1961-02-20

[Stage Direction]
90205-6-139i

[Stage Direction]
Monday, February 20, 1961


Miss Margaret Aitken (York-Humber) moved: that the third report of the standing committee on standing orders, presented to the house on Thursday, February 16, 1961, be now concurred in.


[Stage Direction]
Motion agreed to.


Hon. Donald M. Fleming (Minister of Finance) moved: the first reading of Bill No. S-5 (from the Senate) to amend the Canadian and British Insurance Companies Act.
Motion agreed to and bill read the first time.



FOREIGN INSURANCE COMPANIES ACT


Donald Methuen Fleming: the first reading of Bill No. S-6 (from the Senate) to amend the Foreign Insurance Companies Act.
Motion agreed to and bill read the first time.



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 47-Mr. Roberge:
For a copy of the new insurance coverage manual issued in October 1955 by the unemployment insurance commission.
Hon. Michael Starr (Minister of Labour):: Mr. Speaker, I have been advised by the unemployment insurance commissioners that these manuals contain operational instructions, that they fall within the class of internal communications within the department, and that on that ground they are privileged documents. In view of that I would ask that the hon. member consider dropping this motion.


Mr. Winch:: May I ask the minister why there is so much secrecy about documents of this nature?


Mr. Speaker:: Is the hon. member content to drop the motion?


Mr. Roberge:: Yes.
Order discharged and motion withdrawn.
UNEMPLOYMENT INSURANCE MANUAL, 1950 Motion No. 48-Mr. Roberge:
For a copy of the insurance coverage manual issued in January 1950 by the unemployment insurance commission.


Michael Starr: The same observation applies to this motion, and I would ask the hon. member to consider dropping it.


Harold Edward Winch: May I ask the same question? Why is there so much secrecy about these documents?


Mr. Martin (Essex East):: May I ask the minister to let this motion stand? His suggestion that it has always been the practice to regard these documents as privileged is not fully accepted at this moment, and I do not think that is the practice, in the particular context.


Mr. Speaker:: Order. The motion is not debatable. If the hon. member in whose name it stands is not content to have it withdrawn, it should stand.


Mr. Churchill:: On a point of order, the hon. member for Essex East does not accept the minister's statement that it is a privileged document, I do not believe it is within the competence of the hon. member to reject the statement made by a minister of the crown. It is a matter for the disposition of the house.


Harold Edward Winch: In view of the fact that the minister-


Mr. Speaker:: Order; this is not a debatable motion.


Harold Edward Winch: The point of order is debatable, sir.


Mr. Speaker:: When a motion is called it is open to a minister whose department is concerned to object to the production of a document on the ground that the production is contrary to public policy. It is open to the house to disregard that objection and pass the order, but it is not a debatable motion.

Motions for Papers
As I understand it, the hon. member lor Megantic wishes this motion to stand.


Michael Starr: Under the circumstances I would have to refuse the motion.


Mr. Speaker:: Does the hon. member wish to proceed with the motion?


Gabriel Roberge: Under the circumstances I will withdraw the motion.
Order discharged and motion withdrawn.



ROADS TO RESOURCES PROGRAM, QUEBEC

[Stage Direction]
Motion No. 49-Mr. Martel:
For a copy of all contracts and agreements entered into by the federal government and the province of Quebec with respect to the roads to resources program, together with copies of all riders and schedules pertaining thereto.
Hon. G. E. Halpenny (Minister without Portfolio):: I wonder if this motion could stand, since the minister is unable to be present this afternoon?
Motion stands.



ORDERS IN COUNCIL FIXING DUTIES

[Stage Direction]
Motion No. 50-Mr. Benidickson:
For copies of orders issued by the Minister of National Revenue since December 1, 1958, under the provisions of section 38 of the Customs Act for the purposes of fixing duties.
Hon. Georgs C. Nowlan (Minister of National Revenue):: This is acceptable, subject to the usual reservations.


Hon. J. W. Pickersgill (Bonavista-Twillin-gate):: I wonder if the minister would explain his statement, "subject to the usual reservations"?


George Clyde Nowlan: I do not have to explain it; it is well known to the house.


John Whitney Pickersgill: I am rising on a point of order. This phrase "the usual reservations" is, of course, an amendment to the motion, and an amendment to the motion would have to be considered by the house. There does not appear to be anything in this motion that would call for any of the reservations usually made, and if the minister is not prepared to say what is involved, then we are being asked to accept something blindly. We should be either told what the reservation is or the motion should be dealt with as it stands.


George Clyde Nowlan: This is not debatable. When the hon. member was sitting here he used the expression many times. He knows full well what is meant by that expression. He is simply putting on an act at the moment. It may be that privileged departmental documents are involved. I do not know what is involved in this motion and I am therefore accepting it subject to the rules and practices of this house.


John Whitney Pickersgill: The minister has seen fit to make a statement about me personally which is in fact completely untrue. I never used this phrase "subject to the usual reservations". This phrase was not used until the present government came into office. It is an innovation which I suggest is a bad practice, to which I have once or twice before taken exception and to which I take the strongest possible exception now. Either the motion should be put as is or the minister should make a formal amendment.


Mr. Cardiff:: Go back through Hansard and you will find plenty of cases.


John Whitney Pickersgill: Not that phrase.


Mr. Speaker:: The hon. member takes exception, as a point of order, that in effect the minister proposes a qualification to the order which the house is asked to make, and that in doing so he is proposing an amendment to the motion itself which would have to be proceeded with in the ordinary way.
I think there is some substance to that point of order. We have adopted the practice here of accepting the reservation expressed by a minister and putting the motion subject to that reservation. I think that procedure either implies the unanimous consent of the house-and it is on that basis that I have proceeded in the past-or it implies that the house unanimously accepts the limitation as part of the motion. If hon. members want to go through the full process, I suppose there is a point to be considered. Perhaps the motion might stand today and I will consider the matter and ascertain whether the practice we have been following is, in fact, contrary to our standing orders.


George Clyde Nowlan: On the point of order, Mr. Speaker, may I simply say that it is the practice that has been followed ever since I have been in this House of Commons and it had been followed for years prior to that time. The house has, of course, no right to pass an order which is contrary to the practice and the conventions which have been established by it. That is all that was said, namely that we accept this order subject to the usual reservations, whatever they may be in the particular instance of this particular order. There may be no reservations, or there may be reservations. It is impossible to decide that matter until one goes through the whole file. Whether the order is called today or a week from now, the same reservation will be taken.


Mr. Speaker:: We have been following this practice, but as the point is taken formally, I shall deal with it on the next occasion when these motions come up for consideration.
Motion stands.



CAUSEWAY CONSTRUCTION, P.E.I.-N.B.

[Stage Direction]
Motion No. 51-Mr. Robichaud:
For a copy of all correspondence, telegrams, and other documents exchanged from September 1, 1960, to date, between the federal government or any agency or department thereof, with the government of the province of Prince Edward Island, in connection with the construction of the proposed causeway across Northumberland strait to link Prince Edward Island with New Brunswick.
Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I shall be very happy to accept this order with the usual reservation; but to save the time of the house and for the information of the hon. member for Bonavista-Twillingate I may say that the usual reservation is that we are required under the rules of the house or the practice of the house to get the consent of the province. In this case it is the province of Prince Edward Island. Perhaps that statement will satisfy the hon. member for Bonavista-Twillingate.


Mr, Speaker:: The minister has indicated that the motion is acceptable, subject to the limitation that the consent of one party to the correspondence, namely the province, be obtained before the order be filed. Subject to that reservation or limitation expressed by the minister, is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to.

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Motion No. 52-Mr. Peters:
For a copy of all correspondence, telegrams, and other documents exchanged between the federal government and the council of the municipality of Teck, relating to a proposed municipal housing development.
David James Walker: Mr. Speaker, this motion is accepted without reservation, because the same practice does not apply to municipalities.


[Stage Direction]
Motion agreed to.

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Motion No. 53-Mr. Peters:
For a copy of all correspondence, telegrams, and other documents exchanged between the federal government and the municipal council of the township of Teck, concerning the building of a new federal building in Kirkland Lake.
David James Walker: Mr. Speaker, this motion is also accepted, and perhaps no explanation is necessary.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Motion No. 55-Mr. Robichaud:
For a copy of all correspondence, telegrams, and other documents exchanged since June 21, 1957,
Inquiries of the Ministry
between the Department of Public Works and any individual, engineering consultant firms or others in connection with plans and specifications for the Campbellton-Cross Point bridge, including correspondence exchanged with any groups or syndicate prior to the approval of the project and up to this date.
David James Walker: Mr. Speaker, this motion is accepted on the understanding that correspondence, between the engineering consultants employed by the government and any group or syndicate should be considered privileged, as it is departmental correspondence and is privileged.


Mr. Speaker:: Subject to the limitation expressed by the minister, is it the pleasure of the house to adopt the motion?


Mr. Marlin (Essex Easl):: No; on division.


[Stage Direction]
Motion agreed to.

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Motion No. 56-Mr. Marlin (Essex Easl):
For a copy of any written communication or a record of any exchange between the government and General Motors on the subject of an unfounded report of a removal of General Motors plant from Windsor.
Hon. Ellen L. Fairclough (Minister of Citizenship and Immigraiion):: Mr. Speaker, there is no objection to this question, except that my instructions are that it should be accepted with the usual reservations. If the hon. member objects to that I shall have to ask him to let it stand.


Peter Francis Martin: In view of that, will the hon. lady kindly let it stand?
Motion stands.



INCOME TAX


[Stage Direction]
On the orders of the day;
Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, I would like to address a question to the acting prime minister, who I assume is the Minister of Finance (Mr. Fleming). I wonder whether the minister has seen a reported statement by his colleague the Minister of National Revenue, who sits with him traditionally on budget preparation committees, and whether he concurs in the statement reported to have been made by the Minister of National Revenue in London the other day, that in the next budget income tax increases are more likely than reductions, and that the next budget would undoubtedly have a deficit.

Inquiries of the Ministry


Mr. Speaker:: Order. The hon. member could scarcely find out what the next budget will contain by asking a question on orders of the day, and it seems to me that is the purport of his question.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, surely the hon. member's question is in order, in view of the statement reported to have been made on this particular matter by the Minister of National Revenue.


Mr. Hazen Argue (Assiniboia):: On a point of order, Mr. Speaker, it is a well established custom that there shall be no budget leaks before the budget is made public. Here was a very definite statement by the Minister of National Revenue as to the contents of the next budget.


Mr. Speaker:: Order. The hon. member is not on a point of order. If the hon. member's question relates to whether a statement made by the Minister of National Revenue was a declaration of government policy, I suppose it could be asked.


George Clyde Nowlan: Mr. Speaker, perhaps I had better answer this question, since I am the one to whom reference is made. In the first place, there could be no budget leak in view of the fact that due to the opposition we have not yet passed the budget that was brought down in December. Therefore it would be rather difficult to deal with future budgets.
What I said was this. I have the text in front of me, and this was a prepared text:
I think in the present state of international unrest and uncertainty one would not expect the government to substantially cut its expenditures- at this time.
I do not think that is a statement of budget policy. I repeat what I said:
I think in the present state of international unrest and uncertainty one would not expect the government to substantially cut its expenditures

I was not talking about income tax.
-at this time.
It is true that afterwards I was asked by someone in an off the cuff reference as to the chances of increased taxes. I said that in view of the unrest of the day, the Congo situation and all the uncertainties with which the government was confronted, one might also assume that increases were almost as likely as decreases. Again, if that is a statement of government policy which, of course, it is not, then goodness help the government that makes such a statement of policy.


John Whitney Pickersgill: Just loose talk.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I would like to direct a question to the Acting Secretary of State for External Affairs. In view of the report from the United Nations secretary general's representative in the Congo to the effect that at least seven political prisoners have been deported to Mr. Kalonji's secessionist mining state and that three are rumoured to have been killed, all this indicating once again that the present United Nations command in the Congo has failed in its mission of bringing peace to that troubled land, will the government back the plan of the president of our sister commonwealth nation of Ghana, Mr. Nkrumah, that a new all-African United Nations command take over the Congo, disarm Congolese troups, free political prisoners and convene parliament?


Hon. E. D. Fulton (Acting Secretary of State for External Affairs):: I thank the hon. gentleman for having given me notice of this question, but in the circumstances I am sure he will appreciate that without in any way accepting his preamble to the question as a statement of fact, the only proper course would be to bring this to the attention of the Secretary of State for External Affairs and ask him to make a statement or reply on his return.



CONSIDERATION AT SPECIAL OR GENERAL


[Stage Direction]
On the orders of the day:
Harold Edward Winch: In
the absence of the Secretary of State for External Affairs I should like to direct a question to his parliamentary assistant, or to his deputy at the United Nations. Is any consideration being given to the report that a special meeting of the United Nations may be called to deal with the Congo situation and, if not, does the hon. gentleman anticipate that at the reconvened general meeting, which will take place on March 7, the Congo situation will be the first issue to be considered?


Mr. W. B. Nesbilt (Parliamentary Secretary to the Secretary of State for External Affairs):: In reply to the first part of the question may I say I should like to have that stand until the return of the Secretary of State for External Affairs. With regard to the second part of the question, our information is that the United Nations general assembly will be reconvened on March 7 and I would think it very likely that the question of the Congo would be discussed at that time.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Harold Edward Winch: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. In view of the answer just given me by the parliamentary secretary to the minister of external affairs, and in view of the information that there is no knowledge about any special session of the general assembly of the United Nations but that he expects the assembly will reconvene on March 7, is any consideration being given by the government to the holding of one or two days' discussion in this house on foreign affairs prior to the reconvening of the fifteenth general assembly on March 7?


Donald Methuen Fleming: Mr. Speaker, there was not very much encouragement given to such proceeding as a result of the government's attempt to accommodate the similar request made in this house a couple of months ago. However, if there is a request, apart from the debate that will no doubt take place on the reference of the department's estimates to the standing committee on external affairs, that can be taken into consideration and the leader of the house can take note of the request.


Harold Edward Winch: I am sorry; may I ask the Acting Prime Minister whether I understand from the reply he gave me that the government will give consideration to the house discussing international affairs prior to the March 7 reconvening of the United Nations if the official opposition will play ball and allow it?


Donald Methuen Fleming: Mr. Speaker, in my answer I drew attention to what happened on the last occasion that such a request was made-


Harold Edward Winch: That was not our fault.


Donald Methuen Fleming: -by the opposition. A date was set aside for the purpose of accommodating the request; then on that occasion the official opposition took a position which precluded the debate from proceeding. On that occasion the hon. member had made a similar request, and I indicated that consideration could be given to his request on this occasion, with a recollection of what had happened on the last occasion.


Lester Bowles Pearson: On a point of order, since the minister has seen fit to elaborate on this matter, I should like to say, as the minister knows perfectly well, that the circumstances 90205-6-140
Inquiries of the Ministry surrounding the proposal for a debate on external affairs last time were such as to make that debate completely ineffective and that was why we objected to it.


Donald Methuen Fleming: That was not the
reason given by the official opposition at all.


Harold Edward Winch: That is not an answer. My question is-


Mr. Speaker:: Order. The hon. member has had one supplementary. If he has not got it clarified now I think we might pass on to orders of the day.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I wish to direct a question to the Minister of Transport. Would the minister inform the house whether he has received any request from Saint John or Fredericton that a government icebreaker be sent up the Saint John river as far as Fredericton in order to relieve heavy flood conditions expected in that area with the thaw. If so, has any decision been reached by his department in the matter?


Hon. Leon Balcer (Minisier of Transporl):: No such request has reached my office yet.



COMBINES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: should like to direct a question to the Minister of Justice. In view of the fact that senior officials of a number of companies in the United States have been imprisoned and fined for violation of the law with respect to their monopoly practices, has the minister instructed officials of the Combines Investigation Act administration to commence an investigation to ascertain whether the subsidiaries of these companies in Canada are guilty of the same practices?


Edmund Davie Fulton: wish to thank the hon. gentleman for having given me notice of this question. I can assure him that it is not necessary for me to give special instructions to the officials of the combines investigation branch in order to ensure that those officials are on the lookout for any improper or monopolistic practices.



Inquiries of the Ministry TRANS-CANADA HIGHWAY



QUEBEC-INQUIRY AS TO REPORTED CHANGE OF ROUTE

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I
direct a question to the Minister of Public Works and ask whether he has approved the proposed route of the trans-Canada highway in the province of Quebec as recommended by the provincial authorities, the route which goes through lie aux Tourtres instead of He Perrot.
Hon. D. J. Walker (Minister of Public
Works): The decision in connection with the route of the trans-Canada highway is a matter for each province with regard to that part of the highway which lies within that province. We are asked to consent to the route on which they decide and, tentatively, we have consented to the proposed route referred to by the hon. member for Laurier.


Lionel Chevrier: May I ask a supplementary question. Is the minister aware that one of his cabinet colleagues at a meeting in Dorion recently protested against this route? How does he reconcile this with the principle of cabinet solidarity?


Mr. Speaker:: Order. On reflection, if the hon. member wants to ask a question on cabinet solidarity I suppose he might ask it.


David James Walker: I have not read the article, and hearing this at second hand from the hon. member for Laurier I would not accept it as a facsimile of what was said.


Some hon. Members:: Why?


David James Walker: In the circumstances I will look into the matter in due course. In any event, I do not think I am called upon to answer a question which is, at best, facetious.


Lionel Chevrier: May I ask the minister a further question. Would the minister accept the statement as being first hand if I sent it over to him in a press clipping which appeared over the week end?


Some hon. Members:: No.


Mr. Speaker:: Order.



AGRICULTURE


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Can the parliamentary secretary to the Minister of Agriculture say whether the minister is making extensive additions to his public relations and information staff?


Mr. W. H. Jorgenson (Parliamentary Secretary to the Minister of Agriculture):: will take that question as notice.


John Whitney Pickersgill: Is the hon. gentleman not aware of it?



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I should like to direct a question to the Minister of National Defence or to his parliamentary secretary, notice of which has been given. This question is prompted by a communication received from the Canadian corps of commissionaires employed at the naval base, and also from the Canadian Legion at Sydney Mines. Can the minister advise whether his department is giving consideration to dispensing with the services of the commissionaires at this base, all of whom of course are veterans?


Mr. Egan Chambers (Parliameniary Secretary io ihe Minister of National Defence):: I should like to thank the hon. member for sending notice of this question to the associate minister, who is unable to be present in the house today. This question arises because of the study that has been going on at some naval stations to see whether a partial integration of security and firefighting services would be beneficial. At some locations this integration has been implemented; at others, one of which is Point Edward naval base, the responsible officers of the department have recommended that no change be made in the present arrangements.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. S. Speakman (Wetaskiwin):: Is the
Minister of National Revenue in a position to reply to the question which I asked on February 16 with regard to the removal of the CBX transmitter station from Lacombe, Alberta?


George Clyde Nowlan: I do not want to give a formal answer to that question today, Mr, Speaker. I have a report coming to me in writing which I have been advised about, and I prefer to wait until I get the written reply.


Donald Methuen Fleming: that the house go into committee of supply.



UNEMPLOYMENT


Lester Bowles Pearson: Mr. Speaker, last week we learned that on January 15 in this country 10.8 per cent of the labour force were out of work; that this was the highest level of unemployment for any month since the war, indeed for 20 years, and that it is the highest level of unemployment reached in any western industrialized country.
It is indeed, Mr. Speaker, a sad and worrying situation to the members of this house and particularly, I believe, to the Minister of Labour, who has a special responsibility for employment matters. It is no help in finding ways and means of alleviating this situation to have ministers of the crown travel around the country and, instead of putting forth positive proposals to deal with it, making sneering remarks about the attitude of the opposition when these figures, so distressing to everybody, are brought forward in the house. The other day the Minister of Trade and Commerce, who I am sorry to say is not in the house today, had this to say in a speech at Arnprior:
It is refreshing to see a man like President Kennedy face the facts before the nation.
It would have been even more refreshing after three and one half years to see the Canadian government not only face these facts but do something that would deal effectively with them. Until recently the government refused to see these facts, so obviously it was difficult for them to deal with them. In early 1960, when we on this side begged for action in this situation, which was serious enough then, we got reassuring statements from members of the government and we got criticism ourselves for daring to bring these matters forward as prophets of doom and gloom. The budget speech of the Minister of Finance last April is the best example of that kind of reaction.


Donald Methuen Fleming: It was in March.


Lester Bowles Pearson: In March; I beg your pardon. More recently, Mr. Speaker, we have had the Prime Minister's refusal to agree that the session called last autumn was in any sense a special session to deal with the emergency of unemployment, which was denied at that time. At present we have an obstinate and persistent denial to admit the existence in this country of any recession, even though it 90205-6-140J
Government Monetary Policy began a year ago and even though the President of the United States is not afraid to use that word in connection with his own country, where the situation is not as difficult as it is in this country in terms of unemployment and in certain other respects. Apparently, however, the order has gone out to change the tune in regard to ministerial statements, and this "go with the snow" motif has been dropped for the time being at least.


Paul Joseph James Martin: Except by the Minister of Finance.


Lester Bowles Pearson: The Minister of Trade and Commerce, in his speech at Arnprior a few weeks ago which I have already mentioned, had this to say:
We are facing a difficult time and things are going to get worse before getting better.
The Minister of Public Works made the same statement, and over the week end the Minister of National Revenue said the same thing in London, that things would probably get worse before they get better. I should warn these ministers that on the basis of their own reactions to statements made on this side they are leaving themselves open to the charge of doom and gloom, of giving aid and comfort to the communist enemy, as one minister of the crown interpreted statements made from over here not so long ago.
Well, Mr. Speaker, the words, or some of them, may be a little more realistic now, but these words are not yet being followed by action in any way adequate to the present situation. Even the relatively timid proposals of the baby budget of two months ago are not yet implemented.
Now the government is apparently attempting a new tack by admitting the seriousness of the problem of unemployment, which indeed it is hard for them to deny in the face of the facts, but by placing the major share of the responsibility for doing something about it on everybody else but themselves. As the Ottawa Citizen of February 2 said in a headline to a statement by the Minister of Trade and Commerce, "Hees Blames Canadians for Slow-Up".
The Minister of Labour has recently suggested that the government has certainly done its share in meeting the problem, and that further action must now come from labour and management. Over the last three years, Mr. Speaker, we on this side have put forward and have repeated suggestions regarding economic and fiscal policies which in our view and the view of many outside the house would have combatted unemployment and combatted recession.


