March 21, 1949

PC

Harry Rutherford Jackman

Progressive Conservative

Mr. Jackman:

A year before, if you like, and the boys were still coming home from overseas. We were still in a chaotic state and no one knew precisely what was going to happen. It was still a period of hush-hush; we were not being told a great deal, there were secrets as to the troops coming home, and so on. At that time we felt that perhaps it might be just as well, the office of price administration in the United States having

expired on July 1, 1946, that some action be taken. We were not in possession of sufficient information at the time to criticize, even if we had desired to criticize.

I should like to point out that one projects these difficult and technical questions with a certain amount of humility, which indeed is becoming I think when one questions policies on foreign exchange or matters having to do with international finance. They are not easy even for those who are privileged to devote all their time to them. In fact, as was pointed out by the hon. member for Muskoka-Ontario (Mr. Macdonnell), we find great differences of opinion among the so-called experts. Our economic and financial system is like Topsy-it just grew. It has grown sufficiently to give the United States and Canada the highest standard of living of any two countries in the world. All countries in which there are great financial centres have a higher standard of living than other countries. These natural economic laws functioned, and it was under them that we achieved a high standard of living. To get away from this natural working and to put ourselves in the hands of helmsmen who are economic experts but who cannot possibly foresee all the reactions to their policies, and all the repercussions which may arise from any particular line of action, is something which we on this side of the house do not favour. It has often happened in the past that a policy, which was a part of a plan that was designed to do good, has had in it the seeds of a much worse condition than existed before. In other words, the cure was worse than the disease. That is the general philosophic reason, if you like, founded on facts in great number, why we do not favour controls unless it can be shown that the controls are getting us somewhere.

In my opinion the minister made not a bad defence of the operations of the foreign exchange control board during the last few years, but it was entirely one-sided. That is something which I regret should come into a discussion of this highly technical subject. I believe that the house is entitled to all the information on both sides. The minister has the advantage of his economic advisers, who, as I say, spend all their time on these matters. They have a great many relevant facts on both sides of the question which might well be put before the house. I cannot help but say, when I recall the cries about filibustering in the house, that if we on this side, and in the Progressive Conservative party in particular, were not eager to see these measures carried through and debated as well as possible and as quickly as possible, we certainly would have asked that this bill go before the banking and commerce 29087-107

Foreign Exchange Control committee as it did a few years ago. There we could have called expert witnesses and businessmen; we could have found out exactly what the pros and cons are, and what would be the best solution to this very pressing problem. As it is we are doing the best we can, within the confines of the formalities of the house and the committee of the house which will follow; but it does not take the place of the banking and commerce committee. The only reason we have not asked for that is that time is fast slipping by, and the end of the month will soon be here when the regulation will expire if not given a further lease of life. Therefore I hope that the house will appreciate that we have done everything we could to expedite the matter, and that if we had wished to filibuster we certainly might have filibustered, to use the word in a very proper sense, and have obtained the information we rightly require.

The minister, with all the eloquence he could command, pointed out what he thought would happen if the value of the Canadian dollar were lowered in relation to other world currencies-which, by the way, is not necessarily a policy that we would advocate. What we want to see is a dollar which is influenced by natural and normal economic trends as they exist today, and not one which is subject to the ukase of the government itself. If the Canadian dollar were cheapened in relation to other world currencies, it is true, as the minister said, that it would be more difficult for the United Kingdom, which no doubt would like to get more Canadian dollars, to sell in this market; but then we must always look at the other side of the shield. By having a cheaper dollar, if that resulted from natural laws, it would be that much easier for the United Kingdom to buy our products, to buy our wheat, our bacon, and whatever else was required.

As I have pointed out, one must always consider both sides of the question, and it is by no means a simple one, to find what the right answer is. As every businessman, farmer, and storekeeper in the house knows, in our economic system there are certain natural laws that operate when one thing gets out of adjustment with another. Certain influences are set in motion which tend to right that condition. Now that we have fixed controls and regulations those natural laws are offset. We go along in definite, arbitrary channels and often end up in the situations where we are much worse off than we were at the beginning. We have cultivated the sore spots rather than allowing them to be cured rapidly through the natural working of economic laws.

