March 7, 1947

SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

The hon. member who suggests that without having thought it through fails to see that if the government put in machinery it would have to lay off a lot more men and thereby decrease consumption. That is quite obvious, is it not?

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?

An hon. MEMBER:

No.

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

It is obvious, is it not? If a government mine put in more machinery it would put men out of work. That would decrease consumption. The government, if it were to increase consumption through the coal company, would have to raise wages. Would a C.C.F. government propose to raise wages in a mine and thereby increase the cost of the coal? I hardly think so. No! The government, by taking over the coal industry, could not economically increase the consumption of coal by any means whatsoever. Therefore I think we would be safe in assuming that the proposal in the C.C.F. amendment that the government take over the means of production as a means of increasing either production or consumption is simply futile, will not do any good at all-and may do harm.

Let us come to the socialization of financial institutions. Let us assume that what is meant is government ownership of the banks. Probably our C.C.F. friends will not object to that. Why would they want to nationalize the banks? Banks are private enterprise. Would you nationalize them because they have not lent enough money to produce goods? Have the banks recently neglected to lend enough money to produce goods? How do you account for the fact that there has been such a tremendous increase in the production of goods whenever there has been purchasing power among the people? If the banks had not been willing to lend money would there have been such tremendous production in the past? There has been no recent refusal on the part of the banks to

lend money for any sound enterprise, and surely a C.C.F. owned bank would not lend money on an unsound enterprise.

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PC

Arthur Leroy Smith

Progressive Conservative

Mr. SMITH (Calgary West):

I think you are wrong there.

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

Maybe they would, but they would soon repent. Have we the right to expect our banks to do any more than lend money for the production of goods? That is the point. The private banks are lending money necessary to produce goods. Have we the right to expect them to do any more than that? Banks lend money for production. Let us face facts. Inane remarks will not solve the problem at all. Let us get down to the facts. The banks lend money for production. Is that not right? Banks cannot lend money for consumption. How long would a bank last if it began to lend people money to buy goods like coal for consumption? It could not do so. Even a C.C.F. bank could not do that. Banks cannot give for consumption either. Imagine a bank which began to give to people who needed money; to old age pensioners and others! Imagine a bank in a community giving money for that purpose! How long would it last as a bank? You cannot expect banks to finance consumption. They were not made to do that.

Let us go back to the coal company illustration. If a bank lends money to that coal company on a suitable amount of interest and time, then the bank has discharged its function and cannot be said to have failed if we are to be honest and face up to the situation. Banks are part of the productive system. I think there is a lot of cloudy thinking abroad in this country on this point-many people and politicians imagine banks are part of the consumptive or distributing system. Banks are part of the productive system. If anyone can prove that is not so, let him do it. Banks lend money for production; they do not, they cannot issue money for consumption, only indirectly. That is true both in Canada and in the United States. What good then would government ownership of the banks do? How could government ownership of banks help in consumption? If private banks refuse to lendi on unsound propositions, do you suppose the government would lend on such propositions? A government might be a bit more lenient but I doubt it very much. No government owned bank would or could give money for consumption. No banks could lend for consumption or give for consumption and keep it up.

The Address-Mr. Blackmore

Consumption might be financed through the Bank of Canada, but I just wonder whether the C.C.F. would so modify the policy of the Bank of Canada. If they would do so, they have never indicated their desire to do so by anything they have ever said in this house.

Now the Bank of Canada is already government owned. What would be the object in having it owned any farther? It is socialized far enough; the C.C.F. proposal would produce no improvement at all.

If the government desired to have the present privately owned banks lend on propositions that they are afraid to lend on, the government could remedy the matter by guaranteeing the banks' loan; it does not need to own the banks. If the government is not satisfied with the interest rates that the banks feel they are obliged to charge, the government can subsidize the banks and thereby lower the interest rate. There is no need at all for the government to own the banks. In connection with the socialization of banks, I must confess, and I believe every hon. member who faces the facts will agree that the C.C.F. proposal is simply utterly worthless as a means of solving the problem of consumption, which is the real problem facing Canada.

