April 2, 1952

LIB

Daniel Aloysius Riley

Liberal

Mr. Riley:

I continue to listen.

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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SC

John Horne Blackmore

Social Credit

Mr. Blackmore:

Listen a little bit longer.

In his message to congress on March 26, 1945, Roosevelt used these words:

We know that we cannot succeed in building a peaceful world unless we build an economically healthy world.

Anyone who looks over the world today- and even this United Nations Organization after the mighty United States has been at work on it for six solid years-must recognize that there certainly is not health in any aspect of that organization or anywhere else in the world, except such health as comes in certain favoured countries like Canada and the United States as a result of the enormous amounts of money which they are spending for war preparations, which money goes into circulation among the people and enables them to buy the consumer goods they are producing.

President Roosevelt's objective was entirely commendable, but the technique which he evidently had in mind for employment in accomplishing his objective was entirely noncommendable.

On March 11, as recorded at page 339 of Hansard, I laid down two major fallacies which underlie our Anglo-Saxon thinking. The first one of these is this: We assume that when goods are produced, automatically the money is produced with which to buy those goods and that the money goes into the hands of those people who desire and need to

consume the goods. The second fallacy is this: We assume that, as far as international distribution of goods is concerned, all that we need is international trade. Both of these assumptions, as I pointed out then, are utterly fallacious and have been proved so now for almost one hundred years.

May I now lay down a third fundamental fallacy which is underlying our Anglo-Saxon thinking today and which is probably even more dangerous-in fact, I will say definitely it is more dangerous-than the other two. I refer to the astonishingly preposterous assumption that the so-called non-discriminar tion principle underlying our international trade organization will render international trade a more beneficial and effective instrument of distribution than would be a system of trade in which any nation would be free to do whatever it considered necessary to strengthen and to safeguard its own economy.

I desire to lay down eighteen fundamental postulates. The Anglo-Saxon world has gone astray with respect to non-discrimination and what is called the unconditional mostfavoured-nation clause because it has made mistakes in its fundamental thinking. My purpose in laying down these postulates is to help to guide us in our thinking so that we might arrive at a sound conclusion. These postulates are as follows, and I would ask hon. members to see whether or not they would question the validity of any one of these postulates as I go over them:

1. Any community unable to produce its own requirements must engage in trade.

2. Hardly a nation on earth at present is able to produce the whole of its needs. Thus, practically every nation has to trade.

3. Any trading community is in constant danger of buying and consuming more than it produces and sells; that is, more either in quantity or in price. Hence, there is constant danger for every nation, except probably the United States today, of falling into adverse trade balances which mean international debt which, under present circumstances, will be almost unrepayable.

4. Any community is constantly in danger of being unable to obtain certain of its vital needs-for example, coal, oil and steel in Canada; cotton, feeds and rubber in Britain.

5. Any community is in continuous danger of being unable to sell all its products, as for example wheat for Canada; textiles for Britain; wheat and many other products for the United States.

6. The more nearly a nation comes to falling into the so-called "have-not" class of nations, the greater its constant unavoidable danger of being deprived of its needs; for

example, Britain, Japan and Italy. The more nearly a nation comes to falling into the "have" nation class, the less its constant unavoidable danger of being deprived of its needs, as for example the United States and Russia, but the greater danger it is likely to fall into of being unable to sell all of its surplus goods abroad.

7. At the same time, any "have" nation, especially if it manufactures much, is likely to have real difficulty in disposing of its surpluses and thus keeping its people employed; that is, of avoiding a depression.

8. In order to be able to dispose of its goods, every community needs to have the greatest possible freedom to sell to any other community on earth.

9. Every community basically has an inalienable right so to sell, provided that in so selling it does not injure the economy of any nation within whose borders it sells.

10. In order to be able to acquire all it wants, every community needs to have the greatest possible freedom to buy from any other community on earth.

11. Every community has fundamentally therefore an inherent inalienable right so to buy. provided that in so buying from any given community it is not depriving that community of goods essential to that community's economy.

Up to that point, Mr. Speaker, I think there would be no challenge at all. The people who favour non-discrimination would go right along. Soon now they will begin to disagree.

12. A nation that produces only primary commodities like wheat, sugar beets, milk, trees, iron ore, and neglects entirely to process those products into flour, sugar, milk powder or cheese, lumber and steel-that is, any purely primarily producing community -will unavoidably have difficulty with its prices and, other things being equal, will tend to fall into debt to a community that manufactures the flour, the furniture, the steel, the machines, etc. Hence it will be worrying constantly and fearing, and will be inclined to struggle.

13. Every nation that possibly can do so, therefore, ought to strive, and be encouraged and aided to strive, to develop manufacturing of every one of its requirements in so far as that sort of development is at all even reasonably economic. This probably is the first one of these postulates that challenges the position of the so-called international multilateral traders, non-discriminators and all that; but I think that postulate can be defended anywhere before any body of people, especially in these days when there is such terrible need among the peoples of the world.

External Affairs

14. A nation that produces too few of its needs of primary commodities will very likely run into difficulty in trading its manufactured goods like machines, textiles, furniture, etc., for its primary-product needs of iron ore, timber, grains, cotton-as for example, Japan and Britain-especially as it runs into stiff competition with nations better fitted to produce its particular kind of goods. Such competition is bound to grow stronger, keener and more widespread as highly specialized machines, technological skills like plastics, and the use of solar power grow more easily available and therefore commonly prevalent. That ought to be quite clear.

