But the answer which comes as easily as that is usually nine-tenths wrong, I ask my hon. friend to let the history of the depressions of the world give the answer. Was it sound money which forced Great Britain to abandon her system? She did not take that action of her own volition, she was forced to do so. Was it not sound money which the Prime Minister declared in his opening remarks at the Imperial conference had broken down? He stated that the sound money system of the world had collapsed. If
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it collapsed, it no longer can toe regarded as sound. The reason for its collapse was that its basis was unstable, and that basis was gold. Therefore, you cannot possibly have a safe sound system of money on a gold basis. The facts of history, not the opinions of the Prime Minister, myself or anybody else afford the best proof of my statements. We must take the cold, stern facts of history.
Can it be considered sound money when it has failed to perform the true function of money, namely, the distribution of goods? Goods are rotting in Canada because they cannot be distributed there being no money with which to distribute them. This is what has happened under the sound money system of this government. I ask a common-sense question: Is it sound money which fails to do that which sound money ought to do? Perhaps the Minister of Trade and Commerce (Mr. Stevens) will answer that question. I am quite sure that the answer will be that it is not sound money when it does not do what sound money ought to do.
Let me ask my hon. friend who is so loquacious: Is it sound money which ties this nation to the apron strings of Wall Street and which enables the financiers of New York to dictate the policy of Canada, whether it be under a Liberal or Tory government? Is that sound money? That is the kind of sound money we have at the present time.
Is it a sound policy to deprive our people of the available abundance, to maintain them in various degrees of want down to the starvation point because of the lack of the one thing in the economic system which is the easiest to provide-money? There is difficulty in providing wealth, that necessitates human labour, sweat, brains, and organizing genius. When we consider natural products we realize that it requires the facing of the vagaries of weather conditions. Wealth is hard to produce but when it comes to the symbols of wealth represented by a little bit of paper and a stroke of a banker's pen, then we have paralysis. We have been able to do the most difficult of all things, produce wealth, but we have been unable to produce the symbols which stand for wealth.
An empty stomach deprives a man of the ability to see glowing romance in a theoretical gold dollar which he has never been able to glimpse in reality. I am afraid the Prime Minister's eloquence, great as it is, will fall short of achieving its objective when he attempts to raise once again the status of the gold dollar. I think he will labour in vain if he tries to bring our people to an attitude of
mind where they will be proud to starve in the interests of strong financial structures. I have no objection to his trying, but I am afraid he will not be successful.
Let us look at the words which were put into the mouth of the king in the language of the document which we are supposed to be discussing. The speech states: " I rejoice that the wisdom of your steadfast policy of retrenchment has maintained the enviable financial position of this country." Who is " this country "? I should like to know whose financial position has been made enviable because of the retrenching policy of the present administration. Everyone knows what retrenchment means, it means that matters are made worse under conditions such as these. Every dollar withheld from circulation because of the retrenchment policy of this government means that from $10 to $20 worth of wealth is rotting because of the lack of a purchaser.
Let us see if we can find who has been maintained in such a splendid financial position because of this policy. Are the working people in an enviable financial position? Let us ask those who have been put out or threatened to be put out of their homes because of inability to pay their rent if they are in an enviable financial position as a result of the policies of this or any other administration. Let us ask the mothers of the nation who have had to reduce their standards of living because of reduced incomes if they are in an enviable financial position. Let us ask the unemployed, who, by the way, number more than our bankers, if they are in an enviable financial position as they tramp by the rivers and take shelter under the bridges against the rains. Let us ask them this question as they beg from door to door for a bite to eat and as they try to steal rides at the risk of their necks upon our empty railway cars. I think we must come to the conclusion that these were not the people the king had in mind when he made that statement.
Let us ask some more questions. Let us ask the farmer who purchased his land and machinery when the dollar was worth forty-five cents and who is now called upon to pay for his purchases with goods worth one-third of what they were worth at the time of his investment, if his financial position has become sound and enviable. Leit us ask the farmer who has not paid the interest on his mortgage for two or three years let alone reduce the principal if his financial position is enviable. Let us ask the farmers both in the east and west, who have been producing at a loss and who have had to reduce their standards of living in order to stay upon the
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land if their financial position has become enviable because of the policy of sound money. We must say again: Evidently the speech from the throne does not refer to the farmers.
During the past year the business men of this country have had to struggle to pay their interest charges and meet their notes at the banks; they have had to face reduced sales while overhead costs remained the same; many have been driven into bankruptcy but let us ask them if their financial position has been made enviable. I think we must come to the conclusion that the speech from the throne does not refer to the working people, to the farmers or to the business men. Did it mean the professional men then? Ask the doctors who have been working for two years, in many cases for nothing, unable to collect their fees because there was not enough money in circulation in the pockets of their patients to pay them. Ask the lawyers who have been doing very little most of the time and getting nothing for what they have done. Ask them if the position is one that is enviable in a financial way. You will find out then that the speech from the throne means simply that the only people whose financial position has been made enviable are those who have control of the finances of Canada, the credit of Canada, the banking of Canada, the people from whom we borrow and the people who Live by debts. By setting those few against the entire population of the state, we have a policy which has stabilized the financial position of half a dozen and left the 9,999,994 unconsidered. I suggest to the government in all seriousness that they take those financiers and their enviable financial position along with them, put them on some island by themselves and there let them rejoice forever more in their enviable financial position, but allow the people of Canada by some means to enjoy the abundance which they have created.
Would it not have been better if the king had been caused to say truthfully: I rejoice that my people have produced abundantly and that they are allowed to enjoy that abundance; I rejoice not only that the standards of living have been maintained amongst the working people and the farmers, but that there has been a rise in both cases and I rejoice that in so far as economic wellbeing can make people happy, my people are happy. What a strong, epoch-making speech from the throne that would have been! But alas, instead of that we have an enviable financial position for the few, a strong financial structure in Canada, if you please; but we have starving, hopeless multitudes of people and we have abundance of goods that cannot be consumed and growing debts that cannot 53719-6i
be paid. All these things are present and yet we must thank God and rejoice that we have an enviable financial position.
