I have enjoyed the discussion up to the present time, but I believe the committee is, as usual, getting itself into real difficulties now, not knowing just what to do about a very bad situation. There obviously must be some way out.
There must be a way out in a country which is as rich as Canada is. May I for a moment refer to the speech made by the Minister of Labour. The Minister of Labour has his own natural way of expressing himself, but he generally manages to hit the nail right on the head and1 face facts realistically. I think all hon. members will recall fairly well what he said: how in the world are you to have money for subsidies if you decrease taxation? I believe nearly every hon. member would like to see subsidies, such as the one on milk, retained. The remarks of the hon. member for Qu'Appelle quite clearly indicated that she would like to see the subsidy on butter retained. Of course she would assume that prices of butter are being held up because of the desire on the part of certain people to make a profit. In the light of what she said, I should like to recall the remarks made by the hon. member for Fraser Valley
the other night as reported at page 2142 of Hansard. The hon. member quoted Dean Clement of the university of British Columbia, to the effect that last year butter fat cost 58'77 cents a pound to produce. He did not specify whether that was only in British Columbia; I presume it was, but he indicated quite clearly that he would veiy much like to know what would be the actual cost of the production of a pound of butter fat in Ontario. I believe, if all the hon. members of this house knew exactly what it cost in Ontario or in the maritimes or in any other part of Canada to produce a pound of butter fat, they would be greatly impressed. I believe we have been enjoying butter and a good many other things in Canada at a low cost for a long time, because the poor people who produce the butter and other things were simply absorbing part of the cost and producing at a loss. Now the time has come when, if we are to face the facts realistically and build for the future, we must cease calling upon any group of people to produce at less than cost.
The hon. member for Kamloops made some pertinent remarks, indicating that a number of producers whose raw products depended upon the activity of farmers had closed their doors because the farmers could no longer produce at the prices they were being offered, which prices were under their cost of production. We must face these facts. Merely talking about the difficulty will not solve the problem.
May I refer again to the remarks of the Minister of Labour. He said you just cannot have increased subsidies without increasing taxation. Let me say to the members of this house that when the minister made that remark he was wrong. That is one respect in which he just did not have the best information. Let me direct the attention of hon. members to this problem for a moment or two, and see how many can agree. The amount this country should be able to pay for butter ought to depend upon the milk, the apples, the potatoes, the lumber, the coal, the fish and all the other things Canada can produce. If Canada is able to produce a sufficient amount of all the other commodities the producer of butter needs, then certainly it is obvious that Canada should be able to pay that producer of butter enough of these various kinds of goods. Let us just face that set of facts squarely. If Canada is able to produce the goods of all kinds, to provide what is needed by the producer of any given commodity in order to enable him to make a living, then the time has come when this country must introduce a financial system under which it will be possible to pay that
individual the price he needs to receive. The fault lies in our financial system. We do not have a financial system which can reflect the facts of this country. So many of us do not look upon the wealth of Canada as the lumber, the coal and all the other goods and services we can produce. So many of us look upon wealth as the dollars and cents we can take or not take out of the pockets of the people of Canada. Which is a completely fallacious standard by which to judge wealth. I believe everyone in the country will agree that the wealth of this nation is the lumber, the coal, the fish, the food of all kinds, the clothing, the shelter and the other things this country can produce. If the country can produce enough wealth, then certainly we ought to be able to have the standard of living we desire, at least the standard which our production would justify us in enjoying.
That is the first important point. The very minute we recognize that, we shall not at all agree with the Minister of Labour. Then we shall recognize the fact that we might be able to pay greater subsidies without increasing taxation. I do not care a great deal about issuing challenges, but I should like to throw out a challenge to any member of this house to disprove the remark I made. I should like to see any member who thinks he can do so get up and disprove my statement, when I declare that the amount we should be able to pay for butter or any other commodity, or any kind of service in this country, should depend upon the milk, the cream, the cheese, the coal, the potatoes and the other goods we can produce in this country. If anyone can disprove that statement, we are ready to listen to him. I defy any man in this house to do so. I would be prepared to give him as many weeks as he needs to prepare his argument, and I would be ready to pick holes in that argument when he presented it here.
