Mr. A. M. NICHOLSON (Mackenzie):

Mr. Speaker. I had intended to ask a question of the Minister of Labour, but in his absence perhaps the Minister of Agriculture might answer.

In view of the fact that dominion contributions for relief to the provinces are being discontinued on March 31, what responsibility will the federal government take for supplying food to the northern settlers in Saskatchewan who are being reestablished under a joint dominion-provincial arrangement, in the event that the province cannot care for these settlers? What announcement, if any, has been made by the Saskatchewan government in connection with supplying relief after March 31?

Hon. J. G. GARDINER (Minister of Agriculture):

In the absence of the Minister of Labour I have been asked by him to reply as follows:-

It has always been the responsibility of the provincial or local authorities, acting under provincial regulation, to determine to whom, to what extent and under what conditions assistance is granted. The dominion responsibility was largely that of assisting the provinces financially. It is assumed that the provincial authorities will arrange to take care of those in need after March 31 without dominion assistance. I have no information as to the intention of the Saskatchewan government.

Hon. J. A. MacKINNON (Minister of Trade and Commerce):

Yesterday the hon. member for Parkdale (Mr. Bruce) suggested that I lay on the table of the house the letter

Decennial Census

to which I referred as having been received from him in connection with taking the census, and I do so now.

Read it.

Mr. MacKINNON (Edmonton West):

It reads:

522 University Avenue,

Toronto, January 24, 1941.

The Hon. James A. MacKinnon,

Minister of Trade and Commerce,

Ottawa, Ontario.

Dear Mr. MacKinnon,

I am informed that you have appointed Mr. Travers, my opponent in the last election, as chief census officer for Parkdale.

When the national registration was taken you will recollect that the members were asked to nominate the registrar for their ridings and after I nominated the president of my association, Mr. Wm. McKeown, I asked him to appoint Mr. Travers as assistant registrar and also to give Mr. Travers the opportunity of naming fifty per cent of those to be employed on this work.

Would it not be fair, therefore, to ask Mr. Travers, the chief census officer, to appoint Mr. McKeown as his assistant and to allow the latter to designate fifty per cent of those who will be engaged in this work?

Oh, ohl

Mr. MacNICOL:

That is fair.

Mr. HANSON (York-Sunbury):

There is nothing wrong with that; it is reciprocity.

The house in committee of supply, Mr. Vien in the chair.

Mr. HANSON (York-Sunbury):

Mr. Chairman, I made a few remarks yesterday concerning the matter of procedure with respect to this item. I do not propose to repeat anything I said then. In my remarks to-day I shall review the criticisms of the government's proposals, and I hope to make a few constructive suggestions.

The wheat problem is not of recent origin; indeed it goes back to the years succeeding the last war, when the wheat-importing nations of Europe adopted the policy of attempting to become self-supporting communities.

If you will examine the record you will find that beginning with the year 1922, and in succeeding years down to at least 1934, the importing European countries, such as Germany and France, began by a succession of

rMr. J. A. MacKinnon.!

tariff increases, quota systems and other limitations, to cut down their imports of wheat until finally some of them, notably France, actually became exporters of wheat.

What was the reason for this? Frankly I think it was that they were afraid of war. They were afraid of the difficulties of transportation in time of war, but over and above all these reasons they were afraid of the price they had to pay for wheat during the great war. They determined that never again would they pay ransom to America for their bread.

Upon whom did this policy fall most heavily? Without doubt upon Canada, the United States and the Argentine, and upon Canada most of all. What did Canada do? Did she take cognizance of the growth of economic nationalism in Europe with respect to wheat? She did not-most emphatically she did not. During the time the right hon. gentleman and his party were in power and in control of government policy, this country increased its wheat acreage from 18 million acres in 1921 to over 25 million acres in 1930. Production in terms of bushels grew from 300 million bushels in 1921 to 479 million bushels in 1927, to 566 million bushels in 1929 and to 420 million bushels in 1930. In terms of dollars and cents the value of exports of wheat and wheat flour for the crop year 1925-26-the first year for which the figures have been made available to me-was $475 million, but in 1930-31 this had fallen to $188 million.

