September 8, 1950

CCF

Major James William Coldwell

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

Mr. Coldwell:

While that limitation was set aside, because of considerations the minister of munitions and supply gave the house, including the difficulty of obtaining certain basic supplies under that limitation, it is interesting to see what was done at that time under similar circumstances. Mr. Mackenzie King said this, as reported at page 171 of Hansard for September 12, 1939:

Hon. members will recall that at the time the defence purchasing board was set up the Minister of National Defence (Mr. Mackenzie), in reply to a specific question, said-

Then he quoted what Mr. Mackenzie had said when the defence purchases act was passed:

The answer is this, that this is a measure for peacetime-

The measure we are discussing today is, of course, a measure introduced in peacetime. The then prime minister continued the quotation as follows:

-and I trust that it will long be used for that purpose. If an emergency arises, doubtless other measures will be enacted immediately to deal with the emergency.

Mr. Mackenzie King went on to say:

The main concern at that time was to ensure that there should be no profiteering incidental to preparations for defence.

I am suggesting this morning that at the present time we have no legislation which would prevent profiteering incidental to preparations for our defence. Hon. members will recall that at the last session we endeavoured to amend the bill then before us so that we might limit profits to five per cent, and suggested to the government, when it refused to accept our proposal, that it might propose some alternative to prevent profiteering. Up to the present time, however, we have no such legislation on the statute book. Mr. Mackenzie King went on to say:

The then minister of finance (Mr. Dunning) envisaged different methods for controlling profits in the event of war. In the same debate he said:

"And of course if-God forbid-war should come and we have to consider the results of war inflation of one kind and another, outside of this measure altogether we shall have to evolve schemes for profit control which will apply not only on purchases by the Department of National Defence. I think there is no doubt we would come to that."

Of course we did come to that during the second world war. At the present time the condition in this country is vastly different from the situation we faced in 1939. Hon. members will recall that even in 1940 at one time we had something like 400,000 people in

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Canada on relief, many of whom were unemployed persons. As the minister indicated this morning, industry was not working at anything like capacity.

At the present time we have probably one of the highest levels of employment in the peacetime history of our country, and one may say that our industrial machinery is fully employed. The very figure the minister gave this morning of the value of the total national production this year, an all-time high, indicates that there is neither a labour surplus nor a surplus of industrial machinery.

Consequently it seems to me that if we are to protect the country, apart altogether from individuals, from undue expenses in the field of national defence equipment, much more than is suggested in this measure should have been brought before the house. The minister told us this morning that we have never had more goods and services. As I have already stated, he recognizes that in spite of that fact there were hoarders-and as I have said, I suspect there were some profiteers as well.

No control is foreshadowed or guaranteed in the measure before us other than the control of essential materials needed for defence. But, I ask the government, what of essential supplies needed for the sustenance and welfare of the great masses of the people? We cannot rely wholly upon equipment for our defence. As the minister said at one point, we have to marshal the moral resources of the country, and, if we do that successfully we must see to it that we have sufficient supplies and that they are so allocated that all our people will receive an amount sufficient to ensure a reasonable and decent standard of living.

I have been watching the newspapers lately and have noted that some of the European countries that removed controls are in difficult circumstances. For instance, for a long time Belgium was held up as an example of the beneficial results of the removal of controls; but today Belgium is suffering from severe inflation, and in many respects supplies are so difficult to obtain that the government of Belgium is preparing to introduce some rationing as well as some controls.

The hon. member for Vancouver East reminds me that at the present time there is a considerable amount of unemployment in Belgium. That is what he was informed when he was an adviser to the delegation to the ILO conference at Geneva two or three months ago. Consequently I say that while the measure gives the minister very wide powers in some respects, it does not give the government those essential powers

which are necessary in order to protect the people against the kind of condition to which I have been referring.

