My hon. friend laughs
because apparently he does not understand it. He takes it out in humour. I like humour. If the hon. gentleman will tell me the joke, unless it is himself, I will laugh with him. I should not like to laugh at him. As I say, the committee was investigating high prices. The Stevens committee was investigating low prices. In a catch-as-catch-can, free enterprise, competitive system there is no power on earth that we know of that will keep things on an even keel. There is no means of controlling things except the desire for greater profits, which leads both to low prices and high prices, depending upon how the pendulum is swinging.
The committee began at the points where increases in prices were most pronounced which, as we discovered, were in matters of food and clothing. We investigated butter, bread, meat, vegetables, fruits and eventually textiles. I agree with the hon. member for Eglinton that perhaps we did not proceed in an efficient way by taking up those prices which happened to be most pressing, nor did we deal with things in a logical way. I agree also with him when he says we did not get very far. We concluded just about the time we should have been beginning. We have not even scratched the surface of the job that was given to us. So we can only speak of the very limited field which we have covered.
The point I would make in that connection is that the basic industries were never touched at all, even though they have both a direct and an indirect effect upon all the commodities that we were trying to study. The price of steel, the price of gasoline and of other commodities all have their effect on the price of bread, and even on the price of butter. But we made no examination into that. We plunged right into butter and pretty nearly stayed there most of the time. The investigation was lacking in thoroughness there, but that was not the fault of the committee. I think it will be agreed that we did all that any committee could have done with such a subject in the time we had at our disposal.
One of the industries which I think should have been investigated, and the committee
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should have stayed here all summer and done it, was the steel industry, also fuel, farm machinery, binder twine, boots and shoes-
Hardware, if you like; commercial rents, freight rates, the manufacture of construction materials and other important industries of that type.
I want to make a comment or two on the findings of the committee with respect to the causes of higher prices. The factors of significance which were regarded as being causal of high prices, in the findings of the committee, were: first, the rise in external prices, that is to say, prices in countries other than Canada with which we must deal; second, the increase in costs of production; and third, the expansion of purchasing power in relation to the goods and services available. I want to make a comment on each of these alleged causes.
With regard to external prices, it is clear that Canada's prices have been rising for some time. Our price rises in Canada become external prices to other countries, causing them in turn to raise their prices still higher because our prices went up. Our relationship in that respect to other nations is pretty much that of an industry in Canada to inter-related industry, and so the spiral will continue just because we have allowed our prices to rise higher and become external prices to other countries.
As to the increase in production costs, I think we begged the question there, because it is more than likely that any increase in production costs must have been caused by the increased prices of certain materials which enter into costs, and not having found what made those prices rise, we should not just assume that there was an increase in costs of production which caused the recent price increases. I think that is begging the question.
As to the third factor, the expansion of purchasing power, I am hoping that the hon. member for Lethbridge (Mr. Blackmore) or some of his associates will enlighten us on that. The purchasing power abroad in this country today is alleged to be more than is necessary to purchase the goods that are available on the market. I believe that the hon. member for Lethbridge and his associates would like to have still more purchasing power distributed. However, they will be able to deal with that point. Of course there can be no doubt that the expansion of purchasing power is a vital factor, and we cannot afford to ignore it, whether it is raised by the hon. member for Lethbridge or in the report of the prices committee. There is a vital connection between the amount of money in circulation at any time and the amount of goods on the market to be
bought, and these factors in a society such as ours must have a direct bearing on prices and cause them to go higher or lower as the case may be.
Having found these causes, the committee should, I suggest, have been vested with sufficient power to make recommendations on howto cope with the effects which we have noted until the causes could be removed, and secondly, to advise how this parliament should proceed to remove the causes of high prices.
I think it will be agreed that the most important point in the causes is the implied shortages in relation to effective demand. I am almost afraid to use the words "supply and demand"; we heard so much of them in the committee. There supply and demand were more or less represented by those who talk so much of it as a law of peerless perfection, which works in such a way that supply is always demanded and demand is always supplied. But that just does not happen, or there would have been no need for the committee.
The question is this, as I see it: Shall we use wisely the principle of supply and demand, or shall we allow the undirected principle of supply and demand to use us? Demand, properly understood, is the measure of a nation's capacity to consume goods; that is the sum total of any rational demand. Supply is the measure of a nation's capacity to produce the goods demanded. These two factors, if used wisely in a planned economy, would be safe guides to our economic policy. But demand in a private enterprise economy means the measure of the total monetary income of would-be consumers, and supply means the measure of what it is profitable to produce. Both supply and demand are hampered by a private enterprise economy. I must not stop to develop that because I see my time is running out.