Mr. Campbell (Stormont):: What suggestions?


Lester Bowles Pearson: What recession?

Government Monetary Policy


Donald Methuen Fleming: He said "What suggestions".


Lester Bowles Pearson: A recession which has resulted in 10.8 per cent of the people of this country being out of work.


Donald Methuen Fleming: He did not say
"what recession"; he said "what suggestions".


Grant Campbell: The Leader of the Opposition misunderstood me. I said "what suggestions".


Lester Bowles Pearson: I apologize. I thought the hon. member said "what recession". I am told now that he said "what suggestions". If he will read his Hansard he will find out about the suggestions, and he will find out more before this debate is concluded. It is quite clear, however, to any student of this matter that economic policy and fiscal policy cannot do the job alone, that they must work with and be co-ordinated with other governmental tools, that they must be supplemented by sound debt management policies to promote confidence in our financial markets, and by sound monetary and credit policies to make credit easier and cheaper at this particular time.
These are the two aspects of employment and economic policy that I want to deal with in my remarks and the amendment I intend to move. The Prime Minister told us last week that the labour estimates would be called tomorrow, so we have a right to expect a general debate on other aspects of the unemployment problem without delay, perhaps on Wednesday of this week. The best occasion to go into the whole question of unemployment will be on the estimates, which we expect will be taken up not later than this week. That will enable us to get answers from the Minister of Labour to the many questions we have and, furthermore, it will permit many members to take part in the discussion rather than the small number able to participate in a debate of this kind on the motion to go into supply.
Today, Mr. Speaker, as a backdrop and as a preliminary to the discussion of unemployment which we expect to have on the estimates of the department beginning on Wednesday of this week, I want to initiate a discussion of one of the root causes of our current recession and of present unemployment, namely, the irresponsibility of the government in the field of monetary policy and its incompetence in the field of debt management.
We have already criticized the government more than once in the House of Commons for its inadequacy in these fields. We have criticized the government for its monetary policies, if it has any monetary policy, which I will
[Mr. Pearson.)
come to later; for its credit policies; for its debt management policies. That criticism has been echoed and underlined outside the house by bankers, by labour leaders, by financiers, by economists, by financial editors.
Specific and serious criticisms have been made by responsible persons against the government's monetary and financial policies, and up to the present at least the reply of the government to these criticisms has been that the government has no responsibility for monetary policies. When the governor of the Bank of Canada has made important statements in this and related fields, the Minister of Finance so far has refused to say whether or not the governor of the Bank of Canada is speaking for the government. Indeed, the minister has taken a very narrow, legalistic view of the responsibility of the government in this field.
The governor of the Bank of Canada makes his speeches, and he does not answer his critics because presumably he assumes that the government will do so. The governor of the Bank of Canada in Newfoundland and elsewhere has emphasized the danger of the import of capital from the United States at this time adding to our unfavourable balance, while the Minister of Finance goes to New York and emphasizes the fact that the government does not wish to do anything to discourage the import of United States capital for the development of this country. One contradicts the other in this field, and the result obviously is a feeling of instability, a feeling of uncertainty, a feeling of confusion in a field, that of bond markets and finance, where such confusion and uncertainty can do the most harm and where rumours and reactions can indeed be determining factors.
Because no one in this country is clear about what is happening, rumours obviously are rife. There are rumours of complete agreement between the minister and the governor, as indeed there should be, in regard to the content of the latter's speeches. There are rumours of serious division of opinion between them. There are rumours of divisions that exist in the cabinet. There are rumours that the governor of the bank has requested a series of controls which, to say the least, would have an unfortunate effect on our economy.
An economic consultant certainly not unfriendly to the government, Dr. J. R. Petrie, referred to these rumours in a recent speech. His reference to these matters is not only that of an expert but of an objective expert. He said this, and I quote from Dr. Petrie's speech of January 31, 1961, entitled "The Economic Scene in 1961", in which he

had some friendly things to say about government policy in these fields. He had this to say:
One is almost driven to the conclusion that we are creating a schizophrenic image as a result of Mr. Coyne's speech in Ottawa two weeks ago decrying foreign investment in this country, while the Minister of Finance stated the following day in New York that we welcome foreign investment. If Mr. Coyne really wants controls and the government gives in-God help us-then there could be a flight of capital from this country with disastrous consequences. If American investors pull their money out of Canada, it is not difficult to see a 10 per cent discount on Canadian funds- it could be even worse.
He went on to say:
In short the kind of "cures" which Mr. Coyne is advocating seem to me to be aimed at curing the symptoms rather than the cause of our troubles. If the newspaper reports of Mr. Coyne's ambitions are correct, then the final controls that he wants will determine where we work, what we build, what we make, what we consume and even determine how we live. This to me, gentlemen, verges on dictatorship, and I believe that we should fight against it with all our resources.
Mr. Speaker, that is a very serious criticism on a very important subject. Another criticism came from another non-political source. It came from the president of the Royal Bank of Canada in a pamphlet entitled "Maintaining Canada's Economic Independence". Mr. McLaughlin had this to say:
The soundest ground for the critics of exchange rate and monetary policy lies, not in second guessing the monetary authorities in the performance of their often unpopular public duties, but in urging that, if their operations were smoother, and especially if the direction of policy were made clear to the banks, the money market, and the public, a number of intermittent crises, and a host of relatively minor upsets in the market, would disappear.
Under the present system, with a floating bank rate completely useless as a signal, the banks are in the position of having to forecast not only the course of the economy-that's our job-but also the course of monetary policy-and that I maintain is not our job. I realize that the same uncertainties regarding the course of economic events and changes in public policy have to be taken into account by the governor of the Bank of Canada. For this reason all that the banks can realistically hope for is that they may be told, not what monetary policy will be in the future, but what it actually is at the moment. They must be content with "spot" not "futures", so far as monetary policy is concerned. The trouble today is simply that they do not get even this.
That is another very serious criticism, Mr. Speaker.


Grant Campbell: Would the hon. member permit a question at this point? As a newer member here in the House of Commons I am not thoroughly familiar with the control this government has over the Bank of Canada. Is the Leader of the Opposition seriously suggesting that the governor of the Bank of Canada should be summarily dismissed?
Government Monetary Policy


Lester Bowles Pearson: If the hon. member will possess his soul in that patience to which it is accustomed I will be dealing with that subject later in my speech.


Grant Campbell: A simple yes or no would answer my question.


Lester Bowles Pearson: Mr. Speaker, this is a very important matter, and I propose to deal with it, but not with a simple yes or no, as the hon. member will find out later. Perhaps he is accustomed to dealing with these complicated monetary and financial matters with a simple yes or no. Perhaps he would do the same with the government if he finds that its monetary policy is wrong. I would ask the hon. member if he would answer that question with a simple yes or no.
These are serious criticisms levelled against monetary and financial policy by experts in the field who are not influenced in any sense, as I am sure the minister will agree, by any kind of partisan consideration. These criticisms should be answered. It is time the government dealt with this matter and tried to clear up some of the confusion which does exist in this country by a definite statement of government policy, which we certainly have not had. I hope the minister will take advantage of this debate and consider it as an opportunity rather than, as he often does, an irritation, in order to deal with this matter in a responsible, informed and definitive way. Perhaps he will gives us yes or no answers to some of these questions. His intervention in this debate will, I hope, clear up rather than add to the existing confusion and uncertainty.
Mr. Speaker, there are four areas of controversy in respect of this general subject. One is monetary policy; one is debt management; the third is investment policy of the unemployment insurance fund through the investment committee, and the fourth is interest rates on housing loans. It is not only difficult in all these areas but in some impossible to know who is responsible for what. In all these areas serious mistakes have been made resulting in financial losses; resulting in unnecessarily high interest payments by government and by private borrowers; resulting in increased borrowings abroad and thereby in an artificial maintenance of the high premium on our dollar. The mistakes that have been made in these fields have weakened confidence in the bond market; have slowed down the forces making for recovery in 1958-59, and have hastened the recession in 1960, thereby adding to our unemployment difficulties during the recession.
Before I deal with some of the evidence of mismanagement in this field I want to

Government Monetary Policy deal with the question which has just been raised by the hon. member who wanted a categorical yes or no answer; to explain the question of who is responsible, and the question of governmental responsibility in particular. Here the confusion is complete. There are different views by the government as to its responsibility in these different areas. They accept the responsibility for some of them and reject the responsibility for one of the most important. The minister must in fact know that the fiscal, monetary and debt management policies cannot be separated without getting into trouble. Any attempt to separate responsibility in these fields, in the words of Professor Gordon, serves only "to confuse both the understanding of economic policy and the working of responsible government".
The governor of the bank has perhaps unwittingly added to the confusion by giving the impression in some of his statements that he was independent of the government in monetary policy while, at the same time, his responsibility extended beyond such matters. It is not, in fact, his obligation; it is the obligation of the government to explain and defend, if necessary, these policies; I refer to the conversion loan, the investment decisions of the unemployment insurance fund committee, and fiscal policies generally. Hence with the silence of the government and the speeches of the governor, this situation with regard to the two responsibilities could hardly be more confused or more unclear and unsatisfactory.
There is no reason for this confusion in this field of responsibility, because under our statutes and under our system of responsible government the situation is clear. The conversion loan, which is one of the things I have mentioned, was, of course, a debt management decision. There should be no doubt about where responsibility lies there. It is the direct and exclusive responsibility of government, and I am sure it will be accepted as such by the Minister of Finance. In this matter the bank is merely the fiscal agent of the government and certainly cannot be blamed for any policy decision before, during or after the conversion loan, or on this matter of debt management, any more, indeed, than a deputy minister can be blamed for the decisions of his minister irrespective of the advice which he gave his minister.
The investment decisions concerning the unemployment insurance fund are also the sole responsibility of the government. The act is clear in that regard, namely that the investment committee is responsible to the government. The fantastic decision taken in the summer of 1958 to convert all the victory bonds of the unemployment insurance fund

into new conversion bonds was essentially a decision of the government, for which the government must take responsibility. The responsibility is not that of the members of the committee, the chairman of which, of course, is the governor of the Bank of Canada and one member of which is nominated by the Minister of Finance, I believe, and the other by the Minister of Labour.
Then we reach the question about responsibility for monetary policy generally. In the preamble to the Bank of Canada Act, often quoted in debates on this subject, parliament has given wide powers to the bank, that is to say to regulate credit and currency in the best interests of the economic life of the nation. That situation is as it should be. The bank, like several other public corporations, however, has an immediate responsibility to the government and an ultimate responsibility to parliament. The governor and the directors are appointed by the government. They can be removed only by parliament, it is true. The budget of the bank is approved each year by the government.


Donald Methuen Fleming: Do I understand that the Leader of the Opposition is saying that the budget of the Bank of Canada is approved each year by the government?


Lester Bowles Pearson: That is what I said, Mr. Speaker.


Paul Joseph James Martin: Surely that is the case.


Donald Methuen Fleming: That is the latest mistake.


Lester Bowles Pearson: Perhaps the minister will point out what the situation is when he replies. If the minister is now saying that the government of this country has no responsibility for the budget of the Bank of Canada, perhaps he will explain that statement when he speaks. Therefore, although the bank has been given wide powers and specific and important functions, the government, as we see it on this side and as we have seen it for many years, must accept full and sole responsibility for the way in which those powers are exercised and the manner in which those functions are carried out.
Surely that is what responsible government means. The idea that such an agency as the Bank of Canada can report to parliament through the minister without that minister taking final responsibility for its over-all policy, as contrasted with its day to day administration, is both inadmissible and unconstitutional. It would place executive power and responsibility in this field either in the hands of the legislature itself or in the hands of a public servant. This denial by the

government of responsibility for monetary policy is merely an effort to evade an inescapable obligation.
That doctrine does not-and I will anticipate this criticism-involve, of course, any interference in the day to day management and operations of the bank. It does not make the bank a department of government or anything like that. The bank should be free of that kind of interference. However, it involves full and sole responsibility for policy orientation and policy content in the hands of the government. No royal commission and no government can change that basic principle of responsible government. That is something that could be done only by a change of legislation, and any such attempt would certainly involve a grave constitutional issue.
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign. If the governor carries out the general policy in the monetary field without any indication of government disapproval, and as the government is responsible ultimately for monetary policy, I think the governor has a right, as we have, to assume that the government of the day is not opposed to the policy he has put forward.
That is the clear line of responsibility for monetary policy followed in all parliamentary democratic systems. It was made perfectly clear in the United Kingdom recently in the Radcliffe report with which I know the minister is familiar. The responsibility of the government and the powers of the bank in this country were laid down in the Bank of Canada act of 1936. The minister of finance of that day-


Donald Methuen Fleming: It was before 1936.


Lester Bowles Pearson: The Bank of Canada Act of 1936. When it was discussed in this house the minister of finance of that day, Mr. Dunning,-


Donald Methuen Fleming: The act was passed prior to that time.


Paul Joseph James Martin: It was not a
publicly owned bank.


Lester Bowles Pearson: I am talking about the Bank of Canada Act, 1936, as found at page 3620 of Hansard of June 1 of that year, the minister of finance of that day insisted that the government should be given adequate control over the bank. In 1941 the then minister of finance, Mr. Ilsley, on June 13 of that year in the House of Commons, as reported at page 3936, emphasized the necessity of control by the government over the policy of the central
Government Monetary Policy bank, and pointed out that a bank management unwilling to carry out government policy would have to resign. The same decision was taken in 1951 by the then minister of finance, Mr. Abbott, on June 20, as reported at page 4383 of Hansard of that year, when he said that ultimate responsibility must fall upon the government; and of course that is where it belongs and beyond the government, of course, parliament, if it desires to change the legislation. In the banking and finance committee of the house in 1954, as the Minister of Finance knows because he attended those sessions, the governor of the Bank of Canada expressed agreement with the interpretation of responsibility which I have just given.


Donald Methuen Fleming: At what page?


Lester Bowles Pearson: The minister of finance of that day, Mr. Abbott, reaffirmed that position before the committee, as may be found in the committee minutes and proceedings of that year at pages 714, 883 and 1348; and on that occasion that interpretation of responsibility was insisted upon by the hon. member for Greenwood and by the Minister of Finance himself-


John Whitney Pickersgill: That is the present Minister of Finance.


Lester Bowles Pearson: -as I should have said, the present Minister of Finance in interventions which in due course will be put on the record of Hansard. Nothing happened-and again I will anticipate what the minister will undoubtedly reply-in 1956 to alter this position with regard to responsibility by any statement on behalf of the government of that day. The then minister of finance, Mr. Harris, indeed confirmed the traditional doctrine and did not try to deny government responsibility. He stated in very clear terms, notwithstanding some misinterpretation that has been given to his words, that the government did accept responsibility for monetary policy. Here are some excerpts, to substantiate my statement, from a speech made by Mr. Harris on August 11, 1956, as resported at pages 7456 and 7457 of Hansard: In these circumstances, what kind of fiscal and monetary policies are appropriate? In the first place I would say-
And this is important:
that government policies should not contribute unnecessarily to the increased demand for goods and services.
Then he said:
The government is satisfied, and I believe that the vast majority of informed observers are satisfied, that under the economic conditions of the past 12 months it was desirable to moderate the rate of monetary expansion.

Government Monetary Policy Those economic conditions were conditions of boom. Mr. Harris went on:
I know of no responsible person who argues openly for inflation as a solution to the problem of excess demand.
1 need hardly say that a condition of "tight money'' performs a very important function in our kind of economic system in present circumstances. That is because it compels the borrowers and the lenders of money to review their plans and, if necessary, to revise them. This helps to ensure that the aggregate of all spending plans is consistent with the aggregate production that is physically possible.
Then there is this paragraph:
It is right and proper that our fiscal system at this juncture should emphasize additional restraint in public spending wherever possible. It is equally appropriate that monetary policy should assist by exerting a moderating influence on the expansion of credit.
I ask you, Mr. Speaker, was that not the acceptance of responsibility for monetary policy by the minister of finance at that time? The position on this side today is that taken by Messrs. Dunning, Ilsley, Abbott, Towers, Mackenzie King, Macdonnell, the member for Greenwood, the present Minister of Finance (Mr. Fleming). Indeed, the present Minister of Finance dealt with this matter with his characteristic dogmatic vigour-


Donald Methuen Fleming: Clarity is the word.


Lester Bowles Pearson: Yes, he was very clear on this point, and perhaps he will reaffirm his support for this statement at this moment. If he does he will clarify the issues very considerably. In doing so, of course, he would have to contradict what he has been saying more recently. But this is what he said on August 11, 1956, as reported in Hansard at page 7459. I am sure the minister does not even need the reference:
The minister has a very direct responsibility-
That is the minister of finance:
-because the action taken by the Bank of Canada in this respect surely has a direct influence on the whole field of action and on the whole field of responsibility of the government in relation to fiscal matters.


Donald Methuen Fleming: Yes, in relation to fiscal matters.


Lester Bowles Pearson: The Minister of Finance continued:
I say, sir, that the government cannot shed its responsibility for full fiscal policy in the broadest sense of the word, and that must include the actions of the Bank of Canada-
Perhaps the minister will agree.


Donald Methuen Fleming: Go on.


Lester Bowles Pearson: The quotation continues:
-even when, in a technical sense, those actions are taken by the governor of the Bank of Canada in the exercise of the powers conferred upon him by the Bank of Canada Act.

He said, even when the governor of the Bank of Canada acts in the exercise of the powers conferred upon him by the Bank of Canada Act, in a technical sense. The Minister of Finance of today, the hon. member for Eglinton then, insisted that the government could not escape its responsibility for those actions, and we ask the government today to take exactly that kind of responsibility. But the government now has a different view. That view was expressed by the present Minister of Finance on April 28, 1959 as reported in Hansard at pages 3098 and 3099, when he said this:
... in the matter of monetary policy this parliament has placed the responsibility and . . . power-
I emphasize those words, "responsibility and power":
[DOT]-in the hands of the Bank of Canada. The government does not exercise any sway in the field of monetary policy.
In regard to something which is decisive and at times determining and always important in the whole field of fiscal and economic policy, the Minister of Finance today says that the government does not exercise any sway in the field of monetary policy. He says "We leave monetary policy and all it stands for", with its indivisible relationship to fiscal and economic policy, "in the hands of the governor of the Bank of Canada. Fiscal and debt management policies, yes; we take responsibility for those. Monetary policy", which is inseparable from those, "no, we take no responsibility".
I say that such division is impossible if confusion and uncertainty are to be avoided, though it is apparently now acceptable to the minister, and I gather it is also acceptable to the bank. I hope the minister will now accept, and not evade this ultimate responsibility by the government, and behind the government by parliament. I hope that in accepting it he will remove doubts, misunderstandings and uncertainties regarding the relationship between the governor of the Bank of Canada and himself, and that he will indicate his own position and that of the government with regard to positions taken and policies that have been advanced by the governor of the Bank of Canada.
After all, the minister and the government did not hesitate to interfere with the operations of monetary policy by the bank, so they should not attempt to evade responsibility for policy-


Donald Methuen Fleming: Mr. Speaker, to what is the Leader of the Opposition referring?


Lester Bowles Pearson: I am thinking of the intervention of the government in the bank auction of treasury bills some time ago, which had

an influence on the rate on treasury bills. The minister knows all about it. He knows all about the cabinet meeting which was held and the auction being postponed an hour or two so the government could make up its mind what to do.


Donald Methuen Fleming: Is the Leader of the Opposition saying that was done to influence monetary policy?


Paul Joseph James Martin: It certainly was.


Donald Methuen Fleming: Such nonsense.


Lester Bowles Pearson: I say that was an intervention by the government in the operations of the bank in the field of monetary policy for which the minister said the government had no responsibility.


Donald Methuen Fleming: It had nothing to do with the bank operations.


Lester Bowles Pearson: The minister can answer that point later. The government is quite prepared to accept full responsibility for the level of interest rates on housing loans. That is something with which one of my colleagues will deal in more detail later in the debate.
So much for the question of responsibility. Now I wish to deal with mistakes that have been made in policy which have had a direct and harmful effect on the economy, on confidence, on national development, on the recovery from the recession and hence on employment. The first evidence of such mistakes is to be found in the field of debt management. Of course we dealt with this previously in the house. More particularly there is the mistake found in regard to the conversion loan. The conversion loan was a bad mistake.


Donald Methuen Fleming: Nonsense.


Lester Bowles Pearson: That is the general view held in the country by experts.


Donald Methuen Fleming: It is not held by any expert. What experts?


Lester Bowles Pearson: We could cite dozens of experts.


Mr. Bell (Carlelon):: Name one.


Lester Bowles Pearson: I will indeed, and I will quote some.


Donald Methuen Fleming: Not experts.


Lester Bowles Pearson: That operation weakened confidence in the bond market and got us into monetary trouble. It was unnecessary, it was ill-timed and it was misconceived.


Peter Francis Martin: And costly.


Lester Bowles Pearson: And it certainly was costly. Certainly the seventh, eighth and ninth victory loans, and perhaps the sixth also, should
Government Monetary Policy have been excluded from it. That would have saved the taxpayers hundreds of millions of dollars and would have prevented an acute indigestion in the bond market at the time.


Donald Methuen Fleming: Do you realize what you are saying?


Lester Bowles Pearson: I realize what I am saying. Mr. Speaker, this sort of juvenile intervention by the Minister of Finance does not amount to anything in the way of argument.


Donald Methuen Fleming: You are making irresponsible statements.


Lester Bowles Pearson: If we say something on this side of the house with which the minister does not agree, he keeps on throwing out these interventions of "rot", "rubbish" and "nonsense". I would ask the minister to stop using these juvenile tactics and get on his feet afterwards and explain where we are wrong on this and where the government is right.


Donald Methuen Fleming: On a point of order-


Mr. Speaker:: Order. Is the hon. member rising on a point of order?