Effective defence, the minister said, demands the co-operation of industry and all the people. I want to say to the government that if we are going to get that co-operation there must be freedom from discontent. Industrial unrest resulting in strikes would be disastrous to the defence preparation plans that the minister has in mind. Let us also bear in mind that so far as the farming population is concerned, their prices have been falling in some instances. In the areas which some of us represent in the house the initial price of wheat this year is considerably lower than it was a year ago, and with the prospect of a low-grade crop the returns may not be nearly sufficient to meet the needs of the population at a time when we have serious price inflation and the prospect, if shortages occur because of our defence activities, of further increases in our inflationary difficulties.

The minister said that the requirements foreshadowed in the rearmament of ourselves and the assistance to our friends across the seas would not demand more than ten per cent of our gross product. He went on to point out that in the peak years of the war at times forty per cent was required for war purposes. Again if we compare 1939 with the present situation we can see that ten per cent now will mean a great deal more to our general economy than the allocations we made in 1939, because of the difference in the availability of labour forces and the use of machines. We have few factories with machines idle at the present time.

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PC

Arthur Leroy Smith

Progressive Conservative

Mr. Smith (Calgary West):

Will the hon. member permit a question? I think the reference he made to forty per cent applies to 1943 and not 1939.

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CCF

Major James William Coldwell

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

Mr. Coldwell:

I think what I said indicated that I was also referring to 1943; then I said that if we compare 1939 with 1950 we find that we had both idle machines and idle labour in 1939. Therefore ten per cent now with machines and labour fully employed means a great deal more in regard to inflation that what we started to do in 1939 meant in 1939 when we had available both idle labour and machines. That was my point.

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PC
CCF

Major James William Coldwell

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

Mr. Coldwell:

I may not have made it clear, and I appreciate the hon. member asking for clarification.

I think what I have said demonstrates that we need more effective controls than we had in 1939. Yet the government in 1939 paralleled their preparations for defence and

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Essential Materials (Defence) Act participation in the war with comprehensive proposals for the prevention of profiteering and the maintenance of a price level. Let us remember that at that time the government indicated clearly that they were not going to allow profiteering and would introduce excess profits taxes in order to prevent anyone from profiting unduly out of the war. In spite of that there were some very great beneficiaries of our war effort. Because of my interest in the subject during the war, I noted the reference the minister made this morning to the aluminum industry. During the war we gave terrific concessions to the Aluminum Company of Canada. They built a most remarkable power project at Ship-shaw, and I thing the engineers who constructed that great project can be very proud of it. I have no criticism of the men who did that wonderful job, but after all, we paid for sixty per cent of the project.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

May I correct my hon. friend? We paid nothing for the aluminum project. Never at any time have we paid anything to the Aluminum Company of Canada for power development or for any capital construction. Anything that we did for that company by way of accelerated depreciation we are getting back now through additional taxes.

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CCF

Major James William Coldwell

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

Mr. Coldwell:

All right; suppose I take the correction of the minister and say that we did not pay for it. What we actually did by accelerated and special depreciation was to allow the Aluminum Company of Canada to charge an additional amount over cost of production and normal profit to pay for sixty per cent of the Shipshaw project and one hundred per cent of the additional aluminum equipment installed. Speaking from memory, because I did not expect the minister to mention it this morning, I think the special and accelerated depreciation amounted to approximately $170 million. I can well remember the statements made in the house when this agreement was under criticism. We were told that the justification for these tremendous concessions to that great company was that after the war the larger part of the new equipment, and indeed the new electrical development, would be surplus and would not be used. Some of us argued that with the coming of the use of light metals in all probability there would be no surplus plant. As a matter of fact, so far as I have been able to ascertain, expansions have actually been made by the company during the last year or two.

Let me say to the minister that I am not criticizing the excellent job the company did for the country during the war, or the excellent job which I hope it is going to do now.

