1933-03-24

[Stage Direction]
The report of the examiner.of petitions for private bills was read, recommending that the petition of the Nipissing Central Railway Company be not received.
Mr. A. C. CASSELMAN (Grenville-Dun-d'as) moved:: That the petition of the Nipissing Central Railway Company praying for an extension of time to complete its railway, together with
the report of the clerk of petitions thereon, be referred to the select standing committee on standing orders for the purpose of considering the suspension of standing order 92 in relation thereto.


[Stage Direction]
Motion agreed to.


Hon. R. J. MANION (Minister of Railways and Canals):: Mr. Speaker, I table herewith the annual report of the Canadian National Railways system, in English and French, for the year ending December 31, 1932, as well as the annual report of the Canadian Government Merchant Marine and the Canadian National West Indies Service for the same year. Hon. members will find these reports distributed in their post office boxes. In case some hon. members might care to see it I will table also the questionnaire sent out by my department some time ago in regard to motor traffic.
MONTREAL HARBOUR COMMISSION On the orders of the day:


Mr. J. A. MERCIER (Laurier-Outremont):: I should like to address a question to the Minister of Marine (Mr. Duranleau). It is being stated in Montreal and even published in some newspapers favourable to the government that the harbour commissioners of Montreal, being dissatisfied with the findings of the Gibb commission, have sent a memorandum to the minister and the Prime Minister together with their resignations. May I ask the minister if there is any truth in this statement?


Hon. ALFRED DURANLEAU (Minister of Marine):: A report containing suggestions
and representations was made by the harbour commissioners of Montreal, but there is no truth in the statement that it was accompanied by their resignations. They did say if my memory serves me well that in order to help the government in any reorganization of the administration of national harbours they would be ready to send in their resignations at any time, but that is all.
WESTERN GRAIN RATES On the orders of the day:


Robert James Manion: Yesterday the hon. member for Comox-Alberni (Mr. Neill) asked about the grain rates from the prairie provinces to the province of British Columbia,
Soldiers' Pensions

and I told him they had been put into effect on March 10. That did not agree with a letter the hon. member had, but I have checked my statement and I find that the rates were put into effect two weeks ago to-day, on March 10.
SOLDIERS' PENSIONS On the orders of the day:


Mr. E. R. E. CHEVRIER (Ottawa):: I
should like to direct a question to the Minister of Finance (Mr. Rhodes) in connection with his remarks regarding pensions, which appear at page 3223 of Hansard. I should like to ask what effect this will have on disability pensions, the pensions paid under contribution and the pensions paid under the non-contributory system.


Hon. E. N. RHODES (Minister of Finance):: I am indebted to my hon. friend for having intimated that he was going to ask this question, but I did not know the specific nature of the question. I was very much engaged this morning and in fact did not have an opportunity to even look upon Hansard, so I prefer that this be taken as a notice, and an answer will be forthcoming at an early date.
Perhaps in this connection, however, I might be permitted to say one word, as there would appear to be some considerable misapprehension with regard to what is in the mind of the government in respect to pensions. The last thing in the world that we had in mind was any interference with the sanctity of the contract concerning pensions. Whatever merit there may or may not be attached to the suggestions contained in the budget speech with respect to pensions, it was never intended to interfere with pensions as such. Perhaps I should also add for the information of the house that this morning we had a long conference with the heads of the various veteran organizations. That conference is to be renewed, and at its conclusion an announcement of a specific character will be made to the house which will embrace also an answer to my hon. friend the senior member for Ottawa (Mr. Chevrier).
REDISTRIBUTION BILL On the orders of the day:


Right Hon. R. B. BENNETT (Prime Minister):: In answer to a question asked by my hon. friend from Quebec East (Mr. Lapointe) yesterday I should like to say, Mr. Speaker, that the chairman of the select committee on redistribution is calling a meeting of the full committee in order that there may 
be no misapprehension as to the desirability of expedition in concluding their labours. Sub-committees have been working steadily, I understand, for the various provinces.


Mr. LAPOINTE:: Ex parte so far as Quebec is concerned.


Richard Bedford Bennett: When I say sub-committees, representatives of the provinces have been endeavouring to work out schemes acceptable to all, and the full committee will meet and consider them.


An hon. MEMBER:: Schemes.


Richard Bedford Bennett: Yes, schemes is the word I used, and the correct word too-schemes that will be acceptable to all parties; and the full committee is called now, or is being called, in order that there may be no misunderstanding about the matter.


Ernest Lapointe: My right hon. friend has kept his word, because last night the government's representatives from Quebec, for the first time, gave some information to our own representative. I may add that if the rest of the work is as bad as the beginning there will not be much agreement.


Richard Bedford Bennett: That is rather bad.



PENSIONERS IN MONTREAL

[Stage Direction]
On the orders of the day:
Hon. MURRAY MacLAREN (Minister of Pensions and National Health):: The hon.
member for Bow River (Mr. Garland) yesterday inquired whether representations had been received by the department with respect to the statement that starvation existed among some of the pensioners in Montreal in receipt of small pensions. In answer to the question I wish to state that representations have been received by the department on this subject. The department is now pursuing a thorough investigation of the matter but it has not yet been completed. It will be so at an early date. The matter is being looked into carefully having regard to the serious nature of the complaints that are made in these representations.



UNEMPLOYMENT AND FARM RELIEF


[Stage Direction]
The house resumed from Thursday, March 23, consideration in committee of Bill No. 55, respecting relief measures-Mr. Gordon-Mr. MacDonald (Cape Breton South) in the chair.
On section 3-Further powers of governor in council.
Mr. POWER:: 1 have a suggestion to offer with respect to the phraseology of section 3. Subsection (c) reads:

Relief Act. 1933
Take all such other measures as may be deemed necessary or advisable for carrying out the provisions of this act.
Section 5 reads:
The governor in council shall have full power to make all such orders and regulations as may be deemed necessary or desirable to carry out the purposes and intention of this act.
I know that the government is anxious to take full power to itself, but it is not necessary to have this provision twice in the same piece of legislation. I am not particularly desirous of making this legislation any better, but having some respect for parliament and for the kind of laws we put on the statute books, I suggest that one of these sections be dropped or altered. I am not insisting on it, but I think the minister himself will see that it is unnecessary to have both sections in; one or other may be dropped.


Mr. GORDON:: Subsection (c) of section
3 has reference to any other measures that are not included in (a) and (b), and section 5 has to do with the regulations that the dominion prescribes, in so far as it can prescribe regulations for the actual carrying out of relief measures which the province heretofore has approved of.


Mr. NEILL:: I take advantage of the
presence of the Prime Minister to make a few observations When the Minister of Finance introduced his budget I naturally assumed, with regard to what he said about the stabilization fund, and I think every other member did the same, that it would be promulgated by legislation during the passage of which we might have a general discussion of the whole matter. I find now, from what took place last evening, that the fund is going to be organized and administered under this relief act, and therefore there may be no special legislation introduced in connection with it. Consequently this is the only opportunity we shall have to discuss it. We might discuss the subject on going into supply, but any debate that might take place then would have to be confined to general principles and one could not ask any questions of the minister. It is one thing to have the precise language of a statute and quite another thing to have the more or less general terms which the Minister of Finance used in speaking of his policy with regard to the stabilization fund. I should like to get some definite advice as to just how far this goes.
The Prime Minister last night, speaking of course from memory, said he thought the words fish and fish products were the words
used in connection with fish. That of course is a mistake, because the words used are fresh fish and canned fish. If the right lion, gentleman is in a position to say that he intends it to mean fish and fish products, then what I have to say is practically at an end, and it will be a source of gratification to us in British Columbia.
I wish to plead particularly for an industry that exists solely in the district I represent; that is, the reducing or processing of pilchards. They make pilchard meal and pilchard oil and I do not think there is any other district in Canada where this business is carried on. This industry came into existence-I speak from memory-six or seven years ago, and at that time it was confined entirely to white men, something which is true of very few of the fishing industries in the west. There was a large outlay of capital. There were at one time, if I remember rightly, twenty-seven reduction plants on the west coast of Vancouver island, each with a capital investment of from 85,000 to $8,000. They would each employ perhaps one hundred men, between the men on the plant and the men engaged in catching the fish. That would mean a total employment of some three thousand people, and then as a side line, depending on this, there would be employment for perhaps another five hundred. Owing to the distressed market conditions, instead of twenty-seven stations as there were a few years ago, last year there were, I think, only three in operation. I think they were run more with the idea of relieving the un-emploj'ment situation than with any hope of making a profit, in fact I think that they ended up in the red. This industry could provide employment for a large number of white men, at least it used to provide employment for white men before the British Columbia government fell heir to certain jurisdiction, after which they permitted orientals also to be employed. The cost to the government would be comparatively small but the employment would be quite large. I ask if the government could see its way clear to include pilchard oil and pilchard meal within the terms of the stabilization fund? I received a wire the other day from one of the largest operators. They state that they are disappointed that these commodities have not been included. They told Doctor Found, the Deputy Minister of Fisheries, when he was out there last December, that it was impossible to carry on the reduction industry unless either the cost could be cut or a subsidy provided. They then go on
Relief Act, 1933

to point out that a sales tax has been placed upon fuel oil which adds very considerably to their working expenses and makes it all the more necessary that they should come under this stabilization scheme. The telegram continues :
Would ask your earnest endeavour secure inclusion fish oils under stabilization plan particularly as without some such help the industry must be further curtailed whereas by inclusion we can reasonably look to increased operations and improved employment.
Would the Prime Minister be kind enough to state what his attitude will be in regard to this matter?


Richard Bedford Bennett: Mr. Chairman, I can add very little to what I said last evening. I said that we had indicated the items or commodities to which the stabilization would apply but that the door was not closed for representations with respect to other agricultural and fish products. The hon. gentleman has presented a case on behalf of the pilchard oil industry but he has not stated the extent to which this commodity is sold in Great Britain and where the surplus not used domestically finds a market. I followed him closely but I do not think he said anything with respect to that. I do not think it would serve any useful purpose to repeat what I said last night.


Mr. MUNN:: Mr. Chairman, the Prime
Minister made a statement yesterday evening in connection with the products of the forest. He is quoted on page 3349 of Hansard as follows:
So far as the products of the forest are concerned, that is a matter which has not engaged the attention of the government; nor was lumber included in the items mentioned yesterday, for reasons which I fancy commend themselves to the house at once. There are other avenues of effort through which we think we can attain the end, by some means other than the means indicated by the statute.
Would the Prime Minister indicate at this time what he had in mind when he made that statement and whether or not we will have an opportunity later on to discuss this particular item?
Mr. BENNETT; The market in Great Britain for lumber which has been subject to competition from a foreign country will assume an entirely different position next month. Other efforts are being made to permit the export of lumber more freely from Canada to foreign markets. These efforts cannot be discussed at the moment other than to say that they are being put forth to create a wider market for lumber and its products.
(Mr. Neill.1


Mr. MOTHERWELL:: I was very much
interested in the Prime Minister's explanation last night as to why certain commodities were put upon the preferred list so far as the adverse exchange on the British market is concerned. If I understood him correctly, he indicated that each commodity had been dealt with upon its merits and I was wondering what particular demerit was attached to butter to have it excluded from the intended benefits of this exchange adjustment. I might also mention wheat as another excluded commodity.


Richard Bedford Bennett: I think the hon. gentleman is aware of the fact that the production of butter in Canada barely meets the consumption; there is a very small available exportable surplus. This is a relief measure and the evidence which the government had before it was not sufficient to warrant action being taken with respect to butter similar to that taken with respect to cheese, for instance. As a matter of fact, butter is selling at a higher price upon the Canadian market than that prevailing upon any other market of which I know. At the moment the Canadian price is much higher than the British or American prices. In fact, it has been so attractive that our friends in New Zealand have endeavoured to secure this market.
Mr. MOTHERWELL; The dairy industry will be upon an export basis as soon as the full flush of milk comes in the summer. It has been usual for this industry in the past half century to go on an export basis around the first of June in each year. It is usually off the export market in the winter but on in the summer. What will happen after June 1? Unless something happens, I anticipate that the price will be lower than it ever was during the first quarter of this century. That is whiat the present indications point to. This will happen within two or three months, possibly before this house prorogues, and that commodity should be put in a position to take advantage of this intended exchange benefit. This government should be the last to turn a cold shoulder to butter because it owes its position of power in this house largely to the import of butter problem and the export of whiskey. From a sense of gratitude, this commodity should not foe overlooked by my right hon. friend.


Richard Bedford Bennett: The committee will find it rather difficult to understand the hon. gentleman's reference to the export of whiskey. The measure prohibiting the export of whiskey was introduced by the government of which he was a member and supported by the oppo-

Relief Act, 1933
sition which I had the honour to lead. I take it that the injustice should be attributed to hon. gentlemen opposite while the support is attributable to ourselves.


William Richard Motherwell: That means that
the hon. gentleman has no explanation to offer as to why butter is not included in preferred lists?


Richard Bedford Bennett: Not beyond what I said last night.


William Richard Motherwell: My right hon.
friend did not say anything specific last night and does not want to raise the question of butter. That is the reverse of the position which prevailed in 1930. Our hon. friends opposite do not like the spectre which faces them in connection with this commodity and their promise to give dairymen forty-cent butter. What about wheat? Surely that commodity is as important as honey. The busy bee gathers up the honey from the prairies at no cost so far as the supply of nectar is concerned, yet it is given a preference under this exchange adjustment. Apparently the comparatively small interest of growing wheat is overlooked, but it strikes me it is nearly as important as the busy bee's processed product honey.


Mr. HOWARD:: I was quite surprised at
the statement made a minute ago by the Prime Minister. I had always understood that milk products included butter, but does the Prime Minister now say that they do not? What does the Prime Minister include in milk products? I am in a dairy section of Quebec and I thought this included butter. I am surprised to-day to get the information it does not. I would like to know what milk products really include.


Richard Bedford Bennett: I am not at the moment in a position to define the term.


Mr. HOWDEN:: But it does not include butter.


Richard Bedford Bennett: I did not say that. The former Minister of Agriculture asked why butter was not included. Last evening I said that when the order in council is passed after April 1, if this bill carries, it will be quite clear what is covered by the various items mentioned in the statement of the Minister of Finance.


Mr. VALLANCE:: If the Prime Minister has nothing to state as regards the question asked by the hon. member for Melville, what position is wheat in, because it is not mentioned as one of the items?


William Richard Motherwell: It is by a violent stretch of imagination included in meat products possibly.


John Vallance: I really think we should have an answer.


Mr. McINTOSH:: Let us have a Canada first answer.


Mr. GARLAND (Bow River):: It is hardly fitting for the Prime Minister to take the position he has just taken on this question. He said in effect: As soon as this measure passes and when the orders in council based upon it are prepared, then he would say what this legislation really means. Frankly, I think the committee is entitled to know just what, in the mind of the government, are milk products.


Mr. MALCOLM:: Before the bill passes.


Edward Joseph Garland: Yes, we should know that before the bill passes.


Richard Bedford Bennett: I thought last evening I made as reasonably clear a statement as could be made with respect to the matter, and I do not desire to repeat. As regards wheat, I did deal with it and there is a statement on record with respect to it. As to the elaboration of the meaning of the words, if there is any doubt about them, of course they will be clarified. Milk products as the term appears in the statement of the Minister of Finance, certainly did not mean butter; it referred to powdered milk, condensed milk and things of that kind regarding which our milk producing population is having difficulty in finding a market. At present there is an ample market for the Canadian production of butter, in fact so much so that there have been some importations to meet the present demand.


William Richard Motherwell: I have not said
very much about this matter yet, and I am interested in it. As regards meat products, meat sometimes means all kinds of food, and if we take that interpretation in that broad and charitable sense, meat products should cover wheat. Therefore with that hope in our minds, I am willing to proceed with this relief bill until we reach the budget if that will help my hon. friends opposite in any way out of their very apparent dilemma.


Mr. VENIOT:: I do not intend to discuss the butter question for fear of slipping on it, but I wish, for the sake of information, to ask the Minister of Labour a question. Under this bill I understand money may be advanced to certain corporations, or institutions. For instance, money might be advanced to the Canadian Pacific Railway for continuing work
Relic! Act, 1933

in their shops or perhaps for the purchase of supplies where it could be shown that this is necessary in order to help out unemployment. Can money be advanced out of this fund to the Canadian National Railways for the same purpose, for example, the purchase of different kinds of supplies? What I had in mind was the purchase of sleepers. Supposing the Canadian National Railways had on hand at a given time, according to them, sufficient sleepers for their purpose, if the government deemed it necessary, for the purpose of relieving unemployment, to make a contract for the purchase of sleepers, would the Canadian National Railways be entitled to receive out of this fund sufficient money to purchase those sleepers?


George Gordon: I do not think there is any question that under the terms of this legislation that course could be followed if it were found desirable and expedient.


Mr. REID:: Paragraph (a) of section 3
reads:
Provide for special relief, works and undertakings in the national parks of Canada and elsewhere.
In British Columbia, in those camps which have been established for single men, there are some 5,000 who have been provided with clothing, food and shelter. Is it intended under this clause to provide useful work for those men?


George Gordon: That was the main reason for inserting that phraseology; it was in order to give authority to do just such things as those to which the hon. member has referred.


[Stage Direction]
Section agreed to.
On section 4-Payments for direct relief not to exceed $20,000,000.
Mr MACKENZIE KING:: If section 4 is carried, it will have to be carried on division and I should like $ie Chairman to read the section so that it may appear on the record. It will show of itself why we take exception to it. Under section 2 we establish a dictatorship. Section 4 provides the wherewithal for the carrying on of that dictatorship. There is no limitation to the amount that may be taken by the government out of the public treasury, no longer any control by parliament.


The CHAIRMAN (Mr. MacDonald, Cape Breton):: Section 4 reads:
The governor in council may pay out of the consolidated revenue fund such moneys as may be necessary for all or any of the purposes of this act, but the amount paid for direct relief for the fiscal year ending the 31st day of March. 1934, shall not exceed the sum of $20,000,000.
[Mr. Veniot.l


Mr. IRVINE:: Would the minister indicate on what basis the government arrived at this estimate of S2O,OOO,0CO? If my memory serves me aright, when the minister was dealing with the resolution, he pointed out that there were in Canada at present some 1,300,000 persons on full or part relief. This amounts to about four cents a day for those on relief. It is well within the realm of probability that next year the number requiring relief will be greater and that those now receiving relief in part may require to have it in full. That being so, it appears to me that the sum required next year might be very much larger than the amount expended this year. Therefore I would like to know on what basis the sum is arrived at and what the government will do provided the amount of $20,000,000 is not sufficient to carry them along until parliament meets at the next session?


George Gordon: The dominion's share of
direct relief for the fiscal year 1932-33 will not amount to $25,000,000. The sum required for the coming fiscal year will not, in my judgment, amount to $20,000,000. Of course I shall have to match my judgment in the matter as against t-hat of the hon. member for Wetaskiwin. If the sum does exceed $20,000,000, parliament will certainly be in session before this amount is by any means expended or commitments made amounting to it, and resort if necessary can be had at that time to parliament for legislation to supplement the bill now before the committee.


Charles Gavan Power: May I make just one
observation before the clause carries? Under this bill entitled The Relief Act, 1933, and under this clause, the government may spend all t'he money they like on any conceivable thing they may think of, but when it comes to relieving distress they can spend only $20,000,000. That is all I have to say.


Mr. BRADETTE:: I wish to refer to the
moneys spent on direct relief in my own section, and I think the same condition applies all over Ontario. A number of storekeepers who have advanced money on scrip are kept waiting for their money from the government for as long as two and a half and three months. I have protested against that, and I would ask the minister to see that this condition is remedied. I do not know if this is one of the ways adopted for avoiding proper expenditure during the year or for the government to make a better financial showing, but three months is entirely too long for a retailer to wait who has been taking scrip in exchange for goods. There is not a single retailer or merchant who should have to wait that long for payment of his goods.

The minister knows that the wholesale houses will not sell goods on terms of three months, and I believe it is within both the jurisdiction of the minister and of the provincial government to see that these bills are paid more promptly. There is one complaint which has been attended to; the scrip has been made negotiable, but nevertheless the time for payment is altogether too long. I think thirty days should be made the utmost limit.


