1937-03-25

[Stage Direction]
Mr. S. W. JACOBS (Cartier) presented the second report of the standing committee on standing orders, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
Mr. S. W. JACOBS (Cartier, for Mr. Moore) presented the fourth report of the standing committee on banking and commerce, and moved that the report be concurred in.
Motion agreed to.

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

Mr. MULLINS:: 1.	How many demonstration farms were being operated prior to 1930 in the province of Quebec?
2.	How many of these demonstration farms are being operated at the present time?


Mr. GARDINER:: 1.	Demonstration farms are operated by the provincial government but the dominion Department of Agriculture operated forty-two illustration stations prior to 1930 in the prov-of Quebec.
2.	Fifty-three illustration stations.


NEW BRUNSWICK NATIONAL PARK
Mr. BROOKS:: 1.	Was a survey made in the year 1936 by a representative of the Department of Mines and Resources of prospective sites for a national park in New Brunswick?
2.	If so, what sites were surveyed, and where located in New Brunswick?
3.	Was a report made to the commissioner of national parks, and, if so, in what order were the proposed sites recommended: (a) first choice; (b) second choice; (c) third choice, etc.?


Mr. CRERAR:: 1.	Yes. A number of sites submitted by the province were examined in the year 1936.
2.	Mount Carleton site in Northumberland and Victoria counties, a site in Albert county, and a site in Kings and Queens counties.
3.	A report was made recommending the Mount Champlain site in Kings and Queens counties as first choice; the Lepreau site in Charlotte county (previously examined and reported upon) as second choice, and the Albert county site as third choice. This report, without being considered by the dominion government, was forwarded to the provincial government, as the latter must furnish free of charge the property covered by the site finally selected.
Sockeye Salmon Fisheries



PRIVILEGE-MR. MASSEY

Mr. DENTON MASSEY (Greenwood):: I rise to a question of privilege. At page 2096 of Hansard I read the following:
Only the other day the hon. member for Greenwood (Mr. Massey) referred to the bonus given to the farmers as a dole. If the hon. member did not hear that, I can assure him it was said.
That statement was made by the hon. member for Marquette (Mr. Glen). I was not present in the house at the time, and immediately following that statement my right hon. leader (Mr. Bennett) and the hon. member for Mount Royal (Mr. Walsh) endeavoured to convince the hon. member for Marquette that he was in error. At no time within this house or outside of it have I said anything that could possibly be construed as even insinuating what that remark suggests, and if the hon. member were in his seat I am sure he would be pleased to withdraw his statement.



SOCKEYE SALMON FISHERIES


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the house go into committee to consider the following proposed resolution:
That, in connection with the exchange of ratifications of the convention between Canada and the United States for the protection, preservation and extension of the sockeye salmon fisheries in the Fraser river system, signed at Washington on the 26th May, 1930, it is expedient that the houses of parliament do approve of a declaration being made on the part of Canada to the effect that the provisions of the convention may be administered upon the following understandings:
(1)	That the international Pacific Salmon Fisheries Commission shall have no power to authorize any type of fishing gear contrary to the laws of the state of Washington or the Dominion of Canada;
(2)	That the commission shall not promulgate or enforce regulations until the scientific investigations provided for in the convention have been made, covering two cycles of sockeye salmon runs, or eight years; and
(3)	That the commission shall set up an advisory committee composed of five persons from each country who shall be representatives of the various branches of the industry (purse seine, gill net, troll, sport fishing, and one other), which advisory committee shall be invited to all non-executive meetings of the commission and shall be given full opportunity to examine and to be heard on all proposed orders, regulations or recommendations;
and that this house do approve of the same; provided that nothing in this resolution con-
tained shall be deemed to prevent the governor in council from exercising at any time any authority in him vested to make effective orders or regulations duly adopted by the said commission.
Motion agreed to and the house went' into committee, Mr. Sanderson in the chair.
Mr. MACKENZIE KING:: Mr. Chairman,
as the committee is aware the sockeye salmon fisheries convention between Canada and the United States for the protection, preservation and extension of the sockeye salmon fisheries in the Fraser river system was signed at Washington on the 26th May, 1930. The convention was subsequently confirmed and sanctioned by an act of this parliament, chapter 10 of 20-21 George V, during the session of 1930. Agreement, however, has not been reached to exchange ratifications, and the convention therefore has lain or in other words been inoperative for some seven years. At the moment we are faced with the necessity of considering whether or not the convention should be accepted subject to certain understandings which the senate of the United States desired to have declared in connection with the exchange of ratifications. The senate of the United States approved of the convention by the requisite two-thirds majority on June 16 of last year, subject, as I have said, to these understandings.


Mr. BENNETT:: Did they not call them reservations when they made them?


William Lyon Mackenzie King: I think they called them understandings; that is my impression, but I shall make sure of that before we conclude the discussion. According to my memory at the moment, the way it was expressed was that the convention was ratified subject to "the following understandings."
In the opinion of the government it is not necessary, nor is it in accordance with general practice and procedure, to bring understandings of the kind before the house for approval, inasmuch as in our view they are not inconsistent with either the principle or the purpose of the convention. But the hon. member for Comox-Alberni (Mr. Neill) is particularly interested in the subject, and he as well as the leader of the opposition (Mr. Bennett) has expressed a desire to have an opportunity to discuss the understandings. The government therefore have thought it advisable to submit the understandings in the form of a resolution for the consideration and, we hope, approval of both houses of parliament.

Sockeye Salmon Fisheries
On March 3 the hon. member for Comox-Alberni asked whether or not the understandings would be submitted. At that time I replied in part as follows:
These understandings, which under existing practice and precedents constitute clarifications or interpretations upon administrative aspects, appear to be not inconsistent with the principles and purpose of the convention; accordingly the question of their submission to parliament, which confirmed the convention in 1930, does not arise.
As I have said, since that question was answered in that way the leader of the opposition also expressed a desire to have the understandings discussed. The acting Prime Minister, my colleague the Minister of Justice (Mr. Lapointe), gave an assurance on March 12 that this opportunity would be afforded, the exchange of ratifications having not yet taken place.
Since the understandings relate to the convention as it has been signed, it might be desirable for me to indicate briefly the provisions of the convention.
Article II provides for the establishment of an international Pacific salmon fisheries commission, each country appointing three members. Under articles III to VII the commission is instructed and empowered:
(a)	to investigate the natural history of this fishery as well as hatchery methods, spawning ground conditions and so on;
(b)	to conduct fish cultural operations, improve spawning grounds, establish hatcheries, rearing ponds and other facilities for the purpose of stocking convention waters;
(c)	to recommend the removal of obstructions to the ascent of sockeye salmon;
(d)	to report annually upon the commission's investigations and action taken;
(e)	to regulate the taking of sockeye salmon in convention waters;
(f)	to regulate the fishery with a view to a substantially equal division of the catch;
(g)	to regulate the size of meshes in appliances used for catching spring salmon during the spring salmon fishing season and the fishing equipment permissible for use on the high seas covered by the convention.
Under article VI an affirmative vote by at least two commissioners from each country is required to make any action by the commission effective. This is important in view of the powers given to the commission. The result is that neither country, through its representation, can impose its view on the other. There must first be a process of reaching agreement; then, and only then, action may proceed.
That brings me to the understandings which the United States senate, in giving its approval, desired to have declared in connection with their agreement to ratification. The first understanding is:	.
That the International Pacific Salmon Fisheries Commission shall have no power to authorize any type of fishing gear contrary to the laws of the state of Washington or the Dominion of Canada.
The convention itself indicates that the commission is not concerned with types of fishing gear, but only with the size of meshes in certain circumstances. It was never contemplated that the commission should have the right in any way to authorize any type of fishing gear contrary to the laws of either the United States or Canada. Accordingly this understanding was not considered inconsistent with the main intent of the convention, and may be regarded as a harmless declaration of administrative intention.
Before considering the second understanding, the one upon which I imagine discussion may arise, I shall pass to the third. It is in these words:
That the commission shall set up an advisory committee composed of five persons from each country who shall be representatives of the various branches of the industry (purse seine, gill net, troll, sport fishing and one other), which advisory committee shall be invited to all non-executive meetings of the commission and shall be given full opportunity to examine and to be heard on all proposed orders, regulations or recommendations.
The convention does not make specific mention of the appointment of an advisory committee. It does not say that an advisory committee shall be appointed. In that particular the convention respecting sockeye salmon is similar to the convention respecting halibut, to which agreement was given several years ago. Under the halibut convention it was found advisable to establish an advisory committee, and such a committee was in fact established and has been in existence. It is quite within the power of the commission dealing with sockeye salmon to adopt a procedure similar to that adopted by the halibut commission in its consideration of halibut fisheries. Such indeed has been the intention. This step would be in no way inconsistent with the Sockeye Salmon Convention, but rather in furtherance of its purpose. No special provision is necessary. So that from our point of view the third understanding is superfluous, and there could be no legal or formal objection to its acceptance.

Sockeye Salmon Fisheries

The one remaining understanding is the second one, which is in these words:
That the commission shall not promulgate or enforce regulations until the scientific investi-ations provided for in the convention have een made, covering two cycles of sockeye salmon runs, or eight years.
It is true that in the opinion of our fisheries experts eight years seems an unnecessarily long time to be permitted to elapse before the commission shall have power to make regulations. On the other hand, if in the interval at any time agreement should be reached between the commissioners with respect to any regulations they deem advisable, there would appear to be no reason why at such time some' supplementary agreement between the two countries should not be reached. As a matter of fact such a course was followed with respect to the halibut convention. In connection with investigations respecting halibut it was found that about eight years of scientific inquiry were required before the commission felt they would be in a position to recommend something practicable and advisable. It is possible the present commission might find itself similarly situated with respect to promulgating regulations in respect to the sockeye salmon. However, as I have indicated, if a majority of the commission on both sides come to the point of view that regulations are desirable at an earlier date, it is always possible for our government to ask the United States government to join with us either in consideration of amendments to the present understandings or in the drafting of a new convention.
I believe the eight year period is intended to cover two cycles of sockeye salmon runs. In view of the fact that either national section of the commission could delay regulations for eight years or longer for that matter, if it, or its government, or other influential interests were not convinced of the desirability of regulation, the third understanding could be regarded as not going to the heart of the convention, but as a statement of intention or interpretation as to the sense in which it had to be administered, if any practical progress was to be made.
I have already pointed out to the committee, at least two of the commissioners of each country must agree on regulations before such regulations can be promulgated. Under these circumstances, even without the understanding to which I have referred, if either country did not wish to have any regulation promulgated in a time less than eight years, it would be very easy for its commissioners to prevent the step by a ma-

jority of them refraining from agreement with the majority on the other side.
As to the present position, through careful inquiry at Washington our government has ascertained that there is not much hope of securing the approval of the United States senate to practical action without these understandings. Apparently it has taken some seven years to get agreement to this point. We are now in the position of having to decide either to let the convention as a whole go by the board, or to accept it subject to the understandings I have read. The government believes that the understandings constitute clarifications or interpretations upon administration aspects of the convention and are not inconsistent with its principles and purpose, also that apart altogether from the references in the understandings, although regulation is postponed, there remain for immediate action, considerable other functions and powers, and there are sufficient to warrant the convention being brought into force at the earliest possible day. The important thing is to get the commission and scientific investigation immediately under way. We believe the better course is to accept the understandings rather than to let the convention lapse.
An examination of the fisheries resources throughout the world would indicate that they are being rapidly exhausted, and that unless between countries, conventions and agreements can be speedily effected the result is likely to be serious. Experience has shown that it is impossible to exaggerate the importance of conservation measures. Only by joint action can conservation be carried out. Some seven years have elapsed which might have been utilized for the purpose of protecting, perserving and extending the fisheries. Let us hope that another period of time will not be permitted to elapse without some beneficial action being taken. If in this sockeye salmon case, the investigations of the new commission when set up, as well as the further ^ experience of the fishing industry should indicate that it would be practicable to promulgate effective regulations before the lapse of two sockeye salmon cycles of eight years, it will always be open to the government to raise the matter again and to endeavour to secure the agreement of the United States that regulations should commence. The convention is for a period of sixteen years, subject to continuation unless exception is taken by either side. If the understandings are accepted so that agreement may be reached for exchange of ratifications, our government proposes to inform the government of the United States that the right is reserved to raise this question again as soon as circumstances may appear to render such

Sockeye Salmon Fisheries
a course appropriate. This will be kept in mind and no opportunity lost in this connection. [DOT]
In connection with the halibut convention it was found that a period of eight years elapsed before it was possible to put forward practicable regulations, and to get sufficient agreement on all sides for that purpose. It may be that was one of the reasons . why the senate of the United States in the present instance has thought it well to name an eight year period.
I should point out further that the government understands that those connected with the fishing industry on our western coasts are in entire agreement with an acceptance of the convention upon these understandings.
Just this one word in conclusion in order to show the significance and importance of the convention. At the time the senate of the United States was investigating the matter it was disclosed that the salmon pack on the Fraser river system and Puget Sound which in 1913 amounted to 2,357,000 cases, had fallen in 1929 to 172,291 cases. This enormous reduction may have been due partly to the rock slide in the Fraser river that took place some years ago as well as to over-fishing. The government believes that such a convention as this will make it possible for these valuable resources, instead of becoming exhausted, to be re-established, and their magnitude restored to what it was in previous years, if not vastly increased beyond that point.


Richard Bedford Bennett: Mr. Chairman, I regard this matter as one of more importance than the mere incident to which it refers. It will be within the knowledge of most hon. members that this is the second attempt to conclude a treaty between the United States and Canada with respect to the sockeye fisheries. The first convention was criticized somewhat in this house and the then and now Prime Minister negotiated a new arrangement which was approved by this house before he left office in 1930 and embodied in the statutes of that year. I then suggested that in dealing with a country as large as the United States, where so much uncertainty prevails with respect to the action that may be taken by the senate, it would be well if we had the approval of the senate to the convention or treaty before it was confirmed by the parliament of Canada. However, I understand that at that time our minister at Washington was of the opinion that the circumstances were such that the treaty would be approved by the senate. Such, however, was not the case, and, as the Prime Minister 31111-138J
has said, for seven years efforts have been made to have action taken by the United States to ensure approval of the treaty by the senate before ratifications were exchanged.
Two questions arise. The first is whether the conditions that have been imposed by the United States senate in confirming the treaty are reservations or understandings. That question is not easy of solution.


William Lyon Mackenzie King: I have the
exact wording here, if my right hon. friend would like me to give it to him. It is:
Resolved (two-thirds of the senators present concurring therein), That the senate advise and consent to the ratification of Executive M. 71st Congress, 2nd session, the convention between the United States and Canada for the protection, preservation and extension of the sockeye salmon fisheries of the Fraser river system, signed at Washington on May 26, 1930, subject to the following understandings to be made a part of such ratification.


Richard Bedford Bennett: I regard that as important, because there are certain principles of international law which I think are being contravened by the action we propose to take. When the Prime Minister was dealing with this matter last year he spoke of them as reservations. The hon. member for Vancouver North (Mr. MacNeil) asked a question on the orders of the day, to which the Prime Minister replied, as reported on page 3848 of Hansard of June 18, 1936, as follows:
Mr. C. G. MacNeil (Vancouver North):	I
wish to repeat the question I directed to the government yesterday as to the present status ot the Fraser river sockeye salmon treaty, in view of the announcement of ratification by the United States senate.
Right Hon. W. L. Mackenzie King (Prime Minister):	I have in my hand the answer
which I was going to read. I tried once or twice to rise so as to anticipate my hon. friend's question. The question he asked was:
What is the present status of the Fraser river sockeye salmon treaty, in view of the announcement in to-day's press of ratification in the United States senate?
The ansrver is: The sockeye salmon convention, the second attempt to ensure the preservation of this important branch of the fishing industry was signed in 1930 and approved by the Canadian parliament in the same year. Differences of opinion in the state of Washington prevented action by the United States until this year. This week it has been approved by the senate, subject to three reservations. The first of these reservations, providing that the commission is not to authorize fishing gear contray to Canadian or state of Washington laws, presents no difficulty; the convention does not grant such power, lhe third, providing for an advisory committee of five from each country, representative of the various branches of the industry, is also quite consistent with the purpose of the convention. The second reservation, however, providing that the commission will not put into
Sockeye Salmon Fisheries

effect any order or regulation before its investigations have covered two cycles of salmon runs, or eight years, raises serious difficulty. It was of course understood that thorough investigation would precede any regulation of the actual fishing operations, but there is, in the opinion of those qualified to judge, no ground for anticipating that this would require anything like eight years, or more than half the fifteen years for which the convention runs. We therefore propose to discuss this question with the United States authorities, in the hope that some satisfactory solution of this point can be found and made effective next year.
The Prime Minister has been very frank and has told the committee that although discussions have taken place with the United States authorities, apparently there has been no desire to modify the terms of the conditions, understandings, or reservations, which were attached to the approval given to the treaty last year by the senate. I cannot look upon these reservations as being mere understandings. The first understanding reads:
That the International Pacific Salmon Fisheries Commission shall have no power to authorize any type of fishing gear contrary to the. laws of the state of Washington or the Dominion of Canada.
I think that that understanding is faultily drawn. I believe what they intended to say was that they should have no power to authorize the use of any type of fishing gear. As it reads now it provides that they shall have no power to authorize any type of gear, not the use of gear. It is quite clear that in article V the treaty contemplated that the commission should exercise supervision over the type of mesh that should be used in fishing for sock-eye salmon.