Essential Materials (Defence) Act What I am pointing out is that while we asked the people of Canada generally, and our young men particularly, to make sacrifices, the manner in which we operated during the war enabled some of the great companies

and I have just mentioned one; there were others-to reap tremendous benefits out of the tragedy of war. That was so in the case of steel, nickel, and others that one might mention.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I should like to straighten this out in my hon. friend's mind if I can. I think if the Aluminum Company of Canada had foreseen the future of the industry as we see it today they would never have elected to write off the sums they wrote off through accelerated depreciation in those days. It is true the company took accelerated depreciation over three years, but the result is the company has no depreciation to take now, and anything it earns is subject to corporation tax by the government.

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CCF

Major James William Coldwell

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

Mr. Coldwell:

I am not going to argue that particular point. Hon. members may laugh, but I am going to say that, unlike the people of Canada, unlike the young men who went to war, the Aluminum Company of Canada took no risks at all. They had a guarantee of price and quantity in advance. The money was. put up in advance by the allied countries. Because the condition is changed-and this is what I am trying to say-is no reason why, when we start to do anything during this preparatory period of defence, we should repeat the same kind of policy and the mistakes that I think we made during the last war. I am also saying that, while it is all very well to control allocations and exercise control over industrial material, it is the duty of the house and the government to see to it that allocations of food and other supplies are made available to our people at prices they can afford to pay.

This is a very important measure. I have pointed out that we are not doing anything nearly as comprehensive as we did in 1939, when, as I said the other day, we appropriated far less money than we are appropriating under the bill this session. The authority sought for the allocation of material I am quite sure will be supported by the house, together with the control of prices of essential supplies and services for defence purposes. However, we go beyond that; we say, why control the price level of supplies and services for defence purposes and refuse to give some protection to the men and women working in those industries, the men and women producing food on the farm, and

workers generally upon whose efforts industry in this country will be built during this period of defence preparation.

Let me add that when we divert supplies and the machinery of production to producing military and other defence supplies we are indeed taking away from civilian production, particularly at a time when that production is at peak levels. So I say to the minister that while the powers he asks are necessary under present conditions, the government should be doing much more. It should see to it that there are adequate and proper controls, as the Prime Minister indicated in 1939 and as Mr. Dunning in an earlier speech, earlier in 1939, said would be essential if we had to prepare for war or if war came.

I wanted to make these criticisms immediately, because I was impressed by the deficiencies in the minister's statement as he presented his proposals to the house.

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LIB

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnott:

I listened attentively to the hon. member for Rosetown-Biggar, and I should like to ask one question. Does he propose that the government should impose over-all control on wages and prices?

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CCF

Major James William Coldwell

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

Mr. Coldwell:

I suggest that the government should call together the producers of this country, whether farm producers or wage earners, and discuss with them the levels which they -feel would be reasonable and proper for both farm production and wages. During the war there was very little difficulty about the wage earners coming to an understanding and controlling their own wage levels. We were free from strikes and major dislocations. I notice that hon. gentlemen opposite share with us the view that if you can get something without compulsion it is better to do so, and I have no doubt that the unity of labour, in view of the necessity for preventing aggression at the present time, would enable us to come to suitable arrangements with them for the voluntary control of the wage situation.

So far as industry and other factors in the economy are concerned, the situation is somewhat different. You cannot get together the thousands of people who are producing and distributing all sorts of things, in the same way that you can get the organized groups together, the organized farmers and the organized wage earners. However, in that way I think we could arrive at a decision which would be beneficial to the whole country.

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LIB

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnott:

Even after the question I asked and the lengthy answer of the hon.

member, I still do not understand whether or not he proposes over-all wage and price control.

Mr. Cold well: I am afraid I cannot help it if the hon. member does not understand me; it is not my fault.

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SC

Frederick Davis Shaw

Social Credit

Mr. F. D. Shaw (Red Deer):

It occurs to me, Mr. Speaker, that more effective consideration can be given the proposals of the government in the fields outlined by the minister when the bill which will follow this resolution is before the house. However, I wish to make a few observations at this time, and I intend to make them extremely brief.

