September 8, 1950

LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

But that is the working of supply and demand on an international scale.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

I believe these shipments have a great deal to do with it. Certainly the price of lumber has been increased in some cases in an irresponsible way. Something has to be done to stop it. That increase in prices has resulted in the cost of housing going completely out of reach. I do not believe that in an emergency such as we are facing at the present time the government could dare to decline to do anything about the cost of such commodities as beef and lumber. Is it the intention of the government to take any action to deal with the high prices of commodities of that kind?

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Mr. Chairman, my hon. friend is an able and experienced lawyer. He must realize the legal restrictions upon our position. Canada is a federal state, and the only process by which the federal government has the right to control prices is by invoking the War Measures Act by declaring a state of emergency. I can remember debates over

the last several years in which the opposition members have told us that we were then far exceeding our powers by maintaining the existence of a state of emergency. Except in respect of rent controls we have acceded to opposition pressure, and we now have no right to interfere with domestic price levels, except in the field of rentals.

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PC
LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

The power of allocation granted by the bill is wholly associated with defence. Except for defence we would have no right to allocate goods for civilian purposes. This government has the legal right to defend our country. The Department of Justice has ruled that we have the legal right to do that for which this measure provides. The Department of Justice has also indicated that that is about as far as we can go, unless we wish to invoke the War Measures Act.

The hon. member for Rosetown-Biggar was comparing the situation in 1939 with that of 1950. I would point out that in 1939 Canada had declared war against Germany. The War Measures Act had been invoked and that legislation gave the government power to pass and to enforce almost any sort of law it liked. We have not invoked the War Measures Act at the present time and we have not declared war against any country. We believe the situation now scarcely warrants the invoking of the act on the ground of impending war. That is the legal difference between the 1939 situation and that of today.

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CCF

Major James William Coldwell

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

Mr. Coldwell:

I realize that. I quoted Mr. Dunning's words in 1939. I suggest the government could introduce a comprehensive powers act, outside of the War Measures Act, to give us the necessary power.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

We have had many opinions to the contrary.

At one o'clock the committee took recess.

The committee resumed at three o'clock.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Mr. Chairman, just before the committee adjourned for lunch I was pointing out to the Minister of Trade and Commerce the increased cost of beef and lumber which I thought was largely due to shipments to the United States. He mentioned certain reasons why the government could do nothing about it. I should like to ask him whether there is not power under the Export and Import Permits Act to deal with that situation. Again, I wish he would tell us whether it is the plan of the government to take no direct

action with respect to prices at least until the next session of the house, which will probably be in January of 1951.

I sometimes wonder whether the ministry have a clear realization of how people in the constituencies are being squeezed by the cost of foodstuffs. I received a letter yesterday from a very responsible housewife in my own constituency. She says:

We do most earnestly hope that you will do everything within your power this session to urge the government to curb the rise in prices in essential foods Eggs are up again, a rise in milk threatened, now bread. Wholesome meats are already beyond the average family budget. As usual the full hardship of inflation falls upon the poorer members of society, already handicapped in "the battle of the housewife" by poor housing, often containing little or no storage space, refrigeration, nor ovens capable of baking good bread.

I submit that is a situation which should not be left until next year. I ask the minister to explain whether the government intends to do anything about it in the meantime.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Just before lunch I was pointing out the lack of legal authority for the government to do so. It is illustrative of the difficulties of government in Canada when the opposition will fight against the maintenance of controls for four or five years, and then, as soon as the controls and emergency powers are abandoned, demand that we exercise emergency powers that have been repealed at their insistence.

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PC
LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

We think it is the same old emergency. The rise in the cost of living is not something that has occurred within the last few weeks. The current inflation is not wholly the result of the Korean war.

My hon. friend has referred to the Export and Import Permits Act. That act was never designed as an act to control prices. If there is an acute supply situation in Canada we can invoke the Export and Import Permits Act to prevent those supplies from moving out of Canada that are urgently required in this country; but my hon. friend is proposing something quite different. He is proposing that we invoke the act to cause a glut of lumber in Canada sufficient to bring the price down, which is quite a different matter.

