1917-08-04

[Stage Direction]
On the Orders of the Day:
Hon. WILLIAM PUGSLEY (St. John):: Can the Minister of Trade and Commerce give the House any definite information in regard to the statement made in the press of St. John that the Government, through the Minister of Marine and Fisheries, had made arrangements for securing steamers for the purpose of transporting coal from the United States to the port of St. John, and whether the vessels will be at the disposal of the local authorities, or will be run by the Government themselves?


Sir GEORGE FOSTER:: I can add this to the information I gave my hon. friend the other day. The Government has intervened in the matter to the extent of arranging for the necessary transport for supplying hard coal to the cities of Halifax and St. John and the districts supplied therefrom. The difficulty at present appears to be the finding of suitable accommodation for these vessels, which are of large size, and have to be unloaded quickly to avoid unnecessary expense. This matter is being looked into by the authorities of Halifax and St. John, and it is hoped that they will be able to arrange for the docking and unloading of these vessels. If so, they will be at their disposal at reasonable rates for carrying the coal that is required to supply these two cities and the surrounding districts.


INSURANCE ACT AMENDMENT.
[Stage Direction]
House again in committee on Bill No. 53, respecting insurance.-Mr. Steele in the Chair.
On section 59-Investment of company's funds:
William Pugsley: The only change in the securities, I understand, is what is shown in italics on the preceding page.


Sir THOMAS WHITE:: That is correct.
On section 60-Deposits outside Canada:


Mr. MARCIL:: May I ask the minister if this Bill applies to the so-called friendly or mutual benefit associations?


William Thomas White: There is a later section covering them.
On section 63-Investment by companies other than life companies:
' Sir WILFRID LAURIER: What'is the
change?


William Thomas White: Hitherto this provision only applied to life insurance, now it applies to all insurance.


William Pugsley: Might I ask why the last three lines of subsection 3 have been struck out? They provide that an amount at least equal to two-thirds of the total liabilities of a company in Canada shall consist of investments in or loans upon Canadian securities. I think it is very desirable that insurance companies, which derive their assets from the masses, should make their investments largely in Canadian securities, instead of in foreign securities, and I think there should be some good reason to show for striking out this provision.


William Thomas White: That point was carefully considered, and it was feared that the retention of the provision might lead to retaliatory legislation on the part of some of the States in which Canadian companies are doing business. I think it is a fact that most Canadian companies doing business almost solely in Canada invest their funds in Canadian securities, but there are Canadian companies doing a large business in many States of the Union, and it was thought inexpedient, for the reason I have mentioned, to retain that provision. I admit it might seem upon its face as if what my hon. friend says is reasonable.


William Pugsley: I do not see how it would lead to retaliation, because this section only applies to Canadian companies.


William Thomas White: But they might be doing business in the United States also.


William Pugsley: The section does not apply to foreign companies doing business in Canada, therefore, the retention of this provision should not lead to retaliation. I do not see how the fact that Parliament requires a Canadian company to make an investment in Canadian securities proportionate to its liabilities in Canada would cause any retaliation against Canadian companies in respect of business they might be doing in the United States. If our legislation affected foreign companies in Canada, the case might be different, but we are only dealing with Canadian companies. I think there is every reason in favour of retaining this provision.


William Thomas White: I confess it looks like a reasonable provision, but the arguments put forward in the Banking and Commerce Committee were very strong, and were considered very carefully, and it was thought the retention of the provision might lead to retaliation, which would result to the detriment of Canadian fire insurance companies doing business outside of Canada. My hon. friend asks how it would invite retaliation.
Canadian companies may lodge Canadian securities dn the United States with the superintendents of insurance in the states in which they are doing business. It was contended that a state legislature may say: As your legislation requires you to invest an amount equal to two-thirds of your liabilities in Canadian securities, we shall require you to invest a certain amount in our securities. What about our insurance companies? They might resent legislation requiring them to make investments in foreign securities equal to two-thirds of their foreign liabilities."


William Pugsley: It says "liabilities in Canada."


William Thomas White: I follow my hon. friend perfectly, and yet one meets this contention of those who are practically engaged in the business and who appear to have a well-founded apprehension that retaliation might result. It appears to be the case that legislation affecting insurance companies is pretty carefully followed by the different administrations, and retaliation is likely to occur if there appears to be any discrimination against the securities of the foreign countries in which our companies are doing business.


[Stage Direction]
Section agreed to.
On section 65-Investments, how taken:
William Pugsley: I suppose there is some general penalty clause?


William Thomas White: Instead of having the penalty clauses in this Act, there is a Bill, standing in the name of my hon. friend the Minister of Justice (Mr. Doherty) and which has passed the Banking and Commerce Committee to. which it was referred, dealing with the matter under the criminal jurisdiction of Parliament.


William Pugsley: That would not appear to cover a ease like this. Suppose section 65 is violated, what is the penalty for it?


William Thomas White: That is enacted by section 187.


William Pugsley: That is all right; there are penalties.
On section 68-Appraisement of real estate by direction of superintendent:


Mr. MURPHY:: What is the change in this section?