George Gordon: The province pays the
bills in the case of Ontario, and I presume it is to that province the hon. member refers, just as soon as the bills are received from the municipalities. If there are cases where a merchant has had to wait two or three months for payment, it is certainly not because of any undue delay so far as the contribution from Ottawa is concerned, because our contribution is made after the province has paid the bills. It may be that in some instances delay has occurred, but this is not the first time that retailers have had to wait a month or two for accounts to be paid; at least that is my experience, and I am not a retailer.


Mr. TETREAULT:: If the hon. member
for North Timiskaming lived in the province of Quebec, in my county for instance, he would know of municipalities which have had to wait ever since 1930 to get their accounts paid, and they are not paid yet.


Ernest Lapointe: Go and fight it out with the provincial government.


J.-Eugène Tétreault: I would not get any
results.


Mr. MacINNIS:: When we discussed this
resolution previously, I drew attention to this section of the bill under which the amount that may be expended by the government for direct relief is limited. I would point out in connection with the answer given by the minister to the question by the hon. member for Wetaskiwin that all the information which the minister gave him in reply was based on his own opinion that more than a certain amount would not be necessary, and that if the amount should exceed $20,000,000 the house would be in session before then. I would also point out that the government have abandoned practically every means of dealing with relief except direct relief measures. I think that the number of persons now unemployed, and consequently the number on direct relief, is increasing daily. The government is reducing its expenditure on constructive work of all kinds and also in other ways. Our provincial legislatures are
Relief Act, 1933
in session at the present time, and they are doing the very same thing. Our municipalities are on the verge of bankruptcy, and consequently they cannot engage in any constructive work. The result must be that more and more people will come on direct relief, and will have to be taken care of in that way. Because we are giving the government the right to make unlimited expenditures in every other direction is no reason why we should limit it in its expenditure in this particular direction. I have every confidence that this government will not spend on the unemployed any more than is absolutely necessary. As a matter of fact, I am quite willing to give them a free hand, particularly in regard to expenditure for unemployment relief, and I think the minister should reconsider this section and leave it on the same basis as other parts of the bill and as it was last year.


Mr. POULIOT (Translation):: Mr. Chairman, I wish to give some explanation on the vote I shall cast in connection with this bill. First, I am opposed to a dictatorship. We had a dictatorship in 1930, and also in 1931. The measure, in 1932, was somewhat different, however, the bill under discussion is nevertheless equivalent to a dictatorship. The government, first, introduced an amendment to the effect that the outlay, pursuant to this bill, should not be over $20,000,000. Then, a second and third amendment were introduced annulling the first. Consequently, we are faced with a dictatorship. Under the circumstances, sir, owing to the present situation of the country, it is impossible to approve of this bill and I reserve the right to comment later on in this respect. All I wish to state for the moment is that this bill was not given the full necessary consideration while it was being prepared. The entire legislation introduced by the government, since 1930, has had most disastrous results and, basing myself on past experience, I have my fears for the future and therefore cannot approve of this bill.


William Irvine: Supposing the amount of $20,000,000 should be inadequate and that it runs out before parliament meets again, what will the government do in dealing with those requiring relief?


George Gordon: I do not anticipate at all that such an event will happen, but if it does, I presume that there is a number of courses that may be adopted. I may be incorrect in this, but I suppose we could get a warrant for more money, or we could call parliament together. I feel confident, however, that the
Relief Act, 1933

fears which have been expressed by the hon. member are groundless so far as the question of direct relief is concerned, and of course the government will have to take the responsibility.


William Irvine: I do not like to see a limitation upon this particular expenditure, and therefore I move that all the words after the word "act" in the third line of section 4 of the bill be deleted.


George Gordon: Mr. Chairman, I think the amendment is out of order. It obviously contemplates an expenditure of money beyond that which the government contemplates by this measure. For that reason I think the motion is out of order, as it is not sponsored by the government.
The CHAIRMAN (Mr. MacDonald), Cape Breton): I think the objection is well taken, and I declare the amendment out of order.


Edward Joseph Garland: May I point out that the carrying of this amendment does not necessarily in any way entail the expenditure of any more money.


Finlay MacDonald: It may.


Richard Bedford Bennett: That is the basis upon which it is put.


George Gordon: If not, it has no meaning at all.


Edward Joseph Garland: It may have. The object of the amendment is undoubtedly to free the hands of the administration in the event of a necessity arising. I agree with the mover of the amendment that this is perhaps the most important part of the bill. Under existing conditions I do not believe the government should be limited to any stated amount. I have never agreed with that principle since the unemployment crisis struck the country. The government has every opportunity to give employment and to carry on the necessary relief; I am not sure that it has lived up to its promises in that regard. I am certainly opposed to this committee fixing any limitation upon the government doing what it desires to do or considers to be necessary in any event.


William Irvine: May I point out that the deletion of the fixed sum of $20,000,000 might mean that they wanted to spend less than the amount mentioned. I do not believe the minister would be right in assuming otherwise. The minister has just said that if this was not sufficient the government would find means

of making it more. Therefore in any case it would appear that the money would be spent. So I think we ought to be careful before giving a ruling such as the one now given, or declaring it final.


Mr. SPEAKMAN:: On the point of order: Apparently the point raised is that the deletion of this clause would, in effect, mean an increase in public expenditure. Well, if the deletion of the clause means an increase in public expenditure it is obvious that its deletion must take place if we are not to interfere with the proper carrying on of this work. Because if it must necessarily follow that more -money will be expended, I would say then it must also necessarily follow that the limitation is too small, and that the amount named is insufficient.


Mr. HEAPS:: ' Would the chairman be good enough to give the house the basis for his ruling. I have always been under the impression that any amendment that had the effect of decreasing an amount would be in order. This amendment does not name any larger sum. Therefore I should like to know the basis for the ruling.


Richard Bedford Bennett: Mr. Chairman, the house has really dealt with this matter already- once-and therefore I think the amendment is out of order. The resolution was amended to enable the minister to place this clause in the bill. Special notice was given when the resolution was in committee asking for an amendment to the resolution to enable the minister to add this clause. Therefore the matter has been dealt with.


William Irvine: If it has been settled, then the addition is out of order because it has already been considered by the house.


Richard Bedford Bennett: No, dealt with.


Finlay MacDonald: The rule is:
No increase may be considered either of an existing, or of a new or temporary tax for the service of the year, except on the initiative of a minister acting on behalf of the crown.
The amendment moved by the hon. member is open to that construction. I understand his objection is that the amount is too small. For that reason I rule the amendment is out of order.
Section agreed to on division.
On section 5-Orders and regulations.


Finlay MacDonald: Shall the section carry?

Relief Act, 1938


Peter John Veniot: On division.
Section agreed to on division.
On section 6-Enforcement of orders and regulations.


Finlay MacDonald: Shall the section carry?


Peter John Veniot: On division.
Section agreed to on division.
On section 7-Orders and regulations laid before parliament.


Charles Gavan Power: I merely wish to repeat the suggestion I made last night to the effect that section 7 should be amended in order to cover any agreement, enactments, arrangements or contracts which may be made with the government, to avoid the situation we have now whereby orders in council dealing with certain matters are brought before us almost a , year after the actual arrangement or agreement has been made. I make the submission with all deference and in good faith, but I am not going to insist upon it.
Section agreed to on division.
On section 8-Report to parliament.


Finlay MacDonald: Shall the section carry?


Peter John Veniot: On division.
Section agreed to on division.
On section 9-Duration of the act.


Mr. MACKENZIE KING:: I should like to propose an amendment to section 9, as follows:
That section 9 be amended by adding the following words thereto: "Provided also that subsection (b) of section 2 shall be inoperative during the time parliament is in session."
Subsection (b) of section 2 reads as follows:
Notwithstanding the provisions of any statute or law the governor in council may:
(b) Take all such measures as in his discretion may be deemed necessary or advisable to maintain, within the competence of parliament, peace, order and good government throughout Canada, and to protect the credit and financial position of the dominion or any province thereof.
I submit, Mr. Chairman, that unless this section is amended in the way I have indicated we will be in the anomalous position that even while parliament may be sitting and may be enacting laws deemed to be necessary by the peoples' representatives the governor in council may overrule and override any law which parliament may pass.
I think if we in this House of Commons, as legislators, are to be asked to commit hara-kiri, we ought to have, at least, one clause which will help to save our faces during the time parliament is in session. The purport of the amendment is to ensure that at least for the time that parliament is actually in session it will be supreme in the matter of any enactment which may be necessary for the purpose of maintaining within the competence of parliament peace, order and good government throughout Canada. I hope the Prime Minister will find it possible to accept the amendment.


Richard Bedford Bennett: Mr. Chairman, the right hon. gentleman was good enough to indicate to me a moment ago what he had in his mind and has just expressed. The only difficulty is that as the amendment is drawn it would limit the power of the governor in council to protect the credit and financial position of the dominion and any of the provinces thereof, which is a matter which might arise during a session of parliament. I am wholly in accord with the suggestion with respect to maintaining within the competence of parliament peace, order and good government throughout Canada, and I shall endeavour to have subsection (b) redrafted in such a way that when the third reading of the bill is taken it will be referred back for the purpose of adding a clause which, I think, will meet the right hon. gentleman's views. These words "and to pro-' tect the credit and financial position of the dominion or any province thereof" have been in the last two bills, and such an amendment would make it impossible to exercise authority under that provision at a particular moment, for instance, when it might be desirable to act because of a condition which might arise between eleven o'clock and three o'clock next afternoon. I therefore suggest that the right hon. gentleman accept my undertaking that we will submit a reconstruction of subsection (b) which, I believe, will meet his views, and which I shall send to him before the bill finally leaves this house.


William Lyon Mackenzie King: It is the clause with respect to peace, order and good government with which I am particularly concerned.


Richard Bedford Bennett: Yes.


William Lyon Mackenzie King: That is quite agreeable.
Section agreed to on division.
Bill reported.
The Budget-Mr. Ralston



VISITING COMMONWEALTH FORCES

[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved the third reading of Bill No. 40, respecting visiting forces of His Majesty, and the exercise of command, discipline and attachments of commonwealth forces when serving together.
Motion agreed to and bill read the third time and passed.


[Stage Direction]
The house resumed from Tuesday, March 21, consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Hon. J. L. RALSTON (Shelburne-Yar-mouth):: Mr. Speaker, as a fellow Nova
Scotian it is to me always a pleasure to listen to my hon. friend the Minister of Finance (Mr. Rhodes). His long parliamentary experience, his knowledge of public affairs and his voice and pleasing presence makes it a matter of gratification to hear him sjpeak on almost any subject. Last year I had the pleasure of congratulating him upon his accession to the honourable post of Minister of Finance of the Dominion of Canada, and I was at least able to congratulate him upon his manner of presentation and the distinction he had received even though I could not go far in congratulating him upon the tenor of the budget speech which he delivered.
My hon. friend, after one year, has had experience which I am sure must lead him to realize that there are onerous as well as honourable duties in connection with the Department of Finance. When listening to him the other day, knowing the outstanding position he occupies among his colleagues, I could not help thinking that if this was the best my hon. friend could do in the way of a budget surely this country is far from well off under the government which at present sits opposite.
In discussing the budget to-day the question which I put to myself and to the house is this: Will this be the budget when we get through with it in this house? I recollect that in years gone by, while my right hon. friend the Prime Minister (Mr. Bennett) was Minister of Finance, budgets were brought in which indicated that the main policy of this government was one of being able to right about face should the exigency require, and I shall be very much surprised if some of the

terms of this budget are not dropped before this session is over. I do not know of any government in Canada since 1867 which has shown the ability to start and stop as readily as this government has. I remember that my right hon. friend the Prime Minister announced in no uncertain terms that we were to have sound money in this country, and he decried the use of the printing press. It was not so many weeks after he made that statement in this house and on the platforms of this country, however, that he put through the neatest little bit of inflation with printing press currency that we know of anywhere, in the issue of $35,000,000 of Dominion notes. How was that money secured? It was secured by treasury bills which the government first gave to the banks in order to secure a loan from the banks to the government; the banks then promptly handed back the government's own treasury bills and got $35,000,000 in Dominion notes for them.
I mention this instance to indicate that one cannot be certain that the assurances one may receive from the treasury benches, even from the right hon. Prime Minister, will verily come to pass. There are other instances I might mention. I remember distinctly that in one budget introduced by my right hon. friend the Prime Minister there was a headliner by way of an amendment to the Income Tax Act, but we all know what happened. It fell by the wayside; it never was put through. There was a tax on cheques under $5 which was abandoned, and certain exemptions under the sales tax which were to be struck out were left in. In introducing that budget my right hon. friend had the opportunity of his life to carry out the idea which he had so strenuously advocated and so forcibly expressed when he was on this side of the house, that is, to conscript portions of the deposits in banks and the insurance companies, but nothing whatever, was' heard of that proposal. Finally, in connection with that budget I remember my right hon. friend singing his swan song as Minister of Finance and expressing the regret he felt that he had been unable to carry out those policies which were so near and dear to his heart. Here is what he said, as it appears at page 3307 of Hansard for July 2, 1931:
I believe my hon. friend from Labelle (Mr. Bourassa) was sincere in his suggestion with regard to taxation, beoause 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

The Budget-Mr. Ralston
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 1 shall ever again submit ways and means to this house. I am not without hope, however, that some Minister of Finance-
I commend this to my hon. friend who now occupies that portfolio.
-reviewing the means by which taxes may be raised will realize the values and benefits accruing from a turnover tax.
Then he went on to say:
Sir, it has not been my privilege to introduce any new forms of taxation to this country at this time.
If he has not introduced new qualities certainly he has introduced them in quanti

ties; there is no doubt about that.
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 be.
And women wept and strong men bowed their heads. Then we had the spectacle just last fall of my right hon. friend rising in his place and intimating, if ever a Prime Minister intimated anything, that there was to be a measure brought down providing for unemployment insurance, that the matter had been considered and was to be placed before the Dominion-provincial conference, and that there were indications that it would go through. That made splendid newspaper publicity, but once more the constitution, my right hon. friend's bulwark, got in the way and as a result unemployment insurance is not to be introduced. Why? Because the provinces do not want it he says.
What I want to know is whether the government will stick to this budget or whether, when one speaks about it, he will be speaking about something which will be discarded before the budget is finally adopted.
There are some things that are sure, however, and of those things I want to speak first. My hon. friend the Minister of Finance has had a good many weeks to consider this budget. It was coming down the first week in March; then, due to events which were taking place south of the line, it was delayed. Naturally I have not had the opportunity which the minister has had to consider the various subjects dealt with in the budget, and therefore of course my treatment of them must be cursory as compared to his- and I mean cursory in the strict grammatical sense of the word rather than what it sounds like. There is one point I should like to mention, however, in dealing 53719-213
with the matter of time; I feel that I should put it on record. I am sorry that the Prime Minister is not in his place. Were it only a personal matter I would not mention it, but I think it has to do with the usual procedure of parliament and with the practice which has been long established in connection with the reply to the budget. The right hon. gentleman the other evening, in replying to my right hon. leader, intimated that a somewhat longer time than usual was being given to the representative of the opposition who had moved the adjournment of this debate-I presume he referred to myself. I have looked up Hansard and I find that when my hon. friend the present Minister of Justice (Mr. Guthrie) was to reply to the budget he had four days. I find that when the present Secretary of State (Mr. Cahan) replied to the budget he had four days. I find that when the right hon. the Prime Minister (Mr. Bennett) replied to the budget, when he was leader of the opposition in 1930, he had five days. I have been given three days. I just put that on record so that my right hon. friend-


Mr. GUTHRIE:: Let me correct my hon.
friend. Four days were forced upon me; I was ready the day following.


James Layton Ralston: I can assure the hon.
gentleman that four days were not forced on me.
As I have said there are some things in this budget which will not be changed and of which one can be sure regardless of what may take place in relation to the proposals contained in the budget. The Minister of Finance comes into this house representing, let us say, the board of directors of Canada Incorporated, and making his report upon the fiscal administration for the year. He is asked immediately, and he asks himself in making his report:	How about what the Prime
Minister calls the equilibrium between revenue and expenditure-has that been maintained? What is his answer? His answer is that unfortunately the equilibrium has not been maintained, but that there is a deficit on ordinary account of $53,000,000. Someone speaks up and says: Is that all? He says: No, that is not all. In addition to that there are special expenditures, less special revenues, of $38,000,000; capital expenditures of $9,000,000; loans and non-active advances of $2,000,000, making a total of $102,000,000 short of the amount of revenue collected. Again he is asked: Is that all? And1 again he says: No, it is not all. In addition we have the Canadian National Railways requiring $53,000,000; in other words, he is $156,000,000 short of having kept within his income.

country to extract from them each year these increasingly large sums of money and make no provision for the retirement of our national obligations. The sum to be set aside is not large. I can only say this, that if we on this side of the house were entrusted with power, we would not hesitate a single moment to make provision for the retirement of the national debt of this country.
Since that was paid, $445,000,000 have been added to the public debt of this country and not only has not one dollar been set aside to take care of that debt but there will be another deficit of $90,000,000 this year even though we balance the ordinary expenditure and raise all the money my hon. friend expects to raise by taxation. That statement that his party would not hesitate for a single moment if they came into power to provide for the retirement of the national debt sounds very much as though it came from the same gentleman who in 1930 undertook to end unemployment.


Cameron Ross McIntosh: And did not.


James Layton Ralston: 
Peter John Veniot: The amount of 81,000,000.