William Lyon Mackenzie King: The size of mesh.


Richard Bedford Bennett: Yes. Article V reads:
In order to secure a proper escapement of sockeye salmon during the spring or chinook salmon fishing season, the International Salmon Fisheries Commission may prescribe the size of the meshes in all fishing gear and appliances operated in the waters described in article I of this convention which are frequented by sockeye salmon.
Whenever the taking of sockeye salmon in said waters during said period between the first of June and the twentieth of August in any year is permitted under the orders adopted by the commission in respect of Canadian waters any fishing appliances authorized by the laws of the Dominion of Canada may be used in such waters by any person thereunto legally authorized, and whenever the taking of sockeye salmon in said waters during said period is permitted under the orders adopted by the commission in respect of waters of the United States, any fishing appliance legally authorized by the senate of Washington may be used in such waters by any person thereunto authorized by that state.

Article V clearly contemplates that the commission shall have power to pre^ribe the size of mesh, not for the purpose oPcatching fish but to permit the escapement of fish. They contended-and properly so in my judgment, although I am not an authority-that we were not permitting the escape of fish that should escape because of size and not be caught as articles of commerce. As it stands now, article V is subject to the reservation or understanding that the International Pacific Salmon Fisheries Commission shall have no power to authorize any type of fishing gear contrary to the laws of the state of Washington or the Dominion of Canada.


William Lyon Mackenzie King: Is there not a distinction between type and size?


Richard Bedford Bennett: I follow all that, but the effect of it is to render the first paragraph of article Y nugatory and useless. I say that with some hesitancy, but I have given a great deal of thought to it. The minister will observe that-
In order to secure a proper escapement of sockeye salmon during the spring or chinook salmon fishing season, the commission may prescribe the size of the meshes in all fishing gear and appliances that may be operated. . . .
In Canadian and United States waters. If that does not mean that the size of mesh to be used in Canada and in the United States is to be prescribed by the commission, it means nothing. It cannot mean anything else. No one to whom I have talked has suggested that it means anything else. Then follows a provision that the Canadian form of fishing appliance shall not be altered by them, nor shall the United States form, but the size of the mesh which permits the escapement of the fish is to be regulated by this commission. Obviously it is not going to regulate it in a museum in Washington.


William Lyon Mackenzie King: But the understanding does not have to do with the size of the mesh.


Richard Bedford Bennett: The reservation or understanding says that the international commission shall have no power to authorize any type of fishing gear.


William Lyon Mackenzie King: "Type."


Richard Bedford Bennett: -"of fishing gear."


William Lyon Mackenzie King: Yes.


Richard Bedford Bennett: And obviously the mesh
in the net is the essential thing. It is of no use to talk about the size of a mesh lodged in a museum in Seattle or Vancouver. This contemplates the use of the mesh in a net,

Sockeye Salmon Fisheries
otherwise it does not provide for the escapement of anything. There is no getting away from that difficulty. If the commission is to settle the size of the mesh, obviously the mesh must be in a net and obviously the net must be utilized for catching the fish. Therefore it contemplates that the fishing gear, and the type of gear, which is the mesh and the net, shall be of such a size as will permit the escapement of the salmon.


William Lyon Mackenzie King: Would it not
be possible to have different types of gear with mesh of the same size?


Richard Bedford Bennett: No; that is the whole
point.


William Lyon Mackenzie King: Why not?


Richard Bedford Bennett: The essential thing is
that the catching of the fish depends on the size of the mesh.


William Lyon Mackenzie King: Certainly.


Richard Bedford Bennett: About that there is no
doubt. The question of the type of appliance that is used for the purpose of enabling that net -to catch the fish is another thing altogether.


William Lyon Mackenzie King: That is all
that is dealt with.


Mr. MICHAUD:: That applies to escapement, not to catching fish.


Richard Bedford Bennett: I think the minister is
too experienced in catching fish not to see that, while this act provides for escapement, it obviously provides for retaining those that are larger in the mesh and lets the smaller go out of the mesh.


Joseph Enoil Michaud: The commission has
nothing to do with any type of fish other than sockeye.


Richard Bedford Bennett: But it distinctly says
they have the power to authorize the size of the mesh to provide for the escape of the smaller fish.


Joseph Enoil Michaud: Of sockeye.


William Lyon Mackenzie King: They still have.


Richard Bedford Bennett: No, they have not. That is the point exactly.


William Lyon Mackenzie King: I am afraid we cannot agree there.


Mr. TAYLOR (Nanaimo):: May I ask the right hon. gentleman a question?


Richard Bedford Bennett: Certainly.


James Samuel Taylor: Does he regard the intent of the mesh to be that the smaller fish of any species should be allowed free?


Richard Bedford Bennett: Certainly. That is what
it says in distinct terms:
In order to secure a proper escapement of sockeye salmon during the spring or chinook salmon fishing season, the commission may prescribe the size of the meshes in all fishing gear and appliances operated in the waters described in article I of this convention. . . .
Notwithstanding that, it will have no power to authorize any type of fishing gear contrary to the laws of Canada or of the state of Washington. It therefore follows that whatever Canada may prescribe as to the type of gear which may be used, meshes that do or do not conform to a regulation or order of the commission cannot be interfered with either on the United States side or on the Canadian side.


Mr. REID:: May I interrupt the right hon. gentleman? Did he not leave out the word " other ''-any other type than the spring or chinook salmon? That makes quite a difference.


Richard Bedford Bennett: No. It says:
In order to secure a proper escapement of sockeye salmon during the spring or chinook salmon fishing season, the commisison may prescribe the size of the meshes in all fishing gear and appliances operated in the waters described in article I of this convention, which are frequented by sockeye salmon.
I have read that just as it appears; there is no question about it. I leave that matter, only submitting that I cannot regard this as a mere understanding. The effect is to prevent this commission from effectively controlling the size of the mesh in connection with fishing operations under any type that may be authorized by the Dominion of Canada, on the one hand, or the state of Washington on the other.
With respect to the enforcement of regulations, I think there will be no difficulty in this house or any other chamber in showing that this is at entire variance with the general principles of the convention. I am certain that the minister would not have recommended seven years ago that the house ratify the treaty if it had contained that provision, because the effect of it is to render the whole treaty practically nugatory for eight years.


William Lyon Mackenzie King: Oh, no.


Richard Bedford Bennett: Let us be fair about it. I am sure the minister desires to do what he deems to be the very best for everybody in connection with this matter, and I am sure he knows the efforts that were made to secure
Sockeye Salmon Fisheries

the approval of the United States senate to the treaty in the form in which it is drawn. This is the provision:
That the commission shall not promulgate or enforce regulations until the scientific investigations provided for in the convention have been made, covering two cycles of sockeye salmon runs, or eight years.
For eight years this convention is nugatory and without effect, except that they carry on the investigations.


William Lyon Mackenzie King: That relates only to the regulations to be promulgated.


Richard Bedford Bennett: Yes, but the regulations are the expression of the results of the investigations. On the one hand you have the scientific investigations; on the other hand you have the regulations-the one the seeking of knowledge, the other the regulations to give effect to knowledge thus obtained; and here you have a statement made by the senate that for eight years no regulations are to be promulgated.


Mr. HOWDEN:: From what date?


Richard Bedford Bennett: From the date of the ratification. That would be half of the fifteen or sixteen years. I approach this matter simply from the standpoint of a Canadian who is concerned about it, because we all have had to do with it. Certainly there is no question of party politics involved. The minister secured the treaty in the form in which it is; we endeavoured to secure the approval of the senate to it; finally, last year or about a year ago, the senate approved it with these three understandings or reservations. I submit with great confidence to this committee that the effect is to render completely nugatory this treaty for a period of eight years. Unless as a result of the knowledge obtained, regulations can be promulgated to give effect to the information so procured, it is obvious that the effort will be in vain.
I submit in all confidence, Mr. Chairman, that there is no member of this committee who, after careful consideration, will say that this has anything to do with an interpretative understanding. It goes to the very basis of the whole thing; it strikes at the root of the treaty. We were to have side by side investigations and regulations; on the one hand, immediate regulations for the preservation of this industry which is being destroyed, on the other hand continued investigations not only in the wider waters but in the narrow waters and in the river itself. In fact the question was discussed, you may recall, of the rights of the two

countries to acquire lands for the purpose of ensuring an extension of the breeding grounds of the fish. Now, all these regulations that we were to have, predicated upon these scientific investigations, are to have no value and cannot be promulgated until eight years from the date of our ratification. In other words, for another seven years the fisheries are being depleted; for another eight years they are to be depleted still more, making in all fifteen years of the life of the treaty in which nothing is to be done to conserve the industry. That is the position.
The third understanding or reservation with respect to the setting up of an advisory committee might well be regarded as an interpretative administrative act, because I think one could read into the terms of the treaty itself, by implication, sufficient power to enable the authoritative body to set up an advisory committee. But it is at variance with the terms of the treaty when it begins to define who the advisory committee shall be and is a new term introduced into the negotiations and therefore amounts to refusal to accept the treaty. On that point international law is not silent, and I shall read from Oppenheim's International Law, the edition by McNair, volume 1, at page 724, on treaties. I think it might be well to indicate to the committee-and I hope I shall not be misunderstood in doing so-that the approval of parliament is not the ratification of the treaty. Ratification is the act of the head of the state, the sovereign, and hence it is that treaties run either in the name of the king-emperor on the one hand or in the name of the president of the United States on the other. That is ratification by the head of the state; approval is another thing; but the principles that govern with respect to approval and ratification, in so far as the treaty itself is concerned, are not contradictory. I quote from section 516:
Ratification is effected by those organs which exercise the treaty-making power of the states. These organs are regularly the heads of the states or their governments, but they can, according to the municipal law of some states, delegate the power of ratification for some parts of their territory to other representatives. Thus, the Viceroy of India is empowered to ratify treaties with certain Asiatic monarclis in the name of the King of Great Britain and Emperor of India.
In case the head of a state ratifies a treaty, although the necessary constitutional requirements have not been previously fulfilled (as, for instance, where a treaty has not received the necessary approval from the parliament of the said state), the question arises whether such ratification is valid, or null and void. Many writers maintain that it is nevertheless valid. But this opinion is not correct, because it is

Sockeye Salmon Fisheries
clearly evident that, in such a case, the head of the state has exceeded his powers, and that, therefore, the state concerned cannot be held to be bound by the treaty.
517. It follows from the nature of the ratification, as a necessary confirmation of a treaty already concluded, that ratification must be either given or refused, no conditional or partial ratification being possible. That occasionally a state tries to modify a treaty in ratifying cannot be denied; but conditional ratification is no ratification at all, but equivalent to refusal of ratification coupled with a fresh offer which may or may not be accepted.
I pause for a moment to point out that these three understandings constitute fresh offers on the part of the United States, and that was the reason I suggested to the Minister of Justice (Mr. Lapointe) the desirability of parliament approving of this new offer, if it thought fit, so that there would be no question that the ratification when it took place would be an absolute and not a conditional ratification, having regard to the provisions that regulate such matters by international law.
Nothing, of course, prevents the other contracting party from entering into fresh negotiations in regard to such modifications; but it must be emphasized that such negotiations are negotiations for a new treaty, the old treaty having become null and void through its conditional ratification. On the other hand, no obligation exists for such party to enter into fresh negotiations, it being a fact that conditional ratification is identical with refusal of ratification, whereby the treaty falls to the ground. Thus, for instance, when the Senate of the United States on December 20, 1900, in consenting to the ratification of the Hay-Pauncefote treaty, added amendments which modified it, Great Britain did not accept the amendments, and considered the treaty to have fallen to the ground.
Quite particular is the case of a treaty to which a considerable number of states are parties, and which one of the contracting parties ratifies only in part. Thus France, in ratifying the General Act of the Brussels Anti-Slavery Conference of July 2, 1890, excepted from ratification articles 21 to 23 and 42 to 61, and the powers acquiesced in this partial ratification, so that France was not bound by these twenty-three articles.
But it must be emphasized that ratification is only partial and conditional if one or more stipulations of the treaty which have been signed without reservation are exempted from ratification, or if an amending clause is added to the treaty during the process of ratification. It is therefore quite legitimate for a party who, in signing a treaty, made reservations against certain articles to except those articles from ratification, and it would be incorrect to speak in this case of partial ratification.
Again, it is quite legitimate-and one ought not in this case to speak of conditional ratification-for a contracting party, who wants to secure a certain interpretation for certain terms and clauses of a treaty,-
That is the interpretative administrative provision.
-to grant ratification upon the understanding only that they should bear a particular interpretation. In such cases ratification does not introduce an amendment or an alteration, but only fixes the meaning of otherwise doubtful terms and clauses of a treaty.
The leading example of that was, I believe, the declaration of London. It is not mentioned in the immediate context here but I believe it appears later on in the book. Great Britain placed a certain interpretation on certain words of the treaty of London and declined to ratify the treaty unless this interpretation were ensured by proper terms. That, one can understand. But if this be sound, that there can be no such thing as an approval of the treaty conditionally, then it follows that the approval given by the United States constituted an approval with a fresh offer, and this parliament is now asked to accept a fresh offer in addition to the terms of the original treaty. In view of what the minister has said, if those most interested deem it desirable, it may be that it is in the interests of the country as a whole to accept it, and I have no definite opinion on the subject. But it does occur to me, as it does to the minister, that eight years is a long time to wait to have authority conferred upon a commission to enact and promulgate regulations. That is all I desire to say with respect to that point.
Now I want to say a word with respect to procedure. It will be recalled that in 1930, by chapter 10 of the statutes of that year, we passed an act in which we confirmed the treaty to which reference has been made. We are now adding to it three paragraphs which, I contend, on the authority of Oppen-heim, constitute a fresh offer which we are accepting, and I do suggest to the Minister of Justice that it would be desirable, from the standpoint of maintaining uniformity of practice, that a short bill should be prepared on the basis of this resolution ratifying, in the terms of this resolution, the three understandings in question. I suggest that only in order that we may maintain uniformity of the practice and procedure which we have initiated in connection with this treaty. The position may be summarized in a few sentences. A treaty was approved by this parliament by a chapter of the statutes of 1930 and now there has been a modification of it-I will leave out the words "understandings" and "reservations!" and use the generic term "modification." That modification is comprised in three paragraphs that are now before us, and I suggest, in order that our position may be consistent,
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that we should now say, in terms of the statute, that we are accepting the new offer, and enact it as a statute of Canada, supplementary to the statute which we passed in 1930.
There remains only one other question that might be mentioned, and that is the effect upon the general situation with respect to what was said by the privy council a few days ago in connection with our treatymaking power. What I wish to direct attention to is this:
It must not be thought that the result of this decision is that Canada is incompetent to legislate in performance of treaty obligations. In totality of legislative powers, dominion and provincial together, she is fully equipped. But the legislative powers remain distributed and if in the exercise of her new functions derived from her new international status she incurs obligations they must, so far as legislation be concerned when they deal with provincial classes of subjects, be dealt with by the totality of powers, in other words, by cooperation between the dominion and the provinces.
If those words have any value-and in my opinion they have not-they perhaps should not be overlooked until such time as they have been overruled.


Mr. CAHAN:: Or withdrawn.


Richard Bedford Bennett: "Withdrawn" may be the proper word, but as it is a hypothetical case perhaps " overruled " would be the more appropriate term. But that factor does arise. It need not be considered in detail, but I think it is my duty to direct attention to it in view of the fact that that pronouncement was made long subsequent to the date of our adoption of the treaty by legislative action, and long subsequent to the date of modification of the treaty by the act of the senate itself.


William Lyon Mackenzie King: To enact a statute, would not help us at all, if what my right hon. friend is now saying is true.


Richard Bedford Bennett: I do not suggest that it would, but in my judgment it would strengthen our hands in so far as maintaining the validity of our position on the first statute is concerned, if now that these modifications are made we adopted the same method in dealing with them. Because the language of the Prime Minister's declaration, it will be recalled, is this: he asks parliament to state that-
... it is expedient that the houses of parliament do approve of a declaration being made on the part of Canada to the effect that the provisions of the convention may be administered upon the following understandings.

There is, I think, a slight contradiction of terms there. When we talk about giving effect to the provisions of the convention and administering it "upon the following understandings," it is not too much to say that at least in part, that is a modification, and certainly in one particular a very important reservation. In other words, what we looked upon as immediate action will now be delayed action; what we looked upon as continuous improvement will now be delayed for eight years. Regulations which we had hoped would begin to effect the preservation of the fishery in which we are so keenly interested will not, as far as this treaty is concerned, become effective until eight years from the date of ratification. The ratification can probably take place in ten days, but we should have to wait eight years more before we had any promulgation of regulations to effect the preservation of a fishery which we regard as extremely important. The net result is that if the contentions of my friends from British Columbia are correct-and I defer to their views-that we have not been obtaining our portion of this fishery, this state of things will be continued for eight years notwithstanding that article VIII is of very great importance.


Thomas Reid: We have obtained a greater catch in the past two years.


