The exporter is paid with a bill of exchange on Liverpool or London. Today he receives for the British pound only $4.17, or thereabouts; the rate varies from day to day. Were our currency at a par with English currency he would be receiving $4.87. The same applies to the sale of cattle and hogs. I am sorry I have not the article before me, but may I inform hon. members that in the monthly letter for October of the Packers' Association of Canada they state definitely that the cause of the low price of hogs in Canada is due to the fact that we have a surplus, and are now definitely on an export basis. Not only that, but we are suffering from ithe disadvantage that whereas last September we were receiving $4.87 for the pound, at the time this letter was issued we were receiving only $4.17. In other words there was a loss of 70 cents on every pound sterling. That situation is brought out clearly in letters of the Packers' Association.
The hon. member must be wrong. He knows that when the Englishman buys our wheat he buys at the seller's price, namely 63 or 64 cents. He may have to pay more shillings than he had expected, ibut the fact remains he has to pay it in our money.
Ever since I can remember, we have been told that the price of wheat was set in Liverpool, that we could not set the -price of Canadian wheat. I understood that we sold or kept it, just as we wished, but that when we sold it was at the Liverpool price.
One reason our price is higher than it was a year ago is that to-day we are twelve per cent or thirteen per cent off -gold prices. The same applies to cattle. Some of the Prime Minister's friends in Calgary are probably still in possession of cheques they received for the sale of steers shipped to the old country last October or November. By the time the shipments had reached the old country and the drafts had been sent
back here in payment for the cattle the shippers could get only $4.40 per pound sterling. They held the drafts, believing that our dollar would come back to par. Some of them may still hold the drafts, and we know that to-day they are worth only about $4.17 per pound sterling. That has brought down the' price of cattle in Canada. The price of hogs is down in this country. Only a few days ago I quoted a despatch from Montreal by a representative of the Canadian press pointing out that when Canadian butter was shipped to England we took a discount on the British price,-that is, when it was translated into Canadian currency. On the other hand the Danish farmer, dealing in a currency at par with the pound sterling, took no discount, and the New Zealand and Australian farmers were receiving very handsome premiums in the funds of their own countries owing to the fact that the British pound is at a premium in those countries. I am speaking only from memory, but I believe that in Australia the British pound is at a premium of about 25 per cent.
While I am on this subject I should like to refer to a copy of the New Zealand Dairy Produce Exporter, dated Saturday, February 27, 1932. This journal is issued at Wellington, New Zealand, and it carries a report of a committee of experts who had been dealing with conditions in New Zealand, who gave particular attention to the farming industry. I should like to read their findings to the house. Before doing that, however, may I quote one or two paragraphs from their report in which they deal with the dangers of inaction:
It is true that, if no action is taken, farm costs will eventually be brought into line with selling prices, but the present economic and financial system would be in danger of collapse in the process.
I think that is absolutely true in Canada. Our financial institutions are too dependent upon agriculture to ignore the situation prevailing in that industry. The article continues :
Those who prefer to adopt a policy of inaction, or who talk easily of "getting costs down" are completely out of touch with the realties of the situation. If internal prices In New Zealand are to be brought into conformity with our overseas prices by means of a direct attack on costs, it will be necessary to reduce interest, wages, rents, salaries and all payments for services by about 37 per cent, unless export prices rise.
The findings of this committee are very significant and should foe of particular interest to this house and government. The first proposal of the committee is:
As a first step the exchange rate should be raised to twenty-five per cent, and held at not below that level until conditions stabilize overseas. The currency should then be revalued in terms of sterling at a level to be determined by an expert committee.
As I said a few minutes ago, I believe at the present time exchange is at a rate of about ten per cent. This committee would have it raised to twenty-five per cent. That would increase the price of agricultural commodities in New Zealand by fifteen per cent. This committee also suggests:
A reduction in all interests and other fixed charges should be imposed, subject to exemption in the case of hardship.
The government and the banks should agree to a lowering of deposit and "over the counter" rates.
