December 4, 1940

NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I say

it is astounding to me that a little nation like Canada, with twelve million people, should buy from the United States of America, with one hundred and thirty million people, twenty-five times more per capita than they buy from us. That is a situation which I suggest to the government and to the people of Canada has been going on altogether too long, and it cannot continue indefinitely if we are to keep our heads above water. In the old days we had a remedy for that situation. We had a settlement on a three-way basis, but that, as the Minister of Finance (Mr. Ilsley) himself stated, is no longer open to us. If that be so, what is ahead of this country if it is not national bankruptcy, war or no war. It is a situation that must be corrected, and we are now in a favourable position to have it corrected. The Prime Minister (Mr. Mackenzie King) has, he has told us, paved the whole way. He has got the United States to the point where they will cooperate with us in

War Budget-Mr. Hanson (York-Sunbury)

the defence of our nation, and financing is a part of the defence of this nation and of the north American hemisphere. I ask the minister to tell the house if any avenues have been explored with respect to sending our exports to the United States.

Topic:   WAR BUDGET
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Certainly. That has been our policy ever since we came into office in 1935.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

We are tied up to the Canada-United States agreement; and the minister in dealing with the question, in making an apology, shall I say, for taking no action in the matter of fresh fruits and vegetables, made it quite plain that we dare not go back to the United States and ask them to correct that position because it would put the agreement in jeopardy. That just shows the futility of having our tariffs made for us in Washington.

Topic:   WAR BUDGET
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Does the hon. gentleman

want us to scrap that measure of extending our export trade to the United States?

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

No, I do not suggest for a moment that we should scrap it.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It would have that effect.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

But I do suggest that if conditions are as ripe as has been indicated to the house and the country we can go to the people of the United States and say: We are increasing our purchase of United States products, particularly manufactured products, and especially war materials; we are finding great difficulty in paying for them; the load of adverse exchange is becoming increasingly burdensome, and because we are buying so much more from you than we did in days gone by, we think it a fair proposal that avenues should be explored with a view to increasing our exports to the United States.

I could indicate to the minister articles which the United States could use in their war effort right at the present time. I might mention base metals, for instance. Has the United States ever been approached to let down the bars against our base metals? Has the United States been approached to extend to us further facilities for the export of more of the natural products of this country?

Take, for example, the small item of cream. Cream is in the agreement, but the membership of this house could drink in one day all the cream that the United States is importing from us. But the dairy farmers of eastern Ontario, the dairy farmers of the eastern townships, the dairy farmers of Quebec counties lying along the Vermont and New Hampshire borders, and the dairy

14873-42}

farmers of my province, where we are just twelve hours overnight from the Boston market, could ship substantial quantities of cream to the United States every day of the year, to the advantage of the United States consumer and without any great disadvantage to the United States producer. These are matters which I think should be explored.

One of my colleagues suggests, what about quotas? I have no desire to go into details.

I am trying to deal with principles and leaving it to others to give specific instances and cases. I am questioning in my mind whether the government, in meeting this problem, have met it full face. It has two aspects. I have tried to deal with one of them, that of increasing exports as opposed to restricting imports. I suggest it is of the greatest importance, and I commend it to the government. We should make every possible effort to increase our exports to the United States in view of the fact that we are daily increasing our consumption of their manufactured products. I believe that in war time they would meet us in the right spirit.

I know that in peace time the situation was difficult. I know that in the winter of 1934 and the spring of 1935 we could do nothing with the officials of the state department of the United States with respect to two homely products of the maritime provinces, fish and potatoes. We got a quota for potatoes, a quota which a single county in New Brunswick could easily fill in any given year. What has happened this year with regard to potatoes? Does the minister know? We have no tariff against United States potatoes, and according to the trade reports of this country potatoes from Aroostook county are being imported into Canada via Windsor, to the detriment of the New Brunswick producer. That may be all right, but it is pretty hard to tell the farmer in the Saint John river valley that it is all right. Where is Manitoba getting its potatoes from this year? It may not be feasible to ship potatoes so far west, but my information is that the crop in that province is a failure.

Topic:   WAR BUDGET
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LIB

William John Ward

Liberal

Mr. WARD:

No.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

My information is that the crop in Manitoba is a failure and that they are importing potatoes from the Dakotas.

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LIB

William John Ward

Liberal

Mr. WARD:

That is just not true.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

If the hon. member will go over to the bureau of statistics, he will get the information that North

652 COMMONS

War Budget-Mr. Hanson (York-Sunbury)

Dakota potatoes are being imported into Manitoba. The trouble with my hon. friend is that he does not want to hear the truth and he does not want to know the truth.