Everyone knows that shortages in essentials such as food, clothing, homes, and the like will mean higher prices in a competitive market under our present system of private enterprise. That is precisely the first problem with which we have to deal. That was the problem to which the committee had to address itself; for, even if a fuller production were achieved so that shortages were in part at least abolished, the best way of reducing prices would still have to be given consideration, because the need for price controls continues to exist up to the point where shortages cease. Shortages will unquestionably send prices up until only those who have the money can buy, and those who have not the money will not be able to buy. That will, of course, shorten the demand and start us down the hill, and that is where
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you begin to move on toward the next committee which will be dealing with how to raise prices.
We had similar shortages during the war and we dealt with them. This government dealt with them in a manner which I think met with the general approval of the people of Canada, to a great extent at least. We found, during the war, that prices would not go down voluntarily; that nobody intended to bring them down voluntarily. The fact is that prices rose during the war in spite of patriotic fervour, and, but for controls, would have skyrocketed. So that if prices were not reduced voluntarily in time of war, we may be sure that will not happen in time of peace. I want to quote in that regard Mr. F. A. McGregor, combines investigation commissioner, who said this at page 157 of the report:
Under our wartime price legislation the freedom of individual sellers to decide their own prices was sharply curtailed. It had to be, because we were living in a period of serious shortages. Under such conditions competition was not the appropriate public safeguard.
There is also the observation of Mr. K. W. Taylor, chairman of the wartime prices and trade board, who said at page 58 of the evidence:
Shortages . . . are numerous and widespread and some of them are severe ... A 5 or 10 per cent shortage can drive prices up rapidly.
In that connection also let me emphasize again that there is no hope of bringing prices down voluntarily. I, and other hon. members, asked witnesses time and time again whether they wanted to bring the prices down voluntarily, and they laughed at the question instead of taking it seriously, and humorously said that they were in a system in which it was necessary for them to make good while making good was possible; that if they did not make good then, they would go to the bad at some other time, and that, therefore, they were taking all the slack in that they possibly could whenever it slackened up, so that they could take it in. That was the attitude of all the witnesses.
I want to quote next Mr. Graham F. Towers, governor of the Bank of Canada. He was questioned at pages 3361 and 3369 of the evidence as follows:
Q. Have you any suggestions to this committee how prices can be brought down by voluntary methods?
A. No, sir.
Q. That being the ease would you say there is practically no chance of prices going down throughout the world as a whole, and particularly here in Canada where of course we are most interested, as long as the world scarcity of food continues?
A. I think that is probably the case.
Mr. Thatcher: Unless controls come back?
the Witness: Unless prices are forced down
At page 10 of the committee report the following appears:
The committee does not feel that the interests of Canadian consumers would be safeguarded by a system of over-all price and related controls.
Then it goes on to make a suggestion that a measure of price controls might be advisable here and there. I want to emphasize strongly my view that it is not possible to control prices effectively in spots. I think the criticism which has been made in this house and elsewhere about price controls is that you must make it comprehensive and you must have the weight, of public opinion behind you. I think that is a fair statement. I do not believe that we can effectively control prices by just having one item here and another item there under control. In that connection I want to quote again Mr. K. W. Taylor, chairman of the wartime prices and trade board, who was perhaps the most authoritative witness whom we had before the committee on matters of this kind. He said:
As I said before, efficient price control, the fixing of prices, is just the beginning of your problem; that the fixing of prices is just the first step. You have got to have a great range of controls which must buttress and support your fixed prices.
None of this is an argument against price controls in emergencies, when prolonged physical shortages of goods are inescapable.
