October 15, 1973

OFFICIAL REPORT


FIRST SESSION-TWENTY-NINTH PARLIAMENT 22 Elizabeth II


VOLUME VII, 1973 COMPRISING THE PERIOD FROM THE FIFTEENTH DAY OF OCTOBER, 1973, TO THE TWENTY-THIRD DAY OF NOVEMBER, 1973, INCLUSIVE INDEX ISSUED IN A SEPARATE VOLUME


Published under the authority of the Speaker of the House of Commons by the Queen's Printer for Canada Available from Information Canada, Ottawa, Canada 26635-H



Monday, October 15, 1973 [ English]


WELCOME TO MEMBER FOR OXFORD ON RETURN

NONE

Lucien Lamoureux (Speaker of the House of Commons)

No affiliation

Mr. Speaker:

Order, please. Before going ahead with routine proceedings as we resume this session, may I take one moment to say how pleased all hon. members are to see that the health of the hon. member for Oxford (Mr. Nesbitt) has permitted him to return to the House.

Topic:   OFFICIAL REPORT
Subtopic:   WELCOME TO MEMBER FOR OXFORD ON RETURN
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?

Some hon. Members:

Hear, hear!

Topic:   OFFICIAL REPORT
Subtopic:   WELCOME TO MEMBER FOR OXFORD ON RETURN
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ROUTINE PROCEEDINGS

FINANCE

LIB

John Napier Turner (Minister of Finance)

Liberal

Hon. John N. Turner (Minister of Finance):

Mr. Speaker, I wish to make a short statement to inform members of developments at the meeting of the Commonwealth Finance Ministers in Dar-es-Salaam, Tanzania, on September 19 and 20, and at the annual meetings of the International Bank for Reconstruction and Development and the International Monetary Fund in Nairobi, Kenya, September 24 to 28.

At both meetings I strongly urged the need for greater policy co-ordination between countries in controlling the spread of inflation internationally. I emphasized the importance of the international fall-out of domestic inflation, for example, when sudden commodity purchases by one country send waves of inflation into a number of countries or when high interest rates generated by one country create troublesome international capital flows and also produce inappropriate interest rates in other countries. I made it clear that we need to strengthen the fund so that it can provide leadership in creating badly needed co-ordination of policies among countries. We intend to pursue this matter further in the continuing discussions on monetary reform.

[Transla t/on]

I was encouraged that the new Managing Director of the International Monetary Fund, Mr. Witteveen, as well as a number of other representatives at both Conferences, dealt with the problem of international inflation at considerable length. Commonwealth ministers noted, in particular, the problems arising from high food prices and called

for urgent international study of inflation with a view to action to overcoming it and its adverse effects, especially for developing countries.

The meetings in Dar-es-Salaam provided a useful opportunity for an exchange of views between ministers from Commonwealth countries on the major issues involved in monetary reform and on the current world economic situation as it relates to both developed and developing countries. Ministers welcomed the agreement which had been reached in Tokyo the previous week to launch comprehensive trade negotiations, stressed the importance of a satisfactory outcome to these negotiations and urged that they lead to an improvement in the trading position of the developing countries.

Ministers devoted a large part of their time to questions related to improving the relative positions of the less developed countries of the Commonwealth. Discussion included items referred to them by the Ottawa Commonwealth Heads of Government Meeting of last August.

Among the more important of these items was the Commonwealth Fund for Technical Co-Operation. I am pleased to report that as Canada's representative I expressed our support for strong, continuing Commonwealth arrangements and reaffirmed the pledge, given by the right hon. Prime Minister (Mr. Trudeau) at the Heads of Government Meeting, of a significant increase in our contributions to this Fund.

[ English]

There was much discussion among Commonwealth countries concerning the possibility of a link between the creation of special drawing rights and development assistance as an integral part of the reformed monetary system. We have examined the link proposal with great care, and this we have done not just because of our interest in monetary reform but also because of our firm conviction that development finance must increase and must be soundly based. We are concerned that such a link might hinder the acceptance of the SDR as the principal asset of the reformed system. We are also apprehensive that such a link might inhibit the establishing and maintaining of control over international liquidity which is essential to reform. Moreover, we are not convinced that such a link would increase the flow of development assistance.