I must hurry on to the printing press. Those who have opposed the suggestions in regard to monetary reform, which, at least since 1923, have come from this section of the house, have never tried to answer the arguments or to meet the facts. They have always endeavoured to scare people by throwing up their hands and shouting about printing presses. I think they had better not shout so loudly about printing presses, because it must not be forgotten that the banks use the printing press to print the notes, and they use the people's credit behind it to justify them in doing that. It must not be forgotten that the state uses the printing press to print the notes that must redeem the notes of the bank, so they must not laugh at that. If it is all right for the bankers to use the printing press in the interest of bankers, who says that it is not all right for the people to use the printing press in the interest of the people? Let hon. members take that printing press suggestion home with them and think about it, and then let them not talk so much about printing presses hereafter. But let me hasten to say that no one from this comer of the house has ever been so foolish as to advocate that we print money on a printing press to pay our obligations in New 'fork. That was the statement of the Prime Minister. We have never been guilty of such folly and I have never heard anybody else uttering such a statement as that.
The Prime Minister, in the development of his argument proceeded to say that when Great Britain went off the gold basis, that struck a terrific blow at Canada, a knock-out blow, somebody suggests. I think if Canada had followed Great Britain, she would have ducked the blow. That is the point. Great Britain did not get any blow. It was the best thing that ever happened to her, and in that regard let me refer my hon. friend who says that she got a blow, to The World's Economic Crisis by Sir Arthur Salter, K.C.B., Sir Josiah Stamp, K.C.B., J. Maynard Keynes, M.A., Sir Basil Blackett, K.C.B., Henry Clay, M.A., D.Sc., and Sir W. H. Beveridge, K.C.B. If those names and letters following them cannot convince my hon. friend of their authority, I cannot. He will find in this very book that the ablest economist in Great Britain points out, not in these words that I am going to use, but to the same effect, that the slipping off the gold basis was one of the best things that had happened to Great Britain in many years. There is no need to argue that. If my hon. friend who is
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mumbling his objection has not been convinced of that, it is hopeless to try to convince him. My point still stands that if Canada got a blow, she received it because she stuck her head in one spot and refused to remove it out of the road of the blow. Let me say next that the condition by which Great Britain slipped off the gold basis was the relentless logic of the sound money theory that is advocated by this government. Great Britain did not choose to go off the gold basis. On the contrary a national government was formed and elected by the people to keep her on the gold basis.
fingertips on to the gold basis, a condition of affairs which leaves us in a worse position than if we were completely off it. But the folly of this cannot longer be doubted. The unequivocal declaration of the Prime Minister yesterday about our adherence to sound money means nothing other than to hang on to the gold basis and, if possible, to hunch up on it a little further than we are. I say again that the sound money theory was the cause of Great Britain going off the gold basis, so what arguments can be set forth in favour of the sound money theory which plays such tricks as the Prime Minister said that it played on us when Great Britain slipped off the gold basis?
Let me also emphasize what was brought out clearly last night by the hon. member for Acadia (Mr. Gardiner). There are, by the way, seventeen countries that are off the gold basis to-day and that are working in harmony on the pound sterling basis. Those seventeen countries have not met with destruction. As a matter of fact Great Britain borrowed enormous amounts of money from France and the United States to enable her to stay on the gold basis, and after she went off the gold basis against her will, she found this so profitable that she was able to pay off those loans in New York before they became due. I would ask the Prime Minister to inquire from Great Britain how, when they were off the gold basis, they could pay their commitments in New York, indeed when they were further off the gold basis by a long way than
we are now, without apparently losing anything to hurt. There must be some way of doing this. Great Britain did it.
I am not saying exactly what they say, it might not be parliamentary. As my forty minutes have almost expired let me conclude by saying that apparently the government intends to retain the gold basis. Gold is only one commodity; it is so scarce that it cannot function. It is very hard to find, and there is not enough of it. As one commodity it can be cornered by one nation, and under such circumstances it would be impossible for our financial system to function. That is what is called a sound money system. We stand for a money system based upon the
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character of the Canadian people, plus all the wealth of the Canadian people-not on only one commodity.
attention and the attention of the house two sentences to 'be found in the speech from the throne. The first of these sentences I know to convey nothing but the truth. The second I also believe to be absolutely true. The first will be found at the foot of the first column of the second page. It reads as follows:
-the economic situation still weighs heavily upon all classes of the community,-
I think possibly one might say that this is a general truth. But on the other hand this situation weighs more heavily on some classes of the community than upon others. There are some classes, very few in number, to whom perhaps the situation does not present any great difficulties. For instance, the fortunate few who derive their income from government bonds no doubt find that their spending power has been increased by the fall in the general price level. On the other hand there are some classes who are suffering most acutely. The attention of the house has been constantly drawn to this fact.
The other statement is to be found earlier in the first column of the second page. It reads:
The problem of unemployment continues to receive the anxious attention of my ministers.
I am quite confident that that is correct. It could not be otherwise.
I also find in the paragraph from which I have taken this sentence a promise for the present, reading:
Under the powers granted them at the last session of parliament they-
-have been able to develop further, in cooperation with the provinces and municipalities, a scheme of direct relief to be put into operation during the autumn and winter months to the extent required by prevailing conditions.
There is further a declaration as to the future:
Plans for the reestablishment of the unemployed in various parts of the country are in preparation and will become operative as soon as, in the opinion of my ministers, the public expenditure incident thereto will be productive of commensurate benefits.