Now I should like to say just a few words in connection with subsidies. I believe, with the C.C.F., that the minister and the government as a whole are proceeding far too rapidly with the removal of subsidies. A good many people who have only half thought through the problems of this country are beginning to argue that we should remove subsidies; and the line of reasoning they are using is precisely the line used by the Minister of Labour, which was based on fallacy.
Let us not get too serious. I should like my hon. friend to answer this question, if he will, and again I say that at the moment I am not talking about his monetary theories. Will he say whether or not at the moment the present subsidies come out of taxation on the Canadian people?
I shall be delighted to answer the minister. Certainly the present subsidies come out of taxation, because the present subsidies are being paid by a government which does not have enough wisdom to use a factual financial system. It is using a false system based upon debt, while it should be using a financial system based upon credit. The mere fact that the government has consistently gone into debt for many, many years, and now has the nation in such overwhelming debt that not a member on the Liberal side of the house or on any other side, except perhaps in the corner where the social crediters are, has the least idea how we can possibly get out of that debt, is the best proof of that statement. That debt is simply a wall over which they cannot see; and the fact that we are in this debt is clear evidence that we have been using a fallacious financial system. Of course the minister must not assume that all the wisdom to be found these days is reposing in the minds of the finance ministers of the Liberal government in Ottawa. He must not assume that, because those gentlemen do not know7 how to do things, those things cannot be done.
I believe I have given the minister a sufficient answer, unless he has another question to ask. I suggest to him that he go to the report of the royal commission on banking and currency for Canada published in 1933. That report is in the library in this building. Let him turn to page 22, paragraph 47 of that report. There he will discover that during the last war, between 1914 and 1917, some $26,000,000 were printed or created by the dominion government and used debt free. This nation has never paid five cents in interest on that $26,000,000, and that money discharged its percentage of the cost of the war just as effectively as any other dollars used during the war. If the minister understands that he wall be in a position-
Order. I hesitate to interrupt the hon. member, and I am not suggesting that he is entirely out of order, but it does occur to me that at a later time there will be a better opportunity to discuss the financial system of the country. Would it not be more appropriate if we discussed the question of subsidies only at this time, and our financial system only in relation to subsidies? I am not saying that the hon. member was out of order.
May I for a few moments discuss the question of subsidies? I believe that subsidies should, be maintained and should be used definitely in Canada for an indefinite period of time, perhaps from now to the end. There are sound and fundamental reasons why that is so; and I particularly draw the attention, of the Progressive Conservative party to the problem I am going to present to them for a few minutes.
If they will take the Searle letter of April 17, 1947-and I think all hon. members received it-and turn to the last page, they will find an account of the Searle index which poses a serious problem to every person who bears a share of responsibility for the conduct of affairs in Canada. In the Searle index of things farmers bought, it is shown that the cost of 147 items now stands at 165-1 per cent, using the 1913-14 figure as 100 per cent. This means that those same things cost the farmers of the west today 65-1 per cent more than similar items of the same quality in 1913-14. Those costs have risen twenty-five per cent since August 1939. Hon. members might attribute the rise of twenty-five per cent since 1939 to the war. But they' cannot attribute to the war the other tremendous percentage increase, between 1913-14 and the outbreak of the war.
The index is quite clear that there is a general tendency- for prices to rise, as the hon. member for Qu'Appelle has pointed out so well. There is a general tendency for the price of manufactured articles to rise. And unless primary- products
oats, barley, wheat, milk and other things which the primary producer produces-are definitely subsidized, unless a floor is put under them, the tendency is for those prices to fall. In any- capitalistic economy, any free economy, any private enterprise economy, such as we have in Canada, and as they have in the United States, this produces a discrepancy- between the cost of secondary- products and prices of primary products. Both by statement and by clear implication the hon. member for Qu'Appelle pointed that out.
One of the problems which must face the government and the country from this time forward is how they can possibly bridge the gap between prices of secondary products and those of primary products. I submit in all sincerity that there is no way known to man whereby that can be bridged, except by subsidies.
