April 13, 1933 (17th Parliament, 4th Session)


Charles Gavan Power



I wish to read one order in council dealing with this matter, P.C. 2239, dated September 12, 1931:
The committee of the Privy Council have had before them a report, dated September 11, 1931, from the Minister of Finance, submitting that the economic depression prevalent in Canada, in common with all other countries with which Canada has business relations, is intensified in the provinces of Manitoba, Saskatchewan and Alberta by a partial crop failure, and the difficulty of finding a market for the exportable surplus as rapidly as deliveries are made by the farmer of wheat and other grains grown in the year 1931 in these provinces is apparent. There is need, therefore, if unemployment and distress are not to grow greater, not only in these provinces but elsewhere in Canada, of making immediate provision to enable the farmers in these provinces to sell at market rates or secure reasonable advances upon delivery of their wheat and other grains to the marketing agencies possessing the facilities for marketing the crop. These marketing agencies are:
Manitoba Wheat Pool, wtih its subsidiary, Manitoba Pool Elevators, Limited.
Saskatchewan Cooperative Wheat Producers, Limited with its subsidiary, Saskatchewan Pool Elevators, Limited.
Alberta Wheat Pool, with its subsidiary, Alberta Pool Elevators, Limited; but they, while possessed of a certain amount of cash, do not possess adequate financial resources warranting banking advances that will probably be necessary. Representations have been made by the respective provincial governments. already burdened by obligations arising out of the marketing of the 1929 crop, for assistance from the government of Canada.
The committee, therefore, on the recommendation of the Minister of Finance, advise that repayment of advances made by any chartered bank to any of these marketing agencies, and interest thereon as may be agreed upon between the banks and such marketing agencies in connection with and for the purpose

Supply-Trade-Grain Act
of marketing said wheat and other grains, be guaranteed by the governor in council under the authority of the Unemployment and Farm Relief Act, 1931, under the conditions and to the extent hereinafter mentioned, to wit:
Then it refers to each of the wheat pools and goes on:
(d) That security upon the wheat and other
grains be taken by the banks under the
provisions of the Bank Act;
(e) The extent of the guarantee shall be
limited to the maintenance at all times of a fifteen per centum margin in the securities so taken. .
When, in the usual course of accounting and auditing from time to time, it is ascertained that the margin of fifteen per centum is
impaired, the liability under the guarantee of the government to the several banks shall accrue. .
The committee further advise that in the
event of impairment as above set forth further advances, under this guarantee may thereafter be made by the banks, the total not to exceed the respective credits originally established by the banks for the respective marketing agencies unless and until the Minister of Finance makes further arrangements with the banks for additional credits if such be required.
The committee further advise that payment under this guarantee shall be made out of the consolidated revenue fund for the respective balances, if any are owing after the marketing agencies have sold and realized upon all or practically all such wheat and other grains in their possession or control and application of the amounts realized, less expenses, has been made against bank advances and interest, and thereupon the governor in _ council, on the recommendation of the Minister of Finance, shall determine the date at which payments are to be made in pursuance of this guarantee.
That is one order in council. There was another one dated September 28, 1931, and others, a large number of them, down to the latest, April 10, 1933. Now, it is nearly two years since this first order in council was passed and we have never been able to ascertain from the government exactly what the extent of their guarantee was. I do not care whether it was McFarland or anyone else, the government has backed, endorsed and permitted people acting on its behalf to gamble in wheat. It does not matter whether you call it buying hedges or buying futures, they gambled in wheat. They dealt in a commodity they did not have. They bought options for the future delivery of wheat. Very early in his regime the Prime Minister brought Sir Josiah Stamp over from England to find out whether it was moral to deal in futures. I am not sure that at the very time Sir Josiah was investigating this matter the government was not playing the market. I do not know whether the Prime Minister's conscience was bothering him after he started to deal in wheat, but the fact is that an Englishman was brought over here to tell us 53719-253J
that it was permissible and perhaps a good thing to gamble in wheat. I do not think that is sufficient justification for any government to take the money raised by the taxpayers and throw it into the wheat pit like any vulgar speculator. That is what happened.
But there is something still worse than that. Either through incompetency, a lack of the knowledge of finance or for some other reason, we have never been able to find out just where they stand. Many of us gambled in the stock market and we were always able to find out from our brokers just where we stood. We were called for margins upon all occasions and the government must have been called for similar margins. The minister shakes his head but I should like to know if they were not called upon for margins when wheat went to thirty-eight. If they were dealing with brokers and they were not told that their guarantee called for such and such an amount of money, then they had a blanket guarantee. The wheat market is really worse than the stock market as far as gambling is concerned. Lord knows, most of us know how bad the stock market was. We bought Nickel on margin and we bought Auburn automobile, which I consider to be about the worst gamble, on margin, but we knew the condition of our accounts. If rumours are correct this government has been speculating in hundreds of millions of bushels of wheat and they are not able to tell the taxpayers the extent of their gamble. That seems to me to be an unfortunate situation. Apparently there is no accounting to parliament. To the ordinary person who does not know anything about wheat the explanations given as to the wheat pools and Wheat Producers, Limited, and so on are more or less incomprehensible. However, everyone does know that when you play a market, whether it be the stock market, the mining market or the wheat market, you are able to find out whether you are ahead of or behind the game. The taxpayers have never been able to find out from the government just where they stood.
We are told that because of conditions in other countries we may have a win on our gamble, but is -that any justification for the action taken by the government? Any bank clerk absconding with a bank's funds can always say: if -I had continued to gamble I would have been able to make restitution. But that does not save him from criminal prosecution. To-day the minister told us with a certain amount -of pride: we are going to get out and we may make some money. I do not know of any gambleT who does not think the same thing. Everyone in the world
Supply-Trade-Grain Act

Who goes into a gamble believes he is going to make some money but that is no justification from the moi'al or economic standpoint. It looks ias though we may make some money out of it because this last order in council says that the governor in council may at any time fix and determine the date at which Wheat Producers shall proceed to sell and dispose of all wheat and other grains in its possession or under its control acquired under the guarantee of the governor in council. There must be a very intimate relationship between Wheat Producers and the government if the government can by order in council older Wheat Producers to sell. If it was an ordinary transaction of guarantee I do not think they would have the right to order them to sell, but here they say by order in council: you must sell. In order te>
be able to do that, Wheat Producers must be the agents of the government. I cannot interpret it in any other way.

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