Donald Methuen Fleming: Yes. I did not use
at all the words attributed to me by the Leader of the Opposition. I simply said the statements were irresponsible.


Mr. Speaker:: I understood the Leader of the Opposition to be complaining about the interruptions he was receiving. Perhaps the minister, if he has an interruption to make, would rise, as he has now done, on a point of order.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: I was just appealing-


Mr. Macdonnell:: Would the Leader of the Opposition permit a question? I do not think the hon. gentleman wishes to be unfair. I want to ask him if he wishes to leave the impression that all people of expertise in the financial field were critical of the conversion loan. Does the hon. gentleman not know that many high ranking people still believe this operation was fully justified?


Lester Bowles Pearson: I did not state that all the experts were against it. I said there were many experts throughout the country who though it was ill-timed, ill-conceived and costly as an exercise in debt management.


An hon. Member:: Liberal experts.


Lester Bowles Pearson: Certainly not Liberal experts; people who are normally very friendly to the Conservative party. This kind of effort twc years afterwards to evade responsibility for an operation which went sour is not going to help.
2204	HOUSE OF
Government Monetary Policy


An hon. Member:: Throw him out. He is too young.


Mr. Speaker:: I am not able to hear the hon. member tor Cariboo (Mr. Henderson) well when he is seated.


Lester Bowles Pearson: I am glad to see that the hon. member for Cariboo is still concerned about this matter, and I am sure he will wish to take part in the debate. I hope he will be given an opportunity, because this is a very important matter.
As to whether this operation was ill-timed, it was, of course, undertaken at a time when the bond market was weak. The minister will surely agree with that.


Donald Methuen Fleming: I will not.


Lester Bowles Pearson: The minister says "I will not". I thought the hon. gentleman might intervene at this time and say that. But this is what he said in 1959-


Donald Methuen Fleming: Would the Leader of the Opposition confirm the fact that he used the word "undertaken"?


Mr. Speaker:: Order. The Leader of the Opposition has the floor unless he has yielded it.


Donald Methuen Fleming: He has yielded.


Lester Bowles Pearson: I said that this operation was ill-timed, that it was undertaken at a time when the bond market was weak, and the minister said that was nonsense, or that it was not so, or something like that. Well, as reported on page 2411 of Hansard of April 9, 1959 the minister said:
After some signs of strength in the earlier months of 1958 the New York bond market broke sharply in mid-June, and continued a pronounced downward trend to the end of the year. The Canadian market, with some variation followed this general trend.
I am grateful for that support for the argument I am advancing that this operation was ill-timed. I think, also, it was misconceived in its objective of 100 per cent conversion of the $6.4 billion of victory bonds, and I have already stated that some of those earlier maturing bonds might well have been left out of the conversion. Before the operation began those bonds were all selling under par. The government established an artificial market and offered to buy them at par during the period of the loan. The Bank of Canada supported the prices of the new bonds after the end of the loan which kept them at par. That, of course, resulted in a very substantial windfall accruing to-what shall I call them-some of the better informed bondholders at the expense of the taxpayers amounting to many millions of dollars. The high pressure campaign-we all


remember it-was, of course, very successful. Many Canadians acquired long term bonds not really suited to their more or less immediate need for cash, and when they had to sell them they suffered heavy losses. Moreover, to ensure this so-called success-the minister insists that it was a success-unprecedented high rates of interest were given and a new burden was placed on the taxpayers. Oh, there were beneficiaries all right, but they did not include the taxpayer; they did not include a great number of the small investors, and they did not include the government itself.
Here is what Professor Scott Gordon has to say in his recent book about the conversion loan. I do not think anybody would suggest that Professor Scott Gordon is a Liberal or a Liberal sympathizer. Here is what he has to say:
The real significance of the conversion is that it proved to be the beginning of a series of acts by the monetary authority which has produced extreme instability in the finance market. The conversion loan itself so racked the prices of government bonds about that they had to be regarded as assets with uncertain and unstable market values. The government bond market was changed from one where savers, make long term investments to one where speculators gamble on the next swing of the pendulum.
Now what about the management of the unemployment insurance fund? What about the actions of the investment committee of that fund, for which the government, we claim, must take responsibility?


Mr. Bell (Carleton):: Would the hon. gentleman permit a question? Is that the only expert the hon. gentleman proposes to call in relation to the conversion loan?


Lester Bowles Pearson: Professor Scott Gordon is one expert. There will be many of them called before the debate is over. I do not intend to take up all the time of the house in this debate, but we shall satisfy the hon. member for Carleton; and he can bring his experts forward, too. The facts speak for themselves in this matter.
The unemployment insurance fund is another victim of the conversion loan and of mismanagement by the government. That surely has been documented already beyond argument. At the time of the loan this fund stood at $640 million in government securities, $300 million in victory bonds, plus $340 million in other long term government bonds and C.N.R. securities. The position, therefore, was highly illiquid at a time when new and serious demands were bound to be made on it, as anyone who knew anything about the economic picture and the unemployment picture would have known. The fund could have corrected its position during the period of the loan. It could have sold its bonds at par, bought

treasury bills and short term securities, and thus put itself in a better position to meet those demands which were bound to occur in view of the picture at the time. Instead, the investment committee of the fund converted victory bonds into conversion bonds, more than half of them into long term 1972 bonds. Remember, Mr. Speaker, that this fund is no ordinary fund. It is a trust fund financed 40 per cent by industry, 40 per cent by the workers and only 20 per cent by the government. This is a trust fund, and it should have been considered as such.
The conversion policy followed was not, we claim, in the interests of those who contributed to that fund. In order to comply with government policy the fund had to clear the decks and get everything converted. Later the fund had to unload in order to meet its obligations, which were increasing, as the minister must have known they would increase, so in January of this year this trust fund, held in trust for industry and workers, had lost $27 million in that operation; and in borrowing from the government to meet its needs at the rate of between 5 per cent and 5| per cent during the two years it had lost an additional $1.7 million. When the full impact of the government decision taken on July, 1958 is known-the full impact of exchanging victory bonds for conversion bonds-the total losses incurred by the fund will be close to $70 million.
The government must take responsibility for this gross mismanagement, and that mismanagement should be investigated before we are asked to replenish the fund as, indeed, we shall be asked to do, because by May the fund will be very low indeed.
I want to say a few words about the operation of monetary policy generally. The Bank of Canada is required by parliament-and these words have already been quoted:
To regulate credit and currency in the best interests of the economic life of the nation,- to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action
That surely means, Mr. Speaker, that an active policy on monetary matters and expansion should be followed during recessions when production and employment are declining, and that monetary restrictions should be used in periods of boom, along with other tools of government policy, to prevent rapidly rising prices. Well, let us see what has been the orientation of our monetary policy in the light of that requirement in the Bank of Canada Act.
First let us look at the recession of late 1957 and 1958. During that period the money supply was not materially increased-I think
Government Monetary Policy by about $200 million on a comparable basis, over the preceding period, when the government put into effect monetary restrictions because of boom conditions. After 1958 forces in this country began to move for recovery; the economy began to get going again and ministers told us at that time that the recession was over. Let us look at this period in terms of monetary policy. What happened from April to October, 1958? We had the largest monetary expansion during that period since world war II, an expansion of $1.4 billion. That expansion was too large and came too late for the needs and stability of the economy, as indeed the governor of the Bank of Canada recognized in his report in 1958. Why, then, did it take place? It took place to help the conversion loan and enable the minister to claim that the conversion loan had been an unprecedented success. It was not justified by sound monetary policy. It was attempted for debt management purposes.
The next period is from October, 1958 to March, 1960, when the trend toward recovery was continuing, though it was weak and there were danger signs ahead, which we on this side tried to point out at that time.
The peak of the last economic cycle, the peak of this trend toward recovery, was reached, I suppose, in the first quarter of 1960. During that period of recovery and at least of incipient expansion, there was still excess productive capacity and there was still high unemployment, so that there was no danger of a boom like the boom we had in 1956. Yet, during that mild recovery period monetary restrictions v/ere more severe than they were in 1956. Indeed, in 1956 the money supply increased slightly. But during the period October, 1958 to May, 1960 the money supply was actually reduced by more than $300 million, at a time when we were in only slow recovery and in no danger of a boom because there was lots of unemployment and there was excess productive capacity. Yet, notwithstanding that, the money supply was reduced by the amount I mentioned. The decline and dislocation of the financial markets after the conversion loan, as well as huge government borrowings necessitated by its past deficits, the great scarcity of funds and the highest interest rates since the 1920's, forced provinces and municipalities to borrow in the United States market and kept the dollar premium up. In short, Mr. Speaker, the recovery of 1958, greatly weakened by the restrictive monetary policy of 1959 and by the government's debt management policy, resulted in a loss of confidence in the financial markets. That helped to slow the speed and prevent the deepening of that recovery. Therefore from April,

Government Monetary Policy 1960 to the end of the year, beginning with the second quarter of 1960, we had this trend toward recovery reversed, and we found ourselves in another recession. In the second quarter of 1960, there was a drop in the gross national product which was the greatest in the post-war period. Yet, from April to the end of August last year, in the face of this condition, the money supply was kept almost stable.
From October there was a fairly rapid increase to facilitate the issue of Canadian National Railway bonds, and after that increase the supply began to decline again, although I confess nobody is quite sure where we are in that regard at this moment. Again, as in 1957 and 1958, the increase in the money supply was too late and was decided not by considerations of sound monetary policy but by the requirement of debt management. The inescapable conclusion that must be drawn is that monetary policy, for which the government claims no responsibility at all, has become a mere instrument of debt management, for which it admits full responsibility. When the government's borrowing causes congestion in the securities markets then the money supply increases; otherwise it is kept more or less constant, presumably to minimize the inflationary potential created not by boom and expansion but by sporadic and rapid increases necessitated by debt management.
This, Mr. Speaker, is the situation, as we see it, as regards the government's operation of monetary policy for which they take no responsibility. In short, Mr. Speaker, credit and currency have not been regulated as required by the act "to mitigate fluctuations in the general level of production, trade, prices and employment". The primary role of the Bank of Canada in implementing monetary policy has been subordinated to the requirements of its secondary role as fiscal agent of the government.
I recognize, Mr. Speaker, that this is a very serious criticism but is it not confirmed, at least implicitly, by the governor of the bank himself in his speeches made as a public servant on matters for which the government, and not he, has the ultimate responsibility? For these reasons we think the content, the orientation and the whole question of government monetary policy in recent years should be investigated. Is it, for instance, wise to let the bank rate be determined by the average rate of treasury bills fixed by weekly auctions? Why has the bank never used the cash reserve power it was given in 1954, but has established a minimum liquid assets ratio which is not provided by the act?

Why, since 1957, has monetary policy not made the contribution required by our legislation to mitigate recessions, and why does the governor feel that there is no special obligation in this respect, as he said recently in his speech in Newfoundland?
May I say just a few words in conclusion before I move the amendment?
The general orientation of our monetary policy has been strongly and rightly criticized since the fall of 1957 by many, though not all, highly respected experts-bankers, economists, financial editors, financial commentators. More recently these criticisms have increased both in number and in vigour. We now hear persistent rumours that the government intends to set up another royal commission to investigate the operation of the Bank of Canada generally, and those criticisms. No doubt, if it is done, this device could delay for two or three years the solution of an urgent and important issue which no royal commission can solve.
In the present economic circumstances it is quite normal to expect criticism of monetary policy. Such criticism, if it is legitimate, if it is valid, should not require a royal commission but a change of policy on the part of the government. As I see it, however, that is not the most important aspect of the current issue. It is most regrettable indeed that the Bank of Canada has become the centre of the present controversy because it may weaken seriously the prestige and the authority of a most essential institution whose prestige and authority in this country since it was established have been strong and which has commanded the highest respect. Yet, Mr. Speaker, this danger, this unfortunate possibility, and I will go no further than that, became almost inevitable because of the vacuum created by the government's refusal to accept any responsibility for mon- [DOT] etary policy. The central issue, then, can be summarized by the following question: Who is or who should be responsible for general monetary policy?
I suggest that we cannot wait for two oi three years to get an answer to that question and to solve such a basic issue. I am quite sure that all hon. members in this house will agree that in our system of responsible government the general direction of monetary policy should not be turned over to any public servant. There should not be any disagreement about this because monetary policy is an essential and basic aspect of general economic policy which is indivisible from it and for which the government and parliament must take responsibility. I would be very surprised indeed if the hon. member for Greenwood (Mr. Macdonnell) did not agree 100 per cent with that doctrine. If the government does

not accept this position, then we do indeed face a major constitutional crisis. So we expect the Minister of Finance (Mr. Fleming) to make a clear statement on behalf of the government on this question during this debate.
The Minister of Finance, contrary to what he has said in opposition, has been contending that such an over-all responsibility has been assigned by parliament to the Bank of Canada. We do not accept that interpretation of the Bank of Canada Act because, among other things, it would be completely incompatible with our system of responsible parliamentary government. If the government maintains its position during the present debate, then the best way to determine this issue is to refer it at once to the banking and commerce committee which could have full power of examination and the right to call expert witnesses and which could begin its work immediately.
If the committee comes to the conclusion that under the provisions of the present act the government has responsibility, then let the government discharge that responsibility. If the committee decides that parliament has assigned complete responsibility for monetary policy to the Bank of Canada, then the government should take the initiative as soon as possible during the present session and introduce an amendment to the Bank of Canada Act in order to correct this fundamental weakness.
One thing surely is obvious. The present uncertainty and confusion must be cleared up as soon as possible. That cannot be done by a long drawn-out royal commission. It can be done effectively and quickly by the government either by recognizing now that it has the responsibility for the general direction and control of monetary policy or by having the banking and commerce committee investigate and report on this matter without delay.
As far as we are concerned, Mr. Speaker, we are convinced that the government has such a responsibility. We say that it must also answer for public debt management, interest rates on housing loans and the management of the unemployment insurance fund. We believe that the government has mismanaged this whole matter, one of such great importance to our economy and of particular importance to our economy at this particular time. Therefore, Mr. Speaker, I move, seconded by the hon. member for Kenora-Rainy River (Mr. Benidickson):
That all the words after the word "that" be deleted and the following substituted therefor: "this house regrets the refusal of the government to accept and discharge its proper responsibility in the field of monetary policy and its demonstrable incompetence to manage the public
Government Monetary Policy debt in the interests of the Canadian people, resulting in unduly high interest rates, erosion of business confidence, and consequent deepening and lengthening of the economic recession."


Mr. Fisher:: On a point of order, Mr. Speaker, I should like to ask your opinion of an amendment which has the house regretting its own demonstrable incompetence. I would draw your attention to the amendment. If you parse the sentence I think you will find that the way the amendment is now grammatically constructed we have this house regretting its own demonstrable incompetence. I suggest to you that this is quite apparent from the grammar of the sentence and it seems to me it would invalidate the amendment completely. I do not want to make any remarks with respect to the grammatical competence of the people who framed the amendment. I would appreciate having your views in the matter.
If you want to come down to specifics, I would ask what the "its" refers to. It is apparent that in the mind of the person who framed the amendment the antecedent of "its" was "government". However, I suggest to you that according to the structure of the sentence it must go back to "house". Therefore I think I have a valid point of order.


John Whitney Pickersgill: Mr. Speaker, on this egghead point of order, if I may say so, I may say I have always understood it is the normal rule of construction when there is some doubt as to the antecedent of a pronoun that the next immediately preceding noun to which it can apply is the one to which it does apply. It is perfectly obvious that the next preceding noun to which it can apply is "government" and that, of course, is its clear intent.


Hazen Robert Argue: Did you draft it?


John Whitney Pickersgill: No.


Douglas Mason Fisher: On the point of order, if we are going to accept the argument of the hon. member for Bonavista-Twillingate I suggest that the next antecedent is "refusal" which comes between the grammatical antecedents "house" and "government".


John Whitney Pickersgill: I said the preceding one to which it could reasonably apply.


Herbert Wilfred Herridge: Mr. Speaker, from the official figures we understand that at the present time there are nearly 700,000 unemployed Canadians, or 10.8 per cent of the total working force, and ministers have told us that they expect the situation to get worse. Without any question, that is an emergency. Repeatedly during recent days we have heard demands from the official opposition that the government have a day's debate on unemployment. We in this group have sat here with bated breath waiting for

Government Monetary Policy the cannon's roar on unemployment. We have been disappointed. We have just finished listening to the pop gun in respect of one segment of the problem that faces us at this time. We were surprised; we were amazed; we were disappointed. We intended if possible to move such an amendment to the motion to go into supply, but under the rules we were denied the opportunity while the official opposition had the right to properly move a prior amendment. I am sure that the unemployed in Canada will not consider the effort of the leader of the official opposition this afternoon as taking full advantage of the time provided by the rules to deal fully with this serious question of unemployment.
As I have said before, this amendment deals with one important and somewhat highly technical aspect of the cause of unemployment, as has been mentioned by members of this group on repeated occasions.
Once again let me draw to the attention of the house the fact that we were pleased to note that the leader of the official opposition did again put forward one of these proposals which was made previously by the members of this group, namely, that this problem, and the report of the Bank of Canada should be referred to the committee on banking and commerce. There is no question that there is a growing demand in various quarters for a recognition of the influence of the monetary and fiscal policy upon the economic situation that we are suffering from today. That is clearly indicated, as the leader of the official opposition and members know.
There has been a demand from the president of Canada's third largest bank for a thorough examination of the financial responsibilities of the Bank of Canada in respect of the country's unusual financial structure. N. J. McKinnon, chairman and president of the Canadian Bank of Commerce, told his firm's annual meeting that such a study should be painstaking, deliberate and unhurried, in order to allow the most careful consideration and to reach wise conclusions. The heads of the labour movement in this country, including the C.L.C., have asked for a monetary inquiry. Canada's top labour leaders have called for a full-scale royal commission investigation of the monetary policies of the Bank of Canada and James E. Coyne, its controversial governor.
According to a report in the Leader-Post of February 2, 1961, it is stated that fiscal policy, no matter how good, will achieve little if monetary policy is pulling the other way. The report goes on to say that the central bank is apparently sticking to a relatively tight money policy when the opposite is required. Second, its policy has resulted

in higher interest rates in Canada than in the United States, which has encouraged Canadian borrowing on the New York money market. Third, the report states that the instability of the bond market and the accompanying wide swings in interest rates must be attributed in part to the management of the Bank of Canada.
We also have Mr. Gordon, the well known economist who has criticized the present fiscal policy of the Bank of Canada, suggesting that this whole matter should be studied. We have had university professors from various parts of Canada giving voice to very similar opinions and criticisms. It is obvious that there is widespread nervousness and growing apprehension in regard to the effect of the fiscal and monetary policies of this government and the Bank of Canada, and a suggestion that they are not conducive to the solution of this very serious unemployment question.
Mr. Speaker, I must say that we in this group on these occasions have to speak more or less off the cuff. The only research department that I have is the member for Kootenay West, so I have to do the best I can without preparation. I will put forward in general, without going into detail, the views of this group with respect to this amendment.
As the leader of the official opposition mentioned, the government claims it has no responsibility in this field. We shall look forward with interest to what the Minister of Finance (Mr. Fleming) has to say with respect to that statement. There is growing confusion and concern in the public's mind with respect to the delay on the part of the government to crystallize its own policies and attitude toward the monetary and fiscal policy. Therefore, although the amendment does not deal with our point of view as socialists, and I speak as a democratic socialist realizing that we are living in a sick society, we support the amendment which deals with one important segment of the problems that face us today.
This group are socialists in their thinking. Someone might say, what is socialism? We say from a philosophical point of view that socialism is the search for truth in all fields; the building of the good life for all, and the worship of beauty in all its aspects so far as creation is concerned. That is the sort of philosophic phase of socialism in which we believe.
What about the economic aspects of our socialist philosophy? As I said before, we believe this amendment only deals with one segment of the problem. We believe this must be related to the other segments of the problem if we are going to have any effective action in order to meet unemployment at this

time. We believe in over-all planning. We feel there must be planning on an over-all scale. There must be a plan in respect of this policy; there must be co-operation between the federal, provincial and municipal governments, there must be co-operation between labour and management. However, in order for that to occur, or for it to be possible, it is necessary for this government, as a federal government, to give leadership in this field.
I have said that we are in a sick society. Sometimes when I read newspapers and much of the correspondence that I receive, and when listening to the debates in this house, I realize more than ever that we are living in a very sick economic society.
We have on that side of the house, Mr. Speaker, a government which is aiming to administer Toryism without tears. We have in the official opposition a group of kindly, well-intentioned gentlemen who are trying to put forward Liberalism with latitudina-rianism. Then we have some who believe we can have socialism without sweat.


An hon. Member:: With senility.


Herbert Wilfred Herridge: That indicates the sort of opinion held by some members, and illustrates their concern. It also illustrates to some extent the confusion that faces people at this time.
Mr. Speaker, I said we were democratic socialists, and we believe in economic democracy-and I am speaking of this amendment-and it would be only in keeping for me to explain in some detail what I mean by that. Sometimes we are misunderstood. The public sometimes are not properly informed of what we say in the house and in the country. As I said before, we believe in economic democracy. We are democratic socialists. Socialism seeks to replace capitalism by a system in which the public interest takes precedence over the interest of private profit. I said "precedence"; that does not mean to say that there will not be private profit. The immediate economic aims of socialist policy are full employment, higher production, a rising standard of life, social security and a fair distribution of incomes and property. Who can disagree with those aims? No one, surely, can disagree with them. I even see one of the hon. members opposite apparently indicating that he does not dissent with that statement.
In order to achieve these ends production must be planned in the interests of the people as a whole. Such planning is incompatible with the concentration of economic power in the hands of a few. It requires effective democratic control of the economy. Democratic socialism therefore stands in sharp contradiction, let me emphasize, both
Government Monetary Policy to capitalist planning from which we suffer to some extent today as far as corporations are concerned, and to every form of totalitarian planning; these exclude public control of production and a fair distribution of its results.
Socialist planning can be achieved by various means. The structure of the country concerned must decide the extent of public ownership and the forms of planning to apply.
Public ownership can take the form of the nationalization of existing private concerns in the federal, provincial and municipal fields and co-operative ownership on a wide scale. As we have said repeatedly before, there is ample opportunity for what we would term legitimate private enterprise.


