Mr. Archibald:

I have listened to the hon. member for Vancouver-Burrard bat the minister around and tell him that he does not know anything about the problem in British Columbia, and I have to admire the minister's patience. I might disagree with the minister in all his economic policies, but when I hear an hon. member tell him that he should become a second Moses in the wilderness and lead the whole world into multilateral trade, to me it begins to sound rather ridiculous when I think of the brains which Europe can produce and has produced, and yet the hon. member for Vancouver-Burrard can only dream up a solution to the Canadian problem by asking the minister to go over to Europe and tell them how to do their business. That is Tory politics-meddle in the other guy's business but do not attend to our own business.

If the hon. member for Vancouver-Burrard is interested in jobs and meal tickets on the Pacific coast and wants to see the workers out there working on export goods, then let us adapt ourselves to the policies which are becoming prevalent in the international field, namely, barter agreements. Whether we believe in it or not, let us eat regularly. That is the problem.

Mr. Merritt:

I am with you on that.

Mr. Archibald:

I should like to see something more constructive come out of British Columbia than this mugging about with something which the hon. member does not know anything about. He did not advance one idea in his whole speech.

Mr. Jackman:

Some time ago I tried to get some information from the Minister of Agriculture, but I am afraid I did not get quite what I wanted. I did get a note from one of my colleagues which said that the qualification of a cabinet minister is to be able to reply to a question without answering it. The minister did not answer my question. I am not going to ask it again because the minister is much smarter in debate than I am or ever hope to be. I am just an average, ordinary member, like my colleague the hon. member for Vancouver-Burrard. Therefore I shall address my question to the Minister of Finance. Some time ago some figures were given in this house

I think from this side-which showed that the total imports of Great Britain from Canada were $688 million and the total exports from Great Britain to Canada were $374 million, or 40 per cent of the amount they took from us. What I

Foreign Exchange Control should like to know from the Minister of Finance is this, and it is purely factual; there is nothing else behind it. What efforts have been made to have Britain send more goods such as iron and perhaps textiles? I know that we altered tariffs on one particular point. But a good salesman not only tries to sell his own goods when he goes over to Great Britain; he shows them the way oy which they can purchase goods from us. I should like to know if the Minister of Finance can throw any light upon these matters. What has been done to try to get more of Britain's goods into Canada, to offset the goods we are sending to Britain? Because only this month we have read in the press that Great Britain's over-all balance is now about equal. The only shortage is in hard currencies-Canadian dollars and American dollars.

I think it is true to say generally that there have been many things produced in Great Britain and exported to soft currency countries which could have been sent to Canada. Can the Minister of Finance throw any light upon that-before I ask further questions?

Mr. Abbott:

I had intended at another time, and still intend, to deal in somewhat greater detail with the question the hon. member has raised. Generally speaking, however, I can say this-

Mr. Jackman:

Would the minister prefer to answer it at another time?

Mr. Abbott:

I would, because I do not have figures with me. However, perhaps I could give a general answer at this time-and I am sure this will be concurred in by my colleague the Minister of Trade and Commerce.

When the chancellor was here last September we urged upon him strongly the desirability of endeavouring to persuade British exporters to direct as much of their production as possible to the Canadian market. As members of the committee are aware, we have been particularly interested in textiles because, prior to the war, British textiles were exported in substantial quantities to this country. As a result of the war that market was largely taken over by American exports-Canadian imports from the United States.

As a result of the severe import restrictions against the United States there was a great opportunity for British textile manufacturers to export to this country, and they have been doing so in fairly substantial volume. When Sir Raymond Streit, chairman of the textile group, was out here-he has been here on several occasions-great stress was laid upon the desirability of directing

as many exports as possible to Canada. Substantial success has been achieved along those lines, although not as great as we would have wished.

I am not familiar with all the details; but I do know that my colleague the Minister of Trade and Commerce, as a result of discussions with board of trade people in the United Kingdom, was able to arrange for a substantial divergence of steel to Canada. The joint committee which was set up following the chancellor's visit met in London a month or so ago; and again at those meetings we impressed upon the British government-at official levels, it is true-our anxiety that everything should be done to encourage exports of this type from the United Kingdom. I propose to deal with some aspects of the matter at greater length, perhaps in my budget speech. I have no doubt that the Minister of Trade and Commerce will be doing so, too.

Mr. Jackman:

The annual report of the foreign exchange control board points out that official holdings of gold and United States dollars increased by $496 million. May I ask the minister if the amount of United States currency which Canada would have received through the purchase of a minority interest in the International Petroleum Company by Standard Oil of New Jersey would be reflected in the 1948 account, or would it be reflected in the 1949 account; and approximately how much in millions of dollars would it be?

Mr. Abbott:

I would have to check on that. I should, think it would likely be reflected in the 1948 accounts. I am afraid, however, that I could not give an accurate answer, but I shall get the information and give it to the hon. member at the next stage.