Let me come back to the more technical aspects of this matter. When war broke out and the control was established, the foreign exchange control board set an arbitrary rate. 'i do not mean, arbitrary in the sense that it *?as purely arbitrary; it was a rate which they h their judgment-and I do not know any >ody who would have better information on she point-deemed to be a rate which possibly liould be sustained without any ups and downs over a long period of years, and it had jhe merit of stability. I think that is a fair position to take with regard to it; and in so far as it had that merit of stability, it was an advantage to business people in this country and in the neighbouring republic. They fixed the rate on purchases at ten per cent, and the rate on sales at eleven per cent, the additional one per cent covering the charges of operation. The board thus came into possession of the substantial profit of one per cent, a portion of which, I understand, they had to give to the commercial banks of the dominion in return for the services which they rendered in carrying out the operations of the board. Just what that rate is I have heard, but I have forgotten. However, there must have been accumulated, in the fifteen months or so which have elapsed since that time, a very substantial fund, which the board, I assume, has made or will make use of in connection with stabilization operations. At all events, out of that fund will be paid the cost of the operations, and there will be, I assume, a substantial surplus as well.

I should say this: My understanding of the rate established was that it was about halfway between the value of the United States dollar and the British pound sterling-it could not be said to be pegged to either-and was fixed at that rate as the result of the exercise of the best judgment of those having charge, and for the reason that it was about half-way between the two currencies. I am bound to say, so far as my information goes-and I have made inquiries-it has operated well, although I am of opinion-and the necessity of this legislation bears me out in that opinion-that in recent months the rate charged for foreign exchange has been on the low side.

I have already outlined what steps, more or less important, were taken in the preceding months, and I have indicated in a general way what thoughts occurred to me with relation to the present proposal. The measures proposed have, broadly speaking, two ends. First, they are to help Canada finance war

purchases in the United States. I think they have a second purpose, a psychological one, namely, to impress upon the Canadian people the necessity of not spending their money on articles they can do without; and that is all to the good. I have advocated that for a long time. I have no objection whatever at this time to the principle of that kind of legislation.

I shall have some objection, as we go into committee, with respect to the incidence of that burden. There is room, I should say, for honest difference of opinion with regard to that, and it may be that the minister- although I have found his mind rather inflexible in days gone by; having set his mind upon a certain course, he is loath to change it-will be in a position to say that he will give more than consideration to any suggestions we make with respect to it. But on the general principle I and my friends are in agreement. I think it serves the two-fold purpose of helping our war effort and of instilling into the Canadian people the necessity of sacrificing something. There will be, of course, some whom it will not affect because they cannot make any more sacrifices than they are making. There will be a middle class who will be affected. Then there will be a class of well-to-do people who will have, in spite of everything, what they want as long as they have money to pay for it.

In its second phase this proposal is to help Britain finance her purchases in Canada: and with that, too, I am in substantial agreement. But here again, in connection with the incidence of this lifting of restrictions on British imports, there will, I think, be room for honest differences of opinion, and we can argue those out in the later stages.

I have in mind at the moment the question of Nova Scotia coal. I do not think the importation of British bituminous coal free of duty will be immediately detrimental to the production of coal in Nova Scotia, because the information I have is that to-day coal is a scarce commodity. But I venture to suggest that, before this war is over, the question will become a very live one, and I am going to leave my colleague from Nova Scotia, the hon. member for Cumberland (Mr. Black) to deal with it.

Before I leave this question, I wish to say to the minister that Nova Scotia coal is the only coal which this free importation of British bituminous can affect. They both will have to go into the same market unless the market increases beyond what any of us visualize that it will increase to. Whatever is imported from the other side will displace Nova Scotia coal. If we are prepared to make that sacrifice, well and good. I know

War Budget-Mr. Hanson (York-Sunbury)

that all these changes in policy and all these diversions of trade are bound to affect somebody. They cannot help doing so, once a channel of trade is established. How about the effect on our policy of subventions? It will affect that policy indirectly. I wonder whether the minister has thought that through.

Topic:   WAR BUDGET
Subtopic:   CONTINUATION OF DEBATE ON PROPOSALS OF MINISTER OF FINANCE FOR CONSERVATION OF FOREIGN EXCHANGE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Yes.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Well, if

he did, he did not say anything about it. We shall have ample opportunity to discuss that on the committee stage. I personally would have preferred to delay my remarks until we were in committee, but we are faced with the rule of this house which I had in mind when I spoke briefly the other day, and which the leaders of the two groups to my left had also clearly in mind, namely, that if there were no general discussion on this resolution, then, when we got into committee of ways and means, we could not deal with the general principles and we would be held down to the item immediately under discussion. If, for that reason, the passage of these measures is delayed, it is because I think there would have been a too rigid application of the rule. With that I think the Prime Minister and members of the government will have to be content.

