May 22, 1952

?

An hon. Member:

How can you tell?

Topic:   NATIONAL DEFENCE
Subtopic:   THEFTS IN MILITARY ESTABLISHMENTS
Sub-subtopic:   FURTHER PROSECUTIONS
Permalink
LIB

Brooke Claxton (Minister of National Defence)

Liberal

Mr. Claxton:

Just as soon as the legal

advisers of the Department of Justice think it is desirable.

Topic:   NATIONAL DEFENCE
Subtopic:   THEFTS IN MILITARY ESTABLISHMENTS
Sub-subtopic:   FURTHER PROSECUTIONS
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I have one other question. Are those in respect of thefts at Petawawa or elsewhere?

Topic:   NATIONAL DEFENCE
Subtopic:   THEFTS IN MILITARY ESTABLISHMENTS
Sub-subtopic:   FURTHER PROSECUTIONS
Permalink
LIB

Brooke Claxton (Minister of National Defence)

Liberal

Mr. Claxton:

Unfortunately, as I indicated in the house the other day, there are a number of prosecutions laid every year; but the only ones I know about are at Petawawa.

Gold Mining

Topic:   NATIONAL DEFENCE
Subtopic:   THEFTS IN MILITARY ESTABLISHMENTS
Sub-subtopic:   FURTHER PROSECUTIONS
Permalink

EMERGENCY GOLD MINING ASSISTANCE ACT

EXTENSION OF APPLICATION TO YEARS


1952 AND 1953


LIB

George Prudham (Minister of Mines and Technical Surveys)

Liberal

Hon. George Prudham (Minister of Mines and Technical Surveys) moved

the second reading of Bill No. 242, to amend the Emergency Gold Mining Assistance Act.

He said: Mr. Speaker, the amendments before the house will provide for the extension of the provisions of the Emergency Gold Mining Assistance Act for two years. It will also clarify the application of the formula for cost-aid as it applies to the last quarter of 1950, and in the years 1951, 1952 and 1953.

We had a very full discussion on the resolution. I was pleased to note that the speakers without exception indicated their intention to support the amendments. The hon. member for York West (Mr. Adamson) referred to gold mining as a dying industry. I know that the industry is experiencing serious difficulties at this time and is, in fact, struggling for its very existence. I will not, however, agree that it is a dying industry.

The legislation now before us is designed to assist the industry over the present difficult period. At no time has it ever been suggested that this Emergency Gold Mining Assistance Act and subsequent amendments are intended as a cure-all for the ills that beset the industry. They are only intended to help meet the emergency. In my opinion the difficulties that the industry is now struggling against will produce some benefit. The very fact that the price of gold has not been high enough to make it profitable is a challenge to all engaged in the industry.

As I said on a previous occasion, I recently had the pleasure of visiting the gold mining area of northwestern Quebec. There we saw at first hand the miracle that has taken place during the last few years. A short time ago the country was nothing but a vast wilderness. Today there are in existence thriving and prosperous towns; they are not the temporary makeshift communities that some people would expect to find on a wilderness frontier but are permanent, modern towns with all conveniences, well planned, with permanent and beautiful public buildings and fine homes. This has all taken place within the last twenty or twenty-five years. Similar history is being made in many other provinces in Canada and in the Yukon and the Northwest Territories. Around the towns agriculture is developing on an ever-expanding scale.

The spark plug of all this development was, and still is, gold. Many of the communities

Gold Mining

to which I have referred are largely dependent on one or more mines in their vicinity. Some mines are producing base metals as well as gold. Here and there base metal mines are being developed and these are adding stability to the region. I am informed that in almost every instance the original development was for gold.

These mines use an enormous amount of steel, electrical goods and products of the factories, forests and farms. They also contribute to the prosperity of our railways and other transportation facilities.

I should not pass on without saying a word about the contribution that aviation has made to the development of the north. Aviation has speeded up the exploration and development work tremendously.