Let us turn for a few minutes to the tremendous success of private enterprise during the war. It is said that private enterprise failed. I will challenge anyone to prove that private enterprise has failed in any of the essentials for which private enterprise can be primarily held responsible. Let us see what happened during the war. I hold in my hand the Bank of Canada "Statistical Summary, 1946 Supplement". If one turns to page 64 he will see just what happened during the war-and remember private enterprise was canying on in Canada all during the war! On page 64 we find a table headed: "Gross national product at market prices". The market prices were as follows: In 1938, 85-1 billion; in 1939, 85-5 billion; in 1941, $8-3 billion and, in 1942, $10-3 billion. In 1943 it was SIM billion; in 1944. $11-8 billion and, in 1945, $11-4 billion. If it be argued that private enterprise was failing to produce in 1938, what can be said of the same private enterprise in 1944 when production increased to S1T8 billion? Someone will say, "Oh, yes, but you are supporting private enterprise". What I am doing is supporting Canada. I am anxious to keep a' system in Canada which will produce an abundance of goods.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

Will my hon. friend say that war is a part of private enterprise?

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

No, it is not.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

That to which tlie hon. member referred took place during the war.

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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

The war was something which came and which forced the government to adopt a change in its financial policy; that is all. It forced the government to buy the goods and distribute them. If the government had bought Canadian goods and distributed them in 1933 there would have been a tremendous output of goods just the same. That is the point. Should the government proyide the money with which to buy the goods? That is the whole point.

What is the reason why we have had relative prosperity in 1946? What does the president of the Bank of Canada say? He says that the reason that we have been able to sell so successfully and have such a high degree of prosperity is that we have been lending abroad. He says we cannot continue to lend abroad to keep up our market. What are we to do when we no longer lend abroad and no longer buy the goods to send away? What is to happen then? Is private enterprise to be denied markets? If so, surely private enterprise will not be able to produce the goods and services. It will not be private enterprise then which will fail, but government policy, because it is the government's policy which will determine the purchasing power. That has been obvious during the last five or six years when there has resulted the tremendous increase of production in this country.

May I turn to the United States. I hold in my hand a book entitled "Tomorrow Without Fear", by Chester Bowles. He was head of the OPA in the United States. I think I am safe in saying that he is one of the best informed men in the United States. He gives some figures on what happened in that country. There was a situation there completely comparable with what was happening in Canada. Private enterprise prevailed there. At page 21 he says:

Between 1923 and 1929 output per man-hour in the manufacturing industries increased by aproximately one-quarter-24 per cent, to be exact.

Private enterprise did thatl

Mr. Speaker, I think my time has just about run out; therefore I shall give no more evidence to support what I was saying.

I will say that Canada as well as the United States needs a new system of distribution, a new system of finance. It needs debt-free money. This Social Credit group has contended for debt-free money ever since it came to the house. I submit to hon. members in the house it will surely be impossible to solve the problem which faces us, that of increasing consumption in the country, without debt-free

The Address-Mr. Zaplitny

money-debt-free money in accordance with the amount of goods which can be produced in the country.

I warn the members of this house that if they do not work towards the adoption of some such proposal, then the country will go into depression and there will be only one group of people in Canada responsible and that will be the gentlemen who sit in this house on the other side.

The C.C.F. amendment offers no hint of a solution. I therefore intend to vote against it.

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CCF

Frederick Samuel Zaplitny

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

Mr. F. S. ZAPLITNY (Dauphin):

I rise to speak because what I have to say bears on the amendment before the house, and I wish to discuss that before the vote is taken. I should like to refer specifically to that part of the amendment moved by my leader, namely, the first paragraph, which refers to price control and a planned economy:

We respectfully submit, however, that in the opinion of this house Your Excellency's advisers have shown a readiness to return to the policies of uncontrolled and unplanned private enterprise which resulted in the depression and unemployment of pre-war years.

