1960-03-22

BANKING AND COMMERCE

[Stage Direction]
Third report of standing committee on banking and commerce-Mr. Gathers.


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I wish to direct a question to the Prime Minister arising out of press comments about the reported slaughter of 62 negroes by South African police and army units in pursuit of the apartheid policy. Is Canada in the name of human dignity prepared to protest this brutal policy of apartheid in South Africa?


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I have already made the position of the Canadian government clear in this regard in the past, and have nothing to add to what has been said already. The attitude of the Canadian government has been made clear on more than one occasion, that anything in the nature of racial discrimination is not regarded favourably and is indeed condemned, but I would not like to go further than that at this time.


Hazen Robert Argue: A supplementary question, Mr. Speaker. In view of this violent outbreak, is the government prepared to make a protest at this time in the good name of Canada?


Mr. Speaker:: Order. The hon. member has an answer to the same question in reply to his first intervention.
(Translation):



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. J. J. Martel (Chapleau):: Mr. Speaker, I should like to put a question to the Minister of Citizenship and Immigration (Mrs. Fairclough). Has the minister's attention been drawn to an article in the March 17 issue of Le Devoir, page 3, concerning the report of 79951-0-145J
the investigation committee instructed to draw up a brief on the perquisites of an educational policy for the aborigines?
(Text):


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, I believe something was lost in the translation, because the hon. member had the kindness to send me a copy of his question and I think he had reference to education rather than immigration.
The committee to which he refers is a subcommittee of the advisory board on Eskimos of the Department of Northern Affairs and National Resources, and consequently does not directly concern my department. I can assure him, however, that any recommendations with reference to the education of Indians always receive the earnest consideration of my department.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. A. McGrath (St. John's East):: Mr. Speaker, I have a question for the Minister of Transport, notice of which has been given. Can the minister tell the house whether his department has received and answered a request for an icebreaker from a Norwegian sealer caught in the ice off the north coast of Newfoundland and Labrador?


Hon. George H. Hees (Minister of Transport):: Yes, Mr. Speaker. A Norwegian sealing vessel has been completely disabled and caught in the ice off the coast of Labrador north of Newfoundland. She will require a tow, and it is understood that the vessel's owners have dispatched a salvage tug for this purpose.
However, the tug will not be able to establish contact with the disabled vessel in the ice without icebreaker assistance. Accordingly a Department of Transport icebreaker has been dispatched from St. John's, Newfoundland, to break the sealer out of the ice so she may establish contact with the tug.
Reports have been received that certain other Canadian sealing vessels in the area may be experiencing difficulties, and the departmental icebreaker will review the situation in this regard when she reaches the area; and if help is needed for those vessels to

Inquiries of the Ministry escape from the dangerous ice conditions she will try to provide the necessary assistance for this purpose.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Harold Hicks (Fraser Valley):: Mr. Speaker, I have a question for the Minister of Public Works; I rather hate to ask it behind his back. According to the March 15 issue of the Chilliwack Progress, Central Mortgage and Housing Corporation will not grant $110,000 to the Jubilee housing society toward the cost of senior citizens' housing in Chilliwack. Is this statement true?


Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I am used to having questions asked in every way. The Central Mortgage and Housing Corporation office in New Westminster received on March 10, 1960, a formal application for a limited dividend project comprising 36 units for a senior citizens' housing project by the Jubilee Housing Company of Chilliwack, B.C. The sponsors were informed that the project could not be considered until additional funds were made available by parliament. When parliament votes the necessary funds this application may be resubmitted, and I assure the hon. member that it will be given every consideration.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Koofenay West):: Mr. Speaker, I should like to address a question to the Minister of Citizenship and Immigration. My question is based on a Canadian Press dispatch from Winnipeg dated March 17, 1960, in which Dr. Norbert Mongeus, a veterinarian with the federal Department of Agriculture, is reported as saying that Cree Indians in northern Manitoba are facing starvation, as a deadly epidemic is killing off their dogs. Will the minister kindly inform the house of the steps her department is taking to halt the epidemic and assist the affected Indians?


Ellen Louks Fairclough: Mr. Speaker, the hon. member for Churchill (Mr. Simpson) also brought this matter to my attention. Upon inquiry I found that during the week of January 4, 1960 the superintendent of The Pas Indian agency received a report of a large die-off of sled dogs in the Nelson House and south Indian lake areas of Manitoba.
[Mr. Hees.)

By arrangement with the Department of Agriculture, a veterinarian from the health of animals division and the Indian superintendent proceeded to the area to investigate the report. It was found that approximately 200 dogs were involved and that many of them have died or may do so.
A number of specimens were sent to the animal pathology laboratories at Hull, where examination revealed that the primary cause of death was infectious canine hepatitis. Once the cause of death was determined, steps were taken to bring the infection under control. The question of a further immunization program is at present under consideration as is the question of replacement when the epidemic has abated.
The reference to Indians facing starvation is an exaggeration, although many of them will be very greatly inconvenienced by loss of the dogs upon which they depended for transportation.



VANCOUVER


[Stage Direction]
On the orders of the day:
Mr. Douglas Jung (Vancouver Centre):: May
I address a question to the Minister of Citizenship and Immigration. Can the minister advise the house about the circumstances surrounding the death of an Indian woman, which occurred last week in Vancouver while she was being transferred from the Vancouver general hospital to the Indian hospital at Sardis? I am particularly anxious to find out why she was transferred, why she was being transported in a panel truck rather than in a regular ambulance, and also whether there was a qualified attendant accompanying the woman during the trip.


Ellen Louks Fairclough: Mr. Speaker, since this is a matter that comes under the administration of my colleague the Minister of National Health and Welfare, I wonder whether he would answer the question.


Hon. J. W. Monteiih (Minister of National Health and Welfare):: Mr. Speaker, this matter has come to my notice. I am having an investigation made and will be pleased to report to the house just as soon as it is completed.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisla-Twillin-gate):: I should like to ask a question of the Minister of Citizenship and Immigration. No

doubt the hon. lady has seen stories in the press about the latter day Mata Hari. Are they true?


Ellen Louks Fairclough: Mr. Speaker, I have no comment.


John Whitney Pickersgill: May I ask a supplementary question. Is the department proposing to deport a member of the staff of the University of British Columbia?


Ellen Louks Fairclough: Mr. Speaker, I think in the past Your Honour has ruled that questions of this type naming individuals should not be asked.


Herbert Wilfred Herridge: should like to direct a supplementary question to the Minister of Citizenship and Immigration. I should like to ask the minister whether she is now trying to invoke the Speaker's manna now that we have disposed of Hanna?
(Translation):



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Mr. Maurice Bourgei (Levis):: Mr. Speaker, I should like to put a question to the Minister of Defence Production. Is it true that, between February 1 and 15 last, contracts were awarded to Quebec industries only because the Minister of Defence Production interfered personally? This was stated in a press release dated March 4, 1960, issued by the information service of the Progressive Conservative party in Montreal.


Mr. Ricard:: You read those releases?


Mr. Johnson:: You should read them more often.


Maurice Bourget: Certainly, we keep in touch with everything.


Hon. Raymond O'Hurley (Minister of Defence Production):: In reply to the hon. member's question, I may say that he can rest assured that the Minister of Defence Production had no objection to the granting of those contracts. Unfortunately, the release in question has not come to my attention.


Maurice Bourget: A further question, Mr. Speaker. Is it true that the minister intervened personally in the granting of those contracts, or were they awarded by way of tender?


Mr. O'Hurley:: The member for Levis should know that in the Department of Defence
Inquiries of the Ministry Production there are many contracts for which tenders are not invited.
(Text):



REPORTED POOR PACKAGING OF POWDERED MILK IMPORTED FROM CANADA

[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, on Friday last questions were asked in connection with newspaper reports regarding some difficulties which were reported to have arisen with respect to Canadian dry skim milk powder shipped to Japan. The hon. member for Ottawa West asked me to make a further report to the house when I had received information from the embassy in Japan with regard to this occurrence. I am now prepared to do so.
Some 4 million pounds of skim milk powder were shipped to Japan last December. The powder was all manufactured from May to July, 1959, and met our Canada first grade specifications. On arrival in Japan and after sample tests there, 1,885 tons were distributed to 34 prefectures throughout Japan for school lunches. After cases of diarrhoea developed the Japanese education ministry, as a precautionary measure, has temporarily suspended further use of Canadian milk pending conclusive testing. The education ministry has not officially blamed Canadian milk for the outbreak of diarrhoea, and newspaper reports so far published are based on incomplete and unofficial information.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I should like to address a question to the Minister of National Revenue. Because of current press reports and misunderstandings that may exist in members' minds, certainly in mine, about the policy of the C.B.C. in buying sports events for telecasting, for example, Big Four football, could the minister tell us whether the C.B.C. is now a bidder for such events, or has it accepted the recommendation of the broadcasting committee of last session in this matter?


Hon. George C. Nowlan (Minister of National Revenue):: I will take that question as notice.

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INQUIRIES FOR RETURNS


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: I should like to ask the Minister of Citizenship and Immigration if she could undertake to discover what progress is being made with respect to an order of the house regarding a question of mine concerning deportations, which was made an order for return on February 3.


Ellen Louks Fairclough: Yes, Mr. Speaker.


John Whitney Pickersgill: I should like to ask whether the minister of northern affairs has yet reached an understanding with the government of Manitoba on the Red river flood control matter.


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):: Yes, Mr. Speaker.

The house resumed, from Monday, March 21, consideration of the motion of Mr. Fleming (Eglinton) for committee of supply, and the amendment thereto of Mr. Pearson, and the amendment to the amendment of Mr. Winch.



TRADE-REQUEST FOR ACTION TO REMEDY UNFAVOURABLE BALANCE

Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, yesterday I was giving a review of Canada's trade position, and I shall now complete that review. I had covered the situation with regard to our relations with the commonwealth, the trade blocs in Europe and the United States. I have left to consider our relationships with other areas of the world such as Latin America, Japan and Russia, about which I will say a few words.
In so far as Latin America is concerned, that area continued to face serious economic difficulties from May of last year until the present, mainly as a result of low world prices in most of the primary commodities which are the major source of their export earnings. They have been making some progress toward the establishment of regional trading groups. At a meeting held in Panama in May of last year, all 20 Latin American republics discussed a draft plan for a free trade arrangement covering the Latin American area. No substantial measure of agreement was reached.

Later in 1959 conferences were held at Lima and Montevideo by a smaller group of countries with a view to establishing a southern free trade area as an initial step. On February 18 of this year seven countries, Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay signed a treaty establishing a Latin America free trade association. This treaty provides for the gradual elimination over a period of 12 years of customs tariffs and quantitative restrictions on essential trade between the member countries.
In the field of economic regionalism, about which we have been talking, the Central American free trade treaty came into force in June, 1959 for an initial period of 10 years on being ratified by Guatemala, El Salvador and Nicaragua. Costa Rica and Honduras have indicated a willingness to accede to that treaty.
From the point of view of Canadian trade interests, the establishment of the Latin American free trade association, with a population of 140 million, could in the long run provide an expanding market for Canadian products. In discussing this subject at the fifteenth session of GATT the Canadian delegation stressed that the free trade association should be outward looking, and that their plans should lead to an expansion and not a diversion of trade.
Canadian sales to Latin American countries declined slightly in 1959, but toward the end of the year began to show a firmer trend. Where noticeable decreases did occur, as in sales to Brazil and Mexico, the decline was over a number of products and resulted from intensified restrictions on imports rather than actual loss of markets. Brazil, for example, bought less newsprint, railway rails, aluminum, electrical apparatus and zinc. Mexico reduced its purchases of aluminum very sharply, and of pulp and primary iron and steel more moderately. The marked gain in sales to Colombia represented an increase in exports of wheat grain from Canada; sales of wheat to Ecuador also rose by $1 million. Venezuela, now Canada's largest market in Latin America, increased wheat purchases but sharply reduced those of wheat flour due to the establishment of new domestic capacity. Milk, egg and dairy product sales continued to increase, as did those of iron and steel goods and synthetic resins.
A major portion of Canada's imports from Latin America consists of crude petroleum from Venezuela. As a result of the expanding use of Canadian crude, these purchases continued to decline. Other imports remained quite stable in 1959, lower coffee prices being offset by a larger volume of purchases. Of

other major items, raw sugar imports from Cuba declined, while cotton purchases in Mexico rose from 1958 levels.
In total, Canada's exports to Latin America in 1958 were valued at $180 million, and at $173 million in 1959. Our imports from that region in 1958 were valued at $380 million, and an estimate for 1959 of about $345 million, so the balance of trade is in favour of Latin America.
I wish to say just a word with regard to our trade with Japan, of which quite a bit has been said recently and commented upon in the papers across the country. The Japanese economy was prosperous in 1959. There was a steady rise of Japanese imports, exports and reserves of foreign exchange. Canada's export trade responded to these influences, rising from about $105 million in 1958 to about $140 million last year. Wheat and flour sales figured prominently in this increase, rising from $64 million in 1958 to $71 million in 1959. Japan has become our second largest importer of Canadian wheat, alternating that position with Germany from year to year.
This is a very important market for Canadian wheat and flour. Other agricultural exports showing improvement were flax seed and rapeseed. In industrial materials, export increases in a wide range of commodities reflected the increased industrial production in Japan. Exports of sulphate pulp, iron ore, asbestos, aluminum and copper rose substantially; those of zinc and chemicals, more moderately.
Canadian imports from Japan also rose very rapidly in 1959 to an estimated $105 million, from the 1958 value of $70 million. Textiles are the leading imports from Japan. The rise, in addition, was spread over a large range of light consumer goods such as boot and shoes, sewing machines, cameras and photographic equipment, hand tools and toys and hardwood plywoods. In January of this year our exports to Japan were valued at $9.1 million as compared with $7.6 million, in January, 1959.
The Leader of the Opposition discussed the Soviet trading bloc and the threat to the western world in the trading sphere of that area, and this question has been the subject of comment by various people from time to time. The Soviet union has been participating in international trade to an increasing extent. While the bulk of her trade continues to be with the Soviet bloc, exports to and imports from western countries have also expanded.
Canada has been participating in this trade to some limited degree. In the 1956 trade agreement between Canada and the U.S.S.R.
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the Soviets undertook to purchase 400,000 tons of Canadian wheat valued at approximately $25 million in each of the three years of the agreement. In 1959, following expiration of this agreement, Canadian exports to Russia declined to $12,740,000. Direct imports from the Soviet union into Canada for the first 11 months of 1959 amounted to $2,258,000. As I have mentioned on many occasions, negotiations are still continuing between Canada and Russia and we are looking toward a renewal of the trade agreement.
Although there may be some dangers in Soviet participation in international trade, there are also opportunities for Canada. However, we have to realize that in many respects Canada's resources are similar to those of Russia, particularly forest products, nonferrous metals, and grains; and if the U.S.S.R. should engage in disruptive selling practices, Canadian export interests could be seriously affected. But it is not reasonable to conclude that in every instance in which Canadian exports may be meeting Soviet competition, unfair trading practices are involved. We are aware of the dangers there may be in trade as it is conducted by members of the Soviet bloc, and we are aware of the need to safeguard the Canadian economy from any disturbance which might arise.
Our trade with the communist bloc countries on the export side consists mainly of wheat and barley, which fluctuates widely in amount and destination from year to year as local conditions dictate. Russia purchased slightly less wheat in 1959, and virtually no barley, against 5 million bushels in 1958. Communist China bought no grains in 1959 but small amounts of copper, nickel, drugs and chemicals. Poland, on the other hand, re-entered the market for both barley-5 million bushels-and wheat-6 million bushels. Imports from these countries amounted to $15 million in 1958. These were largely composed of edible nuts, some types of textiles and brushes from communist China and a wide range of consumer goods from Czechoslovakia.
Looked at in detail, Canadian exports to the Sino-Soviet bloc were $30.3 million in 1958 and $33.8 million in 1959. Imports in 1958 amounted to $15.1 million, and the estimate for 1959 is close to that figure. Thus the balance in this trade has been in our favour, although it is not extensive.
Mr. Speaker, that completes what I have to say with regard to the various regions with which our trade has been conducted. Before I conclude I should like to refer to the amendment which was introduced by the Leader of the Opposition (Mr. Pearson).

Trade Balance


Mr. Fulion:: Hardly worth mentioning, is it?


Gordon Minto Churchill: The Minister of Justice says it is hardly worth mentioning, and that expresses my opinion precisely.


Mr. Pearson:: Then why talk for three hours?


Gordon Minto Churchill: Because, unfortunately, it is a negative amendment. There is no constructive attitude taken in this amendment. It expresses grave concern. It starts off on a gloomy note. It talks about the deterioration of Canada's trading position, yet Canada's trading position has not deteriorated over the last three years; it has vastly improved. So the amendment is inaccurate in its phrasing.
Then, of course, it is inaccurate in that it lumps together the invisible items, those items which were mentioned last night concerning freight and service charges, tourist expenditure, interest and dividends on foreign investments in this country; the amendment lumped all these together with the deficit in commodity trade, thereby distorting the picture.
Then the resolution goes on to urge the government to deal with this serious problem, as it is called, by taking effective action. I showed last night that we were taking effective action and that we have been taking effective action during the last two and a half a years.
The amendment ends by suggesting the working out of proposals for the establishment, on a gradual and progressive basis, of an Atlantic free trade area. That is a typical sentence coming from the Leader of the Opposition; inconclusive, vague and difficult to pin down. Of course when the Leader of the Opposition was talking about this he said he knew these things could not be done very quickly and that we would have to move cautiously; that it would be a gradual adjustment over a period of years, and so on.
Four years ago in this House of Commons a debate on Canada's trading position took place. We were then on the opposition side. It is interesting to look back at the amendment we put forward dealing with a situation something like this; only then, in 1956, the deficit trade balance was double what it is on this occasion. But our amendment was constructive. It was subsequently embodied in the policy for our party which received the approbation of the Canadian people in 1957 and 1958.
Our amendment in those circumstances, instead of starting off in a gloomy way, was

constructive. It was constructive, and it advocated a national policy to develop our national resources for the benefit of all parts of Canada. It went on to stress the importance of developments in Canadian life rather than simply dwelling on the gloomy side and attempting to paint a picture of concern and dismay for the Canadian people.
That is one of the basic differences between the Liberal party and the Conservative party. The Conservative party from the time of confederation has been the party of progress, the party of development in this country, and the Liberal party has been the party of little Canadianism, as I expressed it last year, the party of the small view, the gloomy attitude, the party of despondent characterization.


