April 5, 1948

RETURN OP TRIESTE TO ITALY


Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): Mr. Speaker, I should like to answer a question put on March 22 by the hon. member for Peel (Mr. Graydon) as to the intention of the government with respect to objectives set out in the joint statement on Trieste issued on Saturday, March 20. by the governments of the United States, the United Kingdom and France. The first part of this declaration reads as follows: The governments of the United States, United Kingdom and France have proposed to the governments of the Soviet Union and Italy that those governments join in agreement on an additional protocol to the treaty of peace with Italy which would place the free territory of Trieste once more under Italian sovereignty. In his address before the plenary session of the Paris conference on August 2, 1946, the Prime Minister (Mr. Mackenzie King) said: Our concern as a nation is to see that, as far as we can help to make them so, the peace treaties will be based upon broad and enduring principles of justice and equity. Canada seeks no territory, no reparations, no special concessions of any kind, but we do seek to build a lasting peace. On October 8, 1946, the head of the Canadian delegation, the Hon. Brooke Claxton, speaking before the plenary conference, stated with reference to the statute of Trieste: The compromise for which the large majority of the commission eventually voted followed the lines laid down by the council of foreign ministers. The Canadian delegation supported the creation of the free territory of Trieste in the hope that it will possess genuine independence under the authority of the united nations. This hope, however, is based upon the belief that in the last resort Yugoslavia, which was in the forefront in the Avar against the axis forces, will find it possible to play a leading role in supporting a pacific and progressive solution of this most difficult aspect of the Italian settlement. This hope has not been realized. In reply to the question of the hon. member for Peel, therefore, I wish to state that it is the intention of the Canadian government to support the proposal of the governments of the United States, the United Kingdom, and France to return the free territory of Trieste to Italy by revision of the peace treaty with Italy.


PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

Does that mean that the resolution standing on the order paper in the name of the Secretary of State for External Affairs as the second order under government notices of motion will have to be amended with respect to Italy?

Mr. ST. LAURENT: No. It is our intention to proceed with this resolution, and, if there is a protocol to the Italian peace treaty, to bring it forward in proper time for approval by the house.

Topic:   RETURN OP TRIESTE TO ITALY
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VOCATIONAL TRAINING

CONSOLIDATION INTO ONE AGREEMENT OF SEVERAL TYPES OF TRAINING


Mr. PAUL E. COTE (Parliamentary Assistant to the Minister of Labour): Mr. Speaker, I should like to table copy of order in council P.C. 1146, passed on March 25, 1948 under the provisions of the Vocational Training Co-ordination Act, 1942. This order in council provides for the consolidation into one agree ment of several types of training being carried on under financial arrangements between the dominion and provincial governments. The types of training are: training of veterans, training of unemployed workers, youth training and student aid, training of foremen and supervisors. The new agreement will run for two years from April 1, 1948, whereby the dominion government will pay dollar for dollar the cost of training all except war veterans. The entire cost of the training of war veterans is to be borne by the dominion government.


FREIGHT RATES

INCREASES ORDERED BY TRANSPORT BOARD-MOTION FOR ADJOURNMENT UNDER STANDING ORDER 31

CCF

Major James William Coldwell

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

Mr. M. J. COLDWELL (Rosetown-Biggar):

Mr. Speaker, before we proceed with the business of the house I ask leave, seconded by the hon. member for Vancouver East (Mr. Maclnnis), to move the adjournment of the house under standing order 31 for the purpose of discussing a definite matter of urgent public importance, namely, the proposed increases in freight rates authorized by the board of transport commissioners, which rates it is understood' are to be posted by the railroads concerned on April 8, thus creating a situation demanding urgent consideration by this house with a view to making clear the need for immediate action by the government.

Freight Rates

Topic:   FREIGHT RATES
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Has the hon. member leave of the house?

Topic:   FREIGHT RATES
Subtopic:   INCREASES ORDERED BY TRANSPORT BOARD-MOTION FOR ADJOURNMENT UNDER STANDING ORDER 31
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?

Some hon. MEMBERS:

Yes.