Richard Bedford Bennett: Article VIII reads:
Each high contracting party shall be responsible for the enforcement of the regulations provided by the commission in the portion of their respective waters covered by the convention, and to this end they agree to enact and enforce such legislation as may be necessary to make effective the provisions of this convention, with appropriate penalties for violations thereof.
For eight years that will have no effect at all. And the seventh article, to which we attach the greatest importance, will become completely nugatory:
Inasmuch as the purpose of this convention is to establish for the high contracting parties, by their joint effort and expense, a fishery that is now largely non-existent, each of the high contracting parties should share equally in the fishery. The commission shall, consequently, in regulating the fishery do so with the object of enabling, as nearly as they can, an equal portion of the fish that is allowed to be caught each year to be taken by the fishermen of each high contracting party.
Certainly the effect of this reservation is to render that article completely useless for eight years, because this was to be done by regulation. If it were not that one does not desire to speak in other than respectful terms of the legislative body of another country I

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would say that our friends from the state of Washington have certainly endeavoured to put it over us. We have laboured incessantly to maintain the principle that as the fish spawn in Canada and are caught in the sea, there should be as nearly as possible an equal division of the fish caught. That was the whole purpose of our efforts. But as it now stands, for eight long years no regulations are to be passed which will in any sense regulate equality of catch by the fishermen of the high contracting parties, although that was the essential matter with which we were dealing.


Mr. LAPOINTE (Quebec East):: But if the treaty falls, it will be more than eight years; it will be never.


Richard Bedford Bennett: If there is no treaty, my hon. friend is entirely right. We would just have to take conditions as they are. But I know that if Canadians were to assert themselves within their legal rights on the Fraser river they could make it difficult for our neighbours to get the spoil of the sea that they now secure. It is because they realize that on the one hand, and we on the other hand desire to have friendly and amicable relations in respect to this great resource, that we said that the catch should be equally divided between us, and that was to be secured by regulation of the fishery. And now for eight years there is to be no regulation. That is my difficulty.
I have no party interest in this matter; if the government, with the fund of knowledge that it possesses respecting the situation which I have not, is of the opinion that to proceed in accordance with the resolution is in the national interest, I am content. I desire only to point out my difficulties, and certainly they are very real, having regard to the purpose of the treaty. The essential part of it was equality of catch. That has been destroyed, for it was to be secured by regulation, and regulations are not even to be promulgated for eight years from the date of ratification. Whether it is worth while to wait eight years for regulations that have effect only if four people agree, two from each country-which of course is an unusual provision but was the only one our friends would accept-is another question. Whether it is worth while to wait eight years, with the experience we have had with this and other treaties, for the purpose of determining whether or not at the end of that period two men representing Canada and two the United States will agree upon regulations that will give Canada half that catch, I cannot say. It is for parliament to determine.


William Lyon Mackenzie King: May I say a word to my right hon. friend in regard to his last remark. In the view of the government the vital thing is to get a commission appointed and get it to work. Experience has shown in regard to the preservation of the halibut that little if anything could be done until a commission was appointed. After the commission was appointed very much was achieved in a comparatively short time. In the case of the halibut fisheries commission no regulations were promulgated in less than eight years; it took that period of scientific investigation and study and experimentation to enable the members of the commission to become agreed on the regulations they wished to make and satisfied they would be practicable. But it did not prevent the governments of the two countries from amending the original convention and giving additional powers and putting through measures which were helpful in the conservation of that resource.


Richard Bedford Bennett: Of course they can do that without a treaty.


William Lyon Mackenzie King: No, I do not agree with that statement. Unless some sort of organization in the nature of a commission is established they will never get together. Once a commission is established with a personnel of three representatives from each country upon it, then you have the necessary machinery wherewith to work towards securing something in the way of agreement between the two countries. Without some such organization it would be very difficult indeed to get agreement. And apart altogether from the matter of regulations promulgated, there are other functions and powers given to the commission, as I indicated at the outset. For example, under articles III to VII, the commission is instructed :
(a)	to investigate the natural history of this fishery as well as hatchery methods, spawning ground conditions, et cetera;
(b)	to conduct fish cultural operations, improve spawning grounds, establish hatcheries, rearing ponds and other facilities for the purpose of stocking convention waters;
(c)	to recommend the removal of obstructions to the ascent of sockeye 6almon;
(d)	to report annually upon the commission's investigations and action taken.
Similar powers were given to the commission having to do with halibut-


Richard Bedford Bennett: Of course halibut and salmon are entirely different. The halibut are deep sea fish entirely, while salmon have their origin in Canada. That is the real difficulty.
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William Lyon Mackenzie King: That is quite true, but the means of effecting an agreement between the two countries as the consequence of the appointment of a commission remain the same. An agreement was reached between the United States and Canada on certain matters affecting the conservation of halibut. It was eight years before that commission promulgated regulations. The convention was agreed to in 1923, if I am not mistaken, and it was 1930 before any regulations were promulgated by the commission. In the meantime they had been experimenting and investigating. They had taken action in a number of directions, and on one or two occasions the convention itself was amended. Before this session closes I propose bringing before the house another amendment to the halibut convention arising out of the work of the commission. We believe that once this sockeye salmon commission is established, since it will be in the interests of the United States as well as in the interests of Canada to conserve the sockeye salmon in the Fraser river system, suggestions or possibly recommendations will be put forward by the commission itself which will enable amendments, if necessary, to be made to this convention within the next couple of years, without waiting the expiration of an eight-year period.
As to the other point mentioned by my right hon. friend, I must say that the government does not agree at all with his view that the powers of the commission are in any way altered with respect to dealing with the size of mesh. We believe there is a distinction between the type of gear and the size of mesh. The understanding is that the commission is not to seek in any way to deal with the type of gear in the connection set forth.


Richard Bedford Bennett: Perhaps without interrupting the right hon. gentleman I might ask this: If the commission say, "We will have a four-inch mesh," and the laws of Canada and the United States provide for a three-inch mesh, what happens?


William Lyon Mackenzie King: The commission has power to deal with the question of the size of the mesh. Let me read again the first sentence of article V:
In order to secure a proper escapement of sockeye salmon during the spring or chinook salmon fishing season, the commission may prescribe the size of the meshes in all fishing gear and appliances. . . .
That is all we need to consider. The understanding is that the commission is not permitted to consider the type of fishing gear and appliances, but the convention gives the commission full authority to deal with the size of meshes for escapement purposes. I want

to make that clear, because it is on that interpretation of the understanding that the government is seeking the approval of this house.


Thomas Reid: The treaty and the proposed amendments have to do with the run of sockeye salmon in the Fraser river, and as a member representing quite a large number of fishermen on the Fraser river I feel it incumbent on me to say something with regard to this very important matter.
It is well known to those of us who live in British Columbia that the great runs of sockeye salmon have been going down until now they are not nearly as large as they were in former years. In 1913 the catch amounted to some 2,409,760 cases, which dwindled to only 226,093 cases in 1936. In order that the house may better understand what this means in the number of fish caught, let me say that in 1913 over 26,000,000 sockeye salmon were caught, whereas in 1936 only
2,500,000	were caught.
It should be pointed out that the sockeye salmon of the Fraser river are entirely Canadian fish, for it is in the rivers and lakes of British Columbia that the fish are propagated and live for one or two years before heading out to sea. It is to these same rivers and lakes of British Columbia that the fish return to spawn before their life cycle is completed, and then they die. On the return journey, however, they pass through United States waters, where they are caught in large numbers. So much is that the case that up until only two years ago United States fishermen were catching the greater proportion of these fish. In some years their proportion of the total catch rose as high as 78 per cent as against Canada's proportion of 22 per cent. It was felt that something should be done which would permit Canadian fishermen to obtain a larger percentage of the total catch, since these fish are reared in Canadian waters, and since we have spent large sums of money in maintaining and propagating them. That -being so, it was considered hardly right or fair that United States fishermen should obtain the greater share of the catch of this variety of salmon.
Briefly that is the story behind the treaty, and from that point of view the treaty is not only commendable but highly desirable. Canada could easily destroy this variety of salmon, but of course that is unthinkable. However, it is strange that the United States should have taken so long to agree to the treaty which was passed by Canada in 1930. While there are many commendable features

Sockeye Salmon Fisheries
to this agreement, however, I believe that because of certain conditions which have changed since 1930, when the treaty was first signed, if the treaty were coming before the house now for the first time certain provisions might well be altered. For instance, following the elimination of trap nets by the United States some two years ago, Canada has caught more sockeye salmon than the United States. Last year we caught 78 per cent of the sockeye, so one of the conditions that brought about this treaty has largely disappeared. Canadian fishermen would have little cause to complain if we were assured that no trap fishing would be allowed again by the United States; probably we could get along without a treaty of this kind, but unfortunately we have no such guarantee from the United States. What means will be taken to apportion properly the catch between Canada and the United States of course will have to be worked out later by the commission that is to be set up.
If the entire treaty were coming before the house one criticism I would offer would be that I do not believe the boundary lines are quite correct. On their return to the Fraser river, and before they enter the strait of Juan de Fuca and Puget sound, the salmon are caught in large numbers off cape Flattery at a spot known as Swiftsure bank, the greater part of the fishing being done from twelve to twenty-five miles off cape Flattery. These banks extend out about twelve miles from shore before deep water is reached. Then it is only three hundred feet deep, and as far as thirty miles from shore the water is not more than six hundred feet deep. The most favoured region, however, is the Swiftsure bank, where the water is only ISO feet deep. Hardly a fishing day passes when you cannot find at least 100 boats fishing on these banks. My criticism of the boundaries as defined in the treaty is that the line should have been drawn very much further south than the 48th degree of north latitude. The present line is only some twenty to twenty-five miles south of cape Flattery while the actual fishing bank extends fifty miles to the south.
Again, in article I the high seas boundary is far too vague. The article states that territorial waters on the high seas westward from the western coast of Canada and the United States shall come under the provisions of the convention, and therefore are to be affected by the various orders or regulations which may be issued, but the question arises as to how far westward into the open waters of the Pacific ocean the treaty really extends. Very little difficulty will arise, I think, in regard to the definition of
territorial waters. According to international law, territorial waters briefly are those waters within the three-mile limit. The question of the waters beyond the three-mile limit, however, is something else entirely. It is not so easily defined because of the fact that international law, as agreed to and understood by practically all nations, does not recognize the laws of any country on the high seas beyond the three-mile limit. Consider for a moment how this question might affect not only the salmon industry of British Columbia but also the halibut industry, in regard' to which I shall have something to say on a later occasion; as we are dealing only with the salmon treaty I shall endeavour to confine my remarks on this resolution to the matter of salmon.
As stated in the treaty, no limit has been placed upon the distance westward, and it is to this I wish to direct the attention of the committee. The question is likely to become one of grave international importance should a foreign country decide to invade these fishing banks, which are well outside the territorial waters or the three mile limit. In these days of modern fishing operations and equipment we see ships, known as mother ships, being outfitted for long fishing expeditions, fully equipped with small power boats used for catching the fish, and with cold storage plants, and so on, to take care of the fish caught. These boats are outfitted for cruises lasting anywhere from six to eight months.
Great Britain has long been a pioneer in this type of fishing, sending her fishing vessels out into many oceans; although so far she has refrained from lending encouragement to fishing on the north Pacific, due no doubt to the fact that she recognizes the difficulties which would arise in Canada and the United States which have a treaty between them regarding halibut. Great Britain's last great fishing invasion was to the coast of Greenland, where six ships were sent out each year, fishing there until fully loaded and then returning to Great Britain.
Japan is another country which will have to be reckoned with in the matter of fishing off the Pacific coast. It is not generally known Japan has over 1,500,000 of her citizens in the fishing industry, which is twice as many as are engaged in the textile industry in Japan. As a matter of fact, Japan is recognized as being supreme in fisheries, the catch by the Japanese amounting to one-quarter of the total world's catch. The Japanese method of fishing consists of sending out large floating canneries, operating on the mother ship principle. These vessels are equipped as canneries. They carry with them the fishing
Sockeye Salmon Fisheries

boats and fishing gear. The Japanese have demonstrated that sockeye salmon can be taken on the high seas in deep water and far from shore. They use enormous nets. The length of them is almost unbelievable, being three to five miles in extent. A practical monopoly of the fisheries off the coast of Siberia was granted by the Japanese government to a Japanese concern, and literally hundreds of miles of nets, veritable barriers, were put out in the high seas by fishing vessels and resulted in preventing the salmon from ever reaching the home streams in Siberia. As is well known, so extensive has been the fishing carried on by the Japanese along the Siberian shores that these fisheries have been practically destroyed and Japanese fishing companies have been looking for new fields of enterprise. Since 1930 they have carried on their mother ship operations off the coast of Alaska. I might add that this year they are operating off the coast of Australia, having investigated that field over a period of two or three years.
Previous to last summer Japanese fishing boats off the Alaskan coast were catching only crabs, which, it may interest hon. members to know, in those Alaskan waters sometimes attain a size of three feet. Last summer, however, a new 10,000-ton ship visited the Alaskan waters. It was an experimental vessel from top to bottom, having a reduction plant, cold storage, and the latest, most modern and scientific equipment. From the mother ship power boats were sent off in different directions. They took samples of the sea water, temperatures, et cetera. These boats returned in the evening to the mother ship, when the scientists aboard immediately analyzed the sea water and compared the temperatures. From this they gained information, and could show the fisherman where to fish. That 10,000-ton boat came on down the Pacific coast, finally calling at Seattle, where it was discovered they had on board some 22,000 cases of salmon caught on the expedition. This catch represented a total of about 270,000 salmon.
According to press dispatches, Mr. Hara, Director of Fisheries in Japan, made a statement in the Japanese Diet that the government intended to encourage Japanese salmon fishermen in the public waters off Alaska. This is being done, in view of the promising nature of the fishing there, as indicated by the information obtained by the expedition ship which visited the shores last year. Already petitions have been filed with the Jananese diet asking for the issuance of licences for fishing salmon outside the three mile limit off the coast of Alaska. It is to be sincerely

hoped that nothing will be done to precipitate unfriendly feelings or relations between the United States and Japan, but some solution will have to be found for this before any overt act is committed to arouse the violent opposition of United States fishermen, or retaliation from United States commercial interests.
True, for the time being this will not directly affect the salmon fisheries of the Fraser river, but once the Japanese begin their extensive fishing methods off the Alaskan shore, what is to prevent them coming on down the coast and fishing off cape Flattery and within the waters designated in article I? The situation is so serious that I would urge that steps be taken to deal somehow with the matter at this time, believing that the problem should be faced openly and not underground-it is a matter which -might become dangerous if submerged. I respectfully suggest, Mr. Chairman, that that matter be discussed at the forthcoming imperial conference. I do not know just what can be done about it, but it is a matter which has international complications. It should be discussed at that conference, before the situation becomes grave.
The sockeye salmon coming to the Fraser river are Canadian fish and, whether caught in the open sea or not, should be definitely declared as such. Canada spent a total of more than $7,000,000 on fisheries in the ten years between 1925 and 1935. The United States -have spent $9,000,000 in an endeavour to protect and develop their fisheries in Alaska. The importance of the salmon industry should be judged not only by the number of men engaged in it, but also by the value of the product.
Salmon is one of our most wholesome and outstanding food supplies. Fish as food is perhaps of more importance to a nation such as Japan, which to a considerable extent has to rely on the catch of fish to maintain her people. An appeal might well be made by that country on that ground alone.
The importance of the fishing industry of British Columbia is indicated by the fact that the total capital investment in British Columbia fisheries in 1935 amounted, to $20,890,825. The fisheries production in British Columbia was valued at $15,169,529, and that for the whole dominion at $34,427,854. These figures show that British Columbia is in a supreme position in Canada so far as fisheries are concerned. In 1935 there were 10,965 persons engaged in fishing, in connection with British Columbia fisheries, and 6,065 in manufacturing, -making a total number of 17,030. There were 5,808 engaged in gill net fishing, alone, with a catch valued at $954,394; there were 320 operating purse seines, with a catch

