February 2, 1948

CCF

Major James William Coldwell

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

Mr. COLDWELL:

But this committee is merely a fact-finding committee, with no power except to report to the House of Commons; and thus it is not to make recommendations in that report. The Prime Minister says that, of course, later on, if we want to do so, we can add authority to recommend, but that it is not the desire now to give that power, because it is more or less unnecessary until we have found the facts.

Well, when we have found the facts we should be entitled to make recommendations. And in finding those facts the committee should always bear in mind the cross-examination of witnesses. As my hon. friends know, the cross-examination of witnesses is often conducted on the basis that the examiner will be making recommendations. He sometimes examines in order to substantiate the recommendation he wishes to make and, consequently, to establish a fact in order that on that fact he can make a recommendation.

Well, why not give the House of Commons an opportunity to hear recommendations and to recommend to the government action to be taken upon those recommendations? We know what the opinion of the country is; we do not have to find that out as a fact. I do not know bow reliable the Gallup poll is. It seems to have been pretty reliable in many instances in the past. But a Gallup poll taken before Christmas indicated that seventy-six per cent of the Canadian people wanted the reimposition of price controls. That seventy-six per cent is one per cent more than three quarters of our population, a very substantial body of opinion, if it is representative; and it has been in the past. That is a very substantial section of Canadian public opinion demanding reimposition of controls.

Years ago the Prime Minister himself made speeches respecting references to committees. I do not think that on occasions anyone was more critical than he was respecting references to committees. I do not think, really, that it was necessary either for the leader of the opposition or myself to make a speech this afternoon on this particular point. We could merely have quoted.

However, I brought with me Hansard for February 2, 1934; and I rather suspect the Prime Minister had that particular page of Hansard in mind this afternoon when he said that, under different circumstances, he had made speeches opposing references to committees. But may I say to him that, while I agree with him, at the time the price spreads committee was set up, prices were depressed; today prices have gone sky-high. The situation is reversed.

But the methods the government should use are in some respects quite similar to those which were recommended by the price spreads committee. I believe that powerful interests in this country have been able to increase prices abnormally. Indeed, I read only a short time ago that the government had forced down the price of fertilizers. The price of fertilizers was high. Why? Well, because there is no effective competition in the production of fertilizers. It is in the hands of a giant monopoly, a monopoly which is part of a great international cartel, Canadian Industries Limited. The government took action to force the cost of fertilizers down.

Some of the revelations in the price spreads report were that certain restrictive practices and certain monopolistic practices of certain combines were operating in Canada. And, perchance, the scarcity of some goods we produce in Canada has given the same kind of people an opportunity to do the same kind of thing. This is what the Prime Minister said at that time, because it was well known to most Canadians why prices had been driven down in Canada to the level at which they *were at that time. Said the Prime Minister on February 2, 1934, as reported at page 190 of Hansard:

The motion indicates that there is to be an inquiry by a committee with the possibility of the matter being followed still further by a royal commission.

And I think that is what has also been said about this problem.

The Prime Minister (Mr. Bennett) has just indicated that in all probability a royal commission will be appointed. I would take that to mean that so far as this session of parliament is concerned, if we are to judge by the length of time parliamentary committees and royal commissions usually take to do their work, we shall hardly be able to look for much in the way of legislation that will help effectively to meet what apparently at last the government recognizes to be a very serious condition. The motion is in large part one of postponing action. What the country is interested in is not so much further inquiry with respect to matters about which nearly everyone knows a great deal, but legislation, if more is required, to meet a situation that is already understood.

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LIB

Paul Joseph James Martin (Minister of National Health and Welfare)

Liberal

Mr. MARTIN:

What did he say on page 215?

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Did ever words spoken on one occasion so aptly fit another situation exactly fourteen years later?

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LIB

Paul Joseph James Martin (Minister of National Health and Welfare)

Liberal

Mr. MARTIN:

Read what he said on page 215.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

I will let the minister read what the Prime Minister said on page 215 because I have not read that page. I could

Prices Committee

go on reading from this speech and point out that the Prime Minister roundly denounced the idea of setting up what he called at that time a postponing committee.

May I just say a word about the amendment and perhaps make one or two comments on what the leader of the opposition said. He indicated that we were suffering from a period of inflation due to increased credit, that is, increased purchasing power and the lack of goods available for purchase with that increased purchasing power. It is true that there is a great deal of money around, and I think we should do everything in our power to step up production rather than to make money dear and scarce. If we endeavour to make money scarce and dear we shall enter upon a period of deflation which may be as disastrous, perchance even more disastrous, than the present inflation.

The difficulty at the moment in increasing production substantially is that we have, as the Minister of Labour (Mr. Mitchell) boasts from time to time, full employment. In order to increase production, more labour is needed. That kind of labour we cannot get by immigration even though we were able to get labour by immigration in large quantities. It seems to me that we are then faced with the problem, not of allowing the law of supply and demand as it is so called to settle this problem for us, but of the exercise of beneficial controls. That is the only way by which we can meet the situation. It can be met, not by deflation, not by withdrawing money from circulation, not by increased production to the extent necessary, but rather by the exercise of controls and by the use of subsidies, methods . that were tried during the war and found to be effective under not dissimilar circumstances.

