July 1, 1942

NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

No, I am pointing out that the statement was made this afternoon for the purposes of the record, but there might as well be a ceiling in the face of what is happening to-day.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No. Take the events of the last two or three months.

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NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

Would the minister care to explain this matter right now for the benefit of those engaged in the cattle business? -because it is confusing to the producers. I am willing to lose two or three minutes of my time now if the Minister of Finance or the Minister of Agriculture will explain the matter.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Go on with your speech.

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NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

I said I was prepared to lose a few minutes in order to get an explanation for the benefit of the producers of the country. I am satisfied that money is still in control and ' is considered more important in some places than the essentials of life. One sometimes wonders what a difference it would make to the farm people, in the balance of Canada's economy, if Mr. Donald Gordon had spent half his life on the farm and the other half, as he has the greater part of it, in the bankihg business. Tennyson once said, "I am a part of all that I have met," and I think that applies equally to the chief price controller to-day. I still think that money is in control in this country. If there is any doubt about that, hon. members have only to refer to a reply made by the Minister

of Finance on June 5, at page 3114 of Hansard, to a question put by the member for Lake Centre (Mr. Diefenbaker). The minister was asked why interest was left out of the priceceiling structure. His answer was:

The reason is that the risk varies so greatly that we did not think we could put a price ceiling on it. Money is worth 6 per cent when it is lent on one class of risk and only 3 per cent when it is lent on another. You cannot do that unless you made it 10 per cent, 24 per cent or something like that. You could have a ceiling such as that, but it would completely prevent lending in many places where lending should take place.

I wonder if there is much greater risk anywhere in this land than in farming-and yet the farmers' commodities must be put under the price control board. In my opinion prices under this price control machinery are not based on equity, and I do not think the minister or anyone else will claim that they are. Here let me quote from paragraphs '4, 5 and 6 of the famous Atlantic charter:

They will endeavour, with due respect for their existing obligations, to further the enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity;

They desire to bring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labour standards, economic advancement and social security;

After the final destruction of the nazi tyranny, they hope to see established a peace -which will afford to all nations the means of dwelling in safety within their own boundaries, and which will afford assurance that all the men in all the lands may live out their lives in freedom from fear and want.

I believe the Prime Minister (Mr. Mackenzie King) has suggested in this house that unless some of the principles of the Atlantic charter are put into operation before this war is finished, there will be little hope for the country after the war. I would point that out to the Minister of Finance at this time, because he is responsible for this price-ceiling set-up. I think he should bring about some basis of equity. I intend to discuss some points of this budget when we are in the committee stage because they more directly affect the great agricultural population of Canada.

There is another matter that gives me a great deal of concern, which I had thought of discussing under the budget. It is a matter of considerable importance. On June 8 the Prime Minister promised to set aside a day for the discussion of the Hong Kong report. In my opinion that inquiry should not have been made in secret. I know there are those who have their doubts as to whether we should refer to the report. It hao been mentioned on

The Budget-Mr. Reid

the floor of the house. To clear that up I would read a short article from the Montreal Gazette of June 8:

During the last great war, two royal commissions were appointed by His Majesty's government in the United Kingdom to look into various military operations. Lord Cromer headed a commission investigating the Dardanelles campaign. In the 'second volume of his autobiography, "Memories and Reflections", the then Prime Minister Asquith thus described the way the Cromer report was received:

"The first report (of the Cromer commission) did not survive four hours' debate in the House of Commons, in the course of which it was riddled by the criticisms of (Winston) Churchill and myself."

Lord Cromer was one of the most distinguished jurists of his day in Great Britain. Yet the report he submitted on the much-disputed Dardanelles expedition was subjected in parliament not only to debate, but to such vigorous and successful criticism that the report was subsequently redrafted.

That in my opinion was the correct procedure. I submit that this is the proper place in which to discuss the report. I am satisfied if the evidence is produced, whether or not dereliction or error is found on the part of the war committee of the cabinet, of which the Prime Minister is chairman, or of the then acting minister of defence, the Minister of National Defence for Air (Mr. Power), or of members of the permanent joint defence board of the United States and Canada, and certain high ranking officers-I am satisfied that all officers of the expeditionary force and of military district No. 10 will be entirely exonerated. At a time like this, in face of the peril that now exists to the democracies, prosecution of loyal citizens under the defence of Canada regulations, such as has recently been instituted against that gallant and great soldier, Colonel George Drew, who has such an excellent record, are unjustified and are not in the interests of an all-out war effort.