15. Any manufacturing nation ought to strive, and be encouraged and aided to strive, to develop its farming, its fishing and other primary products industries to the optimum of its capacity, its leaders, and the leaders of its neighbour nations, realizing more and more vividly and appreciatively the urgent and increasing importance of co-operatively and sympathetically bringing all the world's resources into the greatest possible beneficial production at the earliest possible time to meet the rapidly developing need of mankind for all kinds of useful goods.

16. Sensing this evident fact, every enlightened and responsible leader on earth must concede the obvious truth that every nation must have, and universally ought to be recognized as having, the basic right and inescapable duty to protect by every needful means, its economy, both its primary and its manufacturing and service industries, from every kind of destructive competition originating outside that nation's borders, it being palpably clear that any external competition which impairs the effectiveness of any industry within any nation must, by such impairment, be rendering unproductive a certain amount of the world's potential productive capacity in a time when we are talking about the rapid increase of population and many people are actually afraid that our productive capacity will be unable to keep up with the growth of population. The truth of that postulate must be exceptionally evident.

17. Such being true, then every device which nations have employed to shield their economies-devices such as tariffs, quotas, exchange control, embargoes, subsidies- ought to be, and must be looked upon as being legitimate protective measures, freely to be resorted to by any government of any nation whose productive activities are being endangered by actions originating in some other state, friendly or otherwise. Now, of course, this postulate goes right to the very core in opposition to the attitude adopted by the United States in dealing with the Bretton

External Affairs

Woods agreement, the international trade organization and so on. They maintained, the statesmen of those days, Roosevelt and others, and maintained stoutly, that every one of those protective devices adopted by any nation constituted economic warfare against the United States and every other nation, which is such absolute nonsense as to render me utterly astounded that enlightened people could ever be imposed on by any such fallacy.

18. The use of such protective devices as quotas, tariffs and so forth by any state does not, in any genuinely realistic sense, constitute economic warfare. Economic warfare actually does exist, however, when any nation permits agencies within its jurisdiction to produce or to fabricate commodities and to sell them-either with or without governmental assistance-to sell those commodities to consumers in another nation in competition with, and to the displacement of, the comparable commodities produced or capable of being produced in that other nation, provided that such sale be contrary to the desires of the government of that other nation.

Now, we have an illustration of that kind of activity in what the Japanese were doing in the thirties. Just one striking case comes to my mind. The Japanese, because of certain ways of managing their economy, were producing bicycles, for the like of which we were paying $50 in Canada, and they were offering those bicycles for sale at $5.75 each. Obviously no sane government could permit such bicycles to come into its economy and compete with the bicycles that that nation was producing. Well, then, that meant there had to be protective devices-discrimination- and there were. Canada would not look at one of those bicycles, neither would the United States nor any intelligently governed industrialized country at all.

That put the Japanese in a very serious difficulty, a difficulty which I shall probably say more about when we talk about the Japanese treaty. It must be recognized by all of us who desire to enable the Japanese to live in this wonderful world in which we dwell; but they must not be allowed to destroy our industries by fabricating and putting into our economy things that will destroy our industries when they are allowed to compete.

Having enumerated these eighteen postulates, I would invite the most careful study and criticism which can be offered to any of them, and if the answer that hon. members give is that the list of these postulates is sound, then the whole system of non-discrimination in trade is automatically proved to be subversive and must be discarded.

The result of a study of these postulates is the conclusion that there are three major

[Mr. Blackmore.J

problems to be solved by those responsible for devising the world's trade agreement structures for our time and the time immediately ahead of us, probably one hundred years-no one knows. The first of these is: How can it be so managed that any "have" nation, more or less like the United States, being almost self-sufficient, producing and able to produce vastly beyond its present consumption, can trade or sell its goods in the world without competing destructively with the industries of many of its neighbouring nations, and without putting practically all of its neighbours into unrepayable adverse trade-balance debt?

Just as sure as we are here in this house, and as sure as the United States government is in the houses of government there, that problem must be solved. It is no use for us to sit just twiddling our thumbs, saying we do not have to solve the problem. We have got to solve it, and we cannot do it by any device which has been suggested by Liberals or Conservatives, Republicans or Democrats, or Socialists heretofore.

The second major problem: How can it be so managed that any more or less "have-not" nation, needing goods from outside, can buy such goods from one or more of the more fortunate "have" nations resembling the United States, when such "have" nations will not, and economically cannot, accept from such "have-not" nation, goods which that "have-not" nation might, and must, offer to the United States, for example, to pay for United States goods such "have-not" nation might direfully require? As an example of that, Japan grievously needs iron. How is she going to get the iron which she must have? We cannot accept cheap bicycles that she might produce, or any other commodities that might destructively compete with our production. How is she going to get that iron? That problem must be solved, because the Japanese, somewhere near 80 million of them, have to get iron from somewhere. The same is true of many, many other nations, in respect of various commodities.

The third major problem: How can it be

so managed that certain nations like Japan and Greece, which, alone, in spite of all possible efforts, would be likely to experience great hardship in providing themselves with the needs of life, but which might prosper satisfactorily if allowed to work together with other less favoured nations-how such nations as Japan and Greece might be enabled so to work together through forming a group of nations co-operatively trading with each other through preferential tariff arrangements,

thereby materially assisting each other without hurting other nations. That problem, again, has got to be solved.

