June 17, 1935 (17th Parliament, 6th Session)


George Gibson Coote

United Farmers of Alberta


I believe it quite proper for the government to take steps to protect the external value of the Canadian monetary unit, but the important point for us to consider at this time is the policy to be followed by the minister in administering this fund. That is, at what level is it considered desirable to hold the value of Canadian currency as expressed in terms of other currencies? I speak particularly of the American dollar and the British pound. It seems to me that during the past few years our currency has been at too high a level in other countries, so far as our exporters are concerned, and Canada's basic industries are to a great extent dependent, so far as their price levels are concerned, upon the price which they receive for their sales in foreign countries, and the value at which they can translate foreign funds into Canadian currency. Undoubtedly we have suffered in our attempt to compete with many other exporting nations of the world. To-night we heard considerable discussion as to why it was so difficult for Canadian and even English textile companies to compete with those of Japan. I noticed that no person mentioned that which I believe to be the most important factor, namely that Japanese currency to-day 925S2-237J
is depreciated in terms of Canadian currency by approximately seventy per cent. I think that is the greatest factor in favour of Japanese exporters.
Then, to come to the industry in which I am most interested, agriculture, our chief competitors might be said to be the Argentine, Australia, New Zealand and Denmark. In each of these countries we find that, compared with that of Canada, their currencies are depreciated to very marked degrees. In Denmark the currency has depreciated 22 per cent as compared with the value of our money; in New Zealand the figure is 23 per cent, and in Australia 24 per cent. The official rate for the Argentine is given as 24 per cent, but the unofficial rate is approximately 60 per cent. What is needed in Canada to-day is higher commodify price levels, and the easiest way to do it would be deliberately to depreciate our currency. We must do it frankly and honestly, as has been done by the other countries I have named. In Denmark, Australia, New Zealand and the Argentine the step was taken as a matter of governmental policy, and now that the Canadian government is setting up an exchange fund to be administered by the minister it seems to me we are taking a very positive step towards making the level at which our currency is held in foreign countries a matter of government policy. I am not suggesting that we engage witih any other countries in a race for currency depreciation, but we do require this depreciation to restore our price level's. There is a great deal of opinion expressed in financial papers in favour of stabilizing exchange rates of various countries. So far as I am personally concerned I do not believe that we can afford to stabilize our price structure at present levels. That would mean disaster for those engaged in most of our primary industries. It would mean that for many years to come they must carry an almost intolerable burden of debt. But with a currency depreciated to 'the level of most of our competitors our price level would be placed nearer where it really ought to be. I am sure even that would hardly restore the price levels of 1926. Some of the outstanding if not some of the best economists have said repeatedly in the last few years that a rise in the price levels to the point at which they stood in 1926 is absolutely necessary if we are to be able to continue to carry the present debt structure. We all realize the devastating effect of attempting to deal with debts in any other way. I think myself that that is the proper way to deal with them.
Exchange Fund

I should like to make it clear again that I am not opposing this bill, nor am I even criticizing it. I think the important point to be considered at this time is the policy of the minister who will be in charge of this fund. I hope it will not be used to stabilize price levels at where they are to-day and I hope it will not be used to keep our currency at its present high level if there are other factors which would operate to bring it down. I realize that this is a matter for debate and I have debated it in this house and have put my point of view before hon. members. I shall not repeat my views to-night at any length but I think it is realized by the majority of hon. members that there shouild be a rise in commodity price levels if we are going to compete with other exporting countries. Take the case of Brazil; their currency is depreciated forty-four per cent as compared with ours. Not long ago I was talking to a bank manager who had just returned from Brazil and he gave as one of his personal reasons why there had been no unemployment or distress in Brazil the fact that depreciation had taken place in their currency and they had maintained much higher price levels than otherwise would have been possible.

Full View