December 4, 1940

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Has the hon. member thought that through?

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I would

make the gesture, anyway. I know it would have a detrimental effect on some people. I have heard someone say that he was glad the woollen schedules were not touched. I would help England in any way I could, unless that help meant suicide to Canadian nationals and Canadian labour. I will go that far with the minister. I am anxious to that extent about the situation, and that is why I tell him I am going to support these resolutions.

I do not believe, however, that the minister and the officers in his department have adequately thought through the implications in the proposals, and I am certain they are wrong about cotton textiles. That is my conclusion from the information at my disposal.

Anything further I have to say I shall defer until the items in the schedules are under discussion. I have already indicated my desire to help England in her present position. I want it to be understood that we on this side of the house are in favour of the principle of aiding England by the means suggested or by other means. Let me say this: I have never forgotten the ringing words of the Prime Minister of the United Kingdom on the occasion of his ascendancy to that office. He said, "I have nothing to offer but toil, sweat, blood and tears." Neither have the British people in these days; and the people of Canada should emulate that example. That is why we are willing to make sacrifices to help England win this war.

The Minister of Justice (Mr. Lapointe) rose in his place last night and declared that he was a Britisher to the core. I am sure that statement will have a wonderful effect throughout the country. I felt like applauding him for making it, but I could not help thinking that if he had adopted that attitude years ago, there would have been much less trouble in Canada.

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LIB

Ernest Lapointe (Minister of Justice and Attorney General of Canada)

Liberal

Mr. LAPOINTE (Quebec East):

My hon. friend is wrong in listening to his supporters.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Let bygones be bygones. I wish to tell the Minister of Justice right here and now that my admiration for him began to glow when I read the report of the speech he made on the question of the neutrality of Canada. I say to him that it was a noble speech, and after reading it I forgave him for much of what has happened in days gone by. I am willing to do that; that is my attitude toward this whole matter.

I was impressed with the declaration of the Prime Minister in England; and we in Canada should help, even if it pinches every last one of us. Therefore I say to the Minister of Finance that we will support these proposals, but we shall reserve the right to examine each and every one of the items he proposes to change.

There is just one other matter to which I might refer before I resume my seat. When the matter of foreign exchange came to the front, the thought occurred to me that the government of Canada might very well ask residents of the United States to leave their dividends in Canada to be invested in Canadian securities, just as we compel them to leave their capital assets in Canada, invested in Canadian securities, and not to be removed during the war. I wonder whether it would not be possible to ask the well-to-do in the United States who hold these securities to help us out in these times. Has that possibility been explored? If I understood correctly what the minister said the other day, it takes the total gold production of Canada to pay those dividends and interest. I believe my suggestion will have to be accepted by him sooner or later, and I believe it should be the subject matter of negotiation now rather than later.

I commend that suggestion to the minister. Already, in effect, we have frozen capital assets in Canada. Is it asking too much to do as I now suggest, or are we afraid of the repercussions on our own investments in the United States? I know it is a ticklish matter to deal with, but I suggest that we shall have to take drastic action in connection with it, and that the minister might well explore the possibilities.

I had toyed with the idea of suggesting that an arrangement be made between ourselves and the two nations now so closely associated with us, one of which is our mother country and our ally, and the other, our good neighbour to the south, for the tying of our respective currencies together for the duration of the war. That would be done along the same lines as were followed when

War Budget-Mr. Coldwell

the British pound and the French franc were tied, until the time of the fall of France. I have abandoned that theory, and I shall tell the house why. I am afraid the burden would be so great that it would fall altogether upon the shoulders of our neighbour to the south, and that it would not be decent to ask them to accept that burden.

But, over and above this reason, let me say to the minister I would oppose that theory to-day because I believe that so long as we are a nation, so long as we call ourselves Canadians, we must, by all means at our command, preserve if we can our fiscal independence. Once we lose that fiscal independence, the laws of economics will become too strong for us, and I am afraid that the next step would be the loss of our political existence. Therefore I reject that theory, and suggest to the minister that if I have made the suggestion, he ought not even to toy with it.

