justify it-


Gordon Minto Churchill: They called my hon. friend a wise man a few years ago, but that was a mistake.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: All I would like to say about that particular report is this, that if the North Atlantic Treaty Organization would carry out the recommendations made in it, there would not be any need for the appointment of any additional committee. Two of the three members of that earlier committee were indeed wise men. But this committee of four should go further than its terms of reference now permit it to go. I think it should be authorized to explore-or else explorations should be made in some other form-a North Atlantic free trade area. I repeat that nothing less than that will do. That is so especially true now that we know that a major communist attack on the free world may soon develop on that front.

The Address-Mr. Pearson
Mr. Speaker, those are some of the subjects arising out of the omissions from the speech from the throne about which I talked this afternoon. There are, of course, many others. I could, for example, talk about some of the fumbling and confusion in housing policy and its financing; and especially about the civil service and the awful mess the government has got into due to the way in which they have handled the civil service problem, as well as the arrogance shown by the minister in refusing to publish a report dealing with this matter of civil service increase because, according to a report in the press, he said the report made recommendations with which the government did not agree.


Mr. Graffiey:: At least he did not hide it.


Lester Bowles Pearson: The minister has now laid down a doctrine whereby one can hide a report if one does not agree with it. That is a completely new principle of parliamentary operation. However, I have not time to deal with all these matters; no doubt they will be taken care of by others.


Albert DeBurgo McPhillips: Was the report on Herbert Norman made public?


Lester Bowles Pearson: Is the hon. member for Victoria asking me a question?


Albert DeBurgo McPhillips: Yes. I would like to ask whether the hon. member made the communications regarding the Herbert Norman case public?


Lester Bowles Pearson: My hon. friends are now in charge of the government and of governmental files. If they see fit they can make public every communication on that subject, as well as every communication on the Suez crisis appearing in government files. No one would be more pleased than I if they did. That is my answer to that point. I would suggest to my hon. friend, who is so vociferous in his interruptions, that he ask the government why they are not making these matters public.
The world, and our country as an important member of the world community, now faces problems and dangers greater than perhaps human society has ever had to face before, but the government's concern with these matters, as reflected in the speech from the throne, is superficial to the point of complacency. It is not surprising, therefore, that this speech gives no grounds for confidence that the government has any policies or plans adequate to the situation before us, a situation charged with difficulties, with dangers and with opportunities. Nor have the actions of the government or of its spokesmen since we last met in parliament given us any reason for such confidence. This government has continued to handle the

matters which have come before it-when the Prime Minister has got round to handling them at all-with a confused but evangelistic inefficiency which amounts very often to ineptness. I have given some examples today; there will be a great many given later in this debate. The fact is that this government still manages, as we pointed out last year, to mistake movement for progress, adjectives for action-and we will get a lot of adjectives shortly-demagogy for democracy and propaganda for performance. Procrastination, political manoeuvring, drift, still characterize its approach to the problems it has to face. As a writer in the current London Economist puts it, in the policies of this government "no principle is discernible save that of 'fixing up' ".


Donald Methuen Fleming: Date?


Lester Bowles Pearson: The current edition of the Economist-January 10 or 11. And in 'fixing up', public relations is the thing that matters. "Save the surface and you save all." In short, this is a government still characterized by the bad administration of hastily contrived expedients, a government more concerned with the package than with the contents.
Last year, in moving the amendment, we charged the government with incompetence and confusion, and we cited some examples in our amendment. The government has not improved since that time. Its record is no better; it has even gone back a little in some respects, and therefore our general charge against the government is exactly as it was last year. We had hoped that in the intervening period the government might have done something which would enable us to soften our language a little in our indictment of its policy. It has talked a lot and travelled a lot, but that is the limit of its achievements, and therefore I move, seconded by the hon. member for Laurier (Mr. Che-vrier), that the following be added to the address:
This house is of the opinion that the failure of the government to develop and enunciate clear and consistent policies or to provide full and accurate information, is a major cause of the confusion and uncertainty that prevails about national defence, public finance, agriculture, markets, employment and in other important areas of governmental responsibility.


John George Diefenbaker: Mr. Speaker, before I commence an analysis of the comprehensive speech delivered by the hon. gentleman, and before I have the opportunity of dealing in any detail with the amendment, I shall of course follow the usual practice and deal with those matters upon which we are in agreement. Then, having taken that course, I intend to consider the

several matters discussed by the hon. gentleman and follow his lead in that regard by quoting no other than himself in respect of those matters. And the result, I think, will be that his words about confusion and uncertainty prevailing with regard to national defence, public finance and other matters of national responsibility will be placed in their proper light.
I realize the position in which the Leader of the Oppositoin (Mr. Pearson) finds himself. Many of the things he has said at length this afternoon and this evening are but a repetition of words he used in 1957 and 1958. He has gone across this country since; he has participated in events in every province; he has revealed these same criticisms even to the extent of their being adopted in whole or in part in several provinces in the elections in those provinces; and I seem to remember that the outcome in Prince Edward Island, in Ontario and in Manitoba, where these very arguments were advanced, has not been entirely in keeping with the prophecies made by the hon. gentleman. But I must start with first things first.


Some hon. Members:: What about federal elections?


