December 4, 1945

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is right.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. MACDONNELL (Muskoka-Ontario):

I might ask another question while I am on my feet. I have no desire that we should take a huckstering or technical attitude. The minister spoke yesterday and, if he then said all he wants to say, I will not press the point, but I take it that a very important question arises as to what agreements or understandings we have with those countries to which we are proposing to make these large advances. In the case of France the advances are very great indeed. The French are pretty hard and realistic people in their trading arrangements, and I assume we have given full thought to that.

But I come back to my first point-one, it seems to me, of overwhelming importance- and that is, where are we going to stand with regard to the United Kingdom at the end of the negotiations now going on at Washington and which, week after week, we hoped to hear were successfully terminated The well known United States correspondent, Herbert L. Matthews, writing from London the other day, spoke gloomily about it and said that even if the agreement went through, the British would feel that they had been dealt with in a rather harsh manner, and that they might not go on with the Bretton Woods agreement. The Bretton Woods agreement may prove to be a matter of life and death to people like ourselves.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
SC

Solon Earl Low

Social Credit

Mr. LOW:

Mostly death.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. MACDONNELL (Muskoka-Ontario):

I would ask the minister again if he does not think that something more should be said on this matter and an opportunity given to the house, before it adjourns, to discuss the tremendously important question of what we are prepared to do and what we should do in the matter of loans and credits and the like. In the case of Great Britain they are not, as I understand it, really covered by this bill at all.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
CCF

Major James William Coldwell

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

Mr. COLDWELL:

This morning it was

intimated over the air that within the next forty-eight hours some anouncement might be expected from Washington or London regarding the negotiations at Washington. The way in which the matter was worded leads me to believe that the announcement might be of a kind which may involve the discussion here of our own interest in this matter. I think what has been said by the hon. member for Muskoka-Ontario is very much to the point

Export Credits Insurance

in that respect. I do not go all the way with him in some of the other points he raised, but I do go all the way with him in that there should be an opening for a discussion in this house, and we should understand whether or not there is sufficient power to do what we may find it -not only in the interest of humanity but in our own interest to do within the next few months. The point made in that connection is, indeed, one which the minister should consider.

I do not know what agreements or understandings are involved in this proposed expenditure. Perhaps the house should be more fully informed. To be told, as we were a few moments ago, that the war appropriation and other treasures would give the government under the act some S3,300 million, is not sufficient information upon which we can base any opinion. I would urge upon the minister, as suggested by the hon. member for Muskoka-Ontario, that he provide an opportunity for discussion should the occasion arise, as it may well arise. My thought is that if an announcement is made from London and Washington within the next forty-eight hours it may not be that an agreement has been reached, but something quite different.

I am more convinced than ever that the house ought to see to it that the Bretton Woods agreement gets a thorough investigation in the banking and commerce committee before we are asked to vote on it here. I do not think that this is the place to give it the investigation it requires. This is not the place to call the departmental officials whom we must call in order to understand all the implications of that agreement. While on balance we may have to support and accept it, I am much disturbed about it. I am not convinced, and I do not like to be put in the position of having to approve agreements of this sort without having much more information than we have at the present time. However, I rose to concur in the point of view expressed by the hon. member for Mus-koka-Ontario in respect to this particular bill.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
PC

William Alexander McMaster

Progressive Conservative

Mr. McMASTER:

Perhaps when the minister answers the questions asked by the last two speakers he will answer one which I should like to ask. It is a very considerable sum which he is asking us to consent to have guaranteed, and I should like to know whether the government has a policy as to what exports shall be subject to this guarantee. It is easy enough to give stuff away, or sell it cheaply, or sell it to one who cannot pay. I should not expect, for instance, that automobiles would be guaranteed. I suppose the government has in mind some products for

export which will benefit Canada to a great extent while also benefiting very much the people who receive them. I hope the minister while he is on his feet will state what is the policy of the government in that regard.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I said that the limit contained in the War Appropriation Act of $3,300 million limited our powers to make advances on behalf of other governments as agent. There is no such limit, I findi The power to advance there is to make advances out of unappropriated money. Under the foreign exchange order, there is power to buy sterling as well which would furnish the United Kingdom with Canadian dollars to enable them to make purchases. I wanted to make these corrections so as to keep what I say strictly accurate.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
CCF