Sockeye Salmon Fisheries
valued at $355,850. In 1935, salmon fishing in British Columbia had a total value of $12,099,000, and halibut fishing a value of $940,000.
With respect to territorial waters may I say that the straits of Juan de Fuca, which are ten to twenty miles in width, are, I believe, designated as national waters. It is equally important that the waters around Swiftsure bank and for a definite distance off the United States and Canadian shores covering the entire fishing bank should also be designated as United States or Canadian waters. At least in the treaty we should place some definite limits to the high seas boundaries embracing the fishing banks.
I realize there might be some difficulty in this, owing to the fact that international law does not recognize anything outside of the three mile limit, but in view of the seriousness of the matter and the grave problem which may arise, it should not be overlooked at the imperial conference taking place this year. I am strongly of the opinion that had there been no treaty entered into between Canada and the United States in regard to halibut, British fishing boats would have been operating in the north Pacific halibut fishing banks this year, and I have no doubt that Great Britain will adopt the same policy in the matter of our sockeye salmon fishing industry. I am equally as confident, however, that if there had been no treaty, encouragement would have been given by Great Britain to her fishing fleet to operate in these northern Pacific waters, and as is well known, Great Britain has for hundreds of years maintained her right to fish anywhere outside the three mile limit of any and all countries. As recently as 1923 Great Britain dispatched His Majesty's steamship Harabel for the protection of British fishing vessels off the Russian coasts, due to the fact that the Soviet government on May 7, 1923, through the use of gunfire, had captured a British trawler which was fishing just outside the three mile limit of Russian territory. Unless Canada takes steps to declare the sockeye salmon a Canadian fish and Canadian property, little support need be looked for even from Great Britain in the event of our fishing banks being invaded by foreign fishermen.
As I have pointed out, the situation in regard to the sockeye salmon heading for the Fraser river is unique and the contention by us that they are Canadian fish cannot be successfully disputed. The fish are propagated entirely in Canadian rivers and lakes and are fully protected by law and regulation with a view to their preservation. Canada has spent millions of dollars in this connection. Canada
and the United States have been working together for years in connection with the halibut and the salmon industries. They have endeavoured to see that these great industries not only do not perish but shall be increased if possible.
The treaty we are now discussing is a culmination of the efforts made by Canada to have the United States cooperate with us, not only in the matter of the equal distribution of the sockeye salmon but also in arriving at methods designed to bring back if possible the industry to the position it held in 1913 when the total pack was two and a half million cases. If we in Canada hatch, develop and preserve this species of salmon, then we have a right to claim them as being Canadian fish outside territorial waters. I believe every hon. member will agree with me when I say that that is what we should do.
Referring for a moment to the duties and functions which will devolve upon this commission to be set up, I contend that it should be urged upon them that more serious consideration should be given than has been given in the past by departmental officials and previous governments to the blocking of rivers and streams by power companies. Some important streams in the Fraser river system have been blocked by the British Columbia Electric Railway Company which has put in dams at Stave river. These dams prevent the salmon from ascending to the spawning beds. I believe a survey has been made of the waters of the Fraser river above Hope. No doubt further electrical power will be required and a constant effort should be made to see that from now on there does not take place on the Fraser what has taken place on the Columbia river. If that ever happens the entire salmon industry will be wiped out.
Dams were erected on the Columbia river, the effect of which has been gradually to destroy the fisheries. Repercussions of this action are now being felt in Canada. It should be pointed out that the variety of salmon known as spring salmon, which are caught in considerable numbers in the waters of British Columbia, are propagated in the Columbia river. Because of the dams and obstructions which have been placed on the Columbia river, the catch of spring salmon has gone down each year. Power wheels have been placed along the Columbia river to lift the salmon over the dams, but these have not proven very successful if at all.
At this point I should like to tell the Prime Minister (Mr. Mackenzie King) what I told the leader of the opposition (Mr. Bennett) two years ago when he was prime minister, that Canada was lax in her duty when
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she allowed these obstructions to be placed on the Columbia river without protest. Canada has a considerable interest in that river. It will take me only a moment to quote from the treaty which was signed in 1846. Article II reads:
From the point at which the 49th parallel of north latitude shall be found to intersect the great northern branch of he Columbia river, the navigation of the said branch shall be free and open to the Hudson's Bay Company, and to all British subjects trading with the same, to the point where the said branch meets the main stream of the Columbia, and thence down the said main stream to the ocean, with free access into and through the said river or rivers; it being understood, that all the usual portages along the line thus described shall in like manner be free and open.
In navigating the said river or rivers, British subjects, with their goods and produce, shall be treated on the same footing as citizens of the United States; it being, however, always understood, that nothing in this article shall be construed as preventing, or intended to prevent, the government of the United States from making any regulations respecting the navigation of the said river or rivers, not consistent with the present treaty.
By that treaty British subjects, that is Canadian citizens, were to be allowed free approach and access from the interior of Canada right to the Pacific ocean through United States territory. During the last few years quite a number of dams have been built for power purposes on the Columbia river. These dams have taken away from us the right granted in the treaty of 1846. and we are now beginning to feel the effects of the construction of these dams. Since these dams have been completed, fishing on the Columbia river has practically passed out of existence. Besides the one dam to which I have referred, another dam is nearing completion located about thirty miles from Spokane. This dam will back up the waters of the Columbia river across the boundary line into Canada. This whole matter should be taken up by the International Joint Commission and a claim made by Canada for adequate compensation for the losses sustained enrough the violation of the treaty of 1846. I need not point out that if Canada had violated such a treaty, the United States would have made immediate representations in protest.
I should like to refer to the third understanding. The Prime Minister has pointed out that while the representation is not compulsory, it is intended that various branches of the industry will be represented upon this commission. I cannot see any reason at the moment why sport fishing should be represented As is well known, the sockeye salmon

is not a sport fish. I think the representation on this commission should be confined to commercial and actual workers in the industry. Representations were made only last year by sports clubs in my district to eliminate the commercial fishermen from two rivers. It was pointed out that a six or seven inch mesh net would not stop the sport fish, but these clubs wanted the rivers for themselves. The attitude of the sport fishermen in many parts of Canada does not take into account the men who gain their livelihood from fishing. These sports fishermen are concerned only with having a little pastime generally after their week's work is over.
I should like to add one word in answer to some statements made by the leader of the opposition. Perhaps I can do this best by asking a question. What further can be done by Canada if the United States will not sign the treaty? The treaty passed this house in 1930 and since that time representations have been made at various times to have it approved by the United States. But they would not do .it. I do not agree with the leader of the opposition when he says that nothing can now be done for eight years. During the past two years, since the traps have been prohibited by the Americans, Canada has been getting a greater percentage of the sockeye catch. Last year Canada got 78 per cent of the catch as against 22 per cent caught by the Americans.
The treaty can be summed up as having at least two desirable points. The first is the attempt to equalize the catches as between the United States and Canada, and the second is the preservation of the fish. An attempt is being made to preserve the fish and if possible increase the catch in the Fraser river. As to the preservation of fish, this work has been carried on for some time by the Canadian fisheries department. If one looks over the records of the catches for the past years he will see that the remarks made by the leader of the opposition are not exactly correct. The catch last year of sockeye salmon on the runs to the Fraser river amounted to 226,393 cases. If the catches had been going down every year to the point of depletion, they would not have caught as much as they did in 1932 or 1933.
Mr. BENNETT; That indicates the undesirability of the treaty.


Thomas Reid: We have no guarantee that traps will not come back. Having no guarantee, then I say that a treaty is desirable. It is desirable and we are at least assured that for at least two years we shall be able to

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get a greater proportion of the catch than the Americans because they have agreed to prohibit the use of traps for two years. So that for the next two years there is no doubt that Canada will get the greater proportion of the fish coming through Puget sound waters. But as I say, what further can be done to make the Americans sign a treaty? It would be unthinkable for Canada to go out and destroy the sockeye on the Fraser river just because the Americans will not sign a treaty or because they are getting a greater percentage of the catch. I know the suggestion has been made here and there, but to me it is unthinkable. To my mind we have everything to gain even if nothing is done for eight years, although that contingency is greatly in doubt, and it may well be that, as in the case of the halibut treaty, something will be done after the commission starts to function.
I shall reserve further remarks until the committee considers the various clauses, but I thought it incumbent upon me to suggest to the committee the important questions that arise affecting the high seas and territorial waters, point out the possibilities of international complications, and to urge that it is far better for Canada to face the issue at once.


James Samuel Taylor: In view of what has been said, including the interpretation placed upon some of these regulations by the leader of the opposition (Mr. Bennett), I should like to place before the committee some information. Reading from fisheries document 1092 of the bureau of fisheries, United States Department of Commerce, I find:
Chinook, quinnat, or king salmon. The largest of the Pacific salmons is the ehinook or king salmon. It is found throughout the region from the Ventura river, California, to Norton Sound, Alaska, and on the Asiatic coast as far south as northern China. As knowledge extends, it will probably be recorded in the Arctic.
In the spring the body is silvery, the back, dorsal fin. and caudal fin having more or less of round black spots, and the sides of the head having a peculiar tin-coloured metallic lustre. In the fall the colour is. in some places, black or dirty red. The fish has an average weight of about twenty-two pounds, but-
This is the point I want to stress.
-individuals weighing 70 to over 100 pounds are occasionally taken.
Dealing with the sockeye, that name being an anglicizing of the apparently Russian word sukkegh the sockeye, blueback, or red salmon:
The red or sockeye salmon, when it first comes in from the sea is a clear bright blue above in colour, silvery below. Soon after entering the river for the purpose of spawning,
the colour of the head changes to a rich olive, the back and sides to crimson, and finally to a dark blood red, and the belly to a dirty white. The maximum weight is about 12 pounds, and length 3 feet, with the average weight about 5 pounds, varying greatly, however, in different localities.
That throws some light on the question of the nets and the meshes of the nets. The plain object of a net is to catch not a few but every fish of a particular type which it is spread to catch, and if the mesh is too large, so that the small fish of that type pass through, it will not be very long before the fish of diminished size will be reproducing themselves in the spawning ground. But in this case, where ehinook and sockeye salmon are running together, evidently these regulations are intended to permit the sockeye spawning fish to pass through the net, which is otherwise gauged to catch all the ehinook, king or spring salmon.
I thought that that information should be brought out, in view of what has already been said.


Mr. A. W. NEILL (Comox-Albemi):: Mr. Chairman, I would like first to thank the government, and more particularly the Minister of Justice (Mr. Lapointe), who I think was leading the house when he agreed to bring this matter into the house at the request of myself and the leader of the opposition (Mr. Bennett). It is no lack of modesty that leads me to put my name before his, but simply because I brought it up first by a question in the house and then on the orders of the day, and I suffer no least illusion as to what my fate would have been if it had not been for the powerful intervention of the leader of the opposition. I have only to look at the answer that I got to the question which I asked on March 3, when I was told that the reservations or understandings simply constitute clarifications or interpretations upon administrative aspects and therefore it was not necessary to bring them into the house. That, Mr. Chairman, is another illustration of the ever-growing custom in this house, not under this government alone, but under preceding governments as well, of proceeding to eliminate almost all the power and influence of the ordinary common member and giving us government by cabinet rather than by parliament. We hear a lot about the common man, the man in the street, the forgotten man. I think there should be a movement in this house to preserve the rights and jurisdiction of the man who represents the common man -that is, the ordinary member of parliament. Otherwise the day will come when we may get ourselves elected by what methods we can,
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i

and stay at home and let the two dozen men who now control this house continue to control it. When I say that I am not referring to the cabinet alone, but to both sides; twelve men on the government side and about eight on this side control the policy of this house. I make that statement without any fear of contradiction from those who know. The rest of us, knowingly or unknowingly, willingly or unwillinglly, are merely puppets, merely chessmen on the chess board of political history.
I heard the hon. member for St. Lawrence-St. George (Mr. Cahan), in a debate which I shall not particularize for fear I might be out of order, suggest to the Minister of Justice (Mr. Lapointe) that we should assert ourselves, that Canada should assert itself and should pass certain legislation or acts under the Statute of Westminster. That is perhaps necessary, but I would not use the word "assert"; I would use the word "exercise," because the British government, when it gave us the Statute of Westminster, did so with no niggardly hand. The British are not going to fuss whether we exercise our powers or not. Such language smacks rather of the boy with his watch, anxious to get into a debate as to what the time is. If the hon. member would use his undoubted abilities and his long experience in breaking a lance, as the saying is, for the rights and privileges that are far more precious and far more seriously threatened-I mean those of the common ordinary member of parliament-he would be doing something which I think would be much more effective. I am not going to be called to order for diverging from the subject, and I will confine myself to this particular matter, although I could point readily to repeated instances of this ever-narrowing circle, where successive governments have sought-it is natural and it is convenient-to take power from the ordinary members of parliament and confine it within the ranks of the governing bodies.
In 1929 the Prime Minister (Mr. Mackenzie King), speaking to a motion respecting the sockeye treaty, said, as reported at page 2630 of Hansard:
It has been intimated to the government that some hon. members of the house would like to have detailed information with respect to this treaty. In order to supply the information which they wish to have, it would appear to be desirable to have the resolution referred to an appropriate committee of the house where that information could be given.
He therefore moved to send it to the marine and fisheries committee, where, he said, we should have the advantage of hearing witnesses, and so on. That was seven, years ago.
LMr. Neill.]
That the action was sound at that time is proved by the long and extensive debate that took place in the committee, a debate far more effective and detailed than could have been afforded in committee of the whole house. The matter was thoroughly discussed in that committee for weeks and resulted in a very close vote on the motion for recommendation of the treaty for approval. So close, indeed, was that vote that it was carried by the casting vote of the chairman.
While this is not a new treaty, there are such substantial changes in it as to make a full discussion imperative. It was determined to have it adopted by government action alone and the members of the house would have had no opportunity of learning anything about it except through the columns of the press-and this in connection with a treaty which is of vital importance to the province of British Columbia at least. The leader of the opposition quoted the Prime Minister, as reported at page 3848 of Hansard of last year. The Prime Minister at that time said that while two reservations were not important the third was of such a character as to raise serious difficulties, and he went on to say that it was proposed to discuss the question with the United States authorities in the hope that a more satisfactory solution might be found. I presume that the negotiations took place verbally, because I asked for correspondence the other day and was told that there was none. When the Minister of Justice agreed the other day to bring the matter before the house the decision of the government to do this weis phrased in the usual way by the clerk's office; it was to be in committee of the whole. That, of course, means that there may be a full discussion such as we are having to-day. A few days ago we were told that the intention was not to bring the matter to the committee of the whole but merely to discuss it on a motion for the Speaker to leave the chair, which would mean, of course, that the debate would be very much restricted. On a motion for the Speaker to leave the chair there is practically no debate; there are a few set speeches, but no questions can be asked and answered, and the effective value of proper debate is entirely lost. The ordinary procedure with regard to resolutions coming before the house is to have a bill based on the resolution submitted to the committee of the whole, where it can be fully discussed. But this matter, we were told, was not to be dealt with in that way, so that if we had lost this opportunity to-day we should have been confined entirely to set speeches by one or two members, but there would have been

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no real opportunity for the imparting of information which is so necessary in connection with a matter of this importance. The leader of the opposition has secured these privileges to us, though as a matter of fact they always adhere to the house and should not be taken away; and while I am grateful to him for having secured my right of free speech, I rather resent the necessity of having to shelter under his prestige and influence.


William Lyon Mackenzie King: I am perfectly sure the government would have been only too pleased to accord to my hon. friend the same courtesy as was accorded the leader of the opposition. When I answered the hon. gentleman's question I was making a statement as to the procedure in matters of this kind, but it was always understood that if the hon. gentleman or any other hon.-member wished to discuss in detail a matter of this kind the government would not seek to prevent his doing so.


Alan Webster Neill: I did not see much evidence of yielding to my request until the leader of the opposition came to my rescue. The statement was made that it was not material.


William Lyon Mackenzie King: I did not say
that there would be no further discussion.


Alan Webster Neill: We will leave it at that.
The matter is before us anyhow. I do protest, however, against any lessening of the privileges of the ordinary member, because those privileges are diminishing all the time. Some of the rules of the house are archaic and grotesque having regard to the fact that there are more than two parties in the house. Have we no ability to change the rules? Were not members deprived of their rights the other day owing to the correct interpretation of rules that have been out of date for the last fifteen years? When I speak in this way I am not moved by any personal consideration; I am speaking on behalf of the ordinary member of the house.
As regards this treaty I want to reverse the ordinary process and make one or two comments on matters of detail before dealing with the main principles. As regards reservation No. 1, should there not be at the end the words "or regulations made thereunder"? Most matters dealt with here are effected by means of regulations and if those words were inserted I think it would be clearer.
In reservation No. 2 it is provided that the commission shall not promulgate or enforce regulations until the scientific investigations provided for have been concluded. There are no scientific investigations mentioned in 31111-139
the treaty itself. What this has reference to is the provision contained in article III for the making of an investigation. Article III states:
The commission shall make a thorough investigation into the natural history of the Fraser river sockeye salmon. . . .
And so on. This second reservation provides that the regulations shall not come into effect until the scientific investigations mentioned in the treaty have been made, but the treaty itself makes no mention of scientific investigations.
Reservation No. 2 also provides that the regulations shall not be enforced for a period of two cycles or eight years. What is a cycle? Ordinarily, in connection with sockeye salmon, a cycle is supposed to mean four years; but I think the Minister of Fisheries (Mr. Michaud) will agree with me that, especially in view of the fact that we are adding to our knowledge all the time, many of these fish are now supposed to run a cycle of five years. Again, it says, two cycles or eight years. Does that mean whichever is greater or less? It is rather vaguely worded. It is evident that either party to the treaty or the commission itself could postpone action indefinitely by declaring that the scientific investigations had not been concluded. As a matter of fact scientific investigations are never concluded, for science is always teaching us more and more.
Should not the word "orders" appear after the word "regulations"? Article IV of the treaty does not mention anything about regulations; it speaks of orders, and if we introduce the word "regulations" we ought to connect it up with the word "orders" in some way. When the Prime Minister gives his explanation in reply later on, I submit that he should inform the committee why it was necessary for us to insert the last words:
And that this house do approve of the same; provided that nothing in this resolution contained shall be deemed to prevent the governor in council from exercising at any time any authority in him vested to make effective orders or regulations duly adopted by the said commission.
I do not understand that. If it means anything it contradicts something else and is not necessary. At any rate, it seems superfluous to me, though that may be only because of my lack of knowledge of the subject.
I believe the leader of the opposition said that this was the second attempt that had been made to have a treaty ratified. If I mistake not, it is the fourth attempt; certainly -it is the third. There was one ratified in 1918, but the United States senate turned it down. At any rate this matter has

