1936-06-18

[Stage Direction]
On the order for. motions:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, hon. members may have noticed that in the votes and proceedings of yesterday I gave notice of the following motion: -
That on Friday, the 19th instant, on Saturday, the 20th instant, and every sitting day and Saturday thereafter until the end of the session, the house shall meet at eleven o'clock in the morning, and that in addition to the usual intermission at six o'clock p.m., there shall be an intermission every day from one to three o'clock p.m., and the order of business and procedure shall be the same on Saturday as on Friday.
I handed this notice to the clerk last evening, having had a word with the chief whip who in the interval had seen the whips of the other parties. I understand that the motion expresses the general view of hon. members. Such being the case, I would ask for unanimous consent for the adoption of the motion so that the order of procedure for tomorrow and Saturday may immediately be known.


Mr. A. A. HEAPS (Winnipeg North):: Mr Speaker, before the motion is put I should like to say a word or two with regard to the sittings of the house. For some time I have been thinking about this matter and it has occurred to me that we might change the hours during which the house sits. In Great Britain the house sits continuously from four o'clock on, and I was wondering if the Prime Minister or the government would consent to having a committee appointed next session to study this question and perhaps any rules which need revision. H the house would

sit continuously from two o'clock until seven,, it would mean five hours a day or twenty-five hours a week as against the twenty-seven hours a week that we now sit. I think we would actually get through our work more expeditiously than we do by sitting from three o'clock to six, and from eight o'clock to eleven.


William Lyon Mackenzie King: May I say to my hon. friend that the government will be pleased to consider the suggestion he has made. If when the house resumes at a subsequent session it is the wish -of hon. members that a committee be appointed to consider this and allied matters, there will be every disposition on the part of the government to grant the request.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the order:
First reading of Senate Bills-Bill No. 108 (Letter E2 of the Senate), intituled: "An Act to enable the establishment, operation and maintenance of free foreign trade zones."
Hon. H. H. STEVENS (Kootenay East):: I understand that the hon. member who was to move this 'bill, or rather to sponsor it, is not here. I should be glad to move the first reading of it.


Mr. SPEAKER:: Mr. Stevens moves that Bill No. 108, to enable the establishment, operation and maintenance of free foreign trade zones, be read the first time.


William Lyon Mackenzie King: Explain.


Henry Herbert Stevens: The bill, as will be seen, originated in the senate. It provides for the establishment, operation and maintenance of free foreign trade zones, or what is known as the free port zone. It is not proper at this time to go into any lengthy explanation, but briefly it provides merely for the issuing by the government of a licence for -the establishment of such a free port zone in any port in Canada. The bill does not come into operation except on proclamation, nor does it involve in any sense a charge upon the treasury.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. NEILL:: 1.	How many of the select standing committees of the House of Commons have met this session and discussed matters within their jurisdiction?

Questions
2.	How many of the said committees have not functioned this session?
3.	What are the names of such committees, and the reason in each case?


Mr. MACKENZIE KING:: 1.	Ten.
2.	Three.
3.	Marine and fisheries, mines, forests and waters, and public accounts. No matters referred to them.


PORT CREDIT, ONT., HARBOUR IMPROVEMENT
Mr. GRAYDON:: 1.	Was the property at the mouth of the Credit river, Peel county, Ontario, purchased for harbour improvement purposes, and, if so, when ?
2.	What sums of money have been spent in each succeeding year since the date of the said purchase, for dredging and other purposes in the harbour at Port Credit?
3.	What amount was voted by the last government for harbour improvements at Port Credit in the year 1935?
4.	Is any work on the said harbour improvements contemplated in the year 1936?
5.	If so, how much money will be spent on the said improvements this year?


Mr. CARDIN:: 
Mr. DUNNING:: 1.	10,706.
2.	S20 a month.
3.	4,201.
4.	Fiscal year 1934-35-689.
1935-36-837.
Includes new pensions granted, pensions increased to maximum and transfers from other provinces. Information not available at Ottawa for the fiscal year 1933-34.
5.	$16.43 a month.



DOMINION HOUSING ACT

Mr. DOUGLAS:: 1.	How many loans have been approved to date under the Dominion Housing Act of 1935
(a)	by provinces; (b) totals?
2.	What is the total amount of such loans approved (a) in provinces; (b) total?
3. How many loans have been approved for all of Canada (a) in urban centres; (b) suburban areas; (c) rural areas?


Mr. DUNNING:: 1. (a):
Ontario		
Quebec		
Nova Scotia		10
Prince Edward Island .	.... 2
Manitoba		
British Columbia		.. .. 2
(ib) 262.	
2. (a):	
Ontario		. $848,015
Quebec		. 953.676
Nova Scotia		- 46,788
Prince Edward Island.	. 7.500
Manitoba		
British Columbia.. ..	. 6,050
Ob) $1,876,629.	-
3. Loans have been made in what might be termed urban or suburban areas. No specific classification is made.



OLD AGE PENSIONS-SASKATCHEWAN

Mr. COLDWELL:: 1.	How many persons are in receipt of old age pensions in the province of Saskatchewan?
2.	What is the maximum amount of the allowance paid in the province of Saskatchewan?
3.	How many pensioners receive this maximum amount, and how many persons receive the maximum?
4.	How many new pensioners were placed upon this maximum in 1933, 1934 and 1935?



S.S. MARMAT

Mr. STEVENS:: 1.	Is there a boat in the government service in the maritimes known as the Marmat?
2.	If so, is it a government owned vessel, or is it leased?
3.	If leased, who are the owners?
4.	When was the lease entered into, and what is the term of such lease?
5.	What rental is paid for the boat?
6.	What was the date of construction of the boat?
7.	What was its approximate cost?
Sockeye Salmon Treaty


Mr. MICHAUD:: 1.	Yes.
2.	Leased.
3.	McKenzie, Irish and McDonald of Pictou, Nova Scotia.
4.	1934, for period of that year patrol required and yearly since on same basis.
3.	At rate of S300 per month.
6.	1934.
7.	Information not available.



QUESTION PASSED AS ORDER FOR RETURN


Mr. COLDWELL:: 1.	Is one Captain Talbot, formerly of Victoria, British Columbia, in the employ of either the Department of National Defence or the Department of Labour?
2.	If so, when was he appointed, what are his duties, what is his salary, was he on the payroll of the Department of Labour in 1935 or 1934, and, if so, in what capacity and at what salary?
3.	Is J. Hincks, of Victoria, in the employ of the Department of Labour or Defence?
4.	If so, what position does he hold, at what salary, what other allowances does he receive, if any, by whom was he appointed, and who recommended him for such appointment?
5.	Is J. Pomeroy, of Victoria, in the employ of the Department of Labour or Defence?
6.	If so, what position does he hold, at what salary, what other allowances, if any, does he receive, by whom was he appointed, and who recommended him for such appointment?



CANADIAN FARM LOAN ACT

[Stage Direction]
On the orders of the day:
Mr. ROBERT FAIR (Battle River):: I
should like to ask the Minister of Finance (Mr. Dunning) whether it is the intention of the government to amend the Canadian Farm Loan Board Act in such a way that borrowers who have paid interest on shares of the capital stock of the board from which they have received no benefit would be credited with the amount of such interest, as these shares were retired last year; also whether the government intends to retire the original loan to the Canadian farm loan board and to borrow at a lower rate of interest. By way of explanation-


Some hon. MEMBERS:: Order.
Hon. CHARLES A. DUNNING (Minister of Finance): My hon. friend was good enough to intimate that he was going to ask the question. With regard to the first part of it, it is of course a matter of government policy and cannot be indicated in advance. With respect to the second part I may assure him that the matter is now under consideration and study.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Henry Herbert Stevens: I wish to ask the Minister of National Revenue (Mr. Ilsley) a question. Some weeks ago an order of the house was passed calling for the production of copies of certain bulletins issued. May I ask the minister whether it is possible to have that return brought down soon?


Hon. J. L. ILSLEY (Minister of National Revenue):: I shall make inquiries and attempt to expedite the bringing down of the return.



SOCKEYE SALMON TREATY

[Stage Direction]
On the orders of the day:
Mr. C. G. MacNEIL (Vancouver North):: I wish to repeat the question I directed to the government yesterday as to the present status of the Fraser river sockeye salmon treaty, in view of the announcement of ratification by the United States senate.


William Lyon Mackenzie King: I have in my hand the answer which I was going to read. I tried once or twice to rise so as to anticipate my hon. friend's question. The question he asked was:
What is the present status of the Fraser river sockeye salmon treaty, in view of the announcement in to-day's press of ratification in the United States senate?
The answer is: The sockeye salmon convention, the second attempt to ensure the preservation of this important branch of the fishing industry, was signed in 1930 and approved by the Canadian parliament in the same year. Differences of opinion in the state of Washington prevented action by the United States until this year. This week it has been approved by the senate, subject to three reservations. The first of these reservations, providing that the commission is not to authorize fishing gear contrary to Canadian or state of Washington laws, presents no difficulty; the convention does not grant such power. The third, providing for an advisory committee of five from each country, representative of the various branches of the industry, is also quite consistent with the purpose of the convention. The second reservation, however, providing that the commission will not put into effect any order or regulation before its investigations have covered two cycles of salmon runs, or eight years, raises serious difficulty. It was of course understood that thorough investigation would precede any regulation of the actual

Bank of Canada-Mr. Cahan
fishing operations, but there is, in the opinion of those qualified to judge, no ground for anticipating that this would require anything like eight years, or more than half the fifteen years for which the convention runs. We therefore propose to discuss this question with the United States authorities, in the hope that some satisfactory solution of this point can be found and made effective next year



PRIVILEGE-MR. POULIOT

[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANCOIS POULIOT (Temis-couata): As a matter of personal explanation, may I say that one knows that "White Russians" are those who fought under General Wrangel in Russia. They fought the Bolsheviks; therefore "White Russian" is synonymous with anti-'bolshevist.


[Stage Direction]
The house resumed, from Wednesday, June 17, consideration of the motion of Hon. Mr. Dunning for the third reading of Bill No. 82, to amend the Bank of Canada Act.
Hon. C. H. CAHAN (St. Lawrence-St. George):: Those who listened yesterday to the eloquent speech of the Prime Minister (Mr. Mackenzie King), which was addressed I assume to his supporters in this house and to a great extent to his supporters in the country, must have felt the impress, as I often do in listening to him, of the strength of his emotional appeal. In fact, I could imagine, as he lay such stress upon the privately owned and privately controlled bank and sounded the changes upon it, as shown by the extracts from his speeches which he read, that he must have impressed particularly the people of the western country with the idea that the previous government had created a monster of such frightful mien as, described without being seen, was sufficient to create an intense hatred of the whole institution. Perhaps I might read one or two clauses of the report of the royal commission on banking and currency. First, at section 218 the commission reported:
It is essential for the full and satisfactory working of a central bank that it should have the sole right of issue of legal tender notes; it is essential that the central bank, as the financial adviser of the government, should in due course hold the various government accounts and carry out, on behalf of the government, all major financial transactions.
The royal commission emphasized the fact that the bank proposed to 'be created should be the financial adviser of the government. It 12739-245
was not suggested that the bank should control government policy; and as I proceed I think I may prove quite conclusively that the bank as created at present does not control or purport to control government policy in any large matters affecting the monetary interests of the country. At section 219 the commission reported:
The functions discharged by a central bank being of such vital importance to the economic and financial life of a country, it is perhaps natural to ask whether they could not be adequately performed by some direct organ of government. It has in practice been found that a central bank can give most effective service to the community if it is free from the fear of interference for political ends in operating the delicate mechanism of the national monetary and financial machine. Certain statutory limitations have almost invariably been adopted in order to emphasize the national character of the bank. Thus, apart from the detailed provisions of the legislative act constituting a central bank, we may refer to the customary provision that the profits of the note issue should accrue, either directly or indirectly, to the state; that in most modern instances a limit is set to the profits which may be distributed to the shareholders; and lastly, that the state should have a final voice in the appointment of the governor and deputy governor and sometimes of certain of the directors. Within this legislative framework it has been found that there are preeminent advantages to the state in entrusting the special and highly technical functions of a central bank to a body not subject to the vicissitudes of political life.
Referring to the Finance Act of 1923, the commission say, at section 222:
Finally, we may note that the powers of the Finance Act are entrusted to a board which is in effect a committee of the cabinet and are thus directly in political hands.
I understood the Prime Minister to suggest that, under the amendment which is now under consideration on the third reading, in his opinion parliament would revert to the same conditions as prevailed under the Finance Act, when the Minister of Finance and four other members of the administration of the day had control, and complete control, of -the issue of dominion notes. But that must have been an oversight: perhaps I misunderstood what was stated.
Again, at section 232, the commission say:
Obviously, the bank must work in close accord with the government in all that pertains to the external value of the country's currency, and if it were carrying out a national policy in this respect the bank must clearly have the support of the government in its foreign exchange operations.
Again, at section 235:
We should perhaps sound a note of warning as to the degree to which such an institution could fulfil all the expectations that the public mind might attach to it. A central bank could

Bank of Canada-Mr. Cahan
not cure all the economic ills of Canada; it would not be a source of unlimited credit for all borrowers on all occasions; indeed its operations might as often be restrictive as
expansive.
In the following section, 236, the report
says:
236. On the other hand, its positive services would, we believe, be very considerable; it would substitute for the present undeveloped and anomalous system a more rational and unified1 control over the credit structure; it would provide a suitable instrument for the execution of a national policy-
I repeat:
-a suitable instrument for the execution of a national policy in regard to the external value of the currency; it would be increasingly a source of skilled financial advice for the dominion and possibly for the provincial governments; and, finally, it would provide a central body which could maintain relations with similar institutions in other countries, which find at present no counterpart in Canada with which to maintain contact.
There are other sections which might prove interesting. But I do not wish to take the time of the house except to refer to the fact that, under the Bank of Canada Act as at present existing, it is provided by section 5:
The bank shall be under the management of a board of directors composed of a governor, a deputy governor and seven directors. There may also be an assistant deputy governor who shall not as such be a member of the board.
Of course under that act the shareholders, who are private persons, elect the board of directors with the exception of the governor and deputy governor, who have a place on the board. Section 7 provides:
7.	(1) The governor of the bank shall be the chief executive officer and shall on behalf of the board have the direction and control of the business of the bank, with authority to act in connection with the conduct of the business of the bank in all matters which are not by this act or by the by-laws of the bank specifically reserved to be done by the board or by the executive committee ...
Then section 8 makes provision with respect to the appointment of the governor, deputy governor and assistant deputy governor, and in subsection 5 of section 8 it is provided:
(5) The governor, deputy governor and assistant deputy governor shall each hold office for the aforesaid term during good behaviour.
In bringing down the amendment the finance minister very properly stated that the appointment of directors whose votes would outvote the directors selected by the shareholders would give the government a certain control at the meetings of the board of directors. But that suggestion implies that the directors hereafter proposed to be appointed by the governor in council will be subject to the

direction of the governor in council, from the mere fact that they were so appointed by the governor in council, and therefore that the governor in council through the new board of directors will have a larger and an almost complete control over the operations of the bank. But I suggest to the right hon. gentleman that he has not laid sufficient emphasis upon the fact that the appointments of governor and deputy governor are made by the governor in council, that they hold office nominally for ten years but in fact during good behaviour, and that the clear, the established and the vital principle of the act is that the government, in so far as governmental control may be deemed necessary or expedient, will exert that control through the governor and the deputy governor, who are governmental appointees.
Then section 13 of the existing act, in which no change is being made, provides:
13. (1) There shall be an executive committee of the board, consisting of the governor, the deputy governor and one director selected by the board.
That is, two of the three. members of the executive committee must always be governmental appointees. Then it provides for the deputy minister of finance being authorized to attend all board meetings in order that the Minister of Finance, and through him the government, may receive reports of the meetings and of the transactions at the meetings of directors. Subsection 3 of section 13 provides:
The executive committee shall be competent to deal with any matter within the competence of the board but every decision of the committee shall be submitted to the board at its next meeting.
The executive committee, therefore, has executive control of the administrative affairs of the bank. It is possible that the report of the executive committee to the board might not meet with the approval of the board, but I suggest there is no provision in the act as it at present exists that the board could overrule the decisions in relation to administration which are arrived at by the executive committee, on which there are two governmental appointees. But to make the matter clear, section 14 was inserted, to provide:
No action or decision of the board of directors, or of the executive committee, shall have any effect unless the same is concurred in by the governor, or in his absence or incapacity by the deputy governor.
There was in that provision an implication that the board of directors selected, except as to two, by the shareholders of the central bank, who are private individuals, might



IS, 1936

[Stage Direction]
Bank of Canada-Mr. Cahan
discuss, might consider and might advise, but they could not by any decision overrule the decision of the tw-o governmental appointees, the governor and deputy governor of the bank when sitting as a majority of the executive committee; because it is clear from the act itself, clear from the terms of the commission which proposed the bill in its present form almost verbatim, clear from the discussions which took place at the time, that the governor and deputy governor are appointed by the government and responsible to the government for carrying out all matters of importance in vital public policy which the government had adopted or announced.
Then, to make the matter clearer still, it was provided with regard to the by-laws of the bank in relation to dividends that dividends could only be paid out of profits and could only be paid from time to time at a rate not exceeding 4J per cent as provided in by-laws which had been formulated and adopted. How were those by-laws made? By whom were they proposed, adopted and enforced? Section 43(1) provides:
The governor in council shall make by-laws not repugnant to the provisions of this act with respect to-
I will leave out one intervening paragraph which is not important:
(b)	the transfer and transmission of shares;
(c)	the declaration and payment of dividends;
So that by-laws providing for the payment of dividends were by-laws to be made in the first instance by the governor in council. And then in order to interpret that provision of section 43(1) let me read section 31(g) of the Interpretation Act, chapter 1, revised statutes of Canada:
If a power is conferred to make any rules, regulations or by-laws, the power shall be construed as including a power, exercisable in the like manner, and subject to the like consent and conditions, if any, to rescind, revoke, amend or vary the rules, regulations or by-laws and make others;
Therefore there continued to be under all circumstances a power in the governor in council to make, rescind, modify or reenact the by-laws under which this bank operated; but in order that there might be an ancillary power in the board of directors to initiate the making of by-laws or changes or modifications in the by-laws section 43(2) provided:
The board may with the approval of the governor in council amend or repeal such bylaws or make others with respect to the matters mentioned in subsection one hereof.
And subsection 1 includes the subjects upon which by-laws may be made. So that we find that the by-laws governing the administration
12739-245 J
of the act, governing the transfer and transmission of shares, governing the declaration and payment of dividends, were first made by the governor in council, which still retained its right to amend or modify them; and even if the directors proposed by-laws these could be made only with the approval of the governor in council. In my opinion, therefore, and I do not desire at this moment to enter into any personal controversy with regard to it, this act as it at present exists constituted a bank whose stock was privately owned, it is true, but a bank which nevertheless in all matters of policy and administration was controlled by the governor in council through officers appointed by the governor in council who hold office only during good behaviour.
The present act also has a provision with regard to voting at general meetings of the bank, to the effect that no shareholder, either in person or by proxy, can vote more than fifty shares, excepting-and it is a very important exception-the Minister of Finance. The provision in effect is that those who do not attend the meeting but desire to vote by proxy must send their proxies to the Minister of Finance, which fact gives the Minister of Finance a very extensive control; for we all know that the great body of shareholders in banks and other companies, either public or private, send their proxies to the president or other officer of the company or corporation in order that he may vote for the absent shareholders. So that from first to last I think that this present bank is to a very large extent under governmental control.
How much more extensive control is given by the amending bill which we are now considering on the motion for third reading? This amending bill does provide for a larger number of directors. It does provide that at all times the directors who are appointed by the governor in council shall have and exercise a majority vote over the directors appointed by the private shareholders. The finance minister emphasized the fact, as I think he was entitled to do, that the appointment of these directors by the governor in council, and the appointment of two others sitting on the board of directors, namely the governor and the deputy governor, give the government a preponderance of influence and direction and control over the operations of the bank. It was never intended that a bank was to be set up which was to act as an independent oligarchy to control in matters of grave public policy. The very fact that the governor and deputy governor were to hold office during good behaviour emphasizes the contrary view. But in the amending act the conditions as to
[Stage Direction]
Bank of Canada-Mr. Cahan
the executive committee consisting of the governor and deputy governor and one director of the board are still continued. The board is enlarged, it is true. It is no longer a wholly privately owned bank, but the present Prime Minister stated again and again that he dad not regard that issue as vital. I have not had any consultation with the leader of the opposition, who was then Prime Minister, but as far as I can recall conversations with him 'he did n-ot regard private ownership as absolutely vital. The whole question of ownership of shares was an open question, with a great deal to be said on both sides.
But now we have one change. Section 14 as I read it in the existing act says:
14. No action or decision of the board of directors, or of the executive committee, shall have any effect unless the same is concurred in by the governor, or in his absence or incapacity, by the deputy governor.
That, I submit, gave the government direct and complete control over the operations of the bank, in view of the fact that those officers hold office during pleasure. Furthermore. no governor or deputy governor appointed to such a high position would attempt by the exercise of any arbitrary power to defeat the government in a matter of public policy adopted by the government in .respect to the management of that bank. The assets of the bank are not the assets of the company. On dissolution or otherwise, by provision of the existing act, the shareholders are entitled to receive only the par value of the shares for which they paid par. The whole .intent of the act is that all the other assets of the bank, its gold reserve and its rest, are assets of the crown in the right of the government of Canada, in respect of which the shareholders have no ownership whatsoever. Furthermore, to accentuate the fact of government control, all the excess profits of the bank accrue to the government; and in the payment of dividends, such payments can be made only to the extent of four and a half per cent under the authority of bydaws which the government have adopted or enacted or which have been proposed by the board of directors with the approval of the government.
I do not wish the house or the country to run away with the idea, by reason of the eloquent and impressive way in which the Prime Minister in the discussions on the public platform, and yesterday in the discussions of this house, referred to a privately owned bank, that we of the late government were acting altogether foolishly and without due regard to the public interest in creating

the institution with the powers and authority with which it is vested but which are always under the control of government nominees.
Section 14 of the old act, which I have just read, has been repealed and a new section adopted in committee as follows:
14. (1) the governor, or in the event of his absence or incapacity the deputy governor only, shall have power to veto any action or decision of the board of directors or of the executive committee, and if this veto power be exercised, the governor or deputy governor, as the case may be, shall within seven days inform the minister in writing of the circumstances and the minister shall submit the veto to the governor in council who may confirm or disallow the veto.
(2) any director or member of the executive committee may inform the minister in writing of his view of the action or decision in question, which view shall also be transmitted to the governor in council.
Dealing first with the executive committee:
The governor ... shall have power to veto any action or decision of the ... executive committee....
The executive committee is composed of the governor and deputy governor and one other member of the board. Such a contretemps as the governor having against him the deputy governor and the other member of the executive committee is not likely to arise. If it should arise it would be a dispute between two government nominees. It must be a dispute between the governor and the deputy governor with regard to some grave matter of public policy. And I see no objection, in view of the reorganization of the board, to the government having a final and decisive voice in respect to disputes between its own nominees. Furthermore, remember that a majority of the votes of the board, and after certain date a majority of the members of the board, will be government nominees, and there can be no decision by the board except one in which a majority of the board appointed by the government have a voice. This provides simply that in case of dispute in respect of a matter of public policy of grave concern between the government nominees appointed as members of the board and the governor, who is also appointed by the government, the matter shall be reported to the governor in council, who shall hear the terms and nature of the dispute, and give a decision thereon.
I wish to impress upon the Prime Minister what appears to me to be an indubitable fact, that the introduction of this new provision which is assumed by public acclaim to differentiate between the so-called privately owned and privately controlled1 bank on the one hand and the govemmentally controlled bank on the other is only due to the incident