Major James William Coldwell

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

Mr. COLDWELL:

That gives a little better picture.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It gives a little more freedom.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
CCF

Major James William Coldwell

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

Mr. COLDWELL:

That is what I mean.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Whether it is too much is for the house to say, but I do not think it is. There are many uncompleted transactions with the British. We shall be paying bills to the British for one thing or another for the next few months, and all sorts of accounts are being adjusted. We have claims against them and they have claims against us, and it would be impossible for me with any definiteness to describe that situation. Mutual aid was concluded on the second day of September, and we knew that with these accounts against each other, and power to make advances, under section 3 of the War Appropriation Act, as agent of the British government we would be able to keep trade flowing until we could make a definite agreement with the United Kingdom. I do not know what agreement they are making with the United States government. As soon as that agreement is made we shall look at it. We have great interest in such an agreement, and the agreement we make will have-to take that into account. I am willing to give the committee any information I have when the estimates of the Department of Finance are under consideration, but the government cannot give now a statement of its intentions with regard to size of loan or terms of loan to the United Kingdom, and will not be able to do so for some time. I should think the situation would be clarified before next session, and I anticipate that it will be necessary to have a special act authorizing financial arrangements with the United Kingdom.

2S95

Export Credits Insurance

As the hon. member for Muskoka-Ontario says, that is a matter that is more important than our dealings with any other country in the world, with the possible exception of the United States, our dealings with them being on a different basis entirely-the basis of -each one paying for what he buys and neither lending to the other, and so on.

It would be premature for me to say anything definite about what we intend or expect to do or can do with the United Kingdom. I agree with what the hon. member for Muskoka-Ontario says; in fact, from what I recollect of what he says, I agree with it all. It is of tremendous importance that we should make satisfactory arrangements with the United Kingdom. It is of tremendous importance that we should keep trade flowing both ways with them. I do not intend to deal with that, except in passing, under this bill, which is designed to authorize loans to countries other than those in the sterling area. I indicated the possibility that some parts of the sterling area might avail themselves of the privileges of this bill, and in that connection I mentioned India, but I have nothing definite in mind.

Yesterday I said-and this touches upon the point raised by the member for Muskoka-Ontario-.that in our dealings with France we had stipulated for most favoured nation treatment, and that it was a term of the agreement. I find that the matter is referred to only in correspondence between the two countries, in a letter which I wrote to the representatives of the government of France as follows:

At this time, when Canada will be assisting France to increase substantially its imports from Canada for purposes of reconstruction, and when the Canadian government hopes to see an increase in exports from France to Canada, it seems to me appropriate to suggest that Canada and France might agree to extend to one another most favoured nation treatment in commercial policy. Such action would, I think, impress upon the people both of France and of Canada our intention to develop future trade between the two countries on a mutually advantageous basis.

I went on to say that I understood the Department of External Affairs would welcome an opportunity of discussing the possibility of such action with representatives of that government at an early convenient day. The relevant passage in the reply is as follows:

As regards your suggestion concerning the most favoured nation clause, this is a question which in due course will be discussed between [DOT]the representatives of our countries, _ but in conformity with the general principles included in the lend-lease master agreement, which is well known to you, and that France has signed,

I can now assure you that-the French government will collaborate with the Canadian government in concerted action to elminate all forms of discriminatory treatment in international commerce and to the reduction of tariffs and other trade barriers.

It is true that in these loan agreements we have not tied up these countries with regard to tariff treatment or similar treatment on Canadian exports into those countries, nor do I think it would be practicable to do so. The subject matter of these loan agreements is certain goods which will be ordered for the next two or three years, and of course [DOT] we need have no worry about these goods because they are buying them and taking them into their own country. So that the question of tariff treatment of these goods is not one of indifference to us, though it need not give us any worry, inasmuch as they are borrowing money to buy the goods.

