Mr. SLAGHT:

The hon. member suggested that he was construing what I was thinking, but let me assure him that I had no thought that any suggestion of his was intended in any way to indicate that there would be the slightest endeavour to have British industry harmed at all. I assumed his intense loyalty and desire to help, and only that. It occurs to me that when hon. gentlemen opposite, and perhaps some of us on this side, attempt to evoke from the ministry assurances that bill after bill, measure after measure brought down during this emergency shall operate only during the war and not thereafter, we are indicating a sensitiveness in that regard which is not being shown even by the people throughout the country. Surely by this time all hon. members have realized that most of the measures with which we have occupied ourselves this session are strictly war measures, and that no administration should be asked to say that they will become inoperative on the termination of the war. Surely we should not be so supersensitive as to require a declaration of the kind. Sufficient unto the day is the legislation thereof, when we are in a dilemma of this kind. I am sure the

hon. member who spoke a moment ago, with his studious mind, will at once recognize the analogy. I do not think we can assume that from now on most of the legislation brought down will be the result of present conditions; and leave it to the future, be it distant or near-we all hope it will be near-when all these measures may be reviewed by the parliament then entrusted with that task.

Mr. LEADER:

I am prompted by the remarks of the hon. member for Vancouver East (Mr. Maclnnis) to offer a word at this juncture. I hesitate to venture upon a discussion of anything so complex as fiscal matters. As a rule such things are difficult for farmers to understand, and even when they do understand them they find difficulty in discussing them as experts would. But speaking as a Liberal I want to say that I believe the vast majority of Liberals in this country will agree with members of the Cooperative Commonwealth Federation party that this is a step in the right direction. I believe in Liberal policies and Liberal traditions, and I believe the statement I have just made will meet with the approval of most Liberals in this house. Certainly it is the opinion of those whom I represent that these policies not only should be adopted for the period of the war, but should be continued after the war as well. Two or three weeks ago I had occasion to chide some of my Conservative friends who had said that some restriction ought to be placed on United States goods entering this country. At that time I said statesmen were not talking that way now.

Mr. HANSON (York-Sunbury):

Well, the government is acting that way.

Mr. LEADER:

The tendency is entirely in the other direction.

Mr. HANSON (York-Sunbury):

Not according to the legislation.

Mr. LEADER:

I heard over the radio the speech delivered by Mr. Anthony Eden yesterday afternoon, and if the leader of the opposition did not hear it I suggest that he read it. Mr. Eden agreed with the view that has been expressed by Mr. Bevin, Mr. Churchill, Mr. Hull and Mr. Roosevelt, that the time has arrived when we must remove the restrictions on foreign trade. I can always understand the viewpoint of the Conservative party. I remember that in this house, in 1924, I said we could easily appreciate the Conservative policy because in season and out of season, in office and out of office, they have advocated high protection. At that time I went on to chide the Liberals because when they were out of office they talked of lower customs duties, but invariably when they

War Exchange Conservation Act

assumed office they ke-pt the tariff at about the same level as the Conservatives had it when they were in power. Now that the party with whidh I am affiliated is willing to step out and reduce these duties, I want to encourage it in its action, and I think that should be done by every Liberal member of this bouse. Back up this administration. We want the trade barriers removed; we want justice in this country. This very war we are fighting to-day was caused by restrictions on international trade. Perhaps now we are learning what we should have learned twenty years ago, that these trade restrictions have caused unrest, distrust and misery among the people of the world. I have heard it stated that this war was caused by the interests of capital and the interests of the people coming into conflict. We must remove the causes of war, and one of the very best things we can do is to accept the advice of the great statesmen of England and the United States; and I believe we have some in Canada as well.

Now, Mr. Chairman, if you will not call me to order I should like to say something that I may not have an opportunity to say again, and it will not take me more than two minutes. I want to compare the Canadian manufacturer with the British manufacturer. Why can the Canadian manufacturer not compete with the British manufacturer, even without a customs duty?

Mr. MacNICOL:

Because he pays the men in his factory 50 per cent more than the British manufacturer pays.

Mr. LEADER:

If they cannot compete

they should go out of business.

Mr. MacNICOL:

May I ask the hon. member a question?

Mr. LEADER:

I do not speak in the house very' often, and I am sure hon. members do not begrudge me these few minutes. Perhaps I am out of order in these remarks, but as a farmer and live stock producer I think at this time the government should undertake to bring out from Great Britain as much as possible of the thoroughbred live stock at present in that country. Britain is the nursery for many of our best breeds of live stock, and the government should give consideration to this suggestion if they have not done so already, because it may be that millions of those grand animals will be slaughtered. We have plenty of room for them here in Canada; and as a live stock producer and breeder I am not afraid of competition from the old country.

