April 9, 1951

LIB

Joseph-Arthur Bradette

Liberal

Mr. Bradette:

I did not get that. Wool

stood at 157 in January of 1950. In December of 1950 it was 304. In the past we often heard our good friends of the C.C.F. party say that if only there were socialist governments in Europe and Britain there would be no possibility of any profiteering as far as production was concerned. Well, we have had socialist governments for the last four years or more in Australia, New Zealand and Great Britain, and we have seen those three governments corner the wool market of the world. Did they do that for the benefit of the rest of the commonwealth or for the

good of the rest of the world? No; they did it to make a profit out of the sale of that wool. When the Canadian people buy wool, they have absolutely nothing to say as far as the price is concerned; they must pay what is asked for it.

These matters we must keep in mind in a discussion of this kind. Take cotton yarn and thread. In January, 1950, they were 164; in December they were 169. Take iron and steel billets, partly imported; they went from 187 to 207. Certainly we have no control over those prices. No matter what the Canadian government might do, no matter how hard we might try to get these things from Great Britain or the United States for less money, we have no power to bring about a reduction of any kind. Let us take some other items that enter into the cost of living. Who would dare to say we should stop Canadian farmers selling their beef in the United States market? I well remember the agitation some three years ago when the farmers wanted access to that market, and rightly so. That is one of the principal reasons for the high cost of beef at the present time, but who would dare to say the government should tell the farmers we are going to put an embargo on the export of beef? We all know what would be the reaction of farmers in this country from coast to coast.

These are things we must have in mind in discussing this question. Look at lumber. What would happen if we put an embargo on the export of lumber, and took away from our producers the markets they have in the United States and Britain? There would be a great hue and cry on the part of the lumber operators of this country, and rightly so. In my own constituency we have two newsprint mills and one sulphite mill, and every pound of that production goes to the United States. We all know what has happened to the price of newsprint in the last three years. It has increased by at least 200 per cent. Would it be practical or feasible for the government to say that the price of newsprint must be reduced to what it was three years ago? These are some of the things that we as parliamentarians must thoroughly consider if we are to deal with these matters logically, for these things make one realize how difficult it is for the government to please everyone.

We export many other things. Most of the copper from Noranda and from the big smelters in British Columbia goes to the United States market. We also export to that market zinc, some lead and other metals, and we are glad to have such a market. Is there anything we could do about those prices? Then there is nickel, one of the

biggest, yes the biggest, mining industries in Canada, employing thousands of people and adding so much to our national economy. All that production goes to the United States. Are we going to lower these prices even though our neighbours are willing and ready to pay them? I just bring these points to the attention of the house to help every hon. member realize how difficult it is to deal with a question of this kind at the present time and satisfy everyone.

I spoke to my own people only a few days ago and told them there were many ways in which the Canadian people could help. I am going to enumerate some of those ways. It is surprising that the cost of living should have increased so much during the month of February, but in large part that was due to the fact that during the course of last fall most of the raw material that had to be bought by the United States and Canada had increased in price tremendously. Now the cost of production of the finished article has almost caught up. In the United States, for example, the average price of goods at retail increased only 10 per cent in the nine months between March, 1950, and January, 1951. This is a small increase when compared with the increase in the cost of raw materials. But it is not likely that the gap will last much longer. As the raw materials which were bought at the higher prices get into the finished products, the cost of those products will go up also.

This is not a pleasant situation to face, but we must be realists and study it from all angles. Wishful thinking will not settle the problem. Obviously as long as the countries of the world are bidding against each other for basic raw materials such as wool, cotton, rubber, lumber and lumber products including newsprint, sulphite, wood pulp and so on, and base metals and farm products, Canada has to go along with them or do without. Are we going to do without cotton or without wool? Are we going to do without rubber? I just leave that thought with hon. members to answer for themselves and their constituents. That is why the United States, Britain and France are trying to get the main producing and consuming countries outside the Russian orbit together to devise ways of distributing scarce materials they all want. The whole world wants those scarce materials.

After the last war all nations shared the fear of a depression. They were afraid that what happened only a few years after world war I would recur with all the other disturbing factors that such an economic calamity brings with it. So government policies were formulated, with well prepared

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blueprints properly drawn, designed to bring about full industrial activity, fair prices for our agricultural production, almost full employment and plenty of production to meet the requirements of the consuming public. Under that planning it was hoped that there would be no inflationary or deflationary extremes. Of course practically all those high hopes were built upon the premise that after the complete defeat of the axis powers upon the battlefield we had every reason to expect that the whole world was going to enjoy a very long, if not a permanent, period of peace which would allow it to recover from the terrific loss of life, the tremendous destruction, the misery and despair which followed that war. We must carry that thought in our mind as well, because in part at least the present situation has resulted from the policies of Hitler and Mussolini from 1939 to 1945, and indeed from world war I. We are still feeling the effects of some legacies of both wars.

The organization of the united nations in San Francisco enhanced1 those hopes, which unfortunately did not come to fruition. Instead of unity and understanding among the nations the world found itself divided' into two camps, in fact into two worlds. In the other camp was Soviet Russia with all her might, her advantageous position, the well organized and ruthless tentacles of Moscow communism spreading into every part of the world and the so-called1 cold war. The destruction of human lives and material resources has had a devastating effect upon us. Most of the high cost of living of the present time must be traced to Joe Stalin, with his expansionist policies and the threats of war he is making all over the world. At the present time we know that pressure is being brought upon parliament to apply price controls at once. This measure could easily be passed by the government, but would it be the real solution? Will the Canadian people accept drastic controls under the conditions existing? They worked relatively well during the last war, but they were also highly criticized as I said a few moments ago. The people do not like to be pushed around by too many governmental restrictions, at least not the Canadian people, unless there is a national emergency.

I have no doubt there are many measures that could be applied which are within the power of our people, if they are willing to put them into practice. I know I shall be criticized for some of the statements I am going to make now, but I am speaking my mind sincerely and honestly as a Canadian citizen. There are certain measures which people may be willing to practise under dire circumstances which will perhaps prove to be

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a deterrent to the high cost of living. If labour, for instance, were willing to increase the length of the work week by ten per cent from forty to forty-four or forty-eight hours, and I say that deliberately, it would increase the national output by eight or twelve per cent. No matter what one may say about shorter hours with the same take-home pay, that does not increase national production.

