Mr. Knowles:

Keep Ontario strong.

Mr. Abbott:

That is the thing.

Mr. Merritt:

For a moment I want to refer to what an outside authority has to say as to the effect of the minister's foreign exchange control upon the expansion of British Columbia. I have here a clipping from the Vancouver News-Herald of some time last year, and I do not believe the present situation will have changed. It refers to a visit to British Columbia by Francis Adams Truslow, president of the New York curb exchange. He gave an interview to this newspaper, in the course of which he said that after having studied the situation in British Columbia he was satisfied there were no greater opportunities for risk capital in all the world. I quote from this clipping:

Canada, however, he found, had set up man-made barriers against the flow of capital from U.S.A. . . .

Canada requires vast amounts of risk capital, but its regulations scare capital away . . . He did not suggest that it would be possible for Canada to remove all restrictions at once, but it was vital that this should be the objective, because, he said, "You can't expect capital to walk into a trap."

That is the opinion of a very good authority on the Foreign Exchange Control Act of the Minister of Finance. He calls it a trap.

Mr. Abbott:

Did he refer to the Foreign Exchange Control Act?

Mr. Merritt:

He refers to the fiscal policy of the government and says it is a trap into which capital would be too wise to put its foot.

I should like to say a word about the other possible sources of capital that are available for expansion, one of which is savings. In British Columbia there is a large number of small businesses that have been built up over the years and which rely for their expansion capital on the savings of the proprietor. You know, Mr. Speaker, that all through the war the standard profits for this type of business under the Excess Profits Tax Act were set unusually low. This meant that expansion capital could not be obtained from that source. You know, too, how the jewelry tax, the soft drinks tax and all these other unusual taxes were levied during the war for the sole purpose of slowing down the particular businesses to which those taxes applied. Probably that was a very good thing for the war effort, but it is a very bad thing for the prosperity of the people today. They cannot increase their savings. The same remarks apply to the general rates of income tax which have the effect of making it difficult to acquire capital for expansion. By reason of these two measures, the restrictions upon capital coming into this country and the rates of taxation imposed by the government, the opportunity for expansion in our province is being held back.

Let me turn, sir, to the second requirement we have in British Columbia, and that is people. We have experienced a considerable influx of people in the past few years. Our population is still not large enough to do all the things we would like to do. How in the world are we going to handle a larger number of people and do the things we want to do, while the government is unable to do more than it has been doing about housing? In a newspaper report dated January 29 of this year, the Minister of Reconstruction and Supply, who is responsible for housing, is quoted as saying that he hoped 100,000 houses would be built in Canada in 1949. Then he said this:

If we had 100,000 additional housing units available right now, there would be occupants for every one of them.

If during the course of the next year all the minister hopes to do is provide 100,000 houses which could be used right now, what chance is there for the expansion of our population in the next few years? If we are to be prosperous economically, if we are to be secure from the point of view of national defence, then we should expand our population. It is not sufficient for the government to say how difficult it is to build houses and to be satisfied with increases such as we have seen over the past few years, from 60,000 units to 70,000, to 80,000 and now to a target of 100,000 units. Broadly speaking, there is something wrong with the whole manner in which this government is conducting the economic affairs of this country. If after four years of trying to make provision for a very much greater quantity of housing than will simply meet our needs our building trades cannot meet those requirements, then something should be done.

I see my time has expired, but I should like to refer to a third requirement of which I spoke, and that is markets. I assure you I shall not be more than a moment. I have a report from the Pacific lumber inspection bureau of Seattle which points out that the water-borne shipments of lumber from British Columbia declined 24-1 per cent in 1948 as compared with the year before. From this you will see that this government is losing those markets which are important to British Columbia. Nothing is being done to restore them.

I did intend, Mr. Speaker, to expand on the question of markets, but since my time has expired I shall bring my remarks to a close. I simply want to say this, that if by these policies-

Mr. Speaker:

If the hon. member would permit me, since he has exhausted his time, I would ask the house whether he has unanimous consent to continue?

Continue.

Mr. Merritt:

I thank the house for its courtesy.

Mr. Abbott:

Solve this question of markets while you are at it.

Mr. Merritt:

Since the minister and his colleagues are so obviously unable to do so, perhaps I might have a try at it. I have referred to the fact that the water-borne shipments of lumber from British Columbia have declined 24-1 per cent over the last year. This is not a matter about which anyone who has lived in British Columbia could be happy. We have had experience before in trying to market our lumber in the United States, and it has not been a happy

The Address-Mr. Merritt experience. We are very properly alarmed at the present trend in the commonwealth countries, particularly Great Britain, South Africa, Australia and New Zealand, which have always been our best markets for lumber. These markets have been shut off because of the dollar shortage.

In British Columbia we do not like the way this government has thrown away our empire preferences. In the Geneva trade agreements of last year the government was very generous with these preferences. It gave away half the preference on lumber, half the preference on fish and the whole of our preference on apples. We do not like the cavalier fashion in which that was done. No matter what the Minister of Agriculture (Mr. Gardiner) may have said the other night about the Ottawa agreements, in British Columbia* we know that they were the salvation of our economy. We know that they have been the background and the basis for our economy every year since 1932. We particularly do not like the declaration of the right hon. the Minister of Agriculture the other night against the whole principle of empire preferences. We do not like the manner in which the government has handled either the freight rate policy or the question of the trans-Canada highway because those are two matters which vitally affect our possibilities of markets. If we are not to have these overseas markets, upon which we have principally relied, then we should like to have a better entry into the home markets.

I was greatly disappointed that, despite the promises made by the ministers in the Vancouver Centre by-election of last year, the government has not seen fit to deal with the mountain differential as a question of government policy rather than as a question which will be determined simply by the board of transport commissioners. The differential should have been taken off in order that we might have some alternative market in place of the markets overseas which the government seems quite content to allow to be given away.

In my view it is the home market to which Canadian industry should be turning now. The home market in Canada, in this difficult world, will be our surest and most secure market. Anything the government can do to build up that home market will be well done; and where they fail to build it up and make it possible for us to sell a greater amount of our produce within our own borders, they will be doing our country and our people great harm. I believe that Canada's new preferential trade policy should be one of preference for people. The minister wanted to know if I could suggest to him some way whereby he might have other markets for the

The Address-Mr. Merritt ones he is allowing to slip away. I am suggesting to him that if he must maintain-and 1 do not think he must-all the socialist policies which he is now pursuing, and-

Mr. Abbott:

Which ones would the hon. member discontinue?

Mr. Merritt:

-if he must try to put an iron curtain around this country to keep capital out-

Mr. Abbott:

No answer.

Mr. Merritt:

-and prevent us from exporting our goods to our usual markets, then I suggest to him that he should seriously consider bringing people here so that our industries can sell to the people within our own borders.

Mr. Abbott:

Would my hon. friend allow a

question?

Mr. Merritt:

Yes, certainly.

Mr. Abbott:

To which markets does my hon. friend suggest that government policy is preventing us from exporting our products?

Mr. Merritt:

The markets of the whole sterling area.

Mr. Abbott:

If my hon. friend will allow another question, I would ask him this. In what respect is government policy preventing these exports to the sterling area?

Mr. Merritt:

It is government policy, as the minister well knows-