May I pause here to say that the problem first became acute at about this time, early in 1930. I really have never been able to make up my mind whether the then government, the then minister of agriculture, the then minister of finance, were aware of the situation rapidly coming to a head. But the evidence is that the government of my right hon. friend had not at the beginning of 1930 the slightest appreciation or understanding of the wheat problem then rapidly approaching. On February 20, 1930, the right hon. gentleman put these words into the mouth of his excellency in the speech from the throne:

The dominion is already recovering from the seasonal slackness evident at the end of the year and it is not to be forgotten that the bulk of the 1929 "wheat crop still remains in Canadian hands for final disposition.

Mr. Chairman, mark well that sentence! We, in common with the rest of the world, were then in the fourth month of the greatest economic depression the world had ever seen, and the right hon. gentleman called it a "seasonal slackness"! What vision! How characteristic of him! Trying the old game of lulling the Canadian people into a sense of false security. And then how naive the

Supply-Agriculture-Wheat Acreages

statement that "the bulk of the 1929 wheat crop still remains in Canadian hands for final disposition"!

That was the position with respect to wheat which the Bennett government inherited in 1930. The crop of 1929 still remained unsold in the hands of the farmers. The problem continued down through the years to 1935, and then the Bennett government had to take over the whole burden and establish a new policy.

In the meantime marketing prices went from bad to worse. Wheat went down in price in 1933 on the world's markets to the lowest price in 400 years. The selling agency of the pools had called in John I. McFarland in 1930 to take over the problem. The government in the course of time had to put the credit of the country behind the agency, and it did so. This action carried the situation through to 1935, and no matter what the criticism was, the fact is that the operations of John I. McFarland never cost Canada one cent. On the contrary in the final accounting the McFarland operations resulted in a substantial profit to the treasury, and it should have been far more than it was.

I want to pause here to pay a tribute to Mr. McFarland. He was not employed by the government. He was employed by the pools, and he undertook, without salary, to serve Canada, and particularly western Canada, to the best of his ability-an ability, I believe, without a peer in that particular field. He gave himself so unremittingly to the task that I believe his health was permanently impaired. But what 'he did, he did for Canada, and I am sure the farmers of western Canada, irrespective of party politics, respect him and look upon him to-day as one of the greatest friends western agriculture ever had.

Then in the session of 1935 the government took, in the face of the sternest opposition from gentlemen opposite and from the trade, the only possible constructive position that was open to it. It decided on the establishment of the wheat board.

Hon. gentlemen who aTe interested in the position at that time may read with a good deal of profit Mr. Bennett's speech on the second reading of the bill on June 12, 1935, in which he traced the history of the production and sale of wheat in the whole world and its relation to Canada, and in which he made a most reasoned argument in support of the measure.

The terms of the 1935 bill were simple. It provided for the marketing of Canada's wheat crop through a government board, not through private enterprise. Why? In the

circumstances private enterprise had failed, and it has failed ever since. That was the fundamental reason. Nobody wanted to put the government into the wheat business, but because there was no other method, no other agency that would function, the wheat board was established. Another reason was that a wheat board would ensure against the destruction of that measure of economic stability which had been built up in the most trying years of the history of wheat production in Canada. The bill was offered on the further theory that Canada had an obligation not only to herself, as the chief exporter and the third greatest producer of wheat, but also to the other wheat exporting countries, to give such help and assistance as we were able, to prevent wheat from being sold at prices ruinous to the producers. Generally speaking, these were the principles upon which that legislation was based. .

The advent of another great world war has accentuated the position. It has not changed, except in degree, the underlying position.

May I pause here now to examine the position of hon. gentlemen opposite, who were then sitting on this side. I well remember it. They were hostile to the principle. Who was their spokesman? He was the same gentleman who is now Minister of National Defence (Mr. Ralston). At page 3581 of Hansard of 1935 he made this statement:

I do not believe that the people of the Dominion of Canada are favourable to a compulsory wheat board-

Well, we have it; we have it to-day.