I realize there is a difference of opinion on the merits or otherwise of a planned economy, but I do not think there is any difference of opinion on the fact that, unless the government takes certain steps, there is great danger that we are going back on the road to depression and economic crisis. The words of the amendment I have quoted are that the government has shown a readiness to return to the system we had before the war, and in my opinion they are an understatement because the government has shown not only a readiness but almost an eagerness to get back to what some members here have called normal times.

In that connection I wish to refer to the speech made the other day by the member for Lincoln (Mr. Lockhart), in which he said, as reported at page 1060 of Hansard:

For goodness sake, let us get back to normal. Let the law of supply and demand hold sway.

That is a statement of policy and I presume the members sitting around him concurred in what he said. If I had not thought so, then I would have thought so today after hearing the hon. member for Lake Centre (Mr. Diefenbaker) speak. The official opposition, the Progressive Conservative party, have definitely come out for what they call normal times, the doing away with controls, and the return to what they term free enterprise; and as the hon. member said, so long as these opinions are held sincerely and in all earnestness there is no reason why we should attack each other because of them, except to point out fallacies where they exist.

On the question of controls, and particularly price control, I think we should at this time try to hammer out a policy which is suitable to the nation, regardless of what our particular philosophies may be, and it would be valuable to go back a little and trace the history of controls as such to find out whether they are really of such a terrible nature as some people hold them up to be.

I have here an excerpt taken from the royal commission on price spreads, which, as hon. members know, was appointed during the administration of the Bennett government and which reported in this house in 1935. No one can say that that commission, which was first set up as a committee, was by any stretch of the imagination a socialist commission. The majority of the members of that commission were of the Conservative party of that time and, when they reported, they brought out some interesting statements which I should like to place on the record. I quote from page 248:

At no time in history have economic activities ever been completely free from social control. For centuries its has been recognized that there must be some state mechanism for supervising contending economic rights and interests.

There is a statement by a commission which had gone into the question of price spreads, which had taken evidence, and which had eminent counsel to advise it. They came to the conclusion at that time that controls as such are a part of our present economic civilization, so to speak. They quote from another eminent economist. They say:

As the great master of English classical economists, John Stuart Mill, whote in 1893 "that principle (laissez-faire) like other negative ones, has work to do yet, work mainly of a destroying kind; and I am glad to think it has strength left to finish that, after which it must soon expire . .

That was fifty-four years ago. John Stuart Mill at that time felt that laissez-faire, which he called a negative system, the system of allowing things to balance themselves or work themselves out, leaving full sway to the law of supply and demand, was needed in 1893 and a period of time after that, but in his opinion its work would soon be done and then it would have to expire. We find, more than half a century later, members of parliament rising in this house and saying in effect that we need more laissez-faire, that we need to have the law of supply and demand in full control and that we must get rid of government control. Surely, if we are going forward instead of backward, what was predicted half

The Address-Mr. Zaplitny

a century ago as being of a temporary nature, something that must soon expire, a temporary expedient, cannot now be held to be anything progressive.

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PC

Harry Rutherford Jackman

Progressive Conservative

Mr. JACKMAN:

John Stuart Mill might have changed his mind had he lived during the intervening years between the time he made his prediction and the present day.

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CCF

Frederick Samuel Zaplitny

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

Mr. ZAPLITNY:

I would not be surprised to learn that a gentleman who does not now live could not change his mind, but I am surprised that people now living cannot change their minds. Let me go farther. Here is the most telling sentence in the whole report of the commission, to be found at page 249. _ I wish to emphasize that this was not a socialist commission. It was a commission set up by the government in 1934. I quote:

Under present conditions, then, the question is not intervention or non-intervention but merely the nature and extent of intervention.

They came to the conclusion that the state must intervene where the interests of its citizens are at stake.

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SC

Walter Frederick Kuhl

Social Credit

Mr. KUHL:

They did not know much about Social Credit at that time.

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock.