When one reflects upon the dangerous international situation; when one considers Canada's accelerated preparedness program to meet whatever situation may arise, it is not difficult to conclude that powers such as the minister is reguesting in this resolution are more or less reasonable. Certainly it is most desirable for the government to be in such a position that the governor in council can take action to avert the possible disruption of defence preparations which are necessary to safeguard the national security. It is most desirable also that the government should be in a position to assist the United Nations in accordance with Canada's obligations. My colleagues and I have always stressed the fact that Canada must live up to her commitments under the United Nations. It is also necessary, I believe, that the government be in a position to prevent economic disorder and hardship on a national scale; and finally we believe it necessary that they should be in a position to engage those persons who are required for the purpose of carrying out such a program.

Having said that, I want to emphasize that this does not necessarily mean that we agree with everything the government contemplates doing or may do under the measure now before us. If it were the purpose of the minister and the government immediately to plunge headlong into a program of rigid controls, stringent allocation measures and rigid price fixing under this legislation, I would be extremely hesitant about speaking as I am at the moment. However, I did not miss the minister's assertion that this was but a standby measure, and that no immediate severe action is contemplated. He used several expressions, all of which mean the same thing. He said on one occasion "as and if required." On another occasion he said, "if and when necessary," and again, "such action may be necessary." Specifically the minister referred to steel and power as being two commodities that might have to be dealt with

Essential Materials (Defence) Act early in the program. It is our firm conviction, Mr. Speaker, that if and when it becomes necessary to take rather severe action under this measure, parliament should be kept fully informed, and should be called upon to participate in whatever action may be contemplated, more particularly if that action is to be severe.

The minister emphasized our improved trade position, and the fact that it is expected that in 1950 the value of the gross national product in Canada will reach approximately $17 billion. We feel that we are in a much more favourable position today to meet any contingencies that may confront us without the same degree of rigid control which was necessary during the last war. After all, it is undoubtedly true that from the standpoint of trade, and from the standpoint of our own national production, we are in a much more favourable position today than we were in the early forties when confronted with all-out war. Moreover we cannot overlook the fact that today, except in theory, Canada is not yet at war.

During the minister's observations he associated almost every instance of military preparedness with economic preparedness. He spoke of military needs and civilian needs. I, for one, am particularly pleased that the government is laying such emphasis upon civilian needs. We have always taken the position that a strong Canada can result only from economic stability in the nation, when the people enjoy an optimum standard of living, and when there is that high degree of unity within the country that comes from the application of sound economic policies.

The minister said that if self-discipline is practised by industry within Canada, it may be possible for us to avoid many of the stringent regulations which would otherwise be necessary. Certainly we concur in the minister's hope, and we join with him in appealing to industry to co-operate fully to avoid the rigid price control and rigid material allocation. Personally I think that industry in Canada could play a major role in rendering it unnecessary for the government to go too far in those fields.

With respect to new plants for the production of war materials, I was quite impressed by what an hon. member said yesterday about the necessity for the decentralization of plants within Canada. It is my sincere hope, quite apart from any desire that anyone in any particular part of Canada may have to see industry established in that quarter, that that can be done. From the standpoint of safety alone, in a war such as we could easily be

Essential Materials (Defence) Act confronted with in the future, the decentralization of war industry in Canada to the greatest possible degree should be carried out.

For example, how much easier it is to decentralize war industry in the years to come, particularly in the light of the oil development in western Canada. Surely that as a source of power should contribute materially towards a government decision to see to it that the major part of our war industry is not established in the two central provinces. Moreover, from the standpoint of cost, great savings could be effected if the government would give favourable consideration to this matter.

In the third place-and I put it there because it is important, though not the most important reason-I think it is much fairer to the people of Canada themselves if industry is decentralized even in peacetime, but particularly when there is likely to be such a rapid expansion during wartime.

