1937-03-30

OFFICIAL REPORT OF DEBATES

Mr. SPEAKER:: I have the honour to lay before the house a report and communication of the civil service commission respecting revision of the compensation of the editor of French debates and the chief of the French reporting staff.



AGRICULTURE AND COLONIZATION


[Stage Direction]
Mr. W. G. WEIR (Macdonald) presented the first report of the committee on agriculture and colonization, and moved that the report be concurred in.
Motion agreed to.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I should like to table the convention between Canada and the United States for the preservation of the halibut fishery of the north Pacific ocean and Bering Sea, which was signed at Ottawa on January 29 of this year.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Hon. C. D. HOWE (Minister of Transport):: Mr. Speaker, last night while in committee on the Canadian National Railways financing bill the leader of the opposition (Mr. Bennett) suggested that I place on Hansard a breakdown of the figures appearing in the bill. With the consent of the house I shall place the statement on Hansard without reading it. I believe the detailed figures would mean very little if read in the form presented.
Details of C.N.R. Requirements under Financing and Guarantee Act 1937
(a) Retirement of maturing capital obligations, miscellaneous maturing or matured notes and other obligations secured or unsecured and payment of sinking funds, not exceeding $7,114,000.
Retirement of Maturing Capital Obligations-	Due
7 % Wellington, Grey and Bruce Railway
bonds	July 1/37 & Jan. 1/38
3j% New England Elevator Company first
mortgage bonds	 July 1st
Indebtedness to State of Michigan re Woodward avenue	 Dec.	31st
Sinking Fund Payments-
Canadian National Railways 2% guaranteed
debenture stock (1927)	 July	1st
St. John and Quebec Railway 4% debenture
stock	 Oct.	1st

Equipment Principal Payments-
C.N.R. 5 % Equipment Trust Series "G".. C.N.R. 44%	"	"	"	"J"..C.N.R. 5 %	"	"	"	"K"..C.N.R. 4J%	"	"	"	"H"..C.N.R. 5 %	"	"	"	"L"..G.T.W.5 %	"	"	"	1929.
C.V. Railway 5% Equipment Trust 1929..
Feb. 1st & Aug. 1st	1,500,000
May 1st	1.000,000
May 1st	1,200,000
July 1st	625,000
June 1st	1,050,000
Dec. 14th	283,000
Dec. 14th	124,000

Grand total

(say) $7,114,000

C.N.R.-Refunding
(b) Additions and betterments including co-ordinations and acquisitions of real or personal property, not exceeding $23,607,700, estimated as follows:
General additions and betterments	 $11289 999
Less: Equipment retirements	' ''	7389999
A [DOT] ... c . .	$ 3,900,000
Acquisition of securities	 ssi non
New equipment purchases	!!	19396
561,000 700
t am,,,	,	$23,857,700
l,ess: Available from working capital	 250 000

As follows:
General Additions and Betterments-	1937 pr0p0sed
Atlantic region	 $ 792,794
Central region	 1,826,939
Western region	 2 709 500
Grand Trunk Western Railroad Company	 1 123 200
Central Vermont Railway, Inc	[[ '[ '' ' ' ' '	'154 328
Prince Edward Island car ferry and terminals	 3 000
Montreal and Southern Counties Railway	 17 249
Niagara, St. Catharines and Toronto Railway Company	 34 000
Oshawa Railway Company	''	4 226Thousand Islands Railway Company	
!!	1000Canadian National Steamships Company Limited (Pacific)	
9 750Prince Rupert dry dock and shipyard	
*Grand Trunk-Milwaukee Car Ferry Company	
*'Muskegon Railway and Navigation Company	
24 100Hotels..	.	"	;;	357|000Canadian National Express	
5^qTelegraph and Telephone Department	
' ''	548 631Stores Department (including Grand Trunk Western)	
42A40Rail and River Coal Company	''	. ' ' \	37 075Chicago, New York and Boston Refrigerator Company	
1773Legal and Tax Department (including Grand Trunk Western).. ..	.. ..	129876Headquarters, includes replacement Fredericton bridge in 1937-$850,000.. ..	1245 883Headquarters-Retirement of roadway and structures-not replaced (Cr.)	275 000Additions and betterments to equipment-C.N. owned	
2 390725Montreal terminals development-Chapter 12	'. '" 100^000Total additions and betterments	
$11 289 999
Less-Equipment retirements-
Canadian National Railways	 6 500 000
Duluth, Winnipeg and Pacific Railway	 ' 74^286
Grand Trunk Western Railroad Company	 576A00
Central Vermont Railway, Inc	 168!970
C., N. Y. & B. Refrigerator Company	'' ..	70543
Total equipment retirements	 j 7 389,999
Total additions and betterments less equipment retirements	 $ 3,900,000
Acquisition of Securities
Toronto Terminals Railway Company-
Joint with Canadian Pacific Railway Company
General additions and betterments:
Expenditures to December 31, 1936, not yet funded	 $142,981
Requirement for year 1937	 Ol'oOO
Total	 $233,981
C.N.R. proportion-50 per	cent	 116,990
(say) $100,000
C .N.R.-R e funding

Northern Alberta Railways Company-
Joint with Canadian Pacific Railway Company
General additions and betterments:
Expenditures to December 31, 1936, not yet funded	 $384,776
Requirement for year 1937	 267,552
Total	 $652,328
C.N.R. proportion-50 per cent	 326,164
Portion of securities acquired in 1936 financed from working capital:
Total value of securities acquired	 $250,000
Amount financed through capital budget	 193,000
Balance financed through working capital	 57,000

(say) $350,000
Chicago and Western Indiana Railroad Company

Amount to be advanced as sinking fund payment under terms of fourth supplemental indenture dated March 1, 1936, between the Chicago and Western Indiana Railroad Company and the Bankers Trust Company, securing an issue of 44 per cent series "D" first and refunding mortgage bonds, in amount of $24,462,000.
Total payment to sinking fund in 1937	 $553,000
Grand Trunk Western Railroad Co. proportion 20 per cent 110,600
Total
(say) $111,000 $561,000
New Equipment Purchases
Canadian National Railways-	Total
Freight cars
3,000 Box cars 300 Refrigerator cars 300 Gondola cars 15 Snow plows 14 Flat cars 40 ton capacity 44 Flat cars 50 ton capacity
Passenger cars
50 Coaches
10 Mail and express cars [DOT]	10 Baggage cars
Total estimated cost of above 3,743 cars, including sales tax and inspection
charges	 $17,496,700
Grand Trunk Western Railroad Company- Freight cars
200 Automobile cars 100 Gondola cars 200 Refrigerator cars
Passenger car3
3 Baggage cars
Total estimated cost of above 503 cars, including inspection charges	 1,900,000
Grand total estimated cost of 4,246 cars			 $19,396,700
In event of equipment trust being issued for the purchase of new equipment, it will only be necessary to provide approximately 25 per cent of the total amount of $19,396,700 through the Financing Act of 1937.

Hon. W. D. Euler



HON. W. D. EULER WELCOME EXTENDED TO MINISTER OF TRADE AND COMMERCE ON HIS RETURN FROM AN EXTENDED TOUR

[Stage Direction]
On the orders of the day:
Right Hon. R. B. BENNETT (Leader of the Opposition):: Mr. Speaker, before the orders of the day are called I am sure the house would desire to welcome back the returning traveller, who, since last we saw him, has visited most of the countries of the world, and can give us first-hand information as to the various types of government now functioning in those countries. Particularly he could give us first-hand information regarding dictatorships that are not dictatorships and soviet unions that are not soviet unions; and, above all else, he could inform us regarding great overseas dominions which, with this country, constitute the British commonwealth of nations. I am sure we are all glad to see him back so vigorous and healthy and strong in mind to meet the onslaughts which have been made upon protection during his absence. I am sure he has been invigorated and helped by the report which I read last week and which I need hardly mention. If it is quite in order I know we all would be delighted to hear from one who has seen so much of the world in the months that are past and who can give us his impressions to brighten our days which have been made dark by the attention we have had to pay to our parliamentary duties while he has been enjoying the sunlight.


Hon. W. D. EULER (Minister of Trade and Commerce):: Mr. Speaker, while the remarks of the right hon. gentleman are in some respects not entirely unexpected, I have to thank him for the kindly way in which he has spoken of my return to Canada. I wish also to thank hon. members of the house for the generosity with which they responded to what he had to say.
My right hon. friend made reference to my having travelled practically to all parts of the world, but I think that statement will have to be modified considerably. Of course I could say a great deal about what I saw in Russia. I did not see the dictator of that country personally, but I did see the dictator in Germany. Perhaps I am not quite as well qualified to speak with regard to dictatorships as are some others to whom I might refer.


Richard Bedford Bennett: You are returning to the leadership of one.


William Daum Euler: It is not my intention at this time to give an extended account of my peregrinations or pilgrimages, but I shall refer briefly to my mission to Australia and New
Zealand. Of course the house will understand that as the negotiations are not complete it is obviously impossible for me to give any detailed statement with regard to them. Our conferences were carried on-quite naturally, since I was the leader of the Canadian delegation-in the most amicable manner. Perhaps I could say just this with regard to the negotiations. In my opinion sufficient progress has been made to enable me to say with considerable confidence that I believe a satisfactory arrangement will be the outcome. In the meantime the present agreement will continue in force.
I should like to take this opportunity to express briefly my appreciation of the general courtesy, kindness and hospitality of the prime ministers of Australia and New Zealand, the members of the governments of the two countries, and the people themselves. I think I might quite appropriately refer to the lengthy visit made by the right hon. leader of the opposition (Mr. Bennett) to the British dominions, more particularly to Australia and New Zealand. I hope my own leader will not find any fault with me when I tell him that sometimes I described myself as a follower of the right hon. gentleman opposite-that is, I followed him throughout New Zealand and Australia.


Richard Bedford Bennett: You always have on fiscal matters.


William Daum Euler: Perhaps I can say this to him without embarrassing him: the right hon. gentleman made a number of public addresses, all of which were good, and everywhere he left the best possible impression. Of course that was to be expected. I think it would be well worth while for hon. members of the house and of the government to visit the overseas dominions, even if it is not for the purpose of negotiating trade agreements. They would thus be able to get the viewpoint of the people of Australia, New Zealand and elsewhere, and try to convey to them something of the viewpoint of the Canadian people. This cannot be done at a distance of ten or eleven thousand miles; it can be accomplished only by personal contact. I am quite sure that what the right hon. gentleman did in Australia and New Zealand went a long way toward cementing the feelings of good-will that exist between the people of those countries and the people of Canada.
I must say I was surprised at the extent of the resources of Australia and at the variety of climate to be found there. The climate varied from the tropical to be found in Queensland in the extreme north to that of Tasmania in the extreme south, which is much
Interim, Supply Bill

like that of this country. No one can see the resources and extent of New South Wales, Victoria and the other states and New Zealand without being convinced that a great future is in store for these countries. At a later date I hope to go further into the details of the negotiations which took place while I was there.



MAIL DELIVERY ON GOOD FRIDAY

[Stage Direction]
On the orders of the day:
Hon. J. C. ELLIOTT (Postmaster General):: Before the orders of the day are called I should like to answer the questions asked yesterday by the hon. member for Wentworth (Mr. Lennard) and the hon. member for Lincoln (Mr. Lockhart) with regard to mail delivery on Good Friday. I might remind my hon. friends that when the supplementary estimates were being considered on Wednesday evening the question was asked as to whether or not there would be a delivery on Good Friday. I indicated that the regular delivery would take place on that day. On Thursday I learned that through some misunderstanding directions had been given for only the morning delivery, and I had instructions issued that the regular delivery should take place on Good Friday.



TRANSLATION OF QUESTIONS

[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANQOIS POULIOT (Temis-couata):	Before the orders of the day are
called I should like to direct attention to the poor translation that has been made of certain questions. I have given private notice twice of this fact; this is the third time, and if it is necessary to bring it up the fourth time I will have to say much more about this matter. I am referring particularly to the questions appearing in the Votes and Proceedings for to-day.

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee of supply.
He said: In making this motion perhaps I should explain that the immediate object is to secure assent to interim supply, it being near the end of the present fiscal year. The amount to be asked for is one-sixth of the amounts to be voted. There is the usual provision that the rights of discussion will not be prejudiced. I make this explanation 1 ecause I understand that the hon. member for Winnipeg North Centre (Mr. Woodsworth) intends to speak on the motion that you,

sir, do now leave the chair. If my hon. friend will defer his speech for the moment I shall undertake, after we have been in ways and means and the interim supply bill has passed, again to move that Mr. Speaker do now leave the chair for the house to go into committee of supply.
Richard Bedford Bennett: Of course it is understood that in granting interim supply no hon. member, at least of those associated with us, can be taken as agreeing to the items by reason of the fact that one-sixth supply is being granted. That is the usual provision made on an occasion of this kind.


Mr. DUNNING:: Agreed.
Motion agreed to and the house went into committee of supply, Mr. Sanderson in the chair.


Charles Avery Dunning: Resolved, that a sum not exceeding $37,395,179.14, being one-sixth of the amount of each of the several items to be voted as set forth in the main estimates for the fiscal year ending 31st March, 1938, laid before the House of Commons at the present session of parliament. be granted to His Majesty, on account, for the fiscal year ending 31st March, 1938.


[Stage Direction]
Motion agreed to.
Charles Avery Dunning: Resolved, that a sum not exceeding $16,010,551.17, being one-sixth of the amount of each of the several items to be voted as set forth in the special supplementary estimates for the fiscal year ending 31st March, 1938, laid before the House of Commons at the present session of parliament, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1938.


[Stage Direction]
Motion agreed to.
Resolutions reported, read the second time and concurred in.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Charles Avery Dunning: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1938, the sum of $53,405,730.31 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon

Curtailment of Civil Liberties moved for leave to introduce Bill No. 81, for granting to His Majesty certain sums of money for the public sendee for the financial year ending the 31st March, 1938.
Motion agreed to. bill read the first and second time, considered in committee, reported, read the third time and passed.

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee of supply.
["Yes, he drew a large sum. Perhaps I can satisfy the hon. member for Qu'Appelle (Mr. Perley) by quoting from the order of reference as it is contained in the order in council regarding the matter of seed oats in Saskatchewan:\nAll transactions to be investigated since the year 1930 pertaining to the handling of grain for relief and seed purposes in Manitoba, Saskatchewan and Alberta under dominion government guarantee or otherwise."]
Mr. J. S. WOODSWORTH (Winnipeg North Centre):: I should like to call the attention of the government and of the house to some recent occurrences that endanger the liberties of Canadian citizens and deny, especially to labour, certain fundamental rights. A few days ago, in answer to a question with regard to "sit-down strikes," the Minister of Justice (Mr. Lapointe) made quite a far-reaching statement, as contained in Hansard page 2114. The minister did not, in this instance, wait for the courts to interpret the law, but stated that a "sit-down strike" in Canada would be entirely illegal. He further made the statement that there were legitimate means of redressing grievances already existing in Canada; in his own words:
Legitimate means of redressing grievances already exist in Canada.
Further, he stated that all the resources of the dominion should be utilized against such a strike; using his own words again:
. . . the dominion government is prepared to utilize all the resources and agencies at its command and to the extent of its legal powers to the end of restraining and eliminating this illegal mode of procedure in Canada.
It seems to me that this statement cannot be dissociated from the recent Sarnia riot in the Holmes Foundry on March 3. As far as I can ascertain the outstanding aspects of that strike were these. The shop committee had asked and were granted an increase in the weekly wage rate. The company however stepped up the schedule of work required, thus more than nullifying the increase. I ask the minister, what legal means had the men of redressing those grievances? I would like him to make this specific. The men, rightly or wrongly, resorted to what is known as the sit-down strike. I am not going to discuss the merits or demerits of that procedure. It may be wrong. Let me call attention to what actually happened. With the knowledge, if
not the connivance, of the management a gang of men armed with axes, iron bars and rods made an attack on the factory and later, according to press reports, on their homes. Have the employers no legitimate way of settling their troubles, of securing control of their own factory? The employers apparently contented themselves with having the foremen distribute to the mob, as they entered the doors, certain mimeographed sheets requesting the invading gang not to be violent. That is a serious state of affairs. Apparently the whole affair had been a frame-up, with the management itself to a greater or less extent responsible.
Where were the police? It seems that there was one policeman in the municipality, at Point Edward. Just across the road the Sarnia police confined their efforts, as they said, to directing traffic and so on. After the riot they conducted the beaten up workers to the gaol and some to the hospital.
As far as I can ascertain the only indictable offence under which the criminal sit-downers could conceivably be charged was petty trespass with a maximum fine of $10. At it turned out, only one of them was fined even this amount. The rest were dismissed under suspended sentence but they were first held three days in gaol without bail and incommunicado. I ask the Minister of Justice: Does this kind of thing, in his own words, not tend to undermine all respect for law and order? It would seem as if in Canada the protection of property was much more important than the protection of human rights and even life itself. I know that is a serious charge, but events of this kind would appear to substantiate it.
Now I turn from Ontario to the province of Quebec. In recent weeks there have been three outstanding instances of high-handed action on the part of the provincial government. The first I mention in passing, the ejection of Brigadier-General Panet by provincial constables who showed no warrant, and the seizing of all relief commission records. I would refer the house to the Montreal Gazette of March 17. I have no doubt the municipal counsel and General Panet can take care of themselves, but I instance this as illustrating the way in which things are being conducted in that province at the present time.
I am interested in another matter, the arrest of seven clothing workers in Montreal. Most of these were officials of what is known as the Montreal Joint Board of Amalgamated Clothing Workers. This organization, a legitimate trade union, has been in operation for some thirty years in Montreal. These men were



Curtailment of Civil Liberties
arrested in the dead of night by special provincial officers. They were dragged from their beds and held in gaol overnight, incommunicado, on a warrant issued by Mr. Justice Tetrault, a magistrate, who endorsed the said warrant " no bail until appearance." The men were charged with conspiracy of different kinds-conspiracy to prevent others from working; intimidation; injury to business, and forcing employees to join a foreign organization.


Mr. DUPUIS:: Is that from a newspaper report?


James Shaver Woodsworth: That last statement was taken from a memorandum given me by counsel appearing for these men.
Mr. DUPUIS; Has the hon. member the names of those arrested?


James Shaver Woodsworth: I have the names but I am not in court. They were given to the press at the time. I do not think I will take the time to read them; I have them here. Under section 497 of the criminal code the right of trade unions is supposed to be safeguarded. That section reads:
The purposes of a trade union are not by reason merely that they are in restraint of trade, unlawful within the meaning of the last preceding section.
Yet it would seem as if these men's crime was primarily that they sought to organize a trade union and to carry out its purposes. I am glad to note that in the provincial assembly in Nova Scotia, Colonel G. S. Harrington recently introduced a bill formally legalizing trade unions. I should like to read one clause:
(5) It shall be unlawful for any employer hereafter to insert any clause in any written contract of employment, or to impose any condition in any verbal contract of employment, or to continue such clause or condition heretofore in effect, where such clause or condition seeks to restrain any employee from exercising his rights under this act, and any such clause or condition shall be of no effect.
Did our own Minister of Justice, upon these arrests in Montreal, hasten to interpret the law as he did in the case of the sit-down strikers? Did he offer to use all the resources of the dominion to the end of protecting trade unionists? I do not think so, even though the welfare of large numbers of workers in the province was definitely at stake.
Now I come to the third event to which I referred, the most important of all, and that is the so-called "padlock act" to protect the province from communist propaganda. In protesting against this action of the government of Quebec I am protesting not merely in the name of trade unionists, certainly not in the name of communists, but in the name of

all British subjects who love liberty. In the Free Press published in my own city of Winnipeg there appeared on March 27 an article under the heading, " Red hunting in Quebec." The Quebec legislation is characterized as-
One of the most savage assaults upon freedom which Canada has ever seen.
Premier Duplessis in introducing the bill stated, according to the Gazette of March 18, that since the parliament of Canada repealed section 98 of the criminal code, there was no means of preventing communist meetings. I submit that that statement in itself is an admission that that legislation is an indirect attempt to legislate in the field of criminal law, and as such it is in reality ultra vires. The important sections are 3 and 12. Section 3 reads:
It shall be illegal for any person, who possesses or occupies a house within the province, to use it or allow any person to make use of it to propagate communism or bolshevism by any means whatsoever.
And then section 12:
It shall be unlawful to print, to publish in any manner whatsoever or to distribute in the province any newspaper, periodical, pamphlet, circular, document or writing whatsoever propagating or tending to propagate communism or bolshevism.
I would point out that communism is not defined in the act. In the upper house in the course of the debate one member sought to identify communism and socialism. The premier said there would be little difficulty in making decisions, for communism could be "felt," and it was not advisable to have a definition. Surely that is a most curious statement for any premier to make; "not advisable to have a definition of what communism is." Someone suggests that not only could it be "felt"; it could be smelt. Just as sensible! It means in effect that anyone whom the premier does not like may be termed a communist. For example, the premier stated in the chamber that Mr. Joseph Schubert is a communist. Now Mr. Schubert is an alderman of the city of Montreal. He has again and again opposed the communists and been opposed by them. I am informed that he is at present in charge of the bureau enforcing the Arcand law in part of the garment industry. He says he proposes to go ahead proclaiming his doctrines as he has been doing in the past, so I presume that under this act the Montreal city hall might be padlocked, since "communism" is being propagated there by Joe Schubert.
I should like to ask what the Minister of Justice has to say with regard to a situation of this kind. I recognize that disallowance

Curtailment of Civil Liberties
may not be a very wise procedure. Yet the power of disallowance exists in Canada. But there is another course which might be adopted. The governor in council under the Supreme Court Act (R.S.C. 1927, chapter 35, section 55) has the power to refer any dominion or provincial legislation to that court for a test of its validity. Seeing the government were so anxious to find out whether the social legislation enacted by the Bennett government was valid they might try to find out whether this law is valid. Thus they might accomplish the end without resorting to disallowance. On unemployment insurance legislation the government immediately ran off to the supreme court and then carried it to the judicial committee of the privy council.


Mr. LAPOINTE (Quebec East):: Is the hon. member criticizing that?


