May 19, 1952

LIB

George Matheson Murray

Liberal

Mr. Murray (Cariboo):

Mr. Chairman, I repeat that I believe it would be a splendid gesture in the year of the coronation for Canada to strike golden coins in certain denominations to mark that great festival.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Louis-René Beaudoin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The Chairman:

Order. I think the other day the hon. member made the same suggestion and, if he will recall, I pointed out to him on that occasion that he was not in order. He is not any more in order this evening.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

George Matheson Murray

Liberal

Mr. Murray (Cariboo):

The position is this, that I am from a riding in which gold mining is an industry just like cattle ranching, lumbering or any of the other great natural industries. Any measure at all which could assist in improving the price of gold would certainly be of value to that part of Canada, and indeed to every other part in which gold mining is a great and basic industry. That would take in many parts of Quebec, northern Ontario, Manitoba, Saskatchewan, right across the country. I hope to see the day when Canada is released from any commitment under the international monetary fund. I hope to see the day when gold will command its proper price throughout the world. This would be of great benefit to our country, stimulating not only the gold mining industry but many others dependent upon it.

We have heard about the great development of iron in Labrador. The project now

being carried out would have been impossible had it not been for the genius and experience of men who had operated in gold in northern Ontario, who had acquired capital and the ability to participate in the development of that great iron ore industry in Quebec. In my own province, gold miners having acquired wealth in that industry have spent their money in many other industries, and have developed ranching, as well as mercantile and other activities in Vancouver, Victoria and elsewhere. In fact, the story in British Columbia is that the mining of gold has been fundamental to the success of that province.

Our north Atlantic allies should have a common coinage as well as a common monetary system. I had thought this might properly be considered under this resolution, but I believe I am ruled out of order, so I must be content to retire to a discussion of conditions within the boundaries of my own riding. We should continue this subsidy and increase it. By increasing the production of Canadian gold we can stimulate the business of all our people.

France hoards gold; the United States buys gold. Let us, then, follow the policy so well outlined by the Minister of Trade and Commerce, to sell our commodities in the best market. If France, United States and other nations wish to buy that metal product, then let us go into those markets and, as I say, free Canadian gold from control at the hands of men who, while their intentions may be good, direct institutions such as the international monetary fund. With all due respect to our own Minister of Finance I say those persons are often advised by theorists and by those who are not practical in the handling and directing of industries and the meeting of problems in the development of the northwest.

I do not wish to speak at greater length. I would point out, however, that during the last few months I have been in many of the new centres of northern British Columbia, as well as the Yukon and the Northwest Territories where, despite the low price of gold, development is going on. Large purchases are being made and a great market exists for the business houses of Vancouver, Edmonton, Toronto and elsewhere.

We are most fortunate in having a minister in the department who, I believe, shares the views I have endeavoured to present this evening. I commend him for continuing the subsidy to an industry which is vital to the success of our country.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

Mr. Chairman, the length of this discussion and its very thoughtful nature indicate that all hon. members have become aware of the fact that the gold mining

Gold Mining

industry has been made a sick industry through the restrictive policies now being followed by the government as a result of our adherence to the international monetary fund. I say the gold mining industry has been made a sick industry because any industry is sick when its welfare depends directly upon the continued favour of the government and the continued support of the public treasury.

When I refer to favour of the government, I do not have in mind industries the existence or continuation of which can be wrecked by sudden changes in domestic, fiscal or tariff policy, but rather industries the existence of which on a solvent basis depends upon subsidies from the treasury. It is the seriousness of that situation and the growing awareness that it should not be allowed to continue which have given rise to this thoughtful discussion.

I believe we have to support the resolution and the bill which will be based upon it because, for reasons given by the minister and others who have taken part in the debate, it is hoped that the measure will improve somewhat the present position of this vital industry. But the mere fact that we support the resolution and the bill will not be taken, I hope, as any indication that we are in favour of the general policy now being followed which, in effect, amounts to a continuation of restrictive barriers built up around the industry and against trading in the commodity it produces.

I am not going to repeat the arguments set out in the excellent and timely speech of the hon. member for York West, in which he prescribed in some detail measures which would lead to a cure of the present conditions from which the gold mining industry suffers. But it seems to me that anyone who thinks cannot avoid being struck by the folly of the situation in the world today where we find large numbers of people in this country and in South Africa-to name only two of the largest gold producing countries-busily engaged in digging this valuable commodity, out of one hole in the ground and shipping it to the United States where on the other hand a large number of people is busily engaged in burying and guarding it in another hole in the ground.

