I am glad to accept that
statement, because I do not know of any Canadian who would argue that an increase in the price of gold in Canada would be inflationary. Three years ago I visited Washington where I had some discussion and argument with some high officials of the government. They told us very definitely that it was impossible for the United States to increase the price of gold. At the time we thought we might have a chance to get some $10 to $15 more an ounce. I argued
until I was blue in the face trying to show them that an increase in the price could not possibly be inflationary. I tried to point out that the United States was the greatest holder of gold bullion in the world, and that if the price was increased by their own volition it would only be beneficial to that great country. However, that feeling still prevails among the higher officials of the United States, and I believe it is one of the things on which the president is absolutely convinced.
Now I am going to say a few words about the Bretton Woods agreement, because in several places it mentions the necessity for at least a 25 per cent gold backing for that fund. I do not entirely agree with the opinion of the hon. member for Lethbridge. In my opinion the Bretton Woods agreement was a wonderful thing, not only for Canada, but for the whole of the civilized world. When that agreement was drawn up mentioning gold it showed that there was a reason for that metal; it showed there was a need for such a yardstick for our own monetary system and that of practically every other country. That is the first point in favour of gold production. Then there is a demand for gold by artists and craftsmen, in dentistry, and for many other things for which people would gladly buy gold if it were available. For instance, I believe that if tomorrow our mint should issue say $50 million in $5 and $10 gold pieces, they would be distributed within two or three weeks at the most. People want something tangible in their monetary system which they feel they do not have at the present time. They are right, of course, in that feeling, but I am just giving the opinion of the people in my own constituency. Only last evening at the reception at the French embassy I was told by a Frenchman from North Africa that practically the only currency which was accepted during the war in North Africa, Spanish Morocco, Sicily and southern Italy was the $5 and $10 gold pieces carrying the United States eagle. He told me, and I believe it to be true, that those gold pieces had saved the lives of hundreds, yes thousands of young Americans, Canadians and allied troops.
So there is a meaning for gold in our monetary system; and if there is a meaning and acceptance of it there is no reason why it should not be dealt with at least to some extent as other mining like base metals and other production is dealt with. We all know what has happened to steel, copper, lead, zinc and all the other metals. Mind you, gold is one of the most difficult metals to extract from the entrails of the earth. There is no placer gold in northern Ontario. At
the present time there is only a little placer gold in Yukon and the Northwest Territories. There is no placer gold in northern Quebec or the Kirkland Lake section. It comes from solid rock, and many of the mines are operating today only by the skin of their teeth. The Hollinger mine, for instance, has always been working some very low grade ore, on which they pay very small dividends indeed. It is only because of the ingenuity of the men running these mines, their good management and the fine miners working in them that they have been able to keep in operation. What has happened to the base metals? What has happened even to silver? What has happened to cobalt and to aluminum?
The prices of those products have increased by twenty per cent, forty per cent, sixty per cent and in some cases by three hundred per cent. Gold production has remained absolutely stationary. This is a situation which cannot be tolerated much longer because gold production looms large in our national economy, as the member for Eglinton said so well a few moments ago. It has its beneficial effect in all streams of our Canadian life. It affects, beneficially, the cities of Toronto, Montreal and Vancouver, regardless of what the member for Comox-Alberni (Mr. Gibson) states. In our section we buy a lot of lumber from the hon. member's province, and we pay a great deal more for it than we used to pay. We are not complaining about that. The hon. member ought to realize what gold has meant to all sections of Canada, even the Yukon Territory, in the past, what it may mean in the future.
I have at least established this argument that gold is a metal which is not only being used as the yardstick for the monetary systems of most of the nations of the world, but it is a metal that the people generally throughout the world will accept, whether it be minted or in any other form. I recall that my grandfather had one of those heavy gold chains. I believe it was almost pure gold, twenty-four carat. It was an heirloom and he cherished it. If you try to buy one of those gold chains today, you will not be able to get it. Only a few days ago I was in one of the large jewelry shops in Ottawa. I was told by a responsible man in that shop that if they were allowed to buy gold and use it as they liked in jewelry they would buy hundreds of thousands of dollars' worth of gold. There is a reason for gold; there is a necessity for gold; there is a demand for gold. If there is a demand, it should follow the trend of other metals.