James Shaver Woodsworth: I am not for the
moment, but I say that the government, having done that, should not hesitate to act when the rights and liberties of people resident in the province of Quebec, and others who may be passing through, are thus imperilled.
May I point out that not only is communism not defined but the phrase is used, "propagating or tending to propagate communism." According to my way of looking at things this very act, in its repressive character, tends to propagate communism. I think undoubtedly communism is propagated when people are denied the right of expressing their views. Yesterday I listened to a statement of conditions in certain outlying portions of his constituency as described by the hon. member for Temiscouata (Mr. Pouliot); such conditions tend to propagate communism.
Let me read a passage which is familiar to every hon. member of this house:
And all that believed were together, and had all things common; and sold their possessions and goods, and parted them to all men, as every man had need.
That passage is from the second chapter of the Acts, verses 44 and 45. and certainly tends to propagate a certain type of communism. There is no definition whatever in the act, and I suggest it would not be going altogether too far to say that if the act were rigidly enforced all bibles might be seized and destroyed and all the churches be padlocked. Of course someone will say that that is absurd. It may be carrying the application to an absurd degree, but I point out that such a procedure would be in accordance with 31111-145}
the law. The danger is that those in authority will use the law against some helpless individual who cannot defend himself.
When I was a younger man I had occasion to read what we used to call patristics, that is, the writings of the early Christian fathers. May I point out that in these writings again and again occur certain passages which would come definitely under this law. May I point out also that in the province of Quebec, as elsewhere, there are Catholic communities which are perhaps the best examples we have of communism within certain limited bounds,, among certain classes of people.


Mr. MARTIN:: Not Marxian communism.


James Shaver Woodsworth: That is the very
point I wish to emphasize; communism here is undefined. In our reading of history we recall the peasant revolt, Wycliffe, Thomas More and his Utopia, John Ball, William Godwin, Robert Owen, the struggle of the chartists, and Christian socialism as expounded by Kingsley and Maurice; all these men and movements may be said to propagate or tend to propagate communism. I submit that you cannot teach history or literature or economics without getting into this realm. So I would suggest that if the law is to be rigidly enforced McGill university and most of our schools might be padlocked.
I come to modem socialism and its leader, Karl Marx. I think all who have read anything of socialism will concede that modern or so-called scientific socialism is largely founded on Marx's communist manifesto. Undoubtedly then any teaching of Marx or of the many schools of socialism which have drawn inspiration from him may well be said to tend to propagate communism. It is indeed fortunate that the House of Commons is situated in Ottawa rather than in Hull, or I am afraid that our library might be padlocked by Mr. Duplessis, because there are shelves of books there which deal with communism.
How about the British Labour party? How about the present French government headed by M. Blum? How about prominent Britishers such as Lord Passfield, or the Webbs, or Professor Laski, or Bernard Shaw? Under a strict interpretation of this law not one of them could speak in Montreal, because if they dared to do so the man who had rented them the hall might find it padlocked for a year. In fact I am inclined to think that there are some of my political enemies who might think that my speech to-day would

Curtailment of Civil Liberties
tend to propagate communism. If that is so I suggest that this day's issue of Hansard might be seized in the mails when it reaches Quebec, and all the post offices be padlocked.
Probably this time the Quebec government have overreached themselves. Even the financial papers are concerned. Let me read a paragraph from the Financial Post of March 27, under the caption:
Personal liberty worth preserving.
Communism is an economic and social theory which is offensive to a great many people. But those who believe in communism have as much right to present their point of view to the public as those who believe in capitalism, a competitive economy, or state socialism. . . . There are some things worse than the propagation of new and even unpleasant and unsound doctrines. Among them are the tyranny of the state and the loss of personal liberties.
I think all hon. members will agree with such a statement. I turn to select a few paragraphs from an editorial in the Ottawa Journal of March 24, under the heading "Another measure that strikes at liberty." Referring to this law the editorial says:
Its threat is against freedom of opinion

against freedom of print.
The editorial proceeds:
The Oxford dictionary defines communism as:
"A theory of society according to which all property should be vested in the community and labour organized for the common benefit."
Are these theories to be made a crime? With those who hold them liable to arrest, to imprisonment, to have their premises padlocked? If so, and if anything even " tending toward Communism " is to be made a criminal offence, then a Franklin Roosevelt would have small chance in the province of Quebec. Even Mr. Bennett, with his radio speeches, would have been in danger. Not to mention Mr. Woods-worth.
*****
Actually this bill is not aimed against lawlessness. It is aimed against liberty. Against
liberty to write and speak, to discuss and debate. It is a vicious law because:
I gladly quote these reasons because I believe they put in a few words what I myself would like to charge against the law.
1.	It enables an executive officer to punish a man (by padlocking his house) before any court has found him guilty.
2.	It puts the burden of proof of innocence on the person thus attacked.
3.	It bars any appeal from the decision of a single judge of the Superior court.
4.	It enables any peace officer to seize literature, not only of a Communistic sort (with interpretation of what constitutes Communism left to the government) but also of a sort " tending to produce Communism."
The editorial concludes:
That isn't freedom. It isn't freedom as we have known it in British countries for two hundred and fifty years	
(Mr. Woodsworth.]
I do not like often to refer to the classics, but perhaps I may be permitted to quote two or three sentences from Milton's Areopagitica:
Give me the liberty to know, to utter, and to argue freely according to conscience, above all liberties.
And again:
And although all the winds of doctrine were let loose to play upon the earth, so Truth be in the field, we do injuriously by licensing and prohibiting to misdoubt her strength. Let her and Falsehood grapple; who ever knew Truth put to the worse, in a free and open encounter?
And again:
For who knows not that Truth is strong, next to the Almighty; she needs no policies, nor stratagems, nor licensings to make her victorious; those are the shifts and the defences that error uses against her power.
I would ask in closing: What might we expect from the Minister of Justice in a Liberal cabinet? First of all, I think a declaration that the Quebec act is ultra vires and as illegal as a sit-down strike. In the one instance the minister undertook to interpret the law; why should he not do so in this much more important case?
Second, we might expect a statement that there are legitimate means of protecting Quebec against lawlessness and violence. We have that, as I think he will tell us, in the criminal code. That ought to be told to Mr. Duplessis.
Third, there should be the emphatic assurance that the resources of the dominion will be used to protect the rights and liberties of all Canadian citizens-even in Quebec. Such a statement was made most emphatically the other day when the minister was dealing with a few people who had gone on what they termed a sit-down strike. In this instance, where liberty is at stake, might not the minister assure the people concerned that all the resources of the dominion will be available to protect the rights and liberties of all Canadians? Fourth, I suggest that the minister should assure us that there will be a reference to the supreme court in order that we may know what rights we have. I point out once more that such action was taken by the government in respect to certain social security measures. Surely similar action might be taken in the present instance.
In presenting this matter I feel that I am appealing to a minister who fundamentally is a Liberal at heart and to whom an appeal of this kind could not be made in vain but must meet with a favourable response.

Curtailment oj Civil Liberties


Ernest Lapointe: Mr. Speaker, I thank the hon. member (Mr. Woodsworth) for the compliments conveyed in his last words. I hope I shall always deserve to be known fundamentally as a Liberal. The hon. member has covered a good deal of ground, and as briefly as possible I shall try to answer some of the points he has raised. I shall not be able to do it with his vigour and his power, but he may be sure I shall do it with as much sincerity as he has shown.
The hon. member spoke first of the statement I made a few days ago in answer to a question put by the hon. member for Essex West (Mr. McLarty) regarding the stand of the government on sit-down strikes. I have not been able to gather whether or not the hon. member favours that mode of expressing grievances. The sit-down strike, as I indicated the other day, is certainly an illegal mode of procedure. I repeat that statement, and could not do otherwise. The hon. member has said that my statement was directed against some poor strikers in Sarnia. I did not know anything about that. I have no knowledge of proceedings which may have been instituted against those men. Those proceedings were instituted, as they must be, in provincial courts, and under the control of provincial authorities. What I stated about the legality of the sit-down strike had no relation to the incident at Sarnia. The hon. member related certain incidents in connection with the strike with which I was not familiar, and of which I have no knowledge; I surmise he is basing his information on newspaper reports.
The hon. member said, "The Minister of Justice has stated there are legitimate ways of redressing grievances; what are those legitimate ways?" What are they? We have in Canada a piece of legislation which for many years has benefited labour as well as employers. The Industrial Disputes Investigation Act has been qjted elsewhere as a model of legislation. Let me tell the hon. member we have just had one example of what a legitimate means may do to redress grievances if they exist. A momentous threatened strike of all railway employees in Canada has just been settled by the legitimate means we have at our disposal. It was not settled by a sit-down strike or by listening to agitators; it was settled because the railway labour unions were able to present their case in a legitimate way. There were negotiations; there were understandings; and I say the fact that the threatened strike has just been settled is a feather in the cap of the Minister of Labour (Mr. Rogers), who was so largely instrumental in bringing about
the settlement. That is the legitimate means I had in mind when I spoke the other day.
Apart from the instance in Ontario, the hon. member spoke about the province of Quebec and what he termed the ejection of Brigadier-General Panet from the offices of the unemployment commission in Montreal. I am not as free as is the hon. member to pass judgment upon the action of other governments in Canada. I cannot pass judgment until the matters are officially brought to the knowledge of the government and in one way or another are before me for adjudication. I have nothing to say about the matter. I do not know what the circumstances wrere. If they are as the hon. member has described them I would say with him that that is not the way to act with regard to a gentleman of the ability, the calibre and the integrity of Brigadier General Panet. But we have had nothing to do with that.
The hon. member also spoke of the arrest of the seven leaders of a union in Montreal, in connection with the strike of the amalgamated clothing workers.


Mr. HEAPS:: There was no strike.


Ernest Lapointe: Well, they have been arrested for conspiracy. The laws of the land are there; we have nothing to do with that matter. What has the Minister of Justice to say about it? Nothing, except that if those men are not guilty they will be found not guilty by a tribunal in the province of Quebec, where laws are administered as in the other provinces. I have no judgment to pass upon the matter, in any way, shape or form.
Then the hon. member spoke about a bill which last week passed through the Quebec legislature. All I know about it is what I have read in the press. Again I say I cannot speak on a matter of this kind with the same: freedom as the hon. member can.


James Shaver Woodsworth: Here is the bill..


Ernest Lapointe: I have not the bill, but when the bill comes to me it will come in an official and regular way, not through the agency of the hon. member for Winnipeg North Centre. Under the constitution, any law enacted in a provincial legislature has to be sent by the lieutenant governor of the province in question to the Governor General of Canada, and that law is reviewed or considered by the Minister of Justice. Then there is a report as to whether or not the law shall be allowed to stand. There is that power of disallowance, as the hon. member has stated. The law to which he has referred has not reached the governor general
Curtailment oj Civil Liberties

or the Minister of Justice; I do not know what it is, beyond what I have read in the newspapers. Therefore I must accept the hon. member's statement. I believe his observations in that respect are premature, and certainly any comment on my part would be premature. I cannot comment on the law before it is sent officially and regularly through the channel established by the constitution.
With regard to disallowance, I am surprised that the hon. member should suggest the disallowance of provincial legislation.


James Shaver Woodsworth: I did not suggest it.


Ernest Lapointe: Ordinarily the hon. member is very much opposed to arbitrary measures.


James Shaver Woodsworth: May I say I did not suggest it. I said there was a power of disallowance, but I made another suggestion.


Ernest Lapointe: For many years the power of disallowance has not been resorted to by the government of Canada. The same power of disallowance existed in connection with federal legislation in the hands of His Majesty the King, represented of course by the imperial government. That power lias not been exercised, for many years. In fact at the imperial conference of 1926, and later in 1930, it was formally declared that this power no longer constitutionally exists, and that the imperial parliament has no constitutional right to disallow laws of the parliament of a dominion.
I would not say the same condition would apply to provincial legislation, but it has often been stated by the courts that within the sphere of their own jurisdiction the provincial legislatures are sovereign. I do not think that in a federation such as this the power of disallowance could easily be exercised by the central government. I believe the provincial legislatures feel that they are still supreme and sovereign within the sphere of their jurisdiction.
I understand the act has been assented to by the lieutenant governor. If, as the hon. member suggests, it is ultra vires, then the courts will so rule. The courts will declare that it is ultra vires, and it is better that the courts so declare than that the Minister of Justice do so, because there would be no appeal from disallowance by the minister. On the other hand, there would be appeal from a court decision, and there would be a final judgment as to whether or not it is within the powers of a province to legislate in the matter.
The hon. member suggests that there should be a reference to the Supreme Court of Canada. As I have said, I was surprised to hear

him make that statement, because he criticized the government for having referred to the Supreme Court of Canada acts of our own parliament; now he wants us to take an act of the legislature of Quebec and refer it to the supreme court. All I can say with regard to his suggestion-and the hon. member certainly does not expect me to say more-is that it will receive the most serious consideration.
The hon. member spoke of communism and the way to fight it. He asked what our stand against communism would be. I am pleased that the debate gives me an opportunity to express my views as to the doctrine of revolutionary communism. I have never concealed my views on the subject. I am opposed to everything that they teach and preach. I am against their doctrine on moral, religious and sociological grounds. With the exception of a few individuals, I think our whole population is opposed to the spreading of this doctrine. I believe the best way to fight communism is to eliminate the causes of discontent which exist among many classes of our population. We should try to give justice to everyone, to the poor the same as to the rich, to the humble the same as to the powerful. We should endeavour to eliminate the grievances and abuses which now exist in our system. But while that system may need reforming, we still want to keep it.
The second method we should adopt is that of education. If communism is bad, it should be fought with something that is better. If it is wrong, we must provide something that is right. I agree that hatred will not eliminate communism. I wonder if many hon. members of this house read the recent encyclical of Pope Pius XI on communism? He indicated that justice and charity were the two best agencies with which to combat communism. I believe that is so. All Canadian citizens should unite to preach the true doctrine. I have been thinking aBout this matter for some time and if I find support for the idea I should like to organize a league of Canadian citizens for the purpose of spreading education throughout the length and breadth of Canada. All democratic people, the labourer and the employer, the church man and the public man, should join hands in helping to spread the right kind of education throughout Canada. The purposes of this organization would be, first, to preserve the democratic state in Canada; to combat communism and fascism and to counteract the activities of all subversive and revolutionary forces which seek to overthrow the democratic state by force and violence; to

Curtailment of Civil Liberties
guard the religious heritage of Canada from the protagonists of foreign and atheistic doctrines and to assist the state in every lawful way to the end that Canada may remain a place of safety, that the welfare of her citizens, that men and their wives and children, may be guarded, and that peace, order and good government may be maintained in our dominion.


Richard Bedford Bennett: Peace, order and good
government?


Ernest Lapointe: Yes. I think such a method would be more effective than the use of guns, prisons and other arbitrary methods. I am quite willing to try to get such an organization started in Canada, and I hope my hon. friend will join in fighting that against which he protests. Those who believe in order, religion and liberty make the best bulwark against communism. They are more effective than prisons.
I should like to relate an incident which happened a few months ago. A municipal election was to be held in Sudbury. As hon. members know, there is a considerable labour element connected with the mines in that district. A gentleman from Sudbury came to my office one morning and told me that three or four communists were in the field. He asked that these men be arrested and prevented from taking part in the election. He claimed that the entire population of Sudbury had sent him to make this request. I told him that I had no right to do it, that the best way to fight these people was to beat them at the polls. He accepted my views and persuaded his friends that that was the best method to adopt. The communists received about 110 votes as compared with the 5,000 and 6,000 received by the other candidates. I think that was the best way to show the people of Sudbury that the teachings of these men were wrong. If they had been put in gaol they would have been treated as martyrs. They would have claimed they were persecuted because of their ideas.
By the way, whoever heard of Tim Buck before he was put in gaol? Because he was put in gaol people go by the thousands to attend his meetings. He is teaching the same bad doctrine, but I would prefer to attempt to destroy his arguments rather than put him in gaol. I would rather adopt the Hyde Park method than force conspiracies in cellars. I would rather know what is going on than suspect that meetings were being organized in cellars and other places. Experience in religious and political matters has shown that arbitrary methods of repression
have always failed.	But law and order
must be maintained. If those men do or say things which are prohibited by law they must be treated accordingly, and as far as I am concerned, they will be.
I saw in the press a suggestion that the definition of the crime of sedition should be widened. It comprises, however, everything that is an element of trouble. In the famous English case of Burns, Judge Cave gave the best definition of sedition that exists. He said:
Sedition embraces everything, whether by word, deed or writing, which is calculated to disturb the tranquillity of the state.
The law of sedition-and we have it under our common law as well as in other laws- is at the disposal of every good citizen to be invoked against those who are guilty by act or word or conspiracy wherein there is an element of sedition. The dominion government will help the provincial authorities to enforce internal peace and order in Canada, within the sphere of our own jurisdiction; and let it be understood that we have the means of doing it. We have a very fine Canadian mounted police force. Sometimes it is criticized; I do not know that I have not myself criticized it in the past, but it is my experience that in the Royal Canadian Mounted Police we have the best police force which exists; it is straightforward, honest, courageous, and a fine agency for peace and order in Canada. This session we have taken means to increase another force we have available to maintain internal order in case of emergency', as well as to defend our coasts. I do not know whether it will astonish the house and the hon. member who has just spoken if I tell them that these increases in the estimates have been bitterly criticized by communists and those associated with communism in this country. I hold in my hand a circular which has been sent throughout Canada. One side is in English, the other side ini French. It is the work of the association controlled by the communist party in Toronto, and is directed against those estimates.


Miss MACPHAIL:: I was against the estimates, and I am not a communist.


Ernest Lapointe: I know; this does not apply to my hon. friend. But it is strange that these people should be so strongly opposed to the provision I have mentioned. They circulated this document throughout the province of Quebec; they even sent around a form of resolution to be adopted in that province by associations which are far from friendly with the organization that started

Curtailment of Civil Liberties
this movement. This resolution has come to members of the House of Commons from a movement in my province organized by the Canadian League against War and Fascism and other associations of the kind. Why are the communists so strongly opposed to Canada having even the skeleton of an army for defence, when they seem to be wholly in favour of Russia having the greatest army iD the world? They want Russia to be armed, but Canada, and other nations as well, to be disarmed.


Richard Bedford Bennett: I suppose they have been listening to the speeches of the opposition during the last five years.


Ernest Lapointe: I do not know. More than that: when I announced in parliament that I was about to introduce a law to enforce in Canada the Foreign Enlistment Act, I received hundreds of telegrams from people describing themselves as communists or friends of liberty or friends of all sorts of other things-


Richard Bedford Bennett: Sons of Freedom.


Ernest Lapointe: -and indicating that the communist party was opposed to that measure. They do not want Canadians to have a militia of any kind, but they want Canadians to go away and fight for their doctrines in Europe. The two ideas are closely associated. I have with me two letters, in exactly the same words, from two French-Canadians in Montreal. I am going to read them to show the propaganda which was going on while these matters were before the House of Commons. I will read one of them-because the other is precisely the same-in French, and will then translate it.
M. Lapointe,
ministre de la Justice.
Cher monsieur,
Je proteste contre l'embargo et 1'interdiction d_e porter secours au gouvernement democratique legal d Espagne, et contre le rearmement canadien.
(signe)	
It is better that I should not give the name of the writer. The translation is as follows:
Mr. Lapointe,
Minister of Justice,
Dear Sir,-
I protest against the embargo and the interdiction to go and help the democratic legal government of Spain, and against Canadian rearmament.
(Signed)	
All this was the result of a propaganda.
To summarize what I have said, I believe that our best way to fight these doctrines is, first, to try to eliminate the causes of dis-

content and friction; second, to organize for the dissemination of good ideas to fight bad ideas; third, to see that order and peace are maintained in Canada. But with all that, I am a strong believer in the British way of administering justice. I believe in the majesty of the law. I do not think that it is a good thing to fight illegality by other illegalities. Arbitrary methods, which are not strictly according to the British practice, do not appeal to me, and I do not believe that their effect is what those who use them have in view. It is my opinion that no power, whether federal, provincial or municipal, should usurp the powers of other bodies, but that they should all confine their activities within what the law and the constitution permit. If we observe these principles I have no doubt that we shall keep Canada free from the disastrous doctrines and deeds which are the plague of other countries; and to that end it is the duty of all citizens, wherever they are and to whatever class of society they belong, to contribute their share.


[Stage Direction]
Motion agreed to, and the house went into committee of supply, Mr. Sanderson in the chair.
FURTHER SUPPLEMENTARY ESTIMATES, 1936-37 Write-down of assets-
To authorize-as the dominion's contribution to a program of adjusting the indebtedness of farmers living in the drought area of the province of Saskatchewan which program has been sponsored by the government of that province and involves appropriate adjustments in debt or tax claims on the part of the provincial government, the municipalities and certain mortgage lending institutions-the writing off and cancellation of certain treasury bills of the province held by the dominion, provided (1) that said treasury bills be transferred in the books of the Department of Finance from " active assets " to " non-active assets" as at March 31, 1937; (2) that final writing off and cancellation of said treasury bills be subject to the approval of the governor in council and in accordance with such terms and conditions as he may approve, including the nature of the evidence to be submitted as to the adjustments made by the provincial government, the municipalities and the mortgage lending institutions aforesaid; and (3) that the amount of treasury bills to be written off and cancelled shall not exceed the amount advanced by the dominion government to the provincial government by way of loan to assist in financing expenditures incurred for relief, seed grain and seeding purposes in the said drought area during the period from May 1, 1931, to January 1, 1935, plus such accrued interest thereon as has been capitalized, and shall not in any case exceed in the aggregate the sum of, $17,959,606.51.
["-and indicating that the communist party was opposed to that measure. They do not want Canadians to have a militia of any kind, but they want Canadians to go away and fight for their doctrines in Europe. The two ideas are closely associated. I have with me two letters, in exactly the same words, from two French-Canadians in Montreal. I am going to read them to show the propaganda which was going on while these matters were before the House of Commons. I will read one of them-because the other is precisely the same-in French, and will then translate it.\nM. Lapointe,\nministre de la Justice.\nCher monsieur,\nJe proteste contre l'embargo et 1'interdiction d_e porter secours au gouvernement democratique legal d Espagne, et contre le rearmement canadien.\n(signe)\t\nIt is better that I should not give the name of the writer. The translation is as follows:\nMr. Lapointe,\nMinister of Justice,\nDear Sir,-\nI protest against the embargo and the interdiction to go and help the democratic legal government of Spain, and against Canadian rearmament.\n(Signed)\t\nAll this was the result of a propaganda.\nTo summarize what I have said, I believe that our best way to fight these doctrines is, first, to try to eliminate the causes of dis-\n\ncontent and friction; second, to organize for the dissemination of good ideas to fight bad ideas; third, to see that order and peace are maintained in Canada. But with all that, I am a strong believer in the British way of administering justice. I believe in the majesty of the law. I do not think that it is a good thing to fight illegality by other illegalities. Arbitrary methods, which are not strictly according to the British practice, do not appeal to me, and I do not believe that their effect is what those who use them have in view. It is my opinion that no power, whether federal, provincial or municipal, should usurp the powers of other bodies, but that they should all confine their activities within what the law and the constitution permit. If we observe these principles I have no doubt that we shall keep Canada free from the disastrous doctrines and deeds which are the plague of other countries; and to that end it is the duty of all citizens, wherever they are and to whatever class of society they belong, to contribute their share."]
Richard Bedford Bennett: This is a most extraordinary item. We lent Saskatchewan, Alberta and Manitoba certain sums of money and they

Supply-Debt Adjustment in Drought Area
gave us their promise to pay. We now propose to take $17,000,000 of this money and call it a non-active asset and under certain circumstances to write it off altogether. This is a procedure the effect of which is to deprive the people of Canada of $17,000,000, for in the one instance they had to find the money either by borrowing or by taxation, which means the same thing, and then they are to lose it for all time; and it is to go to one particular section of one particular province, although there are other parts of Canada that are afflicted by drought. Alberta nearby is in that position and nothing is being done for that province, but $804,000 is being written off with respect to Manitoba. I should like to have some reason for the selection of these provinces as against the other.


