1923-06-20

[Stage Direction]
Hon. JACQUES BUREAU (Minister of Customs and Excise) moved for leave to introduce Bill No. 225, to amend the Inland Revenue Act.
He said: The bill explains itself. The old clauses appear in the bill and the amendments are shown in italics. The first clause extends the interpretation of the word " chemist." When prosecutions 'were taken under the act it was often the case that the certificate of an assistant or junior chemist in the department, by whom the work was actually done, was refused by the court, and it became necessary to send our chemist down from the department to the court. The interpretation is extended to include any employee classified as junior chemist, assistant chemist or chemist in a laboratory in the Department of Customs and Excise or of any department of the government. The second clause makes the presentation of the certificate of the chemist prima facie evidence of his capacity to act as such. The third clause is to provide a penalty for those who deodorize denatured alcohol. Under part 10 of the Inland Revenue Act, only methylated alcohol was mentioned; we now add denatured alcohol.
Motion agreed to and bill read the first time.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. BOWEN:: Is the original official sample of grain on which the grade is determined by the inspection department used in case of a survey (or re-survey) of this grain?


Hon. Mr. ROBB:: The party asking for a survey on any car of grain has the privilege of requesting that the survey be held on the original sample, or on a fresh sample, drawn by an official of this department, if and when the car is in such a position or location that a fresh sample can be secured.
Questions

It has always been the practice of this department to secure fresh samples for survey purposes when requested, if at all possible to do so.
The great majority of samples placed before the Survey board are fresh samples.


WELLAND CANAL-TOWING
Mr. BENOIT:: 1.	How much of the towing on the Welland Canal, given by the Department of Railways and CanaLs, since 1917, was done by Captain William Hand, and what was he paid for this work?
2.	Does the Superintendent of the Welland Canal open the tenders for towing and does he make recommendations thereon?
3.	Did Captain Hand tender for towing, in December, 1921, at $5.50 per hour?
4.	Was he awarded the tender at a greater amount?
5.	What are the names of others who tendered on this towing, and what were the amounts of their respective tenders?
6.	Who opened these tenders submitted in November and December, 1921?


Hon. Mr. FIELDING (for the Minister of Railways and Canals):: 1.	Of the total paid by the Department of Railways and Canals for towing on the Welland canal since March 1, 1917, amoimting to $26,035.57, Captain William Hand received,, $3,810.50 for this work. The total amount he received is made up as follows: 3 days at $100; 38 hours at $20; 22 hours at $17; 27 hours at $13.50; 127 hours at $10; 11 hours at $7; 80 hours at $5.50.
Return trip from Port Dalhousie to Port Maitland and Dunnville-$225.
2.	Usually tugs are engaged at established rates, time not permitting the calling for tenders. When desirable to obtain quotations, the superintending engineer opens the letters and accepts the lowest offer.
3.	Yes.
4.	No.
5.	John Harrigan-$6 per hour.
6.	L. D. Hara, superintending engineer, Welland canal.


GRAIN ELEVATORS
Hon. Mr. MANION:: 1.	For what term is the lease of the G.T.P. elevator at Fort William, and the C.N.R. elevator at Port Arthur?
2.	To whom are they leased?
3.	When will their leases terminate?
4.	Are tenders being called, or about to be called, for the leasing of these two elevators?


Hon. Mr. FIELDING (for the Minister of Railways and Canals):: 1.	The lease of the Grand Trunk elevator at Fort William is for a term of ten years; for the C.N.R. elevator at Port Arthur, one
year.
[Mr. RobbJ
2.	The G.T.P. elevator is leased to the Grand Trunk Pacific Elevator Company, Limited; the C.N.R. elevator to the Port Arthur Elevator Company, Limited.
3.	Grand Trunk Pacific lease will expire on August 1, 1930; C.N.R., on August 31, 1923.
4.	For Port Arthur, yes; Fort William lease in effect until August 1, 1930.


COMMUTED PENSIONS
Mr. BLACK (Yukon):: 1.	Is it the intention of the government to introduce at this session legislation for the relief of returned men who have been induced to commute their pensions?
2.	If so, of what nature will such relief be?


Hon. Mr. BELAND:: No men were induced to accept final payment of pension. Pensioners who voluntarily accepted final payment, who are dissatisfied, have been afforded an opportunity to present their complaints to the government through the medium of the royal commission appointed to investigate questions relating to pensions and re-establishment, and it is expected the matter will be covered in the final report of the commission.


MORNING AND SATURDAY SITTINGS
[Stage Direction]
On the Orders of the Day:
Mr. J. J. HUGHES (King's, P.E.I.):: I would like to ask the Prime Minister if the government have considered the advisability of having the House sit Saturday next, and also holding morning sittings beginning with to-morrow or at a very early day, with a view of reaching prorogation by the 28th or 29th of this month? Perhaps the Prime Minister would like to have the opinion of the House on this question.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: The government has had both these points under consideration. The government is as anxious as the members to prorogue before the end of the month, but we have not thought it necessary to begin morning sittings this week or to sit this Saturday. In all probability we shall begin morning sittings next week.


HALIBUT TREATY
[Stage Direction]
On the Orders of the Day:
Mr. JOS. T. SHAW (Calgary West): I would like to ask the government what is proposed to be done in connection with the halibut treaty?

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Hon. ERNEST LAPOINTE (Minister of Marine and Fisheries):: It will be submitted to the House in a few days.


CATTLE EMBARGO-INQUIRY FOR RETURN
[Stage Direction]
On the Orders of the Day:
Mr. DONALD SUTHERLAND (South Oxford):: I would like to make an inquiry of the government with reference to an order for return passed on the 12th of February last asking for the correspondence between the Canadian government and the government of Great Britain regarding the embargo against Canadian store cattle. I would also like to know if it is the intention of the government to withhold this information until after the provincial elections in Ontario are over. In view of the reckless statements being made by the Premier of Ontario and others-


Mr. SPEAKER:: Order.


Donald Sutherland: -I think it is important that the return should be brought down.


William Lyon Mackenzie King: The return will be brought down almost immediately. I may say to my hon. friend that it has been represented to the government through the High Commissioner that the British government desire that part of the correspondence should be regarded as confidential; however, the government will see to it that all the correspondence is presented to the right hon. leader of the Opposition and he may judge what in his opinion should be so regarded. I think that any correspondence that is not laid on the Table will be simply of a character that might create embarrassment overseas, but which will not affect the situation so far as this country is concerned.


BANK ACT AMENDMENT
[Stage Direction]
The House again in committee on Bill No. 83, respecting banks and banking, Mr. Marcil (Bonaventure) in the chair.
Mr. FIELDING:: I would ask the attention of the House for a moment to be permitted to return to section 80. A suggestion was made by the hon. member for East Edmonton (Mr. Kellner) for a certain amendment to that section in regard to exemptions in the western country. In substance we desire to accept the hon. gentleman's amendment. The wording is slightly different in the amendment I propose, but I am quite sure he will be content with it. I beg to move that
section 80 be amended by adding after the word "property," in the third line, the following:
Provided, however, that no mortgage or hypotheque shall be taken, held or disposed of in respect to or be deemed to include any personal property which at the date of the coming into force of this act is by any statutory enactment exempt from seizure under writs of execution.
I think that is substantially the same as my hon. friend proposes.


Mr. KELLNER:: The amendment is satisfactory to me. It is practically what I had intended.
Amendment (Mr. Kellner) withdrawn.


Mr MEIGIIEN:: The effect of this would be to disenable a man from mortgaging to a bank anything that would be exempt under the laws of the province in case of writ of execution.


William Stevens Fielding: Yes, confined to personal property.


Mr. MEIGHEN:: I am disposed to think it will be more injurious to the public than to the banks.


William Stevens Fielding: Perhaps.


Mr. MACLEAN (Halifax):: That was
pointed out.
Amendment (Mr. Fielding) agreed to.
Section as amended agreed to.
On section 92-Percentage chargeable for collection.


Donald Ferdinand Kellner: I would like to point
out, that in this section the maximum and minimum rates of discount are both fixed. When we were discussing section 91 yesterday the government argued that it would be impracticable to fix a maximum rate of interest. It seems to me very peculiar that in section 91 we decide that it would be wholly impossible for us to fix a maximum rate of interest and then in section 93 we fix both maximum and minimum rates of discount. I would suggest to the minister that it might be desirable to strike out section 93 entirely.


Alexander Kenneth Maclean: There is no
similarity between the rate charged in the way of exchange and the rate of interest charged. Section 91 referred to the rate of interest charged for the loan of money. This section refers to charges made for banking service.
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Mr. COOTE:: Might I ask the hon. member if it is fair to the bank to insist that they shall collect a cheque on some branch located, say, in the Yukon at the same rate as a cheque on a branch located in the same province?


Alexander Kenneth Maclean: That is a
matter of practice, I suppose.


Arthur Meighen: Is there any restriction
in the act as to what a bank may charge on foreign collections, which are practically all or nearly all in the United States?


William Stevens Fielding: I do not think there is any special mention of foreign collections.


Arthur Meighen: I think there should be.


[Stage Direction]
Section agreed to.
On section 99-Bank may sell assets to another bank.
Mr. SHAW:: The sections from 98 on to
103 I think are the sections under which mergers of banks are consummated. As I read the sections they are in Substantial conformity with the provisions of the act as it was revised in 1913. In other words there ha# been substantially no change. Now, in view of the fact that the banks have decreased from the number of twenty-four I think it was, to seventeen, does- not the minister think it advisable that some restricting clauses should be enacted which would prevent an undue centralization of money?


William Stevens Fielding: I think my hon. friend would have difficulty in defining any way to accomplish that. I suppose he approaches this question from the point of view that a merger is necessarily a bad thing-


Joseph Tweed Shaw: Not at all.


William Stevens Fielding: -I am not able to concur in that view; I think there may be cases in which a merger is a very good thing. I have known cases in the past where a bank in fairly good position was on the down grade, and by being taken over by another bank it was saved; every good interest was promoted by the merger. There may be a similar case in the future. I am quite prepared to admit there may be need in the future of some mergers. I think as a rule they should be discouraged, but circumstances may arise which may render a merger necessary and proper. It has been suggested that a merger should only be made by a special act of parliament. I could not approve of that because the circumstances under which a merger mayr be deemed necessary may be very urgent, and to wait until parliament could convene might

be to destroy the possibility of the merger going through and to lead to serious trouble. I am not anxious to promote mergers unnecessarily, but I cannot conceive of any arrangement that could be made which would be better than that which we already have.


Joseph Tweed Shaw: I observe that under the provisions of this bill the minister is empowered, if he considers it m the public interest, to give his consent to a merger. Well, during the last ten years one such application has been refused.


William Stevens Fielding: Yes?


Joseph Tweed Shaw: And the remaining applications, I think some six or seven have been granted. Now, what I should like to have if possible is an enunciation of the principles upon which the merger should be allowed. What is meant by this vague term "in the public interest?" For instance, I understand that the Bank of Hamilton sought to merge with some other bank, but the application was refused on the ground that it was not "in the public interest."' Surely there should be some limitation to that very wide and vague term which means something to everybody and nothing to anybody in particular. It is like the phrase "adequate protection" which covers-


William Stevens Fielding: A multitude of sins.


Joseph Tweed Shaw: Yes, it covers a multitude o' sins.


William Stevens Fielding: I am afraid that if my hon. friend were asked to suggest what conditions could be laid down he would have as much difficulty as I have in the matter. If it were a case of two large banks where the amalgamation involved a diminution, a material diminution, in competition it might be held there is no particularly good reason for the merger except some profit-making motive; there might be no public reason which would indicate its necessity. May I suggest to my hon. friend that all applications or suggestions for mergers do not come before the public in a formal way. Ministers of Finance are approached sometimes informally and are asked what they would think of a merger, and if they give an intimation that they do not think the merger is likely to be a useful thing that would probably be the end of it and there would be no formal application. As I said a moment ago I am not anxious to promote mergers 'but I quite realize, and I should expect, that if, after this bill passes, there should be applications for mergers, the minister, and the government acting co-ordinately with the minister.

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will decide what the circumstances call for and what ought- to be refused. I really have difficulty in defining the matter more clearly than it is defined at present.


George Gibson Coote: I wonder if the minister would care to state whether he has received information already regarding further mergers in Canada or not?


William Stevens Fielding: I have no proposal before me for any merger nor do I anticipate any coming at any early date.


Mr. MACLEAN (York):: I should like to ask the Minister of Finance whether in his opinion it is not in the interest of the public that there should be competition in banks as well as in all other organizations. The whole tendency is in the direction of mergers and I must say that I would look upon the movement with some degree of favour if we should see established a Bank of Canada. Such an institution would be a national bank, and more or less associated with smaller concerns. Something in that direction may be effected which would serve the interests of the public. Apparently, however, the tendency is to remove the competition that now exists in banking. Heretofore we have had a great many banks in this country serving the public, and when those desirous of getting accommodation cannot get service at one they may go to another. Still, the tendency is towards mergers, and if it continues there will not be very many banks left in the country. They will all be merged. The same thing has occurred in Great Britain. An enormous amount of merging has taken place there. I cannot say what the net result has been in Britain, but certainly there has been a great diminution in the number of banks, and the same thing is going on in many other countries. It is taking place in the United States. There have been mergers there, and especially mergers in connection with the railways. There have also been extensive mergers in Great Britain in connection with the railways. Where is this merging business going to end? We have got through a great war, and a great disturbance, and there have been many mergers and consolidations of this kind. Is it in the public interest that there should be these consolidations without having some explanation as to the underlying principles that ought to obtain in connection with mergers, especially of banks? While the minister says he has not heard anything of any likelihood of other mergers, there have been hints in the public press of other mergers coming, and coming in the city of Montreal. There may be other mergers under way which are directed from
Toronto, and the public certainly have some interest in knowing what ought to be the underlying principles. Those principles, if possible, ought to be embodied in the Bank Act with which we are now dealing. I do not see why there should not be a more explicit statement by the minister not only on behalf of himself and the department but on behalf of the public, as to what the government's attitude is toward this question of bank mergers. There is rather an attitude on the part of the public that they do not know exactly what is transpiring and the extent to which these mergers are going on. If up to date they have been all right, well and good, but I do not think such is the case.
There is another thing that has transpired in connection with the revision of the Bank Act this session and that is a direct refusal to permit the creation of smaller banks. Now, in the United States, which is a country very similar to ours, they have a provision in their banking laws which allows the establishment of smaller banks ,and these banks have been of great service to particular localities. In these localities the capitalists get together and establish a small bank for the encouragement of their particular district and the local industries, and I think they have done very substantial service to the country. But we have gone so far as to say that we do not want small banks, and we are allowing mergers to go on without any direct definition of the underlying policy or principle which should govern. We have heard from members from the Maritime provinces what has happened in that particular part of Canada in regard to the disappearance of banks. One of the strongest banks in the Dominion today came from one of the Maritime provinces. The administration, for example, of the Bank of Nova Scotia-and it is one of the best and most successful administrations in Canada, has been moved from the Maritime provinces. We have heard Maritime province members say that they look with a great deal of suspicion upon the disappearance of the local banks. I do not know how many strong Maritime province banks have disappeared during the last twenty years. The present Finance Minister, and previous Ministers of Finance, could doubtless justify this, but there is a suspicion in the minds of the public that there should not be this widespread merging of banks, and that there should not be this direct refusal to grant charters to small banks without a declaration of policy by parliament. If there is one good reason why the bank charters should only be granted for one year it is because all these questions are coming up.

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Before we renew the charters for ten years we should settle the underlying principle on which mergers are to be allowed. We have the refusal of parliament at this time of revision to make any proper provision for the establishment of smaller banks. I am a great believer in the success of the small banks in the United States, notwithstanding the disasters which accompanied the administration of some small banks. I challenge the proposition that it would be a good thing for Canada to have more bank mergers. Competition is a good thing for trade, as has been said by many exponents of fiscal policies. I subscribe to that doctrine.


Mr. BUREAU:: How are you going to
compete?


William Findlay Maclean: Do not merge
them. Leave us what we have at least, or give us a good reason for having mergers.


Alexander Kenneth Maclean: I thought the hon. member believed in putting all our banks together?


William Findlay Maclean: I said that I
would not object to one large Bank of Canada, and not only one national bank, but one national reserve for all the banks, and a national system of currency, instead of the creation and widening of the principle of bank-note issue. We are now strengthening the right of the banks to issue their own notes, and they actually destroy the national notes as fast as they can get them; they put them out of business and substitute their own notes for the use of trade. We are now making the third revision of the Bank Act; we are revising it for ten years, notwithstanding the disclaimers that have been made; we are doing all this without a declaration of the underlying principle that ought to govern bank merge ns', without a real declaration in regard to what we ought to do in connection with the establishment of smaller banks, and we are declaring that this revision should be for ten years. If there is anything incumbent on parliament to-day it is that they should make a declaration in regard to these matters I have mentioned. We have a report presented by another committee which states, after careful study, that they are not prepared to say what ought to be done to widen the basis of credit, as it is called and this matter has been very carefully considered by the committee on Agricultural Conditions. In view of all these things, we ought to have a care at this time, and should not grant a renewal of the bank charters for ten years without an absolute
rMr. W. F, Maclean.]
declaration as to the underlying principles in the matters of mergers. Yet we are doing 'this at a time when there are hints of other mergers coming. I leave it to the members from the Maritime provinces to say whether they appreciate the disappearance of all the local banks which were doing business in their provinces. The world has been turned upside down by the war, and a new alignment is now under way, and I ask whether in view of the re-adjustment that is taking place, this new alignment should be on broad progressive lines, or in the direction of a conservative movement and the consolidation of capital in very few hands. If there is to be consolidation of capital, there will soon be a political movement in this and other countries for the distribution of the power of these immense consolidations of wealth, especially in connection with the banks, because the life of trade is banking, and the life of the farmer is banking. To-day the farmer is asking for an improved banking system, something he never had before and for which he has great need. One thing he asks for is the recognition of the smaller bank; yet the mergers are proceeding. The number of banks is now down to seventeen and later on the number will be down to twelve, then ten and perhaps nine. They will centre in Montreal; perhaps many of them will centre in Toronto. I maintain that it is not a good thing. In the Mother Country there are very powerful banks that have their influence outside of London, although the concentration is all in the direction of London, as the concentration of banking in the United States is in the direction of New York. In the States however they have something which we have not got, and they dealt with it in connection with their banking act. II refer to the creation of a national reserve bank system. I am not going into the detail of that, but I have read enough, have seen enough and studied enough to realize that the American national reserve bank system is the very thing we want in Canada.
Another thing we want is to have no issue except the national note for public business. If any public representative in the United States proposed that the banks should be allowed to destroy the national notes, what we call legal tenders-put them out of business and substitute their own issue in place of these notes-he would not get a hearing, and would not be re-elected. The tendency of the banking system in Canada is to put the national notes out of existence and substitute bank notes in their place. There is some reason for this, and I suspect that there is a great advantage to the banks in it. I main-

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tain that there is some reason for the action of the banks when they take away the national notes and destroy them. They are putting the legal tenders out of business so fast that we will never see them. If the banks were very anxious to issue their notes for the purpose of serving the public, I would not have any great objection, but the whole tendency of the legislation this session has been to strengthen the banks, to increase their power, to destroy the national notes and the national reserve. I challenge the Minister of Finance, and I challenge his party and the banks of this country, to say why there should be two issues of notes in Canada, a bank note and a national note, and why the banks should be given an opportunity to put the national notes out of existence and substitute their own notes. Thait occurs very frequently.


Alexander Kenneth Maclean: Carried.


William Findlay Maclean: Is the hon. member for Halifax a merger man? Does he speak on behalf of the government? That is the issue? It is very easy to say "carried." Of course they can carry it, if that is the attitude of the party. I will give the government credit for trying to make things a little better for the country, but they have not succeeded.


An hon. MEMBER:: Carried.


William Findlay Maclean: Somebody had better carry out the hon. member. Call in the carrier. I repeat that it is incumbent on the Minister of Finance to say whether he approves of mergers. So far he does not disapprove. But a public man in office, when his party has to assume the responsibility of carrying on the government, must deal with these questions as they arise. This question has arisen all over the country. Great scandals have been started in connection with one merger and we have not got the explanation of it yet. We cannot get it. We cannot get the witnesses before parliament. I am not going to name the merger, but hon. members know that one of the finest banks in the country disappeared not long ago. It was a splendid bank and had customers all over the country. The bank gave these customers a good service, and in the time of war these people were let out. Probably the bank that took over this bank took over the customers. But that is not a good merger. I hope before this discussion is over-and I am quite sure it is not over just yet, and that the section will not be carried in a moment-that we will have a definition of policy in regard to mergers and a further enlightenment as to
whether it is the policy of the government, now that we are revising the Bank Act for ten years, that there should be two sytems of bank reserves in this country, and two issues of notes, namely bank notes and national notes. We want a final declaration from -the government whether it would not be wise for this parliament under present circumstances to renew the Bank Act for another year or for two years, in order to allow parliament to take up all these questions of mergers and revisions, even the establishment of a national bank reserve system, and in connection with that a system of credit for the farmers. They want that, and they ought to unite in order to secure it. A national bank reserve system and a system of credit for the farmers ought to be part of this policy, or you will not afford relief where relief is asked for by the people of the West. For a moment I am going to leave the discussion, in order to give my hon. friends from the Maritime provinces an opportunity to say whether they are pleased with the mergers which have taken place, and to give some of the other members of the House an opportunity to say whether they think that for ten years longer we should prevent smaller banks from getting charters on a much smaller capitalization.


Mr. GARLAND (Bow River):: May I join my voice with those who have pointed out to the government the danger of permitting the continuation of mergers in this country? I have little to say as to the merits of concentration. I am not prepared to argue in favour of or against it at the present time; but the people are not at all satisfied that it is in the best interest of Canada that there should be a steady concentration of the money of the country in the hands of fewer and fewer men. The danger must be obvious to hon. gentlemen, when the control of capital is placed in the hands of private individuals who are not always actuated by the interest of the nation, but are more frequently actuated by their own gain. I think I may speak at any rate for my own constituents when I say that they are absolutely opposed, possibly for their own reasons, to the continuation of mergers in this country.


Mr. IRVINE:: I do not think mergers can be stopped. I think the attitude of the Minister of Finance (Mr. Fielding) is correct in this regard. At the same time, I do not think they should be encouraged for their own sake. Mergers are merely a passing phase of the economic system. I look forward to a time when they will be merged to the uttermost. Then, perhaps, we shall discover how to decentralize them in the interest of the people. I hope that before the next bank revision, we
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shall have only one bank in Canada and one financial king upon the throne. Then, perhaps, we shall be in a position to do something better. Therefore, I hope the Minister of Finance will encourage as much as he possibly can the growing tendency to merge.