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had a long and chequered career, and through all this time I have been a staunch advocate of a treaty. I am therefore more than regretful to have to oppose this substantial amendment of the treaty. I am in favour of a treaty but I consider that the amendment defeats the main purpose of the original treaty. Such a treaty has been the ambition of members of parliament and different governments and officials for many years, and its final ratification was looked upon as a matter for congratulation; and I must say that by far the greater part of the credit for the treaty belongs to the gentleman who is now deputy minister of the Department of Fisheries. When his work in that department comes to be recorded he will be able to point to this as a major achievement in his career and one of which he may well be proud. I know that certain men on the coast who have a flair for and greater access to publicity have succeeded to some extent in taking some of the credit for it; but I have a fair knowledge of the situation and I am thoroughly convinced that the greater part of the credit should go to Doctor Found. And I say that all the more gladly because in other matters it has been my misfortune to oppose his methods.
As regards the first and third provisions, I do not think there is much trouble. I do not agree with all the features of the third, but I do not think there will be much trouble. As regards the second, however, that is something I consider wholly undesirable. The life of the treaty is sixteen years, and to put in a provision that nothing should be done for eight years to my mind renders it highly undesirable. However it may be sugared over, I do not think you can get away from the fact that it means a complete cessation of activities. The commission is to consist of six members, three from each side, and there is a provision in article VI that no action will be taken by the commission unless it is affirmatively voted on by at least two commissioners on each side. That prevents any trouble with one of our commissioners being "got at," as the saying is, or weak-mindedly giving away the interests of Canada. It does assure that at least two of our men will be in accord before anything is done. It will guarantee that they will be practically unanimous.
Then the commissioners must be men of repute. We give them broad powers, and if we cannot trust them we should not appoint them. They are to proceed with what article III calls for, a thorough investigation, and then take appropriate action, and we must suppose that they will not do so

before they are satisfied. If such is the case, why tie their hands for eight years? We appoint them and say to them "Go and do an important work," and then without knowledge acquired by experience we butt in and say: You must not do anything for eight years but just sit and look nice. The suggestion was made that in this eight years we might get a new convention. Well, if that is the best solution we had better not have this convention; because in eight years we might get a more suitable one. I think the chances would be strengthened rather than lessened if we did not pass this. If it is passed the feeling will be: it is passed and we had better stick to it.
The Prime Minister made a point in connection with the halibut treaty, but I would point out that the conditions are entirely different. In the case of the halibut business the fishing is done far out at sea. We had to begin de novo; we did not know where the banks were; we had to hire a boat to locate them and map them so that we had some vague idea what the treaty was governing. The salmon business is quite different. We have been investigating the salmon situation for thirty years, and if we have not yet acquired enough practical knowledge to be able to formulate rules I do not know when we shall be able to. The trouble has been, not lack of information, but lack of cooperation by the people on the other side of the line. They carried out their investigation- their books and records are full of it and so are ours-and all that was required was to get together. So that the suggestion that the cases are parallel, and that because seven years passed in the one ease, we should by force of law wait eight years in the other is not appropriate. In the case of the halibut, if they had found themselves ready to do something at the end of three years they could do it; but in this case they could not because the law says they are not to do anything for eight years. A treaty of any kind, a bargain of any kind, involves certain concessions on both sides, sacrifices perhaps, restrictions at any rate. But why agree to the restrictions and make the sacrifices and then arrange that we are to get no benefit for eight years?
There is a provision under article VII that each of the parties shall share equally in the catch, that it shall be divided as nearly as possible fifty-fifty each year. That is the crux of the whole deal; the leader of the opposition (Mr. Bennett) put his finger on it. The Minister of Fisheries can tell us that the reason the treaty fell down in years gone by was that the Americans could not see their

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way to agree to give up the hold they had on our fisheries. They were getting 70 to 79 per cent of the total catch of fish running through Puget sound to the Fraser river, and they would not give way and divide fifty-fifty with us. That is the rock on which the preceding convention was wrecked. Now we have got down to this fifty-fifty division. That was the essence of the whole thing, and we are going to give that up. Whether the advantage now will inure to us or to the other side, I shall deal with in a moment. But when we were getting only 21 to 30 per cent of the fish and the Americans were getting the rest it was highly to our advantage to accept the treaty. Possibly we might be less concerned now if the Americans did not accept the treaty without these reservations, because they took out their traps in Puget sound in 1935 and 1936, and the result was that our catch went up from 21-30 per cent to 52J per cent in 1935 and to 86 per cent in 1936. That of course reversed the situation. We are now taking the big end. If we had any guarantee of that continuing, which we have not, we would not need to be so concerned about fifty-fifty. If that is so, and if there is any reasonable probability of it continuing we have not so much to gain.
I have alluded to the Americans taking out their traps. They took out 219 on an average, and if our government would insist on the four or five which we maintain being taken out, there is every prospect that the Americans will ban trapping in Puget sound. They have just passed legislation to that effect in Washington. It is suggested that the S6 per cent caught by us last year was caused by natural conditions. That may be so; in any case we put our hand to the treaty on a fifty-fifty basis and I think we should stick to it. But that does not involve the substantial material change which the Prime Minister described last year as being very serious. I would have hoped that the negotiations would be continued to see if we could not get them to accept the treaty as it is.
There is another reason to pause in considering this treaty now. After all we are dealing with things as they are, and times change. We never dreamed for a moment at that time that Japan was going to take the attitude which is now threatened. They sent a huge steamer to Alaskan waters last year, carrying boats which would be equivalent to the dories used in cod fishing on the Atlantic, the steamer acting as the mother ship, and they fished and caught salmon galore. And there is nothing to prevent them practising the same method in these waters off Puget sound; in fact, it is suggested that they will 31111-13E>i
do so. And they are subject to no treaty, no restrictions. The convention was that we shall control our nationals from fishing in certain waters and all the waters westward thereof. That takes in all across to China and Japan. But we cannot control or prevent nationals of other countriis from breaking the provisions of the treaty.
I think we might be well advised to pause and see whether anything can be arranged with Japan, or change the treaty if she is going to pursue the same merciless policy that she pursued in Russian waters, observing no rules or seasons or anything but just cleaning out everything. If Japan is going to do that in our waters and in American waters there is no use making a treaty of this kind. And the same thing applies to British ships. It was suggested that a British boat was going to be sent to do the same thing-not necessarily under the auspices of the government, of course.
There is a side line in connection with the halibut treaty that we might follow up. Canada and the United States made the halibut treaty of 1923. but I find that the Washington people inserted a restriction, as they have in this. That restriction was to the effect that none of the nationals or inhabitants or vessels of any other British country shall engage in halibut fishing contrary to the provisions of that treaty. In other words the Americans said:	We have made a deal with
Canada, and Canada will control her nationals, but what about the British-they might send a boat around and engage in that fishery? Well, I have no doubt this understanding was agreed to at that time, but I am told they have passed a subsequent treaty in which that clause was not inserted. So I think it would be a good thing if in the treaty now forecast by the Prime Minister in regard to halibut we put in a clause binding the British in the same way. An example such as that makes us hesitate to bind ourselves for sixteen years when we can see no definite advantage for eight years certain. I address myself to business men. Suppose I had bought a house, had arranged price and terms and conditions. and sent my agent to close the bargain. Then he comes back and says " Yes, it is all right. I have signed, sealed and delivered the papers in your name, but you cannot have it for eight years." I would be inclined to say, " That is not the bargain I made. I prefer to wait and make a bargain with somebody else who will give me a house right away. At least I want to know what I am going to do, and I cannot tie up my whole future as far as this house is concerned for eight years, and trust that nothing may happen in that
219t5
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period." If we can make a suitable treaty, if we can get the assent of our American cousins to the treaty which we adopted and they signed, by all means let us go ahead, forgetting even these objections I have mentioned. But if they do not agree to that and impose such an onerous condition as inaction for eight years, I do not know that we would not be better to leave the treaty unratified. We are not refusing to ratify it; we are only leaving it in the air, as they left it for so long. Conditions may change; a year or two from now the American government might be very eager to make this deal; two or three years from now we might be glad we did not make it. At least let us not deliver ourselves into this sort of bargain, when there is nothing to be obtained to our advantage for eight years after we sign it.


Mr. STIRLING:: I think consideration will have to be given to the question of where control will lie during the eight years if we agree to these reservations. Under this convention a commission is set up, and that commission is given control. At the present time control is in the hands of Canada on one hand, and the United States on the other. If we give that control to the commission and the commission is told that it must not operate for eight years, in whose hands will control lie in the meantime?


Joseph Enoil Michaud: Control of what?


Grote Stirling: Of the fisheries.


Joseph Enoil Michaud: Of the quantity of fish that may be caught?


Grote Stirling: The whole question of the control of the fisheries.


Joseph Enoil Michaud: Control of the fisheries remains with the respective governments, where it is to-day.


Grote Stirling: But just as soon as we ratify this arrangement we hand control to a commission.


William Lyon Mackenzie King: Only with
respect to such matters as are specifically given to the commission.


Grote Stirling: Matters which now are dealt with by Canada.


Mr. BARBER:: I think the objection we take to the treaty is occasioned by the delay of eight years. The Prime Minister has pointed out that the delay is to permit scientific investigations to be carried on during that period. We know that scientific investigation was carried on in Canada for eleven years; last session a report was made, and as a result of that report the sockeye hatcheries 
were closed. It may be a question whether it was wise to have that report made last year in view of the fact that this treaty was coming up, and questionable also whether or not action should have been taken based upon that report resulting in the closing of the sockeye hatcheries of British Columbia. I understand that hatcheries and matters having to do with the propagation of fish are supposed to be dealt with under this treaty.


Joseph Enoil Michaud: That was a report made by the biological board.


Harry James Barber: They were scientists, just the same.


William Lyon Mackenzie King: Might I just say in a word that the government takes the view that unless it is possible to get the two countries together to begin investigation and to initiate measures of conservation in connection with these great fisheries resources, there will after a bit be no fisheries industries left to talk about or fish to divide. The rate at which these resources are being exhausted is appalling, as shown by the figures I have given to the committee this afternoon. Unquestionably the choice lies between seeking to make a beginning by mutual agreement between the countries, in connection with methods of protection, conservation and extension of these fisheries, or allowing matters to continue to drift as they have been drifting for the past few years.
That is the position. Certainly the government wishes that in some particulars the agreement might have been a little different than it is, but from the inquiries we have made at Washington we are satisfied that as matters stand at present it would be impossible to get the senate of the United States to go further than they have gone in this matter. I imagine that these understandings were brought forward in the senate as a means of getting the convention approved and having a start made. It all depends on the faith one has in the good intentions of others as to whether one would say the understandings will be used to block what is of common interest, or interpreted in such a way as to further what is of mutual benefit. We believe it is to the mutual interest of both countries to preserve these resources.


Alan Webster Neill: Would that not apply just the same if we did not have the eight-year period? I would trust them to use their judgment.


William Lyon Mackenzie King: With regard to the eight-year period, I said previously that in the event of the house approving this resolution, in communicating with Washington the

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fact that the resolution has been approved and that ratification may be agreed upon as a consequence, the government will state that at any time within the eight years we may wish to raise the question of regulations being promulgated at a much earlier date. If after the' commission is appointed and the commissioners begin their work they find that it is desirable to promulgate regulations say within one or two years, and we have reason to believe that there is agreement between them to that extent, then we will immediately communicate with Washington and ask that further consideration be given the convention with a view to its modification or to the drafting of some new convention in the light of what has been demonstrated, through investigation, to be to the advantage of both countries. There is every reason to believe that if a proper case is made out it will be favourably viewed, but the main ithing is to get the parties together and at least let them begin investigating and considering recommendations for their respective governments which will help conserve this great resource.


Richard Bedford Bennett: I think perhaps the Prime Minister has not quite followed the significance of the observations made by the hon. member for Yale. The Minister of Fisheries, I am afraid, has overlooked the fact that the moment this treaty comes into effect article V provides that all powers of prohibition and otherwise with respect to fisheries are vested in the commission. I am afraid I did not make myself quite clear. My difficulty is whether or not the regulating power provided for in the reservation or understanding will affect that in any way. The Minister of Fisheries was wrong when he said the Canadian government would have anything more to do with it. The moment this treaty comes into force article IV provides:
The commission is hereby empowered to limit or prohibit taking soekeye salnion in respect of all or any of the waters described in article I of this convention, provided that when any order is adopted by the commission limiting or prohibiting taking sockeye salmon. . . .
Any order adopted by the commission limiting or prohibiting taking sockeye salmon in the waters covered by this convention, or any part thereof, shall remain in full force and effect unless and until the same be modified or set aside by the commission.
The other article to which I also directed attention has to do with the powers of the commission, subject certainly to the point made by the hon. member for Comox-Alberni that there is no provision at all in the treaty for scientific investigation. The hon. member for Fraser Valley has just pointed out that after eleven years of effort
we have completed that scientific investigation, but it is article IV that gives me concern.
I am afraid I did not make that quite clear. If the regulations are not to be promulgated until after eight years and the authority is vested in this commission immediately after the treaty comes into force, I wonder just what position we will be in. A moment ago the hon. member for Yale spoke to me about it before he mentioned it to the committee, and I said I did not know. Frankly I do not know. When the minister said the control rested with Canada obviously he was wrong. We are divesting ourselves of the responsibility and turning it over to the commission. If the commission is to do nothing, then real force is given to the points made by the hon. member for Comox-Alberni and the hon. member for New Westminster. That is my real difficulty about it.


William Lyon Mackenzie King: As I understand it, the powers which already reside in our government with respect to matters of control of the fisheries will continue subject to regulations which may be promulgated.


Richard Bedford Bennett: No.


Grote Stirling: It is handed to the commission.


William Lyon Mackenzie King: Certain powers to do certain things are given the commission, but those powers do not necessarily conflict with the powers of our own department.


Richard Bedford Bennett: I do not wish to interrupt, but the Prime Minister probably sees that the restriction on fishing is covered by the treaty. That power of restriction is vested in the commission, whereas our parliament has vested itself with the authority to authorize our people to fish in those waters.


Joseph Enoil Michaud: That power is vested in the commission only for the purpose of attaining the object of the treaty. The ultimate object of the treaty is to ensure an equal division of the fish caught by each country in Fraser river waters. In order to enable nationals of each country to attain that object there is a provision in article IV whereby:
The commission is hereby empowered to limit or prohibit taking sockeye salmon in respect, of all or any of the waters described in article I of this convention.
It is evident that article IV is for the purpose of bringing the catch on one side to the same level as that on the other, at a time of the year when normally the run would not be equally distributed.
Sockeye Salmon Fisheries


Richard Bedford Bennett: Yes, but is that not done by regulation?


Joseph Enoil Michaud: Yes.


Richard Bedford Bennett: This regulation says
there shall be no limit for eight years.


Joseph Enoil Michaud: Yes.


Richard Bedford Bennett: And that will clean out our fisheries.


Joseph Enoil Michaud: If we had no treaty that would continue to prevail.


Richard Bedford Bennett: For eight years there is to be no treaty.


Alan Webster Neill: I say that is what we want, if there is to be no treaty for eight years, but I object to its being in existence and not operative.


Joseph Enoil Michaud: The equal division of the catch is not the only purpose of the treaty, t am afraid that is a misapprehension under which we have been labouring.


Richard Bedford Bennett: No, it is conservation on one hand and equality of catch on the other.


Joseph Enoil Michaud: Yes, and more than that, to bring back the run of sockeye on the Fraser river to the 1913 level, if possible. It is more than conservation. The purpose is to try to increase the quantity of fish in the Fraser river by investigating the possibilities of protecting breeding grounds and preventing the over-catch in American waters of fish coming up to breed in Canadian waters, where Canadians have their only chance of taking them. So considering the purpose behind the treaty, and the powers to be given to the commission, it must be admitted that unless there is some change it will not be possible for the commission to order an equal division of catch on the river. That is certain. However, in view of conditions as they prevail to-day, I am afraid that Canadians will not be the first to ask for a revision of the understanding.


The CHAIRMAN:: Shall the resolution carry?


Richard Bedford Bennett: I think we shall have to say "on division," because I cannot bring myself to follow that part of it.


Frederick George Sanderson: Shall I report the resolution?


Richard Bedford Bennett: Does the government propose to found a bill on it?


William Lyon Mackenzie King: No.


Richard Bedford Bennett: It has no authority in law, then.
Resolution reported, read the second time and concurred in.
[Mr. Michaud 1



NON-RESIDENT INCOME TAX CONVENTION BETWEEN CANADA AND THE UNITED STATES AS TO RATES AFFECTING INDIVIDUALS AND CORPORATIONS

[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue) moved that the house go into committee to consider the following proposed resolution:
That it is expedient that the houses of parliament do approve of the convention entered into at Washington on the thirtieth day of December, 1936, by the government of Canada and the government of the United States of America, concerning rates of income tax upon non-resident individuals and corporations, and that this house do approve of the same. Convention between Canada and the United States of America concerning rates of income tax imposed upon non-resident individuals and corporations. Signed at Washington, December 30, 1936.
The government of Canada and the government of the United States of America, being desirous of concluding a reciprocal convention concerning rates of income tax imposed upon non-resident individuals and corporations, have agreed as follows:
Article I
The high contracting parties mutually agree that the income taxation imposed in the two States shall be subject to the following reciprocal provisions:
(a)	The rate of income tax imposed by one of the contracting states, in respect of income derived from sources therein, upon individuals residing in the other state, who are not engaged in trade or business in the taxing state and have no office or place of business therein, shall not exceed five per centum for each taxable year, so long as an equivalent or lower rate of income taxation is imposed by the other state upon individuals residing in the former state who are not engaged in trade or business in such other state and do not have an office or place of business therein.
(b)	The rate of income tax imposed by one of the contracting states, in respect of dividends derived from sources therein, upon non-resident foreign corporations organized under the laws of the other state, which are not engaged in trade or business in the taxing state and have no office or place of business therein, shall not exceed five per centum for each taxable year, so long as an equivalent or lower rate of income taxation on dividends is imposed by the other state upon corporations organized under the laws of the former state which are not engaged in trade or business in such other state and do not have an office or place of business therein.
(c)	Either state shall be at liberty to increase the rate of taxation prescribed by paragraphs (a) and (b) of this article, and in such case the other state shall be released from the requirements of the said paragraphs (a) and (b).
(d)	Effect shall be given to the foregoing provisions by both states as and from the first day * of January, nineteen hundred and thirty-six.