Charles Avery Dunning: Perhaps I had better make a brief general statement covering the whole matter.


Richard Bedford Bennett: That might shorten it.


Charles Avery Dunning: In so doing I shall cover the points mentioned by the leader of the opposition (Mr. Bennett). Saskatchewan is the province immediately before us, Manitoba being in vote 392. During the summer of 1936 various conferences were held between the government of Saskatchewan and representatives of The Dominion Mortgage and Investments Association with a view to working out a cooperative program for the voluntary adjustment of farmers' indebtedness in the drought areas of that province. As is well known, the drought area of Saskatchewan is many times larger than the drought area in either of the other provinces and affects several times the number of people. At a number of these conferences the dominion Minister of Agriculture (Mr. Gardiner) was present, and he intimated on behalf of the dominion government that the dominion would be prepared to participate if a plan could be agreed upon under which the mortgage lending institutions, the provincial government and the municipalities would undertake to make appropriate concessions to the farmers in these areas who had suffered from prolonged drought conditions. Finally in September a plan was evolved as follows:
First, all government and municipal advances for seed grain, fodder and relief, made prior to January 1, 1935, to be cancelled to the farmer concerned.
Second, all municipal tax arrears to be adjusted as at January 1, 1937, so as to leave not
more than an average of two years' taxes standing against any of the properties within the area.
The provincial government was also to cancel all arrears of provincial taxes down to January 1, 1935.
The mortgage companies agreed that the rate of interest on all mortgages throughout the province should be voluntarily reduced by the mortgage-lending institutions to six per cent per annum as at January 1, 1937. In the drought area, in addition to the reduction in the rate of interest by the mortgagees, all unpaid interest on the mortgage, accumulated down to January 1, 1935. was to be cancelled and all mortgage accounts were to be voluntarily adjusted as at January 1, 1937, on such a basis as to leave no more than the balance of principal money advanced and any interest thereon which might be due for the years 1935 and 1936.
A standard form of extension agreement, approved by the government of the province, provided that the account will be consolidated, that is, the principal and the two years' interest which I have just mentioned, and extended for ten years on terms that will provide that delivery of one-third share of crop in the first three years will keep the debtor out of default. Five per cent on principal is to be payable annually, with the balance due in the tenth year.
The standard form of agreement was also to represent a final adjustment.
In brief, this was a cooperative voluntary form of debt adjustment and I am bound to say, as representing one of the creditors, a large creditor, the dominion government, that I do not consider the debt in question a good asset, and I am reasonably sure that my predecessor was of the same opinion. The government welcomed the opportunity, through cooperation with other creditors, a large number of people throughout that area, of bringing about on all hands such a debt reduction as would afford the people of that area an opportunity to start again, should rain come, with a reasonable prospect of being able successfully to prosecute their calling of agriculture in the future, without having on their shoulders a burden of debt which no one expected that they could possibly pay off.
As to the amount involved, the language of the vote indicates that there cannot be any certainty with regard to the final amount that will be involved as written off by all creditors. Various estimates have been made ranging from $50,000,000 to $75,000,000 as being the total amount involved as a write-off by all of the creditors.
2298	COMMONS
Supply-Debt Adjustment in Drought Area
As regards the progress of the adjustment I am advised that it is proceeding with certain difficulties, as must occur in such a large transaction covering a large number of individuals.


Richard Bedford Bennett: How many people are
involved? How many farms are affected?


Charles Avery Dunning: There are 156 municipalities.


Richard Bedford Bennett: Surely we can tell how
many farms are affected?


Charles Avery Dunning: We can get that information.


Richard Bedford Bennett: I would not trouble to
get it, but one would think it would be a very elementary sort of thing to have. We are dealing with a problem in which we know the number of municipalities. Surely we didn't buy a pig in a poke; we knew what we were doing.


Charles Avery Dunning: As my right hon. friend
knows, the government of Canada during his regime advanced these moneys to the provinces.


Richard Bedford Bennett: Surely.


Charles Avery Dunning: The province in turn loaned it to the farmers and took security from the farmers by way of a note. The debt, as far as the dominion is concerned, is a debt due the dominion from the province. But it has a further aspect as a debt due by the farmer to the province.


Mr. PELLETIER:: In what form?- A direct loan to a farmer?


Charles Avery Dunning: The farmer gave his note; the province holds the note of the farmer.


René-Antoine Pelletier: For cash advanced, or what?


Charles Avery Dunning: For seed grain and all the various purposes during the years, differing in some as compared with others, for which advances were made.


Richard Bedford Bennett: Not for relief, I think.


Charles Avery Dunning: Oh, yes.


Richard Bedford Bennett: They cancelled the notes for relief.


Charles Avery Dunning: Not all of them. The relief notes for the years for which my right hon. friend arranged cancellation are not concerned in this adjustment; they were taken care of otherwise. Also my right hon. friend will remember that there was one year, I think 1934-35, in which the dominion government of that day dealt with the matter not

by way of loan to the province, but assumed the position which this government has assumed in relation to the problem of 1936, that it was a national problem; and in that year the national government bore the cost. So that year does not enter into the adjustment.


Richard Bedford Bennett: They ultimately bore the cost of relief for the first year it was adopted.


Charles Avery Dunning: And 1934-35. The
amounts outstanding relate then to the intervening years, with respect to which up to now no adjustment has been made. By virtue of this adjustment being made, other creditors, namely the province, the municipalities and the mortgagees, are making the kind of voluntary adjustment to which I have referred, which results in removing a very considerable burden from the shoulders of those in that locality, and will I hope and believe, enable them under providence, to get a fresh start, relieved of a burden which would be all but insupportable.
My right hon. friend asked a question regarding the province of Alberta. The method made available to the provinces of Saskatchewan and Manitoba has been and is available to Alberta. Up to now the Alberta government have not chosen to avail themselves of this method; they have adopted other methods which do not involve dominion participation in such a cooperative scheme as I have just endeavoured to explain. I may say however that this government stands prepared to apply the same principles to Alberta at any time.


Mr. BLACKMORE:: What is that method? Does it involve a loan council? Has the minister any idea why Alberta has not accepted it?


Charles Avery Dunning: As my hon. friend knows, Alberta adopted a method which involved arbitrary dealing with all mortgage contracts in the province. I cannot describe it in detail. This method involved a cooperative voluntary arrangement, relating to the drought area in Saskatchewan, with the government of Saskatchewan and the municipalities there participating, as well as the mortgagees. And the same applied in Manitoba. They said to the dominion government: If all the creditors of these farmers agree to do this, will the dominion agree to come in also and write off to the same date the indebtedness for money advanced by the dominion government in former years? Our answer was yes. And I say to my hon. friend that at any time Alberta comes along with a similar proposal we shall be very glad to give it favourable consideration.

Su-p-ply-Debt Adjustment in Drought Area


John Horne Blackmore: I am very much interested in this thing and would like to get it cleared up. Who initiated the movement which resulted in this request to the dominion government? Did the Saskatchewan government, or the Saskatchewan municipalities, or the mortgage companies, initiate the movement?


Charles Avery Dunning: I should not like to
award the credit to any particular individual. Naturally the minds of many men were applied to the problem in Saskatchewan and in Manitoba, and conferences were held long before conclusions were reached, at which the dominion was represented by the Minister of Agriculture. The official statement in regard to the method was made by Premier Patterson in the case of Saskatchewan and Premier Bracken in the case of Manitoba. Perhaps I can clarify the matter to my hon. friend in regard to that phase by reading an official letter which I wrote to Premier Patterson with regard to it, under date of October 24, 1936:
I have given careful consideration to the various questions involved in the determination of the amount of Saskatchewan's indebtedness to the dominion arising out of loans for relief expenditures prior to January 1, 1935, which is to be written off as our contribution to the general debt reduction program which is under way in your province.
I might explain that this letter followed a report by the Minister of Agriculture (Mr. Gardiner). The scheme was first announced by the Minister of Agriculture and then by Premier Patterson. This letter followed with respect to working it out:
There are apparently a number of matters which will require investigation, and perhaps adjustment. However I am convinced that for reasons which will be apparent to you any write-offs which are made must be confined to loans made for relief and seeding assistance in the drought area. For this purpose the term "drought area" should he defined as consisting of the 156 municipalities which I understand were regarded as constituting the drought area in the agreement which has been reached between your province and the mortgage and loan companies.
Furthermore, I believe that the general principle to be followed should be that the dominion should cancel your treasury bills to the extent that the funds received therefrom by the province were loaned to farmers in the drought area either directly or through the municipalities, and the resulting obligations taken by the province are now being cancelled by the province.
I think my right hon. friend had an almost similar problem with respect to the cancellation of the former notes.


Richard Bedford Bennett: No, the commission took those notes, not the provinces.


Charles Avery Dunning: The letter continues:
I am prepared to recommend to my colleagues that action be taken by the dominion in the above sense when appropriate assurance has been given of the action taken by the provincial government and the mortgage and loan companies.
You understand, of course, that it will be necessary for the dominion government to introduce legislation at the forthcoming session of parliament to authorize action on the part of the dominion in this regard, and it is therefore of the utmost importance that the principles on which the legislation is to be based should be determined as soon as possible so that we may proceed with drafting.
I have referred to the details of the negotiations. The dominion minister who was responsible for negotiating from the dominion's point of view was the Minister of Agriculture. In respect to anything having to do with that phase of it the minister is now here and will I know be glad to give any information he can.


Richard Bedford Bennett: Is that the whole letter?


Charles Avery Dunning: Yes, the whole letter.


Mr. PERLEY (Qu'Appelle):: That is dated prior to the announcement made by the Minister of Agriculture, of course.


Charles Avery Dunning: No, it is after that. The announcement was made in September. This letter is dated October 24.


Ernest Edward Perley: Was Premier Patterson aware of the announcement to be made by the Minister of Agriculture-at Calgary, I think, was it not?


Mr. GARDINER:: No, the announcement was made in Regina, on the day the conference was held at the parliament buildings at Regina between representatives of the loan companies and representatives of the government of Saskatchewan. I spoke that day at the Canadian Club luncheon. We discussed the matter all forenoon and I made the announcement at the noon hour.
Mr. PERLEY' (Qu'Appelle): I was under the impression that the minister made the announcement in Calgary.


James Garfield Gardiner: No, I made the first announcement in Regina. I also spoke of it in Lethbridge and Edmonton. I discussed it with the government of Alberta in Edmonton two or three days later.


John Horne Blackmore: Was the minister invited into Saskatchewan for that occasion?


James Garfield Gardiner: As a matter of fact negotiations in connection with debt adjustment in the western provinces had been going on for about two years prior to the time final
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conclusions were reached. Discussions had also taken place at Ottawa. I do not know personally whether any discussions took place before the present government was formed, but since then from time to time, as provincial ministers were in Ottawa and as representatives of mortgage companies and banks and municipal organizations were meeting with us, the question was brought up and discussed. The final discussions here before I went west took place early in September, in the office of the Minister of Finance. By arrangement between the provincial government and the creditors concerned a conference was held in Regina, and I attended that conference representing the government of Canada. All the members of the Saskatchewan government were present, and representatives of the creditors.


John Horne Blackmore: Was any effort made
on the part of the Alberta government to negotiate with the minister at the same time, or were they neglecting it and only Saskatchewan's representatives prosecuting it?


James Garfield Gardiner: There never were any
representations made by the Alberta government to the present dominion government with regard to any form of debt adjustment which involved cooperation from here. But after meeting the representatives of the mortgage companies and discussing the matter, even before I came down here, I discussed the matter with the municipalities, and discussed it shortly with them while I was in Regina on the occasion referred to. I was in Alberta also and I took occasion to meet the government in the council chamber of the parliament buildings at Edmonton, and indicated to them what was being done in Saskatchewan. I did not suggest to them that they should follow any line of policy in connection with their debt adjustment matters, but indicated what was being done in Saskatchewan, and I think they have been fully aware of it from that time to this.


Ernest Edward Perley: I am under
the impression that the scheme in detail as we have it laid out here was announced by the Minister of Agriculture in Edmonton after the Canadian Club meeting in Regina. I remember well the headlines in the western press. When he made this announcement a great many people in Saskatchewan were surprised that the premier of Saskatchewan had not made the announcement at the same time. The premier of Saskatchewan I think made his announcement the following day.


James Garfield Gardiner: The details of the
arrangement were announced by Premier Patterson I think the same day that I was in

Edmonton. But the general trend of the arrangement was announced previously. A proposal of that kind was discussed for eighteen months in Saskatchewan before that announcement was made, and most of the people of Saskatchewan were fairly familiar with it. There was an arrangement working in Saskatchewan for at least twelve months prior to that, which takes in part of the present understanding that exists as between the two governments and the creditors. A proposal similar to this was made very early in 1935, I think about March or April, by the provincial gove'rnment to the creditors. But at that time the creditors did not feel that they could go as far as the government was asking them to go, partly because they had to show on their books for their annual statement at least two years' back interest, in order to show a balance which did not endanger the position of some companies.
The proposals had then been considered fairly fully, and as a result of the discussions an arrangement was entered into whereby the mortgage companies agreed to go into three municipalities in Saskatchewan and indicate to the people of those districts the extent to which they were prepared to reduce the claims which those companies had against individuals in those municipalities. The municipal councils were called in and they agreed to forego taxes to a similar amount, and the provincial government came into the picture and agreed to relinquish any relief claims, and other amounts such as provincial revenue taxes that were due from the municipalities, or individuals in the municipalities to the provincial government. That had been working all the summer of 1935 and on into 1936. I think some twenty municipalities in the drought area had been dealt with in that way. So that the negotiations that started in September, 1936, were for a return to the original suggestion. Suggestions for the opening of those negotiations came from the province and the creditors to the federal government, asking the federal government to release debtors in the area from any amounts that might be owing to the federal government.
I have the map before me, but I do not think the figures are actually on it as to the number of municipalities. Speaking however from memory I think there were 158 that came under the scheme which has just been outlined by the Minister of Finance. In addition there are eighteen that are still being dealt with under the previous arrangement. That is, the creditors and the province go into those municipalities and arrange for debt adjustment more or less on a blanket scale

Supply-Debt Adjustment in Drought Area
within the municipality. Meetings are held between the local government board of Saskatchewan and the municipal councils and representatives of the creditors before those adjustments are made.


Ernest Edward Perley: Would the eighteen municipalities include those which are considered as in the semi-drought area?


James Garfield Gardiner: Yes they would. I can give the numbers if the hon. member desires.


Ernest Edward Perley: We would not be able to identify them by the numbers.


James Garfield Gardiner: There are three south of Moosomin; one south of Grenfell; one directly south of Regina, that is No. 99 just on the border of the heavy lands; there are two just east of Saskatoon; one just south of Elrose, and ten south of Battleford, making up the eighteen.


René-Antoine Pelletier: The Minister of Finance stated a moment ago that he considered that these debts were really not very good debts- he called them bad debts-and that he felt he could assist the province and the municipalities by cancelling the amounts which were owing to the dominion government either by the province or the municipalities, which must in turn come from the farmer. If I understand the position it is this. A farmer owning a quarter section would have certain indebtedness against it, such as taxes due the municipality, relief received from the provincial government and assistance given by the dominion government. On top of all this the farmer owed money to the mortgage companies. As the claims of the municipalities, the province and the federal government took priority to the claims of the loan companies, it seems to me that the only logical conclusion we can come to is that the government have bettered the position of the mortgage companies and at the same time have destroyed any possibility of return to the governments on account of these bad debts. Instead of improving the condition of the farmer in Saskatchewan, it seems to me, following the matter to its logical conclusion, that we have turned him over to the mercy of the private loan companies, and at the same time destroyed whatever opportunity there might have been for future cancellation of his debts. That is done simply because of the fact, which cannot be denied, that the claims of the municipality and of the provincial and federal governments were prior to all claims held by any bond company. The final result therefore has been that you have helped the scheme of the loan companies, and at the same time lost a great deal of revenue.


Charles Avery Dunning: The hon. member is entitled to his opinion.


Ernest Edward Perley: Would the minister give us the opinion of the association of rural municipalities? I believe they have made representations to the government along the lines expressed by the hon. member.


James Garfield Gardiner: Mr. Chairman, I would not attempt to give the opinion of the council of the association of rural municipalities in this particular matter. The council of the association probably raised some objection as to the extent to which they had been consulted in the matter, and probably they had some grounds for their objection at the time the arrangements were entered into. But they had been consulted earlier, and I believe they are fairly well satisfied with the general working out of the scheme. They may have some objection with respect to details.
Answering what has been said with regard to the general position, I think it is well to have in mind, in so far as it is possible to do so, what actually does happen under the scheme. Mortgage companies write new agreements under which any arrears of interest down to January 1, 1935, are eliminated from the agreement previously held. In some cases additional adjustments are made with regard to principal.


Richard Bedford Bennett: There is no obligation.


James Garfield Gardiner: They are not required to go further under the agreement; but there is nothing in the agreement to prevent loan companies or other creditors from going further than the agreement provides.


René-Antoine Pelletier: Have they done so in many instances?


James Garfield Gardiner: Yes, in many instances they have done so.


Richard Bedford Bennett: They have done so under the Farmers' Creditors Arrangement Act.


James Garfield Gardiner: Yes, and under the debt adjustment legislation of the province. I think, too, it should in fairness be said, because it has actually happened, that in many cases without coming before any tribunal set up either by the province or the dominion creditors went out and made very important adjustments of debt all through the drought area of Saskatchewan.
The present arrangement makes necessary debt adjustments on the part of the municipality, the mortgage companies, the provinces and the federal government. The provinces have gone into the matter more carefully than we have been in a position to do, and in so far as provincial and municipal amounts are
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concerned they are in a better position to know the facts. They estimate the interest on first mortgages and agreements of sale at $21,500,000.


Charles Avery Dunning: That is the amount that has been cut off?


James Garfield Gardiner: Yes, that has been cut off. Then, the municipal taxes are estimated to be reduced by $8,325,000; school taxes by $6,300,000; telephone taxes by $1,800,000; public revenue tax and wild land tax by $2,475,000; municipal hail by $1,800,000. That makes a total of taxes of one kind or another including municipal hail, school, provincial and telephone of $20,700,000. So far as relief is concerned, the provincial government has wiped off about $5,000,000, and the proposal here for the federal government is, in round figures, about $18,000,000. That makes a total of S65,200,000.
In addition to that, it is estimated that the lower rate of interest results in an annual cutoff of $4,000,000. Of course, over a period of ten years, multiplying the figure by ten you get $40,000,000; but just for the one year it is $4,000,000. I have seen estimates which ran as high as $100,000,000, but that includes the $4,000,000 per year for the ten years. If we take the actual amounts wiped off on the day this comes into effect we get the figure of about $65,200,000. Out of that the federal government is dealing with about $18,000,000.
I do not know that it is just fair to all parties concerned to leave the impression that all the amounts owing the governments stood in a position ahead of the first mortgage. Probably they did technically, but in actual practice they very seldom did. As a matter of fact, most of those who owed debts to the extent these people did expected the governments to step out of the way and allow them to make their payments to other creditors. Municipal governments, provincial governments, and perhaps to a lesser degree the federal government were in a position where they practically had to do that. So that it is hardly fair to say that these amounts were in a position of preference over the creditor who held the first mortgage. I think the better way to put it is that the creditor who held the first mortgage, the creditor to whom taxes were due, and the federal government cooperated for the purpose of reducing the indebtedness of persons, in so far as it was possible to do so, for amounts for which they were involved through no fault of their own. That was the principle underlying it.
In 1930 these people owed a certain amount of money, and from 1930 on they have had no crops. The governing bodies and the mortgage companies thought it was somewhat

unjust to ask individuals in that position to pay the full amount of interest which had been piling up in those years in which they had no opportunity to pay and for which they received nothing. That was the main reason behind the wiping off of the interest. The municipalities were asked to take the same position with regard to taxes, and I believe I can say that the great majority of them were more than willing to do so. The provincial governments were asked to do the same thing in connection with relief amounts and public revenue taxes; and the federal government was asked to deal with the one thing in which they had had an interest, namely, the amount of relief which had been put on during those years, and the amount of seed grain which had been issued. But it does not deal at all with seed grain from January 1, 1935, to the present.


René-Antoine Pelletier: I should not like to leave the impression that I do not approve of any procedure which would reduce the debt of the farmer in western Canada. My views in that connection are well known. I believe that anything we do to help them is simply helping ourselves in the long run. But the point that has not been made clear is this: I asked a definite question of the Minister of Finance and he replied simply that everybody is entitled to his own opinion.


Charles Avery Dunning: I did not understand
that the hon. member was asking me a question; I understood him to be stating his own views. If he will restate the question I shall try to answer it.


René-Antoine Pelletier: Does or does not the minister agree with me that the taxes against these lands, as well as other evidences of debt held by the various governments, were prior to the claim of the mortgage companies?


Charles Avery Dunning: The Minister of Agriculture has just answered that question.


Mr. CHURCH:: Ever since the present
Minister of Agriculture has been in the house he has been getting preferred and special treatment for his province. A royal commission has been appointed to investigate in all the provinces these very matters. If we do not look out we are going to have another problem like the railways; we will be paying forever like the railways the deficits of bankrupt provinces. Nearly $19,000,000 treasury notes of active assets are being transferred to non-active assets. It is upon such things as this that the credit of the country is based. The financial institutions base their credit advances to the government upon these things.