As I have already said, this government regards such an increase as being very important. I urged in both Dar-es-Salaam and Nairobi that further work be undertaken to see if these difficulties might be surmounted. The Commonwealth finance ministers, I am happy to report, agreed that the next step should be to examine specific link mechanisms which would be consistent with a soundly based international monetary system. Furthermore, the Ministers of the Committee of Twenty have instructed their deputies to establish a special technical group to examine in a comprehensive and detailed manner the

October 15, 1973

Finance

question of the transfer of real resources to the developing countries as it relates to monetary reform.

With the permission of the House, I should like to table a copy of the communique issued at Dar-es-Salaam following the meeting which reflects the wide range of topics discussed.

I am pleased to announce in this House that the Commonwealth Finance Ministers accepted Canada's invitation to meet next year in Ottawa.

The annual meetings of the IMF/IBRD in Nairobi were preceded by a meeting of the Committee of Twenty on Monetary Reform on Sunday, September 23. This provided an opportunity for the committee to review the work of their deputies. A good deal has been achieved since the committee was established last year, but many ministers, including myself, expressed a degree of impatience over the pace of progress to date.

I am concerned that, if results are not soon achieved, the momentum of the discussions may be lost. The issues that have to be dealt with include suitable techniques for redressing payments imbalances, rules relating to converting currencies into primary reserve assets, methods for dealing with the problem of excessive holdings of currency reserves, the role of gold in the system, and the problem of valuing the SDR in terms of currencies and deciding what rate of interest it should carry.

The committee, and the governors of the fund as a whole, are cognizant of the urgency which is attached to resolving these questions. In my interventions in the committee and in my statement at the annual meetings, I stressed the importance of proceeding to implement reform in a sequential way as changing economic conditions permit. Specifically, I pointed out that more effective consultation over matters such as adjustment problems and exchange market developments could begin now. This could be done through special meetings of the executive board of the fund attended by representatives from capitals. I also believe that SDR valuation problems might well be solved through the deliberation of the fund executive board, and that progress with respect to the role of gold and the reduction of excessive currency balances through bilateral funding also need not await full-fledged reform of the system.

I believe it unlikely that an ideal environment for the implementation of a fully revised monetary system will emerge in the next few months. In particular, it will not be possible to complete the reform until the United States balance of payments, which is now improving, has achieved a much stronger position. This should not, however, impede progress in particular areas which could even now contribute to improved stability and confidence in world monetary arrangements.

The Committee of Twenty Ministers have set for themselves a deadline of July 31, 1974, for the settlement of the outstanding issues needed to achieve an agreed outline of reform. In working to this objective, the committee will meet in January and again in the spring. At the same time,

our deputies will pursue with a new sense of urgency the work program which we have set for them.

The House will be interested in the position we took on monetary reform. 1 made our position quite clear in my statement to the governors, elaborating on it at some length. I should like, with the permission of the House, to table this statement for the information of hon. members. For the convenience of members, I will also table a copy of the Report of the Chairman of the Committee of Twenty to the Fund Board of Governors, as well as the First Outline of Reform prepared by the deputies and the statements made by the managing director.

With respect to the World Bank group, the principal issue was the Fourth Replenishment of the resources of the International Development Association, the World Bank's concessional lending arm. In his statement to the annual meeting, which I am tabling today, Mr. McNamara stressed the urgency of reaching agreement on the replenishment so that the association could continue lending operations in the poorest developing countries after July 1, 1974.

I am glad to report that representatives of donor countries were able to agree at Nairobi to recommend to their legislatures a total replenishment of $4.5 billion U.S. for the period 1974 to 1976. On behalf of Canada I pledged a contribution, subject to the approval of parliament, of $274.5 million, or 6.1 per cent of the total. I also assured Mr. McNamara that the Canadian government would do all it could to ensure that Canada's contribution can be made on time.

[ Translation]

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Hon. Marcel Lambert (Edmonton West):

Mr. Speaker, first, I would like to thank the minister who sent us a copy of his statement along with the related documentation in time to allow us to study it, at least partially. It is true that the minister had sufficient time to think about his statement and prepare a text with somewhat ambiguous passages to embroil matters a bit, because it should be noted that the minister was reporting on his participation in two conferences. First, he participated in the conference of the Finance Ministers of Commonwealth countries, which have particular problems and are bound by special ties. Then, he took part in a much more important conference in Kenya, where he discussed international problems, inflation and the reform of the monetary system with his colleagues.

Mr. Speaker, in the text which we have been given, the minister has confused these meetings; however, he was probably unable to indicate the problems which are still unsolved or suggest an acceptable solution.

