1931-07-02

[Stage Direction]
Seventh report of the select standing committee on miscellaneous private bills.-Mr. Stinson.
Seventh report of the select standing committee on banking and commerce.-Mr. Matthews.

[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved for leave to introduce Bill No. 108 to amend the Companies Act.
Motion agreed to and bill read the first time.

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

Mr. POWER:: 1.	Since September 1, 1930, how many persons are receiving allowances under the War Veterans Allowance Act, 1930?
2.	How many of these persons are pensioners.'
3.	How many are non-pensioners?


Mr. MacLAREN:: 1.	As at May 31, 1931, 2,593.
2.	1,119.
3.	1,474.



FONDERIE DE ST. ANSELME

Mr. RHEAUME:: 1.	Were certain contracts awarded to the Fonderie de St. Anselme for supplies required by the Department of Marine?
2.	If so, what supplies were covered by these contracts?
3.	What was the price paid?
4.	Were tenders called for in each case?
5.	If not, why not?


Mr. DURANLEAU:: 1 and 2. A contract has been awarded La Fonderie de St. Anselme for two stem cable winches.
3.	The contract price for the two winches is 810,670.

4.	Public tenders were invited by advertisement in the press at Montreal, Quebec, Sorel and Ottawa.
5.	Answered by No. 4.



CANADIAN NATIONAL RAILWAYS-PAYMENTS FOR ROYALTIES

Mr. CHEVRIER:: What amount of money was paid by the Canadian National Railway Company to authors and composers of copyrighted music and of other works, as fees or royalties for the use of the said copyrighted music or other works by the said Canadian National Railways broadcasting stations in Canada during the past twelve months?


Mr. MANION:: 



$20.42. RIVIERE DU LOUP WHARF

Mr. POULIOT:: Who recommended to the district engineer the foremen, the carpenters and the labourers who worked after August 7, 1930, on the Riviere du Loup wharf?


Mr. STEWART (Leeds):: No information.



QUEBEC LEADER OF OPPOSITION


[Stage Direction]
On the orders of the day:
Mr. VINCENT DUPUIS (Laprairie- Na-pierville):: Before the orders of the day are
called I should like to call the attention of the Prime Minister to newspaper reports of June 22. These reports refer to a meeting held by the leader of the opposition in Quebec who is reported to have said:
I will propose that the federal government ive a premium to encourage the production of utter and cheese, and I will also propose, if I am elected, that the Quebec government give a similar premium to those interested. I will propose also that the federal government reduce the farm loan rate of interest.
I should like to know if the Prime Minister had any understanding with the leader of the opposition in Quebec which would prompt that gentleman to make the statements I have just quqted, and further if the Prime Minister made the suggestion. If so it would seem that the ministry has been amenable to the suggestion I made during the special session that owing to the fact that the farmers would not have a single cent-


Some hon. MEMBERS:: Order.


Vincent Dupuis: -in connection with unemployment relief-


Some hon. MEMBERS:: Order.
JULY 2, 1931	fp	3299
House of Commons-Ventilation


Vincent Dupuis: -tile farm loan rate should be reduced to 41 per cent. I should like to know if the Prime Minister had anything to do with the statement by the leader of the opposition in Quebec.


Right Hon. R. B. BENNETT (Prime Minister) :: Owing to the fact that the remarks
of my hon. friend have been somewhat involved I shall read them in Hansard and see if an answer can be given.



REQUEST THAT STEPS BE TAKEN TO IMPROVE VENTILATION OF THE CHAMBER

[Stage Direction]
On the orders of the day:
Mr. E. J. GARLAND (Bow River):: [
wish to address a few remarks to the Minister of Public Works (Mr. Stewart), and to ask him in the interests of humanity and personal comfort to undertake in some way to cool the air in this chamber. I would suggest to the minister and to Your Honour that it is absolutely inhuman to expect hon. members to remain seated in this chamber with their coats on. I have no objection whatever to obeying the rules of the house and observing its proper dignity, but to my mind it is perfectly absurd to stress dignity to the point of discomfort. For these reasons I suggest that a Frigidaire cooling system be obtained for the house.


Hugh Alexander Stewart: In reply may I say that during
the past few days special attention has been given to every possible device to improve conditions in the chamber. The fans have been set going and the curtains have been tied back in order that the ventilation may be improved. I would ask hon. gentlemen not to disturb the curtains, because when they are drawn down they prevent the operation of the extraction fan. The air is being brought in over water cooled with ice. We have a record of the temperature inside and outside and there is difference of from five to ten degrees in favour of the inside of the chamber.


Mr. EULER:: Not enough.


Hugh Alexander Stewart: I am told that
any lower temperature than that might be dangerous to the health of hon. members.


Some hon. MEMBERS:: Oh, oh.


Hugh Alexander Stewart: The suggestion
of making openings in the windows has been considered. Some advice is against it. However, I am going to try it.


Robert James Manion: Hear, hear.


Hugh Alexander Stewart: At this time
of the day the temperature is much higher outside than inside, and opening the windows would only aggravate the discomfort.


Robert James Manion: No, no.


Hugh Alexander Stewart: However, I assure hon. gentlemen that everything possible is being done to improve conditions in the chamber, and if they will only keep their heads cool I will see that their feet are kept warm.


Mr. M. N. CAMPBELL (Mackenzie):: I am sure, Mr. Speaker, we all appreciate what the hon. Minister of Public Works (Mr. Stewart) has been doing to improve conditions in this chamber. But, sir, as a matter of privilege I wish to raise once again the question of the right of private members to come in here garbed in whatever attire they may feel to be comfortable.


Some hon. MEMBERS:: Oh, oh.


Milton Neil Campbell: Technically under the rules of the house all members are equal, but in reality we know it is not so. For instance, if the Prime Minister (Mr. Bennett) had entered the chamber to-day without his coat, the only thing that would have happened would have been that every other member would have shed his coat; and I think the same thing would have occurred if the leader of the opposition (Mr. Mackenzie King) had appeared first without his coat-the Prime Minister would have been glad to take off his coat also, and neither right hon. gentleman would have been threatened with expulsion from the house or imprisonment in the tower, although that happened to a number of us who a few years ago tried to break some of the sacred conventions-they are not rules. It seems to me that no other sensible body- and I take it for granted that this is a sensible body-


Some hon. MEMBERS:: Not always.


Milton Neil Campbell: -Would submit to such foolish conventions. I would ask, sir, that you give us a definite decision on this particular point, because it is of very great importance to many of us.


Mr. SPEAKER:: I think the good judgment of hon. members will direct them as to what they should do in the interests of decorum in the house. It may be uncomfortable to be properly dressed, but I think we should endure the discomfort.


Some hon. MEMBERS:: Hear, hear.
International Labour


Mr. A. E. MacLEAN (Prince):: While the question of improving conditions in this chamber is under discussion I should like to draw to the attention of the Minister of Public Works some correspondence I have had from a firm that guarantees an even temperature in this chamber at all times. I should be pleased to forward the correspondence to him for his consideration. The control is brought about by what is known as the Silica Gel system, and I am advised that it has been satisfactory in controlling the temperature of buildings that before its installation was even hotter than the present temperature of this chamber.


Hugh Alexander Stewart: I shall be glad to receive the correspondence and file it with the already bulky volume of similar suggestions that we have received.


Mr. H. E. SPENCER (Battle River):: I
understand, sir, that in the British House of Commons the Speaker wears a wig.


Some hon. MEMBERS:: Oh, oh.


Henry Elvins Spencer: We have been told that
in this house we have done our best to follow the procedure of the British house. Although you fill the chair with great dignity, sir, I do think it would lend added dignity to this house if you followed the British practice and wore a wig.


Some hon. MEMBERS:: Carried.


Mr. G. G. COOTE (Macleod):: I understand, that where our rules do not provide for specific cases we follow the rules of the British House of Commons. I should like to draw to Your Honour's attention that according to press reports which I read a few years ago the members of the British house on some occasions when in committee of the whole do remove their coats. I would suggest, sir, that you should to that extent at least make it known that the members of this house are quite free to follow the custom of the British house, the mother of parliaments, and that at least when we are in committee of the whole members may be at liberty to remove their coats. I do not think that would interfere with the decorum of the house.


Pierre Édouard Blondin: What the hon. gentleman refers to may be the practice of the British house, but I do not think it should be regarded as a precedent here.



INTERNATIONAL LABOUR CONFERENCE

[Stage Direction]
On the orders of the day:
Hon. ERNEST LAPOINTE (Quebec East):: As the estimates of the Department of La-

bour have not yet been taken up, Mr. Speaker, I should like to ask that we be given the report of the recent International Labour conference which was held in Geneva, beginning on the 28th of May last, and at which the Hon. Howard Ferguson was the chief delegate for Canada. I should like to have this report and the proceedings of the conference before the estimates are taken up.


Richard Bedford Bennett: The absence of the Minister of Immigration and Colonization (Mr. Gordon)-


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Pardon me, hon. gentlemen have not yet heard what I was going to say- from this house attending the sittings of the Beauharnois committee, have rendered it impossible to ask that the estimates of the Labour department be taken up. But so far as I recall at the moment, no report of the conference at Geneva has yet been received at the office. There was a cablegram from Doctor Riddell, saying the meeting had been closed and certain matters dealt with, but the precis of the proceedings has not, so far as I recall, been received. I will look into it and let the hon. gentleman know to-morrow.


Ernest Lapointe: Thank you.



CANADIAN HIGH COMMISSIONER


[Stage Direction]
On the orders of the day:
Ernest Lapointe: Mr. Speaker, I should like to ask the right hon. Prime Minister if the oration of our distinguished diplomat in London-the High Commissioner-on Dominion day at the dinner over which he presided was submitted to him for approval before delivery.


Richard Bedford Bennett: Mr. Speaker, the answer is in the negative.


Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: Mr. Speaker, I should like to draw the attention of the Prime Minister to the expressions used yesterday by his representative in London, the High Commissioner for Canada, in speaking-I assume of hon. members of this house-and of the judiciary of Canada in a manner which I regard as casting a reflection upon both. I am quoting from the Canadian Press cable despatch from London yesterday:
Hon. Mr. Ferguson spoke of the question of appeals to the privy council as provided by the British North America Act.

Canadian High Commissioner
Then in quotations:
"Sometimes we have heard from men of short vision and small caliber that we have the brains in Canada to decide such questions of appeal."
All that is within quotation marks in the despatch. My right hon. friend will recall that yesterday this house was discussing that very question. I do not think that the hon. members who took part in the debate were either of "short vision" or "small caliber;" I think they were very fair representatives of the people of this country. I submit that the remarks of the high commissioner are not only a reflection upon those who hold views favourable to discontinuing appeals to the privy council, but are also, in the manner in which they are expressed, a distinct reflection upon the judiciary of this country. I do not see why Canada's position on any matter should be presented to the British public by its representative in London in language of the kind.


Richard Bedford Bennett: Mr. Speaker, I have no reason to know whether the report referred to is accurate or inaccurate.


An hon. MEMBER:: It would be accurate.


Mr. GUTHRIE:: How does the hon. gentler man know?


Richard Bedford Bennett: I cannot think hon. gentlemen opposite have any larger means of knowledge than I have in that regard. But this I will say: I have received several communications recently and I doubt not that some hon. members have seen an article which appeared in an English paper, wondering exactly why it was that so many people in Canada, but not elsewhere, were directing attention to the speeches of the High Commissioner for Canada in London. It would seem, as the despatch indicated, that they seize upon some particular paragraph or sentence unrelated to the text, and from that endeavour to make it appear that the utterances of the high commissioner, are out of line with Canadian sentiment. Be, that as it may, I do state with certainty that he is filling his duties with .great acceptance to the people of England, as is indicated not only by the very large number of communications which have come to me since, the attacks were made upon him in this house, but also by the public press itself. In view of the fact that in so many instances unrelated sections of his addresses have been seized upon, I should have to be satisfied definitely not only as to the accuracy of the report just read by the right hon. gentleman but also as to how and when it was said.
As I indicated some days ago, in matters of this kind very frequently observations
have been made in a jocular sense, but when they appear in print they seem very serious indeed. That has happened on more than one occasion and to more than one public man, for the reason that in a printed speech you cannot get the inflection of the voice, nor can you reproduce the facial expression as the words were uttered, so that in many instances what seemed to be nothing more than a passing joke has been taken as a serious declaration or statement because of that inability to translate the jocular into cold print. For instance, I know of hon. gentlemen in this house who have made observations which seemed very amusing at the moment, but when they were read in Hansard it was somewhat difficult to find exactly where the humour was. So I have no doubt that in many instances the remarks which have been attributed to the high commissioner

and one in particular which is recalled to my memory at the moment-have been made in a jocular way and were not intended to be treated seriously. At public gatherings I have heard distinguished public men of this country call some of their friends men of small vision and small calibre, knowing that the men to whom they spoke were opposed to their viewpoints. It seemed to them an amusing incident, as they passed on. That happens frequently; I have seen it happen at meetings of the Canadian Bar Association and other gatherings of that kind, and I am bound to say that I have known it to happen even in this chamber.
So perhaps under the circumstances the right hon. gentleman will conclude that he is somewhat in error in thinking that the high commissioner for Canada is endeavouring in any sense to cast aspersions upon the judiciary of this country, because I notice this sentence did not end where the hon. gentleman ended it, but went on to say something further as to the reason why this attitude of mind sometimes was to be deplored. For my own part 1 have always felt that the value of an appeal to the privy council was that we escaped the possibility of dissenting judgment, in that a single opinion is given in the advice tendered to His Majesty, which has had a most beneficial effect upon the construction of our constitution and the body of jurisprudence which has been created by those opinions and judgments. Everyone in the legal profession is well aware that great difficulties have arisen from the various opinions which have been expressed in our own courts with respect to the construction of our constitution. When it has been crystallized into a single opinion, and the jurisprudence has been built up from precedent to precedent, each case taking full

Canadian High Commissioner
cognizance of the case which preceded it, we have as a result a body of jurisprudence in connection with the interpretation to be given sections 91 and 92 of the British North America Act which, in my humble judgment, it would have been quite impossible to create if there had been no court of appeal such as this. Whether or not the time has arrived when this practice should cease it is not for me to say at the moment, but I do say to my right hon. friend that I am satisfied that any observations made by the high commissioner were not meant in any sense to reflect either upon the capacity or ability of his fellow Canadians or upon their judicial qualities. I think that may be taken for granted.


William Lyon Mackenzie King: My right hon. friend is entitled to express any views he may have with respect to appeals to the privy council, but I ask him whether he thinks the high commissioner for Canada, speaking in public, should deal at all with that question except under instructions from the Prime Minister, for which the Prime Minister must take full responsibility?


Richard Bedford Bennett: I am bound to say, Mr. Speaker, that I have never heard of any government instructing its high commissioner to make a public statement of that kind on Dominion day. It is certain that Lord Strath-cona did not do so in any of the addresses I heard him make, and certainly the predecessor of Mr. Ferguson would not have made such observations under instructions.


William Lyon Mackenzie King: Lord Strathcona never would have made a statement of the kind.


Richard Bedford Bennett: Perhaps not; he was not concerned in matters of that kind, but I have heard the predecessor of the present high commissioner make speeches in London on Dominion day which I would hesitate to believe were prepared here and sent to him for that purpose.


Mr. MOTHERWELL:: I should like to ask the Prime Minister how many times we are to forgive this somewhat communicative high commissioner of ours; is it to be seven times, or seventy times seven?



SPECIAL WAR REVENUE ACT

[Stage Direction]
Right Hon. R. B. BENNETT (Minister of Finance) moved the second reading of Bill No. 106, to amend the Special War Revenue Act.
He said: I do not know whether it was intended to indulge in any debate upon this measure at the moment; I thought probably

it was placed upon the order paper in order that the bill might receive its second reading to-day. Several suggestions were made when the resolutions were being considered in committee, and to one or two of them effect will be given as the measure progresses. I do not know that I can usefully add anything at this stage to what was said yesterday, and therefore I move the second reading.
Mr. STEWART (Edmonton):: Does my
right hon. friend intend to amend the bill in committee?


Richard Bedford Bennett: Yes. Effect will be given to the suggestion of the hon. member for South Oxford (Mr. Cayley) dealing with the question of mutual insurance companies, and to the suggestion of my hon. friend from North Gray (Mr. Porteous) with regard to the definition of the word "company." Then it is proposed to give effect to the suggestion of the right hon. leader of the opposition (Mr. Mackenzie King) with respect to goods valued at $25 or less being free from excise tax when brought into Canada by persons entering this country, whether tourists or otherwise. I think there is also one clerical error to be corrected.


Mr. FACTOR:: What about the stamp on cheques under $5?


Richard Bedford Bennett: That has not been decided.


Mr. HENRI BOURASSA (Labelle):: I do not want to delay this measure, but since I kept perfectly silent during the budget debate and during the debate in committee with regard to the resolutions, I just want to set forth my objections to the main provisions of this bill.
I cannot but deeply regret that the Prime Minister has not seen fit to give expression in legislation to what he proposed some years ago: that instead of dealing with matters of consumption taxes by way of sales tax, he has not elaborated the plan of a turnover tax, which would have given a much better result as far as the public exchequer is concerned, while it would have enabled the people to know just what they paid. My objection to the sales tax is that the consumers really do not know what they pay, and I well remember the hon. gentleman quoting an expression of that old authority on matters of taxation, Adam Smith, to show that one of the main features which should accompany all forms of taxation is visibility.
Then I have a word to say with regard to the so-called excise tax of one per cent. Having regard to the present conditions of the

Special War Revenue Act
country I have not much objection to the rate, but what was stated yesterday is perfectly correct. This tax should come out under its true name; it is a customs duty over and above such duties as are provided in the tariff. An excise duty is essentially a tax levied by the government upon goods produced and consumed in the country, and any tax levied upon imported goods is a customs duty.
But these are small things. My main objection concerns the stamp tax and some of the exemptions from taxation in connection with the transfer of titles. There was a good deal of discussion last night with regard to the stamp tax on cheques; but I was surprised that among so many practical men of business who took part in it, none suggested the very simple method of having the banks become the tax collectors. Every cheque issued upon which a stamp is supposed to be placed eventually comes to be cashed at the bank upon which it is drawn, and if the tax were levied by the bank and charged to the issuer of the cheque, it would do away entirely with the stamp, postage or excise, and the collection would be made by the government from the bank. Suppose a man issues 50 cheques a day: they go either directly to the bank in which the company or individual has an account, or they go through the clearing house. But they all finally reach the bank on which they are drawn; and as every one of those cheques came in, the bank would affix the stamp and add its value to that of the cheque. Each evening the bank could ascertain how much it owed the government in connection with all cheques cashed during the day. Moreover, the power of supervision on the part of the government would be quite easily exercised because the banks keep all cheques for several weeks and sometimes months.
The point made by the hon. member for Antigonish-Guysborough (Mr. Duff) is well taken. If people use postage stamps instead of excise stamps then the government will lose 50 per cent of the tax. I have no objection to the postmasters getting a little benefit, but not in this way. This tax is supposed to be imposed for the full benefit of the country, and I have an objection to the taxpayers of Canada contributing in any indirect way to an increase in the salaries of postmasters, with the result that the country loses the whole surplus taxation which is intended to remedy the present condition of the exchequer.
With regard to small cheques, the suggestion made to exempt cheques up to $5 is a
good one. But as to the tax itself, the government was right in coming back to further taxation on cheques small and large.
With regard to the point made by the hon. member for Winnipeg North Centre (Mr. Woodsworth), that there should be a difference in taxation according to the amount of the cheque issued, there is ground for discussion. But if the method I suggest were adopted it would be quite easy for the government to see, through the banks, that cheques from $5 up to SI 90 paid the 2 cents, cheques from $100 to $200, 4 cents, and so on. That is in the hands of the government ; but in regard to the so-called nuisance of this form of taxation, instead of substituting postage stamps for the excise stamp, as a result of which the government stands to lose one half of the returns, it would be far more practical, from the point of view both of the government and of the taxpayers, to do away with the stamp on cheques. If that were done, I come back to the suggestion I made to the former government. If the banks were charged with the responsibility of taking the 2 cents from every cheque issued, then I submit that we should extend this principle and oblige the banks to levy 2 cents on every coupon presented at their offices for collection. I have discussed the matter with some of the most reliable accountants in Montreal, men of high responsibility whose names, of course, I cannot divulge; and they have assured me that the treasury of this country loses hundreds of thousands of dollars every year in connection with the income tax by reason of the evasion by debenture holders of the tax on coupons.
We always take as our examples England or the United States, although I notice that this government has a tendency to copy more exclusively the methods of the United States. But we should enlarge our views and study the conditions that exist in countries other than the so-called English-speaking countries. Take Italy. She was at one time on the verge of bankruptcy-in fact, she was bankrupt at the end of the war. Perhaps the most efficient statesman whom that kingdom has known since it completed its unity in 1870, Signor Giolitti, was struck by the amount of revenue lost by the state in connection with debentures issued either .by the government or by private companies. He had a law passed which Obliged both the government and companies to issue nothing but debentures payable to the creditor, which required the presentation of every debenture with its coupons at certain offices. By this means the revenues of Italy on that account were nearly doubled, and,
Special War Revenue Act

besides, it greatly diminished what the Prime Minister has so reasonably denounced as one of the -causes -of the present crisis, namely, stock gambling, a folly which has wrought so much evil in this country.
I regret that, either with a view to public economy or to increase the revenues of the country, the government has not endeavoured to find means of taxing stock gambling operations. If they cannot put a stop to the practice, at least the country should get some benefit from it. I would; far rather see it stopped altogether and stock gambling made a crime, because it is certainly much more criminal, much more injurious to the social and economic safety of the country, than many of the things which by statute we have made criminal in the past.
I reserve for another -occasion the observations I have to make with regard to income tax. But I think it is regrettable that in its honest endeavour to improve the financial conditions of the country the government has not adopted more energetic methods of dealing with the situation. Let me say at once that I appreciate the fact that the Prime Minister has faced that situation with a measure of courage and energy which we can all admire. We may differ from his policies, but in this regard he is entitled to a tribute of admiration from every Canadian citizen. My only -regret is that he has set aside his best ideas to adopt what I consider to be a weak method of dealing with the situation. For a great number of years, this has been to a large extent the curse both of the social and of the economic situation in Canada. We are faced with the influence of men who are, to bom-ow the words attributed to our representative in London, men of small vision. They may be great captains of industry, they may be manipulators of millions and hundreds of millions of dollars, but they have not the proper sense of social and economic equilibrium.
In all these matters the duty of the government is not only to consider the views of the banker, the views of the trader, the views of the manufacturer; they should consider, first, the general interest of the country, including all classes, but especially the poorer classes; second, they should consider the exigencies of the public purse, and, third, the peculiar interests or claims of this or that class of the puiblic. Unfortunately for many years ou-r fiscal policy has -been framed alternatively by this or that class, .by industry or finance, and very seldom has a study been made of all economic and social viewpoints. The same tendency shows itself with a vengeance, in these proposals. I will not for the moment

refer to the other features of the budget which have no -reference to this bill, but when the income tax and the amendments to the tariff are before the committee I may have something more to say. At the present time I simply state that I cannot agree with the main dispositions of this bill because in my opinion they do not fit the situation, because they will not apportion fairly the load of new taxes upon all classes of the community, because they will not give to the government the amount of revenue-I will not say to which it is entitled;-which it is bound to collect if we are going to preserve the credit of Canad-a.
We should not be deluded. I am not a pessimist, nor an optimist. Statesmen, all men responsible for the welfare of the country, should be realists and see things as they are. The situation may not be desperate but it is very bad. For many months the Prime Minister has attempted to show a spirit of optimism, but yesterday his conscience and sense of duty imposed upon him the painful task of depicting the situation in far darker words than those used by any hon. member of the opposition or any independent individual in this country. We have a very serious situation to meet, serious as far as the finances of the country are concerned, serious as far as maintaining the credit of the country is concerned. The provinces, the private and corporate enterprises, every one, will have need during the months to come of the credit of Canada. After all, the credit of the various provinces, the credit of the various industries and the credit of all individuals at large is, in the long run, governed by the credit of the country, and reversely the credit of the country is affected by the economic condition of the various units, political, industrial or other, which compose the whole of the tax paying community of Canada. If we want to maintain the credit of Canada and thereby the credit of the provinces; if we want to help the sufferings of a vastly increasing number of Canadians, we should see that every measure adapted by this government to derive revenue, to put money in the coffers of the country, for the benefit of the community at large, should give to the country all that it is entitled to. This should not be lost or cramped, through various small avenues, by such means as the use of postage stamps instead of excise stamps. This should have been made the occasion for the enlarging of the basis of our direct taxation in order to increase the revenues of the country by reaching those sources of income which are not at present reached either because of legal

