December 11, 1947

PETITION OP TRADE UNIONISTS AND OTHERS REQUESTING GOVERNMENT ACTION

CCF

Alistair McLeod Stewart

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

Mr. ALISTAIR STEWART (Winnipeg North):

I have been asked on behalf of 31,496 trade unionists and others to present to parliament this petition on prices. The petition may not be in the traditional form, but its urgency impels me to present it to the house.

Topic:   PETITION OP TRADE UNIONISTS AND OTHERS REQUESTING GOVERNMENT ACTION
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FOREIGN EXCHANGE CONSERVATION

PROHIBITION OF CERTAIN IMPORTS, AND PROVISION FOR IMPORT QUOTAS AND PERMITS


Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 3, respecting emergency measures for the conservation of Canadian foreign exchange resources.


CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. KNOWLES:

Explain.

Topic:   FOREIGN EXCHANGE CONSERVATION
Subtopic:   PROHIBITION OF CERTAIN IMPORTS, AND PROVISION FOR IMPORT QUOTAS AND PERMITS
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

This bill will provide for the imposition of the prohibition of certain imports, the placing of certain others under quota, and the placing of still others under special permit.

Motion agreed to and bill read the first time.

Topic:   FOREIGN EXCHANGE CONSERVATION
Subtopic:   PROHIBITION OF CERTAIN IMPORTS, AND PROVISION FOR IMPORT QUOTAS AND PERMITS
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TRANSITIONAL MEASURES ACT, 1947 CONTINUATION IN FORCE UNTIL MARCH 31, 1948

LIB

James Lorimer Ilsley (Minister of Justice and Attorney General of Canada)

Liberal

Right Hon. J. L. ILSLEY (Minister of Justice) moved:

That, whereas section seven of The Continuation of Transitional Measures Act, 1947, being chapter sixteen of the statutes of 1947, provides that subject as thereinafter provided, that act shall expire on the thirty-first day of December, one thousand nine hundred and forty-seven, if parliament meets during November or December, one thousand nine hundred and forty-seven, but if parliament does not so meet it shall expire on the sixtieth day after parliament first meets during the year one thousand nine hundred and forty-eight or on the thirty-first day of March, one thousand nine hundred and forty-eight, whichever date is the earlier: Provided that, if at any time while that act is in force, addresses are presented to the Governor General by the Senate and House of Commons respectively, praying that that act should be continued in force for a further period, not in any case exceeding one year, from the time at

which it would otherwise expire and the Governor in Council so orders, that act shall continue in force for that further period.

And whereas it is considered desirable to continue said act in force until the thirty-first day of March, one thousand nine hundred and forty-eight; .

The following address be presented to His Excellency the Governor General of Canada;

To His Excellency Field Marshal The Right Hon. Viscount Alexander of Tunis, Knight of the Most Noble Order of the Garter, Knight Grand Cross of the Most Honourable Order of the Bath, Knight Grand Cross of the Most Distinguished Order of Saint Michael and Saint George, Companion of the Most Exalted Order of the Star of India, Companion of the Distinguished Service Order, upon whom has been conferred the decoration of the Military Cross, one of His Majesty's aides-de-camp, General, Governor General and Commander-in-Chief of t'he Dominion of Canada.

May it please Your Excellency:

We, His Majesty's most dutiful and loyal subjects, the House of Commons of Canada, in parliament assembled, respectfully approach Your Excellency praying that The Continuation of Transitional Measures Act, 1947, be continued in force until the thirty-first day of March, one thousand nine hundred and forty-eight.

He said: Mr. Speaker, the resolution you have just read is self-explanatory. It is based upon section 7 of an act which was passed last year and which expires on December 31 of this year, unless it is continued for a further period by addresses of the Senate and the House of Commons respectively.

1 believe hon. members of the House of Commons will agree that during the discussions last year it was fairly generally assumed that some of the orders in council which were given the force of law by the legislation of last year would be required until the end of the present fiscal year, and the date that was used commonly in the discussions here as the date to which these orders in council were extended was March 31, 1948.

This pre-Christmas part of the session is of course called for a specific purpose. There has not been an opportunity to determine just what emergency measures, if any, will be required past the end of the present fiscal year. Those matters, however, will be considered during the early part of that portion of the session which is convened after Christmas. As I think there must be general agreement that under present circumstances some of these powers are still required, and as some of the orders in council could not be terminated at once without many unfortunate consequences

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in the country, I would hope that this short extension to March 31, 1948, for which the government is asking, will be readily granted by the house.