And leave having been granted:

Topic:   FREIGHT RATES
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CCF

Major James William Coldwell

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

Mr. COLDWELL:

Mr. Speaker, on March 30, the board of transport commissioners brought down its decision on the application of the railways for permission to increase their rates by thirty per cent. It will be recalled that they also asked that on coal a flat rate or sliding scale of rates of increase be permitted. According to the judgment of the board, the railway companies are authorized to publish and file tariff schedules in accordance with the board's findings on not less than three days' notice. The minimum charge for single less than carload shipments between any two stations will be one hundred pounds at first class rate, but not less than seventy-five cents. Then they go on to say that the recognized differentials via rail, water and rail routes are to be preserved as far as may be practicable, even though certain rates via differential routes may be lower or higher than would otherwise prevail if such rates were subjected to the increase authorized. As hon. members no doubt know from reading the judgment issued by the board, the increase 'authorized is a flat increase across the board of 21 per cent, together with an increase of 25 cents a ton on coal.

There are of course certain exceptions to this increase which the board has listed, namely, rates affected by the Crowsnest Pass agreement, the rates on the movement of grain, feeds and so on east and west, and the rates which are affected by our relations with the United States and the transportation systems of the two countries.

The proposed increase in freight rates I take it is a matter of vital concern to every part of Canada. It is of particular concern to certain parts of Canada, namely, the maritime provinces, the Pacific coast province of British Columbia and the provinces that we call the prairie provinces. This is a flat increase in rates of 21 per cent across the board-in other words, .a horizontal increase, as it was sometimes termed in the discussions before the board of transport commissioners. I think it should be noted that all the interests in the regions to which I have referred, whether governmental, * commercial, agricultural, or otherwise are united .in opposition to this increase in freight rates.

I would draw the attention of the house to the fact that the implications of these increases are a matter of grave concern to this house and to the country at the present time, because they come in one of the most inflationary periods in modern Canadian economic history.

According to the dominion bureau of statistics the cost of living index is now 150-8 as compared with 100 as the pre-war level. That is indeed a most substantial increase, and one which has occurred largely within the last twelve or fifteen months. In our opinion this will further aggravate the difficulties that many of our people find in meeting the cost of living on the fixed income or salary or wage which they have been receiving for the past number of years. To those people in the more distant parts of Canada who live on such incomes the impact will be the greatest, just as will the impact be the greatest in every respect on those who live farthest away from this part of Canada which we usually describe as central Canada.

The provinces that are most concerned with the export of primary commodities will feel the effect the most. These are the provinces, like my own province of Saskatchewan, where there is very little manufacturing, where they export the bulk of what they produce and where they have to buy nearly all the things they need for the production of that which they export. The same thing applies in parts of British Columbia, in parts of Alberta and Manitoba and in the maritime provinces. These areas are likely to be the most hard hit by the decision of the board.

The freight rates in these regions have always been unusually high in relation to their total production. Into the cost of their production go the costs of the machines and supplies they must purchase, and in the main those costs, as I shall show in a few moments, have to be met by the producer himself. They cannot be passed on to the public.

I wish to point out to the house, and particularly to the government, that a horizontal or across-the-board increase is particularly discriminatory and prejudicial; it does not affect all parts of Canada in the same way and to the same extent. Where, because of competition by water or by road, railway rates are kept down, the 21 per cent increase is obviously less in dollars than it is in regions where the rates are higher because there is not that effective competition. The dollar increases will be larger in British Columbia and in the maritime provinces and on the prairies than they will be in central Canada where this competition does exist.

When we read the story of confederation we realize that this nation as we now know it was largely made possible by the undertaking given at that time by the government and the fathers of confederation that a transcontinental railway line would be built to the Pacific coast, and it was largely on the basis of those bands

Freight Rates

of steel that British Columbia joined confederation. We are linked, then, by those bands of steel, and while the board of transport commissioners could not consider what one may term the political implications in the sense in which I have just noted them, while they apparently felt they had to consider the question purely on the ground of economics, this house and this government are in my opinion obligated to take the wider and the broader view of the conditions under which confederation was established in Canada.

