March 22, 1943

DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed from Friday, March 19, consideration of the motion of Hon. J. L. Usley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Blackmore, and the amendment to the amendment of Mr. Coldwell.


LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Hon. J. L. ILSLEY (Minister of Finance):

Mr. Speaker, I had some doubt about whether I should make a speech in this debate. I had that doubt partly because I am anxious that the debate close at the earliest possible moment so that we may address ourselves to the budget resolutions, some of which are extremely important, and the passage of which at an early date is equally important. I have been concerned, however, by some speeches that have been made in the house, not only in the debate on the budget but also in the debate on the address, particularly as to the effect they may have in the house and in the country on our measures of price control and generally on our fight against inflation.

So far as my recollection goes, no member of the Progressive Conservative party opposition, with the exception of one, the hon. member for York West (Mr. Adamson) to whom I am very grateful, has said he was in favour of our measures designed to prevent the growing and eventually the prevailing of the menace of inflation in this country. On the other hand I think it is fair to say that they have not expressed their disapproval of those measures. But they have done something which is the equivalent ; they have attacked piecemeal the preservation of the price ceiling and the wage ceiling. This applies equally to the other opposition parties and also to the utterances of some hon. members supporting the government. This being so I think it is my duty at this stage in the debate to present once

The Budget-Mr. Ilsley

more to the house the reasons for our antiinflationary policies and the great importance of administering and enforcing those policies in an effective manner.

In the budget speech I outlined the growing force of inflationary tendencies in this country. I said that the forces making for inflation are present on a large scale, and that their pressure is held in check only by the rigour of our existing taxation, by the willingness of Canadians to save on an unprecedented scale, and by our price control and wage control.

There has not been in this debate much attack upon, much objection taken to, our taxation programme-remarkably little; perhaps that will come later, on the resolutions. There has not been a serious or widespread attack on our borrowing policies. There has been some, but it has not been very great. But there has been a disconcerting tendency on the part of a fairly large number of hon. members, mostly in the various oppositions, to urge that we weaken our price and wage controls.

My colleague the Minister of Munitions and Supply (Mr. Howe) the other night, speaking in the fuel debate, put the matter in better language than I could when he said, as reported at page 1316 of Hansard:

We have had various suggestions offered to-day for a solution of the problem. I think the one most often given was to increase the ceiling price. That is an easy solution for a great many problems, but it must be obvious to every member that if we were to adopt the practice of increasing the ceiling price to meet every problem that comes along, we should soon have no price ceiling and no price control at all, and thus be well on the road to inflation. Five hon. members of the Progressive Conservative party offered that solution. I urge them to avoid suggestions of that kind if they believe that price control is a sound policy in times such as this, because that policy can be maintained only by rigidly observing existing price ceilings. One break-through for a particular commodity invites a break-through for a number of other commodities. To maintain a price ceiling policy with frequent exceptions is an impossibility.

These attacks in individual cases have been accompanied more or less by attacks on the wartime prices and trade board and on the chairman and officials of that board, and, in some cases, on boards generally, officials connected with boards generally, and on the system which we have set up, a system which demands a certain amount of extra-parliamentary activity.

I think that in order to deal with this matter in a fundamental way I shall have to start there and explain why it is that we do have

this system; first, why it is that parliament has to delegate so many of its powers to the governor in council, and, secondly, why it is that the government has to delegate so many of its powers to boards and controllers. Why is it that we do not bring this great mass of activity into the House of Commons for discussion before it is undertaken? Why is it that we do not bring these measures before the house and deal with them by way of legislation? Hon. members must know that the reason is that in time of war the other course is essential to get action. In the last session of this parliament we sat here for six months. We dealt with a substantial number of very important measures; we could not have dealt with many more. I assume that it is not the wish of the house or the country that parliament sit here for twelve months in the year. Certainly if parliament were to deal with all the things that have to be dealt with, there would not be enough time in the year for parliament to get through the business. So far this session we have sat here thirty-seven days, and hon. members can just think over for themselves what our record of legislation achievement has been.

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PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

Is that not an argument for change of the rules?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No change of the rules could possibly overcome that. It is because in war time the necessity for action is so great, the necessity for so much action, that there must be measures such as the War Measures Act under which there is a broad delegation of authority to the governor in council.

It may be asked: if that is so, why does not the governor in council assume its responsibility and discharge its duties? Why does it in turn delegate so much to boards and officials? The answer is just the same as the first answer I have given. That is in turn essential if we are to get action. During the twelve months which ended December 31, 1942, there were 11,597 orders in council passed, that is, about one thousand a month. Recommendations submitted but not passed numbered 117; treasury board reports passed numbered 88, and the treasury board dealt with 5,653 matters the record of which is found in 5,653 minutes of treasury board. The total number of recommendations to council was 11,802, or as I said, about one thousand a month.

Council does the best it can by internal organization to handle this great mass of business. Much of it is delegated to treasury board; much of it is delegated to the war committee of the cabinet. A large part of it is delegated to the wheat committee, a

The Budget-Mr. llsley

great deal to the routine business committee of the cabinet, and from time to time a great deal is delegated to special committees of the cabinet. We do our best by internal organization to meet this great mass of work, but we cannot overtake it. Therefore we have to pass orders in council which delegate to others in the employ of the government, in whom we have confidence, the power to deal with these matters. This is democracy functioning in time of war. It does not mean that the business of the country is being placed in the hands of irresponsible officials. All these officials have ministers to whom they are responsible. The ministers are part of a government which is responsible to parliament. Parliament has an overriding control upon the government, the ministers and the officials, and so far as I have ever been able to learn, there is no other way we can do it.

I say that by way of introduction, because I hear from the odd member of this house charges that parliament has abdicated its functions, that the government has delegated its responsibilities, that we are in the hands of bureaucrats and irresponsible officials, and that the democracy for which we are fighting does not exist in any real sense. I deny that entirely.

I come now to the other matter I mentioned, that is the attack or the sporadic attacks upon one particular board for which as Minister of Finance I am responsible. To hear a good many speeches in this house one would think that the wartime prices and trade board has through its chairman, Mr. Donald Gordon, framed its own policies and is administering those policies in an arbitrary and bureaucratic way without regard to the wishes of parliament or of the government. I want to say a word about that. Nothing could be further from the truth than this statement. To begin with, Mr. Gordon and the other officials of the wartime prices and trade board are continually in consultation with myself, almost every day and for many hours on some days. I am kept closely in touch with all important decisions of policy made by the board; I take full responsibility for those decisions, and am prepared to take full responsibility in this house. I do not say that mistakes have not been made, but where they have been made and when they have been made I am prepared to take responsibility for them. The attacks that are made here should not be made upon the board or upon Mr. Gordon; they should be made upon myself and upon the government, and I will undertake to defend what has been done to the extent of my ability. I think a pretty effective defence can be

offered, in the main, in regard to the record and achievements of the wartime prices and trade board.

One would think, to listen to some of the-speeches in this house, that Mr. Donald Gordon is some sort of big banker pushing around the primary producers and the small retailers just because he is a big banker. What nonsense! Mr. Donald Gordon came to this country when he was thirteen years of age, an immigrant from Scotland, without any money. At fifteen years of age he went into the Bank of Nova Scotia, and by sheer ability and force of character attained a high executive position in that bank by the time he was in his early thirties. He was so prominent, so eminent and so promising that he was brought to Ottaxva wffien he was thirty-four years of age and made secretary of the Bank of Canada. In 1938, at the age of thirty-seven, he was made deputy governor of the Bank of Canada, and it was while he was holding that position, in the fall of 1941, that we approached him to undertake this worst of all jobs, this job of administering and enforcing our price ceiling policy.

I want to point out that not since 1934 has Mr. Gordon had any connection whatever with the private banking system of this country. Since that time he has been a servant of the state; he has been an official of the bank which for two or three years was controlled by the government of Canada, and which since that time has been owned entirely by the government of Canada, not a private institution but a nationalized institution, a people's central bank. I want to make that very clear, because one wmuld think in listening to some references to Mr. Gordon that such was not the case. He was largely responsible for the organization of the foreign exchange control board, and anyone who knows anything about that organization knows that he did a magnificent job. We went to him in the fall of 1941 and requested him, almost pleaded with him to take on the most difficult of all jobs, the most thankless of all jobs, one of the most if not the most important of all jobs, the administration and enforcement of our price ceiling policy. He could have declined it. He was no job seeker. He was no suppliant for government favours. He had an assured position, of which he was making an outstanding success, but to my immeasurable relief and to the relief of my colleagues he accepted the assignment. And he accepted it as a war duty, knowing that he might fail; knowing that he might break down his health; knowing that he could not faithfully discharge his duties without incurring considerable unpopularity and resentment, He took on the

The Budget-Mr. Ilsley

job; and if ever a man, in the killing seventeen months since, has discharged his duty, it has been he. I have had my differences with him. Some of his officials have had their differences with him. Some members of the public have had their differences with him; but I want to say now that I have never met a man with greater honesty or integrity, with greater moral courage, with greater capacity for straight, clear thinking, with greater capacity for hard, nerve-wracking work, with greater capacity for decision or with more unselfish devotion to duty. He may not be giving everyone who comes to him everything he wants, but I am profoundly thankful, as I think the members of this house should be profoundly thankful, that we have him.