Bank of Canada-Mr. Maclnnis
that the government is now appointing two classes of its own nominees. The one class is appointed by the government and is undoubtedly removable by the government. I know of no provision of the law wThereby an order in council appointing one of these gentlemen as a government appointee on the board may not be repealed and the appointee removed, and a new order in council passed authorizing some other nominee to fill the vacant position. So that what has now been introduced is simply a provision whereby in the event of a dispute or difficulty arising between one class and another of government nominees, the government reserves to itself the right to make a decision.
I am not disposed to enter into any discussion with the Prime Minister with respect to his public addresses. It is clear that even many of his own supporters took, from what I considered his undue emphasis with regard to the privately controlled bank, the idea that more sweeping changes were proposed. I congratulate him upon limiting the proposed changes to the extent they have been limited, and also upon the fact that he is not placing upon the shoulders of the Minister of Finance, an already overburdened minister, the direct supervision of the ordinary administration of the Bank of Canada. That would be too much of a burden to be borne by any member of any goverment. The Minister of Finance will find, if my presumption is correct, that under present conditions no man in public office in Canada, other than the Prime Minister-and I except, him-has burdens, responsibilities and duties as great as those now imposed upon the Minister of Finance. Therefore I congratulate the government upon the fact that although they may differ from us as to names and nomenclature, the real facts indicate that to the same extent that the government had control, by the appointment of its nominees as directors and deputy directors it now retains control. But the government will have no more far-reaching, no more extensive or no more competent control than it exercised before the day this bill was introduced.
I do not wish to enter upon a political discussion, nor do I wish to create or even suggest any further difficulty between the Prime Minister and some of his supporters who have voiced extreme views. But I insist in deference to the leader of the opposition, to his well known views as I understood them, and to his colleagues who were engaged in and to some extent assisted in the drafting of this measure, that they are entitled at least to this explanation to the public of the real facts at issue.
['Mr. Speaker, I should like to move, with the consent of the house, that we revert to the order for motions, in order to file the fifth and final report of the standing committee on miscellaneous private bills.']
Mr. NEEDHAM:: May I ask the hon. member who has just taken his seat whether in his
opinion the Bank of Canada was under the control of the government prior to the introduction of the present bill?


Charles Hazlitt Cahan: Yes.


Joseph Needham: Then did the hon. member describe the government's policy when, speaking in Toronto, he said that about $932,000,000 had been withdrawn from circulation?


Charles Hazlitt Cahan: The address made in Toronto, to which the hon. member refers, was one made before the initiation by the government of a central bank policy. It was made before the royal commission had published its report. If my hon. friend wishes to have my personal views with regard to the address I delivered in Toronto I suggest that he call upon me some fine morning in my office, and I shall be prepared to enter into a discussion of it. But that is not now a matter of public policy; the policy of the late government was indicated by its actions just as that of the present government is indicated by its actions in dealing with the central bank.
Mr. ANGUS MaeINNIS (Vancouver East): Mr. Speaker, up to the present I have not taken any part in this debate, but on this occasion I wish to place on record very definitely the position taken by the small group of which I form a part. I do so particularly in view of a statement made yesterday by the Prime Minister (Mr. Mackenzie King), and also because in British Columbia, and especially in the city of Vancouver, the Bank of Canada issue was one of the main points in the campaign of 1935. I believe I would be correct in saying that so far as Vancouver was concerned there were only two issues, namely, the policy of the Liberal party on the Bank of Canada, and the oriental question. In view of the discussion in the house two days ago, and the approval and loud applause of the Minister of National Defence (Mr. Mackenzie) on every reference made to British justice, British fair piay and British traditions, I am satisfied we shall have no more trouble with the oriental question.
Immediately upon the conclusion of the session in 1934 the same hon. member pointed out that the group in this corner of the house had supported the government in forcing upon the people a privately owned central bank. The facts of the matter are that we have always been in favour not only of a national bank but of the socialization of the financial institutions of Canada. While the Bank of Canada Aot of 1934 was not everything that we would have liked it to be, we voted for it because it was a step in the direc-

Bank oj Canada-Mr. Bennett
tion in which we wanted to go. For the same reason we will vote for the amendments proposed by the present government.
Unlike my good friend the Minister of National Defence I am concerned with the legislation, not with the party that may be putting the legislation on the statute book. If the Conservative party brings in legislation of which I can approve, even in small part, I will support it. The minister would probably oppose it because the Liberals had not brought it in. On the other hand, if the Liberals bring in legislation of which we can approve, even though it does not go as far as we want it to go, we will support it. We are not satisfied with the present amendments any more than we were satisfied with the original act. But the principle has been adopted. After the act as passed in 1934 we pointed out that as the principle had been adopted, the legislation could be changed if any party in power saw fit to bring in the necessary amendments.
We are in favour of socialized banking or the socialization of the financial institutions of Canada. We are not in favour of these things because we wish to print money and give it to every individual who wants or needs it-we feel quite satisfied that that would only create another problem-we are in favour of these things because we want to use them to socialize the means of production within the country. Unless the people own the goods and services that are in the country they cannot get access to them by merely owning the bank. It is for these reasons that we are supporting the present amendments to the Bank of Canada Act, 1934.


Right Hon.   I@: Mr. Speaker, I have not made any observations on this bill since its introduction, for very obvious reasons, but after listening to the speech of the Prime Minister (Mr. Mackenzie King), delivered yesterday, I think it is desirable that I should make some very brief observations upon the attitude which the present government assumed on the public platform during the election of last year when dealing with this question. First, in various parts of Canada which I visited I found that this bank had been held up as a privately owned bank. It was stated that, by contrast, it was to be a publicly owned bank. I agree with the Prime Minister when he says that he did not use the word "nationalized'; he did not use that word, so far as I know, but the effect of the words "publicly owned" upon the public mind was to induce the people to believe that the bank was to be nationalized.

A publicly owned bank means a bank owned by the people. The bank created by the late government was a bank privately owned; the bank that will be in existence after this bill emerges from this parliament will be still a privately and publicly owned bank. It will not be a publicly owned bank. Therefore, the promise that this will be a publicly owned bank has not been honoured. There can be no gainsaying that.
Secondly, it was stated that it would be a publicly controlled bank and that currency would be issued in terms of public need. Of course that meant only one thing, and that one thing has not been accomplished by these amendments, and it is not proposed to accomplish it. Those of us who read the delightful utterances of the Minister of National Defence (Mr. Mackenzie) recall the statements he made with respect to what this bank would be. I cannot help but think that his understanding of it was entirely different from the observations made by the Prime Minister yesterday. It may be that he did not properly appreciate what was meant. If he did not, is it any wonder that the ordinary, average elector looked upon it as somewhat different from the terms of the bill now before the house?
The next point that was made was that we would have, in effect, a publicly controlled bank. I cannot do more on that point than direct the attention of this house to the fact that the executive committee is the governing body of this organization, and the executive committee has not been modified or changed. Under the former act it consisted of the governor, the deputy governor and one director to be named by the board of directors. The deputy minister of finance was to attend, although he had no power of voting; he was to attend as the liaison officer between the government and the bank. When this bill is assented to in a few days it will perpetuate an executive committee consisting of the governor, the deputy governor and one director selected by the board of directors. The deputy minister of finance will still be the officer who relates the policy of the government to that of the bank. Therefore, there has been no change in the executive committee and the control of the organization from day to day is a control exercised by the executive committee. The board of directors will be able to meet but seldom, because the distances are great and they are scattered over the whole country.
The next point is the power of veto. It is perfectly clear that the governor in council has now assumed the power to veto. To veto what? To veto resolutions that may have

Bank oj Canada-Mr. Bennett
been arrived at by the executive committee when there has been a difference. How can that difference arise? Remember, the committee consists of three members, two of whom are selected by the government while the third may be a government nominee. There being only three members, any differences that will arise must be, first, differences between the governor and the deputy governor on the one side and the director on the other. In that event the governor would not disallow it and the resolution would stand. In the other case it would be the deputy governor and the director against the governor, and in that event the governor in council would have to decide between its own governor and its deputy governor and director, who might or might not be a government nominee. Could anything be more ridiculous than the suggestion that an executive committee thus composed can ever run foul of the governor in council unless there is a conflict between those who are operating the bank and the government of the day, a division of opinion between the executive committee and the government itself? In that event the powers conferred by this bill will not have modified in any sense the provisions that now exist, except that the governor in council may exercise a veto with respect to differences where the governor is on one side, as I have said, and the deputy governor and the director are on the other side. The government will have to choose between the two.
It was said further in the course of the explanations given the public last year that this was a private bank, entrusted with the power of issuing money, and to which had been transferred the gold of the country to hold as security for the issue of the currency of Canada. All of this was true, but only partly true. It will be recalled that under the provisions of the statute creating the bank, the bank was made responsible for the issue of the paper currency which it took over. In addition, that responsibility was secured and assisted by the issue of Dominion of Canada bonds which were placed in the treasury of the Bank of Canada and which have been a vital factor, contributing as they do to the revenues from which the dividends are paid. Is there any change in that? No. The gold still belongs to this bank, owned partly by the people and partly by private shareholders. The paper money is still issued by the bank, owned partly by the people and partly by private shareholders. The liability of the bank for the Dominion of Canada notes still exists; it has not been changed. The guarantee given by the deposit of bonds in the dominion with the bank to
secure its obligations still continues. There has been no change, none whatever. There still continues the relation between the bank and the private shareholders that existed when this bill was introduced into this house.
And lastly, upon that phase of it, it will be recalled that the present Minister of National Defence introduced in the banking committee, when the bill was under consideration, an amendment by which he proposed-and it struck me at the time it was a proposal that was in the minds of many hon. members- that the country, if it so desired, might secure the shares of the bank-secure them by taking them over at any time. This proposal was negatived by a vote in the committee-why? The answer is obvious. For this parliament had power, as it had in the case of the Grand Trunk Railway, to enact a statute to provide for the expropriation of these shares, for the taking over of the shares, and for the fixing of the value of the shares by arbitration or otherwise. That power rested with this parliament, and the Minister of National Defence will remember that the amendment he proposed was negatived for the very obvious reason that it was a declaration of a power which rests with this parliament, which has always rested and always will rest with it, the power on the part of parliament to enact legislation, if it so desires, to expropriate or compulsorily take any property which in the national interest it should possess. And when, during the progress of the election campaign, it was suggested that this should be a publicly owned bank, I took the trouble to point out to the people on more than one occasion-on many occasions in fact-that so far as the government was concerned its first view had been that these shares should belong to the Canadian people as a whole, publicly owned.
But having regard to what became apparent with respect to methods abroad, the invading of the privacy of governments and the insistence that patronage should be utilized in the creation officially of positions in the bank,
I told the committee myself that we could not possibly undertake properly to create this bank if we as a nation undertook to hold the shares, that the pressure of all sorts of people for all kinds of positions was such that the bank itself must assume responsibility for its organization. And I pointed out, as I do now, the sort of pressure that was used: (a) geography; (b) rates; (c) religion; (d) polities, and, after all, sometimes, merit-not so often, but sometimes, merit. Now these differences pressed upon us so strongly that we believed that this bank could be properly organized only if it were done under the auspices of directors, the bank being privately

Bank of Canada-Mr. Bennett
owned; and that was the method we pursued. I told the banking committee that; I told the people of the country that; and I said that if after a fair trial it was found desirable that the bank should be owned by the people I would be the last man in the world to interpose any obstacle or to suggest any difficulty; because, if the people desired to follow the policy pursued in some countries instead of adopting the policy followed in other countries, if they preferred the policy followed in great nations rather than to adopt a new policy followed by a smaller number of countries, I was content. New Zealand was organizing its bank about the same time that we were, and adopted in the first instance the very idea that we did, namely, that the organization might be carried on best under private auspices; and then came the change of government and the same cry for public ownership, but not the same result, for they did one thing there that one would expect them to do if they were to make it publicly owned. They took over the shares.
I come now to the next point. The sum of $5,000,000 was the capital of this bank. In Australia it was pointed out that capital as such was unnecessary, inasmuch as a loan from the state was all that was essential to enable the bank to function; and the central bank in Australia carries on more than a central bank business: it carries on the general business of banking, having secured in the first instance, from the state itself, sufficient money for the purpose of enabling it to discharge its function. But it earned large profits, and these profits have now become the nucleus of its capital with respect to its general transactions of savings bank business. It well may be that the experience of nations is not of value in relation to financial matters, for each country has peculiar conditions which may possihly require different treatment from any other country in the world. But we did know, in the light of history, that the publicly owned central banks were few in number and that their success had not been greater than, if as great as, that of the privately owned institution. The circumstances connected with the coming into being of the Bank of England perhaps differentiate that institution from other central banks; but in Europe there are many central banks, and when it was suggested that the Liberal party was in the van of the movement for the creation of a central bank in Canada, I could not but think that the language used by those who sit to my left must have carried conviction, because we do recognize that in the early days immediately after the war-

the Minister of the Interior (Mr. Crerar) will recall this-those who sat to the extreme left then urged the creation of a central bank. Why? I am not referring to his party; I am speaking of the smaller group, notably Mr. William Irvine, if the hon. gentleman wishes me to mention any names.


Mr. CRERAR:: I am speaking only from
memory, but I think that if the right hon. gentleman will search the records of Hansard of 1921 and on for several years, he will find that suggestions for a central bank were not made at that time.


Mr. BENNETT:: I was not in the house
and therefore I can speak only from what was said outside, but I do recall one man, Mr. Irvine, and another, Mr. Coote, urging that a reserve bank-I think ait times he called it a reserve bank and) at other times a central bank-be established:.


Mr. MACKENZIE (Vancouver):: The
question was suggested in 1916 by Mr. W.
F.	Maclean.


Richard Bedford Bennett: I am familiar with that.
I know that in 1916-it was before the Union government came into being-the late Mr. W. F. Maclean did urge the creation of a central bank at the same time that the question was engaging the attention of the United States authorities. But that was in passing rather than the urging of it as a matter of national policy, if I may differentiate between the two. It will also be recalted that at the Genoa conference the question of a central bank for all the nations of the world was discussed as a matter of international policy.
Leaving that, however, I merely desire to mention that the question of the establishment of a central bank engaged the attention of all the great international monetary conferences and of financial men in Canada, because the banks in Canada were opposed to it. There was never any doubt about it that, with one exception, the chartered banks, the managers and presidents, in Canada opposed the creation of a central bank. We might as well face that frankly. They did it openly without hesitancy or doubt; and the reasons were obvious. All one had to do was to look at the Finance Act and the Bank Act to realize why the president of any bank would be opposed to the creation of a central bank. So far as the late government was concerned its attention was very markedly directed to it by special circumstances apart altogether from, shall I say, the academic discussions about it-and I fancy they were academic discussions-by members of governments for

a very long time in this country. When England went off the gold standard and the question of exchange became acute it was of course realized that all our exchange business was carried on. through New York, and a special effort was made to discover any means whereby we might assist in creating some method of doing our exchange business with London. It was pointed out that our efforts were futile, having regard to the small volume of trade, relatively speaking, that we controlled, and which was, of course, the basis of the exchange values. Therefore to a very considerable extent we had to continue to rely upon the New York market. But the government made up its mind that a central bank was desirable. Before the commission was appointed it had already determined, as was pointed out in this house, that it was desirable we should have one. But there might be differences of opinion, and a commission was appointed consisting of many men who were well known in financial and other circles for their knowledge of the situation. We were fortunate in securing as chairman one who had discharged in Great Britain a very great function as chairman of a most important commission there. Those of us who were in the house from 1930 to 1935 will recall that the Minister of National Defence became so familiar with the Macmillan report that he could quote from it with perhaps more readiness than even from the bible, of which he is a good student. The Macmillan report became known to every member of the house, and it supported the project of the central bank.
The bank was organized on the basis I have indicated. As I frankly told the committee in 1933 when we were dealing with the matter, the idea we originally had in our minds was that the shares should be held by the state and that it should be publicly owned, but we saw so many difficulties in the way of organizing it that we thought the only way we could secure an organization that would not be a political one was to pursue the methods that we did. But we pointed out-not one of us, not only myself, but others as well-as regards the question whether it should be a publicly or a privately owned bank, that we knew what the experience of other nations had been, and we said that whatever the people desired to have in that regard we should be glad to see they had. But when the people were told that they were going to get a publicly owned bank they thought they would get a bank that was publicly owned; and the bank they are going to get now is not going to be a publicly owned
Bank oj Canada-Mr. Bennett
bank. Of that there is no doubt. There is only one way that it could be done. The Minister of National Defence realized it when he was on the committee. He understood that we could achieve that end only by that same method, properly adjusted of course to meet the circumstances in taking the shares of the bank, as we employed with regard to the Grand Trunk Railway; or we might do it as we did with the shares of the Canadian National Railway, that is, acquire the shares and fix their value either by arbitration or by some other method-if thought desirable, by reference to the exchequer court.
It is said that these shares have changed values; that many people bought them at a higher value than that for which they were originally obtained, namely $50 a share. That sort of thing is true of any property. Look at the poor unfortunates who bought property at the townsite at Hudson bay; consider what they paid, and what they got after the present Minister of Finance, when Minister of Railways, had expropriated their rights. Observe their evidence in the exchequer court that they had paid thousands of dollars for that for which they were compensated in hundreds. It was a speculative movement. For the shares that were acquired S60 at the most was paid, and $60 represents an increase of twenty per cent over the original value. If the government was going to make the bank a publicly owned! institution it was necessary to do only one thing, and that was to acquire the shares, unless indeed', as was suggested from some source, five million dollars was not sufficient to enable the bank to function and it was necessary to increase its capital. But the Minister of Finance has not so suggested, nor has any one on behalf of the bank. "We raise the capital to $10,100,000, and we put in the capital structure of the bank $5,100,000 more than it had, without any request from anyone but in order that a majority of the shares may be held by the state." That is the explanation that has been given-"a majority of the shares held by the state." That is accomplished, I say, by the method that has been stated, namely, the payment of $5,100,000 to the bank and the issue of a special class of shares vrhich do not carry a vote for the purpose of electing directors, leaving still to the holders of the privately owned shares the right to elect directors, while the crown, owning the $5,100,000 worth of shares, appoints its directors. The number of directors that it is appointing will now be six in all, which of course will give control of the directorate, but it will not give control of the executive committee, which still consists of the two original nominees, the governor and the deputy gov-

Bank oj Canada-Mr. Bennett
ernor, supplemented' by one director who may be either appointed or elected, as the case may be.
So much for the capital stock and the way in which the matter has been dealt with. There is one other matter upon which I think a few words should be said. The Prime Minister referred to it yesterday. You will find it in his speeches-not only those delivered in this house-that currency should be issued by this bank in terms of public need. What do those words mean-"in terms of public need"? There was not a platform in western Canada that I visited where I was not told before the meeting, "You must deal with this question. You must be prepared to say that you are willing that the Bank of Canada should issue currency almost ad lib, to any extent that may be necessary for the public need." Well, heaven knows the public need is still here; it lias not changed. But this bill does not confer any greater power for the issue of currency than the bank had before the hand of the present government touched it-not one change in the world. Then what do these words mean, the power to issue currency in terms of public need? What did they ever mean? They mean to-day not more, not less than they meant in 1930; for this parliament has not been asked to confer nor has it conferred upon the Bank of Canada wider powers to issue currency than the bank possessed under the original charter. Let there be no misunderstanding with respect to that. I wish that to sink firmly into the minds of the people when the Prime Minister says, "We have kept our promises by one hundred per cent." Currency, we were promised, would be issued in terms of public need. We have heard two or three hon. members speak about the public need, but I defy any member of this chamber to point out that there has been a single modification either for good or for ill, either adding to or subtracting from the powers conferred upon this bank w'hen it came into being. Still stands metallic coverage, still stands the same percentage, still stands the same position with respect to legal tenders, still stands the same power of rediscount, still stand the same powers of transaction of business; no widening of powers, no increase in the ambit of its authority, no extension of jurisdiction, no power to issue currency to the extent of a single dollar in terms of public need beyond what it had when we created it in 1933. Where are the powers? I listened yesterday, expecting something of this kind might be pointed out, because I knew it was not to be found in the bank act; peradventure something now was to be done. But nothing of that sort has been done. Credit was a social service-I took 
down these words, so it is not necessary to turn back to Hansard-"and the great struggle was between the money power and the people." The money power and the people- that is the struggle the Prime Minister put before the people of Canada, and he was the stalwart champion going out with sword and shield to fight this money evil, remembering the Spartan mother's direction of old, "Return, my son, with your shield or upon it." He went about this country and said to the people: All I want to do is to fight this great money evil, to take part in this great struggle between the people and the money power. Well, they fought it all this session, and I have seen no signs of any change in the instruments with which this great fight was to be fought from what the situation was when he went to the people last year. Is there any change? They say: Yes, we have six more directors in the Bank of Canada; we have doubled its capital; the executive committee remains as it was, but we have given a veto to the governor in council to deny or affirm if the governor and deputy governor do not agree. And they say: Look what we have done-we are fighting the money power for the people. Is it not amusing?