Mention was made this afternoon of the high cost of farm implements. These implements do have a high cost but the farmer also has to pay about three times what he used to pay for hired help. Even during the haying season or the crop season most of the men who used to work on the farm will not work there unless they get the forty hour week. They will not work in the rain-I do not altogether blame them for that, but they will not work any more than eight hours no matter what the condition of the hay may be. They will not work after six o'clock either. All this has increased the farmers' cost of production. The labour unions would do well to think about this principle, too. Three years ago I was at a party in the home of one of our national labour leaders. It was mooted at the time that they might have a strike in the General Motors plant at Oshawa. Two prominent leaders were advancing an argument that even if the men did get an increase of fifteen per cent in their wages that would not increase the cost of production of those automobiles. I told them that I did not want to enter into a discussion, but even a labour leader could not make me believe that when wages are increased in an industry like the automotive industry or on the farm or in any other industry by fifteen per cent, the cost of production will not increase by that amount. You cannot get away from that simple principle of mathematics.

I am not against what labour has done. During the last war labour and its leaders did a magnificent job. We do not want to see the old days return. In my youth while working in the lumber camps in the province of Quebec I suffered from poor labour conditions. I do not want that to happen to my young brethren in the northern part of the province today. At the same time every citizen of Canada, including the labour union leaders, the farmers and the professional men, all have some duties to perform under present conditions. We need more consumer goods to absorb the increased purchasing power. Of course, economically speaking, the best results will be obtained from the workers producing more by working harder and more efficiently. They did that during the war, and they do that most of the time without any increase in pay. All

the extra people, all the extra hours that we can get to increase our productivity are going to help reduce the high cost of living; that applies to every citizen in this country. There are certain conditions which attach to this principle, the first being that the extra wages should not go straight into the spending stream. I could give some lists as to how we are spending at the present time. It is true that they have a right to do it, but so far as our economy is concerned it is not the principle our forefathers were practising. For instance, there is the attendance at movies. I go there myself, and I have no regret on that score. Take the man who is spending money on liquor or consider the amount that is being spent on tobacco. I just mention those facts so that the house will realize that, as the leader of the opposition and the other party leaders said this afternoon, those who are living on a pension or with set incomes are no doubt badly hit, but generally speaking our citizens are reasonably prosperous.

I was speaking to some lumbermen in my section during the Easter recess. During last winter some of them earned from $12 to $16 per day. They are spending money and they have the money to spend. Take the men who are working in the big mills in Kapuskasing. I believe they earn something like $2 per hour. They are not feeling the effects of the high cost of living to the same extent. We are not all in that fortunate position, and to that extent I agree with what has been said. The leader of the C.C.F. party mentioned one or two particular cases in which some people were in dire circumstances. When the leader of a party takes the trouble of citing one instance in which the family is suffering-I admit that should not be tolerated-I believe he is not being fair when he does not give the other side of the picture. I can give that picture. Since the last war many of the people in my constituency have started little grocery stores or restaurants, small enterprises like garages, et cetera, with small amounts of capital. Today they are out of the red and some of them are worth $10,000 or $20,000. This picture can be repeated from coast to coast. We realize that, as the leader of the C.C.F. party said this afternoon, there is some suffering. I could cite some very bad cases myself, but it is not the general situation. Perhaps it is not the fault of the father or the mother, but in some cases it may be the fault of one or the other. Generally speaking, people who are healthy and who have a good occupation are not feeling the pinch as they did in the period 1930-35, and they certainly do not want to go back to those times.

We want to increase the supply of goods so that production will increase more than the demand. Ta:xes will play a part in this, but they cannot be a cure-all and it is not a real remedy. Our good Minister of Finance (Mr. Abbott) has received a lot of publicity during the last few months about the terrible budget he is going to give this house tomorrow night. He is responsible for the finances of this country. Since I do not know that I shall have another opportunity, I am taking this occasion to compliment him for the good job he has done as Minister of Finance, a very difficult responsibility indeed.

It is recognized that there are drastic ways of curbing inflation, and that they are effective. There is practically no inflation in Russia, but do we want our government to copy the Russian method of deterring inflation? I well recall that only about three years ago we heard of an order given by the Russian government which meant a loss of forty to fifty per cent to the citizens in that country of all the bonds that they had bought during the war. We do not want that to happen in Canada. In Russia all the goods are rationed. They have very little butter. They have practically no meat, but they have many guns and aeroplanes. We know that, and we have to make some sacrifices to meet that threat. Surely, we do not want this parliament to copy the attitude or attempt the methods that Russia has adopted to deter inflation. Surely, we do not want that to happen here. What a marvellous gesture it would be for example

I speak only for myself in this case-if I forgot the interest on my bonds during the next four or five years. I hope I have the courage to do it, and if it was generalized no doubt it would be helpful in aiding in solving inflation.

What about management? Up to the present time our people have had confidence in the Liberal party because we believe in the free play of supply and demand. In the election of 1945 there were no faux-fuyants so far as our policies were concerned. We went to the Canadian people and told them we would gradually remove controls once the war was over. We have done that and the people voted for us in 1945. They voted for us again in 1949 because they had confidence in the principles of Liberalism. But at the same time, did all the manufacturers, did all the wholesalers or the retailers play fair with the government, or our present system and way of living? No doubt there have been some cases where there have been exorbitant profits that have not been warranted, that were unfair to their customers; and unless they mend their ways the government must of necessity to some extent step

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in and stop those activities and some of those excessive profits.

What about the wholesalers? If tomorrow they will say we will accept 10 per cent less gross profits, that would be a marvellous and helpful gesture. What about the retailers in the same way accepting 5 per cent or 10 per cent less, always having regard to the losses they may have in collection and general expense. These are matters we could explain, the same as I did in my own section, to make the people realize that they cannot expect the government to settle alone by itself the high cost of living at the present time but that we must all put our shoulders to the load. Even in peacetime we cannot completely rule out controls. There are limits to fiscal and monetary policy, and no democratic government can do more than is warranted by the active support of its people.

