March 21, 1949

PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

Yes. I have tossed in my half pint; let other people do the same. The minister will not commit himself at all. He just says: As you were! and everything stays as is. I continue with the quotation of the Minister of Agriculture:

I am inclined to agree with that; but in spite of the fact that some people have credited me with stating the position very forcefully over in London, I still say that the best way to get a final result is to listen to what the other people have to say, to put forward our own views from time to time with regard to the matter and, since we are all friends, to co-operate with them in trying to get the results as quickly as possible not only in our own country but in all countries.

When I was speaking on Thursday one of the points I made was that one of the great arguments for this international monetary fund was that it would provide a forum. The minister said that they have a meeting once a year.

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:

Once a week.

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):

Wait a minute-once a year, to which the minister goes. I want to get the minister in on this. I do not think things will happen until he gets in. He will not do much by going there once a year. He has got to give his mind to it.

I want to read just a sentence from the last report of the international monetary fund. I am ganging up on the minister with a lot of witnesses. Here is another one. What they say is this:

The fund agreement makes It clear that the provisions for the regulation of exchange rates are not intended to impose upon the fund the duty of perpetuating in the name of stability exchange rates which have lost touch with economic realities.

Further on they say:

There are indications, however, that in some countries the exchange rate is becoming a restraining factor on exports and that it is adding to the difficulty of earning convertible currencies.

I am suggesting that here, you might almost say, is a straight appeal to the political people back home who have the

Foreign Exchange Control authority to give these people a chance to get on with it. At least that is the way I construe it.

I should like to read just a sentence from a document which is of great importance, put out by the top-ranking United States economic advisory committee at Washington, called the national advisory council on international monetary and financial problems. I wish to read the following from page 25: Among the objectives of the fund has been the progressive removal of exchange controls.

We have had this present bill for three years; there has been no progressive removal, so far as I can see, and we are asked to have two more years of the same. I do not think it is good enough. I come back to what the minister said: "What can we do?" Well, Mr. Speaker, we practically invented this international monetary fund, as I understand it. We have a tremendous responsibility for it. As I understand it, we had the Keynes plan and the White plan, and it was Mr. Rasminsky who came along and reconciled them. The minister shakes his head. He had better learn more about it.

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. Abboii:

He was at Bretton Woods.

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):

Perhaps the minister has been doing good by stealth. Probably some of his officials have been doing more than he knows. At any rate the minister will not disagree when I say that we had quite a lot to do with the invention of it, and no one has a better right to make suggestions.

We have been talking pretty big. I have heard the minister speak in a grandiloquent manner about what the government has done. I do not object to that at times.

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:

And always strictly accurate.

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):

That is all right; we must expect that, especially when an election is coming along; but speaking seriously, we are not a negligible factor. I should like to go back and ask the minister what would have happened in 1940 if we had said, What can we do? Anything we could do in 1940 because of our geography, and by our own efforts, enabled us to play a very important part in what was going on then, and there is no saying what might happen if a lead were given now. I am saying all this against a background not of favourable but unfavourable prospects. The Minister of Agriculture told us the other night that the agreement had been made for this year; let us not forget that it is because of United States money. Let us not be fooled because of what the Minister of Trade and Commerce told us about our wonderful position. Do not let us overlook the fact that we

Foreign Exchange Control are standing on slippery places and that the thing could change so quickly that you could hardly recognize it. That is the basis on which I am putting this forward.

It might be asked: Well, why should we do it? Why does not the United States take the lead? I have quoted these important United States officials, and I think when the time comes they may take the lead; nevertheless it is likely that they might want to avoid doing anything like shaking the big stick. I think it is quite on the cards that they would be extremely pleased if we came forward. Because of our efforts and exertions during the war and since, we have a rather remarkable place for a small nation. No one doubts that. I think you might almost say that we are a natural for this job, because we would be much less open to jealousy than almost any other nation that I can think of. Why do we have to sit around paralysed for two years?

As a matter of fact I am giving the Minister of Finance a wonderful opportunity. I am giving him the chance to step out and provide the Abbott solution and have his name ring around the world as has Mr. Marshall's rung around the world. If he is going to do it I think it would be fair to have the election before it is done, because we do not want the minister to become world famous before the election.

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

John Ritchie MacNicol

Progressive Conservative

Mr. MacNicol:

He will not be here after the election.

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:

Don't be too sure. That was prophesied once before from that same seat.

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):

Let

me just sum up and poll my witnesses again- the governor of the bank; the associate chairman of the foreign exchange control board; Mr. Hoffman; Mr. Snyder; the international monetary fund; the London Economist. Remember, I do not for one moment hold myself out as an expert as against the Minister of Finance, but I hope he will pay attention to this noble array which I have paraded before him.