If you will let me be a philosopher for a moment I will give you the result of my experience with price control. I claim no better judgment than anybody else, but I think I have had more experience with the administration of price control than any other member of the house. I believe that price control can be effective only if it applies across the board. In November, 1941, we instituted 69'2 (i2-301

Essential Materials (Defence) Act over-all price controls. We froze the price of every commodity except wheat. We froze wages and salaries. In other words, we made it impossible for any change to take place in payments for any of these services. That was effective for about two and a half years. I think it was far more effective than the price control system applied in any other country. It broke down finally when labour situations developed with which we could not cope, and we had to abandon controls on labour. The success of that system was possibly because we were in a state of war, because the people of Canada were worked up to a high pitch of war fervour, and because sacrifice was the keynote of the day. During that period I think almost every home in Canada had a member of the family on a fighting front.

Under those conditions we applied effective price control, but short of war conditions I doubt whether effective price control can be made efficient by law. To attempt to control one, two, or three commodities is likely to be futile and to defeat its own purpose by being the cause of price increases in other commodities. The bill to be based on the resolution undertakes to control the drain of war purchasing as it may tend to react on the price system, and to that extent I think it will be reasonably effective. In fact I am very hopeful that, having the authority to control prices, it will not be necessary to do so.

The bill mentions commodities such as steel. I feel quite certain that steel is one commodity that will not require control. There are only four or five primary producers of steel in Canada. Over the years these producers have been working closely with the department. I think steel prices have remained more stable than prices for almost any other commodity, and I have every reason to believe that if we convey to the primary steel producers the requirements of the government in relation to war and civilian purposes we shall receive the fullest possible co-operation.

It is really amazing what can be accomplished by conference and through the desire of Canadian industry to co-operaite with the government. Yesterday I had in my office twelve or fourteen representatives of the scrap dealers of Canada, people who deal with scrap iron, non-ferrous metals scrap, rags and papers. It is an important industry, and any deviation in the industry has its repercussions on the price of finished goods. We were having some problems associated with that industry. . I had these people come to see me. We had a very frank discussion It was agreed that the situations that caused

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Essential Materials (Defence) Act us concern would be corrected by the industry itself, and I am confident that they will be.

I suggest to the committee that a word from the government is more effective if there is a law in the background that can be applied in case the response is not all that may be desired.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

What are some of the other main items that the minister expects will be under the act? He has referred to steel and scrap. What are some of the other items he has in mind?

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Any item where war buying interferes with the normal civilian supply. It could easily be copper or zinc. Nickel is already being rationed by the producer in consultation with the government. It is being rationed both in Canada and the United States.

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PC
LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Lumber might very well be one of these commodities.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I should like to ask the minister whether any labour shortage is expected because of the contemplated industrial expansion to meet the needs of defence preparation.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

The hon. member speaks of expansion of industry. When industry is working to full capacity and when there is no unemployment, war industry can only be imposed on civilian industry by displacing a certain amount of civilian production. As I said earlier, unless the position becomes much more serious I do not contemplate that we shall be building new plants or extensions, of plants. The policy under present circumstances will be to find the capacity we require by replacing non-essential civilian production rather than by expanding the productive capacity of Canada. That is as I see it at the moment.

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PC

Harry Oliver White

Progressive Conservative

Mr. White (Middlesex East):

So that there will be no misunderstanding about the statement the minister made to the leader of the C.C.F. group with respect to the cost of living index, if I recall aright the minister said just before lunch that in the last month for which we have figures the general cost of living index went up one point, whereas the agricultural cost of living index went up two and a half points.

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LIB
PC

Harry Oliver White

Progressive Conservative

Mr. White (Middlesex East):

Yes. I have in my hand the last cost of living index, published on September 2. Without going into it too fully it says:

But the Canadian farm prices index dropped from 154-3 on July 28 to 142-7 on August 4.

That is the last month for which there is a report.

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September 8, 1950