April 2, 1935

LIB

Louis Édouard Fernand Rinfret

Liberal

Hon. FERNAND RINFRET (St. James):

[ would like to ask the Minister of Marine if he intends to proceed with the resolution appearing under No. 22 on to-day's order paper, with respect to the collection of shipping dues by the Canadian government.

Topic:   AIDS TO NAVIGATION
Subtopic:   COLLECTION OF DUES TO APPLY TOWARDS MAINTENANCE BY BRITISH GOVERNMENT OF SHIPPING SAFEGUARDS
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CON

Alfred Duranleau (Minister of Marine)

Conservative (1867-1942)

Hon. ALFRED DURANLEAU (Minister of Marine):

I did not know, Mr. Speaker,

that my hon. friend was interested in the matter, but I may tell him that I am getting some further information in view of the discussion that took place when the resolution was before the house. The matter is under consideration.

Topic:   AIDS TO NAVIGATION
Subtopic:   COLLECTION OF DUES TO APPLY TOWARDS MAINTENANCE BY BRITISH GOVERNMENT OF SHIPPING SAFEGUARDS
Permalink
LIB

Louis Édouard Fernand Rinfret

Liberal

Mr. RINFRET:

Thank you.

Topic:   AIDS TO NAVIGATION
Subtopic:   COLLECTION OF DUES TO APPLY TOWARDS MAINTENANCE BY BRITISH GOVERNMENT OF SHIPPING SAFEGUARDS
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THE BUDGET

DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed from Monday April 1, consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the proposed amendment of Mr. Ralston, and the amendment to the amendment of Mr. Coote.


CON

James Herbert Stitt

Conservative (1867-1942)

Mr. J. H. STITT (Selkirk):

Mr. Speaker,

last evening in the course of my remarks in this debate I paid some attention to the criticisms which were made by the official critic of the opposition, the hon. member for Shelburne-Yarmouth (Mr. Ralston). I desire now to direct the attention of the house and of all western grain growers particularly to a few words which that hon. gentleman spoke, and which will be found at page 2116 of Hansard. Among other things he said:

We find that in the fall of 1934 the prices of Canadian wheat in the British market- were something like 22 cents above Argentina and something like 14 cents above Australia. What has been the result? In the first place the dominion as it wanted to do, shared with the western wheat producer in the responsibility for marketing the 1930 crop, and nobody finds any fault with that action; both parties joined in approval of it.

A little further on he says:

What is the criticism? What do I mean by that? I mean that the government through Mr. John I. McFarland, who is its agent, becomes in effect the potential holder of

200,000,000 or 225.000,000 or 250,000,000 bushels of wheat that should be off the market in order to enable the western producer to dispose of his 1935 crop.

Here we have it in the words of the official critic of the opposition that the price of our wheat in the British market is 22 cents above the Argentina price and something like 14 cents above tihe Australian price. Was that to the advantage of the western producer? Was that something done in the interests of the grain grower? Wlnat is the hon. gentleman's solution? He says that this wheat ought to be off the market. In other words, his policy would have been to dispose of the wheat. What t-hen would have happened to the western producer?

I think, Mr. Speaker, that this party and its supporters ought to proclaim throughout western Canada every such word of criticism against the activities of this government in upholding the price of wheat for the producer.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Vallance

Liberal

Mr. VALLANCE:

What did Australia do

with her wheat?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. MEMBERS:

Sit down.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Vallance

Liberal

Mr. VALLANCE:

I won't sit down. What

did Australia do with her wheat?

The Budget-Mr- Stitt (Selkirk)

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Herbert Stitt

Conservative (1867-1942)

Mr. STITT (Selkirk):

I believe that the

western grain producer is not so much interested in wlhat Australia did with -her wheat as he is in what we are doing with ours.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Ernest Lapointe

Liberal

Mr. LAPOINTE:

We are not doing much.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Herbert Stitt

Conservative (1867-1942)

Mr. STITT (Selkirk) :

We are not adopting a laissez-jfaire policy anyway. I notice that the hon. member for Shelbume-Yar-mouth quotes as his authority for what ought to be done the Financial Post. I wonder how much the editor of the Financial Post or the barons of St. James street are interested in the welfare of the western producer.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Charles-Philippe Beaubien

Conservative (1867-1942)

Mr. BEAUBIEN:

Ask your government.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Herbert Stitt

Conservative (1867-1942)

Mr. STITT (Selkirk):

There has been a

great deal of discussion to the effect that the Conservative party is the servant of the vested interests.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. MEMBERS:

Hear, hear.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Herbert Stitt

Conservative (1867-1942)

Mr. STITT (Selkirk):

"Hear, hear," my opponents say. I ansrver " there, there." Who are they in this house who first raised their voices against the policy of this government of helping the farmers on the land? Who are they in this house who have come to the aid of the bank? Who are they in this bouse who have tried to prevent us from taking the gold from the banks and ear-marking for the benefit of Canada the profit on that gold? Were we the henchmen of the vested interests when we undertook and carried through that legislation? I say no.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Ian Alistair Mackenzie

Liberal

Mr. MACKENZIE (Vancouver):

Have we got the profit on that gold yet?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Herbert Stitt

Conservative (1867-1942)

Mr. STITT (Selkirk):

We have the gold,

every bit of it, and we can get the profit any time. I have paid some attention to the hon. member for Shel'burne-Yarmouth. Although I disagree with him, I want to pay my respects to him as a member of this house, as a lawyer, and as a soldier with a gallant military record overseas, but Mr. Speaker, if his policy were carried into effect I believe that bankruptcy would be suffered by every grain producer in western Canada. The last thing that the farmers of western Canada want us to adopt is a policy of laissez-faire, to leave them at the mercy of the manipulators of the market.

There is a resolution on the order paper for the establishment of a grain board. I stated last evening that this government was not afraid of big business, and the legislation which the government has brought down proves it. Were we the champions of the big interests

when we reduced the interest rates by our conversion loans, when we brought down the average rate of interest from over five per cent to under three and a half per cent, saving the taxpayers of this country over $15,000,000 per year in interest? Were we the servants of the big interests when we enacted the Farmers' Creditors Arrangement Act, when we gave to the debt-ridden farmers of western Canada some opportunity to get rid of the heavy and burdensome debts which were driving them into economic servitude? Were we the henchmen of the big interests when we enacted minimum wage legislation, when we enacted the eight hour day and when we enacted the Unemployment Insurance Act?

I do not know that I have time to give the complete record of this government but I should like to outline some of the legislation which has been passed for the benefit of the people. First, there was unemployment relief; second, there was the reduction of interest rates; there was the Farmers' Creditors Arrangement Act, the Canadian Farm Loan Act, the wheat bonus, the legislation in connection with the marketing of wheat, unemployment relief works, loans to the provinces and amendments to the Currency Act whereby $50,000,000 of new money was produced. Millions of dollars have been voted for public works; $20,000,000 the first session and $40,000,000 last year. Legislation was passed to bring into being the eight hour day and there is yet to be considered the minimum wage legislation. This government has passed the Unemployment Insurance Act and the Bank of Canada Act. It has increased imperial preference and has conducted an investigation in connection with price spreads. The marketing act was passed along with other reform legislation. This government brought into being the Ottawa agreements and is enacting pensions for the blind.

I think it is time that every hon. member who is supporting this administration should stand behind the government and the Prime Minister (Mr. Bennett). The Prime Minister has waited upon this country; during the present dilemma which has faced the country he has given the complete measure of his devotion. He has waited upon us and we should wait upon him. AVe are glad to know that he is recovering and will soon be back to lead the forces of reconstruction.

I believe my time is about up. With the permission of the house I should like to say just a few more words. I want to thank every hon. member for the manner in which he has listened to what I have had to say. I feel

The Budget-Mr- Stitt (Selkirk)

that I have friends on both sides of the house and among the independent group. I have considered it a great privilege to be here and I hope I have learned something and I trust I have contributed a little to the debate of this house. In conclusion I should like to pay a tribute to the Prime Minister although it is almost impossible to find the language with which to express my admiration for him. He is a man of giant intellect, he has been most unselfish in giving his health and strength to the welfare of his country. I believe in the words of Disraeli, that he has been a Conservative to preserve all that is good and a radical to remove all that was bad. I believe that I express the wish of every Canadian who loves his country when I say that I hope he will soon be restored to health and be again able to lead his party. In February, 1932, when I seconded the address in reply to the speech from the throne, I quoted some lines which I should like to repeat. At this time thejr refer most appropriately to our beloved leader:

I vow to thee, my country-all earthly things above-

Entire and whole and perfect, the service of my love,

The love that asks no question; the love that stands the test;

That lays upon the altar the dearest and the best:

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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UFA

William Irvine

United Farmers of Alberta

Mr. WILLIAM IRVINE (Wetaskiwin):