Alexander Kenneth Maclean: We are dealing with a clause relating to the purchase of the assets of a bank. People designate this as a " merger," and this word has been made unpopular, being often unfairly and improperly used. Hon. gentlemen talk about a merger as if it were a thing that could be prevented. The Minister of Finance has stated the government's policy, which is a sound one, namely, that it is not disposed to consent to the merging of banks each of which occupies a sound position merely for the sake of their being merged or for the sake of profit-making. But we must have in this act some provision whereby a bank may purchase the assets of another bank. Most mergers that have taken place in Canada were induced by the fact that the selling bank was in, or approaching, an insolvent position and the management were not disposed to carry on business further. It is in the interest of depositors and shareholders that there be a legal procedure to dispose of the assets of one bank to another. There could be only one other procedure for a bank approaching insolvency to adopt, and that would be to wind up; and it is preferable to give such a bank an opportunity of disposing of its assets under favourable terms to a bank already in existence. It would be a great mistake on the part of parliament to prevent that from being done. Further, I should like to point out that a bank cannot continue right up to a position of insolvency as an ordinary business concern might do. The slightest intimation of a weak position by a bank is the sign for withdrawal of deposits, and loss of credit, which mean the destruction of the bank. Personally, I have never been able to understand the criticism which has been directed against the merging of banks. Of course, we all believe that banks which occupy a strong solvent position should not be permitted to merge. When their solvency is threatened, when their business is on the decline and is bound to end some time, they should have the right under the law to merge with other banks.


[Stage Direction]
Section agreed to.
On section 101-Agreement of sale to be submitted to selling shareholders at meeting.
Arthur Meighen: Perhaps I might say a word or two anent the remarks of the hon. member who has just sat down (Mr. Maclean), as this clause has to do with the

carrying out of provisions of sale. My conception of the position is this. The attitude of the government against the merging of banks, while not obdurate and not absolutely antagonistic, should be just as close to that as there is any possibility of getting. I do not think it is right that there should go out word that as soon as a bank feels itself to be approaching insolvency, it can apply for and obtain consent to a merger. There might be conditions under which insolvency would be the best course. It is conceivable that a bank might bring itself into, at least, a seeming position of approaching insolvency in order that merging might result. But, even if it does not do that, the utmost resistance should generally be given against a merger until it is found to be absolutely impossible to do anything else, short of definite insolvency. I believe that was the attitude of the late Minister of Finance. I know representations were made that the descent to insolvency had commenced, where still resistance was given, and where finally there was no merger because there was no consent, and at the same time there was no insolvency I do not say that the directors, in the case I have in mind, were insincere in their representations that merging was absolutely necessary; but I know the resistance was successful in preventing a merger, and that the trend of events did not finally reach insolvency.
What I want to say is this. In my judgment, the fewer mergers we have the better, that is, of the banks that we have to-day My information is that in England they have fewer than we have in Canada, although they have a much larger population. Of course they have a somewhat different system. But the fewer we have the better, and the more adverse the attitude of the government and the Minister of Finance is towards mergers, the better for us. At the same time I quite admit that the hon. member who has just sat down is correct when he says that there comes a time when merging is the only way that can prevent very great hardship to shareholders or possible loss to depositors-in a word, to prevent the very things which the safeguards of the Bank Act are intended to prevent. But it should be the last resort, and the very last resort; and the bank should understand that such is the attitude of the government. It should understand that it is only as a rescue from inevitable insolvency that a merger can be assented to. I can think now of no other justifiable case.


William Findlay Maclean: I would add just a word or two after what the right hon.

Bank Act
gentleman has said. There should, I think, be some provision in the Bank Act to obviate the necessity for any banks approaching insolvency, which is the very thing complained about now. Probably the best safeguard against such a condition would lie in still more stringent regulations under the act. After some little observation of bank mergers in this country I have come to the conclusion that provision should be made in the act for an earlier examination into the condition of banks. Most of the mergers that have taken place ought to have been known either directly or indirectly to the Deputy Minister of Finance who, not by any public examination but by an examination of some sort, should have a way of finding out a year or two ahead the exact state of affairs in connection with the banks in order to prevent the things that lead to insolvency. As it is, we have no such provision. That is one reason why the Bank Act should be extended for only one year, so that at another session of parliament we might deal with this question, which is associated with the creation of a national reserve bank system and a system of credit for the convenience of farmers.


William Stevens Fielding: With most of what my right hon. friend (Mr. Meighen) said regarding mergers I am heartily in accord. But he was perhaps too rigid in his statement that a merger should be allowed only when a bank could prove that it was on the eve of insolvency. That, I think, is too strong a statement to make. I have in mind the case of a merger which is not by any means recent having occurred some years ago, in connection with which the bank that was absorbed was entirely solvent when turned over to the other bank-it was not insolvent, nor indeed was it on the edge of insolvency. The directors, capable business men, reviewing the whole situation, saw however that the bank was on the decline, and that the day was coming when it could not be successful. They realized that if they persevered their shareholders would lose money, and in good time, before insolvency was absolutely in sight, they asked for a merger. I
4 p.m. do not know who was Minister of Finance at the time, I do not believe it was in my day; but they got permission and the merger took place. I am not dissenting from what my right hon. friend has said, but I would not suggest that a bank should prove that it was absolutely insolvent before being allowed a merger. The whole situation should be reviewed from the point of view of not desiring mergers; but
at the same time you do not want to sacrifice any existing institutions or destroy the property of shareholders if by allowing a merger in time you can safeguard that property.


[Stage Direction]
Section agreed to.
On section 107-Further conditions.
Donald Ferdinand Kellner: Has any effort been made to withdraw the notes of the Merchants Bank which are in circulation?


William Stevens Fielding: I am not quite aware whether any special arrangement has been made to have them withdrawn, but they are as good as the wheat, there can be no objection to them.


Edward Joseph Garland: They certainly are not good to eat.


William Stevens Fielding: The notes of the Merchants Bank are as good as those of any other bank because the Bank of Montreal has agreed to redeem them.


Donald Ferdinand Kellner: I was not questioning the validity of the notes, I simply wanted to know what was the policy of the government in a case of that kind. Is it the government's policy to let such notes circulate until they are all finally in?


Alexander Kenneth Maclean: As they are presented they will be redeemed. I do not suppose there are many of them in circulation now.


Donald Ferdinand Kellner: I understood it used to be the function of the Merchants Bank to cancel them.


Alexander Kenneth Maclean: They will now be presented to the Bank of Montreal.


[Stage Direction]
Section agreed to.
On schedule G.
George Gibson Coote: I would like to ask the minister for a little information on this schedule. I refer to paragraph 2, "Balance due to Dominion government after deducting advances for credits, pay-lists, etc." I would like to ask the minister what method is used in his department in allocating deposits to the different banks. Or, is there any such method?


William Stevens Fielding: There is no special rule in the matter. The chief banker of the government is the Bank of Montreal, but we have more or less business with all the banks of Canada. Sometimes the convenience of the various departments in making their deposits influences the matter.
Bank Act


George Gibson Coote: Are advances under the Finance Act shown in this column at the present time? I am referring to the return for February 28th which was posted in the first report of the standing committee on Banking and Commerce. It shows a total balance due the Dominion government of $32,000,000. Does this include advances to the bank under the Finance Act?


William Stevens Fielding: My recollection i3 that the advances under the Finance Act would come under the list of securities and not be included in that item.


Alexander Kenneth Maclean: It would appear under paragraph 3 of the liabilities.


George Gibson Coote: It just struck me as being rather significant-that one bank is shown in this return to have $10,832,000 of a balance due the Dominion government out of a total balance due the Dominion government of $32,000,000.


William Stevens Fielding: In the new form of return there is a special item showing advances under the Finance Act.


George Gibson Coote: Could the minister tell me whether this includes such advances?


William Stevens Fielding: I think not. My impression is they would appear under a different heading, but hereafter they will have a special heading of their own.


George Gibson Coote: Just what is meant by item No. 11 under Liabilities, "Bills payable." The total shown in this return under that heading is $10,364,000.


Alexander Kenneth Maclean: Bills payable to the Dominion government?


George Gibson Coote: I do not know whom these bills are payable to. I would like a little information from the minister.


Alexander Kenneth Maclean: If those are the bank returns that my hon. friend is quoting from, that means bills payable by other banks and by the public, I presume.


George Gibson Coote: This is under "Liabilities."


Mr. HANSON:: It is a matter of acceptances on the part of the bank.


William Stevens Fielding: There might be bills payable on both sides of the account. The bank might have in its liabilities certain outstanding bills.


George Gibson Coote: It seems to me rather significant that the total of bills payable by Canadian banks is $10,364,000 and of this amount one bank has $7,773,000. Could the minister give me any explanation of that?


William Stevens Fielding: That is under "Liabilities?"


George Gibson Coote: Yes, item No. II.


Mr. MITCHELL:: It is item No. 12 in the amended bill.


William Stevens Fielding: 
William Stevens Fielding: I could not give my hen. friend any explanation without inquiry from the bank. It is a matter between the banks themselves. It is not a matter between the bank and the government. These are the ordinary commercial transactions.


George Gibson Coote: I just wondered if it had been drawn to the minister's attention by any officer in his department. This is a very large amount for any bank to have under that heading.


Mr. RYCKMAN:: I might be able to offer a word of explanation. That item includes all the amounts which the correspondents of the bank have on deposit. Take a foreign bank: it will have sums on deposit in Toronto, Montreal and all through this country, and the Canadian bank has to show those sums on deposit under Item No. 11 "Due to banks and banking correspondents elsewhere than in Canada and the United Kingdom." Every deposit that a bank has from any correspondent is put under this item. It does not represent borrowing at all.


[Stage Direction]
Schedule agreed to.
Preamble agreed to.
William Stevens Fielding: May I remark that an hon. gentleman who differs from us with regard to this bill has intimated, as they have been kind enough to facilitate the passing of the bill to-day, that they want it to be understood that on the third reading they will propose four amendments. It is expected they will not be debatable but they want to have recorded votes upon them. It may be

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as well understood that when the third reading is called that is what is expected by way of procedure.


Richard Burpee Hanson: When will the third reading be?


William Stevens Fielding: Perhaps to-morrow. If not, the next day.


Arthur Meighen: I do not know that I understood the minister aright. He said that he anticipated on the third reading there would be four amendments and that they would not be debatable.


William Stevens Fielding: I did not say they would not be debatable. The hon. gentleman who gave us notice of them said that his expectation was they would not be debated. Of course, they are all debatable. I understood that it was not their intention to debate them, however, but they wanted their votes recorded. Every one of them, of course, is debatable.


Edward Joseph Garland: I wish simply to place my position before this committee. If hon. gentlemen opposite or hon. gentlemen to my right take it upon themselves to debate these amendments I shall reserve the right to myself of reply.


William Stevens Fielding: Anybody can cause a debate who moves an amendment.
Bill reported, amendments read the second time and concurred in.


Mr. GOOD:: May I ask the Minister of Finance what time to-morrow the third reading will be taken?


William Stevens Fielding: If it is brought up tomorrow it will be the first order.


William Charles Good: In the afternoon?


William Stevens Fielding: Yes.


Arthur Meighen: I wish to express the hope-I do not put it in the form of a request because I have nothing to back the request with-that the Bank bill will not be called, in that case, until next week. I do so merely for a personal reason; I should like to be present when the amendments are moved and the vote recorded on each one. However, that is not a sufficient reason for making a request.


William Stevens Fielding: I am not sure but that it might be convenient to myself not to proceed with it to-morrow. I do not see any reason why it could not be understood that it would be made the first order for Monday. 1 would be quite content with that, only the quicker the better. In view of the suggestion
-I will not call it a request-made by the right hon. gentleman, I am content that we should make the third reading the first order for next Monday. That is ample notice,


William Charles Good: Monday is election day in Ontario and a good many Ontario members *will be away.


William Stevens Fielding: What is my hon. friend's suggestion?


William Charles Good: I say Monday is election day in Ontario and a great many Ontario members will be absent. It would be a very unfortunate day to choose.


Arthur Meighen: As far as I am concerned I am quite prepared to go on with the third leading now.


William Stevens Fielding: Would hon. gentlemen opposite be content to proceed now?


Some hon. MEMBERS:: Yes.


William Stevens Fielding: Very good. Then Mr. Speaker, by consent of the House I ask for the third reading of the bill.


Hewitt Bostock: By unanimous consent, Mr. Fielding moves, seconded by Mr. Motherwell, that Bill No. 83, an Act respecting banks and banking, be now read a third time. Is it the pleasure of the House to adopt the motion?


William Charles Good: I beg to move in amendment as follows:
That all the words after the word "that" be struck out and the following substituted therefor:
That Bill 83 be not now read a third time but that it he referred back to Committee of the Whole with instructions that subsection 1 of section 5 of said bill be amended by substituting the word "twenty-four" for the word "thirty-three" in the fourth line thereof, and that subsection 2 of said section be amended by substituting the word "twenty-four" for the word "thirty-three" in the third line thereof.
I have a few remarks to make in that connection, Mr. Speaker.


Hewitt Bostock: Who is the seconder?


William Charles Good: The hon. member for Springfield (Mr. Hoey). I had intended some days ago speaking at some length on the situation that presents itself in connection with the revision of the Bank Act, and the granting of bank charters for a period of ten years; but I have concluded, after seeing the way things have been going during the last day or two, that it would be useless and inexpedient to speak of any of the matters I had in mind. I shall take another opportunity elsewhere to put myself on record.
Now, the substance of the amendment has already been debated in Committee of the
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Whole and therefore there is no need at present to cover the ground again. But 1 should just like to say, Mr. Speaker, that in my judgment this matter, and the fundamental questions which are involved, have not been given any adequate consideration in the committee on Banking and Commerce. The economic situation in Canada is admittedly very serious at the present time, and that fact, together with all the circumstances which were outlined the other day in Committee of the Whole makes it highly desirable that the bank charters be not extended for the full period of ten years. Of course, if if is generally understood, as has been to some extent intimated, that the Bank Act is open for revision at any time, that may be satisfactory; but it has not, I think, been clearly and definitely so understood, and for (he purpose of clearing up what has been lest m a rather indeterminate condition I think this amendment is necessary.
Now, Mr. Speaker, there has been, perhaps, a good deal of feeling in the committee over some of the proceedings. I have personally felt that investigation, very necessary investigation, has been stifled. I have felt that at times very necessary discussion has been choked off, or that an attempt has been made to choke it off. I want to say further that the opposition to the course which has been taken by a number of the Progressive members has seemed to me to be entirely unworthy of those concerned. In that connection, and in conclusion-for I do not wish to speak at length I want to refer to an editorial which appeared in the Montreal Standard of 9th June, which was referred to yesterday, but not read, by the hon. member for Bow River (Mr. Garland). I should like to submit this editorial to the judgment of the House as the sort of thing which we ought not to have in discussions on any public question. I think, Mr. Speaker, I am in order in reading this editorial or a part of it.


Hewitt Bostock: Order. The hon. member will find that according to paragraph 202 of Beauchesne's parliamentary rules and forms:
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the House and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the House.
The hon. member will find that this is supported by Bourinot, page 336.


William Charles Good: Mr. Speaker, referring to the
point of order, it seems to me that if you give the interpretation you seem inclined to give, it would cut out the reading of comment in any newspaper upon the proceedings of
fMr. Good.]
this House, or on any matter that is being dealt with here. I must confess I do not quite understand the rule. There is nothing in this editorial that reflects especially upon the integrity of any particular member so far as I know. It is simply comment such as we see continually in the public press upon the proceedings in this House.


William Findlay Maclean: Does it reflect
upon some hon. gentlemen who are in the House?


William Charles Good: Not by name.


William Findlay Maclean: Does it insinuate something in regard to them? If not, perhaps it would be in order.


Alexander Kenneth Maclean: Perhaps the
article was written by a humourist and therefore should not be regarded as serious.


William Charles Good: Do you rule me out of order in advance, Mr. Speaker?


Hewitt Bostock: I am simply directing
the attention of the hon. member to the pitfall. I do not know what the contents of the article are or the subject to which it refers. If the hon. member will give the gist of the editorial to the House, I might be in a better position to rule as to its admissibility.


William Charles Good: I would be very glad, Sir, if you would give me permission to read the editorial and you could stop me if at any time you thought I should be stopped.


Alexander Kenneth Maclean: Go on.


William Charles Good: The editorial, only part of which I shall read is as follows:
Time to digest the evidence-
This has reference to the position which the Progressives had taken in asking for more time to consider the evidence placed before the committee.
Time to digest the evidence is obviously a ruse, because one part of the evidence is indigestible save by progressive gastric juices and the other part formed a lump in their stomachs long ago. It is this lump, rejected by commonsense and good business, which gives rise to all their windy futilities in committee and in the House. The evidence has been chewed and rechewed by the paper money theorists time and again and any further chewing will not make it taste oi smell better.
The brethren from the West, who are bent on turning the banks inside out for their own benefit, are in no hurry to get home. They can make more money at Ottawa. It takes a lot of wheat to equal $4,000, almost aid of it net profit and no particulai toil involved.
I will omit a few sentences referring to two of the members of the committee by name. The editorial continues:
Of course there is no danger of the government being defeated by the Progressives. They are not

anxious for an election which would lead them into the wilderness, and no doubt the boldest held their breath when the government squeezed through with a majority of eight on the budget. But their pose is in peril and a display of firmness on the part of all the sound thinkers in the House will soon bring them to terms. We can also depend on the hot weather to take the starch out of their souls and the stiffening out of their necks.
Such being the case it looks as if Liberals and Conservatives could not do better than bury the hatchet for the nonce get together on a non-partisan measure-as the Bank Act is and press it to a vote. What the Progressives might think about it is comparatively unimportant, but it is important that this land of Canada should have a sound banking system.
I hope my reading of the editorial does not transgress the rules of the House. I just wanted to cite this as a sample of the sort of opposition which we sometimes have to meet, but I am not greatly worried over this kind of opposition.


Hewitt Bostock: There is a misunderstanding. I thought it proper to let the hon. member read the gist or the substance of the editorial to the House. As a matter of fact it is out of order, because it has no bearing on the present amendment moved by the hon. member, but I must say that what the hon. member has just read might be the subject of a question of privilege, because it contains a reference to some hon. members of the House, but it has no bearing on the present amendment.


William Charles Good: I am not as familiar with the rules of the House as I would like to be, and if this particular matter should have been referred to under another heading, I must, of course, apologize for bringing it up in this connection. I submit, however, that it has a very distinct relevance to the question under discussion, because the amendment is for a reference of the bill back to the Committee of the Whole with instructions as to the amending of clause 5, and the editorial which I have read seems to me to have specific reference to the amendment which I have just moved in that it refers to our claim made hitherto, as to the need for further time for considering this question. However, I do not think there is any need at the present time to prolong the discussion on this matter. It received a good deal of ventilation in the Committee of the Whole the other day, and I presume every one here has made up his mind in regard to it; so that I shall say no more.


Arthur Meighen: Before the question is
put, I want to put, in a word or two, the reasons for my vote. I cannot review to any advantage what the hon. mover of the
Bank Act
amendment has said. I was not a member of the committee and I do not know personally of its conduct. He charges that there was a stifling of discussion and blocking in that committee. I hope the allegation is not correct; I would be sorry to think it was correct as against the Chairman, or indeed against the majority of those present. But, remembering that it was not long since I wa3 charged with being a stifler and a blocker myself, I want to be charitable to those who, the assailants of that day, are now charged with the same offence. I am very glad, Mr. Speaker, that you did not enforce the rule by prohibiting the reading of the editorial, because I remember that that rule has been always more honoured in the breach than in the observance. In fact, I can recall the Finance Minister (Mr. Fielding), at a very recent date, quoting the Ottawa correspondent of the Montreal Gazette in support of the theory that he made a very excellent budget speech; consequently I am glad it was not enforced on this occasion against the hon. member for Brant (Mr. Good). As to the allegations in the editorial about Liberals and Conservatives getting together in order to defeat the Progressives, I have to say that I am unmoved. I purpose to take my position on this clause on the same principles I endeavour to apply with regard to all public questions, that is on my judgment of its merits. From that judgment I do not intend to be swayed either by the adhesion of a proselyte or by the antagonism of a foe. The question is whether the act should be extended for ten years or only for one. To commence with, unless there is strong reason to the contrary, it is, of course, presumable that it is better to extend it for ten years. If one-year extensions would serve the purpose of the country generally speaking as well as ten, it is presumable that they would have been adopted long ago.
It does not take any reflection to convince one that one-year extensions would not be favourable to the conduct of public business. I do not know how public business could be carried on if there was a sword of suspension hanging over the whole financial fabric of the nation that might be brought down every twelve months-


William Charles Good: May I ask a question?


Arthur Meighen: Yes.


William Charles Good: Does the hon. member understand the amendment to mean that the charters shall be granted year by year?


Arthur Meighen: No, I was merely saying that it was presumable that, unless there were strong reasons to the contrary, it was better
Bank Act

for public business that the extension be for ten years, and I fortify that by saying that otherwise it would have been the practice of this parliament to grant yearly extensions. The reason yearly extensions are not granted is because, under yearly extensions, anything in the nature of stability and continuity of business would be impossible.
But hon. members say, here is a special case, and there should now be only a yearly extension for this one time. I listened to arguments the other day in support of that contention. As I grasped them-and I may not have succeeded in getting them all, or perhaps in getting any of them right, although I listened to four or five speeches-they may be summarized as follows: First, that there is' in contemplation on the part of those who favour the amendment and, perhaps, generally, certain legislation looking to the establishment of rural credit banks or some other system that will take care of the demand for loans now not capable of being met by either the loan companies or the banks, and that if when it comes to the point of considering such legislation, we are confronted with a definite ten-year extension of the Bank Act, we shall not be in favourable circumstances to establish this competing institution. I have stated this in the best terms I can. Stated in that way, I do not see any force to it. Wherein will conditions be unfavourable for its establishment, conditions that would be favourable if there was an extension for only one year? One hon. member suggested that the funds would be in the financial control, as he expressed it, in the hands, of the banks. Any funds in the banks at that time are withdrawable at once or on very short notice, and if depositors, the owners of the funds, wish to transfer them to the new institution, I do not know what would stand in their way, nor do I know of anything that would stand in their way that would not likewise stand in their way if a yearly instead of ten year extension were given. What is meant by "financial control?" There has to be somebody in control of our banks, but there would be just the same control on a one-year as on a ten-year extension. I do not know whether I grasp the argument as sought to be presented. Perhaps I do not. It really does not strike me as being capable of expression in a plausible way at all.
But it was said, if at that time the heads of our banking institutions find themselves secure behind a ten-year extension, they will not be disposed to come to parliament and to give the assistance that might be expected of, them towards the working out of legislation for a rural credit system. This is more plausible, but I do not think it has force.

For myself, I do not like to think the establishment of a rural credit system would at any time depend upon the assistance it would get from those who are now responsible for our chartered banks. I think it will have to get its inspiration and its support mainly from other sources. I do not think it will be wanting in either inspiration or support because the established institutions do not look with favour on it. It seems to me that we shall be just as well equipped a year from now as we are to-day or a year from now as we would be in ten, though there is an extension for ten years. I think the management of the banks will give us what is their opinion at that time, nowith-standing the fact that they have a ten-year extension; but as managers of going institutions that have been established for a long time, their opinions will naturally, and conscientiously, be formed in the atmosphere of those institutions, and they will not be favourable to something which is in the nature of an intrusion.