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CCF

Frederick Samuel Zaplitny

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

Mr. ZAPLITNY:

When the house rose at six o'clock, Mr. Speaker, I was discussing the question of controls; and, if I remember correctly, I said it was no longer a question of whether or not we should have controls but rather a question of who should control, and for whose benefit. I believe it is quite well established now that whenever the interests of the people of this country are at stake the government which is charged with the responsibility of looking after those interests must intervene. In that regard I might refer to something said in this house the other day by the hon. member for Lincoln (Mr. Lockhart) in discussing the waste of man-power in connection with the wartime prices and trade board. The hon. member was quite incensed and indignant about it; perhaps his experience put him in that frame of mind. I looked up his words as reported at page 1060 of Hansard, and found that he advocated the use of a sawed-off shotgun to get rid of gentry of that kind. I do not believe anything so drastic is necessary; and while I am not here to defend any official of the wartime prices and trade board I would say that the gentlemen charged with the responsibility of administering price control in this country are only

carrying out their duty. They are civil servants and are not responsible for the policies they are required to carry into effect. If any sawed-off shotguns are to be used I believe they might be more properly used on the people who pass the laws-not that I am suggesting this-because in my opinion it is useless to pour that kind of invective on people who are only endeavouring to carry out regulations which are laid down for them. I might also remind hon. members who talk in that way that the wartime prices and trade board was set up by this whole parliament; and, if I remember correctly, there was no opposition to it at that time.

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

I do not remember its being set up by this parliament. I understood it was set up by order in council.

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CCF

Frederick Samuel Zaplitny

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

Mr. ZAPLITNY:

This parliament gave the authority to set up such a board, and it amounts to the same thing.

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

It is not the same thing, just in case that goes on the record.

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CCF

Frederick Samuel Zaplitny

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

Mr. ZAPLITNY:

The point I wish to refer to particularly is the question of this waste of man-power. I agree that man-power should be conserved as much as possible and used as wisely as possible, but it is an open question whether putting a few hundred or a few thousand extra men at work in this country hewing down the forests or doing anything else would be of more value to the country than having a price control administration. I want to reinforce that statement by again quoting from the report of the price spreads commission, where they said:

We are convinced that certain forms of intervention are likely to be less expensive than the wastes of goods and of life that (would result from) the collapse of our economic system.

In other words, it is a question whether we want an economic system which will work in the interests of all the people, or whether we are concerned only with dollars and cents. These days we hear a great deal about cutting down government expenditure. I say we would be making one of the greatest mistakes possible if we were to go on a spree or crusade of cutting down government expenditure on necessary projects at this time. It is not a question of how much it costs to administer a certain law or set of regulations. The question should be whether that law or those regulations are good or bad. If they are good for the country, no expenditure should be spared to see that they are justly and fairly administered. If they are not good for the country, then even one cent is too much to spend on them.

The Address-Mr. Zaplitny

What is the present trend of the government? What I have said so far leads up to this question. Is the government taking the advice, in the matter of decontrol, of our lion, friends of the official opposition to my right? The government have a perfect right to take their advice if they wish, but in my opinion they should be very careful, because the line of action they have been following since January 1, 1946, in going ahead with their decontrol policy, has not been in the best interests of the Canadian people. It may be that my hon. friends to my right are quite sincere and quite convinced that what they are advocating is the right thing, but the best of intentions will not help if the results are such that the people of this country must suffer. Let me give an illustration of what I mean. It is easy enough for the official opposition to say the government must go ahead and decontrol as quickly as possible, but they are not in a position of responsibility, and the results of such a policy will not be their responsibility. I have before me a clipping from the Toronto Globe and Mail, dated March 7 of this year, and the heading is: "Liberals jittery when decontrol ups living cost." It goes on to make this interesting and pointed statement:

Liberal party members are pressing on the cabinet the necessity of braking the price board's decontrol programme and continuing present subsidies for a longer period than is now con-templayed. Some of those who six months ago were chafing at the government bit and urging more rapid removal of controls are now getting worried at rising costs of living and suggesting that the line be held even if subsidies have to be increased rather than curtailed.