The search for gold is the spearhead of civilization rolling back the wilderness and revealing and contributing to the development of the great riches of the Canadian shield. I could go further and tell you about the prospectors who brave the hardships of the wilds-black flies and the discomforts of the trail-as they go forth to discover and unlock the secrets of Canada's great storehouse of wealth, namely the Canadian shield. I could tell you about the engineers who plan the development and operate the mines and whose ingenuity and resourcefulness have evolved new and better methods, and more economical production.

It is this fine response to the challenge of adversity that has enabled the mines to continue under the present difficult circumstances.

I could tell you of the miners who daily face the dangers and hazards of underground operations. I believe, as the hon. member for Cariboo (Mr. Murray) does, that any man who works underground should receive a good svage for an honest day's work.

One partner in this great Canadian enterprise that is often forgotten, or to whom little credit is given, who I think should be recognized, is the investor, the provider of the risk capital, the men and women who provide the capital that makes possible the large scale very expensive enterprises that are necessary for successful operation under present-day conditions.

We all know that the prime reason for investing in mining enterprises is the hope of making a profit. As long as we believe in free enterprise we believe in the profit motive. We also know that free enterprise to operate successfully requires co-ordinated effort of capital, labour and management. In the gold mining industry at the present time we have an outstanding example of that co-ordinated effort.

I have been impressed during my trip to northwestern Quebec by the evidence of sincerity and public responsibility on the part of the owners and management and by the miners themselves. To their credit, they are investing -large sums in recreational and social facilities for the old and young. They are building beautiful churches and schools.

We visited one splendid community centre that had been donated to the town by one of the mining companies. In another centre we visited a large community hall that had been built and completely paid for by the employees of a mine.

I am confident that the gold mining industry, and our mining industry in general, will survive the present difficulties and show the way to a greater and more prosperous Canada. The industry will be stronger than ever because the people in the industry are meeting the challenge of the present day with the spirit of hard work, enterprise and ingenuity.

The people of the gold mining industry are not looking for a handout. They are only asking for a chance to work out a solution to their problems. I am firmly convinced, Mr. Speaker, that if Canada is to be a great nation, as we all hope, we must maintain that spirit of adventure, enterprise and industry that is so clearly exemplified by these -northern communities.

By these remarks I have endeavoured to show that the mining industry, although facing difficulties, is meeting the challenge and without a doubt will survive the emergency and be stronger for the struggle.

The extension of the cost-aid for another two years will give the mining industry a chance to cope with their problems. We all hope, and I know that the industry hopes, that they will not have to ask for further aid. However, that can be reviewed when the time comes. As I said before, this is not intended to cure the ills, but merely as a temporary aid to assist the industry in working out their own problems.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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PC

Agar Rodney Adamson

Progressive Conservative

Mr. Rodney Adamson (York West):

In his

remarks the minister used the word miracle in describing what he had seen in northwestern Quebec. May I say with all due respect he is hoping for another if he hopes that this gold mining area will continue to live in face of rising costs, with a fixed price for its products, that is in front of it today.

To go over the situation with regard to gold production for the last fiscal year, we find a very serious deterioration has taken place. The costs for straight gold mines have increased in the last twenty months, rather

less than two years, by no less than $4.20 an ounce produced, or 12 per cent as a gross cost.

As I mentioned in my remarks last week, the Hollinger had an increase based on a ton of gold of $1 a ton. The grade at Hollinger may run $11 or $12 a ton, and the profit is a comparatively small amount. If this increase in costs per ton continues the gold mining industry even for the most profitable producer is doomed, and doomed in a comparatively short space of time.

The figures of production for last year published by the Canadian Metal Mining Association are as follows-they are in round figures: Thirty per cent of the gold is now being produced by mines whose costs are over $35 an ounce. The assistance from this act is $6 an ounce on the average. Even with this assistance these mines are operating at a loss at the present time. Thirty per cent of the straight gold mines have an average price of $32.50 an ounce, and the cost-aid averages $3.50 an ounce. At the present time these mines are just breaking even. The remainder, or 40 per cent of the straight gold mines, have an average cost of less than $30, and the cost-aid is 70 cents an ounce. These mines are still able to make money.