To get a long-term agreement covering other goods during a subsequent period would be a very difficult task. It would involve long commercial negotiations, and the view we have taken is that such commercial negotiations should rest on their own feet. Our policy is to seek and try to obtain reciprocal reductions in trade barriers. The concessions that we would make would be tariff reductions, and the concessions we would seek would be tariff reductions in consideration of our reductions in tariff, without attempting the almost impossible task now of trying to tie up with these loans trade negotiations involving tariff treatment on a wide range of products coming into this country as well as going into those countries.

It may be that some principle should be kid down. In fact, principles were laid down in our mutual aid agreements with these other countries, but apart from general principles I do not think it would be practicable to incorporate in these loan agreements trade agreements covering goods other than the goods they intend to buy with these moneys.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. MACDONNELL (Muskoka-Ontario):

I perhaps gave the minister a slight misunderstanding of what was in my mind. I should be loath to see us tie up with individual agreements, because, if I understand tariff matters rightly, every time you enter into a bilateral agreement with some country it raises difficulties in relation to the broad question of multilateral trade, which seems do me, frankly, the only solution for this country. I wish to reiterate a point I made a few minutes ago. I have been disturbed to find that apparently we have regarded ourselves as nothing more than interested spectators of

Export Credits Insurance

what has been going on at Washington. To me, we are so vitally concerned in this that I have never been able to feel that we were merely interested spectators.

I inferred from what the minister said that we had nobody actually sitting in at the Washington conference. I had thought that we had some economic observers, and I hoped that they were more than observers because I have always felt that we Canadians ought to be able to do more to bring Britain and the United States together than anybody else. We have talked a lot on that and I think with considerable justification. We have talked a lot about our influence in the world. I think we should have more influence on what is going on in Washington now. We should let it be known. If other hon. members feel as deeply concerned about what is going on in Washington as I do, I think that the house should go on record in the matter. It may be that what we say here would not fall entirely on deaf ears. We played a considerable part in the war; Britain has acknowledged that.

I think the time has come for us not to ask a quid pro quo but to try to play a very considerable part in connection with these trade negotiations which are going on. I want to make my position clear. We must have multilateral trade so that world trade will move, let us say, as freely as it did in the first decade of this century. I am not talking about free trade; that raises all kinds of difficulties. I am talking about a reasonable degree of freedom. Without it the prospect for this country is very bleak. I think we had better be specific about it. I hear people chant about full employment in a kind of incantation; they think that by repeating it we are going to get it. Well, many of the people who talk so glibly about full employment do not seem to understand the full implication of it.

I understand that yesterday someone said:

1 Why do not we take the money that it is proposed to use for these advances and use it :or social services?" The reason we are making these advances is to build up foreign trade so as to give us an income which will enable us to have social services. I hope I have not got the cart before the horse. Let us be frank about this. Let us not make fools of ourselves. Let us look at it in a realistic way and not forget the influence which I hope this country has. I suggest to the committee that there ought to be a debate on this matter in the house. If my views are the views of the members of the house then I think it is desirable that the people of Britain should know

it and know it in time, because they are not going to disregard what the people of Canada think.

I believe, and I say it again, with somewhat tiresome iteration, that multilateral trade is essential to this country. If we do not get multilateral trade we face economic reorganization. I was talking to a very competent economic friend of mine yesterday. He told me he had been discussing these matters with a man whom you might describe as an apostle of the new economic thinking. My friend asked the man to be specific and I will also be specific. Suppose we increase the consumption in this country by as much as we possibly can by internal arrangements; how much of the present wheat production will be consumed in Canada? The utmost that we can expect to consume in this country would be about twenty-five per cent of our production. If I am wrong in that, hon. gentlemen to my left will correct me. Am I wrong? If I am right, then where is the remainder of the wheat to go? If we are to have a tied-up regional world wherfe are we to export if we are not in the sterling bloc, into which incidentally we do not fit. Let anyone in the house tell me where. I want to use moderate language. If there is a bloc and all that it entails it is a serious thing for this country. I think we should omit nothing to prevent this. I do not think that a day or two devoted to this talk in parliament would be wasted. If other hon. members present have the views I hold, and to which I have been giving expression, their voice would be heard in Britain, and the views we hold would be known.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
CCF