John George Diefenbaker: Mr. Speaker, in moving into this debate let me say I am in agreement with the hon. gentleman in his references to the mover of the address in reply to the speech from the throne, the hon. member for Rimouski (Mr. Morissette), who is an outstanding scholar and economist, a graduate of three universities, who in the course of his maiden speech had a profound influence on hon. members of this house. With respect to the seconder, I knew that the hon. member for Grenville-Dundas (Mrs. Casselman) would acquit herself exceptionally favourably. Her father has been a distinguished hon. member of this house for many years. Her late husband was first elected in 1921, retired in favour of the Hon. Arthur Meighen and was again elected in 1925 and thence until he passed away. Her ability and charm have added much to the House of Commons. I am sure the pride of her father in being privileged to hear her was shared by all hon. members in all parts of the house.
I wish now to refer to some recent events in the history of our country. The most significant was the visit last summer of Her Majesty the Queen and Prince Philip. That is referred to in the address. I need not mention the happiness and joy of the Canadian people at having her gracious majesty 79951-0-5
The Address-Mr. Diefenbaker amongst us. Speaking not only for the members of the government but for all Canadians I know our prayer is that all will go well with her in the soon to be expected event.
I want to say a word or two in regard to His Excellency the present Governor General who discharged his responsibilities at the opening of parliament in a manner that would be expected of him as a great soldier and diplomat. His predecessor, the Right Hon. Vincent Massey, is a great and devoted public servant whose range of activities gave him leadership in business, in diplomacy, and in commonwealth affairs. His devotion to the arts and to the better things of life gave Canadians everywhere a cultural leadership which will live for generations to come.
In the appointment of the second Canadian governor general it is interesting to look back a few years to 1918 when it was stated in Nicolson's "King George V-His Life and His Reign":
In October 1918, Canada announced her intention of appointing a Canadian minister in Washington. Although realizing that this would lead to similar demands from other dominions the king wrote that effect must be given to Canada's wishes.
That was one major step along the road to Canada's position within the commonwealth as an independent nation joined with the other nations of the commonwealth. However, there are other steps that have yet to take place. Here at this session of parliament, in order to secure an amendment to our constitution on a matter that is of national importance affecting the jurisdiction of both the federal and provincial parliaments and legislatures of our country, it is still necessary for us to seek an amendment from the parliament of the United Kingdom. My hope is that the time will not be too long delayed when as a result of an agreement between the federal and provincial authorities we will arrive at a point where this particular phase will be eliminated, to the end that we will be able within our own country to arrive at a basis for the amendment of our constitution agreeable to all and within the constitutional limitations of sections 91 and 92.
I hope we may be able to do something at this session to bring about further steps in the improvement of the organization of the house. I am simply making it as a suggestion at the moment, that something in the nature of a rules committee might be set up, if agreeable to hon. gentlemen in the opposition, similar to that set up in 1955 with a view to promoting the expedition of the business of the house without in any way

The Address-Mr. Diefenbaker interfering with the fullest freedom of speech and discussion, or limiting or curtailing the opportunity of all to present their arguments.
In pursuance of our desire to bring about an expansion in the opportunities for all members of the house as a whole to make their contribution, we have in the last two sessions set up a number of committees. I would point in particular to the public accounts committee under the able chairmanship of the hon. member for Mount Royal (Mr. Macnaughton) which has discharged its responsibilities with efficiency, impartiality and effectiveness. I hope we will be able to expand the system in this regard to the end that we can use committees to a larger extent than was the case in the past, thus rendering parliament more effective, but without falling prey in any way to the dangers that are inherent in a committee system under our form of government.
This afternoon the hon. member for Ottawa East (Mr. Richard) made an inquiry of me respecting the question of action being taken to improve the efficiency of national public administration. I think something must be done in this regard. This is one of those matters that we in this party discussed not only in parliament while we were in opposition, but also throughout the country as a whole. I now wish to advise the house that it is intended to set up a royal commission along the lines of the Hoover commission, subject, of course, to Canada's constitutional differences. The essence of the Hoover commission, according to the words of the 1953 statute public law of congress was, among other things:
-to recommend methods and procedures for reducing expenditures to the lowest amount consistent with the efficient performance of essential service activities and functions.
The Hoover commission consisted of a chairman, the ex-president of the United States, and 24 task forces each focussed on a particular department. At this late hour I am not going to say more than this. The matter will receive consideration later on, no doubt in the house. I wish now simply to advise of the intention of the government to bring about the establishment of a commission of this nature, an idea which over the years has received general support from the press of the country and which commission I believe could perform a function in keeping with the greatness of its opportunity.


Lester Bowles Pearson: May I ask the Prime Minister a question on this point? Did the very important announcement he is now making appear in the speech from the throne so that the mover of the amendment could have discussed it?


John George Diefenbaker: The hon. gentleman of course knows the answer to the first part of his question, and I shall deal in a moment with the speech from the throne and contents which should be included.


Murdo William Martin: It should have been included in the speech from the throne.


John George Diefenbaker: I will return to that very shortly because I have listened to the hon. gentleman referring to what should be in the speech from the throne. I have taken it upon myself to study the course followed in the United Kingdom. While not in any way slavishly following that course, it reveals that the hon. gentleman's belief that the speech from the throne should include a state of the union message is as far removed from constitutional practice as some of the other statements he has made.
Indeed he referred to the fact that defence was not referred to in the speech from the throne as though a terrible thing had been done. I did not see that the fact that it was not included in the speech from the throne in any way thwarted him from discussing that matter at great length. As a matter of fact, I have here the parliamentary debates of the British House of Commons for the opening day, October 27, 1959 setting out the speech from the throne. I would point out that there is a reference to defence in this particular instance but the total reference is as follows:
My armed forces will continue to make their contribution to the preservation of peace throughout the world.
I also have here the speeches from the throne in the United Kingdom for 1957, 1958 and 1959 and I would point out that, although defence was a major consideration, having in mind the changed relationship strategically that has become evident as a result of the exploding of the first bomb in 1945, the only reference made to armed forces or defence was in the speech from the throne in 1959, to the extent mentioned.
Indeed, Mr. Speaker, the difference should have been apparent to the hon. gentleman. The separation of the executive and the legislative in the United States makes it necessary for the president as head of the executive to set out in the fullest detail the situation in the union to the end that the legislative body may recognize the requirements that he has in mind and the course that he would like the legislative body, with which he is in no way directly connected, to follow.
Having said that and having removed from the discussion the non-inclusion of defence in the speech from the throne, I now come