If costs go up in 1952 an amount similar to the increase in 1951, two-thirds of the Canadian gold mining industry will not be able to produce an ounce of gold for the statutory price of $35 in United States funds by the end of the year. And despite cost-aid on these figures, by the end of this fiscal year, practically two-thirds of our straight gold mining companies will not be making a profit on what they are producing. If that does not mean that the destruction of the industry is facing us, and facing us in the very near future, then I do not know what it means. The statement the Minister of Mines and Technical Surveys has made, that gold is the magnet, the metal that has attracted our frontiers north, is one with which I agree. But that just reinforces my statement that the gold industry today is in a perilous condition.

There is one other point I wish to make, and that is to deny the assumption that the United States treasury is the main market or even the control over the price of gold. The premium on the Canadian dollar is due not so much to inherent strength in our currency as to a weakness in the United States position, or a flight from the U.S. dollar. No matter how great or how rich a nation is, it cannot defy the laws of economics continuously. The United States policy of 55704-1554

Gold Mining

deficit financing is dangerous, not only to that country but to the whole of North America.

Annual deficits, particularly deficits which are suspect of being caused by and for internal political policies, are weakening the economic structure of the United States, and causing a great danger to the entire free world. The U.S. dollar, because of this policy, cannot be other than a wasting asset in terms of goods and services. For us to sell gold for this currency is basically unsound for this reason alone; but to sell it at a price below the world price, even, stated in terms of U.S. dollars, is, to put it mildly, the supreme folly. No matter what the prosperity, no matter how great the production, no matter how high the standard of living, no country can survive continuous deficits in its national accounting.

I say that without any desire to criticize a great and friendly government. But the whole policy which is being followed, the whole economic policy, makes the gold industry in Canada hostage to American inflation. And, as I pointed out before, today less than 15 per cent of the gold is going into useful channels; it is being placed in hoards. That is the one thing we are trying to prevent. The one thing that we are trying to do is to put gold back into useful circulation. To fail to do this would be as dangerous as any national policy we could follow.

I spoke at length on this subject last Wednesday, and I do not propose to repeat today what I said at that time. But I wish to deny as emphatically as I can any suggestion that the United States either controls the world price or is the main market for gold. We should examine carefully th* whole policy of selling gold to this market at the present price.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
SC

Victor Quelch

Social Credit

Mr. Vicior Quelch (Acadia):

Mr. Speaker,

when this measure was in the resolution stage we stated we would support it, to give assistance to the gold mining industry, because we recognize the important part that industry plays in the Canadian economy. First of all, we are producing gold and, secondly, gold plays an important part in helping us to meet our unfavourable balance of payments with the United States.

For a number of years we have been in the difficult position of not being able to balance our trade with that nation; and therefore gold does help us to balance our payments. On the other hand I would say that we would be in a far happier position and would be making a greater contribution to the welfare of the world if, instead of expanding the

Gold Mining

production of gold, we were to expand the production of some other useful commodity the United States was willing to accept. In that way not only would we be able to balance our payments with that country but, in addition, we would be making a real contribution to the wealth of peoples throughout the world.

During the last four years I believe we have paid over $40 million to the gold producers by way of assistance. I understand there are in the neighbourhood of 26,000 workers in that industry. I mention that only to remind those hon. members who, at the time we were discussing another measure, one which gave $65 million to the wheat producers, opposed it. Let me point out in passing that that $65 million was paid over a period of five years, and that over 250,000 grain producers benefited from the payment. So the amount of the subsidy now being given to the gold producers is far greater than the assistance given to the wheat producers. Further, the price of wheat was controlled in the same manner as the price of gold is now controlled. I mention that only in passing, and in the hope that in future, if measures come up to give assistance to wheat producers, a more reasonable attitude will be adopted by some of those very people who are so insistent now that this assistance be given to the gold producers.