I have been impressed with the thought that I should urge upon the government the necessity of beginning at once negotiations with the United States toward the establishing of credits for us, and to enable us to borrow over there. I am afraid we shall have to come to that sooner or later. I realize, however, that there are certain legal impediments in the way. First of all, there is the neutrality act. I have no doubt that after the examination now under way in the United States senate, both the neutrality act and the Johnson act will be at least moderated. I believe the way will be opened. But let me say to the minister and to the people of Canada that borrowing is just a palliative; if is just a mortgaging of the future; it is just stalling off the day of settlement. If we create a heavy debt, at the conclusion of this great struggle we may find ourselves so far in debt to the United States that our economic and political existence will be in jeopardy. We ought to stall off that evil day to the last minute.

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CCF

Major James William Coldwell

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

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

Mr. Speaker, I do not propose to discuss at any great length the details of the special budget. I realize of course that the new financial proposals with which we are faced are made necessary on account of our war expenditures, and that we have to face a grave economic and financial situation in the future.

While in the main supporting the proposals made by the minister at this time, we wish to offer some constructive criticisms, because we believe the proposals are insufficient to meet the needs of the country now and in the near future. We understand that in presenting this budget the government's objectives are the conservation of foreign exchange and

the encouragement of individual saving among our people so that the savings may be available for war purposes. Such revenue as may come from the excise tax must be considered to be purely incidental and not a primary requirement of the tax. It seems to me that an equally desirable objective is the maintenance of the Canadian dollar at a stable value in terms of foreign exchange and particularly in relation to the currency of the United States; hence I presume the proposals for the restriction, indeed the prohibition, of the import of many commodities.

On the other hand, large purchases by Britain in Canada make it essential that we should buy more from Great Britain. In other words, we have to conserve our United States dollars for purchases by Canada in the United States, and if possible expand the amount of Canadian dollars available to Great Britain in order that she may pay for the very large purchases she is committed to make in this country. We are heartily in accord with the proposals made to improve Britain's ability to purchase here. The criticism that we would make is that they are too timid and therefore largely ineffective. I do not agree with the leader of the opposition (Mr. Hanson) in that regard. I do not think that you can have it both ways. I do not think that you can keep certain British goods out of Canada and yet serve the British need to the fullest extent. Consequently we have to face the facts as they are before us; and so we approve of the removal of the duty on a fairly wide range of British textiles.

I notice that most other products, excepting coal, will be subject to a tax of ten per cent or more. This tax, together with the high ocean freight rates, constitutes a fairly substantial protective tariff. When I looked over the schedules a small matter occurred to me. For example, why should soap powders and soaps, of which Britain produces a very large quantity, not be included in the free list? In a previous speech which I made in the house I referred to soap advertising, and a few days later I read in the Montreal Gazette a reprint of an article which had appeared in one of the United States women's magazines in which it was stated that the soap companies spent upon radio time alone, exclusive of the voices and scripts, the enormous sum of 830,000,000 per year. This is a substantial sum of money, and I believe that there is a field for further taxation in connection with that industry, or else British soap should be allowed to come into the country free of duty. I make one further observation in that regard. To my mind, more British goods should be placed upon the free list. I have always been in favour

War Budget[DOT]-Mr. Coldwell

of British commonwealth free trade, and I am glad to see a step being taken in that direction. I wish that under the pressure of war the government had gone a little further. As I have said, high ocean freight and insurance rates give Canadian industry quite adequate protection.