I listened with some interest to the observations of the hon. member for Rosetown-Biggar (Mr. Coldwell) with respect to profiteering. The hon. member for Peace River (Mr. Low) also made a reference to it. Although technically Canada is not at war today, there is every evidence that profiteering is taking place within our country, and quite apart from the supplying of any war materials. I am thinking particularly of those who are supplying civilian commodities. In almost every quarter in Canada there is evidence that profiteering does exist. If there is profiteering at a time like this, when Canada is not involved in all-out war, how much more likely is it to occur if we do become involved in all-out war. I feel that a duty rests upon the government to investigate price spreads as they apply to many commodities, that spread between the cost and the price which the consumer is called upon to pay.

Unfortunately it is the little retailer in the corner store who is bearing the brunt of a good deal of the criticism which has arisen as a consequence of higher prices. I urge the government, if it hopes to secure the full support of the Canadian people, to proceed immediately to investigate this question of price spread. There may be a better opportunity of doing it now than a few months from now if we should become Involved in all-out war.

I do not intend, Mr. Speaker, to take more time at the moment. I have mentioned two important things, the decentralization of industry, and the obvious price spreads which prevail at the present time.

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PC

John George Diefenbaker

Progressive Conservative

Mr. J. G. Disfenbaker (Lake Cenire):

Mr. Speaker, I was impressed by what the minister said about the necessity of mobilization, of our resources, and in particular the integration of economic development in Canada with that of the United States. On more than one occasion I have advocated the necessity of having this problem of the development of Canada's hidden resources, which are so necessary in war, brought before the forthcoming dominion-provincial conference with a view to arriving at an agreement between the provinces and the dominion whereby the development of our resources may receive the consideration that it deserves. This would assure that many of the commodities which are so necessary and are in such short supply in other countries will not only be available but will be developed.

It is difficult, however, to debate a resolution such as the one now before the house until the bill based thereon is presented. I am not in agreement with the hon. member for Rosetown-Biggar (Mr. Coldwell) when he says that vast powers are not being granted under the resolution in its present form. All of us want to see the mobilization of our resources to the end that freedom will be maintained. We cannot afford to resort to the belief that history proves that tyranny is ultimately overturned and that good eventually wins, without translating our resources into powerful potentialities for the assurance of our freedom. At the same time history has proven that parliament is, in its essence, the greatest power for the preservation of freedom. If this resolution goes as far as it says, there is indeed being set up at this time an economic dictatorship. The powers granted to ministers will, unless subject to rigid controls and vigilant supervision by parliament, constitute once more an abdication by parliament of many of its important functions.

I know what the answer will be to that. History shows that the symbolism of democracy must often be sacrificed to meet the exigencies of national danger. None the less, and without opposing the legislation at this point-for without all the facts it is impossible to debate it-I point out that it gives to the governor in council clear title deeds to almost unlimited economic power and unlimited executive lawmaking power. Let us just read it:

... a measure to authorize the governor in council to take action to avert possible disruption of defence preparations requisite for the safeguarding of national security . . .

In his interpretation of that resolution the minister pointed out how important this is;

for in effect he said that we must get ready for a long period of austerity, if you will, in order to meet the world situation, and that we must have the necessary stand-by powers. The Minister of Trade and Commerce gave an answer to the Prime Minister (Mr. St. Laurent) who the other day spoke as though the danger were only a matter of ten months, when he said in effect that it is possible that Canadians will face greater difficulties in the next eighteen months. The minister has given us a message today which is challenging to this parliament. At the same time he has asked that powers be given to the governor in council which are tremendous in their import, powers which to a large extent should be exercised by parliament.

With those words, Mr. Speaker, I conclude my remarks; for one cannot debate without knowledge. But the generality of those words if they are actually expanded and implemented, will give to the governor in council powers tremendous in their amplitude, powers to be exercised by the governor in council independent of parliament.