Non-Resident Income Tax
Article II
The provisions of this convention shall not apply to citizens of the United States of America domiciled or resident in Canada.
Article III
This convention shall be ratified and shall take effect immediately upon the exchange of ratifications which shall take place at Washington as soon as possible.
Signed, in duplicate, at Washington by the duly authorized representatives of Canada and the United States of America, this thirtieth day of December, in the year of our Lord, one thousand nine hundred and thirty-six.
For Canada:
(L.S.) Herbert M. Marler
Envoy Extraordinary and Minister Plenipotentiary
For the United States of America: (L.S.) R. Walton Moore
Acting Secretary of State
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Mr. ILSLEY:: Mr. Chairman, I do not believe I need enter into a long explanation of the convention standing in my name as a resolution on the order paper. It is one between Canada and the United States of America concerning rates of income tax imposed upon non-resident individuals and corporations, and was signed at Washington on December 30, 1936. In May of last year the United States authorities made certain alterations in their income tax law by which it became necessary for persons remitting certain dividends and other forms of income bo nonresident aliens to deduct 10 per cent therefrom and pay it to the United States government.
Since 1933 Canada has had a provision in its income tax legislation by which five per cent is deducted from certain dividends and interest being remitted to non-resident aliens. The result was-


Richard Bedford Bennett: -that we got several millions of dollars in income tax.


James Lorimer Ilsley: Yes. After the passing of the amendment in the United States the result was that more was deducted from incomes of residents of Canada derived from sources in the United States than was deducted from incomes of residents of the United States derived from sources in Canada. Representations were made by and on behalf of this government, at the time the bill was under consideration in the United States, that the deduction should be five per cent in the case of residents of Canada so that it would be the same as the deduction made here. Before the bill actually became law a change was made in it providing for a treaty with
countries contiguous to the United States, the effect of which might be to reduce the deduction to five per cent. I read the following from an explanation of the United States Revenue Act of 1936:
In the ease of foreign corporations subject to taxation under this title not engaged in trade or business within the United States and not having any office or place of business therein, there shall be deducted and withheld at the source in the same manner and upon the same items of income as is provided in section 143 a tax equal to 15 per centum thereof, except that in the case of dividends the rate shall be 10 per centum, and except that in the case of corporations organized under the laws of a contiguous country such rate of 10 per centum with respect to dividends shall be reduced to such rate (not less than 5 per centum) as may be provided by treaty with such country;


Mr. LAWSON:: Is that section 232 of their act?


James Lorimer Ilsley: I am reading from the explanation of section 144 of their act. If hon. members will refer to the convention, they will see that clause (a) reads as follows:
(a) The rate of income tax imposed by one of the Contracting States, in respect of income derived from sources therein, upon individuals residing in the other State, who are not engaged in trade or business in the taxing State and have no office or place of business therein, shall not exceed five per centum for each taxable year, so long as an equivalent or lower rate of income taxation is imposed by the other State upon individuals residing in the former State who are not engaged in trade or business in such other State and do not have an office or place of business therein.
The effect of that is that on dividends remitted from the United States to Canadian corporations not engaged in trade or business within the United States, and not having any office or place of business in the United States, the rate is five per centum and not ten per centum.


Richard Bedford Bennett: The same as the Canadian rate.


James Lorimer Ilsley: The same as the Canadian rate. Section 211 of the Revenue Act, 1936, of the United States refers to non-resident alien individuals. Subsection (a) reads:
There shall be levied, collected and paid for each taxable year, in lieu of the tax imposed by sections 11 and 12, upon the amount received, by every non-resident alien individual not engaged in trade or business within the United States and not having an office or place of business therein, from sources within the United States as interest (except interest on deposits with persons carrying on the banking business), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and
Non-Resident Income Tax

incomes, a tax of 10 per centum of such amount, except that such rate shall be reduced, in the case of a resident of a contiguous country, to such rate (not less than five per centum), as may be provided by treaty with such country.
So far as the United States is concerned, this treaty is made under authority of that section. The treaty reduces the deduction from ten per centum to five per centum in the case of remittances from United States sources to individuals residing in Canada. It will be noted that this applies not only to dividends but to various forms of income in the case of individuals, and to dividends only in the case of corporations. This reduction will be beneficial to residents of Canada, but it will be particularly beneficial to the government of Canada. The government has been the heaviest loser by the ten per cent deduction on the part of the United States government. A person paying an income tax to the Canadian government is entitled to deduct the amount paid to the United States government. If the income tax is equal to or greater than the ten per cent deduction, the whole loss comes out of the treasury of the dominion. That being so, the benefits of this convention will inure partly to the Canadian resident and partly to the Canadian government.


Richard Bedford Bennett: Not much to the government; more to the individual.


James Lorimer Ilsley: I am not so sure about that.
I have not made any computation, but it would all come out of the government if the income tax levied in Canada is equal to or greater than the deduction made in the United States.


Richard Bedford Bennett: A man paying an income tax of $200 can deduct $50 if that is the amount the United States government has taken at the source, but it would be difficult to conceive of a man having such investments in the United States that five per cent of the income thereon would be equal to the income tax paid in this country.


James Lorimer Ilsley: I discussed that point with the commissioner and he tells me that there are many such cases. Our tax here is an income tax upon which there are certain exemptions, but the tax there is a gross tax upon the remittances to this country. In many cases it may exceed the income tax paid to the Canadian government. However, that is a minor point. So far as I can see, this convention is to the advantage of Canada. We are not extending any particular concessions to the United States, but the United States is now doing for us just exactly what we have been doing for them since 1933.


Richard Bedford Bennett: We could not place our rate at ten per cent without discriminating against the United States. It was felt that a rate of ten per cent was too high to be imposed upon British investments in this country. My hon. friend will remember that when he was in opposition there was considerable discussion whether or not there was any warrant for the tax. Many people complained bitterly about it, although in England they impose such a tax at the source. To avoid being discriminatory, we are making the five per cent tax apply to all remittances made to this country. This has brought in a very large sum of money, especially with respect to bearer bonds and things of that kind.


James Lorimer Ilsley: Briefly, that is the explanation of this convention, but I shall be glad to answer any questions.


James Earl Lawson: There are two or three things I had in mind in connection with this convention, but some of them have been dealt with by the minister in his preliminary explanation. I note that paragraphs (a) and (b) of the convention provide that the rates of income tax imposed by the contracting parties shall be so and so. Paragraph (a) relates to the tax to be imposed upon individuals, while paragraph (b) refers to non-resident foreign corporations. As I understand it, the United States act fixes the tax on all income leaving the United States for a foreign country. That is set at 10 per cent in respect of dividends and interest, and 15 per cent in respect of other income.


Richard Bedford Bennett: Deductible at the source.


James Earl Lawson: I have not read the American act for some three or four months, but I understand that in the case of a contiguous or adjoining country discretionary power was given to the president to reduce the rate in respect of dividends only to five per cent.
I am speaking from recollection when I make that statement. This convention deals with the rates of income tax to be imposed by the contracting states. Will it not be necessary to have legislation of the house of representatives and the senate of the United States to bring this convention into effect, as the discretionary power vested in the president is limited to dividends only? That is the first point I have in mind.


James Lorimer Ilsley: This convention is a treaty within the meaning of the constitution of the United States, and must be ratified by the senate.


James Earl Lawson: Oh, this is a treaty.

Non-Resident Income Tax


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: It is a convention, not
a treaty; because you see it does not run in the name of the head of the state; it runs in the name of the government.


James Earl Lawson: That is very confusing to
me, because it is called a convention.


Richard Bedford Bennett: It is a convention. That is the distinction between it and the halibut treaty. One is in the name of the head of the state; the other is in the name of the government.


James Lorimer Ilsley: The United States provides
for the reduction by treaty, and this is regarded as a treaty and as requiring ratification by the senate of the United States.


Richard Bedford Bennett: That is the reason, I
take it.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: It is not a treaty.


James Earl Lawson: There is no distinction
between a non-resident foreign corporation and an individual, because if the whole matter is a treaty and has to be ratified by the senate, then irrespective of what the present provisions of their act may be this provision will supersede it?


James Lorimer Ilsley: Yes.


James Earl Lawson: The next point I want to raise is this. The persons who may get the benefit of this, both (a) and (b), read "who are not engaged in trade or business" in the taxing state "and do not have an office or place of business therein." There has been a great deal of feeling, shall I say, on the part of many Canadians because of the attempt of the United States to tax them on stock transactions which they have had in the United States in respect of which they are assessed income tax by the United States because of capital gains made in one year, which may never have been drawn; the transactions in truth and in fact may have resulted not in any profit but in a serious loss; and that applies to a substantial number of Canadians. The United States government did hold that by the very purchase and sale of stock on a United States stock exchange one was engaged in trading or business in that country, and if this convention were worded differently than it is, and but for the conjunction "and" before "have not an office or place of business therein," I would not have difficulty. May I take it that if this convention is passed, one will not be carrying on trade or business in the United States unless one has therein an office or place of business?


James Lorimer Ilsley: I am not sure that I understand the hon. gentleman's question. The matter of taxing individual gains made on the stock market is not within this convention at all.


Richard Bedford Bennett: Quite.


James Lorimer Ilsley: As I understand the point made by the hon. member he is objecting to the wording thinking that in some way persons in Canada who speculate on the New York stock exchange will be deemed to be carrying on trade or business within the United States.


James Earl Lawson: Yes.


James Lorimer Ilsley: And that therefore the reduction of the ten per cent to five per cent will not apply in the case of such persons?


James Earl Lawson: Right.


James Lorimer Ilsley: The information I get is that it is not expected that it will be held that such persons are carrying on trade or business within the United States. We take that view.


James Earl Lawson: That seems rather obscure and indefinite, does it not, in view of the wording of your convention? Let me assume that I, as an individual, buy and sell stock in the United States and have two or three transactions in one year. I want to know, does this convention apply to me? I am a Canadian resident in Canada. In order to know it, I read that I am exempt from the regular rate of income tax in the United States and that I am subject to a five per cent deduction only if I am not engaged in trade in the United States. That is number one. And number two: if I have no office or place of business therein. Now I say, surely that was not intended. Must it not have been the intention, and should this not read, "who are not engaged in trade or business in the United States unless they have an office or place of business there"?


James Lorimer Ilsley: All I can say is that it is the view of the Department of National Revenue and of myself that the purchase and sale of stocks on a stock exchange in the United States would not constitute engaging in trade or business in the United States.


James Earl Lawson: But is it their view?


James Lorimer Ilsley: We anticipate that there will be no difficulty about this. I want to point out that there is nothing that could be done in drawing the convention that would meet that situation. The convention had to follow the wording of the United States statute. The United States statute, sections
Non-Resident Income Tax

211 and 143, stated the sort of treaty that could be made. The wording is taken from the United States statute, and the draftsman of the convention could not state it in any words other than the words that are used there. All I can say is that our interpretation of these words is that buying and selling of stocks is not engaging in a trade or business, and that we anticipate that that also will be the interpretation of the United States.


Richard Bedford Bennett: But is that quite the
point?


James Lorimer Ilsley: I think it is.


Richard Bedford Bennett: This convention deals only with two things. It deals with the income derived from any source, and it deals with dividends. It deals with an income tax based upon an income from any source and from an income derived from dividends. I can cite a case. I had 117 shares of a particular kind of stock in the United States. I have since sold it so I can speak about it. On that they took at the source ten per cent. Under this statute they will take only five per cent.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: That is all there is about it.


James Lorimer Ilsley: Right.


Richard Bedford Bennett: That is all this convention touches-just that.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: But the point made by the hon. member for York South (Mr. Lawson) is an entirely different one. The question is whether or not the embarking on transactions on the stock exchange and deriving a profit therefrom does not render the stock holder liable to taxation, whether the profit be either capital gain or otherwise. If it is capital gain they say they tax you- and that is all there is about it.


James Earl Lawson: And I say they should not.


Richard Bedford Bennett: Well, we have no control over that at the moment. I remember that the issue arose sharply; it was started in the United States, not here.


James Lorimer Ilsley: The United States since 1936 does not tax capital gains.


Richard Bedford Bennett: No, they have stopped it. But these cases referred to by my hon. friend are cases where Canadians are harassed on capital gains they made in the United States during the years that capital gains were taxed. 1 have not followed what happened to them,

but they were a great deal worried in 1935 and asked to have the matter presented to the government of the United States because they said " We have no business in the United States." And finally the United States drew a sharp distinction between the transaction that my friend might have carried on here through his broker in Toronto, utilizing an American agent, and transactions which he carried on direct with a broker in New York, and there is a clear distinction between the two. In the one case there was never any deposit of moneys to his credit in the New York office; it was all through the Canadian office, and in that case the situation was clear. But if, on the other hand, he embarked on stock market transactions in the United States and made capital gains, the contention was that those gains were liable to taxation because they were profits made in the United States without the intervention of any Canadian house between him and the profit. They drew that distinction clearly- at any rate that is my recollection of what they did.


James Lorimer Ilsley: I am advised that they were not taxed because the Canadian was carrying on business or engaging in business in the United States, but because he was making a profit in the United States.


Richard Bedford Bennett: Quite.


James Lorimer Ilsley: I understood that the point made by the hon. member for York South was a little more subtle than that.


Richard Bedford Bennett: Of course it is.


James Lorimer Ilsley: I thought he was making this point, that if the leader of the opposition is drawing an income from the United States, and they ascertained that he bought or sold a share or two on the New York stock exchange, that would disqualify him from taking advantage of the five per cent and would put him in the ten per cent class. I do not think there is anything to be apprehended in that regard. I think that is a purely groundless fear.


James Earl Lawson: Paragraph (c) reads:
Either state shall be at liberty to increase the rate of taxation prescribed by paragraphs (a) and (b) of this article, and in such case the other state shall be released from the requirements of the said paragraphs (a) and (b).
In other words the convention may be nullified at any time by either party. Will there be founded on this resolution a bill in which discretionary power will be vested in the minister or somebody else to exercise this right of repudiation? If not, how can you acquire the right to do it in Canada?

Non-Resident Income Tax


James Lorimer Ilsley: It will have to take its
ordinary course.


James Earl Lawson: And its ordinary course
means doing nothing until parliament meets again.


James Lorimer Ilsley: That is the intention.


James Earl Lawson: That is one of the very reasons why Canadians have been subject to a deduction of ten per cent, whereas United States citizens have only been subject to a deduction of five per cent on money leaving this country. I presume nothing could be done about it by pressure on the United States government to change the situation until such time as this parliament was in session; hence this convention. Would it not be wise so to amend the appropriate act that the minister might have discretionary power to deal with the matter between sessions, or to have it done upon recommendation of the minister by order in council, instead of having to wait for another session of parliament to take action if difficulty arose?


Richard Bedford Bennett: I was going to mention a point I raised in the discussion of the preceding convention. I am rather inclined to think it would be desirable to found a bill on the resolution. It will be recalled that in 1930 we discussed this question when the fisheries convention was under consideration. That was a treaty but we called it a convention at that time and founded a bill upon the resolution, If we desire to take any action predicated upon this resolution it must be crystallized into legislation to enable us to do so. There is no necessity for legislation so far as the five per cent rebate is concerned, and the mutuality of arrangement, which is covered by the treaty. But if we desire to take domestic action in connection with enforcement we have to do it by virtue of legislation, because that is the form in which we give a sanction, if I might use that word without offence, to the provisions of the treaty itself-the convention. If the minister will look at the statutes of 1930 he will see how far we had to go to provide for that situation. It is always desirable to have in the statutes of Canada provision for any action that may be taken by any Canadian department of state for the purpose of carrying into effect the provisions of a convention. It is quite clear that as between the two countries it is unnecessary; but for domestic enforcement with respect to our own citizens there must be a statute, as my colleague has suggested.


William Lyon Mackenzie King: With regard to the necessity of statutes, my right hon. friend a moment ago quoted an authority; was it from Todd.


Richard Bedford Bennett: No, McNair's edition of Oppenheim.


William Lyon Mackenzie King: I should like to quote Todd, on Parliamentary Government in England, volume 1, page 365, under the caption "The right of making treaties.":
It is a peculiar function of sovereignty to make treaties, leagues and alliances with foreign states or princes; and by the law of nations it is essential to the validity of a treaty that it be made by the sovereign power, for then it binds the whole community. In the British empire this sovereign power is vested exclusively in the crown, acting under the advice of its responsible ministers.
This is the part to which I wish to direct attention:
Whatever engagements or contracts the sovereign enters into, no other power within the kingdom can legally delay, resist, or annul; although the king's ministers are responsible to parliament for their participation in the conclusion of any treaty derogatory to the honour and interests of the nation.
The making of treaties carries with it surely all that is necessary in the way of giving it enforcement, unless there are some specific acts which the treaty calls upon the state to perform, and which require additional legislation.


Richard Bedford Bennett: As to the question of the state being bound as such, in honour or otherwise, to implement its undertakings, as indicated by the document, call it a convention or a treaty, there is no question as far as the other country is concerned. But if the treaty contains provisions that involve the possibility of action being taken in regard to our own citizens it is the practice to crystallize it into legislation. The minister will recall the discussion we had. If he will look at the treaty of 1930-I mention that as an illustration-


William Lyon Mackenzie King: I remember it.