I was in my home town a few days ago and I saw one man buying twenty cases of sweet biscuits. That was hoarding. I know that some people bought sugar at the beginning of the war around 1940 and still have some left. That also was hoarding. I was told by a storekeeper in. the drygoods business, an excellent and alert businessman, that at the present time the retail trade is buying as much as they can because they are afraid the price of men's clothing and of women's clothing will go up after this coming budget. You read in the newspapers a few days ago-I do not know how true it is; I read it myself; that is all I can say about it-that in British Columbia some clubs there bought some liquor to the tune of hundreds of thousands of dollars because they feared that as a result of the budget tomorrow there would be an increase in the excise tax on liquor. These are examples of things that the Canadian, people do not want to see done generally at the present time or in fact at any time. It is not playing the game with our country. It is not playing the game with themselves either.

This is no time for any businessman to think that he should get all he can while the getting is good. It is no time for the labour union leader to think his union should get all that it can while the getting is good. In that leadership there are good men who realize the seriousness of the situation. I do not want to believe some of the headlines that I saw on Friday and Saturday when information came out from the bureau of statistics to the effect that the cost of living had increased by 4 points or more. They said that we were going to have some labour trouble in Canada. That is not the kind of leadership they have given us during the last seven or eight years. It was better leadership than that. If they have grievances, they should present them to

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the Canadian people, through their government, in a practical way, in order to be listened to by Canada as a whole.

This is no time for the man with money to think that he has the right to hoard and to bid for scarce goods, letting the devil take the hindmost. In doing so, they are all inviting inflation, inviting controls and, perhaps, unwittingly working for the communists. Again I repeat what I said before. There is no doubt that the high cost of living that we have at the present time is to some extent playing into the hands of Joe Stalin and into the hands of international communism, because they can point out what are faults in the economy of the capitalistic system and if unchecked may be conducive to bankruptcy. Again I repeat that the remedy lies with the government and also with every one of our citizens. We all have serious obligations to discharge on that score.

Our people are made of better fibre than that and, as in all times of crisis, they will rise as before to the occasion; and by the help and co-operation of all, they will surmount this difficulty in the same manner and in the same spirit as that they so readily demonstrated during the last two great wars, which gained for us the admiration of all the nations that were in a position to know of our accomplishments.

Again I repeat that we should always remember this. A country like Canada, which of necessity needs world markets for our great exports, cannot entirely control the cost of living. How many pounds of tea do we produce here in Canada? Tea is high in price at the present time, but we have nothing to do with the price of tea over the counter at the moment. How many pounds of coffee do we produce here in this country? Not a single pound. We have to buy it from South America and the South Americans will not accept dictation from Canadians with regard to the price of coffee, no matter how much they like us; we have to accept their quotations. These are matters of supply and demand, of interchange between countries of the world in which one trader cannot dictate to the other in the matter of prices. The same thing applies as forcibly as I mentioned a few minutes ago to the sales that we make to all the nations of the world, for which we get much higher prices than we did six, seven or eight years ago. We cannot and will not put embargoes on our exports at the present time. We still need United States dollars. We want the export markets to be wide open to us. We need to keep our balance of trade. These are necessities, and the leaders of this country must recognize them, and to interfere with them would prove disastrous.

I appreciate this opportunity which has been given to me to make these statements. I made them sincerely and I spoke from the heart. I know that in some sections what I have said will not be popular, but I believe it is my implicit duty to give expression to these thoughts, which I believe are shared by the people I represent at the moment.

I always very much admired the great artistry-I believe that is the proper expression-of the Canadian parliamentary system which is based almost entirely upon the British parliamentary system, with all its common sense and safeguards. Today, on the motion to go into committee of supply, opportunity was given to hon. members to speak on an important problem on which no doubt we shall spend quite a few hours. Buit I believe this is the time and place to compliment the previous speakers-the leader of the opposition and the leaders of the other parties-for expressing their opinions in a clear-cut and forceful way, although you could tell that they all realized the seriousness of the situation. The leader of the opposition was not entirely drastic in his request for controls. He did not make any such plea. We do not want absolute controls that will cut all across the economy. He does not want that because he knows it is not practical. From 1930 to 1935 I sat on the opposition benches and I saw from there the efforts of a fine man, the late Lord Bennett, who was caught in a situation that no human being no matter how gifted he might be, no parliament or no nation could have solved1. I refer to the depression. For five solid years that man must have worked an average of sixteen hours a day. He did the best he could under the circumstances. But sometimes there are certain problems that are outside, bigger and beyond the orbit of a parliament or of a nation.

Today I do not believe that many Canadian people think that we can, as the leader of the C.C.F. said, roll back the high cost of living. You cannot roll back the high cost of living at the present time as you roll back a 20-foot log. You cannot do it in that way, unless you take some drastic measures which the Canadian people will resent for the next decades to come. You must use the system that you have at the present time, try to comprehend the mentality of the Canadian people and in close co-operation with them try to do what is best for them and1 the nation as a whole. We all realize that unchecked! inflation would be calamitous for this country. It is a dangerous issue. The leader of the C.C.F. party made it quite clear from the history of what happened to Germany and what happened to other nations.

We do not want that to happen to Canada. We must always remember this. The government does not deserve to be criticized if they are looking closely at what is happening in the United States, and at their experience with control, under present conditions. Perhaps it is not working as they would like to see it work, but I have no doubt it is doing some good. Already the government, through the good offices of the Minister of Trade and Commerce (Mr. Howe), has looked after some control of commodities in short supply. He has done a good job on that score. Let us take, for example, the buying of automobiles: there are some restrictions today; you have to pay 50 per cent of the purchase price. That is also a step in the right direction. With all these matters up for discussion in the house, I believe it is our implicit duty to tell every one of our constituents that parliament is fully alive to this situation but that it is also fully aware of the legacy which has been imposed upon us and which we are not asking for and which is certainly not of our own making. If the great hopes we had in San Francisco had been fulfilled, if at the present time there were no two worlds, if we had communication as we have between businessmen and had friendly diplomatic relations with Soviet Russia and her satellites, how different the situation would be at the present time- undoubtedly fruitful it would be to allin offering amendments to the motion to go into supply I sometimes think that hon. members go too far. I believe it was only two years ago that the leader of the C.C.F. party offered an amendment to the motion for supply in which he deplored the unemployment situation at that time. We realize that there were signs of unemployment, but most of it was of a seasonal nature. At the same time the discussion was a good one. Hon. members will recall the dire calamities the hon. member suggested would fall upon the Canadian people. He talked blue ruin at the time. In my view that was not the proper way to discuss unemployment.