Mr. WOODSWORTH:: In the case of the
establishment of a rural credit system, if the banks were unfavourable, where would the right hon. member suggest that we could get the money from?


Arthur Meighen: I do not think a rural
credit system will ever be established on the basis of a forced extraction of money from the banks. It could not be established on that basis. Consequently, it will not matter at all whether the answer to the hon. member's question is, "yea" or, "nay." In a word, so far as money is going to be necessary for rural credits, the will of the owner of the money will have to be brought into a favourable state of mind to apply the money to that purpose and towards that institution.


William Irvine: Would the right hon. gentleman be prepared to admit that if the bank charters had not been extended for ten years, the bankers would be more likely to take a co-operative attitude with a rural credit system, in the way of supplying the requirements?


Arthur Meighen: I do not think that will make a bit of difference to them. I do not expect they will be in a co-operative attitude at any time; I do not think the rural credit system depends upon that at all, it depends upon the soundness of the priciples on which it is worked out. One of those principles can never be the compulsory taking of money from banks or from any individuals whatsoever.


Edward Joseph Garland: Who suggested the compulsory taking of any money from the banks?

Bank Act


Arthur Meighen: The hon. member for Winnipeg (Mr. Woodsworth). He wanted to know where we were going to get the money from if the banks' charter were extended. The question has no meaning unless it is intended to get the money by compulsorily taking it from the banks.


Edward Joseph Garland: I do not think that inference is fair.


Arthur Meighen: I do not know, then, what the intention was.


William Findlay Maclean: In the United States they have made the national reserve bank system, every bank, the Comptroller of the Currency and the Secretary of the Treasury-as a matter of fact, the whole banking system of the United States-a part of the rural credit system. It might be necessary to do so. I shall have something to say later, but I am just intervening to say that, so to speak, this is a part of the national banking system of the United States to-day.


Arthur Meighen: The hon. gentleman says that the national banking system was under some compulsion to the reserve banks. Undoubtedly. I do not know that it was under any compulsion to the rural credit system.


William Findlay Maclean: Yes, it is.


Arthur Meighen: I do not think it is. I do not pretend to have very recent knowledge at hand, but at one time I went pretty thoroughly into the question. I do not think the rural credit system of the United States rests in any degree at all upon compulsory contribution of banks. If that could be established, there would be some force in the observations of some hon. gentlemen who have argued in favour of the amendments.
I fancy I have reviewed all that has been argued in favour of the amendment, save one observation which had to do with another sphere of the discussion altogether. It was stated that there -was this overdue investigation into the conduct of certain officers of one of our banks, the Merchants Bank, and that the extension should be temporary as a lever to make certain investigations. Agair I do not see the force of the lever. I do not see how a temporary or a ten-year extension has anything to do with bringing about, oi deferring, or squelching, an investigation. It does not appear to me that the objects sought to be gained, though they may be valuable, will be in the least prejudiced by the ten-year extension. Very well, unless there is a forcible reason, one is not justified in voting for a one-year extension. This has been
a pretty barren session, but I do not want to contribute to make it more barren than it appears likely to result now. If we have a one-year extension, we have to go over all the work that this committee went through this year. We shall likely have plenty to do next session without that. From what I have learned of the committee, I believe it certainly went very laboriously and, I am disposed to think, pretty thoroughly about its task. Do we want to face next session with the whole thing to be reviewed once more? If we do, it means just that much less attention next session to other business that is going to demand all the time of hon. members of this House. Besides, it is undoubtedly correct-and I would not do justice to myself if I did not say it-that anything in the nature of a twelve-months' extension at this period in our commercial history, when a strain is being felt everywhere, would result in an instability and a sense of insecurity, the reflex action of which would come right back upon the borrowing public of the country. Of that there seems to my mind to be no reasonable or logical doubt whatever. Consequently, I feel like voting against the amendment and in support of the clause as it stands.


George Gibson Coote: Mr Speaker-


Mr. RINFRET:: Have you anything new to say?


George Gibson Coote: Yes, I assure the hon. member that I shall have something new to say before I am through. I had no intention of speaking on this occasion, but the remarks of the leader of the Opposition necessitate my rising. I regret that the right hon. gentleman was not a member of the committee on Banking and Commerce so that he could have seen just how the inquiry was conducted. I understood him to say that he thought we had gone into the matter thoroughly. Well, I may observe that we went into the matter as thoroughly as we were allowed to do. In the subcommittee of the committee on Banking and Commerce, which was charged with the duty of calling witnesses, an application was made at its first meeting, I think, to have Mr. Macarow of the Merchants Bank called to give evidence. That application was refused.


Walter George Mitchell: If the hon. member will permit me, I might inform the House that Mr. Macarow's name was not suggested at the first meeting. It was suggested subse-
Bank Act

quently and the committee decided to postpone the decision as to whether or not he should be called. The subcommittee did not meet again and the matter was dealt witn by the general committee.


George Gibson Coote: In that case I am corrected by the hon. member. At any rate, the fa:t remains that the application to have this gentleman called was refused. That subcommittee also recommended that Mr. Baker be requested to give evidence before the committee, but Mr. Baker did not appear. Later on it was moved in the committee by one hon. member that this gentleman should be [DOT]summoned to give evidence; the committee voted that proposition down and we were not allowed to have the benefit of Mr. Baker's evidence. Sir John Aird and Sir Frederick Williams-Taylor both appeared before the committee and if I remember correctly on both occasions the chairman of the committee gave the assurance that these gentlemen would be back again The questioning of these witnesses was largely in regard to the investigation, in connection with the motion of the hon. member for Calgary East (Mr. Irvine), into the basis of credit, and not very generally in regard to the Bank Act as it was presented to us. Later on in the committee I moved that these gentlemen be recalled with the particular purpose in view of securing some details of the cost of running their western branches, in view of the statement they had made that they could not earn7 on under a maximum rate of interest of 7 per cent. This request was rejected by the committee, although, as I say, we had the assurance of the chairman previously given that the witnesses would be before the committee again. It was also moved that a witness should be called who was familiar with the operations of the federal reserve bank system in the United States, something entirely new within the last ten years. The committee, I think, took a very unreasonable attitude and absolutely refused to call any witness, although I believe that in the revision of the Bank Act ten vears ago several bankers from the United States were called, and that at a time when the federal reserve system was not yet in existence in the United States.
The principal question, it seems to me, has not been touched upon, and that is the very serious situation that exists to-daj7 in the banking business of Canada, and the utter inadequacy of the present Bank Act to deal with that situation. I made the further request that a statement be called for from the banks of Canada showing their losses by provinces during the last two years. The

question did not come to a formal vote in the committee. I was requested by several members not to press the motion because it would not be wise to do so, that if the losses were made known they might 'be so large as to shake the confidence of the public in our banks. I yielded to that view. But if that is the case I do contend that the present act. as we have passed it through the committee to-day, is totally inadequate to deal with the situation.
Before I sit down I want to say something new for the benefit of my hon. friend opposite (Mr. Rinfret). Has that hon. gentleman heard that a certain chartered bank in Canada has borrowed to the extent of quite a few million dollars from the firm of J. P. Morgan & Company of New York? If so, does he think that such a situation in Canada, *which is brought about under the present Bank Act-


Alexander Kenneth Maclean: What has that to do with your motion? What is wrong with the borrowing?


George Gibson Coote: I wanted to introduce something new for the benefit of the hon. member.


William Stevens Fielding: It should be something
relevant.


Alexander Kenneth Maclean: It should bo something relevant and sensible.


George Gibson Coote: The bankers told the committee that they had plenty of money to loan, but I am told that the conditions are such as are suggested by the statement I have made. I do not know as to the accuracy of this report, of course, but it is possible that if the committee had carried on its investigation as fully as we wished they might have found that what I have stated is substantially true. Now, I do not think that the situation in Canada is so good as to warrant the hasty passage of this act. As was pointed out on a former occasion by the hon. member for Nelson (Mr. Bird), our banks carried on business from 1910 to 1913 under a charter which was renewed yearly and I never heard that there was any feeling of insecurity at that time on that account.


James Shaver Woodsworth: Just as the leader of the Opposition sat down I was about to rise to explain in a word what I had in mind when I asked the question I did while he was speaking. It was not my thought that any force should be applied to the banks in order that they should help any rural credit scheme. But, as I understand it, under present conditions the banks have very largely a monopoly of the

Bank Act
deposits which are made by the people throughout the country, and if this rural credit scheme would in any way tend to take these deposits from the banks I am quite sure there would be a decided opposition, as there has been in some of the provinces which have attempted to establish rural credits; and there might very well be an objection
5 p.m. that there was more or less an infringement on the recognized rights of the banks. Further, there is the question of currency. The banks have the right to issue currency, and they are the only institution outside the government that have that right. It is quite conceivable that if a rural credit scheme were put forward it might be necessary to issue some other kind of currency than we have at the present time. I can understand that we might, in that connection, be met with the argument of certain vested interests; but more important than even that is the question of the giving of credit. It was said again and again during the course of the investigation that the giving of longterm credits was not a part of legitimate banking business, but I cannot see how we can arbitrarily distinguish between the kinds of credits that may be given. When it is urged that we should have short-term credits or that we should have only those kinds of credits that can be readily cared for by the banks, I can see that there may be very considerable danger of invading the province which the banks have claimed for themselves. By this act we are granting certain privileges to these institutions which, if we later attempt to introduce something like a rural credit scheme, may be found to be seriously infringed upon. That is what I had in view when I asked the right hon. leader of the Opposition (Mr. Meighen) where the money would come from if it should be found wise to introduce some such scheme in the near future.


William Findlay Maclean: Mr. Speaker, while I am in sympathy with the motion, I am an absolute believer in the supremacy of parliament in the matter of legislation; in the right of parliament to change the Bank Act or any other act at any time. I may add that we shall be forced to change the Bank Act, in my opinion, at a very much earlier day than ten years from now, having regard to the circumstances that are developing. So I am here to vote for this limitation in order to allow parliament to deal with the question, but I point out that we have the right to reopen it at any time- the Prime Minister (Mr. Mackenzie King) has stated it; the chairman of the Banking
committee (Mr. Maclean, Halifax), has stated it. Parliament has the supreme right to reopen any question, notwithstanding any limitation that may be imposed at this time. The Criminal Code can be amended at any time; so can the Railway Act. But privilege is coming forward and saying that there shall be an amendment to the Bank Act only once in ten years. Well, that is not in the British North America Act; that has not formed part of the parliamentary policy of free people, of people subject to the democratic and the progressive rule that we have here and that they have in the Mother Country. The Minister of Finance (Mr. Fielding), and the hon. members of the committee generally will, I am sure, agree with me in this view. We are giving now the greatest privilege that can be given in connection with our financial institutions, and while I agree that there should be stability I object to its being stated here to-day that a privilege should be created for the banks of this country for a period of ten years and should not be interfered with during that time.


Hewitt Bostock: The question is on the main motion.


Joseph Tweed Shaw: Last evening when the House was in committee on this bill, I proposed what occurred to me to be an effective interest rate controlling section in substitution for section 91, which is admittedly legally ineffective for the purpose for which it is intended. I do not propose to argue the question again, I will simply submit my amendment which reads as follows:
That all the words after "that" be struck out and the following substituted therefor:
That Bill 83 be not now read a third time but that it be referred back to committee of the whole with instructions that subsection 1 of section 91 of said bill be struck out and the following substituted therefor:
(1)	The bank may stipulate for, take, reserve, or exact any rate of interest or discount but not exceeding 7 per cent per annum and may receive and take in advance any such rate.
(2)	The rate of interest or discount charged by the bank shall appear on the face of the note, bill or other evidence of debt.
(3)	In the event that a greater rate than 7 per cent per annum has been paid to the bank, then the person by whom it has been paid or his legal representative, may recover in any court the excess interest thus paid, provided such action is commenced within two years from the time such excess interest was paid.
(4)	In any suit, ^ction or other proceeding concerning a bank loan wherein it is alleged that the

amount of interest paid or claimed exceeds the rate of 7 per centum per annum, the court may reopen the transaction and take an account between the parties, and may, notwithstanding any statement or settlement of account, or any contract purporting to close previous dealings and create a new obligation, reopen any account already taken between the parties, and relieve the person under obligation to pay from payment of any sum in excess of the legal rate of interest and if any such excess has been paid, or allowed in account, by the debtor, may order the bank to repay it, and may set aside either wholly or in part, otr revise, or alter, any security given in respect of the transaction.


Hewitt Bostock: Call in the members.


An hon. MEMBER:: No, lost on the same division.


Hewitt Bostock: Shall I say lost on the same division?


Some hon. MEMBERS:: No, no.


Henri Sévérin Béland: The names will be recorded.


Hewitt Bostock: What is the sense of the House? I declare the amendment lost on the same division, with the names to be recorded.
The following is the division:
++YEAS
Messrs.
Bancroft,	Knox,
Bird,	Leader,
Campbell,	Lovie,
Carmichael,	Lucas,
Coote,	Maclean (York),
Davies,	Macphail,
Evans,	McConica,
Forke,	McDonald (Timiskaming)
Gardiner,	McTaggart,
Garland (Bow River),	Millar,
Good	Reed,
Gould,	Ross (Simcoe),
Halbert,	Sales,
Hoey,	Shaw,
Hopkins,	Speakman,
Humphrey,	Spencer,
Irvine,	Steedsman,
Jelliff,	Stewart (Humboldt),
Johnston,	Wallace,
Kellner,	Ward,
Kennedy (Edmonton),	Warner,
Kennedy ((Port Arthur	& Woods,
Kenora), King (Huron),	W ood sworth-46.
 NAYS Messrs.
Arthurs,	Copp,
Baldwin,	d'Anjou,
Baxter,	Dechene,
Beland,	Delisle,
Benoit,	Denis (St. Denis),
Binette,	Desaulniers,
Boivin,	Descoteaux,
Bouchard,	Deslauriers,
Boucher,	Dickie,
Bourassa,	Duff,
Cardin,	Duncan,
Casgrain,	Euler,
Chevrier,	Fafard,
Cl ark t	Fielding,
Clifford,	Forrester

Bank Act
Fortier,
Gauvreau,
Gendron,
Gervais,
Gouin (Sir Lomer), Grimmer,
Hammell,
Hanson,
Hatfield,
Hughes,
Kay,
King (Kootenay), Ivyte,
Lapointe,
Lavigueur,
Leger
Logan,
Lovett,
Macdonald (Pictou), MacKelvie,
MacLaren,
Maclean (Halifax), McBride,
McCrea,
McGiverin,
Mclsaac,
McKillop,
McMurray,
McQuarrie,
Marcil (Bonaventure), Marcile (Bagot) Martell,
Meighen,
Mewbum,
Michaud,
Mitchell,
Morrissy,
Munro,
Murdock,
Murphy,
Neill,
Ouimet,
Papineau,
Parent,
Pelletier,
Power,
Prevost
Putnam,
Rheaume,
Rinfret,
Robb,
Roberge,
Robinson,
Ryckman,
St. Pere,
Sheard,
Sinclair (Queens, P.E.I.), Spence,
Stevens,
Stewart (Argenteuil), Stewart (Hamilton), Stewart (Leeds) Sutherland, *
Tobin,
Tolmie-95.


Hewitt Bostock: The question now is on the main motion.


George Gibson Coote: I desire to move an amendment to the main motion. The amendment is the same as the one I moved last night, and it is to the same effect as the amendment moved by the hon. member for Calgary West (Mr. Shaw), excepting that the rate mentioned is 8 per cent instead of 7 per cent. I do not propose to speak on the amendment as the matter was thoroughly debated from the affirmative side last evening. The amendment reads as follows:
That all the words after "that" be struck out and the following substituted therefor:
That Bill 83 be not now read a third time, but that it be referred back to committee of the whole with instructions that subsection 1 of section 91 of said bill be struck out and the following substituted therefor:
(1)	The bank may stipulate for, take, reserve, or exact any rate of interest or discount but not exceeding 8 per cent per annum and may receive and take m advance any set rate.
(2)	The rate of interest or discount charged by the bank shall appear on the face of the note, bill or other evidence of debt.
(3) In the event that a greater rate than 8 per cent per annum has been paid to the Bank, then the person by whom it has been paid, or his legal representative, may recover in any court the excess interest thus paid, provided such action is commenced within two years from the time such excess interest was paid.
(I) In any suit, action or other proceeding concerning a bank loan wherein it is alleged that the amount of interest paid or claimed exceeds the rate of 8 per centum per annum, the court may reopen the transaction and take an account between the parties,
and may, notwithstanding any statement of settlement of account, or any contract purporting to close previous dealings and create a new obligation, reopen any account already taken between the parties, and relieve the person under obligation to pay from payment of any sum in excess of the legal rate of interest and if any such excess has been paid, or allowed in account, by the debtor, may order the bank to repay it, and may set aside either wholly or in part, or revise, or alter, any security given in respect of the transaction.


Hewitt Bostock: Shall I say lost on the same division with the names recorded? What is the sense of the House?


Some hon. MEMBERS:: No, no.


Hewitt Bostock: Call in the members.


Mr. T. W. BIRD (Nelson):: Mr. Speaker, I do not wish to prolong unduly this very interesting series, but I have an amendment which introduces a very important subject. 1 may say that, in substance, it is the same amendment that I attempted to bring into the House on a previous occasion, and it deals with the matter of the Merchants Bank. Since the Bank Act was last revised, there has occurred a very vicious . and cynical attack upon the principles of rectitude and integrity that are supposed to lie at the very root of our Canadian civilization, and the flagrancv of that act seems to be exceeded only by the complacency with which some hon. members in this House are prepared to see it sink into oblivion. I will content myself with reading the amendment. Some of us on this side of the House think the responsibility for pushing through this Bank Act without an inquiry into the Merchants Bank case ought not to rest upon any committee, but ought to be laid where it belongs, at the door of the House as a whole. I therefore beg to move:
That all the words after "that" be struck out, and the following substituted therefor:
"Whereas the select standing committee on Banking and Commerce decided by resolution not to hear evidence dealing with the collapse of the Merchants Bank, and its subsequent amalgamation or absorption with the Bank of Montreal;
And whereas it is in the public interest that the conditions which led to or were connected with said collapse should be made public, in order that any weaknesses or deficiencies in the existing Bank Act may be remedied, and the interests of depositors, shareholders, and the general public may be safeguarded:
And whereas it is in the public interest that the facts surrounding the said amalgamation or absorption should be made public, in order that appropriate action may be taken by parliament, to prevent improper financial combinations and undue centralization in the control of financial credit in Canada.
Therefore be it resolved that Bill No. 83 be not now read a third time, but that the said bill be referred back to the standing committee on Banking and Com-

merce, with instructions that it have power to call and hear evidence concerning the said collapse and the said amalgamation or absorption, and that it have power to make such recommendations in the premises as may be deemed advisable."
Mr. JOS. T. SHAW (Calgary West): Mr. Speaker, in supporting the amendment moved,
I desire to take this opportunity of making a few observations, not that I for a moment am labouring under the misapprehension that whatever remarks I may make, will make the slightest impression upon the House. But I think it is only reasonable that an opportunity should be given to this House to express its views in connection with the recent collapse of the Merchants Bank and its more recent absorption by one of the strongest banks in this country. The decennial revision of the Bank Act gives us a casual opportunity, at least, of surveying the whole field of banking legislation and the whole credit field, and to observe whether or not in the preceding decade the Bank Act has really functioned in the interest of the people. It gives us at this revision period an opportunity to study and to appreciate conditions which have arisen in the intervening time, and it allows us, if we are students of the problem, to add to our experience and, perhaps, to make necessary corrections and alterations in the act itself. The outstanding incidents of the last ten years may be placed under two categories. There is first of all the fact that during that period some six mergers have taken place. There has been the merger of the Royal Bank with the Quebec, the Traders and the Northern Crown banks.


Alexander Kenneth Maclean: The hon. member is not speaking to the amendment.


Joseph Tweed Shaw: I shall be there just in * moment.


Alexander Kenneth Maclean: The hon. member should not depart from the question.


Joseph Tweed Shaw: I desire to lay the basis in a few introductory sentences for what remarks I have to make, and I ask the hon. member for Halifax to be patient with me and to listen to the facts, however unsatisfactory he may deem them. The Bank of Montreal has joined hands in the past decade with the Bank of British North America and the Merchants Bank, and the Bank of Nova Scotia has absorbed the Bank of Ottawa. That is one set of circumstances. Another circumstance is the collapse of the Merchants Bank. In connection with the collapse of the Merchants Bank, with which this particular amendment has to do, I want to give a very
Pelletier,
Powert
Prevost,
Putnam,
Xtheaume,
Rinfret,
Robb,
Roberge,
Robinson,
Ryckman,
St. Pere,
Sheard,
Sinclair (Queens, P.E.I.), Spence,
Stevens,
Stewart (Argenteuil), Stewart (Hamilton), Stewart (Leeds), Sutherland,
Tobin,
Tolmie-89.

Bank Act
short history of that institution and to observe, if possible, the place which it filled in the financial history of this country.
This bank was organized in 1864 and at the time of its collapse had 389 branches functioning in all parts of Canada, except the province of Prince Edward Island and the Yukon. It stood third among the chartered banks of Canada in respect of the number of branches. It made a special effort to minister to the agricultural requirements of the country, for we find that of its total number of branches 147 were located in the three western provinces; and in the province of Alberta it led all other chartered banks with a total of 75 branches. In this connection I would observe-because I do not want to be misunderstood-that the losses that caused the collapse of the Merchants Bank did not arise in western Canada; they clearly arose in eastern Canada.
The success of this bank is not measured by the number of its branches, because I find that in the value of its assets, according to the last statement submitted, it stood fifth among the chartered banks of Canada, with assets totalling $182,000,000. Its liabilities to the public were $161,000,000, of which amount the responsibility to its depositors totalled the not inconsiderable sum of $130,000,000. It had an unimpaired reserve, according to the figures submitted, of $9,500,000. In addition to that I might point out that this bank, for a number of years paid a dividend of 12 per cent to its shareholders, and its shares immediately prior to the collapse brought on the market $160 each. So that generally speaking it may be said, so far as the public was concerned, that the Merchants Bank of Canada has an apparent financial stability, and merited in no limited degree the public confidence and esteem which it enjoyed. Very suddenly the scene is changed. Early in December, of 1921, the president of the bank, Sir Montagu Allan, issued a statement in which he pointed out two or three rather important facts. He pointed out that there had been large losses suffered by the bank which losses had been undisclosed to the directors, and that as a result there had been a very serious impairment in the reserve. He also stated that one Mr. Mackenzie, who, I believe, was general manager of the Royal Trust Company-an institution which has been called in this House the backdoor of the Bank of Montreal-had been employed for the purpose of making an audit some months before and had disclosed the particular facts to which I have alluded. Finally, the president stated that an absorption into the Bank of Montreal had been arranged, and among other details he mentioned that two Merchants Bank shares, would be exchanged for one Bank of Montreal share and the sum of $10.
At six o'clock the House took recess.
After Recess
The House resumed at eight o'clock.


