March 21, 1949

LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Why does not my hon. friend address the Chair?

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PC
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

The hon. member was a

Speaker in a legislature for years.

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PC

Thomas Ashmore Kidd

Progressive Conservative

Mr. Kidd:

I want to ask the minister, through you, Mr. Chairman, why he has not returned this money. There is another case that I read of only yesterday in the Financial Times. This case was not correctly stated by the foreign exchange control board. This man is a French Canadian, Mr. Peter Brunet, and when he was crossing the bridge en route to Ormstown, Quebec, the English-speaking officer asked him-he works in my constituency-what money he had. He told them he had $5. He thought they were asking him about United States money. They asked for his purse, and when he gave it to them they found $68 Canadian funds in it. They took $43 from him. That man was innocent.

That is why I find fault with the administration of the act. If we had the old trusted inland revenue men they would have told the man to leave the money there because they would know he was coming back on Monday morning. But what was done? These other

Foreign Exchange Control officers put it in an envelope and sent it behind the iron curtain to the foreign exchange control board. The man was penalized and the money has not been returned. The minister knows both these cases and I am glad of this opportunity to bring them before him again. Will the minister state why these moneys have not been returned to Miss Renaud and Mr. Brunet.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

The details of these particular cases have gone out of my head at the moment. Many of these cases are brought to my attention, but I do recall my hon. friend took up with me these two particular cases. From the reports which I got from the officials of the board I came to the conclusion that there was no greater justification in these two cases for returning the money than there would be in several hundred others, and consequently the money was not returned.

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PC

Thomas Ashmore Kidd

Progressive Conservative

Mr. Kidd:

Who is Mr. Rowe and how long has he been appointed?

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I am afraid that I cannot give an answer offhand, although I can get the information. I cannot keep track of hundreds of employees in the Department of Finance and the Bank of Canada.

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LIB

George Alexander Cruickshank

Liberal

Mr. Cruickshank:

Mr. Chairman, I have only been in the chamber a few minutes because I do not believe in sitting at seven-thirty. I think it is a lot of nonsense because no one is here. I heard what the hon. member for Lake Centre had to say and I agree with everything he said because he talks common sense. But I cannot go as far with the last speaker. If we are going to talk about each individual case involving $10 here and $10 there the bill will never get through. There are one or two ways in which I do not approve of the foreign exchange control. I do not know much about foreign or any other kind of exchange because I have never had any money except what I could borrow.

The other day the Minister of Agriculture said that he always spoke as a politician. I do not, because I do not know anything about politics. My riding borders on the United States and many of my people have to cross the line. There are one or two instances that I want to bring to the attention of the minister. Some of us in British Columbia are honest; we do not all come from the mari-times.

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?

An hon. Member:

Those are the ones from Saskatchewan.

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LIB

George Alexander Cruickshank

Liberal

Mr. Cruickshank:

We are allowed $150

United States to cross the line. We may cross the line and being conservative, in the economic rather than the political sense, we save our money and bring back $75. Being honest people in British Columbia, particu-

Foreign Exchange Control larly in the Fraser valley, we turn in $75. Then when we want to go across the line later in the year we cannot get any money. The minister knows that that is the fact. We are not complaining about being allowed only $150 a year, but when we bring back $75-I never do because I happen to be married-we should be given credit. Unlike the Minister of Agriculture, I am not a politician but my riding borders on the United States and these regulations affect my constituents most unfairly.

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PC

Heber Harold Hatfield

Progressive Conservative

Mr. Hatfield:

An act was passed in 1946 permitting a person to have $100 United States currency in his possession; is that still in effect?

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LIB
PC
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I do not remember the exact date, but I think it was the date referred to by the hon. member for Kingston City. I do not want to interrupt, but I indicated before dinner that unfortunately I can be here only for a short time this evening. I gather that the committee wants to discuss this measure for some considerable time. If we could finish in ten or fifteen minutes I could stay, but if not I should like to adjourn the debate and have the house go on to something else.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I shall not be long as I am not going to go into details of cases, but there are one or two things I should like to say with regard to the administration of the Foreign Exchange Control Act.