Mr. MacNICOL:: Worse than that.


Richard Bedford Bennett: My hon. friend from
Davenport says, "Worse than that." When the Prime Minister was referring to these matters and saying that credit was a social service I was wondering how much there is in this statute that was not there before; that is the question. The hon. member for Vjancouver-Burrard (Mr. McGeer) pointed out the situation, and it was not very palatable to some members of this chamber. He said: "I took those words of the Prime Minister to mean just what the ordinary man would think they meant, namely, that currency was to issue in terms of public need and that credit was a social service. I thought that is what was meant, and I told the people that. I told them that a new heaven and a new earth was about to come, and I appealed for their support on that ground. I took the Prime Minister's words," he said, "to mean what the ordinary man would think they meant-currency in terms of public need, credit as a social service." Those are the words, Mr. Speaker, by which appeals were made to the people, and when two leading members of this house, men of first-rate mental power and grasp, the hon. member for Rosthern (Mr. Tucker) and the hon. member for Vancouver-Burrard, saw fit to accept those words as meaning what the average man thought they meant, who can blame them?

Bank of Canada-Mr. Bennett
I should just like to know, if an independent canvass were made of this chamber, how many members did not think that those words meant just what the average man thought they meant. I wonder how many members would disagree with the hon. member for Vancouver-Burrard and the hon. member for Rosthern as to what they thought those words meant in October, 1935.
I confess that those with whom I came in contact, and I talked with many people, all said: Well, you are a sound money man. Sorry, we cannot have any more of it; it is a bad thing. What we must have is a new thing, currency issued in terms of public need and credit treated as a social service. And many of them, Mr. Speaker, fully believed they would be able to use those words to their own advantage-not for profit, but that they might be able better to deal with the pressing problems that confronted them. Will not any member sitting opposite me, will not nearly all of them say, that in the rural parts of Canada the words, currency in terms of public need and credit as a social service, were interpreted by those who heard them as meaning that they as individuals would experience those new conditions that come about by the greater circulation of money and the consequent improvement in the purchasing power of the masses of the people? That is what they thought.
I am going to be perfectly frank and say that the language of the Prime Minister is open to another interpretation, and in this connection I cannot but recall Mr. Keynes' last book, to which the hon. member for Vancouver-Burrard referred. Mr. Keynes in his last book points out that he has taken a different view altogether from the view he took when he wrote his previous books, and that this last book is intended for economists and not for the average man, because he has to convince and convert the experts first, after which he hopes to be able to do something with the common people, the masses of the people. That is the way he puts it in his very interesting and amusing introduction, and if there can be anything humorous in economics I commend those few pages of Mr. Keynes' last book to those humorously inclined. I think the Prime Minister must have had exactly the same attitude of mind, and when you find as profound a mind as that of the hon. member for Vancouver-Burrard and as close a student of economics and as industrious a member of his profession as the hon. member for Rosthern drawing the conclusions they did, one cannot but realize that after all the Prime Minister was talking to the elect; he let the masses draw any
conclusion they desired, and the masses drew the conclusion that currency in terms of public need would be issued, which meant that dollar bills would flow more freely, there would be more paper money floating about the country, the printing presses would be more active and the engraver busier than he ever was before; that credit which was essential to the body politic would now be issued as a social service like the old age pensions or some other measure of social reform. That is what the ordinary individual believed, what the layman, as Mr. Keynes calls him, concluded. That is not what the elect, the economists, understood. But it is what the Minister of National Defence understood. He has a very profound mind, and I know of no student of monetary reform who has given more time to the subject or who has been better trained in a great university than he. He has the clannishness of the Scot, and the Macmillan report became to him the shorter catechism of political economy in this country. Believing all this, accepting it as he did, his utterances were in accordance with the general understanding of the man on the street, the masses of the people.
I listened to the Prime Minister yesterday, and I know there was no intention that this should be so understood. He did not intend the untutored man on the plains or the fisherman on the sea or the lumberman in the forests to understand any such thing. Far from it. He was hoping, as Mr. Keynes hoped, to be able to convince and convert the economists first, that currency issued in terms of public need meant just what it has always meant in this country-no change. Public need merely meant, in the language of one of those who preceded me, sufficient money to enable the issue to correspond with the demand. Interest was still to be paid in the same old way-no change. There was to be no change in the payment of the toll that is exacted for the use of capital. No change, but still currency was to be issued in terms of public need. There was no talk then of interest or of these various matters which we now know the government is still carrying on in the same way. No, Mr. Speaker, the unfortunate electors were made to believe by the fervency of great advocacy that there was to be a profound change, a new heaven and a new earth. A better day would dawn. The monetary problems that had so much agitated great minds during the centuries were now to be solved, and public credit was to be issued in terms of public need, which meant that everyone who needed a dollar would get it. That is the sense in

Bank oj Canada-Mr. Bennett
which it was understood. And they believed it, which was unfortunate for us but very fortunate for those who sit opposite. But having believed it as they did, they can now look at this bill, and I defy any man to point out to me anything in this bill that changes the condition that existed heretofore. There it is. You have no change, but you have beautiful words, the words of the economist, of the political economist and the literary giants, all so mixed together as to make a perfect anaesthetic; being mixed together as a perfect anaesthetic they put the poor unfortunate elector to sleep, and they operated on him and he operated for them at the ballot box. Now he is awakening from his stupor; he looks round to see what the operation was; he learns that there was^ no operation worth while but that he had just been put to sleep with the promise of currency issued in terms of public need and credit as a social service.
I point these matters out, sir, because I feel that it is my duty to do so; in view of the effort made yesterday for so long a period of time, in a most interesting and, shall I say, to himself convincing speech of the Prime Minister, in which he made it quite apparent that there was no difficulty in squaring the circle-not the slightest in the world. All you have to do is to read sufficient extracts from newspapers and say: This i3 what we have done; we have done just what the newspapers said we would, and we have currency issued in terms of public need and credit as a social service. Well, having listened to the right hon. gentleman's advocacy of his consistency and of his one hundred per cent performance of the obligations undertaken, I have only to say that-alas and alack!-the meaning which he put upon his remarks should I think in fairness have been put into them when he was making them to the public. If he had explained just what I have said here; if he had said: Ladies and gentlemen, electors of Canada, when we have finished with the Bank of Canada Act we are going to double the bank's capital and appoint six directors, but we shall leave it just as it was with respect to the issue of currency and the discharge of the functions for which it was created; we are going to make it publicly owned by making it half private, except to the extent of $100,000, and half public,-if he had said that, I wonder how many who shared the general benefit from the language used by the Prime Minister during the election campaign would care to go back to their constituents, taking this bill in their hands, and truthfully tell the electors just the differences between the old act and

the new. "Currency in terms of public need, credit a social service." In hoc signo vinces!
I have nothing further to say, Mr. Speaker, except that I congratulate the government. I congratulate the Minister of Finance upon the training which he has received during the last few years, which enables not only the minister himself but those who sit about him to realize that after all, stability, security, certainty, are the hallmarks of a sound financial policy. Although for a moment you may be led by beautiful phrases or by words capable of two meanings to conclude that you may have currency issued in terms of public need or credit as a social service, you cannot possibly do it and maintain the position which this country has made for itself as a country that has honoured its obligations in terms of its contracts, has paid its debts to the extent that it has been possible for it to do so, and has stood out among the nations of the world as a country poor but young, realizing that if we are to develop as a great power, a great people, we can do so only by attracting capital to our shores, unless we are prepared to adopt the view which my friends to the left maintain and advocate so well, namely a socialist state. We are not yet prepared to do that. But unless we are, then the government is to be congratulated upon maintaining the old standards and following the course that experience has mapped out as the only course that can be followed by any nation that does not desire to bring about an impossible situation with respect to its currency on the one hand or repudiation of its obligations on the other. To the extent that the government has followed the course of its predecessors, leaving the Bank of Canada Act unchanged in its essential features, making the privately owned institution part public and part private, but not changing the general provisions as to its policy with respect to currency, and leaving all the powers and functions of the bank untouched by the ruthless hand either of time or of extreme radicalism, I congratulate it and trust it goes forward to discharge the very onerous duties and responsibilities that during the next few months rest upon it, in a manner that will enable us at the end of that trying period to maintain our position and be able to say with pride and satisfaction that we have not used either the printing press or the engraver's art to issue currency to meet our pressing needs, or treated credit as a social service that can be had by anyone that asks for it. It cannot be done and this system maintained. When I hear my hon. friends to the left advocating a change of the system I appreciate their consistency; for they realize that unless the system is changed we must maintain the posi-

Bank of Canada-Mr. Bennett
tion which was taken by the late administration and which the present administration is continuing to follow.


William Lyon Mackenzie King: Mr. Speaker, there is just one correction which I should like to make in the statement made by my right hon. friend at the beginning of his speech. I did not like to interrupt at the time. The right hon. gentleman said I had spoken of a publicly owned and publicly controlled bank. I do not think he will find in any utterances of mine either in this house or beyond its walls advocacy of a publicly owned and publicly controlled bank. I took care to say on all occasions that the question of public ownership was debatable but the question of public control was not, and I spoke of a properly-constituted publicly controlled bank.


Richard Bedford Bennett: I quite appreciate the statement made by the Prime Minister. In the speech he made at Saskatoon, which place I reached the day after he had been there, that was the understanding of his speech, but obviously it was not an attempt to report the language verbatim. If the right hon. gentleman says he made no such statement of course I am glad to accept his statement. It does not change the force of the argument.



[Stage Direction]
The house in committee of supply, Mr. Sanderson in the chair.
Salaries and expenses of the office of the Canadian Advisory Officer, $32,500.
William Lyon Mackenzie King: Mr. Chairman, in the
statement I am about to make I shall seek to anticipate the questions which may be asked with reference to the important international matters to be discussed this afternoon. Having regard to the critical situation existing in Europe and other parts of the world, and to the possible interpretation which may be placed upon any observations made in the course of debate this afternoon, and especially because of the world significance of some of the matters we are about to consider, I shall make no apology for following somewhat closely the notes I have carefully prepared. I hope the committee will permit me to make my statement free of interruptions. I shall endeavour to say nothing which will necessitate interruption, and upon completion of the statement I shall be pleased to try to give such further information as hon. members may wish to have.
It has been contended that the government has not made clear its policy on the important problems, immediate and future, which have been raised by the outbreak and progress of the Italo-Ethiopian conflict. It is true that the government has declined to make a statement at some critical stages when a statement would be premature, and would complicate rather than advance a solution. I believe it will be generally conceded that the course of events in Europe has more than justified the government's attitude. It is undoubtedly essential that in parliament and outside of it there should be full and responsible discussion of the vital questions of Canada's relations to other states. There has not been sufficient discussion in the past. That has been due to our slow emergence from the colonial attitude of mind; our relative immunity from any' serious danger of war on our own account; the real difficulties inherent in our preoccupation with the tremendous, absorbing and paramount tasks of achieving economic development and national unity, which with us take the place of the preoccupation with the fear of attack and the dreams of glory which beset older and more crowded countries; and the unparalleled complexity of our position as a member of the league, a member of the British Commonwealth of Nations and one of the nations of the American continent.

The situation is changing. Informed and serious consideration of Canada's external relations is being given by the press and by organized groups of citizens throughout the country. There is a much more realistic appreciation of our position than prevailed thirty years, even ten years ago. I cannot say that there has been a crystallization of opinion in any final or clear-cut form, but there is an increasing realization of the complexity of the problem and of the special Canadian factors involved.
So far as the general policy of the government in the present conflict is concerned, it has been made clear from the beginning. That policy was set forth definitely in the statement issued on October 29, within a week after the present administration assumed office. It is a policy by which we have abided and a policy to which we still adhere.
That statement set forth, first, the attitude which the government proposed to take on the immediate question of the application of sanctions to Italy, and second, the line of approach to the wider question of the aims and methods of the League of Nations. May I deal with each of these two questions in turn?
First, as to the immediate question. It was stated that while reserving consideration of the feasibility and desirability of making the league's central purpose the guarantee of the territorial status quo and the reliance upon force for the maintenance of peace-
-in the present instance, when an earnest effort is being made with wide support to test the feasibility of preventing or at least terminating war by the use of economic sanctions, and when there is no room for doubt as to where the responsibility rests for the outbreak of war, and having regard also to the position taken by Canada at the recent assembly, the Canadian government is prepared to cooperate fully in the endeavour.
It was further added that steps would be taken to secure the effective application of the economic sanctions proposed by the coordination committee, and that the Canadian government did not recognize any commitment binding Canada to apply military sanctions and that no such commitment could be made without the prior approval of the Canadian parliament.
I think that was a definite and clear statement of policy. How far has that policy been carried out?
First, "the effective application of the economic sanctions recommended by the coordination committee," representing all the members of the league which had concurred in finding Italy the aggressor. What were those sanctions? They were:

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1.	The prohibition of exports of arms and munitions to Italy.
2.	The prohibition of the export to Italy of certain key products useful for the prosecution of war and controlled by members of the league, including transport animals, rubber, bauxite, aluminium, iron ore, manganese, chromium, nickel, tungsten, vanadium and tin.
3.	The prohibition of all imports from Italy, except gold and silver coin and bullion, goods en route; later, books and newspapers; and later still, goods paid for though not shipped before October 19.
4.	The prohibition of loans or credits to Italy.
These were the sanctions, and all the sanctions, which the league commitee recommended should be put int-o effect. All were put into effect by Canada at or before the time agreed upon, November 18. All are still in effect. All have been enforced strictly and effectively.
As some question has been raised as to whether the sanctions are actually being enforced, it may be well to state the facts briefly. Any doubt on that score is based, I think, on misunderstanding either as to what the recommendations as to sanctions actually were, or as to the actual facts of their application.
The first recommendation for the prohibition Of the export of arms and munitions raised relatively few difficulties for Canada, as we produce these wares only in a very minor degree. There has been no indication of evasion.
The second recommendation, for prohibition of the export of certain key minerals, touched Canada more closely. We are the outstanding producer of nickel, one of the most important minerals included in the list, though it does not hold the decisive place which is sometimes attributed to it. Special care was therefore taken to ensure against not only direct but indirect shipment of Canadian nickel to prevent, in the words of the league committee, "any abnormal increase in the export of prohibited commodities by indirect routes."
The Department of National Revenue vigilantly checked direct export. As to indirect export, the fact is that practically all Canadian nickel bought by continental Europe is bought from Great Britain; London is the dominant centre in the metal trade for Europe. In 1935, for example, Canada sent 149,800 hundredweight of fine nickel to the United Kingdom and only 380 hundredweight direct to the continent of Europe. As a party to sanctions, the United
Kingdom has of course been equally concerned with Canada in ensuring that no nickel should reach Italy after the export ban went into effect. The other important possible channel is the United States. The position in that regard is simplified by the fact that for some years the International Nickel Company has followed the practice of selling to consumers in the United States for their own use only; no nickel has been sold in the United States for export to other countries. The exports to and from the United States have been carefully followed; some nickel has been and is being exported from the United States to Italy, but the amount is not sufficiently large to constitute an appreciable evasion.
Some misunderstanding has also arisen in this case because of the mistaken notion that all exports were prohibited. This of course was not the case. There was no reason why wheat or codfish should not be exported, so far as the exporter was concerned. Our general export trade was of course affected by the retaliatory steps taken by Italy which endeavoured to find substitutes at home or to divert purchases to non-sanctionist countries. Aside from direct steps taken by the Italian authorities, the decreased purchasing power resulting from the inability to sell Italian goods abroad of course reduced Italy's power to buy abroad.
The third recommendation, prohibition of imports from Italy, was relatively simple to enforce, which was one of the reasons for its adoption. The recommendation in this respect has been fully and faithfully carried out. Some misunderstanding has arisen from two sources. First, certain exceptions were included in the recommendation, none of grea importance, the chief being goods en route at the time the sanctions were applied, and goods paid for but not shipped before October 19, but as rigid care was taken to compel complete proof before goods of either category were admitted, the total was slight. Second, the ordinary statistics of importation give rise to misunderstanding. Our customs returns of imports do not comprise goods entering the country, but comprise goods passing through the customs, and consequently the returns show as "imports" goods which entered the country before sanctions were imposed, but not drawn from customs warehouse until some months later.
The fourth recommendation, the prohibition of loans and credits, like the first, created no special problem for Canada. The cooperation of banks and investment companies was early secured by the Minister of Finance. The recommendation, it may be noted, did not
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prohibit making payments due for goods or services, or the making of gifts.
In several cases inquiry was made as to the detailed procedure adopted by the United Kingdom and other countries. It cannot be denied that Canada has enforced the sanctions agreed upon as fully and effectively as any other country, and more so than a number of countries which agreed to sanctions "in principle."
As regards the proposals to add coal, iron and steel, and oil to the list of prohibited exports, it is not necessary to make any extended comment. The criticisms of the Canadian government's attitude on these proposals which were voiced in some quartern last December did not survive a clearer appreciation of what the Canadian government's attitude was and of the position taken by other countries. These commodities have not hitherto been included in the prohibited list for two reasons. In the early stages of the conflict, the prohibited exports were confined to articles which were substantially controlled by members of the league and trade in which therefore could not easly be diverted to non-sanctionist countries. When at a later stage their inclusion came up for review, a second consideration came into play, namely, whether their application would or would not lead to war. There is no inherent reason why these commodities should not be embargoed, why nickel or iron ore should be prohibited and steel or oil continue to be shipped. The difficulty arises from the inevitable dilemma which the application of sanctions presents: If moderate, they may fail to deter or halt the aggressor; if extreme, they may drive an aggressor to prefer the gamble of sudden battle to the prospect of slow strangulation. There is no blinking the fact that economic sanctions may lead to war. They mean the application of force. They are not mere commercial measures. They are in intention and reality a means of imposing the will of one nation or group upon another nation or group. In modem times they have always, in different forms, been an important part of the technique of war, from the Berlin decrees to the Trading with the Enemy Acts and the blockades of neutral countries in the great war. Whether they will progress into military measures is not necessarily within the control of the powers that impose them; that may depend on the calculation of advantage and disadvantage made by those against whom the test of will is directed.
In the present conflict, one of these commodities assumed critical importance. In modern military operations, with aviation and mechanized transport playing so decisive a role, a continuous supply of oil may be vital.

How vital is a question in dispute; the authoritative inquiry made by the league expert committee resulted in the finding that if applied by all countries it would become fully effective in three or three and a half months, but that, if applied only by league members, the effect would be merely to render the purchase of petroleum more difficult and expensive. Whether the enforcement of an oil sanction would, in fact, have led to war is also in dispute; the Italian threats may or may not have been genuine. In any case they were sufficient to cause some great countries to conclude that enforcement of oil sanctions might invoke new wars or at least make impossible a peaceful settlement of the existing war.
During November, the European press were full of assertions that Canada was initiating and urging the imposition of an oil sanction. It became imperative to correct this serious misapprehension. The Canadian government had not urged the step in question. Further, it did not consider that Canada should initiate such a step: Canada had no special power, no special interest in the present conflict which would warrant such a pretentious gesture. It was not upon Canada, but upon countries nearer the conflict that the chief brunt of possible consequences would fall. This was made clear in the statement issued on December 2. This statement, of course, referred to the origin and not to the merits of the proposal. It was explicitly stated that the Canadian government would be prepared to consider, with other members of the league, any proposal for the revision of economic sanctions.
I may add that on two later occasions, in December and in March, when it was expected that the question of oil, coal and steel sanctions would come before the committee of eighteen, the Canadian government instructed its representative to concur in the proposal if generally supported.
As regards military sanctions, the position taken by the government was stated on October 29:
The Canadian government at the same time desires to make it clear that it does not recognize any commitment binding Canada to adopt military sanctions, and that no such commitment could be made without the prior approval of the Canadian parliament.
The provision of article 16 of the covenant on the point is as follows:
It shall be the duty of the council in such
case-
That is, in case of a member of the league resorting to war in disregard of its covenant undertakings.
-to recommend to the several governments concerned what effective military, naval or air

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force the members of the league shall severally contribute to the armed forces to be used to protect the covenants of the league.
As a matter of fact, the council has not in the present instance recommended any military action by any member of the league. One member took, not military action, but military and naval precautions, but Great Britain's action in moving the home fleet into the Mediterranean was decided upon before sanctions were applied, and without any request from the council or members of the league, but as a result of Italy sending large bodies of troops to Libya, and other similar gestures.
In fact in the discussions between France and Great Britain which took place at the outset, there was no proposal to apply military sanctions, and this attitude was communicated to the Italian government. As the situation does not seem to be fully realized, I may take time to quote the concise statement made by Mr. Laval on December 28, as reported in the London Times; Mr. Laval's frank declaration is of interest further as indicating how decisions at Geneva are determined by the great powers there represented, as is doubtless in great measure inevitable. Mr. Laval declared:
As early as September 10 I had, at Geneva, conversations with Sir Samuel Hoare and Mr. Eden. Conversations about what? We were certain that our first effort at conciliation had failed and that hostilities would soon begin. We were concerned to know how the mechanism of collective security would be put into action. Without waiting for an official sitting of the council, in that spirit of close collaboration which must always animate French and British ministers, we discussed and examined the grave situation which would be created for the world by the Italo-Abyssinian war.
We at once agreed to avoid military sanctions, to adopt no measure of naval blockade, never to consider the closing of the Suez canal, in a word, to reject everything which might lead to war. We then considered what financial or economic sanctions we could adopt. I do not remember that there was any difficulty between us. We held our discussions, as may be imagined, on a basis of equality. We agreed in deciding that financial sanctions and an embargo on arms should first be submitted to a committee which did not yet exist, but which was created with the name of Committee of Coordination, and that other sanctions such as the refusal to buy and sell should be examined.
What does article 16 of the covenant say? "The council will indicate to the governments concerned what effectives may be necessary to ensure respect for the undertakings of the league." Well, at no time has the council made such a communication. Never has that text been mentioned, and I even repeat that by common and unanimous agreement we set aside all military sanctions and those which could lead to them.
It should be understood that in this statement Mr. Laval was referring to the initial discussions.
I come now to the present position: A new situation has arisen with the occupation of the Ethiopian capital by Italian forces and the collapse of organized resistance. That event requires us to consider the question, Why has the league failed, thus far? In the first place the preservation of peace and of Ethiopian independence had been seriously jeopardized and compromised before the league took any action. The Ethiopian question in one form or another had been the subject of diplomatic controversy and negotiation between the three neighbouring great powers, France, Britain and Italy, for forty years. Spheres of influence were claimed by each power; and efforts made to harmonize their claims with one another and with the maintenance of Ethiopian political sovereignty. Italy, the latest comer, was particularly concerned. Late in 1934, a border conflict at Wal-Wal brought this special angle of the growing tension between Italy and Ethiopia before the council of the league. After bandying back and forth, Mr. Eden's persistence wan largely responsible for its settlement, in an arbitral decision declaring neither party guilty. But the fundamental difficulty remained unsolved. It was not discussed by the three powers, Italy, France and Britain, when they met at Stresa in April, 1935. A few months previously France had agreed to recognize Italy's predominant right to economic expansion in Ethiopia, as Britain had done in 1926, but Mr. Laval contended that in neither case was there the slightest countenance for forced aggression. In spite of earnest efforts on the part of the British and French representatives in the summer of 1935, Italy persisted in its insistence upon a settlement by force of arms. The main issue did not come before the council until August, and even then its consideration was passed back and forth between the three powers and the league.
The three power conversations failed. In September the league assembly found the Ethiopian question deposited on its doorstep. By that time there were 250,000 Italian troops in East Africa, the Italian authorities had publicly committed themselves to military action, and the league's essential task of preventing war had become almost impossible. The suggestions for settlement offered by the committee of five were rejected by Italy, and on October 2 war broke out.
In the second place, the policy adopted after war had broken out has thus far proved inadequate to bring the war to an end or to save