William Thomas White: Merely a change in phraseology, the substitution of "British or foreign company" for "company incorporated elsewhere than in Canada."
On section 69-Penalties and forfeitures:


William Thomas White: The sections
which have been omitted, sections 71, 72	and 73, are now covered by
the Bill to which I have referred and which is an amendment to the Criminal Code. I am advised by the Department of Justice that in order to give clear jurisdiction it is desirable that instead of dealing with the penalties in this Act they should be dealt with under the criminal jurisdiction of Canada. Then, there is no doubt as to the jurisdiction.


[Stage Direction]
Section agreed to.
On section 74-Assessment Company failing to make attested returns:
William Pugsley: This section, No. 74, becomes 70?


William Thomas White: They will be renumbered.
On section 75-Contracts prior to 20th July, 1885:


The CHAIRMAN (Mr. Steele):: Section 75 is struck out.


William Thomas White: Section 75 is
transferred to page 4 of the Bill which was dealt with the first day we took up the Bill. It was transferred by the Banking and Commerce Committee and it is now included in section 3, (a2). It was thought it should be dealt with among the exemptions, the wording being:
To any contract entered into, or any certificate of membership or policy of insurance issued, before the 20th day of July, 1885, by any assessment life insurance company.
It is only a change of position in the Act. On Section 77,-Disposal of unauthorized investments; liability of directors for unauthorized investments:


Sir WILFRID LAURIER:: The director
who, within a certain time, protests against an unauthorized investment, relieves himself of any liability?


William Thomas White: A director who
is present at a board meeting at which it is determined to make an 'unauthorized investment and who opposes that investment should not be held jointly liable with the directors who favour the investment. This case of the director who is over-ruled, came before the committee, and in order to meet this difficulty this proviso has been inserted. I think that the publication in a newspaper of the protest as here provided would be very rare, but it would be very effectual in (preventing improper investments. Investments have been made, rarely I am glad to say, which were quite unauthorized by the Act 'and whigh have entailed heavy losses. I would move to amend the proviso by substituting for the word "made'" the word authorized." That would make it refer to the meeting at which such investment was " authorized "-an investment would not be " made " at the meeting.


William Pugsley: Suppose all the directors protest against it?


William Thomas White: Then they would not authorize it.


William Pugsley: Why not? The investment is authorized. One director protests, and the other follows his example. I think that they should cease to be directors. A man ought not to be allowed to continue to be a member of the board and to exonerate himself from liability by making publication in a newspaper, where the investment is made contrary to the provisions of this statute. There ought to be some more stringent provision than that.


William Thomas White: Does my hon.
friend seriously contend that, if a board authorized an investment and then protested against it, the court would relieve them of joint responsibility under this provision?


William Pugsley: If the statute says so.


William Thomas White: Would not the court look through the form to the intent and ascertain who, as a matter of fact, did protest in the proper sense of the term, and who, as a matter of fact, put forward sham protests in order to protect themselves under this Act? In the Companies Act there is an almost identical provision, section 162, relating to the payment of 'dividends when a company is insolvent. That has been in the Companies Act for many years and I believe is a useful safeguard against the payment of dividends when a company

is insolvent. The practical effect of this provision would be to make boards of directors exceedingly careful with regard to the investments they make.


William Pugsley: It is very important
that some provision should be made. I have known two or three cases where very considerable losses occurred. Let me illustrate what might occur under this provision. There might be two wealthy men on a board of directors, both of whom would be absent from a meeting. They might desire to make investments in certain securities on which they looked with favour. Three directors, of little or no means, in the absence of the other two, might pass a resolution authorizing the investment. Those who were absent would publish a protest in the newspapers.
But they still remain directors, the illegal investments still remain, and the wealthy directors who would be able to respond are freed from liability. After three or four years, or longer, the company gets into difficulties. It may be discovered that its difficulties have arisen very largely, if not wholly, through the illegal investments which have been made. The wealthy directors, who are the only ones able to respond in damages to the stockholders or policyholders, are freed from liability because they have published a protest; yet they are still allowed to remain members of the board. It seems to me they should be compelled to take .some effectual means to have the securities disposed of and the funds restored to the company. They should not be allowed to escape liability merely by publishing a protest, they still remaining directors, and the illegal investment still allowed to continue.


William Thomas White: I think that case is a very fanciful one, and not likely to occur in practical experience. In such a case, in which there would be collusion, the absent directors would be liable. But the Teal safeguard is publicity, which is the best safeguard in matters of this kind. An illegal investment is made; months afterwards, on an inspection it comes to the attention of the department that there is depreciation and loss, and a certain amount of damage is done. This section will have the effect, eo far as honest directors are concerned, of making them notify the Superintendent of Insurance, or publish this protest. If the Inspector of Insurance were made aware at once of the unlawful investment, there would be no loss, or very

little loss, in most cases, because action would be taken at once to make them return the security to those who sold it, if it were a fraudulent transaction. 1 think it is a valuable safeguard in connection with the investments of these companies.


William Pugsley: Yes, it is a safeguard,
but it would be extremely more valuable if it were left as it stood in the original Bill. The Banking and Commerce Committee have emasculated the salutory provisions of the section to such an extent that they might be rendered nugatory. One of the difficulties with insurance companies, as with all companies, is that many directors do not give personal attention to the affairs of the company, and under' this proviso they are only liable if, after they become aware of the illegal investment, they give notice. Investments might be made by the acting directors, by the small executive committee which companies often have, and the directors, really capable of responding in damages to the policyholders, might have no personal knowledge of the matter. It seems to me theTe would be no great hardship in leaving the section just as the minister had it in the original Bill.


