Mr. Adamson:

It will be increased?

Mr. Adamson:

The point is a minor one, Mr. Chairman, but I am glad the minister brings it to my attention. The real point that I am making is that the cost of assistance has been going up. I think the estimate for this year was $4.19 or about $4.20, if I remember it correctly from a previous debate in this chamber. In any event, the cost of bonusing the gold mines on a per-ounce basis is increasing, and the production of gold is decreasing. The labour disputes certainly had a fair amount to do with that decrease; but as your over-all costs of production go up, less of the basic rock in the Pre-Cambrian shield can be classed as ore. For every ten cents of increase in the cost of production of an ounce of gold, just so much more ore is turned into waste rock. The seriousness of that situation has been brought out many times in this chamber. It shows that one of

Gold Mining

the tragic things is that we are turning a great national asset into waste rock by the present procedure.

So much for the mines themselves, for what is happening to our production, and for what is happening to costs and to the national interests of the country. Since the act was originally introduced, there have been several amendments, including changes in the regulations. I think there have been eight amendments to the act. Straight bullion is allowed to be sold on the free market without having to be adulterated down to 22 carats. That is a good thing because it saves the producers that cost of adulteration.

According to the latest figure I have had for this month, the situation is that the gold mines of Canada are receiving $33.84 an ounce at the mint compared with $38.50 in 1939. It should be remembered that the Canadian dollar was at a discount of 10 per cent in 1939 whereas today it is at a premium of approximately 2| to 3 per cent. Therefore our gold mines are not only not receiving any more for their product in 1954 than in 1939 but are actually receiving about 12J per cent less. The minister has very kindly sent me the figure of $33.79 as of the 6th of March. I was a little generous. I said $33.84. But the main point is that here we have an industry, which at one time was the greatest dollar producer of metals in Canada, exceeding even nickel, exceeding all our base metals, with a production of over $150 million a year, that is today receiving 12 h per cent less for its product than it did in 1939.

I ask you, Mr. Chairman, to think of any industry in Canada today, whether producing a basic or a manufactured commodity, that could even be in business if it were only receiving for its product not what it received in 1939 but 12J per cent less. I venture to say that not a single producer of any other product in Canada could be in business today under such circumstances. I think that shows more than anything else the way that the gold mining industry has tackled this problem and its amazing efficiency. What has been done to pare costs, what has been done to make mining more efficient, what has been done just to keep the mines alive is a great triumph and a great credit to our gold industry in all its branches. I am glad the minister brought that out in his statement because I wish to reiterate it. So much for that point.

We say to ourselves: Can we do anything that will be effective? For a number of years it has been my criticism of the administration that we have not done as much ourselves in this regard as we should have done. I wish to quote a paragraph from the speech made by the Secretary of State for External Affairs

last night in Washington. I think it is of considerable importance, and I shall paraphrase the first few words. Speaking to the Americans he said that it is essential that we work together-

-if the great coalition which we have formed for peace is not to be replaced by an entrenched con-tinentalism, which I can assure you makes no great appeal to your northern neighbour as the best way to prevent war or defeat aggression, and which is not likely to provide a solid basis for good United States-Canada relationships.

I say "amen" to that statement. To me that has been the great weakness of the attitude of our government toward the United States. As I have said, it is none of our business to criticize their actions, and I am not doing so now. But with respect to international matters involving exchange, convertibility, and particularly the question of gold, I feel that we could have established our own market irrespective of the attitude of the United States and that if we had taken resolute and courageous action we could have led the world.

There was a great deal of misgiving when many years ago I advocated the freeing of the Canadian dollar. The same arguments that were used against the freeing of the Canadian dollar are used against the establishment of a free gold market. It was said that we could not free the Canadian dollar because of the international financiers, the United States bankers and the terrific size of our southern neighbour. We did it, with the result that our currency has become, in terms of other currencies, the premier currency in the world. Having taken such action in the case of the Canadian dollar, I contend that we can follow the same course in the case of gold.

I do not agree with the general policy of Canada of waiting for the Americans to make up their minds about what they are going to do. We cannot be hostages to internal United States politics. We cannot stand idly by and wait for the present United States administration or the Republican party to make up their minds with respect to what they are going to do about trade. Gold of course is only useful as a monetary metal and as a medium by which convertibility can be brought about. That is its only real use. Trade is four times as important to the individual Canadian as it is to the individual American. Unless we can solve the problem of sterling convertibility, of which gold forms an essential part, then our future is, to say the least, in considerable jeopardy because our major markets are in the sterling countries.

I do not feel that we can wait to see whether or not the Republican party is going to be run by the isolationists. We cannot

wait for the Republican party to decide whether it is going to revert to political and economic isolationism or whether it is going to embark upon a policy of enlightened world co-operation as set out in documents such as the Randall report. To me, such a policy of waiting is dangerous in the extreme.

It is for that reason that, in and out of this house, I have championed the use of gold as a monetary metal, championed the basic policy of Canada's standing on her own feet where international trade is concerned. In this country we must trade; otherwise we destroy ourselves. Trade figures are encouraging; but to a greater and greater extent, our trade is with one country -a country which, I grant, is our best market, our major market. We are doing this simply because we have been unable to solve the riddle of convertibility. And in my opinion we have been unable to solve the riddle of convertibility because we refuse to lead, and particularly in the matter of gold.

This is not something we can do easily; it is not something we can do without risks. But, to my mind, the Canadian economy and the Canadian people have always been leaders in international affairs. We were world traders long before the Americans knew anything about world trade. Today in our own right we are world traders probably to a greater extent than any other nation in the world. But unless we can solve this problem of convertibility, unless we can produce some mechanism by which convertibility can be free, our international trade can be cut off very quickly and drastically, and with great and increasing danger to our whole economy.

It is for that reason I am speaking here this afternoon. This bill is to keep the mines alive, and it has my support. It also is supported by this party. But I do wish the administration-this government-would take the lead, particularly in this regard, so that we may stand on our own feet in this matter of restoring gold as the medium of convertibility in which historically it has always been, just as we did with our own national currency, the Canadian dollar. By so doing I believe we can give a lead to the world to prevent economic isolationism in North America, should that be the policy of the present administration-which I hope it will not be.

I feel we cannot stand by and watch something happen, if we can possibly take the lead ourselves to see that this great evil of economic isolationism does not occur again in our lives.

Gold Mining

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.

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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.

Mr. Adamson:

Is the minister going to make a statement?

Mr. Adamson:

Is the minister going to make a statement now?