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Ethiopia. That policy, in brief, was to abstain from military sanctions and to apply a number of economic sanctions, in the hope that the cumulative effect of mild economic pressure by the league, hard fighting by Ethiopia, and heavy rains in Ethiopia would eventually compel the aggressor to desist. The rains were delayed; the resistance of Ethiopian troops and Ethiopian geography proved less adequate than the military experts had forecast. The courage and determination of the emperor and the individual bravery of his men were hampered by tribal dissension, by lack of modern equipment, particularly in the air, and by the decision of the army leaders to risk large scale battles rather than fall back on waiting tactics and guerilla warfare. The undoubted organizing and engineering skill shown by the Italian forces, their ruthless bombing from the air, and finally their recourse to the horrors of poison gas in violation of their pledged word, enabled them to break up organized Ethiopian resistance much more rapidly than had been anticipated.
In the meantime economic sanctions have undoubtedly been hampering Italy's war effort, restricting supplies and weakening her financial position. Possibly if Ethiopian resistance had been prolonged, the existing sanctions would have been adequate to turn the scale, whether toward peace in Africa or toward war in Europe, who can say? but they were not adequate under the actual circumstances. General agreement for more stringent and strangling economic sanctions has not been secured; military sanctions have not been proposed. It is now apparent this policy was not calculated to halt a strong and determined aggressor. As Mr. J. A. Spender puts it:
If we strip the case of Italy and the leagu* of the terminology in which it is commonly involved, is it not a very simple one? One resolute man who does not hesitate to make war has been matched against two opponents, one of whom said that he would not make war alone and the other of whom let it be known that he would not make war at all. What other conclusion could there have been to this method of proceeding than that which we have witnessed ?
It is only fair to say that the reason was not fear of Italy, but fear of war, and war on a European scale, apprehension that the strain of economic insecurity, the reckless urgings of ambition or revenge, the tense and neurotic relations between state after state and its neighbours, the mounting armaments, would lead to a sudden flare of war in Europe if the spark fell from Africa. It may be that there was nothing in the Euro-

pean situation in December or in May which might not have been anticipated by statesmen close to the European scene when the existing sanctions policy was determined last September and October, but closer approach undoubtedly make the prospect more vivid and more deterring, particularly when the German government forced the Rhineland conflict upon the stage. In brief, collective bluffing cannot bring collective security, and under present conditions most countries have shown they are not prepared to make firm commitments beyond the range of their immediate interest.
What next? The question arises whether 'sanctions should be increased, continued at their present level, or discontinued. It is a question upon which there is wide divergence of opinion.
Those who urge they should be continued and increased, as for example by closing league ports and the Suez canal to Italian ships until such time as Italy agrees to make peace on terms consistent with her covenant pledges, contend in the first place, that the issue at stake is a great one, the preservation of the league and the system of collective security; and that if Italy is allowed to flout the league and annex Ethiopia, every aggressive great power will be encouraged to do likewise, every small state will be exposed to danger and unrest, and every people driven to fall back on armament and military alliances; and in the second place, that the risk is small, that Italy has been weakened by the financial strain, that the Ethiopian forces may reform and carry on guerilla warfare for years, and, in short, that there is still time to call the Italian bluff, and that it is safer to call it to-day than be faced with a more serious struggle with the aggressor of to-morrow.
Those who urge that sanctions should speedily be brought to an end, reply that the league is not at stake but a mistaken conception of league policy, and in any case article XVI was designed to save the victim rather than to punish the aggressor; that it would be the height of folly to risk an imminent war to-day in order to avert a hypothetical one to-morrow; that with the collapse of the Ethiopian government and Ethiopian armies, there is now no foundation on which to rebuild, no fulcrum on which to rest the lever; that the Italian economic condition is far from hopeless and her people united and flushed by success, and that with the Far East in motion, Palestine aflame, Austria torn by internal conflict and external propaganda, Germany watchfully waiting,
JUNE 18, 1936	3gg7
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France distracted by internal difficulties, only doctrinaires would urge risking war to save a formula.
In a recent debate at Westminster the opposing views were clearly set forth. Mr. Dalton, for the Labour party-
... impressed upon the government the view of the members of the opposition that there was no justification whatever for the removal of the sanctions imposed on Italy by the League of Nations practically unanimously. The conscience of democracy in this and other nations would not accept that view. There was a strong case even now for increasing the sanctions by including oil and other commodities in the list. The economic and financial situation of Italy was not enviable. It "was all very well for people in the capital to cheer a distant victory, but there was the matter of months to come, and we should look ahead and vindicate the already shaken policy of the collective system.
The other view was most forcibly expressed by Sir Austen Chamberlain, a former Foreign Secretary:
In the early days of this struggle I said that for myself I had counted the cost and that I was prepared to go to all lengths with other powers, even to the use of military force.... But the circumstances have wholly and profoundly changed since then. What was the purpose of sanctions? Not in this case to attempt to prevent aggression, but to prevent aggression succeeding. They failed. They were to bring the war to an end and to stop bloodshed. They failed to bring the war to an end. It has been brought to an end by military means, by the conquest and complete subjugation of Abyssinia and the flight of the emperor. To ask at this moment, or to propose at this moment, to continue sanctions is a policy of equal danger and futility. I want to ask those who press this policy on the government, have they reckoned the cost and are they prepared for the price they will have to pay?
No indication was given at that time of the position of the government. To-day the British government has stated its position. As I came into the house this afternoon the Canadian Press were kind enough to hand me dispatches which have come setting forth particulars of the debate which has taken place in the British House of Commons today. It would be of interest I think for me at this moment to quote one or two paragraphs which appear in the press dispatches and which, will doubtless find their way into the evening papers.
London, June 18.-Anthony Eden, Foreign Secretary, told the House of Commons to-day Great Britain would take the lead at Geneva for removing the League of Nations' sanctions against Italy. Mr. Eden said: "His Majesty's government, after mature consideration on advice which I, as foreign secretary, thought it my duty to give, has come to the conclusion there is no longer any utility in continuing these measures as a means of pressure on Italy.
Mr. Eden recited the occasions upon which Great Britain had previously taken the lead in
12739-246 J
attempting to settle the Italo-Ethiopian war, and said that, since the league seemed to be perplexed, the British government considered it to be its duty to take the lead again.
"No doubt it would be quite as easy for us not to do so and to follow somebody else," said Mr. Eden, "but I don't believe that is the right attitude for this country to take."
He declared: "We have to admit that the purpose for which sanctions were imposed has not been realized."
He added, he considered the situation in Ethiopia one "which nothing but military action from outside the country could possibly reverse."
Then Mr. Eden demanded: "Is there any country, is there any section of opinion in this country, which is prepared to take such military action? '
"If the league means to enforce an Ethiopian peace which the league can rightly approve, then the league must take action of the kind which must inevitably lead to war in the Mediterranean-and no man can say such a war can be confined to the Mediterranean."
"I have no reason to think the league favours such a departure or such action, and no reason to suppose this country, on which the greatest burden of such a wrar must fall, desires it either."
"The government," said Mr. Eden, "is actively studying the question of league reorganization but," he added, "it was felt wiser to leave the matter until the September league assembly."
That statement of the British position came in, as I have indicated, this afternoon. The new government of France has not yet had an opportunity of making its position known to the public.
I have summarized the conflicting points of view. The assembly which is to meet at Geneva the end of this month will be called upon to consider the extension or the removal of sanctions. It is desirable, in view of the fact that this session of parliament will shortly come to an end, that the position which the Canadian government propose to take should be stated now.
May I say, Mr. Chairman, in presenting this statement that the position which our government proposes to take is one which was determined in the cabinet some little time ago. It was a decision arrived at before we had any information as to what the British action would be in this matter. Our position was taken in the light of all circumstances as we were able to ascertain them, and with particular regard to Canada's position.
It is urged in some quarters that sanctions should be applied until the principle of collective security is vindicated and Italy agrees to make peace on a basis consistent with her covenant pledges. That could only mean applying sanctions until the aggressor is forced to withdraw and the independence of Ethiopia is restored. How could that end be achieved? It is clear that sanctions of the present order would not be adequate to
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attain it, now that Ethiopian, resistance has practically collapsed. No half-way policy is possible at this stage. Six months or a year of continued ineffective economic pressure would be worse than useless. The end could be achieved only if the members of the league would definitely undertake to resort to whatever measure of compulsion, including war, would be found necessary to secure a speedy and certain compliance. Is there any likelihood that under the circumstances that exist to-day, alike in Europe and in Ethiopia, any appreciable number of the effective members of the league would give such commitments? It is clear there is not. Is there any certainty, if they did, that their objective would not soon be lost sight of in the very serious disturbances which might arise from other quarters? Entertaining this view, we do not consider that we would be warranted either in committing Canada to such a course, or in urging those members of the league upon whom the main burden and risk would fall, to undertake it, if they were not themselves convinced of its necessity. We believe there is no practical alternative for Canada at the approaching assembly of the league but to support the raising of sanctions, and our delegates will be instructed accordingly.
I come now to the concluding part of what I have to say, and which has relation particularly to the future of the league. Probably many of the members of this house have read an interesting speech delivered by Mr. Baldwin on the future of the league a week or so after the debate to which I have referred. The burden of his address was the value of the underlying ideals of the league, the experimental character of article 16 and the policy of sanctions, the necessity of re-examining that experiment in the light of experience and considering whether any changes were required in the covenant, whether automatic sanctions are practicable, and whether it will be possible to give the league the universality of membership its founders assumed.
That brings me to the question of our own attitude to the league in the future. It is not a subject upon which anyone can dogmatize. There are many points of view which may be taken to-day, and new factors, new experience, may require us in the years to come to revise the opinions of today. But it is a question which events have forced us to consider.
Here, again, may I say that the view of the government, in general terms, was ex-
.
pressed in oUr statement of October 29, and that experience since that time has not shown any reason for substantial alteration of that view.
In brief, it was then indicated that the government regarded the league as an essential instrument for peace; that there had been differences of opinion among league members from the beginning as to the means wherelby peace could he secured; and that successive Canadian governments, without any appreciable public dissent, had opposed the view of Geneva as "an international war office," with the emphasis upon ,punishment rather than prevention. The statement concluded :
It is also to be understood that the government's course in approving economic sanctions in this instance is not to be regarded as necessarily establishing a precedent for future action. In the future, as in the past, the government will be prepared to participate in the consideration of the most effective means of advancing the aims of the league through the adjustment of specific controversies, the lessening of the rivalries based upon exaggerated economic nationalism, the renewal of the effort to stem the rising tide of competitive armament, and such other policies as are appropriate for a country in the geographic and economic position of the dominion, and as will ensure unity and common consent in Canada as well as the advancement of peace abroad.
May I develop that view somewhat further? In the first place, we do not believe that isolation from interest in world affairs is possible for Canada. The world to-day is an interdependent world. No happening of any magnitude abroad is without its repercussions on our fortunes and our future. Canada, it is true, unlike many less fortunate countries, is not exposed to direct and imminent danger of attack and conquest by any country. We are fortunate both in our neighbours and in our lack of neighbours. It may be that this fortunate position is not due to any special virtue on our part, that it is an accident of geography and of history, but one has only to be in any European country a day to realize how relatively fortunate a position it is, and what folly it would be to throw it away. It is equally true, I Should add, that if some countries have too much history, we have too much geography; we have the problems of rapid development of half a continent, the burden of budding railways and roads to connect the far-flung provinces, the task of maintaining government over vast areas, and unity among sections thousands of miles apart, problems from which many older,

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developed, concentrated countries are relatively exempt. We have a real interest in the peace and prosperity of the world. Our climate and resources, our whole railway and economic structure, have made international trade essential for us, at least for many years to come. A great war abroad and, in lesser measure, the preparations for war, the rattling of the sword and the darkening of the sky with planes,' may disturb our trade, endanger democracy., strain our relations with other lands.
We are concerned in external affairs, in the events beyond our border, and cannot cut ourselves off from contact with them. External affairs, for Canada, mean in overwhelming degree, our relations with the other members of the British commonwealth, particularly the United Kingdom, and with the United States. With other countries our commercial relations are increasing, and with France we have also an historic tie. This is surely obvious, but it is necessary to emphasize the obvious when men speak as if it were only in and through the League of Nations that we can take our part in international affairs. The league has a distinct place of its own, a long range importance, but our direct relations with Britain and the United States and other countries are of daily and vital import. We have made some progress in providing the machinery, the instruments, for carrying on these direct contacts. It is half a century since Sir John Macdonald established the high commissionership in London. It is just over a quarter century since Sir Wilfrid Laurier established the Department of External Affairs. The recent establishment of legations abroad and the receiving of legations here is now an accepted Canadian policy. Day to day experience makes it clear how imposible it would be to deal with our increasing and more urgent relations with other countries without these agencies of direct and immediate contact, these channels of responsible and friendly intercourse. When circumstances permit I trust it will be possible to carry further this proved experiment in the establishment of legations, and to widen the exchange of representatives with members of the British commonwealth.
But apart from these agencies of contact with individual countries, these means of dealing with specific issues of direct concern, there is a need for a more general organization, an international clearing house, an agency for collective discussion and collective settlement of the problems the nations have in common. We have such an organization to-day in the League of Nations. As someone
has said, the league is the one great thing that came out of the war. If it did not exist, or if it went out of existence, it would be necessary to recreate it. The world is linked together materially and we have to devise political means to keep pace with the closer contacts and the more rapid changes of the new age. I may repeat that "the Canadian government regards the league as an indispensable agency for organizing and strengthening the forces of good will in the world, and for effecting the essential adjustment of conflicting national aims.''
What are the objects of the League of Nations? They are best set forth in the preamble of the covenant itself:
In order to promote international cooperation and to achieve international peace and security,
by the acceptance of obligations not to resort to war,
by the prescription of open, just and honourable relations between nations,
by the firm establishment of the understandings of international law as the actual rule of conduct among governments,
and by the maintenance of justice and a scrupulous respect for all treaty obligations in the dealings of organized peoples with one another.
There is, however, room for difference of opinion and need for discussion as to the means by which these ideals of the league may most effectively be advanced under actual conditions in the world, and as to what means are practicable and appropriate for Canada to adopt. Adherence to the league and to the promotion of security by collective action does not necessarily mean a commitment to the use of force, economic or military. There have been two opposing views as to the course the league should adopt. One view, which may be called the continental view, the contention of a number of European countries facing states from which they have acquired territory, has been consistently from 1919 to 1935, that the members of the league should commit themselves to definite and automatic use of force against an aggressor, or at least a European aggressor. The provisions of article 16, the proposals for an international or inter-allied military force, the proposals for an Anglo-American-French treaty to guard the Rhine, the draft treaty of mutual assistance of 1923, the Geneva protocol of 1924, the long discussions during the disarmament conferences, with the cry "security before disarmament," the proposal in 1935 that sanctions should be applied against a country which without having recourse to war had violated a treaty endangering the peace of Europe, these are only some of the expressions of that view.
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The other view laid emphasis upon prevention rather than punishment, urged the peaceful remedy of grievances rather than making war upon a country resorting to war, questioned the readiness of European countries to give as well as to receive aid. It was on the whole the view of the countries of the British commonwealth and the Scandinavian states. It found expression in the assembly resolutions of 1921, watering down article 16, in the movement for the revision of article 10, in the opposition to the protocol of Geneva, in the contention that mutual disarmament was the best means of giving security, in the movement for conciliation and arbitration. It is well expressed in the reply of the British government in rejecting the Geneva protocol proposals in 1925:
The fresh emphasis laid upon sanctions, the new occasions discovered for their employment, the elaboration of military procedure, insensibly suggest the idea that the vital business of the league is not so much to promote friendly cooperation and reasoned harmony in the management of international affairs, as to
Ereserve peace by organizing war, and-it may e-war on the largest scale....
And it certainly seems to His Majesty's government that anything which fosters the idea that the main business of the league is with war rather than with peace is likely to weaken it in its fundamental task of diminishing the causes of war, without making it in every respect a satisfactory instrument for organizing great military operations should the necessity for them be forced upon the world.
This has unquestionably been the attitude of Canada. I quote from our Statement of October 29:
As regards the means to the advancement of those (league) ends, successive Canadian governments have opposed the view that the league's central purpose should be to guarantee the territorial status quo and to rely upon force for the maintenance of peace.
The Anglo-American-French treaty of 1920 was so framed as to exclude the dominions. Canadian public men of both parties opposed or sought to remove the status quo guarantees of article 10. The Canadian government in 1925 rejected the protocol of Geneva because of "its rigid provisions for the application of economic and military sanctions in practically every future war." Canada and the other dominions did not adhere to the Locarno treaty reinforcing the guarantee of the Rhine border, just as Great Britain at that time refused to guarantee the Vistula. In responding to the invitation of the United States to become a signatory to the Briand-Kellogg paot, the Canadian government, in view of its discussion as to its bearing upon the covenant of the league, made the following statement in 1928.


William Lyon Mackenzie King: I quote from
the statement made in 1928 in connection with the Kellogg pact:
The preeminent value of the league lies in its positive and preventive action. In bringing together periodically the representatives of fifty states, it builds up barriers against war by developing a spirit of conciliation, an acceptance of publicity in international affairs, a habit of cooperation in common ends, and a permanently available machinery for the adjustment of differences. It is true that the covenant also contemplates the application of sanctions in the event of a member state going to war, if in so doing it has broken the pledges of the covenant to seek a peaceful solution of disputes. Canada has always opposed any interpretation of the covenant which would involve the application of these sanctions automatically or by the decision of other states. It was on the initiative of Canada that the fourth assembly, with a single negative vote, accepted the interpretative resolution to which the Secretary of State of the United States recently referred, indicating that it is for the constitutional authorities of each state to determine in what degree it is bound to assure the execution of the obligations of this article by employment of its military forces.
The question of sanctions has received further consideration by later assemblies. It is plain that the full realization of the ideal of joint economic or military pressure upon an outlaw power, upon which some of the founders of the league set great store, will require either an approach to the universality of the league contemplated when the covenant was being drawn, or an adjustment of the old rules of neutrality to meet the new conditions of cooperative defence.
In the light of the recent experience of the league and of the discussions in the United States during the past year on neutrality, this last sentence was a fairly good prophecy.
On the other hand, Canada participated in every league movement for extending the range and facilities for peaceful conciliation, such as the general act for the pacific settlement of international disputes, and the optional clause for extending the jurisdiction of the permanent court, taking the initiative among the members of the British commonwealth in proposing ratification of the latter measure. Successive Canadian governments supported the cause of disarmament throughout. Perhaps all members of the league should have taken a stronger stand at the fatal hour in 1933 when Germany's proposals for equality of armament were rejected, but it was on the countries which were heavily armed that the difficult responsibility rested, and if the wrong turning was taken, we must admit that hindsight is more common than foresight. We did something to aid the minorities protected by the peace treaties to secure a fair hearing. I do not say we have done enough at Geneva, that we were always as concerned as we might have been, or as strong in our advocacy of good causes as we and others might have