The leader of the opposition has moved an amendment. That amendment was moved just as I rose to speak and I have not had an opportunity of studying all its implications. In the main I find myself in agreement with much of what that amendment says, but I ask the house to look at the new clause (e) which reads:

(e) the advisability of continuing the present controls on prices of farm products when there are no controls over farmers' costs of production;

I would' think the inference to be taken from that clause is that the mover of the amendment and his party wanted the removal of all remaining controls because, with the exception of rent, the remaining controls are on farm prices.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

We did not mean to have anything read into the paragraph that is not

there. There is nothing behind it more than you see. I ask the leader of the C.C.F. to accept that statement.

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?

Mr. COLD WELL@

If there is nothing behind it, then what does it mean? Let me explain to the leader of the opposition just how my confusion arises. He says: "The advisability". If jou talk about the advisability of something, then you mean that you have doubt in your mind. He said:

The advisability of continuing the present controls on prices of farm products-

He questions the propriety-

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

You must read the latter part of the sentence, not just the first part by itself.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

The leader of the

opposition need not worry; I am going to be perfectly fair and read all of it:

when there are no controls over farmers' costs of production.

I would say that implies that the controls on prices of farm products should be thrown out because there are no controls on farmers' costs of production. That is the inference I would take from it. Had it been worded something like this: "In justice to our farm population the reimposition of controls on such commodities as enter into the cost of production of farm products," then it would have been clear. That is what I have in mind. I believe that the farmers are entitled to have controlled the things that enter into the cost of production when, we control the prices of the things that they produce.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

Will the hon. member permit me to make one other observation? With all deference I think he is reading something into this that is not there, certainly something that was not intended. It reads:

And in particular to examine and report upon:

(e) the advisability of continuing the present controls on prices of farm products when there are no controls over farmers' costs of production.

The whole sentence must be read together, not separated into parts.

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CCF

Major James William Coldwell

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

Mr. COLDWELL:

This is the place to get an interpretation of what it actually means. I thank the leader of the opposition for giving his interpretation, but that is not the interpretation I placed upon those words. I think they are subject to two interpretations, and therefore there is some ambiguity.

I do not intend to go into all the ramifications of high prices. I could give figures as I did on December 9 showing how profits of

Prices Committee

many of our great corporations are phenomenal today, higher than they have ever been in our history. I could show, from the figures published in the Financial Post and other papers, how apparently they have gone up in the last couple of years. I put a list on the record on December 9 but in error I included two United States companies with Canadian names. I think there were twenty-six other companies on that list, so that the inclusion of those two made no difference to my argument.

The point is that since the war we have seen the cost of living rise; we have seen the standard of living for many of our people go down; we have seen the mother and the housewife finding it more difficult to make ends meet; we have seen how the pensioner and the veteran student at our universities have been embarrassed by increased costs of living. Then, after all the discussion there has been in the country, after the obvious needs of the country, what do we get? We get a resolution referring this matter to a committee for further investigation. It is not investigation that we need; it is action, action to protect the living standards of the Canadian people.

Mr. SOLON E. LOW (Peace River): Mr. Speaker, I listened with attention to all three of the speakers who dealt with this resolution this afternoon. I was especially interested in what the Prime Minister (Mr. Mackenzie King) had to say by way of trying to justify the resolution which he has put on the order paper in his name. While he spoke I was reminded two or three times of the story of the minister in the old church. One afternoon, after the minister had left, the caretaker came in to tidy up before the evening service. He noticed that the minister had left his script for the afternoon sermon on the pulpit, and curiosity led him to look over the notes. He found on the margins of some of the pages little reminders such as this: "soft voice here", "not much emphasis here", "a sly wink here". Then he came to another notation which said: "argument weak, yell like hell". I could not help noticing, Mr. Speaker, that at two or three points in the Prime Minister's presentation he resorted to some forceful speaking, and I could not help noting that these were exactly the places where his arguments were the weakest.

I am not going to take too much exception to the things the Prime Minister said because I think they have already been dealt with quite effectively. But I should like to assure him and the government that I am not one of those given to charging the government with trying to place upon parliament the respon-

sibility for policy when the Prime Minister asks this parliament to give him advice. I have always taken the position that in criticizing the government's policy I should try to offer something constructive, and I shall have, I hope, some constructive things to say in my contribution to this debate.

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock.

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SC

Solon Earl Low

Social Credit

Mr. LOW:

Mr. Speaker, at the time of the six o'clock recess I believe I mentioned that I had listened very carefully to the addresses that were given this afternoon and had found in them a great deal with which I could agree. I wish to congratulate particularly the Prime Minister on the way he manoeuvred to get himself out of a tight situation, because every one of us, I believe, went back to what he had to say, while he was leader of the opposition in 1934, in connection with a proposal of the then prime minister, Mr. Bennett, to set up a price spreads committee. I think, however, the Prime Minister's manoeuvring this afternoon hardly got either himself or the government out of the predicament in which they find themselves today.

May I congratulate the leader of the opposition (Mr. Bracken). In my opinion he made a splendid speech and my only regret is that I was not able to hear all of it. I was tempted once or twice to move my carcass into the close proximity of the leader of the opposition, but I thought perhaps I had better stay here and take notes.

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CCF

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

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

Mr. KNOWLES:

Move your carcass into

his caucus.