Special War Revenue Act
evasion or the dishonesty of the ratepayer. Such dishonesty is favoured by the dispositions of our present fiscal laws. This applies to most forms of taxation, but especially to the income tax.
This would have been the proper time to have applied those great principles which no hon. member has presented to this house as did the Prime Minister himself. I think it was in 1928, that he criticized the budget of that year in what I consider to have been one of the most thoughtful and masterly addresses on matters of finance and taxation ever given in this parliament. Surely it is not through lack of courage, surely it is not because his authority in the government is not strong enough, surely it is not because he is not master of his administration, that this is not done. What are the causes? Why has not the Prime Minister at this present juncture, with the courage he has evineed so far, taken perhaps the one occasion which will be afforded in his whole life of putting into force and of enacting into law those great principles of taxation which he enunciated three years ago? I deeply regret that he has not done so. I regret it for the country's sake, and I regret it for the sake of the right hon. gentleman himself, because whether or not we differ with him, every hon. member will agree that in the interest of the country every statesman who is loaded with the responsibility of ruling it should do so in the most capable manner, and should be permitted to do so without being impeded by petty party obstacles or sordid interests. The right hon. gentleman knows that when I say this, I say it as a sincere Canadian. I may have more inclination for one party than the other; but long ago have I ceased to consider this or any question from a party viewpoint.


William Lyon Mackenzie King: Mr. Speaker,
from the discussion which has taken place on the resolution it must be apparent that the opposition entertains very strong objections to many features of the bill now before the house, which bill is based on the resolution. Were circumstances other than what they are with respect to the stage reached in the present session, and the amount of work which still remains to be done, we would avail ourselves of the opportunity which the second reading of this bill affords us to repeat with emphasis many of the objections which have already been put forward. However, as long as it is understood that our objections have in the main been voiced by what has been said on the resolution, and recognizing as we
must that the government by its majority will carry the measure anyway, we will refrain from further protest and cooperate with the government in expediting the remaining business of the session which includes, of course, the measure which is now before us.
Having listened with great care to the speech which has just been delivered by the hon. member for Labelle (Mr. Bourassa), I do not hesitate to say that he has expressed in a clear way what is uppermost in our minds with respect to the taxes which are to be imposed under this particular measure. In a word, we feel that the administration has not taken sufficient account of what is known as the incidence of taxation. In imposing new taxes they have not considered sufficiently whether the outcome of the taxation will be to relieve burdens where there is great need of burdens being relieved, nor have they sufficiently endeavoured not to increase the burdens of those who are already bearing as much as they are able to bear in the way of taxation. My right hon. friend has not considered sufficiently whether or not those who are best able to meet the obligations of the state through taxation should at a time like this bear a larger share of the burden of taxation, or at all events he has not prepared his legislation along those lines. That, in a word, expresses our views with regard to many of the features of the present bill.
May I say that if the resolutions had remained as they were presented, we would have had occasion to take much stronger exception to the taxation proposed even than we do at the moment. One of the great objections to the measures my right hon. friend has introduced has been the rough and ready and wholesale manner in which he has sought to deal with everything he has touched in the way of taxation. If he had been a little more restrained in making changes at the beginning of his term of office; if he had had more regard for the fact that previous governments had also wrestled with this question of taxation and that all existing taxes have been the result of long and careful study, not only by previous administrations, but also by the House of Commons in the many discussions which have taken place here he would have seen the wisdom of continuing more in accord with the forms and provisions of taxation which he found upon the statutes. To make clear one great change, my right hon. friend in the resolutions as introduced swept aside with a stroke of his pen, all the exemptions that had been made under the sales tax.


Richard Bedford Bennett: Oh no.
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William Lyon Mackenzie King: Well, most of the exemptions that had been made under the sales tax by the previous administration. Those exemptions were not made without the most careful study with respect to each of them. They were all in the nature of exemptions of articles which enter largely either inito the cost of living or into production costs; I believe there was not one of them that had not some special justification, but my right hon. friend, simply, as I have said, with a stroke of the pen, swept away the larger percentage of them. Now, having given the matter second thought, he has had to restore the exemptions, and having restored them, our objection to the bill is of course less than it would have been had its provisions been in accordance with the resolutions as previously introduced by my right hon. friend. He has also indicated that other portions of the bill based on the resolution will also be considerably modified. I do not think I need add more. What I have said, makes clear, I hope, our position that in seeking to cooperate with hon. gentlemen in getting the legislation through as speedily as possible, we desire it to be understood that our silence at this stage in the matter of criticism is not at all due to agreement with many of the principles underlying the legislation, but rather, that our objections to it continue to be those expressed when the resolutions themselves were being discussed.
Mr. J L. BROWN (Lisgar):	It was not
my intention to say anything further with regard to a matter that has already been before the house, that is the question of the tax on cream cheques, but this morning I received a letter from Mr. G. W. Tovell, secretary of the Manitoba Cooperative Dairies, Limited, giving a point of view that has not perhaps been grasped by the Minister of Finance (Mr. Bennett). In one part of Mr. Tovell's letter he refers to certain conditions that prevail in the west that make it necessary, or at least desirable, to issue a cheque for every can of cream that is sent to the creamery. The situation in the east is I think generally that of paying semi-monthly or monthly. The condition in the west means a very large number of cheques and Mr. Tovell in the closing paragraph of his letter makes this statement:
Using our own Dauphin plant as an illustration, we are issuing at the present time about 1,600 cream cash tickets a week; using this as a basis, you can readily compute what this stamp is likely to cost us in a year; my own estimate is that the stamp on cream cash tickets will cost our three plants somewhere between $4,000 and $6,000 per year, and as you are undoubtedly aware, there is only one place

where this can come from and that is out of the proceeds which would otherwise go to the farmer. It seems to me that dairying in its present condition will be adversely influenced by this tax.
The above may not he news to you, but on ihe other hand it may possibly bring the seriousness of the matter a little more clearly before you.
At a time when agriculture requires all the assistance possible, this particular question, although it may seem small, might receive a little further consideration.


Mr. A. W. NEILL (Comox-Alberni):: 1
have just a word to say in comment on the remarks of my deskmate, the hon. member for Labelle (Mr. Bourassa). He expressed my sentiments so much better than I could have done, there is no need for me to elaborate except in regard to one point. He alluded to the fact-and it is I believe a welll known fact-how largely men of more or less wealth, possessors of bearer bonds with coupons attached, evade their responsibilities toward the income tax by clipping those coupons at the bank so that there is no record of them and they do not make any return of them in their income tax returns. Some comments have been made in the press that now that people have to convert those bonds under the recent legislation, they are being, so to speak, checked up, as proving they possess a large amount of money in bonds, a record of which has not been shown in their income tax returns. It is in connection with the remarks of my hon. friend on that point that I want to make one comment. He suggests the remedy would be to have the government impose a tax of one or two cents on each of those coupons and have the bank collect it as they are cashed. That has two objections, or one at least: it would involve the payment of an income, tax by people who have quite small means, whose total income would come far below the exemption allowed by law. So as long as they cashed those coupons, sometimes for small amounts, such as $1.38 and so on, they would be paying an income tax which according to our law they are not supposed to do. I would suggest this could be got over by the method adopted in Britain. There, on every coupon of that description, the income tax is calculated and collected by the bank If there are any people-and there are thousands of them-whose total income would come within the exemption, it becomes their duty to make an affidavit annually of what reductions have been made from their coupons in that regard, and the government then returns the amount. This method has been proved to work satisfactorily and with no great hardship. No one is going to complain very much

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if he is compelled once, a year to make out a form which will give him a repayment of income tax, and this method contains the much-desired feature that those who have the income will pay the income tax which they are supposed to do and which under our present system it. is so easy to avoid.


Richard Bedford Bennett: I am compelled to make just two or three observations in closing the debate on the motion for the second reading of this measure. I wonder if the hon. member for Lafoelle realizes that I feel just as he does. I have very strong and well defined views with respect to taxation. I expressed them to the house some years ago, and I was attacked very bitterly in the press of the country because I had done so. I was rather amused to hear my hon. friend's suggestion that the basis of taxation should be broadened so that every man should make a contribution to the state-


Joseph Henri Napoléon Bourassa: According to his means.


Richard Bedford Bennett: -according to his ability, and then to hear the observations of my right hon. friend opposite with respect to following all the forms of taxation that had been provided by previous adininistrations. If on the one hand we are to follow what has been done, then you have the result which we have; if you are to blaze a new path and make a new road with respect to taxation, you must drastically alter your methods. In other words, you cannot make an omelette without breaking eggs.
What happened in this country is well known. Last spring as soon as it became apparent that it would be necessary to provide for additional taxation to balance the budget there was carried on from one end of Canada to the other a campaign against a turnover tax. I was flooded with memorials from various parts of the country, the origin of which I well knew. The turnover tax was not a success when in recent years it was first tried in France. It has, however, become a very great success. It takes time to accustom the people to it, and in my judgment therefore it followed that having regard to economic conditions and the very great difficulties which were to be experienced in this country in all forms of industry it was unwise to try a new form of taxation, and very desirable as little as possible to dislocate the business of the country. To my mind it was desirable to secure the money required by recourse to well known and practised forms of taxation rather than to break into new ground with a turnover tax. That is the reason hon. members are not asked to
consider in this house a turnover tax. I believe my hon. friend from Labelle (Mr. Bourassa) was sincere in his suggestion with regard to taxation, because on more than one occasion he has done me the honour to talk about the matter privately. Probably he will realize that the disappointment to me is far greater than it can be to him and in fact greater to me than to any other hon. member. Realizing those facts he will appreciate my position. I should like to have seen applied in Canada some new system of taxation, and he is quite right when he says it is not at all probable that I shall ever have a chance to try a new form of taxation, because it is not at all likely that I shall ever again submit ways and means to this house. I am not without hope, however, that some Minister of Finance reviewing the means by which taxes may be raised will realize the values and benefits accruing from a turnover tax.
What I placed upon Hansard three years ago represented my considered views. The turnover tax would be one upon a professional man's turnover, whether he be a lawyer, a doctor or a dentist. The tax would apply to the rich and poor relatively, the turnover of one being restricted and that of the other being large. The turnover tax on business would obviate the necessity for an income tax with all its difficulties of administration and would come regularly to the country once every month, being paid by all forms of business men in every walk of human life and avenue of effort. In the end I believe this particular form of taxation would be acceptable to the Canadian people. However, as I have said, at the beginning of this year the press and public men throughout Canada began to spread propaganda. I saw it begin and swell, and I saw it begin to take root amongst the people of the country who probably may have thought that this indicated a design in the mind of the minister to impose upon them a form of taxation about which they knew nothing and something which would work great hardship upon them. I took the trouble during my investigation with respect to taxation to secure from France a complete record of their experience with reference to the turnover tax.
I remember being in France when the so-called luxury tax was tried, and I well remember how anxious the merchants were at once to notify a customer that if he came from the other side of the channel he did not need to worry about paying the tax because the goods would be sent to him over there and the tax in that way could be avoided. I remember that that was the first
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thing told to a prospective customer who dealt in the shops. To my mind that action on the part of the merchants indicated that the luxury tax was not working successfully and, as I have said, in the end they had recourse to the turnover tax.
Sir, it has not been my privilege to introduce any new forms of taxation to this country at this time. I do not for a single moment disguise the fact that I would like to have done so. I should like to have written a budget which would have expressed my views with respect to taxation in Canada. That privilege has not been given, and it never will ibe. I do say however that the exemption list in the sales tax is notoriously too large. There is not an hon. member in this house who, when he reads page after page of exemptions, does not realize that in a large sense they have been forced upon the House of Commons by the pressure of politics by both parties-not foy one, but by both. When the original resolutions were offered to this house and the list of exemptions was so limited it was apparent there might be a wider distribution of the area of taxation, and that those who were able to make some contribution to the state would do so. The representations made to the Department of Finance however were these, that we have already this system established and to use the language of my right hon. friend-"It has been riveted upon us." Knowing the forms of taxation and the exemptions, having the forms printed and ready, it was felt that to continue the status quo would be most desirable. That is a conservative state of mind which no Conservative Prime Minister could afford to disregard. It was at once apparent that that faculty or habit of thought which finds expression in the words, "I do not want a new system; I want to stick to what is, because I know what it is," is noteworthy in connection with taxation. No one knows better than those who have endeavoured to raise money by the application of systems and forms of taxation that there is that inertia to overcome on the part of the taxpayer. Obviously the doctrine I have just stated is most conservative and in this instance it is directly advocated by our Liberal friends. It is perhaps one of the passing phases of our civilization that those who are of a conservative bent of thought should follow the maxim that:
That man's the true Conservative
Who lops the moulder'd branch away.
There are many mouldered branches with respect to our system of taxation.
I have made these observations because I share even to a greater degree than does my

hon. friend from La.belle the regrets that we have not been able to give effect to measures which I believe would have been of lasting *benefit to the country. However economic conditions and pressure of events being as they were, coupled with the fact that propaganda. had been carried on in a large way, I regarded it as my duty to maintain the two principles-first, to dislocate as little as possible the business of this country, and secondly to disturb as little as possible existing methods of taxation-to accomplish the end we had in mind, the raising of larger revenues.
There are other matters to which reference has been made which will come up during the passage of the bill through committee. I avail myself of this opportunity however at once to indicate to my right hon. friend opposite my appreciation of the attitude taken by himself and his party, knowing as I do that they are not-Shall I say "wedded" to this measure, but have expressed themselves in committee as being opposed to it in a large way. On the second reading they have fulfilled their duty by making their statements, and I presume on division the bill will go into committee.
I am not unmindful of the observations which have been made by the hon. member for Lisgar (Mr. Brown). I would point out to him that the payment of $4,000 for cream cheques, or $6,000, as he mentioned, would mean an issue of 300,000 cheques or 1,000 per day, if we take a 300-day year. That would mean that nearly two cheques a minute would have to be written by the creameries to which he has referred. Sometimes I find there is a tendency to think that a tax, small though it may be, will impose a greater hardship than in fact it does impose. When the bill is in committee I shall point out to my hon. friend a desire not at this time to press upon cooperative enterprises an undue burden. At the same time however for reasons I have already mentioned I think it not undesirable that some contribution should be made by all the people to the revenue of the country. There is also this to be said, which I suppose has been in the mind of many hon. members. The cheque has taken the place of the receipt, and some time ago if a receipt were written it was the practice to place a stamp upon it. When that was abolished, the cheque of course was treated as a receipt and no stamp was placed upon it if it was less than $10. However, we will, as I have said, have some further discussion on that as it goes into committee. I can only add that a very earnest endeavour has been made by every member of the govern-

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ment to have regard to existing economic conditions in Canada, and I shall have some figures to give this house before we dispose of these taxation measures that will perhaps surprise them in their very easy talk of the ability of great corporations, for instance, to pay taxes. It must clearly be within the minds of men, if they take the trouble to acquaint themselves with available information, that during the past year corporations in Canada have had great difficulty to make their income meet their expenditures, having regard to the large fixed charges-with some of which I wholly disagree-and for other reasons which I need not now discuss.


Pierre Édouard Blondin: Shall the motion carry?


William Lyon Mackenzie King: On division.
Motion agreed to on division, bill read the second time, and the house went into committee thereon, Mr. LaVergne in the chair.
On section 1-Part III amended.


Richard Bedford Bennett: Every clause in section
13, except (a) I think, is quite in order. I propose to add to (a) the exception mentioned by the hon. member for South Oxford (Mr. Cayley), and the officials of the insurance department will bring that to the house before we take the bill out of committee. The exception will be practically in these terms:
Except purely mutual insurance companies, fifty per cent of the business of which is carried on on the mutual principle.
For there are large companies that take cash premiums, as my hon. friend knows, and they have not been exempted. The history of the exemptions of these enterprises is perhaps well known to the hon. member who mentioned the matter yesterday. Originally they were exempted, but Mr. Fielding thought they should pay; then certain exemptions were allowed, and ultimately all were freed from the tax. I think the case made out by the hon. member and others who have written to me and spoken in the house is a good case, and that the exceptions should be provided with respect to purely mutual enterprises, fifty per cent of the business of which is carried on in that way. I believe the hon. member is himself an outstanding authority on the matter, and I understand that would meet the situation.


Mr. CAYLEY:: Mr. Chairman, I desire
to tell the Prime Minister that the seventy-one purely mutual companies of Ontario with which I am associated will appreciate very much the change that he has made. These seventy-one purely mutual companies, conducted by the farmers, are scattered throughout Ontario and they handle pretty well all the farm insurance of the province. The older companies, the straight line companies, owing to the fact that they could not make money at this business have dropped out of it entirely, so that these seventy-one mutual companies have had to shoulder the burden. As the committee probably know, the farmers simply pool their money, paying in according to the amount of insurance they may require, and signing a premium note, and those who are unfortunate receive their money from the pool. Their experience over the years has not been as satisfactory as we should like it to have been. I have here an address given by the superintendent of insurance for Ontario before a convention of the mutual companies in March last, in which he says amongst other things:
You can look back over the history of mutual fire insurance in this province for forty years, and you will not find another three successive years-[DOT]
That is the past three years.

where the cash assets of the company decreased twice during the three year period. In other words, this is the second decrease in assets in two successive years.
Further on he says:
So that, in two years, the amount of money borrowed by the companies from the banks has increased almost twelve times.
In another place, reviewing the history of the companies, and having in mind the serious condition in which agriculture finds itself to-day he says:
Gentlemen, I submit to you that the situation is just as serious now, if not more serious than it was in 1923 and 1924.
After quoting the rates and showing that we have had rather an uphill experience, he
says:
According to this method of computation the average cost of $100 of insurance during the calendar year 1928, was 26| cents; during 1929, 34J cents; 1930, 36J cents. Gentlemen! When you find that the cost of insurance in 1930 was $1.10 for three years ($11 per thousand) and compare that cost with the $8 three year in advance cash premium rate ($9 payable in instalments), you must realize that the companies are furnishing insurance at less than cost.
Then he proceeds:
The current depression in the agricultural industry is creating important problems for mutual companies insuring agricultural property. The year 1929 was the most disastrous in the history of mutual insurance in Ontario Reports reaching the department indicate that there has been no substantial improvement in the loss experienced during the first six months of 1930.
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You now know the loss experienced during 1930.
Mutual insurance is insurance at cost; it is not, and cannot be insurance below cost. The majority of the mutual companies are to-day attempting to furnish insurance below cost. This trend cannot continue indefinitely without bringing disaster to those companies without large surpluses or materially drawing on the reserves built up in past years in the case of those companies which have large surpluses. It is important that every company should take cognizance of the existing situation.
In view of that I want to impress upon the Prime Minister the great importance of the step he has taken for the relief of the farmers in this small way under the proposed change in the section.
Mr. BOURASSiA:	Has the Minister of
Finance (Mr. Bennett) the terms of the proposed amendment?