James Layton Ralston: The $1,000,000 item is not paid yet.
They have also entered into a guarantee with regard to the marketing of the 1930 wheat crop. I do not intend to spend much time on that subject this afternoon, but it is being discussed in the public press of the country. While I am prepared to admit that the Prime Minister did not deliberately mean to mislead the house, he certainly left an impression which was different from the facts with regard to the marketing of the 1930 wheat crop and the guarantee

The Budget-Mr. Ralston
that was given. He left on the house the impression that the operations which were being conducted by Mr. McFarland were in connection with the wheat which was being taken over from the farmers. Instead of that, what was done, as I am informed, was this: they took the wheat purchased from the farmer and converted it into "futures" from time to time. This may or may not have been good policy, because it was betting against the future, but it had this in its favour, that the "futures" represented wheat actually purchased from the farmer, and it might be legitimately a matter which the government might, to save carrying charges, turn over and over in the hope that a loss might eventually be saved. But I say it is absolutely wrong for the government to guarantee that marketing operation and permit it not simply to deal in wheat purchased from the farmer but to speculate in futures which have nothing to do with the wheat purchased from the farmer originally, and to do this in order to accomplish two objects: first to bolster up the market, that is, Mr. McFarland or his agency, having attempted to sell find the market low, and adopt the simple expedient of themselves buying "futures" in order to create a demand. That is the way they bolster up the market. Secondly, faced with a situation where there is a drop in the "futures" which they hold, they go into the market, but not simply to handle the same quantity of wheat they had before, but to speculate and to cover their loss by making a bet in July for instance that the price of wheat in October, say, will have gone up by that time, and they buy more wheat in the form of futures. While my right hon. friend (Mr. Bennett) calls it hedging, it is no more hedging than it is for me, if I am in the market holding Montreal Light, Heat and Power and find it going down, to go and buy Consolidated Gas to endeavour to recover my losses. That is not hedging at all. It is just plain, ordinary speculation, or what is more properly called gambling in the wheat market. My hon. friend and the government have backed up an organization which is doing that. They say it is in the interests of the western farmers. I say that they should cut their loss in connection with the respectable transaction of buying the farmer's wheat and should not keep on trading back and forth, in "futures" transactions that have nothing whatever to do with the quantity of wheat that has been purchased from the farmers themselves. My *hon. friend the Minister of Finance last year gave us the IMr. Ralston.]
impression that there was going to be no loss from that operation. Let me read what he said, at page 1759 of Hansard of 1932:
The house will recall the problems which the Canadian Cooperative Wheat Producers, Limited, faced in financing its operations in connection with the 1930 crop. The government, believing that it was in the national interest to protect the credit of the marketing agencies in such a way that the grain might be marketed to the general advantage of growers, had given an undertaking to the seven chartered banks concerned, which then made available the necessary credits. The undertaking was given status by order in council P.C. 2238, dated September 12, 1931. This undertaking-
This was in the budget speech of a year ago:

has served its purpose, and without cost to the treasury. Based upon present market prices the expectation is that, when all accounts are settled, the Canadian Cooperative Wheat Producers, Limited, will be able -to settle all advances without recourse being had to the dominion's guarantee.
Even if that had been so, it is no justification for this government going into wheat speculation with the money of the people of Canada. Let me go further and give the statement of my right hon. friend the Prime Minister last fall, at page 1093 of Hansard. He is speaking of the different people who are in the grain business, and he says that the second class, the speculator, has disappeared, and he gave the impression that the government had taken the speculator's place. He said:
Under these circumstances, Canadian Cooperative Wheat Producers Limited, to which I have referred, became the only available hedging organization left in western Canada, and the government is faced at the moment with the issue as to whether or not, under these circumstances, it would give its support as provided by the Relief Act passed in 1931 and 1932 as well-this being a product of the field and the farm,-by guaranteeing to the banks such sums as might be necessary to enable these operations to be carried on by this organization. But before that was done the government had to consider whether or not the interest of Canada as a whole would be best served by continuing the bonus which we granted last year or by taking the steps I have just indicated for the purpose of protecting the general situation in connection with the marketing of wheat.
That is where my right hon. friend, perhaps unconsciously, misleads people. He says that it is done to protect the general situation. What that means in plain, ordinary language is that they were buying wheat in addition to what was purchased from the farmers in order to support the market, in the hope that some day the price of wheat would go up. It is exactly as the farm loan board did in the United

The Budget-Mr. Ralston
States, with this exception, that this organization in this country goes further and trades in wheat "futures" that do not at all represent what has been taken over physically. The Prime Minister went on:
I hasten to assure the house that on a balance of financial benefits it is clear that in respect of any Obligations which might be incurred-it is not possible that any heavy obligations [DOT] will be incurred unless something very unforeseen happens-the amount involved *will be less than would be involved by the payment of the bonus requested. Weighing the situation as a whole, the probabilities pro and con, the effect upon the dominion, the business which would be secured and the chaos which would result from the absolute failure to sell wheat except as a distress commodity, the steps which I have indicated were taken.
If I might say so, I do not think any good purpose would be served by going into the details of the operations which we have entrusted to the organizations I have mentioned under the management of Mr. McFarland. However, the closest supervision has been exercised and we believe and we have had no reason to change our minds at the present moment, that the steps taken will be more beneficial to the dominion as a whole and will secure for the country as a whole greater advantages than if we paid the producer the bonus which was paid last year and which we are pressed to continue this year. Except for the mention of the exact financial amount involved, which obviously it is difficult to give, I think I have answered all the questions asked.
Those are the Prime Minister's words. Now what was said in the budget speech of 1933? Last year there was going to be no financial commitment. What does the Minister of Finance say this year? At page 3220 of Hansard he says:
The guarantee of advances to Canadian Cooperative Wheat Producers Limited in connection with the 1930 crop remains in effect, and it was necessary during the past season for the company to increase its liability as a result of stabilizing transactions which it was considered expedient in the public interest to support. To these operations the government gave its guarantee. The steadiness which has developed in the wheat market has undoubtedly vindicated the action then taken-
Note this:
-and the question of ultimate liability will depend entirely upon the future course of wheat prices.
How naive! 'Could it be anything else but that? Of course it will depend on future prices. How much had the government's action to do with stabilizing the wheat situation? On account of the situation in the United States recently there was a flurry in wheat in Winnipeg and the market went up. I do not think the government's action had a great deal to do with that. It may be that my right hon. friend may pull out of this transaction with a whole skin, and certainly
everybody hopes he will, but it will not be because of his business administration but simply because he happened to be lucky, just the same as I might be if, having purchased a ticket on the Calcutta sweepstake, I drew the grand prize. That was done under the Unemployment Relief Act. I need not say what everyone realizes-uny hon. friend the Minister of Trade and Commerce (Mr. Stevens) himself pointed it out in a speech not long ago, how important the wheat market is to this country that .our farmers should sell their wheat, but our farmers themselves I am sure do not want this government to go into gambling in wheat to support the market, and the government should take its loss and get out and be rid of that transaction.
With regard to relief moneys generally, there has been a good deal said in the debates which have just closed, and in previous years, with regard to the expenditures. I believe it will be found that there has been absolutely no considered, deliberate policy with regard to relief. When our descendants, supposing they enter a time of stress and strain, which God forbid, such as we have had, look back and find out how we handled unemployment, I do not believe they will be able to find very much light in the darkness in order to guide them in evolving a policy in that respect. They will find that we spent money, and spent it lavishly, but they will not find any enlistment whatever of national effort; they will not find any national organization. They will find a blanket vote, money paid out for this, that and the other, and guarantees on all sides. But they will find no deliberate, ordered policy in connection with this great question of unemployment.
I say, Mr. Speaker, that they will find that what happened was this: We started out with a vote of $20,000,000, which was supposed to be in part for public works and part for direct relief. They will find that we got into public works and that we forced on the provinces and the municipalities in this dominion an expenditure of $100,000,000, which is a noose around their necks to-day. Now we have come back again to direct relief because, forsooth, of constitutional difficulties. That is going to be the record which is going to be read by our descendants when the time comes for them to look over what we have done and the policy that we have adopted in connection with relief.
With regard to other expenditures, on the Canadian National Railways, my right hon. friend the Prime Minister, speaking at Hamilton a short time ago-I have not the speech
The Budget-Mr. Ralston

here but I read it Last night-indicated in no uncertain terms that it was the Liberal party which 'built and guaranteed two transcontinental railways and set them out to compete with one another. My right hon. friend, if he knows anything at all, knows the history of those roads. He knows that the Grand Trunk Pacific and the National Transcontinental were voted for in 1904, and that the building was commenced at that time. He knows that at that time there was a policy on the part of the Conservative party for a second transcontinental railroad, except that it was to take the form of completing the existing railroad to the coast. He knows, further than that, that in 1911 the Liberal government refused a grant to extend the Canadian Northern to the Pacific coast and in 1912 the first vote was made by the government he supported, a vote of $6,000,000 to extend the Canadian Northern railway through the Yellowhead pass to Vancouver; and he knows that not until 1914 was the large grant made of $45,000,000 in order to make the Canadian Northern a transcontinental railway with a terminus on the Pacific coast as stated by Sir Robert Borden at that time. That is the early history of the railroads.
He knows that in 1917 there was an opportunity to take over those roads as bankrupt concerns. He knows that instead of that $10,800,000 was paid for the stock of the Canadian Northern railroad, that we took the railroad over, and that we have its bonds to-day. He knows the Grand Trunk was taken over also by the Meighen government, and at that time, after arbitration, although nothing was paid for the stock the bonds were assumed, because we took the road. There was no attempt made to write down the bonds, but operation was taken over and, as the Duff report states, in 1917, government ownership of the railroads was adopted.
Yet at Hamilton my right hon. friend stated it was the Liberal party which built two transcontinental railroads and set them to compete with one another.
Mr. BENNETT Hear, hear.


James Layton Ralston: He says, "hear, hear."
I have given him the facts.


Ernest Lapointe: Will you repeat it?


Richard Bedford Bennett: I certainly will, because
I happen to know the facts.


Cameron Ross McIntosh: He is still in the woods.


James Layton Ralston: mendous task of cutting down these expenditures by millions of dollars. I say that the very fact that this is mentioned indicates how little real attention has been paid to this vital matter. The Gibb report is mentioned also as perhaps giving some promise of a reduction in expenses. The Minister of Finance had hardly said his last word before the right hon. Prime Minister rose in his place and indicated that because of representations that had been received from various quarters it was doubtful whether the legislation based on the Gibb report would be brought down. So I say it is very difficult for one to tell exactly whether this will be the budget we will finally consider.
Now let me mention one or two other matters that are in the minds of the people, though hon. gentlemen opposite may say they are minor matters. I imagine there were very few people in this country, when they saw the contents of this budget, with the taxes which are being imposed and the lack of any real reduction in expenditure, who did not immediately think of the radio commission, for which we are being asked to vote 81,000,000 at a time like this. I think the very first day the estimates of the Minister of Trade and Commerce (Mr. Stevens) were brought down I took occasion to say a word with regard to a salary which was being increased in his department. That salary is being paid to a man who I understand is a returned soldier and who, I understand, is in every way well equipped for his job. It did seem to me, however, that it indicated an attitude of mind on the part of the government which they should not have at this time; it seemed to me they had not gone over the estimates and pruned them as they should have. I remember a research item of $21,000, I think in the estimates of the Minister of Trade and Commerce again, which could have been cut out just as well as not. It was there as usual; we were asked to vote it as usual. Apparently no real consideration has been given by the government to the question of really pruning these estimates and cutting the coat to fit the cloth. These are matters the people of this country have in mind at this time; these are matters which are going to cause more of an uproar than there already has been if some real attempt is not made by the government to reduce expenditure.
On the other side of the picture the income tax is to be increased, not in the way that was proposed by the right hon. Prime Minister two years ago but at least to some extent. Here again the small taxpayer is being brought in; exemptions are being lowered and there is to be an increase of 650 per cent imposed
[Mr. Ralston. 1
on the man earning a salary of $2,500, with only a 14 per cent increase imposed on the man with an income of $50,000. Those are matters about which the people are wondering. I do not think any more illuminating document could have been published-and I say this to the Minister of National Revenue (Mr. Ryckman), who is not in his seat-than the chart which recently appeared in the National Revenue Review, which shows the collections Of income tax from certain classes of the community, and in certain income brackets. I say that publications such as this give information a great deal more quickly than long rows of figures, and I want to congratulate the minister on having published this statement.
I have no doubt the income tax will bring in a large amount of money; at least I hope it will, but at the same time I believe in his own heart the Minister of Finance is convinced that he is making a mistake in going to perhaps ten thousand, fifteen thousand or twenty thousand people and getting small contributions of $2, $5 or $10. I believe the cost of collection will almost equal the amount of money he collects. Perhaps this is being done with the idea of equality of sacrifice, but if all this time my right hon. friend has left out this class I do not think that when he brings them in he should at the same time increase the tax on small incomes so greatly while the tax on an income of $50,000 is increased by only 14 per cent. I shall not deal at greater length with matters of income tax generally, because they can be discussed later on when the bill is brought down.
Let us consider for a moment the other taxes. There is to be a tax of two cents per pound on sugar, and I understand that molasses is taken from the exempted list under the sales tax. We are told that $20,000,000 is expected to be raised from the tax on sugar. That amounts to $2 per head for every man, woman and child in this dominion and I submit, Mr. Speaker, that this tax, bearing as it does upon a necessity of life that always has been regarded as an essential, coupled with the removal of molasses from the list of exempted goods under the sales tax, imposes a very great hardship on the poorer people of this dominion. So far as the sugar industry is concerned I have no fault to find with my hon. friend. That industry is well protected; in fact it is too well protected, but this tax is not going to be paid by the sugar industry. This tax of two cents a pound will be paid by the individual householder who, with sugar at the present price, will have to pay a 50 per cent tax on all the sugar going into his house.
The removal of other foodstuffs from exemption under the sale tax will bring about the

The Budget-Mr. Ralston
same result. I have not gone over the list of exemptions carefully enough to know how many commodities are included, but I do know that generally speaking it is foodstuffs that are affected.
Then we come to the nuisance taxes, and first there is the tax on cheques under $5. Two years ago the Prime Minister abandoned that idea, but now he takes it up again. With regard to the tax on bonds and on payments made out of Canada I have no doubt that my right hon. friend has received representations long before this from companies all over this dominion who have had their corporation tax increased by one and a half per cent and who now will be forced in addition to absorb this tax on interest payable in the United States. Why do I say that? Because of the fact that the trust deeds, in almost every case, under which bonds are issued provide that the company must absorb any tax that may be levied except Canadian income tax, and as a result instead of taxing the foreigner receiving this bond interest my hon. friend is taxing the Canadian company. As I say, I have no doubt that representations have been received by my hon. friend the Minister of Finance before this, and if he has received telegrams similar to those I have received I have no doubt he will have to give serious consideration to this further taxation of Canadian companies.
With regard to the taxation of foreign investments in this country, the Prime Minister knows the argument that was advanced two years ago as to foreign capital coming to Canada. He knows whether or not that argument is effective; he knows far better than I do. Two years ago the Prime Minister abandoned this tax after it was proposed. Whether he will do the same thing now remains to be seen. I do point out to him, however, that this is a debtor and not a creditor country, that we are a borrowing and not a lending nation, and any tax on capital coming here to help our industrial development must be considered very carefully. With regard t-o taxation generally, however, I have no doubt my right hon. friend is saying that the opposition have nothing to do with taxation anyway. This is what he said in 1928:
There is not much to he gained by an opposition suggesting anything with respert to the income tax nor indeed, for that matter, respecting taxation generally. Taxes must be imposed by the government and under our institutions proposals in this regard must originate with the administration of the day. The government only can take the necessary action in this respect.
My right hon. friend has made the proposals, but I miss my guess very much if those proposals are not considerably changed before this bill gets out of the committee of ways and means.
My hon. friend, as one headliner in the budget, indicates that he is going to establish what he calls a stabilization fund. Stabilization is a better word than bonus-agricultural stabilization. It means, according to the hon. gentleman, that there is to be paid to the exporter of certain products which are named in the budget the difference between the current rate of exchange and $4.60 in connection with goods shipped to Great Britain.
Now, no one can tell how it is going to work out until he sees the result next year.
I said the same thing about the wheat bonus and I repeat it now in regard to this matter. In principle I am opposed to this sort of legislation, because I do not believe it is sound but if bonuses are going they ought to extend to every natural product and, as someone suggests, factory products as well.
I cannot see how you can pick out some part of the community shipping to Great Britain and say to that class that they will have a certain amount made up on what they lose in shipping to Great Britain, while other exporters are given no such consideration. Take for instance the fresh fish producers. According to this they will get a bonus, but the preserved fish man does not. Why, I cannot understand. Again, the canned fish man receives consideration, but the man whose product is pickled fish does not. I have no idea what the reason for this discrimination can be. Take lumber, coal, wheat -they are left out altogether; and the same applies to butter, apples and all these other products. W'hat the reason is, we do not know. One could name numbers of natural products that fall into the same category. After all, Mr. Speaker, I ask you: Is there any guarantee, except what the Prime Minister said last evening to the effect that the government were considering the matter of machinery, that the man who actually produces the goods will get the benefit of this bonus? The exporter is the one who will get it, according to the budget speech. Is this going to be the practical working out of it- that perhaps the people of this country are to pay S2 per head of a tax on sugar in order to subsidize the British consumer? Is that going to be the practical outcome? The benefit may never accrue at all to our producer, because this is a buyer's market. The buyer may say to him, "Yes, but you are getting so much from the government and you must take that off the price." The result is that the British consumer will get his goods that much lower. How is the Prime Minister going to prevent it? I hope he has in mind some means whereby he can prevent this
The Budget-Mr. Ralston

occurring, but I would point out that very often schemes of this kind miscarry. My right hon. friend has to watch two individuals in connection with such a scheme-not only the British consumer but the exporter as well.
Let me make a few observations with regard to fish. I say to my hon. friend that he will not get very far in assisting the fishermen of the east in shipping fresh fish to England. I believe there was about $300,000 worth of fresh fish shipped last year to England whereas the shipments to the United States amounted to something like $6,000,000. If this provision is intended to assist the producer of fish, why does he not get the bonus for the fish he ships to the United States as well as to Great Britain? What is the difference? He ships $300,000 worth to one market and $6,000,000 to the other. I am afraid this will not do our Atlantic coast fishermen any good. I shall be very glad to see them get it, and I advocated it when the wheat bonus was brought up. But the fact is that you will not find any large shipment of fresh fish to Great Britain.
I say to the Minister of Finance, who was formerly Minister of Fisheries, that if he wishes to help the shore fishermen of the maritime provinces all he has to do is to refuse licences to trawlers when they expire on March 31. That would be more helpful to that class of the community than this stabilization fund can possibly prove. I say that to the minister in all seriousness. I mentioned this last fall, and now is the time to aot. The provision of the order in council is to the effect that if the shore fishermen can supply the market then the trawler licences are not to be granted, and I say that the time has come when trawler licences should be refused, inasmuch as the shore . fishermen are in a position to supply more than the market which they have. Moreover, the price is only about three-quarters of a cent per pound and at that figure they can hardly make a living wage; they must have the maximum of production to make even a fair portion of a day's wage. Last fall I put on record the receipts of the fishermen from day to day, and the situation revealed then has not shown any improvement. I say to my hon. friend therefore that he would do far more for the shore fishermen by refusing licences to trawlers off the Nova Scotia coast than he can possibly do in connection with the stabilization fund.
_ This idea of trying to assist an industry by simply having one part of the community 
contribute to another seption is something I do not agree with. We are not getting anywhere by pursuing that policy; we are simply lifting ourselves by our bootstraps. That, I submit, is not the sort of policy that will revive trade and produce tonnage for our railways and revenues through the Customs department. It cannot be done that way. We must find some means whereby exports will be encouraged and revenues will be obtained, not through increased prices to be charged the people of Canada but from the people who are buying in the markets of the world.


Robert James Manion: Does my hon. friend apply that to coal? Does he take that attitude with regard to coal?


James Layton Ralston: I have taken the same attitude straight along. My hon. friend knows that we do not export coal.


Robert James Manion: But we give it a bonus.


James Layton Ralston: I beg my hon. friend's pardon; we pay subventions.


Robert James Manion: It is the same thing.


James Layton Ralston: ho, it does not amount to the same thing.


Robert James Manion: I thought my hon. friend would change his position.


James Layton Ralston: In connection with the carriage of coal to upper Canada we pay subventions with respect to freight rates. I advocated it and it was put into force long before my hon. friend came into power.


Mr. STEVENS:: It is still lifting yourself by your bootstraps.


James Layton Ralston: We do it because it is a Canadian industry which we want to preserve and we are not thereby assisting foreign consumers. My hon. friend knows what the difference is. He will realize perfectly well that in this case the man who gets the ultimate benefit from the action which the government proposes is the British consumer.


Henry Herbert Stevens: I don't know anything of the kind.


Ernest Lapointe: Suppose we have a little order.


Henry Herbert Stevens: Yes, on both sides.


Ernest Lapointe: We did not interrupt the Minister of Finance.


Henry Herbert Stevens: We are not interrupting.