We are linked by those bands of steel. Let us not forget that British Columbians could sell much of their produce and purchase many of their commodities to far greater advantage in the Pacific coast states to the south of the line if those bands of steel ran north and south; that the maritime provinces would benefit enormously through being able to trade with the states on the Atlantic coast of the United States, and that the [DOT] prairie provinces, my own region, would be in a much more advantageous position if the railways ran north and south, thus enabling them to dispose of their goods south of the 49th parallel in Minneapolis and other great cities in the south, and in addition were able to buy their machinery from the United States. But our forefathers decided that we should not link Canada to the United States but build up in this country an independent nation, and we have built up that independent nation along certain lines. One of the bonds that link us together in this country is the bond of railways, those bands of steel to which I have referred. Our forefathers determined to build up an independent Canada, and because of that I submit to the government and to the house that considerations other than those of cold railroad economics must enter into a question of this kind and of this magnitude.

I have said that the substantial increases in ;he rates are bound to make increases necessary in certain price levels. We had a demonstration of that in 1920 when an increase of some 40 per cent was granted to the railways. As I recall the judgment of the board in 1920 I must say that there is one satisfactory feature about the judgment which the board of transport commissioners gave the other day, and that is that there is to be no interference with the Crowsnest rates. We have read the record of the debates of 1920 and recall the controversy that arose then with respect to what are called the Crowsnest rates, and I am glad that we are not faced with that situation again today. But those increases in railway rates were brought about and were followed by a recession, and together they made our whole position, particularly in the

parts of Canada to which I have specifically referred, much more difficult than it might otherwise have been.

I would point out to the house that this judgment of the board is particularly inopportune. Last Saturday the President of the United States signed the European recovery program measure, popularly known as the Marshall plan. We expect that Canada will be called upon to participate in the sending of greater supplies of food and other commodities to Europe under that plan, and of course it will be to our economic advantage to provide those goods. But without effective price controls or subsidies, which have been removed in our country, with an increased demand for our goods without comparable increases in production-and those are not possible to the extent that will be required, because as the Minister of Labour (Mr. Mitchell) loves to tell us from time to time, we have virtually a condition of full employment now and we cannot increase our productivity to a very large extent - with a greater demand for our goods from without the country and' the maintenance of purchasing power within the country, there is danger of still greater pressure on the price level, and the 21 per cent increase in freight rates authorized by the board of transport commissioners is bound to make that inflationary pressure greater than it otherwise would have been.

We have also to bear in mind that freight rates enter into the price level at many points. They enter into it when the primary commodity which is to be fabricated or processed leaves the farm or other point of origin and goes to the processing point. Secondly, when the fabricated goods leave the processing point and go to the wholesaler, the 21 per cent freight rate increase is again effective, and when the article goes from the wholesaler to the retailer the same thing applies. Each one of these intermediaries figures his profit on his entire outlay, which includes freight; consequently the increase in freight rates when the commodity reaches the ultimate consumer has been pyramided many times over what it was at the primary point, and the increase in freight rates becomes far more than 21 per cent on that primary article when it ultimately reaches the consumer. And so I say that the freight rate increase will enter into almost every aspect of our price level.

I said a few moments ago that certain competitive carriers exist in certain parts of Canada. They exist in the province of

Ontario, and when it was announced that

Freight Rates

railway freight rates were to be increased by 21 per cent the truckers met and decided to increase their rates by 15 or 20 per cent- I believe it was 20 per cent-still retaining a competitive position; but because of the increased railway freight rates they are able to increase their own rates very substantially. All this - increased cost of production, the increased cost of living, increased transportation rates-is bound to be reflected in an increased demand for wages. In many lines of work wages in this country are not high. Sometimes it is claimed that the men working on the railways are receiving relatively high wages. But today trains of a hundred cars are operated by the same crew of five as trains of forty cars forty years ago; and so the amount of wages spread over the longer and heavier train is not much more than the wages spread over the smaller train of forty cars.

