June 4, 1942

NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

No; it is not. When the hon. member for Brantford City made his speech in seconding the address in reply, I commended the manner of the speech, though not all the matter. I suggested to the Prime Minister that the speech was at least worthy of consideration for a seat in the cabinet or, if that was too high a reward for the hon. member for Brantford City, then at least-

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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

Order. I do not think the hon. member should refer to a debate which took place this session.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I am not quoting from the debate. I suggested that if that was too high a reward for him, then certainly he was entitled to consideration for a judgeship, or, at the very least, a senatorship.

Now let us be serious. I should like the minister to justify this vote of $50,000,000. Are we to pay any more subsidies on grapefruit juice brought in from the United States? We have provided that as a part of the diet of our armed forces, while the humble tomato, which contains many more vitamins than grapefruit juice, is not even prescribed for our men.

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?

An hon. MEMBER:

Potatoes.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Well,

potatoes are a great food, a great energy food, beyond any question. I will tell the hon. member for Brantford City that I would recommend a potato diet for him. If he were on a potato diet, he would not be so slim; he would have a little more fat on his frame, because it is a starchy food. Perhaps I am a good example of it myself. Potatoes are an energy producing food, and so is Manitoba hard wheat.

I think we should have some justification for this expenditure of $50,000,000. We must have that justification. I tell the committee that this is just another corollary of this whole question of a price ceiling. It may go even to $100,000,000 in another year, before we know where we are going. I have spoken much longer than I had intended. I thank the committee for a courteous hearing, and I hope I have made some contribution to the debate.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I am afraid that I cannot answer the leader of the opposition in the vein in which he has addressed the committee to-night. Members of the wartime prices and trade board and their organization are working day and night to prevent what they think would be a terrible evil, that is, inflation; and in that belief I think they have the concurrence of the people of this country and the members of this house. To-night I was most interested in the attitude of the leader of the opposition. He placed himself, if not his party, unequivocally against the price-ceiling policy of the Dominion of Canada.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

The

methods adopted; I was careful to distinguish between objectives and methods. You cannot put words in my mouth.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Let us get this straight. The hon. member said to-night that he was against inflation. He was in favour of the objective of preventing inflation. Then he took up the method of preventing inflation which the government had adopted as its policy, a universal or general price-ceiling policy, and said that he was against that method. Am I wrong about that? I think that is correct.

I would not like any better issue, if we were talking about an issue at the present time, than that issue. I would like the people of the Dominion of Canada to know that the Conservative opposition is opposed to this policy of the federal government to prevent inflation. I would be prepared to go before the people of this country or of any other country-the people of any country with intelligent citizens, and defend what we have done.

Just consider the position-and if members of this committee do not remember anything else I say, I want them to remember these simple figures. During the first twenty-six months of the last war, known as world war No. 1, the cost of living rose 15 per cent. During the first twenty-six months of this war, world war No. 2, the cost of living

War Appropriation-Finance

in the Dominion of Canada rose by 15 per cent. During the next seven months of the first war the cost of living rose by 13 per cent.

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LIB
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Thirteen points over and above the first fifteen points, making a 28 per cent increase in the total period of twenty-six plus seven months. But during the next seven months of this war the price level has risen less than one per cent. I want to say that in the last war-

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NAT
NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

The

expense of the producer, of course.

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?

An hon. MEMBER:

The farmer.

Mr. ILSiLEY: Oh, on every side we hear that. We knew that when we brought it in anybody who was hurt or who could get a better price than the price he would getunder the control would complain. Weknew that. We expected that, and wedoubted whether a policy such as this, a thorough-going policy such as this, was within the capacity of democracy. But nevertheless we put it in, tried it, and we have been amazed at the response of the Canadian people. We have been amazed at their willingness to assume sacrifices for a common end. Of course it would be easy for members of this house-any member of the house-to listen to a constituent who would say, "If it were not for this vicious, unjust, bureaucratic board I would be getting a little more for my goods." Oh, you will hear that on every side. But you cannot control prices without keeping prices below what they would otherwise be, and you cannot fight a painless or costless war, and win it.

The leader of the opposition has no policy. He has no alternative policy to offer. I have said in this house that in a time like this it is not good enough to do what would have been all right a few years ago, or probably before the war. It is not good enough merely to indulge in destructive criticism. It is not enough to say that the government has no policy, or that its policy is defective in this respect, or that it is defective in that respect. It is not enough to say, "If you ask me what my policy is, I say it is not my responsibility to say anything about it."

That is old-fashioned politics. That is not the kind of cooperation an opposition should give the government in a time of war, and the hon. gentleman knows that. I think we are entitled to something better than that. Criticism-yes; but not this negative, destructive criticism of the type we have heard to-night.

The leader of the opposition said something about a speech I made in 1940, and he made a very good argument, on the face of it, for the proposition that I have changed my mind. Well, if I have changed my mind, that is not a very great crime. No; it is not a very great crime.

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UNITY
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

But I do want to point out exactly what I was arguing on that occasion. The hon. member for Lethbridge, as the leader of the Social Credit party, had introduced an amendment to the address in reply to the speech from the throne. His amendment was in these words:

And this house further regrets the failure of the government to adopt a monetary policy that would permit a maximum war effort without either increasing debt or reducing the standards of living below that necessary for maintaining maximum efficiency;

Furthermore this house is of the opinion that a continuation of the present financial policy will further destroy the precious liberties so essential to, and recognized as being inherent in a true democracy.

And in part of his speech, he said:

Social Credit proposes to use the national credit to provide money without additional debt, without additional taxation.