This is a commodity which is valuable not only because of its intrinsic worth, but also because of its use in international trade. When it is placed in the hole in the ground in the United States it can serve no useful purpose; the only purpose it serves is to preserve the artificial price set for gold, and

Gold Mining

to continue a situation where the gold producing countries are denied the price and the place which would be theirs if international trade in gold were once again freely to take place.

Yet this situation, under which a commodity is dug out of one hole in the ground in one country and buried in another hole in the ground in another country, thus bringing about an artificially depressed price for gold, means that the price which our producers receive for the commodity-a price which is forced upon them by the present restrictive policies resulting from the international monetary fund to which, as yet, we continue to subscribe-bears no relationship to the price or the value which would attach to gold if it could be freely owned and used in trade. I join particularly with the hon. member for Eglinton in his statement the other day that he fully realizes and appreciates the difficulty of changing that situation. It cannot be lightly suggested that any country should withdraw from international agreements and obligations into which it has freely entered. But I do press strongly the point of view that unless we can see indications that these policies will be relaxed progressively, and that the relaxation will commence at an early date, we should serve notice that we may be compelled, in the discharge of the duty which is described as the prime function of this parliament-that is to consider first the interests of Canadians-to take measures which could only be taken if we did withdraw from that arrangement. Some of the remedies suggested perhaps do not involve immediately going that far, and I think they should be considered carefully; if it is at all possible they should be adopted whether or not we in fact withdraw from the fund.

It is for that reason we should see if it is not possible to allow the private ownership of gold in this country. Above all, we must take steps now leading to the restoration, at as early a date as possible, of the free market for gold. I believe that nothing plays into the hands of the communist countries and communist policies so much as the restrictions on the free movements of money and people which, as we see them in effect today, restrict the trade between ourselves and the sterling and other western European countries. The present conditions give a fair indication that if the restrictions are to continue, and particularly if they become any more serious, some form of economic breakdown will confront the western world. Nothing could contribute more to the furtherance of communist policy than that economic breakdown. In the last few years, on a number of occasions, we

have only narrowly averted such a breakdown, the consequences of which would be more far-reaching than the breakdown of our military strength. It goes without saying that military strength cannot be maintained unless there is a sound economy behind it.

When we see the difficulties which confront this country in selling its produce in the markets of the world because of currency restrictions, impediments to convertibility; when we see the complexity of difficulties which we experience in bringing into Canada immigrants of the type that we want and who want to come here, because those immigrants cannot bring their money with them; when we see these artificial restrictions on the free flow of money and people, then I think we have to realize that some parts of the world are being forced to adopt the same policies which we so vigorously condemned when they were adopted by the dictator countries. One of the first things Hitler did was to prevent the export of money and then to prevent the movement of people out of Germany. Having done that, he then said they had too many people in Germany and had to have more living space; that was one of his main pretexts for military expansion. I cannot see the sense of condemning those policies in others, and then permitting a similar situation to arise as a result of these restrictions now being imposed on movements of this type today.

I am convinced that one of the prime tasks confronting the North Atlantic treaty nations, and one quite as urgent as the building up of their military strength, is the restoration of the freedom of people to cross international boundaries and the freedom to move money and goods across international boundaries. I believe one of the first requisites to the restoration of those freedoms would be the restoration of a free market for gold. It seems to me that an international commodity which is accepted everywhere as a basis of values would at least permit the start of the process which would lead to the restoration of convertibility.

Now, those general statements are as far as I dare go into the field of international finance, and I make even those statements with some trepidation. But I am convinced that these general principles are applicable, and that the considerations arising out of them are urgent.

I come then to the other set of circumstances which, as I have said, lead us to support this measure-although we take exception to the continuance of the general restrictive policy-that is, the immediate welfare of the gold mining industry. At the moment, this depends upon some additional

assistance along the lines which will be provided by the bill to be based on this resolution. Other members with greater knowledge of the mining industry have spoken of those factors, and I do not intend to repeat them. I do intend, however, to say that, having two large gold mines in the constituency which I represent, the Pioneer and Bralorne mines in the Bridge river valley, and knowing something in a general way of the difficulties which those mines are facing, the difficulties which they have found in keeping men and the conditions facing the men because of the difficulty in paying wages which are commensurate with wages paid in other branches of mining, I know that even the temporary and limited relief offered by this measure is something we must support.