Supply-Debt Adjustment in Drought Area
In one sweep about $19,000,000 of these treasury bills are being transferred into nonactive assets.
The Minister of Agriculture (Mr. Gardiner) was premier of Saskatchewan for many years. The other day he presented a bill providing for the payment of $10,000,000 for a drought relief program down to 1940. The people in Saskatchewan are not the only ones who are suffering. How is it that no provision is being made for the other provinces? How is it no mention is made of Alberta, British Columbia and the maritimes? I have been trying to find out what is to become of the two industrial provinces and what is their place in confederation. They are the principal taxpayers and there is no reason why these other provinces should receive preferred treatment in advance of the report of the royal commission. If we go on like this there will be little left for the royal commission to investigate. I am not objecting to reasonable treatment being given to Saskatchewan, but we are being asked to provide $18,000,000 as the dominion's contribution to a program of re-adjusting the indebtedness of farmers living in the drought area of that province. Have any banking experts, outside of those in the Bank of Canada, reported on this matter? The Bank of Canada made a report which was laid on the table the other day.
This is hitting at the very roots of confederation. The industrial provinces of Ontario and Quebec have been carrying the peak load of taxation to such an extent that unemployment has resulted. They can no longer carry the burden of debt. These active assets are being turned into non-active assets on the books of the treasury department. This program involves appropriate adjustments in debt or tax claims on the part of the provincial government, the municipalities, and certain mortgage lending institutions. It provides that these treasury bills are to be transferred in the books of the Department of Finance from "active assets" to "non-active assets" as of March 31. which is to-morrow. They are to be written off and cancelled.
Other municipalities in central Canada are carrying tremendous loads of taxation. Some of the people are starving and yet we cannot get one cent from this parliament. I suggest that we change our name and call ourselves the parliament of Saskatchewan. Saskatchewan appears to be the only province that can get any relief, due mainly to the fact that two or three ministers, including the Prime Minister, represent that province. We wrote off the debts of Saskatchewan in connection with our railroads, the stabilization fund, and the relief for drought areas. We are being
asked to maintain protection for that province. The Minister of Agriculture has been a free trader first, last and always. The free traders have stated that the enemies of the prairie provinces were to be found east of the great lakes, not west of the great lakes. They were referring to the industrial provinces, from one of which you come, Mr. Chairman.
This is a peculiar way of financing. There has been some criticism in the old country as to our method of financing. I cannot see why Saskatchewan should receive this preferred treatment when similar treatment is not being given to Alberta, British Columbia, the maritimes and the central provinces. Why is this one province singled out for preferred treatment? This emergency has been taken care of by another statute. All I can say is that we are stirring up a lot of trouble for the future. We should wait until we have the report of the royal commission. The government is simply relying on the single report it has. I am surprised that this sort of thing is being done by the government of the day as a gesture toward one province.


Ernest Edward Perley: Mr. Chairman, there is no doubt that if this adjustment had not been made, many farmers in this area would not have been able to carry on. When this adjustment is made the securities held by the loan companies will be worth something. Reference has been made to the writing off of the relief notes taken by the commission. No adjustment can be fair and equitable if consideration is not given to this phase of the matter. Many people who took relief have since paid it back. Many people in Saskatchewan were forced to go on relief against their will, but they have managed to pay back what they were advanced. I believe that some adjustment should be made in these cases. In other cases the advances are being written off, and those who made an honest effort to pay back what they were advanced now find themselves in a different position. Has the minister received any requests to have adjustments made along this line?


James Garfield Gardiner: That is a provincial matter. So far as this government is concerned, they would not be a party to any adjustment made in that regard. Where the province collected cash, it has been returned. I would not say that that is so in every case, but that is what has happened where applications have been made. When I left the province these payments were being returned. Either the present leader of the opposition or the then minister of finance, speaking from this side of the chamber three years ago,
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Debt Adjustment in Drought Area
stated that where cash had been collected-up to that time I think it was only $8,000-it would be returned. The provincial government has attempted to carry that out. Where cash had actually been collected, cash was in the process of being returned at the time I left the province.
Other cases which gave more difficulty were those where the municipalities had permitted persons to work out on the roads the amount of the grant. If I remember rightly, an objection was raised at that time by the Minister of Finance. He claimed that they were actually using moneys supplied by the federal government to pay taxes in the municipalities, which was really not a proper thing to do with funds provided for relief. This has been got around to some extent by the provincial government allowing substitutions to be made for road work done within the municipalities. As is well known, according to the system they make road grants to the municipalities. They are trying to make some adjustment by relating this matter to the grants that are paid. I am not familiar with all the details because this has been carried on since I left the province.


Ernest Edward Perley: I know of
several cases where the relief was worked out, and these particular parties are very annoyed about the matter; no adjustment has been made so far as they are concerned.


Richard Bedford Bennett: This is a most extraordinary transaction. It does seem to me that to do this in the estimates, instead of by a bill, violates every rule of responsible government. I was amazed when I found by a study of the details just what is involved. I listened with care to the explanations that have been given by the Minister of Finance (Mr. Dunning) and the Minister of Agriculture (Mr. Gardiner). What have we? In the ultimate analysis this is what happened. The dominion government advanced money to the province of Saskatchewan. for which it received the treasury notes of that province. Those loans carried interest at various rates. When the interest fell due, the province did not pay, but gave treasury notes for the interest thus due. Altogether the moneys amounted to a large sum, none of which was expended by the federal government, but was spent for various purposes by the provincial government. There were some checks with respect to the matter, and certain difficulties were experienced.
Let me point out that the notes to which reference has been made in connection with relief were notes about which the federal government did not, at the start of things,

know anything at all. Although I am seldom surprised at anything that transpires in connection with relief matters, when I was told that some people who were receiving relief could not bring themselves to accept it unless they gave notes for the amounts advanced, I thought very highly of my fellow-citizens, and admired them for their high standard of obligation to the state. I supposed that the notes they had given were held by the commission. But we took the view, as we were advancing these moneys without getting notes from Saskatchewan-at the time we were not given anything by Saskatchewan -that this was a national obligation. On July 1, 1931, I made the statement, standing in my place on the other side of the house, that we would treat the situation in that province as a national disaster, and we at once proceeded to advance money from the dominion treasury for the purpose of taking care of that national emergency. We never expected to get notes back, nor did we anticipate that the people who received the money would give notes. But other transactions immediately arose, and among them, applications by the province of Saskatchewan for loans for many purposes. For example, they applied for money to lend to municipalities. Rightly or wrongly, we did make advances to the province, and the responsibility for having initiated that policy rests not with the present administration, but with the old one. The government advanced the money to the province, and the province lent funds to the municipalities and used the money in various other ways. But I repeat that so far as the relief which we extended in 1931 was concerned, it was provided in face of what we regarded as a national emergency. We never expected to get it back; it was a free gift of the Canadian people to the citizens of Saskatchewan, who had been without a crop for many years and found themselves in a position bordering upon absolute ruin. That part of it is simple. From that time on we advanced money and took treasury notes.


Charles Avery Dunning: Until 1934-35.


Richard Bedford Bennett: Yes. In 1934-35 the question came up in connection with seed grain, which is another matter altogether.


Charles Avery Dunning: The whole thing, from 1934-35.


Richard Bedford Bennett: No, the federal government never made advances to the municipalities for relief.


Charles Avery Dunning: No, but to the province.

Supply-Debt Adjustment in Drought Area


Richard Bedford Bennett: Exactly, to the province but not to the municipalities.


Charles Avery Dunning: No.


Richard Bedford Bennett: As far as I know there never was a time when we undertook in any sense to advance money to the municipalities.


William Daum Euler: Was there not an advance to Winnipeg?


Richard Bedford Bennett: No, that was done through the province. In no case did we make an advance to a municipality. As regards Winnipeg, since the Minister of Trade and Commerce (Mr. Euler) has mentioned it, an agreement was made whereby certain public works were to be constructed, including, latterly, a sewer, and the federal government made a grant for labour costs up to a certain sum of money-I think it was $80,000.


William Daum Euler: That would not go through the province, would it?


Richard Bedford Bennett: It went through the province, yes.


Charles Avery Dunning: The whole Winnipeg
transaction went through the province. In that case it was intended for a specific municipality.


Richard Bedford Bennett: Oh, quite; as it was, in Alberta, for Calgary and Edmonton.


James Garfield Gardiner: Regina and Saskatoon.


Mr. McCANN:: And in Ontario, too.


Richard Bedford Bennett: Yes, and Nova Scotia. Rightly or wrongly, the position was this: The provinces made applications and said they were prepared to carry on during the year undertakings at a certain point, if the federal government would advance them certain sums of money to enable them to pay their share, and make a contribution as well. This we did. I am not going into the details. It suffices for my purpose to say that any moneys which went in Saskatchewan to farmers for any purpose did not go direct from the federal government, and there were no contractual relations between the government of Canada and individuals in that province.
to discharge its contractual obligations to the province in connection with public undertakings such as road work and work done in urban municipalities; and secondly, to loan the province on its treasury bills sums of money to enable it to function as a government. Things got as bad as that, that the province did not have revenue enough to enable it to function ar a government. I remember the criticism this, was made at that time by some of my colleagues-unjustly, as it seemed to me. I realized that we had to advance money to Saskatchewan to enable it to carry on as a government because its revenues were so small that it could not even pay salaries. Agriculture was the basis of its ability to collect money, and where there was no agriculture there was no taxation whereby they could get revenue.
At any rate we continued to advance money for which we received treasury bills, and bills were also given for the interest, because the province was unable to pay the interest when it came due. It endeavoured to float securities, and did so by means of a bond house in the east. I objected to the terms of the prospectus under which the securities were sold, because, as I stated, and I still maintain the opinion, from looking at the prospectus it seemed that there had been no default, when as a matter of fact they had not paid the interest on the loans made by the dominion except by compounding the interest and giving new treasury bills.


Charles Avery Dunning: In part.


Richard Bedford Bennett: No, it was in whole, at that time.


Charles Avery Dunning: In part. They have paid some interest.


Richard Bedford Bennett: I am glad to hear that.


Charles Avery Dunning: My right hon. friend's
statement is, in general, true.


Richard Bedford Bennett: I am talking about the time I was in office.


Charles Avery Dunning: The province right through paid some interest, although not much, in cash.


Richard Bedford Bennett: Certainly nothing was
paid with respect to many notes that came due.


Charles Avery Dunning: That is right.


Richard Bedford Bennett: That is the position. Nor were there relations with municipalities except in so far as it might be said that the agreements made with the provinces mentioned the names of municipalities which were beneficiaries; but that was not a matter direct between the municipality and the crown in right of the dominion. All that the dominion did with respect to Saskatchewan was, first of all, 31111-H6


Charles Avery Dunning: 


Richard Bedford Bennett: terest was set up.


Charles Avery Dunning: Right.
And thus compound in-And is going on still.


Richard Bedford Bennett: That is the position. It is not quite correct for the Minister of Finance to say that I looked on this as a doubtful asset. For one thing, we had the amount awarded to the province of Saskatchewan by

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the commission, which would go to extinguish the debt pro tanto. In addition, we believed that when better conditions returned Saskatchewan, with a population the third largest of the provinces in confederation, would be able to pay its obligations. Certainly I was still an optimist with respect to all of the western provinces.
Now we are confronted with a situation in which, with a multiplicity of detail, we are to cancel part of that debt in the case of Saskatchewan and of Manitoba.
I submit at the very start that this should have been done by a bill. To do it in this way, by means of an estimate, as a particular of an estimate, is wholly wrong and violates the essential rules which we laid down in connection with the Canadian National. Why is it that we discontinued certain practices in connection with the Canadian National and introduced bills? Because it was felt that the other course was wholly unsound and that there should be a bill setting out the conditions. Let us look at this and see what we have. We have in an estimate, in fine print, these words:
To authorize-as the dominion's contribution to a program of adjusting the indebtedness of farmers living in the drought area of the province of Saskatchewan which program has been sponsored by the government of that province and involves appropriate adjustments in debt or tax claims on the part of the provincial government, the municipalities and certain mortgage lending institutions-the writing off and cancellation of certain treasury bills of the province held by the dominion, provided (1) that said treasury bills be transferred in the books of the Department of Finance from "active assets" to "non-active assets" as at March 31, 1937.
That is to-morrow. If the minister will look up his precedents he will find that this is something that should never be done as part of an estimate; it should be done by direct and unequivocal legislation. What we have done is to take part of the debt of Canada and, describing it as an active asset yesterday, declare that the day after tomorrow it shall not be; and the Department of Finance, by something contained in an estimate, is instructed to change on its books the status of its securities. It goes on:
(2) that final writing off and cancellation of said treasury bills be subject to the approval of the governor in council-
Now listen to these words:
-and in accordance with such terms and conditions as he may approve, including the nature of the evidence to be submitted as to the adjustments made by the provincial government, the municipalities and the mortgage lending institutions aforesaid.

That, I submit, should be a matter of statute. It should not be left to the elastic attitude of mind of a purely political body; it is too serious a matter to be dealt with in that way. It demands in my judgment rigidity of treatment by statute, and the statute should be clear and unambiguous in the statement of the terms and conditions under which it should be done.
and (3) that the amount of treasury bills to be written off and cancelled shall not exceed the amount advanced by the dominion government to the provincial government by way of loan to assist in financing expenditures incurred for relief, seed grain, and seeding purposes in the said drought area during the period from May 1, 1931, to January 1, 1935, plus such accrued interest thereon as has been capitalized, and shall not in any case exceed in the aggregate the sum of $17,959,606.51.
Now all that, I repeat, should be the subject matter of a statute. It seems to me to be reasonably clear that that is so, for reasons that are public in their character. You are dealing with the country's assets and you should not leave it to a little note of appropriation in the supplementary estimates. There should be a statute embodying the conditions under which possibly $17,000,000-of promises to pay in the province of Saskatchewan became of no value at all and are written off. The right to do it is one of the functions which the government cannot exercise without legislation. This legislation is in the nature of a statute and has the effect of a statute, being embodied in the supply bill, and when it is assented to it is to all intents and purposes a statute of Canada known as the supply bill. That is all I have to say in that respect. I am satisfied that it is a very dangerous precedent to establish, to deal as we are doing here with a matter of this character involving relations between a province and the dominion-not a corporation created and set up by the dominion, but one of the sovereign states of the country, a province. We are dealing with the matter in a way which is contrary to sound parliamentary practice in any event.
The second point is what the effect of this is. The effect is that the sum of money advanced by the Dominion of Canada is wiped out; it is no longer a debt; and in the process the municipalities abandon taxes; the province abandons its claim for taxes, and other rights it has against individual farmers' lands; and the mortgage companies abandon interest up to a certain point, while as a matter of law, as a matter of contractual obligation, they retain their right to their principal. And pro-tanto their securities improve by reason of this transaction.

Supply-Debt Adjustment in Drought Area
The answer suggested by the Minister of Agriculture is, however, a complete one. It is this, that if drought continues they have no value anyway. That is the obvious answer. Personally I should have preferred to see the action taken when it was demonstrated that the position had become such as to warrant some hope for the future. I cannot see that because we hope that a certain condition has ended, we are warranted in taking an extreme position which will at once create a new situation for the lenders of money, whereby their security will become enhanced in value to the extent to which the claim for taxes has been abandoned and the claim for relief and seed grain, if it stood in the name of the crown, has ceased to exist. That is the effect; there is no getting away from it.
It is certainly desirable that some action of this kind should be taken. When the Farmers' Creditors Ainramgement Aot was passed the purpose was to keep the farmers on the land. It was passed to enable a body presided over by a judge to formulate proposals that did involve the cutting down of principal on the part of the lending institutions.


Charles Avery Dunning: It involved the possibility.


Richard Bedford Bennett: It contemplated the
possibility, and that statute was framed after a conference in the office of the Minister of Finance over which I presided. The lending companies of the country were present and we outlined the proposals to them, and when the bill was finally settled the section that has given so much trouble-I do not claim any credit for the authorship of it-was written into it by myself and sent to these people as it was introduced into parliament. That was done in order that they might see it as it was introduced into the house. Some of them complained that it conferred too large a power on the judge, and I am bound to say that some of the decisions of the judges defy description. I cannot use any word that explains my reaction to them, for some of them I cannot understand at all. They are at variance with the principle on which the whole act was framed, and reach a conclusion which certainly is not warranted. I propose to discuss the point further when the estimates are before us in that connection. Down in Prince Edward Island they have appointed a lot of inspectors who are paid fees and they are drumming up business.


Charles Avery Dunning: Under the Farmers'
Creditors Arrangement Act?


Richard Bedford Bennett: Yes.


Charles Avery Dunning: No, there are no inspectors.
31111-146J


Richard Bedford Bennett: That is not the title. There is an official receiver and he is drumming up business. I can give instances. Now obviously with such a thing going on in a province like Prince Edward Island, an extremely difficult situation is bound to develop.


Charles Avery Dunning: That is one of the abuses that were complained of when I first took office, and I took the strongest action possible in all such cases. If my right hon. friend will give me the particulars, I can assure him that the administrator of the act comes down very hard on such abuses; in fact, men will be dismissed who do that sort of thing.


Richard Bedford Bennett: An appointment made in Prince Edward Island would not seem to indicate that appointments are based in any way upon merit. I shall speak to the minister about that matter personally; it involves the appointment of a man of whom one may read in the law reports, who at one time was a' member of the legal profession. That is quite beside the question, however.
I only desire to point out that the effect of this is to accomplish a purpose to which this parliament gave its assent when it passed the Farmers' Creditors Aimngement Act. This is an arbitrary accomplishment of that end. It involves possibilities that are very great, having regard to some recent history.. That, I think, is one of the difficulties that any reasonable person would say should have been avoided by a statute, because this is a statute, but it is a statute in which the terms and conditions are not adequately or clearly stated. They are left to the governor in council.
If the goverment are interested in the matter, some time they might look up the' statutes that have been passed since they came into office. Look at the powers that have-been left to the governor in council; count them, and I am sure they will come to the' conclusion, which will delight them, that never' has such power been left to the governor ini council as since this government came into power, bearing in mind the number of occasions upon which the governor in council has been vested with discretion. In the end it is left to the governor in council to determine the terms and conditions, and also the nature of the evidence to be submitted in connection with the adjustments to be made. That is why I asked as to the number of cases. I thought probably in different municipalities the government would have ten, twenty, thirty, a hundred or two hundred, so they could say there were X cases involving the amount of money that
2308	COMMONS
Supply-Debt Adjustment in Drought Area
has been mentioned by the Minister of Agriculture, for relief and various forms of taxation. It appears that the taxation which has been remitted on the one hand amounts to about $20,200,000, while the amount remitted by us is in the neighbourhood of $17,000,000. I am only too glad to see any arrangement that can be made that will encourage the people in that area once more to look to the future with hope. But they have no money with which to put in a crop, and somebody has to find the money to enable them to put in a crop this year.


Charles Avery Dunning: The Prime Minister announced that legislation would be introduced.


Richard Bedford Bennett: But that means that once more the land will be charged with the payment of the money for the seed, for the sixth or seventh year. That in itself is a reason why we might hesitate to take this action at this moment. Now the provincial government is going to find the seed again, and the provincial government can only do that if we assist them by some means, direct or indirect. When that is done and the seed is sown, we are once more at the mercy of the elements, but in the meantime we have written off $17,000,000 of our assets.
In view of the fact that a commission is Hoeing appointed that we hope will deal with "the whole problem of the relations between the dominion and the provinces, it seems to me that by agreeing to write off 817,000,000 in the case of Saskatchewan we have certainly invited the other provinces to make demands to the same end, and have given cause for the very sort of observation that was made by one of the members from Toronto this afternoon, namely that the burden is being borne by those in central Canada who very Bargely contribute the taxes of the country. That is a position which I think the government and everyone else having in mind the interests and welfare of the west are endeavouring to avoid; but those are the facts.
I can only add that I am' wholly sympathetic to the idea that we must deal with this situation on a proper basis. The Farmers' Creditors Arrangement Act was passed to enable that to be done, and it has been, and is being done in every province of Canada. In addition to that, by our arbitrary act. as a mere item in the supplementary estimates, we have provided for the remission of part of our assets, consisting of debts owing by one of the provinces, on terms that involve the surrender by the province of taxes which cannot be collected unless there is a cessation of the drought. It is admitted on

all sides, as I understand it, that neither schools nor municipalities can be maintained unless there is a crop within these areas.


Charles Avery Dunning: I will go further than
that and include provinces.


Richard Bedford Bennett: I follow the minister; I think perhaps he is putting it somewhat stronger than I had thought was warranted by the situation, but the minister has studied the matter more closely than I have.


Charles Avery Dunning: In its recent manifestations, I mean.


Richard Bedford Bennett: In the minister's view it means the disintegration of the provinces.


Charles Avery Dunning: I would not say that, but their self-maintenance in the ordinary sense.


Richard Bedford Bennett: Yes, that they cannot function as provinces. That is even stronger than I had put it. In these extraordinary circumstances, while extraordinary remedies must be resorted to, I think it should be done in such a way as at least to preclude the possibility of this step being regarded as a precedent that would be injurious to the general national well-being and leaving the impression that in time of stress moneys loaned to these two provinces by the dominion need never be expected to be repaid. The effect of this, of course, will be to make it much more difficult to realize on the remaining obligations of the provinces to the dominion. Certainly it places the province of Alberta in an invidious position. Because they saw fit by legislation to cut interest rates and deal with their problem in another way, that is now treated as a reason why they should not share in the surrender of a part of their debt.


Charles Avery Dunning: Oh, not at all.


Richard Bedford Bennett: The fact is that there is no legislation that warrants a portion of their debt being treated as a non-active asset.


Charles Avery Dunning: Not at present.


Richard Bedford Bennett: That means there is no power; therefore they must pay if they are able, whereas the other provinces need not. The answer is that the province of Alberta dealt with its situation in another way. That method has been declared illegal by the courts, and an appeal has been taken. But that is no reason why the federal power should treat one of the three provinces in a different way and deprive it of the benefits which accrue from the surrender of a part of the debt which they created, in lesser amount per capita than one of the other provinces, and

Supply-Debt Adjustment in Drought Area
which was expended, as the records indicate, not for agricultural purposes wholly, because it is not so great an agricultural province as its neighbours, but in other ways as well. Alberta has within its borders two large municipalities and a third of rather commanding proportions. They had to meet this situation: It was a case of either hunger and worse or they had to borrow the money to enable them to assist in the relief of the people within their province.
Under those circumstances I think the legislation should have been general in its character and should have enabled the dominion, under fixed conditions, to deal with this situation, in which active assets of the country were cancelled. I find it a little difficult to understand why we should say that an active asset becomes non-active and then say we cancel it. There is no difference between cancelling a liability that is non-active and a liability that is active. Probably, I take it, that means that it pays interest no longer; is that the idea? Of course, making it a nonactive asset cannot destroy the contractual obligation of the province to pay interest. You must have either a surrender of the security or an abandonment of the interest, which this does not contemplate except with respect to the contingencies that are the basis of the operation.
I confess that I find it difficult to follow all the ramifications of the situation. I have had no difficulty, however, in following the explanation given as to what is to be done. I think it is somewhat more difficult to say that it is based upon a sound reason. I find it much more difficult to say that it is a proper method to follow to deal with the situation, merely to mention it as an item in the supplementary estimates rather than to embody it in a statute, in which the various contingencies that are contemplated might be dealt with properly.


