1927-03-17

OFFICIAL REPORT


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ftatsst ol Commons Behatts
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Thursday, March 17, 1927.


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Bill No. 153, respecting the Baptist Convention of Ontario and Quebec.-Mr. Edwards (Ottawa).
Bill No. 154, to incorporate "North American Relations Foundation".-Mr. Jacobs.

Mr. E. A. LAPIERRE (Nipissing) moved:: That the first report of the select committee on standing orders presented on Thursday, 10th March, be concurred in.


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Motion agreed to.

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Right Hon. W. L. MACKENZIE KING <Prime Minister) moved:
That the name of Sir Henry Drayton be substituted for that of Mr. Young (Toronto Northeast) on the select committee on standing orders, and that the name of Mr. Young (Toronto Northeast) be substituted for that of Sir Henry Drayton on the select standing committee on railways, canals and telegraph lines.
Motion agreed to.

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Hon. PETER HEENAN (Minister of Labour) moved for leave to introduce Bill No. 171, to amend the Trade Mark and Design Act.
Mr. GUTHRIE. Explain.
Mr. HEENAN:: The purpose of this bill
ia to give permission to the labour unions of Canada to register t'heir labels and to prevent the use of forgeries or counterfeits. While giving the right to unions to register labels, the bill provides that no label can be placed on any go'ods without the consent of the proprietor of such goods. A similar protection is given to the labour unions in many states of the union and in Great Britain.
Motion agreed to and bill read the first [DOT]time.



CANADA EVIDENCE ACT AMENDMENT

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Hon. FERNAND RINFRET (Secretary of State) moved the first reading of Bill No. 152 (from the Senate) to amend the Canada Evidence Act as respects bank books and records.
Motion agreed to and bill read the first time.

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(Questions answered orally are indicated by an asterisk).

Mr. BELL (St. John-Albert):: 1.	Is there an archivist for the maritimes?
2.	If so, what is his name, the date of appointment, and salary?	_
3.	Do his duties require him to be in the maritime provinces?
4.	How many months is it since he visited the offices in Saint John and Halifax?


Hon. Mr. RINFRET:: 1.	Yes.
2.	Dr. J. D. Logan-16th February, 1925- $2,520.
3.	Yes, unless it is desirable in the interests of his office and the department for him to visit other places.
4.	About five months.


PEACE RIVER TELEPHONE SERVICE
Mr. SPENCER:: 1.	Is it the intention of the government to build a telephone line in the Peace river country?
2.	If so, for what distance?
3.	Between what points?
4.	Have tenders been invited? _
5.	Will consideration be given to seniority of service of applicants who tender for the work?


Hon. Mr. ELLIOTT:: Nos. 1 to 5. Matter under consideration,


PATRONAGE IN SOUTH ESSEX
Mr. GOTT:: 1.	Who holds the patronage for the constituency of Essex South?
2.	Must all governmental undertakings be passed by him before they become operative?
3.	Is it the intention of the government to adhere stricly to the line of party patronage in Essex South?

Questions


Right Hon. Mr. MACKENZIE KING:: I ask Your Honour's ruling on this question. It seems to me to belong to a class of questions that should not be permitted to appear on the order paper.


Mr. SPEAKER:: I will examine the point.


MISSION CITY-PUBLIC BUILDING SITE
Mr. BARBER:: 1.	Was a site purchased at Mission City, British Columbia, for public building?
2.	If so, when was it purchased?
3.	What price was paid?
4.	What was the total revenue from the Mission City post office for the year 1926?
5.	How many rural routes are served through the Mission City post office?
6.	How many boxes on each route?
' [DOT] What is the post office accommodation at present at Mission City?
8.	If premises leased, what is the rental?
9.	To whom is rental paid?
Hon. Mr. R1NFRET:
1.	Yes.
2.	January, 1913.
3.	$6,000.
4.	$6,669.21.
5.	None.
6.	Answered by No. 5.
7.	8 and 9. Eight hundred and fifteen square feet is provided for postal purposes in a building owned by the postmaster. The postmaster is granted a rent allowance of five hundred dollars a year based on the revenue.


DAWSON POST OFFICE
Mr. BLACK (Yukon):: 1.	Was a vacancy in the post office at Dawson, Yukon, filled during November or December last, by temporary appointment made without reference to the Civil Service Commission and without the preference to be given to applicants who are returned soldiers?
2.	If so, will an opportunity be afforded returned soldiers to apply for and compete by examination for appointment to said position, and when?


Hon. Mr. VENIOT:: 1.	Yes, temporary appointment.
2.	Yes, if permanent appointment, becomes necessary.


STEAMER PELEE
Mr. GOTT:: 
Hon. Mr. MALCOLM:: 1.	The contract subsidy is $11,000.
2.	The contract is dated February 25, 1927.
3.	The recommendation of the minister.
4.	No. While the subsidy is $11,000 it has stood at this figure for several years. There is only an apparent decrease in 1927-28, due to the fact that there was an increase of $2,750 included in the esimates for 1926-27, to cover a similar amount remaining unpaid from the year 1925-26, due to the fact that the steamship company sent in their subsidy claim for the last quarter of their contract after the books of the Auditor General had closed for 1925-26. This amount, therefore, had to be paid out of 1926-27 funds and provision made therefor in the estimates.
5.	Answered by No. 4.
6.	No. From information in the department it would appear that the average profit is very moderate.
7.	No.



QUESTIONS PASSED AS ORDERS FOR RETURN


Mr. CARMICHAEL:: 1.	How many farms in the province of Saskatchewan are mortgaged?
2.	How many have first mortgages?
3.	How many have second, third, and fourth mortgages ?
4.	What is the total mortgage debt of Saskatchewan farms ?
5.	How many farmers in Saskatchewan were assessable under the Dominion Income Tax Act for the last preceding year?
6.	What is the total federal provincial, urban, and rural debt of Saskatchewan, Alberta, and Manitoba, respectively?
7.	How many farms in each of the three prairie provinces have Dominion seed and relief loans against them, and what is the total of such in each province?
8.	How much money is invested in farm machinery in Saskatchewan?
9.	How much money is owing by farmers on such farm machinery in the said province?


IRON AND STEEL-EXPORTS AND IMPORTS
Mr. SMITH (Cumberland):: 1.	What quantity of iron and steel and their products, of all grades and classes-specifying the grades and quantities, naming the country of origin and the value in grades and classes-* was imported into Canada for the year ending in January, 1927?
2.	What quantity of iron and steel and their products, of all grades and classes-specifying
)

Limitation oj Naval Armament
the grades and quantities, showing the provinces of origin in Canada, the country of destination and the value in grades and classes-was exported from Canada "or the year ending in January, 1927?



CIVIL SERVICE SALARIES

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On the Orders of the Day:
Mr. E. J. GARLAND (Bow River):: Has
the government arrived at a decision as to whether or not it will introduce at this session a measure for the revision of civil service salaries?


William Lyon Mackenzie King: A decision has not been
arrived at as yet. The matter is still under consideration.



CANADIAN NATIONAL RAILWAYS


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Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the House go into committee at the next sitting to consider the following proposed resolution:
Resolved, that it is expedient to extend the time for two years for the completion of the joint section of the Canadian National railway branch line from Rosedale southwesterly, in the province of Alberta, authorized by chapter 30 of the statutes of 1924.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.

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On the Orders of the Day:
Lion. CHARLES A. DUNNING (Minister of Railways and Canals):	On Tuesday the
hon. member for Prince (Mr. MacLean) asked for certain information respecting the refrigerator car service in Prince Edward Island. I have made inquiries and I find that between the 1st and the 15th of March, 181 refrigerator cars were delivered to the island. There are 30 cars on hand at Cape Tormen-tine this morning, which will be ferried across to-day. There are 27 cars in transit from Halifax and Moncton for the cape to-day, due to-morrow morning at the island; also 78 cars in transit from Montreal to Riviere du Loup. That makes a total of 135 cars at the cape or in transit, for loading. The railway management is informed that the requirements call for 200 cars, but the 135 cars which are now at the cape or in transit will provide sufficient for at least three days loading, and a further supply will be moved out of Montreal to-morrow.
32646- -82J

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On the Orders of the Day:
Mr. PETER McGIBBON (Muskoka-On-tario):: I have in my hand, Mr. Speaker, a
despatch from Washington to the effect that Canada is not going to be asked to the conference on naval armament limitation. I would like to ask the Prime Minister if, in view of our improved national status, he is going to take any action to uphold our dignity in this matter.


William Lyon Mackenzie King: If my hon. friend refers
to the same despatch which I have seen, I hardly think it would be proper to express an opinion on a despatch that comes to us from Washington, but which relates to matters of which the government itself has no knowledge. I think we may well wait to see what action may be taken by the United States government before commenting on the despatch.



BRITISH COLUMBIA FISHERIES-SEAPLANE PROTECTION

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On the Orders of the Day:
Mr. A. W. NEILL (Comox-Albemi):: May I call the attention of the government to the necessity for a prompt decision as to what they are going to do about a seaplane service for the protection of the fisheries of the Pacific coast. I understand that there is an alternative system offered by private service, but unless a decision is made soon it will be *oo late, because the season is coming on and the protection will soon be required.
RURAL MAIL BOX	]
On the Orders of the Day:	~ '


Mr. W. G. McQUARRIE (New Westminster) :: May I inquire from the Postmaster General (Mr. Veniot) if he has been able to come to a decision in regard to rural mail boxes? As I understand it, there has been some difficulty in deciding on the style of box to be used, and in the meantime routes are being held up because of the want of these boxes. It seems to me a rather awkward situation that should not be allowed to continue.


Hon. P. J. VENIOT (Postmaster General):: The establishment of any rural route is not being held up in consequence of the Postmaster General not yet having arrived at a decision as to the style of boxes to be adopted. I have not reached a decision, however, as to the style of boxes, but I expect to within a few days.
Canada Grain Act



MARITIME CLAIMS COMMISSION

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On the Orders of the Day:
William Lyon Mackenzie King: I might say to my hon.
friend opposite and to the House that I had expected to make a statement to-day with respect to the royal commission on maritime claims. Unfortunately, I have been delayed in the matter. I will promise it by Monday at the latest, but I hope to be able to give the statement to the House on the orders of the day to-morrow.



CANADA GRAIN ACT


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On the Orders of the Day:
Mr. M. LUCHKOVICH (Vegreville):: I
have received more than a dozen letters in the last week from farmers of the west asking me what the government is going to do in regard to the measures that were before the House last year, but which failed to become law owing to the dissolution of parliament. The farmers of the west are very anxious to know what is going to be done; they do not wish to see these measures go by the board, and they are afraid that some of these measures might not be re-introduced in this parliament at all. I have a letter here from P. B. Anderson, of Tofield, Alberta, dated March S, 1927, and reading as follows:
Dear Sir:
At the untimely dissolution of the last Dominion parliament there were several important measures that went "in the wash". I am referring especially to the Agricultural Credits bill and to the amendments to the Grain Act. Those two measures, it seems to me, are of the greatest importance to us farmers of western Canada. We are therefore keenly and anxiously watching and waiting to know what will be done with them at this session of parliament.


Hewitt Bostock: Order. The hon. member cannot by way of quoting from a letter state what he could not state verbally himself. He has put his question to the government, and he cannot go on to comment on the grievance.


Michael Luchkovich: I would like to ask the Minister of Trade and Commerce what is going to be done with the amendments to the Grain Act.


Hon. JAMES MALCOLM (Minister of Trade and Commerce):: I can assure my hon. friend that the amendments to the Grain Act will be brought down in due course. I fully expected that they would have been brought down before this, but other legislation had to take precedence. They will be brought down following the report on the maritimes.



MONTREAL. OTTAWA AND GEORGIAN BAY CANAL COMPANY

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On the Orders of the Day:
Mr. T. E. KAISER (Ontario):: I should like to read a resolution passed by the corporation of the town of Whitby, opposing the Georgian bay canal-


Hewitt Bostock: The hon. member will kindly table the resolution or place a question on the order paper. That is the regular proceeding.



SPECIAL WAR REVENUE ACT, 1915, AMENDMENT

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The House resumed from March 15 consideration in committee of Bill No. 149, to amend the Special War Revenue Act, 1915- Hon. Mr. Robb-Mr. Johnston in the chair.
Sections 1 to 3 inclusive agreed to.
On section 4-Printers, etc., to be deemed producers or manufacturers.
Mr. BENNETT:: I asked the minister the other day a question regarding the amount of business that had to be transacted before the section could apply. The matter is one of regulation?


Mr. ROBB:: Yes.


Richard Bedford Bennett: I daresay that other members have received, as I have done, a circular letter from the Retail Trade Bureau of Canada dealing with this phase of the bill, and if the matter is one of regulation it is unnecessary to discuss it further than to ask the government to give it that attention which the memorandum warrants.


James Alexander Robb: The minister who administers the act has the matter under consideration, but it is not sufficiently advanced to justify a report upon it.


[Stage Direction]
Section agreed to.
Section 5 to 9 inclusive agreed to.
On section 10-When paragraphs 3, 4, 5 and 6 of section 5 and section 6 come into force.	'
Richard Bedford Bennett: Why July 6?


James Alexander Robb: That is the date the returns come in for the previous quarter.


Richard Bedford Bennett: If you make it July 6 there will be several days in that month to which the old rates will apply and the returns will have to be made accordingly. The date 'should be changed. As it stands it rather complicates than simplifies matters.

Special War Revenue Act


James Alexander Robb: This is the date proposed by the department.


Sir GEORGE PERLEY:: The minister will have to reconsider it. It is true that the returns for the previous quarter come in on the sixth of July, but the banks will make up the statement for the previous month on the first day of August.


James Alexander Robb: They will have until the sixth to collect.


George Halsey Perley: Yes, but on the first day of August the banks will have to send in their accounts for the stamp tax up to July sixth. That is what they will have to do according to the bill as it stands, and that is not the intention.


Richard Bedford Bennett: The minister will see that according to the printed explanation of this section it is not intended that the tax shall continue for the quarter beginning the first day of July, 1927, but the statute distinctly says that it shall.


James Alexander Robb: The department, having considered the matter, has proposed the date here fixed. They will have until July 6 to make the returns.


Richard Bedford Bennett: The matter does not require any argument. If the statute is not repealed until July 6, then obviously the old law will apply to the first six days of that month. No argument is necessary.


James Alexander Robb: The Department of Justice has ruled that if the old law is repealed as from the first day of the month we shall not be able to collect for the previous quarter.


Richard Bedford Bennett: I suggest that you might overcome that difficulty by substituting the third-' for the sixth, inasmuch as the first, second and third days of July are holidays. If you make it the sixth, the tax will still have to be paid for two days.


James Alexander Robb: I would direct my hon. friend's attention to the following provision in the Special War Revenue Act:
Whenever an advance is made by a bank to any person by way of overdraft the bank shall, on the last day of each month, or within five days thereafter prepare a statement showing the maximum amount of the overdraft...


Richard Bedford Bennett: The language of the bill rather disguises thought.


James Alexander Robb: I am going by the Justice department.


Richard Bedford Bennett: I do not think the Department of Justice ever said that.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. ROBB moved the third reading of the bill.
Hon. HUGH GUTHRIE (Leader of the Opposition):: Mr. Speaker, on the motion for
the third reading of this bill I beg to move an amendment in the following terms:
That all the words after "that" be struck out and the following substituted therefor:
In the opinion of this House the application of sales tax in respect of personal clothing and boots and shoes places a heavy and unnecessary burden upon the people of Canada, and should be discontinued.
I have endeavoured to frame this amendment in accordance with the rules of the House, Mr. Speaker, but it may be that in the result I would have been able only to express what Your Honour has time and again described as a pious aspiration on the part of the House. This amendment really involves the opinion of this House in regard to the propriety of maintaining the present sales tax upon personal wearing apparel and boots and shoes.
In discussing the budget some days ago I went rather thoroughly into the question of the sales tax and on this occasion I do not intend to more than mention the matter. We are all aware that the sales tax which has existed in Canada for the past two years has been a direct tax of five per cent upon many household necessities. Food has largely been exempted since the institution of that tax. The sales tax was originally placed upon commodities because the needs of the treasury were very great at the time because of war expenditures which were piling up, but even at that trying time it was considered proper to exclude food from that tax. As originally imposed, that tax was at the rate of three per cent; the present government, or its predecessors in office, raised the tax to six per cent and then reduced it to five per cent, at which figure it has remained until the present time. Among those necessities of life which are subject to this tax are personal clothing and boots and shoes.
In the budget this year the Minister of Finance (Mr. Robb) proposed to reduce that tax from five per cent to four per cent, an announcement which will be very welcome, of course, throughout Canada. But that four per cent will still be levied upon the clothing and the boots and shoes of the people of this country. I -think I am within the opinion of the House when I say it is the general desire of hon. members here that this tax a,s against -these specified articles should be discontinued. From the manner in which this government proposes to go on spending money during the next six months, as evidenced by the estimates which have -been going

Special War Revenue Act
through day after day, it is apparent to all that the treasury can easily forego the small amount of tax which will be derived from clothing and boots and shoes, in comparison with the vast bulk of the revenue of Canada. We have already voted large sums of money- in many instances unnecessarily-for expenditure this year, which sums might well be saved to the treasury, and as we proceed further with the estimates we will come upon almost page after page of similar and larger votes. By the practise of a little economy large amounts could be saved; by the practise of that economy it would be absolutely unnecessary to impose a tax on clothing and boots and shoes. We all use clothing and we must all wear boots and shoes; this tax is a burden upon every class of our citizens but, like all taxes, it is felt most by those in the poorer walks of life, and it will be a great relief to the ordinary people of Canada if this tax is discontinued. I would like to have the opinion of this House upon this subject, and for that purpose I have moved this amendment.