Again, though, I urge the minister, for the sake of the welfare of the mining industry as well as for the sake of the welfare of this country and all western countries who must restore freedom in international trade, to lose no time in going further than this temporary measure and making his main effort the restoration of the value of gold and the free trade in it as a commodity.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I know this is not the time to enter into a discussion of the functions of gold in a world economy, but I think perhaps I should say just a word in view of the inference of the hon. member that the difficulties which are now facing the gold mining industry of this country, and other gold producing countries, are due to what he has referred to as the restrictions imposed by the international monetary fund. The causes of those difficulties are very much more deep rooted than that. The very thoughtful speech which was made by the hon. member for York West the other day-I was sorry I was not here to listen to it-and the speech given by the member for Kamloops, show that they must have given a great deal of time and study to the history of gold as a foundation for currency.

The traditional role of gold, however, has been as a means of settling international balances and as a storehouse value. It has retained that position because it has had a stable value, not a fluctuating value. In the past it has been fixed by statute as a unit of national currency containing so many ounces of gold of a certain standard of weight and fineness. That is the traditional role of gold, and that is the only way we shall maintain gold as a metal having the value it has today. Gold itself, as was so rightly pointed out by the member for York West, has very little intrinsic value. Its uses in the arts are extensive, but they certainly would not

Gold Mining

account for one moment for the gold produced in this country alone, let alone that of South Africa and many others. The traditional value of gold, therefore, depends upon its being accepted as a suitable medium of exchange. Really to oversimplify it, the present value of gold today depends upon the willingness of the United States treasury to take it and to give $35 an ounce worth of goods and services for it. If the United States treasury ever stopped doing that, I can tell you that the Canadian gold producers would be in a much more serious position than they are at this moment.

There is a good deal of talk about this free market for gold. Those of us who have followed this question have been rather interested in what has happened since there have been these relaxations with regard to the sale of gold, in processed form, it is true, but in very slightly processed form. The fact that Canada and Southern Rhodesia have entered that market along with South Africa has had the effect of sharply depressing the price. I venture to say that if the so-called shackles were all done away with, if we offered the $110 million worth of gold production we have in this country freely and if South Africa and everybody else did the same thing, the United States would be reluctant to give $35 worth of automobiles, steel or what have you for our gold production, in view of the fact that they now have some $23 billion or $24 billion worth of non-productive gold, as my hon. friend has said, down in the vaults at Fort Knox, Kentucky. I would therefore not take it for granted, as some people do, that Canada gets no benefit from being a member of the international monetary fund.

This is a question on which opinions may differ. That may not be the best medium for maintaining the stable, traditional role of gold in the world economy, but it is one means. The international monetary fund is participated in by most of the major trading countries of the world with the exception of soviet Russia, and by all the major gold producers. I think that statement should be made here. As I have had occasion to do under other circumstances, I again remind hon. members that the continued value of gold and the future of the gold mining industry is dependent, under today's conditions, upon the United States treasury being willing to purchase it. Whether the price of gold will be raised from its present value of $35 an ounce to something else, as was done in 1933, is a matter on which opinions may differ. I am perhaps saying the obvious

Gold Mining

when I say the policy of the United States treasury would be a rather important factor in that eventuality.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

Mr. Chairman, I am interested in what the Minister of Finance has just said. I disagree with him in the statement that the price of gold depends entirely upon what the United States treasury is prepared to pay, for this reason. At the present time the United States treasury and the other monetary authorities are merely purchasing some 15 per cent of the world's .total output of gold. The rest of it is going not to treasury sources but to sources outside the monetary funds of the various nations. As a matter of fact, according to the United Nations, production last year was some $856 million, based on $35 an ounce, of which $130 million went into monetary funds. The rest went to sources not controlled by the United States treasury. Therefore if you have an organization that is prepared to pay a price for a commodity, and by paying that price can purchase only 15 per cent of the world's output, I think it is incorrect to say that that purchaser controls the price of that commodity.

. My point is simply this. The return to a fixed value for gold which is accepted by the people of the world is desirable. It is not happening at the present time. The way to arrive at that price at which gold will be accepted-the whole 100 per cent of the production, the whole gold that is in hoards, doing no good to anybody or at least very little-is by some method in which you take the restrictions off owning, holding, importing or exporting gold. Those methods are, of necessity, complicated. However, that is the only way in which the true price for this commodity can be arrived at. In my opinion, Mr. Chairman, if the United States were willing to say that gold is worth $35 an ounce, they would offer to sell it against their own currency for $35 an ounce, and to their own nationals; but they are not prepared to do that. I suggest to the Minister of Finance and to you, Mr. Chairman, that there would be a great drain on the hoard at Fort Knox, which the United States treasury could ill afford to stand despite the fact that they are today the world's greatest creditor nation.

Just in this week's New York Times there is in the magazine section an article by Hoffman, the economic correspondent of the Times, saying that there are some $6 billion of gold in Europe alone and that the freeing of that hoard and the putting of that hoard to work would, in his opinion, go a long way towards solving the exchange problems of the European continent.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

How do we do that?