At one o'clock the house took recess.

Foreign Exchange Control

The house resumed at three o'clock.

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:

Mr. Speaker, before the noon recess it had been pointed out that variations in exchange rates followed natural economic causes and brought about the rectification of any lack of balance there might be between the currencies of various countries. I referred to the fact that the Bretton Woods agreement brought about certain rigidities which did not allow exchanges to fluctuate so that these discrepancies between international currencies could be ironed out in the ordinary self-righting process. It was also pointed out that while the move on July 5, 1946, might have been one in which the great majority of the people could have concurred, especially in the direction it took, because there was no doubt at that time that our dollar was worth a great deal more than ninety cents in relation to the United States dollar, it would be foolhardy for anyone to say that the value of the Canadian dollar vis-a-vis the United States dollar since 1946 has, at all times, been as one hundred is to one hundred.

It has not been so because the currency of any country will vary according to conditions and according to the prospects which exist in men's minds from time to time. These variations bring about self-righting devices which are good for any country, and which are even necessary, because if the correction does not take place at the appropriate and natural time, then the correction will very likely have to take place at a subsequent and perhaps much more painful time.

In his remarks the other day the minister built up as strong a case as he could for the policy that the government has pursued through its agency, the foreign exchange control board. If the Canadian dollar were, I will not say devalued, because that is not necessarily the policy of the Progressive Conservative party-our policy is simply aimed at freedom of exchange and an approach to reality as soon as that is possible -but if the Canadian dollar were to go to ninety or ninety-five cents, it would be not only harder for England to sell, as the minister pointed out, but as I pointed out it would be easier for England to buy. It is a question of where the greater benefit to Canada lies.

I might point out further that, if our dollar did find a naturally lower level and England were able to buy more from us but we were not able to buy so much from England because of our cheaper dollar, we would nevertheless, because England bought more from us, have far more sterling and it might be that having more sterling we might be able to buy more goods in the United Kingdom even though the prices were fractionally

higher. There are so many repercussions in the matter of foreign exchange that it is quite beyond the power of any of these so-called experts to say exactly what the reactions and repercussions are going to be.

For generations we have had an entirely free economy whereby exchange found its own level. Under that system we prospered and our country built up one of the highest standards of living the world has ever seen. May I point out to you, sir, that as the minister mentioned the Canadian dollar is fairly strong at the present time. But it might be that in place of the Canadian dollar selling at a discount in relation to the United States dollar, it might sell at a premium. Such a thing is not beyond the bounds of imagination. If the Canadian dollar were to sell at a premium, as it has in the past, in relation to the United States dollar, the contention of the member for Spadina (Mr. Croll), that his people would have to pay more for oranges if our policy were carried out, would be reversed. If by following its natural course the Canadian dollar were to sell at a premium, we could import citrus fruits for the people of this country at cheaper prices than it is possible to have under control.

I should like to mention the recent move of Belgium which was made known last week. This article is taken from the Globe and Mail and is attributed to the New York Times. It is headed "Belgian Monetary Move is Seeking Free Economy." I would think this article was very much to the point at which hon. members on this side of the house are driving. We are attempting to have a free economy and get away from the restrictions which lead to complications one cannot expect, against which one does not know how to guard oneself, and which alter the course of international trade and international liberty. The article reads as follows:

Almost unnoticed, Belgium has just taken two daring steps toward making the Belgian franc a fully convertible currency.

The first former belligerent country receiving Marshall plan aid to tackle the realities of post-war commercial competition, Belgium has become the first country to make good on promises made by all Marshall plan countries to re-establish internal-external monetary stability.

Then farther down the article reads as follows:

The National Bank took a calculated risk. It bet, in effect, that the Belgian economy could stand the shock of being called upon to pay off in goods many millions of dollars in claims represented by Belgian franc notes that had been selling at a discount on free markets against the dollar and the Swiss franc. This is a risk no other European ex-belligerent has taken.