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SC

Solon Earl Low

Social Credit

Mr. LOW:

I have no desire whatever to move my carcass into his caucus. I prefer to have my carcass here where it belongs. In all seriousness, Mr. Speaker, I believe the leader of the opposition made a splendid contribution to the debate and we can agree with much of what he said. With regard to his amendment, I only wish to say that I have not had a chance to study it as carefully as I should like to do, but we will give it careful consideration and at a later stage in the debate it is altogether likely that some proposals may be made by one of our speakers with regard to other matters that should be incorporated into the amendment, in order to make the whole thing acceptable to us.

I should like to mention also the speech given by the leader of the C.C.F., the hon. member for Rosetown-Biggar (Mr. Coldwell).

Prices Committee

I wish to congratulate him on a splendid address. I believe that in large measure what he too had to say we can accept. I was taken with this one statement he made, on which I should like to make a brief comment. If I remember correctly, he said: "What the people want is a policy to prevent a rise in prices. The people do not want investigation; they want action."

That is essentially what the Prime Minister said back in 1934 in his contribution to the debate on the Stevens price spreads committee. I believe that what the people of this country want is both investigation and action.

I was interested in the hon. member's challenge to the Prime Minister to call the byelections in the three vacant constituencies in order to give the electors in those constituencies a chance to express themselves on the whole matter of prices and cost of living. I would think, sir, that would be a reasonable thing to do except that in the heat of an election campaign there is so much confusion of issues and so much distortion of the facts that, in my opinion, few electors could possibly know what would be the best stand1 to take. I suggest that they would be much more capable of an intelligent vote if the facts were brought to light in an investigation such as is proposed by the Prime Minister's resolution. Especially would that be the case if the terms of reference were broadened in a manner which I should like to suggest a little later on.

I am afraid that too much has already been said by certain people in this country and certain political parties with regard to the culprits in the price situation in Canada. I believe a good deal of unjust criticism has been levelled against certain groups of our Canadian people, particularly those in business, and there are two political parties in Canada who must bear much of the responsibility for that unjust criticism, if it proves to be unjust-time will tell-and for the distortion of a good many facts that can be obtained1 by anyone with a high school education.

This investigation would doubtless make available to the people of Canada all the facts with regard to the rise in prices and the very high cost of living, and I contend that these facts should be in the hands of every citizen. At the outset, I may say that I am in general agreement with the idea of having an investigation.

During the late war when an enemy plane dropped on to the tail of one of our own fighter machines, the pilot found it necessary for his own safety to take what he called

evasive action. I suggest that the resolution now before this house is evasive action on the part of the government. There is no question about the fact that an aroused Canadian public is right on their trail and the government are belatedly realizing that something must be done about the matter. But what we have in the Prime Minister's resolution is little if anything more than an attempt to evade the whole of the government's responsibility in the hope that they can save themselves without doing anything effective to solve the problem of increased living cost, which problem has forced many people into an almost impossible set of circumstances.

The Prime Minister has argued this afternoon that an investigation of the kind envisioned in the resolution will have a salutary effect upon businessmen, manufacturers and importers who will come under severe public scrutiny and criticism as a result of the inquiry. I have been somewhat incensed of late, as I have already indicated, by the obvious attempts of many people to lay the blame for the rising cost of living on Canadian businessmen, manufacturers and dealers. A great deal of malicious propaganda is circulated having the effect of throwing a smoke screen around and over the real causes of our present plight. For that reason if for no other I would favour the setting up a committee of this house to investigate and report on the factual causes of the rise in prices. The Canadian people should know the facts. The whole truth must be revealed; for, in my judgment, no effective action can possibly be taken until both the public and this parliament are in possession of all the facts.

I venture to assert that when the searchlight is thrown on the true causes of the high cost of living we shall discover that businessmen generally are carrying on their businesses honestly and commendably. There may be and possibly are some individuals and combines in Canada that are taking advantage of the situation to rob the public. If that proves to be the case, then those people should most assuredly be brought to justice swiftly in the interest of the people as a whole. I am convinced that a thorough investigation of the whole price situation will reveal that the policies on finance and taxation followed bjr the government have done more to bring up the cost of living than any other single factor. For that reason the terms of reference given to the proposed committee should be broadened to include the possibility of a full investigation of the effect on prices of the hidden taxes imposed by the government. Speaking in the house on January 26, a member of this group, the hon. member

Prices Committee

for Acadia (Mr. Quelch), had this to say as reported at page 557 of Hansard:

In closing, I would ask the minister to bring down, during this discussion, a table which will show the prices of staple goods and the tax content in those prices. I think such a table would be most illuminating. We would then realize who is largely responsible for the high prices we are paying for many commodities. A similar table was presented to the British House of Commons aud, even though they pay large subsidies, it was amazing the proportion of price that was represented by taxation.

I believe that a full investigation of the effect of hidden taxes especially will reveal that prices in this country could be reduced in a reasonable length of time by from twenty to forty per cent. I do not think there is any question about that. There is no other single factor that anybody can point to at the present time, with the knowledge we have at our disposal, which would contribute to a reduction of prices by anything like from twenty to forty per cent. The proposed committee provides, I suggest, the means of getting just such a table as was asked for by the hon. member for Acadia if the terms of reference are made sufficiently wide to include that type of investigation. Let me just emphasize the need of such a thing by giving an example or possibly two.