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been. There are obvious limitations to the amount of pressure a small and distant country, not primarily responsible for what may be the outcome of the league decisions, can apply. But at least, whatever government has been in power, we have, I think, aimed in the right direction.
There is undoubtedly much that is attractive and persuasive in the conception of a world united to prevent by force a breach of the peace by any aggressor. It has been stoutly contended that if all nations would undertake to make war upon an aggressor, and carried out that undertaking, war would never occur. That may well be, but unfortunately it is only a hypothetical argument; it bears no relation to the actualities of to-day It may be that eventually some such rule of law will be established in the international as has been established in the national field, or at least in those countries where law and the free expression of the people's will still prevail. But clearly that time has not yet come, and to pretend that it has is only to make for disillusionment and misdirected effort.
Two conditions are essential to the working of any such plan of universal compulsion. In the first place, there must be an overwhelming preponderance of power, economic and military, in the league as against any possible aggressor or combination of aggressors. Even economic pressure, if it is to be strangling enough to be effective against a strong nation, must be backed by a definite readiness, in the last resort, to have recourse to armed force. That is surely clear. That condition does not now exist. For one thing, the league is not the universal association anticipated by its founders when they dreamed of it imposing peace throughout the world. The United States, Germany, Japan, Brazil, are outside the fold. A league facing the abstention of some and the hostility of others of such powers clearly cannot operate as it might in other circumstances. In the second place, there must be the certainty that the members of this body will be ready to exercise that force when the occasion arises, regardless of where it arises or whether they have any direct interest in the quarrel. That condition again, does not exist. There are a few countries which have evidenced some measure of idealism in their approach to the question, but in most cases action has depended on a calculation of immediate interest. That was shown beyond doubt in the Manchurian and Chaco incidents. The league did not apply military or even economic sanctions in the Manchurian affair; its action was confined to a recommendation not to recognize the state of Manchukuo. In the Chaco war, between
Bolivia and Paraguay, it did even less. That was not a minor conflict. It was a long and bloody war, dragging out for nearly three years, costing the lives of a hundred thousand men, bleeding and bankrupting both countries, and leading lately to the establishment of military dictatorships. It involved immensely more human suffering than the Ethiopian conflict. Yet the league never even attempted to determine the aggressor; after two years of warfare a league commission made recommendations for a settlement, which were rejected, and later still a futile embargo on arms was proposed. It is true the intervention of the league was complicated by local South American jealousies and rivalries, but this was an excuse rather than a reason for nonintervention; if the letter of article 16 applies anywhere, it certainly applied in the Chaco. In short, these disputes were far from Europe's shores; no direct national interests of other members of the league appeared to be concerned, or none commensurate with the effort and the risk of coercive action. There has been no firm ground any time in the past ten years for anticipating that the league would act otherwise in such cases.
Under such conditions it is clearly impossible for a country like Canada to make binding commitments to use economic force or military force. The league cannot operate as a one-way road. European states cannot throw overboard all obligation to action in Asia or America and expect other members of the league to accept obligations in European disputes. Occasions may arise where military action may become advisable or essential, but so far as Canada is concerned, that would be for the parliament of Canada to decide in the light of all the circumstances at the time. Automatic commitments to action in any and every part of the world have not been and, at the present stage of national development, will not be observed by the members of the league. Automatic commitments in restricted areas wThere direct interests are involved might be so observed, but such commitments, whatever name they go by, are often hard to distinguish from the old fashioned military alliance.
It is a matter of regret that the league is not now in a position to play the spectacular role of dictating peace to all the world.. But admittedly it is not in that position or that mood. To act as if it were is merely to incur failure and recrimination, and to involve the risk of bringing on the very disaster it is the purpose of the league to avert.
But that does not mean that there is not a great part for the league to play. If it
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cannot become the international war office, neither need it become a mere debating society. It can emphasize the constructive side of its task. It is of great value to have at Geneva a world-wide organization where the machinery for conference and conciliation is always available, not having to be improvised in the midst of a crisis; where representatives of fifty countries meet periodically and come to have some appreciation of the difficulties and the mentality of other lands, and slowly develop the habit of working together on small tasks leading to greater; where, in spite of all the criticisms we often hear as to vaguely worded resolutions and hotel bedroom conversations, the statesmen of great countries are forced to come into the open and defend in public, before a world forum, the policies of their governments. It can press on to its task of disarmament, or at least to the halting of armaments. It can develop and apply the instruments of conciliation and of arbitration in settling specific disputes before they lead to open challenges and entrenched positions. It can provide a forum for the discussion of economic grievances. Much nonsense is talked to-day about the Haves and the Have Nots; the countries which are in trouble as regards raw materials are the countries that have them to sell, rather than those that have to buy. Canada, for example, has great resources, but she also has great burdens; we have incurred huge debts in seeking to stake out and develop and unify this widely scattered heritage; and incidentally, whereas many of the countries which complain of their unjust treatment have evaded the burden of internal debt by inflation and of external debt by repudiation, Canada has paid and continued to pay every obligation within and without the country.
We should inquire earnestly and seriously what can be done by joint action to remove at the root the political unrest, the economic insecurity, which is largely responsible for national rivalry and threats of war. We must of course keep a sense of proportion, realize the complexities of the problems of post-war Europe and pre-war Asia, the measure of knowledge, the measure of influence which Canada can bring to bear upon the solution of the racial strifes, the border disputes, the class antagonisms, the economic conflicts of distant continents. But inquire we should into any question, raw materials, population movements, labour conditions, that is felt as a grievance. There is one economic grievance, or rather difficulty, which nearly all share, the 
difficulty of finding markets, the contention that unless we sell we cannot buy. That is sound, anil points to one sound policy all should seek ito follow as a means to world appeasement-revival of two-way international trade, an increase in the total movement of goods, not the futile and fatal attempt to equate balances between every two countries, at constantly falling levels of total trade. Civilization will indeed be in jeopardy if governments tinker with symptoms and ignore causes, if we allow and encourage the disruptive forces to grow and confine our efforts to repression or punishment when the damage is done. Repression or construction, force or cooperation, the clash of tariffs and the appeal to force or the solution of the problems that underlie international rivalries -that is the choice before us.
It is a counsel of despair to assume that trade war or military conflict is inevitable, and to assume that all that can be done is to meet force by force. Particularly is it futile to expect that we can sow the seeds of economic nationalism and reap a harvest of peace and prosperity. It is a policy of organized scarcity, of deliberate sacrifice of the standards of living in pursuit of a security which it makes impossible by the antagonisms it creates. It is a policy which injects the state into every transaction between citizens of different countries and makes ordinary business an international struggle. Within the measure of our power, we must pursue the attempt to bring international trade gradually hack to a sane basis, to lessen the throttling controls and barriers. If we can do so in any degree, we shall make one of the most direct and constructive contributions we can make to the peace and welfare of our own and other lands.
We must not despair of the league. The league has failed, but the league is not a failure. Christianity has failed time and again, but Christianity is not a failure. Rome was not built in a day, and imperial ambitions cannot be exorcised in fifteen years. After all, it is a very little while since we in the British empire ourselves completely reformed. In spite of all discouragements, in spite of the failure of premature efforts, the ideal of world peace is not only sound, it is the essential condition of the survival of civilization and human life itself. So far as Canada is concerned, there is no danger to our national unity and our economic recovery so serious as participation in a prolonged war. We must continue to work earnestly toward the ideal of world peace. To that end we

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must utilize constructively the League of Nations-that indispensable agency which the conscience of mankind fashioned on the morrow of the greatest international disaster of all time, and bequeathed to our own and future generations.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: I must express my appreciation of the very carefully prepared statement of the Prime Minister (Mr. Mackenzie King). On the whole I find myself very largely in agreement with the concrete actions taken by the government and also with the ideals set forth by the Prime Minister. But I would point out that many of the decisions arrived at might be called after-the-event decisions. The policy of "wait and see" has so far proved successful, but we must not take it for granted that such a policy will always succeed. I am afraid that, alone, it may not keep us out of war. The government's decision with regard to the withdrawal of sanctions may have been arrived at some time ago, but it is perhaps characteristic that it was not announced until after the great nations had declared themselves.


William Lyon Mackenzie King: The hon. gentleman says that the announcement made by the government was not made until after the great nations had declared themselves. That is not true. If my hon. friend will kindly state what great nations have declared themselves, and when and where they did so, the record will be complete.


James Shaver Woodsworth: We know now the position of Great Britain; Mr. Litvinoff made a declaration a week or two ago, and according to the press the decision of the French government is now fairly well known.


An hon. MEMBER:: What is it?


James Shaver Woodsworth: I am saying, according to the press. As to the future, I must submit that the government's policy is vague. The Prime Minister avoided, or at least did not mention, many problems that are inherent in the existing world situation. He did not attempt to indicate the implications of the general position he enunciated. Possibly-I say this in all sincerity-that is too much to expect from the responsible head of a government or from the leader of a party which
comprises such diverse elements, but I think that someone should do this.
For a long time we in this house have taken very little interest in foreign affairs. The discussion of a new post office or of a wharf apparently really means more in this house than the discussion of some of these worldshaking events; yet the issue of peace and war is really involved in our foreign policy. The last war, according to a recent computation, cost Canada $4,341,488,904. Through the opportunity I now have in this chamber I would impress upon our Canadian public the disaster that war would mean to Canada and the disaster that it has meant to the world. According to some calculations quoted in Canadian Business of June, 1934, the amounts invested or rather squandered in the last war could have been utilized to create almost a new world. As estimated by Nicholas Murray Butler, who is far from being a radical agitator, the last war cost 30,000,000 lives and $400,000,000,000. He said:
With that amount we could have built a $2,500 house with $1,000 worth of furniture and placed it on five acres of land worth $100 an acre, for every family in the United States, Canada, Australia, England, Wales, Ireland, Scotland, France, Belgium, Germany and Russia.... There would have been enough left to give each city of 20,000 inhabitants and over in all the countries named a $5,000,000 library and a $10,000,000 university. Out of the balance we could have set aside a sum at five per cent interest which would pay for all time a $1,000 yearly salary each for 125,000 teachers and 125,000 nurses. After having done all this we could still have bought up all of France and Belgium, everything that France and Belgium possessed in 1914: every home, factory, church, railroad, street car.
If these figures are anything like approximately correct, they bring home to us the frightful disaster the last war was; and as we contemplate these facts one might well fear lest another war might wipe out civilization. Our people do not realize the danger. I am not altogether blaming the government.
But one reason the people do not realize the seriousness of the situation is that we have not had the discussions which we might have had in this house. The government, even at this present session, delayed for nearly five months before stating its policy. The Prime Minister said that there was danger of our being colonial-minded, and that is a real danger. The tendency is for us slavishly to follow Great Britain. That constitutes a sort of inferiority complex which manifests itself in the idea that someone else must take the lead. I cannot see why someone else should always lead. The Prime Minister said recently that a very difficult situation confronts European statesmen at the present

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time. Why cannot we understand that it confronts the world and Canada and not merely European statesmen? The leader of the opposition (Mr. Bennett), in the same connection, said that efforts must be made to uphold the hands of those who are endeavouring to maintain the peace of the world. Well, are we not members of the league, and why should we not have a responsibility in regard to stating what we believe? On the other hand, this inferiority complex manifests itself in the exaggerated idea that if we take any action it may upset the apple-cart. Only the other day the Prime Minister said:
I ask my hon. friend to consider what the effect of a discussion in this parliament two months ago, one month ago, two weeks ago-*
And the Prime Minister fairly shuddered! Then the leader of the opposition joined with him in the observations he made in this house. He said:
Any observation that might be made in this house and which would embarrass an already embarrassed situation, would be, in my judgment at any rate not only unsound but calculated to retard rather than to assist the accomplishment and purposes of the end we have in view.
I really do not think Canada is as important as that, but I most firmly believe that Canada should be prepared to take her stand and express an opinion with regard to these matters. If the parliament at Westminster, so much nearer the scene of action, can discuss these matters as it has done from time to time, I cannot see why there should be any difficulty in the way of our discussing them in this country.
I suggest that we may as well concede to one another that we all want peace. We all love our country, and if some of us hold views and advocate policies that are not held and advocated by the majority in this house, I hope our arguments will not be met with cries of "coward," or "communist" or "anti-British" or "pro-German" or pro anything else. I admit that the situation is very, very complicated. Any of us who have tried to arrange our own thoughts cannot but have felt that. I think the Prime Minister is quite correct in his statement, and I sympathize with him when he says that we cannot be dogmatic with regard to many of these problems. It may even be very difficult to maintain a consistent position. Our policy must necessarily be contingent upon rapidly changing conditions.
I do not think I can make any greater contribution to-night than to present as briefly as possible some fundamental considerations that I hope no one will call merely academic.

I believe firmly that war is madness; that it settles nothing; that it creates serious trouble. I believe that we must approach the study of war with a scientific spirit and a scientific technique. War does not come by act of God; it does not come out of thin air. It is the result-and I think we are all coming to that view-of clearly defined and ascertainable causes. We recognize to-day a certain war psychology which is apt to get possession of any or all of us. Then there are undoubtedly certain economic factors, prominent among which are the gain that comes from private armaments, and economic nationalism. Just recently Mr. Harold Butler, Director of the International Labour office, speaking at the Twentieth Session at Geneva, 1936, had this to say:
War is not caused only or mainly by lust for territory or booty or prestige. It is also caused by low standards of living, by the feeling of economic insecurity, by the desire for moral or social emanicipation. The founders of the organization were right when they discerned an indissoluble connection between peace and social justice....
There is now a vague awareness that territorial claims and armament programs are not the fundamental issues and that it is impossible to allay the international tension which they have created without striking deeper. They are not the causes of our present discontents but the symptoms. The roots are to be found in actual or threatened impoverishment, declining standards of life, insecurity for the future of themselves and their children which darkens the outlook of the present generation in so many countries. The remedy is not to be found then in political pacts or frontier rectifications or disarmament conferences alone. These methods have been tried and have failed because they did not touch the real source of the trouble. So nowadays we are beginning to talk of the abolition of trade restrictions, the distribution of raw materials, the stabilization of currencies, an international monetary agreement, the resumption of international lending, as things which are not merely required to promote economic recovery but which are indispensable to the future stability of the whole political structure.
Let me say further that I am perfectly convinced that if we want to have peace we must be prepared to pay the price of peace. That is not going to be a light price, but in contrast with the enormous costs of war we ought to consider ourselves fortunate indeed that we are in a position to pay it. Further, let me state the convictions of this group-


Mr. GRAY:: If the hon. gentleman will permit a question, what does he mean by "the price of peace"?


James Shaver Woodsworth: I do not want to go into that at the moment. It would take me too long to outline a program. All I desire here is to indicate that we cannot

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get peace merely by wishing for it. We shall have to give up-as I shall urge a little later-older conceptions of our "sovereignty," the older ideal that we can go our own way without reference to the outside world, and so on. I say we have to pay the price of peace, and it is not a light price.
I believe, and our group believes, that war cannot be eliminated under the existing economic system. I shall not be thought to drag in a mere party slogan when I say I am convinced that capitalism means social injustice at home and it also means imperialism and militarism.	In our modern complex
industrial and social structure, I agree with the Prime Minister that no individual can live to himself and no nation can live unto itself. Self-sufficiency, independence, sovereignty, isolationism belong to the past. The world is becoming more and more integrated. The trouble is that our institutions and our ideals have not kept pace with the development which is taking place in the world around.
I find myself somewhat in a dilemma. Let me confess that as an individual I refuse to participate in or to assist in war, and yet I am a citizen of a country that still relies upon force, and as a public representative I must vote on alternative military policies. Under these conditions in the actual world of affairs one must try to hold to his own convictions and keep ultimate objectives in view, and yet advocate measures which are recognized as merely ameliorative. One must accept half a loaf, or even support procedures which, though repugnant to one's principles, represent a real advance in public welfare and public morals. For example, I am opposed to capital punishment, and yet, rather than see a woman's head nearly torn from her shoulders, as was done recently in Montreal, I would vote for the electric chair, for gas, or even, I think, for the axe! In a decently organized society we would not need a police force. In the present semi-barbarous civilization I prefer a police force to bandits and vigilantes. So, in international affairs, until war is actually and wholeheartedly repudiated as an instrument of international policy, an international police force under proper control, if indeed that is possible, might be preferable to world anarchy.
Lest somebody should set me down as an idealist let me talk for a little while as a hardi-boiled realist. In my judgment it is the advocates of armaments who are the sentimentalists. They are living in the past. Armaments in the past have failed to give us security. Some other way must be found.
It is the imperialists who are the sentimentalists. It is those who pin their faith to the league as now constituted who are the sentimentalists.
Let us consider realistically the defence of Canada. If we start with the assumption that Canada's first obligation is to her own citizens, our problem is: How can we save our next generation from annihilation? I submit, as I did on the defence estimates, that with our present military equipment or any which this country can support, Canada unassisted cannot defend herself against all comers. Fortunately she does not need to do so. The United States will not attack us, and under her Monroe doctrine the United States would protect us, not because of her interest in our welfare, but because of her interest in her own affairs. At the moment, then, I have a good deal of sympathy with the isolationist position, though I quite agree that it cannot ultimately save us. We are a part not only of North America but of the world.
A more difficult question is: What of our British empire connections? Personally I think highly of Great Britain. I am not sure but that spiritually I am more at home in England than in Canada. But I do not believe in modern imperialism, German imperialism, Japanese imperialism, French imperialism, or British imperialism.


Mr. REID:: Or Russian imperialism?


James Shaver Woodsworth: No, nor in Russian imperialism. I do not believe that Canada should be involved1 in British wars. The Prime Minister stated what I think is a very great truth when he said that imperialist ambitions cannot be exorcised in a day. But, if they are to be exorcised at all, we must take our part in striving not to let imperialism dominate the world to-day.


Mr. LAPOINTE (Quebec East):: Are we not doing that?


James Shaver Woodsworth: For that reason I
made the suggestion the other day that I thought Canada, as a self-respecting nation, should now declare to Great Britain that we are determined that we shall reserve to ourselves the right to declare war or to make peace. I understand that we have the right to declare whether we shall participate by sending soldiers to the front, and so on, but if England is at war I believe that, according to international law, we might be said automatically to be at war, and1 ou.r shipping and our coasts might be attacked. As I said the other day on the national defence estimates, the conduct of foreign relations being a matter
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governed by royal prerogative and not by statute was unaffected by the statute of Westminster. Canada has now full control over her own legislation but is without full control over the executive functions of her government. What is needed is to round out the control over her executive in the same way that the statute of Westminster rounded' out her control over her own legislation. I went so far as to suggest-I shall not go into details to-night because I have not time-that in 1934 the Union of South Africa secured for herself precisely what Canada now lacks. In that year, by the Status of Union Act and the Royal Executive Functions and Seals Act, the union parliament declared that-
-the executive government of the union in regard to any aspect of domestic or external affairs as vested in the king, acting on the advice of his ministers of state for the union, and may be administered by His Majesty in person or by the governor general as his representative.
There were further provisions that make fairly clear that the Union of South Africa will be free to determine the question of peace or war on her own behalf.
The same is true of Ireland.
I am not concerned as to the particular way we do this, but I believe that we should make some sort of declaration of neutrality; that we should let Great Britain know now, not later on when she may become involved in some war, that she need not count us in. I recognize the difficult position of the government, but sooner or later that issue must be faced.
Now I come to our relation to the league. Collective security is a fine phrase. What does it mean? The league at first was a league of victors tied to the Versailles treaty. For a long time the league was dominated by France, and more recently it has been used by Great Britain. In no case has it been in any real sense an impartial instrument. In an article recently in the New Statesman and Nation, Mr. Brailsford had this to say:
This is not a league; it is a collection of governments, each retaining to the full its national sovereignty, each the sole judge of what armaments it requires. It has no central authority above these governments. Each chooses and pays as foreign minister a watchdog of its own national interests, and then we expect that this man, when he flies from his office to Geneva, will on the instant grow an international mind. A president and a standing international council elected on personal merit by the assembly might have given some hope for the evolution of a genuine league policy.
The fundamental idea of the league, that it can ensure peace by dealing with isolated disputes between its members, sprang from obsolete thinking. A "dispute" is commonly a sign of something awry in the structure of
[Mr. Woodsworth.l
the world (distribution of population, raw materials, et cetera), that calls for general legislation and planning. But sovereignty (with the unanimity and domestic jurisdiction rules) stands in the way.	_
A league that failed to base its whole structure on economic cooperation was bound to disappoint. The best cement is not coercive sanctions, but economic benefits....
Again let me quote with approval the words of the Prime Minister this afternoon, "Collective bluffing cannot bring collective security." I cannot think that any of us have taken the league very seriously. Certainly the great powers have not. We talk of our obligations under the league, but one of those obligations is that of disarmament. I cannot get excited over the action that Germany has taken in entering the Rhineland. Germany disarmed conditionally. We of the allied side refused to adhere to our solemn obligations to disarm. Again we blame Italy for what she has done. I think Italy is blameworthy, but we ourselves have failed to keep other obligations to which we were bound under the league. Let me say that the removal of the causes of war or any real effort to do so has not been seriously attempted.
The fact is we have been thinking in terms of war. We have had quoted to us again and again article 10 or article 16 of the covenant. These have been emphasized but there has been little reference to article 19. It is all very well to talk of maintaining the status quo, which cannot be maintained in a fast changing world. It is all very well to impose sanctions, which it has been proven cannot very well be successfully imposed under the conditions which prevail to-day. What does article 19 of the covenant say?
The assembly may from time to time advise the reconsideration by members of the league of treaties which have become inapplicable and the consideration of international conditions whose continuance might endanger the peace of the world.
That we have not observed. Let me point out, as I did a moment ago in answer to a question, that I believe in an effective world organization national sovereignty cannot be maintained. The giving up of sovereignty is going to be a pretty big price to pay, but I am firmly convinced that it must come to that. There is no use in our occupying a rather smug position, saying we are in favour of peace and blaming other nations for getting into a row in Europe or Asia when we are not willing to do our share, if it involves parting with some control over what we regard as our own affairs.
Let me pass to the Ethiopian situation. No one can condone the action of Italy, and yet may I point out that Italy was bribed to go

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into the war. Certain promises which Great Britain made were not kept, and whatever the Prime Minister may say about the nonsense that is being talked about the Haves and the Have Nots, I think there is a very real ground for complaint on the part of some of the lesser nations or those who have not early enough got into the great expansionist game.
Let me say further that Japan was as much an aggressor as Italy; I think that is undoubtedly true; and there was the trouble in the Chaco. In neither case did we intervene, and we were just as much breaking our solemn promises and obligations by failing to intervene in China or South America as we would have been had we failed to intervene in the Ethiopian affair. Let me point this out further. The other imperialist powers did very much the same thing a few years ago as Italy has done more recently. It may very well be that Italy used gas bombs. But Great Britain herself threw bombs, not gas bombs possibly, but threw bombs on unprotected villages in northern India and Afghanistan.


Ernest Lapointe: If my hon. friend will permit me, do I understand him to say that Canada should have intervened in Manchuria and Chaco?


James Shaver Woodsworth: No; I say the League of Nations.


Ernest Lapointe: I thought the hon. member said "we."


James Shaver Woodsworth: We were just as much bound to take consideration of the situation that existed when Japan became the aggressor as we were bound to take consideration of the situation that existed when Italy became the aggressor.


Ernest Lapointe: What does the hon. member suggest that Canada should have done?


James Shaver Woodsworth: Canada is a member of the league, and as far as the league has any responsibility we have to share it with the other members of the league. We imposed sanctions against Italy; we did not impose any sanctions against Japan.


Ernest Lapointe: The
league did not.


James Shaver Woodsworth: Nor did we. I think that interjection of the Minister of Justice illustrates one of the weaknesses we all have in dealing with the league, as though the league were something apart from ourselves.


Ernest Lapointe: So is my hon. friend illustrating some of the weaknesses.


James Shaver Woodsworth: I have a very strong suspicion that Great Britain would not have been so much interested in Ethiopia were it not for Egypt and the Sudan, and Suez and India. Further than that, while we talk of the failure of sanctions, we all recognize to-day that they were not adequate or their application prompt enough to be effective. I do not think there is any use in my discussing the question whether or not we should now retain sanctions, but I would say that if sanctions were ever justified then possibly their continuance was justified. The Prime Minister said what I was very glad to hear him say, that we have no commitments with regard to military sanctions, and we would have none without the prior consent of ]jarliament. But he also said in another connection that economic sanctions might and would almost inevitably lead to war. Yet in spite of that Canada did actually join with others in the imposition of economic sanctions. It seems to me that there we got ourselves into a tangle from which I see no very clear way out. I am not here to assert that I see a way out, but I do say that, the old way having failed, we must find some1 new way.