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LIB

Thomas Reid

Liberal

Mr. THOMAS REID (New Westminster):

In rising to take part in the debate on the budget may I at once pay my deep tribute of admiration to our brilliant Minister of Finance (Mr. Ilsley), whose great ability was manifested when he submitted, with such pleasing forcefulness and such clarity, the greatest financial statement ever.brought down in parliament since confederation. I am also reminded, as I feel sure we all are, after listening to the inspiring words of the Prime Minister (Mr. Mackenzie King), the leader of the opposition (Mr. Hanson) and other leaders, that this is the seventy-fifth anniversary of the founding of Canada. As one of Scottish birth, I am not unmindful of the great privilege and honour bestowed upon me

in my having been elected member of parliament for New Westminster. I join with the Prime Minister and others who have spoken in paying my tribute of devotion to this our great dominion. I am Canadian to the core, and in this troubled day I say with heart and soul: God bless and protect Canada.

With regard to the budget, Mr. Speaker, so far not one murmur of complaint has been heard from the Canadian people, and it is my belief that the people are truly prepared to sacrifice anything for victory, so that we shall not lose this war. They want an all-out war effort, in the fullest sense of the word, and with that desire I am in hearty accord. It is my opinion that the people of Canada are somewhat impatient with parliament. They sense a waste of time in the many speeches made here, very often duplicating other previous speeches. They feel that this is not right in time of crisis, and I believe they are watching parliament with great concern and that they resent party being placed before the welfare of the nation. The other day we listened to three very good speeches, one from the leader of the official opposition (Mr. Hanson), one from the leader of the Social Credit group (Mr. Blackmore) and one from the leader of the Cooperative Commonwealth Federation party (Mr. Coldwell). I would particularly commend the speech of the leader of the opposition, which I thought was a remarkable contribution to the debate. I would say to the hon. gentleman, however, that I do not believe he needs to apologize for taking up the time of this house on any occasion. After all, he has a duty to perform as leader of the opposition, and he knows full well that democracy is safer with a live, active opposition. Speaking for myself, I know that many times I have been critical of certain matters affecting our people, often in connection with matters on which the government did not believe I should speak. But I have dealt with those matters in the full realization that the 77,000 people of the constituency of New Westminster, whom I have the honour to represent, have no other voice in parliament but that of their elected representative. I feel that I have a dutsr to perform, and therefore I may have to do some criticizing in my remarks this afternoon.

At the outset I should like to join in what was said by the leader of the opposition with regard to Canada's ever-increasing liquor bill. It is appalling to realize that last year we spent on liquor and wines some $20 per capita. Our wine and liquor bill increased last year by $50,000,000, reaching the stupendous figure of something like $234,000,000. It may be true that it is not the direct duty of the

The Budget-Mr. Reid

Minister of Finance to interfere with an industry of that kind, but we all agree that this is not an essential industry so far as the welfare of our people is concerned. I would say to the minister and to the government that if this increased taxation does not bring about a substantial curtailment in this business, more courageous action will have to be taken than a mere increase in the taxes imposed. I understand that so far as malt is concerned, the increase, which looks very large on paper, will amount only to something like one cent a bottle. However, we can discuss this matter in greater detail when we are in committee.

With regard to compulsory loans, this is a new departure in our budget. I think there are some splendid features in it, but I am just wondering what effect compulsory loans are going to have when the minister, as he will have to do later on, asks the Canadian people for $1,755,000,000 by way of voluntary loans. I trust this new system will not interfere with the success of the voluntary loans, but I rather gathered that the minister sensed the difficulties which might arise, because by way of encouragement he paid certain tributes to the committee which is in charge of this work.

I believe the merging of the national defence tax with the income tax is a step in the right direction. This multiplicity of taxes was rather confusing. I wonder if the minister had in mind, in taking this step, that when the war is over a demand might be made for the abolition of the national defence tax, because then people might say there was no need for a defence tax. By this step, however, it will be possible for the government of the day to continue the income tax and with it the national defence tax, if it so desires, until we are safely through the post-war period.

I listened with a great deal of interest to what the minister had to say with regard to trade between Canada and the United States. It was right and fitting, I thought, that he should pay some tribute to what the United States are doing and to the relationship now existing between that country and Canada. Then he went on to say, at page 3574 of Hansard:

In effect, the agreement may be thought of as eliminating the dollar sign in our war-time transactions with the United States by providing a convenient technique for an exchange of raw materials and other components of war goods for the finished war supplies we are equipped to produce.

As I listened to those words I could not help wondering why steps have not been taken to bring our Canadian dollar to par with the United States dollar. I wondered the

more when I read an address made over a United States radio network last May, on a programme called "America's Town Meeting of the Air", at which Canada was represented by the hon. member for St. Lawrence-St. George (Mr. Claxton) and Mrs. Phyllis Turner, both of whom I believe were very well received and both of whom did very well. On that programme Doctor Kindleberger, who is the research economist for the board of governors of the fedteral reserve system, had something to say with regard to the Canadian dollar. I trust that the minister will take note of this, so that when we are in committee he may give us some explanation of why the Canadian dollar is not at par with the United States dollar. Doctor Kindle-berger was asked this question:

I would like to ask Doctor Kindleberger why should Canadian money be worth less in United States exchange than it was formerly?