The problem of unemployment is certainly one factor, a very important factor, in the condition that is referred to in the first sentence that I have read. The economic situation still weighs heavily upon all classes of the community. Another most important factor is the low price level, rendering it impossible for the producers of this country to spend as they do in normal times. As far as one can see there are no plans for permanent improvement yet formulated by the government. But a large proportion of our people are suffering from hunger, suffering from the lack of clothing, lack of fuel, many of them in abject destitution, many homeless, and a very great many hopeless. I am quite confident that every hon. member of this house is not only seized of the desperate character of the situation but is exceedingly anxious to see it remedied. I cannot believe that within these walls there is any one who is indifferent in the slightest degree to the sufferings of our less fortunate fellow men. Everything that has been done in the past has merely tended to amelioration of these conditions. Much has been done, I admit, to render the position of our less fortunate fellows less uncomfortable than it otherwise would have been. But it appears to me that there are yet underlying evils to be eradicated before our people can enjoy the happiness and prosperity to which all citizens of this country are justly entitled. We are still told that there are to-day between one and one and a half million people living on the borderline of want, men, women and children who are lacking many of the necessities of life and all of them lacking all the minor luxuries of life, and that in a country which, as has been so often said by hon. members on both sides of the house, is richly endowed with natural resources, with wealth of almost every kind, and possessing a singularly resourceful, energetic and willing people and abundance of up-to-date machinery for production. I have no doubt too that every hon. member has pondered these facts, and has done his very best to find a solution for our difficulties.
Nevertheless most of us feel that these conditions cannot continue indefinitely. It is not reasonable to suppose that the patience of the people is illimitable, that it knows no end. I am of the opinion that if this parliament does not strive with great diligence to find a way out, or striving, fails to find it, one of these days the people will say "If the parliament that we have elected cannot find a way out, we will find other individuals to perform the services that we have imposed
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upon our present members." We must expect to be replaced by others if we fail to find a solution for our difficulties.
In all that I am saying to-night I want to avoid captious criticism. I have very frequently criticized what I believe to be the mistaken policies of the government of the day. I have often severely criticized statements made by members of that government. But I have yet to impute unworthy motives, or indifference, to any member of the government. In these days there are not lacking those who are quite confident that they know the reasons for our present sufferings, the causes of the present depression, and who are equally confident that they know the remedies for these conditions. In my opinion it is not always the most vociferous who are the best informed. Intelligent analysis of public affairs is much less common than hasty and ill-considered declamation. Too often the less a man knows of the implications and difficulties of national government, the greater the confidence he displays in declaring his opinions in relation thereto. For that reason I propose to-night to suggest rather than to declare.
First of all, I think it would be advisable to make a short diagnosis of the causes of our present troubles as I see them. During the past two years I have made a list of the various reasons I have heard ascribed for this depression, and I can assure you it is a very lengthy list. I am not going to quote all the reasons that have been given, because some of them are in my opinion foolish in the extreme. But there are some twelve that I have here which seem to me to be contributing causes to a greater or less extent.
I want to refer briefly to these causes in order that I may take the liberty of suggesting what I believe are remedies that may be applied by this present government and by this parliament. I will first recapitulate them: The war; war reparations; armaments; the capitalistic system; the gold standard; the banking system; deficiency of currency and credit; overproduction; the mechanization of industry; the paralysing load of debt; fear and international distrust; restriction of trade, and tariffs.
I do not know that I have placed these in the order of their importance, but if they can be regarded as contributing causes, I would ask what this parliament can do to prevent a recurrence of the conditions we have experienced in the past arising from these causes, and to remedy those that now exist. I would first premise that in my opinion, some of these causes can be eliminated only by international action; others partly by national action but
only wholly by international action, and some wholly by national action-and when I say national action I mean action by this Canadian parliament.
Let us further investigate these causes, the first of which is the war. I do not suppose a single individual can be found within the Dominion of Canada who would claim that the great war had nothing whatever to do with our present condition and our present difficulties. The question may be asked whether we would have had difficulties similar to these had there been no great war. Doubtless in this house there are many men who remember the year 1914, who remember that during the spring and summer of that year thoughtful men all over the country were wondering what was going to happen during the following winter. Even during that summer season there was unemployment, and people were wondering what would happen in the fall. Unemployment clouds were threatening over our heads, but as we thought they were about to break the clouds of war broke upon us instead, and only then were the clouds of unemployment dispelled. But how much better we would have been prepared to meet the situation at that time if we had been compelled then to face the problem of unemployment. I have but to direct attention to a few facts to enable us all to realize how much easier it would have been to deal with the situation at that time. In 1914, according to the Canada Year Book, our national debt was $314,301,625. On March 31 last, according to the same authority, our debt was $2,261,000,000; it had been multiplied practically by seven. In 1914 the interest on our national debt was approximately $12,605,000, and it is now about $121,000,000; it has been multiplied by about ten. In 1913 the cost of government in Canada was $144,456,878, while in 1930 it was $398,176,246, or an increase of some $254,000,000. Again I point out how much easier it would have been for Canada to meet this condition of unemployment had it come in 1914, and this brings me to one of two lessons we might learn from that great event, which brought upon the world so much sorrow and suffering. One lesson is that we should strive, as we have striven always to maintain world peace, and the other is that we should carefully avoid all those occasions and all those acts that are so apt to lead to war. One of those acts, I would say, is the restriction of trade, the desire to do anything other than trade freely with other countries. I think restriction of trade undoubtedly caused war in the days that are gone, and it might easily cause war again.
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The next suggested cause for our troubles is war reparations. There is no doubt that these reparations have been and are now a stupendous load upon debtor nations, stifling and choking the very life blood out of them, but to-day we notice that creditor nations are just about as badly off. The biggest of all creditor nations probably has as great a body of discontent as exists in any other nation in the world, a body which is only a little less obvious than the discontent which obtains in the largest of the debtor nations. Could not Canada set an example and use all her influence towards the cancellation of war debts? Our credit may not be large, but it is possible that our influence might be felt by all other nations. I know there are forceful arguments to be presented against the cancellation of international debts and war reparations, but I firmly believe that even more forceful arguments can be found supporting that action. I have before me an extract which appeared in the Ottawa Citizen last January, which reads as follows:
The members of the Arts and Letters Club were last night privileged to hear an authoritative address on "International Banking and Debt Paying" by Archibald C. Kains, wherein the speaker, from wide knowledge and experience gained when filling the positions of governor of the 12th Federal Reserve Board of the United States and as a member of a banking commission to which he was appointed by the late President Wilson, gave his views on the present international financial crisis.
Mr. Kains expressed the opinion that it would eventually be for the good of both debtor and creditor nations if all war debts were cancelled, and he advanced strong arguments in support of this contention.