Mr. DOUGLAS:: I should like to ask the
Minister of Agriculture a question with reference to the voluntary debt adjustment. In entering into this agreement did the federal government make the cancellation of these obligations dependent upon any action by the mortgage and loan companies with reference to their obligations?


James Garfield Gardiner: The whole arrangement was entered into at the gathering which I described a moment ago. The intent, of course, is that the carrying out of one party's obligation is conditional upon the other party's doing likewise, although there
was no pressure required or anything like that. It was a cooperative arrangement, but it is conditional on all parties carrying it out.


Thomas Clement (Tommy) Douglas: Were the loan companies represented at the meeting to which the minister has referred?


James Garfield Gardiner: Yes.


Thomas Clement (Tommy) Douglas: A"d at that time was the standard renewal agreement introduced?


James Garfield Gardiner: Yes, that matter was
discussed. The agreement was not there, but at that meeting it was agreed that there should be a standard agreement, which has been drafted since.


Charles Avery Dunning: I should like to add just a word. I desire only to remark on one phase of what the right hon. leader of the opposition brought out, if he will be good enough to listen to me. This is a very complex and difficult problem, not merely because of its present position but because of the sequence of events created by succeeding years of difficulty, in connection with which the government headed by my right hon. friend brought to bear its best judgment, I believe, in the circumstances prevailing at the time. But the various obligations created during those years differed in character because of the different policies adopted. My right hon. friend has mentioned that in 1931 the situation was dealt with through the medium of a commission.


Richard Bedford Bennett: A commission appointed
by the province.


Charles Avery Dunning: Quite so. As far as relief for that year is concerned, after a great deal of grief we can say that 1931 is practically out of the books of the finance department.


Richard Bedford Bennett: And there has been no
repayment.


Charles Avery Dunning: None from the province, and no security was ever taken from the province.


Richard Bedford Bennett: Nor asked.


Charles Avery Dunning: Quite. Then we come to the following two years, during which sums were loaned to the province and treasury bills of the province taken as security. Then we come to 1934-35. In the circumstances prevailing in that year my right hon. friend decided upon another course. He decided to advance moneys to the provinces, which were to be accounted for; in the meantime taking their treasury bills, not in the same sense
2310	COMMONS
Supply-Debt Adjustment in Drought Area
that they had been taken in previous years, but as security, I take it, for the due carrying out of certain methods that had been agreed upon between the two governments to meet the situation.


Richard Bedford Bennett: No, as promissory notes for loans made.


Charles Avery Dunning: No, it is quite clear that it was the intention of the government to return the treasury bills with respect to 193435. I assure my right hon. friend that that is so.


Richard Bedford Bennett: They were to repay the money.


Charles Avery Dunning: No, not with respect to 1934-35.


Richard Bedford Bennett: It divided itself into
several branches, but loans that were made at the request of the province for definite purposes were to be repaid; that is, for the purposes of government, in various ways. Seed grain, for instance, to all intents and purposes was a gift.


Charles Avery Dunning: But treasury bills were taken for it.


Richard Bedford Bennett: They were included in the treasury bills given for the whole amount.


Charles Avery Dunning: And the great bulk of the treasury bills given that year were for advances which the government of the day did not contemplate ever would be repaid.


Richard Bedford Bennett: I would not go that far.


Charles Avery Dunning: I think there is no question of that. In any case, what I want to point out is that the accounting and auditing with respect to 1934-35 has not as yet been completed to a point where we can carry out the arrangement made by my right hon. friend to give those treasury bills back to the province. So while with respect to that year there is on our books no loan charged against the province as such, but instead an accountable advance, yet in the debt of the province, when they have to account for their treasury bills in their public accounts, they have to show these treasury bills outstanding.
I indicate that in order to carry my right hon. friend's mind back to the time when he was wrestling with these difficulties himself, and to assure him that the drought of 1936 was more extended in area and affected more people than any previous drought. Coming on top of all that has gone before, it created a set of conditions which demanded
(Mr. Dunning.]
strong action on the part of the government by bringing to bear all the force at its command to have an adjustment made of the indebtedness of individuals, which had grown entirely too large for the machinery of the Farmers' Creditors Arrangement Act to cope with at sufficient speed.


Richard Bedford Bennett: We had 330,000 people on relief in the winter of 1931, the largest number we ever had in Saskatchewan.


Charles Avery Dunning: The Minister of Agriculture assures me that now there is a larger number of municipalities in the west on one hundred per cent relief than ever before.


Richard Bedford Bennett: The commission had some 330,000 on relief, as a maximum.


Charles Avery Dunning: In any case my right hon. friend can appreciate the situation when I tell him that 1936 came after five years of drought, and the situation developed to a point where it was felt that all the force the government could bring to bear, by way of cooperation with other creditors, should be exerted to reduce this burden to reasonably manageable proportions. I agree that it has not yet reached manageable proportions from the point of view of the individual, and will not do so unless there is rain in western Canada in June and July. After all, that is the real point.


Richard Bedford Bennett: And quite a lot of people had left between 1931 and 1936.


The CHAIRMAN:: Shall the item carry?


Thomas Clement (Tommy) Douglas: It is six o'clock, Mr. Chairman.


Charles Avery Dunning: We are in committee; there are two minutes left, and if the hon. gentleman has a question he might ask it.


Mr. STEWART:: In addition to what my leader has said with regard to the extraordinary character of this item in the estimates, I wish to point out that according to all our practice an estimate is an authorization for the expenditure of money for the specific purpose mentioned in the estimate. That, I think, takes this item altogether out of the category of an estimate, because this money has been spent. This is not a contemplated expenditure or the payment of money by this parliament. It is not an authorization of the payment of money for any specific purpose, as is the case with regard to the preceding items, which have to do with the construction of buildings and so on. An estimate contemplates and authorizes the future expenditure of money. This money was loaned long ago. This item

Wellington Fire Insurance
does not contemplate the expenditure of any sum of money by parliament. It seems to me that the argument of my leader has remained unanswered; I do not think any person has given an effective reply.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.



[Stage Direction]
Bill No. 60. for the relief of Ruth Jessica Kimpton Shiells.-Mr. Jacobs.
Bill No. 66, for the relief of Gretna Golden Laird Rankin.-Mr. Jacobs.
Bill No. 67, for the relief of Frank Horace Wood.-Mr. Sinclair.
Bill No. 68, for the relief of Edith Mary Bowers-Hill O'Hagan.

Mr. Jacobs.
Bill No. 69, for the relief of Isobel Jean Herbert Fleming Johnson.-Mr. White.
Bill No. 70, for the relief of Emilie Letsch Rutishauser.-Mr. MacMillan.
Bill No. 71, for the relief of Miriam Silver-man.-Mr. Jacobs.
Bill No. 72, for the relief of Alice Mary Hickman Ings.-Mr. Jacobs.

[Stage Direction]
The house resumed from Tuesday, March 23, consideration in committee of Bill No. 50, to incorporate the Wellington Fire Insurance Company.-Mr. Macdonald (Brantford City)- Mr. Sanderson in the chair.
On section 6-Classes of insurance authorized.
Mr. TOMLINSON:: Mr. Chairman, in the absence of the sponsor (Mr. Macdonald), who is unavoidably detained and unable to be with us to-night, I shall present to the committee an answer to the criticisms made by the hon. members for Broadview (Mr. Church), Winnipeg North Centre (Mr. Woodsworth) and Winnipeg North (Mr. Heaps).
In the first place, each of the two companies has in the past been carrying on a distinct business and they intend to do so in the future. It is true that certain directors of one company are also directors of the other, but I must point out that there are differences in the two boards of directors. In a few moments I shall place on record lists of the directors in 'each company. While certain shareholders are shareholders in both companies, taken as a
whole the shareholders are entirely different. In each case we have made the applicants the same purely as a matter of convenience, having picked out as applicants five men interested in both companies. There is no thought of amalgamation of the two companies. Each wants to continue its own business under federal authority.
Their fields of operation are different. Both are provincial organizations, having obtained incorporation from the province of Ontario. In Ontario at the present time the Federal Fire Insurance Company carries on the business of fire insurance, plate glass insurance, residence burglary insurance, and liability insurance. In Ontario the Wellington Fire Insurance Company carries on the business of fire and automobile insurance. The only business these two companies have in common in Ontario is that of fire insurance.
The agency organizations of the two are entirely distinct. Each company to some extent has extended its operations beyond the province of Ontario; but there again they are quite different. The Federal Fire Insurance Company has extended its operations into Quebec and British Columbia; but in British Columbia it does business in only fire insurance and plate glass insurance. As an Ontario company it has had to maintain desposits under three provincial jurisdictions, and desires in its future operations, after approval by the federal authority, to come under one central control, namely, that of the superintendent of insurance at Ottawa. This will simplify matters a great deal for the company in extending its operations into other provinces in which it does not now operate. It also greatly simplifies matters from the standpoint of reporting as well as supervision.
The Wellington Fire Insurance Company has extended its operations beyond Ontario to the provinces of Quebec, Manitoba, Saskatchewan and British Columbia. In Manitoba, Saskatchewan and British Columbia it writes only fire insurance. In Ontario and Quebec it writes both fire and automobile insurance. Under its present provincial organization it has to make provision for deposits in all of the provinces in which it operates and, like the Federal Fire Insurance Company, desires to organize under federal authority and to bring itself under the supervision of one central authority, namely, that of the superintendent of insurance at Ottawa.
The Wellington Fire Insurance Company is one of the oldest companies operating in the Dominion of Canada. Its shareholders have neither the desire nor the intention of permitting it to amalgamate with any other company, but seek to attain the position of a company
Wellington Fire Insurance

operating under federal authority, under the jurisdiction of the superintendent of insurance at Ottawa.
I am sorry the hon. member for Brantford City (Mr. Macdonald) is unable to be here, but I thought it well to place these facts before the committee, as requested by the Minister of Finance (Mr. Dunning) a few nights ago. I believe I should place on Hansard the names of the directors of both companies. The board of directors of the Wellington Fire Insurance Company is as follows:
W. R. Begg, Esquire; W. H. Buscombe, Esquire; H. C. Edgar, Esquire; E. J. Hayes, Esquire; Hon. Jacob Nicol. K.C.,	D.C.L.;
Colonel S. C. Robinson and E. B. Stockdale, Esquire.
In order to differentiate between the boards of directors of the two companies, the board of the Federal Fire Insurance Company is composed of the following:
W. R. Begg, Esquire; Colonel the Hon. Herbert A. Bruce, M.D.; H. C. Edgar. Esquire; Colonel K. R. Marshall, C.M.G., D.S.O.; Leigh McCarthy, Esquire; F. K. Morrow, Esquire; Frank Shannon, Esquire; E. B. Stockdale, Esquire.
I just want to point out that the directors of the one company are in no way connected with the directors of the other, i think that answers the question.


Frederick George Sanderson: I would remind the committee that sections 1, 2, 3, 4 and 5 have been agreed to and that we are now on section 6.


Abraham Albert Heaps: As I understood it, Mr. Chairman, this bill was held over in order that the committee might be given some explanation why certain incorporators were seeking incorporation for two separate and distinct companies to do the same business across Canada. I do not think the hon. member has given what I would call an altogether satisfactory explanation of the points raised last week.


Frederick George Sanderson: I do not want to interrupt the hon. member, but I repeat that sections 1, 2, 3, 4 and 5 have been agreed to.


Abraham Albert Heaps: If the discussion is to be restricted at this time, it will take place later on. This bill was held over for a specific reason, which we are now discussing. If we cannot get the explanation now, there was no reason for holding it over.


Frederick George Sanderson: I am in the judgment of the committee, but five sections of the bill were carried the last time it was before the committee.


Abraham Albert Heaps: I think we have a right to discuss the point I am raising.


Frederick George Sanderson: I have no desire to restrict the discussion; I am simply pointing out that five sections have been carried.


Abraham Albert Heaps: Section 6 deals with the
classes of insurance authorized. I am discussing that and pointing out that section 6 of this bill is exactly the same as section 6 of the bill we passed last week.


Frederick George Sanderson: Section 6 has not been carried.


Abraham Albert Heaps: We are discussing it. As I say, section 6 of this bill is exactly the same as section 6 of the bill passed last week for the Federal Fire Insurance Company of Canada. The question was raised last week why there should be two measures exactly the same, asking for two separate and distinct charters from this federal parliament.


William Rae Tomlinson: That is not correct; the directors are different.


Abraham Albert Heaps: I said the incorporators were identical in both companies. There may be different directors, but the objection raised last week was against two companies being incorporated by the same set of incorporators to do the same business under separate and distinct charters. In giving his explanation this evening the hon. member has stated that it is the desire of the people who are seeking this incorporation to centralize authority under federal control, instead of having it under provincial control. Why propose centralized control for two companies having the same set of incorporators?


William Rae Tomlinson: The same people are not seeking incorporation.


Abraham Albert Heaps: The names appear to be the same.


William Rae Tomlinson: Oh no.


Abraham Albert Heaps: I will read them. The names given in connection with the Federal Fire Insurance Company of Canada are Herbert Begg, William Robert Begg. William Henry Buscombe, John Gordon Hutchinson and George Alexander Gordon, all of the city of Toronto. Then for the Wellington Fire Insurance Company we have Herbert Begg, William Robert Begg, William Henry Buscombe, John Gordon Hutchinson and George Alexander Gordon. The names are identical.


William Rae Tomlinson: I gave the board of directors for each of these companies and except for the odd one the names are different.


Richard Bedford Bennett: The hon. member is re-* ferring to the applicants.

Wellington Fire Insurance


Mr. STEVENS:: Surely the hon. member does not ask the committee to accept the statement he has made. The names he has read belong to some of the most distinguished citizens in Canada, but they are not the directors of these companies as the companies are not yet in existence. If this bill passes, then the directors of these companies will be the directors mentioned in the bills, as far as parliament is concerned.


Mr. MACKENZIE (Vancouver):: They are the provisional directors.


Henry Herbert Stevens: There is a provincial company, with which we have nothing to do. After this company is incorporated, it will take over the provincial company. As far as this parliament is concerned the directors are those referred to by the hon. member for Winnipeg North (Mr. Heaps). I take no great objection to these bills as they are what are known as model bills, but the fact is they are identical. The explanation given to the committee for these identical bills asked for by the same group of incorporators is that they propose to carry on one type of insurance in British Columbia under one bill, and another type of insurance in Ontario under the other. The committee must take cognizance of the fact that under section 6 of both bills these companies have the right to carry on certain classes of insurance. In order that there may be no misunderstanding, I will read the section. It is as follows:
The Company may undertake and transact and make contracts of insurance for all or any of the following classes of insurance:
(a)	accident insurance;
(b)	automobile insurance;
(c)	aviation insurance;
(d)	bond insurance;
(e)	burglary insurance;
(f)	civil commotion insurance;
(g)	credit insurance;
(h)	earthquake insurance;
(i)	explosion insurance;
(j)	fire insurance;
(k)	falling aircraft insurance;
(l)	forgery insurance;
(m)	guarantee insurance;
(n)	hail insurance;
(o)	inland transportation insurance;
(p)	machinery insurance;
(q)	persona! property insurance;
(r)	plate glass insurance;
(s)	sickness insurance;
(t)	sprinkler leakage insurance;
(u)	steam boiler insurance;
(v)	tornado insurance.
The classes of insurance indicated are identical in both bills. Either company may, according to their desires, use one part of section 6 in one part of the country and another part of the section in another part of the country. So the explanation that has
been offered that these companies are necessary in order that a certain group of individuals may carry on one class of insurance in one part of Canada and another class in some other part of the country has no weight or justification.
The hon. member (Mr. Tomlinson) offered a further explanation, that they desired to come under the supervision of the federal insurance department. That, I think, is desirable, because I have a very high regard for the insurance laws of the dominion as distinguished from those of various provinces, and it is my view that corporations doing insurance business should operate as far as possible uniformly throughout Canada. But parliament should subject to careful and close scrutiny the granting of charters incorporating groups of individuals and enabling them to carry on an insurance business wherever they choose, even though, as in the case of both of these bills, that business is restricted. After all, the insurance business is to-day a semipublic enterprise. That fact is recognized in the very great care that parliament has taken to establish statutory control over it. Not a bill can pass this house that is not in strict accord with the general act. I admit that the two measures now under consideration fulfil that condition, and I take no objection to them on that ground; my point is that we should be very careful not to incorporate insurance companies without due care, close study and full consideration.
I gather that the official incorporators, who will be the first boards of directors of these companies, are identical. It is for that reason that some of us have taken objection to the passing of these two bills. It may be and I gather it is argued, although the matter is not very clear, that these are two companies provincially organized and that they now wish to come under federal control; but it is rather strange that they should come before parliament through the agency or personality of identically the same incorporators and. ask for twTo bills, when one bill providing these very wide powers would amply cover the requirements of both these provincial companies. My own view is that parliament should not multiply insurance companies in this way.
May I remind the committee of what occurred many years ago-a condition into which, under the present general insurance laws of this country, we are in danger of drifting again to-day? Prior to 1919 the accepted practice was, whenever a group of citizens came before parliament asking for the incorporation of a railway company, to grant the charter as a matter of form; to employ a term then used very widely, there was free
Wellington Fire Insurance

trade in railway charters. The view held at that time was that it was desirable to have as much competition in railway construction as possible. Well, we certainly know now the mistake that parliament made in adopting that principle. We found out to our sorrow, and at a cost to the federal treasury of fifty or sixty million dollars a year for many years, that that policy was in part, perhaps in very large part, responsible for the railway mess into which this country has drifted. I submit that there is a danger, and I would add, knowing parliament as I do, a very real danger, that if we accept these bills with very little scrutiny upon the assumption that they comply with the general law, we shall have such a multiplicity of companies doing business in Canada that this great semi-public business will drift into a condition similar to what the railway situation has been in for the last fifteen or seventeen years.
For these reasons I am strongly opposed to the passing of the second of these bills. The first bill will give these companies all the powers they require to do business in any section of Canada. As a matter of fact there is no weight to the argument that one company will transact a certain kind of business in British Columbia and some other line in Ontario, because, as has been stated, clause 6 gives ample power with respect to any class of insurance, and they can use their powers as they wish; that is, the one company can do plate glass and automobile business in Ontario, and some other class of business on the prairies, and still another class elsewhere, if they so wish. We shall establish an unwise precedent if we pass rather carelessly these bills which have been more or less rushed through the house this session.


Thomas Langton Church: I would not have spoken in this debate had my name not been mentioned by the hon. member for Bruce (Mr. Tomlinson). He is not the sponsor of this bill; the sponsor is the hon. member for Brantford City (Mr. Macdonald). I do not object and have not objected to the principle of this bill. I used to go to school with the first two gentlemen mentioned; they were friends of mine; I have said that they were good people. But I object to the powers that parliament is conferring on this company, contrary to the British North America Act, which is the same company incorporated by another bill, with the same promoters, the same stockholders, and the same directors.
I wish to point out to the committee that the powers conferred on this company are very largely copied from England and from

the state of New York, where the insurance laws are altogether different from those we have in this country under the British North America Act.
I desire also to direct attention to certain clauses of the bill which in my humble opinion are ultra vires of this parliament. I think the Minister of Justice might very well give his opinion as to the constitutionality of paragraphs (c), aviation insurance; (g), credit insurance; (h), earthquake insurance; (i), explosion insurance (1), forgery insurance; (n), hail insurance; and (o), inland transportation insurance-which includes buses.
Among the classes of insurance authorized we find personal property insurance, which affects property and civil rights in the provinces. Legislation of this sort may be all right on the other side of the line; it may be all right in England; but I doubt very much whether under the British North America Act the great majority of the classes of business enumerated here are within the powers of this parliament. I do not think we have any jurisdiction to incorporate a company to deal in some of these classes of business.
I did not oppose the bill in committee, but merely asked for information. In any event, notwithstanding that certain people may be friends of mine, I have to do my duty as a member of parliament. There are other risks which are not mentioned in this bill; no mention is made of battle, murder, sudden death, famine and pestilence, or of losses sustained at poker; these might as well be given too. The Minister of Justice is not here to-night -he may have gone to the hockey match-[DOT] but if he were here I would suggest to him that we might as well include in the classes of insurance authorized, losses in gambling and on sporting events; we might as well insure against the weather and loss of gate receipts in sport and elsewhere when parliament is in session. I notice that they have also omitted insurance against defeat in elections. I do not know how they came to overlook that.
This bill has not been very carefully considered. The young gentleman who has spoken in favour of it to-night, the hon. member for Bruce (Mr. Tomlinson), is an excellent young lawyer; but the hon. member for Brantford City is the sponsor of the bill, not the member for Bruce.
Some time ago there was a conference between the provinces and the dominion government with regard to the powers of parliament touching insurance.
As I say, I doubt whether the powers I have enumerated can be properly granted within the jurisdiction of this parliament.

Wellington Fire Insurance
There is no control over the rates of these companies, and they are going to solicit insurance among the industrial workers of Canada. What safeguards are we going to provide? Is this house going to become an insurance factory with all these new powers? It seems to me that is all it is. I object to this bill; I do not care whether those interested are friends of mine. The industrial worker may get the worst of it, and therefore I protest against any such legislation passing this committee without some satisfactory explanation from the Minister of Justice and an assurance that the bill is within the jurisdiction of parliament.


Abraham Albert Heaps: I have no objection in
principle to a measure of this kind. As a rule I have never objected to the passing of insurance bills once they have been before the standing committee, but what I do object to here is that we are duplicating the powers we are conferring upon two separate companies, though they are identical in character. In the absence of any statement that will satisfy the committee, I do not think it is good policy for parliament to duplicate powers granted to two separate companies doing the very same work. Let me quote what the Minister of Finance said when these bills were last before the committee:
The sponsor of the bill evidently cannot give the definite reasons why the incorporators are the same in both these bills.
The hon. member for Bruce, speaking for the sponsor, has not been able to tell us tonight why the incorporators are the same in both bills.


William Rae Tomlinson: Perhaps the hon. gentleman will allow me to answer. These companies, it is true, have the same incorporators, but that is only for convenience; and the bills are brought in at the same time for the same reason. The directors and the shareholders are different.


Charles Avery Dunning: I understood the hon. member for Winnipeg North (Mr. Heaps) to say something about the Minister of Finance having asked for some explanation. The explanation I asked for has been given, and to me, at any rate, it is perfectly satisfactory. It was explained that the shareholders of the two companies do differ, and that the boards of directors are not identical. As a matter of fact, if these two companies had desired to secure for the bills an easy passage through this house, they could easily have named different incorporators. I have no doubt that does happen occasionally in connection with such bills. We find that one of
these companies is one of the oldest in Canada -a hundred years old-and that it has been operating under provincial charter. That is the one we are now considering.