Now, what about his administration of the policy we have told him to administer? Just a word about this policy, which in its very essence must be more concerned with the main . objective, the general result, than with fine [DOT]questions of equity. So that I may not be misunderstood I want to read something which will put the matter in clearer words than I *could. This is a quotation from the minister responsible for price control in New Zealand. Our friends of the Cooperative Commonwealth Federation are great admirers of New Zealand, its government and principles of that government, and I do not say they are wrong at all. Last November the responsible minister there, Mr. Sullivan, speaking about their price and wage control system, the principle of which as I understand the matter was adopted from [DOT]ours, said:

We are now at the point when, in bringing in an all-round policy of stabilization which, I repeat, is absolutely vital to-day, the stabilization of income cannot be balked by demands for concessions from any classes of the community. To peg evei'ybody's income where it is might crystallize certain inequalities for the time being, but I would point out that if inflation were left to develop and run riot the inequalities which would be created would be far more serious and far more unjust in their incidence upon the community. Thus, if stabilization brings about the fixing of wages or farm prices at their present levels, some sections of the * community may feel that they are being made to contribute more towards stabilization than others. It may be only rough justice but it will be far preferable to the complete injustice which inflation run amuck would bring about.

This expresses the thought I have in mind. The more important inequalities are ironed out, of course, by subsidies and some minor adjustments of prices; but the sort of adjustments wrhich many members of this house in their speeches have indicated they want made, would wreck the policy entirely.

A few days ago Mr. Prentiss Brown, head of the office of price administration in the

United States, referred to the insidious way in which inflation may creep upon us-by little concessions here and there; by granting this wage demand or that price increase. Declaring that if the increased wages demanded for coal miners were granted, the fight of his country against inflation would be lost. He said:

If that wage increase takes place there is nothing for the more conservative-minded labour leaders, men like Philip Murray, who has supported the present programme, and William Green who has also stood by it, to do but follow the lead and attempt to get increases for their people.

Inflation will come, not by big leaps in costs, but inch by inch, a little bit at a time, in steps that seem so difficult to stop.

He might have said "in steps that seem so easy to take," because some plausible reason or excuse can be given for nearly all concessions that are demanded. Each pressure group believes, probably sincerely, that it has a right to get what it is asking for, and says.: Surely this little bit will not cause inflation; that is only a bogey you are conjuring up to scare the people. But the trouble is, as Mr. Brown shows so clearly, that one little concession leads inevitably to a series of others. That is the way the inflationary spiral begins, and once it gets started its momentum increases. Soon there is no way to stop it, until the inevitable collapse comes.

The future of Canada is going to depend in a large degree upon whether our pressure groups have sufficient intelligence and foresight to restrain the exercise of their special bargaining power in a war-time emergency. If they do not, they may gain a temporary selfish advantage, but they will do so to the sacrifice of their long-run best interest, and to the jeopardy of the nation and the war effort.

I do not wish to quote unduly, but I should like to place on record something from the New Republic, which, as we know, is a left wing periodical. This is what it says, in a recent issue:

The farm bloc wants higher prices for food because wages have gone up. Labour wants higher wages because the cost of food has gone up. It must be clear even to a simpleton that simultaneous granting of both demands would lead only to their repetition. That is the perfect formula for blowing up the balloon of prices until it bursts with a loud bang in the faces of all concerned. And while prices were rising, the farmers would not get any more industrial products for their increased money, nor would labour get any more food.

This is really a dispute concerning the division of an amount of goods available for civilian consumption which cannot be increased, and may decrease. Neither party to the dispute can win so long as both enforce their present formulas, and both will lose in the end. The rest of the consumers lose as long as the dispute goes on.

The Budget-Mr. Ilsley

Now, what have been the results of price control, which has been an essential part of our fight against inflation in the last seventeen months? Well, cost-of-living index figures speak for themselves. An average of the four years 1935-39 was taken as 100. The index figure at August 1, 1939, just prior to the outbreak of the war, was 100-8. The index figure at October 1, 1941, the base period for the price ceiling was 115-5, which amounts to an increase of 14-6 per cent over the latest pre-war figure. The index figure at July 2, 1942, the date at which the cost-of-living bonus was last adjusted, was 117-9, which is 17 per cent above the pre-war figure, and 2-4 points above the figure for October 1, 1941, the base period for the price ceiling. The index figure for February 1, 1943, the latest figure available, is 116-9. This amounts to an increase of 16 per cent over the pre-war figure. This latest figure is one point below that for July 2 of last year, and only 1-4 above the figure for October 1, 1941, the base period of the price ceiling.

We have kept prices very successfully in check, especially when we consider the experiences of the last war, and when we compare our experiences with those of other countries.

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PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

Does the minister explain the higher agricultural prices in the United States over those in Canada as being due to a greater degree of inflation in the United States than in Canada?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSDEY:

Oh, yes. The cost of living has increased very much more rapidly in the United States during the last year than it has in Canada. So much so that, as the hon. member knows, it is leading to demands for increased wages on the part of labour, so that they will be able to pay the increased prices, which will, in turn, lead to the demand for increased prices for farm products, because of the increased costs of goods into which labour entered.

Someone might say: You have a cost-of-Iiv-ing index which you are holding up before us; but is your cost-of-living index a true index? That matter has been most carefully investigated. A pamphlet entitled "Is the Cost of Living Index Phony" has been issued by the wartime prices and trade board, and in that pamphlet they have shown that upon the most careful investigation it is a true index of prices. It is a much truer index of prices than would be indicated if we had a different system which allowed prices to go up all round the articles in the index. But by our ceiling policy we keep prices down over the whole field, and we have a true cost-of-living index.

To date our policy has been remarkably successful. Whether it can continue to succeed depends in my judgment upon three factors,

and upon whether three conditions are complied with. In the first place it depends upon whether the hon. members of this house-I do not think anything has been said in the other house one way or the other-and those whose views they represent, will cease their piecemeal attacks upon this measure, and will give our efforts their cooperation. I think I am entitled to ask that that cooperation be given.

You will say at once: Do you not want us to criticize? Certainly I want criticism; but I want criticism based upon some consistent and defensible principles. And, if I may say so, I think that the one piece of criticism which I have heard from the opposition which might be termed consistent and defensible criticism, was that which came from the hon. member for Battle River (Mr. Fair), when he attacked the five-cent increase on the price of meals. He attacked us for yielding. Everyone else has attacked us for standing firm. Everyone has attacked Gordon because he has not given way. The hon. member attacked him because in this matter he did give way. There is a defence for what was done. Naturally, with the great increase in the prices of beef, something which I am sure the hon. member for Battle River, among others, demanded-although I did not hear him in the house-the restaurants found themselves in an impossible position.

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SC

Robert Fair

Social Credit

Mr. FAIR:

I am coming back to that, and I shall have more to say about it later on. I am able to justify my stand, if the minister can justify his.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I am afraid the hon. member can not justify his interruption, though, according to the rules of the house.

But the point I am making is that the wartime prices and trade board, including the chairman of that board, have been given a job to do. It is not their policy; it is the policy of the government of this country. Therefore it seems to me that criticism, if it is to be of the highest type, should be for the way they have fallen down in the discharge of their duties-which, I may say, has been very seldom.

In the instances in which they have made minor adjustments in prices there have been abundant reasons for those adjustments. The case of the restaurants, for instance, was studied at least for six months before it was found necessary to make some adjustment. The only alternative would have been subsidies, to prevent many restaurants from going out of business at a time when restaurants must stay in business if the needs of this war population are to be served.

The Budget-Mr. MacNicol

The second condition is that the wage stabilization policy succeed, and the national war labour board be strengthened, not weakened by utterances of members of parliament and 'by labour leaders; for certainly if any group has everything to lose and nothing to gain by a break-down of our anti-inflation policy, it is labour.

The third condition is that our fiscal policies and our policy of taxation and the encouraging of saving shall receive the support that they deserve.

We believe that our financial policies are sound. We believe that the policy of heavy taxation and the encouragement of saving and borrowing from the people as large a proportion of their earnings as we can possibly persuade them to save is sound. It is not a particularly original policy. It has been followed by Great Britain and the United States and by the other British dominions, but we believe in the policy. There are some members of this house who do not believe in it, but I do not think we should ever forget that we are in the throes of a mighty conflict. If we are right, we certainly should be supported. If by chance we and the other governments of the United Nations are wrong about this, is this the time to try to upset the policy? It is working reasonably well and will continue to work reasonably well. I think I am justified in making an appeal to members of this house not to say anything- some things have been said in speeches here- which will prejudice the success of our great loan campaigns, especially the fourth victory loan campaign. I invite the cooperation of members of the house. I must say that I have received cooperation consistently from the beginning from the great majority of the members of this house, I think from all members of the Progressive Conservative party and from most of the members of the house generally.

Those are the three conditions for the success of our fight against inflation. I hope that those conditions will be complied with. We have a tremendous task to raise such huge sums of money, to bring in these billions and to pay out these billions, but while the task is hard it is not as hard as keeping the money good, keeping the money so that it will buy as much in the future as it has in the past. If that once begins to slip, our task of financing will be immeasurably more difficult, our war effort will be greatly impeded, and the misery among the people will be very great.