I do not feel it is necessary for me to say much more, because the strength of the case for an extension of these orders for the brief period the government has requested is, in my view, self-evident.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. JOHN BRACKEN (Leader of the Opposition):

Mr. Speaker, it is clear to hon. members what the situation is with respect to this measure. I wish to observe at the outset that we have now come almost to the middle of this specially called session of parliament, and today for the first time we are faced with *an urgent measure. We may ask ourselves why it is urgent. It is urgent for the simple reason, and no other, that this session was called in December rather than in January.

Before taking my seat I hope I shall have shown the house that this is the only urgent measure the government has brought before us. AH their other plans were conceived and put dnto effect before we came here, and we are asked now to act only as rubber stamps, to approve something that has been done.

What is this measure before us? It is an address to His Excellency the Governor General from the House of Commons asking that the Transitional Measures Act, 1947, be extended from December 31, 1947, to March 31, 1948. What is the Transitional Measures Act, 1947? It is a temporary act conferring very wide powers on the government to control the Canadian economy. When that act was passed, as the minister has said, it was the intention *that it should continue until March 31, or until two months after parliament met, if it met next year. But there is a provision in the act that if parliament met in November or December, 1947, the act would terminate on December 31, 1947. So it is clear that if parliament had met in October, or if it had not opened until January next, this measure would not have been required at all. It has been made necessary now by the fact that we have been called together in December instead of January or February next. It is clear that the resolution before us would never have been necessary if we had met in October, or if we had met at the usual time after the New Year.

We are now asked by this address to cure the situation the government has created by coming here at this time. If we pass this resolution, the condition which was created last May when the act was passed, and which has been undone by the government's calling us here now, would be restored. That is what the minister has said, and that is our understanding.

For a few moments I wish to review the situation in which we find ourselves. The government told us we were being called here to deal with a crisis. Now that we are here we find that the government has already acted, that it has already taken steps to cure the crisis, and that those steps are now in effect. As I have said, we are called here just to approve measures which are already in effect, to approve what has already been done. It is true that what the government has done will have to be approved by legislation, but it was not necessary that that legislation be passed in December. It would have been just as effective if it had been passed in January or February. What then is the reason for our being here in December? The reason for our being here is that the government may spread itself in connection with these Geneva trade agreements and thus distract the attention of the public from the other more objectionable measures that are to be brought forward later.

What are the measures that the government tells us it was important should be dealt with in December; what are the measures that they speak of as being necessary to cure this crisis?

First, they said there are these trade agreements. Then there are the taxation measures. And there are the special emergency measures for the restriction of imports, what I choose to call the totalitarian powers act.

Let us look at these measures and see whether action by parliament at this particular time is necessary.

Let us take the trade agreements first. We have discussed them for some time, but they have been left unfinished. The government says that it does not intend to proceed with them any further at this time. That was clear from the beginning. In the Prime Minister's first address to this house he indicated that they would be brought forward and discussed for a couple of days and then left over to be dealt with later on, because it would take weeks to deal with them. It was quite clear that the government did not intend that they should be finally dealt with at this early part of the session. It is very clear then that they are not an urgent matter to be dealt with at this session. But even if they had been an urgent matter, they could have been dealt with as other agreements of this kind have been dealt with in the past, by order in council under the Customs Act. The law is there providing for that action. That course was followed in the past by the government but it was not followed in this instance. As I said yesterday, they have been brought forward now merely as window-dressing for what is to follow.

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Then we have the excise tax and other measures. These taxes have already been imposed and are now being /collected. In this connection let me refer to the statement made over the air on November 17 by the Minister of Finance (Mr. Abbott), who said:

At the coming session of parliament a special bill will be introduced concerning these emergency restrictions. In order to avoid widespread anticipation and evasion of these restrictions in the next few weeks, which would cost us many millions of dollars that we cannot afford,

The minister recognized the fact that delay had cost and would cost us many millions of dollars. He continued:

we will ask parliament to make this new law apply as from midnight tonight, and we will put these restrictions into effect in advance, as we do in the case of budget proposals.

As lion, members know, when the budget is brought down the minister tells us that it contains certain financial provisions which will go into effect that night, but they are not then legally in effect. It is simply a warning to all who may be affected that they will be brought into effect and apply as of the date stated. Then later on they are brought into effect by legislation. That could have been done in this matter just as well in January or February as in December. The minister went on:

This can be done under the provisions of the Foreign Exchange -Control Act. At the time this act was passed the government did not believe that such power was contained in the act but we are now advised by the law officers of the crown that it provides the legal basis for such restrictions as are proposed.