to one or two matters that are included in the speech from the throne, matters of a spiritual nature that will add, we hope, to the strength of our democracy and make Cana-dianism stronger, more effective and more in keeping with our traditions. I refer, of course, to the bill of rights which will be limited to such rights and fundamental freedoms as are within the exclusive jurisdiction of parliament without in any way infringing on provincial jurisdiction.
The other measure, the provision to give Indians the vote, is one of those steps which will have an effect everywhere in the world-* for the reason that wherever I went last year on the occasion of my trip to commonwealth countries, it was brought to my attention that in Canada the original people within our country, excepting for a qualified class, were denied the right to vote. I say that so far as this long overdue measure is concerned, it will remove everywhere in the world any suggestion that colour or race places any citizen in our country in a lower category than the other citizens of our country.
I say this to those of the Indian race, that in bringing forward this legislation the Minister of Citizenship and Immigration (Mrs. Fairclough) will reassure, as she has assured to date, that existing rights and treaties, traditional or otherwise, possessed by the Indians shall not in any way be abrogated or diminished in consequence of having the right to vote. That is one of the things that throughout the years has caused suspicion in the minds of many Indians who have conceived the granting of the franchise as a step in the direction of denying them their ancient rights.
Having referred to one or two matters in connection with the speech from the throne, I am going to analyse some of the statements made by the Leader of the Opposition. I do not intend to follow him in his use of exaggerated language which is apparently becoming characteristic of him. However, I do wish to point out, having listened to him today and complimenting him on the length of his remarks, that I could not but remember the fact that when speaking in the city of New York a few short months ago, based on his great experience in international affairs and in public life he defined diplomacy and politics in a manner that seemed rather characteristic of some of the remarks that he made today. These are his words:
Diplomacy is largely the art of making an indiscretion sound like a platitude-
The hon. gentleman gave proof of his belief in that definition today. Then he went on to say what politics was. He said:
-and politics is that of making a platitude sound like a pronouncement.
79951-0-5J
The Address-Mr. Diefenbaker
There, Mr. Speaker, is the studied definition of the Leader of the Opposition-


Paul Joseph James Martin: He was thinking of you.


John George Diefenbaker: -given on the basis of his experience, the epitome and essence of his views as to diplomacy and politics.
I am going to deal with the question of defence because, you have heard from the hon. gentleman that the government has vacillated, that it has been inconsistent, that it has not enunciated clear and consistent policies. Those are all charges that sound well and I am going to analyse them in the light of some of the speeches given by the hon. gentleman during the years 1958 and 1959. After all, he has said today the problem of defence should, so far as possible, be nonpartisan and nonpolitical. I might say that something of the viewpoint the hon. gentleman has in mind in connection with defence was revealed in the last 15 minutes of his remarks when he pointed to the trend that is taking place today of joint defence.
He took a strong stand in this regard last year, as I recall it. He said he recognized in 1954 and 1955, and in the years following, the necessity for collaborating in defence. But he started off on a strange angle. I do not know what your experience has been, Mr. Speaker, but I have found where something hurts, where a mistake has been made, the individual in question keeps returning to that in order to exculpate himself.


John Whitney Pickersgill: Is that a personal confession?


John George Diefenbaker: This afternoon he used language that was not appropriate to the Leader of the Opposition. I did not object because I intend to quote chapter and verse before I conclude. He said I had made a speech in the city of Toronto before a political audience; that I had made stupid and false allegations to a selected audience for political purposes and those allegations had no truth in them with respect to Suez. I do not want to relive Suez. I do not want to go back, and my hon. friend does not want to do so either,-


Lester Bowles Pearson: Why did you bring it up?


John George Diefenbaker: -but that is why he went back to it.


Lester Bowles Pearson: Why did you bring it up?


John George Diefenbaker: Because I had referred to it in the house, and I am going to refer to it in particular. I am going back to Mansard for 1956-57, and I am going to leave the house to conclude as to whether or not I said anything different in 1959 from what I

The Address-Mr. Diefenbaker said in that respect in 1956. The only evidence he has produced is that of two British prime ministers, who followed the traditional course of British prime ministers by not criticizing prime ministers or other leaders in the commonwealth.
In 1956, on November 26, it was moved by the hon. member for Dufiferin-Simcoe (Mr. Rowe) and seconded by the hon. member for Vancouver Quadra (Mr. Green):
That this house regrets that Your Excellency's advisers
(1) have followed a course of gratuitous condemnation of the action of the United Kingdom and France which was designed to prevent a major war in the Suez area.
This was the amendment that was discussed at that time. The hon. member for Dufferin-Simcoe spoke at length. I am not going to refer to what Mr. St. Laurent said on that occasion because he is not in the house. I simply point out that statement was made by him during the course of the debate to which reference was made on more than one occasion.


John Whitney Pickersgill: Misrepresentation on more than one occasion.