James Alexander Robb: Mr. Speaker, with the observation of my hon. friend that the sales tax is an expense to the country, and particularly the sales tax on boots and shoes and clothing, no person will find fault. Everyone admits that the sales tax adds to the cost of each commodity, and with the sentiment that as quickly as possible we should get rid of this tax we on this side of the House are in accord. That has been the policy of this government; we 'have been gradually reducing the sales tax. *
I had occasion earlier this session to quote figures showing that at one time the sales tax on boots and shoes could have been pyramided until it was about eight per cent, but generally speaking at no time then was this tax on boots and shoes less than seven per cent. Under the act brought in by Right Hon. Mr. Fielding, I do not recall the year, we reduced the sales tax to a flat six per cent as the maximum; in 1924 we reduced the sales tax on all materials, and indeed on many commodities required on the farm that tax was eliminated altogether. On articles required for production, such as agricultural implements, dairy utensils and articles used by fishermen and lumbermen the tax was eliminated altogether, and the general tax was reduced to a maximum of five per cent. But the sales tax om boots and shoes, which was previously as high as eight per cent and in most cases seven per cent, was reduced by this government in 1924 to a maximum of two and one-half per cent. Under the legislation of this

year we have again reduced the sales tax on boots and shoes to two per cent-the maximum on boots and shoes now is two per cent-and we have also reduced the sales tax on clothing to four per cent.
Let me point this out to my hon. friend before I come to what I regard as 'the most serious objection to his amendment:	As
regards clothing you cannot take the sales tax off an ordinary suit of clothes such as members'of parliament require, without taking the sales tax also off high priced gowns, sealskin jackets, and all the other costly articles of feminine apparel. So the question is one of fairness in that regard. . Is it not better that we should have lowered the sales tax as we did by a gradual reduction of twenty per cent all along the line, rather than have picked out a few articles of commerce and reduced the tax on ithose. But there was another and1 more serious reason. I think I can prove to my hon, friend that it is not in the general interests of the people he represents in parliament that we should take the whole of this sales tax off at once. There are throughout this country many merchants-in fact hundreds even thousands of merchants- with their stock bought. They have bought that stock on the basis of the sales tax as it exists. If you wipe that sales tax off at one stroke you do a great injury to many small merchants, particularly small country merchants, throughout Canada. I am convinced-I am free to admit it now-that in 1924 when we reduced the sales tax from six per cent to two and one-half per cent we made a mistake. We made a mistake because we placed many small merchants throughout the country in an embarrassing position. Letters came to the department from all over Canada asking for a rebate, and1 telling us:	We have
bought our stock; we bought those stocks of boots and shoes on the basis of a six per cent sales tax, and you have at one stroke reduced that sales tax to 2J per cent. To that extent you have taken away our profits. You have placed a competitor who may come and open a store right opposite to us in such a position that we are not able to compete with him. I suggest to my hon. friend that if his amendment is adopted he will be doing great injury to many merchants throughout this country. In proof of that I have the statement, prepared after very careful consideration, of the Retail Merchants Association. I will admit at once that the large departmental stores that get rid of their stock quickly might look with favour upon this amendment, but the country merchants will not regard it with very great favour, be-

Special War Revenue Act
cause, as the Retail Merchants Association represent to us, there are hundreds and thousands of merchants throughout the Dominion who say they cannot afford1 to absorb this reduction of the sales tax all at once. Now since the budget has been brought down, to be accurate no later than the day before yesterday, a delegation of the Retail Trade Bureau came to my office and said: Mr. Robb, you were right in making this gradual reduction. We can stand that, we can absorb it. I say right now -that the policy of the government is. in so far as possible, to get rid of this sales tax gradually.
There is just one other point. It seems to me that if this amendment goes through it will have the effect of killing the whole reduction that I have introduced, the gradual twenty per cent reduction on all other lines. For that reason I am opposed to it.


Hewitt Bostock: Is the House ready for
the question?


James Alexander Robb: Do you regard the resolution as in order, Mr. Speaker?


Hewitt Bostock: I am of opinion that
the amendment is in order and I am fortified in this view by the opinions of May and Bourinot. According to Bourinot, page 431:
All the authorities go to show that, when the government have formally submitted to the House the question for the revision of customs and excise duties, it is competent for a member "to propose in committee to substitute another tax of equivalent amount for that proposed by ministers, the necessity of new taxation to a given extent being declared on behalf of the crown".
And Bourinot adds:
It is also competent for any member to propose another scheme of taxation for the same purpose, as a substitute for the government plan. But it is not regular to propose a new and distinct tax, which is not a mere increase or diminution of a 'duty upon an article already recommended by government for taxation, though it is the function of this committee to impose rather than to repeal taxes.
And here again:
But nevertheless numerous instances will be found in Canadian, as well as English, practice, of committees having been appointed to consider questions of taxation, notwithstanding the opposition of the government. The whole question came up in 1877 in the Canadian House, and Mr. Speaker Anglin decided, in accordance with English precedents, that it is open to a committee to whom a question of taxation is referred, "to express an abstract opinion as to the expediency or inexpediency of imposing a duty."
Then May, page 390, lays down this rule:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to
move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill.
It might be argued that this is not a second reading, but on this point page 421, May also says that on the third reading of a bill, such amendments as have been described in reference to a second reading may be proposed to -the question for now reading the bill.
In my opinion when only an abstract opinion on a matter of taxation i? presented by way of amendment it is permissible. The question is on the amendment. Those in favour of the amendment will please say "aye". Those opposed to the amendment will please say "nay".


Mr. CANNON:: Before the question is
put-


Mr. STEVENS:: The hon. member is out
of order, the question has been -put.


Hugh Guthrie: I rise to a point of order. The question has been put and I submit that no discussion can now take place.


Lucien Cannon: Mr. Speaker, I-


Some hon. MEMBERS:: Question.


Hewitt Bostock: Order, please. The hon. leader of the opposition is right. The question was put. Does the hon. member wish to speak to a point of order?


Lucien Cannon: I rose and asked Your
Honour not to put the question, but notwithstanding my request the question was put. Technically Your Honour is right and if the leader of the opposition wishes to take advantage of that technicality-


Some hon. MEMBERS:: Order.


Hewitt Bostock: There are, of course, amenities which should be observed in debate. I did not see the hon. gentleman rise at 'he time stated by him, and I leave it to the House to say whether or not the hon. member should be given an opportunity to state his point now. It is true that I put the question, and that the hon. gentleman is not in order in seeking to state his point now, but we must observe amenities here and I take it the House will allow the hon. gentleman to proceed.


Henry Herbert Stevens: I rise to support my hon. leader's point of order. I quite agree with what you now suggest, Mr. Speaker, that if the hon. Solicitor General had risen before you put the question he would be entitled to proceed. But the question was put before my hon. friend rose in his place.
Special War Revenue Act


Lucien Cannon: No, no.


Henry Herbert Stevens: I have no desire to prevent my hon. friend from speaking, but at the same time we must have some reasonable observance of the rules.
Right Hon. W. L. MACKENZIE ICING
(Prime Minister): I think you will agree, Mr. Speaker, that seated where I am, I am in a position to judge whether the Solicitor General was on his feet and had addressed his question to Your Honour before Your Honour put the question to the House-


Some hon. MEMBERS:: Order, order.


An hon. MEMBER:: You had your back to him.


William Lyon Mackenzie King: Even with my back to the Solicitor General I heard him say to Mr. Speaker that he wished to raise a point of order before His Honour put the question.


Mr. WOODSWORTH:: I should like to say on the point of order that there should be the same rule for to-day as for yesterday. Hansard corroborates the position which I took yesterday. No amenity was shown yesterday.


Hewitt Bostock: I will state again that I had not seen the Solicitor General. He states that he rose-and I must take his word- before I had put the question. If there is not unanimous consent I must proceed by putting the question.


Mr. RYERSON:: I was paired with the
hon. member for West Elgin (Mr. Hepburn).
Had I not been paired, I would have voted for the amendment.


Richard Bedford Bennett: I was paired with the
Minister of Justice (Mr. Lapointe). Had I not been paired, I would have voted for the amendment.	'


Mr. MALONEY:: I was paired with the
hon. member for St. Ann (Mr. Guerin). Had I not been paired, I would have voted for the amendment.


Peter John Veniot: I was paired with the
hon. member for York-Sunbury (Mr. Hanson). Had I voted, I would have voted against the amendment.


Mr. BELL (Hamilton):: I was paired with
the hon. member for St. Henri (Mr. Mercier). Had I voted, I would have voted for the amendment.


Leslie Gordon Bell: I was paired
with the hon. member for Beauharnois (Mr. Raymond). Had I voted, I would have voted for the amendment.
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Mr. CASSELMAN:: I was paired with the hon. member for Sherbrooke (Mr. Howard). Had I voted, I would have voted for the
amendment.


Mr. SMITH (Cumberland):: I was paired
with the hon. member for Antigonish-Guys-borough (Mr. Duff). Had I voted, I would have voted for the amendment.


Mr. JOHNSTONE (Cape Breton):: I was
paired with the hon. member for Stanstead (Mr. Baldwin). Had I voted, I would have voted for the amendment.


Mr. DUBUC:: I was paired with the hon.
member for Toronto Northwest (Mr. Church). Had I voted, I would have voted against the amendment.


Mr. CAYLEY:: I was paired with the hon. member for Brant (Mr. Smoke). Had I voted, I would have voted against the amendment.


Mr. ROWE:: I was paired with the hon.
member for Beauce (Mr. Lacroix). Had I voted, I would have voted for the amendment.


Edward Joseph Garland: I voted for the amendment moved by the leader of the opposition because it meant a reduction in taxation, which I think is in keeping generally with the policy-


Some hon. MEMBERS:: Order, order.


Edward Joseph Garland: My hon.
friends will find I am in order before I get through, perhaps to their regret rather than their satisfaction. I am opposed to the continuation of both the sales tax and the customs tariff, in so far as they impose a tax especially on the necessaries of life. Without any long discussion, as my hon. friends seem worried about it, let me say that I think every argument advanced by the hon. leader of the opposition is a valid argument also in respect of the customs tariff, and in that- case I feel satisfied he will support me when I move the following amendment:
That all the wo$ls after "that" be struck out ancl the following substituted therefor:
In the opinion of this House the application of the customs tariff in respect of personal clothing and boots and shoes places a heavy and unnecessary burden upon the people of Canada and should be discontinued.
I am delighted to note the premature approval of my amendment by some of my hon. friends to my right, but I feel satisfied, Mr. Speaker, that if they stop interrupting long enough to get the line of argument they will support the amendment as we intend to do.

Special War Revenue Act


Mr. JACOBS:: I was paired with the hon. member for St. Lawrence-St. George (Mr. Cahan). Had I voted I would have voted as I think he would have voted, against t'he amendment.


Mr. HAY:: I was paired with the hon.
member for Prince Edward-Lennox (Mr. Hubbs). Had I voted I would have voted against the amendment.


Thomas Merritt Cayley: I was paired with the hon. member for Brant (Mr. Smoke). Had I voted I would have voted against the amendment.


Richard Bedford Bennett: I was paired with the
hon. Minister of Justice (Mr. Lapointe). Had I voted I would have voted against the amendment.


Arza Clair Casselman: I was paired with the hon. member for Sherbrooke (Mr. Howard). Had I voted I would have voted against the amendment.
Main motion agreed to, and bill read the third time and passed.

Income War Tax Act



INCOME WAR TAX ACT, 1917, AMEND-KENT

[Stage Direction]
The House resumed from Tuesday, March 15, consideration in committee of Bill No. 150, to amend the Income War Tax Act, 1917-Mr. Robb-Mr. Johnston in the chair
Sections 1 to 3 inclusive agreed to.
Bill reported.
Hon. J. A. ROBB (Minister of Finance) moved the third reading of the bill.
Mr. D. F. KELLNER (Athabaska):: Mr. Speaker, I desire to move:
That Bill No. 150 be not now read a third time, but that it be referred back to the committee of the Whole House with instructions to amend it by inserting after the word "tax" in the second line the words "on incomes under ($5,000) five thousand dollars".


Hewitt Bostock: I do not consider the amendment in order. The House has already expressed its judgment on a similar question and by that judgment I am bound. Unless, therefore, any hon. member desires to speak to the point I must declare the amendment out of order.


Mr. IRVINE:: When did t'he House decide on the question?


Hewitt Bostock: On Tuesday last, on an
amendment moved by the hon. member for Winnipeg North Centre (Mr. Woodsworth), the House gave its judgment.


William Irvine: That amendment was ruled
out of order.


Hewitt Bostock: Yes, in my recollection.


Donald Ferdinand Kellner: May I point out, Mr. Speaker, that the decision of the House the other day had reference to a resolution, whereas the present motion relates to a bill-a different matter entirely. If it is not permissible for a member to move an amendment either to a resolution or to a bill of this character, then I submit there is no use in our considering these matters at all. This House, in that case, certainly would have no power to make any changes whatever. This, _ I submit, is entirely a different matter from that upon which the decision of the House was given the other day.


Hewitt Bostock: The figure involved in
the question before the House on the previous occasion was $10,000; in this instance it is $5,000. The Chairman of the committee ruled that amendment out of order, whereupon an appeal was taken, not to the Speaker, but to the House, and the House in its judgment confirmed the Chairman's ruling. That
.stands, therefore, as the judgment of the House, and by it I am bound. Consequently I declare the present amendment out of order.


Mr. BOURASSA:: Before you finally dispose of the question, Mr. Speaker, may I ask whether the House is to understand that you are now rendering a decision the effect of which will be to deprive every member of the right to move any amendment to budget resolutions or to bills based upon such resolutions? If so, I suggest that the matter is very grave. If the present ruling is confined merely to its bearing upon a decision given by the House the other day upon one particular point, then I am prepared to let the matter pass. But I think the House will have to consider one of these days the very grave issue that might be raised if a new parliamentary jurisprudence were here established whereby private members were deprived of the right to move amendments to budget resolutions.


Hewitt Bostock: I do not suggest that I
differ from the hon. member; I am ruling on a specific case which has already been decided by the House, and as I have already said I am bound by that decision. Any decision given by the House is binding upon the Speaker, and in ruling the present amendment out of order I am merely giving expression to the judgment of the House as rendered on a similar question. It is the same with resolutions; they must be considered, if carried, as judgments of the House, and for that reason the House should carefully weigh any resolution or motion presented. I am not now passing judgment on the question as to how far a private member may go in moving amendments to tariff or budget resolutions. It is not necessary that I should read again the motion made the other day and the ruling of the Chair upon it. As I have already indicated, I am now merely ruling in conformity with the judgment of the House on that particular question.


James Shaver Woodsworth: Just for information, Mr. Speaker, do I understand that this *ruling of yours to-day, following the decision of the House the other day, creates a precedent with regard to what may be done?


Hewitt Bostock: That, of course, will depend upon the next Speaker. If any subsequent Speaker takes my ruling as a precedent, so much the better for me and for my reputation. But the House is all-powerful in these matters and can always reverse a ruling of the Speaker. As regards the present question, I have explained that the amend-

Income War Tax Act
ment moved by the hon. member for Athabasca (Mr. Kellner) is framed in precisely the same terms as the amendment moved by the hon. member for Winnipeg North Centre (Mr. Woodsworth) the other day. It has the same purport, except for the fact that the figure is altered; and as the House confirmed the ruling of the Chairman of the committee, rejecting the previous motion, I am bound to be guided by that decision and rule this amendment out of order.


Mr. GARDINER:: First of all, Mr. Speaker, may I ask you to give the authority for your decision at the present moment? In the next place, I should like to call your attention to this fact: the deputy speaker the other day gave a certain ruling which was appealed from.


Hewitt Bostock: The hon. member will pardon me if I interrupt him. If the House is not satisfied with my ruling it may be appealed from.


Robert Gardiner: Tlie Deputy Speaker the other day, in committee, gave a certain ruling-


Peter McGibbon: There is no debate on this.


Hewitt Bostock: Is the hon. member speaking to a point of order?


Robert Gardiner: Yes, Sir.


Hewitt Bostock: The ruling has already been given.


Robert Gardiner: I did not understand that you had given your ruling, Mr. Speaker.


Hewitt Bostock: I declared the amendment out of order and gave my reasons.


Robert Gardiner: I did not hear you give the ruling.


Hewitt Bostock: If the hon. member did not hear me he may speak.


Robert Gardiner: Thank you, Mr. Speaker. As I say, the Deputy Speaker gave a ruling in committee, and that ruling was appealed from. Your Honour then took the chair and the House voted on the Chairman's ruling. To-day you uphold the former ruling, not on the strength of any authorities you might quote, but because of the fact that the House had confirmed the decision of the Chairman. Now, the point I want to make is this: the Deputy Speaker in the first place is nominated by the government in power, who usually have a majority, and that being so it can be understood that when the Deputy Speaker- or the Speaker, as the case may be-gives a

ruling, that ruling will be sustained by the government and its supporters. That, however, does not imply a soundness in the ruling itself, and in this instance I would appeal to you to base your decision upon the authorities rather than upon what may have happened two or three days ago.


Hewitt Bostock: The best authority for the Speaker is the judgment of the House. The Speaker merely voices the opinion of the House. The House, having declared out of order an amendment framed precisely as the one now under discussion, I am bound, in accordance with that decision and irrespective of the authorities, to rule the present motion also out of order. A distinction must be drawn between the principle invoked by the hon. member for Labelle (Mr. Bourassa) and the principle now appealed to. In my judgment there is a slight difference. In the present case I am bound by the judgment of the House, even if I were able to find authorities to the contrary.


Mr. COOTE:: Might I ask a question of
Your Honour?


Some hon. MEMBERS:: Order.


Hewitt Bostock: This is a very important
point, and I should like hon. members to express their views.


George Gibson Coote: I have no view to express;
I would like to ask Your Honour a question. The amendment moved the other day was an amendment to a resolution; this is an amendment to a bill. I would like Your Honour to inform the House whether the effect is the same in both cases?


Hewitt Bostock: It is exactly the same,
and I will explain why. When the resolution is passed by the committee it is reported to the Speaker and it is thereupon moved that the introduction of a bill based on such a resolution be permitted. What is contained in the resolution is contained in concrete form in the bill, so the effect is exactly the same.
_ Mr. WARD:	Just by way of information
may I ask a question of Your Honour? What is the difference between the amendment moved by the leader of the opposition and the amendment just moved by the hon. member for Athabaska (Mr. Kellner)?


Hewitt Bostock: Would the hon. member kindly repeat his question; I did not understand it.


Mr. WARD:: I would like Your Honour
to explain to the House the difference be-

Long Term Farm Loans
tween the amendment moved by the leader of the opposition and that moved by the member for Athabaska.


Hugh Guthrie: I rise to a point of order. There are a number of members in this House who desire to get on with the business of the session, and while this may be very entertaining and instructive I would suggest that Your Honour start a school for the benefit of some hon. members. To keep this House waiting on a point already decided by precedent and the judgment of the House is too much of a waste of time.


Hewitt Bostock: Exactly, but there are
certain amenities of the House which must be observed. In order to satisfy the hon. member for Dauphin (Mr. Ward) I would explain that the amendment moved a moment ago by the leader of the opposition was perfectly in order because it was an abstract declaration of principle. In May, thirteenth edition, I find the following:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill,-
Or a third reading:
-to move, as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill; or expressing opinions as to any circumstances connected with its introduction or prosecution;
The amendment of the hon. leader of the opposition was only an abstract declaration, while the present amendment is specific, mentioning a certain figure.
Motion agreed to and bill read the third time and passed.
LONG TERM FARM LOANS Hon. J. A. ROBB (Minister of Finance) moved the second reading of Bill No. 62, for the purpose of establishing in Canada a system of long term mortgage credit for farmers.
Motion agreed to and the House went into committee, Mr. Johnston in the chair.
Section 1 agreed to.
On section 2-Definitions.


George Halsey Perley: I would like to
ask whether this bill is in exactly the same form as the act that went through last session and if not, what changes have been made?


James Alexander Robb: I have not checked it carefully, but I am assured by the officers of the department that the bill is identical with the bill which left this chamber last session, I think I made that statement once before this session.


Hugh Guthrie: The Senate amendment
is not included?


James Alexander Robb: No; the bill is exactly as it left this chamber last session.