The United States for years had as a fundamental objective, and still has, the objective of destroying imperial preferences in the British commonwealth and rendering it impossible for this vast association of nations co-operatively to set their productive capacity into operation for their own benefit and for the benefit of other people.

The United States has never realized that in seeking to destroy those preferential arrangements she is seeking to destroy the very life of the British commonwealth, including Great Britain and Canada. And now the question is: Was she wrong in opposing imperial preferences? I say she was completely wrong; and if anyone can see how the third major problem I have indicated, the problem of the smaller "have-not" nations, can be solved except by production and cooperation in regions or groups, I will certainly be ready to listen to him. Certainly there has been no hint as regards that matter thus far in this debate.

Any proposed or contemplated international trade arrangement that fails to include measures adequate for solving these three major problems obviously must be unrealistic, and thus be foredoomed to failure, if not to incalculable widespread disaster, such as we are rapidly approaching now in NATO.

We can put a brave face on, as the minister does; but he knows, in the back of his mind, that things are not going well with NATO. Anyone who reads press reports or articles in any of the papers knows that.

Now, what is the basic nature of the trade agreement structure now being sought to be imposed upon the world? I should like to illustrate that principle, the basic principle underlying the trade structure which the United States is admittedly trying to fix on the world, and making great progress in its attempt-the principle of non-discrimination in trade, or, called by another name, the unconditional most-favoured-nation clause. These two, in practice, mean identically the same thing in trade.

Now, let us give some further thought to the conditions surrounding us before we get into that matter. The costs of producing and delivering various commodities vary enormously from nation to nation. For example, coal for Ontario coming from Pennsylvania, in the United States, and coal for Ontario coming from Canada; dairy products in Canada and dairy products in New Zealand. These costs depend upon many factors such

External Affairs

as, for example: (1) climate. In this connection we think of New Zealand versus Canada in the matter of butter. Then, with regard to (2) special resources, there is the matter of oil in Texas. There is (3) a variety of resources, so that the needs of life can mainly be produced within a given country, as in the case of the United States.

Then there is the matter of (4) the proximity of resources-for example, coal, iron and limestone near each other in Germany, rendering the successful development of steel possible.

There is the matter of (5) industrialization, as for example in the United States. Then there is the matter of (6) the skill and character of the people, as we find it in Japan and Germany. There is the further matter of (7) a large population providing an extensive domestic market, as we find it in the United States, so that cheap mass production is rendered possible.

Then, (8) wage and living standards must be considered, as for example in Japan. There is the matter of (9) adequacy of transportation facilities as in Great Britain and Japan, where they have speedy transportation readily available at relatively low cost. There is the matter of (10) proximity to markets.

Those are just a few factors. But those factors are not all present in any given economy, and to the degree to which they are present, for the advantage of an economy, that economy is able to produce goods cheaply and deliver them successfully in competition.

These varying unavoidable costs of producing and of delivering goods in the different nations tend to make the nations differ so greatly one from another in their economic strength and vulnerability, that nations, as regards their economies, might fittingly be compared to boys in a playground ranging in age from six-year-old boys to nineteen-year-old boys preparing for university matriculation.

Imagine that we have between sixty and seventy such boys playing in an ordinary school-ground game-for instance a game such as marbles or peg top. Then, with such a game, let us imagine that we draft the rules so that they will be appropriate for the sixteen to nineteen-year-old age group, playing in a ring eight to ten feet across. Under those circumstances what conceivable chance would the six to nine-year-old age group of boys have to win, or even to break even, when playing in such a ring at the game of marbles? How could they win under such circumstances against the nineteen-year-old boys?

External Affairs

Then, let us draft the rules so that they will be suitable to the six to nine-year-old age group, using a ring two to two and one half feet across. Would the little fellows fare any better in such a ring, when matched against the sixteen to nineteen-year-old age group, again playing under identical rules?

By way of compromise, now, let us draft the rules with our eyes on the ten to thirteen-year-old boys, with a ring five to seven feet across. How many marbles could the little eight-year-old win when playing against experienced, strapping eighteen-year-old boys, with the same rules governing both?

Now, imagine that one or two of the nineteen-year-olds were brawny athletes trained in boxing and wrestling, seasoned in rough-and-tumble catch-as-catch-can tactics, and always rather eager to employ those tactics. One of these is a particularly big, overgrown roisterer, who has been winning the smaller boys' marbles all the way through.

This big boy has marbles at home in tobacco cans and salt sacks, all filled with marbles- flints, onyx and agates. The drawers and shelves in his room at home are cluttered up with them-he has so many he does not know what to do with them. This boy does not need any more marbles; but he still wants to keep on playing and winning.

This big fellow delights in encouraging certain other bigger fellows into co-operating with him to compel the smaller boys to let them play in the smaller rings, where the smaller boys are playing against each other. And if the smaller boys object, and attempt to keep the big fellows from playing in their rings, and according to their small-boy rules, then he becomes quite ugly about it and says, "You are discriminating against me! I have a right to play in your game if I want to. I have the right to play by your small-boy rules if I want to; and I want to." And so this big fellow gets his way.