As I have already mentioned, I rose at this time, not to oppose the resolution, but rather to point out that, worded as it is, it is wide enough to make the governor in council supreme and to constitute a transference by parliament to the governor in council of parliamentary control because of the fact that efficiency demands that these powers be granted. But after all, in my opinion efficiency can be maintained without denying parliament.

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CCF

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

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

Mr. Stanley Knowles (Winnipeg North Centre):

It was my hope, Mr. Speaker, that at this session of parliament the government would profit from past experience and would bring in a proper bill with regard to the control of our economy in the interest of our people.

When I say that I looked for a proper bill, I have two points in mind. On the one hand, there is the experience which the government has had, and to which the previous speaker, the hon. member for Lake Centre (Mr. Diefenbaker) has alluded, namely, that of being criticized on the floor of parliament for the lavish use of unlimited powers by the device of order in council. The government at times has pointed out that from part of this house it gets pushed to use certain powers for the good of the people, and it also gets criticized for the arbitrary use of wide powers.

It seems to me that the solution of that dilemma is for the government, when it asks for necessary powers, to spell them out in considerable detail in the legislation placed before parliament. I gather that the hon.

Essential Materials (Defence) Act member for Lake Centre would agree with that suggestion. He does not oppose the idea of parliament giving powers to the government when they are needed, but says that we should not give them in the form of a blank cheque; that we should know the nature of the powers that we are giving to the government. My friend and I would probably not agree as to the precise nature and detail of the powers that we should give, but at least we are agreed that we should know what powers we are giving to the government.

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PC
CCF

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

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

Mr. Knowles:

My hon. friend suggests that we should not give to the government unlimited powers, namely, the kind that they can later interpret as enabling them to do things that nobody had in mind at the time the legislation was passed. I agree with my hon. friend on that point. On the other hand, as I have said, it seems to me that the kind of criticism that he has made and that I am making could be met by setting out clearly in a stand-by bill the precise nature of the powers, to be used when they are needed, that are given by parliament to the. government.

The other idea I had in mind when I said that this legislation should be on a proper basis is this. The government has had considerable experience with the need of controlling our economy in wartime, in the transitional period after a war is over, and in what the government has chosen to call the period of twilight between war and peace. On the basis of that experience it seems to me that the decision taken by the government at the present time is indefensible.

In this debate one cannot deal with the speech of the Minister of Finance (Mr. Abbott) in another debate he initiated last night; but the same announcements were made to parliament by the Minister of Trade and Commerce (Mr. Howe) in his speech this morning, and the same attitude was taken by both ministers. The government's position is that for the time being they do not intend to go into the field of general control of the economy, and in particular that they are not going into the field of price controls. The government has made it clear now, through several of its ministers, that they feel that the situation is not sufficiently serious for that; that somehow things can be kept on an even keel with the limited amount of intervention in the workings of our economy that is proposed by the Minister of Trade and Commerce. It seems that he and the government feel that

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Essential Materials (Defence) Act that intervention should not at this time go further than control over the allocations of basic materials.

At the appropriate time, Mr. Speaker, some of us will be calling as witnesses on the other side of the question present and former members of the government, notably Mr. Ilsley, who had so much to say about the usefulness to our economy during world war II of the system of price controls which we had under his jurisdiction. I remind hon. members opposite that it was the boast of the government in those days that that system of control was one of the best in world war II in any of the allied countries; that it not only saved the Canadian people huge sums of money, so far as their own pockets were concerned, but it had saved the country money in terms of government expenditures on the war itself. That point was made not only from this side of the house; it was made as a boast on the government side.