The third of the causes which I mentioned is armaments, which no doubt constitute a staggering burden on all the great powers, with immense sums of money being spent both openly and secretly in the endeavour at all times to have forces stronger than those of other nations. But armaments are not a cause of unemployment; they are rather a cause of unprofitable employment. I would ask this house to imagine how many dwellings for the homeless, how much clothing for the ragged and ill-clothed, and what great quantities of the necessities of life might be purchased if the money now devoted to the maintenance of armaments were to be spent for these useful purposes. Again, cannot Canada set an example by saying, "We are at peace with the world and propose to remain so. We have beaten our swords into ploughshares and our spears into pruning hooks." It may be said that this is impractical and visionary, but I would ask hon. members to reconsider and see if it is as impractical as may be supposed.
The next cause to which I referred was the capitalistic system. This afternoon we heard from the hon. member for Wetaskiwin (Mr. Irvine) a very strong indictment of that system, and possibly much that was said by the hon. member is correct. Perhaps it will not be necessary entirely to scrap that system, but who to-day would dare call it perfect; who would say that it is beyond criticism? On both sides of this house can be found men who recognize the weakness and the desperate need of repair of this system. We do not need to go to those whom we call red to find opinions of this kind. I have taken an extract from the Canadian Bar Review which I desire to read, and I am sure no lawyer here imagines for a moment that the Canadian Bar Review would publish anything of a seditious or communistic nature. The extract is as follows:
Wealth divorced from a recognition of social responsibility offends the quickened sense of justice that has grown out of the unparalleled economic crisis the world is now contending with. This is sufficiently clear from the multiplication of social service clubs on this side of the Atlantic and their comprehensive programs for the relief of the sick and needy. Organized philanthropy is thus showing the way for a larger control by the state of the national wealth. This, of course, can be done without any dislocation of our present constitutional mechanism, and while it undoubtedly would be another and a significant step towards the goal of the socialists it will leave us still some way to go in that direction.
We find countenance for what we have here ventured to say on the subject of state control of wealth in the following passages from an article written shortly after the war by so conservative a thinker as Professor Jethro Brown:
I would ask hon. members to note that this statement is quoted with approval by the Canadian Bar Review:
There still exists in all civilized communities the most glaring contrast of riches and poverty. ... I suppose no one hopes for the realization of an ideal distribution of the national income; but the present distribution is so capricious, so dependent on accidents of birth or circumstance, that it embitters social relations, and threatens the very foundations of society. . . . It is probable that the bulk of the electors in democratic communities of to-day would vote for socialism; but . . . there are great practical difficulties in introducing socialism without an industrial chaos extending over a long period. . . . But, whatever the future may have in store, it appears to me to be indisputable that the increasing control by the state of economic or industrial relations is rendered inevitable.
Taken from Labour of April 5, 1932, is an unprecedented example of the truth of this one statement which I have just quoted to you, Mr. Speaker, namely, that the distribution of wealth is so capricious or dependent on the aocidents of birth and circumstances
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that it embitters social relations and threatens the very foundations of society. "Speaking of family fortunes"-this is in the United States, of course,-this article states:
According to an article in the "World's Work" magazine, three brothers in this country control assets of just under $8,000,000,000.
The personal wealth of these brothers is put at $500,000,000.
Their banking resources are given at $787,300,000. The assets of non-banking corporations which they control through outright ownership, dominating interest and otherwise, total $7,490,425,000. This brings the wealth of which they are masters to the sum of $7,990,425,000,-about half the national debt of the United States, or $65 each for every man, woman and child in America.
These three brothers own the aluminum industry of America. They have the second place-if not the first-as owners of oil, power and steel. They have enormous railroad holdings not included in the list above.
Their names are Andrew W. Mellon, Richard B. Mellon, and James R. Mellon.
The gold standard is one of the causes to which the existing depression is ascribed; the charge is made that it is pantially, or, as some of our extreme friends declare, wholly responsible for this depression. Who will claim that the gold standard is still functioning for the good of mankind? Not our great bankers. Some of us may be disposed to say that the gold standard is unimpeachable and that nothing can be said against it. Rut what do we find? We find that even the economists have passed strictures on the gold standard, although not so wholeheartedly as the hon. member for Wetaskiwin (Mr. Irvine) did this afternoon. Let me quote the economist of the Royal Bank of Canada:
In 1928 and 1929 the world's gold was sufficient to maintain a healthy price structure, but it is clear that there is not sufficient gold in many countries or there would not have been a suspension of gold payments, but this is maldistribution of gold, not a shortage.
This is the question I would put to this honourable house. If it is right that gold, or a shortage of gold, or the maldistribution of gold is one of the principal causes of our present troubles, and many thoughtful, intelligent, well-informed men hold that it is certainly not guiltless, then is it not almost incredible that the amazing genius of mankind has not yet devised a way to make gold the servant, as it was intended to be, instead of allowing it to be the master, as it sometimes is? I want to read a quotation from a speech made by the Right Hon. Reginald McKenna, chairman of the Midland Bank of England. We may assume that the chairman of that bank is not communistic nor red. He
is undoubtedly a man of great knowledge in the financial world, and he says:
Let the gold standard be made to work satisfactorily, that is, let it give a stable value to money, and we shall be quite ready to go back to it. On the other hand, if it continues to work as in recent years, with a constantly depressing effect on prices, we shall be driven inevitably to cal! for some other method of controlling the value of money.
"Is it possible, then, with or without the gold standard, to maintain the pound at a constant value measured in internal purchasing power? If we are not frightened by the term 'managed currency,' and can harden ourselves to some degree of indifference to exchange fluctuations, there seems no reason to doubt the possibility. I do not know why we should be alarmed by the idea of a 'managed currency.'
"The world has now got so far as to admit that the long-continued depression and universal economic unsettlement are due, in part at least, to the inefficient working of its monetary machinery. The time has gone by for the childlike belief that as long as a country is on the gold standard all is well. Harsh experience has shaken this faith rudely; we have found that returning to the gold standard did not in fact bring prosperity, and going off it did not entail ruin. So far from ruin, indeed, our present trade conditions are distinctly improved, and we are getting on at least as well without the gold standard as with it.