He maintains quite stoutly and openly, and apparently with strong delusions of assurance that he is right. He maintains that all the boys must play by the same rules regardless of their size and age, and that they must play against any and all boys who offer to play them, regardless of age or size or skill. And he says that if they do not so play, then they are discriminating against him and his pals, and the other boys who are stronger than themselves.

This all sounds rather unrealistic, does it not? It sounds rather fantastic, rather ridiculous, does it not? Well, it is fantastic and it is ridiculous. It is hardly to be believed. Nevertheless that very set-up exists right now.

We ourselves are the victims of just such a set-up-not only the victims of it, but we are participating in such a set-up.

In the world's spacious playground, some sixty to seventy nations, ranging from the very small to the very large, from the very weak and vulnerable to the very strong and relatively unvulnerable, exist. Let us think of Jamaica and Puerto Rico, for example, in contrast with Russia and the United States of America-just imagine Puerto Rico attempting to compete successfully under a condition of non-discrimination, against the United States! Why, the mere thought of it makes us want to scream out in anger! They are all playing, and must play at the dangerous game of trade. The big, brawny roisterer, trained in, and delighting in the rough-and tumble tactics, but always complaining about discrimination, is none other than the United States of America.

May I give a concrete illustration of non-discrimination-the non-discrimination principle in action in the trade practices of the nations? May I illustrate this unhappy situation and its mischievous effects?

May we suppose that we are dealing with Czechoslovakia and Roumania before, or, to be hoped, after their experience behind the iron curtain. Czechoslovakia has a great capacity to produce machinery, but she lacks oil. Roumania has oil but lacks machinery. Each of them is relatively a small and a "have-not" nation, hence they are very vulnerable. Each of them simply must protect its economy in order to exist at all.

Conceivably Czechoslovakia approaches Roumania with the following proposal: "Roumania, if you will lower your duty against Czechoslovakian machinery, Czechoslovakia will correspondingly lower her duty against Roumanian oil. Thus we shall trade machinery for oil straight across. Each of us will acquire an almost indispensable necessity; each of us will attain a market greatly needed. Both will benefit; neither will risk going into debt".

It is a sensible proposition. Any fair-minded, intelligent person will agree readily that it is fundamentally the right of each of these two nations to make and carry through such a trade arrangement-two little boys in the world's big playground want to play marbles in a little ring in accordance with little boy rules. What conceivable right has any other nation to interfere?

But the mighty, well nigh self-sufficient United States of America hears about this plan of these two little boy nations. Immediately she invokes what is called the unconditional most-favoured-nation clause-

another expression meaning non-discrimination in trade. In virtue of non-discrimination, the unconditional most-favoured-nation clause, the United States says to Czechoslovakia: "Listen, you! If you lower your tariffs against Roumanian oil you have got to lower them against United States oil too." "Very well", says Czechoslovakia; "if we lower our tariffs against United States oil, will you, the United States people, lower your tariff against Czechoslovakian machinery so that we can pay you for the oil, thus avoiding our falling into debt to you for our oil?" "Oh, no", says the United States; "the United States aims never to permit foreign goods to come into the United States economy to compete with her products. The United States has many machine manufacturing companies. She produces her own machines and has machines to sell. Her own machine companies have a right to the United States markets and we mean to protect them in that right."

Thus is Czechoslovakia deprived both of the chance to get her oil supply, and of her machine market.

Similarly the United States deals with Roumania. She will insist upon selling Roumania United States machinery, but she will refuse to accept Roumanian oil in the United States to pay for that United States machinery. And all of that she does after having proclaimed the Atlantic charter and pretending that she desires all men to be free from want and fear! What horrible hypocrisy! Or criminal negligence-or perhaps criminal stupidity!

As long as nations like the United States persist in forcing upon the other nations trade principles as perniciously fallacious as the unconditional most-favoured-nation clause, which means the principle of non-discrimination in trade, then the Czechoslovakians and the Roumanians can have no possible freedom from either want or fear-or both together.

If I had time I should like to quote from a textbook which is beyond question. It is "The Commonwealth" by Henry Drummond-Wolff, in which it is shown that the United States has done exactly the kind of thing I have been describing and is even now taking the attitude in the world I have been representing.

If we in Canada are going to work for tolerable conditions in this world we must insist that the practice of the principle of non-discrimination, the principle of the unconditional most-favoured-nation clause, shall be abolished from among men. We must tell the United States time and time again until somehow or other with the help of the Lord she comes to realize and understand, and repent of her evil ways.

External Affairs

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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PC

John George Diefenbaker

Progressive Conservative

Mr. J. G. Diefenbaker (Lake Centre):

Mr. Speaker, I realize that there is little that can be said in this debate that has not been said already. However, there are several matters that I wish to deal with, and I promise that I shall take the minimum of time so that this marathonic debate may be brought to a close as soon as possible.

I regret that the minister is not in his place today. There were a number of questions I would have liked to ask, but they must remain unasked because he is not here to deal with them. There were also some observations I wished to make but which I shall not make in his absence.

I listened yesterday to the minister as he gave a general summary of the information asked for by hon. members in all parts of the house. I was impressed by what I heard him say and the manner in which he said it, but on reading the record I find that the information furnished is not in keeping with the oratory that accompanied it.