-to a board the constitution of which will mean that every wheat grower, every elevator man and everybody engaged in the business must deal with the government agency and no one else.

That was the attitude of my hon. friend in 1935. But while he gave expression to that view, he did not venture to challenge the measure. He was afraid to strike. Discretion was the better part of valour with him and his colleagues. He left us with the impression that while he would like to kill the bill he dared not do so. No wonder that at the conclusion of his speech one hon. gentleman asked him if he was for or against the bill. No one knew.

The board was set up in 1935. The election came. The Bennett government was defeated. The members of the board were dismissed and new men were appointed in their place. Was the personnel improved? That is a question which I leave to the people of Canada to answer. The essential point is that the principle of government control of the wheat business was maintained, and for definite and good reasons.

1956 COMMONS

Supply-Agriculture

Wheat Acreages

I shall not follow the operations of the board from 1935 down to 1938, but I do assert that the marketing of the 1938 crop gave the Canadian Wheat Board Act its first real chance to function. Canada faced the crop year 1938-39 with empty granaries. The world carryover was 40 per cent below the previous five-year average. Early in that crop year, in August, 1938, cash wheat was around 85 cents at Winnipeg and October futures, 75 cents. That year the world acreage sown to wheat was exceptionally large and a heavy crop resulted.

The exporting countries had available for export around 1,200,000,000 bushels, including the small carryover, and we in Canada had available for export approximately 50 per cent of the needs of the importing countries, including Britain. This was not an inviting marketing condition; on the contrary, it was a most uninviting condition.

The initial price of No. 1 northern was fixed at 80 cents by the federal cabinet under the authority of the Canadian Wheat Board Act, and this formed the basis for fixed prices for other grades of wheat. This minimum price was accepted by the cabinet upon the recommendation of the wheat board. The price was announced by the Prime Minister on the evening of August 4, 1938, and on that occasion he made the following general statement:

The policy of the Canadian wheat board will not be to hoard wheat, nor to speculate upon it, nor to seek to establish a monopoly. Canadian wheat will be moved promptly to market.

The announcement went on to state that the minimum price had been accepted by the cabinet upon the recommendation of the Canadian wheat board, and therefore both the cabinet and the wheat board were responsible for the position.

It was evident from the Prime Minister's remarks that the fixing of the 80-cent price was a form of compensating adjustment for the western farmer, who had suffered greatly in recent years because of drought and crop failures. At the same time, the Prime Minister released an announcement from the Hon. W. D. Euler, then Minister of Trade and Commerce, to the effect that Canadian wheat would be competing in world markets; and the milling and grain trades of the world were advised that, notwithstanding the internal initial price of 80 cents a bushel, the Canadian wheat board would continue its work of encouraging the use of Canadian wheat-and now, Mr. Chairman, mark these words-"which will at all times be competitive on the world's markets."

Then things began to happen. There were immediate reactions to the statement of the Prime Minister and the announcement of the Minister of Trade and Commerce. In the United States it was announced that 100 million bushels would be dumped on the world's markets. The Argentine gave its president discretionary powers to fix a margin between domestic and export prices. Australia and other exporting countries acted in response; and all the importing countries except Britain tightened up restrictions, some to the point of exclusion.

Now mark this! In less than one month after Canada's official announcement of the price was made and after the announcement attributed to the Minister of Trade and Commerce that, notwithstanding the initial price of 80 cents a bushel, Canadian wheat would be competing in world markets and that the wheat board would continue its work of encouraging the use of Canadian wheat, which would at all times be competitive on the world markets, the cash prices and price of futures at Winnipeg went down to below 60 cents a bushel.

The government's announcement resulted in sev ere damage to Canadian wheat prices. There was an immediate cash loss of $52,000,000 to the treasury. That $52,000,000 was a contribution which had been advanced by the treasury to the wheat board. An ultimate total deficit of $61,282,329.55 on the wheat crop of 1938-39 resulted. There is no question about this ultimate loss. It is admitted in exhibit B attached to the Canadian wheat board report of the crop year 1939-40, dated January 11, 1941, which recently came into our hands.