John Whitney Pickersgill: C. D. Howe, for example.


Gordon Minto Churchill: It gives no inspiration to the Canadian people. In this particular instance, when Canadian trade is in a flourishing condition-*


Lester Bowles Pearson: Hence our $1J billion deficit.


Gordon Minto Churchill: -and the economy is growing and when, as indicated by the reports from the premiers there is in every province of Canada a feeling of optimism, it is under these conditions that the Leader of the Opposition introduces his gloom and despondency and plays Canada down.
I reaffirm what I said yesterday, that Canada has a well defined and positive trade policy which is practical and dynamic. Its objective is the furtherance of Canada's export trade in all the markets of the world, be they national or regional. Our policy comprises both our trade relations which provide the framework for the expansion of trade, and our trade promotional activities which comprise the many and different ways in which the Department of Trade and Commerce assists our exporters to find and take advantage of market opportunities abroad.
There are eight facets to our program, which may be listed as follows: (1) trade negotiations (2) trade conferences and (3) trade treaties. These are all in the realm of international relations in which we hare been particularly active.


Lester Bowles Pearson: Especially with Russia.


Gordon Minto Churchill: To continue; (4) trade promotion, (5) trade fairs, (6) trade financing, (7) trade missions and (8) trade publicity.
Under those eight points we have the fields of activity in which the Department of Trade and Commerce is involved. In the field of trade relations our policy has been through trade negotiations, through trade conferences and through the treaties which have been

entered into with our trading partners to improve Canada's access to foreign markets.
We have been endeavouring with a great measure of success to reduce both the tariff and non-tariff barriers to trade which have faced Canadian exports in the post-war period. As a result of multilateral tariff negotiations the tariffs facing Canada in the United States and other markets have been considerably reduced, and Canada will be taking part in the next round of such negotiations scheduled to commence at the end of this year.
With regard to non-tariff barriers, the very substantial reduction in quantitative restrictions on trade throughout the world and the virtual elimination of discrimination against dollar exports are a striking illustration both of the improved financial position of our trading partners and of the success which has attended our persistent efforts to do away with these temporary and artificial barriers to our trade.
I have indicated the measures we have taken in the face of the development of regional trading blocs in Europe and elsewhere. Our efforts have been directed and continue to be directed to ensuring that these regional groups have an expansionary rather than a restrictive effect on world trade and in particular on Canadian exports.
As the house knows, Canada is actively engaged in discussions with the European countries and with the United States concerning certain of the problems to which the formation of the European economic community and the European free trade area give rise. That is the Six and the Seven. In these discussions we are taking the necessary action to safeguard and further our trade interests. The house may rest assured that our approach to the new problems in the trade policy field, including the question of trade relations with regional economic groupings, is under the most active consideration, and that our policy is to serve Canadian interest in accordance with the requirements of changing world circumstances.
Our policy of assistance to Canadian exporters involves trade promotion in all its aspects. Throughout the world, and in all markets of significance to Canada, we have trade commissioners on the ground whose function is to seek out and promote Canadian trade. In this regard Canadian exporters are served as well as or better than those of any country in the world. This is not to suggest, of course, that there is no room for improvement. What we must do constantly is adjust ourselves to meet the challenges of changing world trade. The contacts I have with the Canadian business community suggest to me
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that our exporters are well satisfied with the work of the Canadian trade commissioner service.


John Whitney Pickersgill: Especially in the uranium industry.


Gordon Minto Churchill: Scarcely a month goes by that I do not receive letters from Canadian businessmen who have been abroad reporting to me that they have been very courteously and ably served by our trade commissioners whom they have met. The trade promotional activities of our trade commissioners are supplemented by our participation in trade fairs and by the dispatch from Canada of trade missions.
The Department of Trade and Commerce is active in stimulating the interest of Canadian exporters in these special and worth-while activities. It is part of the department's program to step up the number of trade missions from Canada, and we are developing new and more flexible techniques for this aspect of our trade promotion.
With regard to trade fairs, our program for 1960 is interesting and extensive and I should like to give the house some idea of its scope. There are approximately 28 large fairs or exhibitions in which Canada will be participating this year. The Department of Trade and Commerce through its exhibition branch makes arrangements at these trade fairs for Canadian businessmen to display their goods.
Let me cite a few examples. The ideal home exhibition in London, England which is proceeding at this time is, as far as Canada is concerned, largely devoted to the presentation of food products and consumer goods. There is on display there a special house constructed from Canadian lumber and sponsored by the British Columbia lumbermen's association and by the dominion government. Canadian firms will be exhibiting in the Rand easter show in Johannesburg in the month of April. There will be a presentation of engineering products, farm implements, forest products and furs. At the Milan fur show in March there will be a display of fur pelts and fur garments. A similar fair will be held in Paris in April at which there will be a display of Canadian fur pelts and garments.
In January of this year we participated in the national association of home builders convention in Chicago at which there was a presentation of woods used in home construction. We also participated in the national sporting goods show at Chicago early in February. We will be taking part in an exhibition in New York dealing with the equipment used in atomic industry. In Detroit in April we will participate in a presentation of engineering tools at the American society

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of tool engineering show. At the Frankfurt, Germany fur fair in April we will display fur pelts and garments. In New York in May we will participate in the design engineering show. In Leeds, England we will take part in the building trades exhibition at which building materials will be displayed. We will also participate in the international specialty food and confection show at Chicago in June, and at the St. Erik's fair in Stockholm in September at which there will be a presentation of industrial and consumer goods. This is the second year in which we are participating in that fair. I had the pleasure of seeing the exhibits last year, and they were very good and should be quite a stimulus to Canadian trade.
In September Canadians will be showing their products at the British food fair in London. In October there will be a showing of wood and building materials at the Manchester building trades fair. In Philadelphia, in October, we will be participating in the forty second metal congress and exhibition, where industrial machinery and materials will be shown. At Amsterdam in May of this year there will be a bakery exhibition at which Canadian wheat and flour will be exhibited, and so it goes, we are also represented at trade fairs and exhibits in various other places throughout the world, including some of the eastern European countries. There is a fair in Poland in June, one in Yugoslavia in September, and so on. I have not given the entire list, but those I have given will give the house an idea of some of the activity that is being carried on by the exhibition branch of the Department of Trade and Commerce with the co-operation of Canadian businessmen.
With respect to the financing of trade, the house is well aware of the facilities in Canada for export credits insurance and of the amendments made last session to the Export Credits Insurance Act. In the department we are watching carefully the credit facilities available in other countries, with a view to ensuring that within our means, and in accordance with the realistic requirements of trade, Canadian exporters are not placed at an unfair disadvantage in world trade. We have found that many of the exporting countries are making credit facilities available to their exporters, some of them along the lines that we do in the Export Credits Insurance Act.
In the field of trade publicity we are constantly bringing to the attention of the Canadian business community the opportunities of trade which exist abroad, and through our trade commissioner service and in other ways we bring the availability of Canadian goods

to the attention of foreign importers. In all these activities the Department of Trade and Commerce is endeavouring to serve the interests of the Canadian exporter, and the orientation of these activities is being constantly adjusted to the developing requirements of foreign markets.
The expansion of our export sales cannot be brought about just by the Department of Trade and Commerce alone; we have to have, and we do get, the active co-operation of the business community. Canadian businessmen are addressing themselves vigorously to the problem of selling in what has become a highly competitive world. The years when an easy sellers' market existed are over. New techniques and new initiative will be required if we are to exploit the opportunities which exist, but I am confident that Canadians will rise to meet the challenges which face us in the export markets, and the Department of Trade and Commerce will do all in its power to assist.
Notwithstanding some of the difficulties we face, I am confident that 1960 will show another good year for Canadian trade, with exports exceeding the record level of $5 billion achieved in 1959.
(Translation):


Mr. Armand Dumas (Villeneuve):: Mr. Speaker, if we had thought that the Minister of Trade and Commerce (Mr. Churchill) was in earnest yesterday afternoon, we might have believed that he was really in a spot when he said that he was taken a bit by surprise by the introduction of an amendment by the Leader of Opposition (Mr. Pearson). Yes, he said, he was facing a problem, and every time the house went into a supply motion, the ministers had to go through a guessing game from week to week as to what the opposition might bring forward.
For a moment last evening, I was tempted to sympathize with him, but after glancing at the northwest gallery, where a host of distinguished departmental officials were gathered, and later on as I listened to that recital of statistics and quotations from reports of all kinds, I soon realized that the minister had not been in earnest and had only been jesting.
I understood that he had been listening to the radio on Sunday and Monday and that he was steeled for the fray.
In any case, Mr. Speaker, the minister said he was in a spot and yet held forth for more than three hours. What would have happened if he had been forewarned? What would

have happened if, charitably, we had let him know we would introduce that amendment? We probably would have heard one of the longest speeches ever delivered in this house.
Mr. Speaker, our foreign trade, the balance of our international payments and the general condition of our economy are outlined in detail in the latest annual report of the Bank of Canada. In fact, that report reveals a few rather disquieting things that call for serious consideration.
In the last five years, we have bought from abroad all kinds of goods, for a total amount of $38.3 billion and we have gained, in exports and other values, the total of $32.2 billion. In other words our deficit over that five-year period is about $6 billion.
Last year our quotas abroad, including investments of non-residents and other debit accounts, have increased by $2.3 billion, which means that our gross international debt, at the end of 1959, reached another all-time high of $24 billion.
The net Canadian international debt now amounts to $15.4 billion, twice as much as at the end of 1955, and $3.5 billion more than at the end of 1957.
The current accounts' deficit in goods and other services reached $1.46 billion in 1959, the highest we ever had.
The deficit in the invisible trade alone- that is in transactions relating to services of all kinds and to transfers of interest and dividends-was $1,074 million for the year just ended or twice as high as it was in 1955, and naturally that is another record.
Our exports of goods increased in 1959, but on the other hand, imports were much greater than in 1958, with the result that the trade deficit at the end of 1959 was $386 million. While our current account deficit with the United States for merchandise and other services is slightly lower than in 1956 and 1957, it still amounts to $1,236 million.
Our favourable trade balance with the United Kingdom and the other countries of the sterling area, which reached $502 million in 1952, is now down to $64 million as of the end of 1959.
For the first time in 1959 our trade balance with the other European countries, the O.E.E.C. countries, not counting the United Kingdom, has fallen from a usually favourable position to a deficit of $149 million, and finally
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our surplus with other countries also shows deficits, more specifically a deficit of $139 million in 1959.
Given a little more time, Mr. Speaker, the present government will set all kinds of new records. Indeed, in hardly three years since it took office, this government never stopped piling up new records.
In addition to the two I have just mem-tioned, the government had many other records to its credit, such as: record budget deficits, a sharp rise in the national debt, alltime high interest rates and an extremely disturbing rate of unemployment. Of course, the money situation, too, is extremely tight; so much so that municipal governments, small borrowers and small businessmen, the very people the government should be protecting, have the greatest difficulties in finding the money they need.
As a result of this tight money policy, which the government is pursuing and apparently has no intention of relaxing, provincial and municipal administrations as well as crown corporations, have to go to the United States to borrow hundreds of millions of dollars every year, through bond issues, to get the money they need to maintain current services, and therefore to meet current expenditures, and not capital expenses.
In 1957, such bond issues represented $259 million; in 1958, they rose to $316 million and in 1959, they soared to an all-time high; in other words, provincial governments and municipalities assumed, in the form of loans floated abroad, a mortgage of $473 million. This makes a total of $1 billion 48 million for the last three years, or $100 million more than in the five previous years from 1952 to 1956 inclusive. Here is something which appeared in Le Droit for March 18 in that connection, and I quote:
Since the conversion loan, Ottawa has been monopolizing the Canadian bond market to meet its increased payments.
Payments exclusive of interests.
Provinces therefore are sending their agents to New York for the money they need to cover the necessary cost of roads, hospitals and schools. Even so prosperous a province as Ontario is involved with foreign loans. Urban municipalities are in the same fix because of the sudden increase of their services in respect of hospitals, social welfare and schools.
Those loans by provincial and municipal governments, as well as those granted to other corporations are in American currency and

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must be converted into Canadian dollars. Those operations create an artificial demand for Canadian dollars outside of trade, thus contributing to an increase of the premium and keeping our currency at a rate that is much too high to be beneficial to our economy as a whole.
The gap we are facing now in the balance of our international payments has reached dangerous proportions and can be filled only by a sharp increase in our exports.
Even if our exports have considerably increased since 1952-and I admit they have -the country's present position in respect of international trade is nonetheless not so flourishing as a few years ago. Since 1952, world trade has very rapidly increased, but the part played by Canada today is not what it should be. We have allowed others to take the lead.
Our share of international trade, which had risen from 5.2 to 6.1 per cent between 1951 and 1956, is now back to about 5 per cent, which means a decrease of 1 per cent in the last three years. For several other countries, this trend has worked in the opposite direction. Several countries, among them Germany, Japan, Italy and France have substantially increased their share of world trade.
We are probably the most vulnerable nation with regard to international trade, and that is why we must be very wary in that field. We are vulnerable because we depend to a very great extent on our export trade.
One can easily imagine what would have happened if we had stood our ground. If we had kept our share of world trade, our exports for 1959 would no doubt be ranging about $6 billion instead of $5 billion.
The problem of most concern with regard to the balance of Canada's international payments is undoubtedly the size of our current account deficits in the last few years. The total deficit for the last four years reaches $5,333,000 and naturally, the 1959 deficit of $1,460,000 is an all time high.
Logically, we can close this gap only by increased exports. We can hardly reduce our imports, and there can be no question borrowing to make up for the deficits and to pay interest on the indebtedness already incurred, as well as current expenses, because such loans would merely increase by billions of dollars the cost of living for future generations.

All experts agree that we can and must increase our exports. First of all, we have abundant natural resources; we have the required manpower and technicians, and, what is more important, Canadians have the courage and intelligence necessary to face the situation.
It is time the government made its contribution. So far, all the government has done was to set undesirable records, and that is not the way it will succeed in steadying an increasingly shaky economy. It is being said in many quarters that we are headed for an economic slump. Here is what Le Droit of March 18 last had to say about this:
Unable to establish long term policies, the federal government administers from week to week and lets internal factors determine the economy. It allows expansion to take precedence over production. It lets expenses exceed by $1 billion, at least, the proper level for economic stability. It impassively tolerates excessive imports to be financed, not by funds levied on savings, but by foreign borrowings. Instead of speeding up the decline of inflation, it advocates, in fact if not in principle, an inflation of the money supply and a deficit of expenditures. And one tenth of Canadian manpower stagnates in unemployment.
Our world trade has deteriorated during recent years, there is a danger that this tendency may continue and we must take steps to check it.
The governor of the Bank of Canada proposes certain solutions which can be summed up as follows: we must diversify our production; increase our productivity; put off expenditures which require borrowings, especially from foreign countries; obtain the co-operation of the leaders of the common market and of the free trade area, and finally, do all we can to find new markets. And naturally, the governor of the Bank of Canada adds that we must learn to live within our means, in other words to tighten our belts.
Since the Canadian trade deficit is $1,460 billion, largely due to the size of our merchandise imports, especially from the United States, some people might feel this is a good reason for raising our tariff barriers. Those are the protectionists; there are some in the United States and we have them here too in Canada.
Mr. Speaker, we would be making a big mistake if we tried to reduce our trade deficit through higher tariffs. We cannot afford to million, largely due to the size of our surplus raw materials and for our semifinished products are an absolute necessity.

Our domestic market is much too small to absorb all our mine and forestry products.
The United States are unquestionably our largest market for mining, forest and many other products.
However, the contracts we are able to get there, especially for some of our mining products, are obtainable under conditions imposed by the United States administration, and often as a result of pressures exercised by producers in that country, who consider such restrictions as better protection for their own products.
I would even say that certain United States producers sincerely believe that this is the only answer to this problem. Naturally, this is not the case.
In the light of recent developments- and I mean the cancellation by the United States administration of the options taken by the United States Atomic Energy Board on Canadian production of uranium, in addition to firm purchases which have now been extended beyond 1963-Canada now wishes to be reassured, more than ever, so that important sectors of the Canadian economy be not so unfavourably and seriously affected as was the uranium industry, as a result of certain decisions taken by the United States.
Mr. Speaker, Canadian producers are concerned. They, of course, realize the difficulties we are facing, difficulties resulting from that protectionist policy which prevails among our neighbours to the south. But, Mr. Speaker, their concern goes deeper than that. Canadian producers are wondering whether, actually, the Canadian government is taking the necessary steps to prevent United States government policy from getting even stricter.
Last April, in this house, during the debate on the budget, I asked the same question, saying that we would perhaps have an answer to that question when we knew what attitude the United States government would take with regard to the United States atomic energy board's options on Canadian production of uranium, in addition to firm purchases. We did have that answer in November last, but unfortunately it was a negative one.
We must realize-and that is very important-that many difficulties and problems which are common to us Canadians as well as to our friends the Americans are
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rooted in our trade relations. We must endeavour to smooth them out, or at least lessen them.
We must recognize that our trade relations with our friends the Americans suffered a real set-back when, in 1957, the Prime Minister (Mr. Diefenbaker), in one of his ill-considered statements, said that Canada proposed to divert 15 per cent of our purchases in the United States, in order to increase our imports from the United Kingdom. Fortunately, that statement was not taken seriously. However the threat of diversion had its effects and did not fail to disturb some of our friends to the south.
It might have been pure coincidence, but since this government took over, our mine and oil industries have been subject to restrictions which greatly hamper their expansion and development. Thus, in July 1958, the United States government again applied the U/10 cent per pound tariff on imported copper. We know what that means to Canadian industry.
In October of the same year, the U.S. government decided to apply quotas on imports of lead and zinc. There again, we have an idea of what it can mean to that important Canadian industry. In 1958, our oil industry was affected in the same way. In the latter case, restrictions were taken off, but only partly. As the minister said yesterday, the restrictions were relaxed.
More recently still, in November 1959, it was the uranium industry which received the worst blow. Everybody knows what this means to the affected areas of this country, as well as to our trade balance, as our uranium exports had reached a value of more than $300 million in 1959.
With regard to the decision of the U.S. government, that is the cancellation of options, we do not claim that the Canadian government could exert any pressure on our southern friends to the extent of demanding recognition of every option, but we maintain that Canada could have obtained a much more favourable settlement, and that is the main point.
In yesterday's remarks, especially when he was dealing with our relations and trade with the United States, the minister made a statement which surprised me. After giving us a painstaking report of the rather superficial steps taken by the Canadian government when it approached the U.S. authorities

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to improve our position with regard to the sale of zinc and lead, the minister added, as may be seen on page 2295 of Hansard dated March 21, 1960, and I quote:
Apart from the problem of lead and zinc, Canada's access to United States markets was unaffected by any major adverse developments.
To my mind, the minister was mistaken when he said that. Has he already forgotten the uranium tragedy? I doubt it.
However, we are accusing the government of not having brought to that matter all the attention it deserved.
(Text):


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


Armand Dumas: Yes.