Richard Bedford Bennett: Pre-confederation.


Charles Avery Dunning: Yes. This one before us is a pre-confederation company. It may be that some of the shareholders of the two companies are identical, but that is the case with a great many companies throughout the dominion; and if we are to bar federal incorporation to a company because a number of its shareholders are also shareholders in other companies, we are establishing a new precedent for this parliament. In any event these are only provisional directors, and I cannot see where the public good is at all prejudiced by giving federal incorporation to this company. In any case the company will still carry on business. No public interest is being injured. In fact, there is improvement to this extent, that one more of our old companies in Canada has chosen to come under federal jurisdiction, and that is a distinct advantage from many points of view.


Richard Bedford Bennett: There is only one matter that has been overlooked. These are two companies now carrying on business, and when this legislation is passed they will still be two companies in business. The two companies have separate policy holders scattered all over the country, and they are merely seeking a local habitation and a name under a federal statute to take the place of the provincial and pre-provincial charters which they have and under which they are now issuing policies. I thought there was something in the point raised the other evening by the hon. member for Broadview (Mr. Church), but there is nothing in it. It will still be the same companies, doing business in the same way, only attorning to federal instead of provincial jurisdiction.


Charles Avery Dunning: And we could not force them to amalgamate.


Abraham Albert Heaps: The explanation that has now been given removes the objection that was raised last week. That objection, however, was justified, because no reasons had been given for having the same incorporators in both cases. We must make sure that when people come to parliament for charters they will not be granted indiscriminately as in years gone by. Last Tuesday night when the bill was before the committee the sponsor was not in a position to give the information which we have had to-night, and we felt that at least there should be some explanation.
Industrial Loan and Finance

The explanation has been given that it is done as a matter of convenience, that the two companies are completely different although both carrying on the same business, and as far as the two charters being identical in character is concerned, it is just a coincidence. We have to accept the explanation, and as far as I am concerned I have no objection to allowing the bill to pass the house.


[Stage Direction]
Section agreed to.
Sections 7 to 10 inclusive agreed to.
Preamble agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
The house resumed from Tuesday, March 23, consideration in committee of Bill No. 57, respecting Industrial Loan and Finance Corporation-Mr. Vien-Mr. Sanderson in the chair.
On section 1-Loans of S500 or less.
Mr. POULIOT:: I shall probably not scandalize you, Mr. Chairman, by telling you that in principle I am against all private legislation; for this simple reason, that the law is supposed to apply to all, and private legislation is an exception for the privileged few. In England it is entirely different, because there they have no provincial legislatures. In this country we have separate domains, and the federal power has exclusive jurisdiction on certain matters and the provinces are supposed to have exclusive jurisdiction in other fields. This cannot be denied although sometimes in a jocular vein men of experience express themselves otherwise.
Private legislation is always dangerous. It is dangerous, as one of our lady friends said the other day, on account of lobbying. I am surprised that the corridors of the House of Commons are still in good condition, in view of the amount of lobbying that is done here for private legislation. Someone may answer that the lobbyist pays so much for a licence or card which empowers him to go around to the rooms of hon. members and canvass them on any kind of private legislation. Unquestionably this is their right. But an argument advanced to me once by one of those gentlemen was, "Why don't you support the bill? You know it is my way of living." That was said to me by a barrister of the city of Ottawa years ago. He may earn his livelihood that way very properly, but have I to vote for or against any private bill because Mr. So and So who has a card as a lobbyist earns his fees in that way? I find it absurd. It does not make the bill good or bad. A bill is good or bad in itself, not because it serves the

interest of a lawyer who is a lobbyist and goes around to- the rooms of hon. members; that is not sufficient reason for me to vote as he wishes me to do. We must consider the bill in itself.
Is the present bill good or bad? I put aside all considerations of friendship. One of our colleagues who is the sponsor of this bill in the house is a very close friend of mine, the hon. member for Outremont (Mr. Yien); but is that sufficient reason for me to disregard what the bill is in itself? My answer is no. I must act on my own judgment whether the bill is good or bad. Whether it suits my best friends or my worst enemies is no consideration. These preliminaries being settled, let us look at the bill.
This bill is relatively short. I started to read it the other day. But it is only one side of the picture, and not even that; it is only one angle of one side. The whole picture is found in chapter 68 of the statutes of 1930. This is the whole product, plus this appendix which is to be added by the bill now under discussion. There is one clause in the act of 1930 to which I strongly object. It is the one referred to by the hon. member for Kootenay East (Mr. Stevens) the other day:
.	.	. notwithstanding anything contained in
the Interest Act or in the Money Lenders Act or in paragraph (c) of section 63 of the Loan Companies Act-
Each one of those three enactments is a law of general application, supposed to apply not only to all companies but also to all money lenders. When they lend money, which is a commodity and has a certain value, and therefore brings a certain return in the form of interest, that return must not be exorbitant. It shall be fair to both parties, to the one who lends the money and to the one who borrows it. The spirit of the law in all these enactments is that the one who lends the money shall have a fair return in the form of interest, and that the borrower 6hall pay a fair amount for the use of the money he has received from the lender. Fairness on both sides. This is applicable to all, to moral persons, I mean companies in the legal sense, because very often companies are moral persons which are highly immoral. It applies to moral persons and it applies to private individuals. Everybody knows that, and if I repeat it, it is not to tell this committee something new; it is to prevent them from forgetting these simple fundamentals.
There is the law of the land. In 1930 the company which is now asking for a new charter came before this parliament and asked for an exception. An exception to what? An exception to the provisions of those three

Industrial Loan and Finance
enactments of general application throughout the land-the Money Lenders Act, the Interest Act and the Loan Companies Act. Now they come like the burghers of Calais, with ropes around their necks and in sackcloth, telling us they are acting in the public interest by virtue of a federal charter. They forget to tell us that if these exceptions in their favour had not been made by this parliament the directors of these companies would be liable to fine and imprisonment, as others not so favoured have been treated. The directors of these companies escape imprisonment and fine, thanks to the legislation of exception that was passed by this parliament. No member of this chamber can be blamed for that legislation, because as was said not long ago very often legislation goes through this house with the speed of moving pictures, and it is pretty hard for members to scrutinize it. But, sir, I take this opportunity to scrutinize this bill because hon. members are interested in this legislation now, and I congratulate them upon that interest. They have not been impressed by those who earn their living by passing poems and silly jokes around the rooms of this building and make a perfect nuisance of themselves. These people have cards; they have a right to do what they do, but they are like phantoms of the opera, and members are tired of being bothered by these lobbyists for we can form our own opinions without their help. If it pays these lobbyists to do so let them argue cases in the police court or any other court, but I wish they would give hon. members a chance to think for themselves without the benefit of their ready-made views with regard to matters of this kind.
I hope the committee will not mind if I have expressed my humble views in the clearest possible way. My idea is that the law should be respected throughout the land, but in order that such an end may be attained the law must be the same for all, for the rich as well as for the poor, and there should be no exceptions for the privileged few. This is an exception, and a very bad one. This bill is supposed to reduce the interest chargeable, to a rate twice that allowed under the Usury Act. Let me repeat that. This bill seeks to establish a reduction of the abnormally high rate of interest which this company may charge so that the interest may be only more than twice the maximum allowed under the Usury Act. Any member who votes for this bill will be asked by those in his constituency who have been exploited by such companies "Why did you let that legislation pass when it came up in the House of Commons in March of 1937?".-and perhaps in April as well, if the bill is discussed another day.
Hon. members must remember one thing, and that is that this legislation will permit the company to charge nearly thirty per cent interest on a loan. What does that mean? If a civil servant here in Ottawa or anywhere else, receiving a salary of $1,000 a year, goes to one of these companies for an advance on his salary, from that time on he will not receive 81,000; he will receive only $700. If his salary is $2,000 he will receive only 81,400, and if his salary is 83,000 he will receive only $2,100. In other words the loan company will obtain nearly a third of his salary. Easy money! Why do not the members of parliament organize a company like that and become its directors? We would be millionaires in a short time. But we will never do that, because we are not Shylocks. We have read Shakespeare; we know the story of Shylock and his pound of flesh. This company does not ask for a pound of flesh; it exacts a hundredweight of flesh from each of its borrowers, and for that reason I am strongly opposed to this measure.
I am against privilege; I believe in the same rules for all. I will tell the sponsor of this bill that I am ready to support it if he will accept an amendment repealing paragraph ^b) of section 5 of the original act, which appears at page 48 of the private legislation section of the statutes of 1930.


Henry Herbert Stevens: What statute?


Jean-François Pouliot: Paragraph (b) of section 5 of chapter 68 of the statutes of 1930, the first lines of which read:
[DOT] [DOT] [DOT] notwithstanding anything contained in the Interest Act or in the Money Lenders Act, or in paragraph (c) of section sixty-three of the Loan Companies Act.
If that is done I am ready to withdraw my objection to this bill until next year, when the Minister of Finance will bring in new legislation. If that suggestion is not accepted, however, we will continue to fight this measure to the limit.


Henry Herbert Stevens: Nine o'clock.


Mr. VIEN:: I move that the committee rise, report progress and ask leave to sit again.
The CHAIRMAN. Nine o'clock.
Section stands.
Progress reported.
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Supply-Debt Adjustment in Drought Area


FURTHER SUPPLEMENTARY ESTIMATES, 1936-37
[Stage Direction]
The house in committee of supply, Mr. Sanderson in the chair.
Write-down of assets-
To authorize-as the dominion's contribution to a program of adjusting the indebtedness of farmers living in the drought area of the province of Saskatchewan which program has been sponsored by the government of that province and involves appropriate adjustments in debt or tax claims on the part of the provincial government, the municipalities and certain mortgage lending institutions-the writing off and cancellation of certain treasury bills of the province held by the dominion, provided (1) that said treasury bills be transferred in the books of the Department of Finance from "active assets" to "non-active assets" as at March 31, 1937; (2) that final writing off and cancellation of said treasury bills be subject to the approval of the governor in council and in accordance with such terms and conditions as he may approve, including the nature of the evidence to be submitted as to the adjustments made by the provincial government, the municipalities and the mortgage lending institutions aforesaid; and (3) that the amount of treasury bills to be written off and cancelled shall not exceed the amount advanced by the dominion government to the provincial government by way of loan to assist in financing expenditures incurred for relief, seed grain and seeding purposes in the said drought area during the period from May 1, 1931 to January 1, 1935, plus such accrued interest thereon as has been capitalized, and shall not in any case exceed in the aggregate the sum of $17,959,606.51.
Mr.	DOUGLAS:	Would	the	Minister	ofAgriculture tell the committee on what basis the area was set to which this scheme will apply? I noticed that there was considerable confusion last summer when talking about provincial and federal drought areas, and those areas did not coincide. In fact, there were three maps circulating throughout the province, one from the federal department, which	said that a	certain	area	marked	onthe map was recognized by the federal government as the drought area in which relief would be given; then there was a provincial drought area; and there was this debt adjustment drought area, coming under the legislation	with which	we are	now	dealing.	Itwas indicated that	certain	areas	would have
the benefit of the debt adjustment, and that other areas would not. I am wondering who drew up the arrangement, on what basis it was drawn up, and why the areas do not coincide.
James Garfield Gardiner: The first two maps to which the hon. member referred had nothing to do with debt adjustment, but rather with tie movement of live stock from one area to another. Of course, naturally that area was
[The Chairman.]
larger than the one to which assistance was given by way of feeding. The object was to get tlie live stock out, of the marginal areas into other parts, and thus avoid having to ship in feed. The principle followed in dealing with the matter was one of crop failures, and the amount of grain produced per acre in an area over a term of years.
The federal Department of Agriculture was asked to draft a map which would set out prevailing conditions. In the first instance, we took as the basis an area in which there had been a crop production of not more than six bushels to the acre over a term of three years. When that map was completed I found that it took in about 158 or 160 municipalities. Further information was gathered with regard to the area, and we found that in the total area over a period of six years the average yield per acre had been only five and a fraction bushels. That area was accepted as the drought area in so far as this debt adjustment was concerned. It is composed of 158 municipalities-


Richard Bedford Bennett: I thought someone said there were 156.


James Garfield Gardiner: That may be correct. It is composed of the 156 municipalities that come under the full debt adjustment, on the blanket basis. Eighteen of them were admitted under the other scheme.


Thomas Clement (Tommy) Douglas: Eighteen on the margin, in addition to that?


James Garfield Gardiner: Yes. Eighteen, in addition to the 156, were admitted into the scheme under which arrangements are made by municipalities, rather than blanketing all the municipalities under a similar arrangement. That is the basis on which the map was drafted. It was submitted to the creditors and accepted by them as an area which should be given this consideration, and was also accepted by the provincial government.


Thomas Clement (Tommy) Douglas: 
Richard Bedford Bennett: At a reduced rate of
interest.


Thomas Clement (Tommy) Douglas: Yes, at a lower rate of
interest. There is no need to read all the agreement. It was reduced to six per cent. But I draw attention first to two clauses that
tightened the grip of the mortgage and loan companies in the province on this particular area in a way which could never have been done under any other circumstances. The first clause is this:
For better securing the punctual payment of the moneys payable under these presents and said mortgage, and pursuant to the Land Titles Act, the farmer does hereby agree to become and does become tenant to the mortgagee of the said land, and the mortgagee does hereby lease the said land to the farmer for a term of three years from the 1st day of January, 1937, at a yearly rental of one-third of the whole crop of grain of the different kinds and qualities grown on the said land in each year, to become due and payable at the time of cutting of any of the said crop. The mortgagee may at any time after default under these presents determine the said tenancy without any notice to quit.
I refer to another paragraph:
From and after the expiration of the tenancy herein provided the mortgagee leases to the farmer and the farmer becomes tenant to the mortgagee at a yearly rental equivalent to the annual interest secured by these presents, the same to be paid on each day appointed by these presents for the payment of interest, and if any attachment, execution or judgment shall be issued against any of the goods or lands of the farmer, then such rentals shall if not already paid be payable immediately thereafter. The mortgagee may at any time hereafter upon default under these presents determine the tenancy in this paragraph provided without any notice to quit.
Those are paragraphs contained in the standard renewal agreement which the farmers in the area mentioned by the minister must sign in order to get the benefit of this debt cancellation. In order to get rid of debts owing to the provincial, municipal and federal authorities, the farmer in many cases has become a serf to the mortgagee. By the passing of this legislation and the signing of these standard renewal agreements agriculture has disappeared, and peasantry has taken its place in the province of Saskatchewan. The minister states that the reason Alberta was not included in this scheme was because that province had put some other system of adjustment into effect. If agreements like this are the price that the farmers are called upon to pay in order to get rid of relief debts, then I think the province of Alberta is to be commended for resisting such pressure.


Mr. LANDERYOU:: By how much was the capital of these debts reduced?


Thomas Clement (Tommy) Douglas: There was no reduction of the capital by legislation. In some cases the farmers obtained a reduction under the Farmers' Creditors Arrangement Act and under the provincial debt adjustment legislation.
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Supply-Debt Adjustment in Drought Area


James Garfield Gardiner: There has been no reduction by legislation.


Thomas Clement (Tommy) Douglas: I mean that the agreement did not call for any reduction of principal; it only called for the cancellation of the creditor interest prior to 1935, and the reduction of interest in the new agreement. The minister will correct me if I am wrong, but I have been told that the signing of these standard renewal agreements prevents the farmers from taking advantage of the Farmers' Creditors Arrangement Act.


James Garfield Gardiner: Not necessarily.


Thomas Clement (Tommy) Douglas: I am very glad to hear that. These mortgage and loan companies came out of this deal, not only with a tighter grip upon the farm debtor, but with an enhanced security in that the land which was held as security has had removed from it a burden of debt in the form of relief notes, et cetera, which had been signed during the past five or six years. I direct the attention of the committee to the fact that of the four creditors who went into this meeting to which the minister referred, the only one who came out with more than what he had when he went in was the mortgage and loan company. The other three creditors stand to lose. The mortgage and loan company came out of the whole affair with a much better bargain, while the government bodies and the farmer debtor came out with a much worse bargain.


James Garfield Gardiner: Mr. Chairman, there are one or two points raised by the hon. member for Weyburn (Mr. Douglas) with which I cannot exactly agree. His first statement was that these farmers were bankrupt and had nothing to lose or gain by any agreement that might be made. I would rather put it in this way: These farmers went into this area in comparatively recent years, that is, since 1908, which is not a very long period in the lifetime of a district. Ninety per cent of them, or perhaps a larger percentage, went into the area without having anything at all. They paid a S10 fee to file on their homesteads and began developing the district. The present drought period, which began in 1931, struck this district a comparatively few years after these people had started to build their schools and their roads and to put in the telephone and other conveniences. While it is true that during part of this period they had fairly good crops at fairly good prices, it stands to reason that no matter how good the crops were or what prices may have been received, it was absolutely impossible for these people to convert the indebtedness which was

ahead of them when they entered the district into an asset against which there was no debt.
In my opinion it is wrong to say that there is more debt on this district to-day than there was in 1908. When those people went in there in 1908, they had nothing at all. There had been no development of the land, the plough had never been put into it. These people have developed the district largely on borrowed money, in the hope that it would be able to pay its way. Right in the middle of their activities they were struck by this drought. Not being able to get crops, and still being faced with a considerable part of the obligations they had undertaken to pay -they were in no position to pay cash for anything-they found that year by year the interest piled up. After six years the result has been that on a mortgage of 81,000 placed previous to 1930, and still in effect when this arrangement was entered into, there has been an increase to $1,700 odd at eight per cent. In other words, when a man assumed a debt of $1,000 which he expected to pay, he found himself at the end of six years, and in some cases seven years, faced with an indebtedness of $1,700 odd. For the last $700 odd he received nothing. He did not buy anything with it; all he got for it was the accommodation. In spite of everything which that man could do there has been an increase of $700 in his debt. The creditors and the government decided that it was not fair to put that man in the position of having to meet the whole obligation when he came into a period of good crops. The loan companies agreed to wipe out everything down to January 1, 1935, and from that date on the interest was reduced to six per cent and is consolidated in the original debt and spread over ten years.


Richard Bedford Bennett: What would that leave the liability on that thousand dollar loan that he would then pay?


James Garfield Gardiner: I have forgotten the exact amount. It reduces it very considerably. Of course, the last two years you naturally pay the higher amount.


Richard Bedford Bennett: Eight per cent computed on the $1,700 would, of course, increase it to a large sum of money as it was compounded, but I gathered from what the minister said that it was six per cent commencing January 1, 1935.


James Garfield Gardiner: Yes.


Richard Bedford Bennett: And that the $700 that was mentioned disappears?


James Garfield Gardiner: Yes.

Supply-Debt Adjustment in Drought Area


Richard Bedford Bennett: Leaving only the principal SI,000?


James Garfield Gardiner: Yes.


Richard Bedford Bennett: I thought that ought to be made clear.


James Garfield Gardiner: The last two years interest is left, and the six per cent is consolidated with the original debt.
Then in connection with the municipalities, there are arrears of taxes on practically all of ' this land. Anyone who has lived in the west knows that municipal taxes are raised almost wholly for the purpose of building roads; there is very little service outside of that. The telephone and school taxes are separate from the municipal tax. If the money was not collected it was not spent. Down in that country the municipalities have not been able to borrow money during the last five or six years, with the result that no road work has been done, so no injury is inflicted upon the municipality as such by a cancellation of arrears of taxes that were never spent.
It is assumed that to leave the last two years' taxes in effect will pretty well take care of requirements. It is proper that in so far as there are debenture issues to be met, arrears of taxes should be collected in order to cover the amount necessary to pay the carrying charges on those debentures. But as regards making provision in connection with road building which has never been done, there is no hardship upon the municipality in cancelling those arrears of taxes. It will place the individual farmer in a very different position after being confronted one day with four or five years' arrears, in addition to the two years' taxes that will remain, to find next day that the four or five years' arrears of taxes have been wiped off. He at least feels better when he looks at his next tax account; at the same time the municipality is not losing very much by this concession.
In connection with the school taxes, reductions have also been made. These have been reviewed very carefully by the local government board of the province, and care has been taken that no injury shall be done in so far as the handling of the schools is concerned. In addition to that, the provincial government have made some appropriations this session for additional assistance to school districts in that particular locality.
So far as the provincial government is concerned, they of course had given guarantees in connection with certain amounts of relief and certain amounts for seed in the earlier years of the depression, to a total of about five million dollars. The provincial government is assuming that obligation.
So far as this agreement is concerned and the clauses that have to do with the lease, the lease clause, as it is called, is a very common thing all through western Canada and, I think, in other parts of the country as well. A person who has not made his payments in connection with the purchase price of a piece of land is assumed immediately upon his default to be a renter rather than to be in his former position of owner, and he is more or less under the direction of the individual who sold him the land. That same thing is more or less true in connection with certain clauses in land mortgages in western Canada. In regard to this new agreement, it was explained to the house this afternoon that prolusion is made whereby a man does not become in default if he delivers to the creditor one-third of his crop during the first three years of this agreement.


Richard Bedford Bennett: If he has no crop there is no-


James Garfield Gardiner: If he has no crop he does not pay anything.


Charles Avery Dunning: And is not in default.


James Garfield Gardiner: And is not in default. By a special clause in this agreement it is provided that during this first three years all he needs to pay is one-third of the crop, and no matter how light the crop is, he cannot be compelled to pay anything more. In other words, he does not become in default unless he refuses to turn over one-third of his crop to the creditor. At the end of that three years, provided he does not meet the terms of the agreement, the position that he occupied as a renter can be declared to be at an end. That does not mean that possession is thereby taken of the land. It simply means that under common law the individual is put back in the position of owner of the land against whom action can be taken in court. In other words, all the action that would have been necessary had this agreement never been entered into at all in order to dispossess the individual, has to be taken, even after that declaration is made. Many people in Saskatchewan seem to have been convinced that the common law did not apply, and in order to make it absolutely certain in the minds of everyone-although from the legal point of view it was not necessary to do it-that that was the condition, legislation was put through the Saskatchewan legislature this session that made it part of the statute law that that was the condition that existed. So that it is hardly correct to say that if at the end of the three-year period

2322	COMMONS
Supply-Debt Adjustment in Drought Area
a man has failed to make the payments that are required under the agreement he is immediately dispossessed of his land and becomes a serf, and is in the position of the peasantry of some European countries in relation to mortgage companies; he is simply back in the position where he would have been had this kind of thing never been done.


