June 4, 1942

CCF

Angus MacInnis

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

Mr. MacINNIS:

If that is the only one, certainly I could not take any other, could I?

Topic:   FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No; I do not blame the hon. gentleman; but I want to make that clear,

otherwise the committee might think that was just representative of many relaxations, especially as my hon. friend in the latter part of his speech seemed to be building up a serious superstructure on that foundation that the war was already lost, or something of that kind.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

I do not think the minister has any reason to say that.

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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

That escalator would be installed for the saving of fuel in any event and would be a proper investment for that purpose.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

We should not be thinking of profitable investments at this time.

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NAT
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not think we should be going on that basis at this time.

With regard to what the hon. member for Vancouver East said about furniture, as I say he has taken the one instance in the whole range of commodities where the requirement of a down payment of one-third was relaxed. The reason for that-it may have been a mistake-was that the board was most anxious to see that the price of furniture was held .at the level at which it was during the base period, and also to avoid paying subsidies. Costs had increased approximately 12 per cent. The board asked the retail trade to assume 6 per cent of that and the manufacturers to assume 6 per cent. The answer of one or both was that under normal conditions and volume they would be able to take the squeeze, but a reduction in the volume would increase their overhead and increase rather than decrease the necessity for margins. Whether rightly or wrongly, the board then said to them that for a temporary period the requirement would be reduced to 10 per cent and they take the squeeze of 12 per cent and divide it. I do not think there was anything sinister about that; I know there was not. It was not done in regard to any other commodity. There may be arguments against doing it, but that is the reason why it was done in that instance.

With regard to the other point, what the hon. gentleman referred to as the raising of the interest rate from one-half to three-quarters of one per cent a month, there was no such raise. The original order provided that the cash price should be lower than the time price by a reasonable amount. I am informed that the usual amount for carrying charges and interest on these instalment purchases is about one per cent a month. In this case the board fixed three-quarters of one per cent a

War Appropriation-Finance

month as a reasonable amount to cover carrying charges and interest. What there is wrong with that I do not yet know.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

If the minister will allow me, the answer is that the rate in the first place was set at 6 per cent a year. When the down payment was reduced from one-third to 10 per cent the interest rate was raised. There is no doubt about that; it is in the answer to the question that I received. I imagine that answer was formulated by the wartime prices and trade board.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Would the hon. gentleman read it again? I must say I understood it as he says it, but I am told that is not what it says, nor is that what happened.

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CCF
LIB
LIB

Thomas Bruce McNevin

Liberal

Mr. McNEVIN:

I rise to supplement my remarks of yesterday in connection with an item in that portion of the war appropriation bill relating to the Minister of Agriculture under the heading of the dairy boards when I raised the question of the necessity of providing for some increase in the price of butter. I gave two reasons: first, to bring the butter producer to a more equitable position in relation to the other three branches of the dairy industry, namely, fluid milk, cheese, and milk for manufacturing purposes; second, to avert an extreme shortage of butter next winter.

To-night I want to preface my remarks by stating that I believe the general price level of agricultural products is on a satisfactory basis. I do not think much complaint could be offered with respect to the present set-up for beef, cheese, fluid milk, manufactured milk, bacon and so forth. Butter is an exception. I want to commend the wartime prices and trade board for the recent regulations, which were designed to correct a difficult situation as regards beef. I raise this question in order that provision may be made before the butter situation becomes difficult. The arrangement with regard to beef has revealed the flexibility in the set-up as far as the price ceiling is concerned. It has been suggested in some quarters that there is a possibility of the cheese quota being filled late this summer and that, therefore, large quantities of milk could be released for butter production. I cannot visualize that situation becoming a reality.

In the first five months of this year we produced about 26,000,000 pounds of cheese, and I would estimate that in December we produced about 10,000,000 pounds, so that

thus far we have about 36,000,000 pounds toward a quota of 125,000,000 pounds for overseas and perhaps forty or fifty million pounds for Canadian consumption. It would appear to me that it will take the rest of the season to fill that cheese quota, and I think I am correct in stating that the British food import board have agreed to take even more than the 125,000,000 pounds contracted for.

The next three months are those in which large quantities of butter go into storage. The figures for last year show that in May 9,000,000 pounds were in storage; in June, which is the heaviest month of production, that figure rose to 17,000,000 pounds. In July it almost held its own, at 15,000,000 pounds, but in August it dropped to 11,000,000 pounds and in September to 6,000,000 pounds, after which it became necessary to run on' an even keel before beginning to use up the butter held in storage to supply the need during the short season. Recently, as was pointed out yesterday by the Minister of Agriculture, there has been a slight decrease in the price of butter. That is to be expected; it is a seasonal decline almost impossible to avoid during June, when production is at the very highest point of the year. But I would point out that had it not been for the price ceiling, butter would have gone substantially above the thirty-five cent limit. Therefore a seasonal decline would not have brought it down to the present level. The government is giving substantial aid to the cheese industry. I am not saying that is wrong; I think it is necessary to encourage the cheese industry in order that we may obtain the very large quantity of cheese required. But I maintain that there is discrimination as far as the butter producer is concerned; and if we are to avoid an extreme shortage next winter, I think action should be taken now to encourage the butter producer to increase his output.