Joseph Tweed Shaw: Mr. Speaker, when the House rose at six o'clock I was detailing the statement made by the president of the Merchants Bank in the preliminary announcement he gave to the public in December, 1921. Needless to say, an announcement of that character and made under such circumstances created considerable consternation. By the shareholders it was received with feelings of dismay, because the proposed arrangement made with the Bank of Montreal represented a loss to them alone of approximately five and a quarter millions of dollars. In addition to that it represented a very severe loss to the employees of the Merchants Bank, because the pension fund to which they were entitled and which formed part of the inducement held out to them in connection with the services they were rendering, was represented in the form of shares of that bank. After a short delay the Finance Minister of the day gave his preliminary consent to the absorption, pointing out that the only alternative was insolvency and loss. As required by law the shareholders of the Merchants Bank subsequently met, I believe, on the 8th of February for the purpose of approving the arrangement which had been entered into with the Bank of Montreal.
According to the published reports, the president of the Merchants Bank, Sir Montagu Allan, gave some further facts at that meeting. He pointed out that a firm of stockbrokers in Montreal which had become insolvent owed the Merchants Bank something like $4,500,000; that the debt of this firm to the bank had increased from $579,000 in April, 1916, to over $4,500,000 at the time of the firm's collapse in July, 1920, and that owing to the appalling inadequacy of the security and collaterals held by the bank, the bank suffered a loss of approximately $4,000,000. The president further pointed out that a debt owing by an organization called Exclusive Ladies' Wear and two or three allied organizations amounted in December, 1916, to almost a quarter of a million dollars, but that it had increased until in 1920 it stood at a total of $1,300,000. As a result of these two transactions alone the bank lost considerably

Bank Act

over $5,000,000. The president himself described the transactions to which I have referred as adventurous banking, but it seems to me that the amazing insufficiency of the security which was held by the bank justified the use of a very much harsher term.
By reason of these and other minor transactions the president pointed out that the bank's reserve had been reduced to meet these losses from nine and a half million dollars to one and a half million dollars. The shareholders at the meeting in question approved of the agreement and voted down a resolution that an inquiry should be conducted by the Dominion government to ascertain the responsibility for the situation which existed. It is only fair to say that the resolution was voted down not by the shareholders in person, but by reason of proxies held by the officers of the bank.
In addition to these facts mentioned by the president at that meeting to which I have referred, there were one or two other interesting facts disclosed. It was made apparent there that the Bankers' Trust Company, a subsidiary of the Merchants Bank, had in the months of October, November and December preceding the collapse sold some seven hundred sharjs of the bank stock at the market price then prevailing. The Bankers' Trust Company had in these sales secured the prices which prevailed for the Merchants Bank stock prior to the decrease caused by the announcement of the collapse.
Another fact disclosed was that on December 9th a committee had been appointed by the bank directors, consisting of the president, the vice-president, and I think Mr. Ballan-tyne, for the purpose of entering into negotiations with any bank or banks which might have a proposition to offer in connection with the sale of the Merchants Bank's assets. That, mark you, was on December 9th. It also transpired at the same meeting that on December 8th, the day preceding the Merchants Bank directors had received the offer from the Bank of Montreal which was at that meeting approved and which subsequently was carried into effect. In due course the Bank of Montreal shareholders met and ap proved of the arrangement. One of the officers of that bank in giving his reasons for the approval suggested that the acquisition of the Merchants Bank would give to the Bank of Montreal a number of branches in places where formerly they had very little representaton.


Alexander Kenneth Maclean: May I interrupt my hon. friend? Is he not now discus-

sing the merits of the merger? Let me ask him to frankly answer the question as to whether or not he is speaking to his amendment.


Joseph Tweed Shaw: If the hon. member for Halifax will read the amendment carefully he will find that it calls for an inquiry not only into the collapse of the Merchants Bank but into its subsequent absorption by the Bank of Montreal. Now surely my remarks are appropriate to the resolution.


Alexander Kenneth Maclean: The substance of my hon. friend's amendment is that the Bank Act be referred back to the committee with a direction that an inquiry be held into the merger of these two banks, but my hon. friend is arguing the whole thing out now himself. He is giving the committee all the facts as he has them. He is deciding the whole thing now.


Joseph Tweed Shaw: Surely my hon. friend is
not going to deny that in order to justify this resolution I must present to the House some facts which would warrant action being taken on it.


Alexander Kenneth Maclean: My hon. friend must show the relevancy between the merger and the Bank Act. He must show that it is reasonable that we have all the facts before us in order to consider the act.


Joseph Tweed Shaw: and which doubtless would have been given, the bank could have been continued as a promising institution.
Now, Mr. Speaker, these are the three varying views held by the people of the Dominion. Two of them, must be wrong. The conclusions can only be drawn from the facts so far as they are known, and the public can hot fairly be blamed for coming to an erroneous conclusion under the circumstances. I am not so sure, Mr. Speaker, that this House is yet fully apprized of the facts. Indeed, I am confident that the members of this House are not aware of the full facts, and the public have not yet been informed. May I, in that connection, read a statement made by Sir Edmund Walker to substantiate the view which I hold. This question was asked Sir Edrthrad Walker when he gave evidence before the select standing committee on Banking and Commerce:
Q. Do you agree with Sir John Aird, if I understood him correctly, that the merger should not have been allowed to take place between the Bank of Montreal and the- Merchants?
A. Of course that depends on what the real condition of the Merchants Bank was, and none of us have been allowed to see that. Sir John makes that statement upon the basis of a statement made at the time by those who seemed to be in authority, that the Merchants Bank still had a surplus of about $1,000,000 odd; and his opinion was, that if it had its original capital and a surplus of $1,000,000 then it should not have been allowed to fail.
He was asked:
Q. Would you concur with him in that view'?
A. I would. I would also recall the fact that the Merchants had once a capital of $9,000,000 and lost its entire reserve and $3,000,000 of its capital and began business again and succeeded. It altogether depends on what the real conditions with the Merchant's Bank were, and none of us know that.
Q. Why don't we know?
A. I don't know.
Q. Why should we not know?
A. Well, I don't know that either. I may tell you that my feelings are with the feelings of the most of the people in Canada on that subject.
He was further asked:
Q. So that so far as being a banker is concerned, you have no more sources of information than the ordinary people?
A. No, we have never been allowed to know anything more.
Q. Don't you think it is desirable that the public should know the whole history of this particular transaction?
A. Well as a fellow banker with the Bank of Montreal and the rest, I hesitate to answer that, but I may say we were all of us very indignant that we have not known more.
And then, I think, he suggested in another place that it certainly would be desirable to have the full facts disclosed. And so, Mr. Speaker, I suggest that if Sir Edmund Walker and Sir John Aird, bankers of the highest eminence in this country, are not apprized of
Air. Shaw.]
the real facts in connection with the Merchants Bank disaster, and are anxious to know the facts, then surely the members of this House cannot be criticized harshly in suggesting that they too would like to know the facts in order, if possible, to make such amendments as may be necessary to repair those provisions of the Bank Act, which rendered this collapse and this merger possible.
I may say, Mr. Speaker, that an effort was made in the Banking committee to have these facts disclosed, to have them thoroughly investigated. A motion was made for the purpose of calling certain witflesses who would know about these facts. That resolution, I regret to say, was voted down by the committee. In order to secure a discussion on this matter in the House, in order to get the direction of the House on this important question, a further motion was moved that the committee should report to the House the action it had taken on the previous resolution and, strange to relate, the majority of the committee refused to even present to the House the action which they had taken in that connection. Consequently by the action of the committee this House has bes 1 effectively barred from discussing the Merchants Bank matter, or the advisability of inquiring into it, until the present moment. May I say that at that time it was urged by the Minister of Finance that it was not desirable that Sir Montagu Allan and Mr. Macarow, should be tried a second time. Nobody suggested they should be tried a second time. Nobody desires they should be tried a second time. The fact that a man has been tried on a particular criminal charge does not justify this House in refusing to call witnesses to ascertain material facts in the matter, and, as I have already pointed out, these defendants would not in the slightest degree be placed in jeopardy again; they would be entitled to claim and would secure from the committee the usual right which anyone secures under such circumstances, that any evidence given by them could not, under any circumstances, be used against them in any subsequent proceedings-unless, of course, it was necessary to use it in the event of perjury having been committed.
The point is this, Mr. Speaker: Under the existing Bank Act, the Merchants Bank collapse took place. Under the existing Bank Act the merger with the Bank of Montreal took place. Surely it is not unreasonable to suggest that the facts and circumstances in connection with these two matters should be investigated thoroughly, if you want to adequately provide, as far as it is humanly pos-

Bank Act
sible, against similar disasters in the future. I think that is not an unreasonable position. On the other hand, I think it is entirely businesslike, and is what is expected of this parliament. In addition to that fact there can be no question that under the provisions of the Bank Act there is an increasing concentration of the credit power of this country in the hands of a decreasing number of people, and despite that fact, despite the absorption under these circumstances by the Bank of Montreal, we leave these particular sections of the act dealing with mergers in exactly the same form they were ten years ago. We have no improvements to offer, because, of course, we have not the facts upon which to base any improvement.
In conclusion, Mr. Speaker, I say that we. as the trustees of the people's interest, cannot stand by indifferently and see the interest of shareholders, of depositors and even the public credit of this country imperilled. It is, if I understand it correctly, our duty and oui obligation, as far as we possibly can, to prevent, by legislation, like disaster in the future Suppose, for instance, that the Bank of Montreal had not come to the rescue of the Merchants Bank, is there any one in this House who can set a limit to the disaster which would have followed? Depositors, shareholders and creditors would, alike have gone down in a crash of insolvency, and the credit of this country would have been seriously injured for years to come. Now, surely we are not going to allow, if it is possible to prevent, a creature of this parliament imperilling and placing in jeopardy the intersets of the people and the country, and rely only upon either the ambition or the generosity of a competing institution for safety. That is the suggestion which I make. For forty years in this country manufacturing industry has leaned upon parliament. Do we propose now that parliament, in order to preserve the interests of its people and preserve its own credit, shall rely upon a creature of its own creation? It seems to me that the position which we take in this matter, as designated in this resolution, is absolutely sound. The facts should be fully disclosed. In the light of these facts it may be that such legislation may be proposed as will prevent a similar unfortunate fiasco and disaster in the future.


William Stevens Fielding: Mr. Speaker, with all the respect I desire to accord to my good friend from Calgary West (Mr. Shaw), and to those who agree with him in this matter, I am going to submit to the House that of the many reasons that are given for the delay of this Bank
Act, the weakest of all is this story about the investigation of the Merchants Bank. . There is no greater delusion in the whole discussion than the allegation that the public are demanding an investigation into the Merchants Bank. There is no foundation for it in the world. There is no indication that any person who has a penny of interest in the Merchants Bank is asking for investigation, and there is no shadow of connection between the Bank Act and the Merchants Bank investigation. If you had all the investigation in the world, and produced all the results you could produce, you would not bring forth any reason against the Bank Act. Who are complaining? The failure, as you call it, of the Merchants Bank, did not involve a penny of loss to any person in the country, except the shareholders. The hon. member speaks of depositors. The depositors have not suffered any. They are not grumbling. The note holders did not suffer. They are not grumbling. The shareholders did suffer, and they are not grumbling. There is not an application from any shareholder to interfere in this matter at all. I think they have the good sense to see that by letting the matter alone they get the best results. At all events, though at the time there was some irritation, the fact to-day is that the demand for investigation into the Merchants Bank comes from people who, at all events, whatever their good motives may be, have not a penny of interest in it. There is no public interest to-day which demands an investigation into the Merchants Bank. The people who have interest in the matter have their remedy, and apparently they are content. If any shareholder of the Merchants Bank-and he is the only one affected-feels that he has been unjustly treated through the action of the directors or the neglect of the directors, or that he has suffered a penny of loss, he has his remedy in the courts of the country and knows it.
What is the use of talking about shareholders being treated badly? The institution was an unfortunate one. Why constantly talk about the mystery of the Merchants Bank? There is no mystery in the world about it. There is no transaction in public affairs better understood than the Merchants Bank affair-no mystery about it. One hon. member thought it was an extraordinary thing that the Bank Act allowed $10,000,000 to slip away between the bars. There is no mystery about a ten cent piece of the money of the Merchants Bank. They got into trouble by reckless mismanagement. They lent money without security. They lent money to a brokerage firm in Montreal and they should not have done it. They lent money to many
Bank Act

people, and the evidence and the whole record . are there. There is no mystery about it. Everybody knows the cause of the disaster, and in a certain sense it was a disaster. Hon. members will find out that the people who are really interested are not grumbling. The world is full of idle curiosity. I suppose some persons would like to know more about it, but no public interest would be served by further investigation. Every weakness in the Bank Act that was disclosed by the Merchants Bank failure has been met and covered in the bill now before the committee. Accusations were made. The only charge that could be brought against the Merchants Bank by the government was that they had falsified the return. That accusation was made. It was sustained, so far as the department is concerned. Proceedings were taken. The trial took place. These two gentlemen who were accused were acquitted. Hon. members may have their opinions as to whether they should have been acquitted or not. What odds about that? They have been tried by the courts of the country. My hon. friends have an idea that either the Minister of Justice or the Finance Minister should have gone down to Montreal, seized Sir Montagu Allan by the scruff of the neck and taken him to prison. Those men were tried by the courts of the country and acquitted.
What more could be done? There is no mystery about it. Every penny that was lost is known to the public. The shareholders know all about it, and so far as I know they are all content-not content in the broadest sense because they have lost money, but I think they have come to the conclusion that, if things had not proceeded in that particular way, they would have lost more. I submit there is no connection between an investigation into the Merchants Bank and the bill we now have before the House. There is no reason in the world why we should delay this bill for one minute for the sake of an investigation into the Merchants Bank which could not accomplish anything and which nobody who is really interested in the bank's affairs seems to want.


William Charles Good: The Minister of Finance has made a very brave attempt to defend a very bad case. I had a letter the other day from a shareholder of the Merchants Bank, whom I do not know at all and never did know, who happens to be in the United States now. I am sorry I did nos bring the letter down here. I have it upstairs.


An hon. MEMBER:: Go and get it.


William Charles Good: A very irate letter indeed,
endorsing, if I remember the terms of it,

most emphatically the stand that we have taken in this connection. I simply offer that as a bit of evidence in refutation of the statement made by the Minister of Finance that there has been no demand from the shareholders for an investigation.


William Stevens Fielding: Is my hon. friend aware that if that shareholder has a grievance he has his remedy in the civil courts and does not need to come here at all?


William Charles Good: It is a small fact to which
I refer, not for the purpose of attaching any great importance to it, because I do not know that the shareholders are primarily interested. I think the people of Canada are interested in this matter far more than the shareholders. The Minister of Finance says that there is no mystery about this matter. All I have to say is that if we had an investigation, we would be in a position to know. We have had no investigation into the material facts, into the really essential and vital facts of the case, I mean the facts that are important to the Canadian people. We have had an investigation into the facts of the case in so far as they relate to the specific charges that were made against the two gentlemen mentioned. But those are not the facts in which I am interested. I am not a shareholder of the Merchants Bank; but I am responsible for some of the business and the institutions of this country, and so far as my share of the responsibility goes on behalf of the Canadian people, I think this is a matter that ought to be sifted to the very bottom.


Alexander Kenneth Maclean: Why did my
hon. friend not in the month of February make a motion in parliament to grant an inquiry? Or, if he forgot this in February, why did he not make it in March? If it escaped his attention in March, why did he not do it in April? Then he had all the month of May in which to do it.


William Charles Good: I did what I could on the
committee to have investigation made.


Alexander Kenneth Maclean: The hon.
member should have done it in parliament.


William Charles Good: The facts of the case have
already been presented by the hon. member for Calgary West (Mr. Shaw). If the demand which was made in the committee for the summoning of those two or three gentlemen who were in a position to give the facts, had been acceded to, I should have been satisfied. Why did I not make a demand in parliament earlier? Well, perhaps I thought the committee was the right place, at all

Bank Act
events the first place where the demand should be made. The committee was instructed to revise the Bank Act, and as has been shown, this particular inquiry is entirely relevant to the revision of the Bank Act. We did what we could; I did what I could on the committee, to secure the presence of these men in order that we might get information from them. As has been already stated, we failed. On two occasions we were voted down. The committee even voted down a request that the action of the committee taken at an earlier time should be reported to the House, so that the House might then take action if it thought fit to get those men here. That was voted down also. The matter was pressed twice before the committee, and on both occasions the lid was kept screwed down. Sometimes one gets suspicious by reason of the very effort that has been made to prevent an investigation. I do not know whether there is anything wrong or not; but when an effort is made to stifle investigation, I cannot help being suspicious.
There is another aspect of this situation that I would like to mention to-night before the vote is called. I refer to the question of mergers, to the question ov financial concentration. I have in my hand a book by a man who is now, I think, one of the judges of the Supreme Court of the United States. I refer to Louis D. Brandeis. His book is entitled "Other People's Money and How the Bankers Use It." I have referred to this book on one or two occasions in the committee, and I would like to refer to it again here.


Edward Joseph Garland: Who is
Mr. Brandeis?


William Charles Good: He is one of the judges of the Supreme Court of the United States, and I gather from reading the book that he had to do with a number of investigations in the United States some years ago in regard to "big business," if I may use that expression. I may say that the book is descriptive of conditions in the United States, and I think it has a direct bearing upon the situation in Canada and upon the case which we have now under consideration. I should like to quote a paragraph which the writer quotes from a statement made by ex-President Woodrow Wilson in 1911. I read:
The great monopoly in this country is the money monopoly. So long as that exists, our oid variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled hy its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men, who, even if their actions be honest and intended for the public interest, are necessarily concentratd upon
the great undertakings in which their own money is involved and who, necessarily, by every reason of their own limitations, chill and cheek and destroy genuine economio freedon. This is the greatest question of all; and to this, statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men.
That was written by ex-President Woodrow Wilson in 1911. Further on in the first chapter of this book, the writer refers to the way in which the financial oligarchy in the United States extended their operations and gained control of the security makers on the one hand and the security buyers on the other-the large insurance companies and so on. I will read just one or two other extracts from this book. Here is a paragraph under the sub-heading, "Why the banks became investment bankers":
These large profits from promotions-
He is referring to the operations of J. P. Morgan and Co.
-underwritings and security purchases led to a revolutionary change in the conduct of our leading banking institutions. It was obvious that control by the investment bankers of the deposits in banks and trust companies was an essential element in their securing these huge profits. And the bank officers naturally asked, "Why then should not the banks and trust companies share in so profitable a field? Why should not they themselves become investment bankers too, with all the new functions incident to 'big business'?" To do so would involve a departure from the legitimate sphere of the banking business, which is the making of temporary loans to business concerns. But the temptation was irresistible. The invasion of the investment banker into the banks' field of operation was followed by a counter invasion by the banks into the realm of the investment banker.
Then he goes on to mention a number of United States banks which did this very thing.
The next chapter is entitled:
How the combiners combine.
Further on chapter 3 is devoted to interlocking directorates, the question which was discussed in such an illuminating way last year in this House by the hon member for Brome (Mr. McMaster). I want to read one or two paragraphs from this chapter. Here is the first paragraph.
The practice of interlocking directorates is the root of many evils. It offends laws human and divine. Applied to rival corporations, it tends to the suppression of competition and to violation of the Sherman law. Applied to corporations which deal with each other, it tends to disloyalty and to violation of the fundamental law' that no man can serve two masters. In either event it tends to inefficiency; for it removes incentive and destroys soundness of judgment. It is undemocratic, for it rejects the platform: "A fair field and no favours,"-substituting the pull of privilege for the push of manhood. It is the most potent instrument of the Money Trust. Break the control so exercised by the investment banker over railroads, public service and industrial corporations over banks,
Bank Act

life insurance and trust companies, and a long step will have been taken towards the attainment of the new freedom.
I refer now to a rather humorous specimen prospectus cited by Judge Brandeis on pages 106 and 107.


Alexander Kenneth Maclean: Has he chapters on the Merchants Bank failure and on the Canadian Bank Act in that book?


William Charles Good: No.


Alexander Kenneth Maclean: If he has not, I submit that my hon. friend should cease leading it.


William Charles Good: I submit that the material I have in hand is entirely relevant to the issue under consideration.


Mr. DUFF:: Quite the contrary.


William Charles Good: This specimen prospectus is as follows, and I think perhaps it might relieve the feelings of the hon. member for Halifax if I were to read it.


Alexander Kenneth Maclean: If it is pretty humorous and we can get away from the hymn of gloom my hon. friend is always singing, I will stand it.


William Charles Good: I am very glad that I shall
satisfy the hon. member for once.


William Duff: That remains to be seen.


William Charles Good: I read the following:
A. B. & Co.
Investment Bankers
We have to-day secured substantial control of the successful machinery business heretofore conducted
by	 at	 Illinois, which has
been incorporated under the name of the Excelsior Manufacturing Company with a capital of $10,000,000, of which $5,000,000 is Preferred and $5,000,000 Common.
As we have a large clientele of confiding customers we were able to secure from the owners an agreement for marketing the preferred stock-we to fix a price which shall net the owners in cash $95 a share.
We offer this excellent stock to you at $100.75 per share. Our own commission or profit will be only a little over $5.00 per share, or say, .$250,000 cash, besides $1,500,000 of the common stock, which we received as a bonus. This cash and stock commission we are to divide in various proportions with the following participants in the underwriting syndicate: C.D. & Co., New York.
E.F. & Co., Boston.
L.M. & Co., Philadelphia.
I.K. & Co., New York.
O.P. & Co., Chicago.


William Duff: Where is the joke?


William Charles Good: If the hon. member cannot
see the joke I am afraid I am unable to point it out to him. Now, there is a chapter that deals with big men and little business.


William Duff: I think it is little men talking about big business.


William Charles Good: This chapter is particularly
pertinent to the situation in Canada, because there is an inevitable tendency on the part of a number of businesses of various kinds to become concentrated in the hands of a few men. The result is a growth of serious inefficiency in the operation of these businesses.


Louis Édouard Fernand Rinfret: Is that the case with
the Bank of Montreal?


William Duff: Or the Farmers Bank?


William Charles Good: At page 151 there appears
the following quotation from ex-President Wilson:
I am not saying that all invention had been stQpped by the growth of trusts, but I think it is perfectly clear that invention in many fields has been discouraged, that inventors have been prevented from reaping the full fruits of their ingenuity and industry, and that mankind has been deprived of many comforts and conveniences, as well as the opportunity of buying at lower prices.
Then Mr. Brandeis continues:
The fact that industrial monopolies arrest development is more serious even than the direct burden imposed through extortionate prices. But the most harmbearing incident of the trusts is their promotion of financial concentration. Industrial trusts feed the money trust, practically every trust created has destroyed the financial independence of some communities and of many properties; for it has centred the financing of a large part of whole lines of business in New York, and this usually with one of a few banking houses. This is well illustrated by the Steel Trust, which is a trust of trusts.
He goes on at considerable length to show how the steel trust was formed.