In the fiscal year 1946-47 income taxes on wages, salaries and fees of individual Canadians brought to the government a total of S691,988,000. In hidden consumer taxes-that is, customs and excise, sales taxes, processing taxes and so on-the government brought in an additional $1,012 million in the same fiscal year. Of this sum, thirty-two per cent came by way of the sales tax of eight per cent which the rich and poor alike must pay on nearly everything they eat, wear or use. Having collected $313,6*33,000 from the pay envelopes of the people of Canada with incomes of $3,500 or less, the government then proceeded to collect from these same people another $328 million, from their take-home pay, by adding the sales tax to their already high cost of living.

This whole matter, Mr. Speaker, is one that I suggest should be thoroughly investigated. When the people have the facts, they should then unite in demanding that effectual action be taken to remove what I consider to be the pernicious force which pushes up and pyramids the cost of living. I was glad to hear the leader of the opposition speak strongly on this matter this afternoon, and I congratulate him heartily for so doing. The group which I represent in this house has consistently and steadily over the years attacked this pernicious form of taxation. We have pointed out

where it would lead the Canadian people. Our judgment and our warnings are now being vindicated in the conditions which the Canadian people generally are forced to face. I should have liked to hear the leader of the C.C.F. declare specifically the position of his group with regard to taxation. Because he did not mention it except in a passing way, I must conclude that the C.C.F. are not anxious for a reduction of hidden taxation-I have said that before-I believe that their whole program is based upon high taxation. It is possible only with high taxation.

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?

An hon. MEMBER:

Read some of the speeches.

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SC

Solon Earl Low

Social Credit

Mr. LOW:

I should like to have somebody from the C.C.F. get up and declare himself. I am giving them every chance. I should like them to make clear just where they stand with regard to taxation, more especially with regard to hidden taxation that pushes up the cost of living.

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?

An hon. MEMBER:

Read some of their speeches.

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SC

Solon Earl Low

Social Credit

Mr. LOW:

If they believe that these taxes should be reduced in order to bring down the cost of living, then let them say so; and certainly I shall be the first to congratulate them. Thus far we have been kept in the dark. )

We feel that the government is also to blame for the present high prices through removing subsidies which should have been maintained until prices levelled off. Social Crediters have opposed steadily' the elimination of subsidies. We warned the government about what would happen if they went ahead with removing them before the time was ripe. The time surely was not ripe when these subsidies were removed, and we are now reaping some of the results of the ill-advised speedy, headlong action. For many years Social Crediters have advocated the just price, which is the cost of production plus a fair profit. However, I say that there are times in which and conditions under which just prices cannot be maintained without subsidies to producers and price discounts to consumers to stabilize domestic price alignment. We have always advocated their use whenever and wherever necessary. They represent what we have constantly called controls by inducements as opposed to controls by compulsion.

I wish to make it abundantly clear once and for all, Mr. Speaker, that this group believes controls are necessary to a reduction in the cost of living. We have always taken that position; and anyone who goes out on the hustings and says we have taken any other

Prices Committee

position is definitely lying. Several people have been guilty of doing that very thing, in order to make it appear that their political party was the only one in the country looking after the interests of the people and advocating price controls. But let me make it absolutely clear that the type of controls we have constantly advocated are controls by inducement such as are found in subsidies and price discounts; such do control effectively without destroying incentive to produce at a high rate.

I believe this resolution is defective in a number of particulars. I should like to point out about four particulars in which I think the terms of reference can be broadened to make the investigation worthwhile. In the very first clause I believe the word "recent" ought to be struck out. If that word is left in, it is quite possible that the investigation could be narrowed down according to the caprices of those in control of the majority in the committee, and the chairman. I am not imputing motives to any chairman, but I have seen these things work and I have seen how futile investigations of this sort can become if the terms of reference are not made sufficiently broad. To substantiate what I have just said, I want to refer for a moment to the words of Hon. Charles Stewart, who took part in the debate in 1934 when the then prime minister, Mr. Bennett, introduced his resolution setting up the price spreads committee. As reported at page 196 of Hansard for February 2, 1934, Mr. Stewart said;

Inquiries of this sort never amount to a great deal so far as parliamentary committees are concerned. Hon. gentlemen need only refer to the investigation held last year, and the statements made in this house last night by the hon. member who had asked for that inquiry, with respect to milk. Everyone knows how futile it has been-even the suggestion made by the committee.

Then on page 197 he said:

Personally I believe that we would go further by an inquiry under the Combines Investigation Act-[DOT]

Strange, is it not, that the same thing should be said here today.

-but so far as I am concerned, I am in favour of the investigation. I do want, however, to see something result from it. What effect has the milk inquiry had upon the fixation of prices, and how much have the producer and the consumer been helped? I am afraid that is about where we shall find ourselves in this inquiry.

Those were the words of a prominent Liberal, a man who was sitting over on this side of the house, who was telling what had been his experience with investigating committees composed of members of the House of Commons. I would suggest, sir, that if this word "recent" is left out of the first clause 5849-49

of the terms of reference it will be made possible for the members of the committee, if they wish, to go back to the very beginning of the imposition of these pernicious taxes. I believe we ought to be in a position to go back there; and I submit we ought to be able to go back to the time the subsidies were removed. I am afraid we shall not be allowed to do this if we are confined to the "recent" price rises. "Recent" might mean last week or last month or two months ago, according to the caprices of those in control of the majority of the committee. So I suggest this is one place where we could strengthen the terms of reference, by striking out the word "recent" and leaving it open.