The inadequacy of purchasing power and the concentration of credit in the hands of large corporations account for the failure of this and other governments to meet the needs of the people of the world at the present time. How otherwise would you explain, except on the basis of abundance, the destruction of such quantities of goods as were destroyed by the nations of the world in 1934, not to speak of the tremendous further amounts of goods which might have been added to production had our resources of man-power, machinery, plant equipment and raw material been used to capacity? I noticed that even the Ottawa Journal gave a brief, though inadequate, summary of some of the goods destroyed in 1934. It says:

In 1934 nations destroyed millions of dollars worth of goods and foodstuffs while millions of people lacked clothing and food. Holland buried 15,000,000 flower bulbs and destroyed

2.000. 000 sows and 4.000,000 little pigs; Denmark incinerated 25.000 cattle. In New Zealand 5.000 lambs were driven into the sea. In the United States every third row of cotton was "ploughed in." Brazil destroyed

26.000. 000 bags of coffee-

And so the story goes. That is not by any means a complete list, but it does indicate the insanity of a world that does not know what to do with too much, that has no policy applicable to too much but only knows how to act when it has too little and thus seeks to restrict production and destroy goods in order to bring about an artificial condition of scarcity so that statesmen may know their way about. To my mind that is a fair statement of the policies of nearly all governments to-day.

So much, then, for the assumption that there is an abundance of supplies. As to the other assumption contained in our amendment, that there is too little money, I think the fact that there has been a shortage of money for purchasing power has been very adequately and emphatically demonstrated. I direct the attention of this house once more to the analyses and the mathematical demonstration of Major Hugh Douglas, of London, who I think has shown more completely and more thoroughly than any other economist of his time the scarcity of money and the causes of that scarcity. But he is by no means the only one who has demonstrated that fact. Foster and Catching have demonstrated it in the United States; Ivitson, Keynes, Right Hon. Reginald McKenna and numerous others have proved beyond the shadow of a doubt to every intelligent student of the question that there is not sufficient money in circulation at a given time to buy the good? on the

shelves at the prices at which those goods are marked, and that while that is so those goods cannot be distributed.

Time does not permit a recapitulation of the data to prove that point mathematically. I turn from the scientific statement of the case to the fact that must be staring every man in the face, a fact which I think the people of Canada know very well; it is that they have not the money in their pockets with which to supply their needs, while the goods they need are sitting on the shelves of the warehouses of the country and their stomachs are empty and their backs are bare. There is no argument or scientific demonstration that is more effective than the actual, practical fact that the people see the goods, that they are ready to produce more but have not the money with which to distribute them.

Then if we want a real, practical proof, we need only turn to the relief policies of the government. What do they amount to? They amount to this, that the government have undertaken to borrow money which otherwise would not be put into circulation and to apply that money to nonproductive pursuits, so that in their continuation of certain public policies and public services-which may be all to the good-they have been able to distribute money as wages to the people engaged in those projects. By doing such work the government have placed no goods upon the market to offset the money that has been distributed, and to that extent they have slightly increased purchasing power. But apart from the inadequacy of that policy so far as sufficient purchasing power is concerned, what is the inevitable result? The inevitable result of that policy is the utter crash of the system, for every penny that is so circulated among the unemployed on relief projects has been borrowed, and the borrowing of that money naturally increases our debts. Our debts now are terrific; they cannot be paid as they stand at the moment, and as we increase them and as they grow larger through interest charges compounded, we hasten towards the inevitable abyss. Let me just direct the attention of the house to the growth of debt during three centuries. In the seventeenth century the debt of the world increased 47 per cent. In the eighteenth century the debt increased 466 per cent; in the nineteenth century it increased 12,000 per cent and I venture to state that in the twentieth century it will increase 12,000 times 12,000 per cent. So, Mr. Speaker, the speed of our debt creation increases by every year

The Budget-Mr. Irvine

of time, just as the velocity of an object falling through the air increases with every inch it travels towards the ground.

Let me turn now, sir, to a brief summary of the economic situation in relation to purchasing power. Goods manufactured and sold at a profit cannot be bought back with the wages paid those who have produced them. This is chiefly so because much of the money that was employed in the purchase of raw materials and in the payment of wages for production was borrowed money, or credits created by the banks, and as soon as the goods then produced were sold those debts were repaid. Being repaid they were cancelled and being cancelled they were not available to buy the goods which they were employed in producing. So there must remain on the shelves, unpurchasable through lack of money, goods which cannot be moved unless some auxiliary supply of money be found somewhere.