I have said nothing about the terms of the amendment or the subamendment. Nothing turns upon the details of these amendments

and there will be abundant opportunity later to deal with them on the resolutions or when the proper items are being discussed. They constitute the usual want of confidence motion in the government brought forward when the vote on any budget takes place. Personally while I am not hurrying, and will not undertake to hurry the house, I should like to see the house get to the stage of effective action as soon as possible, the kind of action that this nation expects from parliament in time of war.

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NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

I have expressed myself in favour of the principle of price ceilings. Can the minister tell us why parity remuneration for the agricultural producer who is producing foodstuffs and who composes one-third of our population has not been placed on the same basis as that of industry and organized labour?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I cannot answer- that question until the hon. gentleman defines "parity". If he will do that I think I can answer his question.

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NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

You set a base period for industry and organized labour, but you neglected agriculture.

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NAT

John Ritchie MacNicol

National Government

Mr. J. R. MacNICOL (Davenport):

Mr. Speaker, I am not going to try to follow the minister other than to refer to one or two of his statements. He told us that the house has been in session thirty-seven days. I want to tell the minister that I, just as much as he, believe that I am wasting my time getting up to speak. I know that anything I can say will not alter anything that will be done in this house. We on this side of the house feel that our efforts are futile. What can we do? We have offered all that we have to the government, but has anyone on this side of the house been asked to do a thing? I have not been asked to do anything, although when war broke out I offered all I had. Is that the way to treat all this side of the house, not only the official opposition but the members of the other opposition groups? Collectively we represent a large number of people in this country. I have no suggestions to make as to what should be done. It is up to the government to tell us what should be done. We are all ready to do what we can.

I think I can speak for everyone else on this side of the house when I say that we have not been asked to do a thing. The minister has scolded the whole opposition, but I am not going to reply to that. We are in a great war and there is no time to enter into that class of argument. I do not deserve any

The Budget-Mr. MacNicol

scolding under the circumstances. I have offered all I have to the government, and so has everyone else on this side of the house. I feel I am just wasting my time here. What can I do?

I feel that I have accomplished a little through this house and the Ontario legislature. A few years ago I strongly recommended that this government should assist the Ontario government in starting production of iron at the Helen mine in Algoma. This government turned a deaf ear to the proposal. However, I have received some recompense for opening up the matter, because the Ontario government listened to the argument that was put up here. Their action followed the speech I made in this house, but I do not say they acted because of my speech. I am happy to be able to say to-day that the Algoma Steel Corporation are producing approximately 400,000 tons of pig-iron a year from native low-grade iron ores. They deserve great credit for doing that. I feel it is a slight accomplishment on my part.

I am not sure whether my suggestion of a year ago that we should produce more oil in this country is going to bring results. I have made two trips into the great north country and I have been told by letters, and through rumours I have heard, that something is going to be done. I hope that before long Canada will be increasing her oil production. If this should come about through action by this government-that is the only way it can come about-then I shall feel that I have played a small part in this development too.

I believe I assisted somewhat in bringing about the unemployment insurance measures. I made exhaustive inquiries into this matter years ago. I hope that what I said on national health insurance will have some effect. But outside of these items, and a few others, I feel that I have wasted the thirteen years I have been in this house.

When I was on the government side I received the same treatment as any other member sitting over there behind the treasury benches. Our opinions were not sought and we had little or no weight. I find that hon. gentlemen who are sitting where I sat for five years have little weight to-day. I have none over here with the government. It is up to the government to tell each one of us just what we can do. Every member of this house wants to aid the government. The government has many able men among its ranks. There are a lot of men in this house who have had considerable experience in business, and after all, in my judgment business is everything. It comes ahead of everything else by a long way. That is all I am going to say about what the minister said.

I am not going to deal directly with the budget proposals, unless what I say has something to do with broadening the bases of taxation upon which the finance minister will erect his taxation structure. If what I say has something to do with that, I shall feel that my remarks have some relation to the budget proposals.

For the remainder of my time I intend to refer to certain matters affecting three sections of the country, and then I shall continue from where I left off on February 10 in my proposals for improvement in the western economy. For I am convinced even more strongly than I was when I spoke previously, having received a multitude of letters and resolutions from boards of trade and other organizations and people in all parts of the west, that I am on the right course. I hope that in due time not only the three western ministers but every hon. member from the west, of whom I believe there are fifty-four will support a programme for western rehabilitation. In trying to do something for their country an easterner from the city of Toronto ought to have their support-not because it is I who propose it, but because it is for the good of their country.

I have travelled many times to the east, and perhaps more frequently into that beautiful little province in the gulf, Prince Edward Island, which is one of the richest agricultural areas in the world. There in that little island they are doing a great job, about the only job they can do, and it is what the government has specifically asked them to do, namely, to produce farm products. I am told that last year they shipped out of that small province some 17,500 cars of farm produce. But think of the jeopardy they are in to-day, with only one comparatively small ship plying between Tormentine and Borden, connecting them with the mainland. They had a larger ship, the Charlottetown, but it was destroyed. What has the government done to replace it? About a week ago the Prince Edward Island legislature passed a strong resolution asking the government to do something for the transportation service, because they realize that if anything happens to the one ship which is left, all shipments will cease until another boat is made available. I beg on their behalf that the government use every effort to provide Prince Edward Island as speedily as possible with a better transportation system than it has to-day. They were promised proper treatment in this respect when they came into confederation, but we have failed to carry out our bargain.

I pass to Nova Scotia, to make brief reference to a matter which affects our financial structure. In 1913 Ontario and Quebec were buying about two million tons of coal from Nova Scotia. I myself am a user of Nova

The Budget-Mr. MacNicol

Scotia coal and have always advocated its use. I am convinced that after the war, and it is only then that what I am asking for can be done, efforts should be made to bring into Ontario and Quebec twice as much Nova Scotia coal as was brought in before the war. I firmly believe that our provinces can be held together only by interprovincial support and a greater measure of interprovincial trade. Nova Scotia has coal for sale, or will have again. Ontario is the biggest buyer in Canada, and Quebec also consumes large quantities; they should be encouraged to buy Nova Scotia coal and so give more employment to the miners of that province.

A few days ago a committee of this house was told that some 350,000 tons of coal was imported from Seattle or some adjacent point across the border. I am not finding any fault with this; perhaps we ought to be glad to get it from anywhere. But where do you think it went? It went to the Alaska highway, perhaps to Dawson Creek and places beyond, for use in the camps of those who are building the Alaska road. Just stop to think that that 350,000 tons of coal had to pass by not far from a mountain of coal, about eighty miles west of the Alaska highway, and there is no better coal in the world. I have a piece of this Bull Head mountain coal on my desk. I picked it out myself; it comes to the top of the ground. Geologists in our own department tell us that there are six hundred million tons of it. They say it has less than one per cent of moisture, about eighty-four per cent of carbon, only fourteen per cent of volatile matter, and less than two per cent of ash. We have been asleep at the switch in not being able to supply coal from our own deposits there in the building of the Alaska highway I have been asking for two or three years that the railway and roadway on the north side of the Peace River should be extended westward as far as it can go, through to the sea. It has not been done, and that is the reason, I suppose, why coal had to be purchased in Seattle instead of being mined in northern British Columbia. There is, it is true, an indifferent kind of roadway through there as far as Gold Bar. I got over it myself. I believe that the contractors are improving it sufficiently to transport some coal to the Alaska highway from Bull Head mountain. But we should have been in a position to supply all that was required had we not been asleep at the switch. Here is one way to broaden our basis of taxation.

A word about Toronto. Last Saturday I tried to get coal there for some of my buildings, but I could not get any. I was told by a dealer that in 1939 there were 339 coal dealers

in Toronto-I speak from memory-that up to the beginning of this year the number had been reduced to 177, and that since the beginning of the present year fifteen more have gone out of business. In other words there are to-day, I assume, only 162 or more coal dealers, for the most part in a large way of business; most of the little fellows have been squeezed out. It is an outrage that these small dealers should be squeezed out of business. It is in line with what we have seen happening to the corner groceries; and everyone in this house knows what happened to the economy of our cities through chasing the corner grocer out of business. We must have the little coal dealer. It is because he is not to be found in Toronto in the numbers operating a few years ago that we cannot get deliveries. I believe there is an abundance of coal in the cities, but one cannot get it delivered. The sooner we get back to the small dealer in every line of business, the sooner this country will go forward.

I believe that people in eastern Canada should know more about the west. There is constantly in my mind the recollection of a trip I made from the city of Regina three years ago. Regina is the beautiful capital of what should be, and I hope will be, a province of smiling prosperity, but it has been so hard hit that it is scarcely possible to find language adequate to describe what its people have come through in the last few years. It is a province to which every one of us should be ready to contribute whatever he can to help it get back on its feet. I drove from Regina to Estevan, and all the way I was thinking of the late Hon. Gideon Robertson, how he told of his trip through that country in the depression days when he was minister of labour, and how the sights he saw broke his heart. I presume that the trip through those dried-out areas finally killed him. I shall never forget the fine houses and barns I saw as I was driving along the roads, but there was not a blade of grain growing. My heart did not break but it certainly bled for those people all the way through.

