February 10, 1948

LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

I have not that figure available here, but I think I gave that information in reply to a question by the leader of the opposition at the very outset of the session. Those figures are on Hansard, or were tabled early in the session.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

I want to move an amendment to clause 1, the short title. I do not think the word "emergency" is justified at the present time; I think the word should be "chronic". I do not see how we can get the word "chronic" into the title of the bill, but the situation nevertheless is chronic.

Two years ago we warned-I certainly warned-that our exchange situation was going from bad to worse. It was aggravated in 1946 by the parity action. Times without number I said in the house that the government would have to take restrictive measures and would have either to impose embargoes or to put on tariffs, restrict dollar exchange, restrict trading in dollars and eventually devalue.

They paid no attention. They found themselves eventually squeezed and squeezed and squeezed into a corner, like a rat, and having now to take these actions belatedly. As I said when I spoke on the bill, they will have to take action, and even more stringent action, before they get out of the impasse they were in.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

Some people hope they will have to.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

I believe we cannot foresee the day when we shall not have to have exchange conservation acts. And to call this an emergency, or to refer to it as an emergency-well, it is an emergency, but it is more chronic than emergent. To refer to it as an emergency, and to suggest that it will remain such, merely makes the operation of the act more unsettling than it normally will be. From that fact it upsets people who are growing vegetables and producing other embargoed goods. The very word "emergency" makes the operation of the act more hazardous, and adds greatly to the uncertainty of the situation.

We have a problem which will be with us for a long time. The very action that is taking place in the commodity markets and the stock markets of the world in the last week shows that what has happened has intensified our problem. The matter is of the utmost seriousness. It is, in very truth, an emergency; but to call it an emergency and to assume that it is of a temporary nature is, I think, unwise and unsound. The Canadian people should realize the true situation we are in. Therefore I have pleasure in moving this amendment.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Ernest Bertrand (Postmaster General)

Liberal

Mr. BERTRAND (Laurier):

Would the hon. member be good enough to tell us the last time he warned the house about what would happen? I should like to read it.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

On the last day of the last session I said that you have to get down to devaluation, that it would start before you came back here. France devalued, and England will devalue-she cannot help it. I also said-

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Ernest Bertrand (Postmaster General)

Liberal

Mr. BERTRAND (Laurier):

Would the hon. member-

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

You asked me a question; let me answer it. I spoke on the budget last year and, although I have not the copy of Hansard with me, I said on July 17 that there were throe courses of procedure open to the minister. He had to take them and he had better take them before he ran out of hard currency and gold. He could put embargoes on, raise tariffs right across the board, put on restrictions with regard to United States dollars and hard currency, and devalue the dollar. There are three weapons you can take to overcome the hard currency deficit. He has taken two and a half of them. I feel that the third one will be essential.

That was said last summer. And .speaking during the second session I said virtually the same thing, namely, that our monthly deficit

of hard currency was rising and that the nest-egg of SI,600 million would run out, I estimated some time this spring.

The true state of our position with regard to gold and United States currency was asked from the minister recently. He gave a general statement, but he did not bring out the difference between gold and hard currency, and United States dollars. We do not know how much British gold and gold from other sources was shipped in and earmarked. We have just the general overall figure of the gold and hard currency held.

I suggested a year and a half ago that we would run into the impasse we are in today. We are in it now and, Mr. Chairman, with all due respect to the government, we shall be in it for a long time to come. And if we are not prepared to face the facts, then the whole bill is just wishful thinking and a palliative, and we are in for a worse time than this government ever contemplated.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

Just a word in answer to

the hon. member. I do not know how serious he is in suggesting his amendment. He admits that this is an emergency, but suggests that the use of the word "emergency" in the title suggests that it is for a short time. I do not know that I agree with him on that.

It is true that he has been an advocate of devaluation for some time, and there are a great many people in this country who would like to see the devaluation of the dollar. They would benefit by it.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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?

Some hon. MEMBERS:

Oh, oh.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

Yes, they would; I know they would; make no mistake about that. There are advocates of devaluation, because, among other things, it would benefit some lines of endeavour that they would be in.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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?

Some hon. MEMBERS:

Oh, oh.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

I seldom interrupt other

people. I am not questioning the fact that the hon. member for York West has advocated devaluation for a long time; but I do not agree with the assertion which is made here that devaluation is inevitable. I see very little useful purpose in putting it forward. And when he suggests or implies that the position of France is the same as that of Canada and that because France found it necessary to devalue Canada should, in my judgment he is talking nonsense. The situations are not comparable at all. France was not in a position to export because her prices were too high; the goods were too high. That is not so with Canada.