Mr. ARTHURS:: I presume the consent
of the provinces interested is necessary to the operation of this bill, and therefore it is in the same category as various other bills dealt with this session. Has the minister any idea of how many provinces will come under the provisions of this bill?


James Alexander Robb: We have no information on that; we will pass the bill first and then find out.


James Arthurs: Has any effort been made to ascertain that information? [DOT]


James Alexander Robb: The proper method is to pass the bill and adopt the principle and then determine whether the provinces will come in.


Mr. KENNEDY:: We have had some difficulty in the last few days because we could not hear what was being said, and I wish the ministers especially would speak a little louder. I have been doing my best to catch everything the Minister of Finance said but now I do not know what it was.


James Alexander Robb: Sometimes it is better not to know.


James Arthurs: I would like to have a little further information from the minister. What provinces, if any, have applied for legislation of this kind?


James Alexander Robb: This is a government measure, introduced by the federal government. When this bill is passed it will be time to inquire whether the provinces wish to take advantage of it.


James Arthurs: The measure cannot succeed without the acquiescence of the provinces; there i3 no question about that. I would suggest to the minister that it would be better to ask the provinces whether or not they will come under the provisions of the bill. This measure in itself ia of no use unless the provinces do take advantage of it.


James Alexander Robb: How will the provinces know whether or not they desire to cooperate in such a measure until they find out what legislation we are going to submit to them?


James Arthurs: By consultation with the provinces.


Hugh Guthrie: There is a provision here for the provinces coming in. It is in clause 8 of the bill as we all know, and the minister will find he will get his bill through much
Long Term Farm Loans

quicker by giving the necessary information rather than by refusing it-because what he said to the hon. member for Parry Sound (Mr. Arthurs) was tantamount to a refusal. Now when these boards are established-I understand notice has to be given in the Canada Gazette, and until that notice is given the provinces have no part in the matter at all. But after the notice is published in the Canada Gazette, according to section 8 subsection 1-
The subscription by the government of the province to the capital stock of the board to the extent of five per cent of the total loans outstanding at any time in that province as such loans are issued.
Approval must be given to the whole scheme practically before operations are started in the province.. Now the question is:	Have
any provinces up to the present expressed their approval of the scheme?


James Alexander Robb: I do not think so.


Hugh Guthrie: And have they requested the passage of this legislation?


James Alexander Robb: Well, members of this parliament who come from different provinces have asked for this legislation.


Mr. DUNNING:: I have not under my
hand the resolutions passed from time to time in various provincial legislatures in favour of a scheme of farm loans, but I know that a number of such resolutions have been passed from time to time as the expression of opinion of the legislatures of some of the provinces at all events.


James Arthurs: All by the same province?


Charles Avery Dunning: No, not at all.


James Arthurs: I am not apposed to
the bill at all, in fact I am in favour of it, but will the minister in charge of the bill tell the committee what amendment was made to the measure by t'he Senate last session? They amended some provisions of the bill but I have forgotten the nature of those amendments.


Mr.   LETELLIER@: I should like to inform the committee that a large number of my electors in the constituency of Compton are asking for loans of this kind, and I am very anxious to see the bill adopted as soon as possible. The matter is one of great importance to the farmers there, who are in urgent need of these loans.


Henry Herbert Stevens: Could the minister give
us the information asked for?


James Alexander Robb: I am looking up the record
to see if I can find it.
[Mr. Guthrie.)


Henry Herbert Stevens: While the minister is
looking the information up I should like to say that this is a question that has been before parliament for many years. It was very thoroughly considered at the time of the revision of the Bank Act in 1923. On that occasion, as well as in 1924, the banking committee came to the conclusion, and with the approval of the leading representative bankers, that there was need for some medium of credit such as is provided in this bill. I am not prepared to say that every detail of the bill is perfect, but personally I welcome very much the idea of rural credits. If the minister could inform us as to the amendments made by the Senate last year it would perhaps facilitate the discussion. There were one or two amendments the exact nature of which I have forgotten, but which were worthy, I think, of some consideration.


James Arthurs: While the minister is
looking up the information asked for I should like to dissociate myself from any idea of opposing this measure. I look at it in the same light that we regard several other bills that have come before this House, where provincial consent is absolutely necessary before any organization can be arrived at. The hon. member for Compton (Mr. Letel-lier) said that his constituency was in favour of this bill. Would he say that the province of Quebec has asked for legislation of this kind? I am sure he will not, and I am quite sure that the minister in charge of the bill, who is also from the province of Quebec, will not say that that province is in favour of the bill as at present before the House. We are not opposed, at least I am not opposed, to the principle of rural credit, nor am I opposed to a similar bill regarding old age pensions which has passed this House. But we do ask, and I think we have the right to ask, that this government look to the provinces and see which province, if any, is in favour of this legislation before it is passed here.


Mr.   LETELLIER@: If I cannot assure my hon. friend definitely that the province of Quebec, or the provincial government, is in favour of this bill, I can assure him that it was asked for last session by the provincial agricultural association, which claims that it is needed in the interest of the farmers of the province. I think I can assure my hon. friend also that if the bill is passed it will function in the province of Quebec as successfully as it does in other provinces where it is actually in operation. I would state furthermore that my hon. colleague, Mr. Goulet,

Long Term Farm Loam
has told me that in his province there is a similar law in effect which is functioning extremely well.


Mr. CASGRAIN:: That is in the province of Ontario,


Mr.   LETELLIER@: Yes, in Ontario.


James Alexander Robb: My hon. friend asked what
changes were made in the bill in the Senate. There were some changes made of a minor character which perhaps rather improved it. But the main change made was this: If hon. gentlemen will refer to clause 7, near the top of page 5 of the bill, they will see it is provided that the interest "shall be sufficient, in the judgment of the board, to provide for the expenses of operation not exceeding one per cent of the amount of the loan." The Senate cut out the words "not exceeding one per cent of the amount of the loan."


Mr. CLARK:: I regret that the minister
has not paid some attention to that particular amendment of the Senate. He would be well advised to do so at this stage, because I think if he investigates he will find that it is impossible to administer the act and provide for reserves on a one per cent margin. In the first place he could not provide for reserves if the whole of the one per cent were devoted to that purpose, but the attempt to provide for administration and reserves to meet losses with one per cent is really an impossibility; it cannot be done. Why then pass a law to provide for a thing which is impossible?


William John Ward: Is the hon. member aware
that there is at least one large farm loan organization in Canada that has been doing it, and has been paying overhead charges, and so forth, and the rate has never exceeded one per cent?


John Arthur Clark: How long has it been
running?


William John Ward: Seven years.


John Arthur Clark: I would submit, Mr. Chairman, that if an investigation were made it would be found that in no place in the world has such a thing been achieved, and that no company could provide for losses alone on a one per cent margin. One per cent certainly does not meet the administration charges of any company that I have ever heard of, and I think an investigation in the Finance department-I believe particulars will be found in the Insurance department publications-will show that one per cent will not begin to meet administration charges and overhead. In my opinion it is impossible to provide for reserves with such a margin.


William John Ward: What would the hon. member consider is required to provide for the losses to which he refers?


John Arthur Clark: I am not putting myself
forward as an expert to state wrhat percentage should be provided. The department ought to be in the best position to investigate the problem of overhead and the amount required to provide for reserves. I would not arbitrarily fix any figure. I know that one per cent will not cover it. I suggest that the minister is simply inviting further interference with this bill after it has been passed out of this House. Seeing that the question was raised by an amendment of last year, why not study the suggestion of the Senate and try to meet the situation so that we shall not have these bills emasculated when they leave this House?


George Gibson Coote: The effectiveness of this
bill in meeting the needs of Canadian farmers is going to depend largely on whether this one per cent is to be maintained or not. We must keep down the interest rate to the farmers who want to borrow money under the scheme, and if the rate is not held very close to one per cent over the rate paid on the bonds of the Board. I do not think the scheme will be effective in providing the farmers with money at a rate which they can afford to pay. Perhaps it will allay the fears of my hon. friend if he learns that the long term farm loan system in the United States has been operating on this basis of one per cent. They have made ample provision for any losses, taken care of all their administration expenses and in a period of years have repaid to the federal government I think nearly 90 per cent of the money which was advanced by the government to start this scheme.


John Arthur Clark: How long has it been operating?


George Gibson Coote: Since about the year 1916.


Mr. FANSPIER (Last Mountain):: It was considered in the grain business that one cent per bushel was required by all commission firms for operating expenses. When the wheat pool came into existence in western Canada they found that they could operate on less than one-half of one cent per bushel because by mass operation, just the same as by mass production, they were able to cut down the overhead. I would suggest to the hon. member for Vancouver-Burrard that that can easily be taken care of by the volume of business which we hope to set up by this scheme.
Long Term Farm Loans


John Arthur Clark: The greater the volume of business, the more reserves you will have to provide.


William Russell Fansher: Very true, and the less overhead.


John Arthur Clark: I was not speaking of the overhead. I suggest that one per cent is not sufficient for reserves for losses and depreciation.


Mr. CARMICHAEL:: I would like to ask the minister if, according to the language of this clause, the one per cent is. supposed to take care of operating expenses plus reserves for losses, or whether it is not a fact that reserves for losses are to be provided for outside of the one per cent and that the one per cent covers just the cost of operation.


James Alexander Robb: Reserves for losses are in addition to the one per cent.


Archibald M. Carmichael: The hon. gentleman was arguing otherwise.


John Arthur Clark: Where is that provided?


Mr. CAMPBELL:: The fundamental principle of a scheme of this kind is the elimination of competition, following, as the hon. member for Last Mountain has said, the principle of our wheat pool. In the district in which I live there are, I think, no fewer than ten different loan companies operating. At various periods of the year no fewer than seven men will come in there collecting money or soliciting loans or doing some particular business in connection with their different companies. It can easily be seen that if all the business in that particular district were turned into one company and competition eliminated, overhead expenses could be immediately reduced. That is the basic principle of the rural credit system. Unless we can achieve that, the system has failed of its purpose. It is based, as most hon. gentlemen know, on the German Landschaften system which was established by the German government some time after the Seven Years' war. It met the situation and to-day the farmers in Germany are receiving money cheaper than the manufacturers. Just compare that situation with ours in Canada. I presume that no Canadian manufacturer will pay more than 6 per cent interest. Most of them will secure money at less than that. But farmers, at any rate in Saskatchewan, are not securing money on loans at less than 8 per cent and the ordinary banks charge perhaps 9 or 10 per cent. The idea behind this system is that by having such a large amount of business done in one community and by the

elimination of competition and the duplication of travellers on the road and overhead charges, the cost of operation will be reduced. Unless that can be done, of course this scheme fails, and it is only in so far as that can be accomplished that the scheme will be a success.


[Stage Direction]
Section agreed to.
Sections 3 and 4 agreed to.
On section 5-Capital requirements.
Edward Joseph Garland: The closing words of subclause (2) of this section read:
The said shares shall be non-transferable and shall be subscribed for in the following manner.
And so on. Would it not be much wiser if after the word "non-transferable" we inserted the words "except at the option of the board"? It would be as well to give the board discretion in regard to that.


James Alexander Robb: I will accept that. I think it is an improvement. I move that subclause (2) of clause 5 in the twelfth line at the top of page 3, be amended by inserting after the word "non-transferable" the words "except at the option of the board."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 6-Limit of outstanding farm loan bonds.
Edward Joseph Garland: I direct the attention of the Minister of Finance to subsection 4 of this section, and then ask him to turn back to section 4, subsection (d) which subsection gives them authority to invest the funds of the board in the debentures, bonds, stocks or other securities of, or guaranteed by, the government of Canada, or of, or guaranteed by the government of any province of Canada -in other words, fully protected bonds. But the power having been given to invest in that class of security we find that their use as security is to a large extent modified by subsection 4 of section 6, which restricts the board to securities for its bond issue other than the bonds which it has already invested in. It is a restriction on the board which is unnecessary, and it might be just as well to take into consideration a possible adjustment.


Henry Herbert Stevens: You have your initial
payment to start with.


Edward Joseph Garland: Subsection 4 of section 6 reads:
(4) Each farm loan bond shall be signed by the commissioner, or by a member specially authorized thereunto by the board, and by the secretary or treasurer of the board. It shall have printed thereon a certificate by the com-

Long Term Farm Loans
missioner that it is issued under the authority of tills act and that at the time of issue the board holds first mortgages on farm lands at least equal to the total amount of bonds issued under this Act.
Why not have that clause amended so as to read:
-the board holds first mortgages on farm lands and securities, in keeping with subsection (d) of section 4, to the full amount of the bonds issued under the act.
Why in addition to the first mortgages should we not allow this other first class security? Has the minister considered the point?


James Alexander Robb: I am sure my hon. friend does not want to turn this board into a bond investment company.


Edward Joseph Garland: Not at all. The minister has already gone further in that respect than I would have done myself.


James Alexander Robb: The previous section referred
to investments in federal and provincial guaranteed bonds. They may invest in those, but they must have mortgages. Otherwise what are they for?


Edward Joseph Garland: Yes, they
must have the mortgages also, but when you have an ample supply of guaranteed bonds purchased as investment by the board, why should that not be taken into account? With respect to subsection 4 of section 6 which says:
And that at the time of issue the board holds first mortgages on farm lands at least equal to the total amount of bonds issued under this act.
The board might have first mortgages on land and a considerable amount of these other
securities besides.


Henry Herbert Stevens: Subsection (d) in section 4 is a permissive clause and covers extra funds which the board may have, that it has not yet loaned out in accordance with the main intent of the bill, namely, on farm lands; but in order that they may earn for them in the interim as much as possible, they may purchase bonds and so forth, of a certain class, suppose the board has two or three million dollars invested; before borrowing any more money it would dispose of those debentures and loan that money on farm loan credits. If the board did not follow such a course it would not be doing its duty under the act. Therefore I do not see any need for the amendment my hon. friend suggests. If that amendment were carried it would be an indication to the board that parliament expected them to keep those securities in reserve, which is not the intention. The intention is to have the board loan this money on farm loan credits.
32649-S3
But suppose they market an issue of ten million dollars, they cannot invest it immediately in farm loans, but they can place it out at interest while they are arranging these small loans. I suggest that it would be preferable to leave the section as it stands.


[Stage Direction]
Section agreed to.
On section 7-Conditions for loans.
Henry Herbert Stevens: Now we come to the subject of that amendment. I approach this matter with an open mind. I certainly hope the board can restrict its expenses and so forth within the one per cent fixed in this act. I agree with my hon. friend who spoke a moment ago, that it is desirable that if possible we force the board to keep within that limit. I am inclined however to the view that in the early stages it may be difficult for them to do so. It may be one and a half per cent or one and a quarter per cent, and I would be willing to give the board discretion and would favour the adoption of the amendment made by the Senate eliminating the restriction to one per cent. I am not worked up about it at all, but I feel that as a matter of sound common sense they should be given a free hand to that extent.	-


James Alexander Robb: In common with my hon.
friend from Vancouver Centre, I am not worked up about it, and I am not going to worry much over it. In the original bill as presented last year there was no limitation of any kind. The words "not exceeding one per cent of the amount of the loan" were inserted when the bill was in committee. I observe there seems to be a misapprehension as to what this one per cent means. Perhaps there should be a comma or a semicolon in that sentence. However, it clearly provides that the one per cent is for the expenses of operation and reserves for losses. I think that is clear, but if the committee wants to strike out the words I do not object. I want to put the bill through just as it left the House before.


Henry Herbert Stevens: I am not going to press
the matter, but sometimes, in order to get a larger measure, it is well to give way in small matters. I consider this of such minor importance that if we can facilitate its passage through the Senate by acceding to their view, I certainly would rather do it than risk the bill.


Archibald M. Carmichael: I fail to agree with
the remarks which the hon. member has just made. I am rather of the opinion that the cost of operation is one of the large matters

Long Term Farm Loans

in this bill. It was the opinion of the committee last year that unless the cost of operation was cut down to a minimum the bill would be useless after it came into effect. I think the reason why the one per cent maximum was imposed for the cost of operation was because of the tendency of government management to let the cost run unduly high, and it was felt by the committee that if that cost were limited to a one per cent margin, some effort would be made to keep within that margin. We have had comments made here and evidence adduced1 that in Manitoba the rural credit scheme has been running on a margin of one-half of one per cent, and that the American rural credit scheme has been running on something less than a one per cent margin. It does not seem unreasonable, then, to suppose that in the whole of Canada we should be able to run this scheme on a one per cent margin for administration. If not, it would appear to me that the cost of the money to the farmer would run up so high that the loan companies would not need to reduce their interest rate very much to meet the rate charged under our federal scheme, and by so doing our scheme would be killed at the start.


John Arthur Clark: Supposing the board charge
one per cent for expenses, and that one per cent does not meet the expenses. Then there are losses, are there not? This act leaves it in the discretion of the board to increase the rate as much as they like in order to provide the necessary reserves for losses. It seems to me that it is leaving a pretty wide discretion to the board to fix a maximum of one per cent for administration, and then let them charge any rate they like to provide for the necessary reserve. I was under a misapprehension when I first saw the section; I had just glanced at it for a moment, and I thought the intention was to make the one per cent provide for the administration and for the necessary reserves for losses. Frankly, I was of the opinion that that was an impossibility, and I am still of that opinion. As it stands now, the one per cent is limited to administration; I think that is unwise, too; I thought it was unwise then, and I think it is unwise now, because if that amount is exceeded, the excess amount becomes loss, and the board has the discretion to increase the rate to any amount it sees fit to meet these losses or to provide the necessary reserve for losses. Furthermore, I think it is advisable that it should not be left in such an indefinite state. I am not clear whether the board has discretion to fix a rate in each individual case to provide the necessary re-
	. h. ^ .:
serve for losses, or whether a uniform rate will be fixed applicable to all loans. I am left in a state of doubt on that point.


James Alexander Robb: I think good administration
would provide for a uniform rate throughout.


John Arthur Clark: But how many boards are
there?


James Alexander Robb: While I am on my feet I
may say that the losses, as I understand it, will be losses in the investment, not losses on administration.


John Arthur Clark: I think it would cover all
losses. I know the intention ordinarily would be to fix a rate for losses on the loans, but supposing you have a loss on the administration; how are you going to provide against that?


Mr. BOYS:: Has the minister any idea
of what the rate of interest is likely to be under this act?


James Alexander Robb: The act provides:
The interest rate on loans under this act shall be such a rate in excess of the interest rate yielded at the time of issue by the last series of farm loan bonds issued by the board as shall be sufficient, in the judgment of the board, to provide for the expenses of operation not exceeding one per cent of the amount of the loan and for the necessary reserves for losses, or if no such bonds have been issued, such a rate as in the judgment of the board will be yielded by the farm loan bonds when issued, increased by provision for expenses and reserves as aforesaid.


William Alves Boys: I read that.


James Alexander Robb: My hon. friend knows that
the price of money is like the price of wheat; it fluctuates. I cannot tell what the price of money will be next year.