Then I drove north from Regina to a place called Cabri, north of Swift Current. There again I found, in a country that should have been productive, everything stripped. They had planted their grain hopefully, but at the time I was there they had no return. Therefore I am determined more than ever to do what I can do as an easterner to help that western country, no matter what the cost may be. The cost does not enter into my argument at all. Cost invested becomes a capital expenditure. When I think of what we are doing elsewhere to build up this country

The Budget-Mr. MacNicol

it seems to me that there is no reason whatever why we cannot help to build up the west. I see that in Quebec from $160,000,000 to $175,000,000 is being spent to build a power-plant, and rightly so. I am in favour of it. But there is no reason why we should not spend $75,000,000 to build power plants in the west too. In Ontario, under our hydro commission, we are using up to nearly 2,000,000 horse-power, and they are going to increase that by building a plant on the Ottawa river which will bring in another 400,000 horsepower. I am all for it. We have a wonderful commission in Ontario and it deserves unstinted praise not only from this province but from all of Canada. But why can we not do that for the west as well? We can, and I am going to appeal to every eastern member to support any sound programme which the government brings down that will build up the economy of the west through the development of power and other resources.

Since I made my address to this house on February 10 I have been literally swamped with letters from distinguished people, and many from old-timers and pioneers, which it was a delight for me to read. They are wonderful men. One of them must be ninety years of age, but he wrote me one of the finest letters I received supporting the argument I put up, and it was written in his own firm handwriting. That shows what the west does for a man-gives him strength even to a great old age. One gentleman came to see me. I am sorry I did not keep his name. He was interested in pulp manufacturing, and he asked me if what I had stated about northern Manitoba was a fact, that power could be produced on the Fairford river and at Meadow portage between lake Winnipegosis and lake Manitoba, if the Saskatchewan river were diverted. He told me that he was a scaler, that he had scaled all through that area around those lakes and lake St. Martin and the surrounding country, and that there was probably from ten to fifteen million cords of pulpwood in that area. Pulpwood lasts probably thirty to forty years before it rots and drops down. He asked me what I had seen of pulpwood in that area. I told him that I had seen a great deal of spruce. I told him about the possibilities of developments on the Fairford river through damming the Saskatchewan river at Flying Post and diverting its water, which would raise the water level of Cedar lake to 835 feet. Then divert it into lake Winnipegosis and lake Manitoba and lake St. Martin; in other words add the whole watershed of the Dauphin river to the Saskatchewan river watershed.

What would be the result of that? I pointed out to the gentleman who came to see me that

it would permit the storing of approximately 600 billion cubic feet of water, which would permit the Saskatchewan river water to produce power steadily 400,000 horse-power. That amount can be produced by taking the waters from these lakes and developing power first at Meadow portage, where from 60,000 to 75,000 horse-power could be developed because there is a difference of eighteen feet between the levels of lake Winnipegosis and lake Manitoba. Another 30,000 to 40,000 horse-power could be developed at Fairford because there is a difference of twelve feet between the levels of lake Manitoba and lake St. Martin. I hope I converted that gentleman to the possibilities of processing pulpwood there. He said that he could put up a pulpwood mill with a capacity of 200 tons of paper a day and the pulpwood around these lakes would keep that mill going in perpetuity. Is not that something? Why should we not do it? Why should we not assist the west in producing power in that area and developing our pulpwood resources? That is what we want in this country. We want production in a much greater way than ever before. .

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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

Where is the money coming from?

Mr. MaeNICOL: Get it in the same place that we get it to run the war. I said in the last depression that this country would find money to fight a war, and I argued strongly then that we should find the money to put men to work during the depression.

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Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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ND

Walter Frederick Kuhl

New Democracy

Mr. KUHL:

You did not do it.

Mr. MaeNICOL: The money will come all right. I am not interested in my hon. friend's question as to where the money will come from.

Among others who commended the argument I made on February 10 was the Nipawin and District board of trade of Saskatchewan and I am very grateful to them for going to the expense of wiring me when a letter would have done. The wire reads:

Your efforts to have the Saskatchewan river utilized as a power project would be feasible and would produce an enormous amount of cheap energy. This board of trade appreciate your efforts and will support you. We are half way between Prince Albert and The Pas. We will assist you.

That is only one of many such that I have received, and I feel encouraged. I am always willing to help people who take an interest in their own affairs, and I will do all I can to help them get on their feet out there.

I also had a letter from a dear old gentleman, Mr. A. M. Mouat, who was at one time a factor with the Hudson's Bay company. He

The Budget-Mr. MacNicol

was very much interested in the programme of navigation on the Saskatchewan and he went to the trouble of sending me a picture of one of the boats that ran on the river when he was a factor in that country. The boat was called the North-West. It was not the picture I have here, but it was one like it. This picture came from another gentleman. There is a boat 202 feet long and 40 feet wide, with a draft of from three to four feet. That boat ran from the eighties until 1896 or later. Is that not proof positive that at one time .the river was navigable? It certainly was. What has happened since? Why is it not navigable to-day? I will explain that in a few moments.

Another gentleman sent me a picture of the Marquis. I was very much interested in that picture because when I was out west last summer my friend the member for Lake Centre (Mr. Diefenbaker) drove me down the river. He showed me the ribs of an old boat lying on the shore. They turned out to be the ribs of the Marquis, the boat on which the Toronto Royal Grenadiers went up the south branch of the river to the battle of Batoche on May 12, 1885. What a

panorama of history has come to me and to my office from those fine citizens who are thoroughly interested in the progress of their country. These pictures are clear evidence that at one time the river was navigable. I am firmly convinced that God made that river to be a great glory and benefit to the economy of the west, with power, navigation and water resources.

A word about water resources. The hon. member for Medicine Hat (Mr. Gershaw) made a short time ago what I thought was a constructive speech with regard to irrigable land in southern Alberta. I am not going to talk about that now, but I concur in what he said, and I will add that the irrigable land can be doubled in area. I believe that the province is not using one-third of what it could use, and even if it were using all of it, the irrigable land can still be doubled in area if you have the water. My hon. friend spoke of storing some water in places suitable for reservoirs. There are many such suitable places, and I urge upon this government as strongly as I can that they have their engineers, in cooperation with Alberta engineers, make a careful survey of all the possible reservoirs in which mountain water that now flows through the Saskatchewan to the sea, doing little or nothing on its way, could be stored for use to double the irrigated land in Alberta. It is wonderful what can be grown on irrigated land which without irrigation is utterly useless.

I have a letter here on the letterhead of the Saskatchewan Historical Society, signed by George Shepherd. He writes a very good letter, supporting what I have said, and in conclusion he says:

My brother and I started in with cattle twelve years ago, 120 head of cattle and 40 areas of irrigated alfalfa kept our two families off relief during the bad years. To-day we have 200 head of white faces, much more irrigated land, are clear of debt. We are now paying a great deal of attention to crested wheat grass.

That in my judgment is a remarkable example of the results obtainable from irrigated land, though perhaps not as good as was read by the hon. member for Medicine Hat. The evidence is that where the land receiving about eighteen inches of water in the crop year, wonderful crops are raised.

We are a long way behind other countries in irrigation. I doubt if I have time to say anything about that, because I want to say a word about that country I went through, from Regina to Estevan. I have been in correspondence with a number of people who have written to me about diverting Saskatchewan river water at a place called River-hurst. I have made a good deal of inquiry into that. The Saskatchewan river should not be diverted unless the first part of the programme, namely, provision to store spring water in reservoirs is carried out first. There is plenty of water, but if you let it run down to the sea you cannot use it for irrigation.

An engineer has written me on a programme to dam the south Saskatchewan at River-hurst. I have not been there, so that I cannot talk as accurately as I should like, but I expect to be there next summer and look into it. But I have made inquiry from other engineers who confirm what this gentleman writes, namely, that a dam can be built there -that of course is an engineers problem. A dam two hundred feet high, which is not a high dam, would make a lake one hundred miles long containing 200 billion cubic feet of water, according to an engineer, sufficient to irrigate almost anything in Saskatchewan that you want to irrigate and to allow plenty of water to run down the river for the use of northern Manitoba. I am not a hydraulic engineer, and I cannot pass judgment on the details, but to build a dam there two hundred feet high and instead of pumping it over the height of land, which is only eight miles wide, boring a twenty-five foot tunnel, or two tunnels, so that the water could flow through by gravity, would be a boon to Saskatchewan. A twenty-five foot tunnel would take two thousand cubic second feet,

The Budget-Mr. MacNicol

flowing three miles an hour. Two such tunnels would provide ample water to irrigate a strip forty miles wide and seventy to one hundred miles long, all the way to Moose Jaw, and would put under cultivation land that was formerly cultivated, permitting thousands of people to settle there and develop that country. I feel sorry for that province, losing four members in the next parliament, all because its population has moved out. Give them a chance to come back.