The second significant move toward throwing away the monetary crutches was Thursday's decision to permit United States and Swiss individuals and companies, whose accounts in Belgian banks have

been frozen since the war, to use their money freely for purchases in Belgium.

Both moves are part of a consistently followed economic policy unique in Europe, because it places the establishment of a free economy above economic security. Both steps are risky because they might lead to a serious outflow of capital which Belgium cannot afford. Belgians believe that if every European country retains shackles on commerce until there is no risk in removing them, Europe will be bogged down forever in economic controls.

Authorities plan to unblock other foreign accounts the same as the American and Swiss.

In other words, the great Belgian economists, financiers and statesmen realize that if these controls continue indefinitely Europe will become bogged down in economic controls and there will not be the same freedom in exchange of goods or the same general level of prosperity that there might be if these controls were abandoned. Belgium has taken the bull by the horns and eliminated some of the rigidity which formerly held sway over exchange movements.

Canada has subscribed to the Bretton Woods agreement and, with the exception of a small group in this house, every party enthusiastically endorsed it at the time it was passed in 1945. In the last annual report of Bretton Woods, however, we find that the chairman of the fund states that the board is quite willing to have the various countries come before them, put their problems before the members and re-examine whether or not the rate of their national currencies is sound in view of present conditions. So that it would seem that the international monetary fund governors do not for a moment say that the fixed rates of exchange which the various countries established when they became members of the fund are necessarily the right ones; it would seem that these rates should be examined from time to time, and that perhaps now is one of the times when such an examination should take place.

When Bretton Woods was formed it was hoped first that the various clauses under that agreement would shorten the time during which international currencies could once again find a free convertible level; and, second, that the formation of Bretton Woods would ease the period of readjustment until exchanges became once more freely convertible. We have seen that this purpose has not been possible of fulfilment partly because of the unusual situation in which Europe, Great Britain and some of the other countries found themselves after the war. In place of looking forward with happy expectation to the near future when these various currencies will be convertible, we find that in many of the European countries there are growing up some of the evils which Bretton Woods was formed to prevent. Indeed we find some of these evils are growing up in more exagger-29087- 107i

Foreign Exchange Control ated form than we would have expected to find them if there had not been Bretton Woods itself.

Under the international monetary fund it was hoped that any correction of exchanges that had to take place would be done through an expansion, rather than through a restriction, of trade. Yet my colleague, the hon. member for Muskoka-Ontario (Mr. Macdon-nell), gave to the house this morning various extracts from the report of the foreign exchange control board indicating that there was a tightening of commerce rather than an expansion of it, due to some of the currency restrictions which are today imposed. I point out therefore that there is no use of anyone endeavouring to play the legendary part of King Canute and the sea. You just cannot stop an economic trend. If we endeavour to defeat economic laws through too great rigidities in the operation of a measure like the Foreign Exchange Control Act, we are only storing up trouble for ourselves, and indeed multiplying that trouble.

One has only to refer to page 5 of the report of the foreign exchange control board to realize some of the things that are going on. On that page one finds the following:

The prices at which commodities are exchanged in such bilateral deals are frequently considerably higher than those prevailing for similar goods outside the protected trading area.

That is the type of thing that Bretton Woods was supposed to prevent. To continue:

Moreover, the discriminatory restrictions imposed on dollar expenditures keep out competition from the western hemisphere.

That is, we in the western hemisphere cannot compete there because they have not the necessary dollars and they make it impossible to exchange in their own sterling or whatever currency they are using.

In these circumstances trade within the area takes place in many cases on the basis of higher prices than those prevailing outside the area.

That again is the very type of thing which Bretton Woods sought to obviate.

It is easier for countries within the protected area to buy from each other than from dollar countries because they are better supplied with each other's currencies than with dollars, and it is more profitable for the individual producer in any country within the area to export to another country within the area than to dollar countries because better prices are frequently available.