Mr. Graham Towers had this to say under questioning:
Q. Would you need to have an over-all control?
A. Yes. If you didn't start off that way it would very soon become that.
Q. You could not apply it to just some commodities?
A. I hesitate to say you could not apply it to Yo-Yo's without going beyond that; if you see what I mean.
Q. I mean that is an extreme case? A. Yes.
Q. We are speaking now of action to reduce the general price level.
A. Then I think it would have to be an overall affair.
Why then could we not suggest over-all control at least until such time as we have got over these shortages? The answer is given again by Mr. K. W. Taylor, chairman of the wartime prices and trade board, who said:
Under the Canadian price ceiling policy the general level of retail prices, or the cost of living, was kept almost completely stable for more than four years. This was achieved by a vigorous combination of supply controls, production
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directives, export controls, bulk purchasing, subsidies and rationing. It was a tough and realistic policy, very ably administered and firmly enforced; but its success was predicated on the whole-hearted acceptance of the policy and the procedures by practically all industries, groups, sections and classes.
That is another very fair statement that we shall have to accept, but I do not think we are right if we leap to the conclusion that there is no popular support for this today.
Mr. GIBSON (Comox-Alberni):
includes labour controls.
Mr. IRVINE; Don't worry about that, my hon. friend. I am not asking for controls for anybody that I am not willing to impose on myself; nor do I ask it for one class that I am not willing to impose on some other class.
Mr. SINCLAIR; You are on a fixed salary. Mr. HARTT: That is right.
An hon. MEMBER; Six o'clock.
I have at least twenty minutes left.
Mr. HARTT; I do not mind.
Mr. MACKENZIE KING:
I am rising merely to ask if there is not a desire on the part of the house to sit an hour later at this time.
Mr. MACKENZIE KING:
I gather that most hon. members are in favour of so doing. Unless there is objection it might be agreed that we shall sit until seven.
At noon we were willing to give every opportunity to try to finish the work today, but hon. members opposite did not seem to accept that., and an hour was lost. I respectfully suggest that we should not try to finish in a few hours all the work that is before us tonight. It must be quite evident that it is too much work to attempt to complete tonight. We should not be asked to vote the millions of dollars that remain to be voted in the few' hours that are remaining. I am not now criticizing anybody. But I do suggest that it is too much to expect that all these estimates will go through in three hours tonight. We might as well accept that as a fact and guide ourselves accordingly.
Mr. MACKENZIE KING:
May I say to my hon. friend I am not suggesting that for a moment. I am not suggesting, nor would I suggest that we should try to get through everything tonight. I heartily agree as to that. I think, however, it is the desire of hon. members to make as much progress as they
can today so that so far as next week's proceedings are concerned, we shall be able to conclude the session earlier in the week than might otherwise be possible. Since an objection is made to our continuing longer at present, I will not ask the house to sit beyond six o'clock. We shall resume the sitting at eight,
At six o'clock the house took recess.
The house resumed at eight o'clock.
When the house rose at six o'clock I had been pointing out that the recommendations made by the committee with respect to price controls were half-hearted and that the committee proposes to deal only partly with controls. I had quoted Mr. Taylor and the prices board to the effect that price control must be a comprehensive undertaking if it is to be successful. I had also indicated that there were some people who thought that popular support, which was one of the reasons why price controls during the w'ar were so successful, could hardly be expected from people during times of peace. It is claimed today that public opinion would not support a policy of price controls sufficiently to make it work. That is an assumption.
It has been said that these controls were supported by all sections of the Canadian people during the war because of the great need for winning, and because of the danger in which the nation found itself, but that such support would not be available once the war ended. I submit, Mr. Speaker, that all the evidence is to the contrary. I believe that the people of Canada would be glad voluntarily to support a system of proper controls in peacetime as in war, provided that the same need is there and that they have a proper objective for so doing. I would support that opinion by referring to the last Gallup poll on controls a few months ago, which showed that more than seventy-five per cent of the people favoured the reimposition of controls.
I now wish to turn for a moment to high profits and their relation to prices. I do not hold the view-nor do I think any member of my group does-that high profit which may be made by any individual concern is in itself of great importance in affecting the price level. But we say that a profit system which goes all the way down the lines does have a tremendous effect on the price level. In our inquiry we have found that high profits in some instances were made by individual corporations. As a matter of fact, that
I wish to give a ruling on the amendment moved by the hon. member for Cariboo (Mr. Irvine), and seconded by the hon. member for Vancouver East (Mr. Maclnnis). The amendment proposed for the consideration of the house is for the restoration of price controls and of the machinery necessary to make them effective. I would call the attention of the house to section 2 (a) of the amendment, which reads as follows:
Immediate restoration of a comprehensive system of price controls and of the machinery necessary to make them effective.