If there is no necessity for that yardstick in our monetary system, if the people do not request it, let us close the mines and forget about it. Then, you will have an immediate reaction because gold will always be a metal that not only carries glamour but has general acceptability. To illustrate to the Canadian people what it is worth in international transactions, I shall read a few sections of the Bretton Woods Agreements Act. Article IV, par values of currencies, section 8 dealing with maintenance of gold value of the fund's assets, reads:
The gold value of the fund's assets shall be maintained notwithstanding changes in the par or foreign exchange value of the currency of any member.
There, you see the thread of my argument. I am not speaking as a theorist because I participated in the discussion. A member of the Social Credit party was in attendance, and when that paragraph was mentioned it was agreed to by the member for Acadia (Mr. Quelch). I always listen to him with attention because he is well versed in the monetary systems, not only of Canada but of the world. Then, subsection (b) reads:
Whenever the par value of a member's currency is reduced, or the foreign exchange value of a member's currency has, in the opinion of the fund, depreciated to a significant extent within that member's territories, the member shall pay to the fund within a reasonable time an amount of its own currency equal to the reduction in the gold value of its currency held by the fund.
Again there is mention of gold there. It never disappears from that act.
Subsection (c) reads:
Whenever the par value of a member's currency is increased, the fund shall return to such member within a reasonable time an amount in its currency equal to the increase in the gold value of its currency held by the fund.
I shall not read at length, but I should like to cite one other section to show how important gold is considered. Article V, transactions with the fund, section 6, page 9 of the act reads:
Any member desiring to obtain, directly or indirectly, the currency of another member for gold shall, provided that it can do so with equal advantage, acquire it by the sale of gold to the fund.
Subsection (b) reads:
Nothing in this section shall be deemed to preclude any member from selling in any market gold newly produced from mines located within its territories.
Now, the terms of this subsection might seem to be ambiguous, but at the same time there is a good reason for it. This is not the time or place to discuss the reasons. I believe that these sections will prove to parliament that there is a necessity for maintaining the solidarity of something so basic
so far as the Bretton Woods fund is concerned, regardless of what some members say on that score. I agree with the member for Eglinton (Mr. Fleming) when he says that in the world of today gold should at least be twenty-five per cent of the currency used. There is no reason in the world why we should be denied a good price for gold because of this act. We are in a very difficult position so far as gold is concerned. I am no prophet, but I believe that if gold mining played as important a part in the economy of the United States as it does in Canada, the price of gold would have been increased quite a few years ago. South Africa and Canada are to a large extent dependent on gold and the largest producers, excluding Russia-we have no access there at the present time, although they have found it possible to unload a very large amount in recent years on the money markets of the world.
It should be within the orbit of the government, and within the power of this parliament, to tell the Bretton Woods management that it is unfair to Canada so far as the price of gold is concerned to have it pegged at the present price. I am not going to argue that point at any greater length. I believe I have shown parliament the necessity of getting a good price for our gold. I do not like subsidies. I believe I was interrupted by a C.C.F. member a year or two ago when I said I have always been against subsidies. What else can one do under circumstances of this nature? You are dealing with a metal which is, in certain circumstances, a commodity. It is used as the yardstick for the monetary systems of the world, but the price of gold has remained stationary, it has remained pegged. What would the western farmers say today if the price of wheat were the same as during the depression years? What would the lumber operators say if the price were the same as it was sixteen years ago? I would be the first one to get on my feet, under those circumstances, and speak in favour of the lumber industry and the farmers. The gold mining section of Canada is not prejudiced; we always take a national viewpoint. When I was home during the Easter recess I heard no criticism of the bonus that was paid to the western farmers. In fact, some said that we should have given them a little more.