James Lorimer Ilsley: Well, that is constructive!


James Shaver Woodsworth: Well, I am going to suggest one or two things.


Ernest Lapointe: Which is the new way?


James Shaver Woodsworth: I am keeping my eye on the clock because my time is limited; I may have an opportunity at some later time to offer more detailed suggestions. But I reaffirm the position I took at the League of Nations meeting, last November I think it was, that' without seeking to alter conditions, some of which I have described, I believe that sanc-' tions might become worse than useless. Under the present set-up sanctions have failed.
What do we face to-day? Another armament race, in which even Great Britain is participating. Not many weeks ago Sir Thomas Inskip, British Minister of Defence, announced a vast armament proposal. We have before us the unsolved problem of Germany, involving among other things equality. The' demand may be made for the return of her former colonies. Either this should be granted, or all colonial dependencies should be placed under a mandatory system, thus giving to all nations equal access to the sources of raw materials and markets. But to this kind of proposal we are apt to reply; What we have we hold. Now we are back

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again to the old European power politics. In this morning's Montreal Gazette I noticed this dispatch via the New York Times:
In effect it was the beginning of a new British policy intended to use Italy as a counterweight against Germany in defence of the existing frontiers of Europe.
So it goes. We are back again into the same old war game.
The question then comes: Should we withdraw from the league? I think I would join with the Prime Minister in saying that we should stay with the league. But I say that in doing so we should deliberately set about to work for a new and better world organization than the league constitutes to-day. In the first place it seems to me that we must separate the treaty from the covenant. The treaty is an iniquitous one. As long as that treaty stands we are bound to have difficulty. In my judgment we ought to have a fundamental revision of the Versailles treaty. Someone asked for constructive suggestions; that is one which must have first place.


James Lorimer Ilsley: How would the hon. member revise the treaty? It is easy to say that it should be revised, but how?


James Shaver Woodsworth: We are a member and can exercise our right to express an opinion and urge a point of view, and as far as I know Canada has never done that.
Now the Prime Minister says that our delegates are to be instructed to urge the cessation of sanctions. That is all very well, but it seems to me that that is a negative position, and we have to go further than that. I suggest among the things that we should do right away is the revision of treaties. Further than that, with regard to the covenant itself, I cannot quite see how we can go on acting as if we had fulfilled our obligations under the covenant or were prepared to fulfil them. Either we must withdraw wholly from the league, which is one alternative, and a good many of my friends believe that that is the course which should be followed, or on the other hand we should remain in the league under certain definite conditions, one of the conditions being that we should immediately proceed to do everything in our power to explore the possibilities of removing some of those conditions which must inevitably drive the nations to war.
Let me venture to make one more quotation from Butler, whom I regard as having a very real insight into the situation:
Here again is proof that economic recovery is an impossible dream until the fear of another and more catastrophic collapse of the whole international political system has been dispelled. At the moment of writing Europe

once more stands at a turning point of its fate. The same may be true of Asia. Should another outbreak of violence occur in either region, the hopes of any real prosperity would be effectually destroyed for this generation, even if the present fabric of civilization survived. No doubt the underlying causes which have brought the world once more face to face with disaster are largely to he found in the deep-seated flaws in the economic structure....
May I pause here to say that when we advocate changes in the economic system we are doing so in part because we believe that is the only constructive way in which we can attain peace.
I continue the quotation from Mr. Butler:
-the deep-seated flaws in the economic structure, which were created or intolerably aggravated by the world war. It is certainly true that the menace of a fresh outbreak cannot be conjured away unless a concerted effort is made to remove those flaws. Given a general will to seek that end, however, in a cooperative and constructive spirit, the task is not impossible, though no one would deny its immense difficulty. But without such a spirit, the outlook for the future is black indeed.
We are perhaps passing through one of those fleeting psychological moments when a turn of phrase or an access of bold and farsighted resolution may alter the destinies of the human race for generations to come. It is a moment when statesmanship is called upon to rise to greater heights than at any time since 1914. If the occasion is allowed to slip, the discussion of economic and social progress may shortly become largely academic.
Some have asked, even in the course of this debate, what particular policieis I would suggest. I do not think this is the moment to bring forward a detailed program. I have suggested for years past that at the opening of a parliament a committee should be appointed to consider definitely and deliberately the means by which we can attain peace. I have said that again and again, and as opportunities have arisen I have tried to bring certain constructive suggestions before the government. I believe if hon. members will look through Hansard for the last fifteen years they will not suggest that I have not endeavoured again and again to bring the urgency of the situation before the house and to offer constructive suggestions. We as a minority group cannot put any policy definitely into practice; we can only make suggestions. It is very decidedly the responsibility of the government to make statements such as the Prime Minister has made to-day, and, may I suggest to make such statements at the beginning and not at the end of a session. They should be made so that we can discuss them not merely in committee of the whole but in detail in small committees. That is the responsibility of the government.

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While I believe the Prime Minister gave us an admirable survey of what has taken place in the last few years, he has not given us a very definite idea as to the policy of the government in connection with external affairs.


William Lyon Mackenzie King: The hon. member will possibly recall that at a very early stage of the session I took up the estimates of the Department of External Affairs. Upon that occasion all the items with the exception of the ones pertaining to Geneva were passed, and those were held over because hon. members seemed to feel that it was too early in the session to discuss these affairs, and that it would be better to hold over an item or two.


James Shaver Woodsworth: I have forgotten the exact details in connection with the introduction of those estimates. I do know, however, that again and again they have been introduced in the dying days of sessions. Let me remind the Prime Minister that weeks have passed since I asked for a discussion of this kind, and the Prime Minister, backed by the leader of the opposition, has not seen fit to grant my request until two days before what we hope may be the closing of a session.


William Lyon Mackenzie King: Weeks had then passed since we first went into committee of supply on the estimates of the Department of External Affairs.


James Shaver Woodsworth: I shall not argue with the Prime Minister; I am not here to quibble or to criticize the government in a nasty way. But I submit that it cannot fairly be suggested, as has been done by one or two members of the house, that I should to-night bring forward a long string of suggestions which I believe would solve the problems of the world. I am too well aware of the greatness of the problems. I am quite well aware of the difficulties faced by this or any government, under present circumstances, but I ask that the government carefully consider the suggestions I have made. In particular we must be willing to sacrifice much more of what lawyers describe as our sovereignty than hitherto we have given indication of doing.
Let me close by saying that I believe the primary considerations which should determine Canada's foreign policy are the promotion of the safety and welfare of the Canadian people, and the maintenance of the unity of Canada as a nation. I think no one recognizes more definitely than does the Prime Minister that anything like a war would split this nation from stem to stern. We ought to be on our guard against any such disaster. Personally I think Canada should declare her firm intention not to participate actively in any overseas conflict, whatever. Again, in order to avoid any misunderstanding arising between Canada and member states of the commonwealth, Canada should secure immediately from the appropriate imperial or commonwealth authorities full recognition of her right to declare neutrality in the event of another member state of the commonwealth being involved in war.
Let me say to my hon. friends across the way who interrupted me that if that is not a pretty far-reaching suggestion, then I should like to know what is. I admit that it has taken a good deal of political courage to make a suggestion of that kind. However I have ventured to say that that is my opinion, and that we should now take that action.
Finally I urge that the Canadian delegates to the league should be instructed not merely to give up any part in sanctions, but as provided for by article 19 of the covenant, further to press for a policy in which an effort will be made not simply to prevent aggression but to remove those causes of international friction which almost inevitably lead to war.


Mr. PAUL MARTIN (East Essex) (Translation) :: Mr. Chairman, in rising for the first time to address the house, I feel conscious of my responsibility and trust that my remarks will meet with the approval of my con-* stituents.
Mr. Chairman, as a new and humble member of this house, rising for the first time to speak, may I at the outset express my gratitude to the many distinguished and experienced members of the chamber for their courtesy and their encouragement. I sincerely trust that, having in mind my lack of experience in this house, anything I may say to-night will not be regarded by the government or by other distinguished members as presumption on my part.
I attribute my justification to speak to-night to an interest in and a study of the problems with which we are now faced. At the outset, may I say that in the light of the current situation and having in mind that he is the head of a government, in my view the statement of the Prime Minister and Secretary of State for External Affairs (Mr. Mackenzie King) was both complete and courageous, and will do much to clarify in the minds of our people the question now before the committee? I was pleased to hear him observe that parliament should be more concerned than seemingly it has been in the past with a discussion of these matters. I have said outside the chamber and I have written elsewhere, and in fairness to myself, I should repeat on this occasion that I think we pursue problems of a purely-
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domestic kind, always assuming that they in themselves possess a measure of security. But in reality, sir, in the absence of some degree of settlement of the sort of problems we are now considering, we must realize that these purely domestic problems certainly cannot possess the security we attribute to them.
There is another reason why I suggest that we in this chamber should consider these problems more often, and possibly why more hon. members should display greater interest and desire to express themselves. My reason is this: As the Prime Minister has suggested, it is difficult to think one's way through these problems. One cannot be doctrinaire; one definitely cannot be dogmatic, and only tradition, together with long periods of study and some historical background, gives one a chance to arrive at a measure of solution. If that is so in the case of the individual, is it not much more so in the case of parliament?
In view of the present situation, is it impossible that we may be called upon sooner than we expect to give expression to policy or to make a decision which in the light of possibly inadequate discussion may amount to a hasty one. I trust the government will not regard my observations as presumptious when I suggest that our representations at Geneva and at international conferences generally can be more adequate if greater opportunity for preparation is given to those who represent us at these conferences. I suggest that in so far as possible delegates to the assembly and to these conferences generally should be appointed far enough ahead to give them a sufficient opportunity to study affairs so that they may adequately represent Canada at Geneva or elsewhere. I have another observation to make, one which is not new. What our delegates do at Geneva or elsewhere should be discussed in this house. I do not think the discussion of these matters should be left alone to committees of the house. I do not think such a procedure is fair to the nation or altogether fair to hon. members.
We have a Department of External Affairs, a department with which I have tried to keep in contact for some years. This department deserves the highest credit. It is manned by individuals who have trained themselves for their work and who are a credit to the service of this country. Under Doctor Skelton, a great scholar and a man who has endeared himself to everyone, this department is accomplishing much work. But I pause to make this slight criticism, and I know it will be received in the spirit in which it is made. Our administrators are so definitely occupied with domestic problems that it is not always possible

for responsible ministers to give these matters the attention which I am sure they would, like. Would it not be well to sectionalize or departmentalize this department, such as has been done with the State Department in the United States, the Foreign Office in Great Britain and in some of the smaller countries. There could be a Far Eastern section, a League of Nations section, a Canadian-United States section and so on. I do not make this suggestion by way of criticism; I make it because of the relations I have had with this department.
I come now to an important subject suggested by the Prime Minister, which arises out of the axiom with which we are all in agreement, that our main objective in going into the League of Nations was to keep out of war if we possibly could. We all felt that war does not achieve victory and we, along with other nations, were anxious to keep out of war. I should like to address a few remarks more especially to the hon. gentleman who has just taken his seat (Mr. AVoodsworth). I do not doubt the sincerity of the hon. gentleman, but we must maintain some realism in connection with this whole situation. Canada must realize that a country of nine million people, three thousand miles from Europe i3 not in a position to give effect to measures to the same extent as European nations.


James Shaver Woodsworth: I hope the hon. gentleman will not put that out as my suggestion. I have not had the faintest idea of anything of the kind. I am afraid I have failed absolutely to make myself understood if the hon. member has gained that impression.


Paul Joseph James Martin: If I have misinterpreted the hon. gentleman, I wish to correct myself. But I do feel from his remarks that there were ambiguities which lent themselves to the interpretation I have just given to them. So far as an attitude towards war is concerned, Canada has had a fairly definite policy almost throughout her entire political history. On the occasion of our sending a contingent to South Africa, Sir Wilfrid Laurier said:
I claim for Canada this, that in the future Canada shall be at liberty to act or not to act, to interfere or not to interfere, to do just as she pleases, and that she shall reserve to herself the right to judge whether or not there is cause for her to act.
Sir Wilfrid gave expression to a thought which justifies the assertion that we have had continuity in our foreign policy in that particular. Then, as the Prime Minister indicated, although not as specifically as I should like, when we joined the League of Nations we made it clear that in respect of article 10 of the covenant, by which we were

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asked to guarantee the territorial integrity and existing political independence of all members of the league, there must be certain reservations. With the approval of all countries save Persia, we obtained the following reservation:
It is in conformity with the spirit of article 10 that in event of the council considering it to be its duty to recommend the application of military measures in consequence of any aggression, or danger or threat of aggression, the council shall be bound to take into account more particularly the geographical situation and special condition of each state.
From the moment when we first became a member state in the family of states, in the then collective system, we made abundantly clear in so far as military sanctions were concerned, our position was one which would have to be dictated by our location on the surface of the globe.
It was been contended that this attitude is not really a reservation. If I remember rightly, the right hon. gentleman, who now leads the opposition in the upper house, took the view that we could not regard that reservation as properly interpretative of our position. It will be remembered that it was the same right hon. gentleman who gave authorship to the "ready aye ready" formula and later amended his view by declaring that before Canada should go into war, not parliament but the people through the agency of a plebiscite should decide whether or not we should take up arms.
When Germany entered the league she made a condition, precedent to her entrance, that in respect of military sanctions, her peculiar geographical position would always have to be borne in mind.
The Prime Minister indicated that Canadian policy in respect of war participation was clearly affirmed by our attitude regarding the Locarno treaty and the Geneva protocol of 1924. If there was any doubt about this continuity of attitude, our position at the imperial conference of 1923 in respect of the procedure to be followed in the negotiation, signature and ratification of treaties, in so far as our relations with the other members of the empire were concerned, was made very clear. The right hon. gentleman who leads the opposition (Mr. Bennett) and the Prime Minister have given expression to similar points of view.
I do not think there can be any question about the correctness of the position, and I believe the hon. member for Winnipeg North Centre has stated a real difficulty. But I believe this difficulty is one which the government is prepared to consider seriously at the proper time. In so far as our relations with Great Britain or the other members of 12739-247
the empire are concerned, our position with respect to war is constitutionally as follows: We are not obligated to participate in a war in which any one component part of the empire is involved. I think that position is clearly understood. But in respect of the recognition of that de facto status by other nations, the position is altogether different. As a matter of record, I feel it advisable to state here to-night the words uttered in this house by the Prime Minister when speaking on the Lausanne treaty in 1924. I think he has settled correctly, first, our constitutional position, that is to say Canada vis-a-vis the other parts of the empire, and our position in respect of the implications of international law. The Prime Minister said:
There is a distinction to be drawn between the purely legal and technical position in which this dominion may be placed and the moral obligations which arise under treaties, depending upon the manner in which such treaties are entered into, upon the parties who are present, and the representative capacities in which they acted while negotiations were proceeding. Legally and technically Canada will be bound by the ratification of this treaty. In other words, speaking internationally, the whole British empire in relation to the rest of the world will stand as one when this treaty is ratified. But as respects the obligations arising out of the treaty itself, speaking now of inter-imperial obligations, this parliament, if regard is to be had to the representations which from the outset we have made to the British government. will in no way be bound by any obligation beyond that which parliament of its own volition recognizes as arising out of the situation.
That, I think, is the correct position. Now I suggest, not in any doctrinaire way, that the government consider-I do not think it is expedient to put the proposition in any other way at this time-the desirability, either by exchange of notes or by whatever constitutional process is deemed best suited, under the circumstances, of clearly bringing into consistency our constitutional position alongside the obligations that international law in this particular will impose.
The Prime Minister has stated to-night, to my mind, in as clear and facile a way as was possible under the circumstances, what Canada considers her position to be in relation to the collective system. I say "collective system" for want of a better phrase. We really have not a collective system; but I take it from what he has said-and in that I would fully concur-that we oppose the definition of "collective system" in the sense in which that term is understood, for instance, by the League of Nations Society in Great Britain, where there are considered to be three essentials as constituting the phrase "collective system."

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The first is renunciation of war, and with that we agree. The second is machinery for the peaceful settlement of disputes, with which likewise we agree. But we disagree, I take it, with the third essential, namely, acceptance by its members of the obligations to enforce the law if need should arise. I do not think that events of the past few years can indicate anything but this, that if there is not any moral force behind the desire to establish world cooperation, then there is no hope of our having it. I do not believe it is possible to bring peace through armed effort, whether through the agency of economic effort or through the use of military force, and I make that statement for the simple reason that we cannot be expected-I hope my hon. friend from Winnipeg North Centre will understand the spirit in which I make this observation-to give up, in the endeavour to obtain peace, something which we cannot foresee is going to bring peace. Of course, we must give up sovereignty. The principle of federalism alone would serve as a proper agency of government in a world organization. But that presupposes a. public opinion, on the part of governments and of people, which is more powerful than all the military or armed force possible. I mention that again for this reason. The leader of the opposition, speaking in Hamilton some weeks ago, made an observation which I may have misinterpreted-and if I have I hope he will correct me-an observation from which I concluded that if the existing collective system, such as it is, was to be preserved, force would have to be exercised in the effort to preserve it. I hardly think that is what he could1 have meant, because of private talks 1 have had with him, but I repeat that if force is the only agency it will be very difficult for Canada to contribute to it. We want a collective system; of course we do. We want world cooperation; of course we do. We want a league of nations, but a league of nations that will function, having in mind the realities of the moment. When Mr. Ferguson spoke at Geneva last September, he said:
We hope that an honourable and peaceful solution of the Ethiopian controversy will yet be reached. If, unfortunately, this proves not to be the case, Canada will join with the other members of the league in considering how, by unanimous action, peace can be maintained.
With regard to that statement, one of the great scholars of political science in this country, Mr. Dafoe, observed, in Foreign Affairs for January of this year:
Though the language was guarded-

Referring to what Mr. Ferguson had said.
-it was an acceptance by Canada of her obligations under the covenant. It brought within the range of probability the association of Canada with the other members of the league in the application of preventive or punitive sanctions.
I refer to these two observations for this reason. I believe that the true situation is not thus represented. Surely, as of that date, we were content to abide by the provisions of the covenant and to continue along with the other nations in the application of economic sanctions, but only to that extent. And if there was any doubt about it, the statement of the Prime Minister clearly indicates that our conception of the covenant from the beginning has been that, in so far as punitive measures in the purely military sense are concerned, that was never within our contemplation. And that position was even more consistent. I should like to have heard the Prime Minister to-day refer to a resolution he moved, in this very house I believe, in 1926, when he went even further than military sanctions and said that parliament would first of all have to pass upon economic sanctions. The situation as I see it is this: We all want peace; there is not a man in this house or in the country who does not want peace, and I believe that statement reflects public opinion generally. But peace desired and peace obtained are two different things. When we joined the league there were three assumptions, and these assumptions have been clearly set out by Mr. D. F. Malan, leader of the opposition in the South African parliament. By the way, speaking of the South African parliament and the parliaments of the empire generally, I have followed very closely the debates in these various dominion parliaments in the past year, and they have had ample discussion, particularly in Australia and very definitely in South Africa. Mr. D. F. Malan clearly interprets, as of last fall, a situation which, I think, is even more current to-day. On January 31, 1936, he said:
In order to apply sanctions as they ought to be applied, three things were presupposed in the League of Nations covenant. First, it assumed that the league should be a world league, as it was originally intended to be. Secondly, it assumed that in similar circumstances sanctions would be applied in a similar way. Thirdly, it assumed that the league, not only in theory but in practice, would continue on a moral basis.
On a moral basis; not on a basis of punishment, but on a basis that the civilized people of the world want, that is to say, to have the decrees of the league made effective in the same sense that moral force permits