John George Diefenbaker: Mr. Speaker, the hon.
gentleman may be in touch with a previous prime minister of this country from time to time, but there is no mistake about the words used. I am not going to refer to them in particular except to say that they aroused a heated debate. During the course of the debate one after another of the members on this side of the house today, then on the opposite side, dealt in detail and at length with this matter. The present Secretary of State for External Affairs (Mr. Green) used this quotation from the Vancouver Sun:
How fervently the nations, large and small, jumped on Britain and France. And Canada led the way with smug complacency-
Now, that is not a Conservative paper. I continue with the quotation.
Judging from what Ottawa reporters are writing, Ottawa is filled with satisfaction with the eminence it appears to have attained by chastising its friends instead of standing by them in their attempt to save themselves and the free world from a great Russian conspiracy.
Those were the words of the Vancouver Sun. I, myself, spoke on that occasion. I am not going to quote my words, except to say that when I spoke the hon. Leader of the Opposition was in the house, and when I referred in particular to several of these matters there was no interruption. The only interruption he made was when I referred to some article in the Toronto Star and he said, as reported on page 143 of Hansard for November 29, 1956, "It is not true." Now,

this is what I said exactly, as found on page 142 of Hansard for that date:
No matter how one may judge, placing those three in a common position is, to say the least, not in keeping with the fact that two of them represent the motherlands of Canada-
Placing those three in a common position, that is the U.S.S.R., the United Kingdom and France, is not in keeping with the fact that two of them represent the motherlands of Canada. I am not going to quote any more of that because it is available to rebut the hon. gentleman today, whose exaggerated words reveal how deeply concerned he still is at what today may be arguable but was not then arguable. I cannot understand why the hon. gentleman started off in that way unless it was for the purpose of producing a smokescreen early in his remarks.


Lester Bowles Pearson: I rise on a point of order, Mr. Speaker. The Prime Minister has stated that the matter which he raised was not arguable at the time it was raised, in 1956, and that I said nothing about it except one intervention in respect of a quotation. I denied the Prime Minister's statement at that time more than once in the house and some of my speeches were over an hour long. At that time the Prime Minister did not say the United Kingdom was an aggressor. He went even further in November of last year; indeed, he has not said tonight that he said in 1956 that the United Kingdom was an aggressor.


Mr. Speaker:: The hon. gentleman is rising to correct what he alleges is a mis-impression of his speech. The hon. Prime Minister took his seat, of course, but the appropriate time to make any extended corrections would be at the end of the speech.


John George Diefenbaker: I shall be returning to this, if necessary, when the debate takes place on external affairs because I used some words on that occasion critical of placing the United Kingdom and France in the same bag with the U.S.S.R.


Lester Bowles Pearson: As aggressors; that is what you said in November.


John George Diefenbaker: It is what I said then.


Lester Bowles Pearson: You did not.


John George Diefenbaker: I can only say, Mr. Speaker, that the hon. gentleman, having gone back to that particular item, the reference that I made and I believe to be correct is entirely consistent with the views that I expressed in 1956 and entirely consistent with the views expressed by this party in this house and outside.
I now come to the question of defence. I am now going to deal for a moment with this

question, for the hon. gentleman has gone across this country and has made statements which were as changeable as the occasion and as variable as the opportunity and the audience. He has endeavoured to leave in this country the impression that the present government has placed the defence of Canada in the hands and under the control of the United States. I am going to deal with that matter in particular and I am going to refer in detail to the statements he has made and to follow the tortuous course that he has followed in this regard from one end of Canada to the other, leaving one opinion here on this matter and another in another part of the country. Here is the record.
All of us know, as he said, that the problem of defence remains with us the major cause of the tremendous expenditures that we in the free world are obliged to make. He agrees that a policy must be flexible to meet the changing conditions. A rigid or final course would have no regard to the changes that are taking place internationally. Indeed, in the last three days a speech has been made by Mr. Khrushchev to which I also intend to allude and which in every way bears out the views expressed by the Minister of National Defence (Mr. Pearkes) over and over again in this house at the time of the cancellation of the contract for the CF-105, that the day of manned bombers was about to be over and that in the 1960's we would be in the missile age.
The day before yesterday Mr. Khrushchev outlined in detail almost exactly the viewpoint expressed by the Minister of National Defence, his information having been secured from those in responsible positions among the chiefs of staff and also from the various portions of the free world which gather information in this regard. Indeed, when he took that stand there were many people across Canada who could not believe that the U.S.S.R. was about to bring about an end to the manned bomber.
I mention that matter because in defence the uncertainty to which all of the free world is subject arises from the fact that it can never be finally determined whether or not the U.S.S.R. means to go to war or whether, if it does so, the war will be a nuclear one. The hon. gentleman quite frankly admitted today the uncertainty in this regard. This debate on the question of what should be done in respect of defence is taking place not only in Canada, the United States, France, the United Kindgom and the free countries in Europe but everywhere in the world. The United States has been following a course which is based on the fact that if war comes
The Address-Mr. Diefenbaker it will be a cataclysmic nuclear war, the result being that ground forces and conventional weapons will take second place.
Defence policy cannot be certain. If it could be certain, and if we could determine today the course for the next three or four years, great savings might be made. If when the hon. gentleman was a member of the government it could have been determined in 1945 or 1946 the changes that would take place in the intervening years, billions of dollars could have been saved in Canada on expenditures that had to be made for materials that are today obsolete. If we could anticipate what the U.S.S.R. would do, naturally we would be able to look into the future as to the course that should be followed with the same clarity that all of us can look into the past.
The attitude of the Canadian government and its stand on defence was clearly set forth in detail in the defence white paper in April 1959. That Canadian defence policy derives directly from our foreign policy and is designed to ensure national security and the preservation of world peace. These objectives are reached through collective arrangements within NATO and the United Nations. It is the defence policy of Canada to provide forces for defence against an attack on the North American continent; the collective defence and deterrent forces of NATO in Europe and the North Atlantic; and to support the United Nations in attaining its peaceful aims.
Then there is set out in detail the course to be followed. It is stated that the knowledge that an act of aggression would in all likelihood occur with little or no warning requires that Canadian defence forces be at the maximum state of readiness. The course to be followed is there set out in detail and it deals with the attitude of the Canadian government based on the best information that we could secure. In this white paper it is stated that it is now considered that the threat of the manned bomber is not as great as was originally anticipated and that, furthermore, by 1962, when the CF-105 would have come into operational use in the R.C.A.F., the main threat is expected to consist of long range missiles rather than manned bombers.
Those were the words in the white paper of April 1959. Those are words that have been borne out in the declaration made two days ago by Mr. Khrushchev. As I said a moment ago, our defence policy is for the purpose of contributing to the maintenance of peace. We know that there will be no victor in the next war. Gone are the days when a nation could consider war as a means of enforcing a certain policy and of furthering its political aims. The whole purpose of