Thomas Clement (Tommy) Douglas: He can be dispossessed, though, at the end of that time.


James Garfield Gardiner: He cannot be dispossessed in the manner indicated by some of the opponents of this measure, namely, by being given notice without any time expiring at all. He simply reverts to the position of an owner of land against whom there is a mortgage registered. The mortgagee can proceed in the courts to foreclose the mortgage, but he must go through all the process of foreclosure before he can obtain possession of the land. I do not know how anything could be very much fairer than that. I do not think there is very much reason for criticism.
Just to indicate the manner in which this kind of thing spreads, I might say that while I was home to dinner I happened to pick up the last issue of the Regina Leader which has come to my house, and I found on the third page a reference to an enlargement of this plan, in the following terms.
Banks have agreed to a blanket form of adjustment of municipal debts in 131 rural municipalities of the 156 municipalities in the "red" area, Hon. J. W. Estey, K.C., minister in charge of the drouth area debt adjustment bill, said Thursday.
In 25 municipalities in the drouth area, classified as being in worse financial condition than the other 131, the banks have agreed to adjustment on an individual basis.
It is presumed that the adjustments offered to these municipalities will be on a broader scale than the adjustment offered the 131 municipalities.
Basis of the blanket adjustment provides for spreading the amount owing by the municipalities to the banks over 10 years, with interest for the first year at one per cent, for the next two years at two per cent, the next two years at three per cent and for the remaining five years at four per cent.
That is, the banks themselves, through negotiations with the provincial government and the municipalities, have followed up what has been done by other creditors. They have gone to the municipalities direct and made arrangements whereby the indebtedness of a municipality to a bank is spread over ten years, at these much lower rates of interest that I have indicated. All we claim for this kind of thing is that it is very much better for

a group of creditors to sit down and arrive, by some voluntary method of cooperation, at conclusions which are going to be of assistance to everyone.
It has never been claimed that the individual farmer got all the benefits, but I do venture to say that while the security of the creditor has been improved, the credit of the farmer when he gets a crop-if he gets one this year or next year-has been very much improved by the action that was taken by the municipality, the province, the dominion government and the creditors. His equity, too, has been enlarged by very considerable amounts.
I read this evening a special dispatch to the press from the municipality of Weybum indicating that ninety per cent of the farmers of that area affected by this arrangement have signed the agreement in spite of the discussion that has taken place in the province in regard to the sections that have been read in the house to-night. I am sorry that I did not bring the article along because it shows that very considerable amounts have been cut off the indebtedness of individuals in that municipality, and I am sure that is true of many other municipalities in the province. We do not claim anything extraordinary for this, but the dominion government has been trying to cooperate with others in that area in removing a sufficient amount of their obligation to give them at least some hope of being able to meet the situation in the future.
The federal government-not merely the present government but the government back over the years-and the provincial governments have been doing a great deal for that group of persons who are in such great difficulty that they are constantly faced with the threat of foreclosure and all that kind of thing, and it is perhaps proper that we should. But we have not previously found a way of dealing with the man who never appears before a tribunal but goes on shouldering his obligations, carrying on to the best of his ability, trying to meet all his obligations even if it takes him a lifetime to do so. Under this arrangement we say to him: We are not going to ask you to go before any tribunal, we are not going to ask you to go into court and plead your case; we will not even suggest that you ask for something. But the loan companies and all governing bodies will come and offer you the privilege of a new agreement whereby much of your indebtedness will be wiped off. A group of individuals are being served by this action who would not be served under any of the pieces of legislation that have been placed on the statute books either by the federal parliament or by the provinces.

Supply-Finance-Textile Commission


Thomas Clement (Tommy) Douglas: The minister's statement that ninety per cent of the people in Weyburn municipality are signing the agreement, I presume, is correct; indeed, I fancy the percentage will be higher. People have written to me and I have given them the same advice that other members have given, namely, that under the circumstances the farmer has no choice but to sign. In order to have his accrued interest wiped out he must sign the agreement or avail himself of one of the other debt adjustment facilities. Under the circumstances I am not surprised that ninety per cent of the people have signed the agreement. But what I do point out is that when they have signed it, when the period of three years or six years has passed, the chances are that they will be in exactly the same plight they are in to-day, or worse, simply because this whole scheme has played, I believe, very nicely into the hands of those who have ridden on the backs of the farmers of Saskatchewan for a good many years.


René-Antoine Pelletier: I believe that, as the
leader of the opposition said this afternoon, we are establishing a very dangerous precedent, and I would ask the Minister of Finance whether this can be regarded as a precedent. The government will be called upon to supply money again this year to enable the farmers to put in a crop, and right away there will be new indebtedness. These debts having been cancelled in the past, is it not logical to conclude that the same thing will happen in the future? If the Minister of Finance would make a statement, it might clear the situation. If it is the intention of the federal government to cancel all these debts in western Canada whenever the occasion arises, it will be entirely in line with the easy credit policy which the Minister of Finance is always advocating, and if he will make a statement to that effect it will clear the situation.


Charles Avery Dunning: I have been asked to do a great many things but never before has it been suggested that I should enter the realm of prophecy, particularly with respect to a problem like this. I can assure my hon. friend, however, that it is the intention of the federal government and of the three provincial governments of Manitoba, Saskatchewan and Alberta, to see to it that the people in that area have an opportunity to sow another crop in 1937. That is the intention. These negotiations are under way, and the Prime Minister intimated a few days ago that among the pieces of legislation which had yet to be brought down was legislation covering that provision. I think there will be general 31111-1471
agreement that having regard to the present situation we should again give that opportunity.
My hon. friend asks me to say what will happen if drought again strikes that area. I cannot say. I can only say to the people in that area that the people of Canada have stood by them up to now, and I have reason to believe that the people of Canada will be willing to stand by the people of any part of the country who are affected by a disaster of national proportions. I do not think I can make a plainer statement. I do not think there has been a more difficult problem to wrestle with than this, and it has been faced both by the previous government and by this. Our best thought is being given, and will continue to be given to the problem so long as it exists. In the meantime I am sure it is the earnest prayer of every good Canadian who has t' e interests of his country at heart that this awful scourge of drought may cease in the year 1937.


Ernest Edward Perley: I am pleased to hear the minister's statement that a bill will be introduced providing for seed for the seeding of the 1937 crop, and I think I can assure him that he will not meet with the opposition from this side of the house which the former government had to face on one occasion when it had to resort to closure in order to provide seed before the first of April.


[Stage Direction]
Item agreed to.	>
Expenses of the royal commission on the textile industry (governor general's warrant of November 26, 1936), $45,000.	,
Richard Bedford Bennett: This item is a wholly improper use of the power under the statute for a governor general's warrant, because the commission was actually appointed last year. This gives an opportunity to ask some questions, as to what sum has been expended on this-commission; whether or not the $45,000 completes the expenditures; what was the estimate of what was required at the time this money was advanced in November 1936, and as to why the commission should have lasted over 100 days and no report be made after two sessions of parliament have been held.


Charles Avery Dunning: The particulars of the expenditure with respect to the textile commission are as follows: There was a governor general's warrant on February 1, 1936, of $20,000- >


Richard Bedford Bennett: That is before the house* met last session?


Charles Avery Dunning: Yes. Then in the supplementary estimates for 1936-37, vote 510, there was $100,000, and then the warrant now
Supply-Labour-Annuities

submitted of $45,000, making a total of $165,000. The expenses up to March 23, 1937, total $143,618, plus $16,300 expended in the previous fiscal year.
, Mr. HEAPS: Has there been any money collected from anyone as a result of the investigations made by this commission?


Charles Avery Dunning: In the absence of the Minister of National Revenue I cannot give any statement as to the amounts collected. I know that pursuant to certain matters which developed during the inquiry the Department of National Revenue is expecting to make, and is in the process of making, considerable further collections.


Richard Bedford Bennett: I heard the contrary the other day. A gentleman told me that on readjustment of accounts they found they were entitled to a refund.


Charles Avery Dunning: I think that gentleman will be disappointed.


Richard Bedford Bennett: He was not connected with the industry.


Charles Avery Dunning: I believe this will be one of the few royal commissions which will pay dividends to the government.


Richard Bedford Bennett: The difficulty is in finding justification for the governor general's warrant. There is the statute. There was the provision in the supplementary estimates, and the duty, of course, was to wait until the house mot and vote the money. The use of the power under the statute for this purpose cannot be justified. This item of $45,000 was in November last, making a total of $165,000, and the total expenditure up to March 23 is only $159,918, including $16,000 from last year. I should like to know how the estimate of $45,000 was arrived at when the governor general's warrant was passed, because the law requires that to be done with great particularity.


Charles Avery Dunning: I am advised that the amount provided at the last session of parliament was exhausted and the inquiry was still proceeding. The chairman was asked to indicate as closely as he could what would be required to continue the work, and the governor general's warrant for $45,000 was passed upon that basis. The overlapping of time comes about in this way; I have no doubt the $45,000 warrant would have been largely expended before parliament met but for the fact that the commissioner, as I think is well known, was engaged on other work, and pending the preparation of argument of counsel on both sides there was a considerable intermission while other inquiries were being prosecuted by the commissioner.
{Mr. Dunning.]


Richard Bedford Bennett: Are further expenditures contemplated?


Charles Avery Dunning: The hearings are completed; all that remains is the preparation of the report by the commissioner. Further expenditures are not contemplated.


Mr. CAHAN:: Will the evidence be
printed?


Charles Avery Dunning: It is very, very voluminous. I cannot answer my hon. friend's question with certainty.


Charles Hazlitt Cahan: Does this estimate cover the prospective printing and publication of the evidence?


Charles Avery Dunning: No.


Abraham Albert Heaps: When does the minister expect the report to be submitted to the government?


Charles Avery Dunning: I have not accurate information in respect to that.


[Stage Direction]
Item agreed to.
To provide an additional amount for the administration of the Annuities Act (governor general's warrant of January 6, 1937), $82,800.
Mr. WARD:: Could the minister give the committee the purpose for which this amount was required?


Mr. ROGERS:: This amount obtained by governor general's warrant was required to meet expenditures entailed by commissions on the sale of annuities. As hon. members are no doubt aware, the sale of annuities increased during the past year to a degree that was not anticipated. This was due in part, I believe, to the inquiry into annuities which took place in the other house, and to the belief which appeared to be quite common that there would be an increase in the rates. At any rate, we found that if the agents were to receive their commissions it would be necessary to obtain this governor general's warrant. The actual expenditures under the warrant to date are $45,508.88, and the estimated requirement to March 31, 1937, is $15,500, making a total of $61,008.88. The warrant was for $82,800.


William John Ward: Do I understand that the annuities business is not on an actuarial basis, that it does not carry itself?


Norman McLeod Rogers: I do not think that point arises in this connection. For the sales they make the agents receive remuneration by commissions. They give their full time to this work. In other words the only remuneration they receive is from commissions on the sale of annuities. Due to the increase in the

Supply-Trade-Grain Commission
sales we found that the appropriation of $150,000 was inadequate to pay the commissions upon annuities actually sold. Therefore if the money was not obtained in this way the agents would have had to go without their remuneration for a period of two or three months.


William John Ward: Are we to understand that the premiums paid for annuities just go into the consolidated revenue fund?


Norman McLeod Rogers: That is correct.


Richard Bedford Bennett: I point out that the warrant was dated January 6, and the house met on January 14.


[Stage Direction]
Item agreed to.
Expenses of the royal grain inquiry commission (governor general's warrant of November 18, 1936), $103,000.
Richard Bedford Bennett: There are a few questions that have to be asked about this. The first is, why was it necessary to have a governor general's warrant in November when we had in fact already provided for this commission last year? That certainly would bring it within the prohibition. Second, how is the $103,000 made up? Third, how many days has the commission met? Fourth, what are the particulars of the daily expenditures?


William Daum Euler: I am not sure that I can give a definite reply to the statement regarding provision having already been made prior to the obtaining of the governor general's warrant. .


Richard Bedford Bennett: Yes, we made a recommendation last year.


William Daum Euler: But provision had not been made. I know that the committee which had been appointed, of which the right hon. gentleman was a member, and of which I had the honour of being chairman, had made a recommendation, but there had been no provision made. The governor general's warrant was issued June 27 of last year, for the sum of $103,000.


Richard Bedford Bennett: The date given here is November 18.


William Daum Euler: It was the order in council that was passed on June 27.


Richard Bedford Bennett: That was just about the time the house rose, which makes it that much worse.


William Daum Euler: As a matter of fact, the
matter was delayed for the reason that I think was given by the Minister of Finance; the same gentleman, Mr. Justice Turgeon,
was chairman of both commissions. His work was very heavy, and he was not able to begin his duties until quite late in' the year. For that reason also, of the $103,000 only $41,445.07 was expended up to March 15 of this year, leaving an unexpended balance of $61,554.93, which of course will be transferred to the receiver general. Then a new note will appear in the estimates this year for $111,000.


Richard Bedford Bennett: The statute makes special provision in that connection. It says that a special account must be maintained and that the estimate shall be based on some appreciation of the facts. If in June last an order in council was passed and the warrant was not issued until November, and of that amount only $41,000 was spent, it is pretty difficult for this to come within the provisions of the law respecting governor general's warr rants. In addition, and what is even worse still, why should we have an important commission such as this, and an important commission such as the one dealing with textiles, dealt with by only one man? Is there only one person in Canada who can adequately reflect the mind of the government in these matters?


William Daum Euler: That is rather gratuitous and uncalled for, I think.


Richard Bedford Bennett: I just asked the question, and I meant it exactly as I asked it.


William Daum Euler: The reason Mr. Justice
Turgeon was selected was that he was felt to be a specially qualified commissioner. He had done similar work before and perhaps, without casting any aspersions upon anyone else, there was no one else so well qualified' for this particular work. He began late in the year; only the sum I have indicated was-expended, and naturally the balance will go back to the receiver general. The work has-not been completed, and later an additional! amount of $111,000 will be asked for. I do* not remember precisely what other questions my right hon. friend asked.


Richard Bedford Bennett: What are the daily costs of the commission? What is the commissioner being paid?


William Daum Euler: Does my right hon. friend desire that I give the names of all those connected with the commission?


Richard Bedford Bennett: Yes, please.


William Daum Euler: Hon. W. F. A. Turgeon, commissioner, per diem living allowance, $35. Doctor Grindley, secretary, has drawn $1,261.94 in travelling expenses. He is an official of the Department of Trade and Commerce.
2326	COMMONS
Supply-Trade-Grain Commission
R. H. Foster, assistant secretary, has been paid $730.32 in salary at the rate of $200 per month and travelling expenses of $497.20. Perhaps my right hon. friend does not desire the travelling expenses.


Richard Bedford Bennett: It might as well be on record.


William Daum Euler: J. L. Ralston, counsel: per diem allowance, $20; legal fees, per day, $200; per diem living allowance paid, $1,105; legal fees, $13,274; travelling expenses, $567.05. J. E. Coyne, assistant counsel: living allowance, $10; legal fees, per day, $50; per diem living allowance paid, $100; legal fees paid, $5,125; travelling expenses, $51.05. P. H. Shelton, official reporter: 33 j cents per folio; the cost of his services, $2,916.27, and travelling expenses of $470.15. Joseph L. Donovan, replacing Mr. Shelton as official reporter from January 18, 1937; 33| cents per folio; paid, $1,488.47. W. W. Buskard, reporter: travelling expenses, $477.05. I presume he was paid at the same rate as the man he replaced.


Richard Bedford Bennett: He was perhaps an
assistant.


William Daum Euler: J. A. Thomson, clerk-stenographer, $100 a month; paid $310, travelling expenses, $527.21. A. L. Burgess, clerk: $200 **a month; paid, $400; travelling expenses, .*$351.22. Miss McLaughry, stenographer, salary tpaid, $21; Miss McHale, stenographer, paid, :$60. Miss M. Hydes, paid, $70. Miss L. Stewart, paid, $20. Miss Hackett, travelling expenses, S4C5.05. Mrs. McPhaden, typist; travelling expenses, $280.70. Then there were witnesses: L. H. Newman, paid, $99.56; Charles F. Wilson, witness, $141.25; Doctor H. S. Patton, $117.80; and miscellaneous expenses, $916.25.


Richard Bedford Bennett: How many days has the commission been sitting?


William Daum Euler: In the memorandum I have before me it is stated that the commission has already taken the evidence of forty witnesses in hearings covering thirty days, twenty-six of which were spent in Winnipeg and four in Saskatoon. I regret that this memorandum is not dated; I only had it placed in my hands this afternoon. At the present time the commission is recessing while Mr. Justice Turgeon hears the argument in the textile inquiry. I understand the commission now is in Vancouver, but this memorandum states that the textile inquiry will be concluded about March 12 and as soon as possible thereafter the grain inquiry commission will resume in Vancouver. It is intended that hearings will be held in Vancouver, Calgary, Edmonton, Regina, Winnipeg and some eastern city.


Richard Bedford Bennett: Does the commission
propose to go abroad?


Mr. QUELCH:: Why was it necessary to pay Colonel Ralston $200 a day, when no doubt there were many men who could do the work just as efficiently for a much smaller remuneration?


William Daum Euler: I presume that is a matter of opinion. I suppose we are paying a man a good salary because he is a good man. As to the question of the right hon. leader of the opposition as to whether or not the commission will go abroad, I do not think so. I understand that the commissioner was in England.


Richard Bedford Bennett: And in France.


Ernest Edward Perley: I desire to make one or two observations with regard to this commission. I may say I was never in favour of it. Ever since it was first mentioned in the committee last year I have been opposed to it; I see no reason for it. I think the expenditure so far is greatly out of line with any results that have been accomplished. The commission has sat for thirty days, during several of which evidence was given by witnesses from different branches of the service in Ottawa. Some witnesses gave evidence with respect to trade, tariffs and matters of that kind, which really was of no great value. I was very much interested to hear the minister say that the commission are now in the west, which means that they have pretty well covered Canada. I should like to know if they propose to go to the United States or take another trip abroad. I think it important that we should know the itinerary of this commission, and I think we should have some report before the next crop is harvested. It is impossible, of course, to have a report upon which we can base legislation. But this government has done things by order in council, and they might take some action in that way in order to implement a report, whatever it might be.
May I go back for a moment or two to the first mention of the commission. I believe that came about in the committee which was appointed last year to investigate matters with respect to the wheat board. I believe the last session of that committee was on May 4. At that time there was a general discussion and witnesses were heard. A day or so previous there had been some discussion with respect to referring the matter to a commission. That was in compliance with the order of reference to the committee.
A few days ago the hon. member for Wood Mountain (Mr. Donnelly) made reference to the report brought in to the house on June 11,

Supply-Trade*-Grain Commission
and said that that report had been unanimous. It recommended that the order of reference to the committee be referred to a royal commission. There was a reason for the unanimous report, because the last part of the second paragraph stated the committee found it impracticable to get conclusive evidence on the reference made to it. The Minister of Trade and Commerce was chairman of the committee. He, along with two other members of the cabinet, sat in at one sitting at which there was general discussion with respect to the evidence. It was agreed that the matter had not been satisfactorily cleared up, and in answer to a question from me one of the ministers agreed that the matter had not been satisfactorily cleared up and that the evidence was not conclusive. As a result, the committee in drawing up its report suggested a royal commission.
Now we have that commission, and I should like to know whether or not the order of reference, which was enlarged, is now wide enough to investigate one or two matters in particular. Probably the minister would assure me now that the reference is wide enough to investigate a matter which is disturbing the minds of some people in Saskatchewan, namely the question of the purchase of seed oats for the spring of 1935.
Last year I asked the Minister of Finance respecting the liability the government had with respect to the losses sustained by the provincial government of Saskatchewan in the purchase of seed oats. At page 1810 of Hansard for 1936, in reply to my question headed "Saskatchewan Grain Purchases" the minister replied, in part, as follows:
3. A contingent liability exists so long as any bank advances made under P.C. 975 of 12th April, 1935, are outstanding.
Again this year, at page 1236 of Hansard, the Minister of Finance stated in his budget speech that:
The government's guarantee of bank advances for the purchase of oats by Canadian Cooperative Wheat Producers Limited for account of the province of Saskatchewan is also still outstanding. As at February 1, 1937, the amount of bank loans outstanding subject to this guarantee was $384,760.
If that is the same liability that was referred to last year, I think this matter with respect to the responsibility of the loss that was taken on the oats deal in 1935 should be referred to the commission, and a thorough investigation be held so that the matter could be cleared up.
There is another matter which I hope the reference of the commission will be wide enough to cover. If not, I hope that the order of reference may be enlarged to cover
it. I refer to a thorough investigation of the question of the marketing of barley and of the comer that was manipulated in barley last year in the province of Saskatchewan. I believe to some extent the racket was carried on in Manitoba.
In some of the evidence taken at Winnipeg I noticed reference was made to the comer on barley, but the evidence would not indicate that the commission intended making further investigation in connection with that matter. I believe it should be considered.
There is another matter which has not yet been brought to light. I refer to what I might describe as a racket which was perpetrated last year in Saskatchewan with respect to the purchase of malting barley. Last year we were fortunate in having a high grade quality of malting barley and a larger percentage for export than we had had in previous years. In the last day or two I have received a statement from the bureau of statistics showing that in the first seven months of this crop year we exported 12.641,208 bushels of malting barley to the United States, as against 179,000 last year.
I should like to tell a little story in this connection, but before doing so I shall read a statement appearing in the Regina Leader Post under date of March 16, relating to the quality of barley harvested in Saskatchewan last fall. This is the report of a statement made by A. T. Elders, the representative of the organization which was buying malting barley. He states that 79 per cent of extract has been found in the barley shipped to the United States, as against only 71 per cent in the barley produced in that country. This statement would go to show that Canadian barley is of a high quality and wanted in the United States. I have already given the export figures.
Representatives of certain interests in Minneapolis came over to Saskatchewan and Manitoba and got in touch with crop reporters who were familiar with the different districts where good malting barley was grown. The reporters drove through the districts with the men in question, visited the farmers and purchased barley from them at the farms. Of course, the farmer had to load the barley into cars, and attach bills of lading to drafts on the Minneapolis firm. I know some of the men who escorted the representatives from Minneapolis through the districts; and I learned that those representatives bought hundreds of cars of barley in that way.
The Minneapolis firms had no direct interest in elevators, and I do not think they were associated with the Winnipeg Grain Exchange. Some of them might have been
2328	COMMONS
Supply-Trade-Grain Commission
members, but the men who did the work were the direct agents of Minneapolis firms. They went to the farmers, examined their barley, inquired as to the price of barley in the town, and offered the Fort William price. That is, they would offer the farmer a premium of three or four cents over the Winnipeg price for six-rowed malting barley. They started to purchase this barley at fifty cents per bushel and continued right up to eighty cents, the farmer having to load it over the loading platform and ship to the firm in Minneapolis. He could do it through the elevator, and bill it to the firm in Minneapolis.
I want to point out that at no time in the months of August, September, October and November-I secured the figures from the bureau of statistics-was the price in Minneapolis for malting barley less than $1.26 per bushel. The prices in August ranged from $1.25 to $1.35, making an average in the neighbourhood of $1.30. The cost of shipping this barley from the northern parts of Saskatchewan via Moose Jaw, including commission, would be practically the same as shipping to Fort William. There was a duty of twenty-five cents per bushel to be paid. The other costs would amount to about twelve cents, so you would have a total cost of thirty-seven cents per bushel. Deducting that from the average price of $1.30 would give you a net return of ninety-three cents per bushel delivered. I was told by one man connected with this Minneapolis firm that they received at least $1.34 for the barley they bought from the farmers. During that period the price for six-rowed malting barley at Fort William was eighty-four cents per bushel, so the farmer lost anywhere from twenty-five to thirty-five cents per bushel. Hundreds of thousands of bushels were bought last year under those conditions.