This is substantially the same question that was negatived by the house when it divided on an amendment proposed by the hon. member for Rosetown-Biggar (Mr. Coldwell). If hon. members will look at Votes and Proceedings No. 3 for December 9, 1947, at page 45, they will see that amendment, which was in these words:
This house regrets that Your Excellency's advisers have failed to use the powers provided by parliament to control prices-
In view of the decision given this afternoon by the Deputy Speaker I feel bound to rule this amendment out of order.
Mr. W. F. KUHL (Jasper-Edson):
Mr. Speaker, without wishing to give offence to any of the hon. gentlemen who have preceded me, I wish to say that at no time have I been adept in the art of making a hogshead of lather out of an ounce of soap; so I shall make my remarks as brief and to the point as I can, in view of the general desire to terminate this session as quickly as possible.
It was my pleasure and privilege to be a member of the prices committee, though not from its inception. I commenced my service with it at the end of April, in the position previously occupied by my colleague the hon. member for Bow River (Mr. Johnston).
First I should like to endorse the compliments which have been paid by previous speakers to the chairman of the committee, the counsel and the members as a whole, but in endorsing their remarks, I must say there was a notable omission from the compliments that were extended. I believe the witnesses who appeared before the committee, representing various businesses, also deserve a compliment for the contribution they made to the work of that committee, and I wish them
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to know that, as a member, I certainly appreciate the information I obtained. I believe they should be complimented, not only for the information they gave and the patience with which they submitted to cross-examination, but also for the manner in which they overlooked what in some instances 1 consider were positive insults. Perhaps that language is somewhat strong, but sometimes I felt that if I had been in the place of the witness I would have been tempted to make much stronger replies to the questions asked.
I voted for the setting up of this committee in the first place; not because I felt that anything startling or unusual would be revealed, but because I felt that, information might be brought forward which would dispel some of the false impressions abroad in the country, and also that, as a result of the work of the committee, we might be better able to determine what should be done in the circumstances. I believe a good deal of information was placed on the record which, if the public could become aware of it, would dispel certain false impressions which are abroad.
As has been indicated already by the hon. member for Eglinton (Mr. Fleming). I opposed the adoption of the report by the committee. Manj' of the reasons for which I felt I was justified in opposing it were advanced by the hon. member for Eglinton. In the main I believe the criticisms he offered were quite justified and I endorse most of them.
But I had an additional reason for opposing adoption of the report. I think my chief reason was the attitude adopted by the government members, which I resented very much. When I spoke on the motion to set up this committee I said I thought one reason the government was glad to take that action was that for the time being it would silence the wrath of the people with respect to the high cost of living. It would enable the government to offer the excuse that a parliamentary committee was investigating the matter, and as long as that committee sat they could transfer the responsibility from themselves to the committee. The committee has now finished its work; certain recommendations have been made, but I agree with those who have suggested that it still remains to be seen how effective those recommendations will be if carried out. Personally I consider them woefully inadequate to meet the situation.
The attitude on the part of the government members of the committee which I resented so much was expressed in the manner in which many of the witnesses who appeared before the committee were dealt with. I resented
the suggestion that, instead of being regarded as public benefactors, most of the witnesses who appeared there seemed to find the atmosphere like that of a sort of inquisition. They were looked upon as public enemies, who had to account for some wrongdoing. That was the impression I received from the manner in which many of the questions were asked; and I am going to read a few excerpts from the records of the committee to substantiate what I have said. I would not say that applied in every instance; nevertheless in many cases it was true.
Naturally I tried to discover a motive, and the only motive I could arrive at was that up to that time-and it is still the case-the government were not prepared to meet their responsibility in the way I at least think they should. The government have not met their responsibility because they have not done those things I believe they should do for the people of Canada, and therefore the government must look for a scapegoat. I considered the attitude they took toward many of these businessmen was because they were looking for a scapegoat for their own sins. They were attempting to make private business the scapegoat for their sins. In my view it was most unfair for the committee, and furthermore I believe it is a dangerous attitude to take.
From all sides of the house we have heard expressions of fear of the communist menace with its danger to the private enterprise system and freedom in general. The government, the Liberal party and the Progressive Conservative party nominally at least represent themselves as being the champions of the private enterprise system. Yet if one goes over the evidence somewhat carefully he will find that a concerted effort was made in the committee to discredit private business-or at least it had that effect. I am satisfied, from the newspaper reports which went out in consequence of some of the questions asked in committee, that many of the public are under the impression that a large number of businessmen are just a lot of bloated profiteers and chiselers. I believe there is too much of that impression abroad. There has been too much of it abroad for too long a time, without those wiho claim to be the champions of private enterprise lending any more emphasis to it.