As I said, these measures are in effect. The government brought them into effect, and we say that they brought them into effect illegally and unconstitutionally. But whether or not that is the case, the fact is that they are in effect and they are being carried out. We did not need to meet in December rather than January in order to make them effective. That is the point I am making in connection with these taxation measures and the other measures announced as being urgent.

The proposed emergency measures are already in effect under the Foreign Exchange Control Act. Imports are being restricted by embargoes and quotas. We take the position that for the moment those are phony powers, they are usurped powers. What we are asked to do now is to provide some basis of legality ; that is all. They have been put into effect by a measure which the government itself and the government experts said would never be used for that purpose. However, finding themselves in the situation where they needed to

take action, they used it and now we are asked to provide some respectable legal basis for what has been done.

It is clear, therefore, that these three measures are in effect and that we did not need to be called here in December to do anything more about them. Everything could have been done just as well in January. It may be said that we asked for an early session to deal with the nation's crisis. So we did. We asked for a session to discuss these problems in order to arrive at what should be done. But we now find that the government has taken its own action and all we are asked to do is to approve what has been done and is in effect.

So, as I have said, we come now to the only emergent measure that is before the house, the continuation of the Transitional Measures Act, 1947. This act is to be extended for three months. The Agricultural Products Act is in the same position. As I say, those are (he only measures before us that are urgent. And they have been made urgent by calling us here in December rather than January. This seems to be a session where the government starts everything and finishes nothing, and creates the only urgent problem-

Some lion. MEMBERS: Hear, hear.

Topic:   TRANSITIONAL MEASURES ACT, 1947 CONTINUATION IN FORCE UNTIL MARCH 31, 1948
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

A pause for applause.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

-by its own mismanagement.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I do not wish, to interrupt my hon. friend, but I just want to make sure that he is saying exactly what he means. He refers to this session as though, it were a special session that, was being held this year with another session to be held next year. I wish to point out that he has, repeatedly referred during the course of his remarks-

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?

An hon. MEMBER:

Sit down.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

My hon. friend has repeatedly referred in his remarks to a session called before Christmas and a session after Christmas. There is but the one session.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

There is no question but that we are sitting here in December and that the session was called now rather than later on for the purposes of the government and nothing else. What I said was that this was a specially called session, and so it was, and so it was represented by the government itself. Nobody in Canada misunderstands that. And now we are being asked to remedy a situation that results from the government's own

Transitional Measures Act

(mismanagement in this respect. That is what rit amounts to.

What are the facts as to the crisis-the real (crisis, not this temporary crisis? The first is that the government did not perceive the crisis early enough, and when it did perceive ;it, it acted too late; and when it did act it acted improperly and in an ill-conceived manner. Nevertheless its plans are now in [DOT]effect and we are called into session only to [DOT]approve of them. This resolution then is the only urgent problem with which the government has to deal.

Why did the government call us into special session? Only the Almighty and the Prime Minister know, but I think the Canadian people understand that we were called here just in order that they might be confused.

As to the measure itself, we have no time to deal with it adequately. If we did, it would take all the time of this specially called session. The government will pass this measure anyway. It was the law until March 31 next ibut for the government's mismanagement. No doubt there are some things in the measure which will need to be preserved so long as the government's policies result in the severe shortages we have today, but only *under those conditions and no others.

Bringing this measure before us now raises two questions. It raises the question of the principle of controls, the principle of the government's undertaking to run the nation's economy. It raises also the question of the success of the government in administering the controls which it has already had. I wish to touch briefly on these two questions.

In wartime the government asked for wide powers and the nation freely granted them- powers to control prices, powers to control wages, powers to allocate workers to jobs, powers to impose rigid price ceilings, powers to control costs, powers to control profits. Under those conditions a good job was done during the war. But if you remove any one of those controls you create conditions under which you will not get those results. When peacetime came the government came along and said: We want a continuation of those powers. And the government then took some and left out others. But its efforts to control our economy have failed. As I said, unless we have all these controls right through from one end to the other, they must necessarily fail. And to have them all means going to the extreme regimentation and takes us clear into the field of communism and totalitarianism.

We take the position that the government having undertaken to control the economy and

having failed, it is now answerable to the public. The fundamental position is this, that the government has both expanded credit and restricted supplies by controls so that now there is a greater supply of credit than of goods, with the inevitable result of rising prices. And now the government is attempting by the partial use of controls to correct that situation.

Our position is that when you apply one control to correct one condition you raise two problems elsewhere, and when you use controls again to correct those two problems, you have four problems on your hands. We do not believe in the principle of restrictive controls except under very emergent conditions.