Richard Bedford Bennett: How could it have been stopped?


Ernest Edward Perley: This grain commission should have inquired into it. Mr. A. T. Elders made a statement with respect to the value of this malting barley that was purchased in western Canada. He should be called to review the organization that was buying this barley. I think some means could be found of investigating this matter and preventing the farmers from being subjected to such a racket. I know when the farmers heard of it they were quite sore; but there was no redress they could obtain. I think the thing should be investigated.
The grain commission was set up last year following an investigation by a committee of
iMr. E. E. Perlfy.]
this house into the actions of the wheat board. I was hoping that the commission would meet early enough so that a report could be presented in time to cover the marketing of last year's crop, but it looks now as though any report that may be presented will not be of any value as far as next year's crop is concerned.
I agree with the leader of the opposition when he says that there must have been some other man in Canada who could have made this investigation. Mr. Justice Turgeon has been busy with another commission and it was regrettable that some other man was not appointed. I do not intend to criticize the personnel of the commission so far as the counsel and the other persons named by the minister are concerned. However, I think it should be noted that Mr. Ralston has received in the neighbourhood of $15,000, and the commission has sat only thirty days. Of course, it first commenced its work on November 18 last year. If these salaries are to continue I think we should see that the work is proceeded with more quickly and a report made in time to permit some action being taken in connection with the marketing of the next crop.
I can assure hon. members that the farmers of western Canada are not going to stand being kidded as they were last fall. In the dying days of the last session, on June 22, the minister made a statement in reply to some remarks I had made. He said that the government would take steps before certain members went overseas to decide upon a policy in connection with the marketing of the 1936 crop. But the announcement was not made until August 28, and the action they took simply meant that the act was not operative last year. I trust that things will be different this year and that the farmers will know in good time what is to-be done.


Thomas Langton Church: Mr. Chairman, I rise to protest against this expenditure of $103,000. I can remember when I first came to this house that great protectionist newspaper, the Toronto Telegram, spent $20,000 to investigate the grain business and the operations of the grain exchange as carried on under Liberal premiers in the three prairie provinces. I want to protest against this commission roving all over Canada. This commissioner has completed his work on one commission without making a report, and then this other travelling minstrel show starts off. It is going to travel all over Canada to investigate the grain business. I can remember when Mr. Ralston, the counsel who is receiving $200 a day on this commission, sat in this house during the discussion on the grain bill. This multiplication of committees and commissions is causing the people-

Supply-Trade-Grain Commission
of Canada to lose respect for this parliament. It represents the decay and decline of the House of Commons. This is the seventeenth commission to investigate grain since confederation. I have the greatest respect for the chairman, as well as for Mr. Ralston, both of whom I have known for some time.
I can remember the discussion which took place when a new grain act was proposed on July 4, 1935. If there is one piece of legislation that redounds to the credit of the leader of the opposition (Mr. Bennett), it is the grain legislation of 1935. Sixteen reports had been received from royal commissions since confederation down to that date, and this was the first real effort made to assist the farmer in fighting the grain exchange, the transportation combine, and the elevator combine. The Minister of Mines and Resources (Mr. Crerar) was in the house in 1924, and he will remember the investigation carried on at that time by the Toronto Telegram. That investigation covered operations in England, in the United States and in Canada. I was never an enthusiast for the Union government, but they made an honest effort in this connection. I should like to quote the words I then used. They were;
The hon. member for Marquette (Mr. Crerar) and others combined courts and lawyers and injunctions into a prohibitive tariff against inquiry into the methods of the big interests that handle wheat-
That was about the thirteenth inquiry, at that time. Continuing:
.	.	. not excepting the big interests in this
country represented by the hon. member for Marquette. I was never an extremist in my enthusiasm for Union government. But the Union government honestly tried to protect the western wheat producer against the big interests. The western wheat producers have fulfilled in their experience with the hon. member for Marquette and his followers in this house, the words of Scripture, "A man's foes shall be they of his household." The worst enemy of the western wheat growers is the policy of the Progressive party, its leaders and its representatives in this house. The next opponent of the western wdieat grower is the present policy of the Liberal party, its leaders and representatives in this house and in the capitals of the prairie provinces. The best friend of the western wheat grower is the policy of protection.
What did Mr. Justice Turgeon's report show? It showed, as I charged in this house, that there was bootlegging in grain. I went to the harbours of Buffalo, Baltimore, New York and Boston, and I found them mixing Canadian No. 1 with American grain and shipping the product overseas, with great loss to the people of this country. They milled the mix in Buffalo as a No. 1 grade of flour and exported it to Europe. The first Turgeon
report showed these charges were proven, and it was expected that some results would follow. What was done? Not one clause of that report was adopted.
Now the government is going to spend another S103,000 for political purposes-that is all it amounts to. It is just carrying on the debate from back in 1935. One of the greatest services ever performed for this country by the present leader of the opposition was when he exposed in all its forms the shallow nature of these inquiries and when he brought down a measure of public ownership, because the grain business is a public utility which should be operated by the country, getting rid of the middlemen, the grain exchanges, and of the gamblers in futures. But all these conditions continue in the industry, with the result that the poor farmer is fleeced out of a fair price for his crop- the best grain grown in the world.
Mr. Ralston, who was then the member for Shelburne-Yarmouth. took part in this debate. I do not understand why he was appointed as counsel for this commission. If you look over the list of clients for whom he has appeared, not only at that time but since he has ceased to be a member of this house, I think it shows that he is disqualified automatically from acting on behalf of the commission. I doubt whether we shall get five cents worth of value for this whole $103,000 of expenditure. Not one red cent shall we get. You will have a report made by the same respected chairman of the commission who functioned ten years ago. His report of that time was pigeonholed and was made a scrap of paper. Mr. Ralston disqualified himself as counsel for the commission by a speech which he made in the house. In the course of the debate on the grain board on July 4, 1935, he used very strong language; I have never heard him use such terms as he expressed on that occasion, and I was astonished at what he said. At that time I referred to it in these words:
The hon. member for Shelburne-Yarmouth the other night used some strong language which I think was unworthy of him; referring to the leader of the government he used the words "bluff" and "bluster." Well, if there is bluff and bluster anywhere it is to be found in the support now of protection on grain as a policy of the Liberal party to-day.
The present commission is to be a travelling inquiry all over Canada to dig up facts about the grain trade, to consider protection versus free trade, and all that kind of thing.
Well, if there is bluff and bluster anywhere it is to be found in the support now of protection on grain as a policy of the Liberal party to-day. After professing free trade they have been veering round to all sorts of protection, supporting now stabilization, subvention

Sup-ply-Trade-Grain Commission
and subsidies and bonuses. After going through the country denouncing the Conservative party as the enemy of the grain grower, what did they say in Ontario? They said that the greatest enemy the grain growers of the prairies had was to be found east of the great lakes in the manufacturers. Let me tell them that the greatest enemy the western grain growers aad was west of the great lakes; that enemy was in the grain exchanges, the Winnipeg grain exchange, the elevator combines, the transportation combines and all the middlemen and profiteers who for many years past have had the poor grain grower by the throat. I say, therefore, that if this government has done nothing else to win the support of the people, it will merit that support for the progressive stand it has taken with regard to the nationalization of the grain industry. It has taken a national patriotic stand. There is no doubt that an emergency and a necessity had been created and the government could not have done anything but follow the course it has; it has " hedged " the grain and brought the whole credit of the country to the support of these "hedges" or bankruptcy faced Canada. Every part of the country is interested in the bill, and the other night in my constituency, referring to this legislation, I said that it would forever eliminate the operations of the middlemen, profiteers, the grain and elevator and transportation combines and all the other gamblers in futures who have had a stranglehold on the poor grain farmer. It will remove the middlemen and the profiteers and give the farmers a higher price for their wheat.
I doubt if any value will be obtained for the whole $103,000. We are merely duplicating the work which was done years ago. One of the greatest things ever done for the farmer came with the announcement by the then Prime Minister (Mr. Bennett), when Mr. Ralston was sitting on this side of the house, that there would be a minimum price for the grain sold. If the then Prime Minister had not hedged the grain, the country would have been bankrupt.
As far as the sales of grain were concerned, they were handled admirably. The other day I was at the opening of the new Toronto stock exchange, and I talked about this matter with a number of bankers, some of whom were Liberals from the maritime provinces, and they said history would show that the present leader of the opposition had met the crisis of that time in a manner which reflected the greatest credit upon him.
I cannot see why all this duplication of work and waste of public money should go on. We are elected to parliament to administer the affairs of the country. As I said on May 5, 1924, when opposing one of these commissions:
It cannot be too plainly stated or too often repeated that the United States is now a relatively small factor in making world wheat prices. Canada is a much larger factor and European markets are receiving large quantities of wheat at lower prices than even Canada is making.

Moreover, Canada and other countries are able to produce wheat at lower costs than those ruling in the United States. The wheat council in the United States bases its appeal for a higher tariff upon a showing that costs are much lower in Canada.
I also said, when discussing in 1935 the policy of the present leader of the opposition:
Every part of the country is interested in the bill ... it would forever eliminate the operations of the middlemen, profiteers, the grain and elevator and transportation combines and all the other gamblers in futures who have had a stranglehold on the poor grain farmer. It will remove the middlemen and the profiteers and give the farmers a higher price for their wheat. I said further that the day was not far distant when we would have a national policy in connection with our hard wheat, a milling policy, a policy that would handle our wheat right through this country and mill it in Canada, ship it overseas and place it on the markets of the world. It is fortunate for this country that we have at the head of the government to-day a statesman who has brought about this reform. I have every respect and great admiration for the hon. member for Shelburne-Yarmoutli, whom I have known for a great many years; I knew him and his partner before coming into this house. But when the hon. gentleman advocates an inquiry into this particular Canadian cooperative wheat association let me say this to him and to the Liberal party in this house. Years ago they were not so anxious to have a grain inquiry. What did Mr. Crerar do? When the Union government made a strenuous and brave effort in 1921 to come to the support of the prairies to help the poor grain grower who was being fleeced out by the middlemen and profiteers, out of a fair price per bushel for his grain, where were the Liberals and the Progressives?
They were standing together to combine courts and injunctions against free trade in grain.


Frederick George Sanderson: I must ask the hon. member for Broadview to confine his remarks to the resolution.


Thomas Langton Church: I am well aware of all
this, Mr. Chairman. I know the rules just as well as you do.


Some hon. MEMBERS:: Order.


An hon. MEMBER:: Take that back.


Thomas Langton Church: Mr. Chairman, I have not concluded. I am opposed to the vote of this $103,000. Though I am not prepared at present to move to strike it out, it should be struck out. It is throwing money away. With all the multiplying of committees and commissions, parliament has no powers at all. We have a committee on agriculture which can go into these matters; why is it not allowed to do so? I wish to protest against

Supply-Trade-Grain Commission
the encroachment upon the powers of parliament, and to say that while I have respect for Mr. Ralston as a lawyer, I believe him to be prejudiced in relation to the subject matter of the inquiry.


Richard Bedford Bennett: There are a few questions I would ask the minister. Will the commission investigate the grain and elevator companies that acquired stocks of grain at the lake ports, and their profits, as was done in the case of the textile companies, and ascertain what happened in connection with the rest of the crop that was sold, in connection with which there was a loss of $15,000,000, though there appears now to have been a profit of $8,000,000. Will these matters be investigated?


William Daum Euler: The hon. member for Qu'-Appelle (Mr. Perley) was anxious to know whether certain matters would be investigated, and the leader of the opposition (Mr. Bennett) also inquired with regard to other specific questions without making any very definite charge. I think it will be found that the order of reference covers practically anything that the commission might desire to investigate. I have it before me and could read it if the committee desired, but that is hardly necessary.
I am surprised that my hon. friend from Qu'Appelle should criticize the appointment of the commission, as he has done. He was a member of the committee of last session, and that committee was unanimous in its recommendation to the house that an investigation should be held; and the house unanimously adopted the committee's report, so that there seemed to be unanimity all round on the desirability of holding an investigation.
I must disagree with the hon. member for Broadview (Mr. Church) when he says that there is no value in the work that is being done by the commission. Conditions have changed greatly in the grain business, and particularly in wheat, in the past few years, and it was the unanimous opinion of our committee that the commission could do very valuable wrork which would be in the interests of the producers of wheat and other grains.
My hon. friend (Mr. Perley) made some reference to an alleged corner in barley. I am informed that some evidence was taken at Winnipeg during the sittings of the commission there.
With regard to what the leader of the opposition said a moment ago, constituting certain more or less veiled charges, though I am not saying that in any spirit of criticism, I cannot say at the moment whether the
investigation will cover that particular point, but I am willing to pass on to the chief commissioner the remarks -made both by the leader of the opposition and by the hon. member for Qu'Appelle.


Richard Bedford Bennett: Perhaps I had better amplify the statement I have made. Inasmuch as the commission presided over by Mr. Justice Turgeon in the textile inquiry investigated several companies engaged in the industry, it is desirable that he should investigate the various grain companies that acquired from the grain board, presided over by Mr. Murray, the wheat that was at the lake ports and should ascertain who owned that wheat, the visible wheat in Canada at the present time.


William Daum Euler: Any particular time?


Richard Bedford Bennett: At this time, before the opening of navigation. The commission should ascertain who owns the wheat and should investigate the accounts, showing the profits with respect to these transactions, and if possible account for the statement made in this house by the Minister of Finance that $15,000,000 was lost last year, notwithstanding that he shows in his budget this year a profit of $8,000,000 from that same wheat. It seems to me that these are matters that should be investigated, and ultimately they will have to be investigated by some authority, having regard to the position occupied by Mr. Murray, and the fact that the advisory board was swept out of office by the government and a committee of the cabinet substituted for it.
The question of a combine that brought about the position in barley is a matter that can be investigated under the combines act. If the evidence given in part in Winnipeg is to be relied upon, I take it that the commissioner will investigate that matter as well.
I desire to associate myself with the statement that the report suggesting the appointment of a commission was unanimous. That statement is undoubtedly correct. But I do object to the appointment as commission counsel of one who made the remarks that were made by Colonel Ralston in this house in 1935 with respect to the conduct of the grain business in this country, and as to the character of someone engaged in that business. He thereby unfitted himself to act as commission counsel, however well he may be qualified to act for those who took a certain attitude towards the matter. Certainly the attorney general of England took the view that under similar circumstances one would be precluded from acting in a case of this kind

Supply-Trade-Grain Commission


Charles Avery Dunning: With respect to any
investigation of what the Minister of Finance said, I can perhaps remove the necessity for that in a moment. The facts are clear with regard to the budget statements both of last year and of this year. At the time, provision was made for an estimated loss of $15,000,000. That loss was shown to exist in connection with the then holdings on the basis of the then value. Subsequently the price went down so much as very largely to increase that loss, and still later, prices improved; and as I indicated in the budget, I was very glad to be able to say that we should receive during the fiscal year approximately 88,000.000, which would be an offset against the 815,000,000. It was not a case of a loss turning into a profit, but of a loss being less than that which was provided for a year ago. I will take the responsibility for the error in making such provision, if responsibility there be. There is no need to place that responsibility on anyone else, for it was wholly mine; Mr. Murray had nothing to do with it.


Mr. BAKER:: Why was the loss estimated before the sale was made?


Richard Bedford Bennett: The order in council
provided that the ultimate sale when made should determine the loss, and the loss was estimated by Mr. Murray, not the Minister of Finance, according to his sworn testimony. He made the estimate, and he did it having taken the wheat over under duress. There was a threat that if it were not handed over on a certain day, credit would be shut off and the authority of the government used for that purpose.


Ernest Edward Perley: I want to make my position clear. I agree that the report of the committee was unanimous, but it was so only because there was incorporated in it a clause that rendered it practically negative. Furthermore, as far as I was personally concerned, I never favoured the setting up of a commission for a further inquiry. I will admit that no vote was taken on the report and that the report was unanimous; but it was unanimous for the reason I have stated. It was on that understanding that I agreed to it. It was agreed further that there would be no discussion on it when it came into the house. The minister will remember that.


William Daum Euler: Which again proves that it was unanimous.


Ernest Edward Perley: Not necessarily. I agreed in the committee that there

would be no discussion on the report in the house, but only when the minister undertook to arrange with the Minister of Agriculture that on a certain item in his estimates I should have an opportunity of discussing the question of marketing coarse grains. The report was tabled on June 11 and I sat here every day. I was here until thirty minutes before my train left on the second last night the house was sitting before prorogation. I had the report about fifteen minutes only. That is the reason I agreed to that unanimous report.
Before I sit down I should like to have an assurance from the Minister of Finance that this commission will investigate the question of the loss on the oats purchased in 1935 by the provincial government.


Charles Avery Dunning: It is my distinct impression that the matter is before the commission.


Thomas Clement (Tommy) Douglas: I wish to associate myself with those who have expressed the feeling that the appointment of Colonel Ralston as commission counsel was an unwise move. I say that not in any spirit of criticism of the gentleman personally, whose integrity is well known, but in view of the fact that his prejudices are known to be quite strong, as shown not only in the debates that took place in this house, but for years past.


Charles Avery Dunning: Oh that is not correct.
That is all wrong.


Richard Bedford Bennett: In 1935.


Thomas Clement (Tommy) Douglas: It is not unfair to say
that the associations of Colonel Ralston for the past few years have been with those who have decided views on this question, and the appointment of anyone who was prejudiced on either side was decidedly unwise. Whatever the findings of this commission may be, whether in favour of competitive marketing or cooperative marketing, there will be a feeling in certain quarters that the decision was based to a large extent on the point of view taken by Colonel Ralston in this house before he was appointed to this position.
Then in respect to salaries, the minister in reply to someone down here said that a good man deserves a good salary. That may be true. Nevertheless this commission' is in the public eye in western Canada, where people on the land at the present moment are very fortunate if at the end of the year, after they have met the actual cost of taking off their crop, they have two or three hundred dollars left. To them a sum of $103,000 for a thirty days' sitting, and the payment of

Supply Bill
$15,000 to one man for thirty days, seems preposterous. While it may not seem excessive -to oarfcain gentlemen who ame in the habit of dealing in terms of lawyers' fees, which I suppose in certain quarters are phenomenal, nevertheless to the farming population it seems like flying in the face of providence. I can assure the minister that while this $220 a day for salary and expenses may not seem a large amount to him-


William Daum Euler: I did not say that it did
not seem like a large amount.


Thomas Clement (Tommy) Douglas: Well the minister said
"Good pay for a good man."


William Daum Euler: That is entirely different.


Thomas Clement (Tommy) Douglas: So he must be entirely
satisfied with it. But in many quarters it will not be viewed in that light.
But the main criticism is that the whole purpose of the commission will be defeated by the fact that there has been brought to it, not a man who is considered to be impartial by the farming population, but one who is known to have a decided prejudice in the matter. The farmer feels that instead of getting a new deal, he is getting a deal in which the cards were stacked before the deal began.


Mr. FAIR:: I also want to register my protest against the engagement of Colonel Ralston and the salary being paid him. While I am only a new member of this house, Colonel Ralston's name is by no means new to me, nor is it new to a number of those who sent me here. As was pointed out by the hon. member who spoke last (Mr. Douglas), his appointment is not at all favourable to the commission nor to those who set it up. I am afraid the effects will not be very good even though the commission may bring in the kind of report which we do not expect it to bring in.


Mr. KINLEY:: Is the salary paid to Colonel Ralston out of line with salaries that have been paid by this and other governments of Canada in years past for the same kind of work?


William Daum Euler: At the moment I have a recollection of only one. One does not desire to make comparisons, especially between lawyers, for there are so many of them in this house. But I think the counsel who was retained for the price spreads commission received $150 a day, and for quite a long period.


John James Kinley: How long was he at it?


Richard Bedford Bennett: Some months.


William Daum Euler: Yes, he drew a large sum. Perhaps I can satisfy the hon. member for Qu'Appelle (Mr. Perley) by quoting from the order of reference as it is contained in the order in council regarding the matter of seed oats in Saskatchewan:
All transactions to be investigated since the year 1930 pertaining to the handling of grain for relief and seed purposes in Manitoba, Saskatchewan and Alberta under dominion government guarantee or otherwise.


[Stage Direction]
Item agreed to.
Resolutions reported, read the second time and concurred in.

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved:
That the further supplementary estimates for the fiscal year 1936-37 adopted in committee of supply on March 24 and 25 instant be concurred in.
Motion agreed to.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Charles Avery Dunning: Resolved that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the financial year ending March 31, 1937, the sum of $40,903,880.76 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 82, for granting to His Majesty certain sums of money for the public service for the financial year ending March 31, 1937.
Motion agreed to, bill read the first and second time, and the house went into committee thereon, Mr. Sanderson in the chair.
Sections 1 to 4 inclusive agreed to.
On the schedule.
Charles Avery Dunning: I just want to make sure, Mr. Chairman, that the amendment suggested the other day by the leader of the opposition (Mr. Bennett) in connection with the national defence vote is in your record copy.
Questions


Frederick George Sanderson: Yes, it is.


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

[Stage Direction]
Mr. Mackenzie King moved the adjournment of the house.
Charles Avery Dunning: I should intimate that with respect to the reports of the tariff board which were tabled a few days ago, the government now have had an opportunity to give consideration to them, and the resolutions to be introduced in committee of ways and means with respect to the various matters will be printed in the votes and proceedings of to-day so that hon. members will have ample opportunity' to study them.


Richard Bedford Bennett: You are giving notice of intention to move them?


Charles Avery Dunning: Quite so.
Motion agreed to and the house adjourned at 10.58 p.m.
Wednesday, March 31, 1937