May I once again draw the attention of the house and the government to the findings of this expert committee, the first of which is:
That the exchange rate should be raised to twenty-five per cent and held at not below that level until conditions stabilize overseas.
They mean until price levels overseas rise to the point where the export price of these commodities in terms of British sterling will be sufficiently high to return their cost of production to the New Zealand farmer. This committee consisted of II. Belshaw, M.A., Ph. D., Professor of Economics and Dean of the Faculty of Commerce, Auckland university college, and four other economists from New Zealand universities. I am sorry all members could not read this illuminating article. It deals very fully with the situation facing New Zealand. That situation is a good deal similar to the situation facing the Canadian farmer, but it is better there by at least twenty-five per cent, due to the difference in the value of the pound in the two countries; in New Zealand the British pound is worth somewhere about $5.25, as against $4.18 in Canada. I do not see how we are going to compete with New Zealand in the butter market of the old country with exchange at its present level.
May I point out to the committee that this morning's Citizen carries a despatch from London reporting an address by Sir Josiah Stamp before the Canada Club in London. I believe when the Prime Minister introduced Sir Josiah Stamp to us a couple of months ago he referred to him as one of the world's greatest economists; therefore I quote him with great pleasure, but of course, only briefly. Dealing with Canada's currency dilemma, Sir Josiah is reported in these terms:
Canada's economic dependence upon world prices was greater than ever, Sir Josiah con-
tinued. It was sometimes thought her decision to adhere to some fixed relation for her currency to the New York dollar as distinct from the opposite course of adopting sterling or some intermediate level rested upon the importance to the dominion of avoiding payment of substantial premiums on her heavy New York obligations. It had been said Canada could not possibly afford this premium or its general effect upon her credit.
This dilemma was more apparent than real in the opinion of Sir Josiah. Even if Canada left her present dollar standard and her internal price level rose, she would still have to pay her New York obligations, and with gold prices raised abroad for her wheat, the relation between the Canadian dollar and the New York dollar would become immaterial for the purposes of payment.
Although it was important Canada should raise her internal price level for successful prosecution of her industries and the ^ balancing of her provincial budgets, he believed the dominion might be no more successful than England if the advantage gained by exchange depreciation continued to be offset by falling gold prices abroad.
It might well be better, Sir Josiah said, for the dominion's internal price level to remain practically the same as at present than for it to fall continuously in relation to the price level of the United States.
I agree with that, but I think it would be much better for the price level of Canada to rise. Of course, I am talking of the commodity price level. The report concludes:
The United States, he stated, was far better balanced internally than Canada and consequently better able to stand price depreciation.
Canada cannot stand that price depreciation, because it is affecting directly forty-seven per cent of her people engaged in agriculture; it is not affecting the remainder of the population to the same degree, and consequently you have this unfair relation of prices. This question of price stability is one on which I think Sir Josiah Stamp is an authority. He has written a book lately entitled Gold and the Price Level. I quote this one paragraph from it:
The problem of the price level is the most important single problem of the age. ... With business men there is still a sneaking feeling that references to the price level are academic and highbrow, not practical and immediate, . . . and yet it is the most bitterly practical of all questions.
The farmer cannot continue with the present price level. In fact there is no level about it. The price of what he sells has dropped sixty per cent, while the price of what he buys has dropped only fourteen per cent. Surely that cannot continue in Canada.
To say that the price of what he sells has decreased sixty per cent, while the price of what he buys has decreased only fourteen per cent, is hardly correct, for you are taking into consideration insurance, taxes and other items of that character which are a constant factor to all parties in the state.
are I think approximately correct. I based them on figures supplied by the Labour department and the bureau of statistics. Certainly they indicate the change in the different price levels. Mr. J. M. Keynes, one of the most prominent economists of the world, says:
Modern capitalism is faced, in my opinion, with the choice between finding some way to increase money values towards their former figure, or seeing widespread insolvencies and defaults, and the collapse of a large part of the financial structure.
It is that collapse which I am anxious to avoid. I urge the government very respectfully but very earnestly, to take action to raise price levels for the farmers of Canada.