Richard Bedford Bennett: I am asking that subsection (a) stand for a moment until the officials prepare the exact terms of the amendment, but it is proposed to add:
Except purely mutual companies, fifty per cent of the business of which is carried on on the mutual principle.
Some of the large companies are engaged in a cash business and competing with the straight line companies, but apart from them the mutual companies come under this exception.
Mr. BOURAiSSA: I have in mind two kinds of insurance companies in the province of Quebec. One is a small local company on the pattern of our cooperative banking institutions. They operate only within the boundaries of one district. I suppose they would not be covered?


Richard Bedford Bennett: It is proposed to free them from this tax.


Joseph Henri Napoléon Bourassa: The second case is
peculiar also; it is a company which covers fire risks in connection with religious and educational properties. I think the company is called Assurances des Falbriques and it just covers the various churches and schools in a certain district. Would the amendment cover this company?


Richard Bedford Bennett: That is purely a mutual company, and the amendment covers companies of that kind.


Thomas Merritt Cayley: It would cover weather insurance companies also?


Richard Bedford Bennett: Yes.


[Stage Direction]
Section agreed to.
On section 13.-Definitions.
{Mr. Cayley.]
Richard Bedford Bennett: This section 13 is the new section, and paragraph (a) covers every company dealing with insurance. If you, Mr. Chairman, will permit us to take up the various subsections, (a) would stand and I think (b), (c), (d) and (e) are all right.


Mr. RALSTON:: Would my right hon. friend explain to one who does not know anything about the act just what was the reason for including the interpretation of a Canadian company? I was looking over section 14, and that refers to any company.


Richard Bedford Bennett: There is a slight distinction to be made between the company which owes its origin to a Canadian statute and the company which is registered in Canada, having its original domicile outside of the country. The word "company" includes any corporation, and then later on a distinction is drawn in connection with business transactions with companies other than Canadian companies or companies registered in Canada.


James Layton Ralston: My concern was that it did not seem as though there were any exceptions at all in the definition of Canadian companies; there are no exceptions for marine companies, mutual companies or anything of the kind. I wonder if a Canadian company is included in section 14, which would mean that these companies were being taxed.


Richard Bedford Bennett: It was to overcome that difficulty that the superintendent of insurance advised me that the word "company" might have too wide a meaning in the one instance, and "Canadian company" too narrow a meaning in the other instance, and so the distinction was drawn. You have the word "company", and after that it has the meaning attached in the defining clause, while the words "Canadian company" are used only once or twice in the bill.
Subsections (b), (c), (d) and (e) agreed to.
Subsection (2) agreed to.
On section 14.-Tax on certain insurance companies upon net premiums.


James Layton Ralston: This is the section to which I was referring.


Richard Bedford Bennett: It is intended to place a tax of 1 per cent upon every company licensed or registered or otherwise authorized to transact in Canada or in any province thereof the business of insurance. That is upon the net premiums.

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James Layton Ralston: Whether it is marine insurance, or anything like that?


Richard Bedford Bennett: Yes, but the word "company" is defined; it does not cover a life insurance company, or a marine insurance company or a fraternal benefit society, so the tax would not be imposed upon marine insurance companies.


[Stage Direction]
Section agreed to.
Section IS agreed to.
On section 16.-Tax on insurance with unlicensed British or foreign companies.
Richard Bedford Bennett: I should like to speak
to this section. Yesterday my hon. friend from North Waterloo (Mr. Euler) made a suggestion which, if the committee favours, I am perfectly willing should be adopted. This section does not come into effect until a proclamation has been made. The validity of our tax has been attacked by litigation in the province of Quebec, and that question will be decided probably early next year by the privy council. We have been charging 5 per cent, and yesterday the hon. gentleman suggested that the tax should be not less than 5 per cent or more than 15 per cent, as may be fixed in the proclamation of the governor in council bringing the act into force. If the committee thinks well of that I am perfectly willing to have the amendment drawn in that way, because in any event the statute does not come into effect until the proclamation is issued.


Charles A. Stewart: What would be the object?


Richard Bedford Bennett: Without going into very
great detail, I assume that every hon. member of this house, especially those coming from rural constituencies, knows that the business of insurance has become very general. There is hardly a small hamlet without an insurance agent, and these men receive roughly 15 per cent of the premiums from the line companies. They have been losing a great deal of business, amounting to nearly a billion dollars of insurance, to corporations of this class.


Charles A. Stewart: Outside corporations?


Richard Bedford Bennett: Yes, foreign corporations
not registered in Canada, and therefore no part of the commission on premiums remains in this country. Pressure has been brought to bear-


Charles A. Stewart: Is not the
5 per cent tax applicable to foreign companies also?


Richard Bedford Bennett: The tax of 5 per cent is now imposed. I say it is not improbable that this section might have been introduced had there been no change of government because, as every hon. member from a rural constituency knows, strong recommendations have been made to the government. The validity of the impost having been attacked by litigation, this statute will not come into operation until a proclamation is issued, and it well may be that some of those companies not registered will come into this country and register in the meantime, which is the object of many of those who are proponents of the tax.


Charles A. Stewart: Then they
would come under the domestic tax.


Richard Bedford Bennett: Yes.


Charles A. Stewart: In that case I do not see the force of the suggestion. The 15 per cent tax is for the purpose of bringing companies to Canada, but they may come here and avoid that tax.


Richard Bedford Bennett: Without going into details, some of them perhaps are not register-able under the strict terms of our statutes. A great many people feel, as the hon. member for North Waterloo said, that 15 per cent is a higher rate than might be necessary, so if the committee thinks desirable I am quite content to amend the section in such a way as to place the tax at not less than 5 per cent, the present rate, and not more than 15 per cent, the exact rate to be fixed in the proclamation issued by the governor in council when the statute is brought into operation.


James Layton Ralston: The rate is to be fixed by order in council?


Richard Bedford Bennett: Yes. I will ask that subsection (d) stand, and the superintendent of insurance will give me the terms in which he would like the amendment.


James Layton Ralston: The other point in connection with this section is that whereas previously the tax was imposed on the net premiums, now it is imposed on the gross premiums.


Richard Bedford Bennett: Yes.


James Layton Ralston: And it is to be made retroactive.


Richard Bedford Bennett: It is not made entirely retroactive; it will not have any force at all until this proclamation is issued.


James Layton Ralston: But it is for the year previous to October, 1931.


Richard Bedford Bennett: For insurance effected or in force on or after the first day of October,
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1931. That is for this fiscal year, as my hon. friend observes. That is hardly retroactive; it is to cover this year.


James Layton Ralston: The section reads:
.... gross premiums payable by such person during the preceding calendar year for such insurance effected or in force on or after the 1st day of October, 1931.
I take it the return would be made in January showing the insurance which was in force in October, premiums on which had been paid in the preceding year, so therefore it is retroactive.


Richard Bedford Bennett: In that sense, it is
the only way in which it could be done. I need hardly say to the committee that these companies are not registered in this country. This is an individual return of payments made to outside corporations on which the tax of 5 per cent is now collected.


George Gibson Coote: Is not this change in the
tax going to place a considerable burden on industries? From information I have received in the past it would appear to me to be almost necessary for some of the industries, in self defence, to adopt this method, because many Canadian insurance companies were charging them very excessive rates and it was almost necessary to secure relief in this way.


Richard Bedford Bennett: These special provisions
of this statute will do something to prevent. a recurrence of that difficulty, and one of the reasons why the statute does not come into force except by proclamation is to ensure that any such situation as that of a monopoly endeavouring to fix excessive rates will be prevented.


George Gibson Coote: In what way will this affect the monopoly that has existed in Canada?


Richard Bedford Bennett: This is a large question and perhaps my hon. friend does not desire to enter into any lengthy discussion of it.
I am fully alive to the situation to Which he has directed attention, as I believe preceding ministers of finance have been. That is one of the reasons, in addition to the litigation, why this increased burden will not be imposed except when the act is proclaimed.


George Gibson Coote: I am glad to hear the
Prime Minister say that, but I assure him that there has come to my attention within the past few years evidence that many industries have been charged excessive rates. This mutual insurance scheme in some cases reduced rates to one fourth of what they were previously paying. I certainly think the Prime Minister should be very careful to see [Mr B'mnett.]
that no extra burden will foe imposed until we are sure that industries will not be held up as they have been.


Richard Bedford Bennett: If the volume of insurance now in the hands of those affected by this legislation were carried by companies in Canada, the rates would be reduced.


George Gibson Coote: It has been carried heretofore.


Richard Bedford Bennett: The reciprocals always
carry part of it. If the S850,000,000, of which we have knowledge, were in force in companies that are registered in this country the effect would be to reduce the rates, because it represents the very cream of the business, the very best risks, in which the fire hazard is the least. No one knows that better than my hon. friend from South Oxford, because one of his companies, one of the oldest in Canada, did carry some town risks and always found that the best of them were those in connection with which the sprinkler and similar appliances were in use.


George Gibson Coote: Is it not a fact that if the Canadian fire insurance companies had treated our people in Canada right in tjie matter of rates this insurance would never have been written outside? It is because our people were not able to get proper rates from the Canadian fire underwriters that they were compelled to go outside Canada to secure a cheaper method of insurance. We should be careful to see that they are not unfairly dealt with. This is a very drastic increase in the tax placed on this class of insurance.


Richard Bedford Bennett: That business has always been written outside.


Mr. VENIOT:: One of the reasons why
foreign companies could give a cheaper rate than our own companies is that they have no overhead in Canada at all. But why should our companies be called upon to meet a loss because of that fact? There cannot be very much danger of a monopoly when all fire insurance is regulated by the fire underwriters who are appointed for the various provinces of the Dominion to regulate insurance. I have had considerable experience with fire insurance and I know what our people are up against. It was not because they were not getting fair play from the Canadian companies; but the foreign companies, through the mail, were offering rates which they knew our companies could not possibly quote and live, and this simply because they themselves, unregistered in Canada, had no overhead in this country.

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Richard Bedford Bennett: It is not quite correct
to say that the Canadian companies were exploiting our Canadian people. The real truth is that the fire hazard in this country was a very high risk in the early days, with wooden buildings; and fireproof construction only came later in the cities and towns. As buildings became fireproof, with sprinklers and other preventive appliances installed in the buildings themselves, such buildings carried a very special rate, and the business ha3 always gone to institutions carrying that selected class of risk. But as the country has made progress, farm risks have reduced steadily, and in the cities and towns there has been a reduction in risks. When we remember that some of the enterprises to which reference has been made incur no expenses in Canada, my hon. friend will understand that if the business thus lost were retained in Canada it would reduce premiums all round. I assure him that every means that can be taken will be taken to prevent there being any exploitation, and I think the effect of this may be to bring about a substantial reduction in rates on the part of those who are registered in our own country.


Edward Joseph Garland: On more
than one occasion the Prime Minister promised the hon. member for Macleod and the committee that he would, before bringing this act into operation by proclamation, see that something was done to prevent exploitation. That is largely the point in which we are interested at the moment. I should like the Prime Minister to give the committee something more specific than the assurance that he will do everything in his power to prevent exploitation. I wonder to what extent his powers go in that regard? What provision can he make, or what terms can he enter into? Frankly, I think that the provision in the bill, whether intended to or not, will have the effect of transferring a large amount of business to Canadian companies. That is excellent, providing it does not mean an increase in the premiums now paid.


Richard Bedford Bennett: It should mean a decrease.


Edward Joseph Garland: I should
like the Prime Minister to tell us what he means when he says he will prevent exploitation.


Richard Bedford Bennett: I suppose the hon. member knows as well as any other hon. member of the house that there is a board of fire underwriters in this country. The hon. member for Macleod has spoken of insurance companies in Canada as a monopoly. I would point out that the measure of premium 22110-210
charged has been fixed after consultation with the fire fighting authorities in the various provinces, recent decisions having placed this matter more largely in the hands of the provinces than heretofore. The conditions imposed with respect to the carrying-on of business in the provinces, especially with regard to taxation, have been very onerous. For instance, since this bill was drafted in the first instance, it has come to our attention that at a recent session of one of our legislatures an additional tax of 5 per cent was imposed on these same companies. A tax of that kind would be prohibitive and would destroy any healthy competition that might otherwise exist. The whole matter has been and is being fully studied by the officials of the department in cooperation with the officials of the provinces and the fire underwriters, who play so large a part in fixing rates upon risks in this country. Unless there is satisfactory evidence that there will be no exploitation of the Canadian insurer, the statute will not be proclaimed.


George Gibson Coote: I do not desire to delay the committee, but I think it is only fair to say that the reason for such a large amount of insurance being carried by these inter-insurance societies is because the underwriters stick to a set of rules in insuring. They seem to follow the same set of rules in insuring every type of building and have not seemed disposed to give the proper rates to many industries which have gone to a lot of expense in order to make their plants as nearly fireproof as possible. Being unable to obtain a proper rate they have to go to some of these inter-insurance societies, mostly organized in the United States, in order to secure some relief in the matter of insurance rates.


Mr. HACKETT:: They do business here for less than they do it in the United States.


Mr. BOWMAN:: Many of these companies from the United States come into a small town and pick out three or four of the good risks. They insure those risks and will not insure any others. The poorer risks are left for the Canadian companies who have to take the responsibility. That is the reason for their rates being much lower; they have no overhead in Canada.


George Gibson Coote: Should not the man who is the best risk get the best rate?


James Langstaff Bowman: No doubt he should.


George Gibson Coote: The board of fire underwriters in Canada have laid out a set of rules which are followed regardless of whether a man is a good or bad risk.

Special War Revenue Act


James Langstaff Bowman: The hon. member in
making a statement like that apparently is not aware of the facts. A great distinction is made between the classes of property, and the rates are based accordingly. If these companies are allowed to come into Canada and take one risk here and another risk in another town, the Canadian companies must take the risks which are left.


George Gibson Coote: The Canadian companies are not compelled to insure any risk. They do just what the hon. member has said the American companies do, they insure the risks they want to insure.


John Thomas Hackett: These companies are not all American companies; they come from other countries, such as Lloyds.


George Gibson Coote: I did not suggest they were all American companies; some other hon. member suggested that.


John Thomas Hackett: These companies do
business here at rates lower than they are permitted to charge in their own country. They must be licensed and they contribute by means of taxation. Our Canadian companies should be given the benefit of this selective business. If that is done it is anticipated that they will give to the Canadian insurer a lower rate than he has received up to date. Whether or not the hon. gentleman believes in the doctrine of protection, he must realize that the Canadian companies are contributing to the welfare of the country and are paying their portion of the expenses of the country.


Mr. YENIOT:: There is another feature to this case, these companies do not always pay the losses. I have in mind one particular case where a widow insured with a Canadian company paying the rate of $1.75. Through correspondence with a foreign company she was able to get her insurance at $1.55. She accepted that rate and within two years her house burned down and she never got a cent. This company was not registered in Canada and could not be got at.


John Thomas Hackett: I know of a risk taken
with a company located in Maine. An action was taken to recover on the policy in Maine, which was the only place where this company had any assets. The defence raised was that the risk had been taken illegally because the company was not authorized by its charter to carry on business in the province of Quebec, and there was an absolute bar to recovery. I will admit that many of these companies are abundantly solvent and

honour their undertakings, but as the hon. member for Gloucester has seen fit to mention one case, I thought it would be proper to refer to another.


Thomas Merritt Cayley: The fire underwriters
classify very extensively and I do not think there is any dispute that excessive rates are charged. They charge rates to cover individual cases and individual hazards. Aside from those companies which subscribe to the board of fire underwriters and are governed by their regulations, there are a great number of countries which do not subscribe and which quote rates promiscuously on individual cases. There is enough competition in this business to ensure that rates will be quoted just low enough to enable these companies to carry on business.


Mr. McGIBBON:: Mr. Chairman, I feel I should say something on this question because it involves, first a principle and, second, individual businesses. I am thoroughly in accord with keeping all the business we can in this country. Canadian companies contribute to our taxes, and so on, but I happen to represent a portion of the country wherein are industries which are of such a type as to find it impossible to pay the regular premiums charged in this country. I refer to the lumbering industry in its various aspects. This is an important industry in the northern part of the province of Ontario, in the province of Quebec and in other provinces of Canada. This matter has come up many times in this house since I have been a member and these companies tell me that it is essential to their life that they be allowed to carry on in what is a form of mutual society, whereby they set their own rates and assume their own risks. I would like to have the assurance of the Prime Minister that these industries will be protected in the future as they have been in the past.


Henry Elvins Spencer: Mr. Chairman, instances
have been given of insurance companies refusing to pay losses, and I would like to know from the Minister, of Finance if it is not possible to penalize such companies and refuse to allow them to do business in Canada.


Richard Bedford Bennett: I do not think the hon. member for Battle River heard what was said with respect to these companies not being registered in Canada. The statement was that we had no jurisdiction over them, they had no assets in this country and there was no way in which we could deal with them.

331o
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Henry Elvins Spencer: Could not we prohibit
these companies doing business in Canada in the future, if that is the sort of business they do.


Peter McGibbon: Could the minister give an answer to my question?


Richard Bedford Bennett: I did not oatch the last
part of the question so as to make a connected sequence of the whole. Would the hon. member mind repeating it?


Peter McGibbon: Could these industries
have some assurance of a rate as favourable in the future as it has been in the past?


Richard Bedford Bennett: I have already explained -I do not think the hon. gentleman was in his place-that this bill comes into force only upon proclamation, and if there is evidence of the difficulty to which he refers, it will not be proclaimed. The officials of the department in cooperation with the provinces have been dealing with that phase of the matter for some time.


Thomas Merritt Cayley: Will this apply to companies under provincial or Dominion legislation?


Richard Bedford Bennett: The word "Canadian"
appears in the section. The hon. member is familiar with that conflict of jurisdiction between the provinces and the Dominion which does not seem yet to be settled. We can apparently deal only with companies that are created under Canadian statutes and by authority of this parliament. Perhaps the hon. gentleman has been following these judgments, but it is very uncertain where we stand in defining the relative jurisdiction of the federal parliament and the provincial legislature. We have contented ourselves at the moment with endeavouring to deal only with those enterprises which have their origin either in or under the authority of a statute of this parliament.


Thomas Merritt Cayley: The hon. member for
Muskoka-Ontario brought up a point. There are a number of New England mutuals doing business in Canada at a very cheap rate.


Richard Bedford Bennett: They are not registered.


Thomas Merritt Cayley: They have been wonderfully successful.


Richard Bedford Bennett: They handle only
sprinkler risks.


Thomas Merritt Cayley: They have been an excellent example to Canadian companies. I understand a number of them are registered in Ontario. I may be wrong in that.
22110-210J


Richard Bedford Bennett: I could not answer that question, but I know many of them have not been registered in Canada. The New England mutuals have been among the most successful and best conducted companies in the world. Their activity in connection with industrial matters has been largely in connection with sprinkler risks, and engineers have in every instance visited the premises insured and laid out the requirements on the ground, with the result that their losses have been very small and their success correspondingly great. I do not think they are registered under our act.


Mr. CHAPLIN:: I do not know whether
those companies are registered or not, but certainly they are operating in this country and they do not take any risks but sprinkler risks.


Thomas Merritt Cayley: They are also doing a
service to the industry.


Richard Bedford Bennett: And they are an example.


Thomas Merritt Cayley: They are a splendid example to insurance companies in Canada.


George Gibson Coote: It is because they are a
splendid example to Canadian insurance companies I do not like to see any drastic action taken which will drive them out of Canada. As regards this question of taxation, if these outside companies are not paying their fair share of taxation as compared with Canadian enterprises, I do not object to an increase on the rate applicable to them. But we should not endeavour to shut them out of Canada by too drastic taxation.


[Stage Direction]
Subsection agreed to.
Subsections 19, 20 and 21 agreed to.
Section 1 stands.
Section 2 stands.
On section 3.-Order in council repealed.
Richard Bedford Bennett: I do not know what the right hon. gentleman's experience has been, but the hon. member for Argenteuil points out that it is unusual to repeal an order in council by a statute.


Mr. POWER:: Why is the Minister oi Finance doing that?


Richard Bedford Bennett: It could be done by order in council, but inasmuch as the order in council had the force of a statute-I give this explanation only as it is given to me- it is thought desirable that its repeal should be effected by statute so that there would be no uncertainty about the matter in the statutes of the country.
Special War Revenue Act


George Gibson Coote: As regards subsection 20 of section 1, the words underlined are "gross premiums paid or payable". What is the reason for changing the act in that regard?


The CHAIRMAN:: We have passed that section.


Richard Bedford Bennett: I suppose the hon. gentleman knows, does he not, just what commission is paid to insurance agents in the country?


George Gibson Coote: Yes.


Richard Bedford Bennett: This tax, if made on the gross premium, would practically make the company's net receipts just such as its receipts would be if it carried on business in this country through agents. The officials believe -and I have satisfied myself so far as I reasonably can that this is sound-that this is the most equitable manner in which to enforce the act.


[Stage Direction]
Section agreed to.
Section 4 stands.
Section 5 agreed to.
Section 6 stands.
On section 7.-Stamp tax on money orders of post office.
James Layton Ralston: My hon. friend was going to consider an exemption up to $5 on money orders and cheques.


Richard Bedford Bennett: It is unnecessary to make it apply to these in any event.


James Layton Ralston: My right hon. friend must remember this:	In rural districts many
people make small remittances to the towns. They already have to put an extra one cent stamp on the letter, and if they are to be exempt from putting a stamp on a small cheque, similarly they should be exempt in connection with money orders.
Section stands.
Section 8 stands.
On section 9.-Stamp tax on letters and post cards.


Richard Bedford Bennett: I am advised that the drafting is sufficient to ensure the payment of three cents on any letter and post card which is not for delivery at the same post office as that at which it is mailed.


Mr. REID:: As regards the increase in the postage rates, including letters and newspapers, does this extend to circulars and other second class mail matter such as advertising sent out to individuals?


Richard Bedford Bennett: There is no change in the rate of postage; that remains as it is, but the tax is one cent on letters and post cards as defined by the act, not for delivery through the same post office as that from which it is sent. There is no change otherwise.


Jean-François Pouliot: Does it affect also mail sent to Great Britain and France?