William Alves Boys: 
James Alexander Robb: If my hon. friend is right in
saying that they get the money at five per cent, and it costs one per cent for administration, that means they are getting their money at four per cent.


William Alves Boys: I do not want to be misquoted.
I	say they are getting their money to-day at five and a half per cent, and that the Premier of Ontario during the last election campaign stated that he expected to be able to make that rate five per cent. I do not altogether agree with some of the remarks that have been made. I am of the opinion that you should be able to administer this act at a cost of one per cent, and certainly you ought to be able to raise the money on bonds guaranteed by the government at four per cent. If that is the case, there should be some estimate made for losses, and I would think the farmers would be able to get their
32649-83J
money under this act at five and one-half per cent, which is the prevailing rate to-day in Ontario.


James Alexander Robb: That is very encouraging. We will get the money as cheap as we can.


Edward Joseph Garland: A great
deal is to be said for the argument of the hon. member for North Simcoe. I notice that in Alberta this last winter there were no less than thirteen or fourteen mortgage companies competing for business, while four years ago there were only two, and neither of them was competing for business at that time they were just keeping a staff on and doing very little lending. There seems to be a considerable expansion of credit taking place in this country at the present time, and if the scheme is wisely administered, that is all to the good; but if it is unwisely administered it may lead to another crash such as that from which we have just recovered.
I wish to correct an impression that may have been left on the House by the hon. member for Vancouver-Burrard. I have in my hand the ninth annual report of the Federal Farm Loan Board for the year 1925, from which I quote the following:
Rates of interest-the rate of interest charged borrowers by all of the banks in this system is governed by the rate at which they can sell their bonds.
Just as is proposed in this bill.
Every bank is limited in its interest charge to one per cent above the rate at which its last preceding issue of bonds was sold.


William Alves Boys: Is there any provision for
losses?


Edward Joseph Garland: Just a
moment.
The rate borne by the bonds marketed during 1925 by federal land banks was four and a half per cent, which made five and a half per cent the maximum interest charge.
That indicated that all losses and contingencies had been taken care of in that one per cent. The report goes on:
Experience has fully demonstrated that when a bank obtains a volume of one hundred millions m mortgages, and is in good shape as to its delinquencies and probable foreclosures, it can, owing to large volume, operate on a spread less than one per cent. Three of the federal land banks, being in this situation, have reduced their loaning rate-two of them to five per cent and one to five and a quarter per cent.
I need not quote further. This is simply in contradiction to the hon. member's remarks. There was no deliberate misrepresentation ; he was merely misinformed. There are other illustrations that might be cited, but I am satisfied that if the act is administered
Long Term, Farm Loans

sympathetically and with the hearty support of the government there is nothing to prevent its taking the place, in all provinces, of the existing loan system. If that is done there is no question about the volume, and, with the volume, no question about the ability to carry on with the one per cent margin. I strongly recommend that the one per cent limitation be retained.


William Russell Fansher: I would refer to a point raised by the hon. member for Vancouver Centre with regard to the initial expense of setting up the offices and hiring the staff, which he said would exceed one per cent. I might draw his attention to clause 5 of the bill, which provides that the first five millions of bonds issued by the government shall be free of interest for a term of three years. So that while the board will be charging interest on this amount, according as it is loaned, and not having to pay interest on it to the government, the interest it gets from the mortgagors can be used for any initial expense that may be incurred.


The CHAIRMAN:: Shall the section carry?


Edward Joseph Garland: No.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


John Frederick Johnston: When the committee
rose at six o'clock we were considering section 7 of this bill.


Mr. SPENCER:: I would like to refer for a moment to subsection 7, which calls for a charge of 8 per cent on default payments. It would seem to me, Mr. Chairman, that that rate is too high; I think anyone will admit that farming cannot be made to pay under a burden of that kind year after year, and I would be glad if the Minister of Finance could see his way clear to lower that rate to 7 per cent.


Edward Joseph Garland: I would like to add my hearty approval of that suggestion. We have had sufficient experience in the last five years to show that the policy of still further burdening the farmer with heavy arrears of interest makes it almost impossible for him to get out of his difficulties. As a result of that condition, as hon. members know, in our province we have had to establish a special board for the purpose of adjusting debts as between farmers and their creditors, which has caused a great deal of contentious discussion among the financial interests. I

think the minister would be saving himself and the board a good deal of trouble later on if he could moderate that penalty against the unfortunate man who, because of conditions not under his control, is not in a position to make his payments in any particular year. Has the minister ever considered the possibility of giving the board discretionary powers in respect of this penalty clause? For example, should not the board be given power to say to the borrower "We understand your conditions this year; you have had a total crop failure either through drought, hail, grasshoppers or something of that kind, and you cannot pay. We know it is no fault of yours and that you are not trying to defraud us, therefore the interest this year will be at the ordinary rate, with no penalty."	Should anyone attempt to defraud the board, of course, I would agree wth the authorities that a penalty should be imposed, but if through conditions beyond the control of the farmer, such as what are known as acts of God and the like, he is unable to make his payments, I think the board should have some discretion in the matter.


James Alexander Robb: I quite agree with my hon.
friend that it should be made as easy as possible for the borrower to wipe out his debts. This rate of 8 per cent was fixed as an incentive to induce borrowers to pay up, but as I understand it the board may, if the circumstances justify, make the rate less. My hon. friend will notice that the clause reads "not exceeding 8 per cent." I think this a pretty safe clause to insert.


Edward Joseph Garland: I think the minister will realize that 8 per cent is altogether out of the question; that is the very thing we are trying to get away from in this legislation. We want a lower rate of interest if possible and if, because of unforeseen circumstances, it is impossible for a farmer to make his payments, why put him back in the situation he is trying to escape by this legislation?


James Alexander Robb: Of course it must be remembered that the board will be sympathetic. My hon. friend knows that there are people who dally along and avoid payment if they can do so. This clause is inserted to provide an incentive for them to pay, and in their judgment the board may reduce the rate to the usual one of 5 per cent or 5^ per cent, there is nothing to prevent the board from allowing that rate to continue. But if the man is careless and pays no attention to his obligations the board has the right to charge up to 8 per cent, and this will be helpful to all the other borrowers as well.

Long Term Farm Loans


Edward Joseph Garland: Does that
rate of 8 per cent include the amortization?


James Alexander Robb: No, it is straight interest.


Edward Joseph Garland: Then in my opinion that is an absolutely wrong principle and is not fair.


James Alexander Robb: It applies only to defaulted
payments and the board have the right to make it less if they so desire.


William John Ward: I presume the board referred to is the board here in Ottawa, and in that connection I would like to ask a question of the minister. Provision is made in the bill for the establishment of provincial boards; if that is done, what authority would that board have in these matters? Would it be in the capacity of an advisory board to the central board in Ottawa?


James Alexander Robb: I understand that the central
board has the final authority, but it must be kept in mind that the central board is governed by the advice of the provincial boards. The man here in Ottawa does not know very much about these matters and he must of necessity rely on the judgment of the board nearest to the spot, whose members understand the local situation.


Henry Elvins Spencer: There is one other point I would like to bring up, with regard to subsection 8. Would the borrower be asked to pay any bonus if he repaid his loans before they were due?


James Alexander Robb: What does my hon. friend mean by a bonus? That is a matter to be determined by regulation, I think.


Edward Joseph Garland: I am afraid it is. Does the minister consider it wise to leave it that way? Would it not be much better to decide now that after the period provided for, that is five years, the borrower could repay in whole or in part without necessity of paying a bonus. I think it would be a very advisable clause to insert in the bill. There is no question in my mind but that it will increase the volume of business done.


James Alexander Robb: Of course there is no penalty after five years. We hope the board will be sympathetic towards the borrowers and will administer the act in a fair way.


[Stage Direction]
Section agreed to.
On section 8-When loans available.
Joseph Henri Napoléon Bourassa: I would ask the minister if he could not widen somewhat the scope of subsection 3. I had a letter a few days
ago from La Societe de Colonisation which the minister knows is a sub-agent, so to speak, of St. Jean Baptiste Society. It has a provincial charter, interests itself in colonization matters and is frequently an agent of communication between the Land department at Quebec and the settlers. This society asks to be empowered under this subsection of the bill to act as a local cooperative society. I think the addition of two or three words along this line with respect to colonization societies would enlarge the scope of the operations of the bill very usefully.


James Alexander Robb: I can see no objection to amending the subsection in such a way as to read:
Subject to the approval of the board whether loans shall be made directly to farmers or through local cooperative societies, or recognized colonization societies-
And so on.


Edward Joseph Garland: What body would be responsible for determining the nature of the colonization society?


Joseph Henri Napoléon Bourassa: The board.


Edward Joseph Garland: This board? All right. May I submit that this section is probably one of the most important sections in the bill, if not the most important. This is the section which brings the province and the federal board together. It goes further than that, it brings the borrower directly to the board. In the original draft of this bill the precaution was taken by those who were interested in the question from this side of the House to see that this section should provide that the loaning should be made either direct to the borrower, or through cooperative societies, or in the way the hon. member for Labelle (Mr. Bourassa) has suggested, but subject to the discretion of the provincial advisory board, not to the approval or regulation of the federal board. As the section is now drafted it makes the method to be adopted in a province subject entirely to the federal board. So the board, as soon as the bill is passed, could come to our province, where we are prepared to adopt this measure to the fullest degree, and say: "Here, you must administer your loans direct," whereas in that province we administer the loans through our local cooperative societies. I would ask the minister to reconsider this section and have a provision made that the provincial advisory board, or the provincial authorities acting in connection with this bill,
Long Term Farm Loans

have discretion as to whether under the operation of the act in the province the loan would be made through the local credit society, or the local cooperative society, or direct to the borrower.


James Alexander Robb: I think we must have uniformity. There must be some central authority to determine lines of policy for all the provinces. I repeat that the board will be quite likely to listen to the advice of the local boards, but there must be in the last analysis uniformity in the act. I think it is well to leave the central power there. My hon. friend is acting on the assumption that the central board is going to be antagonistic to this whole scheme. I do not look at the matter in that way.
Mr. 'GARLAND (Bow River):	Not at
all.


James Alexander Robb: I think the central board will
be fairly sympathetic to the scheme.


Edward Joseph Garland: The minister misunderstands my point. No one entertains a greater degree of hope than I do that the federal board will be completely sympathetic, but the minister's last statement makes the provision worse. He says that uniformity is essential. Now at that I frankly throw up my hands in despair and say it cannot be achieved. There are provinces that are not prepared to undertake the organization of local cooperative societies for the administration of loans through this bill. On the other hand there are provinces that are preipared to do it in every way. How are we going to secure uniformity?


James Alexander Robb: I admit the point, but thej''
will be the men to put their O.K. on it.


Edward Joseph Garland: Then under subsection 3 of this section the federal board will be advised to consult the administration board in every province with respect to the manner in which these loans should be made.


James Alexander Robb: I am speaking now as the
minister in charge of the department, and that is the advice I shall give to the central board. I do not hesitate to have that go on record as the view of the government.


Robert Gardiner: I think the minister is somewhat mistaken in regard to the attitude he has taken with respect to this particular clause. If he reads subsection 3 very carefully he will see that it states:
Whether loans shall be made directly to farmers or through local cooperative societies,

or both directly to farmers and through local cooperative societies, as the province may desire.
The local board in the province, I submit, would be able to recommend to the central board what method should be adopted in a particular province, and it would be natural that the central board should give its consent to what was thought advisable in a particular province. I think the point is already covered.


James Alexander Robb: I think my hon. friend's interpretation is right. The central board would listen to the recommendations of the provincial board.


Mr. STINSON:: Should not a provision
be added making the provinces liable for any loss that might be incurred within a province?


James Alexander Robb: I recall that last year that
position was taken by some members of the Senate, but I prefer to have the bill as it left the House last year. I would rather not add such a provision to the measure.


William John Ward: Subsection 6 in the fourth
line reads:
That in case of an adverse report on the operations of any provincial board by the auditors of the board, or should any provincial board refuse to enforce in a satisfactory manner the regulations and directions of tile board, the board may after conference with the said provincial board relieve such provincial board of its duties-*
And so on. If the provincial organization lives up to the act, why should any discretionary power be required on the part of the central board?


James Alexander Robb: Is this what my hon. friend has in mind?
-refuse to enforce in a satisfactory manner * the regulations of the act-[DOT]
Instead of, "the directions of the board."


William John Ward: "And" directions of the
board.


James Alexander Robb: I am afraid that would tie
up the board. We might find that a disadvantage later on to 'both the borrower and the lender. Let us leave something to the judgment of the men who are administering the act.


John Frederick Johnston: The minister has moved to amend subclause 3 of clause 8 by adding after the words "cooperative societies" in the 8th line the words "or recognized colonization societies." The suggestion has been made to the minister that the word "both" would have to be stricken out so that the clause might read properly.

Long Term Farm Loans


Joseph Henri Napoléon Bourassa: Should there not be a
slight change made in the ladt line of the same subclause, making it read:
To farmers and through such societies-
Or something to that effect?


James Alexander Robb: Yes. I would suggest:
Such local cooperative or recognized colonization societies.


John Frederick Johnston: The clause as amended would read:
Subject to the approval of the board whether loans shall be made directly to farmers or through local cooperative societies or recognized colonization societies, or directly to farmers and through local cooperative societies or recognized colonization societies, as the province may desire.


Robert Gardiner: The minister might explain just what these colonization societies will include, and if they will have to secure their funds through the provincial board subject to its jurisdiction to the same extent as cooperative societies or individual farmers would be subject.


James Alexander Robb: We are placing these recognized colonization societies on exactly the same basis as the cooperative societies. There are, in some of the provinces-I know there are in Quebec-recognized colonization societies which have charters from the provincial government.


Henry Elvins Spencer: These colonization societies have nothing to do with bringing immigrants into western Canada? This is simply a way of carrying on certatin community work in Quebec?


James Alexander Robb: They are called colonization
societies, but they are doing the same work as these local cooperative societies.


Robert Gardiner: I take it that they will be subject to all the rules and regulations of the local board, and that the property will have to be properly appraised the same as any other property whether it is that of an individual farmer or a local cooperative organization working under this legislation.


James Alexander Robb: It is all dependent upon
provincial legislation.


Mr. EVANS:: I do not think we need open the door there to colonization societies as I understand them. After this scheme is properly organized the local farmers will form themselves into cooperative societies for the purposes of this legislation. I do not see why we should want to open the whole thing up to colonization societies, as the valuations will be made on improvements and the balance of the farm as the farmers organize themselves.


James Alexander Robb: That may be true in the
province from which my hon. friend comes, but in some other provinces we have colonization societies that are doing exactly the same work as cooperative societies. They are all subject to provincial legislation.


John Evans: In those provinces can they not have farmers' organizations under this legislation through the provincial government?


James Alexander Robb: I do not doubt that they
can, but if they prefer to do the work in this way, why should we close the door on them?


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 9-reserve fund.
William John Ward: As I understand this legislation, it is purely cooperative or national in its purpose and application. Why should we provide for payment of dividends?


James Alexander Robb: The dividend is paid back
to the borrower. This is on exactly the same basis, I suppose, as the Grain Growers' Grain Company and other cooperative grain companies of the west. If there is a profit, I imagine it will go into a reduction of the debt.


William John Ward: Will that be returned in the form of lessened charges, or in what form will it be returned to the borrower?


James Alexander Robb: I might direct the attention
of my hon. friend to sub-clause 4 of this clause:
All dividends paid upon stock held by any borrower shall remain in possession of the board and shall be allowed to accumulate at the rate of 5 per cent per annum compounded annually until such time as the said stock with accumulated dividends is sufficient to provide for the payment of all indebtedness under the loan when the amount of the said stock and the accumulated dividends shall be credited to the borrower as a final payment.
It goes back to the borrower.


[Stage Direction]
Section agreed to.
Sections 10 to 15 inclusive agreed to.
On section 16-Regulations.
Edward Joseph Garland: I draw the minister's attention to subsection (e) of this section, which reads:
The board may, subject to the approval of the Governor in Council, make regulations .... to provide for:
The manner of nomination and appointment of representatives of the borrowers on the provincial board in any province.
Long Term Farm Loans

That means these gentlemen will be appointed by order in council. Then subsection (f) provides that-
The manner of crediting advance payments by the borrowers under the mortgages-
Shall be subject to the approval of the governor in council.


James Alexander Robb: What is the objection to that?


Edward Joseph Garland: It leads to interminable delay. Would it not be done better by the provincial board, or by the provincial board in Consultation with the federal board?


Henry Herbert Stevens: The central board will
make its regulations, which may be approved by order in council.


Edward Joseph Garland: If that is
clear, all right.


James Alexander Robb: I think it is clear.


Edward Joseph Garland: Then it is just the regulations.


James Alexander Robb: Yes.


Edward Joseph Garland: This section does not say so. Section 16 reads:
The board may, subject to the approval of the Governor in Council, make regulations not inconsistent with the provisions of this act for the conduct of the business of the board, and without limiting the generality of the foregoing provision the board shall have power to provide by regulation for:
And then it gives a list of the officers, appraisers, inspectors, and so on. In my opinion that is a direct violation of the merit principle in the operation of the Civil Service Act itself, and I suggest to the minister that he insert the words:
The board shall have power to provide by regulation, subject to the terms of the Civil Service Act, for the employment of officers, appraisers-[DOT]
And so on. I am quite willing that the federal board, the provincial board and the advisory council shall be appointed in whatever manner may be best calculated to secure the proper men, but that all under them, all clerk and other employees, should be subject to the Civil Service Act. I do not think there will be any division of opinion in the House on this point. I am satisfied my hon. friends opposite are as anxious to maintain the integrity of that act as hon. members to my right. I am satisfied the minister will accept my suggestion and I do not think any further argument is necessary.


James Alexander Robb: I think the hon. member had
better let this section go through as it stands. I want to assure him that there is no ques-

tion of seeking additional patronage or anything of that sort. If my hon. friend knew what I know and had the experience I have had within the last thirty days in connection with some of the officials in the Department of Finance I think he would agree with me I am finding no fault with the Civil Service Commission. They appointed these gentlemen under the act, but we discovered that some of those who were appointed had been let out of positions-well, I would not like to use a harsh word, but one man assigned to us by the commission has had to go to the penitentiary. I do not hesitate to say that. I have taken that matter up with the Civil Service Commission, pointing out that we feel sometimes that we are sitting on a powder barrel in the case of a department where millions of the people's money are at stake in connection with appointments made under the act. It would look as if the commission had never gone back to look into the question of a man's icharacter-they look tfor everything else but character. After all character is the main thing in administering a department of a financial nature. I think my hon. friend had better allow this to go through as it is. We have arranged to have a sitting with the Civil Service Commission and point out some of the difficulties that have crept in from time to time in a department where large sums of money are handled. I shall be glad to discuss the matter with my hon. friend confidentially and tell him what I know, and I think he will agree with me.