I think there is on the part of the foreign exchange control board far too much of an attitude of distrust toward people in business. I am perfectly satisfied from what I have seen that there is too great a readiness to prosecute. There are many transactions where the regulations have been technically broken but where there has not been the slightest intent on the part of the individual involved to commit an infraction. I feel that there is far too great readiness to distrust the people involved instead of a willingness to sit down with them to discuss the problem.

In connection with the second aspect of the matter that I should like to discuss, I offer this illustration. This particular case involved a substantial amount and it actually resulted in the saving of considerable United States exchange. But the officers of the board considered there had been an infraction. I am satisfied that if there had been one it was purely a technical one. The officers and accountants and auditors of the board went into this place of business in Toronto and asked to see their books and vouchers. The head of the business readily agreed. He said: "You may make yourselves comfortable here. iMr. Cruickshank.]

We will produce anything you want to see." The officers were not satisfied. They said: "We would like to take your books away. Have you any objection?" He said: "Certainly I have objection. You can take copies of anything you want. You can photostat anything that is here, but I am not going to have my books taken out of my place of business." They were not satisfied with that. Nothing was heard of them for several months, and then like a bolt from the blue in walked the R.C.M.P. with a warrant, seized the books, and a prosecution was launched. It seems to me, Mr. Chairman, that reveals a very highhanded attitude. If foreign exchange control must continue then I put the responsibility on the Minister of Finance to see that this highhanded attitude ceases on the part of the officials concerned.

In saying that, I am not going to underestimate the size of the task they have to perform. If we are going to have foreign exchange control, then of course there must be administration, and there must be enforcement, but I think just as important as the letter of the law is the spirit that is instilled into the officials responsible for the administration and enforcement. In that respect it seems to me, with deference, that the Minister of Finance and the chairman of the board could have a beneficial influence.

There is one other matter. I am still concerned about the possibility of the use of this measure for the purpose of regulating or prohibiting in some way or other the movement of goods. I do not wish to thresh old straw. We recall the assurance given to the house on this subject by the Minister of Finance on June 17, 1946, when he said, at page 2547 of Hansard:

We have no intention of using this exchange control legislation to restrict anything but certain types of capital movement.

On that assurance the bill went to the banking and commerce committee of the house. A good deal has been said about what occurred before the banking and commerce committee of the other place, but some things of importance transpired in the banking and commerce committee of this house. I wish to mention briefly two passages in the evidence given by Mr. Rasminsky to the banking and commerce committee of this house on July 15, 1946. At page 55 of the record this question was put to him:

There is one remark of Mr. Rasminsky's that I should like to ask a question about.

Then reference is made to it, and reference is made to sections 25, 26 and 27 of the act. Then this statement is made in the question:

Surely it is not a complete answer to say that protection is provided in what are apparently intended to be the saving or reassuring clauses, section 25, subsection 2, section 26, subsection 2, and section

27, subsection 3. They do not go so far as to remove from the foreign exchange control board all regulatory power with reference to the movement of goods, currency and securities.

Then follows Mr. Rasminsky's answer:

I do think that the subsections to which you have just referred very definitely have this effect, that they make it impossible for the board to withhold permits for the import or export of goods except on two grounds, one, that the payment is not in a currency which has been specified as the appropriate currency for that transaction; and two, on the ground that, there is an improper valuation placed on the transaction.

Mr. Rasminsky, the alternate chairman of the foreign exchange control board, said there were only two grounds on which freedom for the movement of goods could be refused under the provisions of the act. Again at page 57 there is this question:

In other words, the suggestion there is no regulatory power vested in the board with reference to imports at the expense of any power parliament now has in that regard, Mr. Rasminsky, was referring to the export and import of goods rather than securities and currency?

Mr. Rasminsky answered:

That is right.

We know what happened in November, 1947. This house is entitled to the assurance that the act is not going to be used again- or, more accurately, abused again-for a purpose that was specifically disclaimed by the Minister of Finance in introducing the measure, and by the alternate chairman of the board in giving his evidence in the passages to which I have referred. Before the bill is reported to the house I think the minister should be prepared to give assurance that, except in the two cases referred to by Mr. Rasminsky which are clearly within the terms of the act, the act will not be used again to restrict the movement of goods across the border.