I am making this plea because I know this situation. No one wants to see fine centres of population like Timmins closed up. I know that a large number of members have visited that section of the country. No one wants to see centres like Schumacher and
South Porcupine closed and many towns in northern Quebec. The gold mining industry has established them and has established schools, good hospitals, and all the up-to-date necessary utility services. These centres have a fine, healthy, prosperous population- not so prosperous today, but it has been, and hopes to be again. *
Members may recall a few years ago there was a certain amount of colonization attempted in northern Quebec. When I was a young man going to school around 1900, I recall when the Canadian Pacific was built to North Bay. At that time it was thought that it was the extreme limit at which white people could live, according to the belief at that time. Today we are living four hundred miles from North Bay. In Hearst alone we have hundreds of people establishing themselves from year to year. You go into northern Quebec and you will find one of the finest colonization schemes. And how was it made possible? It was made possible not only because of the land and the forest, but because of the mines, copper and gold. No one wants to see that industry closed down. I know of the speeches that have been made here by the member for Lethbridge. Today the hon. member never said a word against gold, and I give him credit for that. He speaks as a Canadian. The leader of the party has been in our section, and he knows what a great factor gold mining is in our national economy. I also want to pay my compliments to the hon. member for Eglinton. I know that in his criticism he did not want to be unfair. He wanted to be constructive, because he also realizes the great importance that the gold mining industry is to Canada as a whole, and no one would want anything to happen to it. It is possible of solution. I do not believe in the open market.
No matter what we say, it is not only Bretton Woods that will stop us from selling on the open market. We must remember this. At the present time we may say that the United States is unfair to us; but when they increased the price of gold from $25 an ounce to $35 an ounce it was a marvellous thing for Canada. Every ounce of gold production was sent to the United States and paid for with United States dollars that we always needed. The same principle applies just as forcibly today. Every ounce of gold that is produced in Canada today finds its way to the United States, and there it helps us to balance Canadian dollars with United States dollars. Those are facts which we cannot forget in this country. To me it seems-I may be wrong-that you cannot bootleg against the United States treasury.
We hear a lot of talk about South Africa selling their gold. I have several articles saying that in some places they get $62 an ounce for it. I think it is said that they get $62 an ounce in Calcutta, and at Hong Kong they get as much as $43.75 an ounce, and that in some sections of Europe they are getting $42.75 an ounce, and at other places they get $40 an ounce. But is that a steady market? Is that a permanent market? What kind of money will you receive in payment for that gold bullion, and who will do the collecting?
If we had an open market for gold I would not want the government to assume the role of collector. They have enough to collect at the present time. Who would try to collect for that gold? All these are things that we must be very careful of when we mention an increased price for gold.
We do not kowtow to the United States but it is fortunate for us to be their neighbour. How fortunate it is for Canada to have as a neighbour that great big friendly nation to the south of us. They have their faults, the same as we have. I have no doubt in my mind that when we present our case logically and justly we shall have as always a good listening ear and they will listen to what we have to say. I have no doubt they are beginning to realize at the present time- I think it may come in the very near future
that the price of gold must of necessity be increased. But until that is performed by the United States treasury then it is the duty of parliament to pass some legislation that will allow that fine industry to survive. I use the word "survive" deliberately, because anyone with any business acumen will readily understand the precarious position that that industry finds itself in at the present time when all metal production and all other production, whether of the farm, of the soil or of the forest, has increased in price, and we are in agreement with it, while the price of gold has been stabilized. The thing of necessity must receive the attention of the government on that score alone.
I come again to the Bretton Woods agreement, and I agree with the hon. member for Eglinton, although I know that as a member of the United Nations and as a signatory to the Bretton Woods agreement we must give up in some instances some of our national sovereignty. But I do not believe it was ever meant that sovereignty would be conducive to this, that this agreement would compel the gold producers of Canada to accept an arbitrary price at the dictation of the Bretton Woods agreement.
Again I repeat, if an increase in gold is needed under that monetary fund, then gold, being a metal, of necessity must follow the prices, or the trends of other metals. If it were a thing that you could find by the pocketful in some creek or a thing of that kind it would be different. No doubt the hon. member for Villeneuve (Mr. Dumas) will speak after me and will give the house some statistics as to the great efforts the gold mining industry this country has put forth, the inventiveness and the genius that they have employed to survive. We sometimes hear that we have some rich gold mines. There are some very high-grade gold mines in Canada. AVe have one or two of them in the Timmins section, like McIntyre, and there are one or two in the Kirkland Lake section. None of them is in the Quebec section, and none in the northwestern section of northern Ontario. The same applies to the Northwest Territories and to Canada as a whole. There is no bonanza anywhere so far as gold is concerned. They are able to exploit those mines now by ingenuity, by modern inventiveness, and by doing all that they possibly can they have been able to survive, hoping that they will have a better day, hoping that some day in the not too far distant future the nations will realize, the United States and no doubt the Bretton Woods agreement will realize, that if they want to maintain the fund as sound as they wish it to be they will have to increase the price of gold.