To make the situation worse machinery is becoming more and more automatic as the industrial process goes on, and the use of solar power, steam, oil, gas, electricity has not only made it possible to produce sufficient goods with a very much reduced number of workers, but has vastly increased production, in some instances far beyond the capacity of the people to consume even if they had the money to buy the goods, which they have not. Moreover the tendency is towards further mechanical progress, which will still further reduce the number of workers required and further increase output. The fact that those who are employed do not receive and never have received sufficient, income under the profit system to buy even the necessities of life, much less the entire output, together with the additional fact that machinery is displacing thousands from every industry, thus depriving a large percentage of the population of any income at all. has resulted in vast amounts of goods going to waste unused while millions are in want. This condition of more goods than money intensifies competition among producers, and compels them further to reduce wages and further to supplant workers with every conceivable labour-saving device, which courses of action still further intensify the problem.

Being unable to find markets at home through lack of purchasing power as I have described, the producers of all nations enter into keener competition for whatever foreign market there may be; thus the economic basis of war. Those who look upon the situation in Europe to-day, as well as in the east, must come to the conclusion that there is grave danger that the events of 1914 may very soon be repeated. This situation has become

so acute that something must be done, and if governments will not heed and take intelligent and constitutional action it is altogether likely that the masses of people, driven by desperation, sooner or later will take unconstitutional and unintelligent action. It is in order to prevent such unreasoned and dangerous action that from time to time during the last fourteen years I have urged with all the sincerity that I possess, upon whichever party was in power, that they take some definite action on this question. Both parties continue to drift, they hope that we may drift into something better. I noticed the Minister of Finance (Mr. Rhodes) in his admirable budget speech indicated that we were drifting out of the depression in the same way we drifted into it, I think he suggested by natural causes. I cannot express my-I was going to say contempt for that view, I hope the minister will realize that the term has no application for him personally, but I have nothing but contempt for the view that we can drift into prosperity. I am as firmly convinced as that I am in this house at this moment that if we are to attain prosperity we must plan our way, that our plans must be based upon economic truths and facts of the present time, and that such plans must be worked out by the application of established scientific principles.

The attitude of bankers and industrialists and bondholders is one of economic fascism. That is to say they want to restrict production to the limits of an unsound money theory, the theory or doctrine which bases money on one commodity only, famed for its scarcity, rather than basing the medium of exchange on commodities generally. Thus they cheat the people of all the advantages of industrial progress, maintain the multitudes in a state of semi-starvation in order that they may continue to hold to an unjustifiable superstition about the relation of money to gold. They further carry their fascistic notions to the restriction of the use of machinery as far as possible so as to employ as many people as possible and to distribute wages as widely as possible for doing unnecessary work. Now that viewpoint is so absurd as to be unworthy of comment. A section of the community, some of the working class who have suffered more under this insane system than any other class, are becoming impatient and demand complete and immediate revolution. They are not prepared to wait for constitutional action, they want to smash all opposition by ruthless force. Now I do not hold with that, I would fight that with all the powers I have, but we have to face the fact that there is a considerable and growing number of Canadians who take that position. Another group, the

The Budget-Mr. Irvine

group to which I belong, hold another view with respect to this question of purchasing power and the Canadian economic problem. We are a small group in this house, composed of representatives of organized farmers and labourers and other groups. We regard the problem chiefly as one of making available to the consumer enough purchasing power to equal the total prices of all commodities that are for sale, and we regard provision of the required amount of purchasing power as the most advisable next step, since it will bring about the immediate distribution of the goods required to satisfy the wants of the community and thus prevent revolution and give us time to think out succeeding steps in a fundamental economic and social reconstruction. We say that the major trouble in Canada to-day is faulty distribution, and money in the pockets of the consumer is the surest way to bring about distribution of goods. We claim that there is no, difficulty in obtaining ample supplies of all the necessities of life, if people only had the money to buy them. We regard social credit as a source capable of providing money and at the same time an adequate method of distributing it wherever it is required.