That is one of the reasons why we have not been getting as much European goods as we might have been getting, and as much as we would have been willing to take. Those exporting countries are getting a higher price in the European circle than they would get if they exported to the dollar area. Indeed I hope that all hon. members will read the report of the board because I think it is

Foreign Exchange Control factual and is objective in many cases. I should like to read this further excerpt:

It is, however, also important to recognize that there is a risk that the special measures taken to maintain and develop trade within this group of countries-*

That is, in the ERP countries.

-may have the effect of reducing their productivity as well as their capacity to earn dollars and so to balance their accounts in this desirable way.

This risk is present because-as will be apparent from what has been said-trade within the group of countries concerned does not move entirely on the basis of competitive price and quality.

In other words, world trade is anything but free under the Bretton Woods agreement. What we are asking for is that there be less rigidity and that, as soon as possible, we get back to the normal state of affairs; because we are breeding certain things which will make conditions more difficult than ever. As I said this morning, the cure may indeed be worse than the disease itself. To quote further from the report:

The tendency for trade within the protected area to take place at a higher level of prices than that prevailing for similar commodities in outside countries cannot fail, as has been noted, to make it more profitable for the individual producer in the countries concerned to sell within the area than in dollar countries.

In other words, keep your goods away from dollar countries and let the dollar countries make donations to you as much as possible.

And a general consequence of the developments outlined is to raise the price and cost structure of the countries inside the area and so reduce their capacity to export to dollar markets.

In other words, what is going on there has the effect of increasing the cost in these European countries so that their level of cost is so high that they cannot sell to Canada. If they had devaluation of their currencies, they would find they could sell to Canada because devaluation of their currencies would mean that, in relation to the Canadian dollar or at least to the American dollar, we could buy their exports notwithstanding the fact that their internal costs were too high for the export market. To continue:

Canadian trade has already been adversely affected by the creation of this protective currency and trading area and it is not possible at this moment to foresee how serious these developments will be from our point of view during the next few years.

Here the board cautions us that the tendencies which are developing in Europe at the present time may become aggravated; and it is impossible even for those great foreseers of our destiny, those in the board, to foresee how serious these developments will be from our point of view during the next few years. Like myself, they admit that they cannot tell what is going to happen, but they want to play the artificial way instead of

allowing natural economic forces to come into operation. A few lines farther down we find this statement:

In this connection encouragement is to be drawn from the recent successful efforts of the United Kingdom to increase their exports to Canada. The performance of other parts of the sterling area and most other ERP countries is less encouraging, and there seems little doubt that competitive offerings would find Canada able to absorb larger quantities of goods from these countries than we are now obtaining.

In other words, in this country we are doing all we can to put Europe on its feet, and yet because of certain exchange fixations, I shall call them, the producers of these countries have been able to make a greater profit in their own currency by sending their goods to some country other than the United States or Canada. We find that while we take all we can, we are not getting from them what we should get because, as the report so well states:

. . . there seems little doubt that competitive offerings would find Canada able to absorb larger quantities of goods from these countries than we are now obtaining.

As I said this morning, if it were not for the fact that we in the Progressive Conservative party are eager to have this measure passed on and put in statute form as soon as possible, we should certainly ask for a hearing before the banking and commerce committee, so that we could find out from the writers of this report exactly what they mean by individual cases which gave rise to putting these words in this published report of the foreign exchange control board.

At the bottom of page 6 the report continues:

The countries whose exports are affected by these restrictions will be confronted with the choice of finding some alternative use, at home or in other foreign markets, for the goods previously exported to the dollar-short countries or making special arrangements in an effort to retain these markets.