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the police power in any given community to exercise its proper function. The statement of the leader of the opposition in South Africa reflects pretty well, in my judgment, the views of this committee as I gather them from what has so far been said. They are based upon this conception. The two vulnerable clauses in the covenant of the League of Nations, articles 10 and 16, are not open to the interpretations which wild though well-meaning enthusiasts for the collective system have given to them. I believe that in respect of economic sanctions there was, as late as last week, an absolute obligation on our part to follow the decision of the council and the assembly to apply sanctions in a purely economic or financial sense. But since the speech of Mr. Neville Chamberlain, and certainly as of to-day, it would be the extremity of folly for a country like Canada, having but nine millions of people, separated from Europe by thousands of miles, having no direct regional or local interest, and in the face of the stand' taken to-day by the foreign minister in Great Britain, to urge the continuance of sanctions. I stress that because, active as I have been in the League of Nations movement in this country and in the Institute of International Affairs, to-morrow I shall receive letters, as will other hon, members, complaining bitterly of the stand taken by us in this chamber. But I say to-day to persons who take that view that if they really believe the cause of peace is worth while, let them realize the realism of the moment. It would be, in my judgment, the greatest folly for the government of Canada to deliver to the nation any different kind of statement from the one the Prime Minister gave us to-day.
The hon. member for Winnipeg North Centre was asked a specific question. He pointed out what he thought were inconsistencies in our position. He was asked by the Minister of National Revenue (Mr. Usley) for a concrete suggestion. I shall not say that I thought the question was altogether unfair, nor shall I say that the answer of the hon. member was altogether adequate or fair.
I believe that it is possible to suggest something very constructive, and I venture humbly to suggest in general terms a program to which, I know, it may be difficult to attain, but which, having in mind the statement given to-day by the Prime Minister, might go a long way, if adopted by other members of the league, to improve the situation as we find it. I do not believe that, apart from minor matters, Canada has any cause for regrets. We have pursued our job, in so far as our international obligations are concerned,
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as best we were able to do under the circumstances. Our obligation is not that of the great powers. I am not prepared to say from my seat to-night that I am glad it has been necessary for Great Britain to take the stand she has taken. I am not prepared, in justice to my convictions, to say that I think the great powers could not have avoided this situation. I think there was a period when they might have applied measures which would have strengthened the league in its present position. But that is not Canada's part. When the hon. Minister of Justice (Mr. Lapointe) gave this country a statement last fall intimating that our permanent advisory officer had acted contrary to instructions, I did not, I confess, at that time agree with that position. But it is only fair to say, in justice to the minister and to myself, that events have clearly shown that the attitude taken by the government on that occasion was correct. Why? Because a country in the north American sphere or region cannot hope, if Europe in her region is not prepared to do her share, to keep the European house in order. It simply is not practicable. But there were facts and circumstances which proleague people like myself were not in a position to know at the time.
For the time being, in respect of our obligations as a member of the league, our position should be definitely that of an observer. I do not think that, having in mind the current situation, we should regard ourselves any longer as obligated to apply economic, and certainly not military, sanctions. I doubt very much if under the circumstances the government of the day would be justified in bringing to the attention of parliament for consideration the application of either of these two kinds of sanctions. But surely we have another obligation. Every individual in a community has a moral obligation to his community to strengthen it; and I believe that we in Canada, having expressed as we have done to-day our affirmation of the principles behind the League of Nations, should do something definite to make that organization a useful one within the limits which circumstances dictate. I would suggest a four-point program, expressed if you like in general terms. Time will not permit a discussion of them in detail, but they constitute in themselves a statement which, if it could be unanimously adopted and simultaneously put into effect, might fulfil the contemplated object.
First: Immediate removal of some of the economic and psychological causes of international tension. By that I do not want any one to think I am giving expression to social-
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ism. We should establish effective machinery for the continuous treatment of these problems.	__	.
Second:	Immediate revision of certain
treaties and establishment of effective machinery for treaty revision in the future. The Minister of National Revenue asked the hon. member for Winnipeg North Centre how he would revise treaties. In the first place, many of the treaties tending to be provocative of disturbances have been removed, some by denunciation and some by unilateral action. But there are some clauses, for instance, in the treaty of Peace, the guilt clause, that might be removed in order to placate the psychological difficulty which Germany experiences, and to do this would go a long way towards bringing peace. One also might consider by way of treaty revision the removal of the Anschluss clause to permit the union of Austria and Germany. I am not advising that, but I am just suggesting illustrations of what might be adopted. The hon. member for Winnipeg North Centre was perfectly correct when he answered the Minister of National Revenue by saying that the way to revise was to proceed with revision. I know quite well that Canada, as a small power, is in no position to tell Europe to do this and do that. A distinguished member of this house, whose name I should not mention, said that, having represented Canada at Geneva at one time, he felt he was a very effective rubber stamp while sitting at the assembly of the League of Nations. That is pretty much at the moment our position as a nation, but there seems to be an obligation upon us to suggest a program which, simultaneously applied, might bring about a different kind of situation than the one now facing us.
Third-and this is important-immediate limitation of national armaments by international agreements, and signature of a convention providing for progressive further reductions in national armaments down to the point of abolition. There, again, we must confess a difficulty. We may be asked, whait are we willing to contribute? One cannot deny the power of that response.
May I come to what I think is the most important suggestion in this humble program: Fourth, immediate strengthening of the power of the league to implement-not to enforce-its decisions and to effect observance of the agreements which its members have assumed as signatories of the covenant and of the convention for the reduction of armaments, due regard being paid to the necessity for regional differentiation of responsibility for taking such measures. May I suggest, Mr. Chairman, that t'he last is the important one. The league has proceeded until now on the

basis, that once an aggressor appears, the act of aggression is to be stampeded by universal action. The Marquis of Lothian, I suppose, is the man perhaps closest to the present administration in Great Britain. He made the suggestion last November, having in anind what he thought were the evident weaknesses of the league, that the nations should divide themselves into regions, and that if a disturbance took place in one region any sanctions, military or economic, to be applied should be applied by the countries within that region. I am not saying that I altogether agree with him because I do not feel that I have given the matter the consideration I should have, but I suggest this, that in so far as Canada is concerned, that is definitely a consideration well worth bearing in mind.
That brings me to this point: Having in mind the policy of the good neighbour as enunciated by Mr. Roosevelt, is it not worth while for Canada now to consider taking part in the negative way that is thereby provided in the Pan-American Union? Is our region not North American as well as European? Have we not definite interests in the union of states on this continent, if alone for commercial reasons? I would suggest, while I see great difficulties in determining where the terminals of Great Britain's region would be, and while I am not at all anxious to disturb our relations with her, because that would be anything but a peaceful pursuit, that the government might well consider the advisability of taking part in the purely advisory conferences of the Pan-American Union. One cannot go through the deliberations of the Montevideo conference, where problems such as immigration and detailed problems of commerce were considered, without feeling the wisdom of this kind of suggestion. At any rate it is one that, I think, is deserving of consideration.
I have spoken longer than I intended. In the past few months I have found it very difficult to wade my way through this problem. In the last five years I have spoken all over this	country on	behalf	of	the League	ofNations Society. I believed in the league as an instrument through which the peace of the world could be guaranteed, but in face of the realities of the moment one feels that one can	pursue the	cause	of	peace and	at
the same time be tremendously realistic. I suggest to hon. members that we have a contribution to make in this particular. If others outside this house consider it their obligation to pursue this matter, surely we have an obligation likewise. It is not so much a question of our willingness. We are torn

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between two convictions: the desire to build of Canada a great nation, with all that a healthy nationalism suggests, and on the other hand to try and build a healthy internationalism. For my part there is no conflict between the two. I believe that it is possible for us to build in Canada a nationalism in the truly great cultural sense, building a national personality, and at the same time in another sphere making a contribution toward world cooperation. Internationalism through nationalism should be our ideal. Having in mind the economic interdependence of nations, having in mind the impossibility, as the Prime Minister said, of maintaining a position of isolation in world affairs, there can be only one step forward, and that is toward world cooperation on truly realistic lines.
May I say, in conclusion, that whatever interest I have in this subject I owe to a great Spanish professor, Professor H. E. Senor Don Salvador de Madariaga, one of the greatest living thinkers, I suppose, along these lines, and I should like, if for no other reason than a purely sentimental one, to quote the last words of his Cobden Lecture for 1934, in which, speaking as a Spaniard and at the same time as a former official of the League of Nations, he said:
The idea of war calls forth visions of activity; the idea of peace calls forth visions of quietude. But passive drifting leads to war, while peace can only be preserved by constant work "which recreates it day by day. And the most difficult part of the work for peace is by no means the organization of world community activities, the setting up and working of international machinery, what might be described as '"work outwards"; it is on the contrary the "work inwards," the conquering of ancient passions, fostered in and for another age, but still vigorous in our own times despite the changes in environment which make them obsolete and out of harmony with contemporary life. This effort is truly worthy of man and compares favourably with the exhilarating effects attributed to war by bellicose writers writing under the lee of peace. This then must be our Holy War-the war against war. Its main weapon, reason. Its battlefield, our own heart. Its victory, true peace.


Mr. T. L. CHURCH (Broadview):: hospitals, crucified women and children, bombed the Red Cross and used the worst form of poison gas? As was said by the Archbishop of Canterbury in the House of Lords, there was no Christian church in Italy to say one word against this contract breaker or breach of the usages of modem warfare.
As far as I am concerned, I think Canada was very much humiliated last December by the action of the government, after having agreed to sanctions. It was bound to participate in the action of the league. The government retreated and said that Canada's actions at Geneva in connection with oil sanctions was merely an expression of personal opinion, and did not represent the view of the federal government. I have before me the views of thirty newspapers on this, and one, the Telegram, said:
The proud boast of Canada that she was the nation which took the initiative in signing the halibut treaty stands in contrast against the action of Canada in connection with the league and the operations of that body concerning Italy.
A few years ago a writer said' in the Empire Review:
The League of Nations lias pledged its members not to recognize Manchukuo, and has thus committed them to hostility to Japan. Is the British government prepared, at the bidding of Geneva, to perpetuate the state of affairs which is detrimental to the true interests of Great Britain? England is more concerned with the far east than any other European power, and Japan is the other predominant power in that quarter of the globe. Peace in the east can only be preserved if Great Britain and Japan cooperate: it is Great Britain's friendship alone which will enable Japan's statesmen to guide her destinies along a safe path.
I agree with that, and we should have a policy in the Pacific and should never have abandoned the Singapore base. He says further:
The plain course of the government was to recognize Manchukuo forthwith, and then come to an understanding with Japan. Whether we like it or not, she is the mistress of western Asia, and nothing we will do can weaken her position there. In these circumstances we must place the interests of peace before the wobbling of the league.
Possibly there may be future trouble in the Pacific; in such event where would we be? After the action taken by the League of Nations Japan is out, and no wonder. We know the Hon. Mr. Rowell has been a leader in .matters respecting the league, and his observations made last January concerning the action of the acting Prime Minister were as follows:
It is the clear and inescapable duty of every member of the league to impose this prohibi-
18, 1936	3887
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tion and to do so without delay. If they fail to do so, they will be violating their solemn international obligations and betraying the league and the cause of international justice. I regret that the government is not entitled to the credit of proposing the prohibition of the export of oil and other key materials.
These were the words by the Hon. N. W. Rowell, K.C., who has taken the strong stand that Canada violated its treaty. May I say that Canada's position is most humiliating to a great many people in this country. We should get out of the league, while the going is good. Since 1919 it has been nothing but an institution for the promotion of strife, ill feeling and mischief between nation and1 nation. It has failed like similar leagues in the past. Formed- to prevent war, by its mistakes it has brought about war; instead of sticking to its last, it has meddled in every petty state's internal affairs about labour and capital, and its meddling has caused the world to be in a perpetual state of unrest. After fifteen years we see the utter failure of Woodrow Wilson's plan of open diplomacy. The league is now in flight.
Of the great powers, four, namely the United States, Germany, Russia and Japan are now outside. At the present time we have little more than England and France which won the war, with Italy in a position where she should be thrown out and France in a position where she is wavering in the league as run now. The withdrawal of Japan and Germany means that the smaller states will in future exercise more influence at Geneva, as they have been the principal cause of international unrest for the last ten years, this development is not reassuring.
This deplorable situation the league is now in is the result of three things: the quest of compromise rather than of justice, the persistent refusal to face facts, as it did re Japan, China and Ethiopia, and the absurd insistence upon the theoretical equality of all nations. The league has failed every time it has had to deal with a problem of the first importance. Unfortunately a confession on the part of the world's statesmen as to the failure of the league is most unlikely, and instead we shall probably have the decaying corpse of the new diplomacy poisoning the air for several years to come. As the late Lord Salisbury once wrote, "The commonest error in politics is sticking to the carcasses of dead policies.'' As a result, where is the league to-day?
Neither the United States nor Russia will join the league until they can secure for the peoples within their sphere of influence a weight in the league councils at least equal to that exercised by the nations of western
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Europe. Japan, again, will not rejoin the league until her demand for a far-eastern Monroe doctrine is accepted in principle. For our part we view with little more sympathy this scheme for five leagues of nations, loosely joined in a super-league, than we view the league as planned in 1919..
I am not opposed to the principles of the league; far from it. It should have been reorganized long ago in conjunction with the five great powers I have named. We can have no peace until those nations are in it. In Canada we have no foreign policy. The only policy we have is set out in some sections of the Militia Act of Canada, chapter 132 of the Revised Statutes of 1927. Section 63 is as follows:
63.	The militia or any part thereof, or any officer or man thereof, may be called out for any military purpose other than drill or training, at such times and in such manner as is prescribed.
Then, section 64, respecting active service, states:
64.	The governor in council may place the militia, or any part thereof, on active service anywhere in Canada, and also beyond Canada, for the defence thereof, at any time when it appears advisable so to do by reason of emergency.
And section 66:
66. Whenever the governor in council places the militia, or any part thereof, on active service, if parliament is then separated by such adjournment or prorogation as will not expire within ten days, a proclamation shall be issued for the meeting of parliament within fifteen days, and parliament shall accordingly meet and sit upon the day appointed by such proclamation, and shall continue to sit and act in like manner as if it had stood adjourned or prorogued to the same day.
I may say that I am friendly towards the league. The suggestion I make here is that it should be reorganized and made more useful. It should include the United States, Germany, Russia and Japan. Without these nations it can be of no use; the covenant would be broken. We have had several Locarnos, as I have shown, and they have all been broken. We in Canada can rely upon no more such pacts or agreements as we have had with Italy and other countries, without the possibility of war.


Mr. HANSON:: What is the hon. member reading?


Thomas Langton Church: In its present form the league is not useful, and we should not continue to spend money upon it.	Pacifist
speeches have been made. In this connection may I describe to hon. members a cartoon which I now hold in my hand, and which ap-

peared originally last February in the Toronto Telegram. It is headed "Advance of Civilization," and under a picture depicting the terrible effects of modem warfare, these words are credited to Haile Selassie: "And they are raising funds in Toronto for the league of nations society, because it prevents war." They were raising funds when hospitals were being bombed, red cross depots being bombed, and men, women and children were being poisoned or crucified. That was done by Italy without protest from the Christian church of that country.
I have in my hand another cartoon-


Olof Hanson: I think hon. members are entitled to know what the hon. member is reading.


Thomas Langton Church: This cartoon shows a
picture of the Suez canal-


Mr.   CHAIRMAN@: Order. I must ask the hon. member for Broadview to state what he is reading.


Thomas Langton Church: From a cartoon I am discussing Canada's foreign policy. After waiting for months we have heard what our foreign policy is supposed to be and we find that we have not any. We are just going around in a circle; we have no foreign policy.


The CHAIRMAN:: I should like the hon. member to state what he is reading.


Thomas Langton Church: I was just showing and reading a cartoon and the writing on it.


Frederick George Sanderson: I must ask the hon. member for Broadview to confine his remarks more closely to the matter under discussion.


Thomas Langton Church: A few moments ago I was quoting from the Militia Act and I am now referring to a cartoon which appeared in the Toronto Daily Star of October 22, 1935. The cartoon is a drawing of Haile Selassie, standing beside the Suez canal, with the League of Nations peace pledge in his hand, and with his eyes on a British battleship. His words are: "It's all right to be given this peace pledge, but I'd rather have Mr. Bull's battleships behind me than all the peace pledges on earth." I am sorry, Mr. Chairman, in my hurry I did not give the date. I shall send the two cartoons to you, sir.
The official records of the war show that as a result of it there were 10,000,000 dead, 20,000,000 wounded, 3,000,000 prisoners, 24,000,000 widows and orphans and 13,000,000 civilian dead.	(
The nations, notwithstanding the league covenants, are all quite ready to go behind one another's backs. Even the British empire

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broke the Locarno treaty and made a secret treaty with Germany. Every large power and country has done the same thing. They are ready to sign covenants with the league, but then they turn around and make secret pacts behind the back of the league. We permit the murdering of little children of Abyssinia. How can the Christian church condone the use of poison gas? There is no need of a league if the nations would agree to a moral code. The league as it exists at present is of no use unless it can enforce the covenants which are signed.
I admit that in non-political matters the league has done a lot of good, but as far as political matters are concerned, it has brought the British empire to the verge of war. The league has made many mistakes. I condemn the secrecy which has been carried on in this house. Has the public had no rights for the past eight months to information as to Canada's foreign policy? We have been refused this information. Why has this house been, so to speak, tongue-tied for the past four months? We should know what the foreign policy of this country is; we should realize how undefended Canada is while the rest of the world is an armed camp. We should get out of the league and give more time to our domestic problems. This secrecy with regard to foreign affairs has found Canada totally unprepared. The disinclination of all parties in this house to criticize the government or to have any discussion about league or foreign policies has had a most unfortunate result. The people have lost confidence in the whole organization. The prestige of the empire has been destroyed all along the line. There should be more publicity in this house given to our foreign affairs-. This country is in a perilous condition. The public should be told what is going on.


Olof Hanson: Mr. Chairman, on a point of order. Some of us who are not so fluent in the use of the English language have not been permitted to read speeches, but now the hon. member rises and reads his speech right through. Is he entitled to do that when we cannot?


Thomas Langton Church: I did not. If the hon. member wants to give his opinion, he can do so. I am giving just my own personal opinion. If the hon. member wants to make a speech later on, he can do so. I can tell him that the province from which he comes owes its protection to the British fleet. Notwithstanding all the peace pacts that have been signed, the British fleet is the real protection of the British empire. I do not believe
the policy of the British government would have been what it was if the government of Canada had not taken the action it did last December and made a right-about-face with regard to the oil sanctions. There are a great many people in this country who, I know, will agree with that statement. This dominion was placed in a most humiliating position by the government of the day. If Canada does not want to keep step with the mother country, let us get out of the British empire. Under the terms of the statute of Westminster, we are practically out of the empire at the present time. We have been sitting here for four months and yet no hon. member will be able to go home and tell his constituents just what is the foreign policy of Canada. Canada must rely upon the protection of the British fleet.


[Stage Direction]
Item agreed to.
Canada's contribution to the expenses of the League of Nations for 1936, including secretariat, international labour organization and permanent court of International Justice, $194,390.
Richard Bedford Bennett: Mr. Chairman, I propose to detain the committee but a very short time. First of all, I should like to congratulate the Prime Minister (Mr. Mackenzie King) upon the statement he gave this afternoon. I should also like to congratulate the hon. member for Essex East (Mr. Martin) upon the address he has just delivered, which I think reflects very great credit upon his ability and studiousness in connection with matters which so deeply affect our country. I do not think any Canadian can look out upon the world at this time without some feeling of fear. That may seem to be a very strong statement, but I make it advisedly. The observations of public men of cabinet rank in Great Britain, as reported in the daily press, must be accepted at their face value. They say that the condition of the world to-day is as serious as it was in August, 1914. On the other hand, if we are to accept the refutation of those statements by those who are politically opposed to those who made them, this is but war-mongering. I cannot say that either view correctly describes the present situation, but no one who has followed the history of the world since August, 1914, can fail to be impressed with the very great difficulties that now confront the statesmen of the world.
We have the Far East situation, which is difficult to explain in a few words. Hundreds of millions of people scattered over one of the most ancient of the occupied communities
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of which we have any historical knowledge are without any effective central government. Encroachments have been made upon their territory by a highly organized and skilful people who have undertaken more or less the stabilizing of Asia. This in itself is a very remarkable achievement, but that it should be undertaken alone gives cause for consideration. That there is in a part of Asia a new government established under a new sovereign, but in reality under the protecting aegis of Japan, is in itself a significant situation. When one recalls what one reads from day to day of conditions in China, one has a real appreciation as to the situation in the Far East.
In Europe there is a situation which I sometimes think we Canadians cannot visualize unless we have seen something of it. It is almost impossible for a Canadian to think in terms of European conditions. I recall reading after the war a small volume by Sir John Marriott, who had long been a member of the British House of Commons, in which he referred to a great battle as having represented the hopes and aspirations of a people for centuries. Now it is almost incredible to us on this continent that a people could nurse a grievance, a resentment, an animosity over centuries of time and find the fulfilment of their hopes and aspirations in a battle fought in the early part of the twentieth century. Nevertheless, as the author pointed out, that was the case. You have differences that have arisen from old causes; you have differences that arise by reason of racial descent;. you have differences that arise from national ambitions; you have a small area inhabited by people of one type and across the boundary you find people of another type; and when you go further you find still another, so that the whole of Europe consists of a large number of states, many of them small. No wonder that men have described the Balkans as the cockpit of war! No wonder that men have not expressed great surprise at the inability of statesmen to steer a course towards peace through all these troubled waters.
In Palestine to-night there is an extremely difficult situation. There is Great Britain with a mandate. There are the Arabs and the Jews, and according to the last reports what is practically war is being carried on, aided and abetted by the gold of a foreign power. All that is disturbing. Some of us remember the Austria before the war; some of us have been in Vienna since the war. Some of us recall the ancient glories of the dual monarchy and now contemplate its shrunken boundaries. The peace treaty makes 
special provision as to how Austria shall be dealt with, and the situation there has developed some of the latent animosities and certainly stimulated some of the ambitions of one of the nations of the world. Then there is Germany. We are all familiar with the terms of the treaty; this house ratified them. We recall the provisions with respect to disarmament, conditional in their character. We woke up one morning and in the newspapers read that the Rhineland was no longer a neutral area but that it had German troops in the barracks and at the bridge heads. Side by sidle with that there is the constant fear of France, the fear of a people who look for security because they know that for centuries there has been a territory in which have been fought great battles and which has passed from the control of one country to another, sometimes with a century intervening, sometimes with less, the peoples in that area being uncertain as to what will be the result of the discussions and negotiations that take place between the nations of the world and the representatives of the particular sovereignty under which they previously lived. Under these conditions it is impossible for Canadians living here in peace and amity with their neighbours to understand such a situation.
When I take the year book of the nations of the world and realize the millions of dollars that are being expended in armaments by small communities, sometimes inland countries building war ships because they happen to be able ,to reach the sea through an indirect method; when I see reflected in these vast expenditures the fears of the peoples, I Understand more than ever that we in Canada cannot appreciate the situation. I am sure that none of us understands it; none of us is capable of understanding this sentiment,, this terrible fear that oppresses the peoples of the smaller and even the larger communities in Europe. When the war ended we all, of course, hoped for better things, for better conditions; and with the idealism of the president of the United States, and the ideal realism of the great South African statesman, General Smuts, and the vision of a trained English statesman, the present Lord Cecil, all uniting together as they did to formulate a covenant of the League of Nations, with the assistance given them by statesmen from every part of the British empire and of the world, we naturally looked for something better. I can recall reading for the first time the covenant of the League of Nations, and I am sure there is not a member of the com-

