March 10, 1939 (18th Parliament, 4th Session)


Ian Alistair Mackenzie (Minister of National Defence)


Mr. MACKENZIE (Vancouver):

No-and I distinctly said so. I am trying to give the two sides of the case as fairly as I possibly can.
I now come to the report of the United States senate committee. As I mentioned in a former debate in the house, the majority report was for the extension of the principle of nationalization. It recommended the nationalization of manufacture of certain large items. But there was a very strong minority report as well. I wish briefly to place it on record, as well as the general findings of the majority of the United States senate committee.
The committee minority (Senators George, Vanderberg and Barbour), supporting all other findings of the committee, questions the complete nationalization of certain defence commodities, because it doubts the advantage from the standpoint of
(1) its effect upon disarmament,
(2) its effect upon essential national defence, and
(3) its effect upon government costs. The committee minority believes that if large government plants are erected to provide these commodities, there will be inevitable local, political pressure to maintain these plants at full capacity production regardless of actual defence needs, and the result will be to encourage armament rather than disarmament. The committee minority believes that if all production be thus concentrated in government plants, furthermore, there will be no adequate corrolary reliance, through private manufacture,
in the event of a war emergency unless the nationalized facilities are maintained at a needlessly extravagant and dangerous rate during peace time.
The committee minority believes, on the other hand, that unless these facilities are kept on a full-time production, basis during peace years, the unit cost of production will increase to a point which will create higher costs to the government than would be available through normal, private purchase. This could be another impulse to armament rather than disarmament through anxiety to maintain maximum arms production in order to maintain minimum costs. In other words, the committee minority believes that the public welfare, from the standpoint of peace, defence, and economy, can be better served by rigid and conclusive munitions control than by nationalization except in a few isolated instances.
That was the minority report of the United States senate committee.
I come now to the committee set up in Canada by the present government. It was known as the Skelton committee, and was under the direction of one of the ablest and most brilliant civil servants in any country of the world to-day. That committee had before it, in the first place, the report of the royal commission in Great Britain, secondly the report of the United States senate committee, to which I have just referred, and, thirdly, information with respect to the difficulties already experienced at that time by the Department of National Defence, and special measures already taken by that department in connection with the problem.
May I at this point refer briefly to the findings of the Skelton committee. In the first place, with reference to the placing of the manufacture of armaments in the hands of the state, it said:
1. The committee are unable to support such a proposal as bein'* practicable under present conditions in Canada. Whether, putting aside the idea of a complete state monopoly, there might be a case for some moderate extension of present government arsenals, in order to produce, e.g., a certain limited selection of articles for which the government would be the only purchaser and might need a continuous supply, and for which no private manufacturing equipment now exists in Canada-is a matter which the government' might wish to consider as a matter of policy.

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