Mr. Howe:

The pit prop industry is not going to be the industry it has been in the

Supply-Trade and Commerce past. When I was in France I happened to pass a considerable forest that had been burned over. The timber from that forest was being cut up for pit props. I asked the man in charge where the pit props were going, and he said to the United Kingdom.

Pit props are the lowest form of lumber that can be cut, and it is inevitable that those using them will get them in the cheapest market. Taking transportation costs into' consideration, the cheapest market is not likely to be Canada, although I understand small quantities of pit props are being sold. The pit prop industry, as we knew it during the war years, was an abnormal industry. I am afraid it will never reappear on that scale in the foreseeable future.

Mr. Brooks:

At one time the minister suggested we might get a market in Turkey; has he any information on that?

Mr. Howe:

Negotiations are still under way. We have had a market in Turkey, and I think its purchases this year will be about on the same scale as the purchases last year.

Mr. Brooks:

Nothing definite?

Mr. Howe:

Nothing closed.

Mr. Green:

Will the minister comment on the attempt which is being made by the lumbermen in Washington and Oregon to have restrictions placed against the importation of Canadian west coast lumber into the United States? We read articles about these men demanding this and that, and I was wondering how serious that attempt is.

Mr. Howe:

Mr. Coldwell:

In Europe?

Supply-Trade and Commerce

Mr. Howe:

In Europe, yes. With that program is coupled the lowering of trade barriers and removal of restrictions.

Mr. Green:

Does that include the pound?

Mr. Howe:

It is hoped that it will include the pound. The British treasury is not fully in agreement, but would seem to be coming into line. The program is hardly workable without the pound. The objective is a program that will make the pound and European currencies freely convertible. You might take the offhand view that this will mean a European bloc, and that trade with America will be influenced adversely. I do not agree *with that view. I put that hypothesis before the officials in Paris and it seemed to me that their answers were satisfactory. They seem to have provided safeguards against inflation, and for preventing that market getting out of balance with our own market. It seemed to me that they had satisfactory answers to the questions that I asked in that regard; and I came away convinced that such an arrangement is a logical first step toward the return of convertibility of currencies throughout the world.

I found that the countries I visited were becoming less dependent on Marshall aid, and more and more tending in the direction of the return of trade to private enterprise. In Belgium wheat and coarse grains are about the only commodities that are now handled by state agencies. In Italy and France more commodities are being handled by state agencies, but the list of those commodities is being cut down from time to time. There is a return in Europe to private trading, which I think is most favourable to Canadian trade. We in Canada find it easier to do business with private traders, who are concerned only with price and quality, than we do with governments that have other factors in mind.

I found the people in all four countries that I visited were working hard. That was particularly noticeable in driving about the country districts. Every square inch of land was being cultivated. Those who were working the land seemed to be cheerful and happy. Food was plentiful. There were no food restrictions in the countries that I visited. There was plenty of food at reasonable prices. Each of the countries had a population problem. The growth of population has outstripped the productive capacity of the soil. That fact is a worry in all of these countries. Wherever I went I met a discussion of the possibilities of immigration to Canada. We in North America, with plenty of land, are bound to give serious attention to that problem.

Mr. Green:

Did the minister find that in the United Kingdom, too?

Supply-Trade and Commerce

Mr. Howe:

I did not visit the United Kingdom. On the day I left Canada an election date was fixed in the United Kingdom. On the day I left Europe the results of the election were known. I thought perhaps the timing was unfavourable for a visit from a Canadian cabinet minister. I had wanted to go to England, but I cancelled that visit.

The threat of communist domination, which was very evident and very serious during my visit in 1947, seems to have been reduced to manageable proportions. There are still large numbers of communists in France and Italy, but they are clearly in the minority. The dividing line has been drawn, and, assuming that the productiveness in those countries can be kept up, provided there is no shortage of food, I think the fear of communist domination in the four countries that I visited was much less than during my visit in 1947. I came back from that earlier visit feeling that there was a possibility that communism would sweep western Europe, as it has swept eastern Europe. I came back this time with a very strong feeling that that would not happen.

I must say that I never had a more enjoyable holiday. My wife and I combined a good rest with most enjoyable contacts with old and new friends in Europe. I hope that I may be privileged to repeat the holiday under similar circumstances before many years go by.

Mr. Ross (Souris):

Mr. Chairman, I am sure that all hon. members have listened for the past hour with intense interest to the statement of the Minister of Trade and Commerce. Those of us who have spent some years in the house have come to know him as a great optimist. He certainly has been optimistic about Canada's future, at least for the next year. I am quite sure that every hon. member, irrespective of where he sits, hopes that that optimism will be fully realized, and even more.

The minister spoke on the matter of trade and economics and said that they could not very well be separated. I am sure we agree on that point. He spoke on the lack of convertibility of foreign exchange. That is one of the very great problems of this nation today. There is not much argument about that. He dealt at some length with our trade with the United States, and said that it was greater than that of any other two countries in the world. I accept the statement he made. He said that 50 per cent of our exports were to the United States, and 70 per cent of our imports were from that country, and that our adverse trade balance increased from $400 million in 1948 to some $600 million in 1949. He also pointed out that the manufacturers in Canada found it easier to sell in the United States of America than in Europe.