The practice of setting aside a certain time for discussion of external affairs is worthy of continuance. The debate generally has been most interesting and revealing, and has provided a great deal of information. It has proved to be a searchlight, as it were, thrown on the subject from all parts of Canada. The views of Canadians generally have been given on matters that affect this country. While there has not been the general interest in the house one would expect in connection with a matter affecting every one of us, I do not know of any debate that has been conducted on a higher plane than this one.

The opposition gave its lead in that regard in the outstanding address delivered by the hon. member for Peel (Mr. Graydon). Last evening the house heard an address from the hon. member for Greenwood (Mr. Mac-donnell) which I feel had a place in this debate in that it put before the house in proper perspective some of the spiritual things for which we stand and which we generally take for granted. Unless we realize what those things are and that they must be preserved, we may inevitably be let into apathy. I think the debate itself was useful because of the fact that few Canadians knew much about NATO until it had taken place.

I believe in a bipartisan policy in connection with international affairs, but bipartisanship is not a one-way street. It requires on the part of the government a willingness to furnish information circumscribed only by the question of security, and it requires on the part of the opposition a willingness to co-operate in- those things unseen or

External Affairs

unknown, which, because of the fact that the government has a general disposition to give full information, will be accepted as necessary even though full information has not been given.

The hon. gentleman who preceded me (Mr. Blackmore) took the stand that NATO has not been a success. I know that in this regard Lord Ismay said that NATO is to some rather a lot of harness and not much horse. There are many who feel that that is a fact. After all, however great the concept, however complete the organization on paper, and however good the leadership, unless there is a mobilization of resources, human and material, behind that organization it can do little to hold back the potential onrush of communism.

In saying that I believe in a bipartisan policy I must at the same time refer to certain remarks made last evening by the hon. member for Rosetown-Biggar (Mr. Cold-well), the leader of the C.C.F. party, who, as reported in the press, stated among other things that he could name some of the leading Conservatives in the house in addition to Liberals in both the Commons and the Senate who agreed with the C.C.F. stand on the NATO rearmament policy but were afraid to express their opinions because of party discipline. I have not detected that attitude anywhere; but if the hon. gentleman is using that argument to bolster up his explanation as to the reason the opposition in general intends to follow the stand taken by my leader, then I take issue with him.

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order. I would point out that I am not sure that it is proper for an hon. member to refer to other hon. members as the hon. member for Rosetown-Biggar is said to have done. I do not know whether the statement was made. Some hon. members might consider it derogatory to members of this house. I merely draw this to the attention of the house, since I may be called upon to give a ruling on some future occasion.

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

I always defer to your rulings, Mr. Speaker, but I thought an hon. member in the house had the right to refer to a statement made by an hon. member outside the house in regard to hon. members ingeneral.

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

I have been misunderstood. I was not calling to order the hon. member for Lake Centre; far from it. I was referring to a statement made by another hon. member. The hon. member for Lake Centre has done nothing irregular, and I am sorry he misunderstood me.

Topic:   LABOUR CONDITIONS
Subtopic:   EXTERNAL AFFAIRS
Sub-subtopic:   FOREIGN POLICY
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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

I refer to the amendment which reads:

this house regrets that the government has failed to take effective steps to achieve the implementation of article 2 of the North Atlantic treaty.

I believe in economic aid. I think hon. members in all parts of the house believe in economic aid. On a number of occasions the Secretary of State for External Affairs (Mr. Pearson) has given his support to that concept. In the issue of Foreign Affairs of October 1951, he set forth not only his belief in that principle but as a matter of fact gave in general a preview of the speech he delivered here yesterday. When the opposition takes the stand that it intends to vote against the amendment, it does so in no way approving the failure of the government to give economic assistance where necessary. The opposition believes that at all costs we in this country should unite in support of NATO, whether or not we disagree as to details, in order to show the world that without regard to party we are united in our determination to assure resistance to aggression everywhere in the world by all the organizations that may be gathered together under the aegis of the United Nations.

I feel that our actions in parliament are sometimes misinterpreted, and I believe a vote on this amendment might very well leave a wrong impression in the minds of people who are looking for divisions and cleavages. While I do believe in the need for economic assistance, which I have advocated over and over again, having regard to what NATO has done I do feel that the hon. member for Melfort (Mr. Wright), having voiced his objection, would be making a great contribution if he did not call for a division in parliament on this question. I hope no message will go out that can be misinterpreted in Europe or elsewhere as indicating a division in parliament- for there is none-on the need of full support for NATO or any other organization under the United Nations that will at least endeavour to assure the maintenance of peace everywhere in the world.

Recent events have emphasized a danger to peace that cannot be exaggerated. At San Francisco in 1945 the statesmen of the world believed they had achieved what had been a vision of mankind for a thousand years. They felt that peace would be achieved under the United Nations charter, embodying as it does great ideals and the necessary machinery, if properly used without the veto, to assure the setting up of the rule of law in the world. Events since that time, however, have indicated that our hopes were not justified, however great the contribution of the United

Nations has been. From time to time communism expresses its willingness to live and let live; then it proceeds in devious ways to carry out its purposes. From time to time communism offers the hope of peace; then in other places it carries on its work of undermining established governments. In Korea we have seen a delay running into months in the discussion of a few items which might lead to an armistice and peace. While those negotiations have been going on, in other parts of the world peace has been undermined by those who owe allegiance to the communist philosophy. That is all in accordance with Lenin's view expressed some thirty years ago when he devised this as the course for communism to follow, when he said they must wage at all timesmost determined and ruthless war, a persistent struggle, bloody and bloodless, violent and peaceful, military and economic, educational and administrative, against the forces and traditions of the old society.