Then I believe that the government of Canada, with the support of the House of Commons, ought to be working toward a state of affairs in which no family in this land would be forced to live on less than $1,800 or $2,000 a year. I know that cannot be done all at once; I know there are great difficulties in the way of achieving such an objective, but certainly we should be taking steps in that direction. In that regard I must certainly congratulate the leader of the C.C.F. party (Mr. Coldwell), who has said this is his view. I commend him for it, and support the idea with all my soul.

If it is true, then, that this government should be working toward such an objective, then I believe this committee ought to be empowered to investigate the effects of rising prices on the standard of living of the people of Canada or on any section or sections of the people. I think it ought to be definitely known to the members, and should be publicized to the people of Canada generally, exactly what effect the increase in the cost of living has had upon the student veterans, for example, or upon old age pensioners, who have been forced to live on $30 or, at the most, $35 a month, with prices in many cases three times what they were when those pensions were granted. I speak a word also for the veterans who have been pensioned, and for their dependents who receive allowances. All those people have been treated pretty roughly by the increase in the cost of living, and I think we in this house should know exactly what the effect of the increased price structure has been upon these people. So I suggest that we could and should add a clause making it possible for the committee to investigate those effects.

My third point, sir, is this. I believe it was the present Prime Minister who, in his contribution to the debate in 1934, complained hat the resolution of the then prime Minister, which proposed to set up the price spreads

Prices Commiltee

[DOT]committee, did not take into consideration a study of some of the ways by which this country's industries were being financed. Everyone knows from experience, I think, that many of our industries have been financed in such a way that losses have occurred, which in turn they have passed on to the people in prices in the hope of recovering those losses. Perhaps I may quote the very words of the Prime Minister at that time; and I am referring now to Mr. Mackenzie King while he was leader of the opposition in this house. On February 2, 1934, right at the end of his remarks, he had this to say, as reported at page 193 of Hansard for that year:

So I would suggest that, before this motion, carries, if at all possible it should be enlarged to include an investigation into the method of financing some of this country's industrial concerns.

I do not wish to enlarge on that at the moment because, if the government should see fit to grant such an addition to the terms of reference, I believe the committee itself will) be able to deal with the problem in detail. However, I think an extra clause should be added to the terms of reference providing that the committee may investigate the methods of financing of some of the industrial concerns of this country, to determine just what effects their methods of financing have had upon the cost of living.

I now come to my fourth point. I believe one of the weaknesses of the resolution, and perhaps the greatest weakness, is that it does not provide that the committee may make recommendations. In this regard I agree entirely with the leader of the opposition and the leader of the C.C.F. I believe the committee ought to be authorized to make recommendations for corrective measures that might) be found necessary as it goes along, as a result of its investigations. Especially I think the committee should be authorized to make recommendations with regard to the means of maintaining a minimum standard of living for all the people of Canada. That, certainly, ought to be one of our major considerations, in line with what I said with regard to those sections of the Canadian population which have been adversely hit by [DOT] the unprecedented rise in prices we have witnessed during the past year.

I was prepared 'to incorporate these suggestions in a formal amendment. But an amendment was moved this afternoon which I should like to study a little more carefully, for it might be possible for us to integrate the two. Therefore I shall not move it at this time. However, I should like to say that it

did include provision for removing from clause (a) the word "recent". It adds the following new clause:

(d) The effects of rising prices on the standard of living of the people of Canada and/or of any section or sections of the people of Canada.

And it provides for the addition of the following as clause (e):

(e) The method of financing of some of this country's industrial concerns.

It provides for the addition of another clause, immediately after (e), containing the authorization-

That the said committee shall be authorized to make recommendations for corrective measures which may be necessary as a result of the investigations, and more specifically to recommend means of maintaining a minimum standard of living for all of the people of Canada.

In conclusion, let me say this, that I am not opposing the resolution. I am welcoming the opportunity for this group to participate in a very close inquiry into the causes of the increases in prices and the increased cost of living. But I suggest and1, in fact, I very strongly advocate, that the government give consideration to broadening the terms of reference, and especially making it possible for that committee to make recommendations with regard to measures which might be taken to meet the situation as it obtains today. Action is long overdue.

Some others of my group will have something further to say later on.

Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): Mr. Speaker, I have only a few observations to offer on this resolution, and I should like to have the opportunity of offering them at this lime before the motion which is now before the house becomes, by amendment and subamendment, something to substitute this committee for both the government and parliament., the economic departments of our universities, and everything else that may have some responsibility with respect to the economy of a civilized nation.

The resolution is directed at one feature which is giving the public very much concern at the present time. I rise to speak upon it because it is of no special concern to my department, and therefore I believe I can do so from the angle of the ordinary Canadian citizen.

The ordinary Canadian citizen has been quite disturbed over the causes of the recent rise in the cost of living and, I think, will be very much interested in having a representative committee of the House of Commons make an investigation into the causes

Prices Committee

of that recent rise in the cost of living. He is also, I would judge from conversations I have had, and from correspondence with a great many, concerned over the question as to whether or not prices have been raised above levels justified by increased costs. He is also concerned as to whether or not some of these rises in prices have been due to what is commonly called hoarding -the withholding from sale of goods or services in the hope of obtaining for them, later on, a higher price. And I believe he will watch with interest the proceedings of a committee set up to ascertain the real facts in that connection.