Edwin William Brunsden: He has been talking a great deal about the action this government might have taken with respect to uranium going to the United States. He seems to have forgotten that the agreement with the United States with respect to the export of uranium from Canada was made by the government previous to this one. What would he do to improve this situation?


Armand Dumas: I have a good answer for that question. We built an industry and you destroyed it.
(Translation):
The matter was of such importance that it justified a personal approach from the Prime Minister himself to the president of the United States, but this was not done.
We are justified in saying, Mr. Speaker, that in the past two years, the government has woefully failed in this field of our trade relations with the United States. In 1958 and 1959, we sounded the alarm and asked the government to intervene and to take whatever action was required to prevent any further expansion of protectionist policies in the United States. No action was taken, and the results are there to prove it.
Mr. Speaker, competition for world markets is greater now than ever in the past. Other ore-producing countries whose labour and production costs, in many cases, represent only a fraction of our own, are developing their resources at an extremely rapid pace.
It must always be remembered that here in Canada, the mining industry particularly depends on export trade, and that mineral

resources are resources only in so far as they are used, put into production and placed on the market. Otherwise, they are only valueless rocks.
We can and must increase our exports to the United States, particularly with respect to ore and forestry products. The United States need metal of all kinds, and they know quite well that Canada remains their safest and closest source, from which they can draw without fear of having the supply cut off for all kinds of reasons.
Our American friends therefore realize that we are good costumers, and they are smart enough to know that trade between the two countries is not a one way street. They know full well that we cannot always have unfavourable balances, such as we have had in the past few years.
I think the government should keep applying pressure and help our businessmen, who are doing a good job. At this point I should like to quote what I think was perhaps the most reasonable statement in the speech made by the Minister of Trade and Commerce. It is on page 2286 of Hansard:
With Imagination in marketing, with aggressive sales promotion and with determination to take advantage of market opportunities throughout the world, I am sure that the contribution made to our export earnings by manufactured products can be steadily increased. That is being done by enterprising Canadian businessmen this year. Now that restrictions on trade have been removed in so many countries our businessmen in the export trade and others who want to enter it are beginning to take active steps to recover the ground that they lost at the outbreak of the second world war.
Mr. Speaker, I agree with the minister. We have groups of businessmen who tend to their interests and do everything they can to increase our exports to the United States, to Europe and elsewhere, and I say the present government is not giving them the support they deserve and need. I feel there is neglect in that respect. The government should do something to help those who want to help themselves.
The Leader of the Opposition has suggested consideration of a broad plan-
(Text):
Mr. Pallet!: Will the hon. member permit a question?


Armand Dumas: I do not know how much time I have left.
Mr. Pallet!: I would be interested, as I am sure the house would' be, in the follow-up of

the suggestion that the government should do something, and to hear the suggestions the hon. member might make himself in this regard.


Armand Dumas: May I say that the government seem to be depending all the time on the opposition to tell them what to do. Why do they not do something themselves without asking us what we should do? I can tell the hon. gentleman that we built industry and they destroyed it. I can tell him that we built trade and they are in the process of destroying it.
(Translation):
The Leader of the Opposition suggested the study of a far-reaching plan, that of Cana-dian-American participation in an Atlantic economic organization. It is a long term plan, but it surely deserves special consideration by the government. I hope the government will study all its aspects and that it will promote the plan if it sees that it may be useful to our international trade.
The Leader of the Opposition also suggested certain steps which can be taken on shorter term. Again, although the government seems to care very little for the business of this country, I am confident that one day the government will wake up and maybe do something to improve the situation. I trust that the suggestions which have been made by the Leader of the Opposition will be taken into consideration and that they will be put to practical use. Mr. Speaker, we should try to increase our trade with other countries. I said that this trade-and I mean world trade-increased by more than 1 per cent from 1952 to 1956. Well, between 1956 and 1959 it decreased by 1 per cent with the result that, today, our exports are not so much higher.
So, I trust that the Minister of Trade and Commerce will try to remedy this situation and obtain more foreign trade for Canada.
Before I resume my seat, I would like to quote the remarks made by the hon. member for Humber-St. George's (Mr. Batten) when concluding his speech last night. Here is what he said, according to page 2277 of Hansard of March 21:
I believe it is the problem of all those who are interested and that includes all Canadians.
I perfectly agree.
But one thing remains-
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Added the hon. member for Humber-St.
George's,
But one thing remains, namely that the government must show leadership in this matter and in this matter talk-
And we had three hours of it,
-talk will not be enough.
Talk is not enough. There must be action, and I hope that the government will take action and try to improve our world trade.


Mr. L. J. Pigeon (JoIielle-L'Assompiion-Monicalm):: Mr. Speaker, the former Liberal government had, in my opinion, a shortsighted policy. When the administration changed hands, our trade situation was alarming. Yet, Mr. Speaker, it seems to me that after the war, the former government could have sent trade missions throughout the world, to promote our trade with European countries ravaged by the war, and whose economy had been weakened.
I wonder why, Mr. Speaker, the former government had that shortsighted policy, one that leads to stagnation. The former government did not want to diversify our trade; it preferred to have it closely tied to that of the United States.
Mr. Speaker, during the last few years, this government, which was then in opposition, has shown its disapproval with regard to the attitude taken by the former government. Hon. members on the government benches, who are now in power, made some constructive suggestions to the government of the day, but the then government stopped its ears and refused to divert our trade.


An hon. Member:: And you, you are closing your eyes.


Louis-Joseph Pigeon: Mr. Speaker, in order to prove what I just said, I want to refer to the closing of the Liberal administration, when we had an increasing trade deficit with the United States. In 1953, $758 million; in 1954, $594 million; in 1955, $840 million; and in 1956, $1 billion and 283 million. Mr. Speaker, the Conservative government had good cause to worry. I can therefore aptly recall what Mr. James Duncan, of Toronto, used to say: "There is but one step between the loss of economic freedom and that of political freedom".
I read with interest the speech made by the Leader of the Opposition (Mr. Pearson). I was really surprised to note that he took inspiration from statements made by Mr. Sharp, the former deputy minister of

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trade and commerce, who resigned a few months ago. Yet, the Leader of the Opposition, in my opinion, should not have quoted some of Mr. Sharp's statements, since Mr. Sharp, a former deputy minister, has always been recognized as a political opponent of this government. In my opinion, Mr. Speaker, the argument of the Leader of the Opposition, based on Mr. Sharp's statements, was valueless, and the same could be said of the arguments of the Leader of the Opposition based on the report of the Bank of Canada.
Everybody knows Mr. Coyne, and is aware of the political statements he made during a previous election campaign. Mr. Coyne has lost the confidence of the people. And I urge the Leader of the Opposition and the members of this house to read the reports of the Bank of Canada from its inception to the present day. You will note that the governor of the Bank of Canada, Mr. Coyne, did not tell the former government what it should do. In other words, Mr. Coyne indulged in petty politics and mainly lauded government policies. Now that the government has changed, Mr. Coyne wants to dictate his policies to the government. Mr. Coyne has lost the confidence of the people. In my view, this report which he has issued, the Bank of Canada report, is nothing but a cheap political pamphlet. The people's money is being squandered. Mr. Coyne's responsibility is not to dictate to the government, no more than it was to extol the policies of the former government.
The present government enjoys the confidence of the people. This government has just come into power and its policy consists in trying to improve our trade. What did the former government do, a government that was responsible for the loss of our export markets?
Sir, if I were Mr. Coyne, having lost the people's trust, I would resign. Mr. Coyne should resign, because his report is nothing but a cheap political lampoon.
Ladies and gentlemen-Mr. Speaker, because I am speaking here to the Canadian people, I may say "ladies and gentlemen"- from 1950 until 1956, Canada's total commercial deficit increased alarmingly. I have here a table showing the deficit in Canada's trade balance in respect of the rest of the world: in 1951, about $122 million; in 1952, $326 million; in 1953, approximately $210 million; in 1954, about $146 million; in 1955,

about $361 million; and in 1956, approximately $842 million.
Under the former administration, at a time that was referred to as a period of prosperity, our trade balance, which showed a deficit, was not to Canada's advantage. Now, with regard to the loss of our traditional markets, I have here a table indicating how far Canada has lost its traditional market in the United Kingdom under the former administration. I have here the percentage of our total imports.


Mr. Boulanger:: Give us the figures.


Louis-Joseph Pigeon: Mr. Speaker, I ask the hon. member for Drummond-Arthabaska (Mr. Boulanger) if he wants to make any remarks to wait until I am through; then I shall listen to him. Now, however, I ask him to listen to me.


Samuel Boulanger: Would you like me to rise now?


Louis-Joseph Pigeon: You have nothing to say, or not much, anyway, you who came in by the back door, having run as an independent candidate.
Mr. Speaker, I am going on with my remarks. United Kingdom:	1936-1939, 18
cent; 1946-1949, 10 per cent; 1956, 8.5 per cent; United States: 1936-1939, 62 per cent; 1946-1949, 72 per cent; 1956, 73 per cent. I am giving here to hon. members the percentage of our total exports: United Kingdom, 1936-1939, 40 per cent; 1946-1949, 25 per cent; 1956, 17 per cent; United States, 19361939, 36 per cent; 1946-1949, 44 per cent; 1956, 59 per cent. Such was the position in June 1957, when the Conservative government took over.
May I say a few words about the improvement in our commercial position in the last few months, after the Conservative government took over. The following figures indicate a lowering of trade tensions in 1957. Until June 1957, there was no appreciable difference. Only during the last six months of 1957 has there been a decrease in the deficit.
Canada's trade deficit with the world at large has decreased under the Conservative administration, from $842 million in 1956 to $693 million in 1957. Canada's trade deficit with the United States has also decreased under the Conservative government, from $1,283 billion in 1956 to $1,064 billion in 1957.

I should like to point out to the house the few steps already taken by the Conservative party to infuse new life into our economic activity. And the present government has fulfilled its promises. We had the commonwealth economic and trade conference. At the time of the 1957 election, the Prime Minister of Canada promised to call an economic and trade conference of commonwealth countries.
At Mont Tremblant, there was no definite agenda prepared by the ministers for the conference, but they decided that the proceedings should deal generally with certain definite matters:
(a)	Importance to all commonwealth countries of changes now taking place in world trade;
(b)	Steps to increase trade between commonwealth countries;
(c)	Progress toward a common objective: greater freedom of trade and payments;
(d)	Degree and trend of economic progress in commonwealth underdeveloped countries and sources of capital and technical assistance to accelerate that progress;
(e)	Economic and trade problems related to agricultural products and other basic products;
(f)	Possibilities, as well as consequences, especially for commonwealth countries, of the European economic community and of the proposed free trade area;
(g)	Provisions for the maintenance, between commonwealth countries, of consultation machinery on economic matters.
A week after having taken office as Prime Minister, the Right Hon. John Diefenbaker, at the commonwealth prime ministers' conference in London, invited the ministers to attend a commonwealth countries' conference in Canada. In September 1957, commonwealth finance ministers met at Mont Tremblant, and I have just outlined the matters which were considered there.
Mr. Speaker, I believe that the Canadian trade mission, including fifty delegates, which left Canada for Great Britain, has done much to promote economic activity in Canada. That delegation was headed by the minister of trade (Mr. Churchill! and was composed especially of Canadian industrialists. Its main object was to promote export of United Kingdom products to Canada. I would men-
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tion here, among other things, the benefits that came out of those discussions, because there has been an increase in our salmon and apple exports to the United Kingdom.
Moreover, here is something I find in La Presse for June 25, 1958:
Canada's deficit grows less. At the end of May, it was down to a third of last year's level.
Canada has cut down its trade deficit with the United States, and its total trade deficit to a third of last year's level.
Mr. Speaker, I particularly wish to commend the government for sending a trade mission abroad to publicize our products and to discuss means of increasing our trade.
Unfortunately, the former government did nothing to diversify our export markets. In an article which appeared in La Presse for July 24, under the heading "Foreign trade. We have too many eggs in the same basket", Mr. Laurent Lauzier wrote, and I quote:
On the whole, our foreign trade has made substantial gains since the start of the year. In the first half of 1959, the value of our exports, as reported by the dominion bureau of statistics, has reached a total of $2,416,700,000, as compared to $2,381,300,000 for the first half of 1958. The rise in our foreign sales was particularly sharp in June, reflecting increased merchandise exports to the United States. Last month, our exports to the U.S. rose to $321,100,000, as against $233,600,000 only in June 1958.
In terms of money as well as in volume, our exports made substantial gains which have reduced our trade imbalance and have stimulated industrial activity in some areas of the country.
As a means of expanding our trade, it might be desirable to grant long term credit to purchasers who are likely to become regular customers. I know this method is being adopted by other countries, and surely, it might be considered by Canada.
I also urge the government to keep looking for new markets for our agricultural and industrial products, and to send other trade missions throughout the world.
It might be advisable to send a trade mission to France, and more particularly to the West Indies, to which Canada should turn, because there are great hopes of expanding our trade in that area.
Everyone knows that each year, in every country of the world, there are national or international exhibitions; in fact, there is an international exhibition every year. I strongly urge the Minister of Trade and Commerce to send those countries a bilingual expert who could, at the exhibitions, display the export products of Canada. This would surely be a practical way of telling the world

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about the products Canada can sell on foreign markets.
Everyone knows that Russia and the satellite countries are now launching an economic offensive that might endanger the very foundations of the economy of the western nations. Canadians will have to make sacrifices and people at all levels will have to work hand in hand. Industries will have to avoid raising their prices, and certain unions will have to be careful before asking too high wage increases. In brief, all social classes will have to make sacrifices if we want to continue to export, if we want to compete with the products of Russia and the satellite countries, now making an appearance on the world market at prices that we cannot meet because of the production costs of our own goods.
Mr. Speaker, as a Canadian, I wanted to express my views frankly on international trade, but before closing, perhaps this would be a good time to ask the Leader of the Opposition and his friends not to take too much stock in statements made by friends of the opposition who are recognized opponents of the government. I believe that when they draw their inspiration from statements made by the former deputy minister of trade and commerce, who resigned, their statements are robbed of much of their weight; in fact it destroys their arguments.
I am not sorry for what I said about Mr. Coyne. He is a highly paid employee of the government, and I suggest once again to all the members of this house to read the reports of the Bank of Canada since its foundation. They will notice Mr. Coyne's attitude on this matter.
Once again, I congratulate this government on what it is doing to promote Canada's economy and I strongly urge it to send other trade missions throughout the world.
(Text):


Hazen Robert Argue: Mr. Speaker, we listened last night and again today with great interest to the speech of the Minister of Trade and Commerce (Mr. Churchill). It was an interesting speech in which he gave a great deal of information to the house but he did not seem at all disturbed about the central problem confronting Canada with regard to its trade position and he was unimpressed by the size of Canada's trade deficit. Indeed, if one can take the word of

the minister, he seems almost pleased that Canada is running this huge trade deficit. The minister has, as a matter of fact, said that the very large deficit in Canada's balance of payments of some $1,460 million is an indication of a rather healthy position in Canada's economy.
As I said, the minister gave us a very interesting discourse for almost three hours. I believe he said when he began his remarks that on a former occasion he complained of not knowing what subject was being advanced in the house for debate. That certainly could not have been the case this time; certainly it was not the case as far as his officials are concerned, because the House of Commons listened very attentively to a rather drab and colourless reading of a whole assortment of uninspiring documents prepared by a number of nameless people in the minister's department. Those statistics perhaps will serve some useful purpose by way of research facilities, but they have very little to do with the questions that have been raised by the opposition in this debate.
Canada's balance of international payments have been worsening steadily for a number of years. In 1954, our deficit on international payments was $432 million. This deficit had been increasing since that time on an annual basis until in 1957 it had reached the high figure of over $1,300 million and is now, as I have already said, the figure that has been referred to a number of times, namely some $1,460 million. What does this mean? It means a tremendous inflow of foreign capital; it means that more and more of Canada's economy and Canadian resources are owned by foreigners and by outside investors.
I think it is perfectly obvious that in an underdeveloped economy, in a country that is looking for and needs outside capital, there is every reason to welcome capital for that development. It also seems to me that in looking for outside capital a nation would be far better advised to receive capital on a long term basis at a fixed interest rate by way of investment in bonds and securities rather than through the great emphasis that is placed today on equity investment. Equity investment in our country means foreign owners are owning a portion of Canadian industry. It is not just a mortgage that is held by foreign investors that we are obliged to meet in the years ahead, but it is a turning over of the ownership of a part of our resources, of a part of our nation, to foreign

investors and as those investments prove lucrative in the days ahead and as profits accumulate they feed upon themselves and they become ever larger and larger so that instead of our nation gradually meeting those foreign obligations and retiring them we are faced with the position where our foreign indebtedness keeps on increasing at an ever more rapid rate. This self-generating process means that our problem is increasing and our difficulties will be multiplied. To meet this argument the Minister of Trade and Commerce (Mr. Churchill) went back in our investments to 1926. He referred to Canada's gross national product and came to this conclusion, as reported at page 2280 of Hansard:
Consequently, I say that our debt, considered in relation to our wealth producing capacity, is far less of a burden now than it was in the past.
I challenge that statement of the minister; I think it is a wrong statement.
Mr. Pallet!: That statement of the minister is 100 per cent accurate.