In these circumstances I move the following amendment, seconded by the hon. member for Vancouver South (Mr. Green):

That the said bill be not now read the second time but that it be resolved that:

1. The Canadian dollar should be allowed to seek its true economic level within the limits imposed by the Bretton Woods agreement: and

2. It is expedient to present a measure to provide for the continuance in force of foreign exchange control with necessary modifications for not more than one year to permit representations to be made to the international monetary fund with a view to obtaining such modifications in its regulations as will permit an orderly revaluation of currencies to bring them to realistic levels and thus make the further continuation of foreign exchange control unnecessary.

[Mr. Macdonnell (Muskoka-Ontario) .1

I wish to say only a few words about the amendment. In the first place, it was my understanding that when the amendment was ruled out before in the committee stage it was mainly on the ground that that was not the proper time to introduce it; that the amendment should have been made on second reading. While I do not wish to put words in the Speaker's mouth, at any rate that was the impression I got.

I sincerely hope that this amendment will be allowed to come to a vote, because it seems to me everyone should be in favour of the substance of it. How can anyone be against it? If it does not produce the results expected, it will be too bad, but how it could do any harm is beyond my understanding.

It will be observed that we have been very reasonable in indicating that if the government accepts this we shall be prepared to go along with some form of foreign exchange control. We do not say it in exactly this form, but we will be very co-operative- as we always are. I cannot see how any reasonable man could object to this proposal.

I close by saying that if Canada, which enjoys a unique reputation in Europe and in the United States, were to step forward and take vigorous action here, the psychological effect might be more than we could realize; it might supply the motive power to take us off the present dead centre which, if left long enough, will be fatal to free institutions.

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:

Mr. Speaker, I should like to say a word at this time, only as to the procedural question raised by the amendment. I am not an expert on procedure, as the house knows, but I do suggest that this amendment is out of order. It is an amendment relating to a money bill. While subsection 1 might conceivably be in order, I do not think a private member is free to introduce an amendment stating that it is expedient to present a measure to provide for the continuance in force of foreign exchange control with necessary modifications for not more than one year to permit representations to be made to the international monetary fund, and so on.

I believe that this part of the amendment should be ruled out of order on second reading, as it was at the resolution stage.

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:

Do any other hon. members wish to make representations with respect to the amendment? I shall give it due consideration.

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

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

Mr. Speaker, on the point of order, there are certain sections of Beau-chesne's second edition which I believe are relevant to the point raised by the minister. While it will be agreed that no private

member is free to amend a money bill, it is important to know exactly what is meant by the expression "money bill". I submit that the foreign exchange control measure now before the house is in no sense a money bill as intended by the rules. In citation 579 of Beauchesne's second edition he quotes from an authority of the British House of Commons in 1911, where "money bill" is defined. It states:

A money bill means a public bill which in the opinion of the Speaker of the House of Commons contains only provisions dealing with all or any of the following subjects, namely, the imposition, repeal, remission, alteration, or regulation of taxation: the imposition for the payment of debt or other financial purposes of charges on the consolidated fund, or on money provided by parliament-

And so on. Then he quotes a lengthy definition of "money bill", and continues by saying:

The word "only" is very important in the above statutory definition. May, 13th edition, page 436, note, says: "It may therefore be well to notice here that a bill for granting aids or supplies to the crown may fail to secure the Speaker's certificate as a money bill as its provisions are not confined to the objects contained in the statutory definition."

I believe it is clear, and I am sure even the minister will agree, that the objects of this particular bill are by no means confined to the statutory definition to which I have referred, namely, a bill dealing only with matters of taxation or charges upon the revenue. That is the accepted definition of a money bill.

One might call this bill merely a procedural one to continue in force for a further period of time a statute already on the statute book. I submit without hesitation that the bill now before us does not come within the definition of "money bill", and that therefore the amendment is in order.

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:

Mr. Speaker, I rise to participate in the discussion on the point of order, chiefly because of the citation just read by the hon. member for Kamloops. I believe the Minister of Finance has really put his finger on the nub of the question. Frankly, I believe it is possible to word an amendment to the motion for second reading which would be in keeping with citation 657 of Beauchesne's third edition, which would declare a principle such as that in the proposed amendment, and still be in order. Unfortunately the hon. member for Muskoka-Ontario, instead of declaring some principle, has taken the prerogative of a minister to suggest that it is expedient to introduce a measure involving the expenditure of money.

The hon. member for Kamloops has endeavoured to base his case as to the propriety of the amendment on citation 579 of Beauchesne's second edition, on the basis of which he argues

Foreign Exchange Control that this is not a money bill. I must say the hon. member drew my attention privately a few days ago to the citation he has just read, and when I first looked at it I found it perplexing. However it was not very difficult to discover what it was all about. All one has to do, as I would expect the hon. member for Kamloops to do, is to look at citation 579 in its context. It will be noted that citation 579 in Beauchesne's second edition is one of the notes listed following standing order 61. Standing order 61 is the standing order which says in effect that all bills voting money are the sole gift of the House of Commons.

Let me repeat that the purpose of standing order 61 is to say that money bills must originate in the House of Commons only; in other words, they cannot originate in the other place. I believe what has happened is that we have fallen into the practice of calling any bill involving the expenditure of money a money bill. Technically speaking, money bills are those bills which vote money, in other words, the supply bills.