William Duff: Read chapter 6, verse 4, on co-operative stores.


William Charles Good: I shall be glad to read it if the hon. member wants me to.


William Duff: Yes, I am asking you to read it. Read chapter 6, verse 4.


William Charles Good: The hon. member evidently is not acquainted with the book. Chapter 10 is the one that deals with co-operation.


William Duff: Well, I made a slight mistake.


William Charles Good: The first two lines in the chapter read:
We must break the money trust or the money trust will break us.
That is perhaps enough on that point.


William Duff: That has nothing to do with co-operative stores.


William Charles Good: I have in my hand a type written document sent to a fellow-member

Bank Act
by a man who, I understand, lives in western Canada. This document is entitled "Canada -a Dictatorship," and in it there is an examination of the system of interlocking directorates and the concentrtaion of control of Canadian credit, industry, and so forth. I do not wish to quote from it because I have not yet had an opportunity of verifying the statements it contains, but reading it over I can see that the writer has evidently looked into the matter rather carefully. I might mention some of the headings. There are references to "The Power of the Bankers," "The Canadian Cabinet," "The Bank of Montreal," "The Grip Upon Industry," "Financial Corporations," "Fourteen Autocrats," and "A New Phase of Capitalism." I wanted to refer to this document to show that there are some Canadians who are seriously exercised over the situation in Canada, of which, I think, the absorption of the Merchants Bank by the Bank of Montreal is a typical case I mentioned the fact that Judge Brandeis gave a great deal of consideration to the matter on the other side, as have also a great many other prominent Americans. The same drift of affairs is evident on this side of the line as has been evident in the United States, and I would respectfully suggest to the House the great importance of this question and would like to impress upon hon. members the seriousness of the menace that Threatens us to-day in the concentration of control in the hands of a very few men. It is not that the few who form the interlocking directorates of a number of large enterprises actually own those concerns, but 9 p.m. they are so placed that they exercise effective control. It is pointed out in this document that one.group of men in Canada pretty well control assets to the extent of about three and a half billions of dollars. I think, therefore, that I am justified in endeavouring to impress upon the House the very serious nature of the situation and the need of investigating to the very bottom this recent collapse and amalgamation so that we may know what the facts are. Probably we do not know what the extent of the danger is; nor can we know until we have ascertained the facts. Ugly rumours are afloat, and I do think that we should sift the thing to the bottom. As pointed out by the hon. member for Calgary West (M'\ Shaw), there are two purposes in view. The first is to be able intelligently to revise the Bank Act, particularly with respect to those sections that deal with inspection and returns; and the second is to find out whether or not there have been intrigue and shady transactions in connection with this affair, as has been rumoured. I trust that the amendment will secure the support of the House.


Arthur Meighen: I desire in a few words to state my reasons for the vote I shall give. I do not want to be understood as voting against any investigation into the Merchants Bank or any other episode; I always feel that if, in cases of alleged wrongdoing, the public is affected, then when a member assumes the proper responsibility for such an allegation, no investigation should be denied. And also there might be a case for investigation, were any wrongdoing alleged, if it were essential for the purposes of intelligent legislation. So the question really is: Is an investigation into this episode necessary to enable us intelligently to legislate as to the Bank Act? I have waited for argument to convince me that it is. One must consider what the public interest is in the Merchants Bank affair.
I do not quite agree with the Minister of Finance that we have no interest merely because-if it were the case-the shareholders alone were affected; it seems to me it is the duty of parliament to guard the interests of shareholders in banking legislation. But we would have an interest much wider and more direct if the depositors were so imperilled, if not actually affected by such actions as we might by legislation prevent the repetition of. Or if holders of bank notes were affected, then our interest would be still more general, more direct and more important. Now, is there reason to believe that there is something connected with the episode still undisclosed that would enable us in this act to protect better the interests of shareholders, or of depositors, or of the holders of bank notes? And there could be one more interest-the general interest of the public who do not want to see a repetition of events that end in the elimination of another bank. I know that in western Canada the case of the Merchants Bank was very widely discussed, as was the case of the Farmers Bank, and I believe the people of that country want to see every precaution taken against the recurrence of such things as result in the elimination of a bank as a separate institution.
Let me inquire again: Has it been shown, has it even been intimated, that there is anything we do not know in connection with the episode that would help us to protect the shareholders, the depositors, the note holders, or help us to prevent the repetition of the incident? If any hon. member had brought
Bank Act

jJ
out a tittle of evidence in support of that, there would be something substantial to discuss. The hon. member for Calgary West (Mr. Shaw) did read from the evidence of Sir John Aird and intimated he had read before I came in from the evidence of Sir Edmund Walker, to the effect that there were some things unknown in connection with the occurrence that led to the merger. Well, I fancy what they must have had reference to was this: They felt, and I believe the bank they were connected with felt, that up to the time of the consent to the merger there had not been disclosure to other banks that might have been just as much interested as the Bank of Montreal, of the exact situation, respecting the Merchants Bank, in order to enable those others to discuss what had taken or was to take place. I think it was felt that there had been too much confinement of the information to one single institution. It may be they had in mind that some facts were still undisclosed that they had a right to know the same as any other bank. I do not know whether they did or not; what those facts could be I do not for the life of me know.


Joseph Tweed Shaw: I suggest that that is exactly what we want to find out.


Arthur Meighen: Well, shall we postpone revision of the Bank Act simply because some witness suggests that there is something he does not know? What is it? I agree with the Minister of Finance that there were some things connected with the disaster to the Merchants Bank which would help us in the framing of this act. But were these not all brought out in the trial? What are we interested in? We are interested to see that every precaution is taken to prevent the nondisclosure to the government of Canada of vital information, of essential information connected with the management. Everything associated with that came out in the trial of these men. I wonder how many hon. gentlemen in this House have read the evidenca taken at the trial? I cannot boast of having done so myself-that is to say, in the original though I have done so very carefully from more than one newspaper that reported the evidence pretty fully. So far as I could see, everything connected with that subject came out in the trial and it should have been known to the committee when the committee sat What perhaps did not come out was an answer to the question -why these loans were made. Well, how in the world can this House ever legislate to prevent the making of bad loans' Hon. gentlemen say that $10,000,000 went 
through a hole. I suppose it did; but I can name more than one company right now through a hole in whose organization more than $10,000,000 has gone. I venture to say it would not be hard to name other banks and to point to an end of this country that might be called a hole through which $10,000,000 of the money of these banks has gone. How this can be prevented unless by making men wiser than they are I do not know. Now, everything that we are interested in is to know what precautions can be taken by parliament. All that parliament can do is to get the best information, to get all the information, required from time to time. We know that now; what other information can we ask for that is not asked for in the act? If there is any other, let us put it in. I understand that amendments have been made to the act as a result of the evidence at the trials and of the findings of the committee. Perhaps they would have been in anyway, 1 do not know; but I am informed that they are the result of the findings. One of them, for example, is the double audit system; another, a better definition of the responsibility of directors; another, the protection of the employees' insurance fund.


Alexander Kenneth Maclean: And another, contact between the shareholders' auditors and the directors.


Arthur Meighen: Very well; I was not
aware of that. The facts that affected the government, that affected the public, that affected parliament, were disclosed in these hearings. The facts that are undisclosed- if there are any, I do not know what they are-are connected with the making of a loan to a brokerage firm in Montreal that evidently should not have been made. But you may frame acts of parliament until parliament is grey and you cannot prevent bank managements from making loans that are bad. Consequently, I do not see why We should defer the passing of the Bank Act in order that there may be further investigation into this failure, or into this episode, however you may describe it. As soon as anyone can show me that by the holding of an investigation there is something to be gained in the way of light upon the Bank Act itself or how to frame it, then, whether wrong-doing is alleged or not, I will not vote against the investigation. But merely because someone says, "Well, if we fished along a bit there might be something," then I feel I would be giving a reckless, an arbitrary, an unreasoned vote in supporting delay for a year on that account.

Bank Act
The House divided on the amendment (Mr. Bird) which was negatived on the following
division.	YEAS Messrs:
Bancroft,	Leader,
Bird,	Lewis,
Campbell,	Lovie,
Coote,	Lucas,
Davies,	Maclean (York),
Elliott (Dundas),	Macphailf
Evans,	McConica,
Forke,	McDonald (Timiskaming),
Gardiner,	McTaggart,
Garland (Bow River),	Millar,
Good,	Neill,
Halbertj	Ross (Simcoe),
Hoey,	Sales,
Hopkins,	Sexsmith,
Humphrey,	Shaw,
Irvine,	Speakman,
Jell iff,	Spencer,
Johnston,	Steedsman,
Kellner,	Stewart (Humboldt),
Kennedy (Edmonton),	"Wallace,
Kennedy (Port Arthur	& Ward,
Kenora),	Woods?
Knox,	Woodsworth-45.
 NAYS Messrs:
Archambault,	Lapointe,
Arthurs,	Lavigueur,
Baldwin,	Leger>
Baxter,	Lovett,
Beland,	Macdonald (Pictou),
Binette,	MacKelvie,
Boivin,	Maclean (Halifax),
Bouchard,	MacLean (Prince, P.E.I.),
Boucher,	McBride,
Bourassa,	McCrea,
Bureau,	McGiverin,
Cardin,	Mclsaac,
Carroll,	Me Murray,
Casgrain,	McQuarriet
Chevrier,	Marcil (Bonaventure),
Coppt	Marcile (Bagot),
d'Anjou,	Martell,
Dech&ne,	Meighen,
Delisle,	Michaud,
Denis (St. Denis),	Mitchell,
Desaulniers,	Morrissy,
Descoteaux,	Munro,
Deslauriers,	Murdock,
Dickie,	Murphy,
Duff,	Ouimet,
Duncan,	Papineau,
Fafard,	Parent,
Fielding,	Pelletier,
Fontaine,	Power,
Forrester,	Putnamt
Fortier,	Rinfret,
Gauvreau	Robb,
Gendron,	Roberge,
Gervais,	Robinson,
Graham,	St. Pere,
Grimmer,	Seguin,
Hammell,	Sheard,
Hatfield,	Sinclair (Queens, P.E.I.),
Hocken,	Spence,
Hubbs,	Stevens,
Hughes,	Stewart (Argenteuil),
Jones,	Stewart (Hamilton),
Kay,	Stewart (Leeds),
King (Kootenay),	Sutherland t
Kyte,	Tobin,
Lanctot,	Vien-92.

(The list of pairs is furnished by the Chief Whips).
For amendment.	Against amendment.
Mr. Gould,	Mr. Cannon,
Mr. Caldwell,	Hon. Mr. Motherwell.


James Shaver Woodsworth: I should like to introduce an amendment which I placed before the committee:
That this Bill be not now read a third time but be referred back to the committee with instructions to amend section 30 by adding thereto as subsection 4 the following:
Such officers, clerks and servants shall have and be deemed to have the right of association for all lawful purposes.


An hon. MEMBER:: The same division.


James Shaver Woodsworth: Mr. Speaker, I understand there are some hon. gentlemen who voted against the other amendment but intend to vote in favour of this.


Jacques Bureau: Before the main motion
is put, I should like to know from the Minister of Finance if there is in the Bank Act any provision that forbids bank clerks from associating together for lawful purposes.


William Stevens Fielding: There is no such provision.
Main motion (Mr. Fielding) agreed to and bill read the third time and passed.



WAYS AND MEANS ONTARIO ELECTIONS AND PETAWAWA CAMP

[Stage Direction]
On the motion of Hon. W. S. Fielding (Minister of Finance) for committee of Ways and Means:
['Next sitting of the House.']
Arthur Meighen: Mr. Speaker, I wish to
refer on this motion to two matters. The first is to recall a question which I put to the government last Friday, and in which I called attention to the inability of certain of the active militia to vote in the approaching provincial election in Ontario and asked that arrangements be made in such a way that those members would not be disfranchised. The Acting Minister of National Defence (Mr. Macdonald) went into the matter as he had promised, and in conversation with officers of the department, ascertained that the date had been fixed three or four months ago and two or three months before the date of the Ontario elections was announced; furthermore that as, under present estimates, only eight days' training is allowed, anything

in the nature of a three-day break in the middle would, of course, destroy the effect of the entire training and, as was urged and as, I believe, was right, was out of the question. A deferring would have meant a cost of many thousands of dollars. The Acting Minister of National Defence reported those circumstances to the House; he stated that he was sending to the Attorney General of Ontario a telegram setting out the facts I have recited and requesting that the attorney general instruct the returning officers affected in about five cities to admit these votes at the advance polls, and he undertook if legislation were necessary to ratify, to support such legislation in the next House if he were still in the government. I acquiesced in that telegram being sent, and I undertook, on behalf of the Conservative party, in the House, that that legislation would, if necessary, be ratified by them, should they be returned. Similar action, I might say, was found necessary in the late election and was acquiesced in by all parties affected. There should have been no difficulty whatever in this case. I wish to ask the Acting Minister of National Defence what has been the attitude of the Attorney General of Ontario toward the matter and whether we are going to be faced with the disfranchisement of members of our active militia merely because they are doing their duty.


Hon. E. M. MACDONALD (Acting Minister of National Defence):: Mr. Speaker, the right hon. gentleman has reviewed the facts in connection with this matter up to the point of sending the telegram which was despatched from the department on June 15 addressed to the Hon. Mr. Raney, Attorney General of the Province of Ontario, Toronto. The telegram reads:
Detachments of batteries from Gananoque, Belleville, Peterborough, Guelph, Hamilton, Cobourg, schedule to train at Petawawa overlapping polling date June 25. Impractical to permit voters to return home for election. Alternative is for you to permit votes to be cast in home towns prior to departure under terms of advance polling provision your election act. If legislation does not give power suggest that above action be taken and ratified at next session of your legislature. Am informed Mr. Ferguson who is now here will agree to this' proposal. Premier King approves of this proposal. If you agree public announcement should be made at once. Reply.
On the 16th, the following reply was received, not from Mr. Raney, but from Mr. A. M. Dymond, the chief election officer of the province:
Your wire addressed to attorney general referred to me, no authority whatever for action suggested by you. Would advise postponement of entrainment for camp until after polling day, announcement made more than month ago of date of pollings.

Elections and Petawawa Camp
In answer to this the following telegram was sent tc the lion. Mr. Raney himself. It was not addressed to Mr. Dymond, because we felt that the attorney general of the province ought to deal with an important matter of this kind himself. On the 18th of June we addressed this telegram to the Hon. Mr. Raney:
Following wire received:
Here we quoted in full telegram received from Mr. Dymond.
Dates of training Petawawa fixed over three months ago. Detachments from Ontario, Quebec and Maritime provinces involved. In view of heavy expense entailed and interference with private arrangements of members non-permanent active militia no alteration dates practicable. Propose publish my wire June 15th.
That was on the 18th of June, and so far there has been no reply. I shall briefly state the situation. Six batteries of artillery consisting of 38 officers and men each, or a total of 2S2 men, entrained on Friday to go to camp at Petawawa, where they will spend eight days, including the day occupied in going out and the day in coming back. Their training is of a special nature which can be given only at Petawawa, and includes three days of shooting in addition to other necessary drill and training in other respects. I may observe that Mr. Hay, the leader of the Liberal party in Ontario, was communicated with on the day on which the telegram was sent to Mr. Raney. The right hon. gentleman who leads the Opposition (Mr. Meighen) properly states that the only way in which these men can exercise the franchise, if they go into camp at Petawawa, will be for the provincial authorities of Ontario to arrange for the taking of advanced polls. I am informed by the officers of my department that it would involve the country in a loss of between $7,000 or $8,000 if any change were made now in the dates fixed for this training, which dates were settled upon long before any provincial or other election was in prospect. I am surprised that the authorities in Ontario have not responded to our suggestion. I do think that an arrangement might have been made between the different political parties by which the votes of these men might be taken to-morrow or Friday before they entrained for camp. As Petawawa is a little to the west of the main line of the Canadian Pacific railway in the northern part of the province there would be great difficulty, even if it were practicable, for any of the officers or men to get to their homes to vote, for it would take them at least three days to accomplish this purpose. Obviously therefore the only means of having them exercise the franchise is that which we have suggested.


Arthur Meighen: I understood, Mr. Speaker, that the Minister of Justice (Sir Lomer Gouin) would go on to-night with the bill to repeal the Lake of the Woods Regulation Bill. I should be glad to have this bill proceeded with.


William Stevens Fielding: There is one remaining budget resolution which it was announced would be taken up to-day. I do not suppose that it would take up very much time, and I should prefer to dispose of it and make way for the Lake of the Woods bill. Has the hon. member any objection?


Arthur Meighen: We cannot be sure how long the resolution will take. If it lasted very long it would not be convenient to me.


William Stevens Fielding: If the debate is protracted I will postpone the resolution.


Arthur Meighen: If the minister withdrew his motion and we took up the Lake of the Woods bill he could go into Ways and Means afterwards.


William Stevens Fielding: That rather interferes with our plans, but I will accede to the request. I move, Mr. Speaker, that the motion be withdrawn and that the order for the second reading of the Lake of the Woods bill be proceeded with.
Motion withdrawn.



[Stage Direction]
Hon. Sir LOMER GOUIN (Minister of Justice) moved the second reading of Bill No. 175 to repeal the Lake of the Woods Regulation Act, 1921.
Arthur Meighen: I think the minister
might give us a statement of the present position of this matter, having regard to the attitude of Ontario on the one hand and of Manitoba on the other, as well as that of the Dominion government.


Sir LOMER GOUIN:: This bill is the same as the one that was introduced last year and accepted by the House of Commons, but rejected by the Senate. The purpose of the bill is to repeal chapter 38. 11 and 12 George V, passed in 1921 and assented to on the 4th of June of that year. In 1920, there was an understanding between the Ontario government and the Dominion government to the effect that a commission composed of four members, two to be appointed by the Ontario government and two by the Dominion government, would t control the waters of the Lake of the Woods, Lac Seul, English river and Winnipeg river. It was agreed that legislation should be submitted to the legislature

Lake of the Woods Regulation
of Ontario and the parliament of Canada for the purpose of organizing that com-
10 p.m. mission. The Dominion government accordingly introduced a bill which passed as chapter 10, of 11 and 12 George V, which was assented to on the 3rd of May, 1921. The government of Ontario, proceeding also in accordance with the agreement to which I have referred, introduced similar legislation; but the premier of the province, facing an opposition to the measure, withdrew it. Under these circumstances the government of the day, considering it important that some commission should have authority to control these waters, passed another bill, which became chapter 38 of 11 and 12 George V, to which I referred at the outset. The second clause of that act provided that-
All dams, structures and other works of whatsoever description which have heretofore been or may hereafter be constructed in, upin, over, about or across,- (a) any outlet of the Lake of the Woods, (b) the Winnipeg river at or about its junction with English river, or (c) English river at the outlet of and below Lac Seul, which do or may or can in any wise control, regulate or affect the outflow of water from the said lakes, or either of them, or the natural levels of the water in the said lakes, or either of them, at any time, or the natural flow of the water in the Winnipeg river or in English river, at any time, are and each of them is declared to be for the general advantage of Canada.
The last clause reads as follows:
If the necessary legislation of Ontario referred to in the preamble of The Lake of the Woods Control Board Act, 1921-
That is, chapter 10.
-be enacted by the legislature, the Governor in Council may, by proclamation published in the Canada Gazette, repeal or suspend this act and the regulations made thereunder at any time when or after The Lake of the Woods Control Board Act, 1921, shall come into force: Provided that notwithstanding any repeal or suspension of this act in the manner provided by this section the works and each of them hereby declared to be for the general advantage of Canada shall remain and continue to be works for the general advantage of Canada.
Acting under the provisions of that statute the government of the day appointed a commission, also composed of four members, as agreed upon. I understand that the government of Ontario was asked to appoint two of the members of the commission but they refused to do so, contending that this statute should never have been passed and that the works of the Lake of the Woods, the English River and the Winnipeg river should not have been declared works for the general advantage of Canada. Last year the then Solicitor General introduced a bill similar to the one now under consideration. I may say that in the session following the Act of 1921 the legislature of Ontario did pass the legis-

lation which had been agreed upon, and last session the then Solicitor General thought we should simply repeal chapter 38 of the statutes of 1921. After some debate the bill was adopted by the House but was subsequently rejected by the Senate. After prorogation, at the instance of the premiers of Ontario and Manitoba, a conference took place in Ottawa in which the premiers of those provinces and the Prime Minister of Canada took part. After discussion and deliberation the representatives of the three governments arrived at an understanding which was put in writing and signed by them. The first clause of that agreement reads as follows:
This agreement, as a working basis for the regulation of the English and Winnipeg rivers, is entered into on the understanding that all parties are agreeable to the repeal of the Lake of the Woods Regulation Act, 1921, but Ontario does not bind itself to the terms of this agreement in the event of that act not being repealed.
Then follow the different clauses which were accepted by the three parties. Consequent upon these circumstances we introduced the present bill. After it was read the first time representations were made to us first by the government of Manitoba and afterwards by the government of Ontario. The government of Manitoba urged that chapter 38 of the Statutes of 1921 should not be repealed until the provisions of the arrangement of November last had been fulfilled. We had a conference and listened to the arguments of the representatives of Manitoba. We told them that this bill would come into force only by proclamation, and that that proclamation should be made only when the essential conditions of the arrangement entered into had been fulfilled. Subsequently the representatives of the Manitoba government wrote a letter to the Prime Minister stating that they could not accept the suggestion that we should proceed with this bill at the present session. In reply the right hon. Prime Minister wrote the following letter to Mr. Farmer, the mayor of Winnipeg:
Dear Mr. Farmer:
I have duly received the letter dated the 29th instant signed by yourself and Messrs. Preudhomme, Sanger, Guy and Johnson, with respect to the above.
You are quite correct in your understanding that the repeal act should not become effective until the conditions of the agreement of November last have been complied with. You suggest that the repeal bill should be amended in such a way as to provide that it shall go into effect on proclamation only after Ontario and Manitoba respectively have so requested by order in council. With reference to this suggestion I would like to point out that the bill has been drafted in a matter which would permit of ho exception being taken by the Ontario government to it.

Lake of the Woods Regulation
provisions. Were the conditions you propose incorporated, it might only serve to raise a fresh obstacle to the final settlement of this whole matter, which is now so near the point of satisfactory adjustment. Our government has in view but the one object of effecting a settlement of the question in a manner which will be wholly satisfactory to all parties concerned. We are as favourably disposed toward the province of Manitoba as toward the province of Ontario, and, inasmuch as the federal government, not less than the governments of Ontario and Manitoba, is a party to the agreement of November last, I think you may take it for granted that we would not take any action or permit any action to be taken which would prejudice the right of either Manitoba or Ontario under any of the conditions of the agreement.
With this assurance I hope you will feel that Manitoba will be justified in withdrawing any opposition it may have to the Repeal Bill in the form in which it has been presented to parliament.
With this assurance, Mr. Speaker, given by the right hon. the Prime Minister of this Dominion speaking for himself and for his colleagues, I do not see that the government of Manitoba can persist in any opposition to the measure.