Some people have distinguished between controls and subsidies. The government itself has done that. The minister who introduced this bill has done it. In discussing his revaluation plans, as reported in Hansard of July 5, 1946, at page 3181, he had occasion to comment on subsidies, and he said this:

The fourth matter which I wish to mention is that the policy of paying subsidies will remain in effect in order to prevent undue increases in prices of articles of major importance in the consumer's cost of living or in primary producer's costs of production.

That was the position the minister took with respect to subsidies on July 5 of last year.

Now I want to touch on the way in which the government has used the powers given to it under its emergency legislation. I shall give two or three illustrations. First of all, take milk. That was dealt with in this house more than a year ago. and - the majority of this house took the position that the subsidy-should not be removed. But after the house adjourned, the government, following out its own policies, did remove the subsidy and the price of milk went up.

I might also mention what was done in connection with flour, or wheat, or bread. The subsidy for wheat was taken off, the subsidy which the government gave to millers who bought wheat to be made into flour to be consumed as bread in Canada. That subsidy was removed and the price of wheat to millers went up, the price of flour followed, and the price of bread followed that. I just want to point out that while the government had that power, it chose to exercise it at the very worst possible time it could have chosen. Here we have an export commodity, wheat. We sell three times as much of it as we consume in Canada, or nearly so. The price of wheat is dependent upon outside conditions and fluctuates widely. It may be 40 cents or it may be $3.40 a bushel; we have seen as

Transitional Measures Act

wide a fluctuation as that in the past fifteen years. But this parliament in its wisdom has said that to prevent prices getting so low- they once reached 40 cents-we are going to establish price floors. We are not by that legislation going to let it drop like that. Even if it does drop that far outside, we are not going to let it drop that far at home. The legislation provides that we are going to subsidize the producer in order to protect him and in order to protect our economy.

You have the right, which you exercised until a few months ago, with regard to wheat for Canadian use, that when the price was high you would see that for bread it was subsidized. The subsidies which had until then been applied were taken off at a time when wheat prices had reached the highest point in our history. They have gone up a little higher since then. When prices went up the government chose to take off the bread subsidy. What could happen but that the price of bread would rise, jwith a commodity selling at 40 cents at one time and eight times 40 cents at another time? Are we going to protect the producer when the price is low and refuse to protect the consumer when it is high? My criticism is that that was the wrong time to take the subsidy off, and that taking it off then could not help but result in increasing bread prices; and those prices, added to the rising cost of living in other commodities, give rise to unrest among workers, causing threats of strikes and all that kind of thing. My criticism is that that was not the time to take off the subsidy.

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?

An hon. MEMBER:

You asked for it.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

I never did ask for it.

I am speaking now of the way in which the government has administered the powers that we gave it.

Let me now touch on another control that you misused. You were giving subsidies and you had a price ceiling on coarse grain. By your control and by your marketing policies you had frozen the prices of the finished products of the farmers. By your contracts with Britain you had frozen farm prices and made them more or less fixed. They were influenced a little by some that was sold outside but they were largely fixed. Then by removing all your controls on costs you let the cost of production go up, with the result that every branch of the livestock industry across this country is now fearful of the future. They feel that under these conditions the possibility to make a profit has gone. They say the government controls are not working out fairly.

But the worst criticism of all is that you chose to do that in the middle of the marketing season. If I remember correctly, up to October 20 these controls were on, and these subsidies were on. The prices received by those who had grain to sell were low. Then you took off these ceilings, and you took off the subsidies, and the next day the prices were 20 cents to 30 cents a bushel higher. You have made one section of the producers of Canada take low prices and have allowed others to get high prices on the same commodity. I say, Mr. Speaker, that there can be no excuse for the government taking that action at the time it did. It should have been done either at the beginning of the marketing season or at the end of it. You have created an inequity in this way, an inequity which you will find no means of correcting short of dipping into the treasury of the dominion in order to do so.

I shall speak now about the administration of another control. It has to do with the question of another cereal; I refer to rye. Rye is a cereal which is actually worth less than wheat, from the point of view of its food value. That commodity was not controlled by the government. The result was that the price went up to $4 or thereabouts a bushel, at a time when this government had sold two-thirds of the wheat crop of the Canadian farmer for $1.55 a bushel, yet here was a cereal worth less than wheat finding a world price of S4. What happened? The price of rye was not so high in the United States. The farmers there were getting about S3 a bushel for their rye. Canadians on this side went over there, bought this rye at around

53 a bushel, paid 9 cents a bushel tariff on it, brought it into Canada and then sold it at

54 a bushel, thus making nearly SI 'a bushel, just by bringing it across th" line.