Angus MacInnis

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

Mr. MacINNIS:

Perhaps a debate on this question would be worth while, even though hon. members do not hold the views of the hon. member for Muskoka-Ontario. Views have interest and relevancy although they may differ. After all, if all hon. members held the same views I suppose there would be no need of a debate.

A question was raised as to the power which the government may have to make financial and trade agreements with the United King-don?. To my mind that is a very important question. I do not believe that we can settle the exact terms of that at the present moment, first because of the short time that this parliament expects to be sitting, and second because of the unsettled state of world affairs and the arrangement between ourselves and the United Kingdom. But this house should do something before we adjourn to make certain that the government has sufficient power to deal with any situations which may arise between the time of prorogation and the openi

Export Credits Insurance

ing of a new session. If .the government has that authority, then I should feel quite satisfied to leave it at that. In fact I am convinced that in any case we shall have to leave it at that, because of the factors I have indicated. I have no objection to the matter being discussed, but I think it will be left in that position.

A moment ago the hon. member raised a point in regard to the conversations going on in Washington between the representatives of the United Kingdom and the United States, and indicated that Canada should have an observer at this conference. To me that appears to be a peculiar doctrine in our international affairs if Canada is an autonomous nation. While we may have ties with the United Kingdom, I am sure that those ties do not give us any right to sit in and observe what goes on between the United Kingdom and any other country with which the United Kingdom does business.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
?

An hon. MEMBER:

That is wrong.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
CCF

Angus MacInnis

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

Mr. MacINNIS:

All right; then I should like to hear the right view. If Canada should be sitting in on this conference, then there is no reason in the world why she should not sit in on the conference between the United Kingdom and China, the United Kingdom and Brazil, the United Kingdom and the Argentine or the United Kingdom and any other country. I have no objection to this country having observers at the conference if we are asked so to do, but I am satisfied that it would not be the proper thing for Canada to assert that we should sit in at the conference.

The hon. member for Muskoka-Ontario said he had heard someone ask this question: "Why could we not expend for social services in Canada the moneys we are now expending to promote trade with other countries?" Perhaps that version of what he heard arose out of what I said in the house yesterday. Let me first of all assure the hon. member for Muskoka-Ontario that I gave my wholehearted support to the export credits insurance bill and supported it, I think, on reasonable grounds. When he spoke a moment ago he said it was likely that we would be giving this money away. He then qualified that by saying that there was a possibility of our giving it away. If we are giving it away, if it is a matter of chance, is there any reason why we cannot give the same amount of money in social services to the people of Canada who need it? There is not. In the past as we looked across from Canada to some other country we have had the hope-I do not know whether we have got over it or not-that we could sell our goods there. We always looked

on those countries as a place where we could sell something. There are very fine people in China, we said, and we wondered if we could sell them something. There were very fine people in Brazil, and we wondered if we could sell them something. We always thought of them in terms of what we could sell them. That day has passed. We still have to think of them in terms of what we can sell them, but we have to think of them also in terms of what we can exchange with them in order that we may build up their economy, and by building up their economy we are assuring our prosperity and theirs. If it is not done on that basis it will not be done at all. That is what we must be concerned with from now on. As a matter of fact the old system of capitalist trade was a system which destroyed itself.