In other words they wage two kinds of war. They wage war on the military front; they wage war on the civil front by coercion and terror; and on the political front they continue to endeavour to arouse cleavages between nations and within nations. As someone has said, the working capital of communism is insecurity; its chief stock-in-trade is hatred.

Then, on the economic front, that is where the need for economic assistance comes in. Communism endeavours to undermine belief in the democratic system, and at the same time to arouse, in the minds of men who have known tyranny in every generation, the hope that, while tyranny may continue, at least there is going to be a hope for the elevation of economic standards. In addition to that, communism feeds on one thing, and I have spoken about it on a number of occasions in this house. It feeds on the attitude of mind that allows discrimination anywhere on the basis of colour, race or creed.

When we realize that today five out of six people within this commonwealth belong to coloured races, then we also have some idea of the fact that unless the British commonwealth stands together against communism, however strong other nations may be, we may not hope to meet communism. It becomes all the more necessary that we in our country shall refuse to allow discrimination to enter into any decisions that we may arrive at. When one reads that in some parts of the world a man who has made the supreme sacrifice in Korea is denied burial in the cemetery of some democratic country, I won-ler whether those who follow that course

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External Affairs

realize that what they are doing accentuates the possibility of communism taking over the coloured races.

Then, I hear people saying that communism does improve conditions. One hears in speeches from time to time that it has its advantages. One of the greatest test tubes today in which the experimentation of communism has been applied under the best circumstances, and with the avowed purpose of its having propaganda value, is in east Germany. At a recent meeting of the United Nations, the mayor of Berlin, Herr Reuter, joined in support of Herr von Brentano, a leader in the federal republic of Germany in presenting a summary of conditions in east Germany. This is a matter of great importance in view of the news within the last few days that Russia has changed her attitude towards a unified Germany. The report presented by this gentleman stated that tyranny stalks through the land. The security service has been built up with 150 officers and 50,000 spies, who can make arrests without warrant. The judiciary has been wiped out, and only the politically fit are on the bench of that country. There are 40,800 persons under arrest as political prisoners; 185,000 have been interned in concentration camps in the last three years, of which 96,000 have died. There have been 25,000 women and girls sent to work in the uranium mines. Those are the results of the experiment under circumstances in which communism has endeavoured to put its best foot forward with a view to proselytizing those in west Germany.

Within the last few days the question has come up regarding a German peace treaty. This treaty will be signed, in so far as six nations are concerned, as a support for democratic principles. Out of it will grow a single European army. These two events will take place during the month of April, and they represent the greatest achievement in a thousand years in the settlement of difficulties in Europe that have prevailed as between Teuton and Celt since the days of Charlemagne. Today those nations solve their difficulties in the face of common danger. Russia, who opposed elections with west Germany, now changes her tune and welcomes the unity of east and west Germany. Russia must realize today that the co-operation of the nations within the democratic Atlantic community is achieving something in unity which we must, at all costs, not permit ourselves to divide. In an interview yesterday Stalin said that war is not any closer than it was two or three years ago.

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LIB

Pierre Gauthier

Liberal

Mr. Gauthier (Portneuf):

Watch out.

External Affairs

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

The hon. member says "watch out." In 1946 he made that announcement; in 1948 and in 1950, and every time after one of those interviews was given to the press or, on one occasion to Mr. Stassen, one of the potential candidates for presidency of the United States, an act of aggression has occurred somewhere else in the world. I believe that NATO is achieving something. Tomorrow in Moscow an economic conference will meet to which representatives from all parts of the world were invited. I know of none from Canada, and I hope there were none. I know of none from the United States, but some of the democratic countries are sending representatives. The undertaking is that, if the nations meet there, something might be done towards restoring a larger degree of trade between the U.S.S.R. and its satellites and the democratic nations. One develops a feeling of suspicion as events unfold, and wonders what the purpose of this conference may be.

On Saturday the New York Times said this:

. . . the free world's embargo on the export of strategic goods to the Soviet bloc is having a steadily increasing effect. Stalin and his colleagues can hardly be blamed if they wish to see these barriers to their armament production removed.

Then it adds:

But they misjudge the temper of the free world if they think propaganda in Moscow will end these bars. So long as the threat of soviet aggression remains we shall not willingly contribute the economic sinews that the potential aggressor needs.

We did that for some time. Britain was placed in a position where she was trading with U.S.S.R. and her satellites in return for certain things Britain required, such as food. She was trading machinery, precision tools and the like. That was dangerous, but Britain was in a position where she could not trade with the rest of us, and that will lead me to a suggestion I am going to make later, that we within the British commonwealth should today be doing something to place Britain in a position where she would not have to trade with any of these satellites of the U.S.S.R. I believe that is one of the things we-

Mr. V/righi: Would not the implementations of article 2 do just what you are suggesting, make for better trade relations?

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

I never evade a question. I shall deal with article 2 a little later, and I shall return to my hon. friend's question when I do. While I have every reliance on international organizations, I am suggesting that within the British commonwealth we have a group of nations with whom we could work in closer co-operation than we are today, and thereby be able to meet in various

TMr. Gauthier (Portneuf).l

parts of the world the onrush of communism

without in any way weakening our international relationships.

