Mr. HACKETT:

Yes.

Mr. ILSLEY:

Yes.

Mr. HACKETT:

We never would have got started if it had not been for external sources of money at that time.

Mr. ILSLEY:

Undoubtedly that is true of the past, whatever may be th.e situation in the future. I wish to deal briefly with two points while I have the floor. The origin of our mutual aid policy is not as stated by the hon. member for Temiscouata. It did not have its origin in any conversations between Colonel Ralston and Mr. Purvis. It was a policy worked out by the government of Canada for which I was primarily responsible and in which responsibility my colleagues shared. The other point made by my hon. friend was that my statement regarding the United Kingdom being our best customer is incorrect. It is borne out by the figures of normal years. My hon. friend took war years, which reflect an abnormal situation. But if one goes back to the years before the war one will find that the exports to the United Kingdom nearly every year were higher than

Loan to United Kingdom

the exports to the United States. For instance in 1939 the figures were slightly in favour of the United States, $336 millions as against $331 millions to the United Kingdom. In 1938 the exports to the United Kingdom were higher, $334 millions as against $261 millions to the United States. In 1937 they were $384 millions to the United Kingdom as against 83S1 millions to the United States. In 1936 they were $356 millions to the United Kingdom as against $348 millions to the United States. In 1933-I am not skipping anything here; these are the only ones given-they were $211 millions to the United Kingdom as against $168 millions to the United States.

There are years when our exports to the United States are greater than our exports to the United Kingdom; but there are many more years when our exports to the United ' Kingdom are greater than to the United States. Our exports of agricultural surpluses and other surpluses of natural products are greater to the United Kingdom by a very large margin than are our exports to the United States.

Mr. CASE:

What about the trade balances?

Mr. ILSLEY:

The balance, of course, is different in the two cases. There is a surplus of exports to Great Britain over imports from Great Britain, and a surplus of imports from the United States over exports to the United States.

Mr. CASE:

More frequently we have a favourable balance of trade with the United Kingdom than with the United States.

Mr. ILSLEY:

Yes.

Mr. QUELCH:

The minister said that when we sell securities to the United States we obtain United States currency in exchange. That is true. If that United States exchange were used for the purpose of liquidating debt to the United States I would have no objection. I do not think the minister can argue that that is true. If it is, it does not really alter the situation except to the extent that the rate of interest we pay on the securities we sell may be higher than the rate of interest we pay to the United States at present.

If the rate of interest is less, then there is a slight advantage. If the rate of interest is higher, then we are losing. I think it would be true to say that the rate of interest would be higher on Canadian Pacific sales than we are paying at the present time.

Mr. ILSLEY:

We do not gain currently, but the only point I was trying to make was that from the way the hon. gentleman was presenting it I thought he really did have a doubt in his own mind about it-there was one in my mind for a time. That is why I

suspected there was one in his. It is thought that you are simply incurring that much additional liability when you sell securities abroad without having anything to show for it, but you have a corresponding asset for every dollar's worth.

Mr. QUELCH:

I did not think that for one minute. Before the war we used to hear certain suggestions, and we are going to hear them again. We have heard it from some people to our right. They say that we shall have to bring about favourable conditions in this country to encourage foreign capital. Hon. members have heard that statement time and time again. They have seen it in the Financial Post; they have seen it in practically every financial paper in this country. We do not need a dollar of foreign capital. I quite agree that in the early days we did need it. At that time we did not have the capital to develop our own resources. We had to sell securities abroad to get capital to develop the country, but we do not need it any more. We are fully able to finance the optimum development of the resources of Canada without any foreign capital. If anybody has any doubt about it, all he has to do is to look at what we did during the war. We had a $5 billion war effort without borrowing a dollar abroad.

Mr. ILSLEY:

There may be an advantage in getting money abroad. If venture capital is not available in your own country and you can get somebody outside of the country to take the risk which you cannot get the people in the country to take, it should be an advantage.

Mr. QUELCH:

The minister means to say we should go after some suckers.

Mr. ILSLEY:

No, I do not mean that at all. Everybody who ventures his capital is not a sucker. Not everybody who takes a big risk is a sucker, by any means. Venture capital is valuable stuff for a country and sometimes it is pretty hard to find. If you can find people outside who will bring it forth, you are doing quite a lot for the country.

Mr. QUELCH:

I recall discussing a bill last year regarding the sale of gold mining stock to the United States. Apparently there was a lot of wildcatting going on. In fact some promoters in this country were looking for suckers in the United States to buy shares in gold mines which were apparently just holes in the ground. If we have any venture capital coming into this country from abroad we shall pay a good price for it. Any time venture capital comes in from abroad it is in the expectancy of making a high profit.

Loan to United Kingdom

I want to turn to the other argument, namely, that it pays us to make this loan to Britain in order to keep her in good standing so that she will be able to buy our exports in the future. I will admit that indirectly it is to the advantage of Canada to keep Great Britain in a position to help play her part among the great nations of the world. Let me point out that exactly the same argument applies to our own people. If it is to our advantage to make these goods available to England so that she can make a worth-while contribution in the future and take our goods, surely it must be of just as great an advantage to bring about the proper reestablishment of our own soldiers, so that they can become worth-while citizens and contribute to the welfare of this country. Therefore the same argument applies to our own people as to Great Britain in that regard.

Mr. ILSLEY:

The difficulty is that we have a great surplus for export. You could never hope to get that market for these exports among your own people.

Mr. QUELCH:

While we may have a surplus of certain commodities, we have a great scarcity of others in the country.

Mr. CASE:

No.

Mr. QUELCH:

We have scarcity of a great many, things. We are even being asked to eat less bread, to cut down by two slices on every loaf to leave enough to go round. People are being asked to conserve in many lines. There would be a strong demand in this country for goods if they were available. I am sure that every hon. member in this house is finding it difficult to buy certain commodities at the moment.

Mr. ILSLEY:

That is true of some commodities because the export demands are great at the present time; but in normal times it is not within any foreseeable future that we shall have a population that will consume all the wheat we produce here, or nickel, or bacon, or newsprint,' or copper, or asbestos that we produce here. There is a long list of commodities produced which would have to be cruelly curtailed if we were to rely upon the home market in Canada. It would mean a dislocation of our whole economy and a lower standard of living, because we would be trying to turn our people into different kinds of producers under more expensive and uneconomic conditions and circumstances. Therefore it is of vital and primary interest to pursue a policy that will not make it necessary for the greatest importing nation in the world, a great importer from Canada, to pursue a restrictive policy and a policy of economic nationalism and self-sufficiency to the complete confusion and dislocation of our whole economy. That is the reason that it is of vital importance here.