Richard Bedford Bennett: *-he will recall that it made provision to deal with our own citizens. If I might express an opinion, I thought possibly it might be better to have legislation in this case; I am not clear about it. But if it does contemplate any action being taken by the minister or by any department of state against Canadian citizens within Canada for the enforcement of its provisions, it should be crystallized into legislation.


James Lorimer Ilsley: That has all been gone into carefully, and the commissioner of income tax advises me that he does not think that any
Commission on Taxation

compulsory action against any citizens of Canada will be necessary, at least of a character that would require enabling legislation. They are filing income tax returns with us, and we get all the information in that way without further enabling legislation. That is the considered view of the commissioner.


Richard Bedford Bennett: This convention has not yet been ratified by the United States?


James Lorimer Ilsley: No.
Resolution reported, read the second time and concurred in.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. ROYAL COMMISSION ON TAXATION



SELECTION OF PERSONNEL AND SETTLEMENT OF TERMS OF REFERENCE

[Stage Direction]
On the orders of the day:
Mr. R. A. PELLETIER (Peace River):: Before the orders of the day are called I should like to address a question to the Prime Minister. On February 16 last the Prime Minister made the following announcement to the house:
... we propose to appoint a royal commission of inquiry to investigate the whole system of taxation in the dominion.
Will the Prime Minister be good enough to say whether the members of this commission have already been selected, and if so, who they are?


William Lyon Mackenzie King: I might answer in the one word "No" the question whether the members have been appointed. They have not. I might say to the hon. member, however, that the government have been giving very careful consideration to the personnel and the terms of reference of the commission. My hon. friend will realize that it is not a matter merely of deciding upon whom the government would wish to have serve on the commission; it is necessary to ascertain whether the persons desired are available. This takes a little time, and I am afraid that until after prorogation it will not be possible to settle finally either the personnel or the terms of reference. It is one of a number of matters that will perhaps have to be more carefully considered once we are through with the business of the house.
[Mr. Hsley.J



THE PARLIAMENTARY GUIDE

[Stage Direction]
On the orders of the day:
Mr. A. A. HEAPS (Winnipeg North):: The other day reference was made in this chamber to the distribution of The Parliamentary Guide. I notice this afternoon that the guide has been distributed to the members of this house. I should like to know if there is any item in the estimates providing for such distribution, and if so, whether such item has been passed.


Hon. C. A. DUNNING (Minister of Finance) :: I do not know anything about it, but I will take note of my hon. friend's question.


Abraham Albert Heaps: Objection has been taken in past years to the distribution of the Guide to the members, and I was under the impression that no more were to be distributed to them. If such is the case I should like to know who gave authority for this distribution.


Mr. DUPUIS:: Is the hon. member objecting?


Abraham Albert Heaps: I certainly am.


William Lyon Mackenzie King: The matter might be
looked into, and if there is any information I can give my hon. friend later, I shall be very happy to do so. At the moment I know nothing about the distribution of the Guide.


James Earl Lawson: In view of the statement of the Prime Minister I would suggest to him that it might be enlightening were he to read the statement of his Secretary of State given to the house the day before yesterday, from which we understood that the reason there had not been distribution was because there had been a failure to provide for payment in the estimates of this session.


William Lyon Mackenzie King: I shall be very glad to do that.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I promised the right hon. leader of the opposition (Mr. Bennett) that I would make a statement to-day as to the further bills to be brought down by the government before the end of the session. I might say that owing to the necessity of having

Trans-Canada Air Lines
either prorogation or some weeks' adjournment before very long the government has sought to curtail its legislative program from now on as much as possible. If it should be found impossible to conclude what is already before the house and appears on the orders of the day, and such additional measures as I shall mention now, before prorogation or an adjournment which would permit of the house continuing later on in the summer, of course we would wish to be free to bring forward further legislation. That may have to be considered, but I do not expect it will be necessary. At the present time our intention is simply, in addition to what is already on the order paper or indicated by what we have already had before us, to introduce a bill to approve the new halibut convention signed at Ottawa, January 30, 1937, amending the existing convention of 1922 and 1930, a bill respecting the guarantee of seed grain loans, a bill respecting the stores of the Department of Transport, a minor amendment to the Immigration Act, and supplementary estimates for the fiscal year 1937-38. As to whether or not legislation will be necessary with respect to the agreement with Germany, I cannot say at the moment. I prefer that that matter should be left over for decision until the hon. Minister of Trade and Commerce who negotiated the agreement is back in the city. I expect he will be here on Monday next. I cannot say whether there will be any legislation arising out of the reports of committees, up to the present there does not appear to be any. That includes, I think, all that the government propose to bring down.


Mr. C. G. MacNEIL (Vancouver North):: Does the legislative program outlined by the Prime Minister preclude any consideration of steps by the government to implement the recommendations of the Veterans' Assistance Commission?


William Lyon Mackenzie King: I expect the Minister of Pensions and National Health (Mr. Power) will be here next week, and I shall direct his attention to my hon. friend's question, and have an answer given later on.



CORONATION POSTAGE STAMPS

[Stage Direction]
On the orders of the day:
Thomas Reid: I should like to direct a question to the Postmaster General (Mr. Elliott) in regard to the issue of coronation stamps. I understand that only one denomination of stamp is going to be issued. In view of the demand for the stamps and the fact that this is coronation year in most of the countries of
the world, would the Postmaster General care to make a statement? I would point out that by the issue of a full complement of stamps we should on a conservative estimate stand to make half a million dollars. That is the financial aspect. The other is that a complete series of stamps for the coronation should be issued in commemoration of the occasion.


Hon. J. C. ELLIOTT (Postmaster General):: There will be only one stamp issued as a coronation stamp. That has been the practice in the old country, and this is the first time a coronation stamp is being issued in this country.



TRANS-CANADA AIR LINES ARRANGEMENT WITH CORPORATION RESPECTING LINES AND SERVICES FOR TRANSPORT OF PASSENGERS, GOODS AND MAILS

[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the second reading of Bill No. 74, to establish a corporation to be known as Trans-Canada Air Lines.
Mr. H. C. GREEN (Vancouver South):: Before the motion is put I should like to say a few words on this bill. I believe that Canadians in every part of the nation are keenly interested in the establishment of a trans-Canada air service. For this reason, and also because the terms of the bill have only been available for a day or two for study by members of the house, the press and the public, I think we should give the principles of the bill full and careful consideration.
This is one bill that should not be rushed through the house. It is one of the most important to come before parliament not only during the present session but during the life of this parliament, because it lays down an air transport policy for Canada. Such a policy is bound to be a long term policy; I think the minister will agree with me in that. Once such a policy has been adopted it will be hard to change, and we do not want to make any mistake at the start.
Incidentally, this bill seems to change the air policy which Canada has followed in the past and which we have been led to believe would be followed in the future, in that it puts the government into the actual business of operating our main airways. I will admit that at first such operation is indirect, through the Canadian National Railways, but provision is made for the government to take over the trans-Canada air lines at any time, which of course would mean direct government operation. The old Canadian air policy was that the government should supply the
Trans-Canada Air Lines

aids to navigation leaving private companies to conduct the actual flying operations and to take the lead in extending flying in Canada.
Personally I am heartily in favour of the establishment of a trans-Canada air service at the earliest possible date. Last year I advocated the adoption by Canada of a bold, progressive air policy, because it would do much to draw the different parts of our nation together, and because the Canadian people are a progressive people, greatly interested in flying, and such a policy would do much to hearten them. But I have doubts with regard to the air policy now announced, and I should like the minister to explain two or three aspects of the air policy which is being established by this bill before it is given second reading.
First I would ask the minister to explain why the government does not take the lead by organizing this new trans-Canada air line itself, instead of placing the burden on the Canadian National Railway, which already has all it can handle in connection with railway problems. In this bill the government actually asks the Canadian National to give the leadership that is required in developing Canada's air policy. It may be wise for the Canadian National and the Canadian Pacific to have an interest in the new trans-Canada air line, perhaps a controlling interest, but I suggest that it is unfair to make the Canadian National responsible for the success of this new company. After all, our Canadian National Railway is doing its job of railroading and doing that job very well, but it is not organized to set up an air transportation system or to organize and supervise any such system. The railway has no department for air service; it is not in a position to decide who is to control this new line, how it is to be managed, how it is to be operated and so on; yet this bill places that burden on the Canadian National.
The bill goes further; it asks the Canadian National to establish a competitor. This air company will compete with the railways in the most direct way possible. It will compete with the main line of the Canadian National; it will serve the same part of Canada. It will compete not only in passenger traffic but also in the carriage of goods. It is not clear whether or not the bill covers freight as well as express, but as it is worded I think it might cover both. The air company will also be competing in the carriage of mail, which is probably even more important to the railways than the competition for the carriage of passengers and goods.
It would not be so bad if the minister could assure the house that any air company or

companies already operating successfully and on a reasonably large scale are prepared to cooperate and take an active part in the formation of this trans-Canada air line, in directing the operations of the new company and in giving the leadership that will be required. Apparently such is not the case. In introducing this bill the other evening the minister said, at page 2042 of Hansard:
The Canadian National Railways will underwrite, in the first instance, the stock of this company and distribute it among firms at present engaged in aviation in Canada which wish to participate.
That does not sound as though any of these air companies now operating are prepared to come in and make this new air company work. It would seem that the government only hopes that the Canadian National will be able to persuade such company or companies to cooperate. I cannot emphasize too strongly the importance of having at least one of our real air companies participating actively and having a real voice in the management of the new Trans-Canada Air Lines, because the record1 of these companies shows that with their leadership we may expect not only prompt action, which is very important, but also a bold, progressive policy.	.
In support of that statement I should like to refer to what these private companies have actually done in Canada during the last few years without any government assistance other than a subsidy for the carriage of mails. These are the approximate figures in regard to the services rendered by private air companies in Canada. In 1933 they carried about
539.000	pounds of mail. In 1936 that figure had jumped to 1.500.000 pounds. In 1933 they carried 85,000 passengers. I have not the figure for 1936. but by 1935 the number had more than doubled for that year they carried
177.000	passengers. In 1933 they carried 4,000,000 pounds of freight, and it is estimated that in 1936 they carried 27,000,000 pounds; in other words, in those four years the amount of freight carried increased to six times the earlier figure. In short, Mr. Speaker, these private air companies have opened up a new Canada for us in our north country. I submit to the minister that unless there is a real company actually ready and willing to cooperate, this bill will set up a trans-Canada air line which will be without life, without any punch, and which will not be in a position to give real leadership. Really it will be just a sort of hybrid organization in which there will be none of the initiative we would get in a trans-Canada air line operated by a private company experienced in

Trans-Canada Air Lines
the business of air transportation. After all, in promoting air services, whether in Canada or any other country, a great deal of initiative is necessary, far more than is required in any ordinary line of development.
Then I think the minister should explain why the British plan would not work in Canada. As I understood his explanation to the house the other night, in Great Britain the government works through Imperial Airways, which is a private company subsidized by the government. I believe the British government owns about 25 per cent of the shares, and is able to say what service will be given, what routes will be flown, what schedules will be maintained, and so on. Here in Canada we already have several air companies. Mind you, I do not stress one more than another, but we have, for example, Canadian Airways Limited, with a splendid operating record. The Canadian National and the Canadian Pacific each have invested $250,000 in this company. Why does not the government pick out one of our Canadian air companies and then back it up? We are going to subsidize the new company in any event. It seems to me that the government is much too worried about the number of air companies in Canada. Referring again to page 2042 of Hansard, the minister said:
It might be argued that the government should do this direct, but I think everyone here will appreciate the impossibility of working out a plan involving a great number of competitors. . . .
Why should there be a great number of competitors? Why cannot the government adopt the British plan, pick out one company and subsidize it, and see that this company does its job properly? Surely it would be possible to arrange with one of these companies for supervision and control by the government. I have no doubt the government could even arrange to have directors on the board, just as it proposes to do in regard to the new company set up under this bill, and could arrange for a restriction on share transfers, for the right to the government to buy all the shares and for the strict limitation of profits.
I should also like the minister to explain whether the new company is to do the actual flying, or whether it is to engage other companies to do it? There is some doubt left by the bill; I would refer the house to paragraph (a) of section 13:
The corporation is authorized (a) to establish. operate and maintain air lines or regular services of aircraft, of all kinds, to carry on the business of transporting passengers and goods by air, and to enter into contracts for
the transport of mails, passengers and goods by any means, and either by the corporation's own aircraft and conveyances or by means of the aircraft and conveyances of others. . . .
In either case there is small incentive to a privately owned air transport company to furnish capital for the new company; and also if the intention is that private companies are to do the actual flying they will have to do it at a profit, and there will be no such thing as a national service at or near cost, as promised the other night by the minister.
Finally I would ask the minister to explain how much of the capital of $5,000,000 is to be found by the government acting through the Canadian National Railway; how much the minister expects to have subscribed from other sources, and from what other sources he hopes that capital will be subscribed? I believe the house is entitled to the information before it adopts the principle of the new bill, the effects of which will be so far-reaching. These questions have been puzzling me and, I believe, many other Canadians. I hope the minister will answer because my questions are asked not with any idea of annoying him or the government or in any spirit of partisanship, because I believe the trans-Canada air system should be kept above party politics. They are asked simply because I want to see our trans-Canada air lines a great success and an inspiration to the Canadian people.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. Speaker, there are one
or two further questions I should like to ask. I agree with the hon. member for Vancouver South (Mr. Green) that it does seem a very awkward arrangement to ask an already overburdened railway company to carry out the organization. In fact, it seems to me that we are getting so many commissions of one kind or another that it is difficult for us definitely to place responsibility. I believe that is a much needed requirement. However, instead of looking to private companies and private initiative as the hon. member suggests, I cannot see why the government could not undertake a service of this kind, not through a separate department but rather through the formation of a commission.
Last session we revised the set-up of the broadcasting commission. I suppose the new set-up is of too recent date for us to judge as to its success or failure, but it does seem to me that in many respects the problem connected with broadcasting is very similar to that of the air lines. It is a new kind of service, one which may compete with an existing service, one which covers the whole country and in connection with which there
Trans-Canada Air Lines

must be more or less of a monopoly. Further it is a service so intimately related to the whole life of the country that it seems to me it must in the long run necessarily come under government control. So I cannot see why at this stage, rather than with great effort later on, we should not set up a distinct body under government control to initiate and, if necessary, to operate or at least to regulate flying.
Again, I notice the government must subsidize the corporation's deficits during the initial period, but the initial period is not definitely stated. I notice, however, that according to paragraph (g) of section 14 the term of the contract shall be not less than ten years.


Richard Bedford Bennett: The definition appears
in paragraph (g) of the interpretation section.


James Shaver Woodsworth: Does it mean that
the subsidy covers a period of ten years?


Richard Bedford Bennett: The period ends December 31, 1939.


James Shaver Woodsworth: It does seem to me that if the country is to be called upon to subsidize the air lines to the extent of the deficit, there is no reason whatever why the government ought not to be granted shares in that company, at least to the extent of the subsidies. I would go further than that, because after all the government is virtually giving a very valuable franchise, and something which is really in the nature of a monopoly. I cannot see why the government should not own the majority of the stock. Surely the lessons we have learned from railway building have taught us that the people, through the government, ought not only to retain control but maintain a controlling financial interest in the corporation.
These are matters upon which from a reading of the bill I am not very clear. Before the principle of the bill is accepted I should like to hear a full explanation from the minister.


Richard Bedford Bennett: Mr. Speaker, I confess I
have read the bill with sympathetic consideration of the difficulties of the minister on the one hand, and an endeavour to see what could be done to protect the public interests, on the other. On the second reading of a bill we are supposed to accept or reject the principle. It is improper to consider the bill section by section, and it is contrary to the rules to endeavour to relate one .. section to another. We are supposed only ^to discuss what we call the principle of the measure.