I never had a concept of what this commonwealth meant until I had the privilege of attending a parliamentary conference of the commonwealth, a year and a half ago, in Australia and New Zealand. What impressed me was this. There were there representatives of every colour and race from all parts of the globe, joined together in freedom-90 per cent of whom enjoy self-government today, showing that the grant of freedom is the strength of freedom-joined together in a commonwealth built on sentiment, on service, on self-interest, and in the world today, on self-preservation as well; many of them independent and yet in their independence stronger in their interdependence.

I know there are some who do not like one to refer to the commonwealth and who feel that, after all, our position in Canada denies to us those close relationships within the commonwealth that are accepted by other countries within the commonwealth not contiguous to a great neighbour such as the United States. To those who have that view I should like to commend the reading of the book "On Being Canadian". At page 100 I find this:

The British connection is essential to Canadian independence. In Canada we have certain institutions and traditions and characteristics which give us, whatever language we speak, our meaning as a separate country. Without the British connection these things would speedily evaporate and we should have less and less significance as an individual state. How long would a Canadian republic maintain its individuality here in North America? The forms of our sovereignty might be retained, but we should be caught inexorably by the southward undertow and completely assimilated to American life.

That quotation is one that is most impressive, inasmuch as it was written in 1948 by a man with tremendous experience. I therefore suggest that is something to be borne in mind in any discussion of external affairs.

One matter to which the minister did not allude yesterday but which he dealt with rather fully in an earlier debate was our general relationship with the commonwealth, and in particular the situation of the United Kingdom today. The hon. member for Melfort asked me whether I did not believe that the implementation of article 2 would be beneficial. Certainly I believe it would be beneficial. In addition to military strength, in a world in which a war of ideas is being waged, I believe that economic considerations must be taken into account. I well remember that in January, 1951, when I returned from that trip to which I alluded

a moment ago, I came out in favour of support of the Colombo plan to the limit of our resources. I favour a fair proportion; by that I mean a fair proportion of our expenditures on behalf of defence. Certainly I believe that economic aid will assist. I call as evidence Paul G. Hoffman, the great American industrialist turned world philanthropist and international administrator. He recently made a speech in Los Angeles where he pointed out that had the United States, in 1945, granted at that time some economic assistance to China, today it would not stand in the danger it does of the onrush of communism that has enveloped country after country. Mr. Hoffman, who is a man of vast experience, said this:

Communism would never have overrun China if the United States had gone into China with a rural reconstruction program, and had spent one billion dollars in 1945. Action then would have saved thousands of lives and billions of treasure.

Today in Asia communism masquerades under the standard of nationalization and it is marching into the commonwealth-into Ceylon, to a lesser extent into Pakistan and even into India itself. A matter of a year and a half ago great Indian leaders denied the possibility of that happening. They averred that there was no probability of communism ever being able to infiltrate into India. Yet in the recent election returns we find that in the congress, out of 497 seats, the communists secured some 30 seats; and among the state representatives the proportion was even greater. With a bridgehead across India, communism today is mobilizing again an Asiatic people. I believe that $25,300,000, the amount expended so far on the Colombo plan, is not, having regard to the total expenditure we make on defence, a sufficient one for the Dominion of Canada.

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LIB

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

Even that amount could not be spent last year.

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

As a matter of fact, I could go into the reasons why that expenditure was not made. We sent over some assistance in the form of wheat in order to meet a famine. What they are asking for there is the elevation of standards, not with regard to individuals but with regard to the improvement of agricultural techniques, the inauguration of power developments and so on.

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LIB

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

That is exactly what we are doing.

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PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

My, you are a big fellow.

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

I appreciate what you are doing. The point I am making is this. If there was a will to give assistance it could

External Affairs

be given. That assistance is certainly necessary today in India if the situation is to be met in its incubating stage. My hon. friend says that $25 million could not be spent. Paul G. Hoffman, the experienced administrator, says that today in India the expenditure of several hundred million dollars-more than a billion dollars, in fact-would be cheap insurance in containing communism; and he goes further and says that no other expenditure in Asia can return such great dividends in potential liberty as can assistance at this time.

I mentioned the vote. In the legislative assembly, out of some 3,000 representatives, 200 are communist today. I believe that economic aid, that assistance such as this, will not only be beneficial in keeping communism from our shores, but will also afford a means whereby our surplus farm products and the like may be disposed of instead of piling up to the detriment of our country.

I now come, and only for a moment, to a reference to the people of the United Kingdom. Today the economic tides are running against Britain. Courage is still upheld. Their courage cannot be denied. They are in a position where some assistance must be forthcoming. It is not a question of amount. I believe even greater than the amount is the feeling that peoples in other parts of the commonwealth will stand behind them as they stood with us and for us during the dark years of the last war. They need something today to lift them; they need something to assist them. They need what we have within this commonwealth, namely, resources, vast resources, undeveloped.

Our trade with various parts of the commonwealth has been receding. It has been increasing in amount, true, but proportionately to trade in general with other countries the reverse has been the fact. I suggest that there are very good reasons today why Canada should give the lead toward the calling of a British commonwealth resources, development and trade conference. Bring together the representatives of the commonwealth. That does not imply seclusion or separation from other nations; but it places quite strategic parts of the world in a position to mobilize our resources so that they will be available to the countries of NATO and also of Asia that will be standing with us when and if that becomes necessary.