There have been statements made here that the facts are well known. There are things which are believed by a great many of us- and by me among others-which may not be facts at all. And we are certainly not all agreed as to what are the real facts in connection with this situation. I think it will be of considerable advantage to the Canadian people to have our present views as to what are the facts clarified by evidence brought out before a parliamentary committee in that regard.

It has already been suggested by more than one that the presenting of this resolution to the House of Commons at this time is evasive, and is a resort to tactics which are not sincere and which do not propose to deal with the matter which is giving such concern to the Canadian people. This afternoon the leader of the opposition (Mr. Bracken) said that we were dealing only with some symptoms of the disease, which was really inflation.

It must be conceded that there has been a degree of inflation in the economy of this country, and that there have been inflationary factors which have operated on the economy of the country.

One of the important inflationary factors which has operated on the economy of the country has been the extension of loans to the United Kingdom and to other war-torn countries for purchases in Canada of goods and supplies for which they did not have commodities to exchange, and for which they did not have currency which was currently exchangeable.

We might have had a different situation here if, for every ounce of food and every stitch of clothing supplied to UNRRA, we had chosen to require the equivalent in cash or in commodities. We might have had a different situation if, admitting that we should have contributed to relief, we had for everything we sold required cash on the barrelhead. What would have been the effect on our own economy if we had attempted to do that?

5849-49$

I have been asserting in a great many places as my firm belief, and it still is my belief, that when we agreed to extend credit to the amount of a billion and a quarter dollars to the United Kingdom without interest for the first five years, and on very generous terms after that, on condition that the United States government would extend at the same time three and a quarter billions in credits on the same terms, and sell on the same' terms of credit the amounts of war supplies they had in Europe, we were taking a course which was wise and in the interest of the Canadian public. And I think it is something which met with pretty general approval on the part of the Canadian people. If we had not done that it seems to me there is very good reason to believe that, with the opinion of the United States public as it then existed, they would not have either extended their credit or done the other things which they have already done for the restoration of the economies of those war-torn countries.

And had we both abstained, what would have been the consequence? It is not possible to assess that with any accuracy or with any exactness. But it is possible to assert that the situation in this country would be very far different from what it is today, had nothing been done by the North American continent for the assistance of the economies of war-torn countries of Europe. Economic chaos would have overtaken them long before now and would probably have extended to our own country. And had we not had these hundreds of millions of our loans to distribute here to pay for the labour of those employed in our factories and for the produce of our farms and for the labour employed in our forests and in our mines, I wonder if we could have avoided a depression, and the depressing effect of direct relief. Instead of that we have had a situation which is said to be artificial prosperity; nevertheless it is the kind of prosperity which shows in the graphs, which shows levels of employment and of economic activity never before achieved in this economy.

Topic:   FEBllUARY 2, 1948
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PC

Karl Kenneth Homuth

Progressive Conservative

Mr. HOMUTH:

And the chickens are now coming home to roost.

Mr. ST. LAURENT: I shall let my hon. friend roost wherever he likes, but I will deal with this resolution which is a serious resolution before a serious assembly representing the Canadian people.

That was inflationary. It was inflationary to ship out of this country during 1946 goods to the value of $860 million for which we received no equivalent in kind or in currency that was convertible. It was inflationary during 1947 to send out $505 million worth of such

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goods without any equivalent in commodities or convertible currency. It did reduce the quantity of commodities available for the purchasing power created and in the hands of those who had produced those goodsj.it did have a tendency to increase the prices of those commodities in Canada.

Another thing which rendered some increase iu prices inevitable was the increases, which took place elsewhere. When Canada is prosperous Canadians buy a large amount of goods from the United States economy. Last year they bought $2,000 million worth of such goods. They had to pay for them the prices that were charged by those who had produced them. That had a serious effect on prices here in Canada. We purchased not only goods that were ready for consumption; we purchased large quantities of raw materials that went into our own economy, into our own plants. There was one of two things we could do. We could either do without them or we had to pay the price the foreign producer required in order to cover his costs.

During the war these increases in prices were taken care of by subsidies. The subsidies were paid at that time because we had an allover control over wages and prices and because the Canadian government was the purchaser of the major portion of the annual production of this country. In the view of us who sit on this side of the house the subsidy system is not a system which can be permanent in our economy. It is not a peacetime system. It is a system which served its purpose during the war and under those extraordinary conditions. We do not agree with my hon. friends of the C.C.F., but we discuss their views and they discuss ours, and ours differ on that, point. We do not believe in subsidies as a permanent peacetime policy, and we endeavoured to get away from them as quickly as the circumstances which had made it necessary to resort to them during the war permitted us to do so. Without subsidizing the cost of materials or commodities brought in from elsewhere, the consumer is required either to do without them or to pay the price that is fixed in the market in which they are produced. That cannot be disputed.

That brings about one tendency toward rise in our level of prices and immediately it sets in motion a series of pressures to maintain equilibrium. Labour at once demands and obtains higher wages. That went on even during the war in spite of the fact that we endeavoured to maintain an all-over system of controls and ceilings. An increase in the cost of labour increases the cost of the things produced by that labour. Even when we had ceilings the wartime prices and trade

[Mr. St. Laurent.!

board had constantly to adjust the ceilings to take care of increased costs that were thus unavoidably inserted in the production price of the goods for sale.