The Budget-Mr. Ralston


James Layton Ralston: I come now to what might be a helpful suggestion, to mj' hon. friend in regard to the way in which he might balance his budget after he has reduced his expenditures and has done what he can in the way of increased taxation. He must stimulate and encourage trade in this country and the sale of the goods we have to sell. I would point out to him that the revenue policy of the Liberal party has had as its keystone receipts from customs revenues as a revenue tariff. Let me give him the proportion of revenue which has been received from customs levies since 1926. These are the figures:
Y ear-
Percentage
1926..
1927..
1928..
1929..
1930.. 1931. .
1932..
1933..
43-7
49
46-7
28
1929
1930 1031
1933
What is the reason for this decline? It is due to the fact that my hon. friend put on higher tariffs. An average duty of twenty-four per cent has increased to twenty-nine per cent; and twenty-nine per cent when figured on the pound at current rates of exchange instead of on $4.86} has become practically thirty-five per cent of a duty on dutiable goods coming into the country. This amounts in large degree to an embargo, so that my hon. friend is cut off from the revenue he expected.
What has happened? The Prime Minister two years ago guessed as to the amount of revenue he would receive from customs tariffs, and he guessed $22,000,000 wrong; he got $22,000,000 less than he expected. The Minister of Finance last year guessed $100,000,000 and he got $80,000,000. He was $20,000,000 out. Hon. gentlemen opposite do not realize that high customs tariffs simply mean the cutting off of revenue.
I should like next to place on record the trade figures since 1928. They are:
Imports

1.265.000.	000
1.248.000.	000
906.000.	000
578.000.	000
442.000.	000
Exports

1.388.000.	000
1.144.000.	000
817.000.	000
587.000.	000
494.000.	000
Total

2.654.000.	000
2.393.000.	000
1.723.000.	000
1.166.000.	000 937,000,000
But my hon. friend says that there is a favourable balance of trade. There was a small favourable balance of trade it is true but it was due-not to our selling more but- to our having to buy less. Imports totalled $442,000,060, only $42 per capita, the lowest since 1905. Our population is being starved for goods, which are necessary and desirable, in order that we may worship this god, the balance of trade. $442,000000 in imports as against $494,000,000 in exports! Our total trade is down nearly fifty per cent from 1931 and over sixty per cent from 1928. That is the trade record. What caused it? Duties were imposed in the special session and more in 1931. In his budget speech the Minister of Finance rather gave the impression that we had put on our tariffs after England had gone off the gold standard. Our tariffs were put on in May, 1931 while Britain did not go off gold, until September 1931. -Canada was one of those who started the parade, not one of those who came in after England had gone off the gold standard. Down went, imports and down went customs revenues, with the result that our customs revenue in 1931 was only $145,000,060 and for the eleven months of 1933, only $69,000,000. That shows the vicious circle and why my hon. friend is unable to get bis revenue. In the first place, we shut out the goods; in the second place
we cut off revenue, and in the third place, we shut in our own goods and then tax the man who can not sell his goods in order to make up what has been lost in customs duties. I think the Prime Minister gave the neatest possible example of that when he was discussing the imperial conference arrangements. This is something about which we happen to know down east. He is quoted on page 121 of Hansard as follows:
Under normal conditions Canada exports annually about 1,800 million board feet of lumber valued at $50,000,000, of which 1.445 million feet, valued at $39,000,000 has been going to the United States and 186 million feet valued at $6,474,000 to the United Kingdom. The recent United States import tax of $3 per 1,000 board feet has practically closed that market to Canada. New markets are essential. This applies to lower and common grades which comprise from 60 per cent to 70 per cent of the lumber sawn.
What caused the United States to put on that $3 per thousand board feet tax? The Bennett tariff of 1931. There was a retaliatory measure of $3 per thousand feet and then another $1 per thousand feet was added. My hon. friend had to bring a conference over from Great Britain in order to see if we could not sell them the 1,445 million feet which we lost in the United States because of the tariffs put on by my hon. friends in 1931. That is *how high tariffs work out, that is the result
The Budget-Mr. Ralston

of the red-blooded policy of my hon. friend the Minister of Railways (Mr. Manion).
If my right hon. friend has learned anything, I think he has learned from the difficulties which have presented themselves in connection with markets. We are trying to find revenue and at the same time endeavouring to find markets. Here is what my right bon. friend predicted when he spoke in Vancouver :
If Mr. Mackenzie King thinks I will not so build up our agricultural and industrial life that its strength will drive our products into the markets of the world, then he is wrong. For that I will do. If he thinks I will not establish new markets for these products, strive with all my heart to retain them, drive our products with all my power into new markets, into old markets, into reluctant markets, he is wrong. For this I will do.
I am sure that when the Minister of Finance counts up the amount of duties received from the customs tariffs he will wish that the Prime Minister had used some other kind of dynamite than that which he has used for the purpose of forcing Canadian goods into these markets. He is now seeking frantically to make up the revenues which he has lost from customs duties by imposing a duty on sugar and by depriving pensioners of their pension. He is trying to make up what legitimate trade would produce. After all, the remedies are simple- cut your expenditures and increase your trade. This matter of a trade policy which will increase foreign trade, while I know it is not as new as some of the policies being advocated these days, is I think vital. Speaking in Winnipeg, in 1930 the Prime Minister told us where he got his trade policy. He said:
The. United States learned a long time ago that to become a great nation it must first look to itself. It therefore began to build up . its home market by keeping out of it the goods of other' nations. There was a time if when foreign countries had had their way, they could have smashed its youthful industries, dried up its revenue, wrecked its transportation systems and left it a country of idle workmen, of starving agriculturists, of futile manufacturers. Look at it now, marching to the slogan of America first.
If my right hon. friend willl read the evidence of Mr. Frank H. Simon given before the United States Senate committee only a few weeks ago, he will find that that slogan of America first is regairded as a rather dangerous one. I suppose my right hon. friend got the idea of Canada first from the idea of America marching to the slogan of America first. I think it will be found that the buy British policy has also been found to be one of doubtful utility. People are beginning to realize the truth of what appeared in a Can-

adian publication just the other day. This article reads:
A realization that no nation can live unto itself alone and that a spirit of international economic cooperation will usher in a return to more normal business conditions is steadily gaining ground.
Signed "Arthur Meighen". That article appeared in the Financial Post of November 5.
As my hon. friends apparently are not convinced, as we shall endeavour to keep on preaching the gospel to them, I may perhaps have to traverse some old ground. I want to point out that this slogan of Canada first, this raising of tariffs, has not attained that end to which my right hon. friend referred in Winnipeg as being the great objective of the American people and that which he desired to attain by his tariff policy. Let us see if it has developed production in our industries to supply the home market which my right hon. friend set such store by. I give just a very few figures:
Volume of Industrial Production Year-	Index figure
1928	 120.1
1930	
When my right hon. friend was making his promises.

 106
September, 1932	 71.9
Let us take manufacturing production, and these are industries which are being protected by the policy of my hon. friends. Surely they ought to be benefited:
Year- -	Index figure
1928	 117.4
1930	 100.5
September, 1932	 74.3
My hon. friend the Minister of Trade and Commerce had a lot to say about pig iron in, I think, 1927 or 1928. The figures are as follows:
Pig Iron
Year-	Index figure
1928..	'	 151.9
1930	 104.1
September,	1932	 9.9
Steel Ingots and Castings
1928	 137.4
1930	 113.4
October, 1932	 27.1
These are some of the figures. What has happened with regard to prices? The prices of manufactured goods have been maintained beyond all proportion to those of farm products. The figures are as follows:
^	Farm Products
iear-*	Index figure
January, 1930	 79.8
J anuary, 1933	 43.6
A reduction of 36-2 per cent.

The Budget-Mr. Ralston
Manufactured Products
January, 1930	 85.8
J anuary, 1933	 67.5
A reduction of only 18-3 per cent.
What about employment? The figures are as follows:
Employment in all Industries Year

	Index figure
July, 1930	 118.9
July, 1931	 103.8
July, 1932	 87.7
And taking the comparable months:
February, 1930	 111.6
February, 1931	 100.7
February, 1932	 89.7
February, 1933	 76.8
In manufacturing where this tariff should have taken hold, where the home market should have afforded employment for all our men, where those Canadian workmen about whom my hon. friends talk so much should have found work, what was the situation?
Employment in Manufacturing
Year-
July, 1930 July, 1931 July, 1932
Index figure 111.3 97.2 85.4
And for the comparable months:
February, 1930	 110.2
February, 1931	 96.1
February, 1932	 85.9
February, 1933	 75.0
Do we need any figures to-day to prove that there is unemployment in Canada; that unemployment has not been ended? The figure of 800,000' unemployed has been mentioned, and it has been stated that $123,000,000 has been spent on relief. The Prime Minister, when he came to the house in 1930, said that as regards curing unemployment, if the measures which he submitted were productive of the good which he indicated they hoped for, the number, which was 117,000, would steadily decrease and the maximum anticipated number of 177,000 would not be reached. Is there any doubt that the policy of high tariffs and economic isolation has failed?
This brings me to what I submit is the most serious defect in the whole budget. That is, that while it does not reduce expenditures, and while it imposes more taxation, it provides for nothing whatever in connection with the fundamental improvement of conditions in this country. Let me read a passage from the first part of the budget speech of the Minister of Finance. I feel that I ought to take the time of the house to put it on Hansard, because it is indicative of the attitude of my hon. friends opposite. He said:
There are those who decry the possibility of an international solution and who insist that we should seek remedies at home for present
conditions. I do not wish to minimize the difficulties and delays which are involved in any program based on international agreement, or to overlook the plain duty which rests upon every nation to keep its own house in order and to strive to the utmost by domestic action to accelerate the processes of business recovery. However, one cannot fail to observe that the present crisis is international, both in its causes and its effects, and that the remedy must be sought in international understanding and cooperation. Slowly, but nevertheless surely, the world is approaching full realization of the fact that the day of national selfsufficiency is past, that an international disease car, only be cured by an international remedy.
Therefore, I look forward hopefully to the World Economic and Monetary conference which is expected to meet in London in the near future, and to -which we propose to give our whole-hearted support. Members of this house have already had an opportunity of studying the agenda of that conference prepared by an able committee of experts. I am hopeful that on the basis of this agenda-
Note this:
-a program can be worked out for the relaxation of exchange controls and other excessive restrictions on international trade, for the stabilization of currencies and for the stimulation of a rise in the world level of wholesale prices. The success of this conference assumes a prior or simultaneous settlement of the war debt question and some appeasement of political fears and rivalries as a result of progress in disarmament discussions or otherwise. If these prerequisite conditions can be achieved, it Should be possible to reach agreement upon a program which would be effective in restoring world confidence and initiating an early recovery of business activity. The world has this solution within its grasp and in my opinion there is no other-short of prolonged and painful liquidation, if this indeed can be called a solution. Events are moving rapidly, driven by the urge of economic necessity. On this fact may rest the basis for a greater degree of optimism than has obtained in many months.
No self-reliance! No leadership! No courage! No suggestion of anything that we in this country may do, but we are leaning altogether on the world economic conference if, as or when there is one, and we are not even yet sure that there is to be one! If we can get a relaxation of exchange controls; if excessive restrictions on trade can be removed: if there can be a stabilization of currencies; if the world level of prices rises; then if prior to or simultaneous with this, there is a world debt settlement and if there is an appeasement of political fears and rivalries, we are on the road to economic recovery; otherwise liquidation.
I am reminded of the classic phrase of the Prime Minister because it has become a classic now: " Mr. King promises you conferences; I promise you work. Which plan do you like best?"
This is what Mr. Beaudry Leman, general manager of La Banque Rationale, has to say
337S
The Budget-Mr. Ralston

of the world economic conference, rather indicating that it is doubtful whether we are going to have definite action from that body. He said:
It would be difficult to conceive how any government would surrender to a body of representatives chosen from seventy nations the power to control its economic policies. One may hope, however, that the delegates to the conference may agree on some broad policy which would promote the economic recovery. The nations of the world depend upon one another to such an extent that agreements that are international in scope are necessary, but-
And I impress this on the Minister of Finance-*
-this necessity in no way absolves each country from establishing sound policies within its own boundaries.
That is where, it seems to me, the Minister of Finance completely falls down, if I may use the expression, in connection with this budget.
Reciprocity with the United States has been mentioned, and I refer to it now. The Prime Minister, in the debate on the resolution which was moved by the hon. member for Antigonish-Guysborough (Mr. Duff), had something to say about the matter. I think the bouse and the country have reason to congratulate the hon. member for Antigonish-Guysborough on having brought this resolution before the House of Commons. I want to point out that in connection with that as with other matters, this government is simply supine, listless, lethargic, and proposes to await the turn of events. Let me point out how my right hon. friend received this proposal. One would have thought it would provide some means for an extension of our trade. I have already mentioned with regard to the fishing industry the millions of dollars' worth of exports that we send to the United States, and that is our natural market for these products. In 1911 my right hon. friend the Prime Minister said:
One of the strongest reasons I had for opposing the reciprocity agreement was-
Not that it was an indefinite agreement, not that it could be changed at any time, but- -that it threw into the melting pot for solution a question that involved a problem of patriotism.
That is what he said in 1911, at page 23 of Hansard. In this house the other night he said:
On more than one occasion I have in this house indicated clearly the reasons I for one was opposed to that measure. First, it was an agreement incorporated into the statutes of both countries for that year, and it mentioned a limited number of items. But it was so

framed that the change by this dominion of its tariff with respect to any one of those items terminated the agreement; secondly, the agreement was for no period of time, or for no definite length of years.
A different reason from that which he gave in 1911, when reciprocity involved a question of patriotism,. But he said the other night that he earnestly desired some arrangement with the United States. What does he and the Minister of Finance propose to do about it? This a time when action is required. This is what my right hon. friend said the other night.
In my judgment all we can do is follow the course that has been followed by successive governments and indicate clearly our willingness to negotiate on terms that are fair and reasonable, to quote the words that have been used by both Liberal and Conservative prime ministers and ministers of finance. We can only be ready and willing to avail ourselves of any proposals that are fair and reasonable and are not of such a character as will involve injury to this country if they are speedily terminated.


An hon. MEMBER:: No blasting.


James Layton Ralston: The Budget-Mr. Ralston

time he goes to council and discusses the powers which the government has for fixing valuations for duty purposes. He said:
Furthermore, the tariff should be stable in its character, not subject to constant change and variation. Nothing is so harassing to a business or a financial man as to be constantly faced with the apprehension that overnight the tariff may be changed and large quantities of goods on hand or on order, seriously affected by such tariff changes. Nowadays a firm dare not issue a catalogue, for it does not know from hour to hour what tariff changes may be made. Tariff stability, voiced so eloquently by the Minister of Finance (Mr. Fielding)-whom we miss so much from this debate-is what we require to-day.
If ever there was a government that had tariff instability, and if ever there was a government about which tariff instability is mbre firmly written on the records of the Department of National Revenue, the records of the importers of this country and the records of the consumers, I should like to know it. There has been absolute instability. There has been no chance in the world for people to know from day to day or even from hour to hour what the duty was going to be upon the goods with which they were dealing.
Mr. Speaker, I have taken longer than I expected to take, I have dealt with figures, a good many of them; I have dealt in some detail with a great number of the factors which affect our situation, and I want now to go back to plain, everyday fundamentals. Conditions of business in Canada, Incorporated, as I called it a few moments ago, are disturbing. By the end of the next fiscal year we will have added, since 1930, considerably over one 'half a billion dollars to the ' mortgage on the farm". We are not living within our income and, in fact are not trying to. We are deliberately planning to have at the end of the coming fiscal year- a deficit of nearly $100,000,000. We are pretending to reduce expenditures, but the way we are going about it is like chipping at the side of a mountain with a hand pick. The worst of all is that at the root of it our trade in basic commodities has dwindled to pitiful proportions, and yet we have the goods the world needs and must have. The government in one breath admits we ought to do something to help ourselves, but in the next it falls back supinely on the prospect of a world economic conference and, in the meantime, I submit with all due deference it is in a state of blue funk. The Prime Minister in a speech recently, referring to representations which had been made regarding a change of policy, asked "dare we do it?"

The other night in this house he made the declaration that the Canadian National Railways could be considered as being in receivership. Now we have the Minister of Finance suggesting that unless the world economic conference does something there will be nothing but liquidation. These are new words in respect of Canadian affairs, but their novelty does not make them any more welcome. The budget all the way through reflects this static, hopeless state of mind. It says "lop off a little expenditure, tax a great deal and wait until prosperity reaches us " instead of taking resolute measures to reach prosperity. I wish to protest against this static, fear-stricken attitude, but I bring the government this hope, not for itself-after the administration of the last two years it could hardly expect that-'but I do bring to this government from the people of Canada hope for the Dominion of Canada.
When the Prime Minister and the Minister of Finance talk about receivership and liquidation I remind him that the people of Great Britain dared to risk the financial leadership of the world by going off the gold standard. I remind him that the people of the United States only a few weeks ago, despite the inconvenience and humiliation in connection therewith, turned the key in the door of every bank from Massachusetts to California and from the forty-ninth parallel to the gulf of Mexico; because they believed it was necessary so to do, they did it. These people dared to do these things because of the greater good which they hoped would come. I say to the Prime Minister-


Richard Bedford Bennett: Do you suggest we should do that?


James Layton Ralston: The people of Canada are impatient and irritated and determined, and they will dare do what this government dare not do. If the government will not lead the people, the people will lead the government. I tell the government that the people of Canada are willing to endure any fair measure, whatever it may be. which would be necessary to put our national house in order, and set the wheels of industry moving in the factory, the forest, the farm, the mine, and on the sea. But they are not willing to keep on as they have for the last two and a half years, holding the trenches with the fire of the enemy becoming more gruelling and devastating as the months go by and allowing the government to confine activities to putting barbed wire in the shape of trade restrictions in front of their own advance.

Railway Act-Rate Structure
Canada must attack-not simply stay in the trenches-it has to attack, not markets but depression. If the government does not initiate the attack soon, they need not be surprised if there is a change in command. The people of Canada will stand casualties but it is not like the people of Canada to stand inaction, and there is plenty of that to-day. What the country wants is the same courage on the part of the government as the government asks of the people. This country calls to the government to come out of the dugout of fear and inaction and resignation and give the leadership which the people deserve. The government is asking the people to make further ' sacrifices and to carry additional burdens. The people expect the government to make sacrifices, and what our government needs to sacrifice at this time is a good deal of its pride and a good deal of that selfassurance which has made it so intolerant of any other policies than those propounded by itself. I refer to its attitude which up to now at least refuses even to examine seriously the currency question, the exchange question and the monetary policy, and which has treated the banking system of this country, good as it is, as something sacrosanct and practically incapable of improvement. They have gone around slamming doors in the faces of good customers and have then found that the so-called home market was not a place where we could dispose of our wheat and other grains, lumber, fish, furs and copper which are on the shelves of Canada's shop waiting to be disposed of. But in order to give some appearance of trade they are undertaking to handle the wheat crop and are now gambling to try to cover the losses.
These are policies which have to be changed, and changed quickly. Times change. New conditions arise which have to be met with new remedies. Some of these involve questions which have not seriously been discussed in Canada before, but the trade policy I have suggested is the policy which has given to Canada the happiest and most prosperous days she has ever known. It is because this budget lacks any practical attempt to grapple effectively with the problems that are at the root of our difficulties, and because it commits this country to another year of temporizing futility, that I beg to move the following amendment, seconded by the hon. member for Vancouver Centre (Mr. Mackenzie):
That all the words after "that" be struck out, and the following substituted therefor: "The proposals of the government as set forth in the budget presented to this house by the Minister of Finance make no provision for the fundamental changes in existing policies regard-53719-2141
ing trade, credit and employment which are required to cope with the present economic situation. They imply a continuance of fiscal and other policies which have not only signally failed to afford any solution of our national problems, but have been proven to have the effect of diminishing trade, of decreasing revenues, of increasing unemployment, and without any corresponding reduction in expenditures, of increasing taxation, and debt, thereby aggravating the existing depression and distress.
The increases in taxation proposed in the budget resolutions will fall most heavily upon those least able to bear the burden thereof, and, combined with other unjust exactions, will serve to intensify the distress already experienced in many homes throughout the dominion.
The absence, at this time, of any provision in the budget indicative of Canada's desire to negotiate trade agreements with countries willing to trade with Canada on a reciprocal basis is further evidence of the lack of a definite constructive policy in meeting the needs of the present situation.
For these and other reasons, this house is of the opinion that the present government no longer possesses the confidence of the country."
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



RAILWAY ACT AMENDMENT

[Stage Direction]
Mr. THOMAS REID (New Westminster) moved the second reading of Bill No. SO, to amend the Railway Act (rate structure).
Some hon. MEMBERS:: Explain.


Thomas Reid: This bill contains two sections, an amendment to section 320 and a new subsection. I may say that this is practically the same bill I introduced last year, though that bill had three sections, the third dealing with domestic freight rates to British Columbia. This year I introduced two bills in an endeavour to clarify the two appeals I am making; I wished also to remove any objections that might be raised, some of which were raised last year by different hon. members including, I think the Minister of Railways (Mr. Manion):
In passing, Mr. Speaker, let me say that I regret that the Minister of Railways saw fit to go out of his way to read me a lecture on my duties and activities as a member of parliament when I introduced the bill on freight rates a few weeks ago. I consider that I am responsible only to the people of the constituency of New Westminster with regard to my activities in this house, and even though I am a new member I do not take it very kindly to be lectured by the minister in that regard.