I am not going into great ifetail today, but I do believe this: In the cold war of today, victory, and I mean victory in the cold war, in a long protracted period of potential aggression in all parts of the world, will depend

External Affairs

not only on the mobilization of the spirit but also of our vast resources that are as yet undeveloped. In convening such a conference we have the opportunity of making an inventory of our resources which are today running short in various parts of the world. We would also be able to come to conclusions among ourselves whereby we would be assured of normal channels of trade between countries, and the trade now lost or seriously threatened could be revived.

Somebody will say there was a meeting in London in January at which the Minister of Finance for Canada (Mr. Abbott) had what we call in law, sir, a watching brief. He was otherwise described in the British parliament, but the expression did not appeal to me. He had a watching brief. Having regard to the contribution that she is making within the commonwealth and to NATO today, Canada has a right to more than a watching brief, and it is necessary that she have more than a watching brief. At such a conference I should like to see canvassed the possibility of purchasing within the sterling bloc raw materials now secured elsewhere, thereby, in part at least, regaining some of the markets for our primary products which today are lost. After all NATO will-only be as strong, and resistance to communism will only be as strong, as the nations that make up the community of nations. At the present time I should like to see us to a larger degree grant orders to the United Kingdom for defence materials we require in Canada. Today we purchase tremendous amounts in the United States. I can understand that because of the proximity of our two countries, but surely there are defence materials that could be ordered in Britain. In return for them, and in order to raise their standards of living, we would make available such foods as today are in short supply, and which they require. These are but a few outlines of some of the things I suggest could be done in mobilizing one of the nations within NATO and the nations within the British commonwealth, in cooperation with the United States, thereby strengthening us; for, Mr. Speaker, resources undeveloped will constitute but a small barrier to the aggression of communism if communist nations ever march.

As I see it, what we require today is a vista of our responsibilities. In addition to that we requirS a vision of some developments that can take place, major developments, that will assure to every part of the British commonwealth that expansion and development that will maintain their bastions of freedom should communism advance; and

[Mr. Diefenbaker.l

at the same time by assuring assistance to the countries within the British commonwealth

and I mention those in Asia particularly-we shall be doing our part to raise the ramparts against the tides of communism flowing into those countries that can only be held off either by force of arms or by the mobilization of those spiritual resources to which the hon. member for Greenwood (Mr. Macdonnell) made reference last evening.

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LIB

Joseph-Alfred Dion (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order. The hon. gentleman has exhausted his time.

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CCF

Hazen Robert Argue

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

Mr. H. R. Argue (Assiniboia):

Mr. Speaker, I rise at this time to support the amendment moved by the hon. member for Melfort (Mr. Wright), regretting that the government has failed to take effective steps to implement article 2 of the North Atlantic treaty. I believe it has already been amply pointed out that we in this group have moved this amendment for the purpose of bringing to the attention of the government and of the country the need for economic assistance now for European countries in the North Atlantic Treaty Organization.

I listened with a great deal of interest to the speech by the hon. member for Lake Centre (Mr. Diefenbaker). He said that he would not be able to support our amendment, nor would his party, because it might appear to other countries that there was a division in Canada. He said that we should all unite in support of NATO, irrespective of party. Well, I want to say that the C.C.F. group, by this amendment, is demonstrating not only that we support some parts of NATO but that we support all parts of NATO, including article 2. Our proposition is not that NATO should be weakened, but rather that it should be strengthened. For that reason I for one feel that the amendment of the hon. member for Melfort (Mr. Wright) is one that deserves support.

I listened yesterday with a great deal of interest to the speech of the Secretary of State for External Affairs (Mr. Pearson). I think he demonstrated to us that not only has the government failed to provide economic assistance, but that it has set itself in opposition to requests by the North Atlantic Treaty Organization that such assistance should be forthcoming.

The minister placed on the record some figures which he described as forms of economic aid. The grand total of those figures was some $2,403 million. The largest item in that huge total was comprised of loans to different countries, the largest of which was to Great Britain. Those loans totalled $1,753 million. Of those various

forms of economic assistance mentioned by the minister, 73 per cent are in the form of loans.

We in this group are not asking the government to make loans by this means to other countries; we are asking that we make outright gifts as a contribution to the building of peace throughout the world. I do not think it is fair to suggest that the loans we have made in the past are, in effect, economic aid.

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LIB

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

What is it?

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CCF

Hazen Robert Argue

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

Mr. Argue:

So far as I know, it is a business transaction, and only a business transaction. The government has an asset on its books and, I believe, expects to collect every dollar of it. It is not economic assistance; it is not economic aid in the sense in which we have been dealing with it. The total figures placed on the record by the minister of provisions made before NATO, amounted to 85 per cent of his grand total of $2,403 million. The amendment of the hon. member for Melfort asks for economic assistance, that such economic assistance be granted to NATO countries, and makes no mention of what Canada did or did not do prior to the signing of the treaty in 1949.

According to the minister, since the signing of the treaty Canada has provided $25,300,000 for the Colombo plan, $324,800,000 for mutual aid, and a gift to Greece of $830,000 for the purchase of wheat. None of those figures represents economic aid under article 2 of the North Atlantic treaty; that is the point I am making now.

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LIB

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

The hon. member had better read the treaty.

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April 2, 1952