March 21, 1949

PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

I will

not commit myself. I am not a prophet, or the son of a prophet, but I think I understand a principle when I see one. All I am saying is that you cannot indefinitely fight against the truth. You cannot indefinitely fight against reality. I shall have something more to say on that subject because I think we are coming to the stage when there must be a showdown with regard to these exchange rates. In turn, I should like to ask the hon. member a question; but I will not ask him to answer it now, because I do not want him to make a speech.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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CCF

William Irvine

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

Mr. Irvine:

I intend to do so after you finish.

Foreign Exchange Control

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

I want to ask the hon. member this question. Is he ready to contemplate the situation which is developing now and which, if things are allowed to stand, may be crystallized and stereotyped so that, as the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) said the other day, you will have an iron curtain with the dollar on the one side and the pound on the other? What I read from the Economist a few moments ago indicates that we are on the way to that condition now. I suggest that there are no people in this house so greatly interested in preventing that situation as are those who represent western farming constituencies.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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CCF

William Irvine

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

Mr. Irvine:

The hon. gentleman did not ask me the question he was going to ask.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

Yes, I did. I asked whether the hon. member was prepared to have the present situation between the sterling and dollar areas become crystallized. He need not answer it now. He can answer it later.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

William Ross Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order. It has occurred to me that a large number of questions are being asked, and the house is not in committee.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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CCF

William Irvine

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

Mr. Irvine:

Nobody has answered.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

William Ross Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

I suggest that questions should not be asked so frequently.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

I

should like to go on now and refer to the question of what can be done. The minister, with a slight sign of petulance which is most unusual in him-

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Surely not.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

-kept saying on Thursday, "But what can be done?" First of all, I say that nothing will ever be done unless you have an objective. My point is, as I said earlier, that our objective should be the restoration of reality-the restoration of convertibility. After all, we hoped for that in 1947. If the convertibility of the British pound had come about in 1947, we would have had a different world since. Hon. members will recall that when the United States made their first big loan after the war, that condition was stipulated; it was hoped that it could be done, but it was not done. In the meantime what I am complaining about is that the minister just asks us to continue the present situation. So far as one can see, he has not, for the moment, given us any hope of convertibility. So far as I can see, he is just ready to continue as we are and to ask us to hope for nothing for the next two years.

Foreign Exchange Control Happily, not everybody is taking that same attitude. There are other people-and people in prominent positions today-who seem to think that something can and should be done. I should like to read from the Economist of February 12, at page 272, at which is given an indication as to the views of that great man-as I think he is-Mr. Hoffman, who is in charge of the Marshall plan. After speaking encouragingly of the progress which they are making, he said this:

The real proving period lies ahead-immediately ahead. This is the time to hit hard for European recovery: time for the Europeans to take the drastic and sometimes painful steps necessary for real recovery; time for the United States to back their efforts to the full.

Then the Economist goes on and says:

Mr. Hoffman went on to outline to his listeners the "drastic steps" he has in mind. They follow closely the conclusions reached in the interim report produced by the OEEC-

The organization for European economic co-operation.

-after Christmas-a document which incidentally earned Mr. Harriman's praise for its "rigorous honesty." The first-

One of Mr. Hoffman's points.

-is the demand for an end to inflation and the stabilization of currencies in 1949.

You have Mr. Hoffman taking that attitude. After all, he is in a position of great influence.

You have another man, Mr. Snyder, at that time secretary of the treasury in the United States, taking a similar position. I read now from page 384:

. . . Mr. Snyder remarked that the question of currency devaluation should be "explored with the European countries in receipt of Marshall aid." Mr. Snyder suggested that the overvaluation of European currencies provided a serious obstacle to the restoration of equilibrium in their balances of payments, and added that "it becomes a matter of grave direct concern to us when a European country tends (by overvaluing its currency) to retard its exports or misdirect its trade and increase its western hemisphere deficit, and thus indirectly increase its calls upon the United States for assistance."

That is the end of Mr. Snyder's statement.

I should add that the Economist points out that on a former occasion Mr. Snyder excluded sterling from the countries to which he was giving this advice. Then the Economist goes on:

But the conditions in which a deliberate overvaluation of European currencies was justified are rapidly departing, and the prevailing overvaluation is having a retarding effect on the efforts of the countries concerned to restore equilibrium.

I commend that also to the minister's consideration, because what I am advocating is not that anything can be done today or tomorrow, but we should make a beginning, and that beginning should be the making of the international monetary fund more flexible. The other day I ventured to make one

suggestion. It is put forward as a suggestion of what might be a beginning: instead of being forced to fix the exchange rate, instead of a country having to come to the international monetary fund and say: We fix our rate at ninety-four cents or ninety-five cents or ninety-eight cents, there should be an area within which they would allow it to fluctuate. That is to say, we might make the floor at ninety cents and allow the dollar to find its own level. I will not pursue that further. We have expert men on the international monetary fund. My own feeling is that provided that we begin to get away from this rigidity, once we make a beginning, further progress may follow-and another thing is that it might be contagious. If we started we might find a lot of other people willing to come in too. I am perfectly sure of one thing: the situation cannot stand where it is. It is going to get better or worse. At the present time there are a good many things to make one feel that it is getting worse. Publicly, these men, Hoffman and Snyder-

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

J. W. Snyder.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

Former secretary of the treasury in the United States.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

He still is.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

These two men, who are in positions of key importance, have strongly taken the view that something should be done; that the present situation should not be left as it is forever. I venture to suggest that what I have read from these valued civil servants would indicate that their minds are moving in that direction. Perhaps what we need is action on the political level. We need an act of courage on this thing politically; it should not be left mired as it is now.

I should like to call another witness to support me. I am sure that this is a witness whom the minister will treat with some respect, because it is the Minister of Agriculture (Mr. Gardiner). The Minister of Agriculture of course has the great advantage of having lived in the west where they know more than others do about foreign trade. He is not a city slicker like the Minister of Finance (Mr. Abbott), or like the Minister of Trade and Commerce (Mr. Howe).

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Or the hon. member for Muskoka-Ontario.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

I will have you know that I am from a rural riding.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

An absentee member.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

No, I

am not an absentee member. I live there during a large part of the year.

This is a quotation from the Minister of Agriculture which is right down my alley. He says, as reported at page 1641 of Hansard:

I am inclined to agree with some of the statements that have been made from the other side of the house to the effect that something ought to be done about the convertibility of exchange-

That is all I am saying. Let us do something and not just talk about it. I continue: -something ought to be done about the convertibility of exchange between all countries who are trying to co-operate in doing the same thing in the world.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

That is something.

Topic:   FOREIGN EXCHANGE CONTROL ACT
Subtopic:   CONTINUANCE IN FORCE UNTIL SIXTY DAYS AFTER OPENING OF FIRST SESSION OF PARLIAMENT IN 1951
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March 21, 1949