June 22, 1938

?

Some hon. MEMBERS:

Order.

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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CCF

James Shaver Woodsworth

Co-operative Commonwealth Federation (C.C.F.)

Mr. WOODSWORTH:

-across the floor of the house, with the statements in this report?

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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?

Some hon. MEMBERS:

Order.

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

I want to assure my hon. friend that there was not the slightest intention to misrepresent the situation. In regard to the contract with the war office, this was declared to the house before he asked his question of me on the floor of the house, and details were given, as they were asked, in committee of supply. There was not the slightest intention to suppress nor was there a suppression of any information, in the slightest degree. I say now in regard to these contracts that there has never been a cooperative effort between the British war office and the government of Canada except in regard to the Bren gun, and the two contracts in that case have been separately negotiated.

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. M. J. COLDWELL (Rosetown-Biggar):

What compensation is the Canadian government receiving from the Inglis company for the loan of the machinery, and what is the value of the machinery so loaned?

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

I think that to answer that question it would be better to table the actual agreement with the company in question.

The Budget-Mr. Poole

Topic:   BREN MACHINE GUNS
Subtopic:   INQUIRY AS TO MANUFACTURE IN CANADA AND BRITISH WAR OFFICE CONTRACTS
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UNEMPLOYMENT

VANCOUVER SITUATION-INQUIRY AS TO PROVISION OF FOOD UNTIL EMPLOYMENT PROVIDED


On the orders of the day:


CCF

Angus MacInnis

Co-operative Commonwealth Federation (C.C.F.)

Mr. ANGUS MacINNIS (Vancouver East):

I would like to ask the government in the absence of the Minister of Labour if their attention has been drawn to press reports of this morning that a number of unemployed are destitute in the city of Vancouver, and that they have announced that they will have to beg on the streets; also that the city officials have announced that if they do so they will be prosecuted; and, under the circumstances, has any arrangement been made to feed these men until work can be provided?

Topic:   UNEMPLOYMENT
Subtopic:   VANCOUVER SITUATION-INQUIRY AS TO PROVISION OF FOOD UNTIL EMPLOYMENT PROVIDED
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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I may say that officials of the government are watching carefully the press reports which relate to the situation in Vancouver, and are cooperating, I understand, with the authorities there with respect to any situation which may develop. I cannot say what action the Minister of Labour may have taken. I have no doubt that he, like other members of the government, would be anxious to do anything he could toward improving the situation of these men at this time.

Topic:   UNEMPLOYMENT
Subtopic:   VANCOUVER SITUATION-INQUIRY AS TO PROVISION OF FOOD UNTIL EMPLOYMENT PROVIDED
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THE BUDGET

CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed from Tuesday, June 21, consideration of the motion of Hon. Charles A. Dunning (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 thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.


SC

Eric Joseph Poole

Social Credit

Mr. E. J. POOLE (Red Deer):

Mr. Speaker, I am not going to attempt to cover all the ground dealt with in the budget speech, which is after all quite voluminous. I have read the budget speech, and I think that the Minister of Finance (Mr. Dunning) is to be complimented on the manner in which he delivered it to this house. I think also that the hon. member for York South (Mr. Lawson), who had the privilege of replying to the government yesterday, made a very fine speech. But as I look over the budget, once again I am struck by the fact that both parties represent the bulwark of traditions. There is nothing new to meet conditions that are new. It is more or less a resume or history of our economic progress during the last 51952-2611

year and the expression of a pious hope that in the future things will change for the better.

During the speech the minister touched on many things which are significant to every hon. member, especially in his references to trade. He said:

In emphasizing as I have clone certain uncontrollable forces which have been influencing our economy, I would not have you think that I neglect or minimize the importance of the domestic factors. The fundamental fact that in this modern world no nation can live unto itself alone does not lessen, indeed it reinforces, the necessity for Canada to devote its maximum energies to the solution of its own internal problems.

The question raised in that passage from the minister's speech is significant, because the trend of the world is toward economic nationalism. This is a truth that we must face. The present economy of Canada is based upon the premise that prosperity is dependent upon our external trade. Quite true, in the days of expansion through the years following the industrial revolution which began in 1742. The system which we know as capitalism has derived its strength from the fact that the world was not at that time industrialized. But later, and especially since the great war, we have seen industrialization in every nation of the world speeded up; the very conditions which brought about prosperity in the days that are gone, through the wages received by the great masses of the people, are no more, and the markets of the world are now contracted to such an extent that there is a lesser possibility of selling goods in the world market. The result is unemployment in every nation of the world, and Canada is no exception.