I am sure that most of us are very much concerned about the United States market. The minister also said that there was no trouble in selling Canada's wheat crop. That will also interest very many of us. May I add that the great nation to the south of us produces many of the same types of surpluses that we in Canada do. Especially is that true of agricultural production. Therefore we do have, as the minister said, very many of the same problems, in the matter of looking after foreign markets.

He also said that, as a barometer of agricultural prosperity in this country, farm implement sales had increased fivefold in the past year. They had increased from about $52 million to $230 million. I am sure that anybody who knows our farmers, particularly our western farmers, knows that they are great spenders. If you give them the money they will see that there is prosperity, and money moving in this country. That has been their tradition in Canada up to date.

The minister might have added that the cost of farm implements had increased 12 per cent in Canada during the past year. The estimated requirements of farm implements in Canada in the coming year, which the minister has been so optimistic about, are still over $200 million, and farm implements are still increasing in price. Of the Canadian farm implements 95 per cent are manufactured in eastern Canada. I know we cannot discuss in detail one factor which is going to enter very effectively into the rising cost, namely, freight rates. Increases have taken place in freight rates, and arguments are going on now. That will add considerably to the cost of farm implements. Of the estimated requirements for 1950, 60 per cent of the implements are required in the prairie provinces. Therefore we shall have quite an added cost over last year on these important commodities. That in itself is quite an item.

Our farmers, even sometimes when they have not the wherewithal to purchase these implements, are great buyers. They do try to keep up to date in modern equipment in so far as possible, and they should.

The Canadian people, despite all of this optimism, have a bit of fear about the future. I hope that that fear will not be realized. Some of us have it today. The Canadian people are now realizing that our trade is slipping, to some extent. In 1949 our over-all external trade dropped by about $87 million. In the first two months of this year indications are that our over-all trade was $22 million down, and our trade with the commonwealth $45 million down. I know I cannot discuss this, but measures have been proposed in this house to try to bring about a

trade conference, which I think would be all to the good for our primary products. But the government defeated the proposal.

During the past year we have been very fortunate in that the Marshall aid of the United States-and the minister made some reference to that plan-has helped us. Money was supplied to the extent of several hundred million dollars by the United States, especially in order that Canadian wheat could be supplied to the United Kingdom. Had this all been done otherwise, our trade position with the United Kingdom would have been very different from that set out by the minister.

Mr. Howe:

No.

Mr. Ross (Souris):

Wheat could be delivered to them, involving several hundred millions of dollars of Marshall aid money.

Mr. Howe:

Marshall aid money was applied to Canadian wheat; but we would have sold our wheat, whether it had been or not. Marshall aid money for wheat did not help Canada particularly. It did help Great Britain's dollar balance with other countries. The dollar balance with Canada was taken care of in other ways, without Marshall aid.

Mr. Graydon:

It didn't do you any harm.

Mr. Ross (Souris):

No, it did not do the

minister's position any harm at all. That plan was made available to Great Britain to take much of our production, and much more wheat than anything else. That is what happened.

Canada is-and we will all agree, including the minister-a great exporting country. Our prosperity certainly depends upon export markets abroad. I pointed out that while we are deeply interested in United States markets, yet the United States and Canada produce many of the same type of surpluses. Therefore we both have to look abroad for trade.

I have here the December 10 issue of Foreign Trade, a most interesting journal put out by the minister's department. On the first page I find an article which, because of its interest, I shall read into the record. It deals not only with the export but with the domestic situation, and says:

A reduction in Canadian export volume from the peak year of the war did not reflect corresponding reductions in production. It was due in part to increased domestic consumption. The Canadian agricultural economy, at the present time, was producing at a level that met the effective demand, and in some commodities tended to exceed it. But, the effective demand was restricted by monetary difficulties and trade restrictions, rather than lack of hunger, when the dollar supply was taken into consideration.

"The importance of agricultural exports in our economy places Canada in a unique position," the

31, 1950 1435

Supply-Trade and Commerce minister declared. "Products of farm origin, while below wartime levels, still represent a substantial part of total exports, and of these wheat alone accounts for about 15 per cent. Canadian farmers, therefore, are still vitally concerned with world markets and are fearful lest monetary difficulties and other trade obstructions deny them entry to their natural market, which is the market of Great Britain. We are the nearest of all countries which supplied them in wartime. We still want to supply them until their needs are satisfied. If we did that, we would not have any marketing problem in those products which they required from us during the war.

"During recent years, as much as 44 per cent of our farm production has entered export trade. To take wheat again, as an example, about 75 per cent of our production has been sold abroad. Thus, in relation to some other exporting countries, Canada has an economy which is particularly dependent upon exports; both from the point of view of the volume and the consequent reaction of Canadian prices to changes in world prices.