Hazen Robert Argue: I understand my hon. friend is going to make a speech for a change. It will be very pleasant to hear him when he gets up and gives his economic dissertation in attempting to support this very far-reaching and rather fatuous assertion made by the Minister of Trade and Commerce. You see, the Minister of Trade and Commerce had to go back to 1926 to find justification for that statement. It would have been interesting if he had made the statement in relation to what has been happening in Canada in the last few years. Our net international indebtedness has been increasing in recent years at a far more rapid rate than has our gross national product. It is not Canada's indebtedness today as compared with 1926 that the argument is about. The argument today is that within recent years there has been an accelerating increase in Canada's foreign obligations and we feel that this will lead to difficult days ahead.
In order to see this picture accurately, it is not enough merely to point out the tremendous increase in Canada's external liabilities. I hold in my hand the dominion bureau of statistics publication, Quarterly Estimates of the Canadian Balance of International Payments, fourth quarter, 1959, and Preliminary Estimates for the Year 1959. On page 14, under "Canadian Liabilities", it lists non-resident owned long term investments in Canada direct, other investments, and these come to a total in 1952 of
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$10.4 billion; in 1954, $12.5 billion; in 1957, $17.5 billion; in 1958, $19.1 billion; and in 1959, a total of $20.6 billion.
If one looks at Canada's net international indebtedness, the figures given on the same page of the same publication for the same year, he finds that Canada's net international indebtedness in 1952 was $5.1 billion; in 1954, $6.8 billion; in 1957, $11.9 billion; in the next year of this administration it went up to $13.5 billion; and in 1959, $15.4 billion. This shows that from 1952 to 1959 there was an increase of $10.3 billion in Canada's net international indebtedness, an increase of some 200 per cent. This demonstrates that the minister misled the house when he said that our debt, considered in relation to our wealth producing capacity, is far less of a burden now than it was in the past. It is less of a burden now than in the extreme past but more of a burden now than five years ago and an increasing burden as this government continues its mismanagement of the affairs of the country.
What are some of the disadvantages of this tremendous inflow of outside capital together with the tremendous increase in Canada's obligations abroad for dividends and profit payments? As I have said, if we were a new economy needing outside capital and if we could get it on a fixed interest basis over a long period of time it would undoubtedly be in the best interests of the country, but as it is now taking place more and more Canadian industries are coming under the control and domination of United States corporations. Canada as a nation and Canadians as citizens of this country are losing control over their economic affairs, over their industries, and in my judgment this endangers the very political existence of our nation as a free and independent nation.
The policies followed in Canada by subsidiaries of outside corporations are often more in the interests of the United States parent company than in Canada's interests. The effect of Canadian law may be jeopardized by an over-all United States law. We have had examples given in the house before. For instance, the Ford Motor Company had an order for the export of 1,000 automobiles to China and the policy of the parent company in the United States prohibited the Canadian company from following a policy in the interests of our nation. Mr. E. B. Jolliffe, Q.C., a well known lawyer in the city of Toronto-
Mr. Pallet!: A well known C.C.F. lawyer.


Hazen Robert Argue: A well known C.C.F. lawyer, a very distinguished C.C.F. member-had the opportunity to make a visit to China some time ago and inquiries were made by that

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country about the possibility of obtaining rubber belting in Canada. Mr. Jolliffe came back and, as I recall, interviewed the B. F. Goodrich Rubber Company. The Canadian company said yes they would be very much interested in supplying the belting. Not long after the manager of the Canadian subsidiary wrote to Mr. Jolliffe and said that he was exceedingly sorry, that although they were interested in the sale of rubber belting the policies of their parent company prohibited them from making this sale.


Edwin William Brunsden: Will the hon. member permit a question? Is Mr. Jolliffe a member of the C.C.F.?


Hazen Robert Argue: I have not checked the files lately but I do not know what that has to do with my argument. Is my hon. friend questioning the facts in this case? If he is, let him stand up and say so. This man is a very distinguished Canadian. He has put the evidence on the record and it is a shame that industries operating within our nation are not able to conduct themselves in the interests of our country. I think Mr. Jolliffe was acting very much in the capacity of a patriotic Canadian trying to promote Canada's economic interests wherever he went. The government was going to correct our dependence on the United States but there is little sign that this matter has occupied very much of the government's time.
There is a second great danger in allowing more and more of our economy to fall into the hands of foreign investors in that it endangers the degree of prosperity we see about us today in Canada in the event of an impending or forthcoming recession in the United States. With these tremendous obligations abroad, with Canada depending for so much of its prosperity on the inflow of United States capital, any conditions in the United States that may lead to a reduction in such capital coming into our country cannot help but have a very adverse effect on our own well-being.
The influx of United States capital into this country at a tremendous rate has resulted in a substantial premium on the Canadian dollar which in turn has made it more difficult for Canadian export industries to maintain export markets. The Minister of Trade and Commerce seems to consider that this penalty in regard to our export markets is a very modest price to pay for the privilege we have of turning over more and more Canadian industry to outside capital. The government is taking an attitude greatly different from its attitude in former days. We had one speech after another from the Conservative front benches in former days 
criticizing the Liberal administration at a time when there was a large current account deficit. The promise was made that if they formed the government they would do something about it, that they would reverse the dependence of Canada on the United States and take steps to reduce the ownership of Canadian industry by outside capital.
But what has been the result? The result is that everything that the Conservatives used to condemn the Liberal administration for doing or omitting to do is being done or omitted to be done by them on a greater scale than before.


Mr. Pallell:: Will the hon. member permit a question? Does he have any facts to refute the statement that Canadian ownership in Canadian companies has increased in the last two years?


Hazen Robert Argue: Mr. Speaker, statistics are available to dispute that statement. I had them here a moment ago. They were taken from one of the government's own publications and from memory they show that, with the exception of the electrical generating industry, the percentage of development by outside capital is increasing. The only mitigating influence is the fact that the electrical generating industry by and large is publicly owned by our provinces and therefore Canadian. But in the manufacturing industry, the mining industry and other industries, more and more of these industries are coming under United States domination because of the mismanagement of the government. How could the facts be otherwise when our deficit is going up at such an astronomical rate? Is it possible to increase our deficit to the United States and to have this tremendous inflow of United States capital without having our industries come more and more under the ownership and domination of outside capital?
The government and' hon. members opposite do not need to take me as an authority on this question. Of course, they will not consider as an authority anybody in Canada who disagrees with them. The annual submission to the government by a man so distinguished and so important as the governor of the Bank of Canada is brushed aside. The Minister of Trade and Commerce took care of the governor of the Bank of Canada the other night in a very sweeping generalization when he said, as found on page 2281 of Hansard:
Taking into account all these factors, the size of Canada's deficit in relation to the foreign earnings capacity, the size of the debt in relation to productive capacity and the trend of consumption and investment in relation to total resources there is little in this picture to substantiate the claim that Canadians have been living beyond their means.

I am very thankful that the governor of the Bank of Canada has been forthright enough to point out the great errors in the policies that this government is following. The governor of the Bank of Canada, I think, is performing a very useful service to the Canadian nation. I believe he is following a very laudable, independent course when he places his views before the government and the country, even though they may differ so greatly from the course now being followed by this government. The governor of the Bank of Canada, in his submission, had this to say in part:
The cumulative effect of all these developments must be to weaken the ability of the Canadian economy to meet the difficulties of the next recession to come upon us from abroad, and to make more likely the development of a domestic recession arising from excesses and structural strains within our own economy which may or may not coincide in timing with recession conditions from abroad.
There is the warning-
Mr. Pallet!: What pages?


Hazen Robert Argue: The report of the governor of the Bank of Canada, pages 8 and 9. There is the warning of the governor of the Bank of Canada to the minister, that we are not only turning more and more of our economy over to the United States and foreign investors, but the road we are following will eventually lead to a recession in this country because of our vulnerability, brought about by an excessive use of outside capital.
I think it is very good advice. I think it is very sound advice to a country in the stage of economic and industrial development in which Canada is, that we should be generating within our country more and more of the capital we require for expansion. Where could we get this capital? I believe Canadians would be prepared to save more if they were encouraged to do so. I think Canadians would be prepared to save more if they had some assurance that their savings and investments would retain their purchasing power in the years ahead and not be eaten up and eroded by inflation. I think we are in a position to produce more capital by putting idle resources to work. I ask the Minister of Trade and Commerce if he does not think that 500,000 unemployed people would be able to produce some of the output, some of the capital requirements for Canadian expansion.
With this tremendous inflow of United States capital, of course, there is a tremendous inflow of goods from the United States. This means that in exchange for the half million Canadians who are unemployed, employment
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in the United States is greater. We are substituting, by reason of this country's dependence to such a large extent upon the inflow of United States capital, jobs for United States citizens for jobs for the half million Canadians who are unemployed. There is a place where the government, by a proper and foresighted policy, could bring about a tremendous increase in Canada's gross national production and, therefore, the opportunity for increased capital within our country.
We heard on former occasions, speeches along the lines of the one I have been making from hon. members opposite when they sat on this side of the house. As a matter of fact one of the proposals that they put before the Canadian people to help bring them to power was the submission that they would take steps to reduce Canada's dependence on the United States; that they would take steps to divert Canada's trade from the United States to other countries; and that, above all, they would take steps to see that Canadian industry was developed in the interests of and in the control of Canadians. The Conservative party put out a very interesting little pamphlet called "Trade", prior to the 1957 election. It was put out by the national headquarters of the Progressive Conservative party and on page 5 we find this:
In 1953 the Liberals promised that they would "use every available means to maintain and expand Canada's external trade and encourage the removal of trade barriers generally."
What we got.
A minus balance of payment of $1,398 million in 1956.
The Conservatives promised the same thing, and what did we get? We got just a little higher minus balance of payments in 1959, namely $1,460 million.
Loss of control of many of our industries to the United States.
We have suffered a further loss of control under this administration in spite of this commitment to the Canadian people.
Tremendous increase in American investment in Canada's natural resources.
This investment has increased In 10 years from $5 billion to $10.3 billion.
I have pointed out how this balance has increased in recent years to over $15 billion and our debt is going up now at the rate of some $125 million a month.
The Canadian economy endangered by making it so dependent upon American prosperity, with no possible alternative.
This was correct when it was stated in 1957, and it is even more correct today than it was at that time.

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Then, on the next page of this pamphlet there is a paragraph headed "Trade", with a subheading "Liberal Failures". Here is what it says:
For generations to come, the benefits of much of our post-war industrial development will accrue to non-resident owners rather than to the Canadians who produce the goods.
This is more true today than in 1957.
Any sudden stoppage of American investment could plunge Canada into a disastrous exchange crisis.
The Minister of Trade and Commerce disagrees with Mr. Coyne today but agreed with him in 1957 when this statement was issued. I know the Minister of Trade and Commerce held a very responsible position in the organizational structure of the Conservative party at that time, and probably had a great deal to do with the issuance of this publication on trade. It goes on to say:
A recession in the United States would reduce the flow of investment capital to Canada, and cause a depression here. The Liberals have not provided any sound alternative to this possibility.
This government has not provided any alternative, sound or otherwise.
No effective action has been taken to protect Canadian exports against the whims of United States tariff policies and practices.
There, Mr. Speaker, is a denunciation of the policies followed by this government, published by the Conservative party, and it might well have been a forecast of the course to be followed by this administration. It is a serious thing when more and more of Canada's wealth is being transferred to foreign ownership. It is a serious thing when we are facing trade difficulties at this time and there must be steps taken to offset these difficulties.
The hon. member for Vancouver East (Mr. Winch) yesterday presented a subamendment in which were listed a number of points with regard to things we should like to see done. I should like to make some other suggestions and to repeat some of the suggestions that have been made.
I would propose, first of all, that steps should be taken to provide for regulation of prices of key industries by setting up a public tribunal before which companies would have to appear in order to substantiate any increases in prices they might wish to undertake.
The second suggestion I make is that great encouragement should be given to Canadians to save more and to invest more in Canadian industries.
The third suggestion is that Canada should undertake, as we have said in our amendment, a great drive for increased markets and, in order to reduce our trade deficit with the

United States, should be prepared to enter into reciprocal trade contracts with countries willing to purchase increased Canadian exports.
The fourth suggestion I have to make is that we should associate ourselves as quickly as we can with the group of trading nations that have come to be known as the outer seven. We heard yesterday in this debate an attack by the hon. member for York North (Mr. Cathers) on labour in this country and his blaming labour and high wages for making it more difficult for Canada's export markets. I think there are two main reasons that Canadian export industrial industries are coming into difficulty and these are associated together. The first is an inability to adopt modern automation practices to the same extent as have the industries with which they are competing. The second is the fact that Canadian industries do not have access to a very large market and that a market of 17 million people is not enough to provide the kind of efficient production that can be brought about when a larger market is available.
The Minister of Trade and Commerce reviewed very extensively the operations of the inner six and the outer seven; but nowhere was there any indication that this government would adopt a bold policy of associating Canada with the arrangements that have been made for this larger trading area in order to bring the tremendous benefits of a vastly increased consumer market to the industries presently native to Canada; I refer to both manufacturing industries and primary export industries.
Britain made a free trade offer to Canada some time ago and there has been no reply. I think the day has come when Canada should associate itself with the outer seven. I say this because of the advantages I am sure would accrue from such an association. I say it for the further reason that this action would mean at least some transfer of the dependence of Canada today on United States capital and United States investors to an association with nations in northern Europe, namely the outer seven. I am not suggesting by this statement that it might not be advisable to have an even larger trade area. I think that in the days ahead, in this world which is really one world, tremendous progress will be made toward freer trade, the reduction of barriers and the bringing of nations into ever larger and larger trading groups.
The fifth suggestion I have to make is that we should establish in Canada a Canadian investment corporation to obtain domestic capital and, if necessary, to obtain capital

from abroad in order to invest it in Canadian industries. Such a publicly-owned investment corporation would obtain foreign capital on a long term, fixed interest basis, on a basis by which we would amortize the obligation. In my view this procedure would be much preferable to turning over a part of Canadian ownership to outside capital, with all the control and the increase in that ownership that is bound to flow from such a policy. We need increased capital but, in the view of the C.C.F. party, we should be getting a larger and larger part of that increased capital from Canadians; and when we must obtain it from abroad, we should not, if it can be avoided, obtain such capital on an equity basis.
This government's trade policy means a transfer of control over Canada's economic destiny to citizens of other countries. We have a political democracy in Canada. It has been built and improved over the years. We are far away from an economic democracy. As a matter of fact, we are getting closer and closer to an economic dictatorship, with cartels, monopolies and semimonopolies controlled by outside residents. If this economic dictatorship and economic control of Canada's destiny are allowed to continue in their present course we may some day, in the not distant future, find that political control has been removed from our nation and been put into the hands of people living in other countries.
We have seen disturbing trends in that regard in recent days. I mention only the report that the United States atomic energy commission announced that it is going to have a nuclear explosion in the Athabasca tar sands. It was necessary for the Prime Minister (Mr. Diefenbaker) of this country to deny that any such undertaking could be made by the United States atomic energy commission. But the very fact that they had the temerity to announce that this was to be done shows just how far, in the view of some people in the United States, extends the control of Canada's destiny into their very hands.
I think we are all good Canadians, interested in the building of a prosperous Canada in the control of our own citizens. I commend to the Minister of Trade and Commerce the remarks of his colleagues in former days when they pointed out so vividly and so accurately the dangers of the policies then followed, the dangers of the policies being continued by this government.


Mr. Terry Nugent (Edmonton-Strathcona):: Mr. Speaker, I have been following the debate in this house on this subject with considerable interest, as I think has the whole
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country. Certainly foreign trade is important enough to the people of this country that we must all take it seriously. I think I am speaking accurately when I say we regard even a slight deficit as a problem. It is a problem that I myself, as a member of this house, have been watching with considerable interest. However, I have been struck by the different approaches taken by hon. members who have spoken on this subject.
It seems to me that the best way to handle the problem is to approach it logically. We must analyse the situation, find out where the faults, if any, lie; what is our objective and what are the various methods of attaining the objective which we desire. No one who has been listening to the speeches made in this house can say for one moment that we have heard too little about the problem. This is one aspect of the question which has engaged the entire attention of those members of the opposition who have spoken. We have heard an odd word now and then about the importance of increasing our trade, but certainly the most useful opportunity of the debate, as it would occur to anyone who was anxious to make a helpful contribution, namely the method to be followed, has been almost entirely neglected by the opposition.
I know that the Leader of the Opposition (Mr. Pearson) moved an amendment toward the end of his remarks calling for an Atlantic free trade area. It seems to me that in his quite lengthy speech on the subject he neglected to do something of considerable importance, that is, to tell the house what would be the possible effect of free trade on Canada. The hon. gentleman dealt with the present troubles; he dealt with the problem of trade blocs and so on, but he said nothing about the effect that his amendment might have on any industry in Canada, nor did he seek to explain how it would solve our difficulties.
It is perhaps of significance that there were only 11 Liberal members in the house at the time this amendment was moved. I have observed on earlier occasions that whenever free trade is mentioned a good many hon. members squirm in their seats, particularly those who come from areas where industrial goods, textiles and footwear are produced. Any suggestion of leaving our industry at the mercy of the industrial giants of the south, or of other industrial groups, makes them cry with rage. Perhaps I am being unkind in suggesting that the members who were not present at that time do not agree with the substance of the amendment, but in