The government propose to deal with the first phase of our exchange position by restricting the imports which are listed in the resolutions tabled. I have already pointed out what in my view are some of the glaring omissions. I am not going to deal in any detail with the question of fruits and vegetables, but I would point out that in four weeks' time the Florida strawberry crop will be on the market. Florida strawberries are ready for local consumption in that state on Christmas day, and a week later they begin to move out in carload lots. Strawberries will come also from Texas, Louisiana and other southern states. Can the minister tell this country that fresh Florida strawberries in January are a necessity for the health of the Canadian people, or to help win the war?

Topic:   WAR BUDGET
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No, they are not.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Of course not. Then take the case of citrus fruits; we all like citrus fruits, there is no doubt about it-and in passing I should like to say that there is no better grapefruit than that grown in Florida. But at the hotel we are eating grapefruit from Honduras and Jamaica, and oranges from Dominica and Honduras. I believe the health argument does not hold water; we can get these fruits from the sterling area. We can get them, and there is

transportation for them; the Lady boats are coming back half loaded at times.

The fact of the matter is that we have not dealt with this question of fruit and vegetables in a realistic manner; we have not been allowed to. I am not going to pursue that line of thought any further; the minister knows exactly what I mean. In my view, we have had the big stick held over us.

I will leave the question of new potatoes to my hon. friend on my left. Bermuda grows potatoes; they will be on the market shortly. And Bermuda is in the sterling area.

In the course of his remarks, as reported on page 555 of Hansard, the Minister of Finance indicated four principles which had governed the government in making up the list of goods to be restricted. He said:

The articles prohibited should he such as consumers can legitimately be expected to do without in war time or for which their requirements can probably be met from the durable goods which they already have on hand.

The list should include finished goods rather than raw materials or parts or equipment for Canadian industries so that disturbance to Canadian industry and to those employed in it will be kept to a minimum.

Wherever possible, goods used by the well-to-do rather than those used by the mass of the public should be restricted.

The items should be such as to require a minimum of administrative machinery and action in order to carry out the restriction.

The first three are important; the last one I do not think is. With the first three statements of principle I do not think there can be much quarrel, if any.

In the committee of ways and means there are to be two resolutions. The first of these precedes the introduction of a bill to be entitled the War Exchange Conservation Act; and appended to that resolution are two schedules. The first contains a list of items, based on the tariff classification, the importation of which from all countries except those in the sterling area and Newfoundland is to be subject to restriction; and with regard to part I of the schedule, no permits are to be granted for their importation from the so-called hard-currency countries. Part II of the first schedule comprises goods for which permits to import from hard-currency countries will be granted temporarily but on a decreasing scale.

I question the desirability of parliament vesting in any minister authority of that kind. In other words, the Minister of National Revenue may say to John Jones, "You may import under permit", and to Tom Brown, "You may not import." There is the opportunity for abuse, for discrimination, because this is to be left to the judgment, shall we say, of one man. No matter how reputable

654 COMMONS

War Budget-Mr. Hanson (York-Sunbury)

he may be or how high his character, I submit that is not good legislation. If it were not war time, I would fight that principle. I suggest to the minister that parliament itself ought to grapple with the principle that is to be followed here, and not leave it to the discretion of the minister. In the hands of a minister who might be weak, of a minister who might be susceptible to all kinds of pressure, I can visualize that great injustices might be done. I do not like the principle, but I am not going to labour that point any further.

In dealing with our exchange position, we must take into consideration the question of the cost of carriage, which is also important. Under present-day conditions we have to find, if I am correctly informed, no less a sum than $50,000,000 per annum for freight payments alone; and, so far as I know, there is no counterbalancing compensation. If the minister knows of any, I wish he would tell me for my information. Thar is a dead-weight debt on our exchange board. It is an extremely important item in arriving at the true adverse balance of trade.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Is that railway freight?

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Yes, and express.

Mr. ILSiLEY: That is net?

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I am told that that would be net, that there is not much offset to it. I may be wrong in that because my avenues of information are, of course, not nearly as adequate as those available to the minister. He has the official authority to find out these things; I have to get them as best I can. But I am informed that that is about the net amount we have to provide. And it will be increasingly great as we increase our imports.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I will check up on it.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Just a word more with respect to these fresh fruits. The Minister of Agriculture (Mr. Gardiner) intimated the other day that on his visit to England he was told that fresh fruits are not considered a necessity in England in war time; hence the failure to take any part of our apple crop. Canned fruits, I understand, are not barred, but even these are well down the line on their list of what are considered necessaries during this war-No. 9 I am told; I thought it was No. 12.

Then there is the question of substitutes in this country. Why should we not try to educate our people to use substitutes? They may have to come to this. I am told that the humble tomato contains exactly the same

kind of vitamins as the lordly orange that comes from the groves of Florida.

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December 4, 1940