Later on in his address the Minister of Finance dealt with the question of increased production in this country. The greatest contributing factor to our internal prosperity in 1937 was the increase in production in terms of metals. Surely it must be evident by this time to every member of this parliament that this is not and could not be a basis for our future prosperity. We notice that the production of all the ingredients necessary for armaments has increased; the production of nickel, lead, copper and so on has increased. Now let us face facts for a moment. Let us suppose that this mad armament race should cease; that once again peace should prevail between China and Japan; that the warring factions in Spain should go back to the soil and turn their swords into ploughshares. What would be the result in this country? From an economic point of view it would be disastrous, because then there would not

The Budget-Mr. Poole

be the same demand for our production. The group in this corner has persistently emphasized this one important fact, that the only way to prosperity is by recognizing first of all that the best market a nation has is the home market. That is where our prosperity must begin and end. The old belief that prosperity lies in selling our goods to the nations of the world, and that the sale of those goods is the only instrument that can be used to feed our own people, no longer holds good; because as we go on, year after year, the industrial machine will speed up more and more, as a result men will be displaced from industry. But that is not the greatest tragedy. The greatest tragedy lies in the fact that the traditional governments of the world recognize that wages is the only sound and legitimate source of purchasing power. If that is true, and the markets of the world contract through each nation becoming more industrialized, there will be a lesser demand abroad for our goods and incidentally less employment.

What is the inevitable conclusion to which we must come? It is that the system of wages has broken down. I am quite sure if hon. members opposite have followed the trend of events in the country to the south this will be brought home to them more fully than in the case of our own country. Markets are contracting; the wage system has broken down; and our prosperity, such as it was, in the year 1937 was the result of conditions which we hope will not become permanent in world affairs, in other words preparation for war. I often think that if one half the effort which is put into the finding of new markets abroad were put into placing our internal market in order, this would be a prosperous country to-day.

Now I should like to say a few words with regard to the "hoary" fallacy referred to by the Minister of Finance. In his speech the minister said:

The experience of several countries with expansionist policies during the last few years has proven that only a rise in the rate of new investment can provide a durable basis for an upswing in business activity. Attempts to stimulate consumption by government expenditure or by suddenly improving labour conditions have been tried on more than one occasion but in every case they have been found wanting.

That is a very important statement. For the moment we should keep in mind my argument in the first instance with regard to contracting markets. As industry speeds up at home; as labour is displaced by technological improvements, it must follow that the burden in the days ahead will fall more on governments if industry cannot absorb these men, and if we are not prepared to change

our monetary system. I want to say to the Minister of Finance that we of this group do not believe in inflation, at least the kind of inflation to which the Minister of Finance has given expression on so many occasions. Nor do we believe in deflation. They are twin evils; deflation, when money becomes so dear that nobody can get it, or inflation of the type that makes money so cheap that it will buy nothing. It is the middle road we want to follow; in the words of the Prime Minister (Mr. Mackenzie King) himself, to issue credit in terms of public need. A little further on the minister dealt once again with the question of money. He said:

There are some, of course, who appear to believe that the government should not pay interest at all or, indeed, should issue debt free money to finance its expenditures or to retire its interest bearing debt or to do both of these things.

Let me say, Mr. Speaker, that I do not believe the social credit group in this house ever suggested repudiating our obligations. That has no part in our program. What we do need, however, is to place in the hands of the masses of the people of this country the means with which to meet their obligations, which is an entirely different matter.

Once again the Minister of Finance, making reference to the "hoary" policy as expounded by this little group, speaks of debt-free money. Here is the difference between the repudiation of obligations and debt-free money. We do not intend to repudiate any Obligations, but we should bear in mind that in the last few years there has been one class of people who have been benefited through deflation. I am now referring to those who purchased bonds or debentures of the provinces and the dominion some years ago, during an inflationary period, when the price level was high. Contracts were then made between the purchaser and the seller. The result has been that over a period of years through deflation the debts of the provinces have increased. Social services have increased, and the cost has been laid on the provinces and municipalities. In terms of high interest rates we have placed a heavy burden upon small properties until the very homes of the people of Canada have been placed in jeopardy. One has only to review the rising mill rate since 1930 in the municipalities and cities of Canada to find out who is carrying the burden.