In any event the demand for increased wages will follow the increased cost of living, and we shall ibe in that inevitable spiral; because wages never catch up with rising prices, and there is unrest when men cannot make both ends meet. Therefore I say that at a time when every effort should be made to reduce living costs and the cost of production, prices will increase and the granting of this increase of 21 per cent to the railroads is a bad example to other industries. We ask other industries to reduce their prices, and at the same time one of the very factors entering into production, the railroads, are permitted a substantial increase in their freight rates. That is why I say it is a bad example to set to other industries.

As usual, in a country like this, freight rates enter into almost every aspect of our commercial relationships. At a time when we need houses for our people, when there is a shortage of dwellings for Canadians, when we need' to ship lumber, cement, steel and other commodities that enter into the building of houses from' one end of the country to the other, we are permitting an increase of 21 per cent on this heavy freight. The result will be more and more difficult in financing the building of houses and in the purchase of homes by those who need them. Altogether the effect, of course, will ultimately be to increase prices and to restrict purchasing power, because when prices rise, individuals have less to spend on things other than their basic needs.

While I do not think there is any immediate prospect of a depression, particularly with the demands that are likely to be made on the Canadian economy in the next year or two, yet we do have a condition of high prices, and inflation inevitably is followed by deflation and depression.

In thinking of the farming community of this country we have to bear in mind that the prices of farm commodities are controlled. As a matter of fact, price ceilings are in effect on several farming commodities, on butter particularly at the present time, and under the new wheat agreement negotiated by the thirty-six countries a ceiling of $2 is set, with a sliding scale downward over the next few years, an agreement which I believe has been made in order to stabilize farm prices, and I think therefore worth while. Nevertheless it has placed a ceiling on the goods the farmer produces, while he will have to meet the increased cost of production that will [DOT] arise because of the increased costs of machines and of the commodities he must buy from outside the areas in which he lives. As a matter of fact that is usually the case with the farmer, because he is one of the producers who cannot pass his costs on to someone else. Usually his prices are pretty well fixed one way or the other, and1 he has to bear any increase in the cost of production, which is unjust.

I said a moment ago-and I want to emphasize it-that the new rates do not affect grain, and I do not want to leave the impression that they do. The price of wheat has been stabilized by an international agreement, and the increased cost of the farmers' machines will have to be borne by himself. May I also say, Mr. Speaker, that at a time when the demands for supplies from North America, and particularly from Canada, are more intense from Europe, naturally there will be an increasing demand for access to the American market, and under the circumstances that is a very legitimate demand. Altogether it seems to me that what this decision has done is to complicate very seriously the situation for Canada, in relation to both our domestic needs and our export demands.

I said the rates are lower in central Canada because of the competitive water and truck haulage. An increase of 21 per cent means less to the people of central Canada than to the people of the maritimes, of British Columbia and of the prairie provinces, but it is still a serious factor in this part of the country, and I do not want to minimize the seriousness of it by the comparison I have just made. The increase of 25 cents a ton in freight on coal, for example, is a serious factor in central Canada, because central Canada is an area which uses vast quantities of coal for industrial purposes and for domestic heating, and every increase in freight always costs much more than the amount of the increase in freight when the commodity reaches the ultimate consumer. Even if the increase is only 25 cents a ton,

Freight Rates

it is bound to be reflected in many ways in central Canada itself. Coal is vital to central Canadian industry; coal is vital in domestic heating in this province and in the neighbouring province where there are no coal deposits.

Apart from these economic considerations the government must consider the political effect of this increase on our regional relationships, to which I have already referred, and ultimately on our international relationships; because if the primary producing areas of Canada are hardest hit and the cost of production increases then their competitive position in world markets is made more difficult. Just at the moment one would not expect that to be a factor, but the day will come when the competitive position of various Canadian primary products will decide the abundance or otherwise of our exports overseas.

A short time ago I read some statistics compiled with regard to the improvements in European farm and productive conditions, and I was particularly struck by the enormous acreage that the Russians seeded last fall in addition to the 1946 fall seedings. I think some seven million additional acres were seeded. Reference was also made to the fact that they are breaking a lot of new land and are going to seed some twenty million acres of fallow land this spring. Bear this in mind: the Russian people accept a much lower standard of living than we do, and the result is that food, which may become a political factor, may also become a matter of economic concern to countries like Canada which experienced the effects of the dumping of cheap wheat on the market back in the early thirties. We should consider how it may affect us again.