These are the facts. These results are not to be dismissed as a mere error of judgment. They are the natural result flowing from the policy announced by the government that Canadian wheat would at all times be competitive on the world markets. The fixing of the minimum price at SO cents was government policy', not a mere leap in the dark; the fall in price in the world markets was a direct result of the announcement of the then Minister of Trade and Commerce. It meant that, while the price had been fixed at 80 cents, yet the wheat would be sold at world prices, to whatever level they' might fall. What a situation in a buyers' market!

This considered policy of the government is not to be regarded as a mere error of judgment, or ineptitude in the transaction of public business. The invitation was made to world buyers not to take the 80-cent price as a minimum; it was an invitation to world buyers, in a buyers' market, to hammer the

Supply-Agriculture[DOT]-Wheat Acreages

price downward, and this invitation was accepted with alacrity and with the results already noted.

As a result of the fall in prices invited by this government, the wheat board failed to sell the 1938-39 crop, and the failure to sell that crop was the primary cause of the debacle in the wheat situation in Canada-not the declaration of war in September, 1939.

It has been said by a cynic that, "as wheat marketers, governments and parliaments have more money than brains, and they are poor substitutes for private trading." Be that as it may, the government and the wheat board proceeded on the theory of a double market, that is to say, government regimentation on the one hand and competitive marketing on the other, at a time when the world wheat market was a buyers' market. That theory was a defiance of the law of supply and demand and of the principles of mathematics.

Notwithstanding the tremendous loss to the treasury of Canada which ensued from this policy, one lesson ought to have emerged, and that is-and I state this very plainly and succinctly-that the treasury of Canada cannot be placed behind unlimited production of wheat. To do so is to invite disaster for all concerned.

After this debacle of 1938-39 came the war. It served to intensify the problem.

Last year, 1940, we had not a policy but an improvisation-the quota system of deliveries -and the levy of the processing tax on domestic consumption. The quota system has probably worked out better than was anticipated, because the quota was enlarged. One thing, however, has emerged. It has transferred to the Canadian people the ownership of the greatest volume of wheat in the history of the country, involving an investment in unsaleable wheat of between $400 and S500 millions, at a time when the Canadian people are being asked to raise, by way of taxation and loan, a sum which will fall not far short of $3,000 million. What a staggering load for twelve million people!

Early in the present session of parliament, on November 14 last, to be exact, the Minister of Agriculture, following his return from Britain, made a speech in this house by way of a report on his visit, in which speech he dealt with wheat and during the course of which he did some prophesying-a very dangerous procedure. If his prophecy was correct, then there is no cause for agony or alarm on the part of either the producers or the taxpayers. If he was right, there is nothing to worry about.

Mr. GARDINER:

Five years is a long time.

Mr. HANSON (York-Sunbury):

I know it is, but to prophesy is dangerous, especially with a world war on. The minister will pardon me and many others in this country, including many who know much more about the wheat business than I do, if we take his forecast with a large measure of reserve.

The minister in his statement, as reported at page 101 of Hansard, said, as to the demand side, based on a two-year blockade, that Canada expected to dispose of 160 million bushels annually to Britain and to raise consumption in Canada from 130 to 160 million bushels. So in two years we should dispose of 640 million bushels at home and to the United Kingdom.

Still on the demand side he prophesied that in addition, after the suggested two-year blockade, it would be possible to dispose of 160 million bushels to countries now blockaded, or 480 million bushels in three years to those countries.

Over the five-year period he predicted that we should dispose of the following amounts:

Million

bushels

1. To the United Kingdom, 5 years

at 160 million 800

2. By internal consumption, 5 years

at 160 million 800

3. To countries now under blockade,

3 years at 160 million 480

2,080

On the supply side, we in Canada will produce, he said or prophesied, an average of 380 million bushels, or a total, for the five years, of 1,900 million bushels. To this he added the carryover from 1940-41 and previous years of 280 million bushels, making a total of 2,180 million bushels to be disposed of in the five-year period, which would leave a carryover of only 100 million bushels.

Mr. SLAGHT:

Does the hon. gentleman say it cannot be done?