It is unfortunate that there is not an opportunity provided now for a review of the whole administration of the act, and a review of the provisions of the act, as there was three years ago when the bill was before us. It is a great pity, because the provisions of this act ought to be very carefully scrutinized by the banking and commerce committee of the house in the light of nearly three years' experience under the terms of this statute. I think the banking and commerce committee would insist on a goodly number of amendments being made if the committee had the opportunity to make that review.

Finally, Mr. Chairman, the minister should give the house some statement as to his objective. It is not good enough to go on saying, "We believe that a need exists for the continuation of the measure; we are not prepared to say when the act should come to an end, and we are asking in the meantime for a

Foreign Exchange Control two-year extension." We had statements of a similar nature when the bill was previously before the house, and I think the house ought to have a clear statement from the minister as to specifically what he is aiming at in that regard. His predecessor as Minister of Finance had this to say on June 17, 1946, in introducing the measure, at page 2547 of Hansard:

We hope-

He is speaking now of the character of the financial relations between nations.

-that it will be one which does not call for restrictive controls and we shall do everything in our power to bring this about.

Again on page 2547 of Hansard he said, following the passage I read earlier disclaiming any intention to restrict anything but certain types of capital movement:

We expect to be able to avoid any interference with current account transactions.

Will the minister give the house some statement as to what his objectives are? Surely the minister must be prepared to subscribe to freedom in this matter as the objective to which the house should be bending its efforts, to which the administration ought to be bending its efforts, and to which the whole purpose of the administration of this measure ought now to be directed.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I think the latter part of my hon. friend's speech was directed rather more to the principles of the bill than to the details of the sections. I do not know that I can add very much to what I said in my rather lengthy speech last Thursday. As to what the government has in mind in asking for the continuation of this measure, in the disturbed condition in which we find ourselves today in the world I look on it as a sort of measure of national defence. I am firmly convinced that we need exchange control, and that we shall continue to need it for some little time yet; but as I have had occasion to say numerous other times when this legislation has been before the house, it is open to the government of the day or to parliament at any time to repeal this measure. It does not have to wait until it lapses by mere passage of time. There is not much, if anything, that I can add to what I said in my speech last Thursday as to the reasons why the government feels that it must ask for the continuation of this measure.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

Will the minister give assurance against the use of the act to limit the movement of goods across international boundaries?

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I am not going to give formal assurance as to anything. As the committee will recall, the foreign exchange control

Foreign Exchange Control order was used in November of 1947 to control the importation of goods into the country. As I stated frankly at that time, it had never been contemplated that power was contained in the act. In those circumstances I think it was very fortunate that it was there. Concurrently with the use of those powers we introduced into the house a specific bill which is now the Emergency Exchange Conservation Act, in which we put in statutory form the prohibitions and quotas on the importation of goods. I can certainly say, however, that the government has no intention at this moment of using the Foreign Exchange Control Act in that way. The committee will recall that in the Emergency Exchange Conservation Act there is a specific provision that its prohibitions and quotas cannot be increased except by a statute of this house. We can relax, but we cannot increase the prohibitions; I think the law will have to speak for itself.

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IND

Herbert Wilfred Herridge

Independent C.C.F.

Mr. Herridge:

I intend to support this measure, but I should also like to express my support for the suggestion put forward by the member for Fraser Valley. I think it was a practical and reasonable suggestion. I also represent a border constituency in which there are a number of people who go back and forth to the United States. Under the present regulations the United States currency they have when they return to Canada is turned into the bank but is not credited to the $150 total United States funds they are allowed per year. If a person returns the unspent balance of this United States money to the bank, in my opinion it should be credited to the total of $150 a person is allowed. I ask the minister if it would be possible to change the regulations in this respect to give effect to that suggestion.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I would be very glad to discuss it with the board. I do not see why it should not be done, but there may be good reasons for not doing it. I will certainly explore the matter. I am sorry, but I cannot stay any longer this evening. If the committee is not ready to report the bill, I shall have to adjourn the debate.

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March 21, 1949