November 6, 1941 (19th Parliament, 2nd Session)


James Lorimer Ilsley (Minister of Finance and Receiver General)



The suggestion has been made that we were bad psychologists or bad politicians, or something of that kind. I think from two or three sources it was said that the psychology of the thing was bad, that we should have gone further than we did, and from the psychological point of view, if for no other reason, it should also have applied to salaried people and executives. I did not intend to make this announcement at this time, but I should like the committee to know that for the last two or three weeks we have been working at an order to place a ceiling over all managerial and executive salaries, directors' fees, et cetera, and that ceiling, I may say, will not provide for any cost of living bonus. It will be readily apparent that there are difficulties in working out the details of such an order, but I hope to have these resolved and to be able to announce the programme in a very few days.
There are a great many people in Canada who would like to know what they can do to help make this a success. I think that should be the attitude of every member of this committee and of everyone in the country; it is the attitude of thousands and thousands of people. I cannot put my suggestions in any more concise form than I did in a speech which I made some time ago when I was asking business men for their assistance in making government control measures operative and effective. Therefore, while I dislike to quote what I said before, as I cannot put it any better, I am going to do so. I said:
First of all, I would ask you to shun a defeatist attitude towards rising prices. Inflation is not inevitable. It can and will be prevented. It will be prevented much more easily if we all join in the effort and reject the view that resistance is useless.
Secondly, we need your active support in our savings campaigns. A rising volume of savings will not only provide the government with the funds needed for war purposes but it will relieve the persistent upward pressure of expenditure on prices. This is its important economic purpose.
In normal times-in peace-time-we do not try to discourage expenditure. We encourage it, to obtain employment and, if possible, prosperity. But these are anything but normal times. Now we must limit expenditure. The
The War-Finance-Mr. Ilsley

more we can limit it by encouraging voluntary saving, the better it will be for all concerned, including business. For example, if *a business finds itself with its prices fixed and its costs being forced up by excessive expenditures in other fields, it will be vitally interested in reduction of these expenditures. You need have no fear now that under present conditions there will be too little spending. What we need to do is to reduce the pressure of excessive spending. Therefore we are asking the public to spend less and save more. We need your support. We want your support in facilitating the organization and extension of savings plans in your own businesses.
Do not be misled by the spurious argument that more expenditure is needed to swell government revenues. The harm done by the extra expenditure is far greater than the good done by the extra taxes. We need the whole dollar diverted to us, not the fraction of it which would eventually come into our hands as taxes, if it is spent. The diversion of the dollar to us is needed to make available for the war the labour and materials which the expenditure of the dollar otherwise would merely use up in civilian satisfaction.
Thirdly, we shall need your cooperation, your active cooperation, in keeping your costs of production down. Price stability can only be achieved if costs can be held in check. In the last analysis they must be held in check by those who are running the businesses concerned. Waste of labour or materials must be eliminated-the nation cannot afford it in war-time. Luxury, extravagance or just plain carelessness in business expenditures cannot be tolerated. The government and the price controlling authorities cannot permit business to enjoy at this time the luxury of a situation in which increases in costs may be automatically passed on to the consumer.
If some costs increase I hope business will find others that can be reduced-perhaps overhead, when output is large, perhaps selling costs, now that there is an almost universal sellers' market, perhaps most of all the unnecessary costs due to an excessive number of patterns, types and varieties of products.
And, fourthly, we need your help in carrying out all our direct controls not only of prices but of production, and the use of materials as well. It is the managers of business who know how materials can be saved by substitutes, by standardization and by repairs. Your assistance is necessary in working out controls in such a way that they will do the most good, and the least harm. Your cooperation is needed in putting them into effect, with a minimum of dislocation. These controls are not going to be easy or pleasant for any of us. But they are necessary, if we are going to exert the greatest effort of which we are capable in the war, and therefore I am confident that you will all support them.
I was talking to 'business men on that occasion, but I should like to address the same appeal to farmers, to wage-earners and [DOT] consumers-indeed, to all the people. This situation is too serious to have a nation resisting or divided, or taking any steps which will render ineffective any important, carefully considered, well-reasoned government
fMr, Hsley.l
policies. I make the appeal to the people of this country to help us make our priceceiling policy a success.

Topic:   THE WAR
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