Richard Bedford Bennett: Yes.


[Stage Direction]
Section agreed to.
On section 10-Producer or manufacturer.
Richard Bedford Bennett: That was to overcome a slight difficulty that was experienced in practice.


[Stage Direction]
Section agreed to.
On section 11-Consumption or sales tax of 4 per cent.
James Layton Ralston: There has not been very much discussion with regard to the rate itself. It seems to have been assumed that the rate will be 4 per cent where it formerly has been one, and the discussion has been directed chiefly to the exemption. No one expects that the Prime Minister will alter this rate; I understand that is the announcement of the government. But in view of the comment made in the course of the debate that people have to pay some sort of stamp tax or make some- such contribution before they are really contributing to the revenues of the state, I wish to read an advertisement which appeared in a newspaper published in my native county only a day or two ago with regard to this stamp tax, for the purpose of indicating to the committee that the people are, at present paying real taxes without having to pay additional taxes through stamps on cheques. The advertisement is as follows:
Recent changes brought down in the federal budget, are sure to mean higher prices on many lines. A sales tax of 4 per cent on everything, and large increases in the duty on certain lines such as tea, canned fruits and vegetables and many others, are bound to bring higher prices. We advise our customers to take advantage of our low prices to-day, and stock up on foods before we have to replace our stock at higher prices.
That is the advertisement, and when I referred yesterday to people looking at their dinner pails this is what I had in mind. It is a definite indication that the people are paying more taxes. Therefore I say we should not consider that people are not doing their patriotic duty if they are forgiven an extra one or two cents in respect of cheques or postage. I am glad to state that since this advertisement was written certain exemptions

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have been restored. In the main however the text of that advertisement is true to-day., and the people of Canada are being taxed largely on food stuffs and clothing.


[Stage Direction]
Sestion agreed to.
On section 12-Minister may determine value if goods are not sold.
Richard Bedford Bennett: That merely embodied
in the form of a statute something which is now being done perhaps without authority.


[Stage Direction]
Section agreed to.
Section 13 agreed to.
On section 14-Excise tax of one per cent, on duty paid value.
Richard Bedford Bennett: I wish to move an
amendment to this section, that:

after the word "express" in the 17th line the following words be added "or by the owner thereof when entering Canada."
This amendment is to meet the situation I mentioned yesterday in connection with travellers entering the country.


George Gibson Coote: Would the Prime Minister
indicate what revenue is anticipated from this particular tax?


Richard Bedford Bennett: It will probably be in
excess of seven and a half million dollars. Of course I cannot with certainty give that information, because the officials of the department are hesitant to express a definite opinion in the matter.


George Gibson Coote: Is it correct to call the tax
now before us an excise tax? It is levied on imported goods.


Richard Bedford Bennett: Certain discussion took
place last night on that point. If parliament calls it an excise tax, then for the purposes of this statute it is an excise tax.


William Lyon Mackenzie King: May I suggest to my right hon. friend that this tax, while not necessarily the highest, constitutes the most extensive restriction which has yet been placed upon trade, because it restricts in some measure everything which comes into the country.


Richard Bedford Bennett: Probably so, but I think my right hon. friend overlooked the fact to which I directed his attention, that for export purposes there is a refund or drawback of 99 per cent. This i3 a revenue section.
Section as amended agreed to.
Sections 15 and 16 agreed to.
On section 17-Refund on goods enumerated in item 442.


George Gibson Coote: It is impossible to hear at
this end of the chamber.


Armand Renaud La Vergne: I have just called section 17, dealing with "refund on goods enumerated in item 442."


Joseph Henri Napoléon Bourassa: I must say that we at this end of the chamber did not hear either sections 15 or 16 called.
May I ask the Prime Minister if there is any possibility of making some changes in schedule III, and whether such changes should be suggested now or when we reach the schedule?


Richard Bedford Bennett: Whichever is most convenient to the hon. member.


Joseph Henri Napoléon Bourassa: Some years ago I brought to the attention of the late government a situation which existed among small industries in the provinces of Quebec and New Brunswick and in portions of northern Ontario where lumbering is carried on. There are small sash and door factories and other factories of that kind operated by only one, two or three men. I have in mind an industry in my own constituency carried on by a father and his son. I pointed out that under the old rate of tax this man and his two sons were making total sales of about $1,800 per year, out of which they had to pay for their materials, maintain their mill and pay the sum of $200 for sales tax. In most cases that money was not got back from the consumers. This type of small, local industry, which in fact has now practically disappeared, by all means should be encouraged. I may add that the small woollen industries could be placed in the same category. To my mind the sales tax should not apply to small concerns which do a business aggregating less than $5,000, let us say, per year. Special consideration should be given to such industries making use of raw material purchased in the immediate vicinity.


Mr. CASGRAIN:: In certain other districts furniture is being made by individuals or by small groups. In the constituency I have the honour to represent, in places such as Murray Bay, La Malhaie, Baie St. Paul and Cap a 1'Aigle, there are many people capable of making a set of furniture for a living room or dining room. The work may be carried on by a father and son in a back shop. These people are making their product, probably in the nature of old fashioned furniture, not
Special War Revenue Act

for the open market but for private sale. For instance, my right hon. friend, myself or any other hon. member might decide to go and ask one of those men to design a certain set of furniture. They are carrying on their businesses in a home-like manner and not in a general way.


Richard Bedford Bennett: Are they not exempt?


Joseph Philippe Baby Casgrain: I do not think they are, because I know of cases where the question was raised, and they were required to pay the tax. I know of a man named Roehette who carried on such a business, and he was required to pay the tax.


Armand Renaud La Vergne: Shall section 17 carry?


Joseph Philippe Baby Casgrain: Just a minute.


Richard Bedford Bennett: Concerning the remarks of my hon. friends I cannot think of any such items to which the exemption does not already apply. When my hon. friend from Labelle mentioned the sum of $1,800 I was able to recall his former speech. I think however that the items to which he referred are not taxable now.


Joseph Henri Napoléon Bourassa: Yes; because I do not
remember that exemption was ever extended.


Joseph Philippe Baby Casgrain: I cannot remember,
either.


Joseph Henri Napoléon Bourassa: May I say that the late Mr. Robb promised he would look into the matter, but unfortunately he disappeared.


Joseph Philippe Baby Casgrain: And the tax has not
disappeared.


Richard Bedford Bennett: I think the tax would
be payable by the purchaser, and those who would be buying such articles would be well able to pay it.


Mr CASGRAIN:: The tax is charged to
the manufacturers.


Richard Bedford Bennett: No. If I have an imitation of an antique chair made by hand, and buy it from a constituent of my hon. friend, I pay the sales tax. My hon. friend, I think, on that occasion mentioned a saw mill.


Joseph Henri Napoléon Bourassa: Yes. The manuafcturer is at the same time the salesman-he does the work and he sells the goods to the farmers who supply him with timber. Well, the purchasers will not pay the tax, and the manufacturer is forced to absorb it in order to keep his customers. Otherwise they will say,

"If you charge us the tax, we will go to the next man." I think it should be covered in a general way. They are forced to make a return on what they have sold during the year.


Joseph Philippe Baby Casgrain: Yes, and they are
assessed on the sales they have made.


Joseph Henri Napoléon Bourassa: It could be made like
the income tax-beyond a certain figure they would pay the tax, but there should be an exemption, I think, of a few thousand dollars.


Joseph Philippe Baby Casgrain: Every year I have small eases such as that. They also make blankets and other things. They are on the land and work in the community. This little surplus income is obtained by the mother and the children, and sometimes the grandparents engaging in the work.


Richard Bedford Bennett: As all the material entering into the production of the article has now been made free from the tax, and the tax is one that the purchaser must pay and not the seller absorb, I really cannot understand why the matter should not be left as it is. When my hon. friend from Labelle first spoke I had in mind something entirely different. I now grasp what he and his friend from Charlevoix-Saguenay are dealing with.


Peter John Veniot: For instance, the farmer
will produce so many logs and haul them to the mill where they will be sawn into boards, and the mill owner will charge the farmer so much for doing so. There is no purchase in that case.


Richard Bedford Bennett: There is no tax on that.


Peter John Veniot: Well, they are asked to
report upon their production, and if the officials cannot collect the tax from the supposed purchaser they recover it from the mill owner.


Charles Gavan Power: To cover that very point
this provision is inserted in the act:
Whenever goods are manufactured or produced in Canada and used by the manufacturer or producer thereof and not sold, or are given away or distributed by the manufacturer or producer-
And so on. In such cases it is left to the discretion of the minister to decide whether or not there is a sale.


Peter John Veniot: The officials recommend to the minister that there is a sale.


Joseph Philippe Baby Casgrain: That is what happens.
They say, "You do it for business and you are liable to the tax."

Special War Revenue Act


Richard Bedford Bennett: I suspect that very often no payment is made, for the obvious reason that there is no sale. I think the clause is most fair as it reads.


Clarence Joseph Veniot: It might be left in that
position for this year, and we can see what interpretation the officials will place upon it.


[Stage Direction]
Section agreed to.
On section 18-Drawbacks.
William Lyon Mackenzie King: This has reference to what my right hon. friend said a moment ago about allowing a drawback where there was export. In the case of the export of manufactured articles, for example, automobiles and the like, there is very little difficulty in determining what materials have been used and wrought into the article that is being exported; but with respect to exports of the primary industries, for example, of agriculture, mining, lumbering and fishing, I think the committee will see it is going to be very difficult to determine what proportion of any articles imported and used in connection with those industries will go into the exported products and therefore be of a character which will permit of any drawback being made. Last night the hon. member for Hants-Kings, for example, spoke of apples exported from Nova Scotia, and pointed out that fertilizer, spraying machines and other materials and articles had to be imported in connection with their production for export in large quantities. I doubt very much whether it would be possible to assess the cost of the portion of fertilizer and spraying machines entering into the production of exported apples. That is only an example of what will be taking place everywhere when the products of the primary industries are being exported. I do think a tax applied in that way is going to be a real handicap to the export trade of Canada, particularly trade in these primary industries. In yet another way it will affect our manufacturers also. There can be little doubt that the effect of a tax applied to so large a range of imports as this tax is being applied to will be certain sooner or later to increase the cost of living in Canada, and the cost of living increase will be reflected in a demand for an increase of wages, which will be one of the factors entering into the cost of manufacturing and the development of primary industries. To the extent to which the costs of production are increased, the Canadian producer or manufacturer is going to be handicapped in the markets of the world.
I know my right hon. friend desires to find a tax that will make everyone contribute something but whether this is possible or not
all comes back to a due appreciation of the incidence of taxation, which no one knows better than my right hon. friend is the most difficult of all subjects with which political economists have been perplexed. I am certain there would be agreement among political economists that where there are considerable importations, you cannot as is the case at present in Canada, impose customs taxes or an excise tax of any appreciable amount over a wide range and not affect the costs of the materials that enter into manufactured articles and the cost of machinery and implements of production used in manufacture or in the production of commodities and consequently the cost of commodities as well in the great basic industries. I believe this tax is going to prove a real handicap to trade, and that a restriction will be effected in a manner that cannot be remedied, as my right hon. friend suggests, by granting a drawback. This is, moreover, another instance where the primary industries are placed relatively at a disadvantage as compared with manufacturing. As I have said, I believe that with respect to our manufacturing industries you can definitely determine the materials that enter into their manufacture, and to that extent the manufacturer and the industry will get what benefit is to be derived from the drawback; but in these great primary industries of agriculture, mining, fishing and lumbering it will not be possible in the same way to make that determination, and they will be handicapped proportionately.
I should like to draw my right hon. friend's attention to the wording of the section. Something further is required, I think, to bring out his own wish in the matter. After the word "used" in the twenty-seventh line some words should be added which will be broad enough to include not only manufacturing but all the different stages of processing and production "wrought into or attached to articles exported." My right hon. friend will see that after the words "material used," there is nothing to connect those words with the words "articles exported" or to link up the idea with production as contrasted with manufacturing,


Richard Bedford Bennett: That section is worded exactly as it is in the present act, with the exception of the use of the words "taxes imposed by this part," in lieu of the words "consumption or sales tax." I confess that when I read the section first I had something of the critical attitude of mind that my right hon. friend has indicated, but after reading it again I found it to be all right. It reads:
A drawback of 99 per cent of the taxes imposed by this part paid in respect to materials used,-
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William Lyon Mackenzie King: Used what?


Richard Bedford Bennett: That is with respectt to materials used.


William Lyon Mackenzie King: That does not connect the word "used" with "articles exported."


Richard Bedford Bennett: I will admit that it is pretty difficult to stretch it to mean just what, in practice, it has been defined as meaning We found the section in the form in which it now appears and we have not changed it, because we thought perhaps in administration certain rulings had been made which it would be desirable to retain. This section might stand.


William Lyon Mackenzie King: The explanation may be in the fact that the section as originally applied had some reference to customs.


Richard Bedford Bennett: No, "consumption or sales tax" were the words; the drawback of 99 per cent of the consumption or sales tax paid in respect of materials used, and the words "taxes imposed by this part" have been substituted. Whatever has been the meaning attached to it heretofore would be the meaning attached hereafter. Personally I think it could be improved, however, and if it is thought desirable it could stand while we see what can be done.


Charles A. Stewart: Since the Prime Minister is going to let this section stand, I might mention that there were certain articles on the free, list of a class or kind not made in Canada, particularly mining machinery. This will strike very heavily at the importation of those goods.


Richard Bedford Bennett: The tax is one per cent, $10 in $1,000.


Charles A. Stewart: After all, it is a considerable tax on the mining industry just now.


Richard Bedford Bennett: I will admit that, but it is a revenue tax.


Charles A. Stewart: I was looking into the matter particularly when my hon. friend had intended bringing under the sales tax what are now exempted articles. This machinery is not made in Canada, and if my memory serves me aright there is a provision that when it is made in Canada the duty will apply.


Richard Bedford Bennett: Not in all cases.


Charles A. Stewart: No, but
there are many cases, and they are rather fMr. Bennett.]
important in the mining industry. When you are looking into this matter it might be worth while seeing if some exceptions might not be made.


James Layton Ralston: In connection with this
section, and just following what the right hon. leader of the opposition has said, I think when the Minister of Finance reads this section he will see that it does not make sense. Would not my right hon. friend go a little further and embody the idea expressed by *the right hon. leader of the opposition, and make the section read, "used in producing or wrought into or attached to articles or products exported". Then it would not be confined to manufactured articles.


Richard Bedford Bennett: The reason I suggest it
should stand is because this section remains exactly as it has been, and I desire to consult the officials charged with the administration of the act to ascertain just how, in practice, it has worked out. I am bound to say that this is the first time it has been brought to my attention, because as a matter of fact the section is just as it was in the former act.


Charles A. Stewart: There did
not seem to be many disputes coming before the treasury board, so I imagine it was working fairly -well.


James Layton Ralston: But probably no applications have been made in connection with natural products.


Richard Bedford Bennett: I shall ascertain that.
Section stands.
Sections 19, 20 and 21 agreed to.
On section 22-Schedule III repealed and re-enacted.


Mr. CARMICHAEL:: I should like toimpress upon the minister the need of giving consideration to the articles I mentioned yesterday, the chemical used for killing weeds and the gopher poison.


Richard Bedford Bennett: Gopher poison is not
mentioned by that name, but I am told that some of the poisons mentioned here will kill gophers as well as other things.


Archibald M. Carmichael: I think the minister should give consideration to this chemical used for the destruction of weeds. The secretary of the association of rural municipalities represents an organization composed of all the rural municipalities, numbering I think some four hundred, in the province.

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He says in his letter to the Minister of Agriculture that during 1930 the value of the product purchased and turned over to the rural municipalities was about $40,000, and that prior to June 2 last it was exempt from sales tax.


Richard Bedford Bennett: Then it still is exempt.


Archibald M. Carmichael: No, he states
emphatically that it is no longer exempt.


Richard Bedford Bennett: Perhaps my hon. friend
has failed to observe that the list of exemptions which existed prior to June 2, now has been included in schedule III and that when the letter was written it was accurate to say that it was not included in the exemptions. However, if it was included previously it is included now; about that there is no doubt.


William Lyon Mackenzie King: The minister
has commented on the extent of the exemptions from the sales tax, as he found them when he came into office. He said that the list was very large and indicated that it left little from which revenue could be collected. May I point out to him that the fact that the exemptions were very large was not an accident by any means; it was part of the deliberate policy of the previous administration to seek to improve conditions by removing duties and avoiding the imposition of other taxes as largely as possible from articles entering into the cost of production, and from necessaries of life. In seeking to increase prosperity where made in the way of taxation increases, the choice seems to lie between raising revenue by taxing widely and reducing taxation on some articles, in the expectation that, the burden being lightened on the people and also on industry, more revenue will in the end be derived than would otherwise be the case because of the prosperity thereby created. For example, from direct taxation sources such as taxation upon income. I just wish to make that point at the moment 'because I gathered from what my right hon. friend said last night that there is a possibility that at some future time a large proportion of these exemptions may again be cancelled, as was his original intention when the resolution was introduced.
May I add, that my right hon. friend will find that a large number of the exemptions applied to articles connected with the primary industries of agriculture, lumbering, fishing and mining, as well as to the necessaries of life, and undoubtedly would have had the effect through lessening the costs of production, placing all who are engaged in export trade in these industries in a better position to hold their own in the markets of the world than otherwise would have been the case.


Richard Bedford Bennett: I do not think anything
I said last evening should induce the right hon. gentleman to draw the conclusion to which he has just referred. I am not discussing the possibilities of the future with respect to matters of this kind. What I did say was that the list is very large.


William Lyon Mackenzie King: Hear, hear.


Richard Bedford Bennett: I did not say that it
was, what I shall now say, calculated to make its value appear to be much more than it really is; for, as I indicated yesterday, the average value during the years of the one per cent sales tax has been in the main about $20,000,000, and the extension of exemptions has not materially changed it. It went to $18,000,000 one year and it went higher than $22,000,000 in another year; but it runs around about $20,000,000 for each one per cent of sales tax. The list of exemptions is perhaps more apparent than real. It covers very many cases, as I said last evening; but when converted into dollars and cents it has not been so large except with respect to one set of items which run into several millions of dollars.


Charles A. Stewart: Mining and farming machinery would run into a good deal.


Richard Bedford Bennett: Yes.


James Layton Ralston: Taxation or value?


Richard Bedford Bennett: The taxation would
amount to several millions. I said the other evening it would be in excess of $3,000,000 at least. I am speaking from memory.


Charles A. Stewart: The tax
would be more than that.


Richard Bedford Bennett: That is the rate of last
year; that is for each one per cent.


Charles A. Stewart: My hon.
friend was quoting 1928.


Richard Bedford Bennett: Whatever year it was.
My memory is not exact in that regard. But I did point out that in the main it amounts to $20,000,000 for each one per cent imposed.


Mr. SPEAKMAN:: The hon. member for
Macleod yesterday brought up a point which the minister thought was worthy of some consideration, namely, with respect tc canned vegetables. The hon. member pointed out, as I now point out, that fish, both natural and the canned article, was put on the exemption list. Cereals, natural and canned articles, or articles in small packages, were alike exempt. But with regard to vegetables which would come in the same category of natural
Special War Revenue Act

foods, while vegetables in the natural state were exempt, canned vegetables were subject to the 50 per cent rate. Neither my hon. friend nor I could see on what logical basis these exemptions were made. At that time the Prime Minister said that the matter was worthy of consideration and that he would look into it. On behalf of my hon. friend I should like to know whether that consideration has been given and what the result has been.


Richard Bedford Bennett: I have asked for the
figures with respect to the matter, and I propose, when we come to schedule IV, that part commencing with 89 and 105 and 105d, to consider the point.


Mr. ELLIOTT:: I assume that if the
change should be made, what is now a part of schedule 4 should come into schedule 3. I wish to stress the point of view of the producer. My hon. friend from Macleod referred particularly to the fact that these articles were in very considerable use on the prairies -beans, baked or otherwise prepared; com and tomatoes; peas and so on. It struck me after the discussion yesterday that in so far as section 89 related to these articles which were grown and manufactured in Canada, there was no very good reason why they should not be put in the same category with some of the articles mentioned in schedule 3, such as honey, sugar, molasses, corn syrup, maple syrup and sugar cane syrup. They are properly in the exempted list, and I fail to see any reason why these articles now in 89, with one or two possible exceptions, should not be in that same list. I am glad the Minister of Finance has promised further consideration of the matter, and I hope that the change will be made, because it will mean a great deal to the producers of these articles in this country, as well as to the consumer.


Mr. McKENZIE (Assiniboia):: On page 13, in schedule 3, section 281, I find that fire brick is mentioned. I should like to know from the Prime Minister whether or not building brick and other clay products will come within the exempted list.


Richard Bedford Bennett: My memory is, no. I
may be mistaken, but I cannot answer further than that. The hon. member has no doubt read it over.


Robert McKenzie: Is there any particular reason why they should not be?


Richard Bedford Bennett: The only reason is that if they are not now exempt they were not exempt.


Mr. SANDERSON:: With regard to extract of rennet, which is used largely in the dairy industry, and which is exempt from the one per cent sales tax-


Richard Bedford Bennett: Four per cent.


Frederick George Sanderson: Well, four per cent.
How does that apply to rennet imported?


Richard Bedford Bennett: Rennet imported into
this country would pay the one per cent excise tax. But-again, if my memory serves me-it is not subject to sales tax, either imported or bought at home.


Thomas Merritt Cayley: With further reference to
the matter I brought up last evening with regard to crushed stone, produced or manufactured by any municipality exclusively for use in building or maintaining its roads or sidewalks, and not for sale,-that is one class -and sand, gravel, rubble and field stone, I should be glad to have the Prime Minister explain this. What is the meaning of it?