The point I want to make is this. In order to buy that rye they had to get United States dollars, of which we were short in this country. They were allowed by the government's regulations to get those United States dollars in this country in order to bring in rye from another country, which rye was immediately sold outside of Canada. Our United States dollars were used for that purpose at a time when we were short of United States dollars. Somebody here is surely responsible for that.

You asked for control of our economy in wartime. The nation gladly gave you the powers you asked for. The war is over. You asked for emergency powers in peacetime, and that request too was granted, but with many misgivings. Under your administration, by the powers you have used or failed to use, you

Transitional Measures Act

have failed to solve the problems you wanted to solve, and we are in the situation we are in today, which everybody admits is not good. Under your administration, your use of these controls has failed to correct the conditions you set out to correct. As I said, your attempts to solve certain problems have created others, and you have misused certain powers you have. I do not question the integrity or even the ability of the men who are trying to control the nation's economy, Mr. Speaker, but I do say that this all goes to show that a few people here in Ottawa cannot regulate the nation's economy satisfactorily.

T-he government asked for all these powers; it got the powers it asked for. It has made its own bed; now it is asking for three months in which to lie in it. I want to say to the government that we are willing to grant that reprieve. But if you do not make a better job in the next three months than you did in the last nine, you will not be facing a complacent House of Commons when you come back here again. You will find yourselves facing the wrath of the people, particularly the farmers, the workers and the businessmen. And you will face the indignation of the members who are sent here to represent them, and you will face it not only from this side but from all sides of the house. While we are granting this reprieve for three months, I promise you a critical appraisal of your acts by this party, and I imagine by other parties as well, and certainly by the Canadian people.

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CCF

Major James William Coldwell

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

Mr. M. J. COLDWELL (Rosetown-Big-gar):

I note from the order paper, Mr. Speaker, that the Minister of Finance (Mr. Abbott) is to move another bill, and there is another resolution-the bill dealing with emergency measures for the conservation of Canadian foreign exchange resources, and the resolution dealing with agricultural products. Therefore I do not expect to follow the example of the leader of the opposition and discuss these two other measures today. I intend as nearly as I can to keep to the problem which is before the house in the resolution which has been moved this afternoon by the Minister of Justice.

First of all, I think that the problem before us is one of the gravest that parliament has had to face for many a long day. I am glad as a matter of fact that parliament was called at this particular time because it gives Parliament an opportunity to discuss the problem that most nearly affects the people of the country, namely, the cost of living. Because of that, apart altogether from the other measures that are to come before us, made

necessary by various actions of the government, which we can discuss on another occasion, I am glad that we are here today with this opportunity. My only regret is that the resolution now before us does not extend the time of these emergency powers beyond March 31, because I am quite convinced that in the next three or four months the condition we now have will become aggravated on account of the other policies which the government has adopted and which the Minister of Finance announced about three weeks ago.

So I say that it is because of that condition that in my opinion the extension of powers is insufficient to meet the needs of the present situation. To those who do not believe that these powers should be extended, but that they should be discontinued as soon as possible, what are the alternatives? Well, the alternatives that are suggested by what you might call the more or less classical old-fashioned conservative economists of this country, the free-enterprisers of laissez-faire, are really three in number, and they worked very well for some people half a century ago when the world was a different sort of world and the economy under which we operated was a different sort of economy.

In those days they would have suggested immediately that in order to meet a situation such as this there should be an increase in the rates of interest. They would probably have suggested, if the condition had been as we have it now, what some of the people are suggesting today, that is, that we should devalue the dollar. Now the devaluation of the dollar in a country where we depend so largely upon imparts for many of our commodities in manufactured goods, for so many of our supplies in the way of food and other materials-things like raisins and currants from California, grapefruit, oranges and orange juice which we need in this climate, as well as vegetables from the United States, which is a source of fresh vegetables in the depth of winter, and materials such as cotton and so on-the devaluation of the dollar, I say, entering into the cost of these basic articles, would further raise the cost of living for the hard-pressed people of the country. Consequently I have always been in support of the policy which has been followed of resisting all attempts to devalue the Canadian dollar. In my opinion at least it would have benefited only a small group of people, particularly those who own and not those who work; because the workers who work in the gold mines would have found their cost of living mounting and would have suffered with all the rest of the people who work for their living, wherever they may be employed in this country.

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The third suggestion that has been made is one that is being made also by some influential newspapers. Take for example an article which appeared some weeks ago in the London Economist that labour might be compelled to move from one industry to another in Great Britain, and in other countries as well, by creating a pool of unemployment. A pool of unemployed would tend to bring down costs, so these so-called classical economists claim. But compulsory hunger-

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?

An hon. MEMBER:

Is that the Cripps policy?

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December 11, 1947