Charles Murphy: As I gathered the sense of this amendment while the Chairman was reading it, I understand there are two conditions to be complied with before a director can relieve himself of liability for ail investment of which he disapproves, and which may have been authorized at a meeting at which he was present, or not present. One of these is that he shall have his protest entered on the minutes, and the other is that he shall later publish that protest. There is a similar provision in a section in the Companies' Act, on which the proposed amendment is based. I did not hear the language.


William Thomas White: It is the same language.


Charles Murphy: What are the words?


William Thomas White: The words are: " and is able to do so." The 'section is taken from the Companies' Act.


Charles Murphy: I am familiar with the section in the Companies' Act.


William Thomas White: The committee felt-and one can quite understand the feeling-that a protesting director who desires to do his duty, hut is overruled by his fel-low-menhbers of the board, should have some means of protecting 'himself against
liability on a loss which .might be very heavy. On the whole, I think it is a wise proviso.


Charles Murphy: The minutes are usually in the custody of the secretary, and it is not always easy for a .director to have access to them as would be necessary if he is to protect himself.


William Pugsley: There are directors in
these companies, residing in the various sections of the country, and upon the reputation and high standing of these directors the policyholders are induced to accept policies in the companies. Suppose the directors choose-as directors often do-to allow two or three of their number to carry on the business of the company, and that those so carrying on the business make illegal investments through which the company sustains loss. Suppose that the company gets into litigation, and it is found that the assets are largely dissipated through this illegal investment, the directors should not be allowed to plead that they did not know of these illegal investments being made. The directors ought to know of the investments of the company; they ought to know whether the .money of the shareholders is being invested in duly authorized securities or not. It seems to me that if the minister insists upon the amendment, it ought to be provided that an absent director should within thirty days after the investment has been authorized, publish his protest. He should not be allowed to escape liability-by saying, perhaps after a lapse of years, that he was not at the meeting, did not know of the investments which were being made, and had not the slightest idea they were illegal. This law will enable him to escape.


William Thomas White: I do not think so.


William Pugsley: Yes, it will.


William Thomas White: No.


William Pugsley: When the case comes
before the court, he can say:	I was not
present when that investment was authorized; I did not know anything about it, and it was only when a suit was brought by the policyholder that I learned that this illegal investment had been made. It seems to me that thirty days would he long enough for an absent director to find out whether an illegal investment has been made or not. It is his duty to do so. He holds himself out to the shareholders and policyholders as taking an active interest in the management of the company and he should within thirty days, or say within three months,

publish his protest. That would make it obligatory upon every director to keep himself in touch with the investments which are being made from time to time. I would allow reasonable time, because a director might be absent from the country; but he ought not to be allowed, after a lapse of many months or of years, to come before the court, as he is permitted.to do under this proviso, and say he had no personal knowledge, and the investment therefore ought to be excused.


William Thomas White: 
Wilfrid Laurier: What is the use of it, then?


William Thomas White: It makes a specific instead of a general provision.


William Pugsley: It helps the directors..


William Thomas White: It helps an honest director; that is what the proviso is intended to do.


Wilfrid Laurier: But it injures an innocent policy-holder. If a loss occurs to the company by reason of an illegal ap-

plication of funds, the loss falls upon the policy-holders. Somebody has to suffer for it; either the innocent policy-holder, or the innocent director.


William Thomas White: If a director neglects his duty, he is liable under the general law of negligence. But this is a case in which an honest director attends a meeting at which an illegal investment is authorized. His objection to the investment is overruled by his fellow directors, and', desiring to put himself right and avoid liability, he publishes his protest and has it entered upon the minutes of the meeting. If my right hon. friend (Sir Wilfrid Laurier) were a director of a company and was overruled' by some fellow directors, who had not as high a sense of
4 p.m. duty as he had, with regard to an investment upon which a loss was made, I do not think he should be held liable, provided he did everything possible to give notice of the improper transaction. That is the purpose of this proviso. The general law of negligence still applies. As I say, the precedent for this is found in the Companies Act.


Charles Marcil: Is the publication of this protest intended to serve as notice to the shareholders of the company?


William Thomas White: It would have that effect.


Charles Marcil: In the province of Quebec a man could publish a notice of that kind in an obscure paper and the great bulk of the people interested in the company would never see it. Thousands of English people in Quebec never read French papers, and vice versa. The common law of that province ought to be followed; publication of such notice should be at least in at least one paper in either language.


William Thomas White: If the protest were published in any paper of Canada against the action of directors of an insurance company, the rivals of that company would at once fasten upon it; it would become public property very soon.


Wilfrid Laurier: I think it
would be better if, under such circumstances, the director should at once notify the Superintendent of Insurance.


William Thomas White: I had that same idea in my mind when the matter was under consideration. There is a great deal of wisdom in that suggestion. I heg to move that all the words after the word "thereafter" he struck out, and that the' following words be inserted in lieu thereof:

"gives notice of his protest by registered letter to the superintendent."