Railway Act-Rate Structure
I do not intend to say more on that subject, Mr. Speaker, because it does not help any when one is endeavouring to present a bill containing an appeal on behalf of the people of British Columbia. To come to the bill itself, the Minister of Railways and many other members have said that the Board of Railway Commissioners and not the House of Commons is the place for freight rate adjustments. I think the recent document brought down by the Minister of Railways bears out that contention; I find that it rather definitely states this to be the case. I am not going to read the whole record; neither am I going to pick out any particular part to try and bolster up my argument. The minute of the privy council states:
. . . one of the duties, if not indeed the principal task, of the Board of Railway Commissioners, is to determine upon application, what are fair and reasonable rates to be charged from time to time for the various services performed by public utilities under the jurisdiction of the board. (Order in council, P.C. 2434. dated the 6th day of October, 1920.)
Further, that in appeals to the governor in council from the Board of Railway Commissioners a practice has grown up not to interfere with an order of the board unless it seems manifest that the board has proceeded upon some wrong principle or that it has been otherwise subject to error. Where the matters at issue are questions of fact depending for their solution upon a mass of conflicting expert testimony, or are otherwise such as the board is peculiarly fitted to determine, it has been customary, except as aforesaid, not to interfere with the findings of the board. (Order in council, P.C. 1170, dated the 17th day of June, 1927.)
The Railway Act of 1903, under which the board was created, constituted the board a court of record with all the powers of such a court as to the hearing of witnesses and obtaining of evidence. The members of the board, in addition to their own long and varied experience, have available for the purposes of their investigations a permanent staff of expert officers and a complete system of records, which render that tribunal peculiarly qualified to deal with the intricate and highly technical subjects such as those involved in the said judgment from which the appeals were taken.
While it may be true, Mr. Speaker, that the board is constituted to deal with all matters of freight rates, I do not entirely agree that in every such matter we should be precluded from coming to parliament or the governor in council, especially in exceptional cases. I do not believe in setting up any board that is above parliament itself. It may be true that in connection with general rates it is not to be expected that parliament should deal with individual cases, but when one has a case of special appeal where an injustice has been done-such as we in British Columbia (irmly believe has been done-I think it only

fair and right that we should be allowed to come to parliament or to the foot of the throne with our appeal. If, however, all the rates are to be settled by the Board of Railway Commissioners parliament should carefully examine the powers of that tribunal and see if the board has all the necessary regulating powers.
In the course of the appeals made on behalf of British Columbia in regard to freight rates, those appealing have stated that as the Crows-nest pass rates were put into existence giving the districts from Calgary and Edmonton to Fort William a sectional tariff, we in British Columbia are equally entitled to the same consideration. However, the Board of Railway Commissioners has made it abundantly clear that we are not on solid ground when we base our appeals solely on the Crowsnest pass rates. They have told us plainly, during the course of various appeals to that board, that the Crowsnest' pass rates have no bearing at all on British Columbia, and in fact that those rates are so set by statute that they cannot be used even as a yardstick in making other rates.	.
That decision and that reasoning have been given at various times by the Board of Railway Commissioners. They did make one decision, however, to which I should like to take some exception. Speaking of the export and domestic rates they said that the export grain does not compete with grain transported for domestic purposes, and in consequence no comparison between the two rates can be properly drawn. I do not entirely agree with that. While it is perfectly true that the grain itself going for export does not actually conflict with the actual grain going for domestic purposes, the fact that those in China or Japan or elsewhere can purchase that grain on the prairies and have it transshipped to that country, and then turn it into poultry or dairy products, which in turn compete with the products of the poultry or the dairy farmer in British Columbia, proves conclusively, I think, that the grain for export certainly has a relationship, so far as price and freight rates are concerned, with the grain and grain products used domestically by the poultry farmers of British Columbia; and we have in turn to compete with those countries.
With regard to the powers of the board, my bill proposes that if the board deeim it advisable requests for appeal shall be granted on much broader lines, and in this connection I shall again have to quote from the report of the royal commission that investigated the maritime claims, generally known as the Duncan commission. That commission's report

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was submitted to the house in 1926, and I use jt as one of the competent authorities in support of my endeavour to have this bill - accepted by the house. I am afraid I shall have to quote extensively from the report because that commission went fully into the matter of enlarging the powers of the Board of Railway Commissioners so as to enable that body to deal with freight rates on a much broader basis than is provided for in the present Railway Act. I quote from page 24:
In addition, the cases which the maritime provinces have already submitted to the railway commission also raise the question of handicaps arising from the geographical position of their natural products, and their distance generally from central markets. If we were satisfied that under their present power the railway commission could adequately deal, on appeal, with the broader aspect of the maritime cases before them, we would make no further comment. Previous judgments of the railway board, however, lead us to fear that they null not feel competent to deal with such broad considerations as are still involved in these maritime claims. We cite, in particular, the following extracts from the board's judgments:
"The board under the Railway Act has no profit and loss responsibility, and its intervention in the matter of rates must, as has been indicated, be concerned with matters falling within the categories of reasonableness and unjust discrimination, and not with a policy of the development of industries through rate adjustments."
"The board has no power to regulate tolls, for the purpose of equalizing cost of production, or geographical, or climatic, or economic conditions."
The conclusion to be drawn from these extracts seems to us to be that the railway commission does not feel itself empowered to pass under its review, when appeals are made to it, the same wide range of business considerations which railway companies themselves can take into account in forming a judgment as to the extent to which they should develop trade and business.
We are far from suggesting that there should be arbitrary interference on the part of the railway commission with the business judgment of the railway companies, or that there should be any confusion between trade development that can reasonably be expected from a railway rate structure, and trade development that must be a matter for public or government responsibility quite apart from rate structure.
I will skip part of it, curtailing somewhat the argument put forward in the Duncan report.


An hon. MEMBER:: Read the whole of
it.


Thomas Reid: If the hon. gentleman insists,
I can very well read the whole of it because it further strengthens my ground. To continue :
Much of the evidence we heard in the mari-times left the impression on our minds that
witnesses thought the railways should be operated to the advantage of the trader irrespective of the financial results to the railway. In other words, what a railway administration might concede, in the exercise of its judgment on what was good business or might ultimately be good business for itself, seemed to us to be demanded as a matter of right by the trader so that his own business might be profitably developed whether the operations of the railway were remunerative or not. Even if there were no privately owned railway company, the business interests of which must be fairly considered and safeguarded, we cannot conceive of a national system being efficiently administered on such a principle as that. On the other hand, from a public point of view, in return for the statutory and other public privileges which railway companies enjoy, it may not be unreasonable that there should be a responsible review of their policy (as interpreted in their rate structure) in its relation to the natural basic products of the country, and the development of these products and associated enterprises.
_ At present the work of the railway commission is circumscribed within the two considerations, viz.:
(a)	Reasonable compensation to the carrying company, and
(b)	No unfair preference or unjust discrimination as between traders.
Whenever the board has dealt with a question on appeal as to what must be regarded as fair and reasonable terms, it has always considered not only the operating costs to the railways but also a fair return on the amount of capital invested, and in the case of the Canadian National it is impossible for any branch to contribute to any great extent to relieving the burden of debt of the system. The same is true of the Canadian Pacific:
Section 320 of the Railway Act seems to give the wider powers that we have in mind to the railway commission, so far as the question of undue preference or unjust discrimination may he involved:
"320. In deciding whether a lower toll, or difference in treatment, does or does not amount to an undue preference or an unjust discrimination, the board may consider whether such lower toll, or difference in treatment is necessary for the purpose of securing, in the interests of the public, the traffic in respect of which it is made, and whether such object cannot be attained without unduly reducing the higher toll."
Even there we feel that, if the intention was to have larger national interests in mind, the section should be made clearer, and instead of the words "in the interests of the public" (which might he interpreted as in the interests of the "consuming" public), the words should clearly state that it is national interests (both "producing" and "consuming") that are in mind. If this was not the original intention of the section, we suggest it is the intention which should now be imported into it.
That comprises the first section of my bill, and of the two sections perhaps the second one is the more important.
We feel further that a similar extension of authority should be imparted to the railway
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board in regard to the question of reasonable compensation. It would then be competent for the railway board to make a survey of just the very character that the president of the Canadian National Railways testified as being part of his function (as the business head of a railway); and if from public policy they felt that an experimental rate should be conceded, they should be free to constitute the rate, even although it might not, at the time, or of itself, give reasonable compensation to the railway company.
We recognize, however, that amongst the business considerations which must always be taken into account in a review of this kind are:
(a)	A proper balancing of the structure of railway rates so that on the whole (though not in a particular item of business) there would be not only reasonable compensation to the railway company for the carrying services it renders but such reasonable Compensation over all as to permit of a certain amount of trade development.
(b)	A means of ascertaining whether, in fact, the rate asked for is necessary to the producing or trading interest, bearing in mind that a reduced rate may be pressed for when trading results might show it was not required, or on the other hand, when trade could not be very much developed even if the rate asked for were conceded.
If the railway board is to be vested-as we think it should be-and we recommend that it should be-with the somewhat fuller supervisory responsibility that we have indicated, we think it should also be vested-and recommend accordingly

with power, in weighing an application that raised these considerations, to order an accounting investigation at their own hand, into the incidence of the railway charge on the costs of production of the commodity, and its relationship to other costs, and to the general trading results of the interest involved.
Another paragraph reads:
We wish to emphasize that this is a field of thought into which we have not carelessly wandered. It has been forced upon our attention by the geographical and other difficulties which the evidence we received in the maritime provinces made it clear parts of the country at long distance from central markets were bound to suffer from; and we had the advantage of hearing from the chief commissioner, who met us at our request, as to the powers of the railway commission at the present time.
That report covers fairly well the two sections of this bill. It will be seen that the powers asked for are not mandatory; the bill simply asks that the board give further consideration to general appeals and the efforts to build up trade through the sale of grain from the prairies to the poultrymen, the dairymen and the stockbreeders of British Columbia. These producers in British Columbia of eggs, butter and so on, can use the cheap grains for which the farmer on the prairies must find a market.
This bill is not sectional in character. While it is proposed to assist British Columbia, it would also assist other sections of the coun-

try, the maritimes included, in going before the Board of Railway Commissioners to appeal on general grounds. It has been amply proven that the board has not the power to allow appeals based upon broad lines. What I am asking for has been recommended by the Duncan commission, so this bill is not entirely my own idea. Unless the board are given these further powers, in my opinion it will be of little use for the province of British Columbia to spend any more money in appealing to the board for a reduction in freight rates.
Further, no one can tell what may happen when the railway bill now before the house goes into effect. If certain main lines are abandoned and all the traffic going into Vancouver is sent over the Canadian Pacific lines, the question of freight rates would be made that much more difficult. I am in hopes that the powers proposed to be given to the tribunal by the railway bill will in no way take away from the powers of the Board of Railway Commissioners in so far as freight rates are concerned. Surely parliament is not going to block every avenue of appeal. Hon. members of this house have appealed at various times for a reduction in freight rates and they have always been told that parliament is not the place to come to ask for a reduction in freight rates, that they should go before the Board of Railway Commissioners. If that is so, then the board should be allowed to go a little further in the matter of decisions. I am asking that further power be granted under the Railway Act so that this can be done. I think it advisable that this board should have sufficient power to be able to order that a certain lower rate on grain and grain products shall apply between the prairies and1 British Columbia. Such a rate would benefit not only the stock raiser, the poultryman and the dairy farmer, but the railway companies, as well, because it would include also the transporting of incubators, eggs, wire and many other commodities. I ask the house to give its favourable consideration to this bill which if adopted will grant further powers to the Board of Railway Commissioners.


Mr. H. J. BARBER (Fraser Valley):: Mr. Speaker, it was not my intention to address the house in connection with this particular measure, but perhaps I may be permitted to say a few words. This matter was before the house last year and also I believe at the beginning of this session. It is very interesting to note that the hon. gentleman who has introduced this bill (Mr. Reid) has changed his attitude somewhat. In the first bill which

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he introduced he took the attitude that freight rates should be set up by statute or, in other words, made by the members of parliament. Now in this bill he asks that certain powers be taken away from parliament and given to the Board of Railway Commissioners. In other words, he wishes to make the commission a political or governing board rather than a judicial board.
It is not necessary for me to go into the history of this board. As the house will recall, in 1903, Sir Wilfrid Laurier in his wisdom saw that it was necessary to set up some organization to take care of the very intricate and complicated matter of freight rates. Therefore by statute he set up what is known as the Board of Railway Commissioners, with powers similar to that of our exchequer or supreme court. This board is so constituted that any citizen of Canada can appear before it and receive a hearing.
The hon. member says that the passage of this bill would facilitate matters. I think it would tend to complicate matters a great deal if this board were made a governing instead of a judicial board. This country is three thousand miles wide and other sections of the country might consider that they had interests just as important as those of British Columbia. What we in British Columbia want is a board similar to our courts before which we can appear, present our case and receive justice. That is all that we expect and all that we are entitled to. I assure the hon. member that all of us from British Columbia are anxious that something should be done to lower the rates on feed grain. This is a matter that we have all advocated, and further, we have tried to keep it out of the political arena. AVe have always realized that we had a case and felt that we were not being dealt with justly. Unfortunately, the hon. gentleman has drawn this matter into the political arena. Some of the smaller Liberal papers in our province have pictured my hon. friend as the real Kingfish as far as advocating lower freight rates is concerned. I have come to the conclusion that he is more interested in the votes of the farmers than in securing a lower rate.
As regards freight rates, as I said before, anyone can go to the Board of Railway Commissioners and discuss this matter; he can place his grievance before them and he will receive consideration. I discussed the matter with the chairman of the railway board some six months ago and I know that if proper representation were made by our province, justice would be received at his hands. The obstacle in the way at the time was that an
appeal was pending and therefore they could not hear the case until the appeal was disposed of. Now that the appeal has been dismissed, the way is open and I think my hon. friend would accomplish a great deal more for the people of our province and particularly of the Eraser valley if he would initiate something in the way of an appeal and present it, not as the appeal was presented before, but along the lines of our claim for cheaper feed grain.
Some people have said that this is not a matter for parliament to deal with. AVhen I was speaking on this subject last year I referred to that and to the fact that I was astonished at some hon. gentlemen, for instance, the present leader of the opposition (Mr. Mackenzie King) and the ex-Minister of National Revenue (Mr. Euler) supporting the hon. gentleman's bill. At that time I referred back to the session of 1925, where I find at page 4439 of Hansard the words of the then Prime Minister, now leader of the opposition. This is what he said:
I have been looking over some of the speeches which I made in western Canada last fall, and which were quoted, in part I think, by the hon. leader of the Progressive party (Mr. Forke) in his remarks the other evening. I notice in speaking on the prairies I intimated very clearly that my view was that the railway commission was the right body to fix freight rates and should be given a free hand in the matter, but that I felt it should expect to receive directions from the government on matters of national policy. AVhen speaking in Vancouver and Victoria I made similar statements.
Then I find that the hon. member for North Waterloo (Mr. Euler) spoke during the same debate as reported at page 4420 of Hansard of that year. He said:
The railway board is charged with the duty of making rates fair and equitable to all. AVe have set up the board to do that work. AVhy then not let the board perform that duty? They are infinitely better qualified to make these rates than are members of parliament. If parliament has no confidence in the railway board-and that sentiment has been expressed by some hon. members-then the remedy is not to throw the business of rate-making into this house; the remedy is so to constitute your board that you will have confidence in it.
That was the opinion of the then government. We had the spectacle last year and again this year when the bill came to a vote, of hon. members opposite, in order to try to help out politically their good colleague from New AVestminster, forgetting all about the principle in which they believed in 1925 and supporting him on the division.
I just wish to repeat, what I have said, that we could do a great deal more to secure these reductions in feed grain rates by going directly

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to this court which has been set up rather than by introducing impossible legislation, legislation that my hon. friend knows could never be accepted by any parliament. The other parties have so expressed themselves.


Alan Webster Neill: Oh, no.


Harry James Barber: The Liberal party did so when they were in power. Of course, if the hon. member for Comox-Alberni (Mr. Neill) were leader of a government he might adopt this bill, but the Liberal party have on more than one occasion expressed themselves as against it. Sir Wilfrid Laurier, the present leader of the opposition and the present Minister of Railways (Mr. Manion) have so expressed themselves. I wish to compliment the Minister of Railways for securing for us the reduction in feed grain rates which came into force, I believe, on March 10. This credit goes entirely to the present minister. I have been informed that the hon. member for New Westminster has stated that it was through his efforts in the house that the government was forced to do something; that he was not satisfied and that he was going to persist in his attempt to force them to do something better. All that I can say is that to my personal knowledge the Minister of Railways has been so much interested in this particular question that some two years ago he called in the president of the Canadian Pacific and the president of the Canadian National and asked them if they could not do something in the way of an agreement between the two lines to give a reduction on feed grain rates to British Columbia. I have on my file a joint letter from these two gentlemen giving their reasons at the time why this could not be done. The minister persisted in the matter, and at the time of the provincial conference, when we found the representatives of the four western provinces could not agree to go ahead with the appeal, he called in the traffic managers of the two railways and they agreed to a reduction in feed grain rates. I would like to have seen this extended to bran, shorts and middlings, but the arrangement was agreeable to and accepted by the representatives of the four western provinces, so that if anything is lacking the blame cannot be laid on the present Minister of Railways. As one deeply interested in securing better rates for the dairymen and poultrymen of British Columbia, I feel that I would not be voting in their interests if I supported this bill.


Robert James Manion: Mr. Speaker, I know a number of other hon. members wish to speak on this bill and I do not intend -to take more than about five minutes merely to put myself on record as opposed to the bill, as it is possible I shall not be able to be in the house next Tuesday should the discussion proceed until nine o'clock, which it may do in view of the fact that a number of members desire to speak.
The bill as drawn by the hon. member is, as has been expressed by the last speaker (Mr. Barber), to my mind an impossible measure. In the first place the clause as he draws it, subsection 2 of section 320, is not clear. I do not know what the clause means and I have read it many times, but even taking the parts that one does understand, one -cannot agree with them in view of the known duties of the Board of Railway Commissioners. The hon. gentleman inserts in the clause a provision that the Board of Railway Commissioners-
-may establish a rate structure in the interests of trade development.
It is not any part of the duty of the railway board, as has already been stated by the hon. member for Fraser Valley (Mr. Barber), to interfere in the trade development policies of any government. I do not think the late government would have agreed to any such policy any more than would the present government, because the railway board would then be deciding the policy of any government in power at the time. That is not part of the duties of the railway board. I do not think it- would be desirable to put into effect any such legislation. The Board of Railway Commissioners might under these circumstances decide on a trade policy which would be contrary to that of the government in power or of the best interests of the people of Canada. That to my mind is not any part of the duties of the board.
The hon. gentleman speaks of putting into effect "experimental rates." That is not part of their duty. Their duty is to make the best rates to which they can agree in a judicial capacity, considering all parties; but I clo not think as a general rule, at any rate, it is their duty to put into effect experimental rates. Then he says in the bill:
Though such experimental rates may not at the time or of themselves give reasonable compensation to the railway companies.
As Minister of Railways and knowing perhaps even better, if that is possible, than some other members, the financial difficulties confronting both railway companies at the present

Railway Act-Rate Structure
time, I do not think it would be any part of the duty of the Board of Railway Commissioners to ignore the financial needs of the railway companies in fixing rates. It seems to me that trade, for example, is a matter for the government and the Department of Trade and Commerce, which is established distinctly for the purpose of fostering trade between Canada and other countries, and between different portions of Canada. The setting of experimental rates, I repeat, is not, generally speaking, a duty of the Board of Railway Commissioners.
The points I have made are sufficient to show my attitude and that of the government in regard to this legislation, which I think is not well thought out. I am not questioning the hon gentleman's right to introduce it, nor am I questioning his sincerity, but I do not think the legislation as introduced would be of any use to the people of western Canada, and it might be of very great harm to this dominion. It might be contrary to the policy of the government then in power, and it would be introducing principles which were not meant to be included in the Railway Act as it applies to the Board of Railway Commissioners.
Finally, as was pointed out a moment ago, there have recently been obtained for the four provinces, certainly for three of them, Saskatchewan, Alberta and British Columbia, special rates on feed grains, a decrease in rates which was acceptable to the three western provinces imost affected, and also to Manitoba, which is not so much affected. It seems to me to be sufficient for this year to have established those rates.
Further, in view of the legislation now before the house to implement the recommendations of the Duff report, I do not think it is wise at this time to introduce other legislation which may be contradictory to or to some extent interfere with the legislation which the government and parliament think it wise to bring in at this time. I merely wish to put myself and the government on record as opposed to the legislation as introduced in the bill sponsored by the hon. gentleman.