Some one may say, what about the cost? I am not interested in the cost. It would be a capital expenditure. We can find ample money to fight a war; we can do something to keep our people on the land and help to build up the western provinces. I cannot see how we are going to hold this country together unless all the provinces are supported as they should be. I know that down east we spent not much less than $600 million on our canals and docks and dredging. So far as I can ascertain we have not done a thing for the three western provinces on this water question except the building of the St. Andrew's locks on the Red river, at a cost of perhaps $2,500,000. I doubt if the whole west, including British Columbia, has had $50 million spent on it. I am strongly in favour of our canals in the east and everything that may be required to keep them going, but I am also strongly in favour of giving the west a chance. If drilling through the height of land can be done, what a boon that would be. If that is not practicable the water could be pumped over the height of land. It would take several thousand horsepower, but the water is running there anyway.

I see a grave problem in the west. I can see the whole of the west in the greatest danger unless some action is taken. I said a few minutes ago that up to five thousand cubic second feet can be taken out of the different rivers in Alberta that are the sources cf the south Saskatchewan to irrigate southern Alberta. I couple with that the restoration of the water by building reservoirs. What do we find to-day? Alberta can take but is not taking up to five thousand cubic second feet. Suppose it takes about three thousand; I believe about thirty per cent of the water going on the land for irrigation would be returned to the river. That would mean that perhaps 1,500 to 2,000 out of the five thousand feet would come back to the river. At present there is no replenishment from reser-

voirs as there should be. All over the world where they have large irrigation projects they have large reservoirs to restore the water. We should do the same thing; we should restore the water, and we could do it by building these reservoirs. In northern Manitoba I found all the lakes much below what should be their levels. A few years ago lake Manitoba, which is only one of the lakes forming the Dauphin river watershed, had a flow which formed a substantial river. In September of last year, however, I walked back and forth across the Fairford river at three different places without wetting the soles of my feet. I inquired as to why there was little water in the river, and the man who was guiding me replied that they had lowered the lake outlet. Of course that would be it; they lowered the reservoir, which was lake Manitoba. I also found in northern Manitoba and Saskatchewan a project under way to drain large marshes into the rivers.

So I come back to what I said on February 10. In my judgment it is imperative that this government set up a board of engineers, perhaps composed of its own engineers and those of the three western provinces, or whatever the government may decide, with authority to conserve water through the building of reservoirs, and to see to it that Alberta gets its fair share, that Saskatchewan gets a fair share and that Manitoba gets its share. What will happen if wTe do not do that? The river will lose its water, because each province will do what it likes with it. I suggest some sort of board like the Tennessee Valley Authority, which takes care of the Tennessee river for the seven states through which it runs. We could set up a board to take care of the whole water economy of the Saskatchewan river basin, and if the dominion were associated with it that would cut down the cost. Then we could develop reservoirs through navigation, at least for a goodly part of the route. In the old days the ships to which I have referred, the NorthWest, North Cote and Marquis, sailed up the river as far as Edmonton, I have a picture of the North-West unloading at the point where the town of Battleford now is located. That picture was taken somewhere around 1884. It does not show any buildings, but now Battleford has grown into quite a substantial town. The fact is that they did have navigation on that river, and I want to appeal to the government once more on behalf of western economy to do something at the earliest pos- . sible moment after the war to place the Saskatchewan river in proper condition. It may be that nothing can be done until after the war, but I repeat that in my judgment that river was given by God Almighty to be a

The Budget-Mr. Marshall

joy and a source of profit to the three western provinces. It is a great river, though its flow perhaps is not as great as it should be. It is over a thousand miles long, and at many points is a mile wide. Fortunately the spring floods occur during the growing season; and because that is so the river would not lose anything because of irrigation, since the surplus water would be available in any case. After the growing season the valves could be closed again and the water conserved. That is what they do at Grand Coulee dam and at Boulder dam, both of which are for power and conservation and irrigation.

I do not know what else I can say, Mr. Speaker. I want to help the government if I can, though of course they may not want anyone to help them. I can only offer suggestions, in the hope that some time they may be listened to by the government as well as by the western members. I want members from the west to feel that in me they have a strong friend who is anxious to help them restore their economy. I want to do all I can for the western provinces, because I am convinced that anything we do for the west we do for all of Canada.

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SC

James Alexander Marshall

Social Credit

Mr. J. A. MARSHALL (Camrose):

Mr. Speaker, I should like to make just one brief comment on the speech delivered early this afternoon by the Minister of Finance (Mr. Ilsley). It is this. The cost of living index has not gone up, but no one will deny that the cost of living has gone up and is still going up.

I agree with the hon. member who has just taken his seat (Mr. MacNicol) that the government should make more use of the services and ability of members of this house. I feel that there are many ways in which we can serve to advantage in this war effort, but in my judgment the government is not availing itself of our services.

I never listen to a budget speech by a minister of finance without having my blood pressure go up anywhere from five to tw'enty-five points. This year when the minister concluded his speech with the Liberal slogan for 1943, "Work and save", I made this remark to my deskmate, the hon. member for Wetaskiwin (Mr. Jaques): "If the people of Canada have not suffered enough under this unholy, unrighteous, debt-creating system, it is their God-given right to suffer some more." Perhaps I should thank the minister for having cancelled the payment of part of my income tax for the year 1942. Pressure lias been brought upon the government to have the taxes for that year cancelled in to to. That has not been done, but I understand that

fifty per cent is being cancelled. I think that is wrong, for this reason. We agreed to this tax in 1942; and if we believe that the system under which we are operating to-day is such a God-given system, then every single dollar the Minister of Finance can secure in order to run the war should be secured. However, there is still another aspect to this question. While part of my tax for 1942 has been cancelled, the debt which that money would have liquidated remains as a charge upon all the people of Canada for years to come, with at least three per cent interest added. In to-day's mail I received a letter from the chairman of the Alberta victory loan committee, asking me to take part in the forthcoming campaign. I just wonder what answer I should give to anyone who might ask me why I should go out looking for money and at the same time give my consent'to the cancellation of part of my income tax for the year 1942. It just does not make sense. We may be winning the war, but budgets of this nature make me feel we are losing the peace.

A discussion of the details of the budget is superfluous, because in my opinion it is based upon a false premise. That premise is that there is in circulation to-day in Canada only a limited amount of money, and that consequently we must budget for money. In peace time this falsity is not so easily detected, because ministers impress upon the people the suggestion that there is just enough money to go round to meet their various requirements. In war time however the situation is changed considerably. People begin to ask some awkward questions, such as the one asked by the hon. member who spoke immediately before me: Where will the money come from? That is the question we must face, and there is no use thinking we can sidestep it very much longer. Debts are growing at such an alarming rate and are reaching such huge proportions that the question must be faced. In peace time people do not bother about money problems, but in war they ask: where does it come from? Then they make the awkward suggestion that if we can get billions for destruction we surely can get a few millions for construction.

I do not wish at this time, however, to deal in greater length with the details of the present budget as it affects the nation. Rather I should like to make some observations respecting farmers' budgets, because I believe, they are as important as the national budget. I admit at the outset that to some extent the war has helped farmers, because they are getting better prices for many of their products. Some products still require price adjustment,

The Budget-Mr. Marshall

but I believe the farmer is receiving a fair price for some commodities. On the whole our farm policy has been a hit or miss policy.

First I should like to discuss the problem of farm help, because spring is approaching, and because a large percentage of the 1942 crop is still unthreshed. In my constituency a large number of men and women from the farms have volunteered for service in the active forces. I hope action will be taken to freeze on the farms the young men and women who are left, in order that they may assist in the 1943 operations.

Many farmers have come to me asking my advice, and I have told them they should organize into little groups which would meet together to plan out a policy ben'eficial to all. By so doing they would produce the greatest possible maximum effort, but I believe they will not reach anything like the amount the Minister of Agriculture (Mr. Gardiner) hopes to get in the coming season. I believe there will be a substantial decrease in production, because there is a limit to human endurance and effort beyond which even farmers cannot go.

The Minister of Agriculture is optimistic in his production programme for 1943. I do not share his optimism. The money which many farmers have obtained from the sale of products has been used by them to pay interest on loans, machine notes, bank loans, mortgage payments, and other accounts of the kind. Had the government formulated a policy which would have permitted these people to keep their money and plough it back, if I might use that expression, to increase their herds of cattle and their hogs, we might have been able to reach the amount of production for -which the minister hopes in 1943.

I would judge that from forty to sixty per cent of the crop is still under the snow in my part of the country. It is my opinion that threshing could have been completed before the snow came last fall, had a better policy been adopted. At the peak of the threshing season someone had the bright idea of bringing young men from Quebec to help in the harvesting. Some of them were only boys from the high schools and colleges. While they were willing and eager to do everything they could, and while one must admire their courage, the fact remains that they lacked practical experience and training. They went into the harvest fields and after a few days came back into the small villages, weary in body and soul, with their hands cut and bleeding. After resting a few days they would return to the fields and try it again, rather than allow the word to go back to

Quebec that they were quitters. An old hand at stooking and pitching bundles told me that last season was one of the toughest he had experienced. Yet someone asked these raw youths to step into the breach. It was just like sending inexperienced troops with bowrs and arrows against highly seasoned troops armed with machine guns. Someone blundered. I never heard of anyone being censured or dismissed. That is one thing that never occurs when bureaucracy is acting in a matter of that sort. The ironical part of the whole business is that we have an army training centre right in the heart of that farming community. In this centre were over 1,200 men, toughened by experience, and quite capable of helping in the harvesting of the crop. I have no doubt that if they had been allowed to assist in the work, that crop could have been saved within two weeks. I have not heard any sensible reason for not utilizing that man-power when our Canadian economy was jeopardized.