We are in agreement with the policy of prohibiting the importation of certain articles from the United States, because we believe that an embargo or a prohibition based on a well-thought-out plan is preferable to increased tariffs. But this prohibition places a responsibility upon the government, and I noticed that during the course of his remarks the minister recognized that responsibility. We have to see that the prices of Canadian-made articles which receive protection through this prohibition are adequately controlled by the war-time prices and trade board. I hope the government will reconsider its policy in regard to price control. We do not agree with the present policy of allowing price increases and then permitting appeals, as it were, to the prices and trade board. I have always thought that when war broke out what we should have done was to set a basic date for commodity prices, as they did in Great Britain in September, 1939, for a large number of articles. Then if the industries felt they required a higher price they could appeal to the board for permission to increase prices beyond that which prevailed on the basic date. I believe that to be the better procedure of the two.

I think our income and excess profits tax legislation will reveal that considerable sums of money have been made out of price increases. For example, I have been reliably informed that certain people interested in sugar-not in the raising of the sugar beet but in the manufacturing of the refined sugar -have made vast sums of money this year because of the increased prices which have been permitted by our government. Unless efficient control is exercised and severe penalties provided in connection with other commodities, huge fortunes will be made out of the war situation. Unless we watch this condition closely there is danger of playing into the hands of the great monopolies or near monopolies which to-day control our oil industry, our sugar industry and our tobacco industry-to mention only three which were subject of comment in the price spreads report of several years ago. In adopting this budget parliament should make such provision as will ensure that our people shall be protected against any exactions because of this new measure.

I take it that the excise taxes proposed will serve a dual purpose. First, they will

restrict consumption because of increased prices and, second, they will bring in some revenue. The question I asked when I saw these excise taxes was: Whose consumption will the taxes decrease? I venture to say that the people who will have to forego buying the articles taxed will be those in receipt of the lower incomes. Those in receipt of higher incomes will be able to buy as before. Some of the articles which are being subjected to fairly high excise taxes are not luxury goods but actual necessities for many persons in the low income groups. For example, electric and gas stoves. In this city there are many rooms and many homes in which no provision is made for a coal stove and where consequently -an electric stove is a necessity. Electric stoves, ranges, heaters, lamps, washing machines-even the toaster upon which many a poor working girl earning six or eight dollars a week gets her breakfast before she goes to business in the morning-are not luxuries to that type of person, and in that respect this is not a luxury tax but a tax upon something that is necessary to their way of life.

As I said a moment ago, for the well-to-do all that the new taxes involve is an increase in the price, thus depleting funds available to them for other expenditures, for luxuries, or for savings. Hence it will be seen that the incidence of the tax may not fall justly upon all our people. A twenty-five per cent excise tax on the range of goods to which I have referred is to my mind the most objectionable feature of the government's proposals, because it tends in some instances to lower an already too low standard of living.

Again I would point out in the same connection that we are trying to raise our war revenues all the time in the wrong places. We appeal for support for sales of war savings stamps and certificates. I recognize that such appeals are necessary and useful because every group of our people ought to be asked to do all they can in connection with our present effort. But these appeals are mostly to the small income groups upon whom the new excise taxes and increased prices will fall heavily, thus restricting their ability to buy war savings stamps and certificates. If, of course, the object is to divert the electrical supplies industry to war work, then perhaps rationing or licensing might have been preferable to increased taxation in this manner.

Canada must raise vast sums of money for the war effort. The method suggested will, I submit, not achieve the desired result. Neither the budget of last summer nor the supplementary proposals we are now considering will achieve that object. Therefore we must explore other possibilities.

War Budget-Mr. Coldwell

Fifteen months ago, in September, 1939, when the war broke out, and many times since, we of this group have said that if our manhood is asked to give its life for this cause, then wealth ought to be asked to give itself to the same cause. Yesterday I referred to a compulsory non-interest-bearing loan for the duration of the war and one year afterwards which was introduced in New Zealand last July. In justice to our people-to our farmers who are depressed on account of the condition of their industry, and to those who are being asked to sacrifice some of their privileges in the industrial life of the nation- we should ask those who control vast accumulations of wealth to make a sacrifice and contribution equivalent to that which the same classes have been asked to make in our sister dominion of New Zealand. Such a proposal is not confiscation; it is merely a loan made to the country in her hour of need, and repayable when the danger has passed away. If a country like New Zealand can do it, I suggest we should be able to do it also. There are not in New Zealand the vast accumulations of wealth, Mr. Speaker, that we have in Canada. Everyone who knows anything about that country knows that there is a greater equality of wealth there; that vast fortunes are less in amount and certainly fewer in number than they are in Canada.