What does that add up to? It simply means that the wave of propaganda this country saw last year and the year before apparently had some effect upon the government and forced it to carry on decontrol before the country was ready for it. Unfortunately some of the rank and file members of the Liberal party fell for that line, too, and urged upon the government a programme of decontrol. Now apparently these same members, having found what it did to the cost of living, and having heard the reaction from their constituencies, from the housewives in their areas as to the cost of living today, are beginning to change their minds, are urging the opposite policy upon the government. That shows the danger of taking advice from those who have not positions of responsibility in that respect.

I want to go ahead from there and point out how a decontrol policy such as the government is carrying out, is affecting different parts of our population. Let us begin with the farmers. As has been so eloquently said on this side of the house, it is well known that the

farmers of this country were carrying the load of price stabilization during the years of the war, and are continuing to carry that load.

The government has made a wheat contract, under which the farmers are to receive SI .35 a bushel up to 1950. Those farmers who are engaged in wheat farming are expected to live out of that $1.35, less what it costs to deliver the grain to the lakehead. The farmer knows now he will not receive any more than that, except what he might get out of participation certificates. The farmer has his income fixed; yet every day he picks up a newspaper, finds that the prices of the things he has to buy, manufactured products, are being decontrolled and going sky-high.

What will be the effect? What has been the effect? We have been told from different quarters of the house that the production of live stock, including hogs, has been decreasing. This is not because the farmer does not want to produce. Perhaps at the present time it is not even a matter of price. But if the farmer is to see his way clear to carry on the production of live stock, grain and other products for the next four years, then he must see some stabilization of prices of the things he has to buy. But there seems to be no prospect of that. The programme of the government is apparently one of a down-hill rush toward decontrol.

I state frankly that I am very much concerned and disturbed, however, by the trend which has been apparent since the new Minister of Finance (Mr. Abbott) has taken over. Very early in this session-or it might have been just before the session opened-I heard a speech over the radio by the Minister of Finance, when he addressed the Toronto board of trade. I tuned in after the minister had started, and was not sure as to who was speaking. But before he had gone very far I was quite sure that it must have been one of my hon. friends of the Progressive Conservative party who was talking about decontrol. And, judging from the applause he received from his good friends there he seemed to have won the hearts of at least some of them when he had finished.

I have great respect for his ability; but let me say to him that if in that speech, he won the hearts of some of the people in the board of trade of Toronto, I am afraid that by the same speech he did violence to any ambition he may have of being the next Prime Minister of Canada, because the people of this country are getting a rude awakening today. All one has to do is to talk to someone on the street or to the people who are riding up and down the country in railway trains. Talk with anyone of them and the conversation will be

The Address-Mr. Zaplitny

about the increase in the cost of living. Today it is only a whisper; tomorrow it might be a gale, and then will come the hurricane. And the Minister of Finance will find himself caught in the vortex of that hurricane, because the people of this country are and always have been ahead of the government.

Today the people of Canada are beginning to see what will happen if the present policy of decontrol is followed any faster or farther along the lines it is now going. We are going to have a period of inflation such as we never had before.

When I mention inflation I should like to quote something that appeared in the Manitoba Co-operator of November 1, 1946. This is an interesting article by Edna Jaques, a well known author, and is entitled "I am Inflation.." She states:

"I am inflation."

Thousands of people never recognize me. True, I have an ugly mug but I disguise it under a thousand different forms of camouflage. Here is my favourite one, it always goes over big with the men.

More money to spend.

I chuckle every time I pull that one, it's old as the hills. I've been using it for hundreds of years. Every time there's a war I pull it out of the bag, and it works every time. The catch in it is that in war there are fewer civilian goods on the market and people are willing to pay more to get what they want.

From then on it's in the bag.

Then it goes on to give us a few reminders.

Remember after the last war when Canada's cost of living went to 192 per cent, in July, 1920.

Then she goes on to say:

In 1920 farmers were paying $8 to $12 for boots $60 to $100 for a suit of clothes, $7 and over for a bag of flour and so on.

And so it goes on.

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LIB

Humphrey Mitchell (Minister of Labour)

Liberal

Mr. MITCHELL:

Would my hon. friend go a step farther?

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CCF

Angus MacInnis

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

Mr. MacINNIS:

Give him time.

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March 7, 1947