This was his answer:

Canada came into the war faced with the problem of having to import a great many things from the United States; faced with the problem of having to cut down on non-essentials. It also wanted to increase its exports to the United States. To that end it changed the value of its money (in terms of United States money) as a Canadian act, not as a United States act. The United States did not partake in that decision at all.

To me that is a rather startling statement, and I think some explanation is due us when we get into the committee stage. Both Canada and the United States are full partners in this life and death struggle. That being so, why should our Canadian dollar be at a discount of 10 per cent? Last year we bought from the United States something like $1,100,000,000 worth of goods and exported to the United States goods to the value of about $600,000,000. In effect this meant that the Canadian people paid $50,000,000 more for the goods we bought from the United States than I believe we should have been called upon to pay. If we are partners in this war, our money should be at par with the money of the United States.

Certain statements have been made here with regard to the farmers. In also advocating their cause this afternoon I offer no apology to anyone; but before going seriously into the matter I should like first to quote what the minister had to say in this regard, at page 3572:

. . . the prices of farm products on the

average are now about 2 per cent above the level of 1926 and prices of animal products on the average are relatively still higher.

I do not know where the minister got his figures, but I do know that they do not agree

The Budget-Mr. Reid

at all with the figures given by the bureau of statistics which I obtained the other day. Taking 1926 as a base of 100, farm products in 1930 reached a height of 82-3 per cent, while wages in Canada were at 105-8. Wages were away above the 1926 level, but farm products were about 18 per cent below. Then, in 1941 farm products had dropped further, to 71-2, while wages had still increased and had reached 109-7.

It is true in connection with certain lines of agricultural products that prices have gone up. To-day farm products on the average, however, are worth 80, and speaking of the month of May, 1942, we find they are worth 80-2, while industrial wages have gone up further to 120-9.

Concluding his speech, the minister said this:

The war will not be won by disputing as to whether labour or agriculture or employer or employee should get a larger share of a swollen national income.

I say to him that the farmers are not fighting with labour for a larger portion of the swollen national income. They are asking that they, as a class, be not called upon to make a greater sacrifice than any other civilian class. And before I have finished I think I will show that they are doing just that.

Comparing 1942 with 1941, it may be shown that in some lines of agriculture increased prices are being paid. But a comparison of 1942 with 1941 does not tell the story. That is just making a statement which proves nothing. In my opinion, agriculture has been further affected since coming under the operations of the wartime prices and trade board. When I mention the wartime prices and trade board I hope the government does not consider that board sacrosanct. Anything I have to say about it is not made in the sense of casting any reflection upon the chairman of the board, who, I think, was the proper person for the job. He is very able, and is doing, I believe, a great work, a work which has been successful along many lines. But let me point this out: We had better be careful of the great powers we are conferring upon the board. We had better be diligent. Although I am not a prophet, I will prophesy that many of the powers they are taking and many of those they have at the present time they will not give up without a struggle.

Not long ago one of the newspapers stated that some members of parliament were kicking because they had lost some patronage. I will tell the house this, that most members of parliament to whom I have spoken do have a sense of frustration because they feel that,

either knowingly or unknowingly, the government has set them aside and has handed certain powers over to boards. The people we represent should be in a position to approach their elected representatives when they want some redress from those who are handling the boards. The only place they can come is to their member, but when the member makes any approach to these officials he finds just how little he means to these men who are running boards. I feel sure every member of parliament knows I am speaking the truth. This is the condition which has brought about the sense of frustration among members of parliament who, like myself, feel that they have been just set aside, and that the people in their constituencies are not being represented as they should be.

With respect to agriculture, we sometimes refer in other matters to what is done in the United States and Great Britain, and we point out that we should follow their example. Why, then, did we not follow the example of the United States in connection with agriculture? The Economic Annalist of April, 1942, states this in pointing out what the United States have done to protect and encourage agriculture:

The United States Emergency Price Control Act, 1942, approved by the president on January 30, 1942, provides for government regulation of commodity prices, rents and marketing margins.

Farm prices-[DOT]

Such as the prices which are being set up by our wartime prices and trade board.

-are to be set by the office of price administration.

There is this proviso, however, this safeguard:

Farm prices are to be set by the office of

price administration, with the approval of the secretary of agriculture.