The Address-Mr. Diefenbaker armed forces today and of defence expenditure is to create a state of preparedness which would enable a country under the imminent threat of all-out nuclear attack to retaliate with a knock-out blow of equal force or at least of sufficient force to meet the aggressor.
In other words, our policy has been one of collective defence. Aware as we are of the changing concept of defence in this age of thermonuclear weapons, of rockets and space ships, we have endeavoured to bring about in Canada the attainment of the largest degree of defence that can be attained in the fields in which we anticipate defence will be important two, three or four years from now, to the end that expenditures shall be maintained at a minimum for those materials that cannot reasonably be expected to be other than obsolete in the days ahead.
I am going to refer to Mr. Khrushchev's speech in more detail when I come to refer to international affairs. The fact remains that he has declared that the U.S.S.R. has a bountiful supply of rockets and missiles, that it is going out of the manned bomber and that it possesses a new secret weapon which makes it the most powerful nation in the world.
Our principle is to secure the largest return possible in defence, the decision being a matter to determine according to the nature of the weapons, on the basis of the best information procurable. I am sure that nobody could have felt more justified, after all the criticism that has been heaped upon him, than that distinguished soldier, the Minister of National Defence, when he read the contents of Mr. Khrushchev's speech. I only wish that the field of defence could be one within the limitations that one naturally expects, which is free of picayune partisanship, which was not too apparent this afternoon.


Mr. Hellyer:: And less apparent this evening.


John George Diefenbaker: The hon. member for Trinity (Mr. Hellyer) in making his speech on July 3 last, when it was announced by the Minister of National Defence that our air division in Europe would be equipped with the F-104G, had this to say, as reported on page 5461 of Hansard:
The plane chosen by the government of Canada to re-equip our air division is, Mr. Chairman, to put it bluntly, no ruddy good for the strike role.


Paul Theodore Hellyer: I wonder if the Prime Minister would permit a question?


John George Diefenbaker: Yes.


Paul Theodore Hellyer: Is the Prime Minister aware that the United States air force is retiring

from active squadron service the A and B models of the F-104 because they are unsatisfactory?


John George Diefenbaker: Mr. Speaker, I will deal with that in just a moment. The hon. gentleman said:
The plane chosen-is-to put it bluntly, no ruddy good for the strike role. The airframe is unstable. The engine is not reliable enough. It was not designed for the job. There are infinitely better aircraft available for the strike reconnaissance role. This, Mr. Chairman, is just one further example of this government's incredibly bad judgement in defence matters.
Mr. Speaker, the hon. gentleman asked me a question. The aeroplane has been chosen for the same purpose in the rearming of the air forces of the Netherlands, West Germany, and it is expected shortly to be the equipment of the kingdom of Belgium.


Paul Theodore Hellyer: But it was not chosen for the same purpose. They chose it for a fighter, not for strike reconnaissance. Stick to the facts.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. There will be opportunities, providing each hon. member speaks one at a time.


John George Diefenbaker: Mr. Speaker, those words have come back, like the chickens referred to by the hon. Leader of the Opposition.


Paul Theodore Hellyer: But there is no room for
deficiency payments.


John George Diefenbaker: The hon. gentleman has shown his deficiency in one regard; the other subject can be dealt with in due course.
What the opposition has tried to do is to go across Canada and lead people to believe that this government was going to make a contribution toward the attainment of nuclear war, that we were going to be under the control of the United States, and that the United States was going to control any nuclear weapons that might come into Canada's possession. They were to control them not only as to ownership but as to use. They have gone across this country, and no matter how often the Minister of National Defence has made himself clear in this direction, the opposition has sown that seed. I intend to answer them by chapter and by verse. I intend to refer to the various statements on the part of the Leader of the Opposition which have indicated in this field, as in others, an irresponsibility that is as striking as it is unusual in leaders of the opposition.
This is what he said today. He believed in collective control of nuclear weapons. He believed that the fifteen nations of NATO each should have equal rights; that there should be an agreement secured before anything is done with these agreements for collective