And Sir Basil Blackett, director of the Bank oif England, made this humorous comment on gold:
The question. Why do banks keep gold? can be answered, I think, frivolously, in several ways. I think the first, and perhaps the most important answer would be because the banks think that people think they ought to keep gold, or even because the banks think that people think that the banks think they ought to keep gold. Possibly another answer would be because the central banks are not clever enough to manage any system other than the gold standard, or they are not clever enough to persuade people to think they are clever enough to manage any such system.
I suggest that the government of the day might with advantage have this matter taken into consideration to see whether it is possible or wise to carry out the proposals of the Macmillan committee. One of the suggestions of that committee was that the internal currency of a country might well be independent of gold. There are some -who say that the banking system is partially responsible for our troubles. It may be. Personally I have no reason to complain about any treatment I have received from the banks; they have always been exceedingly careful in granting me loans and have granted me less than I have asked for, being wise in so doing. However, it is said by cine class of individuals in this country that they are monopolistic and merciless and by others that they are power-
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ful and sane. At this time it is neither necessary nor wise perhaps to pass too great strictures on the banks in view of the fact that in a short time the Bank Act will be under revision. But I do want to point out that the feeling which so many have against the banking system of the country today is by no means new. Gladstone said some years ago:
From the time I took office as chancellor I began to learn that the state held, in the face of the bank and the city, an essentially false position as to finance. . . . The hinge of the whole situation was this: the government itself was not to be a substantial power in matters of finance, but was to leave the money power supreme and unquestioned. In the conditions of that situation I was reluctant to acquiesce, and I began to fight against it by financial self-assertion. I was tenaciously opposed by the governor and deputy governor of the bank, who had seats in parliament, and I had the city for an antagonist on almost every occasion.
In 1916 President Wilson made the following statement, with regard to the United States:
A great industrial nation is controlled by its system of credit,-our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who chill and check and destroy genuine economic freedom.
I do not say that these conditions obtain in Canada but I do say that it would be well for the committee to be appointed to consider the revision of the Bank Act to investigate this possibility, which is in the minds of many men throughout this country, that the real gov ernment of the country is in the hands of the financial interests.
I should like to read from the Royal bank monthly letter of February, 1932, as follows:
_ 'The present depression is usually explained in terms of extravagance, overproduction, excessive tariff barriers, et cetera. In varying degrees these, as well as other contributing factors, produced situations which were essentially unsound; but, speaking generally, the controlling influence has been the mismanagement of money and credit. The average price level is determined by the relation of goods and services rendered to the volume of the money supply, and the disastrous fall in the general price level would not have occurred had the supply of money been properly regulated.
I assume that this matter will be taken up by the committee to be appointed to consider the Bank Act. If not, I suggest to the government that it should be.
It is said that overproduction is the cause of our present condition, but such cannot be the case in the light of all the suffering through lack of necessities which there is at the present time. There are hundreds of thousands of farmers who need almost a complete new line of machinery; there are millions of farmers,
labourers and others who need new clothing, new boots, new homes and other necessities and in the face of these needs it cannot be said -that there is overproduction.
Others say that it is the paralyzing load of debt, federal, provincial, municipal and personal, which is the cause of our trouble. But what do we find? Creditors seem to be just as badly off as the debtors. There does not seem to be any possibility of payment of these debts at the present time. I quote again from one of Doctor Marvin's speeches as follows:
As prices have continued to fall, the burden of these debts, as well as that of other longterm debts such as bonds and mortgages, has been increased by 50 to 75 per cent. It is coming to be recognized that there must be a major rise in prices or there will be heavy cancellations of a substantial proportion of such obligations. One thing or another is inevitable; prices must rise or there will be a wholesale cancellation or repudiation of such debts. For the same reason a continuation of the present price level will bring on wholesale bankruptcies.
I am quite aware that this house will not delve into the question of provincial, municipal and personal debts; these are matters for the provinces to consider. But surely the federal authorities should consider the conversion of our present federal bonded indebtedness along somewhat the same lines as those adopted recently by England. It is admitted that there must be a scaling down of debts or a substantial increase in commodity prices.
The next factors to be considered are fear and international mistrust. The world is faced with the problems of large armies, increased air forces and heavier armaments of all kinds. Canada may not be a great offender in this respect but I believe that she could wisely reduce her standing forces, small as they are. She could show to the world a splendid example in this respect.
Fear is a great factor in blocking progress. It prevents those of us who are older from embracing new ideas, we are unwilling to progress. I venture to say that it would be a good thing for this House of Commons to have in it some young, adventurous blood. We should have men here who would not be afraid to try out those things which have not yet been tried out in this country of ours.
Had time permitted I should have liked to refer to the tariff, as that, in my opinion, is the greatest of all causes of the present degression. My hon. leader (Mr. Mackenzie King) very ably referred yesterday to this matter, but there are a few figures which I had prepared and which I should have liked to give to the house. However, I have enumer-
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ated several causes for our present condition. No doubt many of these causes can be cured only by international action, yet there are some which could be remedied by the national action of the Canadian people.
Mr. Speaker, there are two or three remarks made by the Prime Minister (Mr. Bennett) last night to which I should like to direct attention. He is reported on page 44 of Hansard as saying:
The same right hon. gentleman who went to and fro in this country and said: "Who will represent Canada at the Imperial conference in 1930?" could not fail-and he did not-to disguise his spleen that there should have been a successful conference in Canada in which he did not take part. There was nothing he could do to injure that conference that he did not do before it was held. There was no platform upon which he appeared that he did not endeavour in some way to make it more difficult for the government of his country to represent Canada at that conference.