The reason I read this paragraph is that the gentlemen who are advising the government on foreign exchange also foresee in the future further difficulties, and nothing is being done under Bretton Woods at the present time to keep down these difficulties and to approximate what would be the natural working of normal economic laws. The report goes on to say that these are the difficulties that we may expect to find under the present arrangements:

These arrangements could involve the provision of the exports without payment in foreign exchange, through the extension of grants or credits, or special deals in which the exporting country agreed to use the proceeds of its exports to take more goods from its dollar-short customers even though these goods were higher in price than had to be paid elsewhere. To make room for these relatively high-priced imports it would be necessary to impose discriminatory import restrictions.

Thus we have to go against our undertakings under Geneva; so that we find that even the foreign exchange control board does not offer us very much hope under the present system of controls. If there is no hope under that system, then surely the least we can do is to go back to the natural working of things where, when one currency gets out of line with another, certain self-righting devices are put into force automatically, and we again come to a normal and natural balance of currency between countries.

If our dollar in Canada were to go to some slight discount-and I do not expect it would be many points in discount in relation to the United States dollar today-we might find that the situation was beneficial to us, because we are primarily a primary-producing country. Let us look at our geography from east to west. In the maritimes we find fish, apples and potatoes, all export commodities. If our dollar were slightly less than a hundred it would give us an advantage in exporting to the United States market or to other markets.

If we go to Quebec and Ontario we find our great storehouse of forest products and minerals, most of which again are exported to the United States. Passing further west to the prairie provinces we find wheat, cattle and bacon, all of which would be easier to export if we had a slight discount on our dollar. When we come to our pacific province we find there forest products and fish, which are export commodities and which would find a readier market in the world today if our dollar were slightly less than one hundred cents. Therefore we have nothing much to fear if our dollar is at a slight discount from the United States dollar.

Another reason why we should go into this matter with the so-called experts to find out exactly how the problem hits them is that when this matter of exchange was before the house earlier we were not only in a period of full employment but there were more jobs than there were applicants available. Today we are beginning to have some spotty unemployment, and in some instances that unemployment is in the export industries, for example, lumber. The policy that a country pursues in relation to its exchange when it has full employment as against a time when there is a shortage of employment is entirely different. We found after the war that when every country was short of goods it wanted to establish its currency at as high a rate as possible because it was a buyer. The more they could get for their pound or their franc, or whatever it might be, the better off they were. Now we are beginning to see at least the possibility of running into a situation

Foreign Exchange Control such as we saw in the thirties, when the whole attempt was to depreciate currency in order to export unemployment, as it was called. In other words, make your goods cheap enough so that other countries will buy them, and keep your population active and busy and give them at least a fair standard of living.

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

James Horace King (Speaker of the Senate)

Liberal

Mr. Speaker:

Order. I am sorry to interrupt the hon. gentleman but he has exhausted his time.

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

Andrew Wesley Stuart

Liberal

Mr. A. W. Stuart (Charlotte):

I did not

intend to take part in this debate, but recently I received a telegram from a good Progressive Conservative friend of mine in St. Andrews. If it is in order I shall put it on the record. It reads as follows:

How about telling the house how the foreign exchange control act affects your constituency in Charlotte county? Best regards.

Doug Everett

At the outset I wish to say that in the county of Charlotte the foreign exchange control board has been a source of worry to the people because, when the premium they were getting on their United States money was taken from them, they resented the fact that they had lost 10 per cent of their earnings. Another matter which caused great concern to these people was the restrictions which were put on the international border after the foreign exchange control board began to function and after the austerity program was put into effect. As we all know, the people on the international border resented these restrictions to a great extent.

In listening to the debate thus far I have noted that the Progressive Conservatives are basing their arguments on the fact that the Canadian dollar should be permitted to seek its own level. During my lifetime there have been two occasions when the Canadian dollar was permitted to seek its own level. On both these occasions a Progressive Conservative government sat on this side of the house.

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):

Will the hon. gentleman permit a question? I know he wants to be fair. If he is referring to me I should like to ask him this question. Is he aware that I did not make that suggestion? My suggestion was that there should be a floor of ninety cents so that if there was any tendency to wild fluctuation it could be controlled.