control. He knew when he said that that it is not, and will not be, practicable to bring about unanimous agreement in this regard among fifteen nations. We have to take nations and individuals as they are. We have to do whatever we can to prevent the spreading or the expansion of the nuclear family. This is what he said:
It seems to me that the continued refusal of the United States to make any concessions of any kind to collective authority over nuclear weapons, as she has done over other weapons-and the same attitude is adopted by the United Kingdom-will prejudice the whole NATO collective defence idea. Indeed, we have evidence it has already prejudiced that idea.
Mr. Speaker, when he made that statement, it was an irresponsible one. With all the experience he has had in international affairs, there at the beginning of NATO, with an adherence and a loyalty to article 2, with his membership in the committee of "three wise men", in all of those years those were the hopes held out, those were the plans. He knows as well as I that to express a hope such as that is simply to deny the realities that are existent in international and national affairs.
I had hoped today that there would be some suggestions from the Leader of the Opposition on this matter of defence, something of a constructive nature. I reviewed what he said throughout the years 1957, 1958 and 1959. I ask the hon. member now to join me in this labyrinth of opposition criticism. He says it is bold and imaginative, that that is the policy we should adopt with regard to this matter. The hon. member said it should not be controlled by the United States, and I will have something to say about that later. We in Canada intend to maintain our independence, always consistent with one principle, that only in co-operation with the United States is there survival. Co-operation, ever; subservience, never.
As I listened to the hon. gentleman today I thought of the title of a recent book on this subject by General Maxwell Taylor, "The Uncertain Trumpet". The stands which the hon. gentleman has taken on this matter, if followed along their sinuous course, would lead one from the position, that he believes we should be armed with nuclear weapons, to the position where, finally, he ends up not knowing whether we should or should not be so armed. I have mentioned some of these stands. The first was in 1959 on July 2, as reported at page 5357 of Hansard. This was his declaration:
Canadian policy-cannot be dissociated from the policies of our friends and allies. In these matters there can be no isolation for us, and because there can be no isolation for us there can be no neutralism for us.
The Address-Mr. Diefenbaker
That is a sound and definite principle. Then the hon. gentleman went on to make with regard to the question of sovereignty a statement in New York on June 9, 1959 which I ask. hon. members to contrast with the ejaculations of today. Today he stood as the mighty defender of Canada's freedom and independence. I ask members to recall some of the events in 1955, 1956 and 1957, because the words used today did not reflect the actions of those days. What did the hon. gentleman say about national sovereignty while speaking in New York on June 9, 1959? In the New York New School of Social Research he declared that "a national sovereign state is as outdated as the divine right of kings", adding:
We must accept policies and institutions, social, economic and political, designed for a more supranational association.
Those views were the views expressed in the United States. These views epitomized a reasonable degree of responsibility. But what has he said during the years? I am going back over the record because I want to take chapter and verse, since we have been told that what is needed in defence is consistency, a sense of direction and a degree of leadership. He said on August 8, 1958, as reported at page 3229 of Hansard, and he was talking about the question of the effectiveness or otherwise of the Bomarc missile:
Surely it must also mean the introduction into our air defence forces of ground to air guided missiles such as the Bomarc, which we do not yet have but which in the future will perhaps become a major weapon in our air defence, and which has already become a major weapon of the United States squadrons earmarked for continental defence.
Then we may take the hon. gentleman's further statement made on July 2, 1959 as recorded on page 5368 of Hansard. I interpret what he said on that occasion to be that there should be a shift of emphasis from total war weapons, especially of the so-called deterrents, toward conventional weapons, conventional strength and conventional planning. It was his view that:
We should make effective-the concept of balanced collective forces and a co-ordinated program of collective development and production of arms which would really reflect interdependence.
Then, at page 5370 the Leader of the Opposition stated:
I would go further and say that whenever the United States desires facilities or rights to operate on Canadian soil for defence purposes which are deemed by the United States government to be essential and not by us to be undesirable though not essential, at least as a Canadian effort; I believe in these circumstances that we should give the United States those rights as part of this partnership about which the minister spoke.

The Address-Mr. Diefenbaker
I am going to carry this through, Mr. Speaker. It is a course of action that the hon. gentleman calls bold and imaginative. He says:
But only in each case alter we have worked out an intergovernmental agreement which reserves all Canadian rights of sovereignty and political control.
I add those words to what I have quoted. Then, going back to September 23, 1958, the hon. gentleman was speaking in Boston-he gets abroad too. Under the heading: "Pearson Urges U.S. Give Canada A-Arms" appears the following:
L. B. Pearson tonight urged that the U.S. Congress give Canada atomic weapons for joint defence. The Canadian Liberal leader also said joint air defence should be put under NATO-


Lester Bowles Pearson: Would the Prime Minister read the paragraph on that subject which includes that statement, because he would find that it does not carry out the meaning of that headline at all.


John George Diefenbaker: I cannot hear the hon. gentleman-


Lester Bowles Pearson: Will the Prime Minister read the text of my speech in that regard, because it does not bear out that heading.


John George Diefenbaker: I am reading from the newspaper account.


Some hon. Members:: Read the text.


John George Diefenbaker: All right, we will go on from there. The hon. gentleman went on to say, in 1959 as reported at page 5371-


Paul Joseph James Martin: A point of order. The Prime Minister has attributed certain words to the Leader of the Opposition and quotes, as his authority, a headline. The Leader of the Opposition has asked that his actual words be verified and compared with this headline, and it is contrary to the rules of the house and, particularly, for the Prime Minister-


Some hon. Members:: Oh.


Paul Joseph James Martin: -to resort to devices on occasions of this kind.


Mr. Speaker:: As I understand the hon. member's point of order it is that if the Prime Minister is asked to read something he must read it. That is not a point of order. It is open to any hon. member who feels that he has not been properly quoted to take exception and, as I said a minute ago, unless the matter raised is considered to be one of privilege, the proper time to deal with it is at the end of the day.


John George Diefenbaker: The quotation is taken from the Canadian Press report of September 22, and it goes on:
In a dinner speech, Mr. Pearson said "first-class allies won't be happy with second-class arms."

And then it went on to say that he urged the United States congress to give Canada atomic weapons for joint defence.


Lester Bowles Pearson: Is that a quotation?


John George Diefenbaker: No-


Lester Bowles Pearson: Well, Mr. Speaker-


John George Diefenbaker: I can only read: "Pearson Urges U.S. Give Canada A-Arms".


Lester Bowles Pearson: On a question of privilege, the Prime Minister has purported to quote something I said. I will undertake to send him over the text of the speech I made which will show I was misquoted. I therefore urge him to withdraw that quotation.


John George Diefenbaker: The hon. gentleman has been irresponsible enough today-


Mr. Speaker:: I am sure that if the hon. Leader of the Opposition says he did not use those words, the Prime Minister would naturally accept it.


Lester Bowles Pearson: If he considers I did say it, let him read from the text of what I said.