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view of the fact that the Leader of the Opposition failed to deal with the possible consequences of the policy he was advocating, the absence of these hon. members provide some grounds for wondering whether the hon. gentleman's suggestion was a political manoeuvre rather than a seriously proposed remedy for some of our economic difficulties.
It might also be unkind to suggest that perhaps the Leader of the Opposition, having made for himself a considerable reputation as a statesman, had formed the opinion that such a manoeuvre might fill in some of the gaps in his reputation as a politician. I do not want the house to think that I suspect he really takes the question as lightly as that, or that the house as a whole should take this problem lightly. The point I am trying to make is that we must assess our difficulties realistically.
One of the prime considerations in ensuring that capital will flow into Canadian enterprises and that Canadian enterprise itself will have confidence in its own destiny, is to make sure that the difficulties and the hardships are not so exaggerated as to be distorted to a degree where they appear insurmountable. In this respect I must say that we have had all too many examples recently of people who have apparently been much more determined to make political capital out of our problems than they were in attempting to reach their solution. Recently I have had a good deal of correspondence from the west. Reports in newspapers noted for their Liberal bias have distorted the facts, for example, about our trade with Japan, suggesting that this government was attempting to slash imports from Japan, with the result that western agriculture would find it impossible to sell any grain to that country. This allegation is so contrary to the facts that I cannot help but feel it shows the complete irresponsibility of some people in their desire to gain a political advantage.
The Leader of the Opposition mentioned the name of Mr. M. W. Sharp, the former deputy minister of trade and commerce, a gentleman who is well known for his Liberal tendencies. Mr. Sharp is one more of those who in speaking of our present trading and financial situation has never failed to exaggerate out of all proportion our present difficulties. I know, also, that another well known Liberal, Mr. Walter Gordon of the Gordon commission, has been making similar statements about the country, exaggerating our difficulties and painting in the blackest possible light both our economic and trading position. This is the gentleman who, as hon.

members will recall, suggested that the solution for the economic difficulties of the mari-times was to evacuate their population because they are not economically able to support themselves. I suggest that those who hold Mr. Gordon in such high regard should convince him that he ought to run for public office, preferably in the maritimes.
As I said, it is of primary importance to take a realistic rather than an exaggerated view of our difficulties. The next important thing is, perhaps, to consider what really is the role of government, what it is that government can really do, bearing in mind that we should like to have a balanced trade and that we should like to see an ever-increasing trade leading to a regularly increasing growth of economic strength. I think many people lose sight of the fact that trade in Canada is not, primarily, a matter of direct government concern. The government of Canada is not a trader; individual companies do their own trading, and as a result the effect which government can have is necessarily restricted to outside or incidental influences.
Having fixed this in our minds, I think we should take a look at the situation today. I do not think enough attention has been given to the fact that we are living in a world which is changing rapidly, and in which the rate of change is increasing from year to year. New countries are coming into existence. These new countries are changing their economic standards. They are developing their own industries to an increasing extent, and the pattern of their demands for goods and services is changing. Similarly, the goods and services which they themselves can provide to the rest of the world, are changing in their nature. In addition, methods of communication and means of transport are changing.
Along with all of this we have the new and growing idea of people who for the first time are becoming educated and changing their demands. We do not have stable governments in every country and their trade policies are subject to change without notice. As a result of all of this I suggest we must take another and closer look at the role government is to play in our trade position. It is not the government but individual manufacturers who are the traders. Therefore the role of the government is to assist and protect them and lend assistance where it can. We must consider both these factors in the light of what changed conditions are going to bring.
I would suggest to my C.C.F. friends that we must recognize the magnitude of the task of gearing the entire production of a country



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to the changing concept of world needs which is constantly going on, well knowing the fact that government is usually just a little slower owing to its size and complexity in perhaps appreciating some of these problems. Surely this should be enough to indicate to my socialist friends that the only way you can make a quick change in many fields and among our industries is to make sure that private businesses themselves are given the opportunity to meet each challenge as it arises. I am suggesting that the role of the government is purely advisory in respect to what is necessary for production.
I was glad to hear the Minister of Trade and Commerce (Mr. Churchill) give us so much information about the various branches of his department and organizations in the government dedicated to supplying Canadian industry, manufacturers and traders with the latest information as to developments in this field. Certainly the role of any good businessman is to watch all the factors that are going to affect his markets. Each Canadian who owns a firm is certainly going to take advantage of every piece of information that comes his way in order to effectively adopt today a policy for tomorrow, to see if he can determine to the best of his ability what are the factors operating in the foreign country with which he deals that will influence his trading the day after tomorrow. I think we should therefore concentrate on providing information to our businessmen. By "providing" I do not mean that it should be spoon-fed but private enterprise should have ready access to this information in order to increase our trade. We should make sure that the information is efficiently gathered by the government and that it is made available in a form that will make it easy for those interested to consult it.
There is more involved than the provision of information but this is an important undertaking. Before leaving this subject may I advance a suggestion. I believe the government has been doing an excellent job in gathering information and passing it along but in keeping with the increased tempo of foreign competition I believe that some civil servants who are close to the industry should report on it or some who are posted abroad should be brought home to check on what industry is doing in order that the information concerning trade will be even more up to date and useful.
I suppose whenever you are selling there is some risk of not being able to collect. Assistance should be given to other countries so they will have the necessary credit to buy. The government has a most important 79951-0-146
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role to play in making sure that our exporters are not entirely left out of other markets because they are not fortunate enough to be dealing with a country that is part of this or that bloc. I suggest that all these factors taken into consideration are not nearly so important as the initiative taken by the individual exporters themselves. No other single factor contributes so much to increasing sales of our products to other countries than the fact that we can produce the goods more efficiently, more effectively and better than our competitors.
In view of this I think that a certain amount of competition serves a useful purpose and the increased competition we have experienced of late has been a very good thing in that sense. Sloppy business methods should not be allowed to prevail as they have a negative effect on our trading position.
I have sufficient confidence in the skill and ingenuity of Canadian manufacturers to believe that they can and will overcome many of the trading difficulties they are encountering. I suggest, however, that the co-operation of the entire country is necessary. We must have a greater realization on the part of the ordinary working man and investor in this country of the exact difficulties that are being experienced.
Our trading position with Japan will serve as an example. For years the fortunate situation existed in which Canada was able to sell to Japan many times the volume of what that country sold us. The recovery of Japan and her increased productivity as well as her own needs for increased markets has meant that if we wish to continue trading with Japan we must recognize that trade as a two way street. I believe there is a failure on the part of the public to understand that like many other industrial nations Japan has the same facilities for manufacturing as we have. Japan's plants and machinery are every bit as efficient as ours and her businessmen are greatly experienced. In many cases that country does not have the transportation difficulties we have. In addition to that Japanese workers receive considerably smaller wages and so the country can undersell us without difficulty. This has been a cogent factor in our loss of some of our overseas markets. As those hon. members from textile areas in Canada will tell us, Japan has provided rugged competition in our home markets.
In this field I believe the government has acted sensibly. It has refused to be stampeded by the anguished screams of some or the impassioned pleas of others. It might very well have been that some people would have taken advantage of an opportunity of
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this nature to turn the farmer against the manufacturer and vice versa. The government recognized the need of allowing Japan to narrow the gap between us with respect to imports and exports and at the same time sought to encourage sales of our western grains to Japan. I believe the situation has been handled with commendable skill by the government.
The textile industry in Canada has experienced severe difficulty but it is rallying, as private enterprise will, to meet the increased competition. I think there should be a diversification of Japanese exports to this country which would serve to remove the pressure from that particular industry. I think that the people of those industries, in changing their methods, have taken the pressure off this quite a bit and the agricultural community is generally grateful. We are pleased with the part the government has played. I think the general trade situation was unfair and it was only just that we should continue to expand our trade with Japan in a way which has increased the friendly relations between the two countries. It has, I think, served as a model which might well be followed by other industries and by other countries.
I have one more point only. I think we must tell the people of this country that whenever Canadian industry meets competition which they feel is unfair they will be very helpful in helping out Canadian industry by buying more Canadian goods. I do not think it calls for a very great sacrifice most times for the housewife, or the head of the household, to check the product that she is buying, even in instances where it might be a few cents lower in cost, and if at all possible give priority to the Canadian product. I make that suggestion because we are so dependent on a healthy economic situation in the whole country. I think we could make a little more money available generally for investment in Canadian industry if we were even voluntarily to cut down a little on credit buying and thereby make more money available for financing.
Mr. C. W. Carter (Burin-Burgeo):: I just want to take one or two minutes to add to one point which the last speaker made concerning trade with Japan. It is true that Japan represents an important market for Canadian wheat, and it is important for our prairie provinces and our agricultural industries that that wheat market be extended even at the risk of some interference with our own domestic industries, such as the textile industry and the rubber goods industry. But there is, in my opinion, an even more compelling reason why we should trade

with Japan, and that reason is that we are now engaged in what I think might very well be called a third world war. It is not a shooting war at this point but it is a total war. Unfortunately, trade is one of the very important weapons in this particular war.
Japan is the bastion of democracy such as it exists today in Asia and Japan must trade to survive just as Canada must trade to survive. If Japan does not trade with the western world she will be forced to trade with the communist world, and that would be a disaster for the cause of democracy. It would certainly lead to the domination of Asia by the communist regime because it is communist strategy to make a country dependent upon it, and once that country becomes dependent economically it is a very short step to making it dependent politically as well.
Their strategy, as far as Canada and the United States are concerned, is to take away as many of our markets as possible. They do that by their subsidized loans, by their contracts with clientele nations, and the whole purpose of it is that in time we shall be forced to curtail our production, which will increase our unemployment problem. Because Japan is so important to the free world and so important in this ideological war, regardless of the economics involved it is very important that we see this in its true perspective and do all we can to expand our trade with Japan to keep Japan free and independent of the communist regime.


Mr. H. F. Jones (Saskatoon):: Mr. Speaker, in every speech the Leader of the Opposition (Mr. Pearson) makes about trade he always includes a reference to two matters: first, he tries to inject somewhere in his speech something about Tory protectionism; second, he tries to leave the impression that somehow or other the Liberal party is connected with freer trade policies. Both of these references are false. We know it, the people know it and it is about time that he should know it. Yesterday, for example, he spoke of the adjustment on woollen tariffs as being an example of Tory protectionism. He did not, of course, refer to the amount of the increase, for that would have destroyed his argument. The Saskatoon Star-Phoenix, the newspaper which serves my constituency and which follows the line taken by the Leader of the Opposition in this matter, was at least fair enough to refer to the size of the increase as, for example, in the lead editorial of February 23 of this year. In it they quote the Minister of Finance (Mr. Fleming) as pointing out as follows:
They were of a size-

He was referring to the increases.
-not to cut off or divert trade, but simply to allow a number of quite small Canadian woollen mills to keep their heads above water. Many of these mills are located not in big industrial centres but in small towns where little alternative employment is available.
The extent of the tariff increases can be judged from the fact that, according to our computation at the time, the increases might add about 15 cents to the cost of the imported fabrics going into an average suit of clothes, and about 25 cents to the imported fabrics going into an average overcoat. Surely this is not the action of a government bent on high protection.
Although the Star-Phoenix and the Winnipeg Free Press, together with some other persons in the west, have been trying to lead the people of the west to believe that we were restricting trade with Japan, the Star-Phoenix, at least, was fair enough to refer in the editorial to which I have made reference to the fact that in 1954 Canada bought from Japan goods valued at only $19 million; whereas last year we bought from them imports worth $105 million. As everyone knows, the tremendous increase in imports from Japan in 1959 alone amounted to 50 per cent over the 1958 figure. Everyone knows that under a Conservative government we brought about the major part of the increase in imports from Japan and at the same time we have been successful in increasing our exports to them to such an extent that last year we sold them $140 million worth of goods, 50 per cent of which was wheat.
The examples used by the Leader of the Opposition to support his charge of Tory protectionism in fact reflect the determination of this government to increase trade for the benefit of Canadians. The Leader of the Opposition speaks as if he was trying in some way or other to associate the Liberal party with freer trade. Of course, he and other hon. members of this house are well aware of the government's successful efforts to increase our exports, but the Leader of the Opposition, by reference to his proposal for an Atlantic free trade area, once again tried to leave the impression that the Liberal party always strives for freer trade. I think in duty to the truth this bogus argument should be abandoned by him in order that we may get down to the business of seriously discussing methods of further improving Canada's trade relationships on a realistic basis. To clear away some of the debris that clutters up the thinking of the Leader of the Opposition on this problem may I first of all make passing reference to the actual trade situation with Japan. The Minister of Finance, when speaking to the Saskatoon board of trade on February 19 this year, had this to say:
You may be interested in how our actual trade with Japan has developed during the six years 79951-0-146J
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since we signed the trade agreement. In 1954 Japan bought from Canada goods valued at $96 million and sold to Canada $19 million worth, a ratio of five to one in our favour. In each year since then Japan's exports to Canada have increased substantially to an estimated $105 million in 1959. During this period Canada's sales to Japan have also increased, although not nearly as rapidly, and during 1959 we exported to Japan goods valued at approximately $140 million. In the past six years Japan's exports to all countries doubled in value; during the same period Japanese exports to Canada increased sixfold. In the past year alone Japanese sales to Canada rose by some 50 per cent, as compared with a 20 per cent increase in her sales to all countries.
I think hon. members will agree with the Minister of Finance that Japan has done extremely well in extending her sales in the Canadian market. I should like to refer to the terms of entry for Japanese goods. I quote again from the speech of the Minister of Finance:
Japanese goods enjoy freer access to the Canadian market than to the market of any other industrialized country in the world. Apart from moderate tariffs Canada imposes no restrictions of any kind against them. The only special safeguard for Canadian industry rests on a few specific export restraints applied by Japan herself. This is not so in the case of many other countries, including some very rich and powerful countries in western Europe which apply an extensive system of discriminatory import restrictions against Japan, and some of which have refused to extend to Japan the provisions of the GATT.
That is the situation with regard to our trade with Japan. What in fact, is the basic trading position of Canada? We are a nation with a standard of living second only to that of the United States, a nation of only 18 million persons but which is the fourth largest trading nation in the world. We are a nation that is highly industrialized and yet at the same time export chiefly agricultural and primary products, a nation that does more international trade per capita than any other country in the world, a nation that can be damaged more easily from abroad by deviation from what I call fair trading policies than any other nation.
I think the Liberal party propaganda on the trade question is not only deficient in their continual attempt to divide the country into free traders and protectionists, a propaganda line which if it ever did have any validity, that validity certainly lies in the far distant past. Their policy is also deficient in that it does not encompass development and investment policies as well.
There was a time when talk of freer trade did dominate international discussions in his field. Now, I think it is correct to say that a wider, more fundamental approach to the problem of trade is being taken. As I said at

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Washington at the NATO parliamentarians' meeting last November:
-I believe... it is realized that quota tariffs, and even exchange problems, important as they are, are inseparably connected with and cannot be divorced from problems of development, of public and private investment, of technical assistance, of governmental stability, of the maintenance and enforcement of law and order within the nations with which trade in its broader sense is to be conducted and the necessity for the enactment and enforcement of adequate commercial laws.
A proper concept of fair trade policies and fair investment policies is incumbent not only on the Atlantic nations in their relations with one another but as well upon both the less developed nations and the highly industrialized nations of the west in the wider sphere of world trade. Indeed, it is hardly possible to discuss trading policies without bringing within the ambit of that term development and investment policies as well as an integral part of such policy. Fair traders make good neighbours and in this sense of fair trading the special problems of each nation that would be prepared to subscribe to such a concept should be taken into consideration as well as the general principles which may be applicable to the generality of trade and investment.
Before going further into what I conceive to be some of the essentials of fair trading and fair investment policies, I should like to turn for a moment to the suggestion made by the Leader of the Opposition for an Atlantic free trade area. I gather from the remarks of the Leader of the Opposition that he is not advocating the establishment of such an Atlantic free trade area at this time. In fairness to him I think I should recall to the house that he suggested that it was a matter that should be looked into to see if it had any possibilities and that he was not prepared to say at this time whether or not such a free trade area should be established. In other words, he wishes to dangle the carrot of free trade before the Canadian people without accepting any responsibility for the advocacy of such a development.
It is true that the Leader of the Opposition is not very clear as to what he means by an Atlantic free trade area but I gather he has something in mind like the European free trade area, an area providing for the progressive achievement of free trade through the removal of tariff and other barriers to trade over a certain period, an area with no common tariff around it, an area in which each country would be free to maintain and alter its own tariff and to pursue independent commercial policies. In other words, the area would not be aiming at complete economic integration and there would be no specific [Mr. Jones.}
political objective such as the establishment of an Atlantic community analogous to the European economic community.
Something of the looseness of such an association was indicated by the Leader of the Opposition when I asked him how he thought our trade with Japan would fare if we entered such an association. He replied, if I remember correctly, that each country would be free to maintain and alter its tariff policy with the outside world.
I do not want to go on record as being unalterably, inevitably and irrevocably opposed to such a proposition, but again I think it is necessary to refer to the facts of life in this country in the consideration of such a problem. Europe is a low cost producing area as compared with our own. This may change and I hope it will, but to open our doors now to the widest ranges of low cost European production would inevitably put thousands of Canadians out of work. Nor would we be assured of any compensating advantages to our agricultural exports. At the present time Europe buys from us only what agricultural products they need. They have made special provision in both the common market countries and in the European free trade area for continued protection for the remaining areas of their agricultural economies. It is obvious too from the general pattern of its thinking that the United States would not agree to enter such a free trading area. In other words, we would be associating ourselves almost exclusively with European countries that now take only about 30 per cent of our total exports to the detriment of our trade with those with whom we conduct the balance of our trade.
There is the additional problem of Japan, as I have pointed out. Japan is our second largest customer for wheat. In return for their purchases of wheat and primary products they wish to export to us certain manufactured articles. These articles are in direct competition with European manufactured goods. It would be difficult to reconcile increasing imports from Japan with our obligations to trade with other members of the proposed Atlantic free trade area. This suggestion made by the Leader of the Opposition will not meet with much favour in the prairie provinces of our country for it might well destroy our chances for trade with Japan and all that implies in the way of markets for our wheat growers.
As an indication of the concern with which our other trading partners view such a development, may I quote from a report given to this house by the Minister of Finance on January 18 last, when he was relating the developments which had been going on