William Pugsley: This is the way a case of the kind referred to would work out: an illegal investment would be made by the manager. After the lapse of some months, the Superintendent of Insurance, during the course of an inspection, would discover the illegal investment. The thoroughly respectable directors who were merely figureheads on the directorate of the company, having learned that the Superintendent of Insurance had discovered the illegal investment, would proceed immediately to absolve themselves from liability under the Act by giving notice as set forth in the proviso, or by notifying the Superintendent of Insurance. That is like locking the barn door after the horse is stolen.


William Thomas White: They are liable for negligence.


William Pugsley: Not at all. I do not think it is negligence not to attend meetings.


William Thomas White: Not necessarily so.


William Pugsley: I do not think it is even prima facie evidence. I think, therefore, the result would be as I have just stated. Under this proviso the shareholders or policyholders who have been transgressed against are freed from all liability. I think that is the way it would work out.


William Thomas White: My hon. friend knows that it is not possible to provide legislation covering all phases of fraud, but if this provision was not in the Act, in a case such as my hon. friend has mentioned, it would be a question whether or not, according to the law of negligence, the directors were liable. We are not changing that, but are providing for the cases-and there have been many of them-in which the board of directors make an unauthorized investment and one of them objects to it but is overruled. We are giving him an opportunity of notifying the Superintendent of Insurance, so that prompt action may be taken. I think the proviso has been improved by the suggestion of my right hon. friend.


William Pugsley: It expressly provides
the means by which the director may exonerate himself from liability. Does not my hon. friend think that there ought to be a clause to the effect that nothing in the proviso shall be held to relieve the directors from liability for negligence?


William Thomas White: This would only apply to the specific case. I do not think the director would be relieved from the general law.


William Pugsley: It would relieve him from any presumption of negligence by reason of his not attending the meetings and having some oversight over the investments. A court would say that Parliament had made an express provision pointing out the means a director may take to relieve himself from liability. I think we ought not to take away the ordinary remedies which might exist against a director for negligence in not properly attending to the investments of the company.


William Thomas White: I follow my hon. friend's argument, but I would point out that the corresponding provision in the Companies Act has stood and has not affected, so far as I km aware, the question of general liability for negligence on the part of a director. I would suggest that we pass this section, and in the meantime I will think over my hon. friend's suggestion. I might add that in deference to my hon. friend's request I consulted further with the Deputy Minister of Justice on the point of our declaring by this Act a foreign company to be a Canadian company after it has taken out a license, and the Deputy Minister of Justice is of the opinion that we should not change the language of the Act by inserting the words "for the purposes of this Act" which my hon. friend suggested.
Section as amended agreed to.
On section 82-Form of Act of incorporation:


William Pugsley: I do not see any schedule to this Act.


William Thomas White: The schedule has not yet been printed, but I am going to ask the committee to add the -schedule as printed. If my hon. friend has an amended copy of the Act he will see by section 188 that the schedule to the Insurance Act of 1910 is enacted by reference, which is not a very desirable way of doing it. After the schedule is printed, we could have it inserted before we pass the Bill.


[Stage Direction]
Section agreed to.
On section 95-Form of Policy to be approved :
William Pugsley: This requires that a
copy of every policy shall be mailed to the superintendent.


William Thomas White: That part is not new, hut part of the section is. It is in order that the Dominion may exercise this authority, as a condition of the license. The point is that in the case of a provin-cially-incorporated company, question might arise unless this provision was inserted. Section agreed to.
On section 98-Companies having capital stock:


William Pugsley: Is it the intention that section 98 should be limited to life insurance companies, or is it to apply to fire insurance companies as well?


William Thomas White: I think this part applies only to life insurance companies.


William Pugsley: What becomes of section 108?


William Thomas White: That was a section inserted in 1910 to meet a particular case which has since disappeared, so the section is no longer necessary. It was not general in its application.


William Pugsley: I do not like the idea
of putting through a Bill with the sections wrongly numbered. It is very apt to lead to mistakes.


William Thomas White: This is a very
important matter, but it will probably meet my hon. friend's views if the Bill is reprinted before the third reading, and allowed to stand for a while. I have spoken of it,many times to the Superintendent of Insurance, and he has given his closest attention to it. It will be properly numbered before the third reading.


William Pugsley: My right hon. friend
(Sir Wilfrid Laurier) suggests that before taking the Bill out of committee we should have it reprinted, then it can be formally adopted.


William Thomas White: Yes, that will be done. I may say I did not expect to get the Bill out of committee to-day. I intended asking that one or two sections should be allowed to stand.
On section 135

Assets, minimum amount of:


William Thomas White: This is a change with the object of strengthening the fire insurance companies. Formerly they were required .to keep only a fair margin; now there is ia 15 per cent excess required. I understand there is no objection on the part of the companies to that.


[Stage Direction]
Section agreed to.

On section 142a-Hail surplus fund:
William Thomas White: There is a change in this section. For the word " said," -in line 2, page 63, there are substituted the words " net hail."
Section agreed to .
On part 5-Provisions applicable to companies hereafter incorporated by Parliament.


William Pugsley: I would suggest that in the numbering of the subsections of the Bill a number should be placed before the first -paragraph of each section. When that is not done it is very awkward in making citations. I brought the matter up in the Kailway Committee, and the solicitors have made the changes in the Railway Bill. There should be uniformity.