John George Diefenbaker: I have not time to read the vast assemblage of speeches which have been made by the hon. gentleman. I can understand how badly he feels about this. This is a most conglomerate collection of inconsistencies masquerading as statesmanship. The hon. gentleman while in Vancouver, as reported in the Vancouver Province of September 16, 1959, said:
Canadian armed forces should not be armed with tactical nuclear weapons as long as their use remains under control of some other power, including the United States-


Lester Bowles Pearson: What is wrong with that?


John George Diefenbaker: I am going to show the hon. gentleman how right it is. It is one time when he was right. But I must proceed because time is running out.


John Richard Garland: Someone slipped that quotation in by mistake.


Lester Bowles Pearson: You picked up the wrong clipping that time.


John George Diefenbaker: I can understand why the hon. gentleman is disturbed. It is because he believes in bold, straightforward, direct and clear declarations on defence.


John Whitney Pickersgill: And in getting the texts of speeches when they are available.


John George Diefenbaker: Speaking in Ottawa on September 25 as reported in the Ottawa Journal-


Lester Bowles Pearson: What was the date?


John George Diefenbaker: I will turn to the report carried in the Toronto Star on September 25, 1959-


Mr. Nowlan:: That must be right. The hon. gentleman cannot deny that.


John George Diefenbaker: Mr. Speaker, I hear no interruptions from hon. gentlemen opposite at this point.


John Whitney Pickersgill: Does the Prime Minister read the Toronto Star?


John George Diefenbaker: Yes, because I want to read what -the Leader of the Opposition wonders about. In the Toronto Star of September 25 we find the following:
I sometimes wonder if we should stay in this league, particularly when I look at the astronomical expenditures necessary for conducting missile warfare.
Those are the words of the hon. gentleman. He is also reported as accusing the government of being inconsistent and muddled. Here is a quotation from the Ottawa Journal of September 25,	1959, reporting on an
address made by the hon. gentleman at the National Young Liberals convention.


Some hon. Members:: What is that?


John George Diefenbaker: The report states:
Speaking to the National Young Liberals convention in Ottawa, Mr. Pearson referred to the Canadian decision to arm the R.C.A.F. with the United States designed F-104-G which could carry a "radio leash." He said the term "leash" could be interpreted to mean that "we carry the bomb and someone else pushes the button."


Lester Bowles Pearson: Is that not right?


John George Diefenbaker: I shall refer to some other statements made by the hon. gentleman, as I proceed. I am going to come back to this subject tomorrow because there are some prize quotations which yet require to be produced. The hon. gentleman has asked what is our policy and in reply to that I may tell the hon. gentleman that initially we set it forth and epitomized it on February 20, 1959, as reported in Hansard at page 1221. We pointed out in detail that careful thought is being given to the principles that in our opinion are applicable to the acquisition and control of nuclear weapons. I proceeded to deal with our views in that connection and summarized those views by saying that the full potential of the Bomarc could be achieved only when they are armed with nuclear warheads.
On that same date as reported at page 1224 of Hansard the Leader of the Opposition said that we had to co-ordinate our defence policy with that of our neighbours on this continent and also with that of our allies in the Atlantic community, and that this collective defence is the only kind of defence which makes any sense in the world. We 79951-0-6
The Address-Mr. Diefenbaker actually thereby presented our views, the views we are going to underline.
I intend to summarize those views and deal with them at greater length when the house resumes. While I have carefully explained the views of the government on previous occasions, concern has been expressed regarding nuclear weapons in respect to which negotiations are still under way with the United States. Canada's stand might be summarized in this way: Eventually Canadian forces may require certain nuclear weapons if Canadian forces are to be kept effective. For example, the Bomarc antiaircraft missile to be effective would require nuclear warheads.
It is the belief of the government too that there should be no increase in the number of countries manufacturing nuclear weapons and therefore, if obtained, they will be obtained from the United States. This is the principle upon which we are taking our stand. We cannot change the principle of United States ownership-they have taken a firm stand in this regard-but there shall be Canadian control of use in Canada.


Lester Bowles Pearson: Mr. Speaker-


Some hon. Members:: Sit down.


John George Diefenbaker: Will the hon. gentleman permit me to continue because my time is running out? In these circumstances negotiations are proceeding with the United States in order that the necessary weapons can be made available for Canadian defence units if and when they are required. I cannot comment in detail on these negotiations but I wish to state that arrangements for the safeguarding and security of all such weapons in Canada will be subject to Canadian approval and consent.
I want to make it abundantly clear that nuclear weapons will not be used by the Canadian forces except as the Canadian government decides and in the manner approved by the Canadian government. Canada retains its full freedom of choice and decision. Furthermore, in order to ensure that any agreement entered into is kept up to date, it will be made subject to review at any time at the request of either government. As was pointed out by the Leader of the Opposition, this is of importance today in our changed and changing circumstances.
To recapitulate what I have endeavoured to place before the house-


Lester Bowles Pearson: Mr. Speaker, would the Prime Minister permit a question?


Some hon. Members:: Ten o'clock.

The Address-Mr. Diefenbaker


Mr. Speaker:: By leave of the house, yes.


Lester Bowles Pearson: I wish to direct a question to the Prime Minister bearing on the point he has just raised which is very important.


John George Diefenbaker: Mr. Speaker, I have not concluded. The hon. gentleman may ask all the questions he wants when I conclude on this matter or at any time thereafter but I have not concluded as yet. I shall require further time because there are many circumlocutions involved in the hon. gentleman's remarks that I want to follow to their source.


Lester Bowles Pearson: But I have a question on one point only.


Some hon. Members:: Ten o'clock.


Lester Bowles Pearson: Mr. Speaker, will the Prime Minister not permit one question only on a point which is extremely important?


George Harris Hees: Mr. Speaker, may I call it ten o'clock?


Lionel Chevrier: The hon. member cannot call it ten o'clock. The Speaker does that.