It was interesting to hear the minister start out to speak on a subject in connection with which he needs nothing better than the situation in Canada as an inspiration for his concern. I refer to the lack of control over inflation in Canada which this government displays. The hon. gentleman could therefore attend both conferences as a great expert on the problems of inflation, though he did not tell us what might be the solutions. In this regard, at the foot of the first page of his statement he says;

October 15, 1973

I was encouraged that the new managing director of the International Monetary Fund, Mr. Witteveen, as well as a number of other representatives at both conferences, dealt with the problem of international inflation at considerable length.

Here, Mr. Speaker, is the beauty of combining the reports. The minister immediately moves in the next sentence to the Commonwealth ministers conference and says that the Commonwealth ministers noted, in particular, the problems arising from high prices, and so on. It would have been interesting had the minister continued and let us know what Mr. Witteveen had said in his report to the directors of the International Monetary Fund a while earlier. Mr. Witteveen said, as found in the IMF survey:

In order to use this opportunity for a real break-through in the struggle against inflation it may prove essential to supplement monetary and fiscal policies by some form of incomes policy to act directly on prices and wages which are not determined competitively. For recent experience has shown that elimination of excess demand, while necessary to bring down inflation, may by itself not be sufficient for this purpose. Effective incomes policies will be all the more necessary in an international climate from which the inflationary bias has been removed. Under such conditions a continuation of wage and price increases at present rates might easily have adverse repercussions on growth and employment, especially in those countries whose competitive position has suffered by the adjustment of exchange rates.

How true, Mr. Speaker. Would the minister now tell us this: did he in his comments at the conference of the International Monetary Fund express the views of the Canadian government with regard to the director-general's recommendation concerning an incomes policy? It would be very interesting to hear what the minister had to say in that regard.

I certainly support the hon. gentleman in his keen desire for international co-operation in dealing with inflation. But, right there, he fails to follow through. After all, if 12 out of the 19 OECD countries have partial or almost full controls at this time, why is it that Canada must distinguish itself by being one of the countries least able to deal with its inflation, doing the least about it and having only minimal controls?

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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LIB

John Napier Turner (Minister of Finance)

Liberal

Mr. Turner (Ottawa-Carleton):

Because they have not worked.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

On a point of information, the minister says they will never work.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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LIB

John Napier Turner (Minister of Finance)

Liberal

Mr. Turner (Ottawa-Carleton):

No, I did not say that. I said because they have not worked.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

But nothing seems to be working in Canada. Inflation is running rampant every month. It seems to me that, having gone to the African continent, the minister has continued to emulate the attitude of that famous large bird which is endemic to the area and buried his head in the sand.

On the question of monetary reform, there too I share the minister's apprehension that progress is being made very, very slowly. We have just gone through several months of the most agonizing international financial crises in 1973 and I do not think the world can stand another round of that sort of thing. I do not know whether we have a picture of countries frozen into immobility,

Finance

unable to think and act in regard to reforming international monetary relationships. To this extent I agree with the minister that things must happen a lot more quickly.

The minister did not speak of this point because at the time of the conferences the Middle East crisis had not broken out, but I am wondering whether part of the crises of 1973 was not a carefully engineered preliminary within the framework of the International Monetary Fund, leading to the outbreak of hostilities today. It may be that the minister thinks this a little farfetched but I want him to think about it. In any event, it merely illustrates that it can happen.

We also want to know what proposals Canada has made regarding international monetary reform, whether the minister is talking about a broader band or about a creeping peg, and what should be the rights of developing countries to participate in a special category of drawing rights, which I think would unnecessarily complicate what is essentially an exchange program through a foreign aid program around the world.

My last point is this. I could quote extensively from Mr. Witteveen's final summary to the conference in regard to the nature of monetary reform progress which has been made, but it seems that there is to be a fixed exchange system which will be the cornerstone of the reform system. At this point I should like to ask the minister: Did Canada insist that there should be a right to float? If so, how does this square with the minister's reported statement that he expects that Canada will soon return to a pegged exchange rate, as it should be doing in order to conform with the present agreement?

The minister has furnished us with a great deal of material to examine in detail, but this is not the time to do so. I can see that Your Honour is becoming impatient. The minister has made a ten-minute statement. I hope that my reply covering the same ground has been equally short.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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NDP

Lorne Edmund Nystrom

New Democratic Party

Mr. Lome Nystrom (Yorkton-Melville):

Mr. Speaker, I am pleased that the minister saw fit to make a statement in the House today about the meetings he attended over the last few weeks on the world monetary situation. I cannot say that I am pleased, and I do not think many hon. members are, with the progress of those meetings. Indeed, the progress has been very discouraging. The lack of any solution regarding the world monetary system and problems relating to the United States dollar has been discouraging.