Consequently, these freight rates, while grain and so on are excluded, will affect everything that enters into the cost of production of grain. Everything entering into that cost will be affected by the new freight rates which have been authorized by the board of transport commissioners. I say therefore that in view of present world conditions the government should give some consideration to the political implications of the board's judgment. We should endeavour to maintain our associations, both economic and political, with the countries of western Europe and with the United Kingdom, and these associations may depend in no small measure, in a few years' time, upon our ability to sell basic commodities at prices which can be paid by the people overseas and at the same time provide our own people with a reasonable and decent standard of living. But the increase in the freight rates will make it difficult to do either or both of these things.

As I have indicated, the board of transport commissioners could not consider many of the factors I have put before the house this afternoon, but this parliament should and must consider them, and the government should and must do so now. The board, though, admitted that the representations made by some of those who appeared before it were correct. Incidentally, last week the new balance sheet of the Canadian Pacific Railway Company confirmed the statements that were made before the board, that the Canadian Pacific had presented a really pessimistic estimate of its receipts for 1947. Again, that is a factor which the government should take into consideration.

The department of immigration at the present time, from the point of view both of developing our country and, what I think is at the moment even more important, of giving refuge to those who have suffered on account of the war, is bringing to the country many new settlers, some of whom will go into the more remote areas of Canada; and transportation costs will tend, as they have always done, to restrict settlement of those more distant parts.

For example, the district represented by my hon. friend the member for Peace River (Mr. Low) contains enormous quantities of good land yet to be settled. There are various parts of British Columbia, and some parts of Saskatchewan and indeed other sections of our country, which, at a time when we are bringing people into Canada for ultimate settlement, are looking for such settlers; but this freight rate increase will make it more difficult to settle these people economically because of the transportation costs to and from the more remote areas of the things they need or produce.

Then, too, we have to give some attention to the livestock industry. This action will certainly retard expansion in the livestock industry of Canada. It will make hog and dairy production less remunerative because the farmer cannot pass on his increased costs; and already, as has been noted in this house by various hon. members, and admitted by the Minister of Agriculture himself, there has been a serious decline in our hog population in the prairie provinces. At the moment we.are suffering severe shortages in some lines of dairy produce, particularly butter. You can see the consequences of this threatened increase if you consider one or two examples of the effect that will be produced.

I have here a bill for the shipment of thirty-nine head of cattle from a Saskatchewan point to the Toronto market. This Saskatchewan point is near Moose Jaw. It is a little place called Crane Valley. The present

Freight Rates

rate from Crane Valley is $1.09 per 100 pounds. The actual weight of the carload of steers was 21,430 pounds. In the amount I am going to put before the house there was no charge for stopovers and sometimes there are substantial charges for stopovers for various reasons. As I say, the freight charge was $1.09. That amounted to $233.59. Together with the care of the car, and feed en route, the total charge by the railway-and I am advised that it is on that total charge that they can make the increased freight rate- was $238.34. If we take 21 per cent of $238.34, which is the increase to be allowed, we find it amounts to $50.05, which the farmer will have to pay.

It may be said of course that the prices of cattle are relatively high, though they are certainly not as high as they are in the United States, and not as high perhaps as warranted by the present situation, but they are very much higher than I can remember them years ago. I can remember when animals were shipped, not to Toronto from a Saskatchewan point, but to Winnipeg from Saskatchewan points, and the farmers received bills for the freight because the cattle did not pay the freight. In fact, I believe I have such a bill in my files upstairs at the present time. Today of course the prices of cattle compared with those of the time of which I speak are relatively high; and if, as will inevitably happen some time, we have drastic reductions in the price level of these animals, then an increase of $50.05 on a carload of cattle, which is substantial at the present time, will be crippling in the future.

These are factors that should be considered by the government when they are coming to a decision in regard to this matter. Of course, I could give other examples equally striking but I do not propose to weary the house with them. The one I have mentioned will suffice. That one, however, could be multiplied many times in respect of other commodities from the maritime provinces, from British Columbia, and other types of goods from the prairie provinces.