Mr. McGee:: Will the hon. member tell us from what document he is reading at the present time?


Herbert Wilfred Herridge: It is a very sound document indeed. I am reading from a document containing socialist first principles; I am reading in part, not in full.


Mr. Horner (Acadia):: Will the hon. member permit another question?


Herbert Wilfred Herridge: This document is a cooperative effort. In this respect it is different from the policy of the Progressive Conservative party or the policy of the Liberal party. This document was drafted as the result of a circular sent to all C.C.F. clubs in Canada where these policies were discussed. Then, they were forwarded to provincial conventions and from there to the national convention where the document was drafted as a result of resolutions at the national convention. I note that the hon. member for Cariboo has risen in his place, Mr. Speaker.


Mr. Henderson:: I should like to tell you my side of socialism. In San Francisco one day, there was on the street corner a gentleman such as the hon. member for Kootenay West-[DOT]


The Acting Speaker (Mr. Rea):: Order.


Herbert Wilfred Herridge: Mr. Speaker, I am sure we all enjoy the interruptions of the hon. member for Cariboo, but at the moment we are dealing with Canadian affairs. I hope I may be allowed to proceed and to refer to this document where necessary.
Socialist planning does not presuppose public ownership of all the means of production.


John (Jack) Henry Horner: Will the hon. membei permit a question?


Herbert Wilfred Herridge: Oh, certainly.

Government Monetary Policy


John (Jack) Henry Horner: Will he tell us what socialist planning has done for employment in the province of Saskatchewan, and for the growth and development of that province?


Hazen Robert Argue: Unemployment is lower than in any other part of Canada.


John (Jack) Henry Horner: What about the population growth?


Herbert Wilfred Herridge: My answer to that question is that the present C.C.F. or socialist government was elected in Saskatchewan in 1944 and it has been re-elected by the people of Saskatchewan continually to date. I cannot take the time to go into detail.


Hazen Robert Argue: At the last election no Tory member was elected.


Herbert Wilfred Herridge: That is a good point. The people have not elected a single Progressive Conservative in recent years.


An hon. Member:: And they will not do so in the next federal election.


Herbert Wilfred Herridge: In reply to the hon. gentleman, Mr. Speaker, I would say that our policies have had a greater appeal to the people of Saskatchewan than have the policies of the party to which he belongs.


John (Jack) Henry Horner: What have they done for the development of the province?


Herbert Wilfred Herridge: I leave that matter entirely to the people of Saskatchewan.


Walter Clarence Henderson: The people of Saskatchewan-


Hazen Robert Argue: Tell the hon. member for Cariboo to sit down.
The Aciing Speaker (Mr. Rea): Order. Will the hon. member for Kootenay West continue?


Herbert Wilfred Herridge: I rather enjoy these interruptions, Mr. Speaker. I did not hear what the hon. member for Cariboo just said but I suppose it was not of great importance.


Harold Edward Winch: If he does not listen he will not be back after the next election, much as I like him.


Herbert Wilfred Herridge: As I said, I am dealing with the fact that we believe there is an opportunity for legitimate private enterprise or free enterprise and by that we mean enterprise that accepts its responsibility to the community and works in co-operation with the federal, provincial and municipal governments according to an over-all plan, which is part of our policy. Trade unions, and organizations for producers and consumers are necessary elements in a democratic society; they should never be allowed to degenerate into the tools of a central bureaucracy or into a rigid corporative system. Such

economic organizations should participate in shaping general economic policy without usurping the constitutional prerogatives of parliament. That is why the socialist members of the group in the house-I refer to the members of the C.C.F.-are always among the first to protect the rights of this parliament and of legislature in general.
As a result of this economic democracy, which is the economic aspect of our philosophy, we believe that we can extend the individual freedom of all persons on the basis of economic security and increasing prosperity.
I have just mentioned these matters. I have not gone into detail on what we believe are the principles of economic democracy that are necessary to bring us out of the present situation or shall I say, to cure the present sick society in which we live. We admit that this amendment is a necessary amendment. It deals with one aspect of the problem but it is only a palliative; it deals with only one aspect of a constitutional disease.
In conclusion, Mr. Speaker, let me again emphasize that the members of this group are willing to co-operate and to support any immediate measure that alleviates, on a temporary basis even, the suffering of some Canadians from unemployment or ill health or the other sicknesses that prevail. We believe that what is necessary is a completely new approach and a new outlook to the problems that face our capitalist society.
In conclusion again, Mr. Speaker, let me re-emphasize our disappointment at the failure of the official opposition to seize this wonderful opportunity to deal in full with only the problem of unemployment,-


Paul Joseph James Martin: We are the only ones that dealt with unemployment.


Herbert Wilfred Herridge: -having regard to the hundreds of thousands of Canadians who are experiencing great distress and in view of their demands upon the government repeatedly in recent weeks for an opportunity to debate unemployment.


Mr. Eldon M. Woolliams (Bow Hiver):: Mr. Speaker, in rising this afternoon to speak on this motion may I say that, for the sake of the record, I think it would be a good thing to put the motion on the record once again. It reads as follows:
That all the words after the word "that" be deleted and the following substituted therefor:
"this house regrets the refusal of the government to accept and discharge its proper responsibility in the field of monetary policy and its demonstrable incompetence to manage the public

debt in the interests of the Canadian people resulting in unduly high interest rates, erosion of business confidence, and consequent deepening and lengthening of the economic recession."
I think any backbencher who rises to take part in this debate should first place on the record a few introductory words.
I do not think there is a member of parliament, irrespective of the political party to which he belongs, at the present time, or any time when we have had unemployment in Canada, who does not feel very sympathetic toward any group of truly unemployed people. I suppose all of us individually within our own parties have certain ideas and a certain philosophy as to what can be done in reference to unemployment.
As I understand the debate today, the official opposition has moved a vote of nonconfidence in the government in reference to its monetary policy. The official opposition says this government is the cause of unemployment. Therefore, I wish first of all to break down into three parts what I have to say this afternoon. Let us look for a few moments at the record of the past. Let us look at some of the things that have been done to encourage employment; and last but not least, let us answer some of the arguments put forward by the official opposition and the last speaker from the socialist group in the corner.
We do not have to go back very far, but for a few moments let us go back and look at the situation that existed. This is the argument. On the political platform, you often hear of the unemployment figures from 1930 to 1935. At that time there was unemployment in Canada. In 1935 the present official opposition took over the government of this country. I have not the exact figures at this moment because I, like the last speaker, did not have time to prepare a speech. However, I think everyone will agree with me that unemployment was very high from 1935 to 1939. In fact, it was as high as it was between the period 1930 to 1935.
Then, war broke out. When war broke out unemployment continued in this country under the Liberal party, which is now the official opposition. Let us move along. Of course, during the war years, when men put on uniforms and industry was speeded up, there was a degree of prosperity. What happened after the war? In 1955 members who are now on the treasury benches were in the opposition. They brought to the attention of the Liberal party the fact that there was a deepening recession at that time. They also set out the problems of unemployment.
Let us go to 1956 and 1957 with regard to this question of monetary policy. Anyone who was in business in towns or cities as well as
Government Monetary Policy the farmers, knows what happened at that time. At that time the Liberal party implemented a tight money policy. People who wanted to obtain small loans from the banks had to even cash their bonds because they could not obtain these loans. What did they do? I can only refer to the area I know, the city of Calgary. Money was so tight at that time that all the construction workers were on the streets and out of work.
It was rather shocking to hear the Leader of the Opposition (Mr. Pearson) stand in his place today and condemn the present government for its monetary policies, especially when one looks back at the time of tight money in 1956 and 1957 and realizes that, by the deliberate policies of the Liberal party men were put out of work and were on the streets of this country.
As I sit in my place in this house it seems to me that the members of the opposition merely give lip service to unemployment. In fact, I honestly believe that the members of the front benches of the Liberal party stay up at night and sometimes they may pray secretly that the recession, if there is a recession, will deepen so, as one member of our party once put it, they can get their jobs back.
Are they really serious about curing unemployment? Do they suggest anything that would improve the economy of the country? After all, criticism is easy. But there was not one constructive thing offered in the speech today of the Leader of the Opposition. He did not suggest anything they would have done under the circumstances. In fact, it seemed to me as I listened to him this afternoon that his speech was completely composed of language opposite to what it would have been had he been in his seat in the government of 1956 and 1957.
I wish to come back for a few moments to the opposition's condemnation of the monetary policy of this government. I will leave that question for some other person in the party to deal with, namely the minister. But let us take a look at this question of a recession. The Leader of the Opposition said he was going to quote various experts. I take some comfort in the fact that if you have confidence in business in this country you can of course get business underway so there will be full employment.
In the Financial Post of February 18 last there is something I think should be placed on the record. There is an article by Mr. Dalton Robertson, who says:
Recession low-point in sight?
I will come back to this article. Every one of us is somewhat sympathetic toward the problem of people who are unemployed. I

Government Monetary Policy will digress for a few moments before I continue with the article in the Financial Post.
In the area of the Bow River constituency in 1957, when I first became a candidate for parliament, there was unemployment in the coal mines of Drumheller and Canmore. The Liberal party was in power at that time and there was no work in either of those areas. It was only because of the efforts of this particular government in expanding the coal trade that men returned to employment.
This is just one item, in connection with coal from the areas of Canmore and the Crow's Nest pass in Alberta, when 500,000 tons of coal were sold to Japan. The miners in Canmore were not only able to hold their jobs in the winter but also in the summer. There was full employment in that area. That is just one example of what this government has done.
In the article in the Financial Post of February 18 Mr. Dalton Robertson says:
There are here-and-there signs that spring may come early on the business front. More life in a growing number of indicators suggest that the bottom of the current recession may be very close indeed.
That is the kind of optimism I like to read. On what does he base those remarks? He says this with reference to some arguments as to what this government has done about the unemployment problem in this country:
Housing starts are now staging a surprising comeback after a depressed performance throughout almost all of 1960. December starts were up fractionally from a year earlier, January starts were up an estimated 5 per cent-a big switcharound from the 21 per cent, 35 per cent, 24 per cent, 20 per cent, 28 per cent year-to-year declines in July, August, September, October and November, 1960.
He goes on to say that because of the housing situation there is now an economic comeback, and he says there is a sign that the recession low point has been reached. Then he goes on to say this:
Business inventories as a whole give signs of being worked down healthily toward levels low enough to spark some new production.
In other words, he points out that the inventories of business are now at a low level, so they can go into full production. Those are the signs in business that show, it seems to me, the Canadian people and members of this house that there will be an improvement in the employment situation. This is because of action taken by the present government.
Mr. Dalton Robertson goes on to say:
Industrial stock prices, usually a portent of things to come, continue on the upgrade. At mid-week, TSE industrials were still riding about 3 per cent above beginning of the year levels and 14 per cent higher than at their mid-summer 1960 low.

It would seem to me, reading this article in the Financial Post, that Dalton Robertson has faith in this country and is an optimist.
I have always said, and I believe this, that if one business has confidence in another business, if industry of one kind has confidence in industry of another kind, that breeds confidence in the whole of the economy and in that way, with a healthy business throughout the country, we can obtain full employment.
The opposition points today in a critical way to the monetary policies of this government. Let me ask them this question. Did the monetary policy of the Canadian government create unemployment in the United States? After all, I think we cannot overlook these facts. The economy of this country, whether we like it or not, is somewhat tied to the economy of the United States. When they have prosperity, we have prosperity; when they have a recession, we have a recession. After all, because of our geographic situation, because of our ties economically with that country-and this is something that has occurred over the years and has been going on since the time of confederation; it is not something new-we must face the that that as goes the economy of the United States, so goes the economy of Canada. When the opposition points and criticizes and blames the monetary policies of this government and says they are the cause of unemployment, how do they explain unemployment in the United States? It seems to me that when we talk about unemployment there are a few facts we should take into consideration.


Harold Edward Winch: On that phase of the argument, would the hon. member tell us what is the relationship in percentage terms of the volume of unemployment in Canada compared with the labour force as against the unemployment figure in the United States compared with the labour force?


Eldon Mattison Woolliams: I have not got the exact figures, but I may say that I think the hon. member's question is a fair one. I think the figures from the United States show that the percentage is less, but it depends on how those figures are made up-whether, for example, the unemployment figure includes married women who have ceased to work and who are drawing unemployment insurance. From the figures I have read, I would say the percentage is a little less, but, as I say, it depends on how the United States figures are composed.
To return to what I was saying, it seems to me that it is not primarily the monetary policy which affects unemployment. We should look at trade itself, and at the relationship between management and labour.

iVe should consider the effect of the European free trade bloc and its impact upon the jconomy of the Americas. We should also :onsider the recovery which has been made generally by those countries which suffered luring the war. Let us take a look at our ;rade. I have already dealt with one item, jut let us consider the position with regard ;o agriculture. I was most happy to learn his month that there have been 60 million ;ons of grain sold to red China-that this government has been conducting an explosive :ampaign to expand Canada's trade with :ountries abroad. It is my belief that as a [DOT]esult of an expansion of trade we will arrive it a healthy economy and, consequently, at lull employment.
Now I want to say a few words with *egard to management and labour. It seems ;o me as I stand in my place and think about ny own area-and all hon. members have heir own areas in mind-that there must be i responsibility placed on both management ind labour to appreciate that in order to mlarge and encourage our trade we must be n a position to compete with countries such is Japan and Germany, to name only two examples. Over the years, these countries lave eaten into our trade. Let us take for ixample, the manufacture of nails. At one ime we used to export about 40 per cent of >ur production. Today we import 20 per cent >f our production. We have to appreciate, of :ourse-and I know these facts because I lave appeared before the tariff board in rela-ion to this particular item-that the wage *ate in Japan is 17 cents an hour as cornered with about $2.63 in Canada. Now we mow that if automation grows rapidly in lanada or the United States we might be ible to produce these goods at a competitive irice despite the difference in labour costs. 3ut I have been to Japan, and I have seen he growth of automation in Japan. It is ncreasing there just as it is in the United states. Yet they are working with 17 cent abour and we are working with $2.63 labour, rhese are the facts with which we must *ome to grips. These are the practical things. Ian we compete with these nations overseas vhen our wages and prices are so high? It vould seem to me that our tendency to price lursclves out of not only our own market >ut the markets of the whole world is the *eal basis of unemployment. It seems to me hat if Canadians could learn to compete in rade and sell their products not only in our iwn market but in markets overseas we hould be able to attain full employment. Ihis, to me, appears to be the crux of the vhole problem. This is why I say there must >e a responsibility placed on both manage-nent and labour to work together, as two
Government Monetary Policy groups, with the government so that we may still be able to compete in world markets.
It is possible to point out that our trade, in many fields, has expanded. But is that expansion as great as it could have been? Take the item to which I have already referred- the manufacture of nails. There is a tremendous market for that product all over the world, not only in the Americas but also in those countries which were laid to waste during the war. The hon. member who spoke from the corner of the house a while ago recommended a controlled economy, or a socialist economy, as the cure for our economic problems. It seems to me that in reply I should put on record once again the position which his supporters actually take in this regard. The hon. member and his friends talk about a controlled economy. As I have said on other occasions, I come from the province of Saskatchewan, and in 1944 when they took over there were approximately 11,000 people employed in the manufacturing industries of Saskatchewan. After the hon. member's friends had been in office for 17 years, or some such number of years, this figure had risen only to 12,000. This might appeal to the Liberals: the leader of the opposition speaking in the provincial legislature recently pointed out that the premier of that province had boasted about bringing in some 60 new industries, whereas, on analysis, it could be shown that they had not arrived on the doorstep at all. This, of course, is the only evidence we have of any socialist experiment in Canada. They talk about unemployment being least in Saskatchewan. I do not know whether that is correct or not, but I do know that more people have left that province in the last 10 years than any province in Canada, and they are still pouring over the border to Alberta and elsewhere. No wonder there is no unemployment there; they just do not want to stay there under a controlled socialist economy. Now, if one looks back, this is the resolution the C.C.F. party passed in 1933-I wonder if they mean it, and if this is the kind of controlled economy they are talking about. This is what they said then:
We aim to replace the present capitalist system-*
I am reading from an article by J. M. Beck and D. J. Dooley which appeared in the Dal-housie Review-an article entitled "Labour parties, new and old". Incidentally, this article might be of interest to the hon. member for Peterborough (Mr. Pitman); it spells out so well the funeral of himself and his colleagues in the future.
We aim to replace the present capitalist system, with its inherent injustice and inhumanity, by a social order from which the domination of one class by another will be eliminated, in which

Government Monetary Policy economic planning will supersede unregulated private enterprise and competition, and in which genuine democratic self-government, based upon economic equality will be possible.
This is good:
No C.C.F. government will rest content until it has eradicated capitalism and put into operation the full program of socialized planning which will lead to the establishment in Canada of the Co-operative Commonwealth.
In the event, the C.C.F. party has not eradicated capitalism, capitalism in this country has eradicated socialism. The fact is that today in the labour unions people appreciate as never before that when management and capital harnessed properly together are making a profit, labour has a job and labour is earning salaries which make possible a higher standard of living. That is what is so contradictory about this resolution which was passed in 1933. But when they offered that policy to the Canadian people, we know the result. So they met again. They do meet from time to time. They met again in Winnipeg, in August, 1956, and they changed their ideas somewhat. This is what they passed at their last convention held in Winnipeg in August, 1956. I was not there, but they watered the resolution down:
The C.C.F. has always recognized public ownership as the most effective means of breaking the stranglehold of private monopolies on the life of the nation and of facilitating the planning necessary for economic security and advance.
This is refreshing:
At the same time, the C.C.F. also recognizes that in many fields there will be a need of private enterprise.
This is a complete contradiction of what they said in 1933. These socialists are now semi-capitalists. In fact, they are so capitalistic, Mr. Speaker, that when Mr. Fines made a million dollars as treasurer of Saskatchewan he went to live in a province under a Conservative government.


Harold Edward Winch: Mr. Speaker, on a point of order, the hon. member, standing in his place in this house, said that because Mr. Fines was the finance minister of Saskatchewan-


Eldon Mattison Woolliams: I never said that.


Harold Edward Winch: -he made a million dollars. I say, sir,-


Mr. Graffley:: The hon. member has it all fouled up.


Harold Edward Winch: Since the hon. member has made that statement about a former minister of finance of Saskatchewan, I ask him now to prove it or retract it.


Eldon Mattison Woolliams: I am very pleased to
answer. I said this. After the provincial treasurer made a million dollars he then

went to live in the province of Manitoba, under a Conservative government, where he could keep that money.


Harold Edward Winch: I rise on a point of order; I think it is a genuine one. Because the hon. member-I am sorry-the member, in all his talk has been making not a speech but-


The Acting Speaker (Mr. Rea):: Order.


Harold Edward Winch: -a charge against a previous minister of finance of Saskatchewan that he as a C.C.F. member and as minister of finance made a million dollars, I ask that he produce these facts or retract immediately.


The Acting Speaker (Mr. Rea):: Nothing has been said about any member of the House of Commons here. The hon. member for Bow River.


Eldon Mattison Woolliams: I might say-


Harold Edward Winch: The man is a liar in what he said about the minister of finance oi Saskatchewan.


The Acting Speaker (Mr. Rea):: Order.


William Heward Grafftey: Withdraw.


Harold Edward Winch: I will not withdraw unless the hon. member withdraws his charge.


The Acting Speaker (Mr. Rea):: Order. We will wait for a moment until Mr. Speaker comes in.


Mr. Speaker:: I am informed of a difficulty that has arisen in the course of debate. As I have it, the hon. member for Vancouver East, in referring to the hon. member for Bow River, used the words that "he is a liar": and having been asked to modify, reconsider or withdraw that imputation, he has not yel done so.
The hon. member for Vancouver East is an old parliamentarian, and is familiar with the rules and practices of the house. Frorr my experience, I know he has always beer co-operative in matters of this kind. I express unhesitatingly my judgment as Speaker -and I have been entrusted with the responsibility by the house-that no hon. member should use such language in reference to another hon. member and if by any chance he does so, under whatever provocation may have compelled him to use those words, he should, on being advised by the Chair and ou1 of respect for the authority of the Chair, dc what he is asked to do regardless of wha1 his feelings may be as a result of the provocation or regardless of the issues that may be involved between him and any other membei of the house. What is involved here, what i: at stake, is the capacity of this house to carry on its proceedings in an orderly and dignifiec way. The responsibility for seeing that thai

is done is placed upon the Chair and depends in the final analysis on all members having respect for the authority of the Chair, whether they agree with any particular iecision.
As I have said to the hon. member, it is my best judgment that such words should not be used, in these circumstances I would ask him to withdraw them.


Harold Edward Winch: Mr. Speaker, I am very grateful :o you for having said that after my many rears in Victoria and here, I understand the iecency, the decorum and dignity of parliament. You were not here, sir, but the provoca-;ion was great. The charge which was made [ knew was not correct. I tried three times ;o have it withdrawn. It was not. I then made the statement I did. The situation, sir, .s rather strange in that the provocation was jreat. The charge was a lie, and so I called :he man who made it a liar, when on three Dccasions I could not get him to withdraw lis charge. However, sir, this I agree with. To me, the dignity, and the decorum of parliament mean everything. In view of what you rave said, sir, I will, of course, immediately withdraw the word "liar". I am asking you, fir, to have a check made of the charges made igainst a former minister of finance of a irovince. How you can handle it as Speaker if this house I do not know but I ask you, sir, ;o study the record and the provocation and [ will abide by your conclusion because : know you will do right. I hope that the ion. member who made the charges will lave the same decency. I know the rules, sir, md without any qualification I withdraw the word.


Mr. Speaker:: I take it that the hon. mem-ler for Bow River is satisfied with the un-lualified withdrawal of the words which were complained of and were used. If the hon. nember for Bow River, in view of what has ieen said, wishes to modify his statements, le will have an opportunity to do so now.