I think Canada could have played a more positive role in taking the initiative toward finding solutions to these problems. Perhaps the minister in his statement should have outlined more fully the opinion he expressed and the approaches he took at these conferences. About the only positive thing that resulted from these meetings is the fact that the group of 20 set a deadline of July 31, next year, to find a solution. Various technical committees have been established in an effort to hammer out the details of an acceptable solution.

I think the most important thing missing from the discussions held in Africa, as covered by the minister's statement, is the role of the multinational corporations, financial institutions and banks throughout the world and the influence and power they exert in respect of world

October 15, 1973

Finance

financial and monetary conditions. I have in front of me a copy of the Canadian Business Survey for 1971. It contains statistics that reveal the tremendous powers of multinational corporations, with particular reference to their effect on world monetary policy. They indicate that at the end of 1971 the multinational corporations had short-term liquid funds amounting to $268 billion. That is more than double the entire amount of the official short-term funds of all the countries that are members of the International Monetary Fund. I repeat: the multinational corporations had more than double the short-term liquid funds of all the countries which belong to that association.

That is the position of the countries belonging to this association which are trying to get together to solve international financial problems. One can realize from these statistics the effect that the policies of these huge international corporate giants can have on balance of payments problems, on problems in respect of interest rates and on commodity prices. In spite of this, we do not find much in the minister's statement regarding what attitude the world community is going to take toward multinational corporations. We do not see anything in the minister's statement in respect of who is to police their activities, or who is going to say what they can and cannot do.

I cannot help but emphasize that the power of these corporations is largely responsible for much of the inflationary rate we are experiencing today. The expansion of American based multinational corporations outside of the United States has had a serious effect on the U.S. balance of payments. This also has an effect on the value of the Canadian and American dollars, driving them down, and the subsequent appreciation of the German mark, the French franc and the Japanese yen. This has resulted in increasing the prices of commodities imported into in Canada. I suggest that all of this is due to the corporate policies of these giants, most of which decide policy without respect for the ordinary citizen or governments around the globe. These corporations decide policies behind closed doors where most nations of the world cannot exert influence.

My second concern is in respect of the International Monetary Fund, the World Bank and other banking institutions which are doing very little to develop the needy countries of the world. I know as a fact that many of these countries resent the policies of our international monetary institutions. What they want instead is some significant effort toward providing them with a fair share of the trade enjoyed by developed countries. I suggest that our banks are partially responsible for the international monetary situation. They have international arrangements. They have literally billions of dollars tied up in investments and assets in other countries round the world such as the Caribbean and Europe. These are problems we will have to solve. They are what we might call serious ideological problems which the world community must solve if we are to reform the monetary system.

Third, what is the reaction of the minister to the current move in the world toward special drawing rights and away from gold as a standard? He does comment extensively on this in his report, but I should like him to elaborate and

provide the House with more information concerning Canada's position. It is very important when talking about developing the third world to remember that the poorer countries have very little influence on the financial policies of the world in general. It is very important that we learn more about the minister's attitude toward special drawing rights.

Finally, as I said, it is important that we solve the monetary problems of the world because a lot of the instability creates inflation in our country and precisely because of that we do not have control of our economy and do not determine many of the decisions we must determine if we are to control the economic situation in our own country. We in this country should not use the international situation and the importation of inflation as an excuse for not doing anything about controlling inflation in Canada. We can tackle some of the multinationals. In Canada we produce commodities like energy, lumber, copper, iron and steel and we could control to a large degree the prices of many of these commodities that we produce if we only had the guts to tackle some of the multinational corporations and international cartels.

These are things we should be doing if only the minister would get off his fanny and start acting in a decisive and positive manner instead of sitting back in an international financial conference and saying, "Oh my, it is a difficult problem and we cannot solve it". We can do many things. We can put exchange controls on our interest rates if we want to bring down interest rates in this country. We can make certain investment policies mandatory. These are things we can do in Canada and which we should be suggesting to the other countries in the international arena as well. I am not satisfied and I am sure the people of Canada are not satisfied. I urge the minister to press ahead and do all he can in a decisive and positive manner to reform the world monetary system so that the poorer countries of the world, Canada and the ordinary citizens will be beneficiaries of that reform and not the international monetary institutions.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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SC

David Réal Caouette

Social Credit

Mr. Real Caouette (Temiscamingue):

Mr. Speaker, the Minister of Finance (Mr. Turner) has shown clearly enough the almost complete failure of the International Monetary Fund. He actually attended two meetings, one within the Commonwealth of nations, and the other which brought together representatives of various countries of the world in Africa and at both meetings, the minister found-like his colleagues at those meetings-that the system should be reformed.