I should like to draw a parallel. We will suppose that I purchased bonds in 1928, rvhen the price level was high, and that a friend of mine invested in real wealth, or, in other words, built a home.

The Budget-Mr. Poole

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

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

Were Alberta bonds

ever at a premium?

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

Eric Joseph Poole

Social Credit

Mr. POOLE:

I will deal with you in a

minute. I am trying to draw a contrast. I was saying that we both invested, one in real wealth and the other in bonds. But when the depression deepened, when social services increased and the mill rate rose, the debt was placed upon the man who invested in real wealth. In hundreds of cases in Canada people have lost their equities in their homes. Why? It had to be done to pay fixed charges and to meet sacred contractual obligations. Now the price level is down, and the income derived from bonds during the deflationary period purchases more. There has been a hue and cry across Canada against tampering in any shape or form with these sacred obligations. Surely in view of what I have said, and in view of the burden which has been borne by the small property holders, the bondholders should have come forward and accepted at least some adjustment to relieve financial conditions in Canada. But that has not been done.

I now turn to the hon. member who asked the question about the province of Alberta. Let me say to him that we inherited a bankrupt province. The only terms upon which we could get relief from this government was to go into a loan council. At that time we did not think it was advisable to centralize authority with regard to future borrowings.

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

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

On that point, how can the hon. member say that Alberta is bankrupt when a board reports that the assets of the province are 230 billions as against a few millions of debt?

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

Eric Joseph Poole

Social Credit

Mr. POOLE:

I am referring to financial

bankruptcy. A nation is never bankrupt unless it is desolate, unless its fertility vanishes or its natural resources disappear. That is the .only time a nation can go bankrupt in the sense my hon. friend means. But we were financially bankrupt. There was no money in the treasury. So we were compelled to take this action, much against the inclination or the desire of the provincial government. In regard to the issuing of debt money, what exactly do we do when we borrow in Canada? Do we not borrow on the basis of the ability of the people of Canada some day to pay back? Do we not borrow on the basis of our natural and intellectual resources? Is that or is it not true? To-day we are borrowing through the banking system. And what do we borrow? We borrow the permission to produce more of that which we already have-real wealth. In

my opinion the Minister of Finance has taken a step in the right direction. During the life of this parliament he has made a successful attempt to reduce the interest on our national debt. That is a credit to the present government, and a procedure I should like to see continued. But we will never have prosperity until we face the facts. The chief fact confronting us is that our financial system is totally inadequate to meet the present situation. It is true that we have reduced the interest rate, but it is equally true that we have increased our capital debt. How long can a nation continue, generation after generation, to place a chattel mortgage upon the distant future which generations yet unborn will have to carry?

I see no real or logical reason why we could not issue credit in terms of public need.

I do not see why we cannot issue credit on the basis of our real wealth, in exactly the same manner as it is done by the banks. In that way we could place every ablebodied man to work in the creation of national assets. Highways must be built. Surely there is nothing to interfere with a real program of national development. I would hope that during the life of this parliament such development might take place. Unless, however, we take control of our monetary system, I can see no relief. The nationalization of the Bank of Canada is not taking control of the financial system. The most important question in connection with the bank would be this: What is the policy of the bank going to be?

When we say we are going to issue credit in terms of public need, to what need do we refer? Are we referring to loans which would be made available to industry? Do we not yet realize that we can pour money into industry and only aggravate the present depression? We know what has 'been tried in the United States of America. No; we must begin with the consumer. I am convinced any hon. member opposite who will study the questions of costs and prices will realize that the cost of production is one thing and that the retail price of goods is an entirely different thing. The difference between the total cost of production and the ultimate price of retail goods is widening, as the industrial machine speeds up, because it displaces certain payments which to-day go into costs in terms of wages and helped partially to liquidate prices.

The recent unfortunate defeat of our party in Saskatchewan does not cause me any discouragement, and I am sure in saying this I can speak for all members of my group. We feel, as have other men who have gone

The Budget-Mr. Poole

before and who have contributed to the progress of the human family, that we are on the right track. In my short life I have followed governments closely. Since the great war I have watched the governments in Great Britain struggling with national problems. I have followed closely the pump-priming policy of the president of the United States. I watched in Canada attempts during 1931 and 1932 to eliminate unemployment by a program of public works. But none of these things is sufficient in itself. They are only palliatives; they are patches on an already outworn garment. The fundamental thing to do-*

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

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Aberhart!

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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June 22, 1938