Foreign Exchange Conservation

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

If the minister can read anything in what I said where I even remotely suggested that our conditions were the same as those of France, then I suggest very seriously that he see an alienist. I was replying to a question put by the Postmaster General. He asked when I had advocated these three measures in the past. I suggest to the Minister of Finance that perhaps in a court of law he would be considered to prejudice his case when he says that I have advocated devaluation alone. I said that there were three weapons which the government could use. They have used two of them, or perhaps two and a half, but in my opinion they will have to use the third.

Whether the situation in France will have a chain reaction cannot be known, but I merely say that the thing that started to drive all currencies off the gold standard in 1931 or 1932 was the failure of a comparatively small bank in Austria, the Creditanstalt. That started the chain reaction, which led directly to the bank panic in the United States. I do not say that the devaluation of the French franc will start a chain reaction throughout the currencies of the world, but I do say that when you have currencies artificially pegged at a false parity very much higher than the price at which they are bought and sold in the open market, then you are in an extremely dangerous and unsound economic position and one out of which this country is not likely to get for a considerable period of time.

To throw out the rather nasty innuendo that devaluation would benefit some is, I think, unworthy of the minister. It is the sort of glib gibe we are too prone to expect from him lately. When he looks at the whole picture and gets a more oriented and mature view of the thing I think he will see that the forces which are at work in the world today are much greater than those which can be controlled by his government, by his advisers or by the people in Ottawa. The situation is worldwide. Unfortunately we are in it and cannot get out of it wdthout taking continuous measures to conserve our hard currency. The fact that you call it an emergency and regard it as temporary is simply deluding the Canadian people.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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SC

Victor Quelch

Social Credit

Mr. QUELCH:

When the hon. member for York West was speaking I could not help but think it was a pity that he had' not a better appreciation of the world situation at the time we were discussing the Bretton Woods agreements. At that time he supported them, but I notice from an article of his which appeared in the New Liberty magazine he is advocating that we withdraw from the

international monetary fund. It will be recalled that when we were discussing Bretton Woods we criticized the proposal to value our currency in terms of the United States dollar, having only the right to devalue it by ten per cent. We have since then seen nations of the world being forced to break away from the fund' because they could not devalue their currency by more than ten per cent.

As I understand it, the purpose of this measure is to conserve United States dollars. That being the case, I should like to ask the minister why the government has considered it necessary to place prohibitions against imports from the sterling area. I am well aware that under the Geneva trade agreement we have agreed to a policy of nondiscrimination, but I realize also that there is an escape clause which permits a nation with an unfavourable balance of trade to place prohibitions against imports from a nation with which it has an imbalance without placing similar restrictions or prohibitions against imports from nations with which it has a favourable balance of trade.

Surely that escape clause was meant to cover exactly the situation that we have today in Canada? We have an imbalance of trade with the United States, while we have a favourable balance of trade with the rest of the world. One of our main difficulties is to get sufficient goods for Canadians to consume without having to use United States dollars. Apparently Great Britain has certain goods which we need and which are available for export to this country. Surely the logical thing is to doi everything in our power to encourage imports from the United' Kingdom. I know the minister has said that the amount of business covered by this prohibition is small, nevertheless it is a certain amount of business. Why should we discourage importations from the United Kingdom when we have a favourable balance of trade with that country?

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

I have already said why, and I can say it again. Does the hon. gentleman suppose that there is any country in the world which has a greater interest in the principle of non-discrimination than Canada, both because of the volume of our external trade and 'because of the triangular pattern of that trade?

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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SC

Victor Quelch

Social Credit

Mr. QUELCH:

That is not satisfactory at all. In that agreement there is an escape clause to deal with the very situation which exists in Canada. We can take advantage of

Foreign Exchange Conservation

the escape clause without violating the principle of non-discrimination. Otherwise, why is the escape clause there?

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

We do not want to violate it, but we do want to set an example. As I have said two or three times, the amount of business is negligible, whereas the benefits to be got from this restrictive program are tremendous.

Progress reported.

Topic:   FLAXSEED-CATTLE REQUEST FOR ANSWERS TO QUESTIONS ASKED ON FEBRUARY 9
Subtopic:   SCHEDULE III
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BUSINESS OF THE HOUSE

PC

James MacKerras Macdonnell

Progressive Conservative

Mr. MACDONNELL (Muskoka-Ontario):

Is there anything further to be said about the business on Friday? As I understood the Prime Minister, he said that, first of all, we would go on with Bill No. 3, and then he said the minister might wish to do something different.

Topic:   BUSINESS OF THE HOUSE
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February 10, 1948