I think that that statement was altogether uncalled for. If any criticism could have been levelled at the leader of the opposition (Mr. Mackenzie King) in connection with his attitude towards the conference, it was that he maintained a silence in connection therewith. During last session when the conference was under discussion he told the government plainly and honestly what rules he thought should be followed in carrying on the negotiations. After that he remained silent and made no attempt to set up any stumbling block in the way of the success of the conference. The stumbling block which nearly if not completely wrecked this conference was the same stumbling block which completely wrecked the conference of 1930, and that was the legislation introduced and passed during the short session of September, 1930. Prior to going over to England to attend that conference the Prime Minister called parliament together and had legislation passed which made it inevitable that the conference should be abortive. That legislation made it impossible for Great Britain to sell her goods in Canada, but the Prime Minister went to the conference and asked Great Britain to make it possible for us to sell goods in her country and at the same time to exclude goods from other countries. The Prime Minister said: "We
have successfully shut your goods out of Canada; now we ask you to shut out from your country all goods except ours." Can you* imagine anything quite so nervy, if I may be permitted to use that term? Is it any wonder that Mr. Ramsay MacDonald replied: "We
cannot do it." It ill behooves the gentleman
who was responsible for the wrecking of the conference of 1930, and whose policy nearly if not completely wrecked the present conference, to get up in this house and say that the leader of the opposition tried to place any stumbling block in the way cif the Imperial economic conference of 1932.
On page 49 of yesterday's Hansard we also find the Prime Minister making reference to Britain going off the gold standard. He said:
When England went off the gold standard this country wras struck the greatest blow it has ever experienced, the force of which we have never been able to measure.
I did not know we had been struck such a terrible blow when Britain went off the gold standard. The blow that staggered this country most was the blow that was struck by the present government in the short session of 1930, and renewed in subsequent sessions. I remember one time watching a butcher killing a steer. He took an axe and struck it on the head. The steer fell to the ground, but the butcher, before proceeding to bleed it, struck it a second blow. The steer knew nothing about the second blow; he was completely stunned by the first. If we received a deadly blow from England when she went off the gold standard, we were quite unconscious of it because we had not recovered from the blow dealt us by the present government in their tariff legislation.
My right hon. friend tells us on the same page that lack of confidence in banks, in individuals and in institutions was one of the causes of present conditions. It is not lack of confidence, it is lack of a basis of confidence. Give us a sound basis for confidence and confidence will return. If you are a manufacturer and you go into a bank and try to borrow only a thousand dollars, the banker will ask you what you want it for. If you tell him you want it to manufacture certain goods and to try to sell them, he will refuse to give you the money. Why? Because he will say: You cannot sell those goods, or if you can sell them you will not get the cost of production. But if you go into a bank and say: "I want $100,000 to produce goods for which I have a market and for which you know 1 have a market," you could not get out of the bank without the money; they would not let you go. Give us the basis of confidence and confidence will be restored immediately.
On page 54 of yesterday's Hansard the Prime Minister makes this statement:
If the requirements of this country are met by the cheaper goods dumped upon our markets
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from abroad, from Europe and elsewhere, while the Canadian farmer is denied access to those countries with his wheat, the treaty with France being an outstanding example, what happens to the entire industrial fabric of Canada?
The inference is that if we allow France and other countries to dump cheap goods into Canada, our whole industrial fabric will collapse and our people will have nothing to do. Nothing could be further from the truth. If other countries dump their goods into Canada, they either give us those goods for nothing or sell them at a price. If they give us those goods for nothing-and everybody knows they will not-then our people will have the goods they require and they will not have to work to make them; it would not matter whether they had employment or not. But those countries will not ship their goods in here for nothing; they will ask a price for them, and that price will have to be paid in Canadian goods, because there is no other way of paying for them. Therefore the price paid for the goods dumped into this country will give employment for our people. My hon. friends opposite seem to think that all our requirements will be dumped in here and that nothing will be taken in exchange. That is not so. During the election they went about the country saying: If you elect
us to power we will reduce imports by $500,000,000; we will shut out $500,000,000 worth of imports. Now they boast that they have done so. I ask the hon. gentlemen: Did they know, at the time they were making the promise that they would shut out $500,000,000 worth of imports, they would at the same time and by the same act shut in $500,000,000 worth of exports? If they had told the people then: We will reduce your imports
by $500,000,000 and as a result your exports will go down by a similar amount; you will be doing that much less business; you will have that much less employment, that much less work for your railways, would the people have voted for them? No, they would not. Why did they go throughout the country and make that statement? They did not understand the situation. They did not understand that imports were paid for by exports. They did not understand that when goods are imported we have to produce other goods to pay for them, and that when we refuse to buy goods from other people, other people are not in a position to buy goods from us.
What has been the result of this policy? Some of our industries have increased their profits, but our people have been denied goods and employment. Not long ago I saw the report of one of the silk industries in Canada, one of the industries that has been specially
cared for by this government. What did this report say? It said that this year they did less business, produced less goods, sold less goods and made a greater profit than in previous years. What does that mean? It means that the people of this country had less clothing to wear, but the profits of certain manufacturers were increased; that the number of men employed in that industry was not as great as in previous years because they produced less goods. That has been the policy of the government and the result of their policy.
It is time we were beginning to take stock of some of our industries. In a time like this when every industry is looking for ways and means of cutting down expenses, every wise manager looks over all his plant, takes careful stock of each department, finds out what it is costing to operate that department and what revenue he is getting from the operation of it, and determines whether or not he will continue it. If he finds he has a department that is costing him more than it is yielding in revenue, he will close it down. It is time that Canada did the same thing. We have in this country many manufacturing industries that do not justify their existence, that are costing us more in dollars and cents than they are paying in wages to the Canadian people. I will cite only one example-the oil refining industry paying $8,000,000 in wages and charging the people of Canada an additional $24,000,000 in prices. We cannot afford at a time like this to support industries of that kind.