William Thomas White: I entirely agree. I could never understand why the first subsection was not numbered. The Superintendent of Insurance assures me that the Bill is being set up numbered in that way.
On .section 184a-Expenses of organization, to what limited:


William Pugsley: I have noticed that
some companies charge up their organization expenses as an asset. I could never understand why that should be done. They are in no sense an asset. The money has been expended in procuring the charter and getting subscriptions for stock. It seems to me to be entirely a fictitious asset and ought not to be so charged.


William Thomas White: The practice of the Department is to disallow it.


William Pugsley: Quite right. '
On section 184b, subsection 8-If license not obtained, shareholders control -payments :


William Thomas White: Subsection 8, which deals w-ith balance of moneys to be returned -to subscribers, is an important provision, -which follows largely the language of a similar provision in -the Bank Act. The object i-s ito protect the -shareholders during the period of organization. Some rather -shocking cases have been brought to our attention, in which promoters have obtained fairly large ,-sum.s from shareholders and have dissipated them in connection- with the promotion of the company.


[Stage Direction]
Section agreed to. .

On section 188-Schedule to Insurance Act, 1910, enacted as schedule to this Act:
William Thomas White: I move that this' section be struck out and that the Bill be amended by adding the schedule, without reading it. This is on the understanding, of course, that before the Bill leaves committee it will foe reprinted, including tfoe schedule.


[Stage Direction]
Motion agreed to.
On section 189-Repeal of inconsistent Acts; exceptions:
William Thomas White: An amendment is required to this section. I move that after the words: " The Canadian Order of the Woodmen of the World," on line 16, the following be added: " The Royal Guardians, the Grand Lodge of the Loyal Order of Moose in the Dominion of Canada; La Societe des Artisans, C.anadiems Franpais, Alliance Nationale." Those companies have special charters, containing certain provisions that are very inconsistent with the provisions of this Bill, and they all combine life and accident insurance. It is not desired to cut down their powers; therefore it is necessary, as this is a general Act, that they should be specially named. I think that finishes the Bill except 142b, which we reserved.


Charles Marcil: Are those all the friendly societies incorporated by Dominion charter, or aTe there others?


William Thomas White: These are all
friendly societies incorporated by the Dominion of Canada, and licensed.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Mr. J. E. ARMSTRONG:: I suggest it be left to the law clerk to decide whether the schedule should come before the last clause or after. I should think it should come after.


William Thomas White: I think the hon. gentleman is right. I move that the schedule foe added after section 189.


[Stage Direction]
Motion agreed to.
Progress reported.

[Stage Direction]
The House in Committee of Supply, Mr. Steele in the Chair.
Public Works-Chargeable to income-Public buildings, Nova Scotia.- Halifax, customs house-improvements, $3,000.
Mr. A. K. MACLEAN:: Is this to cover contingent expenses?


Mr. ROGERS:: It is to complete the
stonework.
Stellarton, public buildings (revote of $4,000 lapsed)-including cost of site with interest at 5 per cent thereon, $5,500.


Alexander Kenneth Maclean: Why is interest added? It is rather difficul|t to lobtain interest from the Government upon anything.


Robert Rogers: That was added by
direction of the Exchequer Court.
New Brunswick-St. John, new post office $5,000.	.	'


William Pugsley: Has this building been entirely paid for?


Robert Rogers: Yes. This amount is to provide for pavement and for fixing up around the lot.


William Pugsley: Has application recently been made to the department for the placing of lights in front of the building?


Robert Rogers: The matter has not come to my notice, neither has it been brought to the deputy's attention. It may be in the department; we will look it up.


William Pugsley: I saw a statement in
regard to the matter in a news-
5 p.m. paper some time ago. If the minister could see his way clear to grant the request, it would be a great public convenience.


Robert Rogers: I will see if there is
any report on it.
Montreal General Post Office-Remodelling old building, $20,000.


Charles Marcil: Is this work about completed?


Robert Rogers: Yes, practically completed. This is for the heating apparatus.


Charles Marcil: Has postal station "A" been completed?


Robert Rogers: It is now in use.


Charles Marcil: Is that on St. Catherine
West?


Robert Rogers: On St. James street, I
think.
Quebec Post Office, enlargement and alterations, $80,000.


Charles Marcil: Is the work at the Quebec post office about completed?


Robert Rogers: We expect that it will be completed this year. This vote is supposed to complete it.
Cardinal, Ontario-Public building, $4,000.


Mr. ROBB:: Is this a new building?


Robert Rogers: This 'building is for a
post office. It is suitable and can be had at a small price.
Kingston Royal Military College-Covered drill hall, $8,000.


William Pugsley: Does the minister's department retain control of drill halls and armouries after they have 'been built, or are they handed over to the Militia Department?	.


Robert Rogers: They are handed over to the Militia Department, and are under their entire control.


William Pugsley: The reason I ask is this. The magnificent armoury which was constructed at St. John and which was intended to be used for the troops, has been converted into a hospital, I am told. It is certainly not adapted to that purpose, and it certainly is diverting the building from the purpose for which it was constructed, even though it is only for a time. I think it is unfortunate that a hospital could not have been got somewhere else, or other arrangements made. I have heard that there is quite a strong feeling amongst the citizens of St. John that a great mistake has been made in this respect. I thought the minister might know something about it, but if the matter is entirely in the hands of the Militia Department, information, of course, can be sought from the Minister of Militia.


Robert Rogers: It is entirely under his
control.