We already have provision for a noninterest-bearing loan on a voluntary plan, to which there has been some response-but a relatively small response in dollars and cents. New Zealand had a similar voluntary loan, as the following extract from their Hansard will show. I have the New Zealand Parliamentary Debates of the second session, 1940, from which I read yesterday. At page 307, speaking on June 27 of this year, the Hon. Walter Nash, Minister of Finance, had this to say regarding New Zealand's voluntary loan and the proposed compulsory loan:

A start towards the provision of interest-free loans has already been made by generous voluntary effort on the part of many citizens, and to date nearly sufficient has been subscribed to balance the war expenses account to the end of last financial year. But that is not sufficient. It is not right that others equally capable of affording assistance should not make their due contribution. In this connection it is the intention of the government to formulate for the consideration of the house a procedure under which all who have _ means will be required to assist by subscribing to loans for these purposes. Those who already have or who may in the future voluntarily lend money free of interest may have the amount already subscribed taken into account in determining their total liability under this heading.

In order, Mr. Speaker, to bring this matter to the attention of the house more forcibly than can be done in the form of a speech,

I propose the following amendment to the resolution, seconded by the hon. member for Vancouver East (Mr. Maclnnis):

That all the words after "that" in the said motion be Btruek out and the following substituted therefor:

This house regrets that the government has not seen fit to introduce proposals for the raising of a compulsory war loan free of interest to be levied according to ability to subscribe.

We feel that this means of raising money should have been thoroughly explored by the government before new taxation was imposed on the people of Canada at this time. I know that the proposal I am making will meet with a response from a large number of our people, and I can say that because of an interesting experience that I had this autumn. When I was out in my constituency, one of the Cooperative Commonwealth Federation members of the Saskatchewan legislature, whose seat largely coincides with the southern part of my constituency, had been promoting the idea of a voluntary interest-free loan, to which, I may say, he himself, a farmer, had made a substantial contribution. I refer to Mr. L. H. Hantelman of Elrose. I was with him a good deal of the time as he went through his constituency and talked to the farmers and business men regarding the lending of money to the dominion at this time, free of interest, and he estimated that people in that constituency would raise among them a million dollars for our war effort-

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?

An hon. MEMBER:

Those poor farmers!

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Just wait a momenton this condition, that the government of Canada would accept wheat on the basis of the present price and take that as a loan for the duration of the war. The first proposal was that it should be for one year, but then they realized the implications of that, under the storage conditions which exist in Saskatchewan at this time, and Mr. Hantelman has since been going over the district and suggesting that it should be for the duration of the war. The response has been equally good. I rather think that the minister will hear from him again in the near future. Here we have a group of people who for a number of years have been depressed but who in the time of their abundance of wheat and at some sacrifice are willing to make a loan interest-free to the dominion.

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LIB

Jesse Pickard Tripp

Liberal

Mr. TRIPP:

The hon. member would not suggest that Mr. Hantelman is "depressed" so far as wheat is concerned?

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

I am asked if I would suggest that Mr. Hantelman is depressed so

War Budget-Mr. Coldwell

far as wheat is concerned. I certainly would not, and I say that, wherever we go in any industry, we can find individuals who because of fortuitous circumstances are not afflicted with the depression with which their industry is afflicted. Mr. Hantelman happens to be one of the very few men in the province of Saskatchewan whose superior land and equipment are free of debt.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Will the hon. gentleman

permit a question? The offer is equivalent to an offer to lend cash, in view of our wheat board act, is it not?