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

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

I do not believe I suggested that the hon. gentleman said that. I said that the Progressive Conservatives have based their argument on the fact that the dollar should be permitted to seek its own level. If the hon. member looks at Hansard

1700 HOUSE OF COMMONS

Foreign Exchange Control I believe he will find those words appearing there one hundred times in the last ten days. As I was saying, during my lifetime I have known two occasions when the Canadian dollar was allowed to seek its own level. Those two periods which I shall mention briefly were both at a time when the Conservative party was sitting on this side of the house.

The first period to which I shall refer was the one between 1915 and 1920. At that time I was a very young man in the fishing industry down along the international border. I do feel that people living on the international border have a much better idea of the effect of discounts and premiums on money than people living farther away. For that reason I feel I am in a position to explain conditions exactly as they existed at that time.

I remember very well on many occasions going to Eastport, Maine, and getting an American cheque for sardines I had sold in the United States. I would bring it home and go to the bank with it. But I would have to take along with me to the bank someone who was well acquainted with the bank manager before I could get the premium I was supposed to get, or before I could get the premium that businessmen, doing a much larger business than I was, were receiving.

There are men sitting on the other side of the house now who may have had experiences at that time, but they were not on the international border. I can assure the house that, from 1915 to 1920, at no time in Charlotte county or in the state of Maine on the international border could you find rates of exchange posted; if you happened to go in with a few fish scales in your hair or a few hayseeds you were given 10 per cent. But if I were making a transaction and if I got a businessman in the town who was well acquainted with the banker and who knew local conditions better than I did, I would get 15 or 18 per cent.

Now the Progressive Conservative party are arguing that we should go back to that type of thing. I can assure you that the people down where I live do not want any part of that at all. There is a story I have told in the house on one other occasion when this matter was up for discussion. I well remember a man and his wife going to the bank in the town where I live-and that banker still lives here in the province of Ontario. He was the manager of the bank at that time. Apparently the larger the amount of money you had in those days, the greater percentage you got. If you had a thousand dollars you got a better premium than if you had $500.

They both had interests in sardine herring weirs. The woman went to the bank with $1,200, and they gave her 12 per cent. When they were ready to go home her husband said to her, "You made a good day's pay today on your American exchange." She said, "Yes, I got 12 per cent." He said, "No, there is some mistake; I had only $800 but I got 15 per cent." They went back to the bank, and after an embarrassing scene the bank manager apparently decided that he should pay her 3 per cent more on the $1,200.

There were many many instances exactly as I have described which took place at that time. I remember another occasion when a good friend of mine, who is still living down there today, had a like experience. He was living on the other side of St. George, a little town in my county. He was going to St. Stephen to buy a car and had an American cheque. He went to the bank manager in St. George and asked what premium they would give, and they said 12 per cent. He came to St. Andrews and they offered 15 per cent. Then he came to St. Stephen and after going to two or three banks he kept trying until he got 18 per cent. That was the condition which prevailed down there. And I could give a hundred examples of conditions which prevailed between 1915 and 1920.

That was a time when the Conservative party sat here in office-the Tories. That was the condition we had down there then, and we had to put up with it.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

What year was that?

Topic:   FOREIGN EXCHANGE CONTROL ACT
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PC

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

Union government.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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LIB

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

That was between 1915 and 1920. And I can remember very well the year 1918 when I went into the sardine industry. I can assure you that is the condition which existed in 1918.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

You had Liberals in that government then.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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LIB

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

No; they were Conservatives.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

You

are not discussing the exchange rate; you are discussing dishonesty.

Topic:   FOREIGN EXCHANGE CONTROL ACT
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LIB

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

I did not interrupt you when you spoke. I am addressing my remarks to the Chair, and everything I say is correct. I can substantiate every statement I have made.

Another statement made here today contained the suggestion that, if there were a premium on American money, much more American funds would come into this country for investment in industry. Well, when I hear members speak in that way I just look back to the period between 1930 and 1935,

when the premium went as high as 25 per cent. I would ask some hon. members on the opposite side of the house to tell me where is this enormous amount of money that the Americans poured into Canada during that time for the development of industry in this country. Because, if it did come in, none of it came to the section of the country in which I live; I can assure you of that.