I have been a member of this house for the past seven years. Efforts have been made by members of all parties year in and year out; by every member of my own group, by every member of the Cooperative Commonwealth Federation and large numbers of Conservatives and Liberals, to get the government to take some sane step to solve the farm problem. We have not been able to persuade the government to do anything, and I think I am quite safe in saying that our efforts along these lines have been fruitless.

There are three questions I should like to ask and I hope to answer them before I conclude my remarks. First, who is to blame for these past muddles and mistakes? Second, why can we not find a sane, sound long-range policy for agriculture? Third, what is hindering the Minister of Agriculture? There seems to be something which prevents him from going forward.

The farmers of Canada have asked for parity prices. Why have they not received them? In the days before the war we were told that there was not enough money to carry through some of these proposals, but those days are gone. What in the name of common sense is preventing the farmers from attaining their desires? Two summers ago a petition was circulated by one of the farm organizations of Saskatchewan asking for parity prices. It was signed by more than 180,000 people in Saskatchewan and Alberta, including professional men and business men as well as farmers. The people formed themselves into little groups and elected representatives to bring the petition to Ottawa. Over 400 people

The Budget-Mr. Marshall

were elected and more than $40,000 was collected to pay their expenses. What was the result of the work done in those two provinces? My honest opinion is that there was no appreciable result.

Let us look at the situation for a moment to see why that was so. On the one hand we have the Minister of Agriculture with his very formidable array of advisers. These men and women are highly trained, they are efficient, they are expert in their particular lines of work. But they are trained to focus their minds on two phases of the one subject, that is, the problem of agriculture and the means whereby it can be financed. I believe that before the problem of agriculture can be solved the people who advise the Minister of Agriculture must forget completely and entirely the matter of finance and focus their whole attention upon the problem of parity prices. You cannot serve two masters; you cannot serve the farmer and the banker at the same time.

On the other side of the picture we have the farmer. Assisting him is a large number of farm organizations. I do not know just how many there are, but a few days ago I read in a western paper that at the recent debt conference in Saskatoon there were fourteen organizations represented. My own opinion of these various organizations is that they are inefficient, they are effete, they are lackadaisical and they love to bask in the light which shines from Parliament Hill. There are two notable examples of farm organizations with headquarters in Ottawa, and I have yet to hear of one noteworthy piece of work being done by them on behalf of the farmers of western Canada. The officials of these organizations meet in conference, they draw up resolutions which are embodied in briefs which with a great deal of publicity they present to the Minister of Agriculture and other members of the cabinet. They then go back to their offices and fall asleep for another twelve months.

What can be done about this situation? How can we as members of parliament and representatives of the people bring about a change of conditions? I think the whole trouble lies with the farmer himself. We shall have to be honest with ourselves and go back to the farmer and endeavour to have him see the situation in a different light. The first thing the farmer must do is to get rid of about nine-tenths of the farm organizations which are supposed to be working in his interest. In my judgment they are doing nothing of the sort. One good organization fully alive to the farmer's difficulties, fully conscious of his needs and problems, would be better than the whole host of organizations he has to-day.

I have in mind one particular organization, the Alberta Farmers' Union. This is a new organization which has sprung into existence during the last few months and is making tremendous strides in Alberta. It is creating considerable interest among the farmers. In my judgment the reason for its success is the fact that the officials keep very close to the farmer. This organization or any farm organization that is to succeed will have to adopt a different technique, what is known as pressure politics. I do not mean that they should align themselves with any particular party or political organization, because I do not think that would be in the best interests of the farmer or of the farm organization.

To come back to the problem which I set myself early in my speech when I spoke about the petition which was circulated in Saskatchewan. Why did a petition for parity prices, signed by 180,000 farmers, not produce the results for which it was designed? A simple answer to that question is, I think, that the wrong course of action was adopted. That petition should have been presented to every member of parliament. It should have been sent to him to read over carefully. Then, each member of parliament should have been summoned to a public gathering in his own constituency; he should have been asked to speak on the resolution to the people gathered at that public meeting; he should then have been asked if he would be prepared to support it on the floor of the House of Commons. Had the farmers of western Canada taken that course of action, they would have had approximately fifty-five members in this house demanding from the government day in and day out, that parity prices be given to the farmers. The member of parliament should have been told that he must not slacken his efforts until these demands had been met. He should have been told further to vote against the government, no matter whether he was a member of the Liberal party or not, until this demand had been met. Then would the elected representatives of the people be the real servants of the people who sent them to parliament.

Why do I speak in the way I have done? For this reason: year in and year out we have cajoled and pleaded with the government; we have threatened the government, but it does not seem to have had any effect. Consequently, this course of action having proved unsuccessful, w'e must change it. Many hon. members may think this is very elementary. But as I view the situation, hon. members must be aroused to their own perilous position. Representative democracy is being replaced by bureaucracy, and it is quite within

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reason to expect that in a very short space of time parliamentary representatives can be dispensed with.

I had in mind to discuss other matters affecting the farmer. I wanted to say something about the debt problem, because I have had a very large number of letters from my constituents telling me of action taken by various mortgage companies, and of their eagerness to foreclose. I think I shall have to leave this matter until the government have arrived at a decision as to what they intend to do about the question of debt.

There is also the question of a ceiling on mortgages, particularly with respect to interest, I do not think the amount charged should be more than three per cent.

I should like the Minister of Agriculture (Mr. Gardiner), when he comes to deal with these questions, to give us some idea as to the situation which developed last summer with respect to the beef muddle. I understand that a food corporation was set up by the wartime prices and trade board, that it functioned very satisfactorily and to the benefit of the farmers, but that for some reason best known to the wartime prices and trade board and to the government, the food corporation was told to buy no more cattle, and was also relieved of the financing of the difference between export and domestic prices. Since this is a subject which affects the farmers directly I hope the minister will give us a complete outline of what actually took place last summer.

One hon. member, in referring to the budget, said that if it had been broadcast it would have given the people of Canada inspiration. I do not know what inspiration a person can get when the Minister of Finance (Mr. Ilsley) comes along and takes from him a considerable portion of his pay envelope. I see no inspiration in action of that kind. To-day we suffer from the popular delusion that the financial system is a gift from God beyond the power of man to augment, circumscribe or replace. In 1940, that year we all remember so well, when the Prime Minister (Mr. Mackenzie King) called a snap election, I enunciated what I considered to be the four major tasks of any government elected in Canada. They were these:

1. To ensure that no productive undertaking in Canada was short of credit to develop its enterprise.

2. To take the necessary measures to guarantee an adequate supply of raw materials for war purposes-which it can do quite easily by withdrawing supplies from the market, or by rationing.

3. To regulate prices so that they are made up solely of genuine costs plus agreed profits, profiteering being impossible.

4. To ensure that goods which are produced are never lacking a purchaser because the public has insufficient money to buy them.

I wish to deal particularly with No. 4.

On February 23, I placed upon the order paper two questions dealing with the operations of the wartime prices and trade board. Question No. 1 was:

What financial arrangements have been made by the wartime prices and trade_ board with the chartered banks for the handling of ration coupons under order effective March 1, 1943?

Question No. 2 was:

When will the government issue coupons covering rationed commodities which will be a claim for goods without the limiting financial factors?

I desired to find out how far the government had actually gone on the road to a sane, sensible form of rationing. Here are the answers I got, which show just how stupid and asinine a bureaucracy can be at times. The answer to question No. 1 is as follows:

The ration administration of the wartime prices and trade board has arranged with the chartered banks that they shall be reimbursed for the handling of ration coupons on a cost basis. The formula for deriving this cost figure will be worked out between the banks' accountants and the comptroller of the wartime prices and trade board.

Surely that is not giving very much information with respect to the agreement which had been reached between the chartered banks and the board.

Here is the answer to No. 2:

This question relates to a matter of policy and it is not .the practice of the government to disclose policy in giving answers to questions.

Rationing arrangements should provide for a special board to secure for everybody at least the necessities of life. So far as essential goods are concerned, the ration coupons should not only be the title to purchase such goods but also be accepted in payment of the purchase price. This would ensure that no person would be deprived of his fair share of essential goods by reason of inability to pay for them. It would lower the cost of living, and thus strike at the vicious spiral of rising prices and rising wages. It would ensure a better distribution of the basis of a healthy diet. Such an arrangement would, after the war, be capable of further sensible development.

In conclusion, Mr. Speaker, I should like to ask the Minister of Finance one or two questions with respect to his slogan for 1943. My first question is with reference to work.

If work for all is wanted; if all want work, as we are constantly being told, and if food, clothing and shelter cannot be obtained except

The Budget-Mr. Douglas (Weybum)

in exchange for work, how is it that 1 he provision of unlimited work entails sacrifice for all?

