March 16, 1954 (22nd Parliament, 1st Session)

Mr. Adamson:

Mr. Chairman, this recurring bill which the minister has just introduced is, in my opinion, an unfortunate necessity. It is unfortunate because the necessity for it is based on actions which take place outside of Canada, and over which we have had very little control.
The only solution to the problem of gold production in Canada, and I speak solely of the question of gold production now, is an increase in the price of gold. This can be brought about by two methods, and by two methods only. The first method is by a unilateral increase in the price of gold by the United States treasury. The second method is an increase in the price of gold brought

about by the operations of the free market. I shall deal with these two methods very briefly.
The United States treasury and the United States authorities, rightly or wrongly, have a set policy against increasing the price of gold. Since that is their policy I feel that we cannot and should not criticize it even though it may be wrong. They have two basic fears: first, that an increase in the American price of gold would be an inflationary measure. Secondly, they feel that if the statutory $35 price at which the United States government is prepared to buy gold were increased it would assist the Soviet union, which may or may not be the second gold producing country in the world. These are, I believe, their basic reasons and it is not for anyone in this parliament, I believe, to criticize them even though we may not agree.
The second possibility of increasing the price of gold is by action brought about by the free market. One of the most interesting economic phenomena in the world today has been the drop in the price of gold on the Paris market in terms of the French franc. I think it is difficult to understand that drop in terms of a currency such as the French franc, in a country where inflation is today rampant, where for six weeks of last year the country was completely without a government of any sort and where for the first time in the history of the third republic fourteen ballots had to be taken in order to elect a president. Nevertheless, despite what to those of us who are not in France would appear to be great instability in the internal economy of that country, the price of gold in terms of the French franc fell substantially during the past year. I say that fact is incomprehensible. Here you have a paper currency continuously inflated within a country whose government is anything but secure. However, the facts are as I have recorded them.
I now want to put on the record a simple statement from the report on the administration of the Emergency Gold Mining Assistance Act. I think it is important to quote the first sentence of that report for 1953. It states:
The Emergency Gold Mining Assistance Act of 1948 was primarily designed to assist the high cost or marginal gold mines to continue operations throughout the difficult post-war period.
The original idea with regard to the Emergency Gold Mining Assistance Act was that it was definitely a temporary measure, as the report states, to overcome the difficulties of the immediate post-war period. Unfortunately the situation did not improve.
83276-192i
Gold Mining
Whereas the original intent of the act was merely to assist the marginal or high-cost producers, today we face the tragic situation that there is only one straight gold mine in Canada not accepting assistance from the government. I think that fact shows the sort of dangers we run into, right from the beginning, when we start bonusing any industry. I do not think that any of the straight gold mines really asked to be bonused.
One other thing has happened. In 1952 the bonus on our production per ounce was $3.14. In 1953 this figure had risen to $3.93 per ounce. It is estimated that in 1954 this figure will rise to approximately $4.20 for every ounce of gold produced. At the same time the production of gold fell from $150' million; I think our maximum production was slightly over $150 million.