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Yes-interest-free.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

There are facilities for that to be done now. It is just a matter of those farmers buying the non-interest bearing certificates which are available, if they want to do it.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

But may I say this, that with a delivery of eight or even twelve bushels to the acre at 50 cents a bushel at the local point, they have not been able to meet their accumulated obligations. And while, in the district to which I refer, many of them have had crops running from thirty to forty-five and even fifty bushels to the acre, they can hand over surplus wheat which the government can turn into cash, but they cannot themselves turn it into cash because they cannot deliver more than twelve bushels, the proceeds of which are required to meet their own running expenditures and other obligations.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Because of temporary storage difficulties.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Storage difficulties,

yes, and of course those difficulties may continue a long -time. They are quite willing to make this loan immediately if the product is accepted instead of the cash.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

We would have to find

some place to store it.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Well, I do not think the government would find -that an insuperable difficulty.

In our opinion, this whole field of noninterest-bearing loans should be thoroughly explored.

There are sources of revenue of other kinds.

I have in mind the increase to 100 per cent of the excess profits tax, and other means of improving our foreign exchange position. In our opinion the non-resident owners of Canadian property and securities should be taxed. The balance of interest payments against Canada, according to the Canada Year Book of 1939, the last issue which I happen

to have in my office, was $246-2 millions in 1937. It seems to me that the non-resident holders of Canadian securities should be subjected to an increase in taxation at the present time, because the war effort of the Canadian people will protect their property and their security, and they should contribute substantially to the cost of that protection.

Some people may think that these are drastic proposals. They are not too drastic under the circumstances. I fancy that as the war proceeds we shall have to consider proposals even more thoroughgoing than those which I have placed before the house this afternoon. But, because they are drastic, our people have the right to know that the money which is being expended is being expended wisely, without waste, and well.

Last evening the Prime Minister (Mr. Mackenzie King) announced that he had agreed to the proposal made by the leader of the opposition (Mr. Hanson), that a committee of this house should be established to give constant supervision to the expenditures of money used in our war effort. That is all to the good, but I submit, Mr. Speaker, that that committee should have been established already and should be sitting now. A similar committee was established in Great Britain just a year ago; speaking from memory, I believe the Prime Minister said, December 12 of last year; and that committee has been sitting continuously ever since. So that we are now twelve months late, and there should be no further delay. If the committee were established now it would be possible for it to present a report when the house reconvenes and we would be able to discuss much more intelligently our war effort than we have been able to do at this session. I should have 'liked to have seen our standing committees appointed and at work as soon as we assembled in November. As an hon. member remarks, private members want something to do; they want to feel that they are actually doing something to assist the country at this time.

One further word. The leader of the opposition regretted that the entry to Canada of fresh fruit and vegetables had not been prohibited. I think I can understand the desire regarding this matter of those who live in British Columbia, in Ontario, and perhaps in the maritime provinces. But there is another side to that argument. Those of us who live on the prairies know perfectly well that our people cannot produce green vegetables until away on in June, even July, and that fruit, with us, except in a very good year, is very difficult to grow and to ripen at any time. Consequently we have to rely on fruit at some seasons from the immediate south.

War Budget-Mr. Blackmore

Green vegetables, citrus fruits and other winter necessities we must get from that source. If it is ever found essential to prohibit the importation of these goods in order to protect the growers of British Columbia, central Canada or the maritime provinces, it should be done on a regional basis and the prairies should be exempt from such a prohibition.

We want Canada's war effort to succeed. We feel that under the leadership of those who are now directing the allied cause there is no danger of betrayal. For a good many years I felt that those who were leading the motherland and France prior to the outbreak of this war were desirous of seeing a strong Hitler and a strong Mussolini as a barrier against the rise of leftist movements throughout Europe. They showed that from time to time, I think, but they have gone, and have been replaced by men who all through the years were pronounced in their opposition to dictatorship of every sort. I believe we may have every confidence that our present leaders will carry on until the last threat to our democratic institutions has been removed and destroyed. For undoubtedly the fight now is against those who would destroy human freedom. Fortunately however the fight is not only against those who would destroy human freedom; it is also for a great extension of human freedom. That, it seems to me, is the positive attitude that we all ought to be taking in Canada at this time.