Standing order 61 and citation 579 deal solely with that question. The effect of citation 579 is that a money bill, that is to say a bill voting money, cannot be denied introduction in the Senate if it has something else attached to it. Let me repeat that what this whole section in Beauchesne's second edition deals with is the question of defining a money bill. A money bill is a government bill which does nothing but vote money; and that kind of bill can originate only in the House of Commons. Citation 579 protects the rights of the Senate to this extent: if a money bill asking that mdney be voted has something in it besides the voting of aid or supply, then it could originate in the Senate. Section 53 of the British North America Act reads:

Bills for appropriating any part of the public revenue, or for imposing any tax or impost, shall originate in the House of Commons.

Entirely apart from what are correctly defined as money bills, namely, bills that vote aid or supply and nothing else, are public bills which involve the expenditure of money. Such a bill can be introduced in either house, but when it is presented it must be introduced by a minister who is able to say that His Excellency has seen it and has approved of it. I submit that the citation referred to by the hon. member for Kamloops does not apply to this bill at all. That citation merely defines clearly what is a money bill. He is correct in saying that this is not. a money bill; in other words, it is not a bill for voting aid or supply and nothing else. This is a public bill involving the expenditure of money and therefore it has to be introduced by a minister of the crown,

1694 HOUSE OF

Foreign Exchange Control and so would an amendment of the kind now before us, which I feel is therefore out of order.

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

Harry Rutherford Jackman

Progressive Conservative

Mr. Jackman:

May I point out that, instead of this bill involving the expenditure of money, if the foreign exchange control board continues to go on in the same manner as it has during the last few years it will show considerable revenue for the crown. Last year the profit under the regulations under this bill amounted to $10 million.

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 thank hon. members for the assistance they have given me in coming to a conclusion. I must say that it seems to me that this is a public bill involving the expenditure of money, and I must rule the amendment out of order.

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

Harry Rutherford Jackman

Progressive Conservative

Mr. Harry R. Jackman (Rosedale):

Mr. Speaker, when the minister introduced the resolution on March 17 he said that no doubt the house would hear something about the criticism which was leveled at the government in regard to the change which was made in the rate of Canada's currency in July, 1946. That was the time when it was restored to parity with the United States dollar. May I quote one or two of the remarks of the minister, as reported on page 1566 of Hansard:

-that move was hailed with satisfaction by virtually every section of the country-

The minister went on to quote from an editorial which had appeared in the Globe and Mail, as follows:

It was designedly kept at 90 cents for several reasons, not least among them the protection of our future competitive trading position. It is, therefore, somewhat silly for some quarters to attempt to make political capital of the government's action as a "masterstroke" of economic strategy.

I do not know to what political quarters they were referring.

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:

That is the Globe and Mail; it is not my statement.

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

Harry Rutherford Jackman

Progressive Conservative

Mr. Jackman:

I realize that, but they were referring to the attempt to make political capital of this masterstroke. The minister went on to quote the editorial as follows:

The return to parity must be read as an accurate indication of the impact of United States conditions on our economic structure. The change was forced on us by the inflationary trend within the United States.

There was an inflationary trend in the United States where the price level was higher than in Canada. Certainly the foreign exchange control board was never designed to control the cost of living in Canada. The purpose sought to be achieved in July, 1946, was to keep down the price level in Canada, something which had nothing to do with the control of exchange. We found the government at that

time using the board for a purpose for which they should never have used it, using it for a purpose which was not proper.

If the minister thinks that any kudos is due to his own party for the restoring of the Canadian dollar to so-called parity with the United States dollar on July 5, 1946, may I read to him what I said during the debate on foreign exchange control on July 2, 1946. I think I am usually fair to the government, and here is what I said at that time, as reported on page 3048 of Hansard:

However, I will say this on behalf of the board. It is convenient for traders on international account to know that they can buy foreign exchange at a fixed rate and sell it at a fixed rather than a fluctuating rate.

In other words, there are a number of businessmen in this country who like to make their money without having to work for it. If they can buy exchange at one fixed rate and sell it at another fixed rate, so that they cannot possibly lose, it is a very simple way of making a considerable amount of money in view of the transactions involved. As I pointed out, the rather small percentage which the board takes is sufficient to pay all its operating expenses and the high salaries of the officials of the board and still show a profit of no less than $10 million, but which is still an exaction from the business community of Canada. I went on to say:

But the danger is that if these rates are artificial and are sometimes subjected to severe readjustment -the Canadian dollar is now selling too low in world markets-the readjustment to a proper value if it comes suddenly may cause real hardship, which would be avoided if the readjustment came gradually and the higher level of the dollar was foreshadowed by gradual increases in its value.

There was no reason why the government should expect any particular praise because of the change in the value of the dollar at that time, because that change was foreshadowed by economic events. Had the control board not been in existence we would have found the Canadian dollar to be quite close to parity with the United States dollar. The minister now suggests that we are criticizing the action taken at that time. The armistice had just come about a short time before

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:

A year before.

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