Richard Bedford Bennett: I have discussed the
matter with the officials. This appears at the bottom of page 12. My hon. friend from Quebec South said that he had some practical experience and that the department had ruled that if the individual took some sand or gravel or field stone and sold it, it was not subject to the tax. The commissioner rather indicated that it was, and there the matter ended. In my judgment, whatever may be the meaning attributed to the words-and they are repeated just as they were-it is not probable that the individual would ever pay the tax.


Charles Gavan Power: I think the individual did
in some cases, and the matter was brought to the attention of the department. Indeed, I believe the case was even taken to the exchequer court.


Richard Bedford Bennett: I thought so too.


Charles Gavan Power: I am not sure of it because I have not the files with me. I was specially interested in a case of that kind and I know the tax was not paid.


William Daum Euler: We exempted it by order in council.


Charles Gavan Power: The order in council referred to by the Prime Minister definitely provided that the sales tax should not be paid on rubble stone.


Richard Bedford Bennett: If that be so, then the words "sand, gravel, rubble and field stone" would be read as not 'being referable to the preceding words. My inquiry resulted in my

Special War Revenue Act
making the statement I did to the hon. member for Quebec South. In looking again at the matter this morning it struck me as being quite clear that when any municipality exclusively for its own use buys crushed stone for building or maintaining its roads or sidewalks and not for sale, it would not be taxable. Sand, gravel, rubble and field stone are not taxable whether purchased by a municipality or otherwise.


Peter John Veniot: In the province of New Brunswick the provincial government may vote to a municipality as much as 40 per cent of the cost of building sidewalks.


[Stage Direction]
Section agreed to.
Section 23 stands.
Section 24 agreed to.
On section 25-When sections two to nine come into force.
Charles Gavan Power: Some of these sections have not been passed.


Richard Bedford Bennett: This is always done with respect to legislation of this kind. Perhaps the hon. members for Hants-Kings and Antigonish-Guysborough have thought of a clause which might be added as section 28 so that a tax paid by a consumer might be recovered.


Mr. ILSLEY:: It would not have any force at all.


Richard Bedford Bennett: It would have some force.


James Lorimer Ilsley: I desired to get the Prime Minister's statement as to what would be the right thing to do. I think in nearly every instance the dealers would refund the tax.


Richard Bedford Bennett: If any of the distinguished legal gentlemen in the house think there would be any value in making a declaration of that kind, I should be quite willing to do it.


James Layton Ralston: That would be for the benefit of the consumer who has made a payment which includes an amount in anticipation of the tax.


[Stage Direction]
Section agreed to.
Section 26 agreed to.
On section 27-When section 14 comes into force.
Richard Bedford Bennett: I promised both my hon. friends that I would make some inquiry, and I can now tell them that these taxes are not payable until the end Of the month. It is apprehended that there will be very few oases similar to those mentioned by the hon. member for Hants-Kings.


[Stage Direction]
Section agreed to.
On section 1-Insurance premiums.
Richard Bedford Bennett: I see the hon. member for North Waterloo is now in his place. If he will look at subsection 16 of section 1 of the bill, which we have allowed to stand, I think he will agree that the amendment we propose will meet the case. It is proposed to add after the word "tax" and before the word "fifteen", the following:
as may be fixed by proclamation of the governor general bringing this section into force of not less than five per centum or more than fifteen per centum.


William Daum Euler: I did not have any particular cases in mind, but I thought the government might have some discretion in the matter.
'Mr. VENIOT: Why not leave it as it is?


Richard Bedford Bennett: I think it might be valuable in view of the reasons mentioned this afternoon by the hon. member for Maoleod.


Charles Gavan Power: Would it not be putting too much power into the hands of the government?


Richard Bedford Bennett: It could not put very
much power into the hands of the government, and my hon. friend will realize that when he looks at the order in council which is now being repealed and for which I could find no authority., Power is given to lessen but not to increase.


Charles Gavan Power: The statute should be clear and specific.
Section stands.
On section 13-Definitions.


Richard Bedford Bennett: As the hon. members
for South Oxford and North Grey are in their places, this might be a good time to suggest an amendment to this section. The amendment which I will ask the Minister of National Revenue to move has been suggested by the department as being one which would meet the situation.


Mr. RYCKMAN:: Mr. Chairman, I move
that after the wiord "insurance" on the sixteenth line of page one in the bill, the following be added:
or purely mutual company in any year in which the net premium income of such company in Canada is to the extent of not less than fifty per centum thereof derived from the insurance of farm property against fire.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Special War Revenue Act.
[Stage Direction]
On section 23-Schedule III repealed and reenacted.
Richard Bedford Bennett: The commissioner informs me that there is nothing in the exemptions to cover gopher poison. As certain preparations are put up under this name, it might be well to add to the exemptions the words "gopher poison."


Edmond Baird Ryckman: Mr. Chairman, I move
that there be added to the list of exemptions the words "gopher poisons."


Charles Gavan Power: Could white whisky be
used for that purpose?


Richard Bedford Bennett: I think not. I believe
in western Canada a preparation is sold under the name of gopher poison.


Mr. BROWN:: I suppose this exemption
would apply to any poison which a municipality might use or sell for that purpose. For instance, strychnine is used.


Richard Bedford Bennett: That is exempt in any
event.


[Stage Direction]
Amendment agreed to.
Richard Bedford Bennett: As the bill cannot leave the committee, later on I will announce the appropriate clause.
Section stands.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. WAYS AND MEANS



POST OFFICE ACT

[Stage Direction]
The house in committee of ways and means, Mr. Arthurs in the chair.
Resolved, that it is expedient to amend the Post Office Act, chapter one hundred and sixty-one of the revised statutes of Canada, 1927, and to provide:-
That subsection three of section twenty-three of the said act be repealed and the following substituted therefor:-
(3) Newspapers and periodicals which are required to be transmitted for a greater distance than is mentioned in the last preceding subsection, or the publication of which is of greater frequency than once a week, and the newspapers and periodicals described in the immediately preceding subsection, upon any copies in excess of the circulation of two thousand five hundred copies, shall be subject to postage at the rate of one and one-half 
cents on and after the first day of July one thousand nine hundred and thirty-one, for each pound weight or any fraction of a pound weight, and such postage shall be prepaid by postage stamps or otherwise as the Postmaster General from time to time directs; provided that the newspapers and periodicals in question which have a circulation of not more than ten thousand copies per issue shall remain subject to postage at the rate of one cent for each pound weight or any fraction of a pound weight as heretofore; provided further that the newspapers and periodicals in question which are devoted to religion, the sciences, or agriculture, shall remain subject to postage at the rate of one cent for each pound weight or any fraction of a pound weight as heretofore.
Richard Bedford Bennett: This resolution, as the
committee is no doubt aware, provides for an increase in the rate on newspapers from one cent to one and one-half cents per pound. It may be summarized that with respect to free circulation there is no change; with respect to newspapers and periodicals which are devoted to religion, the sciences or agriculture, there is no change; with respect to newspapers and periodicals other than the above, with a circulation of not more than 10,000 copies per issue, there is no change, and with respect to newspapers and periodicals other than those I have mentioned, with a circulation of over 10,000 copies per issue, the rate will be one and one-half cents per pound.
The hon. member for Gloucester was slightly in error the other night in speaking of this matter. In 1926 the revenue for the carrying of newspapers at the rate of one and one-half cents per pound was $1,290,000. In 1927, when the reduction was made to one cent per pound, the revenue was $966,000, or a decrease of $31,000. The circulation figures involve a consideration of British and foreign papers as well, including those from the United States which, as I thought, are mailed in Canada. It is believed, owing to the exemptions that we have provided in this resolution for country magazines, those devoted to agriculture, science and religion, the probable increase in revenue will be approximately $200,000 or perhaps slightly more. The hon, member was correct in drawing attention to the fact that some of the newspapers, in anticipation of this increase, have endeavoured to distribute their newspapers without using the facilities provided by the post office.


James Layton Ralston: To avoid rather than to evade.


Richard Bedford Bennett: I was going to say
that. I know no way in which we can meet that situation, but those are the facts.

Ways and Means-Post Office Act


Clarence Joseph Veniot: If the right hon. gentleman will look at the figures for 1928-29 he will find the postage paid on newspapers was $1,707,149, which shows I was correct.


Richard Bedford Bennett: That includes postage
on Canadian newspapers and publications at the statutory rate and Canadian and foreign periodicals and newspapers including United States papers mailed in Canada.


Peter John Veniot: There was no increase on
the foreign publications; the increase was on the Canadian. I followed the matter very closely at the time and the increase on Canadian periodicals, after the reduction of one and one-half cents to one cent per pound, was $250,000.


Richard Bedford Bennett: The department advise
me that is attributable to United States newspapers mailed in Canada.


Peter John Veniot: We had that before. I
do not intend to advance any argument against the increase. I have already stated my reasons for saying that at one cent a pound no revenue would be lost. The government is now increasing the rate to one and one-half cents per pound, and the chances are that they will lose "evenue. Such large newspapers as the Montreal Star, with a circulation of practically a million per issue, La Presse of Montreal, with a circulation of around a million, the Toronto Globe, with a very high circulation, the figures of which I have not at hand, the Gazette of Montreal and the Vancouver papers, some of which have a circulation of over 25,000, will find the new rate will cost them so much that they will adopt a cheaper means of circulating their newspapers. If they do adopt that means, we shall lose considerable revenue. I have stated my case; I leave the matter in the hands of the government, and when it comes up next year we shall see who is right. If experience proves that my expectation is realized, I hope the government will see the error of its ways and return to the old rate.
Has the Prime Minister received any protests from large newspapers such as some of those I have mentioned regarding the fact that no increase is made in the rate on advertising matter such as circulars and things of that sort at the third class postal rate? Since I put this question the other night I have received a protest and I was informed that the newspaper association was to take the matter up with the Prime Minister. I do not know whether or not he has had any communication in the matter.


Richard Bedford Bennett: I am bound to say that
the newspapers have been fair about this matter. When it was brought to their attention they expressed the desire to cooperate with the government in arriving at a reasonable rate, realizing that the transportation of such paper involved a loss. With respect to advertising some representations were made. It was after the resolutions were before the house that I received the last communication, and it is probable a discussion will take place on the tariff item dealing with duties on imported periodicals. At this time I have nothing further to say.


Peter John Veniot: The chief source of revenue of our newspapers is the advertising they con' tain.


Richard Bedford Bennett: Yes.


Peter John Veniot: The number of subscriptions to newspapers does not matter as much as the advertising which the newspapers contain. If the advertising in those newspapers is classed as second class matter and the rate is fixed accordingly, and at the same time the third class matter, including circulars and other advertising matter, is not affected, I suggest that my right hon. friend is striking at a vital consideration in the publication of a newspaper. Those who avail themselves of circulars for advertising purposes are not charged extra, whereas the larger newspapers are affected. I will not say they are penalized, but I do say that they suffer from the increased rate.
Resolution reported, read the second time and concurred in. Mr. Bennett thereupon moved for leave to introduce Bill No. 107, to amend the Post Office Act.


[Stage Direction]
Motion agreed to, bill read the first and second times and the house went into committee thereon, Mr. Arthurs in the chair.
On section 1.-Postage rate on other newspapers issued more than once a week.
Charles Gavan Power: Will the Minister of Finance tell the committee what this is about?


Richard Bedford Bennett: It is a matter of extreme regret to me that the hon. member for Quebec South was not in the chamber, thereby making it necessary to hold up the business of the country until he should be made aware of the contents of this measure. This bill provides for the increase of the rate of postage on newspapers, neither religious, scientific nor educational, having a circulation in excess of 10,000, from one cent to one and one-half cents per pound.
Income War Tax Act


Joseph Henri Napoléon Bourassa: Does the circulation mentioned in the bill refer to the total circulation, or the postal circulation.


Richard Bedford Bennett: The total circulation.


Joseph Henri Napoléon Bourassa: How can postal rates be applied to that part of the circulation which does not pass through the mail?


Richard Bedford Bennett: The circulation mentioned in the bill is only that part which is handled by the postal department. At first I did not understand my hon. friend's question.


Joseph Henri Napoléon Bourassa: But the 10,000 circulation mentioned in the bill covers the whole circulation?


Richard Bedford Bennett: Yes.


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


[Stage Direction]
The house in committee of ways and means, Mr. Arthurs in the chair.
Resolved, that it is expedient to amend the Income War Tax Act and to provide:-
1. That the rate of income tax applicable to the income of corporations and joint stock companies for the year 1930 and thereafter, be increased from 8 per centum to 10 per centum.
Richard Bedford Bennett: This is a resolution which increases the rate on corporation income from 8 per cent to 10 per cent. The committee will remember that $2,000 is free. I should like to give the committee two sets of figures which in view of observations which have been made might be of interest, and which I commend particularly to the former Minister of Agriculture (Mr. Motherwell) and some of his friends.


William Richard Motherwell: I'll pay close attention.


Charles A. Stewart: My right
hon. friend is adding 2 per cent to the tax on the incomes of corporations?


Richard Bedford Bennett: Yes.


The CHAIRMAN (Mr. Arthurs):: Shall the resolution carry?


James Layton Ralston: I believe the Prime Minister was about to make an explanation.


Richard Bedford Bennett: I shall give the figures
when the bill is introduced.
Resolution reported, read the second time and concurred in. Mr. Bennett thereupon moved for leave to introduce Bill No. 109 to amend the Income War Tax Act.


Charles Gavan Power: Why is there a special bill in this case?


Richard Bedford Bennett: Because I moved a
separate resolution for it.
Motion agreed to and bill read the first time.
Mr. BENNETT moved the second reading of the bill.


Charles A. Stewart: May we have an explanation of the bill at this time?


Richard Bedford Bennett: This bill is founded on a separate resolution dealing with corporation income tax payments as distinguished from other income tax payments.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Arthurs in the chair.
On section 1.
Richard Bedford Bennett: I think perhaps a few figures will be very interesting to the committee. The number of corporations that made returns for 1930 was 7,415; the total capital employed by the corporations was $5,758,797,4^1.85; the net income declared was $403,428,323.42; the exemptions from tax amounted to $14,830,000, and the corporation tax payable at 8 per cent was $31,087,865.87; the wages and salaries paid amounted to $859,528,940.01.
I now give the committee some figures with respect to the number of corporations that did not pay taxes. The number of corporations so reported was 15,327; the total capital employed was $2,683,431,9i99.73; the net loss of those 15,327 corporations was $98,063,567.02; but notwithstanding that fact they paid out in salaries and wages $388,659,062.65. I think those figures must be illuminating to some hon. gentlemen who have been making certain statements during the last few weeks.
The department therefore has a record of the operations of 22,742 corporations in Canada. The total capital employed by those 22,742 corporations was $8,442,229,420.58; they paid a total tax of $31,087,865.87; the net gain of the assessable corporations was $403,428,323.42, and the net loss of the nonassessable corporations was $98,063,567.02, leaving a total net gain for all the corporations of $305,364,756.40; the corporation tax, as I have stated, that was paid amounted to $31,087,865.87, leaving a balance for the shareholders of the corporations of $274,276,890.53; and the salaries and wages paid amounted to the enormous sum of $1,248,188,002.66.


Charles Gavan Power: For 1929?

Income War Tax Act


Richard Bedford Bennett: For 1930.


An hon. MEMBER:: The calendar year?


Richard Bedford Bennett: All the taxes are paid on the calendar year.


William Richard Motherwell: My right hon.
friend did me the honour of commending his observations particularly to myself. I have to thank him for the information he has furnished the committee, not because I did not know about it before, but because thousands of farmers have the same story to tell. After paying out thousands of dollars for wages, for equipment, and for overhead of all kinds they have found themselves with a deficit of $2,090 or $3,000 or more each year. This unsatisfactory condition of affairs applies in a lesser degree to farmers all over Canada. So we can quite understand that men who might be called multi-millionaires, if they have their money invested in corporations that yield no returns, may be paying no taxes at all on suoh investments; they may be exempt because of the losses incurred. I think we all understand that misfortune, and because we do understand it we are the more sympathetic towards those citizens when they are experiencing the same disabilities. I accept my right hon. friend's statement without question. I can quite understand it, because I have been experiencing deficits myself for the last year or two. But I am wondering what prompted him to make an increase n the corporation tax?


Richard Bedford Bennett: In order to obtain the
necessary revenue for the treasury.


Charles A. Stewart: It is really
in order to secure more revenue?


Richard Bedford Bennett: Surely.


William Richard Motherwell: Why take the
"breeks off the Hielander"-if he has nothing to tax why tax him? There are 700,000 farmers in Canada to-day, and on the average last year they paid about 25 cents apiece, showing that they have not very much taxable income. For this last fiscal year I venture to guess they will not pay over 10 cents apiece on the average.


Richard Bedford Bennett: Less than that.


William Richard Motherwell: I do not doubt it,
but I was just making a guess, basing it on what I know they paid the year before. What is the use of trying to income tax the fanner? You might as well try to get something in the way of lactic fluid from a cow that had been dry six months or a year as try to get any income taxes from the farmer at the present
time. So I am sympathetic towards the corporations, although it may not be altogether safe to say so. But knowing they are in the same condition as the farmer, why increase their tax? I await my right hon. friend's explanation, and am ready to accept it if it is as good as the other one. I do not think I ever have belonged to any corporations, so that I am quite disinterested, but I should like an explanation for this increase just as I wanted an explanation as to why the farmers should be taxed at this time to any greater extent than they formerly were. So on behalf, if you like, of the corporations of Canada I ask the Minister of Finance why we should impose this extra 2 per cent at this time when so many are already exempt for the lack of anything to tax.


Joseph Henri Napoléon Bourassa: I do not think we should let pass the statement made by the right hon. gentleman a few moments ago without some reflections with regard to the position of the corporations in Canada. I may lack tenderness of heart, 'but there are so many individuals and small concerns suffering in these days that I have not much sympathy left for the corporations. These statements in bulk figures are very imposing, but I think they need some scrutiny.
In the past many of these corporations have disguised enormous profits in various ways. Some have created capital out of profit and distributed shares to their shareholders without those shareholders paying anything for them. I do not think the income tax has ever reached that part of their profits. Corporations have also disguised part of their profits, or rather diminished their margin of profit, in order to create a condition which would appeal to the public for sympathy, by making extraordinary expenditures. A few weeks ago I quoted the instance of the Sun Life Assurance Company, which last year increased its dividends to its shareholders by fifty per cent over the previous year, making the dividend 75 per cent of the apparent capital. I do not suppose there is much watered stock there, but when a corporation is able to pay 75 per cent on the face value of its stock it should not require very much sympathy from hon. members.
This company has put an enormous amount of money into the construction of its new central office, which was entirely uncalled for. Every time I pass that building I cannot but *think that a part of my very small contribution to the building up of that company is invested in that structure. When I took a policy with the Sun Life Assurance Company at the age of twenty-five it was still the
Income War Tax Act

custom of insurance companies to issue a prospectus setting out the type of insurance issued, the amount of the policy, the amount of the premium, the number of years for which it was to be paid, the assessed profits reserved or paid yearly, and the probable profits. When that policy was paid up after twenty years I received the capital and the assessed profits, but of the probable profits I only received half, and of course I knew I was not legally entitled to receive what had been mentioned in the prospectus. One of two things happened; either the operations of the company were well conducted according to their conjectures at the time the contracts were made, or they were not. No one ever suggested that the corporation was not well administered, but what has happened in this case, as in many others, is that the company, to disguise the profits which were accruing from what was paid in by its clients, simply sunk millions of dollars in large buildings such as the one now under construction in Montreal, which will never return two per cent on the capital invested. That capital investment has not been subscribed by the shareholders; as a matter of fact it represents not an investment of capital but rather an amount taken from the profits derived by the company from its insurance business. The same thing may be said of many corporations; 'banks and other financial institutions have followed the same practice, and large industries have invested funds in enterprises not in order to secure revenue but in order to disguise a portion of their profits.
Now, however, the most important question is that of watered stock. I have never been in business in my life, for which I thank heaven every day, especially during times such as these. I do know a few men in business, however, and some time ago I was talking to a man in Montreal who is interested in many things and who has a large business experience. He is a bank director, among other things, but in spite of all that he is an honest man. I pointed out to him the provision in our Companies Act that the issuance of shares for which full value has not been paid to the company is forbidden, and that the distribution of shares except for services rendered is also forbidden. A large part of the watered stock is distributed under the pretence of services rendered. A few gentlemen get together and organize a large company. Let us suppose they are in need of 110,000,000 for the real purposes of the company; they will issue paper for $20,000,000 or $25,000,000 and distribute to themselves a large portion of that paper as paid up stock for which they have not paid one cent into

the coffers of the company. It is distributed to them for services rendered. Then they issue stock at an alluring price to the public, and these shares go up if there are profits or go down if there are not profits. Frequently they go up or down according to the wishes of the directors. If they wish to gather in a large portion of the stock, it goes down on the stock exchange, they purchase it at a low price, and then it goes up again. All these things have to be taken into account.


Peter McGibbon: Would the hon. member be good enough to tell us how that is done?	m


Joseph Henri Napoléon Bourassa: There are many methods. I am not familiar with the details; I am simply giving to the house what has been stated to me by men who are absolutely cognizant of the facts.
Mr. MoGIBBON:	That is not the statement the hon. member made a few moments ago; he made the statement as an absolute fact, but now he says this is what he has been told.