Believing this, we want to see the burden of the war placed more equitably upon the shoulders of our people, and particularly upon those who are best able to bear the burden. We want this war waged in a democratic manner until Hitlerism, fascism and dictatorships of all sorts and types have been removed from the earth.

I close, Mr. Speaker, with that thought. The suggestions that we have made and the amendment that we have moved have that objective in mind.

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SC

John Horne Blackmore

Social Credit

Mr. J. H. BLACKMORE (Lethbridge):

I must say that I was agreeably surprised when the budget was finally brought down. It was much less severe than I had feared. I found a great deal in it to commend. But at the same time there are several aspects of the budget which in my judgment are undesirable.

In the first place it is a budget of scarcity, just as have been all the budgets brought down by the ministers of finance in Canada since the depression, or even before. It is a budget which tends to starve the goose which lays the golden eggs, to bleed the goose to death rather than to feed it, heal it and

put it in an environment which will enable it to produce golden eggs of the finest quality and in the greatest number.

A nation might be likened to a farm. Granted that the farm is good, the owner will probably get out of it about what he puts into it, in time, labour and money. There are two types of farmer: the niggardly type, and the generous free-hearted type. The niggardly farmer, whose like we have all seen, spends as little as possible on his machinery, consequently is always having it break down just when he has a great pressure of work on. He works his land as little as possible, feeds his stock in a stingy way; his fencing is poorly done; his buildings are ramshackle and fastened together with wire; his attention to his farm generally is such as makes one feel that what he is thinking about when he is on his farm is how soon he can get away from it. He lacks that progressiveness and forward-looking quality which causes a man to rejoice in making his farm a home and a great productive enterprise, a place where he wants to be. He does not put into his farm love. The free-hearted farmer is exactly the opposite in all these respects.

Now I say this budget is a niggardly budget. The Minister of Finance (Mr. Ilsley) will probably feel that that is a severe statement. I make all possible allowances for his feelings in the matter and for his point of view, yet I repeat earnestly and sincerely that it indicates that the government of this land belongs to the type of the niggardly farmer rather than the free-hearted farmer. The farm they are administering is a magnificent one, of boundless resources, but they are so managing it that the goose will be killed, or at least its vitality reduced to the lowest level; and thereby they will fail to obtain the results which they and the people desire.

The budget is a backward-looking budget. It looks back to the last war and the years before the last war; it fails to face the facts of to-day and to-morrow. This is an age of plenty. It is astonishing how few people seem to realize that the last war was fought in an age of scarcity, while this war is being fought in an age of plenty.

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LIB

Frederick Clayton Casselman

Liberal

Mr. CASSELMAN (Edmonton East):

Have we plenty of United States exchange?

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

That is not a very intelligent question, so that I shall not deal with it here. I will deal with it off the floor.

This is an age of abundance. Somewhere between 1913 and 1928 the world rounded a corner. It left behind the age of scarcity and entered an age of abundance, in which men could produce more than the people were

War Budget-Mr. Blackmore

enabled to buy. That fact has rendered it necessary for us to readjust our whole attitude toward the war if we would avoid mishaps.

As I have said, this is a budget of scarcity; it looks backward to the last war, not to to-day and to-morrow. This is an age of plenty, an age of machines, of science, of synthetic goods and improved processes, an age of colossal speed not only in aeroplanes, automobiles and ships but in every process that enters into the fabrication of goods and services for the use of humanity.

This budget is based upon the thinking of "have not" nations like Britain and France. It quite ignores the fact that Canada is a "have" nation. Canada's resources are so rich and so varied that to compare this country with a nation like Britain, whose resources are so much restricted, is to make the gravest kind of error. Canada is capable of being self-sufficient, of successfully applying the principles of economic nationalism.