Mr. G. B. NICHOLSON (East Algoma):: One thing we can compliment the hon. member for New Westminster (Mr. Reid) upon, and that is his persistence and courage. He has introduced a number of bills with regard to the railway rate structure in this country, but to my mind this is the most remarkable of them all. I do not know why he did not content himself with presenting just one brief paragraph eliminating freight rates altogether because in reality the proposed amendment to section 320 of the Railway Act means that
if the Board of Railway Commissioners deem it necessary in the interests of trade they can do just that very thing. May I read subsection 2 of the new clause proposed:
The board may consider the question of what should be reasonable compensation under the circumstances, and may establish a rate structure in the interests of trade development and public policy, though such experimental rates may not at the time or of themselves give reasonable compensation to the railway companies.
My hon. friend quoted from the report of the Duncan commission, if I understood him correctly, that "it is the duty of the railway commission to fix rates to provide a reasonable return on the capital invested," and he followed that up by saying that it was not possible to fix such rates on the Canadian National Railways or on the Canadian Pacific Railway. My hon. friend quoted further from the report of the Duncan commission, that "it was the duty of the Board of Railway Commissioners to maintain a proper balancing of the rate structure to allow of reasonable compensation." This bill ignores altogether the factor of reasonable compensation; it even goes to the extent of ignoring any compensation whatsoever. The duties of the Board of Railway Commissioners now include a consideration of the rates the railways may levy, and my hon. friend by this bill would have the board fix rates, not from the point of view of whether the railways shall be permitted to operate or not, but in the interests of trade development; and he refers to wheat, fish, poultry, and so forth. He did not refer to lumber. I might tell him where there are many thousands of cars of lumber in British Columbia and in other provinces which, if freight rates were wiped out, could all be exported to Europe and from which a return would be received that would at least compensate for the cost of production, and that is exactly what might be done if the Board of Railway Commissioners were given authority to consider the development of trade rather than a fair and reasonable rate.
The cost of producing an article and delivering it to the point where it is going to be consumed must take into consideration every factor involved in putting the goods on the market, and a part of the production cost of lumber or wheat delivered on the Liverpool market is the cost of transporting it to Liverpool. But my hon. friend ignores that altogether. He says in the first part of the bill, with regard to experimental rates, that they need not be at the time sufficient to provide adequate compensation. But he goes further than that and says that the rates in
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themselves need not be sufficient. The meaning of that, if I understand it at all, is that the Board of Railway Commissioners may in the first place establish experimental rates, and in the second place maintain them on a basis that will not provide an adequate return for the service that is rendered. Every consideration of what the railway must pay in wages, for the maintenance of lines, for the purchase of coal and other supplies, for rolling stock and all that sort of thing, must be left entirely out of the picture, and the only consideration must be the development of trade and the marketing of goods.
If that is to be the case, I would ask my hon. friend how he expects the railway companies to carry on. Who is going to pay the bill? For a couple of weeks in this house we have been discussing the problem with which this country is faced by reason of the position in which the railways now find themselves. The people of Canada to-day have to provide directly or indirectly, through advances made to the government railways and to the Canadian National Railways a sum of 8100,000,000, which must be raised by taxes, because the returns from the earnings of the railways are in themselves entirely inadequate. The Canadian Pacific Railway Company, the finest transportation system in the world, is carrying its commodities at lower rates than any other transportation system in the world except its competitor the Canadian National Railways. My hon. friend may search the rate structure records the world over and he will not find anywhere commodities carried at a lower rate than they are in the Dominion of Canada. In the country to the south, in Europe, Australia, and any other country where he may go he will find higher commodity rates, higher mileage rates, higher rates in every respect than are granted on the commodities of Canadian farmers, Canadian manufacturers, Canadian lumber producers. Every producer in this country can market his commodities at lower rail costs than a producer of similar products in any other country of the world. Yet my hon. friend suggests that we should put into the hands of the Board of Railway Commissioners a power that will make it possible for them in every part of Canada, in relation to every commodity that Canada produces, and in relation to every producer who has goods to transport, to fix a rate which, as the bill itself deliberately states, may not yield a reasonable or adequate compensation. Who, let me ask again, is going to provide the money to carry on the railways?


Alan Webster Neill: The increased traffic may provide it.


George Brecken Nicholson: If you eliminate the rates, an increase in the traffic will only increase the burden. You put commodity rates at a level below the cost of carrying them, and the more the railway carries the worse off it is. There are commodity rates of that type in force in Canada to-day. There may possibly be compensating advantages arising out of some special rates; at the moment I shall not argue that point. I have taken the position ever since I have been in this House of Commons that these matters should be discussed before the Board of Railway Commissioners. One of the best pieces of legislation ever placed upon our statute books was that constituting the board of railway commissioners, because it took out of the political arena matters which should not be discussed politically, and made a general law applicable to all parts of the country. It eliminated sectionalism and all other considerations than those related to sound business policy. The formation of the board enabled the railway companies to give to John Smith and to everybody else service on an equal basis and without discrimination.
Under the suggested change I could go to the Board of Railway Commissioners and say: "If you will give me a certain rate I will establish a new industry, and undertake to give you ten, fifteen, thirty or forty cars of goods to carry each month." I do not suggest a rate which will make it possible for them to earn any money,-no; but it will enable me to build up a business. My neighbour may do the same thing. They could give me a rate entirely different from that given to another person at another point in the country who might be carrying on a business similar to that which I propose to create. There is no question whether we are being treated on an equal basis. They give me an entirely new rate, because it is in the interest of what they conceive to be trade development.
I submit the Minister of Railways was quite right when he said that the business of trade development, and the policy the country should follow in building up trade, is not the concern of the Board of Railway Commissioners. It is the duty of that body to act judiciously and to maintain a proper balance between all persons who are trading or developing trade, who are the producers or distributors of products in Canada. This House of Commons should not say to the Board of Railway Commissioners: "It is your duty to ignore every element of sound busi-

Railway Act-Rate Structure
ness policy concerning the products railways are to carry; all you have to do is to consider whether the creation of a rate, whatever it may be, may double trade in one direction or another."
The basis upon which the bill is founded is utterly vicious. It attempts to establish a principle which the parliament of Canada should not countenance. The proposed subsection 2 begins as follows:
The board may consider the question of what should be reasonable compensation under the circumstances-
That is the first statement in the subsection. The remainder of the subsection is a complete contradiction of the opening sentence. It is as follows:
. . . and may establish a rate structure in the interests of trade development . . .
On what basis? Whether the experimental rate for the time being, or in itself, gives a reasonable compensation to the railway companies for the services they are to perform. In the face of the difficulties which confront railways, I submit that the house should not accept the bill, and should never give favourable consideration to the principle involved.
The purpose of the Board of Railway Commissioners is to maintain an even balance between the man who has goods to transport and the companies transporting them. This bill does not help to do that. If parliament does anything, it should introduce legislation which would wipe out all the political rates which from time to time have been established, and should say to the Board of Railway Commissioners: "Your job as a judicial body is to establish a rate structure which will give fair treatment to all parts of Canada, to all people in Canada, to the railway companies themselves and the men operating the railways." I have some interest in the men operating the railways. The wages of many of them have been reduced, and others have been put out of the service because the railway companies could not earn enough to pay the wages they had formerly paid, or to maintain their staffs in full force.
The hon. member was right when he said that the provision contained in the bill was permissive, but not mandatory. However, the mere fact that parliament enacts a statute indicates its desire that the railway commission shall accept the statute as an instruction. The mere fact that the provision is permissive and not mandatory does not
mean that parliament has not expressed its will. Parliament, if it passes this bill, clearly indicates its desire that the Board of Railway Commissioners shall do certain acts. If not, why would the bill be introduced at all? If not, why would parliament pass it? Why should we consider it if we did not expect the Board of Railway Commissioners to act upon it? The mere fact, therefore, that it is permissive and not mandatory does not for a single moment take away the fact that it is an instruction, and that it is an expression of the will and desire of parliament. I submit that the Canadian people, represented in parliament, do not want this legislation passed. Their railway burden is already all that they can carry. To add this additional burden would simply be saying that parliament wants the railways to struggle along as best they can, to find the means for operating their systems as best, they can without any regard for the returns in respect of services they perform. If the hon. member does not desire to withdraw the bill, in the light of what has been stated I submit the house should, in the event of a vote, reject it.


Mr. W. J. LOUCKS (Rosetown):: Mr. Speaker, I had not intended to take part in the debate, but owing to the fact that a year ago I supported a bill concerning domestic freight rates I felt in duty bound at this time to say a few words. In my view we should compliment the Minister of Railways (Mr. Manion) upon the pressure he brought to bear upon the two railways to get for us the help we have been given. I endorse what the previous speaker has said, namely, that we should consider this matter in the light of the fact that our railroads are running at a loss. As a producer and an exporter I am interested in rate structure. There is no doubt that the help already given will be in the interests of the consumers in British Columbia and the exporters in Saskatchewan. When I am informed that at the interprovincial conference there was an agreement between representatives from Saskatchewan and British Columbia upon a fifty per cent reduction in the domestic rate, I think we have reason to be well pleased.


Mr. SPEAKER:: The hour for private and public bills having expired, the house will resume the debate on the motion that the Speaker do now leave the chair for the house to resolve itself into committee of ways and means.
The Budget-Mr. Coote



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Ralston.
Mr. G. G. COOTE (Macleod):: Mr. Speaker, since I am allowed only forty minutes in this debate I can deal with the budget only in a very general way. I hope that some of the speakers following me from this corner of the house will deal more definitely with some of its details.
It is clear from the address of the Minister of Finance (Mr. Rhodes) that the government has no definite policy for dealing in a fundamental way with the extraordinary conditions now existing in the country. It seems to be drifting along, waiting for conditions to improve; but that conditions are not improving is evidenced by the fact, that the number of unemployed receiving direct relief had increased from 800,000 last fall to 1,337,000 at the present time. The government seems to be living in hope and pinning its faith on the world economic conference which is to be held some time this year. I am afraid that may prove a vain hope. I think there have been more than thirty world conferences since the war, and I think almost each could be classified as a failure. At any rate, the world economic conference cannot deal with Canada's problem. We have a problem of our own, the problem of distributing among our citizens that surplus which we are so well able to produce. The world economic conference cam-not deal with that question; it is a matter for Canadians and the Canadian government. I think the policy of drift is indicated in these words spoken by the minister:
But I do wish to warn against too gloomy an interpretation of current happenings. . . . Events are moving rapidly, driven by the urge of economic necessity.
Where is the government being driven by this urge of economic necessity? That is the tragedy-that the government must be driven by economic necessity. Then the minister said:
On this fact may rest the basis for a greater degree of optimism than has obtained in many months. I
I think it is to be regretted that two years ago the government did not adopt a different policy, instead of drifting along with this

policy of deflation. If they had taken a more courageous attitude in regard to the money question and had adopted a distinctly Canadian monetary policy we might be in a very much better position at the present time. It seems fair to say that the inference to be drawn from the minister's statement is that since in effect the United States has been driven off the gold standard we may hope for a rise in commodity price levels. It is common talk on the street that the United States now will embark on a policy of inflation, and that is what we are pinning our hopes on. We have too long followed at the heels of the United States, like a little boy tied to his mother's apron strings or a youngster taken out in the park by his nurse, who ties a string to him so that he will not get away. Too long the government have been turning their eyes to the New York bankers; too long they have held them as their idols. Those idols have proved to have feet of clay. The recent revelations regarding some of those New York supermen have shocked the entire world. On the day of his inauguration President Roosevelt found all the banks of the United States were closed. In his inaugural address he said:
. . . our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and ivere not afraid, we have still much to be thankful for.
Nature still offers her bounty and human efforts have multiplied it. Plenty is a.t our doorstep, but a generous use of it languishes in the very sight of the supply.
Primarily, this is because the rulers of the exchange of mankind's goods have failed through their own stubborness and their own incompetence, have admitted their failure and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
I regret to say that these are the men whose advice we seem to have been following, or at least whose money policy we have been following, and apparently we will continue that policy as long as it is continued in the United States. It seems our only hope is that the United States may now adopt a more enlightened policy. In the face of all that has happened the minister says that the inevitable result of inflation would be a flight from our dollar, a withdrawal on a large scale of the capital invested by foreigners in this country. I should like to know where the capital would fly. Like old Bill, I would say, "If you know a better 'ole, go to it." Why would capital fly from this country to the United States or any other country in the face of the revelations which have been made

The Budget-Mr. Coote
recently and the admission of the president of the largest bank in the United States of practices for which I think any man should be put in gaol? This foreign capital invested in Canada has been a curse to us. It has furnished the Prime Minister (Mr. Bennett) with an excuse for keeping our dollar at such a high level and, as a consequence, our commodities at such a low level. It seems to me that the monetary policies of our government always have been framed with an eye to New York, and the result certainly has been injurious to Canadians generally. That Canadians engaged in industry are still able to carry on under these conditions is a wonderful tribute to their resourcefulness and endurance. Finance, which should be the servant of industry, has become its master, and a pretty hard master at that.
It seems to me, Mr. Speaker, that during the last two years the financial policy of this country has been a burden and a hindrance rather than a help to industry. That there has been a policy of deflation carried on is evidenced by the fact that the total amount of bank loans and currency is $700,000,000 less than it was three years ago. So in spite of the words of the Minister of Finance I say that we must have inflation. I want inflation to replace the $700,000,000, or part of it, by which we have been deflated. We need it; we must have it in order to raise price levels. To make my position clear let me say that I want only controlled inflation, controlled for the express purpose of raising and maintaining price levels at a decent level. Professor Irving Fisher said a short time ago-and I quite agree1-that we want neither inflation nor deflation; we should keep the car in the middle of the road. The proper place to drive this car is in the centre of the road, not in the inflation ditch on the right hand side or the deflation ditch on the left hand side. At present he says, the car is in the deflation ditch. It must be steered out of that ditch and back to the middle of the road, but we must be careful that we do not steer it into the inflation ditch. I have been warned lately by one or two of my friends that I should set myself right with the House of Commons with regard to inflation. They say we are liable to get uncontrolled inflation soon if this government remains in office because the policy they are pursuing may result in the necessity for wild inflation. Should that happen I want to make it perfectly clear that I am not now advocating and never have advocated that policy.
Just here I should like to commend the government for their announcement that they
intend to appoint a royal commission to inquire into the whole question of our banking and monetary system. It is very important that the government should get the. right type of men on this commission, because if we should have a group of orthodox Canadian bankers we might just as well not have the commission and save the money. I would suggest to the government that they secure on this commission men of the type of John Maynard Keynes, Lord Macmillan or Mr. Reginald McKenna, and with these a few Canadians, some of whom could be found capable and unbiased and not in any way connected with our banks. As regards this announcement by the government, although I commend them for it, I must express my regret that they did not see fit to take this action two years ago or even a year ago. For the past two years we had resolutions on the order paper asking for an investigation into this matter. If we had had such an investigation we might now have a central bank in Canada, and if we had a central bank properly operated it would be very useful to us in financing our operations at this time. Perhaps I had better make it clear that in advocating the establishment of a central bank I want a national bank owned one hundred per cent by the state, a bank whose policy should be laid down in black and white in its charter. The principal thing that should be outlined in the policy of such a bank would be that it should maintain stable price levels when they had been raised to a point approximately on the 1926 level. Though I regret, that the government is two years late, still it is better late than never. A good deal has happened in the last two years; some provinces and a good many municipalities are on the verge of bankruptcy and thousands of citizens have also gone into bankruptcy in that time.
I was glad to hear the minister assure us that our banks were sound. Nearly every Canadian believes that the government would not allow one of our banks to fail, and consequently thinks that the banks are sound. Although I am glad to hear that statement from the minister, I must point out to him that it is not the banks that the country lives on; it lives on its industry and production. In reality, the banks are a secondary bit of machinery. They have become, I suppose one might say, almost a necessary part of the system under present conditions, but the fact is that too much thought has been given to the soundness of the banks as compared with the soundness of industry. As a matter of fact, sound industry is more important to us if we have to make the

The Budget-Mr. Coote
choice. We can maintain a much sounder banking system if we see to it that industry remains in a sound condition, because the main purpose of the banks ought to be- perhaps it is not but it ought to be-to finance industry and to keep it at work.
One of the chief matters for investigation by the royal commission should be this question:	How can the Canadian banking
system be improved so as to serve the needs of industry? I hope that when this investigation is held and the report is brought down there will be recommended a distinctly Canadian national money policy. Money is distinctly national in character, and one of the chief causes of present world conditions is the attempt to carry on a lot of national economic units with an international currency. The two do not go together. Money, I say, is national and we want a money system suited to our own needs.
I wish to quote two or three sentences from a recent review issued by the Midland Bank of England:
The brightest hope for revival of prosperity in Great Britain and the world lies in our complete freedom to pursue a monetary policy of our own devising, aimed at the recovery of commodity values to a level at which business in general becomes profitable again.
It is desirable that the people of this country pay more and more attention to the course of sterling_ commodity values, and to be undisturbed in the face of exchange movements even whrn they involve further external depreciation of the pound. The value of the pound in terms of gold is far less important than its value in terms of goods. Happily, mankind is coming to realize, though only slowly, that exchange stability is not enough, but that to subserve economic welfare the currency must divest itself of the extreme variability in commodity value which has proved the source of most of our troubles in the years just passed.
That puts the case very clearly.
One of our great troubles comes from the fact that we have given more consideration to finance than to humanity. After all, the greatest asset of the country is its people. We must take care of our people, and if humanity is to be sacrificed to the banking industry, then the banking industry will not profit in the long run. The fact that we have been more concerned with money than with humanity is the reason for so many people in Canada being unemployed. There is a market in Canada for industry-I regret that we have not very good statistics on this point; they are meagre-there are thousands of people in Canada who need houses; thousands who need furniture; thousands who need furnaces or central heating systems in their houses; thousands of homes without any water system, without refrigerators, pianos or radios; and

there are thousands of people in need of food and clothing.
Here are just a few statistics I have been able to obtain to indicate the market available in Canada. I find from a recent bulletin issued by the bureau of statistics that there are in Canada 728,000 farms-I omit the hundreds. Of these, 116,000 have radios. That means that there is a market for 612,000 radio receiving sets. There are 321,000 farms with automobiles and 407,000 without; and 233,000 farms with telephones and 494,000 without. Remember, these are 1931 figures, and in some districts one half the rural telephones have been taken out in the last year. Of all the farms in Canada only 60,000 have running water in the kitchen. There is work for plumbers to install water systems in 668,000 farm homes. The number of farm homes in Canada with running water piped in the bathroom is 36,000, or about five per cent. There is a wonderful market in Canada for all our industries. I am sorry I have not the statistics for the cities, but they are not published by the bureau. If every building in Canada that needs a coat of paint were painted this year it would give employment to 100,000 men making the paint and putting it on the buildings. I am impressed with this fact every time I make the trip from here to Montreal. I am sure there is plenty of employment in Canada for all our people for the next ten years, and in that period we would have a breathing space to make comprehensive plans for giving employment to the people and supplying them with the goods we know we can produce.
Coming to the financial position disclosed in the budget, it is clear to me that the deficit is the result of this government's policy of deflation. Perhaps I am wrong in speaking of the government's policy; perhaps I should say, lack of policy. The decreased revenues are the result of a deflation of money, which causes low commodity price levels with stagnation of trade and unemployment and declining railway traffic. There you have the cause of the budget deficit. Our whole internal economy is upset; our standard of living, our incomes, wages and salaries, and even the chance for employment are all sacrificed to maintain the fetish called sound money- mostly sound and very little money, so far as most people can see. We have been blindly following the moneychangers of New York. Professor Gustav Cassel, one of Europe's greatest economists, and for many years financial adviser to the League of Nations, in a lecture last summer, speaking of the money policy of the United States, described it as a