Joseph Henri Napoléon Bourassa: I stated I had gathered the information in conversation with men who are in business and who know all about these operations. In addition, this is a well known fact; any man who has had anything to do with banking or stock exchange operations knows this to be so. I remember some years ago I prepared a whole record for the house with names and everything complete, in order to show the criminal results of stock exchange operations and stock gambling, which is very often conducted by the men who are supposed to be responsible for the good administration of the company concerned.
Then there is another matter. In industrial affairs there is the question of efficiency in management, which is very often neglected for the speculative side of the operation. Mention has been made of salaries. What portion of these salaries is paid to individuals who really work in the company, individuals who take part in what I may call the actual operations of the company? What proportion is paid to the directors for their atendance, and to the president, the vice president, the general managers, who are very often large shareholders, and who draw enormous salaries which are really profits in disguise? All these things have to be taken into consideration. I mention these facts to show that the government is amply justified in raising the tax on the profits of corporations. But what I think should be done in all circumstances, and especially in cir-

Income War Tax Act
cumstances like these, is that a board or an organization of some kind should be established to scrutinize the operations of the company. It should not be left entirely to the companies themselves to present to the government a statement of their affairs for taxation purposes, or to the public for what perhaps I might call deceptive purposes.
The Prime Minister spoke this afternoon about the manner in which the French government had carried out its taxation policy. Of course, in France as elsewhere there is a good deal of speculation and there are many abuses in the conduct of large enterprises. But if -on the whole the economic situation in France to-day is better than it is in any other- country it is because the governments there, with all their political shortcomings, have been much stricter in their supervision of large companies than we have been in this country or in the United States. If there is a danger threatening the economic structure of North America -the United States and Canada are in the same position in this regard-that danger lies in the absolutely loose fashion in which large corporations conduct their business. We have reached the point where we must abandon the old shibboleth of laissez fa-ire, which was perhaps to a certain degree the cause of the great industrial and financial development in England, buit which in the present circumstances, under conditions as they exist in America, with the spirit of speculation rife, which spirit the Prime Minister himselt has so rightly denounced, is a menace to the community. Large corporations have not the right to conduct their business in such a manner. There are some 22,090 corporations in this country, and the way in which so-called private enter-X>rise has been carried on has had more to do with the ups and downs of our economic and financial structure in Canada than the policy of any government can have. I believe that the strict supervision of companies, from the point of view both of the exchequer -and of national stability, is one of the most imperative duties of the government of this [DOT]country.


William Richard Motherwell: The Prime Minister was having a little fun -in the remarks he made, and I was having some in return. But I desire to know what his real views are about this increase in the tax on corporations. I will admit that while the Australian treaty economically was absolutely sound, politically it was a mistake to those who were responsible for it. In regard to corporations, will my right hon. friend admit that politically this is good taxation? I should like to have his real 22110-211
opinion as to the advisability economically of taxing corporations of this kind indiscriminately, whether big or little, hard up or well to do.


Richard Bedford Bennett: The hon. member for
Labelle has apparently answered the hon. member for Melville-


William Richard Motherwell: Maybe I wasn't
listening to the hon. member for Labelle. I wanted to hear what the Prime Minister had to say.''


Richard Bedford Bennett: -and while the hon.
member for Labelle could not speak for the ministry, sitting where he is, his observations are most pertinent. The beneficent attitude of my hon. friend (Mr. Motherwell), in his eager solicitude for the corporations, merits and no doubt will receive the support of the farmers whose interests he has so much at heart.


William Richard Motherwell: I am not afraid of that; don't worry.


Richard Bedford Bennett: I can only tell him that
from this source of taxation we shall receive about $8,000,000. The very circumstance to which attention has from time to time been directed, is a clear indication of the necessity for money being secured. While no doubt this provision will operate to prevent some shareholders from securing the same amount of profits they might have received had the tax not been imposed, it will cause great rejoicing in some quarters amongst those who sit opposite me, even if it does call forth the solicitude of the ex-Minister of Agriculture, whom I congratulate on his broadminded and tolerant view of the situation which has been indicated to the house. I am sure my hon. friend from Weyburn will have a quiet discussion with him shortly after the house rises and tell him how delightful has been his return from his apostasy.
May I say that the questions raised by the hon. member for Labelle are questions that are engaging the attention of the people of this country more and more as the days go by. The Department of National Revenue is making an effort to scrutinise with extreme care all the returns of corporations and of individuals so far as that may be possible. And it is the purpose of the government to place in the supplementary estimates a substantial sum to enable that scrutiny by auditors to be continued during the present year; for we are assured that any sum thus expended will return, like bread cast upon the waters, after many days, much increased. I will not follow my hon. friend to-night, but

Income War Tax Act

I say frankly that I have not been able to satisfy myself that the government should set up a department which would give its imprimatur of approval or disapproval with respect to the capital structure of corporations, because it might delude people into believing that, with supervision to that extent on the part of the government, the securities would be necessarily sound. So profound a student as the hon. gentleman, who says frankly that he has no experience in business, for which he is very glad, will realize that in this regard there is a record in other countries. And when the state has endeavoured to scrutinise the capital structures of corporations, and give its approval to the issues of securities, it has sometimes led to very great difficulties. One of them, for instance, arose in this country in connection with a bank, in which there was some contention with respect to the manner in which the provisions of the law were applied. A claim arose, not perhaps enforceable in a court of law, but which this parliament recognized as entitling those interested in one bank, if not in two, to obtain restitution through the aid of the state. This indicates how difficult it would be for the state to undertake generally the duty of supervising the capital structure of issues of securities made by corporations. Undoubtedly, however, there is an increased interest in this country in this regard, and some of the results that have been brought so strikingly and so sadly to the attention of the people of this country during the last fifteen months or two years have made it more and more apparent that the corporate jurisprudence of Canada, which is statutory in form, must be strengthened to protect the people from exploitation.


Mr. DONNELLY:: The Prime Minister
gave the committee certain figures in connection with the number of corporations doing business in Canada, the amount of capital involved, the amount of profits, the salaries paid and so on. But I would rather he had given us a comparison for the last three or four years so we could ascertain what progress had been made during that time. I did not get all the figures, but I suppose I shall be able to get them in the morning in Hansard.
In his budget speech the Prime Minister referred to the number of manufacturing concerns which had been established in Canada. He emphasized the fact that some eighty-seven new concerns had been established during the previous ten months. That meant an increase of about one hundred in a year, and it did not seem to me that we had made much progress. I went down to Mr. Coats of the bureau of statistics and obtained some figures in connection with the establishment
Mr. Bennett.]
of new businesses. These figures show that we are going behind very fast. In 1927 we had 22,936 manufacturing concerns. In 1926, there were 22,708, so that for 1927 there was an increase of 228. During that same year there were 430 failures, so that the total number of new manufacturing concerns which had started up in that year was 658. Eighty-seven for ten months is very small when compared with 658 for the year 1927.


An hon. MEMBER:: Oh, oh.


James J. Donnelly: Is the hon. member
saying something, or just clucking? The number of manufacturing concerns was 23,379 in 1928, an increase of 443. During that year there were 505 failures, so that the total number of new businesses was 948. In 1929, the total number was 23,597, an increase of 218. The number of failures was 443, or a total of 661. Mr. Coats informed me that the complete figures were not available for 1930, but the total number of failures for that year was 488.


John Thomas Hackett: Will the hon. member
state how many of those companies were new companies coming to this country from England or the United States?


James J. Donnelly: I am giving only the
figures as supplied by Mr. Coats.


John Thomas Hackett: The Prime Minister
referred to companies which had come here either from Great Britain or the United States; he was not speaking of local companies.


Charles A. Stewart: Where
does the hon. member get that idea?


James J. Donnelly: If the hon. member
will look up Hansard he will see that the Prime Minister did not say that.


John Thomas Hackett: He used the words
"from England and the United States."


James J. Donnelly: The hon. member for
Sherbrooke mentioned a company in that city which had been organized by Canadian capital. There are many other concerns of a similar nature. If the Prime Minister had given us a comparative statement we would have been able to see what progress had been made in capital invested, the number of employees, salaries paid, profit and loss and so on, during the last four or five years.


Frederick George Sanderson: I believe the Prime
Minister mentioned a figure of $19,000,000 for exemptions.


Richard Bedford Bennett: The figure was $14,830,000.

Income War Tax Act


Frederick George Sanderson: Would the Prime
Minister tell the committee how those exemptions are arrived at?


Richard Bedford Bennett: I have not the particulars before me, but there is the $2,000, there is interest on borrowed money, depreciation and matters of that kind.


Frederick George Sanderson: There is nothing in connection with tax free bonds?


Richard Bedford Bennett: The tax free bonds are not taxable. The interest on those bonds would amount practically to $14,000,000.


Alan Webster Neill: Mr. Chairman, would it be asking too much for you to reiad the. section under discussion? With the curtains drawn back the acoustics of the chamber are very bad. I applaud the Prime Minister's desire to get on with business but I do not think it is good policy to put a bill through which is not in the hands of the members. I understand that this is a bill to impose larger taxation on companies, but if it has been printed it has not been distributed. I have been told that it is founded upon the resolution which has been discussed, but quite often we have discussed resolutions and then found that the phraseology of the bill based thereon was such as to involve us in something different from that to which we thought we had committed ourselves in the discussion of the resolution. At this stage of the. session it is quite customary for a minister to present a bill and have it put through its various stages, but the bill should be distributed. Failing that, I would ask that the section be read so that we will know to what we are committing ourselves.


Richard Bedford Bennett: Apparently my information that the. bill had been sent to the distribution office was inaccurate. I had but a half dozen copies, all of which I distributed except the one in my hand when I made my motion. I cannot explain the delay, and if the hon. member desires I will move that the committee rise and the matter can stand.


Alan Webster Neill: I have no desire to delay the committee. All I wish is to hear the section read.


James Arthurs: Section 1 reads as follows:
The first schedule of the Income War Tax Act. chapter ninety-seven, of the revised statutes of Canada, 1927, as amended by chapter twelve of the statutes of 1928, is further amended by striking out the words
"Rate of tax applicable to corporations and joint stock companies 22110-2111
On the amount in excess of $2,000-8 per centum."
and by inserting the words
"Rate of tax applicable to corporations and joint stock companies
On the amount in excess of $2,000-ten per centum."


William Richard Motherwell: The Prime Minister would not give me very much information as to the reason for this increase in taxation from 8 to 10 per cent when many people are not paying taxes now because of their poverty.
I think I can prescribe, because he will not do so, a better way of putting some of these business institutions-because that is what they are, after all-on their feet. By giving agriculture, the paramount industry of this country, a better opportunity to get on its feet, is the way to help business to prosper. In addition to agriculture, we have lumbering, fishing, mining, water power development; these five great basic industries should first receive assistance before the business of the country or corporations can show much response.
During the last few months I have been trying to secure a little knowledge of economics. I have been sitting at the feet of some of our economic Gamaliels to my left, and not without some purpose. I have been trying hard to see the advantage of deflating currency. I can see some advantage if we had not to do any buying, but since we have both to buy and to sell, deflated currency is worth just as much less when one comes to buy as it is worth more when one comes to sell, and in this way you are left just where you were. I am willing to sit at the feet of any financial Gamaliel to learn, but I am beginning to wonder whether there are any in this chamber, especially on the government benches, if one may judge by the kind of budget that has been presented and the crawfishing that has had to be done before we can even get started on the resolutions.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
On section 3.-Special provision re interest on non-payment of income tax of 1930 only.
Richard Bedford Bennett: There is no interest payable on the 2 per cent increased taxation for the year 1081; that is, during the balance of the year it may be paid at any time prior to the 31st December. Should the corporation fail to pay within one month of the date of issuing the assessment notice, it pays not only the interest but a penalty of 4 per cent.
Supply-Finance


Charles A. Stewart: That covers the retroactive feature of the legislation?


Richard Bedford Bennett: Yes.


[Stage Direction]
Section agreed to.
Bill reported.

Richard Bedford Bennett: With the consent of the "house I should like to take up some of the items of Finance in supply, as a matter of convenience to myself.


William Lyon Mackenzie King: My right hon.
friend is the master.


Richard Bedford Bennett: No, I must have the consent of the house.


William Lyon Mackenzie King: We will agree with pleasure.


Joseph Henri Napoléon Bourassa: May I ask the Prime Minister when he expects to take up the remainder of the amendments to the income tax?


Richard Bedford Bennett: As to that, I can give my hon. friend definite information to-morrow.


Joseph Henri Napoléon Bourassa: It will not be the first order to-morrow?


Richard Bedford Bennett: No.



DEPARTMENT OP FINANCE

[Stage Direction]
The house in committee of supply, Mr. Anderson (Halton) in the chair.
Charges of Management Offices of the assistant receivers general-
Salaries, $130,000; contingencies, $10,000.
Printing, signing, sealing and macerating dominion notes, $475,000.
Printing, advertising, inspection, express, etc., $125,000.
Commission for payment of interest on public debt, purchase of sinking funds, auditing, $100,000.
English bill stamps, postage, etc., $2,500.
To provide for temporary clerical work in connection with the transfer and registration of bonds, etc., and the flotation of loans, and authority for these purposes to employ a temporary staff, fix their rates of remuneration and otherwise wholly regulate their services, without reference to and notwithstanding anything contained in the Civil Service Act; and also to pay additional remuneration to any employee engaged in connection with the flotation and redemption of loans for work done outside of prescribed hours, at such rates as the treasury board may approve, $45,000.
To authorize payment, in lieu of retiring leave, of the sum of $1,500, to Walter Duncan, special investigating officer, Department of Finance, who shall be entitled to all the benefits and privileges under the Civil Service Superannuation Act, as if he had elected,
-Mr. Bennett.]
pursuant to the provisions of part IV of the act, to become a contributor thereunder, and to have the period of his service from the 4th February, 1919, to the 31st August, 1931, included for the purpose of the said act, $1,500-Total, $889,000.
Richard Bedford Bennett: The committee will
observe there is a reduction in the estimates of $95,690. Part of this arises by reason of the fact that there has been an endeavour, shall I say, to reduce the cost of printing dominion notes, which amounts to a substantial sum, by perhaps a little more care and having them last longer. There is a small decrease in the sums paid to commission agents with respect to the public debt, and there is also a decrease with regard to clerical work. Then there is a decrease in the provision for payment, in lieu of retiring leave, to Mr. Walter Duncan who was with the department for some years and whose retirement had as a matter of fact been arranged about the time of change of administration.


William Lyon Mackenzie King: This item includes administration of sinking fund. Would my right hon. friend tell us when he hopes to be able to introduce a sinking fund provision of which he spoke so often when in opposition?


Richard Bedford Bennett: Not so often. I said I believed it was sound financing to provide for a sinking fund, and I have not changed my mind in that regard, but in many countries it has been found necessary to suspend the operation of the sinking fund in times of financial stress. Since William Pitt established it in England, that has been done more than once there and in other countries as well. I assure my right hon. friend that I hope the day may not be too far distant when provision may be made for a sinking fund of respectable proportions. One-half of one per cent has been regarded by many financiers and economists as being reasonable. If we had a fund of $10,000,000 it would make a [DOT] very fair beginning. I am in no better position than is my right hon. friend to say when such a sinking fund will be instituted. Not having been responsible for the revenues of the past year, I can only say it could not well have been established that year, but I can say equally that present conditions do not seem to warrant the hope that it will be established this year.


William Lyon Mackenzie King: Is this unfortunately one of the ambitions of my right hon. friend's public career which he has to abandon in view of what he said this afternoon?


Richard Bedford Bennett: I assure my right hon. friend that although I may find myself con-

Supply-Finance
fronted, as I have been, with many difficulties, and be swept back, I do not entirely abandon any views I hold that are worth holding. I always pride myself upon the fact that I am able to discriminate and to abandon such views as I think will no longer serve useful purposes. I see no reason to abandon the idea of a sinking fund; indeed I cling to it with the same tenacity with which I cling to other views which I hold.


William Lyon Mackenzie King: I was not speaking of my right hon. friend's views. We were all sorry to hear him say this afternoon that he was afraid he would never introduce another budget.


Richard Bedford Bennett: I do not expect to be Minister of Finance another session.


Mr. MACKENZIE (Vancouver):: Who is going to be?


Richard Bedford Bennett: I know the material that offers itself to me from hon. gentlemen opposite is quite ample, but I do not care to select it.


[Stage Direction]
Item agreed to.
Pensions
Annuity to Doctor F. G. Banting, $7,500.
Annuity to Doctor Charles E. Saunders, $5,000.
Pensions to-
The unmarried sister of the late Colonel Harry Baker, M.P., $700.
J. Langlois Bell, $600.
Captain J. E. Bernier, $2,400.
James Elliott, $672.
Mrs. Wm. McDougall, $1,200.
Alice Morson Smith, $600.
Elizabeth Swinford, $600.
The last mentioned item appeared first in the estimates of last year. I think the other expenditures have been made for a considerable period of time.
William Lyon Mackenzie King: May I say to
my right hon. friend that in the supplementary estimates of last year he was kind enough to insert some consideration for Mrs. Robb, the widow of the late Minister of Finance. Many hon. members would be pleased if my right hon. friend, in the supplementary estimates, could see his way clear to have that amount renewed this year.


Richard Bedford Bennett: I hasten to assure my
light hon. friend that consideration is being given to this matter.


[Stage Direction]
Items agreed to.
Superannuation - to provide for retiring allowances to former employees of the Department of Public Printing and Stationery, $14,200.
Authorized by statute-Civil Service Superannuation and Retirement Act, $475,000.
Public Service Retirement Act, $575,000.
Civil Servants' Widows' Annuities Act, 1927, $135,000,-Total, $1,185,000.
Summary-to be voted, $14,200.
Authorized by statute, $1,185,000.-Grand total, $1,199,200.
Richard Bedford Bennett: These are superannuation items. Of course, my right hon. friend opposite is very familiar with the first. The remainder are authorized by statute over which we have no control.


[Stage Direction]
Item agreed to.
Richard Bedford Bennett: The next items are Nos. 309 to 319, inclusive.


William Lyon Mackenzie King: I should like to have them called separately.
Miscellaneous-grant in aid of the Canadian General Council of the Boy Scouts' Association, $15,000.


Thomas Merritt Cayley: Will the Prime Minister
please explain?


Richard Bedford Bennett: This vote provides for
a grant to the Boy Scouts' Association, which as a matter of fact, has been made since 1906 or thereabouts. In the fiscal year 1922-23, the grant was increased from $5,000 to $15,000, and is being maintained at that amount. For some years the chief scout has been His Excellency the Governor General. I believe the boy scout movement is fairly well known to every hon. member.


Thomas Merritt Cayley: How many units of boy
scouts are there?


Richard Bedford Bennett: I am bound to say I
have not that information, but the scout movement is in every province of the Dominion. I assume the information could be obtained if my hon. friend insisted.


[Stage Direction]
Item agreed to.
Expenses in connection with the negotiation of treaties, $10,000.
Richard Bedford Bennett: This is a standing item.
Sometimes it is drawn upon and sometimes it is not.


Charles Gavan Power: I believe it would be more proper to say that the fund is for the disruption of treaties.


Richard Bedford Bennett: I had no-t intended to refer to that painful circumstance by which last year the New Zealand treaty was terminated.
Supply-Finance


Charles Gavan Power: And twenty-seven others that my right hon. friend promised to repeal.


James J. Donnelly: Is there a grant given to the Red Cross Society?


Richard Bedford Bennett: My memory is that there is no grant to the Red Cross. During the last few years the provinces have made grants to that organization and not the Dominion. The Red Cross occupies a position with relation to war activities of the Dominion, and its peace activities are defined by a statute which brings its operations more nearly within the ambit of provincial legislation. For that reason grants have been made by the provinces. It may be in view of what has transpired during the last few weeks that something will have to be done in that regard.


James J. Donnelly: I made the inquiry because I believe neither the federal nor provincial governments can adequately provide relief for all the destitution which prevails at the present time in western Canada. Some such charitable organization as the Red Cross will have to be called into service, and I am suggesting that they begin operations so that in each town or distributing point clothing and other articles can be collected for distribution during the winter. Not only that, but collections could now be made of goods to be distributed. It seems to me that charitable organizations such as the Red Cross are the right and proper bodies to do the work.


Richard Bedford Bennett: Apparently the hon.
member is not as familiar with the province of Saskatchewan as I thought he would be. Last year the government of that province granted at first $30,000 and later an additional sum to the Red Cross to care for those requiring clothing and assistance in the stricken areas. So far as I know in every province west of the great lakes there is a provincial Red Cross organization which is responsible for the maintenance of local chapters, as they are called in the United States, or branches, as they are called in Canada. From time to time I receive letters from various branches of the Red Cross in the western provinces. The extent to which we will directly assist the Red Cross has not yet been determined but is receiving our consideration.


James J. Donnelly: The Red Cross did a certain amount of the work last year, but it was very late in the season before they became active, with the result that they were not properly able to look after their work. It is for that reason I now bring the matter
Mr. Bennett.]
to the attention of the government. The Red Cross should become active at once so that they may be prepared to cope with the work thej' will have in hand.


Richard Bedford Bennett: Once more may I say that I am surprised my hon. friend from the province of Saskatchewan is not aware of the fact that a permanent provincial organization is maintained in that province. Mr. Kerr I believe was the commissioner for the province, and the activities of the Red Cross have been continuously maintained. If there has been any occasion for criticism, it should be directed to the provincial commissioners and not to the federal government.


Henry Elvins Spencer: While we are discussing
these grants I should like to remind the Minister of Finance that I do not see any item in support of the Canadian Social Hygiene Council. Considering the splendid work they have done, will the government make an appropriation for them in the supplementary estimates? I do not see any item in the main estimates.


Richard Bedford Bennett: There is no item in
the main estimates. It is apparently an organization carrying on educational work. It has always been believed by the federal government that it is the duty of such government to assist educational organizations of this kind until such time as the results of their work have become apparent in action taken either by the provincial or the federal government, or by both. Due in no small measure to the operations carried on by this voluntary organization, such interest has been aroused as has resulted in practically every province in the Dominion setting up a department of health, and the burden is now borne by the taxpayer. The Dominion has also set up a department of health, the cost of which is also borne by the taxpayer. The sum of $100,000 is voted each year for the various services to which attention has been directed by this voluntary organization. Therefore it is felt the necessity for continuing that form of activity no longer exists.


Henry Elvins Spencer: Is it the intention of the government then to discontinue the grant for the association?


Richard Bedford Bennett: That is the present view.