That in turn affects other sectors of the economy. Soon the farmer finds that he is paying more for his seed, for his wages, for his fertilizer, for clothing for himself and his family, and he has to have higher prices for the product of his farm. That affects the cost of food to all consumers and sets off another wave of these efforts to maintain or to improve one's level in the general economy, in the distribution of the national income. '

It was realized, when prices were stipulated for farm produce in the long-term contracts with the United Kingdom, that they had to be adjusted in relation to new costs and that the prices of that portion of the farmers' products which would be consumed here in Canada would also be affected in the same way and to the same extent. It was realized that there would have to be increases in the price of butter, that there would have to be increases in the price of meat, but it did appear to a great many that some increases in the prices of some of these commodities were beyond what was reasonable and fair. The public wants to know if that is really so.

When the actual price ceiling was removed from any commodity there seemed to be an impression that that commodity ceased to be controlled. Of course that was an error because the general provisions of the wartime prices and trade board regulations remained in effect. It remained the law of this land that no one was entitled, to charge for a commodity a price which was higher than that which was fair and reasonable. It also remained a provision of the wartime prices and trade board regulations that no one was entitled to withhold from sale goods or services for a price that was higher than that which was just and reasonable, and that no one, if he were in business, was entitled to withhold from sale goods or commodities beyond an amount reasonably required for the purposes of his business. It was required that no one, if he were only a consumer, was entitled to hoard in his possession more than what was reasonably required for the purposes of himself and his family.

As I say, it was felt that, as soon as the actual ceiling was taken off, all control disappeared. It was necessary to make it known to the public generally that the general provisions remained and that the government intended to do what was declared by the Minister of Finance (Mr. Abbott) on January 15, namely, to ask parliament to extend

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the duration of the powers under which these regulations could be maintained as law for another year from the expiry of this fiscal year.

There were some things which actually remained under ceilings, such as the prices of primary iron and steel products and tin. Those controls did in fact put an effective brake on the prices of implements and other important supplies required by some of our primary industries such as farming, forest operations and mining. We also still had controls and ceilings on sugar and molasses, on oils and fats, on canned fruits and vegetables and, what is perhaps most important of all, on the rent of residential housing.

At that time it was found that there seemed to have been an inordinate increase in the prices of certain fertilizers and the wartime prices and trade board took steps to roll back the prices of basic ingredients and to prevent inordinate processing and distributing markups. It was also announced that there would be ceilings provided for dairy products and meats. It was also announced that investigations would be made by the wartime prices and trade board to ascertain if there had been cases of violation of the general regulations which would warrant prosecutions, not that prosecutions would be instituted in any vengeful spirit, but because it was necessary to make the Canadian public realize that these regulations still existed, and that though we were partisans of free enterprise we did not want the kind of enterprise that would be free to take advantage of all possible conditions to impose undue hardships on the community at large.

Topic:   FEBllUARY 2, 1948
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CCF

Angus MacInnis

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

Mr. MacINNIS:

There is no other kind.

Mr. ST. LAURENT: I think there is another kind. I think free enterprise is very much like free democracies, and I had the opportunity in this house on one occasion to declare my belief in free democracies and my belief that, though we of the French race were in minority in this country, we could count upon the Canadian citizenry at large to use the free democratic institutions in such a way as would not cause us unjust injury. I still believe that. I still believe that the institu- ' tions worked by reasonable-minded people can be worked in a reasonable way and that there are more men in business and in enterprise in Canada who want free enterprise to be worked in a reasonable way to the benefit of the whole community rather than of the few who attempt to take advantage of any possible circumstances to extract inordinate prices.

This resolution has been put before the house in very general terms. The resolution asks for the appointment of a committee to examine and report as to the causes of the recent rise in the cost of living. The hon. member for Peace River (Mr. Low) suggests that the word "recent" should not be there. I can tell the hon. member that it was not there in the first drafts that we had prepared. But you had to have some point from which the rise started, and it was felt that it would be dangerous and hampering to insert any date, that it might well be left to the committee to determine what the public was concerned about, and that the time factor might very well vary according to the results of the investigation after it got under way. It was felt that a committee of this house could be trusted to construe that in a reasonable way to achieve for the Canadian public what it would feel the Canadian public wished to know.

The committee is also to examine and report on prices which have been raised above levels justified by increased costs. I remember some time ago, when the subsidies were removed on wheat used for milling purposes in Canada, that an increase took place in the price of flour. There were many who felt that that increase was larger than was justified by the increase in costs. I made inquiries about it, and I was shown and convinced that there was a larger increase in the price of flour than was represented by the removal of the subsidy, but that that increase represented less than the increase occasioned by the removal of the subsidy and the additional increase which had been applied for six months before the removal of the subsidy because of the increased costs of labour, bags and so forth, and that the price which had been fixed represented less than the aggregate of the application which had been pending before the wartime prices and trade board for some time and the portion represented by the subsidy. I did not make an investigation under oath, but that is a question which might very well be determined with precision by this committee: Was the

increase in the price of flour which occurred on such a date an increase larger than was justified by the increases in costs?

Another matter into which the committee is to inquire is hoarding. I have heard it asserted-I do not know whether it is a fact or not-that some of the difficulties with respect to the distribution of coarse grains and feedstuff's are due to the fact that a considerable number of dealers are refusing to sell what they have on hand and holding out for a higher price in the future. I do not know whether that is true or not, but there are a

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great many in the Canadian public who would like to know if it is true or not and would like to have that brought out as a fact.