My other two questions have to deal with that part of his slogan which urges us all to save. We are told that the correct thing to do with money to-day is to save it because that prevents inflation. Am I correct, therefore, in assuming that if everybody saves and nobody buys anything, then there is plenty of everything for everybody, although of course they cannot have it?

My next question is this. If I have to save to pay my income tax, how much must I have to spend so that my grocer can pay his income tax? If I have to save so that more money can be spent for war materials, how much must I spend so that the trade of our country can be saved?

I had intended dealing with the question of taxation, particularly the taxation of the chartered banks. On page 70 of the Public Accounts there is an interesting table. It shows that in 1916 there was placed upon the chartered banks a tax amounting to $1,300,000. But if hon. members will examine that table carefully, they will notice that the tax has been gradually decreasing from .year to year, as follows:

1938- 39

$1,014,0001939- 40

949,0001940- 41

898,0001941- 42

786,0001942- 43

690,000

I suggest to the Minister of Finance that if he wants to find a source of revenue, here is a splendid source which he can tax. Here we have a powerful institution which creates, controls and destroys the blood stream of our country, which calls all money and credit into existence, which never possessed any physical assets in the beginning but to-day spreads its web all over the country. Yet we find that taxation has not been increased on this institution, although it has been increased on every other institution and upon everybody else in Canada. Perhaps the Minister of Finance will give me some enlightenment on this when he speaks again in this debate. I had other things to say, Mr. Speaker, but I leave them for another time.

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

James Lester Douglas

Liberal

Mr. T. G. DOUGLAS (Weybum):

Mr. Speaker, during the eight sessions that I have been attending this house I have studiously avoided indulging in theoretical and abstract discussions. I have tried as much as possible to devote myself to whatever legislation was before the house and to avoid general discussion. This afternoon I propose to depart from that practice. The reason is 72537-91

that ever since this session opened there has been a concerted campaign by the capitalist groups in this house, and by the capitalist press outside it, to launch a storm of vilification and abuse at the Cooperative Commonwealth Federation. Scarcely a member has risen from either of the old-line parties who did not at some time or another in his speech refer to this group, not by its proper name, but as the "Socialist party." We have heard one speaker after another depicting the horrors of dictatorship, regimentation, bureaucracy, and the loss of democracy that would occur should the Cooperative Commonwealth Federation be elected to power in the Dominion of Canada.

To those of us who have been associated with that movement ever since its inception, it is interesting, looking back over the years, to see the bogey-men which have been trotted out and to realize that to-day some of these bogey-men are being advocated and endorsed by both the major political parties in this country. I can remember some of the social security measures that were advocated by this group-unemployment insurance, health insurance, lowering the age for old age pensions and raising the amount of the pension. I remember some of the speeches that were made in which we were told that social security legislation would lessen the incentive to thrift and remove private initiative. But to-day the old-line parties are vying with each other in telling the people how sympathetic they are toward measures of social security. I remember the bogeyman of economic planning that was trotted out. I remember a speech made by the Minister of Agriculture (Mr. Gardiner) in my own constituency in which he told the people that economic planning meant that they would have to telephone the city of Regina to see what they could sow in the south field. Well, this government, under the pressure of war, has been compelled to do some economic planning. It is true it is not the kind of economic planning which we had in mind. It has been haphazard planning. It has been planning from the top and not from the bottom, whereas the planning we wanted was planning in which the farmers and the workers would have some voice both in the planning and in the carrying out of the plan. But this government has been compelled at last to do some economic planning.

I remember the old bogey-man that was trotted out in Saskatchewan in 1934, and one which was very hard to answer. They said that if the Cooperative Commonwealth Federation were elected in Saskatchewan there

1440 COMMONS

The Budget-Mr. Douglas (Weybum)

would be no more elections. All you can do with a whispering campaign like that is to deny it. The people were afraid. The strange anomaly is that to-day in both Saskatchewan and Ontario there are Liberal governments seeking to cling to office long after they have lost the confidence of the people. I remember in the 1938 provincial election in Saskatchewan the slogan whispered from door to door in some non-English speaking districts was, "If the C.C.F. get in they will close the church." We do not hear that now. I was through some non-English speaking districts this fall, and the story has changed. The story now is, "if the C.C.F. get in they will close the beer parlours." Apparently it was estimated that there is moire sympathy for the beer parlours than for the churches, so that the story has been changed.

A few years ago the Cooperative Commonwealth Federation was not mentioned on the public platform without associating it with communism; we were accused of being communists. We do not hear that now, since the magnificent fight put up by the Russian people. Instead of that, the bogeyman now is to say that the Cooperative Commonwealth Federation is fascist. The hon. member for York-Sunbury (Mr. Hanson) the other day-I am sorry he is not in his seat at the moment; I never like firing ammunition unless I can see the whites of their eyes-said that this was national socialism and that national socialism led to fascism. Surely the hon. member knows current history better than that. He must know that the National Socialist party of Germany headed by Adolf Hitler was not built by the common people of Germany; it was built by powerful industrialists and financiers of Germany, in order to break the socialist movement. If we ever get a fascist party in this country it will be that kind of people who will be supporting it, not the common people. The fact is that Hitler put the term "socialist" in the title of his party for the purpose of deceiving the people. If he had told the people that the National Socialist party of Germany was organized for the purpose of taking away their economic and political democracy, he would have had no support. Therefore he used the terminology of the socialists and put the name "socialist" in his title. There are many people in Canada to-day who consider that the word "progressive" has been put in front of the word "Conservative" for very much the same purpose.

This old bogeyman having been pretty well laid, a new bogeyman is being trotted out. We are being told the Cooperative Common-

wealth Federation means socialism, means regimentation, means loss of democracy. The hon. member for Swift Current (Mr. Graham), as reported at page 1171 of Hansard, said:

What he proposes as a cure for a situation which we all agree must not exist is to remove the paramount authority, namely, the government or a free parliament . . .

The hon. member for York-Sunbury not only accuses us of wanting to take away democracy but asks other hon. members to join with the two old parties who call for the return to private enterprise. It is a good thing to stop sometimes and clarify our terms. What is private enterprise? The hon. member for York-Sunbury suggests that all that we have that is good in modem civilization we owe to private enterprise. He said, as reported at paage 1358 of Hansard:

It is private enterprise which has built up and improved our economic system ever since the advent of the Christian era.

I suggest that the hori. gentleman may be a good corporation lawyer, but he is slipping badly in his history. The capitalist system did not produce the machine age; the machine age produced the capitalist system. Tire material prosperity that the world has enjoyed for the last seventy-five or one hundred years has been due to the introduction of power; steam power, then electric power and the internal combustion engine. The capitalist system or the free enterprise system-the terms are synonymous and interchangeable - was the product of the power age. The capitalist system did not produce the power age.

What is this free enterprise system? It is the law of the jungle applied to economics. It is the law of every man for himself, as the elephant said when he was dancing among the chickens. That is not a bad philosophy if, like the hon. member for York-Sunbury, you happen to be in the elephant class, but it is likely to be depressing if you are a farmer or a worker, and belong in the chicken group. Free enterprise means unrestricted competition; the race to the swift and the battle to the strong; nature red in tooth and claw.

These men talk about going back to private enterprise. We have never left it. We have had in Canada both the major line parties in power administering a system of private enterprise or free enterprise. What has been the result? We saw the fruits of that free enterprise system from 1929 to 1939. The people of Canada will not forget that. The free enterprise system produced the growth of monopolies on the one hand and poverty on the other, until the time has come in Canada when

The Budget-Mr. Douglas (Weyburn)

a small handful of bankers control our financial system. Two packing houses control eighty-six per cent of all the country's packing and processing business, and consequently they control the prices which the farmer shall receive for his live-stock products. One large firm and three smaller firms control the entire farm implement industry on the north American continent and are able to set the price that the farmer will pay, and that price is always consistently higher than the price he receives for his products. This free enterprise system produced, for ten years in this country, a state of affairs in which we had about a million people on relief, a million people who were ill-fed, ill-clad, ill-housed. When the war came we were shocked to find, as Mr. Thorson, the then Minister of National War Services said, that forty-six per cent of the men called were rejected because that depression had left physical and psychological scars which will never be erased from that generation.

Does anyone think that the farmers have forgotten that free enterprise gave them loans when wheat was $2 to 82.50 a bushel and then sought to collect payment when wheat was 23 cents a bushel; that it piled up debts upon them that they and their children and their children's children will never be able to pay? It made thousands of people hewers of wood and drawers of water and recipients of relief. Some of the young men who are flying over Germany or standing guard on the coasts of Britain or who took part in Dieppe are the same young men who rode the rods and waited in the bread lines. If the hon. member for York-Sunbury thinks that these young men are coming back to return to the .free enterprise system that crushed the life out of them for ten years, I would tell him that he is mistaken. Three or four times in the course of his speech he said: Beware of the Cooperative Commonwealth Federation; they want to destroy things as they are. We do not want to destroy things as they are; we want to change things as they are, and to make sure we shall never go back to things as they were. The other day- the hon. member for York-Sunbury stood in his place calling upon the old-line parties to support free enterprise. He reminded me of nothing so much as King Canute bidding the waves go back. But they will not go back, Mr. Speaker. If the Progressive Conservative party wants to board the ship of "back to normalcy" and nail the flag of free enterprise to the masthead, it can do so; but I should like to tell hon. members that if they do this their ship will founder on the rocks 72537-9H r

of progress and will sink forever into the sea of political oblivion.