Alfred Speakman: May I suggest to the
Prime Minister that the work of this organization is not yet complete. Such educational work must be carried on continually from year to year because, all the time there are people arriving at the age of intelligent

Supply-Finance
thinking who require to have this subject of health brought directly to their attention. To my mind it is most important that this voluntary organization should continue to receive assistance, because all the health activities carried on by the provincial, the municipal and the federal authorities to be effective must have behind them the continued pressure of a well-informed public opinion. Therefore I think the government would be well-advised to reconsider the continuance of this grant.


[Stage Direction]
Item agreed to.
Amount required to provide for grants to be made to the provinces of Nova Scotia, $875,000; New Brunswick, $600,000; Prince Edward Island, $125,000, pending consideration of provincial subsidies.
Richard Bedford Bennett: These grants, as it is
not at all improbable hon. members know, are consequent upon the Duncan report.


Henry Elvins Spencer: Does this vote complete
the recommendations contained in the Duncan report, or is there much else to be done to comply with those recommendations?


Richard Bedford Bennett: My friend from West
Edmonton (Mr. Stewart) implores me to be very careful in discussing this lest we have a full dress debate. I need hardly say that this is a continuance of the sum which was paid immediately after the report was made, and which was accepted not as fulfilment, but as a payment pending what might be called the accounting between the Dominion and the provinces. That is one way in which some of the representatives of the provinces put it. But at any rate the payment is being continued for the purpose of enabling the provinces to enjoy the immediate recommendation of the commission. The other matters have been further considered from time to time.


James Layton Ralston: It is termed in the report an interim payment.


Richard Bedford Bennett: Yes.


James Layton Ralston: What can or will be done in regard to the accounting?


Richard Bedford Bennett: I think for four or five years my hon. friend pressed vigorously and well the claims for a continuance of the accounting. The matter is not free from great difficulties, and it stands, I think, in exactly the position it was in when my hon. friend gave up office on the 7th of August, with the exception, I believe, of one letter having been written indicating that just at
that time the opportunity had not arisen to enable the matter to be further taken up. It has certainly not come since so far as opportunity is concerned,


William Lyon Mackenzie King: May I point out that these sums are in addition to the subsidies that have already been granted?


Richard Bedford Bennett: Quite so.


William Lyon Mackenzie King: They are associated with the subsidies and to that extent are in accordance with the point of view that I have been trying to press on hon. members opposite-that moneys going to the different provinces should go as subsidies and not as grants in aid for special purposes.


James Layton Ralston: Now that the transfer of the natural resources to the western provinces has been made, there seems no reason why the accounting should not go on, because in the resolution of this house it was provided that the accounting should take place having regard to that transfer as well as to the report to which he has referred.


[Stage Direction]
Item agreed to.
To provide for salaries and expenses of the tariff board-payments may be made notwithstanding anything in the Civil Service Act or regulations thereunder, $120,000.
William Lyon Mackenzie King: I suppose that sum will apply to the new board, if the bill carries.


Richard Bedford Bennett: Yes, that is what it is for. It is the same, amount as last year.


Henry Elvins Spencer: When is it the intention of the government to name the members of the board?


Richard Bedford Bennett: Within as reasonable a time as possible after the enactment of the legislation.


[Stage Direction]
Item agreed to.
To provide for expenses of the Royal Commission on the Public Service, $22,042.87.
William Lyon Mackenzie King: Is there any progress report from the commission?


Richard Bedford Bennett: The last time I saw the chairman of the commission he said it was becoming increasingly difficult for him to go on with the work, but I urged him to do so. I believe the other two members of the commission indicated to him that they found it a little difficult also, especially tne president of the University of Saskatchewan, but I urged the chairman to ask them to continue their work, and he thought possibly they might find some time within the next few months to proceed. The matter stands there.


[Stage Direction]
Item agreed to.
3336	COMMONS
Supply-Royal Grain Commission

[Stage Direction]
The Canada Grain Act, including management, operation, maintenance and equipment of elevators, administration of, $2,681,000.
William Richard Motherwell: Unfortunately I was absent yesterday, but I understand that during the. day there were some developments in connection with the supplementary appendix to the Stamp commission report. If my hon. friend the minister has anything further to give the committee to-night beyond what developed yesterday we should be very glad to have him lead on.


Mr. STEVENS:: Mr. Chairman, really I
think everything that profitably can be said on this subject has been said, but we might summarize the situation briefly in this way: The other night when this question was brought before the committee I did not have with me information on the subject. I stated the matter as fully as I could. Last night the Prime Minister dealt with the subject quite exhaustively. I think I can summarize by saying that appendix XII, chart No. 10 as it is termed, was filed with the commission by Mr. Pitblado, counsel for the Winnipeg Grain Exchange; that it was numbered by Sir Josiah Stamp and included in the series of charts and other matters; that it was handed by Sir Joseph Stamp to the secretary of the commission in New York just before Sir Josiah sailed for the old country; that it was brought by the secretary to Ottawa, with the draft report; that the draft report was typed and concluded, as far as its arrangement was concerned, by the secretary and Mr. Sanford Evans, and sent to Sir Josiah Stamp for his revision and final approval.


William Richard Motherwell: I should like the
Prime Minister to remain, because I believe he has more information with regard to this matter than the minister has.


Henry Herbert Stevens: None of the charts of
appendices were sent to Sir Josiah Stamp, because they were not prepared in time for a mail it was desired to catch, and as they had been seen by him already and numbered and passed on by him to the secretary, it was thought unnecessary to forward them. There was no suggestion from Sir Josiah Stamp that he was opposed to the inclusion of this appendix in the report; I understand that he intimated it was one of the appendices he wished included, and it was included with the others. Nothing was changed on it; it was included exactly as it was filed.
With regard to the filing, it should be noted that during the last meeting in Winnipeg,
Mr. Bennett.]
which closed at 12.45, at about 12.20 Mr. Cairns, of the pool, filed a lengthy document, reading parts and leaving it to the commission to peruse the remainder. The evidence discloses that Mr. Pitblado, counsel for the grain exchange, was asked by the chairman if he wished to say anything in regard to this document filed by the pool. Mr. Pitblado replied that he had not seen it before and therefore was not in a position to ask any questions, but he asked for the privilege of filing a chart, which is the chart now before us as appendix XII. That is how it was originally introduced.
Subsequently, when the accuracy of the chart was called in question, the three commissioners were communicated with and they authorized its deletion from the report. This coincided with the indication, to the Prime Minister, to myself and to others as well, of apparent inaccuracies in the chart itself, and therefore further circulation has been stopped. Communications have been sent to all those who received the report, indicating that this particular appendix having been objected to should be deleted and no longer recognized as forming a part of the report carrying the judgment of the commission. I do not know that anything further can be said.


William Richard Motherwell: Who requested the removal of appendix XII or chart 10?


Henry Herbert Stevens: As matters stand now, it
has been removed at the request of several persons. The chairman and the two commissioners have agreed to its removal. When the matter was brought to the attention of the Prime Minister he expressed the opinion that it should be removed, and after I had studied the report myself I took the same view. It has been removed accordingly. The point to be borne in mind is this: upon the discovery of the obvious unfairness of the chart it was immediately discarded. I do not know that any more could be done. To those who have received copies of the report- there were quite a number-we have sent out communications indicating that the chart should be removed.


William Richard Motherwell: I wanted to find
out whether my hon. friend was prepared to lay down the principle that if any just complaint were made against a report of this kind the government would be justified, after the report had been tabled, in removing the objectionable feature complained about. Take the Turgeon report referred to in the report of this commission, with respect to the question of futures. Let us suppose that Mr. Justice Turgeon, or anyone on his behalf, had com-

Supply-Royal Grain Commission
plained about anything in the Stamp report, whether with respect to exhibits or any other phase of it: would the government be justified in taking such complaint into consideration and eliminating something else from the report? On that principle, where would you end? Is each complaint to be considered and the particular feature of the report objected to eliminated?


Henry Herbert Stevens: That is a purely hypothetical question, to which my reply is very plain and simple. If it were noted that any inaccuracy had crept into the report, or that there was included in it anything which upon reflection it appeared unwise to retain in the report, and if the commission, those having charge of the matter, considered that it should be removed, it would be perfect!} proper to take prompt action after the circulation of the report with a view to overtaking it. But when my hon. friend speaks of the Turgeon report, made five or six years ago, and uses that as an illustration, suggesting that we should start now to delete any part of that report-


William Richard Motherwell: That is not my point. Reference was made in the Stamp re-,port to the 'Turgeon report. Suppose some member of the Turgeon commission were to call the attention of the government to any alleged inaccuracies in the Stamp report, which makes reference to the Turgeon report, is that necessarily a hypothetical case? Would a complaint made by anyone, either a member of the Turgeon commission or anybody else, with respect to the Stamp report, be taken into consideration and the feature objected to deleted? If that principle is sound in one case it is sound all along the line. And I take the ground that it is not sound. There is no justification for it without-obtaining someone's consent. If the government have the right to delete any part of the report, exhibits or anything else, after the report has been tabled, they have the same authority to delete it, or at least to point it out to those who made the mistake, before the report is tabled at all. I took the ground the other night that you could not segregate the various members of the government, which is an entity; for no member is responsible individually. The government is responsible collectively. Now I want to know whether the various members of the government had an opportunity to see the report before it went to the printer, I am concerned to know whether the Minister of Agriculture saw it, because I fancy he would have detected at once the significance of this appendix XII,
inasmuch as he is himself a member of the pool and a contract signer. He would certainly be jealous of the interests of the pool, and if he did not see the report some explanation is called for.


Mr. YOUNG:: The other night when the matter first came before the house the impression got abroad that someone had dishonestly smuggled that draft into the report, and a demand arose that the guilty party be discovered and punished. Having followed the discussion as it has proceeded, I cannot find anything to persuade me or anyone else that any employee of the government or of the commission was at all culpable in the matter. I suggest to the minister that he see to it that no innocent party is made to suffer.
Mr. STEVENiS: There is no question of that.


William Richard Motherwell: I have had the privilege of being in a government for a considerable time both here and in the west, and we have never had a report submitted to us in regard to which the Prime Minister had not invariably consulted his colleagues, to obtain the collective wisdom of the cabinet Every report of importance has been considered by the cabinet as a whole item by item before ever being sent to the printer. This report was heralded throughout the country as one of great importance, and I thought, as I still think, that the personnel of the commission was a first class one. The report itself I do not consider very important, the information having been already known. But what I want to know is whether the report was submitted to the various members of the cabinet, because there is joint and not individual responsibility in connection with this mistake, which is regarded as grave by those who have been adversely affected. I think I have the right, just as the Minister of Agriculture had the right as a contract signer, to get all the information available in connection with the matter. I admit with the hon. member for Weyburn that the situation is different from what it was the other night, because it is now admitted that Sir Josiah Stamp O.K'd the appendix at New York. The fact that the exhibits were not sent back to London for his formal O.K. is neither here nor there, and I would not criticize that point too strongly, although possibly it would have been better so to do. It would constitute a collective responsibility upon the government as to whether or not
3338	COMMONS
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they looked into this report before they took the responsibility of tabling it. They should have brought the combined knowledge of the cabinet to bear on it with regard to what it meant.


Henry Herbert Stevens: I disagree entirely with
the doctrine set forth by the hon. member.


William Richard Motherwell: That of collective
responsibility?


Henry Herbert Stevens: No, the question of the
reviewing by each minister of the government of all reports which are presented. This is a report made by a commission consisting of three gentlemen, of which Sir Josiah Stamp was the chairman. Hon. members pressed for the early tabling of the report, and as soon as it was received, and as quickly as it was possible for it to be put into proper shape and printed, the Department of External Affairs, under whom the commission had carried on, presented the report. As far as I know the report was not submitted to individual members of the government, and with all due respect to what my hon. friend has said I do not think this has been done under any administration. The government would have no right to change the matter contained in a report, whether it did or did not suit them. Such a report is received as a bona fide expression of the views of the commission submitting it, and we gave to parliament, precisely as we received it, the report of Sir Josiah Stamp.


William Richard Motherwell: Would it not have been better to discover the mistake before the report was tabled? If a report is not usually submitted to the whole government, it certainly is submitted to a subcommittee of the cabinet, which makes a report upon it. That is the usual practice, and if it has not been followed out in respect to this report, there would appear to have been serious ministerial neglect. Probably in the hurry to get away Sir Josiah Stamp did not realize the importance of this graph, but it was in the office of the Prime Minister for a month and a half. There were plenty of officers in the department who could have looked over it, and yet I understand that the Prime Minister himself did not read it.


Richard Bedford Bennett: Not in detail.
Mr. MOTHER WELT,:	A month ago he
said it was his intention to read it.


Richard Bedford Bennett: The conclusions, but not the whole document.


William Richard Motherwell: I have not read the whole document, but I have read enough to

know what is in it. This chart was in the hands of Mr. Sanford Evans and the secretary of the commission, both very responsible men. I know one of them very well, although I do not know the other. The road was open for it to go right on to the printer without any governmental supervision worthy of the name. Is that right?


Henry Herbert Stevens: Yes, absolutely.


William Richard Motherwell: We have got that
far. It went to the printer and then after it was too late it was found that the damage was done.


Henry Herbert Stevens: The government had no
right to change that report.


William Richard Motherwell: I submit that there is a grave dereliction of ministerial duty in sending on a report like that to the printer without even reading it. Did the Minister of Agriculture have an opportunity of reading this report? Was there an opportunity given to the individual members of the government to see the report before it was printed and tabled?


Henry Herbert Stevens: As far as I know the
report was not submitted to individual members of the government; it was filed with the house as received.


Ian Alistair Mackenzie: The hon. minister stated a few minutes ago that after this discrepancy was discovered Sir Josiah Stamp was communicated with. Was that done through the secretary or through the minister's own department?


Henry Herbert Stevens: I understand it was the secretary of the commission.


Ian Alistair Mackenzie: It transpired last evening that a telegram had been received from Chief Justice Brown of Saskatchewan. Will the minister foe prepared to table that telegram?


Henry Herbert Stevens: I have no telegram from Chief Justice Brown.


Richard Bedford Bennett: My memory is that such a telegram was received by me. I forgot to look for it to-day but I will produce it.


Milton Neil Campbell: I understood the minister to say that it was his opinion that the chart should never have been a part of the report.


Henry Herbert Stevens: After studying the report it is my opinion that it ought not to have been part of the report without an annotation indicating precisely whlat it was. That is only a question of opinion as to the inclusion of any item in the report.

Supply-Royal Grain Commission


Mr. TOTZKE:: Was this appendix approved by the commissioners before being inserted in the report?


Henry Herbert Stevens: At the last sitting of the commission there was a great deal of hurry. Getting down to trifling details, the chief commissioner had been invited to attend a public function at 12.30 o'clock. The incident which brought this about arose out of the filing by the pool of a document at 1220, and about 12.45 o'clock Mr. Pitblado filed this chart. In other words, it was filed in the rush and pressure of the last minutes of the sitting. I question if Sir Josiah Stamp had an opportunity at that time to study it. This chart along with the other charts included in the various appendices was handed by Sir Josiah Stamp to the secretary in New York.


Albert Frederick Totzke: There were other charts put in as evidence, and I should like to know who had the selection of what charts would appear in the report. Why was not the pool chart which was handed in at twelve-twenty o'clock put in?


Henry Herbert Stevens: That was a long statement


Albert Frederick Totzke: Who had the selection of the various statements?


Henry Herbert Stevens: The commission as a whole.


Albert Frederick Totzke: Did the commission approve of this appendix?


Henry Herbert Stevens: The commission left Winnipeg to journey to Chicago. They worked on the train and during every spare hour they could on the preparation of the report. There is no question about its being regrettable that this chart was not carefully scrutinized. I would submit that there are not many hon. members of this house, nor are there many individuals in the country, who could take a chart of this kind and detect immediately any inaccuracies which might be in it. It may be that the commission should have weighed carefully the various points brought out in the chart, but it is easily understandable why this should have been overlooked during the last hurried days. The fact is that this chart was among the others handed by the chairman to the secretary for inclusion in the report.


Albert Frederick Totzke: Were those charts handed to the secretary for inclusion in the report?


Henry Herbert Stevens: Yes.


Albert Frederick Totzke: This chart was among the charts handed by the chairman to the secretary for inclusion in the report?


Henry Herbert Stevens: Yes.


Albert Frederick Totzke: That is not what we were told last night.


Henry Herbert Stevens: There is no question about that. It is quite possible that had someone noticed that there were certain things wrong with the chart, it was then open to being excluded from the report. That however is not the practice which is usually followed. These things are prepared, assembled, and put in their proper place, and as far as we know -and I am now speaking with considerable assurance-the secretary of the commission discharged his duties with exemplary skill and with very great evidence of devotion to duty;
I am told his duties in connection with this commission were exceptionally well carried out. But there was a great deal of stress and labour during the last hours and subsequently, which may account for the error.


Albert Frederick Totzke: Can the minister say that the secretary of the commission did not make the statement that this chart should not go into the report?	-


Henry Herbert Stevens: I could not say that.


Albert Frederick Totzke: It has been rumoured that the secretary said it should not go into the report and he was overridden.


Henry Herbert Stevens: I think it has been stated, just by whom I am not prepared to say, that there was a question in the mind of the secretary or of Mr. Sanford Evans regarding the inclusion of the chart, but that inasmuch as the chart was with the others given to the secretary by Sir Josiah Stamp it ought to be included, and it was that point that decided its inclusion.


James J. Donnelly: Did Mr. Justice Brown not telegraph or write to the secretary protesting against this chart after he found it in the report? I understood from the Minister of Trade and Commerce the other night that he would have tabled at the first opportunity all correspondence between Mr. Justice Brown, Mr. Sanford Evans, Sir Josiah Stamp and the secretary, and also any correspondence with any members of the government in connection with the matter. Has he any of that correspondence?


Henry Herbert Stevens: I have no correspondence whatever from Commissioner Brown. Such other correspondence as there is in my possession, I had it with me in the house last night. I did not lay it on the table, but it is quite innocuous; it is merely formal, interdepartmental correspondence.


James J. Donnelly: Will the minister get the correspondence between the three commissioners and the secretary and have it tabled?

Supply-Royal Grain Commission


Henry Herbert Stevens: I cannot do that because it is not within mj' right to ask the commissioners for the correspondence.


Edward Joseph Garland: 
William Richard Motherwell: So far as this phase of the vote is concerned I am satisfied, and I believe all parties are satisfied, that the discussion has gone to the extent where we can derive no further profit by prolonging it. We know where the responsibility lies-with the government.
I wish to refer to one further matter in connection with the administration of the grain act. During the last two or three years there has been general satisfaction with its administration, and I should like to see that satisfaction continue. The question of who was responsible for the system of mixing which has been more or less in vogue ever since the year 1912 has come up on more than one occasion, and I think if we could settle that matter now we would be well advised to do so. I would attempt to settle the point, not alone in order to place responsibility but to avoid a recurrence of the abominable system of mixing. During the course of my remarks I shall refer to an order in council which was passed, but I shall blame no one for the passing of it because the measure appeared during war time and may have been passed under the War Measures Act. I refer to order in council No. 2394 which is dated from the Government House at Ottawa, August 25, 1917, a date just previous to the time when the board of grain supervisors got into action. Ostensibly this order in council was put through for the purpose of providing a sample market. For years such a market had been under discussion and many agreed it would be worth having. Although this order in council made the necessary provision, the sample -market never materialized because conditions did not lend themselves to its inauguration. However the mixing which was understood to come into effect with the sample market did take place and became w-orse from year to year until practically every terminal elevator in Canada was engaged in the practice of mixing wheat. As I have said that practice arose through the authority of this order in council passed under the War Measures Act which had for its alleged purpose the establishing of a sample market.
Because of the fact that there was a possibility of greater profits through mixing operations the practice grew and grew until it pervaded the whole country. I am not going to place too severe responsibility, although the practice began in 1917, but I wish to state that the government which preceded this one was blamed for not having sooner abolished the practice, and it is in that
3342	COMMONS
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connection I make my objection. When a practice such as that of mixing wheat is begun a tremendous effort is required to stop it. When the Turgeon commission we were discussing a few moments ago was appointed in 1923 they brought down a report upon which a bill was drafted by the commissioners and placed before the government and the house. The bill was given a run for its life, and a great many of the safeguards against the evils of mixing eliminated in the agriculture committee. I am blaming no one for that. The fact of the matter was that the government did not have a majority and was not strong enough numerically to have this contentious bill passed in the proper manner. It was brought up again at a time when we had more numerical strength in the house and as a result we have the satisfactory act of to-day, as passed in 1929-30.
Having had that experience I feel competent to state that if this system of mixing ever gets started again it cannot be stopped without still greater difficulty, because forces behind it are so powerful that no government, except one with an enormous majority and a great deal of determination could put a stop to it. If the practice of mixing became prevalent again it would get worse and worse until the Canadian wheat grower would lose his world-wide reputation. At the present time the Board of Grain Commissioners stands behind the act. May I say to the minister that I would be right with him if he made an attempt to stand behind the spirit and terms of the act. I wish to warn him however that if the practice of mixing which was so rampant four or five years ago gets started again, I am satisfied no parliament, without the working of a miracle, would be able to cope with it successfully.
I have taken this opportunity to place the matter before the minister and I make the promise to give my support to any effort on his part to preserve the present anti-mixing law. I believe the spirit of the act has been carried out during the last two years, and I am sure all hon. members on this side of the house would do their utmost to discourage a recurrence of this most unfortunate mixing practice.
I wish to read to the committee one or two paragraphs from the order in council of August 25, 1917, authorizing mixing:
His Excellency the Governor General in Council, on the recommendation of the Minister of Trade and Commerce and pursuant to the provisions of subsection 2 of section 57, chapter 27, 2 George V, entitled "The Canada Grain Act," is pleased to approve the following rules and regulations for sample markets, and the same are hereby approved accordingly.