I interpreted that to mean-and I think it could mean only this-that be would have financed our war expenditures, which that year were estimated to be one billion dollars- this year they will be three billion dollars or more, but that year they were only one billion dollars-not by borrowing, not by taxation, but by the creation of new money. I interpreted his speech in that way. That is how I interpreted it, and that is what he said. I argued that if we' were to issue a billion dollars of new money or credit with the Bank of Canada, or to issue Bank of Canada notes, that we would have wild inflation. I said that nothing in the world could stop inflation under those circumstances. In considering the remedies which the hon. member himself had proposed, I pointed out that one of the remedies was price fixing-universal price fixing. It was in that connection, in connection with price fixing under those circumstances, and not under present circumstances at all, when we are taxing and when we are borrowing to a terrific level, that I said that you could not have these conditions. If the hon. member will read my speech particularly in that situation, and in the light of those facts, he will find that an entirely different complexion will be put upon it.

I say that if we were now to try to finance this war, not by borrowing $150,000,000 a month, as we shall probably have to do, not

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by taxing to the extent of seventeen or eighteen hundred million a year, as we shall probably have to do, but by placing three billions of money to our credit in the Bank of Canada, or by the issue of that much money in notes, so that everybody in the country would have a great big bank account, or their pockets full of money, and if then we were to try to enforce a price ceiling to keep prices down-I say we would not do it without a spy in every groceiy store, a spy on every corner. It would be impossible to do it, because of the pressure of purchasing power, and prices would be terrific.

It is for this reason that we have taken, not one method to prevent inflation, but two methods to prevent inflation. During the first year or two of the war we resorted to both remedies. We tried to relieve the pressure on prices by taxation and borrowing. In the summer of 1941 the price level was jumping from one to two points a month. It was going up so much that every month I was almost afraid to look at the cost of living index. It was terrifying to see how that cost of living index was jumping. That showed that our fiscal remedies were not sufficient. The only kind of fiscal remedy which would be sufficient would be the kind they resorted to in the middle ages, when they went into people's houses and searched their mattresses and their cellars and took nearly all the money they had. You cannot do that in a democracy. You cannot impose taxes so heavy that a great many people will not accumulate money. You cannot pile them on sufficiently so that people will not still have left a lot of purchasing power, and so you have to supplement your financial remedies with direct control. Therefore we instituted the price-fixing system.

What I was arguing against in that speech was against price fixing alone. But with the two lines of approach, marching against inflation on two fronts, we can beat inflation- if we do not tear the effort to pieces, if we do not bring up small individual cases, if we do not have to listen sympathetically to every person who says, "I could make more money if it were not for this price-fixing policy." If you are going to sympathize with everybody who has a complaint and at the same time attack the policy of the government, never advancing any alternative policy, you are not helping much. Bear in mind that our policy has worked and has been copied by the' greatest democracy in the world. We are taking a course which we believe will prevent inflation. Eon. gentlemen may say: 44561-195J

"Give them enough rope and they will hang themselves," so that my hon. friends will, then be in a position later on to say: "I told you so."

I said that the law of supply and demand could not be defeated, that it was all a matter of scarcity. My hon. friend may think that is going to happen. It may happen. But I have been amazed at the success of this policy so far. It has succeeded so far. Compare conditions to-day with conditions in the last war, when we were spending on the war only 10 per cent of our national income as compared with 40 per cent to-day and when there was, therefore, far less severe pressure on prices than there is to-day. When one compares the two periods and what took place in the last war, I am confident that this is immeasurably the better policy.

The leader of the opposition said something about subsidies and that I would have to justify the payment of this $50,000,000. About a week ago I made a speech forty or fifty or sixty minutes long on subsidies, a most carefully prepared speech, in which I argued the whole matter out. I said that the total might not be limited to $50,000,000 but might be much higher, and I gave facts and figures which I think are sufficient to show that the expenditure of that money is a good investment. The hon. member for Rosetown-Biggar (Mr. Coldwell) interjected at the time, "an insurance premium," and I said, "exactly," -an insurance premium against evils which otherwise would overtake us. I am not going to say anything more to-night. I am going to listen to others if they have anything to say. I do not think the burden is on me to justify this policy any further.

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CCF

Angus MacInnis

Co-operative Commonwealth Federation (C.C.F.)

Mr. MacINNIS:

I am not going to take up the time of the committee in going over the past policy of the Minister of Finance and his party. I believe that every hon. member of this house is agreed that the Minister of Finance is doing a very good job in a very difficult time, and there is no reason why any hon. member, no matter which side of the house he is on, should not make that statement. It is a plain statement of fact, but again that is no reason why we should not criticize the minister on points where we feel there is room for criticism. After all, criticism must of necessity be a matter of difference of opinion.

It is a rather strange trick of fate that the advocates of laissez-faire should have been put into the position where they have been compelled to use controls to meet a crisis. We were in a crisis in this country from 1930

War Appropriation-Finance

to 1939, a crisis in which hundreds of thousands, almost millions, of the people of Canada were starving.

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LIB
LIB
CCF

Angus MacInnis

Co-operative Commonwealth Federation (C.C.F.)

Mr. MacINNIS:

It is true, and if my hon. friend does not know it he ought to know it, because in 1936, 1937 and 1938 he was in control of the slave camps in British Columbia where the unemployed were congregated. There were at one time in that period 1,500,000 people on relief in Canada. Will anyone tell me that people on relief are not starving? They are not starving outright so that they drop on their feet, but over a period of time they die of malnutrition. Everyone knows that.

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LIB

Humphrey Mitchell (Minister of Labour)

Liberal

Mr. MITCHELL:

That is not fair. Point to one case where a person died of malnutrition during the depression.

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June 4, 1942