When we come to make trade arrangements and bring about freer trade with the rest of the world I am convinced that the people whom we shall find most opposed to that freer trade are the very people who are supporting the hon. member for Muskoka-Ontario. I have already seen signs of that in the Financial Post, in a statement to the effect that we in Canada could not expect to accept imports to pay for our exports, that the exports would have to be paid for by Canadian loans. There may be certain ways in which that can be done without giving our goods away, but if there are such ways I do not know of them. I do not believe that there are any. If we do not accept either directly or indirectly value for value for the goods which we export, then we are giving those goods away. I am in favour of discussions and debates on this matter, but there are certain fundamental facts which we shall have to keep continually in our minds while those discussions are being carried on.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
SC

Victor Quelch

Social Credit

Mr. QUELCH:

I find myself in accord

with what the last speaker has said. I could not help but be amazed at the implications of the statement of the hon. member for Muskoka-Ontario. Every once in a while we hear members of the house talk about a large national income and the comparatively small population of the country. They emphasize the fact that it would be impossible for a small population to consume the total production of the country. Then invariably they bring up the question of wheat and try to make people believe that some hon. members suggest we in this country can consume our total production of wheat. Well, in the first place let us remember that the national income is only around nine billion dollars and the population around twelve million. That works out to an average income of

Export Credits Insurance

around $3,000 per family of four. Does anybody suggest that a family of four could not consume an income of $3,000 a year if they had the opportunity? Nobody suggests that we should consume all the wheat we produce, but we do believe that the people of this country can consume the imports that could be brought back to Canada in exchange for that wheat. We feel that that is the right thing to do, and we have an interest in trying to build up large foreign investments as a result of the sale of that surplus wheat, investments that can pay for losses in the future.

I quite agree that we have a moral obligation, resulting from the war, to help countries which have been overrun by the enemy. That is an entirely different question. Any contribution we make to mitigate the suffering' those people have had to endure as a result of the war should be dealt with in an entirely different way from the method adopted in this measure. I know that to a certain extent UNRRA has helped, but the operations of UNRRA have been greatly reduced since the first year it was brought into operation. Originally it was to help to rehabilitate and reconstruct certain areas, but by resolution 12, passed at Atlantic City, it was made into a straight relief organization rather than a relief and rehabilitation organization. The point I am interested in in regard to this bill is exactly how do we provide for repayment of those loans. I take it they are to be repaid in Canadian funds. Do we acknowledge the responsibility of accepting imports to provide the people with Canadian funds to pay the bill? There is a joint obligation. There is no use in giving another country credit in Canada to buy our goods unless we are also prepared to accept credit later in their country to buy their goods. I agree that we need multilateral agreements, but there is nothing to prevent us from trading our credit for the credit of another country on a multilateral basis. The important point is that there should be trade balances. All nations should try to balance their trade. You cannot balance trade by merely balancing the money resulting from the overdrafts as suggested by Bretton Woods. Bretton Woods in reality is nothing more than merely a device to try to bring about balances of payment by having large scale overdrafts. It is interesting to know what is going to happen when each country has exceeded its quota by two hundred per cent.

I should like to know from the minister what main point of disagreement there was

tMr. Quelch.]

between the Department of Finance and Professor Keynes when he was in this country. A good deal of publicity was given to the fact that the main point of disagreement was that England wanted to have the right to repay with her exports whatever loans she got from Canada; in other words, that England was interested only in getting goods from this country that we would be willing to take payment for by accepting imports from England. I think everybody will recognize that that is a sound basis for trade. I should like to know from the minister whether or not that was one of the main points of argument.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No, there was no point of disagreement. Certainly that matter was not up for discussion at all.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
SC

Victor Quelch

Social Credit

Mr. QUELCH:

It was given prominence in the press.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I know; I cannot help that.

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink
PC

John Thomas Hackett

Progressive Conservative

Mr. HACKETT:

Will the minister say whether or not Canada did participate in the negotiations which have been going on in Washington between the United States and Great Britain, and whether or not we had somebody observing those negotiations?

Topic:   EXPORT CREDITS INSURANCE ACT
Subtopic:   INCREASE IN AMOUNT OF LOANS AND VALUE OF SECURITIES HELD UNDER SECTION 22
Permalink

December 4, 1945