There must be subsidies to bring down the prices of secondary products, and subsidies to bring up the prices of primary products, if the price structure of the country is to be on a parity- or to be what we call balanced. So that there is no escaping the conclusion that the subsidy- is here to stay, and must be used from this time forward.
It is one thing for President Truman to say that prices of commodities must come down. It will be an altogether different thing for him to tell how they are to come down. While I do not wish to offend my C.C.F. friends, I wish to say this definitely for their benefit, and for the benefit of those who think along similar lines, that for them to contend that the reason for the increase in manufactured goods prices is entirely the fact that private enterprise does our producing is for them to make a ghastly blunder. And if they go forward with that false notion they will simply be the blind leaders of people who will blindly follow.
Let us face these facts and devise a solution. We do not need to wait for another election. There is intelligence, honesty and honour enough in the house to discover a solution. Let us find it and apply it. But we shall not find it by blaming it on things which are not to blame; and free enterprise is not to blame.
The cause of the difficulty is mainly that there has been such a tremendous increase in the use of machinery. Then, there have been so many other factors entering into the price of things as they come off the factory assembly
line that the spread has been more or less automatic. I have not time to go into the matter in detail, nor do I think it would be in order to do so at this time. But any good textbook on economics will make the facts perfectly clear. To hon. members who wish to go into the matter with some care, I suggest that they read "Controlling Depression", written by Paul H. Douglas, Professor of Economics in the university of Chicago and published in 1935. This book is available in the library. It will explain the reasons for the price spreads clearly and give a possible solution. I say we must have subsidies in order to bridge the gap between the cost of secondary products and the price of primary products.
There is another matter, that of giving the consumer a chance. I am deeply sympathetic with the words of the hon. member for Qu'Appelle. She appeals eloquently and inspiringly in the interests of the little people, the poor people, who have to buy and to live. We cannot allow prices to rise so that they will destroy these folk. I suppose every hon. member in the house has read the letter appearing in this evening's Ottawa Citizen addressed to the Minister of Finance and referring to $40 a week. Anyone who has not read it would do well to do so. Let him then go home and think seriously, realizing that the problem propounded in the letter is one which is facing people in the city of Ottawa right here, while we are in this chamber. And it is a problem which cannot be solved simply by talking.
Something must be done. Because of this rise in prices the people who are involved are suffering excruciating misery. We simply must take care of the consumers. So I say that when the government abolished the consumer subsidy on milk it committed a grave blunder, and set a precedent which could lead to many equally grave blunders.
It must be recognized that the consumers in Canada must be able to buy the goods the country produces. If they are not able to buy those goods they will fall into a state of semipoverty and misery, while the people who produce the goods will be short of markets. That, again, will be bad for Canada and will lead to unemployment.
So far as I can see, the consumer subsidy is the only device whereby we can be sure the consumers will have the purchasing power they need.
I believe that anything further I have in mind might better be said at a future time. However I join with those who have pleaded so earnestly for a cessation in the dangerous rise in prices. I should like to give the C.C.F.
full credit for the stand they have taken in this matter. They are entirely right. I do not agree with them in respect of technique, but only in this fact: Tonight they have advocated the payment of subsidies. I agree with them completely in that respect, but I do not think the subsidies ought to come from taxation, for taxation will destroy the incentive to produce. We might use a certain amount of taxation, but we must come to the point at which we shall create the means with which we shall pay the subsidy, and the means will be based upon the production this country is able to turn into the markets, and which it is capable of returning to the markets in increasing volume.
This much having been said, I draw my remarks to a close.
I feel I would be remiss in my duty to the electors of Springfield if I did not say a few words at this time. No one was more disappointed than I at the discontinuance of the milk subsidy, and I do not think anyone will be more disappointed than I shall when the butter subsidy comes off. I do not think the people of Canada have objected at any time to the dominion government paying out $22,000,000 or $23,000,000 in milk subsidies, or to what it paid out in the butter subsidy to keep the price of butter down.