Let me point out that the areas to which I have referred, and particularly perhaps the prairie provinces, have always been penalized by the operations of the tariff policies of various governments. Almost everything we have to buy in order to produce and to live in western Canada has been imported, if not from the United States, with a high tariff, then from eastern Canada, where the manufacturer has taken advantage of the tariff and added on the tariff toll to the cost of his commodity.

Topic:   FREIGHT RATES
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PC

Karl Kenneth Homuth

Progressive Conservative

Mr. HOMUTH:

Oh, no.

Topic:   FREIGHT RATES
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CCF

Major James William Coldwell

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

Mr. COLDWELL:

The hon. member for Waterloo South (Mr. Homuth) objects to that statement, but all you have to do is to price an automobile in ordinary times in this country and in the United States and you will find that the tariff is in the price of the automobile that one buys in Canada whether the car is made in Canada or not. Take radios for example. I gave a good example here before Christmas of a little radio which I knew cost $96 in the United States and which I found in one of the large jewelry stores in this city priced at $197 plus tax.

Topic:   FREIGHT RATES
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CCF

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

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

Mr. KNOWLES:

What tax?

Topic:   FREIGHT RATES
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CCF

Major James William Coldwell

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

Mr. COLDWELL:

The excise tax.

Topic:   FREIGHT RATES
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CCF

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

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

Mr. KNOWLES:

It was not on then.

Topic:   FREIGHT RATES
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CCF

Major James William Coldwell

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

Mr. COLDWELL:

The tax was being collected illegally, but unfortunately, in spite of the majority vote against it on this side of the house, the house subsequently validated the illegal collection of that tax. That will be for ever held against the Minister of Finance (Mr. Abbott) and the government.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

A previous debate.

Topic:   FREIGHT RATES
Subtopic:   INCREASES ORDERED BY TRANSPORT BOARD-MOTION FOR ADJOURNMENT UNDER STANDING ORDER 31
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CCF

Major James William Coldwell

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

Mr. COLDWELL:

We have been penalized by the tariff, and now we are to be penalized by a further increase in freight rates. I should like to suggest that we should not leave the matter there but rather that the government consider an alternative policy. If we are, as we contend, living in a country which has been built up largely upon railway facilities, then the people who live in distant parts of it should not be penalized because they live there. Consideration should be given to the equalization of freight rates across this country, thus recognizing that the railways are indeed a vital factor in the preservation of confederation. If the railways, as is contended, are unable to provide adequate services and to pay proper wages to their staffs with their present revenues, it seems to me that there arises the question of a national transportation policy for this country, that that national transportation policy should be presented to the house by the government, which should take responsibility for recommending it, and that the house should consider it and either modify it or adopt it as the case may be. There should be no regional injustices in order to finance the railways or to keep in operation any part of the Canadian economy. In our opinion an extension of government regulation of competing transportation agencies is overdue. I know that one of the factors in the demand for increased freight rates is that much of the profitable

Freight Rates

freight and passenger traffic is now being carried by buses and trucks. It seems to me that whether the buses or trucks are owned and operated by private companies-and I am not going into that aspect of it this afternoon; let us leave that out-or whether they are operated by governments, we should consider how they can best be integrated into the whole transportation system so that they may feed rather than destroy the great lines of railway upon which this country depends for its existence.

I note that the board of transport commissioners admit that railway freight rates -and I shall be just one minute longer, if I may conclude, Mr. Speaker-should be just and reasonable. I say that they have always been unjust, unreasonable and discriminatory as far as certain parts of this country are concerned, namely, the maritimes, British Columbia, and the prairie provinces. This freight increase makes them more unjustified, more unreasonable and more discriminatory. Therefore, Mr. Speaker, I want to urge upon the government that they take immediate action-not consideration but action-to

prevent the increase in rates until a thorough investigation has been made, having regard not only to the economic factors upon which the board delivered judgment but also to the broader political considerations to which I have referred this afternoon, and to present an alternative policy to this house for its consideration.

Topic:   FREIGHT RATES
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April 5, 1948