When the hon. member for York West (Mr. Adamson) spoke at the resolution stage he said that a return to the gold standard was desirable. He made it clear that he realized this could not be brought about overnight and that certain preliminary steps would have to be taken. On the other hand he left no doubt that he supported the idea of the restoration of the gold standard; and, in view of the fact that he spoke first for his party, I am assuming he was speaking on behalf of it, and that the Progressive Conservative party supports a restoration of the gold standard.

Let me add that not only the Progressive Conservative party is advocating the restoration of the gold standard, because in his mail every member receives a great amount of propaganda from various interests advocating the same thing. Let me make this clear. If we in this group thought for one moment that assistance under this bill was aimed at the restoration of the gold standard, we would not support it for one moment. On the other hand I have no reason to believe that that is the attitude of the government. As a matter of fact statements made from time to time by the Minister of Finance (Mr, Abbott) indicate clearly that that is not so.

Apparently at the moment the government believes in a managed currency, which I believe is far more beneficial to the country than any effort to operate under a gold standard.

I found the speech of the hon. member for York West most interesting. With some of it I agreed, and with some I did not. I was interested in what he said with regard to the White plan brought down prior to the Bretton Woods agreement. Of course gold plays a large part in the Bretton Woods agreement. It holds a preferred position. It is the only commodity that a debtor nation has the right to demand that a creditor nation accept in payment of its obligations. A member nation's currency is valued in terms of United States dollars, and United States dollars are valued in terms of gold. So gold does play a very important part, and holds a very preferred position under the Bretton Woods agreement.

The hon. member for York West pointed out that Dexter White, who apparently wrote the White plan, had been called by Chambers a fellow traveller. Apparently he was a communist. The reason why that interested me is that at the time we were discussing the Bretton Woods agreement some of the strongest supporters of that agreement in this country were communists. At that time we were the only group in this house opposing the agreement and they criticized us bitterly and called us fascists and a few other names because we opposed it.

At that time we had in the house as a member a prominent communist. It so happened that he sat beside me. I said to him one day that I could quite understand why the communists were so anxious to push other nations into the Bretton Woods agreement because they felt that it was going to be a tremendous handicap to any nation that joined it and therefore Russia was all too anxious to get as many nations into that agreement as possible. I told him at that time that I was satisfied that Russia would never join the Bretton Woods agreement. He insisted they would, but what happened? Russia supported it up to a certain point and then dropped it. I think that was all by design; I do not think that was accidental.

It is very interesting to note that today one of the main reasons why Great Britain is having to trade with nations behind the iron curtain is to be found in the provisions of the Bretton Woods agreement. I do not think anyone should criticize Great Britain at the present time because she is trading with nations behind the iron curtain because it is a matter of life and death with her. She has to get food. She is able to get food

from Russia. Apparently we are not prepared to sell her food unless she pays for it in dollars and she has not the dollars. She must buy that food from nations which are willing to trade with her on a barter basis or in return, for sterling.

The hon. member for York West has advocated a return to the gold standard. I would say that any person who asks for a restoration of the gold standard is playing into the hands of the Kremlin to an even greater extent than were those who supported the Bretton Woods agreement. If the gold standard is ever returned it will mean strikes in this country from one end to the other; it will mean a very serious depression.

I say that for the simple reason that the gold standard cannot work efficiently where you have built up a degree of stability, where there is resistance against a fall in wages or a fall in the prices of agricultural products, where there is stability in incomes. In order to have the gold standard work efficiently that stability must be broken down.

Perhaps I should explain why I say that. I think we are all familiar with the principle of the gold standard. We know that under the gold standard currency is based upon gold; the gold reserves automatically control the internal prices in relation to the external prices. When prices within a nation rise to a higher level than the prices of other nations, gold flows out, exports fall off and we have an unfavourable balance of payments. The gold must flow out in order to adjust that adverse balance of payments. When the gold flows out your gold reserves are reduced and therefore there has to be a general restriction in the amount of money in circulation in order to bring it back into conformity with the reduced gold reserves.