I must say that this afternoon the discussion was somewhat more elevating. Hon. members who spoke seemed to be trying to suggest ways and means whereby a solution would be found-because it must be kept in mind that no party, no matter what it happens to be, could take the credit to itself for getting a solution which would be reasonably satisfactory in settling to a certain extent the condition of inflation and the high cost of living now prevailing.

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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Depuly Speaker:

Order; the hon.

member's time is exhausted.

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Mr. Bradelle@

I was going to refer to another resolution that was moved four or five years ago by the hon. member for Melfort (Mr. Wright). He is a good agriculturist and a good member of parliament. Upon that occasion he moved an amendment to the motion for committee of supply in which he said that, in view of the high cost of farm implements, farmers could not afford to buy them, and that they were not receiving a sufficient amount for their crops. Most of his fears expressed at that time did not materialize.

Let me say to the leader of the C.C.F. party that those of us in the Liberal party are free to vote according to our conscience. We have good reason to follow our leader because at the time of the last election I maintain he received a national vote throughout the length and breadth of this country. Again, with the country facing difficult conditions, the people realized that the future of Canada for the next three or four years is in good hands. So far as I am concerned, I will do all I possibly can to help everyone, and to help the government to see that the proper measures are taken whereby justice and fair play will be given to every member of our population.

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PC

George Harris Hees

Progressive Conservative

Mr. George H. Hees (Broadview):

Mr. Speaker, when speaking in this house on February 8 last, as recorded on page 209 of Hansard, I said that the spending of $5 billion on our defence program would cause an inflation which could only be kept in check by applying very stringent measures. The control measures I proposed were:

(1) Over-all price, wage and rent controls;

(2) Fiscal and monetary measures;

(3) Control of distribution and allocation of materials.

I made those recommendations only after a very thorough study of the report of the commission on prices, which had been set up by the present government after the last war to examine the causes of inflationary pressure, and the means by which those inflationary pressures could be controlled.

The measures I advocated are the same measures which this present government has never ceased to claim operated with such tremendous success during the last war. They are the same measures which Mr. Ilsley claimed, when speaking ini the house, had saved the taxpayers of this country $12.50 for every dollar expended in operating the controls.

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Therefore I find it difficult to understand the government's reluctance to bring in the measures which it claims it operated with such success during a similar period of inflation, at the time of the last war, and which it claims saved the taxpayers such a tremendous amount of money.

While speaking on February 8 I pointed out that if controls were not imposed right away, the cost of living would increase at an ever-increasing rate. The increase in the cost of living during the past two months has more than borne out that prediction.

Before the present session opened I talked with a man who had held a very important position in the wartime prices and trade board. I asked him what, in his opinion, would be the time required to set up the machinery, and to assemble the personnel, that would be necessary to handle price and other controls. He replied that it would require between three and four months.

For that reason, while speaking in the house on February 8, I strongly urged the government to set up the machinery that would be needed to handle price and other controls immediately, so that our defence program could proceed without undue hardship to the people of the country. I pointed out that prices had already risen considerably, in anticipation of controls, because there had been intimations from the government at various times that controls were on the way. I pointed out, further, that every day the imposition of controls was delayed, prices would continue to rise.

The government disregarded completely all the suggestions made at that time to set up the machinery that would be required to handle price and other controls, with the result that we have lost a vital two months. During that time, the cost of living has risen a phenomenal 7 points, with an increase of 4-5 points having taken place in the last month.

During that two-month period, producers have continued to boost their prices in anticipation of the application of controls; and each month from now on they will continue to boost their prices still more, to make sure that, if a roll-back of prices should be applied, they will be "all set", as the Minister of Trade and Commerce (Mr. Howe) has so aptly described what he knows is going on from one end of this country to the other.

Owing to the unwillingness of the government to act, we are still a minimum of from three to four months away from having the machinery that will be needed to handle price and other controls. This refusal on the part of the government to take steps to stop this runaway inflation is causing tremendous

hardship to pensioners, and people in the low income groups. I say it is a callous disregard of the needs of the people.

Therefore once again I strongly urge the government to set up the machinery that will be needed to handle price and other controls now, so that the cost of living can be kept within reasonable bounds. Even if that decision were taken today, we must remember that we would still be from three to four months away from having the machinery we will need to handle price control, without which we cannot hope to control prices and keep the cost of living within reasonable bounds. The government therefore must act now.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

Mr. Speaker, it is regrettable that this debate should have taken place the day before the budget for I am sure that my colleague, the Minister of Finance (Mr. Abbott), will in the course of his budget speech deal at length with the problems of rising prices and inflation. Since you have permitted the debate to take place there are a few comments that I feel should be made.

The government is just as concerned about rising prices and inflation as are the members of the opposition who have spoken. There is perhaps no problem before the democratic countries today more important than inflation, for inflation can undermine the very foundation of society. It is the duty of every government to take such measures as lie within its power to prevent the forces of inflation from gaining the upper hand. Moreover, the Canadian government has a positive policy to control inflation. I suggest indeed that no government is doing more of a constructive nature to relieve inflationary pressures than the Canadian government. Why then has the cost of living been rising?

Let us look at the facts. Prior to the outbreak of hostilities in Korea the cost of living had been declining. Between August 1949 and January 1950 the index dropped from 162-8 to 161. Between January and May 1950 the index rose by as much as it had declined and a bit more. In May 1950 it stood at 164. Then came the Korean episode and a steady rise which in ten months has resulted in an increase of nearly 16 points or about 10 per cent in the cost of living index.