Edward Joseph Garland: Nothing
would give me greater pleasure than to accede to any reasonable request of the Minister of Finance, but any argument he has used is more applicable to appointments by patronage than appointments by commission. Furthermore he knows that, in spite of the, shall I say, exceedingly acute manner in which he endeavours to make the suggestion, without actually stating it, that he found himself in great difficulty with respect to the appointment of an employee who had been in the penitentiary at some time or other. He can get rid of that employee under the Civil Service Act by order in council.


James Alexander Robb: Yes, we might, after he had run away with a million dollars of my hon. friend's money and mine.


Edward Joseph Garland: Exactly the same characters, or even worse characters, have crept in under patronage than under the Civil Service Act. There is no question about that, and if the minister wants me to waste time I shall give all sorts of cases. The min-

Long Term Farm Loans
ister must not forget some of the appointments which have been made under patronage. There is nothing more essential to the country's future welfare and proper development than the administration of the civil service, under, I shall say, principles that have elevated the civil service of Great Britain and placed it above all others, so far as I know, in the matter of personnel and ability. The only way we can hope to improve the civil service is by adding all our strength and force to the prestige of the present commission, and not by appointing such men as have been placed in their positions by patronage. Let us work in this direction, not from the bottom up but from the top down. We are taking a very serious step if we open the door to patronage in the matter of appointments in connection with this board. It is going to be one of the most vicious forms of patronage. The Liberal whip grunts and groans at this suggestion.


Joseph Philippe Baby Casgrain: No.


Edward Joseph Garland: The hon.
whip would be better employed in studying the terms of the Civil Service Act and making it a little better, instead of sneering at it. The attitude assumed by the other side of the House in this matter is regrettable. I do not wish to antagonize hon. members in this matter, but frankly I cannot agree with the minister, and I cannot allow this matter to pass without a protest. I cannot support the proposition to place the appointments of the stenographers, the appraisers and everyone else, the huge personnel of this federal loan board, at the door of patronage. I am opposed to it and I record my protest against it.


Mr. ROSS (Kingston):: I think the minister has made some serious statements in the last few minutes, and I do not think that they can be correct, if I understand what has been the procedure of the Civil Service Commission in the past. He says that the Civil Service Commission do not look for character, that that is the last quality which they consider. I know of no position filled by the Civil Service Commission where the applicant has not been asked to furnish references, and these references are always communicated. They are in nearly every case I know of. How can the minister say that character is one of the matters that is not touched upon by the commission, when, as far as I know, the practice that is followed by the commission is to look into the matter of character? I
should like to know it, if they proceed in one way in one district and in another way in another. The minister should think seriously before that statement is broadcast.


Peter McGibbon: I think it is quite evident from the minister's remark of a few moments ago that the government must do one of two things; either they must have the courage of their convictions and bring in a bill to get rid of the Civil Service Commission-


James Alexander Robb: We do not want to get rid
of them.


Peter McGibbon: You do not want to get rid of them openly, but you are taking this means of getting rid of them so far as these appointments are concerned. We have a Civil Service Commission two members of which were appointed by this government, and what does the minister say? He cannot trust this commission, with two of the government's own appointees on it, to appoint the officials who are to work under this act. The thing is absurd. If the minister believes what he says, he should have the courage to bring in a bill to get rid of the Civil Service Commission, for that is what he is doing here in an underhand way so that the people of this country will not get wise to it. For the minister to say that he cannot trust his own commission to make the many appointments necessary under this act, to say that the commission may appoint gaol birds and cannot be trusted to choose men even for minor positions, is a serious charge to make against the Civil Service Commission. The minister has said either too much or too little.


James Alexander Robb: I have nothing whatever to
withdraw. Unfortunately, we have had the evidence within quite recent weeks of exactly the kind of thing I frankly stated to the House to-night. My hon. friend must not try to convey the impression, just because I pointed out a certain condition, that we are opposed to the commission. Nothing of the kind. We are in favour of it. I am in favour of exactly the same system of civil service administration as they have in Great Britain; but we have not that system in Canada. My hon. friends would try to represent that we are departing from the system of appointments by the Civil Service Commission in creating this very small organization to administer this act, for it will be very small. From letters coming in I notice that there is an idea that we are going to build
Long Term Farm Loans

up a large organization and load it down with expense. Nothing of the kind. Let me point out that my hon. friend sat behind one of the ablest Finance ministers that Canada ever had, and he exempted the Income Tax branch from the operation of the Civil Service Act.


Edward Joseph Garland: That is no excuse for the minister's action, surely.


James Alexander Robb: I am not offering it as an
excuse. I am simply using it as an argument to my hon. friend from Muskoka-Ontario.


Arthur Edward Ross: Does the minister know any other method than the one I have mentioned by which an insurance or liability company operates? They take references from reliable people in the community, who vouch for the character of the applicants. If such people are not to be trusted, where can you get reliable evidence?


James Malcolm: I would like to offer a
word, not in criticism of what hon. gentlemen opposite have said, but simply as chairman of the committee which investigated the whole civil service a few years ago. There is a condition in the Finance department as was pointed out privately to that committee, and in regard to which we seriously considered making certain representations, calling for a high degree of honesty and secrecy in the men who administer that department, and the same applies to the Income Tax branch. I do not think it is possible for the Civil Service Commission, with their machinery constituted as it is to-day, to make inquiries into a man's private life and his records as to trustworthiness without probably casting reflections on some of the men who have not been chosen for appointment. The staff that will be required in the administration of this act is going to be small, and I feel that in this respect the minister in the present bill is not asking even as much as a former Minister of Finance asked in connection with the Income Tax branch employees. He asks the right to select men who, in his opinion, would be worthy of the confidence he put in them. At the time the committee of which I was chairman sat, we were invited by the Finance department to go through the sub-treasury vaults, and I believe that most of the members of that committee who took the trip, and some of them are still in the House, came to the conclusion that what former ministers of finance have said-and it is what the Minister of Finance is saying to-day-was perfectly justified, namely, that there is a class of positions in the Finance department in regard to which nobody should have the right of selection except the senior officers of the department who are responsible for its administration. I 
make that observation with regard to the Finance department based on my own experience as chairman of that committee which brought in the Civil Service Act amendments under which we are now working. We did not recommend that the Income Tax branch be put under the Civil Service Commission for the reasons given to us privately, and for the very same reasons I would not ask that those engaged in the administration of this act be placed under the Civil Service Commission.


Peter McGibbon: I cannot let either of
the two ministers get away with such nonsense as that. There is absolutely no comparison between the experts in the Finance department and the officials who will be appointed under this bill.


James Malcolm: Has my hon. friend ever had the pleasure of visiting the sub-treasury vaults of the Finance department? Let him do so, and then make his comments on nonsense.


Peter McGibbon: I have had that pleasure. This bill is providing for the employment of " officers, appraisers, inspectors, attorneys, clerks and other employees."


James Malcolm: How many are there?


Peter McGibbon: The whole staff. Does the minister say that there is any comparison between these employees and the higher officials of the Finance department? The thing is absurd.


Arthur Edward Ross: Is the minister
serious in his statement that the Income Tax branch has not been placed under the Civil Service Commission because that might cast a reflection on somebody?


James Malcolm: No, I was referring to
the higher officials.


Arthur Edward Ross: Certainly not.
Everybody in this House knows there is a reason why the Income Tax branch was not put under the Civil Service Commission. The minister's remarks might apply to a few of the higher officials of the Finance department, but not to the under-officials who will be engaged under this act. The minister cannot be serious in suggesting that it would cast a reflection on certain people who have been appointed in the past.


James Malcolm: I was referring to the
higher officials.


Edward Joseph Garland: I do not
think this clause should pass until we have had the opportunity of definitely establishing where the groups in this House stand in

Long Term Farm Loans
regard to the retention of the Civil Service Act and the maintenance of the prestige of the Civil Service Commission. I do not see how the government can very well get away from it. As I stated in my introductory remarks, I have no objection to the government providing in this bill for the appointment of the federal board, the provincial boards and an advisory council, in whatever way they consider will get the best results, but so far as the subordinate positions are concerned, I ask that they be placed under the Civil Service Act. I hesitate to move an amendment. I do not wish to embarrass the minister, but I think this is only a reasonable request which should be acceded to by the government.


Milton Neil Campbell: I think we could all agree with the Minister of Trade and Commerce and leave these appointments to the senior officer of the department concerned if only we could be sure that that officer would control these apointments. To my mind, that is the question for us to decide in discussing this matter. I do not know that the minister himself would have an absolutely free hand in making the appointments. We all know the pressure that is brought to bear in the making of political appointments. There would be pressure from every point of the compass and the minister himself, if he were frank, would state that he did not have an absolutely free hand in making the appointments. I heard the former leader of the official opposition, the Right Hon. Arthur Meighen, say on one occasion that a minister who tried to enforce the merit system in his own department would be defeated by his own party on the floor of the House, and I do not think I could put it in any stronger language my condemnation of the patronage system. I would not go so far as the hon. member for Bow River and suggest that we should amend the act, thereby tying up the matter at this time. I realize that we spent a lot of time on this bill last year, as we have done this session, and I would hesitate to do anything that would interfere with the progress of the bill at this stage. But when the question of the Civil Service Commission versus patronage is under discussion we ought to state exactly where we stand. The observations of the minister with regard to certain men in his own department appear to me to be hardly applicable in a general way to the Civil Service Commission. If a man of questionable character is found in the service under the present system, I venture to say that for every one of that type under the commission I can point to two or three men
appointed under the patronage system who are a good deal worse; not perhaps in the employ of this government, but men who have been in the service of various governments of Canada, provincial or federal. I know that very often ministers of the crown, whether provincial or federal, have not a free hand in the matter of appointments. Men come along who have given their services in an election and who are looking for their reward, and the minister is unable to resist the pressure brought to bear upon him. The object this parliament had in view when the Civil Service Commission was created was to relieve ministers of the crown of this very pressure. Why, the present Speaker is on record in Hansard as saying, after the Civil Service Act bad become law, that he walked home from this House that night feeling for the first time in his political life a free man. Surely that statement ought to be considered.


Charles Avery Dunning: I have just a word to
say in reference to the manner in which this legislation will work out in practice. I do not think that due regard has been paid by some hon. gentlemen to the provincial board feature of the bill now before the committee. Provincial boards are provided for, three of the members to be nominated by the government of the province and two other members by borrowers within the province. Then provision is made in the section under discussion for the national board to make regulations with respect to the employment of the officers of the board. I expect to see it work out in this way: the provincial board having to do with the work on the ground will necessarily have a very large say as to the officers who are to operate within that particular province. If that is not the case we certainly shall not get, in the various provinces coming under the act, men who will be willing to assume the responsibilities for administering the act in those provinces. The provisions of the bill are sufficiently elastic to facilitate cooperation between the Dominion and the provincial governments, not only as regards the financial aspects of the measure, but as well with respect to its administration directly within the limits of the respective provinces. Personally I think the method now suggested in the bill should be given a trial rather than it should be insisted upon that the Civil Service Commission of Canada at Ottawa should make appointments within the provinces in relation to a matter with which the provincial governments are concerned. I do not think it wise, because of the joint liability created under the terms of the bill, that the commission
Northwest Territories Act

should be asked to make these appointments. The administration of this law will in the nature of things be largely experimental. The bill is different from other measures which have been enacted from time to time to make possible cooperation between the Dominion and the provinces. This is different in that there is to be cooperation in administration. Reading together section 8 and section 16, with which we are now dealing, I think there is considerable merit in the contention of the minister, apart altogether from the arguments he advanced on other points. As he has pointed out, the employees at headquarters in Ottawa will necessarily be the smallest proportion of the staff. Indeed, the minister tells me that he intends to use in Ottawa, so far as the admnistration of the act here is concerned, a branch of (his [DOT] department which is now under the Civil Service Commission. But with regard to provincial administration my own opinion is that regulations will have necessarily to be evolved, setting out a form of cooperation between the province and the Dominion with respect to the conduct, within the province itself, of what is really a joint undertaking.


John Frederick Johnston: Shall the section
carry?


Edward Joseph Garland: On division.
Section agreed to on division.
Section 17 agreed to.
Bill reported, read the third time and passed.



NORTHWEST TERRITORIES ACT AMENDMENT


[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) moved the second reading of Bill No. 123, to amend the Northwest Territories Act.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Johnston in the chair.
On section 1-Export tax on furs.
Henry Elvins Spencer: Could we have some explanation from the minister as to whether this bill is to raise revenue, or to control the fur trade or export trade, or what it is for?


Mr. STEWART (Edmonton):: I gave an
explanation on the introduction of the bill. We are aiming to bring the Northwest Territories in conformity with the rest of Canada. There are fur taxes in every other province, including the Yukon, and some complaint has

been made that in Alberta particularly fur packs were coming in and the tax was collectable, but the statement was made that the furs came out of the Northwest Territories and there was the difficulty of proof. Of course our expenses are always going up in the territories; we think this act will remove the difficulty of collecting in Saskatchewan and Alberta and will give us some revenue for the administration of the territories.


Mr. FRASER:: What amount of tax is it
proposed to impose? Is it in conformity with the tax in Alberta?


Charles A. Stewart: It will be
based on each pelt, but at the prices of furs to-day it will approximate about 5 per cent.


Donald Ferdinand Kellner: It is a pretty well established principle of taxation that no tax shall be levied on a people who are not represented, and I wonder if the minister does not think he is getting away from that principle in this bill. The Northwest Territories certainly have no representation.


Charles A. Stewart: That is
true, but we have the Northwest Territories Council in operation; we are spending a very considerable amount of money annually from the revenues of Canada in those territories, and we are quite within our rights in imposing this tax. The reason it is called an export tax is because there is no local tax; if the citizens desire to use their furs within the territories no tax is collected.


Donald Ferdinand Kellner: I would take objection
to the remark of the minister about the Northwest Territories Council. In the first place I think the personnel of that council is wholly composed of people residing in the city of Ottawa. It is true that they may have some knowledge of the Northwest Territories from having taken a trip there or something of that kind, but I very much doubt if any of them are personally acquainted with the conditions existing there to-day. The council is not elective and the people of the Northwest Territories have not the privilege of the franchise; they are in an even worse situation than are the people in the constituency of Athabaska. I doubt very much if the minister is within his rights in imposing a tax of this kind.


Charles A. Stewart: All I can
say is that the bill has been drawn up by the Department of Justice; they tell me we are quite within our rights, and of course they are the people who give legal advice to the government of Canada. I think if my hon. friend will make inquiries he will find

Northwest Territories Act
that we are quite within our rights. When my friend says that none of the officers of the Northwest Territories branch go into the territories he is entirely mistaken. Officers of the department are in that territory every year, going down the Mackenzie and to Her-schel island as well as down the east coast. That trip is made annually; all the police posts are visited, and we have very intimate knowledge of what is taking place in both portions of the Northwest Territories. I am willing to admit that there are hundreds of thousands of miles of unexplored land there, but they contain no white settlers.


William Irvine: May I ask a question? Is
not the trapper already taxed on his traps, his other utensils, his clothing and everything he uses, without placing a tax on his furs?


Charles A. Stewart: My friend
may be pleased to be facetious, but I may ask him the same question about the trapper in any other province of Canada. Does not the same thing apply? This has been the one happy hunting ground in which there was no tax on furs, and there is still no tax on the furs used by the residents of the district, which is not the case in any other province.


Mr. ROSS (Moose Jaw):: With regard to
the point brought up by the hon. member for Athabaska (Mr. Kellner) that the Northwest Territories have no representation, I would suggest that they be added to the Yukon territory. I believe there are only about
3,000	people in the Northwest Territories and the hon. member for Yukon (Mr. Black) could very well represent them in this House.


John Evans: I think this is a very hard
measure to impose upon the few residents of the territories. If, as the note of explanation in this bill says, foreigners are going in there trapping and sending out their furs without paying a tax, I think that could be very easily looked after by issuing licenses, as is done to hunters. It does seem rather hard to tax these few residents of that great north country, where conditions of life must be very hard. This tax is imposed on their only means of securing a livelihood, and seems to be rather severe.


Charles A. Stewart: I may say
to my hon. friend that the tax will not be at all onerous upon the residents of the territories; it will be similar to the tax in force in the Yukon territory, which was enacted some years ago. It must be remembered that the residents of that country are having a very considerable amount of money
spent in improvements and facilities for carrying on their work and earning their livelihood. Surely, if every other commodity bears a tax, there is no good reason why a small tax should not be placed upon these furs.


Donald Ferdinand Kellner: Will the minister explain how he expects to collect the tax, and where?


Charles A. Stewart: We expect
to collect it when the furs are leaving the territories, at Herschel island and on the east coast; it will be collected by our police force at the various posts, and especially at Fort Smith. The present staff will do all the work; there will be no necessity for increasing the staff.


Richard Bedford Bennett: Mr. Chairman, when I
was in the west last week I was spoken to by two or three gentlemen who indicated to me that one of the difficulties in this legislation is that all the business in- that country is conducted on credit, and long term credit at that. If this measure is to become operative at once it will undoubtedly work a very great hardship not only upon the settlers who have the furs to sell, but upon others as well. I was going to ask the question which the hon. member for Athabaska (Mr. Keliner) has just put to the minister; how does he propose to collect the tax? It seems to me reasonably clear that one of the great difficulties will come about, under the circumstances which he has mentioned, in the collection of this tax. Having regard to the fact that this matter was threshed out in this House some two or three years ago and was not then proceeded with, I now suggest to the minister that he give these people a year's notice. Let him put the measure upon our statute book, and let 'him indicate that at least a year will be given in which to make possible an adjustment of these conditions before the imposition of such a tax is made. Otherwise I am satsified that it will work a very grievous hardship and a very grave injustice to many people. The minister knows far better than I, because he has lived farther north in Alberta than I have, that there is a limited population in that area. They have no representative in this House, as has been already pointed out this evening. They are governed more or less by a benevolent autocracy, which is the best form of government that you could get if you reconcile your mind to it, and that is always one of the difficulties-
Northwest Territories Act


Charles Avery Dunning: Tempered by assassination.


Richard Bedford Bennett: Well, it depends entirely upon who is the "assassinator" and who is the "assassinee". I can readily understand after the hon gentleman's observations the other evening that if he had the "power" he would commit hari-kari. At any rate I do suggest to the minister, in order to avoid any possible misunderstanding as to the reasons behind this legislation, that if this power is taken and the exercise of it deferred deliberately a year he will accomplish the purpose he has in mind, and everybody then will have an opportunity of adjusting himself to the new conditions. I fear very greatly the unfairness and injustice that will be done to many people, if I am correctly informed, if this legislation becomes immediately operative, and I fear much more greatly the difficulties that will attend the collecting of the revenue. I fear the minister will find that in nine cases out of ten either one of two things will happen: An adjustment will have to be made with the original gatherer on basis of the furs taken, and he will get that much less money, or else the furs will be sold under such conditions that no tax will be collected and the government will then have to seize the furs for non-payment of the tax, causing much irritation, much difficulty and many complications. After thinking the matter over in the light of what was said to me the other day in Calgary and Edmonton-and I think representations have been made to the minister-it occurs to me that it would serve an excellent purpose if he could see his way clear not to make this legislation operative until another season. That is my only suggestion at the moment.