I should like some of the hon. members to visit some of the newer mines in northern Quebec, for instance, where they will see much machinery on the second floor of the buildings. They will hear its continual buzzing, purring and whirring, you may say. They will see those tremendous and great machines crushing enormous amounts of solid rock. They will ask themselves: Where is the manpower? They may see one, two, three men managing one whole floor. These mines have been able to survive because they have kept up to date; otherwise, they would have been buried under their own weight two or three years ago.
I have an appeal to make at the present time first of all to the national treasury, asking them to use all their influence to assist the gold mines, because the yardstick of gold must of necessity be maintained, and so that the Bretton Woods agreement will not have the right to dictate to our country what the price of gold should be.
Personally, I do not think that even in the United States an increase in the price of gold would be inflationary because my information is that the gold bullion that the United States had five, six or seven years ago is almost depleted at the present time, and there is no
doubt also that they will continue to buy it owing to the necessity and the urgency of maintaining their supply.
Some people may ask, why does the Canadian government not buy gold at $35 or $40 or more an ounce and issue their own currency. I believed, and I still believe it, when Mr. Ilsley announced in the House of Commons that the Canadian dollar would be placed on a parity with the United States dollar, that the Canadian dollar was the belle of the ball; it was the soundest money in the world. Whether it is possible for the government to do that, I leave the question with the treasury benches. It has been possible for the United States during the last twenty or twenty-five years to buy all the gold bullion in the world and pay for it with paper money. I want hon. members to realize there is a small margin so far as Canadian gold production is concerned between the selling price and the cost price. There is a very small profit. The profits have never been very high; and if it was possible for the United States treasury to pay for the gold- because they are good businessmen; there are too many hard-headed businessmen there not to realize the full value of gold-they did that for many years at the cost of billions of dollars in the United States money. If they were able to do that perhaps it may be possible in the meantime for the Canadian treasury to try and make an experiment in buying gold at, we will say, $5 or $10 more an ounce, because we must experiment and try new solutions. As the hon. member for Eglinton said a few moments ago, the measure we have before us is filling a gap. It is not a permanent solution.
I know in my section, and I know that every member of parliament who is familiar with gold production realizes this, we hope against hope that next week or next month, or next year or two years from now we will hear that the United States treasury is paying $40 or $45 an ounce. If that happens immediately you will see the northern sections of Canada flourishing because it will bring other mining activities. They are not only developing that industry in the search for gold. In their search the fine prospectors of Canada have found not only gold, they have found copper, and other metals. The Rouyn-Noranda mining industry in northern Quebec was found by gold prospectors. They could hardly believe their eyes when they saw these great formations of copper-almost solid copper. In those days the sale of copper was so low that they built up great dumps of it. But we know what happened to copper in the last six or seven years, and we know what the copper industry has meant to the whole of Canada.
We would hope that within a reasonable period of time the price of gold might come into its own. We do not want an increase of 300 or 400 or even 100 per cent. We want only a reasonable increase in the price of gold. If that is done we will see those northern sections booming and coming into full fruition; there is no doubt about it. That will help every section of Canada. It will help the farmers in the west, the industrialists in the east, the lumber producers and industrialists in British Columbia. It will result in prosperity for all of Canada.
Let me again compliment those who have preceded me in the debate. There has been no acrimony. We all realize the seriousness of the situation in an industry which plays such a great role in the national economy of Canada.
Concluding my remarks, let me compliment again the Minister of Mines and Technical Surveys as well as the Canadian government and the Canadian parliament upon their open-mindedness so far as the gold-mining country is concerned. And if at the moment I speak on a matter of this kind, it is not because I have any personal interest. I am not a stockholder; but I have been in my constituency for the last forty-five years, and I realize the great part the gold-mining industry is playing in our Canadian life, and the great role it will be called upon to play in the future.
Topic: EMERGENCY GOLD MINING ASSISTANCE ACT
Subtopic: MODIFICATION OF APPLICATION AS TO LAST QUARTER OF 1950 AND EXTENSION IN MODIFIED FORM TO 1951