When you reduce the amount of money in circulation it has a tendency to reduce prices. When you reduce prices there is a tendency to reduce wages and increase unemployment. That is supposed to go on until your prices fall to a level either lower than or equal to the prices of other nations. Then those other nations are supposed to buy your production and goods and gold will gradually come back into the country. That is supposed to be the automatic feature. Theoretically it works quite nicely.

As I said before, the gold standard can work effectively only when the social structure is amenable to these automatic features. Fortunately that is not the case in. Canada. I am not trying to pat the government on the back, but we have built up in this country a certain degree of stability. We have a certain degree of stability in wages due to wage agreements. We have a certain degree

Gold Mining

of stability in farm prices through price support. If the gold standard is to apply you would have to break that structure or lose gold and thus have to restrict the amount of money in circulation. In a very short time you would either be forced off the gold standard or you would have a very serious depression-.

I know that some will say that I am not giving a fair interpretation and therefore I should like to quote an orthodox economist, a man who I think has been recognized as an authority on the gold standard. I refer to Mr. T. E. Gregory, professor of currency and banking, University of London, and of the London School of Economics. I intend to quote from his book entitled "The Gold Standard and its Future", pages 32 and 33, as follows:

It is more profitable to turn to a consideration of the general nature of the post-war economic situation and to discuss how and why this situation has complicated the working of the gold standard.

Thirdly, the world economic structure has become rigid1 to an unprecedented degree. Owing to the much greater pressure which organized business and labour interests can bring to bear on government, there has been a general advocacy of "stability" which has in practice meant that particular groups could stabilize their own position without any, or enough, attention having been paid to the result of such stabilizing action on other parts of the economic field or to the long-period results of such action. Raw material producers have been allowed, with the aid of governmental or quasi-govem-mental assistance, to "stabilize" the prices of particular raw materials, without regard to the fact that consumption might thereby be discouraged and production encouraged ... In the sphere of labour there has been in certain countries a development of unemployment insurance schemes or similar relief measures which have prevented wage rates from falling, whilst in others public opinion, reinforced' by government propaganda, has had very much the same effect . . . From the standpoint of the working of the international gold standard, such a rigidity of social structure and of the scale of money income implies that the adjustment, which might under more elastic conditions have been made by movements in the domestic price and income structure, is at best delayed1, with the inevitable effect that gold movements, or, what is in the modern world very much the same things, changes in the holding of foreign exchange assets at the command of the Central Bank, take place on a larger scale than would otherwise have been necessary.

I think that explains it in a more lucid manner than the way 1 described it. It indicates exactly what I was saying, that you cannot expect the gold standard to work efficiently so long as you build up buffers against a fall in wages, a fall in agricultural prices and a decrease in the general degree of well-being. Consequently your gold standard either has to go or you go down into a serious depression.

In this regard I always think that the best way to learn is to study the mistakes we have made in the past. During the past

Gold Mining

we have been on the gold standard on various occasions. I was interested in a report issued by the United States department of commerce in 1944 entitled "The U. S. in the World Economy" in which they review the reason for the quick recovery from the 1920-21 depression, the reason for the duration of the depression in the thirties, and the reason why we got out of the depression rather quickly in 1937-38. As I say, I am only going to quote enough to explain what effect the gold standard had in these movements. On page 2 there is

the following:

The major factors contributing to the relative ease and speed with which our international transactions weathered the strain of the 1920-21 period appear to have been the following:

As pressure emanated from this country through the fall in business activity and prices, declining imports, and cessation of government lending, other countries were able to absorb part of the strain by permitting their exchange rates to depreciate and thus avoided becoming enmeshed in excessive deflation in their own economies. This was possible because the pegged exchange rates maintained among the allies during the war had been abandoned and the international gold standard had not yet been restored. Few countries, if any, attempted at that time to maintain fixed rates on the United States dollar.