After the war was over we were able to get the figures from Mr. Ilsley as to how much had been saved for each dollar that had been spent in the administration of price controls and in the provision of subsidies. I have not the exact figures at the tip of my tongue, at the moment, but, as I recall it the ratio was something in the nature of one to twelve and a half; that is, that for every dollar we spent on the administration of price controls and in the provision of subsidies there was saved to the Canadian people as a whole, either in their own pockets in their personal expenses, or in the expenses of government, the sum of $12.50. With that experience behind the government, I am amazed that they approach this time of crisis, when, Mr. Speaker, the world is just about on fire, and try to tell us that there is really nothing to be concerned about; that we can get along with this minimum amount of intervention in the workings of our economy.

I feel that the speech made by the Minister of Trade and Commerce, and other statements made from the government side, indicate that the government realizes there is rolling up in this country a demand for direct action so far as rising prices are concerned. The other day I referred to the request in that connection that had come to the government from the Canadian association of consumers. I believe the Canadian Legion has called for the reimposition of price controls. Certainly labour organizations across the country that are close to those who know what it is to try to get along on low wages, where housewives cannot make both ends met, are insisting that such should be done. Even financial papers that one picks up admit that there is

this increasing demand for some direct action with regard to rising prices, and that it will be a problem the government will have to face.

In commenting on the government's position with respect to price controls, one of the morning papers indicates in a press comment that we can expect prices to continue to rise throughout 1951. What a prospect! Indeed, this situation is too serious for the government to leave it unsettled, which is the upshot of such legislation as has been given to us thus far in this session.

The leader of this group pointed out that we well remember the statement of the present Minister of Finance (Mr. Abbott) some years ago when he gave us his assurance that the cost of living would level off somewhere around 145. A strange piece of levelling off indeed! It has now risen to the alltime high of 168-5, and, as I indicated the other day, that is the average cost of living index, whereas the item which is of most concern to people, namely, food, stands at 216-7 of the base which was established over the period 1935 to 1939.

I feel that when we raise this whole question of the need of price controls and of the growing demand that there is for it in the country, Mr. Speaker, there is something more to it than just the bread-and-butter necessity of making both ends meet. I suggest that it has a very direct bearing on the struggle in which we are engaged in the world today. That struggle is a very real one, not only in a military sense on the battlefields in Korea; it is a struggle between ideas. Behind the military struggle is that conflict between the democratic idea and the totalitarian idea. I urge again that hon. members consider seriously whether we are paying enough attention to the ideological conflict, whether we are doing enough to make sure that we are not losing the war in the realm of ideas.

Those of us who met any of the people who came to this building yesterday could not help but feel, despite the fact that we regarded them as misguided, their determination to sell the idea to which they are wedded. Around the world people are being misled, are being led to believe that somehow or other the communist way, even though it is totalitarian, even though it is the denial of the essence of freedom and democracy, offers them something more substantial and real than the democratic way does. I submit, sir, we have to sell to the world the reality of our idea, our conviction that the free and democratic way is the better way. We have to sell that idea to the people of Asia; we have to

sell it to peoples around the world. We have also to sell it to our own people. I said the other day, and I repeat it because I am satisfied that it is true, that even if prices run wild, even if this government lets the people of Canada down in economic and social matters, the people will still stand by the government that they have elected; they will stand by the United Nations to which this country is committed; they will see this conflict through. But they will not see it through with the same spirit, the same high morale, that they would if they were convinced, not in a passive way, but in a positive way by new measures, that this democratic way of ours is not just something we have because we inherited it from our fathers and grandfathers, but something that we really prize, something that is worth defending, and if necessary something worth fighting for.

It seems to me that right there is the crux of the situation in the world today, and the crux of the situation so far as our people are concerned. We recognize the evil of the thing that we are fighting against, but there is a limit to which people can go on just fighting against something. They need a boost in morale; they need the fervour, if you like, that comes from the feeling that you have something to fight for. The people in our country will not get that fervour, Mr. Speaker, will not get that boost in their morale if prices run wild, if the value of wages is depressed, if the standard of living in this country goes down.

