Victor QUELCH

QUELCH, Victor

Personal Data

Party
Social Credit
Constituency
Acadia (Alberta)
Birth Date
December 13, 1891
Deceased Date
September 2, 1975
Website
http://en.wikipedia.org/wiki/Victor_Quelch
PARLINFO
http://www.parl.gc.ca/parlinfo/Files/Parliamentarian.aspx?Item=ba7c8691-5f1c-4bc4-9ec1-82c0a828db16&Language=E&Section=ALL
Profession
farmer

Parliamentary Career

October 14, 1935 - January 25, 1940
SC
  Acadia (Alberta)
March 26, 1940 - April 16, 1945
SC
  Acadia (Alberta)
June 11, 1945 - April 30, 1949
SC
  Acadia (Alberta)
June 27, 1949 - June 13, 1953
SC
  Acadia (Alberta)
August 10, 1953 - April 12, 1957
SC
  Acadia (Alberta)
June 10, 1957 - February 1, 1958
SC
  Acadia (Alberta)
  • Whip of the Social Credit Party (January 1, 1958 - January 1, 1958)

Most Recent Speeches (Page 613 of 617)


January 21, 1937

Mr. VICTOR QUELCH (Acadia) moved:

That, in the opinion of this house, the time has arrived in Canada for the adoption of a definite, scientific, nation-wide scheme for financing consumption.

He said: Mr. Speaker, I am moving this resolution in recognition of the fact that today we are living in a country in which in practically every sphere of industry our powers of production are greater than our powers of consumption, and in recognition of the fact that there can be no justification whatsoever for industrial stagnation and unemployment in the midst of actual demand for goods. I believe the reason lies in the fact that we are operating under a system which was evolved' in a time of scarcity, one which has not been able to adapt itself to an era of potential plenty.

The major problem, as I see it, is how in a practical manner, while giving full range to individual freedom and initiative, to distribute the abundance of wealth that science has made available. I realize that perhaps many hon. members may deplore a further discussion of economics. I remember that at the last session the hon. member for Parkdale (Mr. Spence) said we should stop talking economics and get down to business. I think he stated, as a matter of fact, that what we wanted was economy. We must realize, however, that acts of economy may very easily prove to be false economy, unless there is a thorough understanding of the situation.

Purchasing Power-Mr. Quelch

For example, what would be the result upon the economic structure of Canada if all relief were abolished to-morrow? Entirely apart from the terrible and distressing conditions which would result to many of our people, what would be the effect upon industry? What would be the effect upon the small merchant, and especially those merchants in the distressed areas who are dependent upon the receipt of relief payments to carry on. their business? What would be the effect upon employment? I am satisfied the result might put us right back into the depths of the depression. To-day I believe we are too prone to consider the cost of relief, and we do not give full consideration to the great benefits accruing to our people through the injection of this purchasing power into our system.

Coming back to the matter of getting down to business let me ask this question: What is our problem to-day? Can any person say it is just a matter of getting down to business? Let us draw a brief picture of Canada as we see it to-day. On one side of the picture we have the great productive plants working at only a small percentage of their capacity, great natural resources scarcely touched, tremendous reserves of energy and a vast surplus of unused labour. On the other side of the picture we have a vast multitude of people on the verge of starvation, the majority of them having to accept a standard of living considerably below that which they would ordinarily accept. If it is just a simple business proposition, why do we not put that unused labour to work in the factories or industries which are operating only part time, using our natural resources and our reserves of energy to produce the goods that our people are so sorely in need of? I say this: If it is just a business proposition, why do we not do as I have suggested?

The answer is that the problem is one of economics, or as Professor Soddy has described it, the riddle of the sphinx. A good1 example of the peculiarities of the problem may be found in a speech by the Right Hon. Reginald McKenna to the American Bankers' Association on October 5, 1922, which reads as follows:

For over two centuries British capital, that is credit, had been lent to other countries. Year by year England produced more than she either consumed herself or could exchange for the products of other nations, and she could not obtain a market for the surplus unless she gave the purchaser a long credit. Foreign loans and foreign issues were taken up in England, and the proceeds were spent in paying

for the surplus production. British factories and workshops were kept in good employment, but it was a condition of their prosperity that a part of their output should be disposed of in this way.