As will be seen from this paragraph the objective was to establish sample markets, and although the establishment never took place, mixing became prevalent. The then deputy minister of justice interpreted the act to mean that inasmuch as sample markets were provided for, mixing was implied. I shall now read section 10 of the order in council, the vital section giving authority:
10. Notwithstanding the provisions of the Canada Grain Act (section 229, subsection 5). to the contrary, the lessee of any special bin in any public elevator shall have the right of binning together in his special bin grain of different grades-
That is where it comes in.
-grain of different grades and the operator of any public elevator leasing any bin for special binning under these rules and regulations is hereby authorized to become the agent of the lessee to bin together in such special bin such grain of different grades received in cars for the account of the lessee, but nothing herein contained shall relieve the operator of any such public elevator of Ms liability as public warehouseman in preserving the identity of grain as binned in special bins as well as grain in public storage bins.
The meaning of the latter part, as I understand it, is that even if those mixed grades _ are _ put in a bin, their identity must be maintained just like the identity of any other grades. I hope I shall be in a position a year from now to congratulate my hon. friend on having carried out the grain act of to-day in the same spirit and with the same determination to maintain our standing abroad as has been the experience during the last few years.


Richard Bedford Bennett: I desire to try to clear
up one misapprehension under which this committee may now be labouring. The hon. member for Bow River read a statement from Hansard of yesterday. What I said was fhat I knew nothing of this except as I had been informed. My information was just as the Minister of Trade and Commerce has stated. Sir Josiah Stamp handed these documents over for inclusion in the report and left it to one commissioner and the secretary to determine what documents should be actually put in, and at Ottawa what did happen was that this document was included in the report.
May I draw attention to the fact that the report is not directed to His Excellency the Governor General in Council; it is directed to the Prime Minister. He would have been guilty of an offence under the criminal code had he altered a single word of the report. It was his duty to present the report to the house as he did. When I was asked why I was willing that the graph should be with-

Supply-Royal Grain Commission
drawn from the report, I answered, because it was plainly the sense of this chamber that it should be removed as the matter printed upon the graph in red ink contained propaganda. The moment my attention was directed to it I pointed out that as there was no verification of the graph it was not proper that there should be propaganda upon it and it should not be incorporated in the report. As everyone is aware, that is what would happen in a court of law. The commissioner and no one else was responsible for that particular part of it. When the graph was put in the red ink printing was on it. That was my objection to it. When it was brought to my attention after what had taken place, I realized that the proper course to follow- the sense of the house being evidenced by the statements made-was to have the graph withdrawn from the report. I said that in answer to the hon. member for West Lambton (Mr. Gray), who asked why those instructions were given. That is the explanation of the matter. Everything that I have stated is only what I have been informed. The document laid on the table was the document handed to me by the Under-Secretary of State, whose duty is was to bring it to me for that purpose. I looked only at the conclusions on the first day the report was brought to me, and I have not yet read all the details. But the report being directed to me, and not to the government, if any alterations in any way, shape or form had been made by the Prime Minister or by any other member of the government, it would have been a clear violation of the obligations laid upon them by law. The government has no responsibility in respect to the matter. The report is a report of the commission, uninfluenced and undirected by the government or by any member of it.


William Richard Motherwell: I do not think anybody suggested that the government ever had a right to change the report. But it was their duty to read the report, and then, if it contained any mistakes, to refer those to the commission. The very fact that a copy of the report was sent across to Sir Josiah Stamp shows that that was the proper method, and my right hon. friend knew that it was.


Richard Bedford Bennett: The report was sent by
the secretary, not by the government.


William Richard Motherwell: Of course, that was the procedure. But the government, by their own admission, never read the report, they just took chances, and now they want to slink out of responsibility. That is their most extraordinary attitude.


Henry Elvins Spencer: The hon. member for
Bow River, speaking a moment ago, referred to certain copies of the Stamp report that had been sent to the grain exchange in Winnipeg previous to the much-talked of graph being deleted, and he suggested that the grain exchange should be requested to remove this appendix XII from the report. At the time he was speaking from memory, he had not the figures before him. Now I have the actual figures under my hand. In yesterday's Hansard at page 3239 will be found the following question by the hon. member for North Battleford (Mr. McIntosh):
How many copies of the Stamp commission report containing appendix XII, chart, 10, were printed and distributed to the government and by whom?
The answer shows that the total number of copies of the report containing appendix XII distributed was 2,168. Of these I see 1,210 were distributed to the grain interests- 800 went to the Winnipeg Grain Exchange, 260 to the Western Grain Company Limited, 50 to the Searle Grain Company, and 100 to Mr. W. Sanford Evans himself. One can easily see the reason for sending so many copies of the report to Winnipeg. I do not suppose anyone doubts that Mr. Sanford Evans had a great deal to do with the drawing up of the graph. Needless to say it would be quite improper for him to present the chart himself; therefore he naturally invited Mr. Pitblado, representing the Winnipeg grain interests, to do it for him.


Henry Herbert Stevens: No. I think I myself did a grave injustice to Mr. Sanford Evans the other day, and quite innocently, I think, my hon. friend is doing so now. I can assure him that Mr. Sanford Evans had nothing whatever to do with the filing of the chart; it was done by Mr. Pitblado, as it belonged to his clients, the Winnipeg grain exchange.


Henry Elvins Spencer: I quite appreciate that.
Of course, we have to accept this, Mr. Chairman, that Mr. Sanford Evans was chosen by the grain interests as their representative on the commission. Although the Prime Minister, I am sure, had the very best intentions in inviting representatives of agriculture and the grain intertests to sit on the commission, I now think it was poor policy. Mr. Sanford Evans has for years been preparing such graphs. Of course, it was impossible for him to introduce this graph himself, and we know that Mr. Pitblado did introduce it as the one representing the grain interests. It was introduced at the very latest moment before the commission rose at Winnipeg. The next
3344	COMMONS
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step we find is that the one commissioner who came to Ottawa with the secretary was Mr. Sanford Evans, with whom it was left to determine what charts should go into the report. Apparently he was very anxious, and naturally so from the grain interests point of view, to have this chart included in the report, but in doing so I suspect he was thinking more of those interests than of his duty as a commissioner.


Henry Herbert Stevens: It is only fair that I
should again inform my hon. friend that Mr. Sanford Evans declared that he was not in any way influenced by such a consideration, but that he agreed to the insertion of the chart solely on the ground that Sir Josiah Stamp had handed this and the other graphs and appendices to the secretary.


Henry Elvins Spencer: In spite of the fact that
the graph did go into the report; when the irregularities of the graph were drawn to the attention not only of the Minister of Trade and Commerce and of the Prime Minister but also of the three commissioners, the latter agreed that the best thing to do would be to withdraw it from the report. There is not the slightest doubt in my mind, to put it in a nutshell, that this graph was drawn up with only one idea, and that was to help crush the wheat pool. However Mr. Sanford Evans tries to hide behind his commissionership I do not think he can consider himself innocent in that respect. It is too wide open and too plain to the public, and Mr. Evans will be judged by what has come to light in the last few days. The minister the other day mentioned that instructions had been sent to all -those who had received reports that this appendix should not have been included.


Henry Herbert Stevens: No; we have made and
are making every possible effort to correct the situation completely by writing to all those who received the report, asking them to delete the chart. With regard to reports that have passed out of their possession, since we do not know to whom they have gone we have asked those who distribute them to follow them up by notifying the recipients as we have notified them.


Henry Elvins Spencer: The point I wish to make is that while those of us who have been in the house know very well how the minister feels about the matter, there are many members who have not been able to be here, and no notification has been sent to them through their post office boxes.


Henry Herbert Stevens: I will attend to that,
although I did not think it was necessary.


James J. Donnelly: 
Henry Herbert Stevens: I cannot give my hon.
friend that information offhand. I believe Germany, however, has a quota system on foreign wheat. I think the percentage is comparatively small, between 15 and 20 per cent.


Mr. McINTOSH:: It is 25 per cent, I
believe.


Henry Herbert Stevens: I am not sure, but I will accept that statement. The percentage varies, just as it does in France. A short time ago in that country it was 10 per cent; then it was increased to 30 per cent, and a few days ago reduced it to 25 per cent. The same applies to other European countries.


James J. Donnelly: Does the minister know the duty?


Henry Herbert Stevens: It was SI. 16 at one time and 97 cents at another. At the moment I cannot say, but we have the records in the office and I can give my hon. friend that information.


James J. Donnelly: Then I should like to
ask if the minister can tell me why during January, February, March and April of this year there has been an increase of something like a million bushels of wheat shipped to Italy. I do not know whether or not the government have made any concessions to or trade arrangements with Italy, or just why Italy has increased the importation of Canadian wheat. During those four months our shipments of wheat to the British Isles remained about the same, while they showed some increase to France. I understand that France has changed its quota for two reasons. The first is that there was a poor crop; they

Supply-Canada Grain Act
had to have wheat from somewhere, and our shipments to France have increased simply because our wheat is better for mixing than any other wheat in the world. They had to bring in foreign wheat, and since they were able to buy Canadian wheat as cheaply as the wheat of any other country, we have sold something like 3,000,000 bushels more. That is not very much for four months when you consider that we have to export something like 250,000,000 bushels a year, but for all that it is a certain quantity. Can the Minister tel! us why the exportations to Italy have increased ?


Henry Herbert Stevens: As far as Italy is concerned I think the answer is obvious. In the early part of the season Italy purchased a great deal of wheat from Russia; the Russian shipments fell off during the winter months, and Italy purchased more wheat from us, which we were very glad to sell. As far as France is concerned, I think the larger quantity purchased this year is due in large measure to the visit of the Prime Minister to Paris last autumn, when he had a very interesting and very satisfactory conference with the French government.


William Richard Motherwell: There is no evidence whatever to that effect. Our shipments to Italy increased two and a half times, while those to France increased only one and a half times. Was the Prime Minister also interceding at Rome in connection with the sale of Canadian wheat? Without any intercession at all, apparently, the amount of wheat sales to Italy went up very much more than in the case of France, and assuming that anything was done, what did we give for it? There is not a scrap of paper or any other evidence to support my hon. friend's statement, which has been going all over this country with nothing to support it. On the other hand the proportion of foreign wheat permitted to be milled has increased from 3 per cent to 30 per cent, and France is using not only more Canadian wheat but more United States wheat as well. My hon. friend cannot support that statement at all, but if there has been any bargain made whereby we sold more wheat he should be able to rfhow what we gave in return for it and what the bargain was. There has been no attempt at all to show that. Has the French treaty been abrogated or revised? What has happened? In France they do not give things away for nothing, and the statement of my hon. friend is not supported by any facts so far as I can see.


John Thomas Hackett: Has my hon. friend forgotten the visit of Mr. Ferguson to Rome?


James J. Donnelly: I am sorry I cannot
agree that this increase resulted from the Prime Minister's visit. We were shipping as much as 20,000,000 bushels to France in 1929, and during the four months under consideration we shipped only a little over 4,000,000 bushels. That is only at the rate of 12,000,000 bushels a year, so that 'hon. gentlemen opposite seem to be falling down on the job. Last year wte shipped 10,000,000 bushels, so our exports of wheat to France have not increased very much. We have been shipping between 12,000,000 and 20,000,00 bushels of wheat to France every year. Apparently, therefore, there has not been a very great deal of work done for the farmers of Canada. The Prime Minister is not blasting the way into very many markets for us.


Alfred Speakman: I should like to make one observation, and it will interest the minister to know I am not referring to the Stamp commission or its report. I wish to refer to a statement made by the ex-Minister of Agriculture when, a few moments ago, he was urging the minister to make quite certain that the grain act, with its excellent provisions, should be administered sympathetically.
With almost all he said I am heartily in accord, but speaking of that act and of the efforts of the late government to bring it to its present state, he made use of an expression which might give a wrong impression to the committee. The ex-Minister of Agriculture stated that for a number of years the former government had been struggling with the act, but for want of an adequate majority in the house they had been unable to amend the act to bring it to its present form. As a member of one of the independent groups in the house during those years, whose presence caused a situation not very satisfactory to the late government, nor, may I add, to the late opposition, I may say that at no time would the late government have been without a perfectly safe majority in any attempt to amend the grain act to remove the objectionable features. That is the only part of the ex-minister's remarks with which I find fault. I do think, however, that the statement might leave a wrong impression among those members who were not present during those somewhat contentious years.


William Richard Motherwell: I am glad my hon. friend raised that question, because I had reference more particularly to what took place in the committee on agriculture. That is where the difficulty was, and the hon. member for Mackenzie, who was on the committee, knows the circumstances under which these provisions of the act were removed. I



Supply-Trade and Commerce
am glad to have the opportunity of explaining that these mixing provisions, with the safeguards in the act of 1925, were eliminated because the agriculture committee mixers were stronger than the anti-mixers, and there was nothing to do but to let it go.


Milton Neil Campbell: Lest there be further
misunderstanding, I would remind the former Minister of Agriculture that his party always had a majority on the agriculture committee. If there was any disagreement among the members of his own party, he must answer for it.


William Richard Motherwell: Where was the
leader of the Progressive party on that occasion, and several others also of that group?


Milton Neil Campbell: I admit that some
members of our group, who later joined the Liberal party, did disagree with the rest of us. But apart from those two members, the group in this corner are in entire accord with the change.


Henry Herbert Stevens: The change was made to benefit all.


[Stage Direction]
Item agreed to.
Canadian exhibit at the British Empire trade exhibition, Buenos Aires (revote), $20,000.
Henry Herbert Stevens: This is merely to wind up the cost of the trip to Buenos Aires.


William Lyon Mackenzie King: Is the minister able to report any substantial results as a consequence of the visit of the Canadian delegation to the fair?


Henry Herbert Stevens: We had an excellent
resume of the trip from the right hon. member for Argenteuil, and there is nothing further to add at the moment.


William Lyon Mackenzie King: Nothing could have been better than the account of the trip; the only thing missing was any statement of results.


Henry Herbert Stevens: Give us a little time.


[Stage Direction]
Item agreed to.
Exhibitions and fairs, including the sum of $10,000 required for the Department of Immigration and Colonization, $285,000.
Edward James Young: What is this $10,000 for?


Henry Herbert Stevens: That is for preparing the exhibits. We keep a small staff at St. Catharines and one at Winnipeg preparing these exhibits, which are distributed to the immigration branches throughout the world. The Immigration department has had a regular vote for exhibitions, and this is being largely

cut out because of the natural desire for reduced immigration during this period. So that this particular line of activity is not continued this year. But this is for the collection and preparation of small exhibits such as you see scattered in different plaices -fruits, vegetables and so forth.


Edward James Young: Are any immigration offices open in Europe or elsewhere?


Henry Herbert Stevens: No, not so far as I know. The Minister of Immigration will be able to answer that question.


Alfred Speakman: What is the nature of these exhibitions?


Henry Herbert Stevens: Occasionally there are large exhibitions such as the one at Buenos Aires this year, but exhibits are maintained largely in the mother country and in other places as well. These are mostly window displays comprising chiefly natural products, almost exclusively from the farm. We take advantage of large industrial fairs such as are held in Manchester and Brussels.


Alfred Speakman: There is no overlapping as betwen the Department of Agriculture and the Department of Trade and Commerce?


Henry Herbert Stevens: No.


[Stage Direction]
Item agreed to.
Construction of a grain elevator at Lethbridge (revote), $400,000.
Robert McKenzie: Will this complete the work?


Henry Herbert Stevens: No; there will probably be a further vote.


Mr. LUCAS:: A seed grain cleaning plant was established at Moose Jaw a few years ago. Does that come under the minister's department?	'


Henry Herbert Stevens: No; that comes under the Department of Agriculture.


[Stage Direction]
Item agreed to.
Publicity and advertising in Canada and abroad, $250,000.
William Lyon Mackenzie King: The other
evening the minister gave some figures with regard to the cost of the advertising campaign -the series of letters published before the end of the year-which he said amounted to $100,000, roughly. The cost of the creed was, I believe, $7,000. That is, so far. The minister says they are still sending out copies of the creed if there are applications.

Supply-Trade-Advertising


Henry Herbert Stevens: Unfortunately the supply is exhausted, but we have demands for possibly another hundred thousand.


William Lyon Mackenzie King: They are of course demands for something that can be had for nothing. The creed comes in handy for enclosing in envelopes with other material which requires a pasteboard protection and can be used for any such purpose.
I wish to avail myself of this opportunity to make a correction. The other evening, speaking on this item of advertising but referring particularly to political campaigns, I referred to the series of open letters that were addressed to me in 1925 by the firm of J. J. Gibbons Limited, to whom the minister has entrusted this advertising at the present time. I am afraid I gave too much credit to the Tory party and too little credit to Mr. Gibbons or his firm for his part in meeting the expenses of publishing the open letters, because I have received a message from Mr. Gibbons, assuring me that he was not paid anything by the Conservative party for his open letters to me, that they were all paid for by the firm itself, and he asks me in his wire to remove the false impression, because the firm is anxious that they shall not be put in a false light before the people whose good opinion they desire to retain. I am anxious that they shall not be put in any false light and I am only too happy to have the firm given full credit for having paid the cost of these open letters, which, however, as I said the other evening, are all in the nature of Tory protectionist propaganda. It was the firm's contribution to a protectionist campaign. The minister evidently has not been forgetful of the service which was rendered on that occasion, because the $107,000 which has been paid out in advertising has been paid through this firm. This propaganda has been circulated as widely as possible. Not only were these letters published in the press throughout the country, but after the press had been supplied in that way the firm of J. J. Gibbons Limited bound the letters together in pamphlet form. The firm then sent out communications to people throughout the country enclosing a copy of the letters and asking for opinions thereon. Is that a voluntary contribution given by this firm toward the good cause, or is the government paying for that?


Henry Herbert Stevens: No.


William Lyon Mackenzie King: The other
evening the minister spoke about the success of these letters and how much they were appreciated. He regretted that he had not 22110-212*
the supply of communications at hand so that he could read to the house some of the letters he received. I notice he has those communications with him to-night.


Henry Herbert Stevens: I will send them over to my right hon. friend if he so desires.


William Lyon Mackenzie King: Let me show how these letters came into being. Let me read the letter sent out broadcast by J. J. Gibbons Limited. This particular one is addressed to a gentleman in Aurora, Ontario, whose name I can give if it is desired. It is dated January 12, 1931, and reads:
We have had reprinted the series of letters published from October to December, 1930, by the Hon. Henry H. Stevens, Minister of Trade and Commerce, Ottawa, whom we had the honour of serving as advertising agents, and thinking you might be interested we have much pleasure in enclosing you a copy of same.
We think the minister would be interested in receiving from you any comments you may feel like making on this campaign undertaken by him on behalf of the producers of Canada with a view to relieving the unemployment situation.
That letter was signed by Mr. J. J. Gibbons, the president of the company. The letters which the minister has received are communications from friends of the administration to whom Mr. Gibbons had addressed his letter. Undoubtedly, upon receiving a communication of this kind, the faithful would feel it their duty* to send the minister something laudatory of his efforts. I have no desire to stress further what is being done in connection with this campaign, but I would like to repeat it is all in the nature of protectionist propaganda and it does seem to be a grave misuse of public money for a minister of a department to spend any part of the appropriations of this parliament upon party propaganda. If I thought the minister was going to continue to do this sort of thing I would move for a reduction of the vote. My motion might fail to carry but it would draw attention to how the government has been wilfully and wastefully spending public money at a time when I think all will agree money is very much needed for far more important purposes.


Mr. McMILLAN (Huron):: Is not the
minister going to make a reply to the leader of the opposition? Does the minister think that the spending of public money is proper for this "buy in Canada" campaign?


Henry Herbert Stevens: I certainly do. I think it was a very satisfactory and successful campaign, as is evidenced by the abundance of response.


Thomas McMillan: This is a matter of collective responsibility on the part of
Naturalization Act

the cabinet. Does the Minister of National Revenue approve of a campaign like this where public moneys are being spent?


William Richard Motherwell: He certainly does. Is that not right?


Thomas McMillan: I would like to have a reply from the minister.


William Lyon Mackenzie King: How does the minister arrange "Canada first" and "Empire first" campaigns to be run side by side? He has been spending $100,000 on the campaign in Canada, and he is spending public money also for the purpose of advertising in Great Britain. At a dinner of the Canadian chamber of commerce held on March 10, Mr. Ferguson said:
When I see in England such slogans as "Buy British goods made in England by British labour," it semes to me to be forgotten that the goods of Canada and other parts of the empire are equally British. Imperial consolidation cannot be effected on the lines of discrimination.
If this sort of thing-these advertisements and this creed-were distributed to the British press there would be a terrible time. The high commissioner has stated that he would resign if the government compelled him to put forward any "Canada first" ideas 'in Great Britain. He contends that he is over there to put forward "Empire first" ideas and that he will return the minute anyone tries to suppress an utterance which relates to the empire rather than to Canada.


Richard Bedford Bennett: It is not quite as bad
as that.


William Lyon Mackenzie King: If not quite
as bad, what I am saying is so nearly exact that my right hon. friend finds it hard to discover a distinction. What advertising is being done in England under this vote?


Henry Herbert Stevens: In that regard we are
following the example of our predecessors by conducting apple campaigns, Canada weeks, supplying window displays, post office advertising, card advertising, and so forth. Mr. Garrity, an official who has been there for some years has full charge of this work.


William Lyon Mackenzie King: Is there a
creed for window display in England?


Henry Herbert Stevens: I have not prepared one,
as yet, for the British isles.


Thomas McMillan: I should like
to have a reply from the Minister of National Revenue.


William Lyon Mackenzie King: If the minister would promise that he will stop this

protectionist campaign, I might be prepared to allow this item to go through.


Henry Herbert Stevens: It is stopped already.


William Lyon Mackenzie King: It will not be repeated.


The CHAIRMAN (Mr. Anderson, Halton):: Shall the item carry?


Thomas McMillan: If silence gives assent it would seem that the Minister of National Revenue is in accord with the expenditure of public money for matters like this. Is the Prime Minister in agreement with this principle?
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Friday, July 3, 1931.