Also largely because they had not yet recommitted themselves to the gold standard . . .

With respect to the longer depression in the 1930's there is the following on page 5:

The major factors accounting for the duration of the decline and the severity of its consequences were in many respects the reverse of the more favourable conditions noted with respect to the 1920-21 period. Among these factors were the following:

In further contrast to the more flexible situation at the beginning of the decade, the world at large had returned to a regime of fixed exchange rates under the reconstituted international gold or gold-exchange standard, which had won general adherence by the end of the twenties. The initial endeavour to defend their exchange parities and reserve positions let the task of readjustment in their external demands fall full force on their internal economic life, thus strengthening the forces of depression and deflation throughout the world generally.

One can only speculate as to how much deflation other countries would have had to enforce and endure if the adjustment had been carried all the way through in this manner. The principal measures of adjustment resorted to by other countries, most of which involved a radical departure from the gold standard and the previous world commercial system in general, were as follows:

(1) Abandonment of gold parities and depreciation of foreign currencies with respect to the dollar.

(2) General tariff increases aimed at curtailing total imports and promoting domestic production.

(3) Preferential tariff and commercial arrangements designed to foster trade among the participants and to divert trade from other sources of supply.

(4) Direct trade and exchange control through quotas and licensing requirements for the purpose of forcing trade along selected channels and restricting the use of foreign exchange to the available supply.

May I interject there that very often we hear the charge made that these controls and restrictions were largely responsible for the depression. Note that the depression was the reason that these controls and restrictions were implemented, and it was largely as a result of these controls and restrictions and the abandonment of the gold standard that we were finally able to pull out of the depression. With regard to the 1937-38 depression there is the following on page 10:

The reasons for the short duration of the decline in our international transactions in 1937-38 and for its failure to have more serious repercussions seem to be as follows:

Of basic importance with respect to the supply of dollars, prompt and energetic action was taken by the national authorities to prevent the development of the domestic recession into progressive and cumulative deflation along the 1929-32 order and to insure revival. In addition to the greater flexibility of exchange rates in general, by the time of the 1937-38 recession many foreign countries had developed intricate systems of trade and exchange controls and other techniques which helped them to absorb shocks from the outside without transmitting undue pressure to their internal economic structures.

I think it is unfortunate, Mr. Speaker, that we did not benefit by the experience that we gained in those years when we were drafting our post-war proposals with respect to financial policy. If we had given due regard to what had happened during those years, I think we would have been very hesitant about signing the Bretton Woods agreement because under that agreement, as I have already stated, we did place gold in a preferred position. We made gold the only commodity in the world today which a debtor nation has the right to insist that its creditors shall accept in payment of its obligations. Second, we gave exporting nations the right to demand payment in their own currencies instead of accepting the currency of the importing nation without placing any obligation whatsoever upon the exporting nation to buy the other nation's goods so they could obtain their currency.

If they are not able to obtain the currency of the exporting nation with which to pay for these imports, then of course they either have to go into debt or meet these payments with gold. Most of the nations that need1 our goods are not in the fortunate position of having gold. Not satisfied with that, we also supported a policy of non-discrimination which even denied those debtor nations the right to determine their sources of supply. Naturally when they had an adverse balance of trade with the dollar area the only way they could correct their balance of payments was to try to reduce their imports from the dollar area and buy elsewhere. They were denied that right under the principle of nondiscrimination, although at the present time,

realizing that they cannot possibly get on in any other way, we have allowed them to discriminate.

Another point that the hon. member for York West advocated was a free market for gold as a preliminary step to the setting up of a gold standard. So far as this group is concerned1, we would have no objection to a free market for gold provided that gold was divorced entirely from the monetary system and made a commodity the same as anything else. Make it a commodity the same as other goods, provide a free market and make it subject to the law of supply and demand, speculation or anything else you like; but as long as gold is used as a yardstick we consider it very unwise to make it subject to speculation. As long as gold is used as a base for establishing the exchange rate between the currencies of the nations or as a gold base, then of course the price of gold1 should not be subject to speculation.