The Prime Minister, speaking of the question of unemployment, said that the handling otf the situation was a provincial and municipal matter; that it was the function of the federal government, when the municipal and provincial authorities were unable to finance the matter, to help them financially. I shall accept that explanation of the situation, but I think hon. members will all agree that if the government is furnishing the money, it should at least be consulted in the matter of expenditure. I believe the government intends to be consulted as to the manner in which this money is being expended. Last year when the matter was up for consideration I made a suggestion, I think to the Minister of Labour (Mr. Gordon), that a certain plan which had been adopted in a small way in Saskatchewan should be adopted universally throughout Canada in order to relieve unemployment. The plan was simplicity itself; it was this: That unemployed men be given five dollars a month each to go and work on a farm; that the farmer be given five
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dollars a month to take him. The five dollars a month given to the unemployed man would buy his clothes and tobacco if he needs it. The five dollars a month given to the farmer would help to board the man. There are in this country some three-quarters of a million farms. I would say that at least one-third of them are in need of improvements which the farmer cannot make because he cannot afford the labour. Around these farms there are little improvements, for instance to fences, machinery, buildings, etc., that could be made with a little cash outlay and labour if the farmer could afford to do this. They are not being made because the farmer has not the time to do it or the money to pay anyone else to do it. If you could put men on farms in that way, it would cost the government only ten dollars a month each to maintain them. They would not be herded in the cities in an atmosphere of discontent where unsound doctrines might be preached in their ears. They would be in a position to learn whether or not they wanted to go on the land. They would 'be self-supporting. They would feel that they were earning their way. I believe you could dispose of one-third of a million men in that manner. That is perhaps the cheapest way in which you could handle the unemployment situation. I do not claim that this is an original suggestion of mine. It was tried in a small way in Saskatchewan; it might be extended, and I recommend it to the government for their consideration.
In the Prime Minister's speech there was one statement with which I heartily agree, and that is that the government is going to stand for sound money. My hon. friends in the corner of the house do not seem to think much of sound money. I think the hon. member for Wetaskiwin (Mr. Irvine) stated to-day that sound money has failed to make it possible to exchange goods, and for that reason it is of no use. I am sorry the hon. member is not in his seat, but if he were I should ask him this question: What kind of money would make it possible to exchange goods if the governments of the world stand over the people and say, "We will not let you exchange, in any case." The trouble is not with our money; it is with the governments of the world which say to the people, "You shall not exchange the product of your labour for the product of the labour of some other person." Page 57 of yesterday's Hansard contains the following statement by the leader of the group in the corner:
Recently there appeared in the Commercial Intelligence Journal published by the Department of Trade and Commerce of this country a
statement by our representative in Australia, that the Australian farmer was securing two shillings and threepence to two shillings and sixpence per bushel for his wheat delivered at the siding, depending on the freight rate. That, Mr. Speaker, turned into Canadian money means something in the neighbourhood of fifty-two to fifty-four cents up to sixty cents a bushel, and the Australian farmers' wheat, generally speaking, is of inferior quality to our western Canadian wheat.
Mr. Young: What is Australian money worth now?
Mr. Gardiner: Australian money is depreciated, and that is one of the reasons why the Australian farmer is getting a larger price in actual money that we are getting in Canada.
Mr. Young: When you translate that into Canadian funds, will he make what you said?
Mr. Gardiner: It will be very close to that.
I took the trouble to translate into Canadian funds, the figures given by the hon. member. He made the statement that two shillings and three pence is equal to fifty-four cents. He did not state whether or not those were English or Australian shillings. However, if the wheat were delivered to a siding in Australia I presume it would be calculated in Australian shillings. Turning to the Commercial Intelligence Journal of October 8, I find the Australian pound is worth S3.04. Therefore translated into Canadian money, the actual price the Australian farmer receives for his wheat is only thirty cents or approximately the price we receive. Then we must consider that the Australian farmer delivers his wheat to a point close to seaboard, and is not confronted with the long freight hauls for which Canadian farmers have to pay. I think when hon. gentlemen in the corner of the house advance arguments in favour of inflated currency they should give us all the factors. What does it cost to ship wheat to Liverpool? What is Australian money worth in Canadian money? All these points should be considered. If he meant the Australian farmer was receiving two shillings and three pence in English money for his wheat, and that that was worth fifty-four cents, then English money must be at its old par value, and what is the object of his saying that we should tie our money to the British pound? If his statement there is true, it must be true that Canadian and British money are already at a parity.
The leader of the Progressive party asked this question yesterday: "Why should so
many of our people go hungry when our farmers have so much food in the country"? Why should they? I ask hon. members this question: Who owns the food? Who produced all the wheat? The farmers did. Why cannot other people get it? Because they
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have nothing to give the farmer in exchange for it. Do hon. members in the comer believe that the farmer should be required to give his wheat away and receive nothing in return from those who happen to be unemployed?
for the unemployed, but we know that thirty cents a bushel does not pay for the growing of wheat. With 30 cent wheat we cannot pay our taxes; we cannot pay for our seed or the interest on our mortgages. These are our difficulties, with wheat at thirty cents a bushel. Yet hon. gentlemen say: Why should not the unemployed help themselves to all this wheat? The answer is that they have nothing to give in exchange for it. What is money, anyway?
I think we can agree that money is a medium of exchange, a means of exchanging goods for goods. We do not want money for its own sake, but we do want the goods we can buy with money; that is what it is for. When you go into a market to sell goods, what are you doing? You are selling the product of your labour, and you are expecting to receive in exchange for it the product of some other person's labour. One does not carry the product of his labour with him, he cannot. For that reason money was invented to represent such products. A man entering the market to sell the product of his labour for money has a right to expect that the money he receives represents an equal quantity of somebody else's labour.
What is the true 'basis for money What is the basis for currency? Labour. I am quite willing to admit-I believe everybody will admit that a skilled labourer is worth more than an unskilled labourer, that the labour of a man who applies himself assiduously to his work is worth more than the man who does not. But, making due allowance for all that, when one enters the market to exchange his labour with that of another man such exchange should be on an equal basis. In other words one day of your labour should be equal to one day of another man's. I believe it would not be humanly impossible to determine the exact value of a day's labour, and for .that reason a standard has been set up to represent as nearly as possible the average value of such labour. In arriving at a standard the question was asked: How much labour does it take to produce a certain commodity? What commodity was chosen as the measure? That commodity was chosen the amount of labour in the production of which varies less than in the production of an}' other commodity known. I refer to gold. The amount of human labour required to produce gold has varied less than the amount required to produce any other commodity. When Sir Josiah Stamp w'as visiting Canada he stated .that the time had not yet arrived when the world could get along without a metallic basis for its currency. What did he mean iby that? He meant that gold represents the most accurate measure we can get of the amount of labour required to produce a given quantity of it. That is why we state that gold is the best standard we have. We do not say it is perfect, but it is the nearest we can get to perfection because the amount of labour required to produce it is more constant than that required to produce anything else.
