May 17, 1955

LIB

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

Liberal

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

Mr. Speaker, I feel I should say a word about selling wheat abroad for local currencies. It has been assumed by several speakers that we could sell wheat to Britain for sterling and use that sterling to buy goods for Canada or use it to pay our debts in other parts of the sterling area; that is not the situation. If we buy goods for sterling, we buy it under a program that has to be worked out with the chancellor, which limits the use of that sterling. Sterling is not freely interchangeable. It can only be used for certain purposes. If it were true that we could sell for sterling and use that sterling as we liked and anywhere we liked, we would have no objection.

Topic:   FINAL PAYMENT, 1953-54
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CCF

Edward George McCullough

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

Mr. McCullough (Moose Mountain):

May I ask the minister a question? Could not such credits be used in the sterling areas?

Wheat

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Pori Arlhur):

No, not under exchange control rules in the United Kingdom.

Topic:   FINAL PAYMENT, 1953-54
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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fullon:

Even their use in the United Kingdom is restricted?

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Pori Arlhur):

Yes, even their use in the United Kingdom.

Topic:   FINAL PAYMENT, 1953-54
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

If it were accepted in the way the minister says, if it were possible to use that sterling anywhere, then it would not be really acceptance of sterling but would be the acceptance of convertible currency and, in effect, getting our own dollar money.

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Pori Arlhur):

That is true.

It has been assumed that sterling is convertible anywhere in the sterling area, but that is not the case. When we buy goods in Britain we convert dollars into sterling to pay for those goods. If we had sterling in Britain which we had accepted for wheat which could be used for that purpose, we would be very glad to have that sterling. The United States is selling for foreign currency with this proviso, that they leave the foreign currency in the country and use it for certain programs which are usually give-away programs. That is what the United States means by selling for local currencies.

The United States is a powerful country with tremendous revenues, and it is able to do that. In Canada, we feel we have done a good deal in assisting our customers abroad, since the war ended, but we believe we have gone about as far as we can in that direction.

Topic:   FINAL PAYMENT, 1953-54
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SC
LIB

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

Liberal

Mr. Howe (Port Arthur):

Just a minute; let me explain this. I did not interrupt you. Selling for local currencies means to us the lending of money to the country without interest and without a due date; that is the real effect of accepting soft currency for Canadian dollars. Now, we have made loans to countries to help them restore their equilibrium. We have made loans to Britain, France, Belgium, and a number of European countries. I do not remember all of them. We did that, but we had a due date on the loan, and we had a rate of interest fixed. If Britain came to us and said she required help in that direction, we would certainly sit down with them and look at the problems. Britain has never asked us to send exports over there in exchange for sterling, the purpose being to freeze the sterling and create a liability against Britain with no due date and no interest charged. I doubt if the British chancellor of the exchequer would welcome a transaction of that kind.

It has been suggested that it is Canada's duty to balance her accounts with the United Kingdom. I doubt if any country that is shipping raw materials in great quantities, and is the principal supplier of certain raw materials, can ever hope to balance her account by purchasing manufactured goods. I doubt if that is possible. Nevertheless Britain, by trading with Canada, by trading with the United States and by trading for dollars in various parts of the world, has been able to accumulate dollars. The dollar and gold balances of the United Kingdom have risen very considerably in the last two years; that is world trading. It is a sort of fantastic theory to suggest that Canada balance her accounts with other countries by accepting sterling. I do not believe it would be acceptable either to Canada or the recipient countries, at least not to many of them.

It has been suggested that Canada was sending out a cry of despair when I made my announcement; that is not the case. We are selling our share of wheat, I believe. Hon. members are apt to look at statistics on exports and refer to them as statistics on sales. We never disclose our sales position, but I may tell you that the sales position is considerably better than the sales position of a year ago. Last year was referred to as a very poor year for wheat. In the early days of the wheat agreement we were reluctant to take a commitment to deliver any more than 210 million bushels. Other countries entered into the agreement, and in order to help out we raised our commitment to 233 million bushels. At the time we were very doubtful whether, year in and year out, we could export that much wheat.

How much wheat did we export last year? We exported 255 million bushels, which is 22 million bushels more than the commitment we were willing to take under the international wheat agreement. The export figures for April, May and June will emerge, and by the end of July we will have a fair picture of Canada's position for the year.

I can say it will be a better year than last year. It depends on sales between now and the end of the crop year to determine just how much better the picture will be, but still I am not at all discouraged about the prospects for this year as an export year in wheat.

Of course it has been a good export year for coarse grains. We have been able to dispose of our coarse grains as they have been received, and we do not regard them as a selling problem at the moment.

Topic:   FINAL PAYMENT, 1953-54
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PC
LIB

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

Liberal

Mr. Howe (Pori Arthur):

Yes, that would be the case if we undertook to accept sterling.

Topic:   FINAL PAYMENT, 1953-54
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PC
LIB

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

Liberal

Mr. Howe (Pori Arthur):

Yes.

Topic:   FINAL PAYMENT, 1953-54
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

We could not use it in the United Kingdom?

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Pori Arthur):

Not if it were a sterling transaction. If we made it a dollar transaction, we could. That is what we do, as a matter of fact. We sell wheat for dollars and we can convert the dollars into sterling and buy what we like.

Topic:   FINAL PAYMENT, 1953-54
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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

But if we accept sterling, then it is restricted sterling?

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Port Arthur):

Yes, it is restricted sterling.

Topic:   FINAL PAYMENT, 1953-54
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SC

Victor Quelch

Social Credit

Mr. Quelch:

Does that not depend upon the agreement? The United States are spending the soft currency they accept in the countries from which they accept that currency.

Topic:   FINAL PAYMENT, 1953-54
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LIB

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

Liberal

Mr. Howe (Port Arthur):

But for certain agreed purposes. The program must be a relief program, or a program that has been agreed upon as being beneficial to the recipient country. There is no market, except where currencies are convertible, on which the United States can accept local currencies and then buy what they like with those local currencies and ship it where they like. It is not that kind of world.

Topic:   FINAL PAYMENT, 1953-54
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SC

Victor Quelch

Social Credit

Mr. Quelch:

Congress laid down wide

terms under which that currency can be used. They are very wide, far beyond what the minister has said.

Topic:   FINAL PAYMENT, 1953-54
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May 17, 1955