in Paris in connection with an examination of the possibilities of establishing an organization for Atlantic economic co-operation. At that time he said, as reported at page 26 of Hansard for that date:
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.
This is an example of the concern of our other trading partners over the arrangements which are going forward at present, let alone the establishment of an Atlantic free trade area. It seems to me that the investigations which are presently being undertaken, as referred to by the Minister of Finance, in the realm of the organization, of trade, and of aid referred to by the minister in that report, are much more likely to result in a sound, realistic expansion of trade, based on mutual co-operation, and supplemented by realistic aid programs to the less developed countries, than any other course presently under discussion. Under such an arrangement, progress toward expanded trade could be made without dislocation of our industries. Our agricultural export market could be maintained and expanded. Our workers will not be thrown out of jobs and private investment abroad may be stimulated in such a way as to bring the greatest returns to Canada if co-operation along the lines indicated by the Minister of Finance at that time comes to fruition.
On this subject of international investment, I should like to refer to an address delivered last December by Lord Shawcross to the royal society of political economy of Belgium in Brussels. It is a very interesting address, particularly in view of the fact that although he had been for six years attorney general of the United Kingdom under the Labour government, he emphasizes the part that private investment can play in supplying the risk capital, administrative and technical skills and progressive entrepreneurship-to use his own words-which is so urgently needed. I quote his remarks here because of their relationship to what has been said by the Leader of Opposition about the dangers of foreign investment in Canada. I also quote them in relationship to the remarks of the hon. member for As-siniboia (Mr. Argue) in order that he may take account of the views of one who has
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held high office in a socialist government. This is what Lord Shawcross had to say:
The fact is that the gains in production that are achieved as a result of foreign investment are accruing increasingly to the benefit of the capital receiving countries.' And more significantly, these gains are being spread widely throughout their economies by generally rising wage standards, growing employment of nationals in managerial, technical and administrative posts, the increasing use of local enterprises for ancillary services and supplies and, of course, the incidence of local taxation. It is, in fact, this very process of disseminating the productive gains from foreign investment throughout the economic system that will inevitably lead to an eventual and steady reduction in the relative share and influence of foreign enterprise in the country's economic activity even if its absolute contribution seems to expand rapidly.
He goes on to say, and I think it is worth while to note:
Once this process has begun to gather momentum, the relative importance and advantage of the foreign sector is eroded away, and even if the foreign enterprises continue to increase in number, their share of the total productive effort will tend to become progressively less significant. In time, as has after all happened in the United States, in Canada and Australia, indeed in the rest of the industrialized world, the distinction between home and foreign interests ceases to matter, although such interests may remain very large, as they do in Canada, in absolute terms. But in spite of the large amount of foreign capital in Canada nobody suggests that Canada is not completely independent both economically and politically.
He has a final remark to make about this general situation which bears very directly on what has been said by those who by their remarks if not by their action would prefer to hinder economic growth in Canada. He says:
No doubt it is not surprising that concern at the size of the foreign sector in the domestic economy should often arise most acutely... at the stage when it is probably about to begin its relative decline. It is often difficult to understand that those very foreign enterprises which seem to be barriers to local progress in fact, partly and often largely, created the conditions which are giving rise to new opportunities for local economic growth, and that if they are allowed to continue to add to the stream of productive experience and opportunity they will, in fact, themselves assist in shifting the balance of economic activity and influence still more toward domestic interests. But so, in fact, it has been in the case of all the industrial countries in which, in the first place, great reliance has had to be placed on foreign capital.
I should like to underline again one sentence from the part I have just quoted. He said:
No doubt it is not surprising that concern at the size of the foreign sector in the domestic economy should often arise most acutely-at the stage when it is probably about to begin its relative decline.
Lord Shawcross is not a person without experience. Although he is out of office, he is not in a position of having dissociated himself from an active study of these problems.

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There is in existence in Europe, created in 1958, an informal committee of international bankers and lawyers who have been investigating some of the problems attendant upon the promotion of international investment. Lord Shawcross in his address also had some interesting remarks to make about the proposal for a multilateral convention to set forth the basic and elementary principles which should be adhered to in order to provide some protection for the international investor. Such a convention is being studied at the present time by the organization for European economic co-operation and was referred to in resolution No. 5 of the economic committee of last November's NATO conference in these words:
Resolved that the NATO parliamentarians' conference endorse the initiative of the O.E.E.C. in undertaking studies concerned with an international convention for the protection of foreign investments to be adhered to by all member countries, and consider such code of declaration to be highly desirable in the encouragement of private investment in the less developed areas, and offers its assistance and co-operation in the promulgation of such a code or declaration.
There we have an example of a proposal for increasing the flow of private investment throughout the trading world. I should like to refer to some of the other resolutions that were dealt with at that meeting last November. However, before I do so, I should like to make one more reference to the subject of private investment in underdeveloped areas. Last June in London I was privileged to submit a paper to the Atlantic congress on the contribution to peace that private enterprise can make in the underdeveloped areas, suggesting that the Atlantic congress consider the adoption of a recommendation directed to the governments of the Atlantic community, requesting them to take appropriate steps to encourage private enterprise in their respective countries, to assist in the development of the underdeveloped countries of the free world to a substantially increased degree, and to this end explore these two possibilities:
1.	The possibility of making available to private enterprise within their respective nations incentives in the form of tax adjustments and of guarantees against non-business risks of investment, of loans and of sales, together with market and other information essential to operation abroad.
2.	Through the good offices of the international bank or in some other suitable collective manner, the possibility of concerting the efforts of the nations of the Atlantic community in this behalf through the establishment of a free world development agency.

I was pleased that when the congress dealt with this matter they adopted a resolution along those lines in these terms:
(e) It will be well for the Atlantic countries to give even more attention than they have in the past to utilizing direct private investment as an instrument for promoting dynamic economic growth in the less developed countries. This is an instrument uniquely at the disposal of the western economies. To this end, we recommend that the highly industrialized, capital generating countries of the Atlantic community should adopt measures that lend encouragement to provide capital flows- through tax concessions, guarantee provisions against non-business risks, through encouraging the establishment abroad of environments compatible to private business operation, and by special efforts to enlist private technical resources in government assistance programs.
Much has been said about our trade with the United States. I myself find it difficult to relate any activities which have taken place in that sphere to any allegations which might have been put forward by the Leader of the Opposition to the effect that Tory protectionism was rampant. I should like to refer to a publication which has, I am sure, reached the desks of all hon. members. It is entitled, "The Growth and Changing Composition of Trade between Canada and the United States" and it is put out by the Canadian-American committee sponsored by the National Planning Association of the United States of America and the Private Planning Association of Canada. On page 6 of that document we read this sentence:
One should add. however, that Canadian restrictions on imports from the United States are now considerably less than they have been in the past.
Whenever these days we hear references made to the subject of Canadian trade with the United States we hear lamentable cries from the opposition about the situation in the uranium industry. Time after time in this house that matter has been dealt with by the government. It has been pointed out that the arrangements that were made with the uranium industry were made by the previous administration and that, in making those arrangements, they did not make adequate provision for safeguarding the substantial investment that was made in those industries in Canada by providing for assured sales past the time at which they have now been terminated. One would think that a person who had been so intimately connected with the previous Liberal administration as to have held the office of minister of public works and who subsequently, upon his involuntary retirement from that office, became president of Rio Tinto, one of the largest uranium producing companies in this country, would know very well the situation in which that industry was based, the historical arrangements which were made for its protection, or the lack of them and that he

would certainly, on assuming his present office, have undertaken immediate steps to provide for alternative markets. What has he done, Mr. Speaker?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.
Henry Frank Jones: Before the adjournment I was dealing with some of the references which had been made in regard to the situation in the uranium industry, and I was pointing out that the president of one of the leading uranium producers in this country was the minister of public works in the former Liberal administration. He knew the history of these contracts, he knew the length of time they were to run, and he knew the lack of safeguards there was in those contracts; a serious lack of safeguards, particularly in view of the large investment which had been made in the industry. Yet upon his involuntary retirement from this house when he accepted the presidency of Rio Tinto no steps were taken, as far as I have been able to see, to make provision for the day which would surely come when these contracts would cease. Surely, I say, there is some burden on the trade itself and particularly on the person at the head of such a large company involved, to make provision for its own security. I do not see any record of any strenuous attempts by the industry itself to find alternative uses for uranium.
The hon. member for Assiniboia dealt at some length with what he called the folly of purchasing supplies in the United States. Such a statement must have come as a surprise to hon. members of this house in view of the extensive purchases of supplies and equipment made by the Saskatchewan Power Corporation under the auspices of the C.C.F. government of Saskatchewan; the very course to which the hon. member referred in such disparaging tones this afternoon.
I should like to refer to another practical proposal to assist our trade. I think consideration should be given to increasing the number of trade commissioners and the size of their staffs in order that further encouragement may be given to Canadian exporters. I am sure all hon. members will have noticed with pride the activities of the high commissioner to the United Kingdom as reported in the March 5 issue of the Financial Post where on two full pages of that newspaper are set forth the active co-operation and efficient manner with which our offices in London are assisting Canadian manufacturers to obtain entry into
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the United Kingdom market. Some of the headlines speak for themselves:	"What a
Market Waiting for You in Britain Now!"- "How to Get Rolling in the U.K. Market"- "100 Companies Showing Wares." Another heading says: "U.K. consumers have plenty of cash to spend and they want to spend it on Canadian goods." The article itself is full of praise for the efficient way in which our high commissioner has arranged things in London so that the wares of this country may be brought to the attention of Great Britain. This is another example of the dynamic and progressive policies which this government has been following since it took office in furthering the expansion of our trade on sound and continuing lines.


Mr. G. J. Mcllrailh (Ottawa West):: When the Minister of Trade and Commerce (Mr. Churchill) delivered his rather lengthy speech on this subject he started off by complaining that he had not been given notice of the intention to raise this question. Despite that he managed to bring into the house with him sufficient statistics to occupy almost three hours of our time with his speech. It is also interesting to note that the minister also brought into this house some persons whom I was very glad to see, namely some of the senior officials of his department. They were in the gallery, and I had the advantage over the minister in that I could sit here and look at them, but he could not.
The measure of the three hours taken by the minister seems to me to be that he devoted no time at all to the subject of the amendment, the demand for a progressive and gradual development of an Atlantic free trade area. Indeed, he seemed to have no ideas on this subject, despite the fact that it is one which has been occupying the attention of several governments in Europe as is evidenced by the trade associations which they have started in the last few years. Perhaps this interest on the part of European governments flows from the fact that those governments have a better and deeper understanding of the necessities of our times than has the minister, and are taking seriously the problems that arise. One is free to adopt whatever conclusion one wishes in the light of the minister's solitary stand.
There is another interesting facet to this problem. The minister appeared to be far too much concerned with proving that the governor of the Bank of Canada was wrong in his statement that we are living beyond our means. There is an interesting matter of policy outstanding here. The Minister of Finance (Mr. Fleming) seems at least to be getting credit-wrongly, I often think-for attempting to get the country to try to live

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within its means. If I read his speeches correctly, the Minister of Trade and Commerce, on the other hand, says it is not necessary to do so, and the whole purport of his speech in the course of this debate is in the opposite direction. It could be that everybody else is out of step save the Minister of Trade and Commerce. I wonder about that.
I shall try, however, to direct my remarks in an objective way to the amendment which is before the house and not to scatter bird shot as the Minister of Trade and Commerce did, all to no point. The amendment is:
That all the words after "that" be deleted and the following substituted therefor:
"this house expresses its grave concern at the deterioration in Canada's trading position as emphasized by an unfavourable balance of nearly $1.5 billion in Canada's total trade in 1959, and urges the government to deal with this serious problem by taking effective action, including the working out of proposals for the establishment on a gradual and progressive basis of an Atlantic free trade area."
Then there was a subamendment moved by the representative of the C.C.F. group adding a subparagraph as follows:
That the amendment be amended by inserting after the word "including" the letter (a) and by adding to the end of subparagraph (a) and by paragraph (b), to read as follows:
(b) an imaginative and well-planned campaign to expand Canadian exports including:
(i)	use of reciprocal trade contracts with other nations:
(ii)	much greater use of export credit insurance as well as direct federal government credit to foreign buyers;
(iii)	planned reduction of foreign investments in Canada so as to reduce the premium on our currency presently handicapping our export industries;
(iv)	greater economic aid to underdeveloped countries;
(v)	an expanded and intensified effort by the Department of Trade and Commerce to encourage orders for our goods in world markets.
At least the C.C.F. subamendment was directed to the subject before the house, was directly relevant and represented an attempt to deal with the subject. I was a little concerned about the reference to a well planned campaign to expand Canadian exports and by the use of the term "a planned reduction of foreign investments" but it was quite clear from the remarks of hon. members of that group and particularly when their leader was speaking that they did not envisage arbitrary government controls in the use of those words. I therefore interpret the subamendment to mean that these problems concerning the country could be solved by a proper application of proper fiscal financial and trade policies and if I am right in that understanding I do not find anything objectionable in their amendment.


Mr. Regier:: It is to be hoped the government will find nothing objectionable in it.


George James McIlraith: I am quite aware that you are not getting any leadership in this house from the present government.
The attitude of the government is further illustrated by the fact that in his three-hour talkathon the Minister of Trade and Commerce dealt only with the merchandise trade aspect of the problem. Merchandise trade makes up roughly one third of the total trade of the country. There are other things to indicate the minister's failure to appreciate the problem. I think I could well illustrate his attitude by referring to a question I addressed to him on March 10, 1960 when the daily bulletin of the dominion bureau of statistics first announced this enormous deficit in our total trade. I based my question by reading the first line of the dominion bureau of statistics publication of that day which reported an all-time record deficit for 1959 in Canada's international payments. I described the condition as a serious situation and in reply to my question the minister said, as reported at page 1920 of Hansard of that date:
I do not consider the situation anything like as serious as has been suggested by the hon. member. The daily bulletin has drawn our attention to what it calls a record deficit in 1959 on Canada's international payments.


John Cameron Pallett: Mr. Speaker, would the hon. member permit a question?


George James McIlraith: If the hon. member would reserve his question to the end of my remarks I would be glad to answer. I will not be interrupted now but I will gladly answer his question later.
There are other things that indicate the minister's failure to direct himself to this problem. Since the last speaker referred to uranium I could perhaps select this as an illustration. I shall quote from the minister's speech in which he was talking about the prospects for exports to the United States this year and as reported at page 2295 of yesterday's Hansard he said:
Apart from the problem of lead and zinc Canada's access to United States markets was unaffected by any major adverse developments.
Those words were spoken by the same minister who in answer to an address of this house for the tabling of correspondence with the United States government concerning the extension of uranium contracts tabled two letters, one written in August of last year signed by our charge d'affaires at Washington on the subject of the renewal of uranium contracts and the reply to that signed on behalf of the United States secretary of state. The minister was asked if there was anything more and replied that the government had no more correspondence with the United States government on that subject.

In other words, the minister dismisses the adverse information that uranium, an export to the United States exceeding $300 million a year in value is to be cut off as being of no real significance. Surely that is not the way to treat a problem of this magnitude.
Sometimes it is interesting to do a little research in Hansard. On March 28, 1957, as reported at page 2780 of Hansard, the following exchange occurred between the former minister of trade and commerce, Mr. Howe, and the present Prime Minister (Mr. Diefen-baker) who was then the private hon. member for Prince Albert and leader of the opposition:
In northern Saskatchewan-and I mention this merely as an example-there are available tremendous power resources and mineral resources and the fabulous developments at Uranium city.


Mr. Howe (Port Arthur):: Who started those?


John George Diefenbaker: Pardon?


William Marvin Howe: Who started the developments at Uranium city?


John George Diefenbaker: The people started them and then the government stepped in and took over the paying proposition themselves.


William Marvin Howe: The government started everything in Uranium city. The people were never there.
If the present Prime Minister is of that view on the subject of uranium why does the present Minister of Trade and Commerce dismiss the loss in this field as inconsequential.


Mr. Bell (Carlelon):: What does that prove?


George James McIlraith: The hon. member for Carle-ton (Mr. Bell) asks what that proves. It indicates that the minister did not direct his attention to the subject matter before the house and does not appreciate the seriousness of the problem. One could find other illustrations in the minister's speech but perhaps 1 have said sufficient to make my point.
The fact is that there is a serious situation for Canada disclosed by the recently published figures of the total trade deficit. Perhaps it would be well to mention some of those factors and bring them into focus before voting this evening. The total trade deficit for 1959 was $1,460 million the largest in our history. But there is more significance to it than that, although that by itself is a fact worthy of the attention of the house. However, let us examine it a little more closely. I now refer to the report of the governor of the Bank of Canada to the Minister of Finance for the year 1959 at page 22.
We find that merchandise trade dropped continuously and very sharply in 1959. The favourable balance of trade on merchandise account with overseas countries which was $474 million in 1955 had declined by 1959 to $132 million. The deficit or unfavourable 79951-0-147
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balance on non-merchandise account with the overseas countries sharply increased. In 1955 the deficit was $137 million; in 1959 it was $356 million. If we take the total balance of trade with overseas countries we see that the figure dropped from 1955 when there was a surplus of $337 million to a deficit last year, the first deficit in a long number of years, of $224 million. Surely the situation revealed by those figures should have been worthy of the attention of the minister. Surely it is a problem that requires our considered attention.
There are some other things that should be said about it. Perhaps I should continue just to point up the problem a bit. The figures just released show some interesting changes. The Minister of Trade and Commerce wished to talk about merchandise trade exports. Let us talk about them. The total in 1959 was up 5.1 per cent over 1958. That is a very good thing; we are all pleased with that. But the minister did not go on and tell us that at the same time the imports on merchandise account increased in 1959 over 1958 by 9 per cent. Perhaps we should break this down a little further just to show some more aspects of the problem. If we take the United States we find that the exports were up 10 per cent. These are things we all appreciate but in addition the other half of the story has to be stated. Imports from that country were up 7.3 per cent. Take the United Kingdom. They talked a lot about the United Kingdom trade. Exports to that country were up 2.1 per cent while the imports from that country were up 13.3 per cent.
Take the other commonwealth countries. Exports in 1959 were down by 2.8 per cent and the imports were up by 14.3 per cent. If you take all other countries you find that in 1959 the exports were up by 5.2 per cent and the imports were up by 11.6 per cent over 1958. Surely those figures create a problem for Canada, a serious problem, that must receive our careful attention. When I am giving these figures I wish hon. members opposite would realize, if they follow the statistical information carefully, that in addition to the figures which I have given in terms of current dollars, our exports were up in price and our imports were down in price a little, so that the picture is even worse than the figures I have indicated, if you make that slight adjustment.


John Cameron Pallett: The hon. member means we are selling for more and buying for less. Is that bad business?


George James McIlraith: The explanation is quite simple; the volume of imports was increasing, as will be found when I continue with my argument a bit farther.