William Pugsley: The minister can see
that the building is not at all suitable for a hospital.
Ottawa departmental buildings-Building and macerating plant for Currency Branch of Finance Department, $22,000.


William Pugsley: Would the minister explain what a macerating plant is, and the process?


Robert Rogers: It is used for the purpose of destroying old bills that have been withdrawn from circulation.


William Pugsley: I should have thought
they could have been burned in a furnace.


Robert Rogers: The Finance Department
wanted this plant, as it is the modern, way

of destroying old bills. The bills are ground into pulp, and the pulp is sold,
' Saskatchewan-Sutherland - Water supply for Forest Nursery Station, $8,000.


William Pugsley: Is this near Saskatoon?


Robert Rogers: Yes. This vote of $8,000 is required for laying a six-inch water service pipe from the town system at Sutherland to the Nursery Station. The charge to the department for consumption would be by meter at 11 cents per 100 cubic feet, as follows:	Estimated cost of laying water
service pipe inclusive of materials and labour, $6,784.87; contingencies and superintendence, say, $1,215.13; total, $8,000. Approximate distances: From town's main to boundary of Forest Nursery Station, 2,950 feet; from boundary of Forestry Station to pressure tanks, 3,110 feet; total, 6,060 feet. The water supply for the Saskatoon Nursery Station is asked for by the Department of the Interior, April 28, 1915, and August 30, 1916, ,and recommended by Mr. N. M. Rose, Chief of Tree Planting Division.
Flags for Dominion public buildings, $5,000.


Mr. KYTE:: Are these flags to be provided for public buildings all over Canada?


Robert Rogers: Yes.


George William Kyte: I am very pleased to see this vote. While I am not much of a flag-waver myself, I have always thought, and am quite sure, that a more judicious supply of bunting on the public buildings of this country would meet with the approval of the great majority, if not all of the people. Whenever I visit the United States I am always struck with the great contrast between that country and our own, and the great frequency with which one sees the United States flag flying. This has been particularly noticeable since the United States have joined the Allies in this war. There is now even a greater display of flags than ever before. The occasion for flying the Union Jack in this country is quite as great as that for flying the Stars and Stripes in the United States. I am very much pleased to think that in future the contrast between this country and the United States will not be as noticeable as it has been in the past.


Robert Rogers: We share the idea of flying the flag from every public building in Canada every day in the year. This amount is in the estimates in order that we may have an additional supply, because, by reason of the fact that we adopted that

course some time ago, it is necessary that
we should have more flags. I am glad my
hon. friend approves of our action in flying
the flags everywhere.


Mr. McKENZIE:: In contradistinction to my hon. friend from Richmond, we are such flag-fliers in my town that the flag we have on our public building is pretty well worn out. I hope the deputy minister has made some report in regard to the matter. We had a very good flag, but it has been flying every day. The minister will understand that particularly in winter when a flag is left out and the Tain falls upon it and freezes, and this is followed by a heavy wind, the flag is destroyed very quickly. I was sorry to see that for some months past the flag on our post office has been much dilapidated and worn out. It should 'be replaced by a new one.


Robert Rogers: Of course, it is the duty of the caretaker to bring the matter of this kind to our attention. We will take it up, and see that a new flag is supplied.
Dominion public buildings, generally, $30,000.


Mr. DEVLIN:: Before the items are passed I would like to ask the minister if any part of the war profits tax goes to pay for those -buildings, improvements, and so on.


Robert Rogers: All the taxes go into the consolidated revenues fund, and we get our money fro-m that fund.


Emmanuel Berchmans Devlin: Then, what we understand as war taxes are not devoted exclusively towards the carrying on of the war and the winning of the war?


Robert Rogers: 
Emmanuel Berchmans Devlin: Is it the intention of the Government to set aside the tax directly levied for war purposes towards carrying on the war? Take the income tax, for instance, which we are about to collect- will that income tax also go >to pay for the repairs to public buildings, repairs to wharves, the building of post offices, etc., or will it be devoted entirely to war purposes?


Robert Rogers: I am not quite clear as to the form adopted by the Finance Department in regard to the manner in which they earmark the income tax or any other 26.1
particular tax in the payment of the moneys necessary for works, or necessary for the war. If my hon. friend will'renew his question when the Finance Minister is here, no doubt he will be very glad to explain.


Emmanuel Berchmans Devlin: I do not want to quibble over this item, but I would like to place myself on record as being one of those who would like to see all items relating to the w.ar tax, whether by way of stamp tax, income tax or otherwise, devoted entirely to the purpose of carrying on the war. According to the minister's statement a large portion of that money might be devoted to the construction of buildings, which might not be absolutely necessary and might not contribute in any way towards the winning of the war. Then, again, it might be devoted to other general purposes which have nothing to do with the winning of the war. If the people of Canada are to be taxed, and believe they are being taxed for the purpose of winning the war, I would like to say, as emphatically as I can, that every cent of that tax should be set aside for war purposes exclusively.


William Thomas White: There is no advantage by earmarking special funds. My hon. friend is no doubt aware that from the ordinary revenues of the Dominion, that is to say, the revenues derived from customs duties, excise duties, and other miscellaneous sources, we have more than sufficient to pay the ordinary expenditure of the Dominion including all the ordinary expenditure upon public works and all the capital expenditure of the Dominion as well, and we have in addition a surplus devoted to the payment of capital on our war expenditures, so that my hon. friend need not be anxious as far as the special taxation is concerned, because it and more is devoted to the purposes of the war.