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mittee who did not hope that, as a result, we might realize some of our aspirations and our hopes in that regard1. What were we aiming at? We were aiming at peace. That is the hope of the people and the goal1 of all our efforts-peace internationally, peace because democracies cannot survive unless they have peace and an opportunity to develop their institutions and their country. One of the conditions that appealed to me most strongly when I read the covenant was the provision dealing with disarmament and the abolition of conscription. I had always felt that if you continued to supply the means you would inevitably secure the result. You cannot train millions of men to be soldiers and arm them, providing munitions of war, building fortresses and supplying artillery, without inevitably reaping the result of such efforts, which is war. That is the evidence of the world's history. But we had hoped that things would change.
No sooner, however, than we had joined the League of Nations as one of the charter members, so to speak, with other commonwealths of the empire, than we learned that the greatest American nation that was interested in it, the United States of Americas, was unable to implement its signature. The people of .the United States would not permit that country to become part of the League of Nations. That was a blow to the League of Nations the result of which it is not easy to estimate,. For my own part, I cannot but think that when that event took place and the United- States withdrew from the League of Nations the league had received a very, very great injury from which it would ibe difficult indeed to recover. During the years .that have passed since,, the League of Nations has failed notably on four great occasions. It failed in connection with the difficulties of Japan's encroachment upon the Manchurian areas. It appointed a commisison and the commisison under Lord Lytton reported. The report, as we all know, was adverse to the action taken by Japan, and in the end Japan retired from the League of Nations. The League of Nations, as .the Prime Minister pointed out this afternoon, was powerless, or if it was not powerless,, at any rate it did nothing. That is the fair way to put it. And then there is the position that developed in the Chaco, down in South America, to which the Prime Minister made reference this afternoon,. In South America were two republics engaged in mortal conflict. One might say, "Those are small countries. Surely the League of Nations should

be able to do something with respect to that." Yet the truth is that all they did was to -talk about commission. I can recall the discussion that .took place at one time, I think it was in 1934. Thousands of men were killed, millions of money expended, and much territory devastated; yet the League of Nations did nothing to lessen the conflict or to apply in any sense the principles contained1 in the covenant.
More recently we had the Ethiopian difficulty. I shall not traverse that field again. In 1923 Ethiopia joined the League of Nations. The Dominion of Canada was a party to Ethiopia coming into the league; it was represented at the assembly. Ethiopia made promises that were satisfactory to the members of the league, and became a member with exactly the same status as a member as Canada or Australia or Great Britain or France or Brazil. Italy was one of the charter members of the league. The purpose of the league was to provide for, shall we say, an effort at negotiation before there should be war, and a solution of differences other than by force. What happened? Italy made war upon Ethiopia, and Ethiopia, a member of the league with Canada, with Italy, with Great Britain and with France, has been crushed by one of its fellow-members by the use of force, by bombs from the air and poison gases, in violation not only of the provisions of the covenant of the League of Nations but of the definite international agreement which we in this house accepted with respect to the methods by which war should be waged.
In the face of that, the first question Canadians ask themselves is: What is our obligation? I agree on this point with what was said by the hon. member for Winnipeg North Centre (Mr. Woodsworth)-and it is about the only thing he said with which I do agree-that our obligation is exactly the same as that of any other nation which is a member of the League of Nations. Here is the analogy. When individuals in a civilized country have differences they resort to a court of justice. The plaintiff or the complainant files his claim; the defendant files his defence and the case is adjudicated upon. That did not come about hastily. Those who have read Maine's History of our Institutions will derive, I believe, great pleasure and satisfaction from the writer's description of how slow was the development of the institutions which we have so far evolved for the settlement of disputes. If the world is as old as has been suggested recently by scientists, perhaps the progress of humanity individually has not been quite so rapid as to enable us to complain very seriously about the slow progress of nations.
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At any rate it is clear that the evolution of the institutions by which men settled their differences through resort to courts came about slowly. The idea of an international court to which nations would attorn is a very old theory. This question of universal peace engaged the attention of far-seeing statesmen and wise philosophers many centuries ago, but the evolution of the plan under which international differences would be determined by an international court, a body of trained jurists, has been lower still. To settle differences between nations, how difficult the ideal, and how slow must be its realization! Yet we have such a court. I think it is one of the great triumphs of civilization that we have that court.
When we in this country were confronted with the question of bow far we would gc in the direction of judicial settlement of international troubles, we went the whole distance. Canada as a new country was prepared to have any differences of ours settled by a great international tribunal, or what at least amounts to it, because whether you say i1 is by a system of arbitration or by judicial process that you settle your differences is not at the moment important. But it was impossible by this international court to settle the differences between Italy and Ethiopia. Why? Because in this covenant that we cal! the covenant of the League of Nations we have provided that those who are guilty of a breach of it shall suffer certain consequences. If I have a difference with my neighbour aD<l break a contract or bond that has been executed, I am liable for damages, and my property can be taken under an execution for the purpose of satisfying the judgment for damages obtained against me. But when you deal with nations you are dealing with an entirely different situation; how nations attorning to an international court or submitting to international arbitration may be able to settle their differences by judgments against them is an entirely different problem, because they may or may not obey the judgment, and there is no sheriff to levy execution. But we have provided what the punishment shall be; we sometimes call it punishment, though we call it a judgment if we are dealing with a civil matter between individuals. We provide that, as between nations, when one state violates its undertaking, its covenant, its promise, its agreement, there is a punishment. We have used the word "sanction;" first economic sanctions, and provision has been made for sanctions ultimately by force.
Early in the history of this covenant, after the United States had withdrawn, the late

Judge Doherty pressed very strongly for a revision of the covenant because he felt it was not fair that under existent conditions it should continue in its present form. The government of my right hon. friend endeavoured to support the same thesis, but with some success only; the extent of that success was mentioned by my hon. friend from Essex East, and I shall not again refer to it. When Italy invaded Ethiopia it incurred the penalty attaching to a violation of a contract. That penalty, which we have been calling sanctions, involved economic pressure being exerted against Italy, and there were certain provisions that recourse might be had to force. We eliminated force at the very start. The right hon. gentleman was quite right when, in a statement made in October last year, he pointed out that the preceding government had tied his hands to some extent, because the statement made by Mr. Ferguson, representing the government of Canada, as read by the hon. member for Essex East, represented the view of the government of the day as to the position which Canada should take. In other words, when the nations of the world, represented by their validly constituted representatives, had concluded that Italy had violated the terms and conditions of the agreement to which it had become a party, and was the offender as against Ethiopia, then the consequences, this assembly of the League of Nations said, should be visited upon Italy, the aggressor, the offender, the covenant breaker. But the language used by Mr. Ferguson was language which said that Canada would join in unanimous action with the other countries, and that was in order that there might be unanimity in the action which was taken, as there was. When we agreed to sanctions later, after a committee had studied the matter, that was an effort on the part of civilized humanity to punish one of the parties to a contract which had broken its word, violated -its contract and incurred, as it would have done had it been a private individual, liability for damages.
The character of sanctions is something that has to be settled by each of the communities which have to do with that matter. The Prime Minister this afternoon dwelt upon that feature of it, which is very important. We in this country took the only action which we could take, namely, that of enforcing these sanctions or this punishment against Italy in the manner and form provided for by the agreement made between Italy and the other nations of the world, our Canada being one of them, cutting off imports and exports, declining to supply money in any shape or form, bringing pressure to bear upon trade and

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lessening the opportunity of the Italian people to trade with us, and necessarily lessening the trade that we did with them. We were all agreed, after this small committee representing the whole had met, that there should be no military sanctions, so that question did not arise. I have always regretted the unfortunate incident that happened in connection with oil and Mr. Riddell. I have explained that before, and I am not going to do more than say that these things sometimes do happen, happen by accident rather than by design. It was not well that it should have happened as it did, and the comments of the press and of public men, of men of the political faith of the government, indicated that they did not approve what had thus happened.


Ernest Lapointe: They have changed their minds since.


Richard Bedford Bennett: Very few of them have.


Ernest Lapointe: They refuse to see, then.


Richard Bedford Bennett: That is exactly so. But to anticipate action and to say that the representative of this dominion should not have done so and so in a discussion which took place in a small committee was to give a wrong impression, unconsciously, to the peoples of the world; and when the great headlines in newspapers, not published in Canada, indicated the joy of Mussolini and Italy that Canada had taken a position which was in their judgment helpful to them, although in the end1 it was not, this left a wrong impression. Time, I think, has done much to cure that. It has done much to remove the false impression which was thus left upon the minds of the peoples oi the world, but in removing that impression we passed through a phase which, speaking as a Canadian only, I wished we had not passed through. It left on the minds of the people of the world an impression which I should have preferred had not been left there, and which I believe did not represent the genius of the Canadian people or their hopes and aspirations with respect to this difficulty.
At any rate, what happened1 was that sanctions were imposed. Military sanctions were never suggested. In the end what occurred was this, and it could not be put more clearly than it was by the Prime Minister this afternoon when he stated that although Italy had hoped for success within a limited time, the other nations of the world believed that physical obstacles, plus other conditions, including a vigorous defence on the part of the Ethiopians, would have made success impossible within the period of time that was considered necessary. We must not forget that Napier of Magdala captured an

Abyssinian fortress in a limited number of months, released his prisoner, and got the gold which was his aim, and it was thought that having regard to new conditions the expedition of Italy could be much more rapidly carried to a successful conclusion than in those earlier days. Events have shown that while it took a little longer, the Italians conducted a very sharp and vigorous campaign with the modern armaments at their disposal, and Ethiopia was crushed without making that defence which no nation in these days can make against highly developed armaments, especially in the air, and mechanized forces.
That being so, we have to decide two questions. The first one is very simple: Should we continue the sanctions or not? I have been greatly impressed by the attitude taken by General Hertzog. We are the premier dominion of the British empire. In South Africa Premier Hertzog has to deal with problems that we know nothing of. His position is entirely different from ours. At the moment, according to the press, he has expressed the idea that we should maintain sanctions. He believes it would be a very wrong thing for us not to do so, and I have been greatly impressed by reading the press reports, limited as they are, as to what his views on the subject have been. But if we withdraw, as England has said to-day she proposes to do, and as other nations have said they propose to do, from imposing sanctions against Italy, we undoubtedly have put a direct premium upon the violation of international agreements. There is no way by which we can escape that conclusion. We might as well face it frankly. We have said, once more in the language of the ancients, that might is right. One may have strong opinions regarding the Ethiopians; that has nothing to do with the matter. Ethiopia has been a member of the League of Nations since 1923. Italy has been a member since the inception of the league. Sanctions were properly placed in operation, and now Italy having succeeded in attaining her objective, having destroyed Ethiopia and set up and proclaimed supremacy over that country, declaring her king to .be Emperor of Abyssinia, we are asked to say by the removal of sanctions that we acquiesce in that action.


Ian Alistair Mackenzie: What is the alternative?


Richard Bedford Bennett: I shall come to that in a moment. It means acquiescence; that is the unfortunate part of it, just as was said to-day in the House of Commons in England, by a member sitting on the opposite side of the chamber, according to the report to which the right hon. gentleman referred this after-

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noon. Whether we like it or not, are we to say that punishment shall cease because the offender has had the force and strength to win? That is what it means. In that event we lie down, and in the language of Mr. Eden this afternoon, recognize a failure.


Ian Alistair Mackenzie: Britain could not do the whole of it.


Richard Bedford Bennett: I am not for a moment suggesting that the maintenance of sanctions by Canada is going to change in any sense the situation in the world, but in view of the fact that one of our great dominions which has always been friendly to this one, has urged that sanctions be not dropped-I refer to General Hertzog-I cannot but .think that we should pause and consider every angle of the situation, whether in the interests of this young democracy, this nation with none of the difficulties that exist in European countries, where we have nothing to confront us that they have there, we should not as a new country say: We will blaze a pathway for ourselves; we will say to the world that one of our associates with us has committed an action that is an act of war against Canada. For that is the language of the covenant. It is an act of war when we say that nation has done this thing. We as a new country are going to say to the older nations of the world in the very language that Canning used in days long since past, that it may well be that as the new members of the commonwealth, South Africa and Canada, can stand side by side, and say: We are not relaxing sanctions. We have no difficulties such as England has to deal with; we have no complicated situation such as France has; we have no international complications such as other nations in the league have. Might we not say-I am putting this only hypothetically-as a new country, a new people, blazing for ourselves a pathway among the nations of the world, that we stand with South Africa?


William Lyon Mackenzie King: Not unless we are prepared to back up our stand by military sanctions.


Richard Bedford Bennett: Not a bit of it, not a suggestion of military sanctions. The assembly said there should be none; that still stands. There has not been a suggestion from anyone that there should be military sanctions. The very first promulgation read by the Prime Minister this afternoon was sanctions other than military.


William Lyon Mackenzie King: What would be the good of saying all this unless we were prepared to do this other thing?


Richard Bedford Bennett: The good would be that which results every time from a nation indicating to the people of the world that it will not approve and acquiesce in high-handed disregard of international obligations by any country with which it is associated. That is the point. Are we serious in the position which we take, realizing that there is no obligation for military sanctions, that having been swept out at the very initiation of the discussion? Why should I, if I were a private individual, relax my execution that I have obtained in an action for damages against a man who has broken his contract with me because someone else thinks it desirable to remove their execution against the individual who has also violated his contract with them? Each one must be the judge of what is best for himself. In our desire to maintain peace -not to punish-we can best do it, in the language of General Hertzog, as reported in the press, by taking the position that we shall not, because other nations have done so, become parties to the relaxation of these sanctions which were established by joint action of the nations of the world. I put the question to this committee, because it is one which has given me much concern: Why should we take some action just because some other nation has? Why should we determine that we shall abandon sanctions because some other nation is about to do so?


An hon. MEMBER:: Because Great Britain has.


Richard Bedford Bennett: If Great Britain abandoned sanctions Great Britain has good reasons. What reasons are there that we should do the same? Our peace is not disturbed; our shores are not invaded.


Ian Alistair Mackenzie: It would be entirely ineffective.


Richard Bedford Bennett: Not as far as Canada is concerned. It would lessen our trade; it would prevent Italy from receiving from us certain commodities that she otherwise would receive, but we should stand as an example to' the world that a new democracy is blazing for itself a new pathway of rectitude in regard to a position which she had accepted under the League of Nations. That is what it would mean. One may say that that is absurd; that one nation does not count, especially on the north American continent. Ah, well, example is very great. We being a small power in numbers, without military equipment that could possibly be utilized in any prospect of war, whether on sea or on land

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or in the air, that was eliminated in the very first discussion which took place. Then why should we acquiesce when we have no complications in our national life such as the nations in Europe have?
That problem has given me much concern. I mention it to this committee because the government have taken a certain action. They say: We propose to relax and abandon sanctions. I am not complaining of the government taking that action; I am only pointing out what the alternative is. I have said that the problem gives me some concern personally, after reading General Hertzog's position. I am not saying for a moment that after weighing the pros and cons I might not, if situated similarly to this government, have had the same view. I am saying that to-night and for some days I have been thinking about the matter and my mind has been uncertain what course we should take. I am uncertain yet. Nothing said to-day has convinced me that it is a certainty that one should hold unhesitatingly. No cogent reasons have been given which induce me to believe that the economic sanctions imposed against a covenant breaker by the Dominion of Canada should be permitted to lapse because might is right. I am thinking a little of the fact that although black in colour, thousands of men and women have been ruthlessly destroyed with poison gas, bombs and artillery in violation of a distinct and positive understanding. And I cannot but remember that even in the life of nations there have been punitive expeditions for the purpose of making nations understand that such things should not take place, and of indicating the necessity for the maintenance in international relations of the sanctity of contracts made between nations and having to do with the life and liberty of peoples. I am not unmindful of all that.
The other point, which is the second one, to Which the Prime Minister has not directed his attention yet, is the question of the recognition of the Italian proclamation under which Ethiopia becomes part of the empire of Italy. In the case of Manchuria and Japan we have not yet recognized Manchukuo. As far as we are concerned it is true that no sanctions were ever imposed by the league. But we have not recognized that new state. I already see in tire press that Mussolini is not content now with the relaxation of sanctions but must have what is its complement, namely the recognition of Italian supremacy, Italian victory and the proclamation which makes Ethiopia part of the Italian empire. Well,
the peace of the world, I suppose to some extent, depends upon that. We, this new democracy, are told again that we may be in the position of having to do what we did in the case of Manchukuo, that is, not recognize it, or we may be asked to recognize Italian supremacy. Now the first question we have answered. There may be a difference of opinion with respect to it. On balance the government may have taken the proper course under the circumstances; I have put the other alternative to this committee. On the second point, which will inevitably arise from the relaxation of sanctions, there must be a determination of the question whether or not we are going to recognize Italian supremacy in Ethiopia. To-morrow Ethiopia, according to the dictator of Italy, must become a part of Italy, and be so recognized by the nations of the world.
Those arc- the two problems that immediately confront us. One has been answered; the other will have to be answered shortly. I have no answer to the second because for the reasons which I have indicated my mind has been very uncertain as to the answer that should have been given to the first. I am not one who believes that in this country we should not be prepared to make for ourselves a pathway in international matters. I have never for a minute thought it impossible, although we are small in numbers and far removed from the great centres of warring conflict-because it practically amounts to that in Europe to-day-for this country to play an important part. But I have been one who believes that it is impossible for us to exercise that part in the way in which the older nations have; obviously we cannot do it. The reasons given this afternoon by the Prime Minister and by the hon. member for Essex East are conclusive of that point.
But there is a path which we may pursue. There is a way in which the influence and power of this dominion can be felt among the nations of the world. That power General Hertzog proposes his union shall exercise. He may for good reason change his mind. It may be that there will be reasons of state so impelling and compelling that he will. The same is true of Canada. But the place for Canada as the interpreter on this continent of the genius, the hope and the aspirations of the peoples of the world for peace, peace, peace, can never be realized unless we follow some course that will be to the peoples of the world an example of what a free people should do when they find that there has been a violation of undertakings by one of the ancient nations of the world.
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I cannot get away from the fact that this possibly may involve the loss of a few dollars of trade, but it means more than that. It will always, as long as it continues, be an outstanding example to the peoples of the world of this attitude: Here we have a new land, a new people and a new democracy saying that when we sign a contract it means what it says and that those who violate it cannot openly do so and flaunt their victory in the eyes of the world without incurring at least the condemnation of a free people. That is the position I put to this committee.
There arises out of all this the question of the failure of the League of Nations to deal with the problems to which I have referred, its ineptness in dealing with the questions referred to by the hon. member for Essex East, its ineptness because, as he said, it is possible that if certain action had been taken at a certain date the results might have been different. I believe most men think that. Most thinking men are convinced that Mussolini thought he had a sort of tacit understanding which enabled him to proceed to extend his sphere of influence. It may have been that at the outset he did not contemplate a war of annihilation of the sovereignty of a people, but it evolved into that, with the results we now have.
Nevertheless while the league has failed- and it has-I think the Canadian people must first of all-and I hold this as strongly as I can hold any conviction-realize that the greatest assurance we have for the maintenance of our peace lies in the strengthening of every tie that binds the commonwealth of nations, the members of the British empire. That I believe firmly. I am confident that is so. And because I believe that, because I realize that and hold it strongly I still think that the League of Nations may, and I hope will, exercise a great and powerful influence upon the thought of the world.
The very fact that we find negotiation, conference and discussion among the representatives of fifty nations of the world is in itself the best assurance of understanding. There may and there will ibe differences, great differences, of opinion. But just as in this house in connection with non-political or non-partisan matters we may be able to arrive at conclusions after discussion, talk and negotiation which will result in, the common good, and will mean an advancement towards perfection, so the representatives of the men and women from fifty states, and more, by the very fact that they do meet together, the very fact that they see each other, the very fact that they hear each other, the very fact that they shake hands,

the very fact that they exchange points of view that you tell your troubles and he tells you his troubles acquire a fellow-feeling which they could not possibly get by reading history or newspapers. From such a conference much good must come.
If we remove ,the league entirely we have to ask what the result would be. That seems to be the other question we would have to ask. Conciliation would be gone; conferences would disappear and we would have no meeting together of the representatives of the peoples of the world. You cannot make the League of Nations a super-parliament or give it the power of a super-state, but it may still continue to be a medium through which the representatives of all peoples of the world can meet together. Of course this usefulness has been greatly lessened by reason of the fact that one of the leading members has withdrawn, two have withdrawn, three have withdrawn, four have withdrawn, and there is a threat of the withdrawal of the fifth. All these things lessen its possibilities for good.
Nevertheless I approve the vote for the maintenance of Canada's position at Geneva. I still believe it is worth spending the sum of money we spend. When I read, as every hon,. member has read, that in a few hours at Vimy Ridge, where shortly a celebration and memorial services will be held, millions and millions of dollars went up in smoke and carried1 devastation and death to thousands of men, I ask myself to realize how small in comparison is the expenditure of a few hundreds of thousands of dollars for the League of Nations.
Why is the expenditure made? Its supreme purpose is that of peace, not punishment. Of course we have been told in scripture about those who cry, Peace,, peace and there is no peace. Sometimes in these days we are reminded of that. This expenditure of a few hundred thousand dollars, but a fraction of the money our artillery used before Vimy Ridge, is surely warranted if for no other purpose than to indicate that the mind, attitude and purpose of the Canadian people are directed toward world peace.
I am not wholly in accord with the conclusions at which the government has arrived1, because of the uncertainty created in my mind by reason of the attitude which has been taken in a most difficult part of the British empire by one of its great statesmen. But I know this, that the preservation of a certain form of strength in foreign policy is the best assurance this country can possibly have for its continued harmonious development. In Great- Britain when that

Criminal Code-Mr. Lapointe (Quebec East)
was departed1 from, a difficulty of the first order arose.
I am satisfied that the passing of this vote toward the maintenance of the league, although it may be shorn of great authority, will afford an opportunity for a measure of continued permanence in our foreign policy which would be otherwise lacking. I do not think it is fair to suggest that any Prime Minister in these days could outline a foreign policy for this country; it cannot be done. No other nation can outline in detail a foreign policy, except under very limited conditions. But we all can do this: We can recognize that we are one unit among the many units which constitute the world's nations, and as such we have a part to play not by force but by high example. We have not force; it would not be available from the Canadian people, in any event, unles out of a country vastly different from what this one is to-day.
But we have something more, we have a people young and virile, the inheritors of great traditions, believers in the right, and I am confident that if we so determine, by our example we can accomplish what Pitt said his country had done. Be said: England has saved herself by her efforts; she may well save the world by her example. So, small in number, we here on the northern half of the north American continent, far removed from the climatic conditions enjoyed by many countries, a virile, young people, by the force of our example and the determination to show to the world that those who break their obligations and violate their covenants have become ostracised so far as dealing with the civilized peoples of the world are concerned, may be able to show the pathway to ultimate peace and happiness among, not only our own people, but the other peoples of the world.


[Stage Direction]
Item agreed to.
Progress reported.
Mr. McPHEE:: Mr. Speaker, I should like to move, with the consent of the house, that we revert to the order for motions, in order to file the fifth and final report of the standing committee on miscellaneous private bills.


[Stage Direction]
Motion agreed to.
The house having reverted to the order for motions:
Mr. McPHEE presented the fifth and final report of the standing committee on miscellaneous private bills.
On motion of Mr. Mackenzie King the house adjourned at 11.12 p.m.
Friday, June 19, 1936