I maintain if the wartime prices and trade board is to go ahead setting the prices of farm products, then matters in connection with agriculture are bound to get worse. The Department of Agriculture has been, so to speak, divorced from agriculture-I was almost going to say that it had been placed in cold storage for the time being. But each one of us knows what happens when we go to the Minister of Agriculture, after an appeal is made to us by our farmers. Let me say right here and now that it is a good job for the farmers of Canada that the present Minister of Agriculture (Mr. Gardiner) is in charge of that department, because I do not know where oui farmers would have been had they been left under the wartime prices and trade board. As every lion, member knows-and it

The Budget-Mr. Reid

is an open secret, or at least common knowledge-the Minister of Agriculture has had a terrible fight with the wartime prices and trade board to obtain anything for the farmer.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

And still has.

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LIB

Thomas Reid

Liberal

Mr. REID:

But it is not right. The wartime prices and trade board was set up to keep the ceiling prices down. It has no concern with what it costs the farmer to produce. Yes; it has stated just that, on numerous occasions when farmer organizations have gone to it and pointed out that farm labour is scarce, that prices of feed have gone up and that other commodity prices have increased. On those occasions the farmers have been told in plain terms, "We are not interested in what it costs you to produce. Our job and duty is to keep prices down." I say now: Is it any wonder that the farmers of this country are feeling as they do at the present time?

It was predicted by the Minister of Agriculture when the wartime prices and trade board took over, that there would be a butter shortage if they did not raise the maximum price on butter, a price which had been set at 35 cents, and was far too low. There is a butter shortage now. We are almost 10,000,000 pounds shy. What did the wartime prices and trade board say when that was brought to their attention?-"If there is no butter, you can eat more bread."

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Who said that?

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LIB

Thomas Reid

Liberal

Mr. REID:

I think I can find the name of the man in the wartime prices and trade board who said that.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I wish you would.

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LIB

Thomas Reid

Liberal

Mr. REID:

I will, and I will hand it to the minister. I have a little more to tell the minister.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

It is good to hear these things once in a while.

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LIB

Thomas Reid

Liberal

Mr. REID:

I will tell the minister more. I will give him more in connection with another matter.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Give me the name and the date, and I will check it up.

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LIB

Thomas Reid

Liberal

Mr. REID:

I will send the name and the date to the minister.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I want something authentic.

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LIB

Thomas Reid

Liberal

Mr. REID:

Any statement I make I am prepared to prove, and when I make that statement the minister should accept it. I am not rising here to voice a lot of rumours with respect to reports which have come to me.

I had pointed out that there is a butter shortage. Then, the price of new potatoes was set at five cents in Ontario. With what result? New potatoes are being allowed to stay in the ground, and we are importing potatoes from the United States because our farmers cannot pick potatoes and sell them for five cents a pound.

Then, we have a sugar refinery closed in Ontario. Oh, yes, we are told that labour is scarce. But why is labour scarce? We all know that labour is scarce on the farm, simply because the farmer cannot afford to pay wages, when he must meet the competition from shipyards and munitions factories.

Then, the British Columbia asparagus growers have lost $3,000 because of the low price set down by the wartime prices and trade board. The strawberry growers were told, "Strawberries are not essential."

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NAT

John Ritchie MacNicol

National Government

Mr. MacNIOOL:

But they are pretty nice to eat.

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LIB

Thomas Reid

Liberal

Mr. REID:

Yes, and good for you too. I have pointed out that the board is not concerned with farmers' costs, or with the fact that they are getting worse each day. Price control can be made to operate, and I quite realize that great distress would follow now if it does not operate. But agriculture must be thoroughly understood by the wartime prices and trade board.

Food is a munition of war. I am not sure but that there may be a scarcity of many kinds of food in this country if conditions are allowed to continue. With butter selling at thirty-five cents farmers are selling their cows to citizens from the United States who are coming across to buy them. The fact of the matter is that herds are being depleted because of the low prices set by the wartime prices and trade board. I repeat, they are not interested in the farmers' costs.

I am going to make another complaint about the wartime prices and trade board. While I am at it, I might just as well say what my people believe; I might just as well utter the thoughts that are in my mind as a member. I have no complaint to make about the chairman of that board. I think he is a splendid man and the right man in the right job, but I wonder just how the people of this country are looking at the appointments that are being made to that and other boards. If they are, they will be asking us members, "Why in the name of heaven are there so many bankers and industrialists obtaining positions when agriculturists and labour have been ignored and are not considered at all in these appointments?"

The Budget-Mr. Reid

There is a movement in progress toward a new era, toward the implementing of the Atlantic charter. What is taking place in some countries to-day? Certain persons in some countries are viewing with alarm the onward march of the common people for a better life. I wonder how many hon. members know the details of the committee that was set up in Great Britain, called the 1922 Committee, and is still functioning. I have not the time to read all of one report made, but one paragraph is of interest. This committee is really the power behind the throne in Great Britain, and lately its chief function has been to safeguard the rights of private enterprise and big business against the advance of socialism. It is described as the mouthpiece of vested interests and an extension to parliament of the activities of the Federation of British Industries.

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July 1, 1942