What would1 one think if our weights and measures were subject to the law of supply and demand? What would one think if every time there was a surplus of goods we agreed to put 24 ounces in a pound in order to move them, or if every time there was a surplus of cloth we agreed to put 40 inches in the yardstick instead of 36 in order to make it possible to move those goods or to meet the law of supply and demand? I think everybody would realize that our weights and measures would no longer be a yardstick of value. In exactly the same way, if you are going to make gold the basis of your currency and the basis for the exchange value between currencies, and then at the same time make the price of gold subject to the law of supply and demand, you have not got a yardstick at all.

I quite realize that some people may not agree with my viewpoint, and I believe the hon. member for York West would pay far more attention to the leader of the Conservative party in Great Britain than he would to me. Therefore I should like to quote what Mr. Churchill had to say on that particular point in a speech he made in the House of Commons of the United Kingdom on April 21, 1932, to be found at pages 1661 and 1662 of the official report of their debates. He said:

When I was moved by many arguments and forces in 1925 to return to the gold standard I was assured by the highest experts, and our experts are men of great ability and of indisputable integrity and sincerity . . . that we were anchoring ourselves to reality and stability: and I accepted their advice. I take for myself and my colleagues of other days whatever degree of blame and burden there may be for having accepted their advice.

But what has happened? We have had no reality, no stability. The price of gold has risen since then by more than 70 per cent. That is as if a 12-inch footrule had suddenly been stretched to

Gold Mining

19 or 20 inches; as if the pound avoirdupois had suddenly become 23 to 24 ounces instead of-how much is it?-16. Look at what this has meant to everybody who has been compelled to execute their contracts upon this irrationally enhanced scale. Look at the gross unfairness of such a distortion to all producers of new wealth, and to all that labour and science and enterprise can give us. Look at the enormously increased volume of commodities which have to be created in order to pay off the same mortgage debt or loan. Minor fluctuations might well be ignored, but I say quite seriously that this monetary convulsion has now reached a pitch where I am persuaded that the producers of new wealth will not tolerate indefinitely so hideous an oppression.

If any change is to be made in the price of gold while it is being used as a measure of value, then unquestionably that change should be made by statute and not be made subject to the law of supply and demand or speculation.

The member for York West further stressed that the free market would loosen trade in the sterling area. I was very interested in that. Perhaps I had better quote his words because I do not want to distort what any member has said. I refer to page 2212 of Hansard for May 14, 1952, where I read:

The return to the gold standard is the only measure which, by making currency both a medium of exchange and a store of actual value, will prevent inflation . . .

That is an interesting statement, but this is the one I really meant to quote, on page 2210:

If therefore the owners of the soft currencies were provided with the machinery by which they could exchange these currencies, through the medium of our gold market, into gold they would have a much more useful counter, no matter what it was called. There would have to be of course a buyer for the soft currencies, but the productivity of the sterling area in itself indicates a market for those currencies for those who wish to buy in that area.

I think that is a somewhat peculiar statement, because after all if anyone in Canada wants to buy sterling he can pay for it in dollars instead of gold. In so far as Great Britain is concerned she will be able to buy just as many things from Canada or the United States with dollars as with gold. In order to make it possible to buy sterling, you certainly do not have to have the restoration of either the free market for gold or the gold standard. I would have agreed with the hon. member had he advocated that we in this country should be willing to make some concessions to the sterling area by accepting payment for our goods in sterling, instead of demanding payment in dollars.