"We welcomed the statement of the United States representative that they are anxious to put part of the area now in grain back into grass. The economy of Canada would benefit by that being done at an early date. It is essential for us to export 75 per cent of our wheat. Unless our exports can be maintained, we cannot continue to purchase large quantities of goods from the United States and the United Kingdom. We should purchase from other countries, including those two, such goods as they can produce at lower costs than they can be produced in Canada.

On that point, I think there should be more co-operation between the departments of our own federal government. It was pointed out during the discussion of the estimates of one department, which amounted to $420 million, that the purchase of one hundred F-86A aircraft had been recommended. I am not technically qualified on the subject, but that recommendation had been made. True enough, they were to be produced from a plant in Canada, financed to some extent by American capital. It was pointed out however that the Vampire machine, which has features which make it preferable, could be purchased from the United Kingdom for one-third of the amount asked for the F-86A.

I am not going to discuss the details, but if that suggestion is correct, then we see here where a saving could have been made, and our relations with the United Kingdom fostered, so that our trade might be helped in the matter of disposing of our own agricultural production. I am citing only that one example, but I do suggest there should be closer co-operation between departments of government in making purchases, so as to create a better export trade market.

Apparently there are different points of view held by different ministers of the federal government concerning the methods which should be followed. We heard the Minister of Fisheries (Mr. Mayhew) state that, while he was not speaking for the government, he was setting forth a plan for barter deals to boost

1438 HOUSE OF COMMONS

Supply-Trade and Commerce Canada's trade, and to sell Canada's food and other primary surplus production in the nondollar area. That is a plan which certainly should be given some consideration. He said it was his personal view, and it was evident that there is a great difference of opinion within the government on such matters. But even the fact of a minister of the government giving it serious consideration is of importance.

Many of our manufacturing and assembly people in Canada enjoy far greater protection under the federal government today than they have had at any time in the history of Canada. This comes about because of controls, taxation and the like. Many large industries now enjoy greater protection, as a result of federal government plans, than they have ever enjoyed. This has an important effect, because it all enters into the cost of production of the primary producer, and into the cost of living with which the consumers are faced.

When discussing another matter on March 27, I set out a list of figures, and they may be found at page 1168 of Hansard. At that time I was quoting from the Winnipeg Free Press of March 20, in which had been set out a list of articles, many of them very important not only to the farm producers but to the people generally throughout the nation. These figures dealt with an automobile which cost 20 per cent more in Winnipeg than in Minneapolis. Then there was an article which appeared on March 21 that dealt with many electrical fixtures, some of which cost as much as 40 per cent more in Winnipeg than they did in Minneapolis, despite the fact that both these cities are centrally located in the neighbouring countries, and are about the same distance from the great manufacturing areas.

In my view that great difference should not exist, in view of the degree of co-operation we profess to have with the nation to the south of us. As I said, I do not believe there was ever a time since confederation when certain of these industries had greater protection than they have today. Controls, taxes and embargoes applied by the government have added to the cost of agricultural products, and to the cost of living in this nation.

When the Minister of Trade and Commerce is discussing his estimates I would ask him to explain why this situation should continue during these times. I also placed on Hansard some figures having to do with raw products -livestock and other such commodities- sold on the same date by agricultural producers at Winnipeg and, in the United States, at Minneapolis and St. Paul. Those figures may be found at page 801 of Hansard.

It is a strange fact that in practically all of these instances the United States farmer received a great deal more for his raw product than did the Canadian farmer; yet when he came to buy a processed article, in most cases it could be bought cheaper in Minneapolis than in Winnipeg. Surely that situation requires some explanation to the consumer. It is a condition which should not be allowed to exist at this time, particularly in view of the measure of co-operation which we are told exists between these two great nations. I would ask the minister to give the committee some explanation as to why a situation of that kind does exist, because it is a matter of some importance.

The point is made, in the article from the minister's department to which I have referred, that it is essential to the economy of Canada that we export 75 per cent of our wheat. It is essential not only for the people who produce that wheat but, as indicated by economists, in the Sirois report of the 30's the production of wealth in the form of wheat and other grains has more to do with saving our economic system in Canada than anything else. There is not only the production of wheat, there is its transportation, financing, storage and the many other ramifications of this industry during the year after the crop is grown and delivered to the elevator. It is most important to the economy of this country as well as to those who produce the grain itself.

It is realized by many people that the powers of the Canadian wheat board expire on July 31, 1950. At the opening of this session I asked if the policy with regard to the handling and disposal of the 1950 wheat crop would be made known before the Easter recess so that our farmers would have that information before seeding time. The minister has stated that floor prices for oats and barley will be announced before seeding time, and I now ask him to state whether an initial payment will be made for the 1950 wheat crop which commences on August 1, 1950, in order that those who are going to seed may be given some guidance. I think that is most important.

While I am talking about the Canadian wheat board may I say that I think everybody in the house knows where I stand about it.

I have always favoured the Canadian wheal board, and I am sure that with the feeling of this house in general it will be continued.

I do not know what powers will be granted to it or anything of that nature, but, as I say, with the feeling of the house I am sure

the board will be continued. I hope that a policy in this regard will be announced as soon as possible.

Mr. Howe:

It will be announced next week.