Arthur Meighen: Is the government of
Manitoba persisting in opposition, may I ask?


Lomer Gouin: I have here a letter which was written by the Hon. Mr. Johnson, counsel for Manitoba and the power interests, dated June 18th, which reads as follows:
On the 31st ultimo you wrote a letter to Mayor S. J. Farmer of Winnipeg on this subject, and you very kindly sent me a copy thereof. Immediately on the return to Winnipeg of the delegation which waited upon you in Ottawa the Manitoba power interests conferred and discussed your letter with the greatest care.
We note that you desire to take no step which would permit of any exception being taken by the Ontario government to the repealing of the above act. We would, however, point out that the order in council passed by the province of Ontario in connection with the agreement entered into last November makes the absolute repeal of "The Lake of the Woods Regulation Act, 1921," a condition precedent to the coming into force of the agreement, and also to the empowering of the minister mentioned therein to finally negotiate and settle upon the conditions to be carried out; this attitude of Ontario will make impossible the carrying out of the conditions of the agreement prior to the proclamation of the repealing act.


Arthur Meighen: That letter was written on behalf of the Manitoba government as well as the power interests?


Lomer Gouin: For Manitoba and the power interests.


Arthur Meighen: Mr. Speaker, I am opposed to this bill. I have listened to the recital of the history of the legislation lead ing up to this bill from the lips of the Minister of Justice with much interest, and speaking in the main I take no exception so
far as it was a statement of facts, but a review of the question will surely, I believe, bring home to hon. members of this House the unwisdom of passing this legislation at this time.
Everyone understands that in the Lake of the Woods and in the waters flowing therein and thereout the Dominion has a very substantial and indeed a varied interest. We have an interest, first of all, because it is in international body of water. We liave an interest, secondly, because it is a navigable water and is navigated, and we have an interest thirdly, because the whole body of water is interprovincial, and in respect of the flow of the water the interests of two provinces are very great. We have an additional interest as yet, and perhaps permanently. We are the owners of the resources of Manitoba and responsible for their administration, and among the resources, and among the most valuable, are the water-powers constituted by the waters that flow out of the Lake of the Woods into lake Winnipeg. So from those four standpoints all of them important, the first and the last being the greatest, and the last being really in practical results the greatest of all-from those standpoints we have a very vital interest in the proper administration of all works affecting those waters. This was recognized years ago, and as a consequence there was referred, with the assent I believe of all concerned, to the International Joint Commission the question as to the best method of control. The International Joint Commission had the case presented by the United States and by Canada, because being an international stream the United States had an interest in it. They had an interest as well because of certain powers that are developed on the inflowing waters. The International Joint Commission after the fullest evidence, and after I believe a remarkably successful presentation of Canada's case made a report, and for some five or six years we have been endeavouring to cany out that report, endeavouring against great obstacles.
In the body of that report it was recommended that in respect of the exercise of certain powers a joint board be established half by Ontario and half by the Dominion, .he Dominion representing Manitoba as well is all Dominion rights, which board was to have ;ontrol of the levels of the lakes so long as .hose levels were maintained between two definite fixed heights. If thf levels got above or below, the jurisdiction of the board ceased and another board was recommended to be established to exercise jurisdiction-an inter-

Lake of the Woods Regulation
national board. Pursuant to the report, conferences were held between the governments of Manitoba, of the Dominion and of the province of Ontario, and the difficulties that intervened were smoothed away to the extent that the government of Ontario agreed with the government of Canada that concurrent bills would be introduced as government measures, and pressed as government measures, looking to the establishment of the joint board. The Dominion government carried out its part of the undertaking to the full. The measure was introduced, and against considerable opposition passed this House. It passed the Senate and became law. It was later introduced in the legislature of Ontario, and on a show of opposition was deliberately withdrawn by the Premier of Ontario.
I am quite within the fact when I say that the withdrawal of the bill without any attempt to put it through right at the close of the session was in no way a fulfilment of the undertaking that the Premier of Ontario made not only with ourselves but in the presence of representatives of Manitoba. We were then left in the position of having our own statute that was passed totally ineffective, and consequently having so far as statutory power was concerned no real authority, no leal statutory basis upon which to rest our control of those waters. It is true that up to that time or up to a time shortly before, a board had operated to control the waters in a measure without statutory powers. The board found itself helpless to achieve its ends and appealed to the government for statutory powers. In such a position of helplessness we found ourselves upon the collapse of the legislation in the legislature of Ontario. I thereupon introduced as Prime Minister a bill called "The Lake of the Woods Regulation Act," wherein it was provided that a board should be established and be given certain powers, namely, the powers recommended to be given the joint board by the International Joint Commission, this board to be established by the federal authorities.
The bill went further and provided that the works named in the recital read by the Minister of Justice, works built in the outlets of the Lake of the Woods at the junction of English river and Winnipeg river, and in the English river below the outlet of Lac Seul, should be declared works for the general advantage of Canada. Hon. members, of course, know that in the provisions of the British North America Act the parliament of Canada has power to declare any works to be
{Mr. Meighen.l
for the general advantage of the Dominion, works which presumably theretofore were works over which the provinces had legislative jurisdiction. That power on the part of the parliament of Canada is unrestrained, but in practice is exercised wherever the works are such as affect the people of more than one province, where the works are such that, in the judgment of parliament, federal legislative control is preferable to provincial control. Now, I desire to point out that in the understanding that was arrived at with the Prime Minister of Ontario and after hearing by the government on the part of the government of Manitoba, there was no provision for the declaring of these works to be for the general advantage of Canada, nor was there anything done or agreed to which in the least degree restrained the power or the right of the government or of parliament to so declare if it saw fit; the matter was entirely left without reference at all. In a word, nothing that was done was at all inconsistent with this being done, but the government did not recommend its being done until the time came when the government of Ontario failed to go through with its undertaking with the government of Canada.
In the legislation that was introduced, as the Minister of Justice has clearly pointed out, it was provided that this board be established by the federal government to do the work the joint board was to have done under the previous concurrent legislation. It was also provided that as soon as the province of Ontario should pass that concurrent legislation, then the provisions of this bill establishing the board should be repealable by order in council of this government. For the purpose of the repeal of all the provisions establishing the board and giving it its powers the government needs no legislation here; they may repeal it all by order in council. The portion that declared the works to be works for the general advantage of Canada was not repealable by order in council. This bill is to repeal that portion too. I want to say, supplementary to what the Minister of Justice said, that in the legislation now sought to be repealed, the Lake of the Woods Regulation Act, though a new board was to be appointed to do the work that it was originally intended and agreed should be done by a joint board under the concurrent legislation, it was stated at the time by myself that it was intended to appoint by the federal government the very same men who had acted before, half of them being appointed by the provincial government. This we actually set out to perform but the Ontario government failed to permit-such is my recollection-failed to

Lake of the Woods Regulation
permit its employees, to take part as members of that board, refused to allow them to do so. Last session, that is the year before this one, the legislation was put through in the province of Ontario. Why it was not done the session before I do not know to this day. It was done last session, a year ago. Then this government instead of repealing the bill establishing the board by order in council, as it might have done, came to parliament and said "We want to repeal the whole bill, and we want to restore the provincial jurisdiction," that is the provincial legislative jurisdiction over the works in this body of water. To that I made opposition at the time.
I urged then, as I urge now, that, these are works that ought to be declared to be works for the general advantage of Canada, because they really are works for the general advantage of Canada. We have declared over and over again a few miles of railway wholly within a province to be a work for the general advantage of Canada. Here are works as respects which the province of Manitoba, though the works are in Ontario, is perhaps even more interested than the latter province. The power assets that the flow of the water constitutes are, to the extent I think of about 80 per cent, in the province of Manitoba, and the future commercial development of Manitoba is dependent upon the just and equitable legislative administration of those works. I repeat what I said a year ago:	If there ever were works that
ought to be declared works for the general advantage of Canada, that are appropriate for such declaration, these are the very works. Nov/, if you declare works to be for the general advantage of Canada you may if you wish, and I am quite prepared we shall, agree to a joint board for their administration. Quite right and proper. So long as the joint board continues it may be all right, and it may not, I do not know; but the legislation establishing that board may be repealed at any time by the government of Ontario, and also there may be things done under it that will be unfair and unjust to one of the provinces concerned; and, consequently, the reservation of the legislative jurisdiction in this parliament should not be lightly thrown away.
It will be recalled-and this is most interesting at this time; it is most interesting, and indeed it is illuminating-that when this legislation was before the House last session the Prime Minister of this country, in an endeavour to put it through, referred to the conduct of the late government-my own conduct in particular-in introducing the Lake
of the Woods Regulation Bill, because of the failure to pass concurrent legislation in Ontario, as a piece of sharp practice. How interesting it is now to find that this government has agreed in writing to maintain that sharp practice on the statute books of Canada up to a certain time and after this bill passes, agreed that it is right and just to do it in the interest of the province of Manitoba. What an illuminating fact! The letter read by the Minister of Justice, signed by the Prime Minister of Canada, agrees with the province of Manitoba that this legislation that rests on sharp practice must be continued on our statute books even after the bill empowering its repeal passes, and until certain events transpire, to safeguard the interests of Manitoba. I do not refer to the language with any particular resentment; I leave hon. members to judge of it themselves and to say what they think of it. But would anyone want a more ample vindication of the need of the legislation when it passed, than the fact that this government- so anxious to denounce it in order to strike a blow at the late government-nevertheless finds itself compelled to agree in writing to its continuance as part of the law of Canada, a continuance for an indefinite time to come, until Ontario does certain things that Manitoba has enjoined in that agreement, and that this government has enjoined in this agreement with Ontario.
Now such is exactly the situation. What is the present precise position? The minister says we want to repeal the act, but we are putting in a clause that this repeal will not take effect until, later on, we declare by order in council that it shall, and our Prime Minister has given a letter to the government of Manitoba in which he says, we will not, by order in council, declare that this repeal shall take effect until Ontario does the various things recited in an agreement as binding upon Ontario to do. Manitoba states that the things Ontario is to do are concurrent with the repeal, and she will not agree to the repeal until Ontario does them, or until she by order of the Lieutenant Governor in Council, requests this repealing bill to be called into effect.
Manitoba stands to-day opposed to this legislation, and I am glad that Manitoba does oppose it. I only say this as respects the attitude of the Manitoba government: if the Manitoba government at this time looks far enough ahead, if it sees all round the question and the dangers involved in it, it will make its resistance to this legislation absolute and conditional on nothing at all. The only safeguard for the permanent preservation of the



Lake of the Woods Regulation
varying interests of the various parties in these great powers is the reservation of this section. With the section there there need be no difficulty and there need be no danger at all, because the parliament of Canada, which has concern for one as much as the other, has its legislative control intact; so that, as far as my advice will go-and it will go very far. I fear-I will say to the government of Manitoba: Maintain your resistance; do not make it conditional, as you do to-day; do not say that it will lapse when two or three things are done by the province of Ontario that may be done any time, but make it continuous and absolute; reserve this section as it is the safeguard of the whole situation. With this section reserved, it is quite right and proper that there should be joint administration of it, because by that joint administration, under a board, appointed half by one and half by the other, the various details, from the point of view of each, are sure to secure adequate presentation and discussion.
But I protest against a repeal of the legislation. This House is in no way bound to repeal this legislation, by no compunc-to of honour, certainly by no compunction of interest. Both honour and interest demand that we keep it just where it is, and I appeal to the Minister of Justice, who has not the same tortuous record in respect of this that his Prime Minister has, to look upon the matter from a long Canadian point of view. Does it not seem to him that it is going to be best in the long years to come that these works, some of them the most important, that could well be conceived from the general standpoint, continue to be works for the general advantage; and, therefore, continue to be works under the ultimate legislative control of parliament? Let the Minister of Justice ask himself the question, why should they not continue? Why should there be anything in Canada declared to be works for the general advantage of the country, if these works now declared to be so, are to be undeclared by this act? I cannot conceive of anything that more appropriately or usefully comes within the category to which the section of the British North America Act was intended to apply than the very works contemplated by this legislation. I hope, in the interests of Ontario and of Manitoba, that the Minister of Justice will come to my point of view, or that parliament will come to my point of view, and defeat the legislation.


Mr. E. J. McMURRAY (North Winnipeg) :: I find that I cannot support the Minister of

Justice in the bill he has introduced to-night. In fact, I find that I must strenuously and forcefully, and to the best of my ability, oppose the measure which he proposes to pass. I find myself, Sir, substantially in accord with the well-reasoned argument of the right hon. leader of the Opposition (Mr. Meighen). The history of the relationship of the Dominion government, of the province of Ontario, of Manitoba and of the United States, in connection with this inter-provincial and international body of water, really one body of water, the Lake of the Woods, the Winnipeg river and its tributary the English river, I shall not review at any length, but only incidentally, as that has been covered in previous debates in this House and well reviewed to-night by the right hon. leader of the Opposition. Suffice it to say that there are very large and important interests involved in this question, the interests of the province of Manitoba, and the interests of this Dominion; because this Dominion holds the resources that are involved in the Winnipeg river as trustees for the people of the province of Manitoba, and has all the duties and responsibilities that attach to a trustee.
What is the legislation that the hon. the Minister of Justice proposes to repeal? What is that bill? Does that bill contain anything more than the protection of the interests of this Dominion and of the interests of the people of the province of Manitoba? Now these interests are very large, particularly so far as this Dominion and the province of Manitoba are concerned. There is a waterpower valued altogether at some $60,000,000, as horse-power is generally sold. It is necessary to preserve those interests by regulating the flow of the water from that river, and this legislation centres around the regulation of the .flow of water. There are facts brought out in connection with the investigation which show that, by proper regulation, the amount of water flow, 220,000 horse-power aow so far as Manitoba is concerned, would ay better regulation be almost doubled, and would amount to 416,000 horse-power, having an added value to the province of Manitoba of some $20,000,000. The proper regulation of that flow would also make a gain to the province of Ontario of some $9,000,000. The bill that it is proposed to pass will withdraw an act that has protected the interests of this Dominion, and that is a matter to be considered very carefully in the interests of the Dominion itself.
Now, it appears that there was a possibility of some arrangement being effected between the province of Manitoba and the province of

Lake of the Woods Regulation
Ontario through the medium of, and by negotiation with, the Dominion government. The proposal made by the province of Manitoba was a reasonable and fair one. It simply said that they entered into an agreement, and that agreement made certain provisions. The representatives of Manitoba contend that this was a tentative agreement, that certain antecedent things should be done, and when they were done the province of Manitoba would agree. Those things have not been done. I may recite a portion of the agreement, and show what it is that the province of Manitoba demands to be completed before this bill becomes law. The provisions read:
1.	That the Lake of the Woods Control Board should immediately investigate and report to the three governments concerned the possibility of an alternative structure above Norman dam, or failing such being found under what procedure and auspices should the Norman dam be expropriated.
2.	The same board was to canvass the situation and make proper representations to Canada and Ontario as to the regulations necessary to make practically effective the unproclaimed concurrent legislation.
3.	Provision for storage rights on Lac Seul upon application by Manitoba interests.
Those were antecedent conditions. Those have not been fulfilled. This Dominion government says through its ministers: "These must now be subsequent." This seems really too bad when we were approaching what might be a settlement. I think, as the 'leader of the Opposition has urged, Manitoba is conceding a good deal. He urges Manitoba to maintain the last clause passed in the bill that it i3 now proposed to repeal. To me this seems a reasonable and proper thing. Surely these works are works for the general advantage of Canada. It is proposed in this bill that the Dominion government shall not proclaim the bill; that it shall not become law until the Dominion government is satisfied that the agreement entered into by the three governments or representatives of the three governments shall have been fully complied with. The interests of Ontario in this are more or less incidental. To Manitoba, her people and particularly the city of Winnipeg, this is absolutely vital. The city of Winnipeg has its industrial life in the wonderful water-powers of the Winnipeg river. Vast development can be made there in the future. There is or will be before this House a measure in connection with a hemp proposition. If that works through, it will use vast quantities of water-power, giving employment to large numbers of people, and producing great wealth to western Canada, in fact to Canada as a whole. Already vast quantities of horse-power for various projects are being taken from this
266i
same river. The industrial life of the city of Winnipeg, a large and populous city, depends upon this river. The ancient Romans worshipped the Tiber, but the Tiber was not as important to the great city of Rome as the Winnipeg river is to the city of Winnipeg and its inhabitants.
Why should Manitoba make the Dominion of Canada its trustee, or its guardian, or its mouthpiece, or its appraiser, to say that Ontario has complied with the agreement? Why should Manitoba appoint a substitute to act for it? Let Ontario comply fully with the conditions of the agreement, and complete the undertakings it has agreed to carry out to the satisfaction of Manitoba, which is greatly and vitally interested. When Manitoba says that it is satisfied and Ontario says that it is satisfied, it will be time for this bill to pass this House; then it will be time for this House to take the proper and necessary action to carry out the agreement between the three parties. There are always dangers of misunderstandings. There may be verbal misunderstandings, and always the interpretation of written documents brings about misunderstandings. What this Dominion government and its ministers may understand, Manitoba and the various interests that entered into the negotiation may have a different view of altogether. It is because this is so absolutely vital to Manitoba, because it is its very industrial life, and because it is only incidental to Ontario, that Manitoba can afford to take absolutely no chances upon this matter. I believe Manitoba has conceded altogether too much in consenting to the withdrawal of that legislation which says that these works are for the public interest of the Dominion. Manitoba has reason to view with suspicion the situation that exists in connection with the Winnipeg river, not to view with suspicion the action of this government, which I believe to be sincere and earnest and to have an absolute desire to carry out the contract. I maintain, however, that the government is mistaken in its attitude and view, and it is proceeding wrongly. Conditions that were antecedent should not be made subsequent.
But into this there enters another element to which neither of the previous speakers this evening has alluded. A private person has secured large interests upon those waters that feed down the Winnipeg river into Manitoba. This man has reaped a fortune out of the timber limits of Ontario bordering upon Manitoba. He has secured unusual and large rights from Ontario. His attitude in dealing with those, from the first time he appeared before

Lake of the Woods Regulation
public bodies in negotiations between this Dominion and the United States, was unsatisfactory. He secured a dam known as the Norman dam, and I understand, being secure in that position, he proposed to sell that to Manitoba at an exorbitant, unwarranted and extraordinarily high price. When this negotiation was going on and we had more or less secured control over the Norman dam, we find a remarkable thing; we find this man securing power rights at the White Dog rapids lower down on the Winnipeg river, and this again placed completely in his hands a control which we had more or less taken away from him. Later on we find him advancing from this position to secure large timber limits upon the English river, which is a large and majestic stream, much larger than the river which flows by this House. He is now in control of that water-power there. The people of Winnipeg fear this adventurer; they fear that he will not hesitate at all to reap to the full any advantage that he may have there. They have observed the relationship existing between him and Ontario; they have noticed the remarkable manner in which he secured these valuable timber limits, and I assure you, Mr. Speaker, they are very valuable. It is this man Backus that we particularly fear in Manitoba. He is not possessed, in our opinion, of the fine, jovial and genial qualities of the god Bacchus of old, but more of the horns and cloven hoofs, at least, as he is seen by the people of Manitoba situated at the head of the waters of the river that gives them their industrial life. It is because of -this uncertainty; because of the peculiar situation in connection with the refusal of the government of Ontario to pass that bill a year ago; because of the relationship of Backus to that government and the large interests he has -acquired on that river; because of the suspected disposition of Backus -it is because of all this that we -are opposed to this measure. I do not know the man at all, but I am speaking of his repute so far as his relationship to these water-powers on -the Winnipeg river is concerned.
Man naturally is selfish. As he increases in wealth the tendency is that he will become more selfish; and taking human nature as it is, not alleging that Backus is any better or worse than any of the rest of us, but simply taking human nature as we find it, it is a dangerous thing for the province of Manitoba and its people to have this man at its head waters to control the very life of the city of Winnipeg and its industrial interests. I find myself, therefore, strongly opposed to this bill. By the passing 
of it the Dominion is releasing control over rights to which it is entitled. By passing this bill it deprives the province of Manitoba of the protecton that it now enjoys and leaves it in -an unprotected position. The attitude taken by the province of Manitoba is reasonable in the extreme. They have only demanded that the bill should not become law until the agreement referred to by the Minister of Justice and myself, should be completed, not to the satisfaction of the Dominion alone, but to the satisfaction of Jie Dominion and of the people of Manitoba, to the satisfaction of those who signed the contract. I strongly oppose the bill.