In order to understand what has been taking place it is useful to break down the index into its component parts. First is food. The cost of food accounts for no less than 57 per cent of the increase which has taken place in the cost of living index since

last May. Now then which of the food items account for most of the increase? Again the answer is pretty clear. A large part, although of course not all, of the rise is accounted for by beef and butter.

Those are important facts because what the opposition members are really urging when they suggest that price controls should have been in effect is that the prices of these food products should have been under control. To be specific, one of the things they are really suggesting is that the export of cattle to the United States should have been restricted. That is the only practical way I know of of preventing the price of beef in Canada from following the price in the United States. Are members of the opposition really prepared to advocate that the government restrict the movement of Canadian cattle to the United States to markets which Cana-' dian farmers have built up and fostered for so many years? Would it be in the best interests of this country to take such action with all its implications in connection with our trade relations with the United States and our foreign exchange position?

I next take fresh vegetables which accounted for a substantial part of the rise in the cost of living.

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PC
LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

I shall tell you in just a few minutes. During the last war we did very little about fresh vegetables because the prices varied so much from season to season. I doubt whether the price control of fresh vegetables is a practical proposition. I could go further down the list of foods, but I think I have said enough to illustrate my point. In general it would have been impossible to prevent a substantial rise in the price of food and consequently in the cost of living without taking measures which would have been either impractical or necessitated drastic interference with traditional markets for farm produce, or which would have required large subsidies.

I now come to the next group in the cost of living index-clothing. This group accounts for some 12 per cent of the recent rise in the index. The largest clothing increase is to be found in the prices of two chief textiles, cotton and wool. The price of wool has more than doubled since Korea and the price of cotton has risen by nearly 50 per cent. These are prices upon which Canadians have virtually no influence. They are established in the markets of the world by world forces of demand and supply. The simple fact is that the demands for cotton and wool throughout the world have risen more quickly than the supply. In one way or 80709-1121

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another the demand had to be cut down and prices were bound to rise. Fortunately the supplies of synthetic fibres have been rising rapidly, both in Canada and elsewhere, or otherwise the clothing situation would have been much worse. We shall certainly have to depend more in the future than in the past upon these new types of fibres in order to meet increased world demand for clothing.

The rent component in the index accounts for six per cent of the rise in the index. Since May the average increase in rent has been substantial, but not as great as some people thought would be the case. Rents were held down very tightly during the war and it was inevitable that in the post-war period there should be a substantial increase. The federal government could not have justified a policy of holding rents at their pre-war levels indefinitely.

Perhaps I might conclude this brief analysis of some of the main causes of the recent increase in the cost of living index by examining the 4-5 point increase that took place in February and that precipitated this debate and forms the basis for the opposition amendment. Of that increase, 66 per cent was accounted for by food, 10 per cent by clothing, five per cent by rents and 19 per cent by other items. Again food was the principal item. In fact 50 per cent of the whole increase in the cost of living index during February was accounted for by meat, butter, fresh vegetables and eggs.

The food increase is not an indication of runaway inflation, as has been suggested by opposition speakers. A preliminary survey of March prices indicates that the index will hold about even during March, or at the worst show an increase for that month of not more than one-half of one per cent. I am not suggesting that farm prices are too high or that recent increases in farm prices are unjustified or that all of the increase in the cost of food is due to higher farm prices. As a matter of fact it has been suggested in this debate that there is a wide discrepancy between farm prices and retail prices, but the statistics do not indicate that result.

Comparing price increases for the period March 1950 to March 1951 we find that the retail prices of fresh meats have risen by 24-8 per cent whereas the wholesale prices of the same meats have risen by 31 per cent. In other words, the wholesale price has risen to a greater extent than the retail price. The retail price of beef steers has risen 31-5 per cent whereas the wholesale price has risen 39-2 per cent. In the case of fresh pork the retail price has risen 21 per cent whereas the wholesale price has risen 22-8 per cent.

Cost of Living

In the case of eggs, in that period the retail price has risen by 32-7 per cent whereas the wholesale price has risen by 30-2 per cent. In the case of milk the retail price has risen 6 [DOT] 1 per cent and the wholesale price has risen 3-2 per cent. Therefore in general the rise in the wholesale price has been somewhat greater than the rise in the retail price for the items that I have mentioned. All I am suggesting is that to keep the cost of living from rising it would have been necessary to put firm controls on farm prices.

These are the facts, Mr. Speaker, about the recent increases in the cost of living index. They illustrate some of the implications of price controls which are being so ardently advocated by both the official opposition and the C.C.F. party. As a result of its experience with price controls- during the last war, the government knows what is involved in- price controls. It knows how much people have to be regimented and pushed around if price controls are to work successfully. I find it interesting that I have met no one who had administrative experience with controls during the last war who believes that the Same type of controls would be effective or desirable in the present situation. If anyone else knows of anyone who has a different view I would be very interested in knowing his name.

The opposition of course is very vague about the kind of controls it would put into effect. As the leader of the opposition (Mr. Drew) put it, they must be moderate and flexible controls. They must be fair to everybody and hurt nobody. The plain fact is that no such controls would be worth the paper they were written on. The government is not going to put into effect controls which do more harm than good. I have said this before and I say it again. We are not going to put widespread controls into effect just to give the appearance of doing something. We are not going to put widespread controls into effect unless they can be made to work, can be enforced and mean something.

The leader of the opposition quoted a statement or two that I made a year or two ago. Perhaps I might quote a statement that he made on November 24, 1949, as recorded at page 2158 of Hansard. I do so because I believe it is a good thing to keep in mind at this time. I am sorry that he has changed his viewpoint. He said:

I was Interested ... to hear a reference to competition and the necessity for competition to keep prices down. That is what we believe in. When we talk about a free economy and free enterprise, we are asserting our belief that the individual man or woman in his or her home in this country benefits most from a system which by competition itself

[Mr. Howe, j

will improve quality and lower prices. That has been the advantage of this system; and it is because of that system that we have on this continent today the highest standard to be found anywhere in the world.

He was referring to the standard of living.