Charles Marcil: Will the minister tell us if it will be possible to find out what has been collected since the declaration of war, under the special taxes imposed in the post office, in the inland revenue, in the customs, and generally in the so-called war taxation?


William Thomas White: It has been placed upon Hansard two or three times during the present session. If my hon. friend is interested he will be able to find it without difficulty.
Ottawa public buildings-Telephone service, $47,000.


William Pugsley: I notice there is an increase of $5,000 in this item, and I think the minister should give some explanation



in regard to it. I should suppose there would not be as many telephones in this building as there were in the Parliament Buildings which were destroyed by fire. The amount, $47,000, seems to be very large indeed for telephone service in connection with the public buildings in Ottawa. Could not a great saving be made in the case of telephones? I should suppose it would be possible to instal a central switchboard so that the officers in the different buildings would be served in that way, and that this would mean a very large reduction in the cost of the service.


Robert Rogers: The increase is due to the increase in the number of employees, largely in the Militia Department, for example. We had many, many hundreds more during last year in the Militia Department than before. Then we have the pension hoard, the assigned pay .office and various other branches, all of which make a demand at once for telephones. We have switchboards in the Militia Department and the Printing Bureau. Outside of the Militia Department ana the Printing Bureau I do not know that a switchboard would be desirable. The increase of $5,000 is not very large in view of the increase in the Militia Department and in the other services that we have to supply. We have to provide telephones for the Food Controller, the National Service Board, the Fuel Controller and various offices of that kind.


George William Kyte: What company supplies the telephone service?


Robert Rogers: The Bell Telephone Company.


George William Kyte: Is there a special rate of rental agreed upon between the Government and the company, or do you pay the ordinary rate?


Robert Rogers: We have a special rate.


George William Kyte: What is it?


Robert Rogers: Thirty-five dollars.


George William Kyte: That would mean almost two hundred extra telephones this year over last year. That would supply a very large number of additional offices.


Robert Rogers: This item is to take care of any possible increase for the coming year.


Emmanuel Berchmans Devlin: Is there any special building in the city used as a garage for the militia automobiles, or are they distributed in different garages throughout the eity?
fMr. Pugsley.l


Robert Rogers: I would not be able to answer that question.


William Pugsley: From what I hear, they are so much on the street that they would not need a garage. .They are rolling about the streets all the time.


Robert Rogers: That shows that they are necessary or they would not have them.


William Pugsley: The telephone charge strikes me as very high taking one telephone with another. There must be over
2,000	telephones. While in certain of the offices there might be a charge of $35, I would suppose that for the great majority of the offices a very much smaller charge would be made. I know it is customary on the part of telephone companies to charge more for offices than residences. The reason for that, I suppose, is that there are more calls for offices than is the case with residences. But that would not apply to the offices of hundreds of clerks in the different departments in Ottawa. Thirty-five dollars strikes me as being a pretty high charge on the average for all these different instruments. However, that is a matter for the officials of the department to look into. An expenditure of $47,000 would strike the public as a pretty heavy charge for telephone service for a year. The increase of $5,000 is very large. As my hon. friend from Richmond (Mr. Kyte) points out, while there is an increase in the number of employees, they would not all have the telephone service. I think some effort ought to be made to get some reduction in the charge for telephones.


Robert Rogers: The item does seem rather large but I find on looking at the record that we have 1,014 phones altogether, 800 odd of which are office phones and only 100 odd house phones.


William Pugsley: That would be considerably over $45 for each phone.


Robert Rogers: Probably all of that
amount has not been expended-I do not know,-but that is the number of phones that we have on the departmental record. Of these 817 are in offices and 190 in houses.


William Pugsley: As the total last year amounted to $47,000, the minister will see that it will amount to an average of $47 a phone, which is very high indeed, some $12 apiece greater than what the minister said was the amount which was paid. There must be some error in that because the minister surely does not pay $47 a phone?


Robert Rogers: No. Last year our vote was only $42,000 and we did not spend all of it. We have increased it this year by $5,000 by reason of the increased number of buildings which are necessary to house the increased staff, especially of the Militia Department, and probably that amount will be short. The deputy put in the extra $5,000 with the object of taking care of the requirements during the coming year.


William Pugsley: The total vote of $42,000 was not expended last year?


Robert Rogers: Less than $42,000 was spent last year.


Charles Marcil: How many buildings are occupied for governmental purposes here?


Robert Rogers: I am afraid I have not the number of buildings but we will look it up before we rise.


Charles Marcil: The number is very large?


Robert Rogers: Yes.
Dominion public buildings-Kents, $700,000.


William Pugsley: This is a very big item. Will the minister tell us how much is paid for the rents of the buildings in Ottawa and how much throughout the Dominion?
Mr. ROGERS-: This amount is required for buildings leased for the various departments in all parts of the Dominion including all phones, municipal rates, etc., the whole in accordance with an estimate submitted by the chief architect. The approximate amount required for rent of buildings-and the charge for phones is included in the rents for buildings outside of Ottawa under our form of book-keeping- is as follows: in Nova Scotia, $13,000; in New Brunswick, $511; in Prince Edward Island, $176; in Quebec, $37,000. In Ottawa we pay $452,000.