Mr. A. B. HUDSON (South Winnipeg):: The subject matter of the -bill has been discussed in the House on a number of occa sions, and while I do not propose to go into the facts at any great length -there are some circumstances which I think might fairly be brought, to the attention of hon. members. At an early stage it was agreed by everybody, that is to say, by those representing the Dominion, the province of Ontario and the province of Manitoba, that the waters in question should be controlled and regulated. The question then arose as to how this should be accomplished and by whom, and as a result of negotiations which the Minister of Justice has referred to concurrent legislation was introduced in this parliament and in the legislature of Ontario. That concurrent legislation was to my mind defective in one very vital point: it created a board of four, two to be appointed by Ontario and two by the Dominion, nobody having a casting vote. That legislation was agreed to, not because it was satisfactory, but because it
11 p.m. was the best kind of agreement that could be got under the circumstances. But everyone will see that it opened the door to trouble in the future when it provided for no casting vote; for the moment the interests of Ontario conflicted with those of Manitoba there would be a deadlock and control would cease. However, it was agreed to, and, as has been stated, it was introduced into this parliament and the bi:l finally became law. So far as Ontario is concerned it failed, and upon its failure the Premier of Manitoba addressed to the then Prime Minister of Canada a letter which I shall read to the House. It is dated May 1", 1921, and was produced with a return in the session of 1921 when this Regulation Bill was first introduced. It is as follows:
Dear Mr. Meichen,
re Lake of the Woods Control Board I have a letter from Mr. Drury advising me that he was obliged to withdraw his bill in the Ontario

Lake of the Woods Regulation
legislature, and that he has since asked you to continue the present board which was established by concurrent orders in council.
As you are aware, the present board lacks the authority necessary to make its orders effective. Anyone interested in opposing its directions can do so with impunity.
For this reason, the Manitoba government asks your government to take the steps necessary to secure a proper and adequate control of the flow of the waters in question.
The steps which I wish to suggest are:-
First, that the Dominion government should at once acquire the Norman dam. The propriety of and the necessity for this action requires the support of no argument. It was suggested at the conference in your office on the 30th of January last and no objection was raised by anyone. The structure affects navigation and is necessary to carry out your international obligations. Every one must admit that it should not remain in private hands.
The second suggestion is, that parliament should be asked to declare at its present session, that works erected or to be erected in any of the waters in question are and shall be works for the general advantage of Canada under the authority of the British North America Act. Sec. 92 s.s. 10 paragraph (c).
As Mr. Drury wishes to have the present board continued, parliament might, at the same time, empower it to make regulations.
Once it is conceded that control is necessary and that this control should be exercised by a board, it follows as of course, that this board must be given adequate pwer to perform its duties.
It may be suggested that this second proposal involves an improper invasion of provincial rights. It does not appear so to me. The waters in question are navigable waters and the Dominion thereby has already very extensive powers in respect of same. The proposal is for the purpose of ensuring justice as between residents of different provinces in respect of an interprovincial stream. The waters of this stream are not the property of any one riparian owner, but are the common property of all on the banks of the river. The proposal is that there should be control. This does not affect the ownership of the water powers. The effort made to establish effective control by joint action having failed, the proposal now made is the only available method of achieving what was agreed upon. If any set of circumstances could justify action under the above section of the British North America Act, it must be justified here.
The interests of the Dominion as a whole, in the matter are considerable. As you know, it owns all of the water-powers within Manitoba. Some of these powers have been developed by lessees who have established their works in accordance with plans approved of by your government officers and on the assumption that there was to be a regulated flow of the waters in question. Many millions of dollars have been spent in these developments and on this basis. The value of the undeveloped power on the river within Manitoba is also very great. Your government has also spent large sums of money in making most complete and accurate surveys of the river and its potentialities. Under these circumstances, I submit the Dominion cannot stand by and see jeopardized, not only its own subtantial interests but the interests of those whose duty it is to protect.
Any delay will only create new difficulties. For example, only to-day I was informed that Mr. Backus, who owns the Norman dam and who also has an arrangement with Kenora as to the municipal power plant there, has published a notice in the Kenora paper of an intended application to the Department of Public Works for leave to make substantial alterations
in the Kenora plant. These alterations may seriously affect the water power interests as well as those interested in navigation. This same Mr. Backus has also acquired from the Ontario government some Tight to erect works at White Dog Falls, He may be proceeding at once with these works and this might also affect the flow of the water.
For the reasons above mentioned, I would urge you most strongly that immediate action should be taken along the lines above indicated.
In closing, I might explain that the interest of the Manitoba government in this matter arises, first because of its duty to care for the interests of its citizens, more than one-half of whom are dependent on the development on the Winnipeg river for electrical power, and in the second place, because the Manitoba government is a user of a large quantity of power developed by the city of Winnipeg on the Winnipeg river and turned over to the government at Winnipeg for transmission to Portage la Prairie and other points in the province.
Following that letter the legislation was introduced which is called the Regulation Act, a section of which it is now proposed to repeal-a section which has been the chief cause of trouble and disappointment since that time. I think a great deal of trouble arises from a misconception of the nature of this general advantage clause. The general advantage clause does not transfer the property in the powers; it simply gives the Dominion the right to pass regulative legislation. Legislation of this kind is not new. As the right hon. leader of the Opposition (Mr. Meighen) has said, we have had legislation of this kind in respect to railways. But it is not confined to railways; it is a very common provision included in power charters. When the Niagara powers were being developed, this parliament passed acts incorporating the Toronto and Niagara Power Company, the Ontario Power Company and the Hamilton and Erie Power Company. In the charters of these three companies this general advantage clause was inserted. In other words, the powers owned and operated by companies at Niagara are operated under Dominion legislation declaring them to be for the general advantage of Canada. Now, one of these bills, the Toronto, and Niagara Power bill, was fully discussed in this House; the House divided on the question, and many of the gentlemen now sitting on this side voted for that bill. As I have said, the general advantage clause does not take away any property rights; it simply gives the power to regulate. Let me illustrate the distinction in this way: under the British North America Act the Dominion is given authority to deal with fisheries and fishing, but the provinces still own the fish. The Dominion may make regulations concerning the times when and the manner in which the fish may be caught, but the province may lease the fishing rights,

Lake oj the Woods Regulation
and that illustrates the difference between the taking away of property rights and the exercising of the power of regulation.
There is a much more opposite case in the situation in Switzerland. There they have a number of streams that are of very great value for power purposes. A few years ago, when hydro-electric development began to become important, there was a great demand throughout that country that the federal government should take over all these power sites and develop them as federal enterprises. But as against this view there were a large number of people who were very much concerned about the maintenance of state rights-the states there have much larger jurisdictions than our provinces have. So they fought the proposal, and eventually a compromise was arrived at by which the federal government was given the power to regulate much as we have the power to regulate under the present act. If we repeal this act now, it seems to me it will not be long before parliament will be called upon to take similar action in other cases. It is unfortunate that no satisfactory arrangement has been concluded in the matter. I think that in the end there must be some final voice, and that voice should be that of the Dominion. For the reasons expressed by the hon. member for North Winnipeg (Mr. McMurray) and the right hon. leader of the Opposition, I think parliament would make a great mistake, having regard to the interests of Canada as a whole, to repeal this legislation.


Hon. CHARLES STEWART (Minister of the Interior):: Mr. Speaker, it would be needless for me to enter into a rehearsal of what has been so well said by many of the previous speakers. It is sufficient to say that all these things would work out very acceptably if you could get the various parties to agree, but so far that condition has not been attained. I want to point out some of the difficulties that are in the way of a settlement of this dispute. In the first place, when this government took office we found, as has been pointed out by the right hon. leader of the Opposition (Mr. Meighen) and the other two hon. gentlemen who have just spoken, that there hail been an attempt to bring about joint legislation, and that an agreement in the matter had been entered into by the governments of Ontario and Manitoba and the federal government. Now, if the federal government have an interest in one province more than in another, it must of necessity be in the province of Manitoba. The Dominion are trustees for the water-powers of that province, powers

which are of immense advantage to the people there, who will eventually be its ownei'3. But what is the situation? We find that the governments of Manitoba and Ontario and the federal government agreed to the adoption of joint legislation for the control of the waters of the Lake of the Woods. We find also that a private individual has secured important rights from Manitoba and that he is a very potent factor in any attempt to make an adjustment of this matter. The federal parliament passed the legislation. Premier Drury on his part undertook to put through the legislation on the part of the province, and we must take his word when he says he was unable at first to do so. Subsequently, however, he did so. Both those acts are in existence to-day. The bill passed by the legislature of Ontario is contingent upon certain things being put into effect by proclamation of the Governor in Council; until that is done these enactments do not come into effect. The hon. member for North Winnipeg (Mr. McMurray) has pointed out a weakness in the arrangement, namely, that the board consists of four members and that there is likely to be a deadlock. That i* true, but that is what was agreed upon. Subsequent to the passing of the act by this parliament representations were made to this government that the Ontario government had failed to pass the legislation agreed upon, and therefore some other action became necessary. The parliament of Canada undertook to pass and did pass the act that is now objected to so strenuously by the government of Ontario, what is known as the general advantage clause legislation. I would point out that no one has mentioned the fact that the Ontario government strenuously opposed that legislation. As was well pointed out by my hon. friend the Minister of Justice, the first paragraph of the agreement, and of that I shall speak later, provides that this legislation must be repealed, and this has been the rock upon which attempts on the part of this government to settle this question have broken on every occasion.


Edward James McMurray: Who thought it was
necessary that that should be done?


Charles A. Stewart: Premier
Drury.


Edward James McMurray: The province of Ontario?


Charles A. Stewart: Yes, absolutely. I thought I had made that dear. At the last session of this parliament we did attempt to repeal that particular clause, as

Lake of the Woods Regulation
that appeared to be the way leading to a final settlement of this question. I would just like to state in connection with the argument of my hon. friend that he does not question Ontario's right to the ownership of the powers in question, but that the regulation of the power would be better in the hands of the federal government. I have not had a legal training and I do not intend to enter into an argument on that question. Suffice it for me to say to the committee that Premier Drury claims to have been advised, whether rightly or wrongly, that this is an infringement on provincial rights, and he intends to fight it to the limit and carry the case to the Privy Council. He may not succeed, but he will certainly succeed in doing one thing-he will prevent action being taken for a settlement of this question.


Mr. BAXTER:: He will not have much to say about it.


Charles A. Stewart: I do not pretend to have a legal training and I cannot say whether he will succeed or not, but I do say that in the meantime it will prevent action by this government for an adjustment of this question even if we have the right.


Mr. STEVENS:: So long as the general advantage clause remains, how can he prevent action in a matter that is declared to be for the general advantage of Canada?


Charles A. Stewart: By taking
action against the government or against any attempt at a settlement of this question.


Henry Herbert Stevens: How will he take such
action?


Charles A. Stewart: He is at
liberty to submit it to the courts for decision and carry the case to the Privy Council.


Edward James McMurray: Is this government
bringing in this bill because pressure or intimidation is being brought to bear by the Ontario government?


Charles A. Stewart: I thought I had made myself clear when I said that my sole desire, speaking for myself personally, because I have been the means of bringing these people together on two or three occasions, was to get a settlement of this question. The representatives of the province of Manitoba very recently signed an agreement that they were prepared to accept the legislation that exists now, notwithstanding what my hon. friend has said. They were prepared to accept the board for the regulation of the waters of Lac Seul. But the rock on which we split is
that the general advantage clause legislation be repealed.


Edward James McMurray: I beg my hon.. friend's pardon. May I put this question to him?


Charles A. Stewart: Let me read the letter sent by Mr. Johnston on behalf of the power interests and the government of Manitoba. It has been read once before tonight, but I will read it in part again. It is addressed to the Right Hon. Mr. Mackenzie King, Prime Minister, Ottawa, and reads:
On the 31st ultimo you wrote a letter to Mayor S. J. Farmer, of Winnipeg, on this subject, and you very kindly sent me a copy thereof. Immediately on the return to Winnipeg of the delegation which waited upon you in Ottawa the Manitoba power interests conferred and discussed your letter with the greatest care.
We note that you desire to take no step which would permit of any exception being taken by the Ontario government to the repealing of the above act.


Edward James McMurray: Precedent?


Charles A. Stewart: I am not
denying that. I am simply pointing out to my hon. friend that there is no desire on the part of the government of Manitoba as was intimated by him and the other hon. member from Winnipeg, that this legislation should not be passed. It is a question of when. That is what I wanted to make clear.


Edward James McMurray: I admit that, so far
as the regulating clauses are concerned.


Charles A. Stewart: I am answering the contention of my hon, friends that this legislation should stand irrespective of what may be done. They contend it would be a mistake to repeal the legislation, and in effect are sustaining the position of my right hon. friend the leader of the Opposition. I am pointing out that the Manitoba government and the power interests do not expect that. They are content with the legislation, but they say this one thing: We do not want this legislation repealed until the provisions go into effect by order in council.


Edward James McMurray: Why does this government want it done before those provisions are complied with? This government was a party to the contract and should support the contract in its entirety.


Charles A. Stewart: I am not
particular except that we desire to bring about a settlement of this vexed question.


Edward James McMurray: But you are introducing the bill, bringing the matter up here.


Charles A. Stewart: I am sorry
my hon. friend takes this attitude. The bill was brought in here last year. We failed to

Lake of the Woods Regulation
reach an agreement, and that was largely the reason why we failed to reach an agreement. So far as the government of Canada is concerned we are quite prepared to protect the interests of Manitoba. Not only that, but we secured at the conference the signature of the Ontario government to cancel the agreement entered into with the Sioux Lookout for water power that would interfere with the level of Lac Seul and the water supply for the city of Winnipeg. I do not want to be understood as opposing any interest of Manitoba. I want to be understood rather as making an honest endeavour to bring the two conflicting parties together without litigation, if at all possible, and settle this question. If I thought for a single moment that any interest of Manitoba was being jeopardized, I certainly as trustee for the natural resources of Manitoba would stand up for Manitoba's interests as against Ontario's. My sole desire is to bring about a settlement of this question. But how are you going to settle it if certain gentlemen say:	We will
not agree to the repeal of the general advantage clause legislation under any consideration. It is true that the Ontario government representatives may fc>e changed on tho 25 th.	.


Mr. HALBERT:: No chance. They will
be right on the job.


Charles A. Stewart: But we
have to meet the situation as it exists to-day. If they maintain that position then my hon. friends will say "Well, let the Dominion government step in. Let them expropriate the dam held by Mr. Backus, let them fight Mr. Backus and the Ontario government." I doubt very much if that will get us very far.


Edward James McMurray: I do not wish to be too troublesome in my interrogations, but why be in such a hurry to put this measure through? Why not make Ontario complete her arrangement? Why should the Dominion government be so insistent in the matter?


Charles A. Stewart: The Dominion government have never been insistent. We have called these conferences at the request of the representatives of Manitoba.


Edward James McMurray: Then will my hon. friend agree to allow the bill to stand if the government is not insistent?


Charles A. Stewart: Let me point out to my hon. friend that this is one of the rocks which cause difficulty. If it is out of the way we can make progress. He has

heard the letter read the letter ridiculed by my right hon. friend which points out that we are prepared now to maintain this legislation until an agreement is entered into and which will allow us to bring Manitoba and Ontario together. It is in the interest of all parties that the clause which is offensive to Ontario be removed as a bone of contention in the negotiations. Now, we do not say for a single moment that we are pledging ourselves that the legislation shall not go into effect until the agreement in its entirety is accepted by both governments and by the power interest concerned. Let me again say, that acting for this government, as I have done on one or two occasions, I have no other interest in the world to serve except to try to get a settlement of this very vexed question, and to bring together the parties concerned if it is humanly possible. I admit the weakness that four on a board may find the day when they will come to a deadlock, but I wish to point out that that is agreed to by legislation, that that is agreed to by this letter.


Edward James McMurray: Why not carry out this agreement?


Charles A. Stewart: If Ontario and Manitoba persist in their course; if one says on the one hand "You must remove what we consider an infringement upon provincial rights before we will move" and the other province says on their part "If you remove that we will not budge" then we are at a deadlock, and there is just one other thing for us to do: Proceed on the legislation declaring the works to be for the general advantage of Canada, and fight Mr. Backus and fight the Ontario government. Now, that is the alternative. On the other hand we have tried to be the friendly arbiter. We have tried to keep in line the interest of all parties concerned. If I thought otherwise I would not be advocating this method of settling this difficult question. And it is important that this question be settled. It is important, very important, in the interest of Manitoba that it be settled. Not only that. We cannot carry out our international agreement to regulate the levels of the Lake of the Woods until we get control of the Norman dam; and in the agreement the Ontario government has undertaken to adopt measures, by one method or another, to secure control of that dam which it is so necessary for the board to have before they will have the right to regulate the international waters at that point. That is all. I am not expressing an opinion as to the validity of the legislation.

Lake oj the Woods Regulation
I may frankly state that my experience in the provincial arena has made me rather anxious about provincial rights. Probably I view this matter from a different standpoint to some of my hon. friends who are sitting around me. However, I want to dismiss that altogether and try to find common ground for a settlement of this very vexed question with sufficient safeguards around it to meet the vews of all parties concerned.


Mr. HOEY:: What objection would the minister have to not bringing this legislation into force until the two governments entered into an agreement and ask that it be done?


Charles A. Stewart: The letter my right hon. friend read points out that the existing legislation only comes into effect by proclamation.


Robert Alexander Hoey: But not at the request of the provinces concerned.


Charles A. Stewart: At any rate the Prime Minister has placed this government on record as being agreeable to that method of dealing with this question.
Hon. H. H. STEVENS (Vancouver Centre)
I hesitate very much to have anything to say in this matter, but knowing the very deep interest that my right hon. leader has taken and the very important part he has played in it from its inception, I feel that I should make one more appeal to the Minister of Justice, and to state as briefly as I can a few reasons why I think this legislation should be laid over. In the first place I should like to say this: If the House wanted an argument for the staying of this legislation I think they would find it in the remarks of the Minister of the Interior. I am not saying that with any desire to reflect on him, but his presentation of the problem-indicating the complexity of it, the differences between these two provincial governments and the somewhat stubborn attitude of the Premier of Ontario-would demonstrate, to my mind at least, that it was desirable for this government to retain control of the situation until something like a better spirit of agreement obtains between the two governments. For instance, my hon. friend said a moment ago that he was quite prepared to protect the interests of Manitoba, which are admittedly very vital interests to that province; I think the House, perhaps, ought to give very careful thought to that-Manitoba's vital interests. My hon. friend says that he is quite prepared to protect Manitoba's interests, but how can he, or this government, protect Manitoba's interests with any effect by the
repeal of this clause which was passed by this parliament after previously trying without it to compose the situation and finding on the authority of their experts and advisers that the situation was untenable as far as administration is concerned? Let me repeat that question, perhaps I did not make it very clear: In the early stages of this dispute this government endeavoured to compose the differences between the two provinces and on the report of their advisers and experts, they found they could not do so, because they could not make anything they did effective; and in order to make their decisions effective they had to pass this legislation declaring the works to be works for the general advantage of Canada. My hon. friend now says that in order to get together the two provinces that are estranged we should withdraw from the legislation that was found very necessary two years ago in order to make the federal influence effective.


Charles A. Stewart: Does my
hon. friend know that any advance has been made since the passing of that legislation?


Henry Herbert Stevens: Yes, I would say this is clear to me-and I speak with some hesitancy and perhaps with a certain apology to the House for trespassing-it is clear to me that a very distinct advance was made in this agreement which was made last fall. My hon. friend said it was a few days ago but it was in November if I am correct, and the minister will tell me if I am wrong-it was in November, eight months ago, that this agreement was entered into, and yet Ontario has failed to live up to its terms, and we find Manitoba coming back now feeling actually alarmed that the agreement into which it had entered was not only not being observed but there was not even an attempt to observe it in all its terms. Now, that is a condition which, to my mind, not only justifies this government but makes it imperative for them to retain control of. the situation until that condition is thoroughly cleared up. Now, another point-


Charles A. Stewart: I do not wish to interrupt my hon. friend-my object is to have the situation clarified and put clearly before the House-but the Minister of Justice read the first paragraph of that agreement, and I thought I made it clear to the committee that that was the rock which caused all the difficulty. With that paragraph in, we were able to get that agreement.


Henry Herbert Stevens: I wish to speak on that later on. My hon. friend points out that the two governments had been working on this

Lake oj the Woods Regulation
thing and had more or less failed, and he suggests virtually, though he does not say it in so many words, that the control of the situatioi should be turned over to Ontario. In other words, coming to my hon. friend's last question, the province of Ontario all through these negotiations from 1920-I remember it from the first discussion in the House-down to a week or two ago have taken the stand that they will do nothing until this clause is repealed.


Charles A. Stewart: Yes that is right.


Henry Herbert Stevens: He says he wants to stand between the two governments, but he says to Manitoba, "No matter what your rights may be or how much you are injured, no matter what attitude Ontario may take towards you, we insist that you agree to Ontario's stand in this regard." That is not a reasonable position. My idea of the situation is that the Canadian government ought to take a very distinct stand, and say; No we will remain in control of the situation as an independent party.


Lomer Gouin: That is what we do.


Henry Herbert Stevens: But you are giving that away virtually.


Lomer Gouin: No.


Henry Herbert Stevens: You are saying, "We are retaining the power to bring this into operi-tion by order in council." Let me ask the hon. member-and this is really my appeal to him-if the condition of things is such that it is not necessary to pass this act now, in the final form, why not let it wait un.-these two goverments can compose their differences?	[DOT]


Charles A. Stewart: I am sorry I did not make that clear. All this legislation between the two governments and what we purpose now is contingent upon certain things being done, and when they are done the legislation goes into effect. If the bill passes this House to-night, and th>
Governor in Council never makes the declaration, it will never come into effect.


Henry Herbert Stevens: Why take the power?


Charles A. Stewart: Simply tc. get a vexed question settled.


Henry Herbert Stevens: I do not think the minister will settle it, because he tells us that Ontario will consent to nothing until this proclamation is made, or the act repealed. Manitoba comes along and says, "We are alarmed at having our interests subject to the caprice of On-
tario, and we must realize that once this thing is out of the way, if there is a dispute between the two, Ontario is in control of the situation, and naturally will legislate in its own interests, and we cannot expect it to do otherwise."


Charles A. Stewart: How will
Ontario be in control until this government takes the final step and asks for the proclamation of the repeal of this act?


Henry Herbert Stevens: I admit that.


Charles A. Stewart: Wall my hon. friend not agree that it puts this government as an arbitrator, if you will-because that is the position they are to occupy-in a very much better position to settle this question than if the act remains on the statute book and the government has no power to touch it till next session?


Henry Herbert Stevens: There is a very clear
answer to that in the correspondence brought out to-night. If the Ontario government had kept faith with the Manitoba government, I would say your position was sound.


Charles A. Stewart: I do not
want to be in. the position of a pleader for Ontario, because I am not; but that is the contention of Manitoba. There may have been things they could have done more rapidly, we do know they have been moving all the time, but have not succeeded in completing the arrangements provided for.


Henry Herbert Stevens: I simply say that in the absence of my leader, who was called out of the House, realizing his interest in the problem, and the interest of many others who will not have an opportunity to be heard, I would ask the Minister of Justice not to press this legislation at the present time.