Eldon Mattison Woolliams: It is not that I wish to nodify the statement in any way. I think my food friend from Vancouver East, and I say hat because I have always respected him, nisunderstood what I said. He took the view->oint that I had said that this man as pro-fincial treasurer had made a million dollars.
did not imply that at all. I am not sug-lesting by any means that he made it be-ause he was provincial treasurer. I am saying hat during the time he was provincial reasurer he made a small fortune and went o Manitoba.


Harold Edward Winch: Mr. Speaker, do we have to sit iere and put up with this sort of thing?
Government Monetary Policy


Mr. Speaker:: I take it the hon. member is explaining the remarks which caused the interruption by the hon. member for Vancouver East. Did the hon. member for Bow River (Mr. Woolliams) have the floor?


Some hon. Members:: Yes.


Mr. Speaker:: I take it he also is satisfied with the withdrawal.


Eldon Mattison Woolliams: Yes, I am.


Harold Edward Winch: In view of what the hon. member said, I would ask whether he is going to withdraw the reference he made to a provincial minister of finance?


Mr. Speaker:: The hon. member for Vancouver East will be able to raise any appropriate question of privilege, if what the hon. member for Bow River says is not in accordance with the facts.


Eldon Mattison Woolliams: Mr. Speaker, before I was interrupted I was being most critical, may I say to the hon. member in the socialist party, with reference to the controlled economy which they recommend. I had dealt with their philosophy in 1933 and how it was modified in 1956. Now I am coming to the third phase because this afternoon this party has put forward their philosophy as a solution to unemployment. The labour party in Great Britain followed the same policies and it was shown there that they did not solve anything. In fact, the problem remained exactly the same. The fact is that the labour party in Great Britain is now going through somewhat of a revolution. They realize now that the philosophy they once preached about the standard of living of the workers is no longer attractive because workers in Great Britain and workers in Canada especially have a higher standard of living than probably any other workers in the world. So the labour party in England has changed its philosophy and is now making a different appeal. It is rather ironic that the new party seems to be following the philosophy that the labour party in England is now tossing out the door.
Finally, may I say that I feel the question of unemployment depends on the question of healthy trade relations between Canada and other nations. We can only obtain healthy trade relations if we can compete with other nations with respect to the products we manufacture and the agricultural produce that we grow. As I said in the course of my remarks, we have to have a responsibility for leadership on the part of both management and labour. We must be able to compete or take part in the new European free trade bloc. We must learn to compete. We must be able to compete with those countries which have now recovered generally after the war and
2216	HOUSE OF
Government Monetary Policy which are now making the same things we make and seem to be able to manufacture them more cheaply than we can. To me that seems to be the very crux of our problem.
To end where I began, may I say that it would seem that in the view of those people who have some knowledge of our economy, including the Financial Post which I feel in some ways can analyse the situation, the recession has now reached the low point, and it does seem to me that if at this time we follow a philosophy of confidence in our own economy rather than being critical we will once again bring about full employment in this country so that every Canadian worker can have a job and live with his family in dignity.


Harold Edward Winch: Mr. Speaker, I rise on a question of privilege. I do so because of what occurred a few minutes ago. I should like you to issue instructions that under no consideration can Hansard be changed so far as the speech of the hon. member who has just taken his seat is concerned. Would you take that under consideration as a question of privilege?


Mr. Speaker:: Yes. The hon. member knows, of course, that Hansard is not subject to change. That is the rule. He should not assume that any hon. member will attempt to change Hansard. Unless otherwise ordered by the house the transcript is published as it has been reported.


Harold Edward Winch: If that is the rule and it is so ordered by yourself and will be complied with, may I then ask you to take under consideration something that has never happened in the time I have been a member of the House of Commons? An hon. member has made the charge that a man in the position of minister of finance of a province made a million dollars from his position. I ask you to consider that as a matter of privilege and to take under consideration whether such a charge can be made in the House of Commons and what can be done about it.


Mr. Speaker:: If reflections are made on the character of members of the house that is, of course, a matter to be dealt with by the house. Statements that reflect on people outside the house can be taken exception to but that does not raise a question of the privileges of the house. The hon. member has taken exception to certain remarks which were made and which I did not hear. I suggest that he allow the matter to stand until the published report is available tomorrow. If he then finds that there is a question of privilege and he wishes to raise it, he may do so on the orders of the day.
[Mr. Woolliams.l


William Moore Benidickson: Mr. Speaker, as the seconder of the amendment moved by the Leader of the Opposition (Mr. Pearson), I consider it a privilege to deal with the subject that he has introduced today. Before coming to my main remarks, I wish to make a very brief reference to what was said by the hon. member for Bow River (Mr. Woolliams). With respect, I think perhaps he will agree that no great portion of the remarks he made could be considered to be directed to the amendment in a pertinent way. However, to the extent that he did refer to monetary policy, tight money and so on, I simply want to make an observation or two.
Apparently he wanted to relate certain situations to what he referred to as "tight money" in 1956 and 1957. I presume he had reference only to the first part of 1957 when the former administration was in office. He made some references to unemployed walking the streets at that time because of the tight money policy, as he described it. To pul the record straight, I simply want to refer the hon. member to the latest monthly repori and statistical summary of the Bank oi Canada, that is for January, 1961. In doing sc I wish to suggest to him that if he will look at pages 54 and 55 of the summary he will find figures there concerning the status oi the labour force sector of the population.
I want to point out to him that the situation in 1956 and 1957 to which he refers compared with the situation that we are faced with today is as different as day is from night. Under the column headed "unemployed" the annual average for the year
1956	of those without work and seeking work was 197,000, and that is calculated to be 3.4 per cent of the labour force. The government of course, changed in the middle of 1957 anc the average figure of unemployed for the whole of that year was 278,000. The percentage of the labour force was 4.6 for the yeai
1957	as a whole.
I simply want to refer my hon. friend frorr Bow River to the latest figures for the month of January, with which he is familiar, anc point out that I am perfectly sound in saying that the difference is as great as that betweer day and night because the total unemployment figure last month was 693,000 and works out to 10.8 per cent of the labour force. I dc not think my hon. friend from Bow River has really looked very carefully at the rates oi interest that were prevailing in 1956-57, tc which he referred, or has in any way made a careful comparison of these rates with the rates prevailing for money since the new administration took office in the middle oi 1957. From the end of December, 1955 tc June 26, 1957, the treasury bill 90-day loar

rates ranged from 2.56 per cent to 3.81 per cent during the term of the previous administration. I want to say that the maximum rate of interest on government securities to maturity that was offered by the previous administration was 4.3 per cent. Since the new government has assumed office government securities have been offered at an interest rate as high as 6.61 per cent. The treasury bill rate indeed hit 6.16 per cent for 90-day money only and 6.87 per cent for money offered by the government for six months.
Mr. Speaker, I also want to make a quick reference to some of the remarks that were made by the member for Kootenay West (Mr. Herridge). He expressed some surprise today that the official opposition did not directly refer in its amendment, and exclusively refer, to the unemployment situation. I am surprised that it would not occur to an experienced member like the member for Kootenay West that had this been done it might, in the near future, prove of considerable disadvantage to those of us who sit in opposition. The member should know that if a motion of that kind were made now it would preclude us from having a similar debate on a later occasion.
The hon. member for Bow River read some excerpts from last week's Financial Post, an article written by a Mr. Robertson, but he omitted to tell you that in that same article there is quoted the prediction that we may not have hit the low yet. Mr. Robertson referred to the "double bottom yet to come". If we, at this stage, took today full advantage of this opportunity to discuss unemployment in this formal amendment we would not be able to do so again at a later date when perhaps an even worse situation might exist. In addition to that I remind the hon. member for Kootenay West that it was not a member of his party who was the first member during this parliament to suggest that it would be timely to have the Bank of Canada examined in a parliamentary committee. I suggest to him, and I think he will find that I am right, that I happened to be the member who first made that proposal in this palia-ment in 1959. I repeated the suggestion the other day after the Leader of the Opposition (Mr. Pearson) received some rebuffs this session in this connection. I suggested that if the banking and commerce committee was not prepared to take up this subject, then perhaps the public accounts committee could do so. I am referring now to the debate of February 15 last.
I now want to follow up the basic points made by the Leader of the Opposition who was suggesting that the cheap and easy money has come too late in monetary policy, and tight money came too early in the cycle. In
Government Monetary Policy addition the Leader of the Opposition indicated that it would appear that the Bank of Canada, or whoever is giving direction to the monetary policy, is giving priority to decisions related to debt management rather than monetary policy for the purposes of elimination of unemployment and economic stimulation. The Leader of the Opposition suggested that these two purposes did not appear to be compatible.
As the present administration will soon have been in office for four years, I want to review rather briefly year by year the role that has been assumed by this government in connection with what the Leader of the Opposition described as one of the major tools for coping with the difficulties with which we are faced. Even the member for Kootenay West referred to the failure of the government to properly assume leadership in this field, and admitted this very well might be one of the root causes of the difficulties in which we are.
As I have said, we are all familiar with the fact that a new government took office in June of 1957. We know that very shortly afterwards they cancelled some public works and defence production expenditures which, of course, it was their privilege to do as they had not been responsible for putting them in the estimates, and it did not seem to matter whether or not the administration was directing its attention to fighting inflation or preparing against recession.
I think it is interesting to review some of the public statements that were made by the new Minister of Finance (Mr. Fleming) in the course of the few months following his assumption of office. It is obvious that the bogey to him in the ensuing months after assuming office was inflation, and it seems to be the bogey that has received the major portion of his attention ever since. This has received almost his undivided attention. I find in an address of September 13, 1957 to the newspaper advertising managers association of eastern Canada, delivered at Montreal, he is reported as saying:
X said that it is the policy of the government to resist inflation. When the government is asking the people to exercise forbearance the people are entitled to require of the government that it do more than exhort them to productive and saving habits. Your government is endeavouring to practise what it preaches. Undoubtedly the full weight of government expenditure can, if allowed to run unchecked, let loose forces of inflation which are difficult to check. The new government was elected on certain undertakings, one of which was to eliminate waste and extravagance.
We know that toward the end of the year, December 6, to be exact, the minister had decided to give to the assembled House of Commons a financial statement. But in the meantime I think that some of his public

Government Monetary Policy utterances can very well give to us a clear conception of what was in his thinking in so far as monetary policy leadership was concerned. On November 22, 1957, as reported in the Toronto Telegram the Minister of Finance (Mr. Fleming), in an address the day previous, was quoted as saying as follows:
This is no time to be yielding to panic...
If this is a national emergency all I can say is that practically every country of the world would like to have a national emergency like it...
We are told that unemployment constitutes an emergency. I say to you that while we have some unemployment and the government will seriously grapple with it, there is no emergency.
The day before his baby budget was delivered in the House of Commons he delivered an address in Toronto to students at Hart House at the University of Toronto. On December 5, he stated as follows:
No one can fairly say there is an emergency .. Canada has no "crisis" or "emergency" in unemployment-
His colleague who shares with him responsibility for preparation of the budget, namely, the Minister of National Revenue, (Mr. Nowlan), the month previous, gave a speech in Halifax. I quote what his thinking was in November of 1957:
He urged the people not to be alarmed by predictions of severe unemployment this winter.
There was always seasonal unemployment, he said and there would be seasonal unemployment this winter-but the picture for the future was brighter than ever and "there is not going to be depression."
There are other ministers who, in the same vein, made speeches at this time and these are quite indicative of the feeling of the government five months after assuming office. One must, however, find a little bit of amusement in one of the phrases in the budget speech of the Minister of Finance on that night of December 6, 1957, because, as reported at page 2009 of Hansard of that year, he said this:
We trust the committee will, however, recognize the boldness of the government's program and the extent to which it will contribute to confidence and prosperity.
I remind hon. members that the budget proposed tax reductions in the sum of $26,000,000 only to the end of the fiscal year namely, March 31, 1958. At that date the Minister of Finance, with the exception of one or two subtractions of projects, was quite prepared to accept exactly the forecast of revenues which his predecessor Mr. Harris had proposed in the budget of March of that year. Mr. Harris had in March proposed for the course of the fiscal year tax reductions of a value of $55,000,000 and he had brought forward social benefits such as increases in veterans pensions, war veterans' allowances, family allowances, old age securities, old age assistance, pensions for the
[Mr. Benidickson.l

disabled, the blind and so on which he estimated would amount to $133,000,000 in a full year in addition to the tax reductions of $55 million which were proposed for a full year. There was no suggestion that the new Minister of Finance saw on the horizon economically anything that justified any radical departure from the basic plans that were already provided by Mr. Harris for the fiscal year 1957-58. The Windsor Star commented on this matter after the accounts for the year were available, and on April 4 had this to say.


Lester Bowles Pearson: What year?


William Moore Benidickson: April 4, 1958. The Windsor Star had this to say:
When our P.C.'s come out squealing their well worn alibi, "We inherited the recession from the previous government," it'll be well to remember this: Former finance minister Walter E. Harris forecast a $152,000,000 surplus for 1957-58. His estimates stood up so well that even after digging into that kitty to keep their "promises" the P.C.'s were no worse than $28,000,000 in the hole on March 31, 1958.
Indeed in this house after the budget of December 6, 1957, had been presented the Minister of Finance was given almost an additional two months in which to think things over. On January 30, 1958, as reported at page 4019 of Hansard, he repeated:
I have no reason to depart appreciably from that estimate-
The one provided on December 6.
-and I think at March 31 government operations for the year,-
Then, of course, he was patting himself on the back.
-thanks to prudent management, will show a respectable surplus.
This I think is about eight months after the minister had taken responsibility for the department and there is no suggestion there that he saw ahead and was planning for anything in the nature of which the Prime Minister soon afterwards, in the election campaign, called a slide.
I now want to come to 1958. Let us have a look at the election. The election was all consuming in time and I think it concluded at the end of March and the government was returned. After a long time away from his office the Minister of Finance was back on the job in the matters of monetary policy and fiscal policy. In due course he prepared a budget in 1958.


John Whitney Pickersgill: This time he called it a budget.


William Moore Benidickson: Yes; this time he called it a budget. But he was not very much worried about the situation in Canada economically. In the course of his budget address

of June 17, 1958, he said, "Oh, perhaps we are in a mild recession". And as found at page 1235 he said this:
-there are hopeful signs that we have reached the end-
We heard a great deal during the preceding months about public works which, it was suggested, had been provided in some way that was completely new and different from that in which they had been provided in the previous administration. I have here a comparison of the estimates, budgetary and other provisions, for public works programs. I have here the figures found in the blue book of estimates for 1956-57, 1957-58 and 1958-59, in what all members know is contained in one of the columns of a document placed at the back of the book. The heading of the column is "Construction or Acquisition," standard objects of departments. It so happens that for 1956-57 the previous administration provided more funds of this category- I refer to this make-work type of project- than was put in there in 1957-58. When one totals the whole thing one finds that the grand total for 1957-58 was $595 million. This was including loans and advances of a type that might establish work for our people if there had been an aim to create work in that climate. I remind you, Mr. Speaker, that the Minister of Finance had practically no changes to make in this area in December 1957. In the following year, when he himself was doing the full planning, this was raised, despite increases in prices and so on, to only $635 million.
. The interesting thing is that most of the increases that occurred in 1958-59 were completely with respect to projects that had been started by the previous administration. I refer to the St. Lawrence seaway authority, which had an appropriation that went up from $100 million in 1957-58 to $128 million in 1958-59, and the trans-Canada highway, which again was based on a formula established by the previous government, and which had an appropriation that went up from $30 million in 1957-58 to $45 million in 1958-59.
Those items have very little to do with economic planning on the part of the Minister of Finance (Mr. Fleming). Because those increases are approximately $50 million one can see that some of the other construction items were actually shaved, notwithstanding the recession on the horizon.
Let us go on further regarding 1958. We had a winter works conference held, I think, in luly of 1958. The Prime Minister (Mr. Diefenbaker) addressed that conference and minutes were recorded. On July 14, 1958, in opening the conference the Prime Minister said:
90205-6-141
Government Monetary Policy
I welcome this gathering, which I hope will recommend action to be taken well in advance of the winter.
The Minister of Labour (Mr. Starr) was interested in this conference, and after it concluded this heading appeared in the press on July 16:
Labour Minister promises prompt action on winter work plans.
Then the minister was interviewed in August and the press heading is:
Winter job plan ready for cabinet.
Again, in September:
Cabinet studies jobless.
Labour minister Starr said today a government program to combat winter unemployment now is in the hands of the federal cabinet.
But nothing happened. On October 13 the mayors gathered in Ottawa and tried to impress the government with the importance of going forward with some of the proposals that had come out of this summer conference. These included such things as recommendations for sales tax reduction, or elimination of tax on materials used in construction during the winter months. It was urged that there be accelerated capital depreciation allowances for winter plant improvement, and that there be initiated federal-provincial-municipal cost sharing public works.
What was the dismal result? We know that the program of the federal government in this period of economic uncertainty and prospective heavy winter unemployment was not announced by the federal government until October 31. The provinces had then to make a companion offer to their municipalities. In my own province of Ontario the program for that winter was not available to the municipalities until November 21.
I say there was abdication here of the type of leadership so essential to make the most of the situation then prevailing. The house does not need to take my word for this. I can cite one of the most respected bankers of the land in his day. Unfortunately he is now deceased; I refer to the former president of the Royal Bank of Canada.
He looked back on the financial record of the new administration in the utilization of monetary policy for the purposes of creating employment and well-being in this country.
I quote from page 13 of the annual report of the Royal Bank of Canada which followed the annual general meeting of shareholders held January 8, 1959. Mr. Muir said:
Last year, as in previous recession years and while the economy was still on the down grade,
I urged tax cuts by government and price cuts by business. Instead of tax cuts last year which would have encouraged business activity while reducing pressure on prices, we got increased government spending. Instead of an immediate deficit last year,-
2220	HOUSE OF
Washington Visit by Prime Minister
This is the important thing:
-timed to coincide with the depth of the cycle, we find ourselves today with a delayed deficit which has timed itself to coincide with the present recovery and the emergence of a new inflationary potential. For it is the great disadvantage of government expenditure as a cure for recession that it is both ponderous and irreversible; it takes time to get projects under way and once started they must be completed.


Lester Bowles Pearson: Mr. Speaker, I understand the Prime Minister (Mr. Diefenbaker) would like unanimous consent at this time to make a statement on his return from Washington. We are delighted, of course, to see him back in the house.


Mr. Speaker:: I gather from the reception to the remarks of the hon. Leader of the Opposition that unanimous consent is given.


EXTERNAL AFFAIRS
Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I am deeply grateful to the house for giving me the opportunity to make a statement on the meeting which the Secretary of State for External Affairs (Mr. Green) and I had earlier today with President Kennedy and the Secretary of State of the United States, Mr. Dean Rusk.
I shall begin by reading the text of the communique which was issued at the conclusion of the meeting, for it sets forth in general the nature of the discussions which took place:
President Kennedy and Prime Minister Diefenbaker met today in Washington to discuss informally a wide range of international problems as well as bilateral questions of interest to the two countries. The Secretary of State, Mr. Dean Rusk, and the United States Ambassador-designate to Canada, Mr. Livingston Merchant, assisted in these discussions together with the Secretary of State for External Affairs, Mr. Howard Green, and the Canadian ambassador to the United States, Mr. Arnold Heeney.
The President and the Prime Minister welcomed this early opportunity for a friendly exchange of views between neighbours, in a tradition consistent with the long and intimate association between the peoples of the United States and Canada.
The President and the Prime Minister reviewed defence and security problems in all their aspects. They reaffirmed their purpose to work together for peace and freedom in the world. They expressed their readiness to co-operate wholeheartedly with all countries which sincerely seek this objective whatever the difference in approach or outlook. They recognized the central importance of the United Nations, as well as the essential role of direct diplomatic negotiation, in the pursuit of peaceful settlements. They agreed on the need to work steadily towards effective agreements under international control in the field of disarmament.
In reviewing bilateral questions of interest to the two countries, emphasis was placed upon the


various consultative arrangements of a formal and informal character which have been developed between the United States and Canada as a valuable supplement to the traditionally close and friendly relations between the two governments. The President and the Prime Minister noted with satisfaction that joint meetings are about to take place in Canada between members of both houses of the federal legislatures of the two nations.
The President and the Prime Minister reemphasized the importance of close consultation on economic matters. They announced that the joint United States-Canada committee on trade and economic affairs will meet in Washington on March 13. This joint committee at cabinet level has been of great value over the years in furthering understanding between the two governments on questions affecting economic relations of the two countries.
I wish now to elaborate on the text of the communique by giving the house something of the atmosphere and substance of the meeting. I would emphasize at once that I found on the part of the President and the Secretary of State not only an attitude of the utmost friendliness but an obvious desire to assure the maintenance and continuance of the good relations which prevail between the United States and Canada. For my part, having had this opportunity to sit down with President Kennedy in a common, informal examination of the issues which face our countries, I have returned to Ottawa reinforced in my conviction that with good will and constructive endeavour on both sides there is no problem which we cannot surmount.
Our discussion began with a general review of the international situation. Naturally, the house will realize that I cannot go into detail, but there are certain subjects that should be mentioned.
The problem uppermost was the situation in the Congo and in particular in proceedings which are now taking place in the United Nations. Canada and the United States share the same aims in this complicated and dangerous crisis. We are agreed on the importance of preserving the independence and the integrity of the Congo and on the vital necessity of avoiding civil war in that country. We are agreed that in order to keep the Congo out of the cold war it is imperative to support the United Nations fully. Only in this way will it be possible for the Congolese, in freedom and without violence, and without interference from the outside, to reestablish the internal stability of their country and to provide a new cement to the structure of their institutions so as to work out their political destiny.
We looked at the situation in Laos where Canada, as a member of the international supervisory commission, has had a direcl interest for some years. There have been developments there over the week end. These and related developments were discussed, in

general terms, with particular reference to the declaration of policy made yesterday by the King of Laos.
As to NATO, the President and I agreed that the United States and Canada, with all member nations, must collaborate in the work of building up the cohesion and unity of the alliance. I drew the President's attention to my continuing view that there are certain problems facing NATO which will require the attention of heads of government as soon as it is possible for them to be assembled.
In the field of joint defence on the North American continent we discussed a number of current questions, including in particular the Canada-United States defence production sharing program.
We also dealt in a general way with the economic field, not going into detail, however, because, as I mentioned earlier, there will be a meeting within the next three weeks of the joint committee on trade and economic affairs at cabinet level.
We discussed the problem of international surpluses and the food for peace program which is now also receiving the attention of the United Nations.
With regard to trade, I gave the President an explanation of Canada's view on trade between our countries and the importance which we attach to improving the trading position of Canada in relation to the United States.
We also discussed the organization for economic co-operation and development and I informed the President that the Canadian government would shortly be submitting the O.E.C.D. convention to parliament for approval. The President assured me that he shared the Canadian view regarding the importance of this convention which is now receiving congressional consideration.
Mr. Speaker, no one could meet with the President without being impressed by his broad and far-sighted view of international affairs. The President and his senior colleagues demonstrated in every way an understanding interest in the relations between our countries. The President revealed a ready desire to preserve the distinctive quality of the Canadian-United States partnership, with each nation discharging its responsibility toward the attainment of the common purpose and without the sacrifice of sovereignty by either country.
In the past we have had the privilege of hearing presidents of the United States speak to the Senate and members of the House of Commons. We have heard President Truman, and President Eisenhower, and I am happy at this time to announce that I extended an invitation-one with which I hope this house and the other place will agree- 90205-6-141J
Washington Visit by Prime Minister to President Kennedy on behalf of the Canadian government to visit Canada at some convenient time before the end of the current session of parliament. The President advised me that he would be glad to accept this invitation, subject to the determination of a time convenient to both our countries.