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

That is his article. I will give it to the minister.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

He does not know any more than we do about it.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

It is his article.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

How do we do it? That is the big question.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

If gold were free; if restrictions were taken off gold-because gold is merely a form of capital-and if it were allowed to move freely, the situation would be like that portrayed in the old fable by Aesop of the man with the coat, the sun and the wind. Both wanted to get him to take his coat off. The wind tried to blow the coat off, and the man held his coat around him tighter and tighter. The sun came out and made things warm and pleasant and he took off his coat because he did not need it any more. What we must do is make international climatic conditions so financially pleasant that people will not hold gold but will put it to work.

In another article in the same paper it is estimated that there are some 10,000 ounces a day of gold going into the black market through New York channels-they call it the black market but it is in fact really the free market or the open market-and that gold smuggling has reached such an extent that less than one; in fifty of the gold smugglers are caught. I mention these things because I appreciate the minister's point of view. But, Mr. Chairman, we must take steps to free currency and exchange. We are not doing it at the present time.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

We have.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

We freed our dollar.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Yes.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

I think we should take the next step and free gold. The minister says we freed our dollar. That is something I advocated many years ago, and I think we should have done it long before we did. I think we should have had the courage to do it many years ago, as we should now have the courage to free gold. I think we should have had the courage to do it many years ago. At the same time I think we should have the courage, as I said on Wednesday, to take the steps to free our exchange and establish an open gold market in this country. I believe it would be the beginning of more freely convertible exchange conditions. You have the situation, Mr. Chairman, where 15 per cent or less of the gold at the present time is going into what no doubt the minister will say are useful channels. The rest of it

is going into what the minister would probably say is a black market, hoards, which is undesirable.

What are the steps to be taken to make gold the useful monetary commodity that it once was? In my opinion the first thing you have to do is free it. The first thing you have to do with any type of exchange is endeavour to free the trading in it. If the free market is not the way, if anybody can suggest a better way, I would be interested. At the present time we are going from bad to worse. We are destroying our industry, and nowhere do you find trading becoming easier in the world.

The final argument, Mr. Chairman, is that unless we in this country for our own good, let alone the good of the free world, and especially international trade, do this, we are going to further compartmentalize trade, we are going to continue currency blocs, restrictions and all the other devilish devices of scarcity, and by so doing we are not restoring the trade of the world.

I believe gold is a weapon we must use, and we must use it as a freely exchangeable commodity without any strings of any kind attached to it. That is my plea, Mr. Chairman.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

May I ask the minister one question? I am concerned about the number of workers who are engaged in the gold mines of Canada. Parliament had better consider their situation pretty carefully. I have listened to the remarks that have been made by hon. members and because every one of whom knows so much more about the subject than I do I take their word for many of the things that in some other debates I might be looking at with a more critical eye. I have listened to the debates very carefully, and I have been very much impressed with what has been said. The thing I am concerned about is this. If the gold mines of this country are in the condition which it has been said they are, and if the future under our present system is so uncertain, then I think parliament had better give very careful consideration to the people whose very lives are tied up in the question of work in these mines. You cannot just uproot working people and push them around. They have gone into this mining work with the idea of making it a livelihood, a vocation, and not just a temporary one, but a permanent one. For my own satisfaction I should1 like to know how many are involved in gold mining in Canada, because I think that is a figure we ought to have in this debate.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

George Prudham (Minister of Mines and Technical Surveys)

Liberal

Mr. Prudham:

I have not that figure with me, but from memory I think it is 26,000 people, but I could be wrong.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. Adamson:

It is 36,000.

Gold Mining

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

George Prudham (Minister of Mines and Technical Surveys)

Liberal

Mr. Prudham:

The resolution we have before us tonight proposes amendments to the Emergency Gold Mining Assistance Act. We have had a very interesting and I think profitable discussion of this resolution. The Emergency Gold Mining Assistance Act was never designed to cure the ills that beset the industry. It cannot deal in any way with the international monetary fund or with other problems in the realm of finance. It is designed solely for the purpose of providing emergency assistance to the industry over a difficult period. Subsequent amendments, and the amendments that we now propose, do not alter the original intent of the act in any way, and I think we all understand that.

The discussion has all been very helpful, and I hope the committee will see fit to pass the resolution tonight so I can have these amendments before the house. I can also say that I expect that we shall have the report of last year's operations of the act in the hands of hon. members before second reading.

Topic:   QUESTIONS
Subtopic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Sub-subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink

May 19, 1952