James Shaver Woodsworth: As one of the representatives of
Winnipeg, I should like to join in urging that this legislation should not be pressed. The Minister of the Interior (Mr. Stewart) seems to be very anxious to settle the question that, from the standpoint of Manitoba, there is danger of imperilling some of Manitoba'3 rights. It is not necessary for me to go into the legal and historical aspects which have been so fully discussed by the other members for Winnipeg and by the leader of the Opposition. There are, however, just a few points I should like to emphasize. Coming from Manitoba, we have almost to appeal to the generosity of the Dominion government, because we have no legal rights ourselves ;n this matter, and, as has been recognized, tha Dominion government acts as the trustee;
TTTXTTj1 on 1ftOO	4177
Lake of the Woods Regulation_______________
and hence, if possible, greater care should be exercised because of the responsibility which the Dominion government carries in this regard. The present situation is that since 1921 Manitoba's interests are safeguarded, because as has been suggested, all the works in this area are declared to be for the general advantage of Canada. So that, whatever may take place in the future, we feel that at the present moment we are comparatively safe and stand on solid ground. I think I must agree that Manitoba has been willing to concede a great deal, and has consented that under certain conditions this legislation should be repealed. The memorandum on the agreement which was made was read by the hon. member for North Winnipeg (Mr. McMurray). I should like to point out that these clauses are very general indeed. The first clause says-
That the Lake of the Woods Control Board should immediately investigate and report to the three governments concerned the possibility of an alternative structure above the Norman dam, or fading such being found, under what procedure and auspices should the Norman dam be expropriated.
This is a general clause, involving a very careful examination and report by engineers and so on, and it is not at all clear that when these reports come in they can be readily agreed upon by the parties concerned. It is the same with the other clauses of the agreement. No details whatever are given but the understanding is that certain conditions must be fulfilled precedent to the repeal of the Lake of the Woods Regulation Act. I take it, however, that the governments have come very near to a settlement of the matter by Manitoba conceding almost everything. Manitoba, as I understand it, is desirous that the repeal bill should be so amended as to provide that it shall come into force on proclamation to be made only after Ontario and Manitoba respectfully so request by order in council. That is simply that, with a view to the large number of details that have to be decided that are not given at all in this general agreement, Manitoba ought to be satisfied before the proclamation should be made. That, it seems to me, is not an unreasonable request, and if there is anything at all in legal safeguards, Manitoba is right in claiming that these legal safeguards should be left in, until such times as there is full agreement. Let me turn, for one moment, to the practical side of the question. It cannot, be too strongly emphasized that the industrial life of Winnipeg is bound up with the power on the Winnipeg river. We need the light and power, and even the heat, that we get from the power generated there. We need it in our domestic
economies as well as in our industrial concerns. It is very very important to the life of that City of the Plains that we should have this water-power safely guarded. This is at present imperilled. A private corporation could put the city in a very serious position, indeed, in the course of twenty-four hours. Private corporations would be in a position to cut us off entirely from our heat, light and power. The power that they might exercise by a very little change in the water levels could be illustrated by the case of the power at Pelican rapids. Let me read a paragraph or so from a memorandum with regard to that:
In 1922 the town of Sioux Lookout was promised a lease by the Ontario government of the Pelican rapids power site on Lac Seul.
This power site is so situated that it can only be of commercial value provided that the water level on Lac Seul is maintained at its normal height, hence the raising of the lake level for regulation and storage purposes destroys Pelican rapids as a power site.
The promise of this lease was immediately recognized by Manitoba as a serious menace to the scheme of regulation recommended for adoption, as it sacrificed the development of 160,000 horse-power on the English and Winnipeg rivers for a possible 3,000 horsepower at Pelican rapids. A net loss of 157,000 horsepower to the two provinces.
That is just an illustration of what might happen in a number of places if rights to vater-powers are not carefully safeguarded. I would urge that the river is a continuous thing, physically continuous, and that cannot be, as it were, chopped off by arbitrary political boundaries. If the levels were raised hundreds of miles away up the stream, it might produce serious results. It is absurd to say that action in one section of the country-in Ontario-should determine the usefulness of waterpower in which Ontario is not nearly as much interested as is Manitoba. Just to show the absurdity of the situation, if Manitoba should seek to retaliate, I suppose Manitoba could readily construct a dam which would flood Ontario and destroy the powers up in that part of the river. No one would suggest that Manitoba is likely to build, as it were, a spite fence, or anything of the kind. I give that merely is an illustration of how absurd it is to try to work out this problem strictly along the lines of provincial boundaries. Further it would seem as if it would be very difficult in the case of water-powers to distinguish sharply between ownership and control. I submit this with some diffidence, because I know there is a legal distinction made on these lines, and it has already been suggested tonight that the ownership might lie with the province and the control with the Dominion. That might be true in the case of fisheries; it might be

Lake oj the Woods Regulation
true in other instances; but in the case of water-powers it would be sometimes difficult to apply the distinction, because control and ownership are inextricably bound up with one another. Unless you give a certain measure of control, ownership becomes absolutely valueless because the power ceases. I would urge that we must get away from a narrow interpretation which stresses provincial rights, provincial ownership of natural resources, and we must in place of that adopt a rather broader view, basing our action upon general principles, as indicated in the phrase in the legislation as it now stands, that is that we should have regard to the general advantage of Canada. I, therefore, urge that this safeguard for the people of the city of Winnipeg and the province of Manitoba should not be taken away until Winnipeg and Manitoba, as well as Ontario, are satisfied.


Mr. ROBERT FORKE (Brandon):: Mr. Speaker, I wish to say only a few words in connection with this matter, because I want to place myself on record in regard to the situation. I have tried to follow the discussion this evening as carefully as I possibly can. I realize that this is a question of very great importance, at any rate to Manitoba. I can hardly offer a solution. I can see that the representatives of Ontario are pretty much worked up over the matter, although I do not see that they have a great deal to lose in the situation. It seems to me that as regards Ontario, this is largely a matter of claiming a right that is of no particular advantage, so far as I can see. Manitoba, on the other hand, is desperately interested in this situation. By certain manipulations of the water-powers, the power could to a very large extent be taken away from Winnipeg, and this in reality would be a tragedy and a disaster. Looking at the matter dispassionately and from the outside, wanting to do justice to both parties, I cannot understand why the government should be so anxious to repeal this act at the present time. It seems to me that Ontario and Manitoba ought to be able to come together in some way, and to arrive at some arrangement on this matter before this bill is repealed.


Robert Henry Halbert: Why was the late government so anxious to shove it through?


Robert Forke: I suppose that was done to save Manitoba at that time. I cannot begin to argue the question, because I am not aware of all the conditions, but I know the situation. I know the position the city of Winnipeg is in, and I know if these water-powers are hampered or interfered with, a disaster and a

tragedy will be caused to the city of Winnipeg. There is no question about that. I am perfectly sure my hon. friends from Ontario do not wish to do any harm or injury to the city of Winnipeg, nor do I wish to do any injury to the rights and privileges of Ontario. What we want is justice and something to the advantage of both provinces in this matter.
I would venture to make another statement, and I do so with a good deal of hesitation because I am no authority. But when I look at a matter of such importance, affecting two provinces, I question very much, if I were in the position of Manitoba, if I would ever have agreed to have this privilege taken away from the Dominion of Canada proclaiming this to be for the general advantage of Canada. Manitoba, perhaps, went too far when she agreed to that. She having, however, agreed to it, the only solution I can see would be for the two governments to try to make an agreement, and then if this legislation is passed, as it may be, to arrange that it would come into force only upon a requisition from the two provinces concerned. 'I do not think there should be any heat over this matter. It is a matter of trying to do justice, what is right to both provinces. If this is only a matter of provincial rights, it is very foolish to get excited over a theory when, in actual practice, some solution of the question can be reached in a sensible and just manner.


John Babington Macaulay Baxter: Mr. Speaker, I do not want to add very much to this dis cussion, especially at this time; but the matter is being treated or was treated last year as if it were practically entirely a question of provincial rights. It does not seem to me that it is that at all. As I understand it, the greater part if not the whole of the waters involved fall under the operation of the joint commission which has been established between Canada and the United States for the regulation of the waterflow. That means that this country, by asking the intervention of the Mother Country in the making of a treaty, has already treated this water as something that cannot pertain in its regulation to any one province, by the very fact that the treaty deals with it; and we are bound by our legislation to give effect to all treaties that are made on our behalf or which touch our interest. The whole point in introducing this bill seems to be not to get at the earlier sections of the legislation but at the last one, the vital one, the one which makes the work one for the general advantage of Canada. As has been pointed cut repeatedly, even if the government cf

Lake o/ the Woods Regulation
Ontario had fulfilled its undertaking and the Dominion government had done the same, and there had been no mention, as there was none in that agreement, of the work being for the general advantage of Canada, yet from the standpoint of the necessity for giving to the commissioners of the international waters the power over these waters we shouid have had to declare it to be a work for the general advantage of Canada. That would not alter one iota of the property in the dams or the waters or anything else. Wherever the property is, in whatever province it may be, it would still remain, and all that would be implied would be that no advantage could be taken by any provincial legislature with regard to the use or the withholding from use cf that water. The rights of all parties would be preserved subject only to the supreme right which ought to rest in this parliament to prevent injury being done in the case of the exercise of provincial rights. It seems to me that the case is absolutely clear against the repeal of the former legislation if that repeal is to involve the last section which makes this declaration. If the Minister of Justice (Sir Lomer Gouin) wants to repeal only the other sections, I do not see that any harm will be done. But there should be left on the statutes a declaration that will do justice to all provinces and safeguard all interests, a declaration that the legislative authority of Canada will embrace this and all works connected with it.


Hon.   S@: The leader of the Opposition (Mr. Meighen) told us in the course of his remarks that if there were works that should be declared for the general advantage of Canada under subsection 10 of section 92 of the British North America Act, these were the works. In 1920, when an agreement was reached between the Dominion government and the government of Ontario, that Section 92 was in force, and these works were in existence. The leader of the Opposition was then in power. Why did he not at that time declare that such works were for the general advantage of Canada? Why did he not make any declaration to that effect when the two governments came to the agreement that concurrent legislation should be passed by the legislature of Ontario and the Dominion government? Why was there never any mention about any such declaration when the two bills were introduced concurrently in the Ontario legislature and in the Dominion parliament? The reason is this: The province of Ontario has always protested against such a declaration being made by the parliament of
Canada. That province has always contended, as it still contends, that these works are provincial works, that the powers are provincial powers, and that the Dominion government has no right to declare them for the general advantage of Canada. There was no desire to precipitate any litigation with the province of Ontario; the object was to help the province of Manitoba to deal with Ontario in regard to Lac Seul, where there are powers that may be developed for the advantage of the province of Manitoba. There was another reason. The Dominion government of that day and the provincial governments interested were desirous of obtaining a treaty with the government of the United States in regard to the Lake of the Woods. This could be done only if an agreement could be arrived at between the government of Ontario and the Dominion government. It was therefore for that reason that the understanding was reached. In 1921, when the leader of the government was informed that the executive of Ontario could not pass, at that session of the legislature, the legislation pro-
12 m. mised, he introduced the bill which is now chapter 38. On that occasion he addressed the following remarks to the House. I quote from Hansard of May 26, of that year, at page 3903:
The previous bill, already passed, was intended to be concurrent with legislation by the province of Ontario which did not go through, so our former bill is valueless. The present measure is designed to hold the situation m the meantime, until, if it should come to pass the Ontario legislature enacts the concurrent legislation contemplated.
Ontario since then did pass concurrent legislation, but in spite of that the leader of the Opposition says that we should retain that proviso which we find in section 10, of chapter 38. If it had not been for that proviso, we should not have had the quarrel which has given rise to so much discussion for nearly two years. It was to arrive at a settlement of that dispute that the three governments met and entered into an agreement under which they expressed themselves as willing that chapter 38 which we are now discussing should be repealed. It is said that this can only be done when the conditions set forth in that agreement shall have been complied with. I do not see anything of that kind in the agreement, but supposing it is so and even if the conditions were Complied with, the right hon. leader of the Opposition says that for no consideration, under no circumstances, would Manitoba consent to the repeal of that declaration that these works are for the general advantage of Canada. I think the House should trust the

Lake of the Woods Regulation
government to the extent of believing that we will not proclaim this statute before making sure that all the conditions of the agreement of November, 1922, have been complied with. If we take the attitude that we should wait until everything is perfect and complete, what would Manitoba obtain from Ontario? Manitoba has already presented to Ontario a request that they be given the right to store waters in Lac Seul. Ontario says, "We are prepared to enter into an arrangement with you provided that the statute of 1921 is repealed." If we do not repeal that proviso; if we proceed * to exercise control through the board over the dam at the Lake of the Woods and all the other works on English river and the Winnipeg river, we shall render ourselves liable to action any day, next month or next year, by the government of Ontario. We are asked, how could Ontario proceed? There are many methods of procedure; there have been cases in the past where similar questions have been taken as far as the Privy Council. If this bill does not become law, the province to suffer most will be Manitoba, because they will never get from the province of Ontario the rights for which they are asking.
We are told that we should not repeal this proviso because such action might give rise to trouble in the future. Well, we have had no trouble in the past, Mr. Speaker, when we had a board appointed under order in council only by the province of Ontario and by the Dominion government. It was not because the commissioners were quarrelling that the legislation was passed in 1921; it was simply to give them the necessary authority to control the waters of the Lake of the Woods and of the rivers mentioned. It cannot be said that the commission is of no value because it consists of four members and that they may not always agree. We can at any time make a change so far as the commission is concerned; we can provide that the quorum shall consist of three members; that the chairman shall have a double vote, and so on. That is only a question of detail. If this bill becomes law and it is found next year or in subsequent years that the board is not operating in the interests of the provinces of Manitoba and of Ontario and of Canada as a whole, we can at any time again declare these works for the general advantage of Canada. Mr. Speaker, in the interests of the country; for the good of the province of Manitoba; for the protection of those who have invested millions in these powers on the Winnipeg river, I say we should pass this 'legislation. We are told by the members for Manitoba that they will be

satisfied to let the bill pass provided that it is proclaimed only with the consent of Manitoba. We only ask our hon. friends to trust us in that respect. The government of Canada can only be satisfied if the province of Manitoba is satisfied, because the rights of Manitoba are the rights of the Dominion. These resources, these powers, these waters are under the control of the Dominion; why should we sacrifice any of our property in favour of one province as against another. I repeat, Mr. Speaker, that the proposal we put before the House in this matter is in the interests of the province of Manitoba as well as of the Dominion as a whole, and I hope that the measure will be accepted by the House.


Mr. DESAULNIERS:: Mr. Speaker, I was paired with the hon. member for Wentworth (Mr. Wilson); otherwise I would have voted for the motion.


Mr. GENDRON:: Mr. Speaker, I was paired with the hon. member for Carleton (Mr. Garland) ; otherwise I would have voted for the motion.


William Stevens Fielding: I was paired with the hon. member for West York. I do not know how I might have voted. What I mean is I think probably the hon. member and I would have agreed, but in his absence I have not voted.


Mr. SINCLAIR (Queens, P.E.I.):: I was paired with the hon. member for Victoria. Had I voted I would have voted for the motion.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee and reported.
Hewitt Bostock: When shall the bill be read a third time?


Albert Blellock Hudson: I would ask that the bill be not now read a third time but that it be taken up to-morrow.


Some hon. MEMBERS:: Why not?


Hewitt Bostock: Next sitting of the House.



WAYS AND MEANS SALES TAX

[Stage Direction]
The House in committee of Ways and Means, Mr. Marcil (Bonaventure) in the Chair.
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act, 1915, and amending acts and to provide:
3.	That the existing provisions respecting tax on sales be amended by providing for the imposition of a consumption or sales tax of six per centum on the sale price of all goods produced or manufactured in Canada, including the amount of excise duties when the goods are sold in bond, the tax to be payable by the producer or manufacturer at the time of the sale thereof by him, and of a like tax upon the duty paid value of imported goods, the tax to be payable by the importer, or transferee who takes the goods out of bond, at the time when the goods are imported or taken out of warehouse for consumption, subject to the following conditions, that is to say:
William Stevens Fielding: The essence of this proposal is that we adopt one general sales tax instead of the varying rates which were hitherto in force. I may say the aim of the resolution is not to raise additional revenue, though it may produce some, by overcoming the evasions of the past. If it brings us more revenue we shall find it very welcome, but that is not the object. The object is to simplify the sales tax. Instead of having varying rates we have one tax of 6 per cent which will apply practically everywhere. That is the underlying principle. The machinery by which it is worked out is not without some difficulty, but the officials of the Customs department assure me it is quite workable. I think with that explanation the committee will understand all that is involved in the resolution.


John Babington Macaulay Baxter: I have had representations, and I have no doubt the minister also has had, from people in the lumber business, who point out that this will seriously affect them. I received a telegram on the subject from a large manufacturer to-day. Messrs. Haley of St. John also called my attention to the fact that the stocks they carry would not be used up until a much later period than that at which the change goes into effect. I would therefore ask the minister, I have no doubt he has had representations on the matter, as to whether he will be prepared to make some modification to cover cases of that kind?


William Stevens Fielding: The bill which will be introduced deals more in detail with the matter, and I think I am safe in saying that as to the time referred to the criticism of the hon. gentleman can be met. The bill will contain all the details, and if it is agreeable to the House instead of going into an argument about it to-night the resolution might be passed, the bill founded on it introduced, and the whole matter then remain over for further consideration. I think it will be found later that the particular point in question has been met.


Mr. ARTHURS:: Will that apply to all the purchases of lumbermen throughout the Dominion?


William Stevens Fielding: The tax will apply to the lumbermen at the first stage.


Henry Herbert Stevens: Then we are to understand that any matter coming up in this resolution can be discussed when the bill is brought forward?


William Stevens Fielding: Quite so.


[Stage Direction]
Motion agreed to.
[Stage Direction]
Ways and Means-Sales Tax
(1)	A manufacturer or producer who produces goods to the value of ten thousand dollars or more during any fiscal year shall take out an annual license, the fee therefor not to exceed two dollars; the Minister may direct that a manufacturer or producer, who does not manufacture or produce goods to the value of ten thousand dollars a year, and who uses a substantial portion of goods which are exempt from the tax in the manufacture of goods which are liable to the tax, shall take out a license and shall be subject to the same conditions as the licensed manufacturer or producer.
(2)	A wholesaler or jobber who sells not less than thirty per cent of his total sales of goods to a licensed manufacturer or producer to be used in articles to be produced for sale, may be granted an annual license, the fee therefor not to exceed two dollars. Such licensed wholesaler or jobber shall give security that he will keep proper accounts and render true statements of sales to licensed manufacturers or producers and pay any tax imposed by the said act.
William Stevens Fielding: I move to amend subsection 2. The amendment is to strike out the word "thirty" in the first line and substitute the word "fifty". The first two lines will then read:
A wholesaler or jobber who sells not less than fifty per cent of his total sales of goods to a licensed manufacturer or producer-
And so on.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
William Stevens Fielding: The other sections are unchanged until we come down to resolution No. 5:
(5) The said consumption or sales tax shall not be payable in the following cases, that is to say:
(c)	on goods imported by a licensed manufacturer or producer to be used in the production of articles for sale; or


William Stevens Fielding: There is no change down to resolution No. 5. I move that paragraph
(c)	subsection 5, of resolution 3, of May 11th be struck out. It is provided for in another part of the resolution.


[Stage Direction]
Amendment agreed to.
(d)	on goods sold by a licensed manufacturer or producer to, or on goods imported by, a licensed wholesaler or jobber whose sales are to he accounted for in accordance with the provisions of paragraph two of section three of this resolution.
William Stevens Fielding: I move that paragraph
(d)	of subsection 5 of the resolution ^ be
amended by striking out the words:	"on
goods imported by."


[Stage Direction]
Amendment agreed to.
William Stevens Fielding: I want to put in a new section No. 7, as follows:
A deduction from the consumption or sales tax may be granted in respect of goods imported by a licensed manufacturer or producer when such goods are further manufactured' and liable to the consumption or sales tax, such deduction not to exceed the amount of the said tax paid on importation.


[Stage Direction]
Item agreed to.

(7) A refund of the amount of the said consumption or sales tax may be granted in the following cases, that is to say:
(a) to a wholesaler, jobber or other dealer on goods sold to a licensed manufacturer or producer to be used in articles produced for sale; or with the consent of the wholesaler, jobber or dealer a refund or deduction may in the like case be granted to a licensed manufacturer or producer; or
Mr. FIELDING; Then I move that paragraph (a) subsection 7 of the resolution be amended by inserting at the beginning of the said paragraph the words:
(a) To a licensed manufacturer or producer; or
The numbering will be changed. What was 7 now becomes 8.
Amendment agreed to.
Item agreed to.
Ob) to a licensed manufacturer or producer or a licensed wholesaler or jobber, in respect of goods on hand on the 1st of August, 1923, and which are to be used in the production of articles for sale, no refund to be allowed in respect of goods on hand after the 31st of December, 1923; or
William Stevens Fielding: I beg to move that paragraph (c) of subsection 7 of the resolution be amended so that it will read as follows:
To a licensed manufacturer or producer or a licensed wholesaler or jobber in respect of goods on hand on the 1st day of January 1924 and which are to be used in the production of articles for sale, no refund to be allowed in respect of goods not accounted for prior to the 31st day of March, 1924.


[Stage Direction]
Amendment agreed to.
Item agreed to.
William Stevens Fielding: The lettering will be
changed to correspond; (!b) becomes (c), and (c) becomes (d), (d) becomes (e) and (e) becomes (f). Number 8 becomes 9.
On subsection 9, paragraph 5:
5. That Schedule II, to the said act be amended by striking thereout the item respecting beverages and by adding to the said schedule the following item:
"Carbonic acid gas in cylinders per pound, one cent."


William Stevens Fielding: There is an item respecting beverages and carbonic acid gas. I had the impression we passed it, but there was a motion to strike out the words "in cylinders," which I think has been overlooked. [ will ask you therefore to open up the item and strike out the words "in cylinders."


[Stage Direction]
Amendment agreed to.
Item agreed to.
4.	That the said resolutions be amended by striking out resolution No. 7 and by adding thereto the following resolutions:-
"7. A deduction on account of the sales tax may be granted in respect to goods sold at a price fixed by bona fide contract of sale made before the twelfth day of May, 1923, and still in force at the time of delivery of the goods; provided that such deduction

Questions
shall not exceed the difference between the amount of the sales tax calculated at the rate in force on the eleventh day of May, 1923, and the amount of the consumption or sales tax paid or to be payable under the provisions of these resolutions, and that no such deduction shall be made in respect of goods delivered after the thirty-first day of March, 1924, and claims for such deduction must be presented to the Department of Customs and Excise with complete evidence on or before the 30th day of June, 1924, otherwise the same shall be rejected."
William Stevens Fielding: These resolutions were supplemented by resolutions of the 23rd May, to which I will draw attention. I move the adoption of this resolution.


[Stage Direction]
Amendment agreed to.
William Stevens Fielding: Resolutions 8, 9 and 10 have been passed I understand. There is a change of words in these resolutions; but they do not alter the general purpose as I have stated.


Henry Herbert Stevens: While the minister is on the adjustment I should like to draw attention to something which I think is an oversight. In clause 9, page 3, the words "earthen drain tiles for agricultural purposes" are used. It has been represented to me that a lot of drain tiles used for draining farms are made of concrete or cement, just the same as the earthen tiles exactly, made in the locality and used very extensively, particularly in western Ontario. An hon. member drew this to my attention, and asked that the word "earthen" be dropped.


William Stevens Fielding: It would not cover cement tiles, if that is what my hon. friend means. Would hje like cement to be included?


Henry Herbert Stevens: Or leave it "drain tiles for agricultural purposes."


William Stevens Fielding: Then strike out the word "earthen" and leave it "drain tiles." I will move that amendment.


[Stage Direction]
Amendment agreed to.
William Stevens Fielding: I move the following resolution:
"lO.That said paragraph 4 of subsection (1) of section nineteen BBB of The Special War Revenue Act, 1915, being the list of excepted articles not liable to tax, be amended by adding thereto the following item:-
'syrups enumerated in Customs Tariff item 140;'"


[Stage Direction]
Resolution agreed to.
William Stevens Fielding: I move the following, resolution as No. 12:
That any enactment founded on resolutions Nos. 4 and 5, shall come into force on the 1st day of June, 1923; and. any enactment founded on resolutions Nos 1 and 6 of the resolutions of May 11th, 1923, shall
come into force on the 1st day of August, 1923 and any enactment founded on resolutions Nos. 3, 7, 8 and 10 shall come into force on the 1st day of January, 1924.
You will see these are all set out fully in the bill, and they can be better understood then.
Resolutions reported, read the second time
and concurred in. Mr. Fielding thereupon moved for leave to introduce Bill No. 230, to amend the Special War Revenue Act, 1915.
Motion agreed to and bill read the first time.
On motion of Mr. Fielding the House adjourned at 12.45 a.m. (Thursday).
Thursday, June 21, 1923