If we received a greater degree of sterling than we could use in the purchase of goods from that country, then we could hold those surpluses for future purchases or, if we considered that we would not need that surplus

Gold Mining

for future purchases, then I think we would be justified in investing that currency within the sterling area in order to encourage productivity, and thereby make it possible for that area to export more goods to us.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I do not want to interrupt the hon. member, but does he think that would be better than lending the money directly to the United Kingdom-, because of course it is a form of loan. It would be a loan without interest.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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SC

Victor Quelch

Social Credit

Mr. Quelch:

I am interested in the minister's observation there, because I had a dispute with a former minister of finance when I said the same thing about United States investments in Canada. I characterized the United States investments in this country as being a form of debt, and he said that was not a debt at all.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
Permalink
LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I did not mean that making investments in the sterling area was a loan, but does the hon. member think it would be preferable to make a loan by buying sterling, and perhaps investing it abroad, rather than to make the loan directly to the United Kingdom government as we have done in the past?

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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SC

Victor Quelch

Social Credit

Mr. Quelch:

No, this is a suggestion by the member for York West. I am not suggesting for one minute that we buy sterling. I suggested that when we have goods to export to England, and they are not able to pay us in our currency and at the same time they require our goods, then we should be willing to accept sterling. Having obtained that sterling, it could either be used for the re-purchase of goods produced within the sterling area or invested within the country. I agree that, in effect, that would be largely the same as a debt to us, but I think it would be a good way and would help both Canada and the sterling area.

It would certainly affect the agricultural producers of this country, because at the present time the agricultural producers of this country are being warned that if they expand their production there will not be a market for it. I believe it is nothing short of a calamity that any industry today should be reducing the production of food when there is so much starvation in the world. I believe it would be a good thing, therefore, to make it possible for Britain to buy our agricultural products and pay for them in sterling, and then we could take that sterling and invest it in that area. After all, we would be doing only the same thing that the United States has been doing in Canada. United States people are making quite large investments in Canada and we are using the dollars that come from those investments to increase our

dollar and gold reserves and to meet our unbalance of payments. In any event, gold does not need to enter the picture at all. It is merely a question of Canadian dollars and United States dollars.

In closing, I would say that so far as I can see the government of this country intends to adhere to a managed currency. In my opinion a managed currency is far superior to the operation of the gold standard. Under a managed currency you have some of the best brains doing everything in their power to make the amount of money in circulation meet the needs of the Canadian people, and under the gold standard you make the amount of money in circulation dependent upon the size of the gold reserve, regardless of the amount that may be needed to maintain a high level of employment and well-being in this country.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Donald M. Fleming (Eglinion):

Mr. Speaker, having spoken in the debate on the resolution stage of this measure on May 14, I do not propose to repeat anything I said at that time, although I shall press for answers to some of the questions I asked on that occasion which have remained unanswered. But I have a special wish to deal with some of the statements made by the Minister of Finance (Mr. Abbott), who I regret to say has just left the house, when he spoke at the resolution stage on May 19.

Before I come to those statements, I have only one observation to make on the speech the hon. member for Acadia (Mr. Quelch) has made. He has expended a lot of effort and a lot of words in answering a case which I believe was not offered in the house. I do not know that anybody is suggesting that the restoration of the gold standard is even within the realm of possibility under present international conditions. What we of the Progressive Conservative party are urging is a revaluation of gold, because that will serve the interests of Canada.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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SC

Victor Quelch

Social Credit

Mr. Quelch:

That is not what the member for York West (Mr. Adamson) said.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I think if the hon. member for Acadia will read again the speech made by my colleague the member for York West he will see that he is reading into that speech a great deal more than the hon. member said.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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SC

Victor Quelch

Social Credit

Mr. Quelch:

Will the hon. member permit me to read point No. 8 from page 2213 of Hansard for May 14, 1952? It reads:

A gold-backed currency is the only sure cure for inflation. The return to a gold standard Is desirable but is not an immediate prospect.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

It is not an immediate prospect now, and under present conditions it would be quite impossible.

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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SC

John Horne Blackmore

Social Credit

Mr. Blackmore:

Under any conditions will it be desirable?

Topic:   EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic:   EXTENSION OF APPLICATION TO YEARS
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May 22, 1952