It is significant that, according to Mr. McKenna, England's prosperity was dependent, not upon the amount of wealth she could make available to her people, or upon the amount of wealth she could exchange for the wealth of other nations, but upon her shipping out of the country more wealth than she received in return. And the reason is obvious. It is in order that the salaries, wages and dividends paid out in the production of that wealth might be available to make up the deficiency of purchasing power which existed as between the total prices of goods available for distribution within the country, and the amount of purchasing power distributed in their production.

I would say that undoubtedly the greatest condemnation of the present system lies in the fact that it is considered good business to ship out of the country more wealth than is brought in, even though there are people within the country who are sorely in need of that wealth. While on the question of foreign trade perhaps it would be to our advantage to recall the words of Napoleon who said:

Agriculture is the soul, the foundation of the kingdom. Industry ministers to the comfort and happiness of the population. Foreign trade is the superabundance, it allows of the due exchange of the surplus of agriculture and industry. Foreign trade, which in its results is infinitely inferior to agriculture, was an object of secondary importance in my mind. Foreign trade ought to be the servant of agriculture and home industry. These last ought never to be subordinate to foreign trade.

I believe that the majority of hon. members will agree with the soundness of that statement. And yet to-day it is not so much a question of exchanging our superabundance for that of other nations, as it is of our attempting to ship more of that superabundance out of the country than we bring back in. Foreign trade can no longer be called the servant of trade and industry; it has become the master demanding from the nation a toll in wealth for which no wealth is given in return.

Agriculture and industry may be said to have two distinct functions-to produce the necessities of life and to give us the means to purchase the same. In addition to that, a profit must be shown, which means that labour costs must be reduced to a minimum in order to meet keen competition. The point is, is it possible to meet these three

Purchasing Power-Mr. Quelch

requirements? In order to keep down expenses, labour costs must be reduced to the minimum and wherever possible labour saving devices installed, which means that the purchasing power of the people is less able to buy the products of industry.

Undoubtedly we have the ability to produce an abundance of wealth, but there is insufficient purchasing power to absorb same. I think it is greatly to be regretted that in many quarters an attempt is being made to retard progress by going back to out of date methods. Mr. Butler, the director of the International Labour Office, points out in the June Labour Gazette that in many European countries legal restrictions have been placed upon mechanical developments. He points out that similar action has been taken in the United States of America under the various codes. He comments upon this action as follows:

Such measures may have some temporary result, but technological unemployment cannot be combated by preserving antiquated methods by artificial means. The real problem is to ensure that the economies in wages effected by mechanical improvements do not reduce the volume of available consuming power.

For generations past we have been endeavouring, by the use of scientific inventions, to increase the productivity of man until today we have become so successful that we are able to produce an abundance of wealth. Are we going to be so lacking in intelligence as actually to reduce the amount of that wealth by doing away with labour saving devices and going back to the use of manual labour? Is that as far as the intelligence of man can go to-day? According to Mr. Butler, that is what is being done in Europe to a great extent. Canada has followed the same practice to a limited degree. We find in many of the labour camps that men are doing with shovels and wheelbarrows work which could be done far more quickly by modern excavators and steam shovels.

Our main argument rests upon the fact that owing to certain practices inherent within the system, industry fails to provide sufficient purchasing power to buy back its own production. I shall deal with a few of the main faults in the system as we see them. First, the present system is a debt creating one. Practically all new money emanates from our banks in the form of debt. This is an interest bearing debt and our bankers do not issue the necessary money with which to pay that interest. Therefore, the debts of the world to the banking system are increasing steadily year by year. Professor Rautenstrauch of Columbia university has pointed out that the debts of the world to the banks increased

by 47 per cent in the seventeenth century, by 466 per cent in the eighteenth century, and by 12,000 per cent in the nineteenth century. In the past, in order to pay off any part of these debts it has been necessary either to incur new debts or to withdraw money from circulation, thus reducing the standard of living of the people.

For example, in the period 1929 to 1933 over $900,000,000 was drawn from circulation, resulting in a tremendous falling off in the standard of living of the people of this country. No matter from what angle we approach this subject we are bound to come to the conclusion that so long as we continue to operate under this system we are bound to have one of two things, either a steadily increasing debt or a steadily decreasing purchasing power. Of course there is a very definite limit to which the purchasing power of a country can be decreased, and then our debts are bound to increase at an even greater rate. I was discussing this matter recently with one of Canada's prominent bankers and he took exception to that statement. He said it was not necessary to incur new debts in order to meet all our maturing obligations; that there was plenty of money in existence and that we could use a certain amount of this in liquidating our debts. I asked him what would be the result on industry if money were taken from circulation and he replied that industry could borrow from the banks the necessary moneys with which to finance its production. That is just what I have pointed out, that such action is bound to be followed by an increase in debt.