Some hon. Members:: Hear, hear.


John George Diefenbaker: The arrangements for the visit will be proceeded with through diplomatic channels. In extending the invitation I expressed the hope that he would mark his first visit to our country as President by consenting to address a joint session of parliament.
To summarize my remarks, I am more than ever convinced of the value of these informal meetings. There is something about our relationship which might well be a model for other nations in the world, as exemplified in the manner which was so evident today when we met together and discussed the problems which face our respective countries. Where there is disagreement we endeavour by mutual concession to arrive at a basis for amicable settlement, thereby epitomizing something which is so necessary in the world today.
This meeting should not be measured in terms of its duration or in the number of flags unfurled but in the opportunity it offered for better acquaintanceship, better understanding and also for making possible a discussion of common problems in a businesslike and informal manner appropriate to the closest of neighbours and friends.
To me this was a revealing and exhilarating experience. The President of the United States has the kind of personality that leaves upon one the impression of a person dedicated to peace, to the raising of economic standards not only in his own country but in all countries, and to the achievement in his day of disarmament among all the nations of the world.


Lester Bowles Pearson: Mr. Speaker, I know it is after six o'clock but perhaps I may be permitted just a word or two to express our pleasure at this time at the Prime Minister's safe and speedy return and our great satisfaction with the message which he has been good enough to give the house about the results of his visit. I am sure all members of the house are particularly happy at the invitation which has been extended to the President to visit Canada. I understand the period is during the present session. That will give the President a good deal of leeway from which to choose a convenient date.

Washington Visit by Prime Minister
Like the Prime Minister, I think we are all impressed by the calm confidence and the sureness of touch with which President Kennedy has approached these grave international problems which confront him. It is a good thing for the Prime Minister and the Secretary of State for External Affairs to have continued a tradition of establishing close personal contact with the leader of the government of our neighbour, and it is a good thing that these close personal contacts now established can be supplemented by other machinery which has been set up over the years. We are conscious of the fact that a new addition to that machinery, the legislative committee of the two governments, is meeting at the present time. All this goes to show, Mr. Speaker, that there is no contradiction in the closest possible friendly relations with the United States with regard to matters of policy of joint interest and Canadian control of Canadian decisions in respect of that policy. There is no contradiction, either in Canada following Canadian policies but doing it in consultation and co-operation with her neighbour. Of course, we expect, all of us, that to operate also in reverse.
The Prime Minister was good enough to mention some of the matters which were discussed. I am amazed that in such a short time they could have covered so many important subjects. I confess that in my experience, in this kind of meeting, it would have taken us a few hours to agree even on a communique. Perhaps a communique was composed in advance, which is sometimes done. In any event, it is reassuring to know that the two governments are in such close agreement on these important things.
The Prime Minister referred to the necessity of re-establishing the independence and integrity of the Congo. At this time I cannot imagine any more difficult problem than that, and it will be solved, as the Prime Minister has stated, not by weakening but strengthening the United Nations and by keeping the cold war out of Africa; and by putting on African countries and some Asian countries the main responsibility for achieving this obj ective.
The Prime Minister mentioned NATO: I agree with him that here again the main thing is to strengthen, not weaken, NATO, in cohesion and in unity, but to do that in the light of the conditions of 1961 and not 1950, when NATO was born. I venture to say that if we were working out a north Atlantic agreement now it would not be in exactly the same terms as it was then, but the objectives must remain the same, the building up of collective action and collective security in the north Atlantic area.


The Prime Minister has talked about our good relations with the United States and the necessity for maintaining these relations. We all agree with that, I am sure. Neighbourhood, after all, Mr. Speaker, is a fact of geography, but good neighbourliness is a political achievement. I hope the Prime Minister's visit to Washington will strengthen and confirm that achievement.


Hazen Robert Argue: Mr. Speaker, it is important to Canada that our Prime Minister and the President of the United States should have a personal relationship, and it is also important that the many outstanding common problems should be dealt with and solved to our mutual satisfaction.
I take it that the Prime Minister's visit to the United States was a very short one, and the opportunity he had to speak with the President was, I am sure he will agree, all too brief. I believe, from what has happened, this is just an introductory one. Although the Prime Minister made a rather comprehensive statement and went over a number of questions that had been discussed, the statement seemed to me to be rather bare of any concrete conclusions on a number of very important problems.
Apparently, there was no conclusion on the question of the arming of the Bomarc missile. Our stand in opposition to nuclear weapons in Canada is clear but this is certainly a problem that I am sure is in the mind of the Prime Minister. There was no settlement. The whole question of Canada's oil policy and necessary markets for Canada's oil-and this involves the United States-apparently has not been settled.
Although there was some allusion to the disposal of agricultural surpluses, the Prime Minister did not state any details as to the discussion of the way in which the United States has moved into very important markets of the world and provided part of their huge surplus food in those markets, at the same time making it more difficult for Canada to extend necessary food markets in those areas.
The Prime Minister went over a number of questions but he did not refer to any discussion of the operation of subsidiaries of United States corporations operating in this country.
A meeting between the Prime Minister of Canada and the President of the United States is necessary from time to time and I am certain is useful. Any contribution that can be made, following these discussions, toward a settlement in the Congo will be a very major contribution to the peace of the world and to humanity. I hope that as this very difficult situation unfolds it will be possible to achieve an arrangement whereby African nations

themselves may be given the main responsibility for restoring peace and order in that nation and allowing it to develop in freedom in the years ahead.
We shall certainly look forward to the visit of the President of the United States, and I am certain that all Canadians will welcome the announcement of the Prime Minister that at some date convenient to the President he will be with us in Ottawa.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Fleming (Eglinton) for committee of supply, and the amendment thereto of Mr. Pearson.
William Moore Benidickson: Mr. Speaker, I want to continue rapidly with this anthology of drift, procrastination and abdication in the field of monetary policy on the part of the government of the day. I was referring to 1958. I am not going to deal with the conversion loan. It was mentioned by the Leader of the Opposition (Mr. Pearson) and I know it will be referred to by others. I do, however, want to put on the record what the Bank of Canada had to say about their co-operation in this respect. We all know that this operation hogged the market to such an extent that municipalities, provinces and corporations were practically pushed out of the money market. The bank explains it this way on page 4 of the report for the year 1958:
The degree of monetary expansion experienced prior to October 1 was substantially greater than would have been necessary or desirable for monetary and economic reasons alone but was, I believe, justified and unavoidable in order that a strenuous and successful effort might be made to deal with serious problems affecting the financing of the government's cash deficit and the condition of the public debt.
I simply want to draw the attention of the house to the fact that the amount of debt which will mature in less than two years is today considerably greater than the amount of the debt under two years prior to the conversion loan, so not very much progress has been made in this respect. Let us look rapidly at 1959. This was another year of hesitation, confusion and delay. I will just read quickly some of the headlines from the financial papers of Canada during 1959:
Government Monetary Policy "Organized Confusion", "Frenzied Finance", "Inconceivable Blunders", "Misguided Muddles", "Abdication of Leadership", "Gross Lack of Understanding", and so on.
We all know that this was the year when a new load of taxes amounting to $352 million for a full year was imposed upon the Canadian people. I want to remind the house that this government seems to be an Indian giver. They bragged a great deal about increasing old age pensions in 1957. At the rate of $9 per person the expenditure works out to about $100 million for a year, but if one looks at the amount of money that is likely to be brought in strictly for the old age security fund as a result of new taxes imposed in 1959 one finds that it works out fairly close to $200 million, so that for every dollar given in 1957 a tax of $2 was imposed in 1959.
Again, the same practice seems to have been put in effect in 1959 with respect to the unemployment insurance fund. Premiums were increased and it was estimated that the increased premiums would bring in an additional $97 million but the new benefits provided that year by legislation amounted to a calculated value of only $24 million, so that in effect another new tax was imposed amounting to the difference, namely $73 million. It would appear that in 1959 the Minister of Finance (Mr. Fleming) and the Prime Minister (Mr. Diefenbaker) for a great number of months while the interest rate was rising to unprecedented levels did not seem to see eye to eye and there was a great silence throughout the land. In that year those normally friends of the government made such comments as the following.
The Toronto Globe and Mail said:
-under Mr. Fleming the government "has not yet arrived at a fiscal policy ... is simply struggling to raise money for a 12-month period".
Mr. Meyer, the financial editor of the Montreal Gazette, had this to say:
The lack of leadership here-how more exemplified than by the continuing and unconvincing insistence that the government has not imposed a tight money policy-has contributed quite as much to the high cost of borrowing as has the rising demand for funds on a fixed supply.
In October 1959 the president of the investment dealers association said:
The underlying issue is the absence of leadership by the government in monetary matters.
I go quickly to 1960. We recall that the minister, with great pride, presented a budget which he thought would be balanced at least to the extent of a surplus in the small amount of $12 million. Unfortunately the surplus seems to have been the thing that has disappeared with the melting of the
2224	HOUSE OF
Government Monetary Policy snows rather than unemployment which the minister suggested would disappear when the snow melted in 1960.
We also find that the minister was wrong not only in 1959-60 but also in 1960-61 to the extent of 50 per cent at least in calculating the growth of our economy in real terms. We then had much fanfare about a special parliamentary session and accompanying that session we were to have a supplementary budget. I have indicated that there seems to be a tremendous amount of drift and procrastination and I say perhaps nothing demonstrates this more than what has happened during this session. We convened in haste and we in the opposition co-operated. We were asked to provide legislation for a productivity council. The council is not operating yet but the legislation was passed before Christmas. We were asked in the budget to provide double depreciation for new industries that might be established in depressed areas. All that has to be done in this regard is to pass an order in council. We have not got that yet.
So far as the National Housing Act is concerned, there was perhaps some opportunity for work-making features here. However, I want to remind the house that as recently as last July the government seemed to be wrong in its guess as to what would be needed in the housing field because the Minister of Public Works (Mr. Walker), who is responsible for housing, blamed the Minister of Finance for having to turn off the tap. According to a press release of July 15 the Minister of Public Works said:
The present direct lending policy was restricted for fiscal reasons.
Well, Mr. Speaker, we know that in the months of July, August, September, October and November, 1960, housing starts declined 21 per cent, 35 per cent, 24 per cent, 20 per cent and 28 per cent in relationship to the previous year. This is the kind of forecasting as to our economic needs that we have been getting from the present government.
I suggest to you, Mr. Speaker, in conclusion that I cannot think of anything that this government has indicated to the Canadian people stood high, in its estimate, as an objective in finance policy, which this government has carried out. It talked about balancing the budget. We have each year had deficits of tremendous amounts. The government has said that spending should be reduced. I think the main estimates presented by this government this year in comparison to the estimates last presented by a Liberal finance minister are greater by about $1,400 million. Within a matter of weeks after taking office in 1957 the Minister of Finance (Mr. [Mr. Benldickson.l

Fleming) rushed down to Hollywood, Florida, and made a speech in which he said that he was glad to be able to say that the cost of living had been checked. The cost of living index, when this government assumed office in June of 1957, was 121.6, and despite a recession we have the paradox that the cost of living index has gone up 8 points; as of December 31, 1960 the index stood at 129.6.
Mr. Speaker, I say that with this record the house and the country should be tired of the assumption from the minister that everything will come out all right, and with a bits and pieces form of legislation which is certainly not satisfactory. This thing has not been thought out in all of the years I have enumerated and the situation this winter is more serious than in any of the post-war years.


Thomas Miller Bell: Will the hon. member permit a question? Would the hon. member indicate to the house why he did not make this speech during the debate on the budget which concluded only 16 days ago?


William Moore Benidickson: I thought the hon. member for Carleton was the one complaining that I spoke too long on that occasion. I knew that some of these matters should be reserved for the debate on the resolution.


Lionel Chevrier: This speech is perfectly in order.


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, at this time we are being asked to condemn the government for its share of the responsibility for the economic conditions in this country. I should like, Mr. Speaker, to take a good look at the economic conditions of this country, but I should like to look at them through the very document which the opposition seems to regard so gleefully; the latest dominion bureau of statistics weekly bulletin dated February 17, 1961. This is the bulletin in which the figure on unemployment was given, and which contains, as well other very important features which indicate a very sound situation in this country but which were overlooked. I should like to deal with these matters one by one.
The Leader of the Opposition (Mr. Pearson) in moving his amendment touched lightly on the unemployment situation as a background for his complaint that economic conditions in Canada are bad. I should like to look at the other side of the coin; the other side of the picture, because there is another side. I should like first to discuss the question of employment because employment is something that is overlooked in these arguments.

At page 2 of the dominion bureau of statistics release, we find this statement:
The labour force was 3.1 per cent higher than a year earlier, a substantially greater increase than the 0.8 per cent rise in employment.
Following that we find the figures in respect of the labour force, employment and unemployment. Comparing them between January, 1960 and January, 1961, we find that the labour force increased from 6,203,000 to 6,396,000, representing an increase of
193.000	in the labour force in Canada in that year. The number of persons employed from January, 1960 to January, 1961 has also increased from 5,656,000 to 5,703,000, representing an increase of 47,000. I might say that this increase has taken place during a period when ruin has been shouted across the country. The unemployed have also increased in number from 547,000 to 693,000, showing an increase of 146,000 which does not represent as great an increase as that in the labour force. Therefore, when we look at unemployment and say, yes we have unemployment and it has increased, we have also to look at the fact that there are more people working. There are in fact 47,000 more people working in spite of the fact that the labour force in Canada has increased
193.000	during that period of time.
We should look at the business conditions in this country. First, if we look at page 1 of the dominion bureau of statistics release under the subheading "Merchandising" we find the following statement:
Department	store	sales	in the	week	ended
February 4 were 8.9 per cent higher in value as compared to the like 1960 period. Chain store sales in 1960 reached a new peak of $3,441,775,000, up 4.9 per cent from 1959's previous high of $3,280,263,000. Sales were larger for 7 of the 11 specified trades.
Looking at the details on this item at page 15, we find that the following statement is made:
Department	store	sales	in the	week	ended
February 4 were 8.9 per cent higher in value than in the corresponding period last year, according to a special D.B.S. statement. All regions posted increases as follows: Atlantic provinces, 19.0 per cent; Quebec, 9.5 per cent; Ontario, 6.3 per cent; Manitoba, 3.0 per cent; Saskatchewan, 9.3 per cent; Alberta, 5.6 per cent; and British Columbia, 13.6 per cent.
Turning again to chain store sales in 1960 we find that the following appears:
Chain store sales in 1960 advanced 4.9 per cent to an all-time high of $3,441,775,000 from 1959's previous peak of $3,280,263,000. Sales were higher than a year earlier in all months except May and October.
Finally, sales were larger in 1960 than in 1959 for seven of the 11 specified trades which the dominion bureau of statistics investigated.
Government Monetary Policy
Having looked at these particular items of business conditions I think we should look at another matter that causes us concern and that is border crossings: vehicles entering Canada from the United States.
Vehicles entering Canada from the United States in November numbered 1,203,600, an increase of 10.7 per cent over the corresponding 1959 month. Entries in the January-November period rose 2.3 per cent to 17,524,100.
In looking at the details of these on page 14 we find that border crossings in the January to November period were 17,524,100 versus 17,132,700 a year earlier, a rise of 2.3 per cent.
Just incidentally, Mr. Speaker, may I say that there is an extremely interesting item- I do not know whether or not there is any direct connection-on page 10 of the D.B.S. release, namely "Shipments of foundation garments". The D.B.S. release shows that foundation garments are up and that raw hides and skins, the next item, are down. To complete the picture, we find that the population of Canada, as of January 1 this year, has reached an estimated 18,041,000 representing a rise of 2.1 per cent from a year earlier and a gain of 12.2 per cent from the 1956 census. I do not think the population increase is directly attributable to the government but since everything else that goes down is charged against the government, perhaps when something like population goes up they can take a little bit of credit for it.
The other item with which we are very much concerned is the premium on the Canadian dollar. It is not long since the premium was about 5 per cent and 6 per cent, a matter causing great concern to our exporters, our tourist operators and other persons who were deeply affected by the high value of the Canadian dollar. Today the Canadian dollar is 1.1 cents higher than the United States dollar. There is no need to point out the advantages that are accruing and will accrue from this fact. The export trade is going to benefit. The figures that I am about to quote in connection with the export trade were arrived at before the so-called baby budget at the end of this year and their effect had not yet been felt by the time these trades statistics had been compiled.
I should like to look for a moment, in connection with external trade, to the D.B.S. weekly bulletin, issue of Friday, February 3, 1961. Under the item "External Trade" we find the following:
Canada's trade with other countries reached a new peak in 1960, being valued at $10,891,100,000, an increase of 2.3 per cent over the 1959 value of $10,649,200.00. Total exports in 1960 were valued at $5,395,300,000, a rise of 5 per cent over the previous record attained in the preceding year, while imports at $5,495,800,000 were fractionally less than in 1959.

Government Monetary Policy
Along the same line in connection with the export trade, we find that the balance of payments is gradually adjusting itself. I should like to refer to the D.B.S. release of December 23, 1960, in connection with the item "Balance of Payments" under which we find the following:
There was a sharp contraction in the deficit from international transactions in goods and services between Canada and other countries in this year's third quarter. At $114 million this was less than one quarter of the size in the previous quarter and only a little more than one third of the deficit in the same quarter last year, and less than in any third quarter since 1955.
I think that these figures can speak for themselves. They indicate that while there is unemployment there is also increased employment. They indicate also a good financial and economic picture in this country. I should like to refer to some remarks made by the hon. member for Kenora-Rainy River (Mr. Benidickson) as he was taking his seat. He referred to the consumer price index. If we look at the D.B.S. release of February 17, 1961, the latest one on which we are basing all our other figures, we find this item on page 7 which will give the picture with regard to the consumer price index:
Consumer price indexes declined in all ten regional cities between December 1960 and January 1961 with decreases ranging from 0.1 per cent in St. John's to 0.5 per cent in Toronto.
Food indexes declined in all but one of the ten regional cities with decreases ranging from 0.2 per cent in Montreal to 1.3 per cent in Toronto.
This is at a time when the economic situation in this country is good. The consumer price indexes being held down prevents inflation or the dangers of inflation where people living on a fixed income find the situation difficult with the ever rising cost. I do not say that the consumer price index has been checked or levelled off. But I should like to look a little bit more closely at the figures quoted by the hon. member for Kenora-Rainy River. I feel that he did not give the whole picture in the one instance he picked. The consumer price index in 1949 in June- and I will take the month of June because that is the month he used to start off with; that is the month that the present government took office-was 99.6. From 1949 until 1957 in June there was an increase in the consumer price index in this country of 22 points in a period of eight years or an average increase of 2.7 per annum. In the three years in which this government has been in power the increase has been six points or two points per annum, a difference of 0.7 per annum in the increase. The average increase has been checked and it is beginning to decline.
To take the consumer price figures as of now and to relate them to the D.B.S. release

that I have just mentioned, from January 1949 until January 1957 the consumer price index rose from 99.8 to 120.3. This was a rise of 20.5 points in eight years or an average of 2.5 points per annum. In the four years from January 1957 to January 1961, the consumer price index rose from 120.3 to 129.4 at which it stands at the moment, an increase of 9.1 points in four years or an average of 2.3 points per annum.


Mr. Mcllraiih:: Mr. Speaker, I wonder
whether the hon. member would permit a question about the figures he is using.


Gordon Harvey Aiken: Yes.


George James McIlraith: Would the hon. member agree that the Korean war, in the first period he has reference to, did have a bearing on those figures?


Gordon Harvey Aiken: I suppose one could say that. You could take any given period of time and any given number of reasons. The increase in the cost of living certainly rose very sharply in the period between 1949 and 1954.


George James McIlraith: The Korean war.


Gordon Harvey Aiken: If the hon. member wishes to credit this to the Korean war he might be honest and credit the unemployment drop in the same period to the same thing. We hear constantly the figures of unemployment and how they dropped during the Liberal regime in 1951, 1952, 1953 and 1954. Certainly they did. Unemployment dropped, and the consumer price index went up. But you cannot have it both ways. If you are going to credit the one to the Korean war, you have to charge the other to the same event. One can take a set of figures and make them prove anything, I suppose; but you have to take figures over a long period of time to indicate what is the real situation.
Taking this particular release of February 17, 1961, there is one black note in the release, and that is the unemployment figure. The other figures in there are very, very optimistic and indicate a very healthy situation in this country, such as the increase in employment and the increase in the labour force. We are getting ahead of the game by a small margin even at this time when things are bad. The unemployment problem is only one thing, and I believe that with the methods the government has undertaken it will be overcome in a short period of time.