I do not want to labour this point at any great length. I want to renew my request that provision be made to increase the price of butter by about five cents a pound, in order to put the butter producer on a more equitable basis in comparison with other branches of the dairy industry, as I said yesterday. The producers of butter represent about half of the dairy farmers in Canada, and I think that is .too large a section of the agricultural industry to leave in a position where they are not receiving returns on a comparable basis with the other branches of that industry. All I ask is equality of treatment and a fair deal for the butter producers of Canada, and I believe the circumstances warrant most serious consideration of this very important matter by the wartime prices and trade board.

War Appropriation-Finance

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

I am sorry I was unable to get the floor immediately after the leader of the opposition and the Minister of Finance had made some remarks with regard *to what I had advocated. I will grant that a new system may be difficult for orthodox minds to comprehend, but that is no evidence, by any means, that the new system is wrong. It was very difficult for men to understand the radio, but the radio was right. It was next to impossible for Edison to understand alternating current, but alternating current was right. This new system is right, too; there is no doubt about that.

I am sorry the leader of the opposition has left the chamber. I suppose he is weary, but I should have liked to ask him whether or not during the last war $26,000,000 of money was printed by the dominion treasury and used as part of the revenues of Canada. He would have to acknowledge that this was done. He sneered about fiat money. That was fiat money, but that money could have been used to give a fair price for wheat; that money could have been used for any kind of war work that was necessary in Canada during the first world war. The leader of the opposition, and the minister as well, would do well to look at the report of the royal commission on banking and currency in Canada, published in 1933. Let them turn to page 22 and read paragraph 47, and then stop making fun of the people who know this thing can be done.

The minister said he favoured taxation and borrowing. I should like to tell the minister that I never, under any circumstances, said that taxation and borrowing were not sound. I do not oppose taxation and borrowing, as the minister will find if he turns up my speech and every other speech I have made. I have never suggested we should not follow those methods, in moderation. The minister said he needed a third measure in addition to borrowing and taxation. When the war started he thought he could run the war successfully with just taxation and borrowing. He discovered he was wrong, that he had to have a third measure, namely price control, and in addition to price control he has used price subsidies. That is completely sound. Now I want to tell the minister and the members of this committee that as sure as he is in this house, he will have to adopt a fourth measure, if he is to succeed; and that fourth measure is going to be the power of the state to create money based on the real credit of the country. There is a great deal of nonsensical talk about state money, even though the most enlightened men are advocating it. When a person advocates this

creation of money, one would think he was advocating nonsense. I know the minister is a busy man, but I would mention a book that he really should get and read; it would do him good. The book is "Economic Tribulation"-

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LIB
SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

-by Vincent C.

Vickers. I am going to read three or four short quotations from this book, and I am going to ask the friends of the leader of the opposition to tell him to read the book and then "laugh that off". First I turn to page 74, and read No. 1:

1. State control and state issue of currency and credit through a central organization managed and controlled by the state.

The minister may say he has that now in the Bank of Canada. If-he has, let him use it. I shall have something more to say about that later on, but I doubt very much that in the Bank of Canada he has such an instrument as is envisaged by Vincent Vickers in this statement. Now I come to No. 2, and this is the point to which I was referring:

2. Stabilization of the wholesale price level of commodities. That is to say, a fixed and constant internal purchasing power of money; so that a pound will buy to-morrow what it bought yesterday; an honest pound, not a fluctuating pound.

Note these words:

And this can be done by so issuing and regulating the volume of available credit and currency that it shall at all times be adequate to permit of the purchasing power of the consumer being equated with the volume of production; not by limiting the purchasing power-

That is what taxation does, or borrowing.

-but by firstly increasing purchasing power more in proportion to the productive capacity of industry.

I do not hope that the leader of the opposition will understand that. Bless his heart; he has become too old to learn new tricks. Now may I read No. 4:

4. Any additional supply of money should be issued as a clear asset to the state; so that the money will be spent into existence, and not lent into existence.

And now, No. 7:

The abolition of the debt system, where all credit is created by the banks and hired cut at interest to the country.

Those four points alone line this man up, with all his experience, prestige and reputation, right along with the Social Crediters.

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?

An hon. MEMBER:

Who is he?

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

Mr. Vincent Cartwright Vickers, of Vickers-Armstrong, the great

War Appropriation-Finance

munitions manufacturers, and director for years of the Bank of England. He is one of the best authorities in the world.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

Because he was a director of the Bank of England?

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

I am not saying the fact that he w'as a director of the Bank of England makes him an authority, but a man who is a director of the Bank of England is likely to know as much as you do, and just about as much as the minister does, or the leader of the opposition.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

Evidently he did not know it; otherwise he would not be a director of the Bank of England-because that was not the policy of the Bank of England.

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June 4, 1942