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PC
LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

Well stated, and just as true today as it was at the time it was made.

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PC
LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

It is a great pity that my hon. friend changes his policies so often.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

Mr. Speaker, on a question- of privilege, I would remind the minister who is speaking, if this actually is of his own preparation, that there was not an actual defence program in force at that time. The defence program had not started.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

My hon. friend can never be a gentleman. That is quite apparent.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

What I said was that the defence program had not started then. If the minister had been listening to the argument he would have heard me put forward exactly the same argument today, and I then pointed out that the defence program had completely changed the picture so far as the necessity for dealing with this situation is concerned.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

That reminds me, Mr. Speaker, that in 1945, when the war was still on and inflationary pressures were at their worst, the leader of the opposition party demanded that all controls be abolished immediately.

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?

An hon. Member:

You were not here then, George.

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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

Can you give us the quotation on that one?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

I would be glad to. I have the clipping. It was made by Mr. Bracken in a speech at Toronto. The leader of the C.C.F. party has a solution. He says that before freezing farm prices we should call together the leaders of the farm movement and work out parity prices. I think his idea of parity prices is considerably higher than the present prices except in the case of meat. He also suggests that we should call together the labour leaders and work out a system of wages. I understood again that the wages that would be worked out would be higher than the present wages. If that is the path towards keeping the cost of living down I will leave it to the leader of the C.C.F. party. I do not believe that conferences of that kind, and attempts to adjust prices and wages before instituting effective controls, would be a constructive method of approach to the subject of control.

Every country about which I know has had to accept some increase in the cost of living in recent months. In the United Kingdom, where controls have been more extensive than in perhaps any other country, the cost of living has been rising faster than in Canada. The United Kingdom government found that it could not go on paying higher and higher subsidies indefinitely. I believe that, whereas the cost of all retail prices in Canada rose by 15 per cent in the year 1950, the increase in the cost of all retail prices in England was 23 per cent, and I believe in Australia it was still higher. I know that the Minister of Finance (Mr. Abbott) intends to give a good deal of data along that line in his budget speech and I will not undertake to anticipate the statement he will make.

In the United States, where price controls were put into effect a few weeks ago, the cost of living has continued to rise. In fact, as I understand the United States price control system, virtually all increases in costs are to be passed on to the consumer by a system of margin or mark-up controls. Of course, as hon. members are aware, most food items in the cost of living are not yet under effective control in the United States.

I do not wish to leave the impression, however, that the Canadian government has a defeatist attitude towards inflation and rising prices. On the contrary, we are fighting those dangerous and disrupting tendencies where we think the fight can be carried on most successfully, namely, in the field of fiscal and monetary policy and credit control, supplemented by certain direct action about which I shall have something to say later.

But Canada cannot insulate herself completely from a world-wide inflationary movement in prices. In fact Canada is less able to do so than most countries because of our dependence upon external trade. As I listened to this debate today, I wondered how the official opposition could reconcile its demands for controls with its attitude to the extension of the Export and Import Permits Act. I can assure the house that general price controls are not possible without very extensive and arbitrary controls on exports and imports.

It has been suggested that we could keep the cost of living from rising by paying subsidies. Perhaps that is so, but I suggest that the payment of subsidies is in itself not antiinflationary. In fact, unless the subsidy bill is paid in full out of taxes on the great mass of the people, subsidies are inflationary. They add to public spending. I do not think that the people of Canada want to be faced indefinitely with taxes of hundreds of millions of dollars a year to pay subsidies. If we were

Cost of Living

at war and had good reason to believe that the situation was of a very temporary character, subsidies might be a useful device as part of the over-all system of price control.

I suggest subsidies are less appropriate under present circumstances.

Before concluding I should like to make a few comments about the supply position, for it seems to me that there has been a good deal of unnecessary concern about coming shortages, which has led in turn to unnecessary price increases.

There are no real shortages of civilian goods. Now and again there have been rumours of shortages, and when these resulted in a scramble to buy beyond immediate needs normal commercial stocks have been reduced below a safe operating level in some localities. Members will recall the run on supplies of sugar last August. Nails have given us trouble. Recently the same process began with diapers but fortunately was quickly stopped. In these cases what was lacking was not supplies but confidence in the future availability of supply.

Every time a run on available supply occurs it tends to create abnormal buying back through all stages of distribution and production, right to the raw material. This sort of thing pushes prices up. Confidence in future supply is so important that it seems timely to explain what steps have been taken to forestall the sudden appearance of any real scarcity of goods at the retail level.

Early last autumn it was apparent to us that meeting defence demands for nylon could make difficulties for the hosiery industry and other users. With the co-operation of the producers, nylon yarn was quietly and immediately put under allocation and a reserve was built up before defence contracts were placed. Production under these contracts has reached full stride without creating any additional demand on supplies available for civilian uses. There have been no queues at stocking counters and no panic buying as a result.

We are in constant consultation with industry and the distributive trades to discover any threat of future shortage far enough in advance to permit its correction. For instance, we have had to adjust contracts for certain fabrics to forestall a scarcity of work-clothing materials, and have assured a supply of steel for the fastenings. Now there is no reason for retailers to press for larger and quicker deliveries and so apparently create a scarcity of work clothing. The makers are maintaining their output at a high level. We have to take action quickly in order to kill such rumours.

Cost of Living

In other cases we have resorted to export control to protect the flow of material going into Canadian production, as in the case of waste paper, rags, scrap metals, benzol and glycerine. An exchange of quotas with the United States has been arranged in hides and skins to maintain our normal production of leathers. In other cases we have assisted expansion of Canadian productive capacity, as in the case of rubber.

We cannot escape having to pay the going world prices for imported raw materials but we can at times arrange for greater supplies of cheaper substitute materials. Wool prices are very high but rayon can be used in a considerable degree to blend with wool without sacrificing quality. The rayon sells for around 43 cents a pound, while fine worsted tops sell for around $4 a pound. We are giving every assistance possible to increase our production of rayon and our foreign suppliers have also been helpful. As a result, in filling our defence needs for worsted fabrics we shall not give reason for any panic buying by the public. The housewife who searches a little further and buys a little better will not by any means feel the full effect of high wool prices.