Mr. W. H. McMillan (Welland):: Mr. Speaker, I have heard the Minister of Finance (Mr. Fleming) say many times that he is not responsible for the monetary policy in Canada. I do know that on July 3, 1934, royal assent was given to an act to incorporate the Bank of Canada. I do know also that certain powers

were given to the governor, the directors and the executive committee so that they might regulate the currency and credit in the country to the best interests of the economic life of our nation.
I have read the Bank of Canada Act, and section 23, subsection (1) reads:
The bank shall act as fiscal agent of the government of Canada-
Et cetera. Then subsection (2) reads:
The bank, if and when required by the minister so to do, shall act as agent for the government of Canada in the payment of interest and principal and generally in respect of the management of the public debt of Canada.
I have always held the view that the Minister of Finance, as this subsection implies, has control over our debt management. If we have good debt management in this country it is much easier for the bank to operate, but if we have bad debt management, as we have had during the last three years, it is much more difficult for the bank to operate and provide all the extra funds this government requires.
In my opinion there is no one living who could adapt the policies of the bank to the inconsistent and changing demands of this government which requires a great deal of money all the time. We have read articles in the press criticizing the governor of the Bank of Canada both for our fiscal policy and our monetary policy. There is no doubt that the frequent statements of the Minister of Finance disclaiming any responsibility in connection with our monetary policy throw certain criticism towards the governor of the Bank of Canada. I think this criticism should be thrown directly at the government, where it properly belongs.
There is no doubt that the minister always knows what is going on in the Bank of Canada. Before the banking and commerce committee on March 18, 1954, as reported at page 715 of the minutes of proceedings of that committee, the former governor of the Bank of Canada, Mr. Graham Towers, said:
The government of course, either through the deputy minister of finance who is a member of the board and executive committee or through quite frequent conversations between the governor and the Minister of Finance, is always aware of what the Bank of Canada is doing.
Mr. Towers also went on to say:
The situation is that parliament has placed squarely on the shoulders of the directors and management of the Bank of Canada the responsibility for monetary policy.
There is no alibi possible for the central bank. Then he went on to say this:
On the other hand, there is no alibi possible for the government, because if government said: Well, we disagreed with what the central bank did, but parliament has placed the responsibility on them, so what could we do? The answer 90205-6-142
Government Monetary Policy obviously is that the administration of the day, supported by a majority in parliament, can always alter the legislation. In fact, I doubt whether a disagreement would ever necessitate such a thing, because there are various ways and means by which directors and management can be got rid of. I am sure that in the case of a serious disagreement that is what would take place.
These statements were made by Mr. Graham Towers when he was under close questioning by the then hon. member for Eglinton, now the Minister of Finance. That occurred on March 18, 1954, before the banking and commerce committee. I might say that Mr. Towers and Hon. Mr. Abbott gave similar answers to questions asked by the hon. member for Greenwood (Mr. Mac-donnell).
Why does the Minister of Finance refuse to take any responsibility in connection with the Bank of Canada? The fact is that the fiscal policy of this government has become so bad, so much blame has been directed towards the Minister of Finance, that he finds it convenient to let somebody else take it all, if he can get away with it.
Why does not the minister say he either agrees or disagrees with the policy of the Bank of Canada? I cannot imagine the Minister of Finance disagreeing with the governor of the Bank of Canada and saying nothing; it is not his nature. After all, we all recall that at the Mont Tremblant conference he spoke up rather violently; at least the press said he did and some of the members of the press said he used sledge-hammer tactics when softer and milder words would have better fitted the occasion. He used that kind of language in connection with Mr. Thorn-dyke of Great Britain. We all recall the threats of retaliation used by the Minister of Finance towards Great Britain-


Donald Methuen Fleming: There never was any threat of retaliation.


William Hector McMillan: It appeared in the press. We all recall those threats concerning Great Britain joining the European bloc of nations.
On the other hand, the other night in Chicago the minister spoke up fairly sharply, I thought, when he brought to the attention of the United States the situation with regard to purchases of Canadian oil. Certainly, the government of Canada and the Bank of Canada are in agreement. If they are not, what is so sacred about the Bank of Canada Act? It has been amended on two occasions to my knowledge and it could be amended again. This government, with its great majority, could easily bring that about. Parliament is supreme. What parliament has done, it can amend. The minister would have us believe that there are two sovereignties in this country-parliament and the Bank of
2228	HOUSE OF
Government Monetary Policy Canada. Now, Mr. Dunning said in the house in 1936, as reported on page 3262 of Hansard:
The bank may and should resist temporary gusts of public fancy, but in the long run it must show responsiveness to public opinion. In the long run, the bank in the performance of a vital sovereign function must be responsible to the sovereign will expressed through government. There cannot be two sovereigns in a single state.
The government either agrees with the Bank of Canada or it does not, and if it does not and does nothing about it it is spineless. I think it is wrong for a government such as ours to abrogate the authority given it by the people of Canada. I do not think this government should keep on sidestepping and refusing to take responsibility. This leads me to wonder, Mr. Speaker, are they men or are they mice? I know the Minister of Finance will try to talk about something Mr. Harris said. I know that Mr. Harris said at one time on the orders of the day, when he was asked about an increase in the bank rate, that he had nothing to do with that particular increase in the bank rate. That was the case. He certainly had nothing to do with it. However, Mr. Harris said, he had been consulted by the governor of the Bank of Canada, and while the former minister of finance did say he had nothing to do with that particular rise in the bank rate, at no time did he go on record as saying he did not feel responsible for the over-all policy of the Bank of Canada.
We all know that money is like any other commodity inasmuch as the cost of money depends on the supply and demand. The Minister of Finance has been responsible for the high demand and this in turn has resulted in high interest rates. Suppose we assume that the Bank of Canada had all to do with the high interest rates we are paying. Then I say the minister in his own jurisdiction is on record as being responsible for paying higher interest rates on the money he has borrowed. On several occasions, and in particular on January 16, I referred to the various gimmicks which were used in connection with his bond sales. The one to which I referred on January 16 was the 3 per cent 19 months' bond sold at 94.65 to the wealthy friends of this government. Those who bought that bond, if they were corporations paying 50 per cent income tax, had over 5 per cent net after income tax, equal to 10 per cent net before income tax. There have been several bonds of this particular type put out and, in fact, $125 million worth of this issue were sold. At the same time, bonds at 5 J.- per cent were sold to the public at a smaller discount than those sold to the big investors at 94.65. I suggest to the minister that there is a lot of room between 5J per cent and 10 per cent where he might have


stopped instead of paying those people who wanted to dodge income tax. Even though we assume that the Bank of Canada is responsible for the 5J per cent or whatever other interest there is it can hardly be said that they are responsible for these big gobs of bonds, and for the profits which are being made, not always but generally, by wealthy people.
In 1957, when Mr. Harris was minister, we were paying our way and we had a daily surplus of $400,000. Then, as I said on January 16, the present minister brought in his baby budget in December, 1957 which changed this surplus into a deficit of $2 million. Every day, and day after day, we have a $2 million deficit when you consider the government's overspending and the depletion in government accounts. No matter what is said of the Bank of Canada we should all realize that the Bank of Canada must see to it that hundreds of millions of dollars are channeled into the Canadian treasury every year in order that this government may meet its huge deficit and other obligations. This is no longer an easy task. I do not think the governor of the Bank of Canada or anybody else could induce bond holders to go on buying long term bonds after the stinging the minister gave those bond holders who bought 4J per cent bonds at the time of the conversion loan. We know that those bonds fell to a point almost 20 per cent below their face value.
Manu long term bonds were sold to people who could not afford to put up the cash for the duration of the bond; they were willing to put up their cash for a time, intending to sell the bonds later. However, they found out when they came to sell that the value of the bonds had dropped very considerably. They went to the bank, and the bank would not lend any money on the bond. This condition continued for a considerable length of time. I know of some people who had to sell their bonds at a loss and, to say the least, they do not feel enthusiastic about the minister's financing.
At the time of the baby budget in 1957 some sections of the press referred to the budget as budgeting by fraud in that the minister was projecting a surplus over the last three months of the fiscal year when in fact over the whole year there had been a big deficit. Of course, he had a deficit anyhow. Then came the election in March, 1958, and to put it mildly I do not think the handing out of the benefits under the unemployment insurance scheme was meant in any way to lose this government any votes -certainly not in my part of the country, anyhow. Then a little later, came the government's first full budget. At the time of

that budget the minister told us he would need a great deal of money during that summer, and immediately afterwards the hon. gentleman launched the conversion loan which, I will say, was ill-conceived and certainly ill-timed.
We all remember the high pressure that was put on holders of victory bonds to change their 3 per cent bonds to long term 4J per cent conversion loan bonds, and we know that the Minister of Finance and the Prime Minister (Mr. Diefenbaker) both went on the air in support of this program. They paid the public a bonus to switch. During that compaign, on September 4, 1958, I related to members in this house how I had witnessed the conversion of two bonds. I gave the details of the conversion of one bond. I saw one man at a bank with a $10,000 bond to be converted. It cost the government $350, including $51 accrued interest, to change that bond from a 3 per cent bond to a 4-J per cent bond. In other words, the bonus was $250, the commission to the bank was $100. The government put up $350 to change one bond on which they had paid $300 a year interest to one on which they had to pay $450 interest thereafter, an increase of 50 per cent.
The market became glutted with bonds at that particular time and I understand that most of the small people traded in their bonds. This was not true of the big investment companies. Because those big investment companies unlike the unemployment insurance fund, did not trade in their bonds, they were able to wait around for a higher interest rate that they could get in gimmicks and in treasury bills.
The Minister of Finance and the Prime Minister told us that the patriotic thing to do was to convert. The Prime Minister said it would mean bigger and better jobs. They both said that the provinces and the municipalities would be able to borrow to better advantage. In fact, they said everybody would get money cheaper. We on this side of the house said that the opposite would result. We said that it would cost the provinces and the municipalities more money; that it would cost business more money; that it would bring about stagnation in our economy and unemployment. Certainly, nobody will say that that has not come about. Since we knew that the ministers would be requiring new money at the time of the conversion loan this was not hard to see. You did not need to be clairvoyant or a crystal gazer; you did not need to be an economist, you just had to use common horse sense. I am surprised that the minister himself did not see this.
90205-6-142J
Government Monetary Policy


Frank Charles McGee: Will the hon. member permit a question?


William Hector McMillan: He is generally wrong. I know that on two occasions he prophesied a surplus, but on both occasions he was wrong. I will not get into an argument with the hon. member for Greenwood (Mr. Macdonnell) on whether he was 100 per cent wrong or not wrong at all, but at least he was wrong on both occasions.
The interest on our debt is up $200 million over 1958 and when you include the extra bonuses and commissions in the last three years, the extra interest has aggregated $600 million. Our extra interest bill per day is over $500,000, and is very close to $600,000 a day.
During the high pressure sale of the conversion loan I predicted our extra interest bill, because of that conversion loan alone, would be $64 million a year. I hit it almost on the nose. I was a little under, however, because I did not take into consideration the cost of printing, bonuses and commissions, which brought it up more than that.
In talking about the extra interest on the conversion loan on September 4, 1958, I said that the extra interest which the Minister of Finance was putting on the people of Canada would build 100 printing bureaus, one every three months for the next generation, or one almost every mile from here to Montreal. All I can say is that I underestimated at that time.
The conversion loan got us into a trap. It is a trap of the government's own making. As expensive as the conversion loan was, it was cheap when you consider the financial manoeuvring and wiggling that have been going on to try to escape from the effects of the loan. I say that the government will never escape from that and we know, if we start talking about printing bureaus-and that subject was to the fore at that time-that the minister could have 36 printing bureaus now before the ink is dry on the last bond that was sold.
I just wish to say a word or two about unemployment. All of this has had a serious impact upon our economy. Many of the unemployed people are in serious financial straits. In many instances their unemployment insurance has run out and they are on relief. The amount of relief is inadequate and varies from municipality to municipality. I read many accounts of the plight of the unemployed in the minister's home of greater metropolitan Toronto. We can see accounts in any of the Toronto papers. Social workers in Toronto are on record as saying that this help is inadequate. They describe men who go from social agency to

Government Monetary Policy social agency to get enough help to keep their families together. This surely is not good enough in a society where the government has contrived, deliberately or otherwise, to pay high interest rates to those who have money. I think this is a terrible indictment of the government. This surely is not in keeping with the promise of the Prime Minister that no one would suffer from unemployment as long as he was Prime Minister.
In connection with unemployment, I notice different hon. members rising in their places in the house and talking about, or giving figures on, unemployment at this time, and comparing it with previous times. I think they forget one thing. They forget that the unemployment insurance fund went up from zero to over $900 million under the former administration, and in these last three years it has come down to a point where it is almost bankrupt. I think the advisory committee admits that in their last report.
What has been the government's cure? The government called us back here early in the fall and the minister brought in a budget. There is only one thing in the budget designed to stimulate our economy, and that is this: The minister raises from $25,000 to $35,000 the amount on which the lower 21 per cent of the corporation income tax will apply. Out of this new provision a firm making $30,000 would save $1,500, and a firm making $35,000 or more would save only $3,000. This is not enough in either case to put one man to work.
There is another plan in the budget under which the minister says he will allow double depreciation for one year in those distressed areas where they have had chronic unemployment for some time.


Donald Methuen Fleming: I rise on a point of order, Mr. Speaker. The hon. gentleman thinks he is back in the budget debate. The budget debate was concluded several weeks ago when the motion to resolve the house into committee of ways and means was adopted. The resolutions can be discussed in the committee. Therefore, I suggest it is not relevant to this present amendment concerning monetary policy and similar questions. Surely, we are not discussing the budget resolutions on this amendment.


Lionel Chevrier: Mr. Speaker, 1 submit with deference to you that the discussion which has been carried on by the hon. member is clearly and squarely within the terms of the amendment. I think it ill becomes the Minister of Finance to raise a point of order on that matter. If he had wanted to do so I think he could have objected earlier in the remarks of my hon. friend. He did not, and the hon.

member who has the floor now has been dealing exclusively with the amendment now before us.


William Hector McMillan: Mr. Speaker-


The Acting Speaker (Mr. Rea):: Order. I do not object to the hon. member referring to the budget, and ways and means, but I do not think he should make his whole speech on the budget. I suggest that he come a little closer to the amendment.


William Hector McMillan: I will leave unemployment since we can deal with it at another time and I will touch on another subject which is perhaps appropriate in this debate. I have here an issue of the St. Catharines Standard of a little over a year ago. At that time Mr. Grosart of the Prime Minister's office was in the Niagara district making a speech to the party faithful.


An hon. Member:: Where was that?


William Hector McMillan: In the Niagara district.


Douglas Mason Fisher: He is their organizer.


William Hector McMillan: According to his speech, he was not worried about the debt because he said it was easily manageable. He said that he thought the Minister of Finance found the debt easily manageable. Mr. Grosart referred to another matter. He did not think that the government was getting through to the people. I think I can ease his mind on that score and say that the government has got through well to the people. I never knew before who the mentor of the Minister of Finance was. Unfortunately Mr. Grosart's statements do not appear in the press very often and it is hard for us to know what the financial and fiscal thinking of the government is. The Minister of Finance certainly does not take us into his confidence and we would like to get some information from someone in the government.
The other night the Minister of National Revenue (Mr. Nowlan) was in London and he talked about the possibility of an increase in income tax and of a deficit next year. I do not think there is anything new about the matter of a deficit because I think it was three years ago that I predicted that the present Minister of Finance would never have a surplus. Therefore I do not think the Minister of National Revenue (Mr. Nowlan) was giving us any new information.


Eldon Mattison Woolliams: Could I ask the hon. member a question?


William Hector McMillan: After I am through. If I am not out of order, Mr. Speaker, I will make a short reference to trade. The government is trying to do all it can to boost our economy by increasing trade. In December,

1957, the government sent a buying mission to Great Britain. I think the government got things backwards. The Prime Minister gave the members of the mission a great send-off. He told them to buy and not to sell. They went to Britain to buy at a time when industry there was working at full capacity. At that time we had a considerable number of unemployed in this country and in the case of such orders as were placed in Great Britain the mission had to take deferred delivery dates.
Now we have a minister who is following a hard sell policy. We know he is following a hard sell policy because he called a number of trade commissioners to Ottawa and he told them that their chances of promotion depended on their success in the hard sell. We know that we have now sent people to England to try to sell three years after we sent a buying mission there, and at this time industry in that country is somewhat slack and is therefore much more competitive in their home market where we are trying to sell. As I said before, I think the government pays too much attention to politics and not enough attention to government.


John Whitney Pickersgill: That is putting it mildly.


William Hector McMillan: The Prime Minister and the premier of Ontario met in Toronto not long ago and a spokesman at the meeting said:
The party feels that the government has had a good program but we haven't sold It.
The Prime Minister said that the Conservatives plan to mobilize in every part of the country and to expand information services to furnish data on the courses of action taken by the government and how it has fulfilled its promises. "We have just begun to fight", the Prime Minister said, in an apparent reference to the next election. He said that the Conservatives would expand their information services. This is another way of saying that the government feels it has not been able to get through to the public in the way that it would like to. It is another way of saying that the image is not in sharp focus.
This may be a little out of order, Mr. Speaker, but this is just another aspect of the hard sell. From this I can detect that the Conservatives are aware of something sinister and they seem to lament that you cannot sell something that is unsalable.
The hon. member for Parry Sound-Muskoka (Mr. Aiken) said that it was time to take a good look at our economy. He enumerated different items and all his comparisons were made with last year or the year before which were also Tory years. I have made a tabulation of different aspects of our economy. Our fiscal policy, while not the sole cause, has
Government Monetary Policy had an adverse effect in producing these effects: 1. Unemployment is reaching new post-war peaks every month. 2. Carloadings are generally down over corresponding figures of previous years. 3. Business failures are away up so that the press compares them with those in the days of R. B. Bennett. 4. Steel production, the indicator of business, is away down. 5. Mortgage money is so high in cost that many people cannot afford to buy a very modest home. 6. Taxes at all levels of government are year by year reaching new peaks. 7. Hungry people are walking our streets. 8. According to articles in the press, our prestige abroad has dropped, and according to the article, "Canada, A Nation Without a Face", in the current issue of the Financial Post, our prestige is reaching new lows. I do not see how anybody can come to any other conclusion but that our prestige is going down. I hope this is not right. I hope that the government will not expect the governor of the Bank of Canada to take any responsibility in connection with these matters.


Eldon Mattison Woolliams: You differ with your leader.


William Hector McMillan: 9. Our bonds have sold among the lowest of the western free world and foreign financial papers, including those in London and elsewhere, criticize our fiscal policy and say we are in trouble. 10. The cost of living is at or near the all-time high. 11. Through lack of decision in the cabinet we maintain interceptor aircraft under NATO in Europe and at home in Canada that are not fast enough to intercept an ordinary commercial jet aircraft.
The people of Malton were building a plane, the CF-104, of which the people of Canada and in the industry could be proud. No matter whether Canadians disagreed with the breaking up of that industry, I think they all lament that the three or four planes at or near completion were put to the blow torch and cut up into little pieces so that nobody could see how good the planes were.


Eldon Mattison Woolliams: On a point of order, Mr. Speaker, I cannot see that this is material to the debate. The Avro Arrow was as outdated as manufacturing horse collars would be today as far as the agricultural economy is concerned. What has that to do with the debate?


Some hon. Members:: Oh, oh.


Lionel Chevrier: After the speech you made, you should be the last one to raise a point of order.


William Hector McMillan: Apropos of this, Mr. Speaker, I notice in a letter-the writer being

Government Monetary Policy from San Diego, California-it is stated that most of our aircraft workers who went there still recall the anniversary of Black Friday.


The Acting Speaker (Mr. Rea):: Order. I think I have allowed the hon. member to get into a discussion of the aviation business quite far. Perhaps he should now come back to the subject.


William Hector McMillan: I will try to return to a discussion of the economic situation in this country.
After listening to the hon. member for Yukon (Mr. Nielsen) the other day I really felt that the great northern vision had disappeared or became a fleeting mirage.
The people have lost confidence in our government-


The Acting Speaker (Mr. Rea):: Is the hon. member for Yukon rising on a point of privilege?


Mr. Nielsen:: On a question of privilege, Mr. Speaker. I do not think the hon. member from Welland intended to refer to me when he did. I think he must have mistaken me for someone else.


Lionel Chevrier: What is your point of privilege?


The Acting Speaker (Mr. Rea):: Could the hon. member tell me what the point of privilege is?


Erik Nielsen: The hon. member from Welland referred to something attributed to me which I did not say.


Lionel Chevrier: It is on the record.


William Hector McMillan: Because of the fiscal policy, people have lost confidence in this government which has promised to do much but has done little. If the government would only say what it means, and mean what it says, there might be some return of the confidence required for a healthy economy in this country. If the government would say less about its politics and would remove itself from indecision we would all have less to criticize it for, and would not have to ask then, Mr. Speaker, are they men or are they mice.


Eldon Mattison Woolliams: Mr. Speaker, the hon. member who has just sat down said he would answer a question when he was finished. I should like to ask that question now. Is it true that the Leader of the Opposition (Mr. Pearson), all through the 1958 election campaign and just recently, said that in order to cure unemployment in Canada he would finance on a deficit budget?


William Hector McMillan: That is right, but those opposite seem to forget that if you spend perhaps $600 million or $800 million to stimulate

the economy the returns from increased income tax and increased sales tax would offset the deficit to a considerable extent.