I submit in addition to all the things that the Minister of Trade and Commerce is concerned about-such as getting the co-operation of industry, of leaders of industry who are prepared to offer their services for a dollar a year, of labour organizations and so on-the whole government should give real thought to this problem of winning wholehearted allegiance and wholehearted support of the Canadian people to our way of life, to our democratic concept, our concept of freedom, and let us make it freedom from every kind of tyranny, particularly the economic tyranny under which so many of our people labour.

I submit that one of the main fronts of that battle is in this field of prices. Let prices run wild; let inflation interfere with our economy, not only so far as the government is concerned but so far as our people are concerned, and the enemy we are opposing-the idea we are up against-will have a tremendous advantage right in our own midst.

I could not be more serious or more concerned than I am about this whole question of mobilizing the moral support, the confidence and the convictions of our own people. We cannot do it by preaching to them; we cannot 692G2-30

Essential Materials (Defence) Act do it by speeches-even of the kind I am making. The thing that convinces people, when we come right down to it, is action taken to help them and to protect them. Runaway prices will deprive them of their morale, while action taken by the government to control prices and to protect the standard of living of our people will supply some of that fervour of support for our democratic way and some of that conviction that we really need at this time.

I urge the house to realize that this is not just a ten-month conflict. It is not just a conflict of even the years-God forbid-that the member for Lake Centre said the other day we might be at war. This is an age-long conflict between two fundamental ideas; the issue is whether the mind, spirit and life of man shall be free of all forms of tyranny or controlled by a dictatorship of one form or another. There is no question where we stand; but we can lose the political freedom and the spiritual freedom we have gained down through the years if we allow economic tyranny to master and to ruin our livelihood and to deprive our people of their conviction respecting the way of life we are defending.

I urge the government to reconsider this whole matter. I urge them not to think of it as a political question, or refuse to act on it because we in this corner happen to be pressing for it. I would remind them of all the organizations I have mentioned that are asking for price controls, and I urge the government to think of this whole question in the context of the serious times in which our lot is cast. If we do our best in this and in other respects not to undermine the home front, then I believe the time will come when our people will not only say but really believe that our democratic way, our free way, is the way we want not only for ourselves but for the peoples of the whole world.

Motion agreed to and the house went into committee, Mr. Dion in the chair.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Apparently the minister's

department has made an extensive survey not only of conditions in Canada today but also of the expected conditions in the months ahead. It is of importance that he tell us whether he believes it is going to be possible to hold the cost of living at its present figure; or is it expected that it will go even higher than it is at the present time?

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Mr. Chairman, it is very

hard to forecast the cost of living. The recent increase in the cost of living is due largely to the increase in food prices. The price of meat has entered in very considerably. I recall that in the last month, the last one for which we have the figure, the cost of living

458 HOUSE OF

Essential Materials (Defence) Act index went up one point, whereas the agricultural cost of living index went up two and a half points.

It seems to me the high cost of meat may be a temporary situation. The law of supply and demand will likely operate. I am sure that the high prices being obtained for cattle and hogs will tend to increase production and operate as a corrective. Then, there may be opposite forces working.

The purpose of the measure is to try to see that war buying is not permitted to be a factor in increasing prices. In other words, if for war purposes we shorten the supply of materials and the remainder is insufficient for domestic supply, we then take the right to fix prices on the materials for domestic use, and arrange distribution. That is the purpose of the bill; that the effect of war on price levels will be minimized. But just what the effect of the over-all pressure that has been working up to this time will be I would not wish to predict.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

I suggest that if power is to be taken only to deal with war buying, it does not go far enough to meet the present situation. There can be no doubt that the persons across Canada who are on fixed incomes are being strangled economically. For instance, let us consider the condition with respect to beef, to which the minister has just referred, and also lumber. The prices of those two commodities are not at their present terrific height because of the law of supply and demand; they are forced up so high because such a large proportion is being shipped to the United States.

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September 8, 1950