Mr. Speaker:: If the leader of the house would enlighten me about tomorrow I would know how to adjourn the house.


Lionel Chevrier: Mr. Speaker, I was going to ask the hon. gentleman-[DOT]


Gordon Minto Churchill: I will give the answer without your asking the question.


Paul Theodore Hellyer: That will be a refreshing change.


John Whitney Pickersgill: We are not even allowed to ask questions now.


Lionel Chevrier: Ever since I have been in the house, and that is a longer time than my hon. friend, it has been the practice of someone on the opposition side of the house to ask what the business is for the next day.



BUSINESS OF THE HOUSE

Lionel Chevrier: Would the leader of the house please indicate the order of business for tomorrow?


Gordon Minto Churchill: I was just attempting to save the time of the house, Mr. Speaker. I knew what the hon. member was going to ask and I was ready with the answer. In accordance with the outline of business given on Friday by the Prime Minister in answer to a question put by the hon. member for Laurier we will proceed tomorrow with two resolutions which were on the order paper today and take them in this order. We will take first the one standing in my name concerning provisional payments to producers in respect of unthreshed grain and then the one in the name of the Minister of Finance having to do with the guarantee of bank loans to grain producers in the prairie provinces. As the Prime Minister mentioned on Friday, if the house sees fit we may proceed through all the stages of the bills and complete this urgent legislation tomorrow. If that is not possible we will continue on Wednesday and following that resume the present debate.


Lionel Chevrier: May I ask the house leader why he states that this is emergency legislation?


Gordon Minto Churchill: When the matter was discussed on Friday the word "emergency" was not used but the Prime Minister did call it urgent legislation and it is so considered in view of the situation that prevailed in the western provinces during the harvesting season.


Mr. Speaker:: As the business appointed for tomorrow is not the continuation of the throne speech debate the house will stand adjourned until 2.30 o'clock tomorrow afternoon.


[Stage Direction]
It being four minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.

[Stage Direction]
Paris, January 13, 1960.
Representatives of the governments of Belgium, Canada, France, Denmark, the Federal Republic of Germany, Greece, Italy, the Netherlands, Switzerland, Sweden, Portugal, the United Kingdom, and the United States and the representative of the commission of the European economic community,
(a)	fully appreciating the co-operative work accomplished by the OEEC;
(b)	wishing to ensure the continuity of cooperation in the fields where no change is called for;
(c)	determined to pursue economic policies which will contribute to stability and growth in the world economy, including trade policies directed to the sound use of economic resources and the maintenance of harmonious international relations;
(d)	conscious of the need to devote increased efforts towards furthering the development of less developed countries;
(e)	recognizing the importance of continued co-operation to ensure the achievement of these objectives,
(f)	noting the desirability of arrangements which would enable full participation not only by the present 18 members of the organization for European economic co-operation but also by the two associate members, the United States and Canada;
(g)	desiring to proceed with an examination of improved organizational arrangements which could best accomplish these purposes;
(h)	recognizing the equal interest of all member and associate member governments of the organization for European economic co-operation in this matter;
Propose
(1)	That a meeting of senior officials of the twenty governments, members or associate members of the OEEC, and to which the European communities should also be invited, be convened in Paris on April 19, 1960, to consider the question of appropriate arrangements to achieve the objectives stated above;
(2)	That, in order to facilitate the work of such meeting, a group of four persons
consisting of	 and	
should be appointed to prepare a report which would
79951-0-6|
(a)	examine the most effective methods for achieving the objectives referred to above and make appropriate recommendations with respect thereto;
(b)	submit a draft of articles of agreement, should their examination of this question indicate the desirability of bringing about an appropriately improved organization for economic co-operation;
(c)	identify those functions at present performed by the OEEC which should continue to be the subject of international economic co-operation under the aegis of the proposed organizational arrangements with respect thereto;
(3)	That the group named above should consult with all twenty governments and the European communities and appropriate international organizations during the preparation of their report without, however, committing any government as to the content of the report which would be submitted by them in their personal capacities and which would be open for discussion and negotiation at the meeting envisaged in paragraph 1 above.
Paris, January 13, 1960


[Stage Direction]
The Special Economic Committee
Having been informed of the desire of the governments of Belgium, Canada, France, Germany, Italy, Portugal, the United Kingdom, and the United States, and the commission of the European economic community, who, in addition to their contribution to international organizations, are making available or may be in a position to make available a significant flow of long term funds to underdeveloped areas, to discuss among themselves the question of techniques to facilitate such flow of funds, taking into consideration other means of assistance to developing countries;
Notes that these eight governments and the commission of the European economic community intend to meet together to discuss various aspects of co-operation in their efforts, and to invite other additional capital exporting countries to participate in their
[Stage Direction]
work or to meet with them as may from time to time appear desirable, and to consult with such multilateral organizations as the international bank for reconstruction and development and the European investment bank.
Paris, January 13, 1960


[Stage Direction]
The Special Economic Committee
Recognizing that there are problems of commercial policy of particular concern to the twenty governments who are members of, or associated with, the OEEC;
Taking note of the existence of the EEC and of the convention for an EFTA;
Bearing in mind the relationship between the provisions of these agreements and general international commercial policy;
Considering the need to examine, as a matter of priority, the relationship between the EEC and the EFTA with due regard to the commercial interests of third countries and the principles and obligations of the GATT;
Decides
to propose to the twenty governments that they constitute themselves, together with the EEC, a committee with the power to
(1)	establish one or more informal working groups for the consideration of these problems without infringing the competence of the existing international institutions such as the GATT or the OECC; these groups should report back to the committee;
(2)	transmit an invitation to the executive secretary of the GATT to participate in these discussions.
[Stage Direction]
Tuesday, January 19, 1960