Charles A. Stewart: I have had representations made to me to delay the imposition of the tax, but those representations have come very largely from transients.


Richard Bedford Bennett: From whom?
Mr. STEW7ART (Edmonton):	From the
transient traders. The transient trader is the biggest difficulty we have to encounter. He is the man who has been going in there and securing fur from the legitimate traders and is responsible for the losses to them. In order to cope with that difficulty we put into effect a regulation insisting on licenses being issued, and we do not any longer issue a license to the transient trader. Some hon. member may say that is all in favour of the big fur companies but it is not. All we ask a man to do is to take out a license and establish himself in some definite locality. We are being bombarded by the very men who wish to
(Mr. Bennett.]
travel by dog team here and there and gather all the furs they can get hold of. In the meantime some legitimate trader who has given credit to the trapper and his family is cheated out of his legitimate return. The greatest difficulty lies in connection with the matter of credit, and I want to say frankly I do not see anything in the argument at all with respect to the destruction of credit by the imposition of this tax. The difficulty has been created by the fact that some people have seen fit to get outfits, go into the territories, make rapid trips through the country visiting Indian camps and trappers, buying furs and getting them as cheaply as they can by reason of paying cash. That was the greatest evil we had to contend with in the North west Territories. We have stopped all that. We allow no one to enter the territories as a fur trader unless they have a license. We issue a license to a trader no matter whether his operations be small or large; if he says that he intends to trade at a definite location and establish himself there he gets a license and he can begin business. So that we are not, and I want to make this point very clear, turning these operations over to the big companies, such as the Revillon Brothers and the Hudson's Bay Company. I think they complained just as bitterly when the suggestion was made that we put a stop to the operations of the transient traders in order that we might give that protection to which the trade was entitled. I have no notion, however, of bringing these acts into effect with respect to this year's catch. I think due notice should be given in order that the companies interested and others in the business should adjust themselves to the new conditions.


Richard Bedford Bennett: That is what I had in
mind.


Charles A. Stewart: On the other hand I wish to make it very clear that the difficulty did not arise in regard to the stopping of credit. The difficulty was that those who gave legitimate credit were cheated out of their returns.


Richard Bedford Bennett: I think the minister did not follow me correctly. What I had in mind was that if the tax is to be exacted it is probable the price paid for furs will be less than the price theretofore paid, and inasmuch as the price has been fixed and the credit given it follows that with respect to this year's catch, if I may use that word-I think the minister says that is the correct term-


Charles A. Stewart: Quite right.

West Indies Trade Agreement


Richard Bedford Bennett: If that be so it might unjustly affect the whole arrangement that had been made. Hence my suggestion that it should net be proceeded with at least until another season. Then business will be transacted on the basis of the tax and prices will be regulated accordingly. If the difficulty that presented itself to his mind has been cured, as the minister says, then clearly there should not be much trouble on that score. If the danger exists no longer there should be no more difficulty in regard to it.


Donald Ferdinand Kellner: There may be considerable dissatisfaction with the transient trader. I should like to suggest to the minister that he go into the library and consult the record of what the Hudson's Bay Company did at the time it had control of the whole of that territory, I want to point out to the minister that in collecting the tax in the way suggested there will be quite a lot of points where it will be absolutely impossible for the residents to sell their furs at all because there is no office at which a tax can be paid. I do not for the life of me see how the trappers are going to dispose of their furs unless they come out to the main centres, which will mean a trip of several hundreds of miles. I think it will involve unnecessary hardship to many trappers in the district. I have been asked to oppose this measure, but I shall say nothing further at the present stage beyond urging that this legislation be seriously considered before it is passed.


Charles A. Stewart: I think my hon. friend is unduly alarmed. I have a pretty good idea from whom the opposition to the bill is coming. To some of these men we have refused to issue a license altogether because of the manner in which they have treated the natives in the territories. We do not want to make fur operations expensive, but we do want to know who are in the business. After all very few trappers bring their packs down to the city of Edmonton to dispose of them, although some of them do. The legitimate trappers are well known, their reputation is good, and they will not be subjected to any undue hardship in connection with the payment of the tax. I wish to move, in order to meet the objections of my hon. friend (Mr. Bennett) that the act shall not go into force until January, 1928.


Richard Bedford Bennett: That would cover the
season of 1928.


Peter McGibbon: What will the license fees be? Will the amount be the same in all cases?


Charles A. Stewart: They are
not the same. They are less for a Canadian.


Peter McGibbon: What about the fees for non-residents?


Charles A. Stewart: They are
pretty high.


Richard Bedford Bennett: I understand the minister proposes a tax of 5 per cent?


Charles A. Stewart: It is approximately that. It is on a basis of so much per pelt.


Richard Bedford Bennett: How is the minister going to fix the basis of the price of the pelt?


Charles A. Stewart: On the
present price it is approximately 5 per cent. If fur goes up in price, it would be less. If fur goes down, it would be more. We have authority to change it from time to time.


Richard Bedford Bennett: Does the minister propose to fix it as a set charge per pelt?


Charles A. Stewart: Yes. We
must do it in that way.	*


Richard Bedford Bennett: I understand it is impossible to do it otherwise, because if you do it on a valuation basis, you would have all kinds of complications.


Charles A. Stewart: It is so much per pelt. It is approximately 5 per cent on present prices. If prices go down, we have authority to reduce the tax and if prices go up, we have authority to increase it.


Richard Bedford Bennett: It is in the form of a specific tax per pelt?


Charles A. Stewart: Yes.


[Stage Direction]
Section agreed to.
Charles A. Stewart: I move that there be added as clause 2:
2. This act shall come into effect on the 1st day of January. 1928.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Railways) moved the second reading of Bill No. 142, respecting the Canadian National steamships, and to provide for the establishment of West Indies service.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Johnston in the chair.
[Stage Direction]
West Indies Trade Agreement
On section 1-Short title.
Henry Herbert Stevens: The proposal is that a new company is to be incorporated under the Companies Act to carry out the purposes and intentions of this legislation. I have under my hand in the Canada Gazette of January 11, 1919, a copy of the charter of the Canadian Government Merchant Marine. I gather from a study of this legislation that it is intended to organize a company under the Companies Act in precisely the same manner as and of similar character to that of the charter of the Canadian Government Merchant Marine. My first question to the minister is: Why not use the Canadian Government Merchant Marine for this purpose? Why incorporate a new company at all?
My next point is this:	This legislation
provides in one of its subsequent clauses that each of the ships owned by this company may be incorporated as a separate company. That is, of course, the accepted practice. It also provides that the stock of this subsidiary company shall be owned by the company to be incorporated under the Companies' Act. Precisely the same power exists already in the charter given to the Canadian Government Merchant Marine, so that adds to the force of my argument that the Canadian Government Merchant Marine should be used.
The third point is this:	This legislation
provides that the Canadian Government Merchant Marine may turn over to this new company some of the ships it now owns. That seems to be a third reason why we should use the charter of the Canadian Government Merchant Marine instead of encumbering the records and so forth with a new charter. The other day when this matter was before the House, the minister rather disposed of the argument advanced regarding the organization of a new company by saying that it was desired to keep the accounts of this new proposal entirely separate and distinct, so that we might know precisely how the business stood. There is no difficulty whatever in doing that under the present organization. It would be the most simple and elementary matter in accountancy to set up a separate accounting. Indeed you could set up a separate set of books for this and operate quite as effectively under the charter of the Canadian Government Merchant Marine. In my opinion this could be done very much better under the present .charter than by the incorporation of a new company. For instance, in this charter I find that they have power:
To construct, purchase, lease or otherwise acquire, charter, owu, maintain, operate and
[Mr Dunning.]
manage steamships, vessels, tugs, car ferries, dredges, lighters, barges, boats, and water craft of every description.
It goes on. They have the right to acquire.
Structures, erections, buildings, hotels, shops, stores, works-
And so forth.
Lands, water lots, docks, wharves, basins, slips, harbour and port works and terminals and other facilities, easements and privileges of every description.
To build, purchase, lease, or otherwise acquire, manage or control. . . . such buildings as it deems advisable for hotels and restaurants;
To use any of the funds of the company to purchase or otherwise acquire, and take and hold shares, bonds, or other securities of or in any other company or corporation, notwithstanding the provisions of section 44 of the said act.
And so on. Therefore, instead of a new charter being secured under the Companies' Act, the powers taken in this bill should be given effect to through the Canadian Government Merchant Marine under its existing charter. That is the first point I wish to make. I might ask another question at the same time so that the minister can deal with it while he is speaking. Who will be incorporated as this new company?
Mr. DUNhflNG: My hon. friend has asked several questions, and if I should miss one of them, he will remind me. The question as to how the steamship services under this West Indies trade agreement should be provided has been the subject of study by the permanent officers of the Department of Railways and Canals, and more especially by the management of the Canadian National Railways. The method suggested by my hon. friend was, of course, the first method considered. It must be remembered, however- and this is one of the reasons which led to the conclusion to incorporate what is not only a separate company, but a separate holding company in a certain sense, because as my hon. friend mentioned, later on in the act provision is made for the incorporation if necessary of each ship in a separate company for reasons which were discussed when the financial resolution was before the House, and which were more clearly explained by the hon. member for Pictou than I think by anyone else-the Canadian Government Merchant Marine now in existence is indebted to the government of Canada directly. The finance minister holds notes given in payment by the Canadian Government Merchant Marine for the sums advanced originally for the building of the vessels now composing the merchant marine. As the House knows it has 'been the subject of discussion and the exer-

West Indies Trade Agreement
cise of much judgment as to how the very great depreciation in value as compared with the original cost of the merchant marine vessels should be taken care of, and we have not yet got out of the woods completely in that regard. In view of the fact that this particular West India service is in a sense a partnership arrangement with the West India colony, in view of the fact that they themselves each contribute, under the terms of the West India trade agreements subsidy towards the maintenance of the service, it is considered wiser to have the holding company completely standing on its own feet, separate entirely, so that we can in an accounting sense and in a corporate sense show to the West India colony from time to time what it is costing Canada, and what effect their contributions with respect to the cost of the service would have. The method provided in this act, as will be indicated when we come to section 3, is to finance the building of the ships by way of government guaranteed bonds, and it is expected, as I indicated in discussing the financial resolution, to amortize the ships during the course of twenty years out of the revenues received from freight and passengers, and also from subsidies from the various islands. It is also desirable, for comparative purposes that this House should know from time to time what the actual deficit on this separate service is, because it is comparative with what we have been paying for many years by way of subsidy to private corporations for operating a service to the West Indies. Taking it by and large, it is just a matter of business judgment as to which was the better way to handle it, and the judgment of all those connected with the Canadian National railway in an executive way and the judgment of those who have had to do with its business, is that it would be much better to organize a separate company for this purpose, retaining of course entirely the merchant marine organization and staff for the operation of the boats. I do not want to speak positively as to the future, but I would not be surprised if in future years it was found desirable to gradually absorb the Canadian Government Merchant Marine into this company, rather than to absorb this company into the merchant marine. I do not speak positively with regard to it. It is a possibility. As we go through the bill it will be found that provision is made for calling the two companies the Canadian National Steamship Company, and providing for the use of a common name regardless of whether they be Canadian government marine vessels or Canadian national steamship, if they are incorporated under this act.


Mr. CANTLEY:: What thought lies behind the suggestion that they would transfer the Canadian Government Merchant Marine into this company?


Charles Avery Dunning: The thought that lies behind it is this; when the Canadian Government Merchant Marine was organized it was organized as a governmental institution. Its name indicates that. Subsequently, after the organization of the Canadian National railway, the management of the Canadian Government Merchant Marine was entrusted to the railway management. 'In the case of other institutions of a similar character-that is the steamship lines connected with the railway line-it has been found desirable for reasons that apparently were good to those who were interested, to incorporate the steamship company with the name of the railway company, and now that the term "Canadian National" stands for something in the way of efficiency and service, there is some value in it as attached to a steamship concern under exactly the same management as the railways themselves. That is one thought. However, I am not to-night, in connection with these proposals, proposing that that should be done, but I indicate that in the future it is possible such a development may take place. My hon. friend from Centre Vancouver says that the terms of the charter do not differ widely from the terms of the original charter of the Canadian Government Merchant Marine, but the method of financing it is entirely different to the method followed on that occasion, and we are starting this company free entirely from the old awkward obligations of the Canadian Government Merchant Marine in the matter of capital expenditure, in the matter of values of ships. The cost of the ships was far, far out of proportion to the present value.


Henry Herbert Stevens: My hon. friend has not answered the other question as to who would be the incorporators of this company.


Charles Avery Dunning: I think there is a section of the bill with regard to that point.


Henry Herbert Stevens: The company has been organized under the Companies Act, and certain individuals would be incorporated under that act as a company. Who are these individuals?


Charles Avery Dunning: They will be the directors of the Canadian National.


Henry Herbert Stevens: That is decided?



West Indies Trade Agreement


Charles Avery Dunning: Oh, quite. We are not introducing any outside interests whatever. I assure my hon. friend there is no intention to introduce any outside interests.


Mr. MacLAREN:: Will the boats of this company run between the West India islands and Canadian ports alone, or is it proposed that they will touch American ports?


Charles Avery Dunning: The treaty covers that.


Murray MacLaren: A few years ago it was permissible that they call at American ports. Under the present arrangements it is proposed that they will be restricted to West Indian and Canadian ports.


James Malcolm: The terms of the treaty are to give direct service. There is no treaty affecting American ports.


Richard Bedford Bennett: What the minister has said might be well said with respect to any company which changes its name. The Canadian Pacific Railway Company changed the name of the Dominion Express Company to the Canadian Pacific Express Company for reasons they gave which were good and sufficient. The minister says the service may be known as the Canadian National Steamships Company for the same reason, because the Canadian National with respect to railways has become so well known. But there is in this bill a serious matter raised by the hon. member for St. Lawrence-St. George last year, and that is this: What is the obligation imposed upon this country by reason of this legislation? Whatever obligation is imposed upon this country by reason of this legislation-it does not make any difference whether it is guaranteed securities or not-the people of this country must pay if the corporation does not. That is as clear as anything in the wtorld. Whether the obligation is imposed with respect to deadweight debt or guaranteed securities does not make much difference. The Canadian National got $10,000,000 out of the people of this country last year in cash, and the taxpayers paid it. It did not make much difference where it went; whether it went direct to them or in some other way, we had to pay it.
I have looked through this bill, as I did the resolution, with some degree of care. Who is going to build these ships? How are the contracts to be let? What are the circumstances under which the ships are to be built? Speaking for myself, I think there should be added to this bill a provision that not one single contract should be let without public tender with respect to these ships. I have not any doubt that that should be done.

I have not observed what has taken place in this country during the years I have been able to remember without having learned something, and legislation of this character is an invitation to the collector-not the collector of customs either, as we understand the term. I think the time has come to insist that there be added to the legislation itself a provision that no contract shall be let until there has been first public notice and public tenders called for.
Then you will have three sets of figures to consider. You will have an offer to build these ships from continental Europe; you will have an offer to build these ships from Great Britain; you will have an offer to build them in Canada. Then there will be pressure to build them in Canada, because that offers greater facilities for those who desire that to be done. There will be a certain amount of pressure to build the ships in Great Britain; that will be less, and the pressure to build them in continental Europe will be less still. Everybody knows that in the history of building ships, the Royal Mail Company and other lines have found it necessary during the last few years, in order to be able to compete at all upon the high seas, to have their ships built where they could be built most cheaply, and they have had them built in Amsterdam, Hamburg and at the Yul'can Works in Stettin, because the price at which they could be built there was very much lower than what they could be built for in England. The British shipowner could not compete with German and Netherlands built ships if he had to pay British ship-building costs.
We in Canada are faced with this situation. This government made a treaty with the West Indies. That treaty involved this country in large financial obligations. For several days the member for St. Lawrence-St. George endeavoured to ascertain from the government of the day what that involved in dollars and cents. No figures were forthcoming. There came a change of administration for a few months which left those who assumed the responsibility in very great difficulty, because the question of implementing our promises under that treaty had not been commenced; the ships had not been contracted for or built. There was a small sum of money available that enabled us to maintain our word of honour with respect to the West Indies to a limited extent. The Minister of Trade and Commerce knows the demands made from the West Indies with respect to this service being provided. They say: You have contracted to give us this service, and

West Indies Trade Agreement
now we demand that you give it to us. We say: It takes time to provide the service, and in the meantime we will do the best we can.	We have now decided, instead of leaving this service to somebody else, that we ourselves will probably construct the ships for the purpose of providing the service and in order to maintain it, as the minister has very properly said, upon a business basis, we have further decided that we will have an entity created under the Companies' Act, with powers in addition to those that might be obtained under that act given by the measure that we now have before us. That involves, of course, the creation under the Companies' Act and this statute of a new corporation which will have an appropriate name. To that company will be payable the subsidies granted by this government as well as by the West Indies government.


Charles Avery Dunning: No.


Richard Bedford Bennett: In lieu of paying out
money exactly as a subsidy as we have been doing heretofore, we are going to guarantee securities, which admittedly means a deficit, the amount of which we have been very anxious to obtain.


Charles Avery Dunning: It was given to the House the other evening, so far as an estimate is concerned.


Richard Bedford Bennett: So I observed, but we
have no figures in detail as asked for last year except the estimate of the minister, which I take it is based on the best information he can secure. In other words, what we are going to do is to back the note of this company for the amount of money that may be necessary to build these ships, and we propose, instead of paying a subsidy from year to year as we have done heretofore for this service, to assume the responsibility for the deficits which are inevitable. Now the true test of the value of this is going to be the extent to which the deficit exceeds the subsidy, having regard to the fact that the ultimate ownership in the venture will rest with the Canadian people who advance the money by endorsing the note of this corporation. That being so-and I bbserve from the acquiescence of the two ministers that they realize this is really a venture of the Canadian people, pure and simple-


Charles Avery Dunning: Of course.


Richard Bedford Bennett: That being so, is it not
right and just that we should add to this legislation a provision that no contract for the construction of these ships shall be made unless
32649-84J
called for by public tender, so that we cannot in any sense divert responsibility from the government to the corporation created by this statute? I am not saying that in an offensive way; I mean it in the sense that the obligation must be a governmental obligation. My observation as well as my experience has taught me that, in the langugae of Professor Ripley, who has been writing such excellent articles in the Atlantic Monthly and other magazines recently with reference to corporate administration, one of the safeguards of the public in this regard is publicity, and that publicity comes through tenders called for publicly from the shipbuilders. I do not say that you are going to put an advertisement in the Podunk Review-


Charles Avery Dunning: Or the Calgary Herald.


Richard Bedford Bennett: Or the Regina Leader.
If it were given to the Regina Leader, having regard to its proprietorship you would no doubt get a response from the Vulcan yards at Stettin. One of the safeguards of the public which should be provided in this bill is that no contract shall be made by this company for the construction of these ships unless public tenders have been called for. That is the real point I desire to make in regard to this legislation.