The statement is made that the gold standard is mot functioning. Why is it not functioning? What determines the price of gold? the law of supply and demand determines the price of gold, the same as it determines the price of anything else. The amount of gold in the world has not varied greatly, but hon. members know what happened,-There was a war. During the war certain nations placed other nations in their debt. After the war those debts had to be paid, and war reparations had to be made. The creditor nations receiving the greatest amount of these payments said, "We want payment in gold." The normal way to pay such debts would be payment in goods. After the war however those creditor nations said, " We will not take goods; we want gold." The debtor nations said, "We have no-t any gold; we cannot give it to you." In reply the creditor nations said, "Sell your goods on the world market and get the gold for which we are asking." Following that there was a scramble for gold throughout the world. Debtor nations did their best to get the gold to give to the creditor nations. The creditor nations took that gold, hoarded it, and removed it from the market with the result that there was an artificial scarcity of that commodity. The ultimate result was that the price of gold went up and the price of everything else went down.
What was it that made it possible for these nations to corner all the gold in the world, or the larger part of it? It was the tariff. The gold was cornered because those creditor na-
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tions said, "We will not take goods." They raised tariffs and shut out the goods. Remove the tariffs of the world and what will happen? Gold will resume its normal position, and prices will resume their normal level. Prices will become normal because the relative amount of labour required to produce an ounce of gold as compared with the labour required to produce a bushel of wheat has not varied. If we allow economic forces to take their natural course, prices will come back to normal. I say however that the root cause of our troubles lies in the fact that tariffs of the world have put gold in a place where it could not be used or cculd not function. The remedy is not to tamper with the gold standard, not to look for another standard, but to remove the cause of the disease. Remove the tariffs. Let trade flow in its natural channels, and gold will take its proper place and function properly. My hon. friends in the corner speak of inflating the currency-I am wondering how they would get the new money into circulation. Will they use it to bonus the farmer for his wheat? That would not put purchasing power in the hands cf the unemployed. Will they use it to hire these unemployed, to create public works, trans-Canada highways, million dollar auditoriums, parks, unnecessary stations and so on, all of which will saddle us with an immense maintenance cost later on? If so, what are you doing? You are saying to the farmer and to the worker who is in emploj'ment, "You must while you are working give the produce of your labour to support men who are building roads which you do not need (but which later on you will be called upon to maintain, you will have to keep these men out of your meagre earnings doing something that is going to saddle you with further expense later on." Is it right, is it fair to compel a man who has *worked and produced honest wealth, to exchange that wealth for worthless paper that does not represent an equal amount of labour of anyone else? I say it is not.
I would like to draw your attention for the moment to the position of the farmer. Take the case of a farmer on a half-section of land. I am going to take a good farmer on a good half-section who grows good crops. On the half-section of good land he will have probably three hundred acres under cultivation. One hundred acres of that would be under summer fallow, fifty acres perhaps devoted to growing feed for his stock, and one hundred and fifty acres devoted to producing a marketable crop, say wheat. He is a good farmer, he is going to get a good crop; we will give him an average of twenty
bushels per acre-I think my western friends will say that is a pretty generous average. So from that one hundred and fifty acres he will reap three thousand bushels of wheat, which at present prices will bring him about $1,000. He does most of his work himself, and he has not time to do much other work than growing his wheat, but he keeps a cow or two, raises a couple of calves and a few pigs and chickens, and he or his wife keep a little garden. We will value all the other produce of the farm at $300 a year, which I think is a pretty generous allowance at prices now prevailing. His total, income for the year would be $1,300. What are his expenses? Taxes $200; interest on his debts, $200. To thresh his wheat and the other grain which he produces for feed, approximately $250, which will include the feeding of the threshers. We are not going to allow him much help; he will have to do all his work himself except during harvest time, so we will allow him $50 for harvest wages; and for repairs to machinery, oil, etc., $100; binder twine $50, and depreciation of his implements, stock and buildings $150. Then he will have to keep 150 bushels for seed, worth say, $100, for that wheat has to be cleaned. Total expenses therefore are $1,100, total income is $1,300, leaving him for his year's work the munificent sum of $200.
He is. Mind you, I have taken a good farmer, on an exceptionally good farm, obtaining exceptionally good crops. Not many average twenty bushels to the acre.
Now, I want to compare that man with the worker in the manufacturing industry. Average wages paid-I got these figures from the 1932 Canada Year Book, and they are 1929 figures, so we will make allowance for the reduction since. Average wages paid to. industrial employees in 1929, $1,044; since then there have been reductions, ten per cent, twenty per cent, say an average of twenty-five per cent, bringing the average wages of industrial workers to $800 or $850. Farmers^ wages $200, industrial workers' wages $800.
I said a moment ago that when a man goes into the market to sell the product of his labour, if he has worked as hard and skilfully as another man they should exchange on the basis of a day for a day. But here we find a farmer compelled to give four day3 of his labour in exchange for one day of the industrial worker's labour.
Look at it another way. In 1913 wheat was selling at the local elevators out west for approximately 70 cents a bushel, to-day it is
about 30 cents. At that time industrial wages were about S500, to-day over $800. Industrial wages have almost doubled, farmers' wages have been cut in half. There again you get the same relationship, four to one.
Look at it another way. In 1914 just before the war broke out an eight foot binder in western Canada cost the equivalent of 225 bushels of wheat, $180 at 80 cents a bushel. To-day that same binder would cost him 900 bushels of wheat. Again you have the same relationship, four to one. So from whatever standpoint you contemplate it, the farmer today is compelled to give four days of his labour in exchange for one day's labour of the industrial worker.