The second point to which I wish to direct attention is the tremendous deficiency in purchasing power brought about, by the centralization of industry. Before the machine era the profits of the individual craftsman were small, but as such they were available as purchasing power. But there has been a progressive displacing of man power by the machine, and the wages which used to go to the man now go to the owners of the machine. Owing to the centralization of industry, the profits of the machine owners have become so great that even though they explore every avenue of luxury they cannot spend their entire income. Therefore, income to that extent is not available as purchasing power. So long as we have such distressing conditions as we have to-day throughout the country, the gov ernment should take definite steps to tax these redundant credits back into circulation. I know it may be suggested that we have already a very high income tax; nevertheless until the government is prepared to issue the necessary purchasing

Purchasing Power-Mr. Quelch

power to balance deficiency caused by these redundant credits, the least the government can do is to tax them back into circulation. I do not for one moment suggest that such action by itself will relieve the deficiency in purchasing power. It certainly will not, but it will ait least relieve to a certain extent the distress so prevalent to-day throughout Canada. An orthodox viewpoint is very often expressed similar to that of Mr. J. A. Hobson in his book entitled Rationalization and Unemployment. I should like to quote from page 17 as follows:

As the processes of converting raw materials into finished goods -whether for human consumption or for utilization in production, are carried on in a business world, money is concurrently distributed to the persons who apply their labour, ability, land, capital in the different productive processes or as profit. These payments proceed pari passu with the productive processes, and, as wages, interest, salaries, rents or profits, constitute the cost or expenses of production, on the one hand, and the "income" of the recipients on the other. If, as I urge, it is convenient to include profit among these expenses, the whole set of payments amounts to selling price.

So regarding it, we may say this selling price has been paid away in the various expenses of production. Those who have received these payments in their money incomes possess the wherewithal to buy all the products, alike the consumable part of it and the capital goods that constitute the other part.

This argument I quite realize sounds plausible, but it altogether ignores certain fundamental truths which completely upset the conclusions arrived at by Mr. Hobson and his colleagues. Among other things it ignores the question of time, savings, and the reinvestment of savings, and as this contention has been attacked in the house in the past I should like to deal with it shortly because our whole philosophy is based to a very large degree on the understanding that industry, owing to certain practices which are inherent in the system, fails to make available sufficient purchasing power to buy back its own production.

Take the question of time. Mr. Hobson states that payments from industry equal total of prices providing you include profits among expenses. If that is the case, how can we possibly pay off debts incurred in the past to the banking system, for instance, war debts. The goods that represent these debts have long since been consumed or destroyed. The salaries and wages paid out in the production of these goods have in the majority of cases been spent and gone back to the banking system, but the debts representing these war materials are still with us and must be met out of current production.

If payments by industry to-day are used to pay off these debts then the total payments from industry will not be available to meet total prices, and therefore goods to that extent will be left unsold.

Put it in another way. In order that these debts may be liquidated it will be necessary to include in the price of goods certain debt-charges, made either directly or indirectly by the government through taxation. But when these debt charges are included in the price of the goods no purchasing power is distributed to balance these debt charges. Therefore, when the total amount of purchasing power distributed has been spent upon these goods, goods to that extent will be left unsold.

Some people imagine that the repayment of debts to the bank will recreate purchasing power, but as Mr. Reginald McKenna has said, every repayment of a loan cancels and destroys a deposit. Therefore it destroys purchasing power to that amount. Accordingly it is quite evident that the practice of including debt charges in the price of goods completely upsets the calculations arrived at by Mr. Hobson and his orthodox colleagues. So far as savings are concerned, the deficiency of purchasing power caused by them is bo evident that I deal with it only very briefly. If, as Mr. Hobson states, the total payments equal total prices, then, when any portion of these payments is saved, goods to that extent will be left unsold. On the other hand, if savings of the past are being spent at the same rate as savings of to-day, then the two will balance each other. Nevertheless it is generally conceded that the practice of saving to-day is going ahead at an accelerated rate, and therefore a deficiency of purchasing power is caused to that degree.