Charles Avery Dunning: I am sorry my hon. friend was not here the other night because we discussed this at very great length, and I think the discussion centered more around the building of these ships than around any other part of these proposals. I would point out to my hon. friend with reference to his last suggestion, which was also his first, regarding tenders and so forth, that both the Minister of Trade and Commerce and myself, who are primarily concerned in the matter, he with the trade and treaty end and I, of course, with the initiation and operation of the service-


Richard Bedford Bennett: Although it is neither
a canal nor a railway.


Charles Avery Dunning: Although it is neither
a canal nor a railway. I would point out to my hon. friend that in order to cover the very point he mentions-we are again discussing the bill generally now, Mr. Chairman, instead of by sections-an addition was made to section 8 in order to nail the responsibility definitely to the government with respect to the contracts for the building of these ships, as follows:
All contracts or agreements involving an expenditure in excess of $500,000 shall be subject to the approval of the Governor in Council.

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Richard Bedford Bennett: That is not the point.
I have read that.


Charles Avery Dunning: My hon. friend knows
perfectly -well that that involves the scrutiny of parliament of every detail in connection with these contracts.


Richard Bedford Bennett: After the event.


Charles Avery Dunning: After the event,, of course. With regard to calling for tenders, it was plainly stated the other evening that that would be the course pursued, only I am not at all sure that wre shoiild do otherwise than the Canadian Pacific steamships, for instance, or the Royal Mail Steam Packet would do-


Richard Bedford Bennett: They always call for
tenders.


Charles Avery Dunning: But they would not advertise, not in the Vancouver papers. They would address their call for tenders to shipyards which they knew could produce the goods.


Richard Bedford Bennett: That is right.


Charles Avery Dunning: They would not advertise in the newpapers as my hon. friend suggests.


Richard Bedford Bennett: In the trade journals.


Charles Avery Dunning: There would be notice
there, and I can assure my hon. friend in the most positive terms that such a course will be followed whether this act is amended to provide for it or not. To use in the act language having the effect of calling for tenders might imply more than is intended. There is no intention to advertise generally, nor to ask for tenders from any concern which is known not to possess the facilities to enable it to build ships. I have no doubt at all that if any Canadian shipyard, which hon. gentlemen opposite believe might be able to build ships, is not given an opportunity to tender we shall hear about it. It is our intention to give to all Canadian yards that could possibly do the work a chance to tender.
My hon. friend spoke of German yards, and I may tell him-although he is not listening to me just now-that it is not our intention to call for tenders from continental ship builders. I made that clear the other evening. We do however intend to assess properly the differences between British prices and Canadian prices as submitted to us by shipyards in Canada who consider themselves capable of doing the work. But I must say that if a shipyard in Canada, [DOT] which the officers of the merchant marine and those engaged in this business for us consider is not capable of producing ships,

tenders at a lower price than others whom we know to be capable of doing the work, then we shall have to exercise our best judgment, just as any business concern does under similar circumstances. Of course, in such a case we shall have to take the responsibility for our position. I appreciate that fully.
I do want to impress upon my hon. friend that we intend to be fair in the matter. The language I used the other night was that it was our desire that as much of this work as possible should be done in Canada, having regard to all national considerations which ought properly to be taken into account in matters of this sort. Among those considerations I include the factor which has been mentioned as applying to steamship companies that find it necessary, in order to compete on the high seas, to buy their ships in the cheapest- market. We must have regard to that factor and we cannot properly decide, on the one hand, between the work to be given to Canadian yards and Canadian workmen and, on the other, the necessity of which my hon. friend spoke, of being in a position to oompete oh the high seas, until we have before us comparative figures which can be secured only by tender from the British and the Canadian shipbuilders respectively, for each one of the ships in question and, as the Minister of Trade and Commerce points out to me, not only each ship but also, one, two, three, four and five from each yard. This is our intention with regard to the matter and I trust that my assurance will relieve my hon. friend's mind and obviate the necessity of moving an amendment, which it might be rather difficult to draft having regard to what it is necessary to do under the circumstances.


The CHAIRMAN (Mr. Power):: Shall
section 2 carry?


Henry Herbert Stevens: We have not passed
section 1 yet, Mr. Chairman. We must not allow these little matters to go through so easily.


Thomas Cantley: The minister the other
evening referred to a proposal to equip as oil burners two of the vessels now engaged in the West Indies trade.


Charles Avery Dunning: Yes.


Thomas Cantley: I think the department
is making a grave mistake. The cost of fuel oil has advanced greatly within the last two years, so much so that many ship owners who installed oil burning equipment in their boats are reverting now to coal. If the minister inquires he will find that the cost to" gone up

West Indies Trade Agreement
largely, and this reversion to coal has taken place and is still occurring. If the boats were operating at points where it was difficult to obtain bunker coal there might be reason for incurring the additional expense. In the first place the expense of fitting up these boats as oil burners will be considerable. The costs of operation will be very much higher than they are to-day with coal. There is no difficulty in obtaining bunkers for they are readily available at any of the ports from which the initial voyage is made, either from Nova Scotia, New Brunswick, or on the St. Lawrence to the West Indies and vice versa. I should like the minister to take that point into consideration. [DOT]


Charles Avery Dunning: My hon. friend's observations in that regard will be given due weight. The proposals I submitted the other evening regarding conversion were proposals made by officers of the merchant marine. That however is a detail which I have not yet examined sufficiently to be able to say finally shall be carried out.


Thomas Cantley: I thank the minister for
the explanation. The next point I want to refer to briefly is this. It has been the custom for these boats in the summer months when coming from the West Indies, instead of calling at Halifax or St. John, as they do in winter, to complete the voyage at Montreal. I rather consider that a mistake. At any rate, I would point out that these boats in the past have been in the habit of coming up the St. Lawrence too early in the season. That is to say, the first voyage up the St. Lawrence has been at a time when the weather and ice conditions are not favourable to passengers coming directly from the warm climate of the West Indies, and the result has been that in a number of cases personally known to me people who have come up the St. Lawrence through the drift ice have caught cold and been seriously ill, in so'me cases having to be taken to hospital immediately after arrival. If the boats are to come up the St. Lawrence in the summer months I want to urge on the minister the importance of deferring the first voyage, until at least all ice is out of the gulf. They should not come up as early as they have done in the past. If they continue to make the trip so early in the season our people will take an unfortunate view of that voyage from the West 'Indies. April is the period of the great migration from the West Indies of people who have been spending their winter there. In April and May the boats are crowded coming north; the same being true in the autumn months going south.
There is another and broader matter in connection with this whole question, and that is interference by government with private enterprise. I presume the minister has taken this point into consideration. Trade between the West Indies and Halifax and other maritime ports has been going on now for between a hundred and a hundred and fifty years, and many old established houses are thoroughly familiar with it. They have gone through all the vicissitudes of sail and steam, and know all that has transpired in the last seventy-five or hundred years or more in that trade. It seems rather a pity that these people should be called upon now practically to give up their business by competing with a company organized by this Dominion, with all the power, influence, resources and money of the government behind it. I was going to make a suggestion in this regard. One of the ministers a few nights ago, when the subject was under discussion, submitted certain figures as his estimate of the losses that would ensue from the operation of a line, running into about three-quarters of a million and diminishing to half a million later on. Supposing the government, instead of asking for tenders for the construction-of the boats, should make an offer of a subsidy which they are prepared to pay, the subsidy being about the amount which they estimate their loss to be; we could see in that way whether or not offers would be received from steamship companies, either those already in the business or others disposed to take it up. Then we would be relieved from all anxiety in regard to the cost over and above any estimate of the officers of the department, because they are only estimates after all. Again I would refer to the unfairness of interfering in this way as we now propose to do, with private enterprise in view of the fact that these boats or the profits arising from them are not taxed when private enterprise is taxed; if the private company is fortunate enough to make some profit we take a portion of that away in taxes. The competition seems rather unfair, and I would suggest that an effort be made along the lines I have indicated or in some other way to try to discover if it is not possible to get a private company to take over this service rather than have the government embark on what is after all an entirely new and distinct business.


Charles Avery Dunning: I would respectfully point out to my hon. friend that the suggestion he makes with regard to a further effort to get private enterprise to undertake this work is of course entirely contrary to the principle advanced by his colleague from West Calgary

West Indies Trade Agreement
(Mr. Bennett) in connection with another matter fully as important. May I say that at least two efforts have recently been made to get a tender covering the service contemplated by our treaty obligations, and as the Minister of Trade and Commerce (Mr. Malcolm) indicated the other evening, they met with no success. Now I understand my friend to say that having failed to get tenders from private companies we should ourselves figure out an offer which we can make the private steamship corporations as an inducement to undertake these services. I imagine that if I came into this House with any such proposal I should be subjected to attack, and I think properly so, by the hon. member for West Calgary, the ex-Minister of Finance, on the basis of the same principle which he enunciated so well a few minutes ago. Having failed to get even an offer for the western service with all our advertising in the trade journals in London and elsewhere, where it might be thought that those interested would at least be sure to know about the tenders, I do not think we could very well adopt this proposed scheme. We are following the present plan because we are convinced that it is the only way in which we can establish the service called for by the treaty. I think I dealt with my friend's other question, and I do not know that there is anything else I have not covered.


James Malcolm: I would like to make one observation. The hon. member for Pictou (Mr. Cantley) refers to the fact that this will initiate public competition against private capital, and he thinks it is not fair. The hon. member for West Calgary (Mr. Bennett) has already pointed out that private companies can buy their ships in the cheapest market while as a public enterprise we are denying ourselves that right. The cheapest market is continental Europe, and if we deny ourselves the privilege of buying there on the understanding that it is in the public interest to build these boats in Canada even at a greater price, surely private companies have at least the advantage of having the markets of the world open to them with lower initial costs.
I would like to make just one further reference to what the Minister of Railways tMr. Dunning) has said. At the request of people who were interested in, this service and who were most anxious that something further should be done, the matter was delayed and a further call for tenders was made, but without any offer of a private company to undertake the service to the western group of islands. We did have a tentative proposition of about
8750,000	subsidy for both services from one

proposed company, but they were not able to finance their plans and withdrew their offer on the second tender. We had reason to believe the suggested tender would stand, but it was withdrawn owing to the inability of this group to make the financial arrangements necessary. I can assure the hon. member for Pictou that with the government it was not a selection as between a private company and a government service but rather a matter of necessity to meet the terms of the treaty. Considerable dissatisfaction has been expressed in the West Indies as to lack of service, not since the last conference but because of the failure of the government to implement its agreements made at the conference of 1920, which I believe is known to every member of the House.


Richard Bedford Bennett: The minister mentioned building ships in Canada. Do I understand that that is the settled policy of the government?


James Malcolm: It is the intention to send invitations to tender on all five of these ships to all Canadian shipyards and to all British shipyards, because as was pointed out the other night in debate by the senior member for Halifax (Mr. Black), it is quite possible to lay down two boats of the same kind in one yard more economically than to build the two boats in separate yards, and the government will have to take cognizance of all the conditions surrounding the tenders before a decision is finally reached.


Mr. HEAPS:: I would ask the minister if it is the intention of the government to ask for tenders in Great Britain for all the ships that are to be built? .


James Malcolm: Yes.


Abraham Albert Heaps: Supposing there is a great difference between the price in Great Britain and that in Canada; is it the intention of the government to award all the ships to the one place?


James Malcolm: Was my hon. friend
here the other evening?


Abraham Albert Heaps: Yes. I understood then
that it was the intention to have three of the ships built in Canada. That is why I hardly think it fair to ask for tenders on all the ships in Great Britain.


Charles Avery Dunning: I indicated that ratio of three and two the other evening as the basis of the financial calculations which I had to give the House. It was necessary to take some basis and naturally we weighed whether it should be all-British construction or all-

West Indies Trade Agreement
Canadian construction or whether it should be a part of each, and having regard to all the factors we could then see it was thought that the best basis of presenting the calculations to the House would be in the ratio of three and two. That does not mean that we wlil not call for tenders for all the ships in both Canada and Great Britain. As I indicated previously to-night, it will then become the duty of the management of the organization and finally of the government to decide whait proportion shall be built in eaich country, having regard to all the considerations mentioned in the House during the discussion on the matter. I cannot speak more positively than that. Might I point out to my hon. friend that if we say here and now that these ships will all be built in Canada, in my opinion it would have a prejudicial effect upon the tenders; I think there is no doubt about that. We do 'intend to call for tenders in Greait Britain on all the ships in order that we may have before us all the facts before we enter into any contract.


Abraham Albert Heaps: My little experience along
tills line has been that it is unfair to ask companies to tender when they know they will not get the business. I think it will militate against us at some future time.


Charles Avery Dunning: I did not indicate that.


Abraham Albert Heaps: Then is there an understanding that a certain number of ships will be built in Canada?


Charles Avery Dunning: There is not.


Abraham Albert Heaps: Is it possible that the five ships may be built abroad?


Charles Avery Dunning: It certainly is.


James Malcolm: But not likely.


John Evans: According to the minister's remarks, we are entering upon a project which ia most unbusinesslike and of very doubtful benefit to this country; in fact I think from the remarks of the Minister of Railways it cannot be expected to be a paying concern, since no private company would tender for the service. I really wonder why we have entered upon this project at all, seeing that it is an uneconomical thing from the very beginning. We are going to have a line of boats bringing in the products of the West Indies, entailing a very much longer haul than under the present service. I can remember that some years ago when the Minister of Railways was general manager of the cooperative elevators in Saskatchewan he was very emphatic that every part of the business should pay its way. Well, here we are entering upon a national scheme and the
minister admits that it cannot pay its way It is a foregone conclusion that the minister will have to come to this House and meet a deficit each year, or the New Brunswick potato grower and the Canadian consumer will have to be charged a freight rate or price that will pay for the service.


Charles Avery Dunning: We cannot do it.


John Evans: Then we will have to meet a deficit every year.


Charles Avery Dunning: Yes.


John Evans: Why in 'the world have we entered upon such a contract as this? What benefit will be derived from it?


Milton Neil Campbell: I should just like to
say that I realize that we have a trade to keep up with the West Indies and we can hardly ignore that even if we encounter a loss. But those of us in this section of the House have been protesting for many years against the large subsidy paid to a private company operating ships between the ports of Nova Scotia and the West Indies. We have complained of it because we saw no direct result from it, and because the company that had entered into the contract with the government, the company that was receiving large subsidies-amounting I believe to about $450,000 a year-was not living up to the contract. I believe that the proper type of ships was never supplied, and the ships were not equipped with proper facilities for handling the trade. I appreciate the fact that there will be a loss of business for some time, but that loss will probably be made up to us in many other ways. Why even the government itself is carried on at a loss if you look at it from a merely business standpoint; it makes no return from a monetary point of view for the expenditure made. There are many matters with respect to which we have to adopt that point of view. Most of us are married men with families to maintain. We can hardly say that marriage is a profitable investment, and I think that some olf these matters must be regarded1 in the same light. What I am more concerned about is that the system or the principle of government ownership should get a fair trial. Because it seems to me that in the future, in the next quarter of a century in this country, the great political battle will not be between free traders and protectionists but will be between the advocates of public and private ownership. Perhaps my hon. friend from Rosetown (Mr. Evans) will not agree with me on that but that is how I regard the future.

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Mr. MANION:: The fight between free
traders and protectionists ceased this afternoon. There are no more free traders except a few down in that corner.


Milton Neil Campbell: I do not recognize any difference on the issue of free trade between the two old political parties. What I suggested to the minister a few evenings ago in connection with the construction of these ships was that if it were necessary to build them in Canada-and I expressed the hope that they would be built in Canada even at a higher cost-the difference in cost should be absorbed out of the treasury so that the extra capitalization would not be charged to these ships and tend to hinder the development of trade between maritime ports and the West Indies. I have no doubt that if these Ships were to be built in Canada the Canadian companies would want to raise the price; but I think that could be gotten around because there should be some means of ascertaining the relative costs-the cost of construction in foreign countries, in Great Britain, and in Canada. I think when those figures, were arrived at the government could very well allow that difference in cost to the Canadian manufacturers. If the tenders of the Canadian shipyards are excessive, give them to understand that unless their figures are reduced the contract for the construction of the ships would go to another country. But I think in any case the difference in cost should be absorbed out of the treasury.


Thomas Cantley: One of the gentlemen
who has just spoken referred to the fact that public ownership does not get a fair show as against private enterprise. In a matter of this kind they get more than a fair show'. As to that there can be no possible doubt. As far as the Canadian Government Merchant Marine is concerned I do not think anybody can say that it is operating under any disadvantage as compared with private ownership. I do not know of any, and I do not think any can be shown.
It is rather strange to hear members from the west getting up here and protesting more or less against this service. The fact of the matter is that ninety per cent of the flour consumed in the western islands and ninety-eight per cent of the flour consumed in the eastern islands is Canadian flour. Not only that, but large quantities of other products, agricultural products for example, are being shipped from Canada to the West Indies which would not go there if it were not for this service. These boats come up the St. Lawrence in summer, and they have a direct route from Montreal clear down to the West

Indies. That is something they could not have under any other arrangement. There is a good deal of advantage in shipping by this route as against shipping by the American ports. I do not want to go into that feature of the matter again, but every man conversant with the trade knows what those advantages are.
In regard to the construction of the boats, the minister has convinced me that he has not any intention, or the government either, of going to the continent to have them built. I deny that ships built on the continent today are cheaper in the long run, working experience and necessary replacements considered, than boats which are built in this country. British owners have had some experience in that connection and those experiences are not likely to be repeated. If the Minister of Railways has any doubt as to the advisability of building these vessels in Canada, I think I can relieve him of those doubts. There will be competition, there is no doubt about that. There are four or five yards-there are two or three at least- who would be active competitors to-morrow for the building of the two capital ships. I take it that these ships are to be say 400 feet long and say 42 to 45 feet beam, or thereabouts. There are three yards, probably four in Canada, in which those two boats can be built. Let me point out again, as briefly as possible, the advantage which one yard would have in building the two boats. There are detailed drawings to get out, there are the moulds, templates and half a hundred other things, the cost of which is just split in two, determined by the fact of whether you are building two boats or one. If there were four boats to be built the cost would be cut in four instead of in two. As far as the three smaller boats are concerned they can be built in half a dozen places in Canada. I have no doubt there will be very active competition for them. I cannot tell how much greater the cost will be in Canada than in the old country; the minister can, but I presume some advantage would and should be given to Canada yards in competition with Great Britain.


Charles Avery Dunning: Unquestionably.


Thomas Cantley: I thank the minister for
that. That is all I want to say, except to emphasize the reference I have already made to those boats coming up the St. Lawrence too early in the season. The minister was kind enough to deal with the other matters I brought up, but he did not refer to that, and I would be glad if he would do so.