Mr. JACKMAN:

Can the Minister of Finance or the Minister of Trade and Commerce say whether or not any disposition or desire

has been shown by the British manufacturers to establish branch plants in. Canada? Has there been any evidence of that?

Mr. MacKINNON (Edmonton West):

Undoubtedly a great deal of thought has been given in the old country to the establishment of branch plants in Canada, though war conditions and difficulties in connection with foreign exchange have practically put a stop to anything of the sort for the time being.

Mr. ILSLEY:

Perhaps this is the stage

at which I should move an amendment I wish to propose, as follows:

1. That the said bill be amended by inserting the following as clause 2 and by renumbering the present clauses 2 to 6 inclusive, 3 to 7 inclusive:

2. Subsection one of section eight of the said act is repealed and the following substituted therefor:

8. (1) The governor in council in order to increase or conserve Canada's supply of foreign exchange may, on the recommendation of the Minister of Finance, enter into agreements with individuals, partnerships or corporations to grant assistance by way of special tax credits and/or special allowances for depreciation or depletion under the Income War Tax Act and/or the Excess Profits Tax Act, if, in the opinion of the governor in council, such assistance is necessary in order that an expansion of the exports of any individual, partnership or corporation receiving such assistance may take place or that the exports of any such individual, partnership or corporation may be maintained at levels .higher than would otherwise obtain, or, in the case of any individual, partnership or corporation operating an oil well or oil wells, if, in the opinion of the governor in council such assistance is necessary in order that sufficient drilling of new wells may take place to maintain or extend the production of oil in Canada and if the Minister of Mines and Resources certifies that such drilling is in oil-bearing areas which give reasonable prospect of yielding producing wells. The provisions of any such agreements granting special tax credits and/or special allowances for depreciation or depletion shall be effective notwithstanding anything contained in the Income War Tax Act or the Excess Profits Tax Act.

2. That clause 7 of the said bill be amended by substituting the word "four" for the word "three" in the third line thereof, and substituting the word "five" for the word "four" in the fourth line thereof.

Mr. HANSON (York-Sunbury):

What is

the effect of that last paragraph?

Mr. ILSLEY:

It has to do with the renumbering of the other sections.

I will explain this amendment to the committee. Under section 8 of the War Exchange Conservation Act, 1940, the governor in council may enter into agreements for increasing Canada's supply of foreign exchange by expanding exports. That does not permit agree-

War Exchange Conservation Act

ments for the conservation of foreign exchange by developing production here which would take the place of imports. It is not desired to take that power in a broad way, because it is a dangerous power and on the whole, I think, undesirable. I would not want to take it for the whole field, because probably it would be expected that the government would be entering into agreements with manufacturing industries and others to give them tax advantages in order to eliminate the competition of foreign imports, which would be protective legislation of a very extreme character.

Mr. HANSON (York-Sunbury):

In a word, it would be the bonus system.

Mr. ILSLEY:

Yes. It is not desired to do that. But there is an acute situation in regard to oil, and we have adopted the principle of treating gold and oil on a separate basis under the Excess Profits Tax Act. After much consideration I decided to suggest that we ask parliament for power to make agreements with those who may be drilling for oil, which would enable us to make the same sort of concessions that we can make under the act as it is at present, with a view to getting a greater production of oil in Canada. Gold, of course, is subject to this act now, because gold is an export commodity.

Mr. HANSON (York-Sunbury):

The minister was good enough to hand me a copy of this proposed amendment some days ago, and I have endeavoured to give it some study. The difference between the present section and the new section, as the minister has stated very succinctly, is that the present section gives the governor in council authority to enter into agreements for the purpose of increasing our supplies of foreign exchange. The additional power contained in the amendment is sought for the purpose of conserving our foreign exchange by an attempt to stimulate the production of a certain commodity, namely oil, to take the place of oil which otherwise would have to be imported. Of course I understand that the oil situation is acute at the moment, not because an ample quantity of crude oil is not available, but simply because transportation facilities are becoming increasingly difficult to secure. It may be said that this is entirely in the experimental stage; but can the minister tell us whether oil prospectors or producers have asked for it, or whether the suggestion emanated from the oil controller or from the governor in council. What was the genesis of the idea, and just what does the minister expect will result from it?

Mr. ILSLEY:

It came to me from the oil controller, through the Minister of Munitions

and Supply. I understand also that one or more of the companies made representations to the. same effect. I do not know; I did not see anyone acting on behalf of those companies, but the representations were to the effect that under the present taxation laws, with wildcatting for oil so uncertain in its character, it was practically impossible for the companies to undertake it, but that much more of this drilling would be undertaken if some power was given to make concessions.