Then the leader of the opposition comes along and proposes to add particulars. The hon. member for La'ke Centre (Mr. Diefen-baker) and I know that when we could1 force an opponent to particularize his bills in court we felt that we were restricting him and not enlarging the terms of his general allegations. I think what takes place before the courts of justice takes place there because it is something which is comformable to general experience everywhere, and instead of these proposed amendments enlarging the scope of the inquiry the result in fact would be apt to be somewhat restrictive.

I was rather amused1 by the passages between the leader of the official opposition and the leader of the C.C.F. party (Mr. Coldwell) as to the real meaning of paragraph (e) of the amendment of the leader of the opposition, which reads:

(e) the advisability of continuing the present controls on prices of farm products when there are no controls over, farmers' costs of production.

The question was asked: Are you for or against the control of farm prices? I would defy anybody without another bill of particulars to give a positive answer to that question. I think the amendment is in terms which permit of either construction with as good reason to support either as there would be for the other. Then (f):

(f) the advisability of reverting to payments of subsidies on essential commodities of consumption.

It is suggested that the committee should consider it advisable to revert to the payment of subsidies on essential commodities of consumption, that would be an even more striking example of how quickly one can pass from one political foot to the other. As a matter of fact, this seems to be rather academic. I can quite appreciate the advisability of having all the facts as to the effect of the removal of subsidies or what would have been the effect of maintaining the subsidies. But I do not think it is the proper function of the committee to determine as to its advisability or otherwise under our system of constitutional and responsible government, which is now almost 100 years old. As a matter of fact, it was on March 10, 1848, that a Tory government resigned because it had been defeated in the assembly sitting in Quebec, and Mr. Lafontaine was called' upon to form the first responsible government. We have had it for almost 100 years, and under the system of responsible government the

government has to take responsibility for recommending to parliament the policies which have an effect on the public exchequer. It is a system which has been going on for almost 100 years here and which had a long, and, I believe, very useful history before that 100 years in the old land. It is the system to which this party is pledged.

This party wishes to see all the facts brought out; this party wishes the public to know exactly what the situation is, and this party feels that then it will be its responsibility, and not that of a committee made up of sixteen members of this House of Commons, to say what are the policies affecting the public exchequer that should be recommended to parliament. This party intends to do that, and it requests nothing better than full knowledge by everyone in the Canadian public of all the facts which are pertinent to the forming of a conclusion as to what the policy should be. Then, if this government does not bring before this parliament the kind of policy that the Canadian public feels is in the interests of the largest number of Canadian citizens, this government will face defeat and be turned out of office, and whatever party is able to convince the public that it has a policy to recommend which will better serve the interests of a greater number of Canadian citizens, will have the chance to take its responsibility. That disposes of the objection that this resolution does not require the committee to make recommendations.

When the facts have been ascertained it will appear whether or not there are things the responsibility for which rests on the administration, whether or not there have been laches in carrying on under the powers conferred upon the government and its officials by this parliament. There may be, on these facts, a conclusion to be arrived at that further legislation is required and, if there is, that further legislation has to be in. the form of a money bill, which cannot come before this house without a message from His Excellency the Governor General. If this government does not bring before the house a recommendation from His Excellency the Governor General of the kind of legislation that the public of Canada will feel is proper in the circumstances shown by this committee in its investigation, then this government will have failed in its responsibility to the Canadian public and the Canadian public will know how to deal with it.

'Mr. DIEFENBAKER: There is one question I should like to ask the minister. He was speaking about the constitutional background of the country and he mentioned that it was

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not a proper thing to leave with the committee the right to make recommendations. Has that not been the constitutional course followed throughout the years by both sides when in power?

Mr. ST. LAURENT: No. It has not been the course followed by both parties when in power to leave to the committee the formulating of policies.

Mr. DIEFENBAIvER: Making recommendations.

Mr. ST. LAURENT: I have no objection to the committee making recommendations. My leader, the Prime Minister, declared this afternoon that if in the course of investigation the committee felt that it wished to make recommendations it can seek an enlargement of powers; and the responsibility for such policies as will follow has to be the responsibility of this government, or it will cease to be the government.

I was rather amused by the naivete of the leader of the opposition in suggesting looking into me advisability of restoring subsidies, which of course involve the expenditure of very large sums of money, and on the other hand suggesting the elimination of the indirect taxes which he says amount to SI,000 million.

I do not know whether it is SI,000 million, but I do know that some of these indirect taxes are the result of items such as these: indirect taxes on spirits in 1947, $78,377,185; malt and malt products, $51,825,575; wines, 83,310,378; or a total, on spirits, beer and wines, of S133,513,138. That sum goes to the federal exchequer; and of course we know that one and one half times that much goes to the provincial treasuries on these same commodities. When, therefore, I hear grumbling about the level of taxation, and stop to realize that there is such a huge amount of taxes paid voluntarily, I am not so very much impressed.

The other item which no doubt the leader of the opposition would like to see removed is taxes on tobacco and cigarettes amounting to $185,513,309. No one has to pay these taxes and it is not extremely difficult to get along without these articles.

Topic:   FEBllUARY 2, 1948
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February 2, 1948