The question of the reinvestment of savings, however, comes under an entirely different category. The reinvestment of savings to-day causes a permanent deficiency of purchasing power, equal to the amount of the reinvestment where it is used as working capital. For instance, taking all industries as one to make it easier to follow, suppose a total of $12,000 paid out for salaries and wages in industry was saved and then was reinvested in a shirt factory, used as working capital, paid out in salaries and wages, producing $12,000 worth of shirts, and then suppose these salaries and wages were immediately afterwards reinvested in a boot factory, paid out again in salaries and wages, which then, instead of being used to purchase the boots, were reinvested in a hat factory producing $12,000 worth of hats. You have reinvested this

Purchasing Power-Mr. Quelch

$12,000 three times and caused a permanent deficiency of purchasing power equal to $36,000, because you have left behind unsold $12,000 worth of boots, $12,000 worth of shirts and $12,000 worth of goods produced in the first cycle. In support of my argument I should like to quote from a book by Professor Soddy, 'entitled, Wealth, Virtual Wealth and Debt. At page 251 he says:

In general terms, the only possible way to increase the stocks of wealth in the system, whether precedent to producing a larger output or to accumulate capital in the first instance, is to by-pass money past the consumers' mart, so that it passes through the productive system twice in its circulation instead of once. This puts into the system twice the value of wealth which it takes out. But it creates debts to the individuals who give up their purchasing power, and. however we struggle with the problem, we have to arrive at the conclusion that these debts can never really be repaid.

It is undeniable postulate that all the wealth put into the system, reckoned in terms of the costs of production, not only does not but cannot come out.

It has been stated that we are opposed to the idea of savings and the reinvestment of savings. We are not, however, opposed to these practices. We merely wish to point out the fact that the practice of saving and reinvestment of savings is bound to cause a deficiency of purchasing power. This resolution, therefore, is aimed to relieve industry of the sole responsibility of creating purchasing power. Industry, as I have already pointed out, fails to distribute sufficient purchasing power to buy back its own production. Therefore we propose that the government shall issue additional purchasing power outside the industrial system in order to balance this deficiency, and as a first step we would urge the necessity for a thorough survey of the productive capacity of Canada. It might be carried out along similar lines to that of the National Survey of Potential Productive Capacity carried out in the United States of America and financed by the federal government there.

I should like to quote from a foreword to the report of the Director of the American Survey by Mr. Stuart Chase:

Now, with the publication of Mr. Loeb's book, we have for the first time in our economic history a concrete answer to the question. After almost a year of research by sixty technicians, financed by the federal government, the National Survey of Potential Productive Capacity has released its findings. Official publication will follow in due course. Preliminary thereto, Mr. Loeb, the director of the survey, here describes the results and gives his personal interpretation of what the figures mean. The interpretation you may accept or reject as you choose. The figures you cannot reject without subjecting the survey itself to intensive, critical analysis. As

the policy throughout has been to take the more conservative choice where choice was possible, I think you will have some difficulty in minimizing the conclusions reached. But as a taxpayer you helped to finance this study, and you have the right to whip out your slide rule and find errors if you can. I have watched it from its inception, and it looks like a reliable, conservative piece of work to me.

The results are briefly stated. If the existing plant and man-power in the United States were fully employed in the production of honest goods and services for the consumer, the total output, valued in 1929 dollars, would be not less than $135,000,000,000, or an average per family of approximately $4,400. This estimate does not presuppose any considerable change in the physical plant, the introduction of new processes, or the modernization of old factories.

The wealth of Canada is probably just as great as that of the United States, and there is every reason to believe that in a properly balanced economy a similar standard of living might be made available to the people of Canada. We do not wish to be dogmatic in any way as to how this might be accomplished. We are satisfied however, that full cognizance will have to be taken of the facts to which I have referred. We believe that the government, once having made a survey of the productive capacity of this country, should take immediate steps to stimulate the purchasing power of the people up to the full capacity of industry to satisfy that demand, and then, as the ability of the country to produce more goods increases, to see that the ability of the people to obtain these goods should be increased to a like degree. So long as the effective purchasing power of the people is raised only up to the capacity of industry to satisfy that demand there can be no real talk of inflation.

We believe that the government should take immediate steps to control prices, to set fair wages, that is, to establish a fair relationship between prices and wages as between one industry and another, and to guarantee a minimum price based upon the cost of production for the primary producers. A deficiency of purchasing power may undoubtedly be made up in many ways, but the main essential is to guarantee a minimum standard of living to the people based upon the ability of the country to satisfy that demand. This is where we may differ, perhaps, from our socialist friends on the right. We believe that a survey will show that this dominion can produce a sufficiency of goods to give everybody a decent standard of Living, without having to reduce the standard of living of any one. However, should this survey show that wf have not that ability, I would immediately agree that it is only right and just that the standards

Redistribution-Mr. Brunette

of living of the rich people should be reduced' in order to make it possible for the standards of living of the poor people to be increased. But when we recall the conditions of 1928 and when we remember the tremendous strides made by science since then, we have every reason to believe that we have the ability to raise the standards of living of the people of this country without having to reduce the standard of living of any one.