I come to the period between 1930 and 1935. Again I was engaged in the fishing industry. At that time I think a dollar looked about as big as it ever did at any time in the history of Canada. Again the premium on American funds went as high as 24 per cent. That is the highest point I can remember. That premium of 24 per cent was a big help when we were selling our produce for practically nothing.

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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?

Some hon. Members:

Hear, hear.

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LIB

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

All right, you may thump your desks; but I want to tell you what happened then. Our American friends who were buying sardines said, "This is too good a thing to lose." They came over into my county and deposited their American dollars in the banks. Those funds were deposited in the banks of Charlotte county. They took the 25 per cent premium themselves, and paid me in Canadian funds.

The member who sat on this side of the house from my county at that time is a very fine man; he is living today. He was well aware that that condition existed, because it was brought to his attention on many occasions. But we were still paid in Canadian funds. Our American friends took the 25 per cent premium, when they brought the cash into Canada. Some of you people who live near the international border would perhaps remember those circumstances; I remember them well. And I tell you today that many people who are arguing that this Canadian dollar should be allowed to seek its own level are showing selfish motives. I believe that at some time or other they themselves have been benefited by that condition. I do not believe that the primary producers who are carrying on in industry, as I was during the two periods I have mentioned, would want to see the Canadian dollar seek its own level and be handled under the same conditions as it was in those times.

I now come to my explanation as to why I have supported and still support the foreign exchange control board. When war broke out in 1939 a Liberal government was sitting on this side of the house. They decided there must be no manipulation of funds, so far as they were concerned, and they pegged the American dollar at a 10 per cent premium. From 1940 until 1946, I believe it was, when the premium was taken off, I could walk into

Foreign Exchange Control the same bank I spoke about earlier, pass in my American cheques and get back exactly the same premium as the Prime Minister of this country or anyone else.

To me that is democracy. That is why I have supported the foreign exchange control board, and that is why I maintain that the board has done a good job. There was no exporter or importer who could take any advantage from the situation, because each and every person was given exactly the same premium.

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

Heber Harold Hatfield

Progressive Conservative

Mr. Hatfield:

Was not that 10 per cent a help to your fishermen?

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

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

I have not argued that it was not, and I have said they resent the fact that they are not getting it today. And I believe the hon. member for Victoria-Carleton (Mr. Hatfield) will admit he has made plenty from foreign exchange, as others have. I think that is one reason why many of them today are speaking as they do- because they were benefited by it. But, as I said before, they are taking a selfish attitude. You have to look at the general picture, and we should all be working for the benefit of the greatest number.

Another feature I might mention is this. Ninety per cent of the fuel oil and gasoline used in this country is being imported from the United States. If our Canadian dollar went down to 60 or 65 cents-and we do not know where it might go-where would those people be who are obliged to use this necessary commodity which we must import from the United States? There are two sides to the question.

Then, as to coal. We import great quantities of coal into Canada. I believe today that if we were obliged to pay a 20 or 30 per cent discount on the Canadian dollar we would find it difficult to bring in that coal with which to do our manufacturing. I believe that the man who should have been given some consideration is the primary producer, particularly the primary producer who is marketing his own products. That is the man I am fighting for. I have no worry about the man who is buying from him and selling again, but the primary producer who is selling his own product should be given some 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

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

Would not the fisherman who is selling fish get the ten per cent under these circumstances? If you wish to support him would you not have to vote for that?

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

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

No, I cannot see it. As I have explained, the United States importers can come over and deposit United States money in Canada. We would have no assurance that we would get the premium.

Foreign Exchange Control We did not get it under the Conservative government from 1930 to 1935.

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

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

I understood the hon. member to say that the foreign exchange control board was controlling that at the present time. If it is, the fishermen would get the benefit of the ten per cent.

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