Let us now turn to this thing called socialism. Many of the people who talk about socialism have never taken the trouble to read an authoritative work on the subject. Webster defines "socialism" as:

A political and economic theory of social organization based on collective or governmental ownership and democratic management of the essential means for the production and distribution of goods; also, a policy or practice based on this theory. Socialism aims to replace competition by cooperation, and profit-seeking by social service; and to distribute economic and social opportunity more equitably than they are now believed to be distributed.

A simpler definition, and the one which Norman Thomas has given, is:

Socialism is the form of society in which the means of production, distribution and exchange are socially owned and democratically managed in the interest of all the people rather than

for the benefit of a few.

The socialists believe first of all that we must recognize the fact that in the last century the common people have become divorced from the means of production. With the development of power machinery the weaver left his loom, the blacksmith left his anvil and the carpenter left his bench. They went to work in the great factories; and as someone has said, "he who controls the means by which I live controls me". As the free enterprise system has developed, more and more the worker or the farmer has had less and less to say about the price of things he buys or of the things he has to sell. How much has the average farmer to-day to say about the price he will pay for goods in the stores? They are all set by the chain stores or cartels. How much has the farmer to say about the shipping and marketing of his produce, the price he will pay for farm implements, or the interest on his mortgage? We believe that increasingly the common people have become wage and price slaves.

What is the solution of the situation? We believe it can be summed up in tw'o words: social ownership. There has been some criticism because we do not use the term "socialism". I have no objection to using the word, provided that the man who uses it knows what he means by it. It is an all-inclusive term. There are many kinds of socialism: Marxian socialism, utopian socialism, syndicalist socialism, guild socialism, and the Cooperative Commonwealth form of socialism. We use a specific term because we believe that in the Cooperative Commonwealth form of socialism we have found that synthesis which is so essential between economic planning on the one hand and the retention of individual

1U2 . COMMONS

The Budget-Mr. Douglas (Weyburn)

responsibility and individual initiative on the other hand. The other day the hon. member for Dauphin (Mr. Ward) said we had only two choices, either government ownership or free enterprise. We do not agree; we do not think we are restricted to those two choices. We believe in social ownership, which does not always mean government ownership. I think that should be made clear; government ownership is only one form of social ownership. Social ownership is any form of ownership in which people collectively own certain facilities for production, distribution and exchange.

Therefore we place social ownership in four categories. First, there are those things which we believe should come under the ownership of the federal government. In the forefront of those we place our financial institutions, the central bank and chartered banks, because we believe that is fundamental; then our transportation systems, communications, key industries and monopolies. Just here may I pause to emphasize the fact that this group has never advocated government ownership of any industry in which there is sufficient competition, but advocates government ownership only of those industries which have become monopolistic in character. We agree with the statement contained in the encyclical Quadragesimo Anno, written by Pope Leo Xm, that "anything which dominates the life of the community should be owned by the community. ' That is the basis upon which we believe there should be government ownership of monopolistic enterprises.

Then we believe there are other enterprises which ought to come under provincial governments, such as the development of hydro electric power, the development of natural resources and things of that kind.

The third category would include those facilities which can be best owned and operated by the municipalities. There are many examples of these, such as the distribution of milk, which has been attempted in some places, and other forms of our economic process which could be beneficially owned and operated by the municipalities.

Then there is the fourth form of social ownership, namely, cooperative ownership, which we believe to be the most important of all, hence the name "Cooperative Commonwealth". In that form of ownership the people actually engaged in a certain phase of our economic life would themselves own, operate and control it. In that way we would avoid bureaucracy and give to the individuals vitally concerned the responsibility for using their own initiative and developing their own economic processes.

{Mr. T. C. Douglas.]

The other day I noticed that the hon. member for Swift Current said that he saw a certain fuzziness of mind in the members of the Cooperative Commonwealth Federation. I would not think that hon. member would object to anyone having a woolly head, but on one point he must have been a little fuzzy himself; as a matter of fact I wondered if the hon. member had ever read the Cooperative Commonwealth Federation programme. If he did I am sure he did not understand it, or if he understood it certainly he was misrepresenting it the other day, because this is what he said, as reported at page 1172 of Hansard:

The hon. member for Melfort (Mr. Wright)

. . . makes the mistake of thinking that his party is identified with the growth of cooperative enterprise. Let me say to him that I am at least a sincere friend and proponent of cooperative enterprise. . . . But the truth is that if you adopt socialism, or centre the industry of this country under government control, you do away with the need of cooperative enterprise.

I wonder if the hon. member for Swift Current ever heard of Sweden. Has he ever read Marquis W. Childs' book "Sweden-the Middle Way", a country in which they have had successive socialist governments, and in which cooperatives are more highly developed than in any other country? Has he ever heard of New Zealand or Australia, both of which have labour governments with programmes almost identical with that of the Cooperative Commonwealth Federation? And in those countries the cooperative movement has been highly developed. Has he ever heard of Great Britain, where cooperatives had their birth, and where the cooperative movement found that free enterprise did everything possible to throttle it, and was finally compelled to take political action by becoming affiliated with the labour party?

We in the Cooperative Commonwealth Federation not only do not want to destroy democracy; we want the people of Canada to use their political democracy. We treasure our political democracy as one of our greatest legacies. We want our people to use political democracy to gain economic democracy. Lincoln once said that "no nation can long survive half slave and half free". We believe no nation can survive politically free but economically enslaved. Either we must use the political freedom we have to gain economic freedom, or we may do as the German and Italian peoples did, namely, be in danger of losing even the political freedom we now enjoy.

Having said that about cooperatives, may I turn to the record of the Liberal party with

The Budget-Mr. Douglas (Weyburn)

regard to cooperatives. The hon. member for Swift Current said he was a true and sincere friend of cooperative enterprise. Well, he may be, but the party he supports certainly has not given much evidence of it.

Let me give just three illustrations. About ten years ago the farmers in Saskatchewan built their own skimming plant. In that skimming plant they could use only light crude oil. They began to produce tractor fuel in the city of Regina. What happened? The next budget brought down by the Liberal government-and the minister of finance at the time was Mr. Dunning-placed a duty of one cent a gallon on light crude oil; and the point of specific gravity at which they made the duty payable was exactly the point below which the skimming plant in Regina could not operate. They could not use a heavier crude. But the heavy crude oil used by the big oil companies which had cracking plants continued to come into this country duty-free. That duty cost the cooperatives in the neighbourhood of $25,000 a year, until they built their own cracking plant. Then, when they finally built their cracking plant one of the first things to happen was that the oil controller cut them down to 400 barrels a day, despite the fact that their capacity was 1,500.

I believe they now have had their quota increased to 900 barrels a day.

Let me give another illustration of how this government has treated the cooperatives. For two years we have had allocation of cars on the prairies on the basis of permanent storage. The wheat pools have built annexes capable of handling millions of bushels of wheat, but the cars have been allocated on the basis of permanent storage, no consideration at all being given to temporary storage which has been built. The result is this: There may be four elevators in a town; the pools may be doing fifty per cent of the business, and the other three combined doing only fifty per cent. Each, however, will get an equal number of cars, with the result that thousands upon thousands of farmers who have been members of the wheat pool organization since it began operations have been compelled in the last two years to take their grain to the line elevator companies, with whom their farmer-owned organization is in competition.

Let me take a third example of the way in which this government has treated the cooperative movement. I refer to the decision of the government to tax the wheat pools in western Canada. I think most hon. members will recall that in 1930, on the eve of a general election, the Liberal government amended the Income War Tax Act so as to

make cooperative organizations exempt from taxation. Two years ago a campaign was started by a number of eastern papers, principally the Financial Post and Canadian Business, and later taken up by the Winnipeg grain exchange. For two years these papers and the organization I have mentioned, in season and out of season have demanded to know why the wheat pools are not paying excess profits tax or income tax.

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

Colin William George Gibson (Minister of National Revenue)

Liberal

Mr. GIBSON:

They asked if they were cooperatives.

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

Thomas Clement (Tommy) Douglas

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

Mr. DOUGLAS (Weyburn):

Yes, it is the same thing. They asked why the pools were not paying these taxes. Article after article, editorial after editorial asked that question, until finally the government has yielded to the pressure, and the wheat pools are to be taxed. They are to be assessed for taxation under the Income War Tax Act and the Excess Profits Tax Act. Of course they will be allowed to dispute the matter in court. They will have an opportunity of being put to that expense. But I submit to you, Mr. Speaker, that if the government were as sympathetic to the welfare of cooperatives as the hon. member for Swift Current would have us believe, all it would have to do is amend the Income War Tax Act so as to make sure that the exemption covers the wheat pools-if the Department of Justice feels they are not now covered by the act as it stands.

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

Colin William George Gibson (Minister of National Revenue)

Liberal

Mr. GIBSON:

In other words, to make them cooperatives.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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March 22, 1943