West Indies Trade Agreement


Charles Avery Dunning: The matter of the boats entering the St. Lawrence, in the opinion of my bon. friend too early in the season, is one of management. The government does not interfere with that, but I will of course see to it that the views expresed by my hon. friend in that regard are communicated to the management, and I have no doubt they will be carefully considered. I should, however, like to ask my hon. friend a question with regard to his other suggestions as to the building of the boats. He speaks of the economy which could be secured by giving two boats or four boats to one yard. If he were in my place and tenders came in indicating that one Canadian yard had tendered the lowest in Canada for all five ships; that a substantial saving or a saving could be secured by giving all five ships or four or three of the five to one yard, would he regard that as good sound policy, or would he come here next year and criticize the government for proceeding along that line?


Thomas Cantley: The minister has
misunderstood what I said. I had reference to two identical ships. What I said will apply only when they are identical, that is as regards detailed drawings, plans, estimating figures, moulds, templates, jigs and all that sort of thing. There are probably fifty items that apply to the two boats-not necessarily the whole five, because when you change from one size or type of ship to another you have to make new templates, et cetera.


Charles Avery Dunning: My hon. friend does not
clearly get my question. Regardless of the factors which he mentioned, if for any reason one Canadian yard is low for the whole five ships, or if, let us say, two Canadian yards are low, one for three ships and one for two, what is his judgment? Should we confine the building of these Ships to those two yards?


Thomas Cantley: I do not see why not,
but I am quite sure I would not give the five ships to any one yard.


Henry Herbert Stevens: Of course there is this
to say in regard to that. My hon. friend is rather cute.


Charles Avery Dunning: No.


Henry Herbert Stevens: These tenders, as we have been insisting, must be open tenders, so that all will have exactly the same deal, and we would like to have that safeguard inserted in the bill. It would not be fair for the minister to come here next year, having given all these ships or three of them to one yard, and having given that yard perhaps an opportunity of making a special tender on
three ships, and say:	I propounded this
scheme to the House last year, and the House agreed. This all depends upon the conditions surrounding the granting of the contract to the one yard.


Charles Avery Dunning: I can tell my hon. friend that exactly the same conditions will apply to all tenderers. That is the business practice of this government.


Henry Herbert Stevens: We are not so sure of that. I am not desirous of starting a row to-night; I would like to go through the rest of this day quietly and harmoniously, but I want the minister to understand that we are not children and we are not going to be fooled by very quiet and kind observations such as he has made. We might as well say this now: We warn him now that next year when this House meets, if a kind Providence spares us and the government does not dissolve in the meantime, if he lets all these contracts to one yard we shall scrutinize the job pretty closely no matter where it goes and we shall want to know the why and the wherefore.


Charles Avery Dunning: I thought I might be successful in arousing the normal suspicions of my hon. friend.


Henry Herbert Stevens: My hon. friend has never allayed them. They have been there all the time.


Charles Avery Dunning: I never hope to convince my hon. friend that any of us on this side of t.he House is even ordinarily honest.


Henry Herbert Stevens: My hon. friend seems to be looking for trouble to-night.


Richard Bedford Bennett: Methinks the lady doth protest too much.
Mr. DUNNING. I am merely appealing to the good business judgment of the remainder of the members of the committee who, I am sure, desire to be fair. They have heard the repeated statements of myself and the Minister of Trade and Commerce (Mr. Malcolm) with respect to the manner in which we intend to conduct this business. I am oontent to leave the matter to the judgment of the committee and to the record of Hansard, knowing fully that we shall be responsible for what we do. I do not hope ever to satisfy my hon. friend that any business we conduct is conducted honestly; but I am not concerned about that; I am concerned rather about the verdict of the whole House and particularly the verdict of the Canadian people.

West Indies Trade Agreement


Henry Herbert Stevens: Now the minister has
succeeded in reading me out of all reasonable company and branding me as being utterly unreasonable and not capable of being persuaded of the honesty of anybody, particularly of himself, a judgment which he lays upon himself, but which I did not. What I was pointing out, what the hon. member for West Calgary (Mr. Bennett) pointed out a little while ago, was this. This bill is giving the government wide powers, and we would be derelict in our duty if we did not examine it very carefully in order to protect the rights of the people of this country. I do not care a snap of my fingers what the minister's opinion is. I purpose doing that. I am not going to be frightened or estopped by the minister insinuating that it is impossible to satisfj' me. Let me tell him that there are in this chamber other members besides himself who have known me during the sixteen years that I have been in parliament, who probably will not wholly agree with him if he will go out into the lobby and talk to them. Indulgence in that sort of thing is not going to advance his interests or the government's interests or the harmony of the House. As a matter of fact we have been treating the minister with a considerable degree of courtesy this session while he, on the other hand, has been rather provocative at times.


Richard Bedford Bennett: That is his normal condition.


Henry Herbert Stevens: A few things were said tonight which I resented very much, but I kept silent. As we go through this bill we will give it just a little close scrutiny.


Charles Avery Dunning: The record in Hansard
of his observations will speak for itself with regard to insinuation; the record of mine will speak for itself with regard to provocation. I say with all respect to my hon. friend that his attitude towards the government and towards me in connection with this matter from the commencement has been, in my judgment I may be wrong, and if I am doing him an injustice, I regret it-one of insinuation as to the sincerity of the motives which actuated the government in dealing with the matter of building these ships. My hon. friend need only read his observations of the other night. I have no desire, as he would intimate, to brow-beat him in any way or to treat him discourteously. But if we are to be subject all the time to the threat from himself and from some few others that if a minister sees fit to resent aspersions upon his common honesty his measures are going to be blocked, I can only say in all fairness to my hon. friend that, like himself, I am inclined

to scrap when that sort of thing happens. I say this to him in all good humour. My time will be spent here just as his will, but there is a limit to what either of us will stand from the other in that regard. From him I feel it is insinuation all the time. He thinks from me it is provocation all the time. I am quite content, if he is, to let the matter rest there. I have no intention of insulting him at any time. I have not consciously done so, and I will not do so in the future. But I do not intend, and I do not think either the rules or the amenities of this House compel a minister to sit silently all the time while impressions are being created to be scattered by the press across this country that he is not going to handle properly the business which he has sworn to handle with common, decent honesty. I resent that whether it comes from my hon. friend or any one else. I have no complaint in that regard with respect to anybody on that side of the House except my hon. friend.


Henry Herbert Stevens: Keep rubbing it in.


Charles Avery Dunning: My hon. friend asked
me for it and I gave it to him, not in a spirit of pique but in good humour. I say that is the way we feel about it. Now we are square.


Henry Herbert Stevens: No. The minister says I insinuated and intimated certain things. I did nothing of the kind. The other night I drew the attention of the House to the fact that a Shipyard in Montreal had been transferred to two gentlemen whom I named, according to the public report, Senators Raymond and McDougald, I made the statement on the floor of the House and made no insinuation.
I simply said it was a remarkable synchronization with the contracts authorised in this bill, I asked the minister, (before we had the bill and before we had an opportunity to study it, if there was any significance in that fact. I did not go behind the company and did not go outside to make any declaration. The minister recognised that in his crossexamination of the hon. member for Pictou. He was asking a hypothetical question; suppose we let all the ships to one yard, and suppose the figures were below those of the other tenderers, would my hon. friend criticize the government for letting them to one yard?
I intimated to him and reiterate now that that looked like providing in advance for a possible happening. He may call it insinuation or suspicion or whatever he likes, but I am giving him the information that these contracts will be scrutinized.


Charles Avery Dunning: Quite right.

West Indies Trade Agreement


Henry Herbert Stevens: And I claim the right to
scrutinize them.


Charles Avery Dunning: Quite right.


Henry Herbert Stevens: And it .paid this country
to scrutinize the Petersen contract and other matters. The minister knows perfectly well that the government is frequently subjected to pressure that is very difficult to resist. No one is impugning his personal honesty, but while he may desire to go along a certain path it may be difficult to resist the pressure. One of the uses of an opposition is to keep the government on the straight and narrow path. Very often the government will say to importunate followers, "We will have difficulty in getting through with this in the House." I am fortifying the minister with some propositions which might help him to resist the importunities of his friends.


Richard Bedford Bennett: I think the observation of the minister that criticism of a public measure made by the opposition in the House involves a criticism of the minister in charge, is not well founded.


Charles Avery Dunning: I did1 not intend that.


Richard Bedford Bennett: I do not think he intended to state it in those terms, but it was open to no other construction. He spoke about his common honesty and decency. Surely no gentleman charged with the responsibility of a minister in the House of Commons of Canada would for a moment assert that criticism of a measure by His Majesty's opposition in any sense involves a reflection on the personal honesty of the minister in charge, whether it be common honesty or decency or otherwise. I am sure the minister will agree with that. There is reason why the opposition should criticize legislation introduced by the government in the form of proposed statutes. Does the minister recall that in the income tax measure brought into the House within the last fifteen months there was a retroactive provision that quietly disappeared? Does he realize that we are not all fools, and that if we are to make it our business to investigate and criticize business introduced by the minister we are doing it in the public interest? Is the assertion that those who sit to the left of the Speaker, and spend their time night and day in studying legislation from an intelligent standpoint, should be held to be casting reflections on the minister when they criticize such legislation when it is being considered by the House? The reason that the gentlemen sitting to the left of the Speaker discuss
proposed legislation is that it is their duty to do so in the public interest, just .as the Liberal party similarly situated would do. As my hon. friend from Vancouver Centre has properly pointed out, in this country and in every country where democratic conditions prevail that is the course to be pursued. In Pennsylvania last fall, in Ohio and in Illinois, conditions prevailed with respect to elections, and those conditions prevail not only in United States but in other countries. They have prevailed in this country, and reflections such as those made by my hon. friend with respect to those who in the public interest criticize legislation of this character are not well made. I feel sure that in the heat of the moment the minister made his statement a little stronger than he meant to make it. His observations meant only one thing; that criticism of the minister's proposals means distrust and allegations of dishonesty against such minister.


Charles Avery Dunning: No.


Richard Bedford Bennett: I do not think the minister intended it, but as he stated it, it is open only to that construction.


Charles Avery Dunning: No, it was not intended in that way. Allowing assurances made by me and repeated by the Minister of Trade and Commerce that tenders would be called, my hon. friend from Vancouver Centre intimates that I am creating in advance an alibi for what he says is an endeavour to put through a contract as a special favour. I consider that if I did that it would be dishonest on my part as a minister. If in calling for public tenders I permitted some of my officers to give information as to what others were bidding it would be dishonest on my part, and I resent the suggestion.


Richard Bedford Bennett: I am glad to hear the statement by my hon. friend, and I think he means it. Those of us who are familiar with the history of Canada will know that that is just what was done in connection with the alienation of a considerable part of our western Canadian resources.


Charles Avery Dunning: I do not think there is a man on this side or on the opposite side of the House who would be guilty of doing what the hon. gentleman suggested I was doing.


Richard Bedford Bennett: The Solicitor General apparently wants to say something.


Lucien Cannon: We are discussing a shipbuilding proposition, and perhaps that is why we are allowed to go adrift.
West Indies Trade Agreement


Richard Bedford Bennett: My hon. friend misapprehended the point about the criticism. He does not call for tenders under this bill, it is the company that does it, and unfortunately the saying of "yes" or "no" to the tenders rests with that company and not with the government, except to voice approval or disapproval if the sum is over $500,000. Therefore they can make their contract and send it to the government, with a report which may or may not be founded on fact, and the government acts upon that report.


James Malcolm: No, the Canadian
National would call for tenders. The allocation of the tender and the matter of where the ships shall be built will rest with the government.


Richard Bedford Bennett: That is not what the bill says.


James Malcolm: I admit that.


Henry Herbert Stevens: That is our quarrel with the bill.


Abraham Albert Heaps: The question of tender has been overcome by having sealed tenders put in, and having the tenders opened in public. The tenders are not opened until the public can be present. If there is any difficulty in regard to the form of these tenders, my suggestion is that they be called for and that they be opened in public.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.
On section 4-Nature and form of securities to be approved by Governor in Council.
Richard Bedford Bennett: The point that I desire
to make is that these securities should not be sold except by competitive bids. The Minister of Trade and Commerce, who is a business man in eastern Canada, knows how easy it is for bond houses and others to get what in the vernacular is called "a lead pipe cinch" on the sale of these securities, and I think the time has come when we should provide that these securities shall be subject to competitive bids. That, I think, the minister will agree is not an unsound suggestion.


Charles Avery Dunning: This is a standard clause that I am endeavouring to work into all bills relating to Canadian National finance, with the objective of giving to the Minister of Finance a measure of control over the disposition of the securities. The Minister of Finance^ is not here at the moment, but I know his views are in the direction outlined by my hon. friend. I should not like, however, to tie him down positively in a statute without consulting him.


Richard Bedford Bennett: You will not take the
bill out of committee?


Charles Avery Dunning: No, but I am doubtful
as to whether in a statute relating to the sale of securities you should under all circumstances be compelled to call for tenders.


Richard Bedford Bennett: I did not say tenders,
but competitive bids. There is a distinction.


Charles Avery Dunning: That might help out, I
might say that during ten years experience as provihcial treasurer I never sold an issue of provincial bonds otherwise than by public tender; by that I mean invitations issued to all the bond houses who might be expected to bid. I must confess that I had a number of experiences which led me to the conclusion that such a course was not always in the best interests of the body borrowing the money. My hon. friend I know is familiar with such conditions. While agreeing with the general principle, I would hesitate to put in the bill something which would make it impossible to deal with the securities otherwise than in the manner therein set out.


Richard Bedford Bennett: I quite appreciate the
minister's point, but if you say "Such securities shall be sold only by competitive bids," you have met the difficulty. I do not think you should take the bill out of committee entirely, for when we come to section 8, I am going to say that I think $600,000 is entirely too large a sum, if you mean it in that sense.


Charles Avery Dunning: We will come to that.
We will carry this section and leave the bill in committee so that I can discuss the matter with the Minister of Finance.


[Stage Direction]
Section agreed to.
Sections 5 to 7 inclusive agreed to.
On section 8-Powers of company to construct, purchase or refit boats.
Henry Herbert Stevens: I notice the company is
being empowered either to contract for the construction of ships, or to purchase, charter or otherwise acquire the boats. Is it in contemplation at all to purchase boats for this service?


Charles Avery Dunning: We may have to purchase a 1,000 ton 'boat for the Trinidad-Jamaica service.


Henry Herbert Stevens: Is there one in sight?


Charles Avery Dunning: No. I know of no
arrangement having been made as yet.


Henry Herbert Stevens: That would be one of the five?

Customs Act Amendment


Charles Avery Dunning: No, that is a small extra boat.	.


Henry Herbert Stevens: la regard to this $500,000, my hon. friend from West Calgary has intimated that he- thinks that too large a sum.
I have the same opinion. It says:
All contracts or agreements involving an expenditure in excess of $500,000 shall be subject to the approval of the governor in council.
I do not know by what reasoning $500,000 was fixed upon. It strikes me as altogether too large a sum. I do not know what the dimensions of these smaller ships will be, and I do not know what they will cost, but it is quite within the realm of possibility that they may come within this $500,000.


Charles Avery Dunning: That figure was set with the idea of having all shipbuilding contracts approved by the government. The one possible exception might be the small 1,000 ton boat.


Henry Herbert Stevens: Why not place it at $100,000?


Charles Avery Dunning: I have no objection to
cutting down the amount, except that if it is cut down to too small a figure it will necessarily increase what I might call the political control over the management of the company; that is, the Canadian National board of directors and management are, of course, handling contracts and agreements of all sorts-


Richard Bedford Bennett: The Board of Directors does not do much.


Charles Avery Dunning: The management, in any event, and it is just a question of arriving at a figure which will maintain the principle of the government passing upon and being responsible for all the shipbuilding contracts. I am inclined to think that $500,000 will not be too large a sum for any of the ships, with the possible exception of the 1,000-ton ship.


Henry Herbert Stevens: I would suggest that this clause stand and be the clause that will keep the bill in committee.


Charles Avery Dunning: Very well, and I shall be glad to hear any suggestions from my hon. friend in that regard.


Henry Herbert Stevens: In the interim I would ask the minister to consider cutting this amount down to $100,000. His idea is that the company shall have a free hand in ordinary business?


Charles Avery Dunning: That is it.


Henry Herbert Stevens: I would say that $100,000 would amply cover ordinary business contracts.


Charles Avery Dunning: Not in the shipping business. However, I will make inquiries.


Henry Herbert Stevens: About all you would have that would come above that figure might be a large contract for fuel, which would be a contract once a year or something of that kind. Perhaps major repairs might run above that figure, but they would have to be very extensive repairs.


James Malcolm: I think my hon. friend is sufficiently acquainted with the operation of boats to realize that there is not going to be any boat purchased for this service for less than $500,000.


Henry Herbert Stevens: I would expect that to be the minimum.


James Malcolm: There might be fuel contracts and many outfitting contracts that would exceed $100,000. Personally I would not mind the amount being reduced, but if it were reduced below a quarter of a million dollars it would be getting into the realm of small business.


Henry Herbert Stevens: We will let the section
stand and think it over.
Section stands.
Sections 9 and 10 agreed to.
Progress reported.
CUSTOMS ACT AMENDMENT Hon. W. D. EULER (Minister of Customs and Excise) moved that the House go into committee to consider the follownig proposed resolution:
Resolved, that it is expedient to amend the Customs Act, chapter 48 of the revised statutes, 1906, and to make further provisions for a more adequate enforcement of the act and the prevention of smuggling operations.


Robert Gardiner: Explain.


Mr. EULER:: This resolution precedes a
bill to amend the Customs Act and is similar to the bill which was passed a few days ago amending the Excise Act. Briefly, the important provisions of this measure are these. One of them aims at clearing up in connection with the administration of the act, certain departmental difficulties which have been experienced in the last year or so. There is an extension of penalties for offences under the act, and power is given to customs officials to arrest without a warrant. This is in accordance with a recommendation of the parliamentary committee of last year. The bill also provides that importation shall be

Ways and Means-Supply Bill
considered complete when a vessel arrives within the three-mile limit. Finally, there is a change in regard to in transitu shipments of liquor. In future, shipments of liquor brought in in transitu shall be required to give a bond in double duty which will be released only upon production of landing certificates. These are the chief provisions of the bill.
Resolution reported, read the second time and concurred in. Mr. Euler thereupon moved for leave to introduce Bill No. 172, to amend the Customs Act.
Motion agreed to and bill read the first time.



WAYS AND MEANS


[Stage Direction]
The House resumed from March 15 consideration in committee of Bill No. 151, for granting to His Majesty a certain sum of money for the public service of the financial year ending March 31, 1927-Mr. Robb-Mr. Johnston in the chair.
On section 2-$575,204.22 granted for 192627.
Richard Bedford Bennett: There were two items in this bill for which explanations were asked, one in relation to a vote for $15,000 in connection with the Northwest Territories, and the other respecting certain gold claims of one Mclver. The word purchase was used instead of sale, and that caused the difficulty. The explanation has been given by the minister.


James Alexander Robb: Is my hon. friend satisfied
with the information given?


Richard Bedford Bennett: Yes.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.
On motion of Mr. Robb the House adjourned at 11 p.m.
Friday, March 18, 1927