Supply of steel is our most serious problem and every move to expand Canadian production of raw materials or to ensure adequate services, such as power supply and transportation, involves steel. Here we have to plan our moves in collaboration with our friends in the United States, which country supplies a large part of our requirements, particularly for special mill forms. We are now planning to program steel necessary to maintain production of agricultural machinery just as previously we have programmed steel for freight cars, locomotives and lake shipping.

Generally speaking our problems with steel are not reflected at the retail level, but we are in consultation with industry regarding simplification of the construction of durable consumer goods such as washing machines, refrigerators, hardware and plumbing supplies. The purpose of simplification is to maintain production while saving scarce materials. The objective is to have a manufacturer who has been making perhaps three dozen lines now concentrate on one-third of that number and still meet all the real needs of the market. It is conceivable that by doing so he may also save costs since he will gain a higher volume of output in any one line. There is no better brake on prices than adequacy of supply. Even this will not work over a short term, however, if manufacturers, distributors, and the public are panicked into buying out of fear of future shortages.

In fact, there are no serious shortages of ordinary consumer goods in sight. Defence expenditures are substantial and will be substantial but they do not represent nearly as large a drain upon manpower and materials as an all-out war. I am sure that we can get along quite comfortably as consumers and still engage in a substantial defence effort. A few things may in the course of time become unavailable or relatively scarce, but standards of living will remain high. Unless all-out war comes, Canadians can continue to live well.

The greatest contribution any Canadian can make to stop inflation is to avoid panicky buying and to produce as much as possible. All of us should be thinking in terms of working harder; of working longer hours, rather than shorter hours. There is too much of a tendency, it seems to me, for people to look to government for solutions to their problems. Governments can help and should help in dealing with inflation; but consumers, labour unions, farm organizations, and businessmen can do much by their own efforts to reduce the pressures that lead to higher prices.

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CCF

Joseph William Noseworthy

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

Mr. J. W. Noseworihy (York South):

Mr. Speaker, I listened with a great deal of interest to the speech of the leader of the official opposition (Mr. Drew) and the speech just completed by the Minister of Trade and Commerce (Mr. Howe). One feature about those speeches was striking, and must be a bit confusing to the country. It is the complete exchange of positions on the subject that has been made both by the leader of the opposition and the spokesman for the government. One would think the Progressive Conservatives had now become Liberals and the Liberals had become Conservatives following the old Conservative line. The speech by the leader of the opposition reminded me of some of my early religious training. The church to which I belonged strongly believed in sudden conversion, and even condoned deathbed conversion. I am sure that those of us who are interested in this problem, those of us who have been advocating price controls, will welcome the conversion of the Conservatives, even though that may be a deathbed conversion. What appears to me, and to most of the people of the country, as the gravity of the situation, has already been set forth in this house. From the minister's speech it is quite evident that the government does not share the opinion of the people in this country that the inflationary situation is serious. I think I could do no better in emphasizing the seriousness of the situation than to put on the record a statement issued on April 4 by the president

of the Trades and Labour Congress, Mr. Bengough, and the president of the Canadian Congress of Labour, Mr. Mosher, when the last price increases were first published. They say:

The latest rise in the cost of living index, 4-5 points in a single month, is by far the biggest for any month since the war. It is the fourth increase in a row, and each one has been bigger than the one before. The inflationary snowball is rolling faster and faster, and getting larger and larger. The index is now 16 points above last year, and over 60 points above 1945.

Every one of the sub-indexes went up during the month.

While it is true, as the Minister of Trade and Commerce pointed out, the highest increases were in food products, nevertheless every one of the sub-indexes went up during the month.

Food, the most important of the whole lot, went up by just over 9 or 9-5 points. Food is now almost 30 points above last year, and 100 points above 1945. It is rather interesting in this connection to note that in the past those Liberal speakers who have defended the present rise in prices, and who have opposed any measures of price control, have been inclined to blame the wages demanded and received by industrial workers for the higher cost of living. A new line was taken by the Minister of Trade and Commerce tonight when he indicated that the sudden rise in the price of food is due to the prices which the farmers have been receiving for the cattle they have been exporting. Labour cannot be blamed for the phenomenal rise during the month of February, since there were certainly no increases granted in the month of February that would account in any way for the rise which took place. These leaders say there is no use blaming it on wage increases.

There were no increases in February which could begin to account for a 4-5 point rise in the index; on the contrary, there is not the slightest doubt that wage increases during the month wholly failed to keep pace with the rise in living costs. Workers' standards of living are being drastically cut, and the position of pensioners and others on small fixed incomes is even worse.

That is the situation as seen by the labour leaders. In his closing remarks the minister appealed to Canadians to assist in curbing the rising cost of living. He called upon them to refrain from panic buying. He called upon industrial workers to work longer hours, to work harder and to produce more goods. I think what is true is what the minister quite clearly indicated, that today there is no real shortage of civilian goods. The minister himself made that statement. Some people with whom I have been discussing this subject, and who are in close contact with what is actually happening, tell

Cost of Living

me that the warehouses in this country are filled with consumer goods today to an extent that they have never been filled before in history. They are bulging with consumer goods that are being stockpiled, because the buyers have been hearing the government indicate from time to time that price controls, in some form or another, are likely.

As has already been pointed out tonight, every day that the government delays taking some effective measures to check the rising cost of living is simply adding to that rising -cost. Mention was made in the passage I put on the record of the effect upon the workers' standards, pensioners and others on small fixed incomes. In my opening remarks I called attention to the reversal of position which is taken today by the Liberal government as compared with that taken in 1941 when we were faced with a similar situation. I should like to call the attention of those Liberal members who are refusing to take any effective measures that have had any degree of success in stopping the rising cost of living, to a few words of the late prime minister in his famous broadcast of 1941. Speaking of the conditions which faced the country then, and they were similar to those which face us today, he said:

Rising prices unless controlled will make it more costly and therefore more difficult to finance the war.