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Let us examine the nature of those imports; what is the kind of import? Yesterday afternoon the Minister of Trade and Commerce interrupted the Leader of the Opposition (Mr. Pearson) when he was speaking, and again in his own remarks he referred to the situation in 1956 when a problem similar to this was causing concern to the government of that day. But the difference is very interesting. The government of that day took some action about it; the government of that day was operating with a surplus, a thing unheard of in these days. It is rather interesting to know that the cash surplus in 1956-57, the year which the minister was criticizing, was $940.6 million. This is the thing we are complaining of now, this spendthrift government and particularly the portfolio under the irresponsible administration of the Minister of Finance who seems to have lost his sense of responsibility in certain expenditures he makes-


John Cameron Pallett: You have lost your sense of responsibility.


George James McIlraith: I am prepared to back that statement up, if you wish me to.


John Cameron Pallett: There is no foundation for it at all.


George James McIlraith: Since taking over the minister has had a deficit of something over $2 billion, which I am quite sure no supporter of the government should be proud of; and when you bear in mind that that deficit was composed in large part of utterly useless expenditures improperly made by the Minister of Finance, then you can-


Mr. Hamilton (Notre Dame de Grace):: Increases in old age pensions.


John Cameron Pallett: You did not vote against any of them.


George James McIlraith: -see how serious it is.
There is one other thing about the difference between 1956 and 1959, and that is the question of the content of the imports. The imports in 1956 had a much smaller percentage of consumer goods among them than the imports in 1959. The imports in 1956, when the government of the day was concerned with this problem, had a much larger content of capital goods used in production and the development of resources and for the creation of assets that would produce wealth. What is happening now is that the imports are in the consumer goods field; the consumer imports are sharply up. The latest figures I could get-I could only get them this afternoon-cover comparative figures, taking the first nine months of 1959 and the corresponding nine months period for 1956. Anyone examining them will find that the

percentage of consumer goods in relation to total merchandise imports is up by 15 per cent. He will find that investment goods are down 6.3 per cent, and industrial materials are down by 4.4 per cent. This is the trend under this government's direction. Then, of course, all industrial materials and investment goods are not all capital goods that create wealth; capital goods that are used in the development of our resources for the creation of development are to be found in those items, so that the situation is surely pretty serious if viewed in the light of those statistics.
Hon. members opposite seem to think very little of this problem. They think the $2 billion deficit of their Minister of Finance-I regret he is not in his seat; I would like to say something about some of those expenditures-is a joke.


William McLean Hamilton: Talk about the assistance to the farmers. Talk about the increase in old age pensions. Talk about all the other things.


George James McIlraith: Yes, I will talk about them. I think the hon. Postmaster General (Mr. Hamilton) should be told some of the facts of life. It is about time he was. You see, Mr. Speaker, in his interjection the Postmaster General did not tell us about the $20,000 that he as a minister of the crown approved being remitted to a Vancouver citizen in August of last year. If he will read Hansard of a few days ago he will find that when bail was forfeited in a narcotics case in 1956 an application was made to a judge of the court for relief against forfeiture-


Mr. Speaker:: Order. I am afraid the hon. member is getting away from the subject of the amendment and the amendment to the amendment.


Mr. Chevrier:: The Postmaster General
should not interrupt him in that case.


George James McIlraith: Mr. Speaker, I am seeking to come directly to the subject matter under discussion. We are discussing the balance of trade and in doing that it is absolutely necessary to show wherein the danger lies in the large deficit figure. One of the dangers is that this kind of problem may be handled when there is a balanced budget or a surplus but it cannot be handled when the country is running into huge deficits which among other things add to costs of exports. That is the purport of my argument.


John Cameron Pallett: Name one expenditure you voted against.


George James McIlraith: Some utterly ridiculous expenditures have been made that have created

the deficit and which make the problem we are now discussing so serious.


John Cameron Pallett: Name one you voted against.


George James McIlraith: Yes, I will name another one I will vote against. I will name another one-
Mr. Pallet!: That you have voted against.


Mr. Speaker:: Order.


George James McIlraith: I can name others. There are a great many of them. There have been such irresponsible actions as that by the Minister of Finance in his conversion loan when he wrongly included the ninth victory loan which resulted in imposing an utterly useless charge of $165 million on the Canadian people over the period from 1958 to 1965. If the ministers want some more information it will be given to them.
There is another facet of this problem. The total of interest and dividend payments by Canada to other countries rose to $656 million in 1959, higher than ever before. That is particularly important when we remember that in addition to what I have said about the content of our merchandise imports borrowings, as was so ably set out by the hon. member for Villeneuve (Mr. Dumas), by Canadians in the United States, which make up the larger part of the balance of payments, now consist of a substantial volume of bonds issued by provincial and municipal governments for purely service purposes within the responsibility of those governments and not for the creation of production and wealth in this country. We must also remember that all too many of our service industries are borrowing in that country for services as opposed to the development of resources. I am not going to deal with that subject fully because I do not have adequate time to do so but if hon. members care to read more on the subject they will find that there has been a rather interesting debate in the other place which will give them plenty of ammunition.
Mr. Pallet!: So that is where you are getting your material?


George James McIlraith: There is also a contribution to the bad situation with respect to our total trade by the failure of the government since it took office to deal with our oil and gas policy. The government delayed two whole years before setting up an energy board. Then we debated that subject in the house and at that time we were led to believe by the Prime Minister and by the Minister of Trade and Commerce that they would immediately appoint a board so that it could get on with what was considered to be urgent and important business, and I think 79951-0-147J
Trade Balance
it was important and urgent business. How much delay was there before the board was appointed? Hon. members will recall that it was many months before these matters were dealt with.


Mr. Lambert:: You have shown so much knowledge about oil and gas-


George James McIlraith: I will let the record speak for itself. The hon. member for Edmonton West (Mr. Lambert) is just not speaking factually when he makes that interjection. If he knew anything about the industry he would know how costly that delay has been, how adversely it has affected our total trade balance with the United States and he would also know something that is more important to his own constituency, how it has hurt the city of Edmonton.
There was another interesting facet of the debate and that was the complete absence of anything from the Minister of Trade and Commerce on the subject of the movement toward free trade in the Atlantic area. In addition, when he mentioned the European common market and the European free trade association he did not go any further than to make a few general remarks about them. But he left one very outstanding matter totally neglected. When he dealt with the meeting at Mont Tremblant two years ago preceding the commonwealth economic conference, which the government took so much credit for calling, he did not remind the house that the United Kingdom representative made an offer to this country of free trade. He did not tell the house that the government did not consider that problem and that they did not bring it up at the ministers' conference in Montreal. He did not tell the house that when the minister from the United Kingdom was here a few weeks ago he indicated that he was still ready and willing to discuss that subject. He did not tell the house that the government still would not consider it, that they brushed it aside.
He did not mention the cavalier disregard of such an important subject matter by the government, the failure to explore the possibilities to see whether there was anything in the proposal, to see exactly what was meant by it, to see whether what was proposed would be beneficial to Canada. He also did not tell us what effect the failure to do that had on the position of the British with respect to the European trade blocs that are being formed. He did not tell us what position the attitude of the government put the British in with relation to their bargaining with the free trade association, their bargaining with the-

Trade Balance


William McLean Hamilton: Lost for words?


George James McIlraith: -European common market. He did not tell us how that failure will adversely affect Canada.
Then there is another interesting thing. He talked about trade with Japan. I do not know whether the remarks of the hon. member for Saskatoon (Mr. Jones) were intended to be a supplement to those of the Minister of Trade and Commerce. As I understood the hon. member for Saskatoon, he was seeking to say that any movement toward improving our trade relations with the European area would adversely affect our trade with Japan. I could not quite follow his reasoning.


Henry Frank Jones: On a point of order, that is not what I said at all.


George James McIlraith: If that was the purport of his argument, I can only differ with it. I may not have understood him correctly, but I would say that the strengthening of our trade relations, where we are rapidly losing our trading position in the European area, would only better our chances for trade with Japan and improve our trading position with Japan. I am sure that every western farmer wants our trade with Japan to be improved because it is an outstanding actual and potential market for our grain products. It is for this reason that during the last two years I have been continually at the ministers on that very point.
Incidentally, the hon. member for Saskatoon went on to quote some remarks made by Lord Shawcross, and I take it he quoted them with approval. Those were intended to show that foreign investment was not a bad thing. I have no quarrel with the remarks, but the hon. member must have misread them completely. If he will look at the first of those remarks he will see they are predicated upon foreign investment for the creation of production facilities, the very point we are talking about, and the very point we say constitutes the difference between the situation in 1956 and in 1959 when foreign goods that are coming into Canada are consumer goods and the foreign investment is for things that do not create wealth. The hon. member will see that error if he studies the statistics. He will see how far astray he has gone, and he will see further that the remarks of Lord Shawcross which he has quoted with approval, and which were rather interesting, were in support of the position we have been taking yesterday and today. He will see the distinction drawn throughout the whole of the remarks concerns foreign capital for the production

of wealth as opposed to the import of foreign capital to pay for luxury merchandise and to pay for services to the population. He will see that distinction made all the way through.
I make no apology for taking the time of the house to deal with this subject. I consider this one of the major problems facing Canada today. It affects the whole problem of our trade and our whole economic future. There is a material worsening in our position, as the figures have shown. I should have thought, and I would have hoped, that the government would have dealt with it in a responsible way rather than leaving two thirds of the problem not dealt with at all and the other one third dealt with in a wholly inadequate way. If these problems are big, and they are big, here was a motion that put them before the house for debate. I am unable to hear precisely what the hon. member for Oxford (Mr. Nesbitt) is saying, but there is no mistaking the tone of his voice which, perhaps, indicates the peculiar substance of his thought.


Mr. Nesbitt:: I said Mcllraith's interpretation
of the Keynesian theory is certainly most interesting.


George James McIlraith: These problems do offer big opportunities for solution, and the government of the day has the responsibility for offering these solutions. The government, regrettably, neither understands the problems, seeks to deal with them, nor is it willing to consider or offer any solution.


Mr. Speaker:: Order; I regret to interrupt the hon. member but I must inform him that his time has expired.


Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, my first words with reference to this motion must be words of congratulation to the minister upon his careful review of matters of trade and commerce. I think I can speak for the people of western Canada when I say we would rather listen to the optimism of the Minister of Trade and Commerce (Mr. Churchill) than the gloom of the opposition. In fact, I think I can speak for the people of western Canada when I say that we would rather listen to the optimism of the Minister of Trade and Commerce than to the statements made by Mr. Coyne that we have to tighten our belts and things are not so good in Canada. It is the confidence that you have in business that builds business in Canada.
In the few moments I have left to make any remarks on the motion itself I should like to say a few words with regard to wheat and coal. When this government took over we inherited one of the largest surpluses of

wheat ever piled up in Canada. This government went to work and in the first year we sold more wheat, to the extent of $22 million, than had been sold on any other occasion in Canada. The second largest purchaser in the world of our grain is Japan. Last year I had the opportunity of being in Japan and I am happy to note that we are encouraging trade relations with that country. Not only is Japan buying our grain, but she is also buying our western coal.
When I accepted the nomination in the constituency of Bow River, 80 per cent of the working force in places like Canmore and Drumheller were unemployed. Today, because of the subventions on coal put on by this government and because of the type of sales that have been put forward by this government, I can safely say that in the town of Canmore, which has a population of about 1,500 there is full employment.
In the few moments I have left, I want to speak on another matter which concerns everybody in the province of Alberta and everybody in western Canada. I refer to the export of our natural gas. I notice that on page 2265 of Hansard the Leader of the Opposition (Mr. Pearson) criticized the government for delay in the export of natural gas from Alberta. I should like the Leader of the Opposition to get in touch with the former leaders of the Liberal party in Alberta. For years the Liberal record has been very clear in that province, and without exception they have opposed the export of any gas from Alberta. First, we had Mr. Prowse, who led the Liberal party from 1953 to 1957. He was opposed to the export of gas and spoke along that line in the legislature. Then, we had Grant MacEwen, the new leader who was defeated in the last election. He opposed any export of gas from the province of Alberta. Then, we had one of the top spokesmen for the Liberal party, Mr. John Macdonald, who was the senior member of the legislature, and he opposed the export of natural gas from Alberta.
When the Leader of the Opposition says to this house that this government is responsible for delay, let me ask him about his party. Do they say one thing in the province of Alberta and another thing in other parts of Canada? They are on the record. The indictment is against' the Liberal party in the province of Alberta for opposing the export of natural gas. When this government took over there was no medium set up to take care of this problem. This government, therefore, immediately stepped into the breach and set up a royal commission to ascertain what the proved reserves were. Unless we have ascertained the facts, we cannot make decisions.
Division
No members can come up with a decisive factor unless they have the evidence before them. This government immediately stepped into the breach and set up a royal commission. From that royal commission was set up the energy board. The energy board now is set up in such a fashion that we have before the energy board facts as to our proved reserves. We in the province of Alberta now know that we have 23 trillion cubic feet of gas, and probably 27 trillion. We know we have reserves of approximately 300 trillion feet of gas that may and can be discovered in the future. On those facts that board can base a sound judgment. That has been done by this government.


Mr. Speaker:: It being 8.53 o'clock p.m. it is my duty, pursuant to section (4)(d) of standing order 56, to interrupt these proceedings and to put forthwith the question on any amendment now before the house.
The question is on the amendment to the amendment.


Mr. Speaker:: I declare the amendment to the amendment lost. The question is now on the amendment.



INCOME TAX


Mr. J. H. Horner (Acadia):: Mr. Speaker, my grievance is that the Hutterite farms in western Canada are not subject to income tax in the same manner as are all other farmers in western Canada. I raise this question very seriously because the Hutterite problem is becoming more pronounced in western Canada. No member in this house from western Canada will question my saying this. In the past dozen years there have been at least half a dozen commissions set up to study this question in the three prairie provinces. I want
Non-payment of Income Tax by Hutterites to make myself abundantly clear by saying that I have no grudge whatsoever against these people. I feel that they are in a sense receiving a subsidy from all the rest of the taxpayers in Canada and that is my only grievance.
I should point out, Mr. Speaker, that the Hutterites as individuals are subject to income tax, but that the colony in which all the property is held is not. The individuals do not receive high enough salaries, they do not receive any dividends from the colony, and therefore it is very doubtful whether they have ever been in receipt of a taxable income.
I should like to point out that these people are very good farmers. I have nothing against their mode of farming. They have excelled and are considered authorities on the question of farming. My main objection is that they are receiving a definite advantage over all other farmers in western Canada. I raise this point at this time partly because of recent action on the part of the Alberta government.
I mentioned a while ago that there have been numerous studies in the three prairie provinces concerning this problem. In those studies-and I have copies of them before me -at all times in Manitoba and Saskatchewan they point to the communal properties act of Alberta and suggest that the use of this act is perhaps one method to control the acquisition of land by those Hutterites; but recent action by the Alberta government in amending this act has thrown it wide open. Mr. Taylor, the minister of highways in Alberta states- and I am reading from the Gazette of Tuesday, March 22-that the government in Alberta is not going soft on the Hutterites. He made this quite clear. Then he goes on a little later to say that the whole purpose of the amendment to the act is to leave the decision as to where they should acquire land to the cabinet. The people in my constituency certainly know what this means.
Two years ago the Hutterites attempted to purchase a large tract of land in my constituency. I might say that this tract of land is the largest consolidated, deeded acreage in Canada. It is commonly known as the V-Bar-V ranch, which was set up under the Credit Foncier mortgage company. They tried to buy this land, which was directly contrary to the communal properties act in Alberta. The ranchers and the neighbouring farmers threatened to sue the Alberta government, and the Alberta government rescinded their order in council allowing the Hutterites to move in there, and gave the Hutterites two weeks to move off the V-Bar-V ranch.
I might say that those who were promoting the sale stood to make over $1 million profit on the sale of this land to the Hutterites. Surely hon. members can realize

Muir (Lisgar)
Nasserden
Nesbitt
Nielsen
Noble
Nowlan
Nugent
O'Hurley
O'Leary
Ormiston
Pallett
Parizeau
Pascoe
Paul
Payne
Pearkes
Phillips
Pigeon
Pratt
Pugh
Rapp
Regnier
Ricard
Robinson
Rogers
Rompre
Rynard
Sevigny
Simpson
Skoreyko
Slogan
Small
Smith (Calgary South)
Smith (Simcoe North)
Smith (Winnipeg North)
Southam
Speakman
Spencer
Stanton
Starr
Stearns
Stefanson
Stewart
Stinson
Tasse
Thomas
Thompson
Thrasher
Tremblay
Valade
Villeneuve
Vivian
Walker
Webb
Weichel
White
Winkler
Woolliams
Wratten-182.
2336	HOUSE OF
Non-payment of Income Tax by Hutterites what effect this new amendment is going to have. It is going to allow the cabinet to decide where these people will move and whether the move is advisable. There is going to be no regulation of such movement whatsoever. I definitely feel that this is a retroactive step on the part of the Alberta government. I definitely feel that they are going soft on the Hutterites, and I am certain this can be well borne out by the fact that the rural municipalities association of Saskatchewan suggested in 1956 that the Saskatchewan government adopt similar legislation to the communal properties act. As for Manitoba, at one time there was a gentlemen's agreement between the municipalities and the Hutterites as to a similar regulation.
This is one of the things that prompted me to raise this grievance at this time. As I pointed out, the Hutterites are exempt from income tax under section 62 (1) (e) of the Income Tax Act which reads as follows:
A charitable organization, whether or not incorporated, all the resources of which were devoted to charitable activities carried on by the organization itself and no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof.
Certainly I have no objection whatsoever to their religious beliefs. I feel strongly that anybody should be able to worship according to his beliefs, but certainly their farming should not be considered as part of their religion. The neighbouring colony in my constituency operates a farm of approximately 22,000 acres. I am certain that all members will fully realize the size of some of these enterprises. I should like to quote from a case that went to the supreme court in which Mr. Justice Rand stated that a religious society may or may not be a charitable society. He cited the case of Cocks vs. Manners. I might say that this case arose out of the assessment of a religious organization which was operating a dry cleaning business. Mr. Justice Rand stated:
The question in controversy involves the characterization given to the corporation and its activities. A charity or charitable society is, I should say, one whose purposes are those described in the preamble-
He goes on to say:
They can be classified generally, as for the advancement of religion, for the relief of poverty, for the promotion of education, and for other purposes bearing a public interest; and the attributes attaching to all are their voluntariness and, directly or indirectly, their reflex on public welfare.
I have not got the time tonight to go into the effect of these societies on public welfare but any western member will fully realize what these societies will do to a community.