Mr. Jackman:

May I ask how this $496 million of very valuable assets now held by the Bank of Canada is paid for? I presume it is with Canadian dollars. It would make a difference in the budget surplus as shown in cash surplus, when the minister gives us the nation's accounts next Tuesday night. However, I do not wish to anticipate his statement to be made at that time. What will be the government's policy in regard to allowing Canadians to reinstate to some extent their capital position with regard to American securities? The minister will recall how valuable it was for Canada to be able to put our hands on American securities in the possession of Canadian individuals and companies. Some of those securities were not at that time taken over by the government; but in many cases individuals and companies sold part or all of their American securities, and the money went to provide very necessary

funds to purchase munitions in the United States before that country came into the war.

Would it be against the policy of the government to allow Canadian individuals to repurchase American securities? Those securities of course would be under the jurisdiction of the foreign exchange control board. This would allow Canadians a certain amount of freedom which they would not have otherwise.

Mr. Abbott:

So far no consideration has been given to changing the existing policy which, generally speaking, does not allow Canadians to obtain United States dollars for the purpose of investing in American securities.

Mr. Jackman:

May I ask if there is any reason for continuing that policy, or is it just like so many things which have found their way to the statute books? They are never removed because the bureaucrats have not found it necessary to remove them, and the public do not make a big enough fuss.

Mr. Abbott:

The reason is that the government does not consider our reserve position is as yet sufficient to permit us to allow our store of United States dollars to be used to purchase American securities, which would naturally be subject to market fluctuations- to which currency and gold are not subject.

Mr. Adamson:

With regard to what was so clearly and ably said by the hon. member for Vancouver-Burrard, the minister should keep in mind that at the time of the Bretton Woods agreement, after the impasse between the British proposals and those made by Mr. White on behalf of the United States, it was Canada that took the lead, and it was the Canadian compromise proposal which was finally accepted.

Canada took the lead at that time, and I submit she could now take the lead again in asking that the international monetary fund go into the matter we are now discussing, to see if the regulations could not be altered so that the greatly desirable quality of convertibility might be returned to the currencies of the world.

No one realizes more than I what a stupendous task it would be. But I wish to tell the committee and the minister that Canada did take the lead in overcoming the impasse between the United States and Great Britain at the time of the Bretton Woods agreement; it was our proposal which was finally accepted. I believe we could again take the lead.

I suggested last night, as I have done repeatedly, that an initial step would be the establishment of a free gold market so that we could have some common denominator to

Foreign Exchange Control which we could relate our currencies. I shall not labour the point now. I did mention however that there is a considerable body of support for that contention in both the United States and Canada. I believe it should be explored a good deal further. The minister said-and in error I suggest-that the United States dollar was the only currency not subject to exchange control.

Mr. Abbott:

I should have included the Swiss.

Mr. Adamson:

The Swiss is the only currency that is really not subject to exchange control. The United States dollar is subject to the most rigid exchange control in that the holders are not allowed to convert into gold. The gold exchange act of the United States specifically prohibits the purchase of gold with United States dollars. Unless that quality is returned to a currency you cannot say that that currency is free of exchange control.

I should like to quote one thing in connection with this matter of purchases in Great Britain. What the Minister of Agriculture said about this was most interesting. He, like myself, believes that convertibility is essential, that we must do everything we can to strive for that. We owe to the United Kingdom, in fact all civilization owes, a debt that probably can never be repaid. Without the United Kingdom we would probably still be engaged in hostilities or be a vassal state. This is what Mr. Elliott M. Little had to say, as reported in a Reuters dispatch from London in today's Ottawa Journal:

"We are not satisfied that everything possible is being done by you or by ourselves to overcome this dollar problem". Little declared in a speech at the annual dinner of the Paper Makers Association of Great Britain and Ireland.

"It is not only Canada's pulp and paper trade with Britain which has been affected by the exchange problem", Little asserted.

"In the past year one traditional market after another has been reduced or has disappeared and old customers for Canadian pulp and paper products have turned to other countries at much higher prices or have gone without supplies they wished to have."

Granted that the bulk of our newsprint goes to the United States, the fact is that the United Kingdom has been a traditional market for a major part of our production of wood pulp and newsprint. But we find United Kingdom buyers of wood pulp and newsprint paying higher prices for an inferior newsprint in other soft currency countries. Everything should be done to overcome that problem. For the Minister of Finance to stand up and say that it is an impossible problem is not taking a realistic view of the situation.

1648 HOUSE OF

Transitional Measures Act

Mr. Abboil:

I have not said that it is impossible.

Mr. Adamson:

Pretty nearly. We have to be prepared to take a chance; we have to be prepared to take courageous action. If we do not, there will be more and more articles such as this appearing in the press.

Despite the fact that our export trade last year was at a record level, the situation is so ominous that I believe the government has no time to lose in taking steps. I have suggested that the thing to do is to go to the international monetary fund and see if some new arrangement cannot be made to allow- perhaps only in small quantities to start with, perhaps only in a minor scale-these currencies to be given the essential quality of free convertibility.

Resolution reported, read the second time and concurred in, on division. Mr. Abbott thereupon moved for leave to introduce Bill No. 85, to amend the Foreign Exchange Control Act.

Motion agreed to and bill read the first time.

Mr. Fournier (Hull):

At seven-thirty we will proceed in committee with the resolution in the name of the Minister of Justice dealing with emergency powers.

At six o'clock the house took recess.