The Minister of Trade and Commerce referred to the fact we are not now at war, and implied that controls could not, in his opinion, be effectively introduced. I believe what is true is that our defence program this year will cost this country just about the same as our war expenditures in 1941 when Mr. King made this statement. He went on to say:

Rising prices, unchecked, will spread confusion and uncertainty in industry and trade.

It is doing that today. No sooner was this increase announced on April 4 than trade union leaders all across this country were indicating that their unions were being called together to present new, increased demands to their employers. Unless the government can take some effective steps, we are now heading for a whole series of increased demands from industry right across this country. I continue to quote:

They will hinder-

That is, rising prices.

-production and the proper distribution of supplies. They will make the cost of living rise more rapidly than wages and salaries.

They have been doing that. They will continue to do it. There just is no point whatever in the Minister of Trade and Commerce (Mr. Howe) appealing to the

Cost of Living

industrial workers of this country to work longer hours, to work harder and to produce more, so long as rising prices and profits go unchecked by the government, so long as the industrial workers of this country see that the government is taking no steps whatever to curb rising prices and the spread between the producer price and the wholesale price. The Minister of Trade and Commerce did not give us those spreads. He showed us that the retail price corresponded closely with the wholesale price of most food products. But unless the government can take some measures to see that both wholesale and retail prices bear a closer relation to producer prices in this country, some measure to curb the profits that are being accumulated today, his appeal for voluntary assistance, without any leadership from the government, will go unheeded. I continue to quote from this famous broadcast:

The value of savings will be materially lessened. The result would be hardship to nearly everyone, and hardship in very unequal measure.

This is the effective part of the broadcast that I want Liberal members to hear:

Rising prices-a rising cost of living-do not have the same effect on all households. The smaller the family income and the larger the family, the more serious the hardship imposed. For those with small incomes, rising prices of clothing, food and other necessaries may mean serious hardship, while for those with larger incomes only luxuries and small comforts may have to be given up.

Rising prices thus serve to aggravate the inequalities in society, and to throw the heaviest burdens on those least able to bear them.

There is nothing today from any Liberal speaker from the opposite side of the house that corresponds in any way with the statement made by their erstwhile leader in 1941. It makes one wonder what has happened inside the Liberal party since 1941. Where are the men who supported the then prime minister in the sentiments that were there expressed, in their feeling for the common people of this country? Are there still no members of that cabinet who imbibed that philosophy in 1941 and helped to make it effective? Are there no supporters of the Mackenzie King doctrine still occupying cabinet benches for the Liberal party? What has happened to the men who gave leadership in the application of controls during the war? From the Minister of Trade and Commerce, who had more to do with the imposition of those controls than any other single cabinet minister, we hear that they do not want, for some reason or other, to impose those controls today; that they cannot be effectively carried out; that we are not in a national emergency; that they will not have public support. One wonders at the reluctance on the part of some cabinet ministers who so effectively administered

those controls during the war and who taught the Canadian people to believe in the efficacy of those controls. If today the Canadian people believe in controls to the extent that at least 75 per cent of them are calling for the reimposition of those controls, then no one is to blame but those same cabinet ministers who administered those controls during the war and who preached controls across this country. The people of Canada came to accept those theories which were expounded by the men who in those days administered the controls but who today are afraid of something or afraid of someone; they are afraid to impose controls. They are fearful that they will not have the support of the Canadian people or the backing of the Canadian people in the administration of those controls.

I have already stated that the delay on the part of the government in showing some leadership in checking the rising cost of living is contributing to that rising cost of living every single day that that delay continues. We in this group have consistently advocated the reimposition of necessary controls. I realize that the government now is in a bit of a dilemma. They have dillydallied with this subject for at least a year since the necessity for controls became quite evident. During that year prices have risen to a point where to freeze and control prices at this time would assure the continuance of high and exorbitant profits for many of those who have taken advantage of the situation. To roll back prices would be still more difficult.

No one questions the fact that the government today is facing a serious situation with regard to prices. They are facing it chiefly because of their continued delay for at least the past twelve months in doing anything about it. The longer they delay, the worse the situation will become unless they want to see that balloon, inflation-which we have seen rising constantly and getting bigger and bigger-burst of its own accord. Such a situation might well cause a catastrophe in the economic life of this country. I do not think any of us want to see that happen. The only alternative is for someone on that side of the house to adopt the mantle of their former leader, Mr. Mackenzie King, for someone on that side of the house to pay some attention to the crying needs of the people of this country, for someone in the cabinet to return to the doctrine and philosophy of the Liberal party, and give up some of their conservatism.

We do not maintain that price control is the one and only measure that needs to be adopted to stop inflation. What we do insist on is that it is one of the measures that

certainly now become essential. There is really no need in this country lor us, because of military needs, to have shortages of civilian goods. Unless our military needs become much greater than they are at the present time, we can in Canada produce sufficient to meet both military and civilian requirements. There may be-apparently there are-countries today which cannot have guns and butter at one and the same time. There is no good reason why in this country, if we are given some leadership by the government which was elected to give that leadership, we should not be able to have guns, as well as other necessary military equipment, and butter.

What is true, and what has proved to be true over the past, is that we cannot have guns, butter and exorbitant profits at one and the same time. When the Liberal government is prepared to do something to check rising prices and to listen to the needs of the common people, and to return, as I said before, to the doctrines which they preached across this country for years, then we can get on with the job of producing.

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LIB

John Sylvester Aloysius Sinnott

Liberal

Mr. J. S. Sinnoit (Springfield):

Mr. Speaker, in rising to take part in the debate I would refer first of all to the Montreal Gazette of this morning, particularly to the report of Mr. Arthur Blakely where, in the second paragraph, under the heading "Signal", he says:

As soon as the dominion bureau of statistics disclosed that the cost of living index had risen a record 4-5 points in February, Progressive Conservatives, C.C.F'ers and Liberals raced for the privilege of initiating a commons debate on the inflationary spiral. The reason for the race isn't hard to find. The theory held here is that the public will feel that the party which initiates the debate is the one most genuinely concerned over rising living costs. Hence the feverish haste. C.C.F. leader M. J. Coldwell and the redoubtable John Sinnott (L. Springfield) -

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April 9, 1951