The Budget-Mr. Coote
policy of deflation which is grinding to pieces their entire national economy. We are following exactly the same policy and it is grinding to pieces Canada's entire national economy. There is no need for it; it seems to me it is the height of folly. Words fail me when I attempt to state what I think of such a policy. The cost of the deflation to Canada wus estimated by the Ottawa Citizen last year at $4,800,000,000. If it were only half that, deflation has cost Canada enough to pay off the entire national debt about which we are so much worried. Why will the budget not balance? Because taxes and interest are paid out of production. Last year the Minister of Trade and Commerce (Mr. Stevens) said that interest could only be paid out of production. According to the Canada Year Book the total production of Canada in 1922, was estimated at $4,500,000,000; by 1928, it had grown to $6,342,000,000. If we had had a proper money policy, by 1932, it should have grown to something over $7,000,000,000. I could not get the figures from the bureau for 1932, but I have heard it estimated at $4,000,000,000. If we had produced the same quantity in 1932, as we did in 1928, it would have been valued only at a little over $4,000,000,000. The real value of production should always be the same. Why should the money value of production change? It is due to the fact that our money is a dishonest measure of value. In my opinion it is a rotten measure of value: it is like a concertina, it stretches out our national debt to such an extent that we cannot pay it. The government should take the same percentage of our production each year for purposes of government. This year it is taking about forty per cent more of our production to pay the costs of government, and yet our budget is not balanced. Why? Because our money is an unstable measure of value. There have been some reductions in government expenditures but there has been no relief in debt charges. If I had time, I would show just how unfair that is.
In 1928 the net debt of Canada was $2,-
296,000,000 and by 1933 it had increased to $2,599,000,000. In 1928 the wholesale price index figure was 96-4 but in 1932 it had fallen to 64. In terms of wholesale commodities, and that is what we have to pay with, the net debt of $2,296,000,000 in 1928 now becomes a debt of $3,061,000,000. The debt of 1933 of $2,-
599,000,000 now becomes a burden of $3,-
466,000,000. Taking the gross debt of all public bodies in Canada, that is the dominion, the provinces and the municipalities as $6,539,000,000, this works out upon the basis of the 1928 price levels as $8,718,000. The gross debt of the provinces totalling $1,578,000,000. on the
same computation becomes $2,095,000,000. The debt of the western provinces has been doubled because their revenue comes mainly from agriculture, and agricultural commodities have fallen on the average about sixty per cent.
I am sorry that I have not the time to pursue this phase of the question a little further.
Speaking of the western provinces brings to mind the proposal of the government to establish an agricultural stabilization fund. As I understand it, this fund will provide for the payment to the exporter of the difference between the exchange value of sterling and a price fixed at 14.60. This proposal is to apply to animals, meats including bacon and hams, poultry, fresh fish, canned fish, tobacco, cheese, milk products, canned fruits, canned vegetables and maple products. In reality this makes the pound sterling legal tender at $4.60 for a selected list of commodities. But why the discrimination; why the selected list? Why does this not apply to apples and to lumber; why should it not apply to the export of this selected list to other countries? We lose just as much through the high value of our dollar when we export to the West Indies or to any other country as we do when we export to Great Britain. This is a belated recognition of the discrimination which the farmers and other exporters have suffered from for the last eighteen months because of the low value of the pound or the high value of our dollar. I think this action justifies the stand which we have taken in this house for the last two years. Two years ago I urged the government to abandon the gold standard in order to raise our price levels and relieve us from this terrible deflation which was carrying commodity price levels lower and lower. On almost every occasion which has offered since that time we have stressed the necessity of raising the value of commodity price levels by monetary action such as the bringing of our currency to a parity with the pound. This proposal of the government is a poor substitute, or it might even be termed a poor excuse. I think it should apply to every exporter whether he is engaged in the exporting of forest, mine, fish or agricultural products. If we were to bring the value of our currency more in line with the currencies of other countries it would not cost the treasury anything and it would raise prices in Canada to a point where the Minister of Finance would find that he could balance his budget without raising the rate of taxation.
Our exporters have to compete with all the world. We compete with Australia, New Zealand, Argentina, Denmark, Sweden and Norway. In Australia and New Zealand the British pound is at a premium of twenty-five per cent and although I have not the latest
The Budget-Mr. Coote



DEPARTMENT OF NATIONAL DEFENCE

[Stage Direction]
The house in committe of supply, Mr. Cowan (Port Arthur-Thunder Bay) in the chair.
Royal Canadian Air Force-all expenses in connection with the general maintenance of the air force, including training personnel for civil aviation, and provision of the necessary facilities therefor; also
Civil Aviation-all expenses in connection with civil aviation, including the control of commercial and private flying, construction and maintenance of airways and aids to air navigation, airship bases and flying clubs, etc., $1,600,000.
Mr. ROSS:: When this item was previously under consideration I had a few remarks to make on this subject in general. I think we are agreed that a certain amount of money must be spent on defence, and if that money is to be spent I think the house will spare a few minutes to consider what is the greatest necessity in the way of defence.
I am not putting myself up as an expert, but I think we should consider what progress has been made in aviation, and how it is likely to affect us. The old conditions which existed at the time of the last war will never recur. Men are not going to be placed in great masses and be stalemated without any result. I should like to bring to the attention of the committee a few of the important changes that have taken place.
During the great war Germany had at most thirty-eight aeroplanes with which to make a raid on London; to-day she can mobilize one thousand aeroplanes. Moreover, these aeroplanes can now fly a distance of from one to two thousand kilometres, carrying a load of bombs weighing up to three or four thousand kilograms.
The committee may also be interested in the number of aeroplanes available in the different countries. It is said that France has



Supply-Defence-A viation
some 2,500 aeroplanes; England, 1,550; Italy some 1,100, the United States 1,947, and Canada very few.
I should like to point out what my object is in giving these figures. To-day the only useful expenditure for the defence of a country is upon the air force. The bombs which we used in the war would weigh from twenty to fifty pounds. To-day the French Goliath aeroplanes carry bombs weighing 500 kilograms, and they have super-bombs weighing from 1,000 to 1,800 kilograms. In addition there is the small incendiary bomb weighing about one kilogram. During the war it is estimated that the enemy poured upon London about three hundred tons of bombs. To-day they could pour that amount on the city in one day.
Having dealt briefly with the great increase in the development of aeroplanes and bombs, I shall speak very briefly on the development of gas. The first gas used in the war was chlorine, which caused some six thousand deaths on its first use. This gas is produced in a cloud which could easily be detected, and in such a way that we could defend ourselves against it. But the next development was a gas that could not be detected. It was a derivative of chlorine, carbon oxychloride, fifteen times stronger than chlorine, which was known to us as phosgene, and against which we developed gas masks as a protection. In addition there was the development of "mustard gas." In addition to those two gases there had been produced for use in war, chloropicrin. It is now ready for use, and if I could do only one thing, make people shudder at the horrors of the next war so that they will do all they can to help prevent future wars it will be time well spent. Another gas, diphenylchlorarsine- three drops will kill-causes oedema of the lungs, dropsy of the lungs, oedema of the spleen, necrotic changes in the vascular walls, particularly in the aorta. It also produces changes in the blood and the hoemoglobin becomes methaemoglobin. It is a gas against which our masks would be no protection whatever. The gas will penetrate the mask and cause its removal, making available the use of a more deadly gas with which it may be mixed. One part of this gas combined with ten million parts of air will put a man out of action in one minute. In 1918 this gas was used on a herd of goats and it killed all but four, which were in such agony that they smashed their skulls against a fence. This gas can be used in five-pound generators, six hundred forming a load for a commercial aeroplane. One thousand of these generators 
can gas an area of sixty kilometres. Two planes could carry forty tons, sufficient to destroy the population of London.
The next is cacodyl isocyanide. One breath of this gas is absolutely fatal to human beings.
The next is lead tetraethyl. It is a bromine. It cost the lives of thirty-eight workmen at the time it was being manufactured in the factory in New Jersey.
There is another gas called diethyl telluride which will penetrate the skin without injuring it. This gas is one hundred times greater in its effects than strychnine.
Then there ds a bomb, the electric incendiary bomb, which dropped from an aeroplane will set free a substance known as thermite. It develops a heat up to three thousand degrees, which will pierce through iron, steel and earth to gas mains, which would be set on fire, adding to destruction. Two pounds of this gas in bombs would be sufficient to destroy the whole city of Ottawa. Water has no effect on this substance except to intensify its action.
I think these facts will be interesting to the house and the country. They show the great development that has taken place since the war of 1914-1918. They help to show the great dangers there will be in the next war. The attack will come from the air with bombs carrying these fatal substances I have mentioned, against which we have absolutely no protection. The only defence we have is in our air force. A bombing aeroplane could put. a whole nation out if it wanted to, and the only defence in war at the present time is fighling aeroplanes which we are not producing. These aeroplanes will not guarantee to us perfect protection, but they drive the bombing planes to such a height that the certainty of the direction of the bomb is not assured. Further, the bombing plane may be driven away from its objective. In any future war the attack will not be against the men at the front, but upon the industrial areas, the defenceless men, women and children in the areas back of the lines. Aggression will be so speedily carried out that unless protection is afforded, the people will have no way of shielding themselves against invasion. Therefore I believe the house might well agree that the air service represents the most important part of the estimates for the Department of National Defence. I am not asking for an increased expenditure upon air protection, but I do not believe the air defence should be crippled, and when we do vote moneys for defence the country and parliament should, know wherein our true defence lies.

Supply-Defence-A viation


Joseph-Arthur Bradette: Last fall when the statement was made in this house that the government contemplated building the trans-Canada airways, and landing fields in connection therewith in the different sections of the country, involving the employment of many single men in several parts of Canada, the news was well received in my section of the country. I was pleased to learn from the minister only a few weeks ago that a considerable amount of work had been done ini northern Ontario We knew that it would be necessary from a geographical standpoint to establish landing fields in the northern section of northern Ontario, for reasons which I shall not now enumerate. To some extent, however, we are disappointed that in the districts of Cochrane and Hearst, at which points I believe the government had planned to establish landing fields, no work has been started. In fairness to the minister may I say I realize that the task of expropriating or buying the land and attending to all matters concerning the landing fields entails a good deal of work. I urge upon him, however, that at this time of the year and later in the spring many of our rural single population are out of employment until the ground is uncovered, and if it were possible for his department to begin work in our section of the country conditions would be relieved. This may appear to be a purely local matter, but when we consider that in nearly every. section of Canada people are working on these airways, the committee must realize that my request is practical and logical. I know the minister well enough to realize that he will give fair consideration to my suggestion.


Mr. SPENCER:: Could the minister give some reason for this decrease?


Mr. SUTHERLAND:: The decrease of $150,000 is distributed throughout the vote. The chief items are, first, that we are making no provision for new aircraft; second, there will be a lesser amount of flying, thereby necessitating fewer major overhauls; and third, there will be very little new work done at the Trenton aerodrome.


Joseph-Arthur Bradette: Would the minister
kindly answer my question?


Donald Matheson Sutherland: Yes. As the hon.
member has said, the scheme of opening up landing fields to complete the Trans-Canada Airway was recently embarked upon. One very important link in that airway runs through northern Ontario where difficulties have been experienced in landing the machines
53719-215J
flying from eastern to western Canada. During the summer months, on account of the many lakes in northern Ontario, landing is not difficult, and in the summer season flying boats are used. To obviate the difficulty of landing in all seasons, for several years the department have had plans in preparation for the establishment of intermediate landing fields in that part of the country. Under this scheme when we had the opportunity of doing some work we decided to establish the intermediate aerodromes at Diver, Gillies, Nago-gami, Pagwa, Nakina, Camp Creek, Armstrong, Sioux Lookout, and Amesdale in that section. At present we have work going on at Amesdale, Armstrong, Nakina and Gillies. Nagogami and Pagwa are apparently close to Cochrane, and work will be started at those points. As the hon. member has said, it is impossible to get the whole scheme in operation at once. However the preparatory work is being done, and before long we hope to get the work under way in the intermediate fields nearer to Cochrane. In that event doubtless the single, homeless, unemployed men from Cochrane will be employed.


Alan Webster Neill: Mr. Chairman, I wonder if
the minister will be courteous enough to answer a question concerning a matter which does not refer strictly to this item. I notice we have gone into estimates to-night, in defiance of the usual custom of announcing the night before what will be considered on the following day. Last night we were told we would go on with the debate; estimates were not mentioned.
The matter I have in mind was taken up with the minister by letter a few days ago, and the substance of it is this: I am told that an official ruling has been given by the Department of Justice that Where a soldier dies having due to him military pay for services while overseas or pay and allowance while sick in hospital, such moneys are not recoverable from the government. The language used is, "such pay being nothing capable of being regarded or secured as an asset of the estate." If this is correct-it seems almost silly to suggest that it is correct, but there is every reason to believe that it is-it is so patently unjust that it certainly ought to be a subject of legislation. I am told the theory is that there is no contractual obligation, and that payment to a soldier is entirely a matter of grace by the government. I think such a theory has only to be stated to show its absurdity, and, if a fact under the law, indicates the necessity of a change in the law. I should like to ask
Supply-D e fence-A viation

the minister-he has had notice of the question before-if he has looked into the subject, and if he could give me any information in the matter.


Donald Matheson Sutherland: I have looked into
the matter, and my information is that there must be a difference in the pension law with regard to soldiers. With regard to our permanent force, that is not the case. If a member of the permanent force dies, any pay which may have been coming to him forms part of the estate. With regard to the case of which we are both aware, I am informed it was not a question of his pay not forming part of the estate, but one of legitimacy. The other parts, with the exception of pay and allowances which were coming to him, have been paid to the province from which he came. I am informed that it was only because of the question of legitimacy that the other money was not paid, and had it not been for that matter it would have gone to his legal heins.


Alan Webster Neill: Of course I was not discussing the question of the pay of the permanent force. If the minister says this is the decision of the department, that it only applies to the specific case about which I wrote, in which the question of the man's legitimacy did arise, I suppose I must accept that, but if that is so his department has an unfortunate way of stating a case. The letter contains this statement:
The unpaid balance of pay and allowances credited to the account of the deceased, which amounts to $62, represents moneys not properly comprised in the estate.
Then I took up the question with the Department of Justice, and I have read the answer I received, that this was regarded as military pay and was not capable of being secured as an asset of the estate. In conversation with the official I interviewed in the Department of Justice I was told that the decision was based on broad general lines and that it applied to all soldiers. If the minister now says he has been advised by the Department of Justice that it applies only to a specific case where the legitimacy of the man is in question, of course that sheds quite a different light on the matter. Might I ask if the minister obtained his information from the Department of Justice, or whether he obtained it from his own officials?


Donald Matheson Sutherland: I obtained it from my own officials. There has been a good deal of correspondence and after my discussion with the hon gentleman the other day I went over the file very carefully and obtained all

the advice I could get. I was assured that this was the reason, and that when the Department of Justice gave that decision they referred to this particular case. I am told, however, that in all the cases with which we have to deal such pay and allowances do form part of the estate.


Alan Webster Neill: The ruling of the Justice department was given years before this case came up, and could hardly refer only to this specific case. Letting that go for the moment, however, I would suggest that this man's estate should receive this sum. As the minister has been advised, the estate consisted of three amounts. There was $200 left in a savings bank account in Winnipeg, of which tlie department here very improperly took possession. They held that amount for thirteen years; they paid no interest and are not going to pay any interest, though they had no more right to the money than I have. That amount has been wrested from them and returned to the province; in due course it will find its way to their heirs. Then there were two cheques, each for $70, found in his possession after he died. I suppose they were cheques for pay and allowances, but that sum also was kept for over thirteen years. Finally that has been handed over to the province, and in time that amount will find its proper destination. The other sum of $62, however, for accrued pay, was money due the man, and no matter whether or not he was illegitimate he left a destitute mother and sister, and some of his heirs are on relief now. He earned this $62, and outside the question of legal interpretation, on general principles of equity does Canada want it to be said that we did a dead man's relatives out of a few dollars because of some fine spun theory that we did not have a contractual obligation to pay? He went to the war and we undertook to pay him $1.10 a day, but apparently we are trying now to renege on the bargain on the excuse that the man was illegitimate. That seems to me absolutely foreign to all sense of fairness. I do urge that instructions be given to pay this money as a matter of compassion, if you wish to call it that, though I would call it very bare equity.


[Stage Direction]
Item agreed to.
Progress reported.

[Stage Direction]
The house resumed from Wednesday, March 1, consideration in committee of Bill No. 21, to amend the Indian Act-Mr. Murphy-Mr. Cowan (Port Arthur) in the chair.

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On section 7-Enquiry as to fitness for enfranchisement.
Mr. MURPHY:: I have a further amendment to this bill, Mr. Chairman, and I would ask for leave to withdraw the present amendment.


The CHAIRMAN (Mr. Cowan, Port Arthur):: Is it the pleasure of the committee
that the amendment be withdrawn?
Amendment withdrawn.


Donald Matheson Sutherland: Then I beg to move that section 7 be amended to read as follows:
Section 110 of the said act is amended by adding thereto the following subsection:
(14) In respect of an Indian or Indians of any band who has not or who have not made application for enfranchisement under this section or under section 114 of this act, the Superintendent General may appoint a board to consist of any judge of any superior court or any judge of any circuit, district or county court, an officer of the department and a member of the band to which the Indian or Indians under investigation belongs or belong, to make inquiry and report as to the fitness of any Indian or Indians to be enfranchised, and such report shall have the same force and effect and shall be dealt with in the same manner as if the same had been made upon the application of an Indian or Indians under this section; provided, that no enfranchisement of any Indian or Indians shall be made under this subsection in violation of the terms of any treaty that may have been entered into between the crown and the Indians of the band in question.


Charles Gavan Power: May I ask if this implies
that an Indian may be enfranchised without his consent?


Charles Murphy: Yes.


Charles Gavan Power: Then I am "agin" it.


Mr. GRAY:: So am I. May I ask if the
minister received a protest from the Indian band on Walpole island, in the constituency of West Lambton, urging that this legislation be not proceeded with and, if so, what action the minister took?


Charles Murphy: No, I received no communication from the Indians on Walpole island.


Cameron Ross McIntosh: How can an Indian be
enfranchised without his consent if there is a member of the band sitting on this board and that member is representative of the band? It must be a peculiar type of Indian government without much responsibility to it, I would imagine.


Charles Murphy: The board is to consist
of three members, a judge of any superior court or any circuit, district or county court,
an officer of the department and a member of the band, to which the Indian or Indians under investigation may belong, and the board makes inquiry as to the fitness of any Indian or Indians to be enfranchised. The Superintendent General may appoint a board to make the investigation.


Cameron Ross McIntosh: I should imagine, from
what the minister has said, that the representative of the department and the judge in question possess the superior weight in the court and overrule the representative of the band, so that an Indian who does not want to be enfranchised will be. That does not look good to me. The board is more representative than ever, and in that respect I endorse the idea; but I do not think we are getting over the difficulty if we enfranchise an Indian who does not want to be enfranchised.


Charles Murphy: It does not necessarily
follow that the Indian does not want to be enfranchised.


Cameron Ross McIntosh: That question was asked by the hon. member for Quebec South.


Charles Murphy: No. The question asked
bjr the hon. member for Quebec South was whether an Indian could be enfranchised against his will. The Indian under investigation might be quite willing to be enfranchised.


Mr. ELLIOTT:: Can the minister tell us
what the effect is of the various treaties entered into with the Indians-the treaties referred to in this amendment?


Charles Murphy: There are various treaties entered into between the Dominion government and the different bands of Indians throughout Canada, eleven in number.


John Campbell Elliott: What are the dates?


Charles Murphy: I do not know that I can
give them all. I have these dates: August 3, 1871; August 23, 1875; August 23-28, 1875; September 8, 1875.


John Campbell Elliott: Is that the list of treaties providing for surrender of land to the crown by the Indians?


Charles Murphy: Yes; under these treaties
areas were surrendered to the crown.


John Campbell Elliott: Those are not the treaties that have any bearing whatever upon the amendment that is now before the house. There are a great many treaties that have been entered into from time to time by these various Indians, sometimes individuals, and always assented to by the band, providing for surrender to the crown of certain areas, some-
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times one hundred acres, sometimes enough for a right of way, and sometimes, the whole reserve. With the assent of the Indians provision is made for handing over these lands, but the Indians that are vitally affected by this legislation are those whose lands have not been handed over, who still have them, and who are known as treaty Indians. The minister is no doubt familiar with these treaties. Can he tell us what they are?


Charles Murphy: I do not know of the existence of a^' such treaties as my hon. friend refers to. I thought at the beginning of his remarks, when he spoke of surrenders, that he referred to certain surrenders that are made now and that have been made during the past number of years from time to time of certain lands for sale or lease. Apparently however he has in mind some treaties of which he has knowledge under which the Indians possibly claim that they hold their lands, and that their rights are violated by this amendment. I know of no such treaties myself, unless the hon. member can give me some further light on the subject in regard to which he wishes to have information.