As a first step we would urge that action be taken to reduce the age for old age pensions, as was suggested in the last session by, I think, the hon. member for Winnipeg North Centre (Mr. Woodsworth) from seventy down to sixty, and probably in time it might be reduced from sixty down to fifty-five, or fifty, guaranteeing a pension of probably 850 per month. Also we should guarantee pensions to all those people who, whether because of blindness or any other form of disability, are unable to care for themselves. Then, in view of the fact that we are living in a new country in which there is a tremendous amount of work to be done, we should urge that national' projects be carried out, financed by the national credit and utilizing the minimum amount of labour, that is to say, utilizing labour-saving devices wherever possible. We would advocate projects such as slum clearance with the objective of a decent house for every one; better roads, bridges, railroad crossings; reforestation, and various other useful and necessary projects. Of course we realize that there is a definite limit to the extent to which these projects can be carried out, and we propose only that they be proceeded with to the point where the purchasing power of the people will be stimulated to the full capacity of industry to satisfy it. So long as that is done there can be no real danger of inflation. Or to put it in other words, the volume of capital goods production should be sufficiently great that the salaries, wages and dividends paid out in that production are equal to the deficiency of purchasing power as between the total prices of consumption goods and the amount of effective purchasing power distributed in their production.

In closing, I would urge that first of all a thorough survey of Canada's productive capacity be made, and then a definite program be instituted to increase the effective demand of the people up to this capacity, or to a point where economic security may be gained for all, whichever comes first.

Looking to the future, as science and. technological improvements increase the productivity of man. I believe that it will be possible to steadily reduce the hours of labour

and supplement the incomes of the workers by a national dividend, so as once and for all to remove that ever-haunting fear of starvation and poverty from the minds of the people.

Motion (Mr. Quelch) negatived. REDISTRIBUTION

Topic:   PURCHASING POWER
Subtopic:   PROPOSAL FOR THE ADOPTION OF A NATION-WIDE SCHEME FOR FINANCING CONSUMPTION
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June 20, 1936

Mr. QUELCH:

I have had a good deal of practical experience in railway construction work and also in farm labour, and I say without any hesitation that it is absolute nonsense to expect that men who have been trained as clerks in a city or who are physically too weak are able to go out and do eight or ten or twelve hours' work a day on railway maintenance or farm. The minister stated, I believe, that some men had refused to go out. Were those men physically fit to do that work? I have been in some of those camps and I know that many of the men would not be able to stand up under such work. That was recognized in the camps and they were given work which was suitable. If they are not fit for railway work or farm labour, what is the alternative? Is it suggested that they are either to do that work or to be turned adrift? Are they to be treated as convicts and sentenced to hard labour? Are they to be condemned to what is nothing more or less than physical torture or to be told that they will be deprived of the means of living? I should like to know what other alternative will be given these men.

Topic:   UNEMPLOYMENT
Subtopic:   AMENDMENT OF UNEMPLOYMENT RELIEF AND ASSISTANCE ACT, 1936, TO ASSIST PROVINCES IN RESPECT OF RELIEF EXPENDITURES
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June 20, 1936

Mr. QUELCH:

The rest were allowed to

stay in the camps?

Topic:   UNEMPLOYMENT
Subtopic:   AMENDMENT OF UNEMPLOYMENT RELIEF AND ASSISTANCE ACT, 1936, TO ASSIST PROVINCES IN RESPECT OF RELIEF EXPENDITURES
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June 11, 1936

Mr. QUELCH:

Would the minister agree that there should be enough money in circulation at any given time to pay the total prices of ultimate goods available for distribution? It stands to reason that if there is not enough money in circulation to buy the total factory

Bank of Canada

products available for distribution, this would necessitate industry curtailing its output, thus causing more unemployment.

Topic:   QUESTIONS
Subtopic:   BANK OF CANADA
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June 11, 1936

Mr. QUELCH:

The general principle, then?

Topic:   QUESTIONS
Subtopic:   BANK OF CANADA
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