Mr PUGSLEY:: Gould ithe minister furnish a statement showing the different buildings rented in Ottawa and the rental paid for each .building, and the same information for each city in Canada.


Robert Rogers: I have such a statement here, but it is very long. If is very complete and gives the rents in all cities. Perhaps it could foe inserted in Hansard.


William Pugsley: That will be quite satisfactory.


Alexander Kenneth Maclean: Does the statement show that in some cases part of the building is rented to one firm and part to another?
263J


Robert Rogers: Yes.


William Pugsley: The rentals paid in Ottawa strike me as very large, indeed, $452,-
000.	Thus, in addition to the buildings owned by the Government, including the buildings expropriated in the neighbourhood of Vitoria street, many of which are available for occupation by the Government, nearly half a million dollars is being paid. The minister has been going some since he came into office. There has been an extraordinary increase since the change of Government. When I was minister I was criticised very severely by hon. gentlemen opposite, wiho seemed to take a real, lively interest in the affairs of the country. The hon, member for Souris (Mr. Schaff-ner) used to foe concerned over the rents which were 'being paid out.


Mr. SCHAFFNER:: Just as much now.


William Pugsley: pretty handsome interest on the total cost of the building, not only on the part used by the department but also on what is used for the carrying on of a very large commercial business. I refer to the Rea building, to which a story was added some time ago. The two upper stories, the additional story and the one below it, were rented to the Government for $43,000.


Alexander Kenneth Maclean: I have been informed that the Government was paying $2,000 per year rental for the building on Argyle avenue occupied as a restaurant.


Robert Rogers: Yes.


Alexander Kenneth Maclean: It would not be worth much more than that.


Robert Rogers: The owner pays the taxes. Our rentals are all figured out by the officers of the department, and we pay on the basis of six per cent of the actual cost of the building. A very careful examination was made of the Rea building, and we are paying only six per cent on the actual cost of that portion of the building we use. My hon. friend was in error when he said we only used two stories and that we had one department. We use three stories and there are departments, Marine and Fisheries and the Naval Department.


William Pugsley: Both under the one minister.


Robert Rogers: Yes. The rental has been figured on the basis of the cost, and we consider it a fair way to figure it. The rentals are very moderate and reasonable. It is true, there has been a necessity for a large increase in the number of buildings rented in the past few years, by reason of the number of employees, and I may say we have requests almost every week for increased accommodation. The staff has complained very bitterly in some cases that they had not room provided under the law, and we do not come within the Factory Act, which provides so many feet for each person. The Militia Department is only allowing 17 feet to each employee, and the Factory Act provides for 30 feet. Therefore, there is a special demand at the present time for increased space for the Militia Department, to correct that condition. Hon. gentlemen can see the difficulties we are up against. When there is necessity to rent a building, to rent it at the lowest possible amount, which we ourselves have figured on the basis of 6 per cent of the actual cost. That is calculated by the deputy and architect in every case.
[Mr. Puffslev.i


Frederick Laurence Schaffner: It occurred to me that perhaps those buildings on Wellington street were not used to the extent to which they could be used. We may be paying too high a rent for individual buildings, but I think any medical man looking over a great' many buildings would feel sure that there were too many people in certain rooms. The minister refers to that point, and it is very noticeable. The buildings have not the floor space required for the people employed in them. What I particularly wanted to know was whether the Government was utilizing the buildings on Wellington street. It seems to me, from casual observation, that they are not using the buildings as much as they could.


William Pugsley: That is, the buildings
expropriated by the Government?


Mr. MICHAUD:: I understand the Government is going to discharge about 1,700 >
civil servants. That will give ample space and will prevent overcrowding just now.


Robert Rogers: That *will help some. I understand that we are utilizing every one of the buildings on Wellington street which is suitable for use. We sometimes have difficulty in getting various branches of the department to go into individual buildings of that kind, because they cannot all have the accomodation together, but we are utilizing the buildings so far as we possibly can.


William Pugsley: Might I ask where the
National Service Board have their offices?


Robert Rogers: The Canada Life Building.


William Pugsley: What rent is paid for
the premises occupied by that board?


Robert Rogers: I have not that information, but will get it.
Dominion public buildings-Salaries of caretakers, engineers, firemen, etc., $550,000.


William Pugsley: Why is there an increase of $65,000 in this item?


Robert Rogers: That is owing to the increase in the number of caretakers and the increase in salaries that we have been obliged to make at the present time, due to the high cost of living. With the additional buildings rented we have additional expenses.


Daniel Duncan McKenzie: Is there a general increase in the salary of caretakers?


Robert Rogers: We are proposing 10 per cent increase, but it has not been made yet.

Mr. MoKENZIE: That will apply to public 'buildings?


Robert Rogers: Yes:
Water, $50,000.


George William Kyte: There is an increase of $3,000 in this item. I suppose that is due to the fact that prohibition is in force in Ottawa.


Robert Rogers: I might say that this
item represents water all over the Dominion, so that it is due to the fact that we have prohibition in so many parts of Canada as well as Ottawa.
Progress reported.
On motion of Hon. Rogers, the House adjourned at 6 p.m.
Monday, August 6, 1917.