This budget disregards the fact that a nation's fighting efficiency depends upon its people, their health, their strength, their morale and the productive power of the country both potential and actual. This budget tends toward inflation, because it tends to destroy productive power. The only thing that will prevent a great distribution of money in the country from becoming inflation is adequate productive power to absorb that money. This budget will tend to destroy production at the very time when, by loan or otherwise, vast quantities of money are being liberated into the country's avenues of trade. Therefore it has a tendency toward inflation.

The other day the minister spent a good deal of time dealing with the supposition that the proposals my group are making would cause inflation. Let the minister bear in mind that the very principles he is applying to-day are those which brought about the inflation of the last war; and if he pursues them consistently they will result in a greater disaster than any we knew as a result of the last war.

Now, having had some fault to find with the budget, may I point out some commendable features of it. In the first place there is a most refreshing frankness shown in the definition of exchange. I should like to read a sentence or two which particularly pleased me:

First, however, let us recall the nature of the problem. Foreign exchange means, essentially, the money of other countries, with which we can buy goods in those other countries or make payments to people there. It is not like our own money, subject to the control of our national government. We can only obtain it by selling things to other countries . . .

If only the people of Canada during the last ten years had been instructed by both Liberals and Conservatives on the hustings throughout the country that this was the thing which decided the exchange value of our dollar, they would have been in a far happier situation to-day. I continue:

We can only obtain it by selling things to other countries or by getting payments from them for services rendered, or by borrowing it. We cannot simply go and buy it with our own money. People in other countries cannot use Canadian money for their own internal transactions and naturally they do not want it merely to keep or to hoard-they want it only to buy things in Canada or to make payments in Canada for services rendered to them by Canadians.

That is an admirable expression. There is truth in every phrase, in every word, and the significance of that truth is not even dreamed of by the majority of hon. members of this house. As an example, during the last election campaign in Alberta the people everywhere were told, either openly or in whispering campaigns, "Why, the new money won't be any good in other countries." See how widely at variance that sort of thing is with the principle so excellently expressed here!

Let the people know the truth; be honest with them. If there is one thing for which the people of Canada hunger and which they need above all else, it is the truth, the honest, bare, bald truth about the great economic factors that enter into our situation. I commend the minister because in this respect he has told them the truth. Tell the people that what gives our money value in Canada is goods in Canada.

I am sorry that when the minister was answering me the other day he failed to quite follow that principle. He did not stop to tell the people that if a billion dollars were issued in Canada it might be inflation or it might not, depending upon whether or not there were over a billion and a half dollars' worth of goods in Canada to be bought with the money; and that if there were a billion and a half dollars' worth of goods in the country to be bought with the money, it would not cause inflation. He did not tell them that, but that was the vital thing that should have been told. The value of our money in the United States depends upon the goods we have here which we can sell to the United States, as the minister has so admirably stated.

Another commendable thing about this budget is that it frankly faces the development of what is called economic nationalism. For some time, Mr. Speaker, there has been a tendency on the part of certain prominent men in Canada to run away from economic nationalism as something dreadful. They

War Budget-Mr. Blackmore

"hush-hush" it; they say we must not have it, that it will cause war, and all that sort of thing. It was a grave error to talk like that. It was a grave error to think like that. Economic nationalism is a fact in the world, and Canadians need to face that truth realistically and courageously, and say, "Well, what are we going to do about it?" Here is the situation, and the minister does face it frankly in several respects. I commend him for having done so.

There have been definite trends towards economic nationalism in the world which everyone should have been able to see. Always, for the last ten or twelve years, when Canadian leaders have spoken of economic nationalism they have pointed to Germany, to Italy, or to some other country, when right across the line our next-door neighbour was taking every possible step to develop economic nationalism within that country.

Topic:   WAR BUDGET
Subtopic:   CONTINUATION OF DEBATE ON PROPOSALS OF MINISTER OF FINANCE FOR CONSERVATION OF FOREIGN EXCHANGE
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December 4, 1940