Just to indicate a little more specifically what I mean, I should like to refer to one instance of this. While I think of it, perhaps I should say at this juncture that I can understand hon. members of the C.C.F. party doing that, because they have come out flat-footed and have said they are opposed to the private
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enterprise system and opposed to profit. Therefore it is in their political interest to discredit private business as much as they can so as to give them an excuse for nationalizing industry.
However I cannot understand that attitude on the part of those who pretend to be the champions of private enterprise. Therefore I resented the attitude taken by some of the Liberal members on the committee when dealing with some of these matters. The case to which I shall refer is one where possibly we cannot altogether excuse the people involved. But again, as has already been pointed out, I think the .circumstances are attributable to government policy. It was the government which was really responsible. They made possible the circumstances under which these things could happen. Then government members have the gall to turn around and blame someone for taking advantage of those circumstances.
Here is one instance of it-and in this particular instance I think the general public would get the impression that most of the fruit and vegetable business was carried on in this manner, and that profits of this kind, were made regularly in that business. This is the case of Mr. Ruben Marlow, general manager of Marlow and Company Limited of Toronto. It is the case of the famous four carloads of potatoes. I should like to indicate here the way in which this man was spoken to and in which he was treated, which I thought was unfair and uncalled for, in view of the conditions for which the government itself was responsible.
The hon. member for Victoria (Mr. May-hew) was in the chair at the time, and it is his remarks I am going to quote. This/is what he said to Mr. Marlow:
I want to say this; it is my opinion, and it is a little more than an opinion that, in this particular transaction, both the government and its departments were trying to see that there was a supply of new potatoes on the market. The foreign exchange control board released American funds for this purpose. It would appear to me you took advantage of the situation and you prevented potatoes from getting to the public at a reasonable price. In other words, you did not live up to the spirit of the regulations which existed at that time. You took an exceedingly high mark-up. I certainly will draw this to the attention of those writing the report because I think you are doing a disservice, not only to yourself and to the people of Canada, but to the other people in your own business.
Then, when I myself pressed the witness to make a comment upon that statement, the acting chairman said this further:
I fully understand the explanation you make. As far as I am concerned there is no explanar\Ir. Kuhl.]
tion at all, there is no justification for it. There is no justification in your having taken the mark-up on the potatoes which you did at that time. That is my opinion. Those who are writing the report -will have to deal with it in their own way. I feel it is my duty to make that quite plain. As I see it, I consider it one of the most outstanding cases of its kind that has yet been brought to the attention of this committee.
So far as I recall, it was shown that this particular wholesaler had made 43 per cent on the sales of two carloads of potatoes. That is undoubtedly a very high profit. He justified it himself. He considered that it was fair, in the light of prices of vegetables at that time. I considered these statements of the vicechairman a most unwarranted censure of a businessman. In any event, I think the committee could have made statements of that kind among themselves, without saying it to the man personally.
I should like to put the hon. member right, if he will permit me to do so. This gentleman had been buying potatoes for $6.25 a sack and had been selling them at $12 a sack in Montreal and Toronto. So that is 43 per cent on his sales, and I think I was quite right in bringing the matter to the attention of the public.
I am not saying there should not be some censure in the matter. I have not the actual figures here, but the report of the committee says it was 43 per cent on sales. In any event, it affected only four carloads of potatoes and, as I say, the circumstances were precipitated by the government itself. They put the ban on overnight, and they made it possible for this man to make that money. Then they proceed to blame him for making it.
If that were typical of the whole of the vegetable industry I might understand a censure of that kind being made in this instance. But -when it is a mere drop in the bucket-
How do you know?
There was no evidence in the committee that it was a common condition.
I should like to ask the hon. member a question with respect to potatoes. I understand he implies that the government had interfered at that time with the marketing of potatoes. I am not quite clear on the point he makes, and I would ask him to state clearly if he did make that statement.
No, I did not say that the government interfered. I was criticizing the attitude taken by the acting chairman at that time in speaking about the witness in the
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fashion I have indicated, when in fact the responsibility for the circumstances was that of the government. They placed the ban on potatoes and created the scarcity.