There is much talk about the monetary reform of the international fund. They do not know which way to turn, they are lost in conjecture. Inflation is destroying one country after another and they talk of monetary reform without determining clearly the lines and structures of a necessary reform. Mr. Speaker, in 1944, when the Bretton Woods Agreements were signed, the Creditiste members of that time, along with Solon Low and John Blackmore, were against those agreements and they described then exactly what is happening today to the International Monetary Fund.

I say that the world bank is at the present time a complete failure, which undoubtedly shows this organiza-

October 15, 1973

tion's inability to maintain a steady economic growth in its member countries or in the countries that are united under its aegis. Mr. Speaker, as I said a while ago, all countries are suffering from inflation. In Canada, we have inflation; some people advocate a price and salary freeze. This was tried in certain countries. In others, it was abandoned. But in any of the member countries of that organization, it will be noticed that inflation is more . devastating there than in Canada. In France, for instance, a black and white television set, which costs here $175 or $180, costs over there $425. In other countries, it is still worse. It is the same in every field.

Mr. Speaker, the Creditistes have been claiming for a long time that a monetary reform should not be superficial only. To change four quarters for ten dimes may represent a reform but it only adds up to a dollar just the same.

Therefore, what we suggest is a basic reform: that all new credits be debt free. It is the debt-money system. Debts have lead the various nations to this situation, including Canada. The currency created should be free of debt and interest. Thus, if the Minister of Finance (Mr. Turner) lends me $10, I will give him back $10.50, including 50 cents interest. This is quite normal, because he agrees to lend me money. But the financial system is lending us something that it does not own. It cashes in on our properties, our assets, our country and requires from us that we pay a tribute, an interest on our properties. This is the kind of reform that we must achieve as soon as possible, Mr. Speaker, in order to free not only other countries but also our own, Canada.

[ English]

Topic:   ROUTINE PROCEEDINGS
Subtopic:   FINANCE
Sub-subtopic:   STATEMENT ON MEETINGS OF COMMONWEALTH MINISTERS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL MONETARY FUND
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IMMIGRATION

LIB

Robert Knight Andras (Minister of Manpower and Immigration)

Liberal

Hon. Robert K. Andras (Minister of Manpower and Immigration):

Mr. Speaker, I believe hon. members of the House would be interested in a report on the immigration adjustment program which was approved by Parliament earlier this year and created by the amendment to the Immigration Appeal Board Act. This has, since last June 18, enabled thousands of persons in this country, both legally and illegally, to come forward and obtain landed immigrant status without fear of being prosecuted for having violated the immigration laws so far as their method of entry or style of staying here is concerned. The opportunity given to them under the said program ends at midnight tonight under the legislation to which I have referred.

I am pleased to say that thousands of lives have taken on new meaning as a result of this opportunity. By the time our offices closed last night, the immigration offices-and they were open yesterday across Canada- once the dependents of the applicants are taken into account, 45,180 persons will have been registered for this opportunity. To this, of course, must be added the results of today's activities. To indicate that this response has been a national one, these are the numbers of registrations of persons involved by region: in the Atlantic region, 3,036; in Quebec, 7,355, in Ontario, 25,169, in the Prairies, 5,008, in

Immigration

the Pacific, 4,612, for a total of 45,180. I am sure that members will understand that it has not been possible to process all these cases as they are received.

Only the registration must take place by midnight and we have given that priority. Nevertheless, I am able to say that 16,940 cases involving 21,996 persons have already been favourably assessed and the persons concerned will be landed subject to completion of the normal medical and other immigrant requirements.

There has been some suggestion in the media and from other sources that these results may be disappointing to the government and that the number of persons eligible for the program is far higher than the number of those who have, in fact, registered. Uninformed guesses have been made regarding the number of people who may be in Canada illegally. These unfounded speculations relate to a range anywhere from 50,000 to 200,000 people. I hasten to make it clear that at no time to my knowledge has the government given any estimate of the size of the group that might benefit from the adjustment program.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   IMMIGRATION
Sub-subtopic:   REPORT ON ADJUSTMENT PROGRAM
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October 15, 1973