What then is this social credit to which I refer? The real credit of the nation we regard as consisting of its power to produce and deliver goods as, when and where required. Secondly, the extent to which credit may be used for purchasing power equals the sum of the price of the goods available for distribution, and there can be no such thing is inflation so long as money can be redeemed in goods at the prevailing prices. Thirdly we believe that a metallic or gold basis should be abandoned completely, and that the basis of all money should be goods and services, and not any single commodity, metallic or otherwise. To provide all the goods required for consumption is the object of production, in the view of those who advocate a proper use of social credit, and to distribute goods, not create employment, is the problem of today. Proper distribution of goods through an adequate supply of money may be said to be the chief aim of this doctrine. We regard it as impossible under the profit system to distribute sufficient money in the form of wages to buy back the goods produced, therefore we must augment the purchasing power of the people by some other method. What we propose is that purchasing power shall be distributed as dividends freely to the consumer, so that it will operate as purchasing power and not as capital investment, as is

customary under the present monetary system. To-day all credits appear first as investment, loans made to production, and being paid back thereby cancel the means available for the purchase of goods.

"Where is the national dividend to come from" is the question so often asked those who advocate this .method of increasing the purchasing power of the nation. May I point out that we regard the great increases of production during the capitalistic period as accruing chiefly from three sources, first association in production, secondly through mechanical inventions and thirdly through the use of solar power. All of these are social. We have increased production tremendously by association. I must not take time to demonstrate that fact, but I think all hon. members will agree that by specialization and by organization of industry, and even by international trade we have vastly increased the capacity of the world to produce.

Then, second, all will agree that machines do not belong to any individual. Machines have histories, some of them centuries old. Contributions have been made to their development by a great many people of all nations. Those people have died and left their contributions as a heritage to mankind. They are the social heritage. Machine equipment, all inventions, all discoveries, all knowledge whatsoever are the heritage of people now living and since all these things contribute tremendously to our capacity for production they form a true basis of social credit from which every individual has a right to draw.

Finally, solar power belongs to no individual; it is nature's gift to all living creatures. All these combined account for increased production over the hand craftsmanship of preindustrial periods. Together they form the source from which we have the moral, the economic and if you like, the divine right to draw purchasing power in the interests of the people of Canada as a whole. That is the source of the proposed national dividend.

" How are we to prevent inflation " is the next question. I shall have time to say only a word on this point. The social credit proposal prevents inflation which would naturally follow the issuance of such quantities of money under the present system. We propose to prevent inflation by the application of a mathematical formula known as the just price. The main point to be observed in this connection is that the ratio between production and consumption is held at a given level. The principle is that prices will

The Budget-Mr. Perley (Qu'Appelle)

not rise-cannot rise-if there are always goods on the market sufficient to redeem the money available for purchasing power.

There was money for war-any amount of it. There will be any amount of money for the next war. From where did we get it? If we quote the Macmillan report we will discover how it was issued.

It is not unnatural to think of the deposits of a bank as being created by the public, through the deposit of cash representing either sayings or amounts which are not for the time being required to meet expenditures. But the bulk of the deposits arise out of the action of the banks themselves, for by granting loans, allowing money to be drawn on an overdraft or purchasing securities a bank creates a credit in its books, which is the equivalent of a *deposit.

That is the principle by which money was provided for the war, and the real basis of the provision was the power of the people of Canada to produce and to deliver two billion dollars worth of goods-which they did. But Sir Thomas White describes it more aptly when he states:

During the war Canada surprised not only herself but the world when her people subscribed for war bonds twice as much money as there was in Canada, and then we had ample money left with which to carry on a growing business.

Now, sir, I wish Canada to subscribe now twice as much money as there is in Canada to keep the people of this country from starvation, and to save us from having to destroy the goods which we have produced in order to keep somebody else making more of those goods, in order that we may destroy them again. I demand of this parliament and government money for life; I demand money for peace; I demand money for construction. AVe had money for war, money for death and money for destruction. In the name of God why can't we have money for life, for construction and for peace? We can have it just as soon as the opposition says so, just as soon as the government says so, just as soon as this house comes to its senses this question can be solved. But so long as we play the political game which both the budget and the opposition amendment indicate we are not going to get very far.

I look to a crusade against hunger, against scarcity, and I ask every man in this house -and the lady member, too-who believes in this monetary reform policy, who regards it as a first step towards new economics made necessary and possible by abundance, to rise in their seats and to vote for the subamendment w'hich proposes the only intelligent and constructive suggestion offered thus far in the present session towards meeting the needs of the Canadian people.

One sentence more. I would suggest that the government take note of what Alberta has done. The government of that province has invited the only man who knows how to handle this subject to deal with it. But the province of Alberta has no control over monetary policy; this government has. Give the Alberta government your right hand of support; give Alberta the power to deal with the question, if you will not deal with it yourselves, and let us all join together in working out a monetary policy. Let us not quibble over technical details, but get together on a great crusade for feeding the people of Canada out of the abundance which is ours.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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April 2, 1935