John (Jack) Henry Horner: It is customary on a supply motion for the official opposition to move an amendment and to state that the country has gone to pot, and that they no longer have confidence, like the people of Canada, in the government. This is, as I mentioned, a customary motion, and it is the official opposition's duty to choose the subject for debate. Naturally one expects the official opposition to choose the most important subject at the time the supply motion is brought before the house. They have chosen monetary and fiscal policies, as I understand it.
We have now dealt with just about everything in respect of monetary and fiscal policies as well as anything else that can be tied in with them.
I came to this house perhaps a little naive in respect of management by government, the duties of the official opposition and so on, but have always been willing to work, and have listened to a great many subjects. The official opposition has made very determined efforts to speak on unemployment and to give us suggestions as to what should be done. I have had a great deal of difficulty in deciding when the official opposition is serious and when it is actually only making political comments. The previous speaker suggested that this government forget absolutely everything political and get down to business. I would suggest that this would be good reasoning for the official opposition to follow.
I have listened on a number of occasions to discussions in respect of this unemployment situation but have failed to comprehend any concrete solution that the opposition have put forward in regard to this problem. They suggested at one time that the government should get labour and management together. When the government announced that they were going to set up a national productivity council, the official opposition spoke against the measure, yet the council's main work would be discussions with management and labour in regard to creating greater production and thereby greater employment.
We have heard the Leader of the Opposition (Mr. Pearson) speak today about tight money-money loaned out since this government took office-in comparison to the policy of the previous government. He did not mention any figures or go into any great detail concerning what we should be doing which we are not now doing. He did not suggest that we had not lent more money than the previous government because he knows full well that we have. He must realize that we have made money available to small towns.

I might say at this time that this money has been very welcome to a number of small towns on the prairies. We have also increased the number of loans and the amount lent for the purchase of farm lands; we have increased farm improvement loans by more than half as much again. We have also made arrangements for government guaranteed loans to small businessmen.
All these increases have been put into effect since this government took over and yet the official opposition continues to say that we have brought in nothing but tight money policies. We have lent money in respect of winter works projects; we have increased grants to universities. Universities in the province of Alberta receive from the federal government up to $300 per student. We have granted money in respect of university residence construction, for sewage disposal projects, and as one hon. member mentioned in the debate today, we have increased old age pensions by $9 although he did not feel this was much, even though it amounted to some $100 million. He suggested it was nothing to crow about. I think it is evident now that those hon. members who support this view wish now that they had increased the pensions by $9 rather than by $6. We have heard a great deal of discussion about the unemployment insurance fund. No one on the other side of this house has mentioned the increase in the number of days for which an individual can collect unemployment insurance. This is one of the steps that President Kennedy has suggested should be taken in the United States.
A great deal of the discussion has related to the cost of living index. I have here the Canada year book for 1960 which gives the cost of living index for each year. The member from Kenora-Rainy River (Mr. Benidick-son) said it had increased from 121 point something to 129, a rise of 8 over a period of approximately four years. Where he found these figures I cannot say.


William Moore Benidickson: The Bank of Canada statistical summary.


John (Jack) Henry Horner: I am reading from the Canada year book for 1960, page 985, which covers the year 1957, the year in which this government took office. Surely he does not expect that the rise in the cost of living index would be halted immediately on the government taking office. It may have been 121 but I should like him to notice that in 1958 it was 125, and on going down to July 1960 we find it is 127.5, a rise of 2.5 points. Surely that is a proper comparison and has a far better relation to the situation than the figure he used in assuming that this government
Government Monetary Policy should have been responsible for everything that happened in 1957 and should have rectified things immediately.
The hon. member for Welland (Mr. McMillan) went on to speak about what was happening. He said that the government should know everything that is going on in the Bank of Canada. From the way in which the governor of the Bank of Canada has been speaking about the Bank of Canada, nearly everyone knows what is going on there. He has been going across the country doing a great deal of talking, something that I think he should not do. He is a person in a responsible position and rather than try to paint a gloomy picture of the economy of Canada or of the finances of Canada-


Lionel Chevrier: He is preaching gloom and doom.


John (Jack) Henry Horner: I realize that he is a Liberal appointee and that he may preach just in the way the hon. member for Laurier wants him to preach; I am not sure. However, I think that a person in a responsible position such as that which he holds should have a greater tendency to control his remarks and to keep his comment on Canada to himself or express it to the government in a confidential manner, one or the other.
The hon. member for Welland went on to speak about deficits about the fact that we had a great debt; that debt management was a problem and that the matter of raising the interest for this debt management was an even greater problem. What did the Leader of the Opposition (Mr. Pearson) say in 1958? He said that we should have a deficit. He said, "If I were elected Prime Minister of this country I would give all Canadians a tax holiday". What would the deficit have been then? What would the problem of debt management have been? What would the national debt of this country have been if he had been able to fulfil half the promises he made at that time?


Eldon Mattison Woolliams: Who would know?


John (Jack) Henry Horner: I shudder to think what the problem of debt management would have been or what the interest on the national debt would have been.
The hon. member for Welland talked about fiscal thinking. He said that nobody knows the fiscal thinking of the government. May I say that nobody knows the fiscal thinking of the opposition. On the one hand they are talking about debt management. On the other hand they are saying, "You are not doing enough for unemployment". Yet when we bring in measures to increase employment they say, "Too little and too late". Some of these measures have a tendency to reduce

Government Monetary Policy the government's working capital. They think these measures should be increased and yet the debt should be managed and everything should be in tip-top shape. As one hon. member on this side said, "You cannot have your cake and eat it too".
The hon. member for Welland mentioned trade and the fact that we had sent a trade mission over to Great Britain. He did not mention the fact that our imports from Great Britain had risen from 8 per cent to over 10 per cent of our imports. He did not quote any figures. He just tried to make a joke about the trade mission going over to Great Britain. He did not mention the fact that the trade deficit has been reduced this year to its lowest point since 1952. He failed to bring any concrete reasoning to bear in his speech. He dealt with the matter on a higher plane, as did the Leader of the Opposition; and I must admit that it was sometimes too high for me to understand.
I was greatly interested in the speech on socialism by the hon. member for Kootenay West (Mr. Herridge). Some time ago I asked the member of the new party a question on socialism. I asked him whether he was a socialist or whether the new party was socialist. He gave me some definition of Oscar Wilde's and never answered the question at all.


The Acting Speaker (Mr. Rea):: Order. The hon. member for Kootenay West is rising on a question of privilege.


Herbert Wilfred Herridge: The hon. member for Acadia said I made some reference to Oscar Wilde. May I say that I do not read such literature.


John (Jack) Henry Horner: I said that the new party member had made the statement when I asked him a question: it is in Hansard. I have never been a follower of the C.C.F. party.


Mr. Peters:: Thank heaven for that.


John (Jack) Henry Horner: I have been in doubt where the new party stands. I have been in doubt whether they stand for socialism or for what they stand. We have often observed the leader of the C.C.F. rise in his place and say, "You backbenchers on the government side always toe the line; you are all a bunch of trained seals; you always vote with the party". When the new party member came into the house we backbenchers thought, "Here is a new train of thought coming into this house; here is a new train of thought that will be produced for the first time. He will vote and he may bring in new suggestions. We shall have to watch him and see how he votes and how his suggestions are received". Mr. Speaker, not once has he voted in a way different from that of the C.C.F.
[Mr. Horner (Acadia) .1

He has fallen right in with them just like a trained seal, and a better one than any we have on this side of the chamber.
I was also in doubt as to where the new party stood. However, I listened to the proposed leader of the new party the other night on television. He went on and on speaking about the great things that public ownership would do. According to him, public ownership would solve all the problems of the whole economy. The financial difficulties of the country would be settled; the unemployment question would be settled; even the drug industry would be settled if he could bring in public ownership. According to him, public ownership would solve all problems. From that speech and from what the hon. member said today about socialism, I gather that the new party is nothing but socialism in a new skin.
The other night on television the leader of the C.C.F. said that public ownership should build the Aurora pipe line. This small pipe line, six inches to eight inches in diameter, is going to run to the United States border from near Waterton lake. He said that through public ownership we could finance it and that we did not need to bring in the Texas buccaneers. If he is going to go this far in public ownership and is going to go into the drug industry, how is he going to create employment and how is he going to rectify the situation as far as the banks are concerned in this country? Actually, what the C.C.F. party is doing is putting a cover over the top of their party, and writing a splashy "new" on the front of it, just like a new box of soap. They are doing just as soap manufacturing companies do when they splashed "New" on the front of their boxes, had a big advertising campaign and sold a little bit more soap. Perhaps they will sell a little bit more soap; I do not know.
But actually, Mr. Speaker, the C.C.F. was founded by labour. Mr. Woodsworth was elected to this house in 1926 as a labour representative and again in 1930. Then in 1932 there was the big conference and they brought in the farmers and they were going to be the new party at that time. Today what are they doing? This summer they are going to have another big conference and reunite the farmers and labour, so they say. The sad facts of the story are that they never had the farmers behind them, that they never reunited anything; and they probably will not do any reuniting in July. We have just seen what the socialists really stand for. We have had another definition today. But if there is any doubt in anybody's mind as to where they are going or what they stand for, it was certainly cleared

up not so long ago when the union bosses said, "We will have the premier of Saskatchewan for our leader". They pick the boy; they call the shot. The poor hon. member for Assiniboia (Mr. Argue) has not much of a chance when they call it.
Of course, this new party is going to be different; it is going to rectify the whole financial situation in this country. Some of the members sitting in the present C.C.F. group in this house say the new party is not going to amount to much. Some of them say this because they do not like union bosses and they realize unions are going to control the new party. Some others say the new party is just a flash in the pan and they are not going to run again ar yway. We hear this sort of talk.
Again you have to consider that some C.C.F. members even outside the house might have difficulty in joining the new party because I read in the Toronto Telegram a week ago that communists are not going to be allowed in that party.


William Arnold Peters: That does not leave you much hope then.


John (Jack) Henry Horner: Of course, if they exclude them, this might bring a new train of thought into the new party; I do not know.
But how will public ownership aid employment, that is the question? How will public ownership cure the financial position of this country, if we are as sick as the hon. member for Kootenay West (Mr. Herridge) says we are?
What did the socialists do when they took over in Saskatchewan? They bought out six or seven manufacturing concerns and lost nearly $1 million in those concerns. Is that the way they are going to rectify the financial siutation of this country, buying industries and then losing money on them? That is what happened in Saskatchewan, and this is all common knowledge to anybody who has any close connections with Saskatchewan.


William Arnold Peters: How was it you fellows did not do better in the last provincial election?


John (Jack) Henry Horner: Mr. Speaker, these remarks remind me of the proverb in the good book, "A scorner seeketh wisdom, but findeth not; but knowledge is easy unto him that understandeth".
What about the population increase of the province? That is an interesting comparison in itself.


The Acting Speaker (Mr. Rea):: Order. I think perhaps the hon. member had better come back to federal matters that are before the house. The Chair has been quite lenient with the hon. member in allowing him to
Government Monetary Policy make comparisons, but I do not think he should be allowed to enter into a full discussion of strictly provincial matters.


John (Jack) Henry Horner: I have always understood the rule of the house to be that if somebody speaks on a particular matter others can follow suit and deal with the same subject.
Let us take a look at the earnings per capita across Canada and compare them with the earnings per capita in the province of Saskatchewan. In doing so you have first to compare the population growth in the provinces. In Saskatchewan the amazing and most interesting thing is that it is the only province in Canada that has not grown in population from 1941 to 1956, according to the census taken in 1956. There was a decrease in population during that period.
Of course, some hon. members might well say, "Why did they leave?" This question might well apply to myself. I left Saskatchewan in 1945. I think the decrease in population and the decrease in per capita earning of that province are due directly to the socialist government in Saskatchewan. Their method of doing business does not create the right environment for growth; that is why this province has lagged behind every other province in Canada, even Prince Edward Island.


The Acting Speaker (Mr. Rea):: Order. I suggested to the hon. member that he get away from provincial matters. I hope the hon. member will take note of my suggestion.


John (Jack) Henry Horner: Mr. Speaker, I am not referring to provincial matters in any direct relation to federal matters. I am referring to Saskatchewan because it is the only socialist province in Canada and I am comparing socialist methods-


The Acting Speaker (Mr. Rea):: Order. If the hon. member can show me what socialism has to do with this amendment I might be very happy to allow him to continue on this different line.


John (Jack) Henry Horner: I have always understood that the debate followed the trend set up by the original speakers. The hon. member for Kootenay West spoke of nothing else but socialism. He expounded the theories and pious hopes he had for socialism; how it could rectify all our ills; how we had a sick nation and socialism would cure it. I think I should be allowed to follow the line of reasoning he presented, to see how it could cure our problems.
The Aciing Speaker (Mr. Rea): Order. If the hon. member will stay in generalties, certainly; but I do not want this to become a
2236	HOUSE OF
Government Monetary Policy debate on socialism in the province of Saskatchewan. That is the point I was trying to make.


John (Jack) Henry Horner: I will do my best, Mr. Speaker, to stay in generalities. I have always felt, like many other members of this house, that to solve anything you must get to the-


Lester Bowles Pearson: "Root".


John (Jack) Henry Horner: -root of the problem. Thank you. You must do this to see what you are doing, where you are going. You need to see what somebody else is doing, if you are to study the problem.
There has been a great deal of talk about finance and how we should allow depreciation for capital investment in certain depressed areas; how manufacturing needs finances to get started. Let us look at manufacturing in the province of Saskatchewan; let us compare it with the province of Alberta. I will be brief. In 1943 there were 1,100 established manufacturing firms in Alberta. They employed 18,000 workers. In 1957 there were something like 1,900 established manufacturing firms in the province of Alberta and they employed 39,000 people. They doubled the employment figure.
In Saskatchewan in 1943 there were 960 established manufacturing firms. In 1957 that number had decreased to 844 and employment in those industries only went up by 1,000. You might say, "What has this to do with finance?" I will tell you. In the province of Saskatchewan there is no manufacturing firm that employs over 500 persons. This is the only province in Canada that has no large manufacturing industries.
This points out that large firms are reluctant to invest in socialist surroundings. Of course, the government of Saskatchewan recently realized this. They started a steel plant in Regina. They had to do it with private capital; they invited Texas buccaneers up to start that plant. The government invited them up; the minister of finance of that time went down to invite them up. And in that corner they talk about Texas buccaneers bringing money into this country. They say we have to stop it.
We must consider that in the manufacturing industry in Canada we have a large number of products being produced from a large number of different basic materials. Saskatchewan and Alberta have an equal number of materials available for the development of manufacturing. We have manufacturing companies using those products in Alberta. Saskatchewan no longer has any manufacturer of leather products. Of course, everybody in Saskatchewan knows the socialist government bought out the tanneries and
[The Acting Speaker (Mr. Rea).]

went broke. They went out of business and nobody had courage enough to reinvest in that industry.
The same thing applies to knitting mills in the province of Saskatchewan. They closed down, and nobody has had enough courage to reinvest in them. Until recently the province of Alberta had never taken any steps to clamp down on industry. They recently brought in an industrial tax, which I do not like, but they may get away with it. But last fall- and this is a very good example-we had some large financial concerns interested in investing money in western Canada. Where did it go? Well, it went to a little city by the name of Medicine Hat, Alberta. I was born just north of Saskatoon, I used to turn on the radio and hear them advertise Saskatoon as the hub city of the west. If you look at the map you will realize that Saskatoon is a short distance from Winnipeg, with direct rail connection to Regina, direct rail connection with Prince Albert, direct rail connection with North Battleford, Calgary and Edmonton. It is an ideal location for financial interests to invest in, and far better than Medicine Hat, because transportation costs are one of the most important things to which industry pays attention. Why did they choose Medicine Hat? They chose it because they were afraid to invest money in Saskatchewan under its socialist type of government. An ideal position was available to them, but they passed it over and went to Alberta to turn out their rubber tires and so on. I am referring to the Goodyear Rubber concern which employed 300 men in Medicine Hat last fall. Another important firm, Firestone, went to Calgary and started up there, by-passing Saskatchewan because of fear of socialism.
This shows that although socialism might cure unemployment for a short time, because of the necessary increase in civil servants, it will eventually produce a climate in which business cannot possibly develop.
Much has been said about industry, and how financial capital is lacking for its encouragement-how there is no money left for the development of industry, and so on. But suppose we look at the mining industry. It surprised me to read that the province of Saskatchewan, apart from the production of fuels, has the third largest mineral wealth of all the provinces of Canada. Alberta leads Saskatchewan if you add petroleum, but Saskatchewan ranks second to Quebec in mineral wealth if fuels are excluded. So many times when somebody mentions Saskatchewan, we think: that is the wheat province of Canada. But even the Saskatchewan government has recently agreed that Saskatchewan is no longer the wheat province, but a wealthy province with great industrial resources. They

have taken "wheat province" off their licence plates. I do not know if the farmers like that very much. They have, at least, realized they have something else besides wheat, though of course they are not doing a very good job of developing it.
This is easy to see if, for example, one looks at the development of hydro power. Compare the development of hydro power in Saskatchewan with the development which has taken place in any other province in Canada. It has been left far behind. In 1940, Saskatchewan produced 99,000 horsepower units. Today they have got 128,000 horsepower units. Compare this with the situation in Alberta. Alberta, in 1940 had 71,000 horsepower units. Today, they have 312,000 horsepower units. That is a sharp increase in Alberta, compared with a very poor increase in Saskatchewan. And how did that development of power occur in Saskatchewan? Mainly from a large smelter along the Churchill river in the north. Of course, this government has decided to go ahead with the Saskatchewan dam project. The great financial expenditure involved in that province will no doubt create a good many more jobs there and, no doubt, create also to a certain extent, an environment which will allow Saskatchewan to increase its population. The former government realized that the Saskatchewan dam should be built. Jimmie Gardiner, when he was minister of agriculture, said: yes, it is a necessity for Saskatchewan; we must have it. But the prime minister of that day said it was not in the best interest of Canada as a whole. You would not call that a one-man government. It was just that the prime minister said no, and Saskatchewan never got the dam. Now let us take a look at the forest industry. In 1958-


William Arnold Peters: Is there any chance of your making a federal speech when you go home to Saskatchewan?


John (Jack) Henry Horner: Government Monetary Policy should export it. That is all right; that is their view but they are not in power in Alberta or Canada and we can be thankful for that.
What did they do in Saskatchewan? Before any oil industry would go into the province, before it would invest a plugged nickel in the province, the premier of the province had to give a written guarantee that he would not expropriate any of the property or any of the investments in oil development. What did they do three years ago? The provincial treasurer or the premier said that there was oil under the road allowances and that the companies had to give one more per cent to cover the oil remaining below the roadways. That was the small, niggardly approach on the part of the premier of the province to try to squeeze another per cent or so out of the industry.
In some respects the oil industry has been hit hard within the last few years because of the shortage of markets in the world and perhaps in Canada. I have considered this problem very seriously; I have tried to visualize how socialism would cure the sick economy, as the hon. member for Kootenay West (Mr. Herridge) described it.


The Acting Speaker (Mr. Rea):: I am sorry to interrupt the hon. member, but I have been advised that his time has expired.


John (Jack) Henry Horner: I was going to make one more statement.


Mr. Frank Howard (Skeena):: It is a shame to cut off the entertainment, but I believe that is what the rules of the house say and it is a wonder that some people do not abide by them more often.


An hon. Member:: Listen to who is talking.


Frank Howard: If my friend wants to get into an across-the-floor discussion about something that happened earlier, I have just about as much feeling about the actions now as I did then.
After listening to this frenzied, arm-waving hysterical attack on a provincial government, I am reminded of the belligerent, bellowing of a wild bull. It had just about as much sense, too, Mr. Speaker, but there is one thing that comes through in all of this.


Eldon Mattison Woolliams: You lack horns.


Frank Howard: That is something that you do not lack and yours grow on the inside, obviously.
There is one thing that comes through in speeches such as we have just heard from the hon. member for Acadia (Mr. Horner) and the one we heard earlier from the hon. member for Bow River (Mr. Woolliams) and the one he made a few days before, and the


one he made before that. They were all along the same line of thinking, all exhibiting an inner fear of the socialist movement, all of them afraid of what it will do to them in their own constituencies.


Eldon Mattison Woolliams: Don't worry, my friend.


Frank Howard: I never worry about you, my friend, nor about what comes out of this type of discussion. It is not a rational analysis of the economic problems in the country today, which we are supposed to be dealing with if this amendment means anything, but a hysterical attack on something that neither one of them can understand but which they fear.


Eldon Mattison Woolliams: We do not stand alone.


The Acting Speaker (Mr. Rea):: Order.


Frank Howard: You can't stand on your own feet, either.
The hon. member for Acadia started off by wondering whether the Liberal party was really serious, or whether it was playing politics in this particular amendment. I think perhaps he knows the answer as well as the rest of us do, and that is that they are just playing politics and their serious moments are few and far between. The Tories are in the same class. That is why I was sure that my friend from Acadia recognized that the Liberals were not serious in respect of unemployment, which is one of the subject matters with which we are dealing.
I have noticed also that the debate, in so far as unemployment is concerned, which is what I should like to deal with, has oscillated between the juggling of statistics and the making of unprincipled attacks upon people who are not here to defend themselves; the using of a privileged position to get away with what I would call slanderous statements, or what could be slanderous statements if they were made outside. This is unfortunate. I think you will notice also, Mr. Speaker, that those who used the statistics so lavishly, juggled them so ably and distorted the picture of unemployment in this nation, were perhaps in reality paying silent tribute to Mr. Allister Grosart. They took most of the statistics out of "The Record Speaks" to which we have made reference from time to time here. On three occasions I have pointed out that "The Record Speaks", the Tory propaganda piece, is absolutely false and casts some suspicion upon the writers of the statistical material.


Eldon Mattison Woolliams: Now we hear the truth.


Frank Howard: My friend would not recognize the truth if he heard it.


Some hon. Members:: Ten o'clock.


Frank Howard: Unfortunately, Mr. Speaker, what is happening is that these people are becoming so blinded by statistics and percentages, hundreds of thousands of dollars and the amount of money in the unemployment insurance fund, that they are forgetting entirely that people are involved; that workmen have been out of jobs year after year because of the fumbling, bumbling and ineptness of this particular government. Almost a year ago now the government made a most stupid blunder in attempting to balance the budget because it was gambling with people's
Business of the House
welfare, people's lives, and it did not care so long as what came out was politically advantageous.
May I call it ten o'clock, Mr. Speaker?



BUSINESS OF THE HOUSE

Lionel Chevrier: I presume the house will be dealing with this motion tomorrow. Does the house leader want to indicate what the business will be on Wednesday?


Gordon Minto Churchill: We will carry on this debate tomorrow, Mr. Speaker.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Tuesday, February 21, 1961