John Campbell Elliott: May I point out to my
hon. friend that the proviso here means nothing if there are no such treaties:
Provided, that no enfranchisement of any Indian or Indians shall be made under this subsection in violation of the terms of any treaty that may have been entered into between the crown and the Indians of the band in question.
If my hon. friend will direct his attention to this proviso he will very readily see that it means nothing unless there is in existence some treaty to which it may apply. The treaties to which I refer are treaties referred to by the minister. They are certain treaties providing for surrender of certain lands, and there are a couple of volumes of them; and every band has from time to time surrendered certain lands. As I said before, some bands have surrendered all that they had and taken money, annuities in some cases and in other instances a lump sum. I assume that when the department draws up an amendment of this kind containing the proviso I have quoted it must refer to some treaty or treaties. If there is no such treaty then this proviso means nothing. Can the minister tell me whether there is such a treaty?


Hugh Guthrie: The last time the bill was under discussion it was stated by a good many hon. members that there were certain treaty rights and that they should be sacredly protected, and the clause has been drawn with the idea of protecting any rights which the

Indians may have under any treaties. Hon. members opposite spoke of this and referred to treaty rights. No one wishes to violate any rights and if there be such rights they are protected by this clause. It was to meet the objection advanced in this respect that the clause was drawn.


John Campbell Elliott: Does the Minister of
Justice mean to suggest that neither the Department of Justice nor the Department of Indian Affairs is able to tell us what treaties exist between the Indians and the government to which this amendment, so carefully drafted, may refer?


Hugh Guthrie: If there are any treaties the rights thereunder are all protected; the provision has been made broad enough to protect every right that arises under any treaty.


John Campbell Elliott: Do I take it that the minister knows of no such treaties?


Hugh Guthrie: I know of none, apart from those mentioned to-night.


John Campbell Elliott: Does my hon. friend know of none?


Charles Murphy: When the bill was last before the house my hon. friend claimed, if I am not in error, that the previous amendment did violate certain treaty rights and I asked him to name the treaties and give particulars as to what rights were being violated. That question was not answered.


John Campbell Elliott: When did the hon. gentleman do that?


Charles Murphy: The last time the bill was before the house. As I said a few moments ago, there are certain treaties entered into between the Dominion government and the Indians of Canada, and there are certain other treaties in which the Indians are mentioned. In my reading I have been unable to find any place where this enfranchisement clause conflicts with or violates any of the rights of the Indian under their treaties. Hon. members opposite claimed that certain rights were violated and this amendment has been drafted to meet that contention. My personal opinion is that no treaty rights are being violated, but that question can be decided by the law officers of the crown. If the hon. member so desires, I can read one of the treaties entered into with the Indians. Treaty No. 1 entered into by the Dominion government with the Chippewa and Swampy Cree tribes of Indians, reads as follows:
The Chippewa and Swampy Cree tribes of Indians, and all other the Indians inhabiting

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the district hereinafter described and defined, do hereby cede, release, surrender, and yield up to Her Majesty the Queen, and her successors forever, all the lands included within the following limits.
Then follows a description which I do not need to give:
To have and to hold the same to Her said Majesty the Queen, and Her successors forever.
Her Majesty the Queen, hereby agrees and undertakes:-
1.	To lay aside and reserve for the sole and exclusive use of the Indians, the following tracts of land for the various bands

Then comes the description of the lands.
-160 acres for each family of five or in that proportion for larger or smaller families;
2.	Makes the Indians a present of $3 for each individual belonging to the bands here represented;
3.	Agrees to maintain a school on each reserve hereby made, whenever the Indians of the reserve should desire it;
4.	Prohibits the sale of intoxicating liquors on reserves;
5.	To take a census of the Indians and annually hereafter pay to each Indian family of five persons the sum of $15 Canadian currency or in like proportion for larger or smaller family, such payment to be made in such articles as the Indians so require of blankets, clothing, prints, twine or traps or currency if Her Majesty shall deem it advisable.
That is a sample of the treaties entered into with the Indians. I am unable to find within the four corners of that treaty anything which would prevent the enfranchisement of an Indian as provided for by this amendment. Certain references were made during the last debate to the violation of treaty rights, but so far no hon. member has stated in what way those rights would be violated. This amendment provides that if any treaty right is violated, the provisions of this bill shall not apply.


Charles Gavan Power: The stand I took was not
based upon any particular treaty or upon any particular treaty rights; it was based upon the higher ground that as we had taken property from the Indians we had to treat them as wards of the government and we had no right to force them into a position which they did not wish to occupy. I have not before me the Treaty of Paris of 1763, but I have an idea that either in the treaty itself or in the resolutions, the Indians allied to the French-I use the word "allied" advisedly because they were not French subjects-were given certain rights. The Huron Indians now upon the reservation at Lorette were in alliance with the French settlers. They had waged war upon the Iroquois 'but had been defeated and decimated. The King of France decided that they should settle at Lorette near
Quebec. The French government granted them certain rights and I believe those rights still exist. They are not Canadian citizens in the full sense of the word and I do not know that the Dominion government has ever made a treaty with them. They have always held that traditional position of having been allies of the original French settlers and of the French crown. They did not become British subjects but rather inhabitants of Canada who had entered into, if not a peace treaty at least an agreement not to wage war upon the British government. Their rights go much further back than any document or any arrangement which might have been entered into between the Dominion of Canada and the band to which they belong. In my view they are inhabitants of this country who have certain rights which have been sanctified by custom and we are not entitled to take those rights away. As I say, I have not the documents in connection with the treaty before me but I expect to have them before the debate is over. I protest that this parliament should not take away rights which they have held since the beginning of the British possession of this country.


Mr. STEWART (Edmonton):: I am taking exception to the clause from another angle altogether. I do not know of any law that compels a white man to take out naturalization papers and I cannot understand why the department should be anxious to enfranchise Indians by compulsion; whether under the auspices of a judge or under the provisions of section 110, it is the same thing. The government is saying in effect that if an Indian is fit to be enfranchised, he shall be enfranchised. I submit that that is taking very drastic steps in dealing with the Indians. Heretofore the Indian has been enfranchised upon his own application and by his own free will.


Charles Murphy: A similar amendment to
this was upon the statute book for two years.


Charles A. Stewart: Yes, I know, but we had to take it off for the very good reason that it would have caused a lot of trouble. If this bill goes through and my hon. friend attempts to carry out its provisions, I am afraid he will have very serious trouble in certain cases. If an Indian is a non-treaty Indian living outside the reserve and does not desire enfranchisement, I do not think the state should force it upon him. That is the privilege the Indian has always enjoyed and I do not know of any good reason why it should be taken away. It may be said that Indians are taking advantage of the fact that they are not enfranchised, pay no taxes and
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have no responsibility, but for the life of me I can see nothing but trouble in connection with the enforcement of this particular clause. I do not think the department will find more than twenty-five or thirty Indians that they feel should be enfranchised. I never heard of any serious difficulty in this connection. A white man who migrates to Canada must be here five years before he can become a citizen of this country. By becoming a citizen, he becomes enfranchised. But if he does not do that, nobody is going to compel him to do it, nor does the law compel him to do it, so that it is certainly not handing out preferred treatment to the Indian wards.


John Campbell Elliott: Do I take it that the
minister states that there are in the department no treaties that protect the franchise, of which this legislation is a breach? Is he in a position to say that there is no such treaty in existence?


Charles Murphy: I make no such statement, but this amendment amply covers that point in case there is any such treaty. I am not giving my judgment upon treaties which may have been in existence for one hundred or two hundred years or a longer period of time. I do not feel that I am competent to pass upon this point, but I do not think that enfranchisement will be found mentioned in any treaty.


Charles Gavan Power: I never said so.


Charles Murphy: I am answering the hon.
gentleman who has just taken his seat. This amendment certainly covers the point and the department will be governed in such cases by the opinion of the law officers of the crown. I do not feel myself competent to pass upon the question the hon. member has just asked as to whether these treaties will be violated by the provisions of this section. That is a question to be decided by the Department of Justice.


John Campbell Elliott: The minister is drafting an amendment to provide that there will be no violation of any treaty that may have been entered into, and he is doing this without looking up the treaties and knowing whether there is any such treaty that comes within that category, and, if so, what the terms of that treaty are. I would suggest that if we are going to discuss this amendment intelligently, the minister ought to do the committee the courtesy, if I may respectfully so suggest, of ascertaining what the terms of those treaties are. I have received from various Indians, Indians of different reserves, representation as to the terms of treaties. They think fMr. C. A. Stewart.]
they have treaties; as a matter of fact they are firmly of opinion they have. The minister, however, is the man above all members of the house who is in a position to ascertain what treaties there are. There is no question that there are treaties between the Indians and the crown.


Charles Murphy: I have so stated.


John Campbell Elliott: Before we proceed with
this legislation we had better ascertain the terms of those treaties instead of simply inserting a clause of this kind.


Charles Murphy: I have read one of the
sample treaties to the committee.


John Campbell Elliott: That does not bear on the matter at all.


Charles Murphy: There are many other
treaties in existence. I have read some of them; I have not read them all. As I have stated, I shall be governed by the opinion of the law officers of the crown.
The hon. member for Quebec South has made the remark that the Indians are not in his opinion British subjects and that under the terms of some of these old treaties they possess certain inalienable rights that should not be taken away from them. I have a judgment which was given by Mr. Justice Riddell in March, 1921, on a question of fishing rights or the violation of fishing regulations in Ontario. The Six Nation Indians of Brantford and of Tyendinaga take the same position as that taken by the hon. member for Quebec South and I think it would be very pertinent if I read the judgment to the committee.


Mr. MACKENZIE (Vancouver):: Which court was that?


Charles Murphy: 
Charles Gavan Power: I thought I would have to take issue with the minister. The case he refers to was that of a Mohawk Indian, but if he will recall his history he will remember that the Mohawks, on account of their service to the British at the time of the rebellion in 1775, because of the outrages they committed on the American colonies at that time, were rewarded by the granting of lands in Ontario. That is the situation described by the minister, that they had obtained a grant from the British crown for having fought alongside the British in the American rebellion. But the case of the Hurons is altogether different. They were allies of the French, and I find- it does not clear up the whole point, I will admit-in the Constitutional Documents of Canada, the Articles of Capitulation of Montreal in 1760. It is to be found in Documents of the Canadian Constitution, 1759-1915, W. P. M. Kennedy, where at page 12, in article 40, I find this:
The savages or Indian allies of IIis Most Christian Majesty, shall be maintained in the lands they inhabit if they choose to remain there; they shall not be molested on any pretence whatsoever for having carried arms and served His Most Christian Majesty; they shall have, as well as the Frenoh, liberty of religion, and shall keep their missionaries. The actual Vicars General and the Bishop, when tile Episcopal See shall be filled, shall have leave to send to them new missionaries when they shall judge it necessary.
There is this note at the time of the capitulation:
Granted, except the last article, which has been already refused.
The last article referred to the exercise of the Catholic religion, which was granted, as is well known, in so far as it was in accordance with the laws of England. The article preceding says:
None of the Canadians, Acadians or French, who are now in Canada, and on the frontiers of the colony, on the side of Acadia, Detroit,
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Michillimaquinac, and other places and posts of the countries above, the married and unmarried soldiers, remaining in Canada, shall be carried or transported into the British colonies or to Great Britain, and they shall not be troubled for having carried arms.
It says that they shall become British subjects, but it nowhere says that these Indians shall become British subjects. These are the Indians who were the allies of the French, and I do submit that unless there is something else in this bulky volume which I have not had time to read during the course of this debate, they still preserve some of their original status, and that this parliament has no jurisdiction over them.


Charles Murphy: Does my hon. friend contend that these Indians in Quebec are not British subjects?


Charles Gavan Power: I do not think they are unless they want to be.


Charles Murphy: Then my hon. friend disagrees with-


Charles Gavan Power: With Blackstone? Oh yes, he has been dead a long time, almost as long as the minister.


Charles Murphy: As dead as the arguments of my hon. friend.


Ross Wilfred Gray: While this discussion is very interesting, I should like to place on record something practical for the consideration of the minister. This matter has been discussed at great length, and I think the minister has now introduced three or four amendments, but I have yet to hear any real reason for the introduction of this particular clause enforcing upon the Indians compulsory enfranchisement. If these men are intelligent enough to have this forced upon them, they are intelligent enough to have their petitions seriously considered by the minister and the government. The minister has stated before that he had not received these petitions.


Charles Murphy: No, I said that I had not received a certain petition mentioned by one hon. member. I did not say that I had not received any petitions.


Ross Wilfred Gray: I was referring to the reply which the minister made to the hon. member for Charlevoix-Saguenay a week or so ago. I hold in my hand a copy of a petition dated Walpole Island, Ontario, March 8, 1933. It is addressed to the Hon. T. G. Murphy, Minister of the Interior, Ottawa, and it is signed by over one hundred members of the Chip-pewas and Pottawatamies of that island. I am going to place it on Hansard, and before this section passes, or before we consider it [Mr. Power.!
further I think the minister should give to this house the real reason for forcing upon these men an enfranchisement which they do not desire. The petition reads as follows: Dear Sir,-
On report in the press that the government of the Dominion of Canada are in consideration of enacting an act of parliament to force the Indians of the Dominion of Canada into compulsory enfranchisement,
We the Chdppewas and Pottawatamies of Walpole Island do herein make our humble protest to such an enactment of act of parliament for the following reasons:-
The Indians of this part of the province of Ontario are not in a position or qualification to enter into such enfranchisement, by education, or temperament as borne out by the fact that the smartest ones of our race who have taken enfranchisement have in a few months or years lost all their property, and in most cases have had to receive help.
Outside of one or two, who are graduates of universities, the majority of the Indians have not even a common or public school education, and therefore cannot compete with the white people.
Therefore we, your humble petitioners, who are descendants of the loyal subjects or allies of the Brtish crown, who have fought for the rights of the British crown, and also rose as one man to the call of the Dominion of Canada, and have volunteered and fought side by side with our white brothers in the great war, do herein request your favourable consideration of this, our humble petition:-
Signed:	.
F. A. Ermatinger, chief.
Joseph Sampson, chief.
Walter Sands, councillor.
Frank Day, councillor.
Allan Isaac, councillor.
Raymond Nahdee, councillor.
William Nahdee, councillor.
Earle Sands, councillor.
Elijah Blackbird, councillor.
Ebenezer Greenbird, councillor.
I would ask the minister now what he has to say to these petitioners. Does he still insist upon enforcing enfranchisement upon these tribes?


Charles Murphy: The hon. member is not stating the case fairly. He states that I am going to force compulsory enfranchisement upon these people. In their petition they state that they are not ready for enfranchisement because they have not the necessary education, but if the hon. member has read the amendment he will see that a court is set up to determine whether or not the Indians are fit for enfranchisement, and unless they are considered fit they will not be enfranchised.


Ross Wilfred Gray: May I ask this question? Who initiates these proceedings? Is it not the minister?


Charles Murphy: The Superintendent General may.

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Ross Wilfred Gray: The minister or the Superintendent General. That is what I object to very, very seriously.


Charles Murphy: The hon. member has also stated that no reasons have been given to the committee as to why this action has been taken. I have endeavoured to give to the committee on one or two occasions at least my own personal feelings in the matter, and I would refer the hon. member to Hansard of February 21, when I spoke as follows:
Through the years the Canadian people have recognized their responsibilities for the welfare of the Indians of this country. In furtherance of that recognition they have spent vast sums of money in order to raise the status of the Indian. Iin cooperation with the churches they have established a very comprehensive educational system comprising both residential and day schools. They have also provided medical and hospitalization services for the Indian and have spent large sums of money, notably in the west, in order to make the Indian self supporting upon our agricultural lands. This constant endeavour throughout the years to raise the status of the Indian has been for what purpose? What has been the ultimate object in view in the expenditure of these moneys and the providing of these services for the Indian? It has been to raise the Indian to full status where he can take Iris place as a citizen of Canada. I believe this policy is the correct one but so far we have failed to take that final step which, in my opinion, should be taken, namely, to make the Indian a full citizen of this country when he has obtained that degree of advancement which entitles him to the full responsibilities and privileges of citizenship.
Those were the reasons I gave to the committee on that occasion. I am still of the same opinion, namely, that Canada has spent large sums of money for the advancement of the Indians, and again I ask: For what purpose, if not for the purpose of raising the Indian to the full status of citizenship? When he has attained that status in my opinion he should accept the responsibilities and privileges of a Canadian citizen.


John Campbell Elliott: I believe the minister is entirely mistaken as to his views concerning the relationships hitherto existing between the government and the Indians. His views concerning the treatment they have received are contrary to the actual relationships which have existed for generations between the crown and the Indians. I have received a protest from the Indians of the Chippewa band of the Thames who are strongly opposed to any form of compulsory enfranchisement of Indians. I believe they are preparing a petition to be presented to the government, in which they will object strenuously to any change in the rights which through certain treaties they have enjoyed through the years. Then I have from
the Stregis Indians of Quebec the following telegram:
The Stregis Indians strongly protest against amending the compulsory enfranchisement to Indian Act due to conditions on the reservation, lack of work, lack of education, therefore not able to he self supporting and government would be breaking the faith of our Indian treaty.
This is signed bv the Stregis Indians of Quebec. Then I have an appeal from the Caughnawaga Indians. Apparently they seem to believe they have treaties about which the minister does not know.


Mr. McDADE:: Is not the hon. member referring to the St. Regis Indians? He has named them the Stregis Indians.


John Campbell Elliott: The word on the telegram is Stregis; I assume it should be St. Regis. May I direct the attention of the committee to what the Indians on the Caughnawaga reserve eay:
We the councillors of the Caughnawaga reserve, assembled in council this twenty-fifth day of February, 1933, do beg to approach you relative to the passing and adoption by the House of Commons making it compulsory for the Indians of Canada to be enfranchised.
It would be severe calamity to our Indians at this present time should we be compelled to fallow the laws of the white man in that we were not given the advantages of seriously studying and comprehending the difficult problems and laws of the British commonwealth.
In dealing with those treaties between Great Britain and the United States wherein the independence of the Indians of the Six Nations, both Great Britain and the United States have confessed that the Six Nations were an independent people. The Supreme courts of both countries furthermore recognized those treaties as inviolable.
In the life of Sir Frederick Haldimand, the question of the sovereignty of the Indians was very embarrassing, in that it would have been impossible on any theory of the laws of the nations for Great Britain or the United States to establish a prerogative in themselves to enforce the laws of the white man upon owners of this country.
In dealing with the Jay Treaty of Amity, Mallory p. 590 in 1794 the rights of the Indians was recognized. Moreover the language used there treated those tribes as being outside the circle of British subjects in relation to citizenship and sovereignty.
To make this admission still stronger that article was amplified by amendment of 1796 Mallory, p. 607 . . .


Charles Murphy: The hon. member is quoting Malloy; will he tell the committee who the commentator is?


John Campbell Elliott: I assume the book will
be in the Department of Indian Affairs.


Charles Murphy: What authority is Malloy? Is he a member of the judiciary?
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Tax on Sugar


John Campbell Elliott: No; I assume he has made a compilation of the treaties, and I should have expected the minister to have that compilation.


Charles Murphy: If the hon. member's
knowledge of Malloy is not greater than it was of St. Regis I am afraid it is not very wide.


John Campbell Elliott: I can guarantee it would not be less than the minister's.


Charles Murphy: Yes, it is very much less.


John Campbell Elliott: I am reading a petition
from the Indians who apparently know more about their rights than do the people who are trying to look after them. The appeal from the Caughnawaga Indians continues:
To make this admission still stronger that article was amplified by amendment of 1796, Mallory, p. 607, which provides that no treaty made or to be made by either party with another nation or with any other Indian tribe should be construed to deny those tribal rights. We therefore beg and pray that those treaties be maintained and recognized by Great Britain and her commonwealth and that the Superintendent General of Indian Affairs take into serious consideration our request that those laws dealing with the enfranchisement of the Six Nation Indians be not adopted and enforced upon him.
This document is signed by Mayor Joseph M. Lefebre, and councillors.
Progress reported.
_ On motion of Mr. Guthrie, the house adjourned at 11.02 p.m.
Monday, March 27, 1933