I should like to quote what the English law dictionary in the library says concerning charitable organizations. It is one which has no capital stocks, no provision for making dividends and profits but derives its funds mainly from public and private charity. I looked up the word "charity" in the same law dictionary and I find that the word "charity" comprises four principal divisions; the relief of poverty, the advancement of religion, the advancement of education and other purposes beneficial to the community.
In considering these four things it can be said that these people are only trying to relieve the poverty of their children and certainly every member of the house is doing the same thing. But these people contribute very little, if anything, to the general relief of poverty and to the well-being of the community as a whole. As for the advancement of religion, certainly they do not go out and try to impose their religion upon others but they do carry on religious worship in their own community and I have no objection whatsoever to that.
As for the advancement of education, the Alberta royal commission set up to study the Hutterite question found that they were actually retarding education. Of 923 pupils studying in Hutterite schools in Alberta, 699 were considered to be behind in their grades and to be retarded pupils. Out of 923 over two thirds were behind in their grades and were considered retarded pupils. The Alberta commission considered that 216 out of the 923 were average students and only 8 out of the 923 were considered to be accelerated pupils. When we compare this with pupils in the other schools of Alberta we find that in those schools 35 per cent are to be considered to be behind in their grades, 45 per cent are average and 19.61 per cent are considered to be accelerated pupils. This latter figure compares with only 8 of 923 Hutterite pupils. Therefore I think it is abundantly clear that they are not advancing education.
As for the question of other purposes beneficial to the community, they carry on their own business, buy all their goods wholesale and contribute very little to the community. As I said before, I have not got all the time I should like to have in order to go into how these people actually live. It is hard to describe. It would take a great deal of time to do it well because it is hard for a person who has never seen a Hutterite farm to visualize how they live and what their standard of living is. I say that in all sincerity. I am certain that other western members who are familiar with the Hutterite farms know exactly what I mean.

On the same question of the definition of a charity or charitable organization I have 1929 Appeal Cases here and I should like to refer to a case that went to the privy council. The case originated in Australia but it has some bearing in that it describes a public charitable institution and it says:
-an institution which, assuming its public character ... is charitable in the sense oi affording relief to persons In necessitous or helpless circumstances.
As I pointed out, these people afford charity to themselves only and certainly they cannot be considered to be in helpless or necessitous circumstances. In the past years there has been a rapid growth in the number of Hutterites and Hutterite colonies in Alberta. The growth in population in the Hutterite colonies in Alberta between 1951 and 1956 was 19.8 per cent. This percentage was equal to the growth in population in the province itself, but of course the province received a large number of immigrants from other countries and people from other provinces, whereas the Hutterite growth was a natural growth within the colonies.
I have the figures here for the province of Manitoba and in that province the population increase from 1951 to 1956 was nearly 25 per cent. The acreage that they control in Alberta is close to 500,000 acres. I do not have exact figures as to the acreage they control in the other western provinces. They have been migrating from Alberta into Saskatchewan in recent years because of the communal properties act in Alberta.
An interesting point concerning income taxes is made in the Alberta report on page 11 where it is stated that at one time they were assessed and the elders journeyed to Ottawa and presented their case. Subsequently, unlike any other partnership, the profits are theoretically divided equally amongst the members for the purpose of taxation. I say to you, Mr. Speaker, that nowhere else is a farmer with half a dozen sons allowed to theoretically divide his profits so that he may not pay income tax.
There was a case in Saskatchewan about 1945, just as I was leaving Saskatchewan, which involved a farmer who had a great number of sons. He had a large amount of land which he had kept in his own name and the government was taking a net worth statement from him for income tax purposes. He could not theoretically divide this property amongst his sons. He was told either to divide it or they would tax him accordingly. The government of that day taxed him accordingly and the outcome of the case was that this early pioneer farmer hanged himself because of the action taken to collect income taxes.
Non-payment of Income Tax by Hutterites
This business of allowing a company or a corporation to theoretically divide the profits for taxation purposes is something that applies to no other company or corporation. Any company could, theoretically, divide its profits and thereby reduce the amount of income taxes that would be paid by any member of the corporation because each member would be in a lower bracket than if the profits were left in the hands of the corporation. If this statement in the Alberta government report is true, then certainly that principle is wrong. The Hutterites should not have any privilege so far as the farm corporation is concerned to theoretically divide their profits. On page 16 of the same report it says:
Somewhat later the colony secured control of extra land or territories within 40 miles of the existing colonies by providing some of their members with funds from the colony treasury to purchase land as individuals and not as trustees or agents of the colony. This is how they would start another colony.
In my opinion, this is a direct violation of the Income Tax Act which says: no part of the income which was payable to or which was otherwise available for the personal benefit of any property member or shareholder thereof. This is a loophole that they found in the communal properties act and it results in a direct violation of section 62 of the Income Tax Act, so there should be no doubt in the mind of anyone that they could be assessed for the money they spent in buying extra property.
This same question was raised in the Saskatoon Star-Phoenix this year. On February 17 one of a series of four articles on the Hutterite question in Canada appeared in that newspaper. It was stated there that individual Hutterian land-owners or elders may have purchased land in Alberta in their own names and may not have considered the Department of National Revenue in their dealings. There is, therefore, a great deal of question as to whether or not this is possible.
I should like to deal for a minute with the question of the Hutterite farms in its entirety and whether or not the sect and their farms come within the definition of a religious organization. The citation I should like to read to the house is from the case of The King v. Assessors of the Town of Sunny Brae. This case arose in the province of New Brunswick and I quote from the maritime provinces reports, 1951. This is the decision of the court of appeal and the court held that the religious organization, the English name of which was the Home of the Good Shepherd, was taxable because it was considered they were carrying on a business. The town, therefore, had every right to assess them to the value of the business, the value

Non-payment of Income Tax by Hutterites of the property they used in that business. Mr. Justice Richards had this to say:
If the work in question were restricted to that required for the officials, employees or inmates of the institution, no question would arise, but when the work becomes a business in competition with general public business, then the property employed should be subject to taxation in the usual way.
Then I go to the judgment of Mr. Justice Harrison, and I quote:
If this laundry and dry cleaning business were operated merely to do washing and cleaning for the inmates of the institution, then the equipment would be used as part of the charitable undertaking of the society. The equipment in the case before us is used in the operation of a laundry and dry cleaning business which gets customers who would otherwise have their work done by taxpayers. To exempt such a business from taxation would be contrary to the intention of the act as it would be an unjust discrimination against others carrying on laundry and dry cleaning business and paying taxes upon all property and equipment used in such business. To exempt a competitor such as this society would, in effect, be a forced levy on the other taxpayers. It would amount to a subsidy to one competitor in the laundry and drycleaning business which would have to be paid by other taxpayers.
I hold that the Hutterite case bears a great deal of similarity to this case. We farmers of western Canada are, in effect, subsidizing one of our largest competitors. These Hutterite farmers go to the auction sales, the cattle sales and compete against other farmers. They have the same freedom as any other farmer. They buy machinery and repairs in the same manner and they put their produce on the market in the same manner as any other farmer does.
In support of the argument that they are farmers I should like to read another case that came to the courts in 1939. I am reading from the Canada Supreme Court Reports. This was a case concerning a Hutterite corporation, as to whether or not they were farmers under the Farmers' Creditors Arrangement Act of 1934 and the amendments thereto. The Supreme Court of Canada held that the corporation was a farmer within the meaning of that word used in the Farmers' Creditors Arrangement act of Manitoba of 1934 and the amendments in 1953 and was entitled to take advantage of that act.
This points out again, Mr. Speaker, that they are considered in every light to be farmers. There are, I might say, some definite differences in connection with this farm organization I might point out to those who are afraid that I might be going out to tax every religious corporation. I have no such thought in mind and I wish to assure the house that I have no such thought in mind. They have six main differences-I refer to this corporation-as compared with the others.

In 1958 when this government paid acreage payments to western farmers the Hutterites received their acreage payments. They have permit books. They sell grain in the same manner as does any other farmer. They collect the baby bonus if they fill out the forms. They receive deficiency payments for wool; in every case if they sell wool they will receive deficiency payments from this government. They pay taxes on their land. They pay municipal taxes on the land they farm. They pay municipal taxes on the land on which their buildings are situated. This is a decided difference from anything else in Canada. Then there is another point. They take out no citizenship in any country. They do not want to do so. They declare themselves to be noncitizens of Canada. They will not take out citizenship papers in this or any other country. This is a decided difference from anything else we might have in Canada.
In western Canada right now we have the three prairie provinces all setting up farm loan boards in order to lend money to farmers to purchase land. The Hutterites are the only farmers in western Canada who have any money with which to go out and buy land. It has come down to that point. The banks are out of the business as far as the lending of money is concerned to purchase land. The banks very rarely go into this business any more. The government loan board is the only place to which the farmer can turn. The Hutterites in most cases are able to use their own resources and reserves because one colony aids another in the same manner.
I made some inquiries as to how the Hutterites were taxed in the United States and what laws existed concerning them there. In South Dakota there is a law prohibiting Hutterites from forming any more colonies in that state. I was told that the Hutterites pay income tax similar to corporations and co-operatives down there and that they receive the same treatment as do those cooperatives and corporations down there.
I solemnly urge this government to take a close look at this problem. I urge the government to try to envision the prairies 50 years or 100 years from now if this situation continues. I say this in all seriousness because their rate of growth is great. A few years ago there were few Hutterites in the province of Alberta. Today they are spreading fast into Saskatchewan. If a line is drawn across the map of Alberta at Edmonton, from that line south to the United States border there is no other spot at which a Hutterite colony could be established without breaking the communal properties act which states that Hutterite colonies shall be

40 miles apart. That is the situation from Edmonton south to the border. When they were told they had to go up north to the Peace river they said no, that they did not want to do that. They did not want to explore and develop the country. This matter they leave to the pioneers. They were not pioneers. They told the Alberta government that this was their policy. They wanted to live near a community so that they could peddle their eggs, potatoes and vegetables to that community.
I say to you, Mr. Speaker and to all other hon. members that this problem should be seriously considered. Hon. members should try to envision the picture in the prairie provinces 100 years from now if these people are allowed to go on earning money untaxed and purchasing more and more land. For those in the colony this is their main purpose. The main revenue they receive from the sale of their produce is directed into the purchase of more land. As soon as a colony reaches a total of about 100 persons they immediately look for new land and swarm like a flock of bees to settle in another spot. Just try to picture the prairies 100 years from now if these people are allowed to go untaxed.
I hope that this government can cover all the problems that may have to be faced and that stand in the way so that these farmers can be treated in the same manner as are all the other farmers in western Canada and be subject to a net worth statement in the same manner as are other western farmers in western Canada today.


Erhart Regier: Mr. Speaker, I intend to be only a minute or two.


Some hon. Members:: Ten o'clock.


Erhart Regier: If the house will not grant me that minute or two-


Some hon. Members:: Go ahead.


Erhart Regier: I regret very deeply this most unwarranted attack on one of the most harmless minorities, if not the most harmless one that exists in Canada.


Some hon. Members:: Ten o'clock.
Business of the House


Erhart Regier: May I call it ten o'clock.


Mr. Speaker:: Ten o'clock.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the acting house leader what the business will be for tomorrow and the next day?


Mr. Brooks:: Mr. Speaker, tomorrow we will complete this debate, for which 53 minutes remain. I think the house leader announced the business on Friday, although there is a slight change. First will be the motion in the name of the Acting Secretary of State that the standing committee on privileges and elections be empowered to study the Canada Elections Act.


Lionel Chevrier: Order.


Mr. Speaker:: Order. Will hon. gentlemen in the rear of the house hold their conversation until the business of the house is settled for tomorrow?


Alfred Johnson Brooks: The second item is a motion standing in the name of the Minister of Transport that a committee on railways, air lines and shipping owned and controlled by the government be appointed to consider the accounts, estimates and so on. Item No. 3 is a motion in the name of the Minister of Trade and Commerce that the standing committee on agriculture and colonization be empowered to examine and inquire into the delivery of grain by producers to feed mills. Item No. 4 will be interim supply. Item No. 5 will be the final supplementary estimate. Those items are for Thursday and Friday as well, I might say. Then No. 6 is a resolution dealing with federal-provincial tax-sharing arrangements. Then item No. 7 is the resolution in connection with the railway grade crossing fund in the name of the Minister of Transport. If all this is completed then there is the resolution in the name of the Minister of Public Works concerning the Trans-Canada Highway Act.


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

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

Mr. Boivin: How many contraband cigarettes were seized in each province during each month of the years 1957 to 1959 inclusive?
Answer by; Hon. George C. Nowlan (Minister of National Revenue):
(For answer see tables on pages 2341, 2342 and 2343.)


BREAKWATER COMPLETION, PORT HOOD, N.S.
Mr. MacLellan: What steps are being taken by the Department of Public Works to complete the construction of the breakwater at Port Hood, Nova Scotia?
Answer by: Hon. D. J. Walker (Minister of Public Works):
An item in the amount of $260,000 has been included in the main estimates 1960-61 for the completion of this project. The department plans to continue with the construction of the breakwater during the coming fiscal year.


TEXTILE DUMPING
Mr. Boulanger: 1.	Since January 1, 1959, has the Department of National Revenue employed inspectors in connection with the alleged dumping of textiles in Canada?
2.	If so, how many inspectors did the department employ, and what are their names?
Answer by: Hon. George C. Nowlan (Minister of National Revenue):
1.	Yes.
2.	24: S. H. Abdallah, W. J. Armour, R. T. Bird, E. C. Barron, E. A. W. Boyce, J. E. Bruce, B. J. Cheney, C. G. Dodman, S. Drabek, J. F. Gray, D. R. Hagen, M. E. Heisel, L. B. Hillier, R. W. Hines, E. Hough, L. C. Howey, E. J. Laurin, J. M. McKillop, J. R. McNally, M. A. Olivier, A. R. Porter, R. A. Shaw, D. R. Staines, A. W. Walters.
In addition to the 24 dominion customs appraisers listed who specialize in textiles, the chief dominion appraiser as well as his assistant and other senior officials in the customs-excise division are from time to time occupied with appraisals arising out of the alleged dumping of textiles into Canada.


CIGARETTES SEIZED DURING CALENDAR YEAR 1957
[Stage Direction]
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	TotalJanuary	19,940	16,420	53,179	9,960	200	-	680	8,140	108,519February	480	-	6,640	5,140	12,500	2,820	-	-	200	4,480	32,260March	5,557	-	3,900	9,280	251,960	4,653	-	-	-	26,380	301,730April	10,838	-	1,580	500	48,360	11,900	-	200	1,000	11,280	85,658May	4,560	-	-	4,940	31,513	7,020	300	3,200	3,260	9,400	64,193June	2,600	-	-	720	31,320	8,185	1,200	320	400	8,510	53,255July	14,320	-	-	1,340	44,567	4,980	600	-	-	11,128	76,935August	5,600	-	-	1,020	1,967	16,020	800	-	3,340	13,080	41,827September	2,440	-	2,700	3,040	118,780	15,500	400	-	2,200	7,622	152,682October	1,060	-	-	920	244,340	12,280	1,840	200	1,880	4,380	266,900November	2,740	4,380	-	180	50,002	6,740	140	-	-	4,575	68,757December	400	6,200	2,040	820	258,120	4,580	100	-	200	7,130	279,590Yearly total of provinces	50,595	10,580	36,800	44,320	1,146,608	104,638	5,580	3,920	13,160	116,105	1,532,306
Questions

[Stage Direction]
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	TotalJanuary	9,380	4,360	7,475	461,120	12,000	-	-	320	5,300	499,955February	-	-	3,564	28,305	16,500	2,360	740	-	900	9,110	61,479March	2,960	-	9,860	1,680	16,960	3,000	200	-	-	7,900	42,560April	4,220	-	3,680	2,220	283,600	6,940	-	-	200	3,700	304,560May	19,420	-	1,600	8,048	19,760	3,350	200	-	1,320	7,175	60,873June	15,734	-	15,320	800	135,225	13,400	400	-	5,800	11,520	198,199July	200	-	-	5,780	572,960	4,720	180	200	260	6,280	590,580August	2,200	-	-	2,520	35,774	5,700	-	-	-	6,400	52,594September	1,180	-	-	48,600	3,360	10,360	-	-	800	4,900	69,200October	301,621	800	360	1,280	205,100	5,680	-	2,800	400	8,920	526,961November	6,260	-	1,160	920	3,760	5,740	200	-	200	26,230	44,470December	1,770	1,700	600	400	3,680	3,060	380	-	-	16,360	27,950Yearly total of provinces.. 	364,945	2,500	40,504	108,028	1,757,999	76,310	2,300	3,000	10,200	113,795	2,479,3812342	HOUSE OF COMMONS
Questions

[Stage Direction]
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	TotalJanuary	1,000	160	8,700	1,653	139,700	2,580	180	6,730	160,703February	600	-	3,620	12,645	800	40,440	80	-	-	1,735	59,920March	680	-	4,640	7,420	9,453	600	440	200	800	7,060	31,293April	400	-	3,840	31,840	13,013	3,940	-	220	1,200	12,780	67,233May	3,512	-	1,700	4,000	6,697	3,400	-	-	800	16,520	36,629June	3,510	-	800	16,480	9,180	3,160	80	-	200	6,060	39,470July	3,220	-	1,100	9,420	439,000	9,280	-	200	-	12,380	474,609August	1,660	-	-	480	407,820	14,237	200	180	200	3,560	428,337September	4,320	-	680	3,280	67,840	6,800	-	200	1,580	600	85,300October	3,920	26,360	1,660	10,580	493,433	17,600	-	600	140	3,160	557,453November	400	-	200	995	239,900	6,800	200	-	260	10,293	259,048December	1,600	-	5,900	32,880	13,440	1,720	640	-	1,500	7,980	65,660Yearly total of province	24,822	26,520	32,840	131,673	1,840,276	110,566	1,820	1,600	6,680	88,858	2,265,655
Questions
[Stage Direction]
Wednesday, March 23, 1960

[Stage Direction]
Third report of standing committee on banking and commerce-Mr. Gathers.