What are the principles of this measure? From a careful reading of it I have endeavoured to summarize them, and I would say the first principle is that a corporation is to be created by the government of the country, which corporation is to have a capital of $5,000,000, the provisional directors being employees of the crown at Ottawa. That is principle number one.
The second principle is that the shares thus authorized by parliament are to be sold by the corporation through indirect, not direct, methods. In other words the Canadian National Railways are to underwrite the issue. They are not to under-write in the sense in which the term is used in business, namely, to become absolutely responsible, between the crown and the railways for $5,000,000, but to be charged with the responsibility and at the same time have the opportunity to sell these shares. That is principle number two.
Principle number three arises out of the statement of principle number two. I regard that as being somewhat difficult to understand and appreciate. It permits the Canadian National Railways to underwrite and dispose of the shares. Perhaps I should read the section applicable:
The shares of the capital stock of the corporation shall be offered for subscription to the Canadian National Railway Company, and in the event of non-subscription of any of the said shares by the said company such shares not subscribed for shall be offered for subscription to such other persons engaged or interested in aviation as are approved by the minister.
I venture to suggest that hon. members of this house will find it very difficult to find another measure of this kind which has been submitted for their consideration. First of all, the Canadian National and the Minister of Transport are one and the same thing to all intents and purposes. I am sorry to say that that is so, but it is. There never has been a more complete domination of an enterprise than that of the minister over the Canadian National at the present time. That being so, he is offering to himself in another capacity the shares of the enterprise. He says: Do you want them or not? Inasmuch as that involves a capital expenditure, Mr. Hunger-ford as director will say to the minister: As this is a capital expenditure and as we have not the money, will you tell us whether or not we can subscribe for them because you have to find the money? Whereupon the minister says: Certainly. That means the Dominion of Canada finds the money; that means the minister, as Minister of Transport,

Trans-Canada Air Lines
finds the money. That principle is there and you cannot get away from it. Is that a sound principle?
I have asked myself a dozen times why the minister has not said at once that the Dominion of Canada is going to subscribe for these $5,000,000 of shares, instead of saying that five men in the public service shall be created into a corporation and they shall offer to the Canadian National Railways, which administratively is a part of the Department of Transport, the shares of the air corporation. The only answer the railways can make is: We want them if you will give us the money to pay for them. The minister then says: I will give myself the money in another capacity to subscribe and pay for the shares.
Let us go to the next principle. If he concludes that he will not sell the shares to himself or provide the money with which to buy them from himself he then says: I am going to offer them for sale. But to whom does he offer them? Not the public. He offers them to other persons engaged or interested in aviation, approved by himself. In other words, the persons who may subscribe for shares in this corporation, the deficits of which we are to pay, are persons of whom the minister must approve and who are interested or engaged in aviation.
The $5,000,000 has been subscribed. The next principle is that the corporation cannot take anything in the way of second-hand air craft or worn out equipment in payment for the subscription for shares unless in the opinion of the minister such property or services have a value equivalent to the total nominal amount of the shares, or of the call made in respect of the shares. We are limiting subscriptions to those interested or engaged in aviation. Then we say that if they want to trade in worn out equipment or machines, they can do so only if the minister thinks they are worth the amount of their subscription. That is unusual. There have been several lawsuits which have gone to the court of last resort based on that very thing.


Mr. HOWE:: Read the next lines.


Richard Bedford Bennett: I am coming to that. They read:
-the directors shall be jointly and severally liable to pay to the corporation the total nominal amount of the shares or of the call, as the case may be.
The supreme court here decided that question not long ago. Now we have our enterprise created. We have the people engaged or interested in aviation as our shareholders; or we have the minister in another name-in the 31111-140
name of the Canadian National-as the shareholder. Then what, happens? Any one who has bought these shares can sell them only to such persons engaged or interested in aviation as are approved by the minister. He must approve those who buy the shares in the first place, and approve those to whom they may sell. That is restraint of alienation, and the courts have had something to say about that, although this parliament undoubtedly has the right to impose such a principle.
The next principle deals with the ownership of the shares, and I do not think any one can object to that. But now we come to the most delightful of all principles. I know this will interest the Minister of Finance (Mr. Dunning) because he is involved. If the minister wants to buy the outfit he may do so with the approval of the governor in council, which is his colleagues. He is not going to pay the cost of the shares; he is going to pay the book value, and if necessary, that book value is to be determined by the Exchequer Court of Canada. Any of ue who have had to do with these matters know that when you are dealing with book values you are confronted with franchise values and things like that. That is where the joker is.


Clarence Decatur Howe: Franchise has nothing to do with the book value.


Richard Bedford Bennett: Contracts may have been entered into to carry mail, and for their purposes they would be considered part of the book value. These shares are to be held by the minister in trust for His Majesty. The next principle is a simple one. Section 14 reads:
The governor in council may authorize the minister to enter into a contract with the corporation (to be known as the trans-Canada contract) for the organization, operation and maintenance by the corporation of lines of aircraft (to be known as the trans-Canada lines) for the speedy and efficient transport across Canada and between and within the several provinces of passengers and goods.
There is one paragraph in this section which is exceedingly interesting. Paragraph (c) reads:
(c) for the payment to the corporation, at the end of each calendar year of the initial period, of a subsidy equal to the deficit, if any, resulting from operations during such calendar year, which subsidy shall be payable out of moneys to be appropriated by parliament for that purpose;
Those of us who during the last few years have had to consider the difficulties faced by this country in connection with railways know that the initial difficulty arose through the operations of the contracting firm of

Trans-Canada Air Lines

Mackenzie and Mann. This was a construction company building railroads. A contract was made with the Mackenzie and Mann Construction Company to build the railroad for the subsidy and the shares and the bonds. They sold the bonds, and they had the subsidy and the shares as their profit as contractors. The railway company can buy this corporation only if we find the $5,000,000 for them. I ask if it is desirable that we should at this stage provide for the payment of the deficits of this corporation.


Charles Avery Dunning: It is only for two years.


Richard Bedford Bennett: I know it is only for two years.


Mr. MACKENZIE (Vancouver):: The initial period.


Richard Bedford Bennett: That was exactly the story put up by Mackenzie and Mann.


Ian Alistair Mackenzie: No similarity at all.


Richard Bedford Bennett: The similarity existed before the hon. gentleman came to this country.


Ian Alistair Mackenzie: I have heard about it.


Richard Bedford Bennett: I know what happened in connection with that. Let us now turn to the next principle embodied in the bill. This company shall have a contract with the government. This contract is for the carriage of mails, and thus far the carriage of mails has been a profitable operation for the companies that have participated. If the hon. member for Vancouver South (Mr. Green) were to give the details it would be found that the sums paid in subsidies for mail carrying were the moneys upon which the companies relied. And the contract shall be coterminous with the Trans-Canada contract. That principle, I think, should be applied in an entirely different way from the manner indicated. Questions of rates and matters of that sort are to be dealt with in the manner indicated by the bill; that is a matter of detail and need not be further discussed.
I submit that in the light of the experience we have had in this country, if we are going into this air line business we should own it from the start, and not later.


James Shaver Woodsworth: Hear, hear.


Richard Bedford Bennett: The hon. member for Vancouver South will not agree with me, but I am pointing out that inasmuch as we are called upon-it is one of the principles of this measure-to pay the corporation's dividends we might as well start in as we did with other 
enterprises and say that we are going to direct the policy from the beginning. One of the difficulties to-day about the railroads is that we had nothing to do with laying them out. They were laid out for contractors, and not for the public. They were laid out for the mileage and for the subsidy, and not otherwise. Here is a franchise which is going to be very valuable-a franchise for carrying the mails and passengers all the way from the Atlantic to the Pacific. Shall we part with that franchise or not? Shall we hand it over to a private enterprise or not? That is what is involved in the principle of this measure.


Ian Alistair Mackenzie: No.
Mr, BENNETT: The Minister of National Defence shakes his head and says "no." If the control of the company is vested in other than the crown or the railway, the things follow that I have mentioned, and therefore the contracts and everything connected with them inure to the benefit of the corporation, which is not the crown. That is the reason the minister provided that the crown may expropriate. Otherwise why provide for expropriation?
I submit that the proper course to pursue at this time is as I have suggested. What the future may disclose I cannot say. We are on the threshold' of great advances. Anyone who-has followed the story of aviation in this country and abroad and who knows what man has done to overcome difficulties, how he has been able to bridge in days distances that used to take weeks, how, for example, he has been able to fly from the Cape of Good Hope to London in a few days, in contrast with the long journeys of former years, realizes that in making arrangements for flying across Canada from the Atlantic to the Pacific we are dealing with matters which are on the threshold of tremendous developments.
It may well be that we shall conclude later that it is desirable to pursue some other course. We should not now provide that the people may acquire later something that they are parting with. It should be the other way about,-that we may, if we so desire, sell, instead of our buying back something that we ourselves created. As we are creating it, let us hold it. As we are making it, let us keep it. And if in the fulness of time it is desirable that the-management and operation should pass, let it pass. We shall have something in the way of control that will enable us to dictate policies, to provide for the hundred and one things that cannot be foreseen at the moment. And who suffers if we do that?

Trans-Canada Air Lines
It is obvious that the Canadian National Railway cannot take over this enterprise except by paying for it money which we in the end will have to find. With a deficit last year of 843,000.000 and this year estimated at 835,000.000, it is obvious that the necessary $5,000,000 must come from us. And as it is to come from us, let us own the enterprise now. That is what I say to the minister. I ask him to revise this bill to provide that at the start the ownership shall rest with us: that the shares and the capital stock shall be owned by the minister in right of the crown, in trust for the crown. If that is done, we shall not have parted with something which may have a value that I, for one, cannot possibly estimate.
If I jocularly referred to the difficulties of underwriting by the Canadian National Railways, I did it because the Canadian National and the government are, with respect to financial matters, one and the same. But, sir, this cannot be regarded in any sense as a party matter. It should not be. Certainly I have not suggested to any of those with whom I am associated that they should take a particular view of the matter. The opinions I express are my own, as the views expressed by the hon. member for Vancouver South are his. I have had. at least some experience with respect to these matters. Perhaps it is less personal and direct than that of some others, but I know well the evils that have come upon this country through such courses as are contemplated here. It may be said that government ownership is always inefficient, that it always has been. I am not prepared to say that it need be, but even though there is inefficiency we can devise methods by which efficiency can be secured and the property retained in the people.
This is my plea to the minister. This bill need be modified only to the extent of providing that the capital stock shall be such and such and shall be provided out of the consolidated revenue of the country, which is where it will come from in the end if the underwriting is taken up by the railway. That would enable the company to make contracts with the Canadian National Railway and the Canadian Pacific Railway if they so desired, the same as they do in other countries, to correlate their carrying activities with those of the railways. In the United States for instance, as is well known, provision is made whereby passengers may, if they so desire, travel by air during part of the day and in pullmans during the other part of the day. That might easily happen in this country in connection with both railroads; it could happen without the railroads 31111-1404
being shareholders. If it were thought desirable that others should be brought into the enterprise as minority shareholders, that could be done.
The plea made by the hon. member for Vancouver South for those who have been pioneers in this branch of transportation is something to which I referred the other evening. I realize that we put $250,000 into the Trans-Canada line-the Canadian National did, but we found the money-and the Canadian Pacific Railway put in $250,000; and the contracts were cancelled within the terms of the contracts because as I said on another occasion, we could not contemplate the expenditure of hundreds of thousands of dollars to drive aeroplanes through dust that men could not see through, representing the spoliation of the farms of western Canada, where we had to disburse millions of dollars for relief. The service could not be continued under those conditions, and therefore within the terms of the contract we discontinued it. There are certain claims in that [DOT] connection which may be of such an equit-1 able character that the government will desire to give them consideration for the sake of the shareholders, and perhaps have the shareholders represented on the directorate for the purpose of obtaining the benefit of their wise judgment and large experience.
But I do now implore the minister nofr to part with this property. To-night the field is clear. To-night no franchise encumbers the ground. To-night we stand in a; position to create by act of this parliament an enterprise that will have complete control of aerial navigation between the Atlantic and the Pacific. We have that right tonight. If we pass this measure and hand this right over, not to the crown but to a. body of shareholders, and provide that the-crown may buy it back some time in the-future if it so desires, we shall be going in-the wrong direction. I plead with the minister to reverse the process, to own the enterprise now, and sell it later if he so desires.. That is the difference between the minister's view and mine of the principles that underlie this measure.
I make this suggestion to the minister not because I can be said to be one of those who believe in public ownership and control, for I have not that reputation, but because I have found by grim experience that the condition that now exists in Canada with respect to railroads has arisen in consequence of the blunder we made. We cannot make a blunder if we keep what we have got; and what we have got to-night is control of the whole matter. It seems to me,
Trans-Canada Air Lines


Hon. H. H. STEVENS (Kootenay East):: I wish to say a word or two because I consider this bill a very important one and I should not like to express in an adverse vote the stand I take on this question without first giving a statement of my reasons for doing so. I have long held the view that some definite steps should be taken for the establishment of a trans-Canada air service. I urged it some years ago, and I have always been one of those who have held very strong views on the subject. So that I have no criticism of the minister in taking some step towards the accomplishment of that end.
On examining the bill, however-and in the haste with which we are doing things these days one has little time to look carefully into some of these measures-I am perturbed perhaps rather more by its form than by its real

intent. It will be noted that the bill in its general form is in the style of a public bill; that is clear from the short title and the preamble. But when we turn to the constitution of the corporation we find that the bill is cast in a different form. It provides for the incorporation of certain individuals under the name of Trans-Canada Air Lines, which is the form used for private legislation. In other words, we have in this bill a mixture of private and public legislation. That is my first objection to the bill.
In the second place I object to the bill for the reason that in the part of it that provides for the capital stock it is stated that the shares of the capital stock of the corporation :
-shall be offered for subscription to the Canadian National Railway Company, and in the event of non-subscription of any of the said shares by the said company such shares not subscribed for shall be offered for subscription to such other persons engaged or interested in aviation as are approved by the minister.
I do not think-and I address myself now to the Prime Minister-that any minister of the crown should be clothed by a public act with such responsibility. I wish to avoid the appearance of casting any reflection upon the minister personally, but I do say in the light of considerable experience in this house that it is inadvisable to put a blanket power of this kind into the hands of any minister in any government at any time. I strongly object to it.
Let me point out what might happen. If this bill passes we have a corporation set up composed of five or six gentlemen of very high standing-all civil servants, if I mistake not. They are incorporated and become a corporate entity. Thereupon this new corporation must offer its stock first to the Canadian National Railways. I do not know what is in the minister's mind. He may give us the assurance that it is the intention of the Canadian National Railways to take up all this stock; I do not know. But if it is the intention of the national railways to do that-


Clarence Decatur Howe: May I interrupt the hon.
gentleman? I have anticipated his objection and I intend to introduce amendments to section 7, which will make the purpose much clearer.


Henry Herbert Stevens: Without labouring the
point, then, I will wait until the committee stage. I merely observe that as it stands before me I object to it, and that would be one reason why I would oppose the bill.
There is another point. This corporation which we are creating is in operation, we will

Trans-Canada Air Lines
assume. We do not yet know who the shareholders will be; if we knew, we should perhaps be justified in granting the power sought in paragraph (f) of subsection (1) of section 14, which states that the trans-Canada contract shall provide:
-for the operation and maintenance by the government of Canada, without charge to the corporation, of emergency landing fields, lights and radio beams, necessary for the operation of the said trans-Canada lines and for the supply to the corporation free of charge of weather reports.
Then follows a proviso that if at some future time the revenues of the corporation warrant it, they may be charged for these services. The point is that we are creating a private corporation and placing on the statutes of the country an obligation upon the government to maintain a very substantial portion of the facilities necessary for the conduct of this business. That adds great weight to what has been said before. If you are going to that extent in public ownership, surely it would be better to make it absolutely and avowedly a publicly owned organization from the start.
There is another point, but these are the main points I wished to refer to. Reference has been made to the question of an unknown deficit. My interpretation of the clause by which we undertake to pay any deficit that may arise, knowing how these things work from observation over many years, is that it is. in fact, an invitation to those operating this company to think, using the popular expression, that the sky is the limit-Don't worry, because your deficit is guaranteed by parliament, no matter how much or how it is incurred. There is no limitation, no restriction upon the directors of this corporation.
For these reasons I hesitate to support what otherwise I should like to support, a genuine move for trans-Canada airways. My mind is not clear, that is, I am not enthusiastic about a government-owned trans-Canada airway. I am inclined to the view, and have been for many years, that inasmuch as trans-Canada aviation will be distinctly in competition with the two railway systems, they ought to organize and control and operate such a system in conjunction with their railways. For instance, one might take the airway to Winnipeg, then get on the train and go over night to Calgary, and then take an airplane for the rest of the trip, or reverse the process. In my opinion it can be operated most advantageously in conjunction with the railways. Here again we are in the dark. It may be that it is in the mind of the minister to do something of that kind, and when we go into committee he may explain it.
But we are being asked here to approve the principle as embodied in the bill without knowing where that principle is going to lead us. As the bill is now drafted I could not give it my support in principle, although I should very much like to do so. I have made these remarks for the purpose of giving the minister an opportunity perhaps to clarify the situation in his answer.


James Earl Lawson: I have in mind one or two matters to which I should like to call the attention of the minister before he closes the debate. With much of what has been said by the right lion, leader of the opposition (Mr. Bennett) I entirely agree. I have, however, one or two matters in mind which I should like to deal with a little more fully.
Personally I cannot claim to be a public ownership man, if by that is meant one who favours the public ownership of most things in the country, although I have always recognized that there are certain exceptions to my general rule or principle of the greater efficiency of private enterprise. But there is one principle to which I make no exception and of which I am thoroughly convinced, and that is that we should not have ownership or operation which is part public and part private. I think I made my views of that situation fairly clear in connection with the central bank legislation. As I see it, under this bill we are going to set up an air transport corporation which may or may not be, but has the possibility of being, partly public and partly private.
It will be observed that under section 9 the shares of the capital stock shall not be transferable except to such persons engaged or interested in aviation as are approved by the minister. I direct attention to the word " transferable " because the last section provides that certain sections contained in part III of the Companies Act are applicable. It seems to me that under that section, although you could not transfer a share once it is issued, there is nothing that requires the approval of the minister of the initial issue; because when you issue a treasury share you do not transfer a share. In the terms of the Companies Act you may allot or issue it, but you do not transfer it. Therefore I suggest that the minister seriously consider the fact that this board of directors, which for convenience I will call original directors or original incorporators, have extraordinary powers, provided that the Canadian National Railway Company saw fit not to exercise the whole or any part of the option conferred upon it by the sections of this bill previous to section 9. In other words, the stock
Trans-Canada Air Lines

might be offered to the Canadian National Railway; the Canadian National Railway has to come to the minister and say: Will you provide us with the money to subscribe for this stock? And the minister on behalf of the government might say no. Whereupon the treasury shares could be issued to any group or corporation as this temporary board of directors saw fit.
Then I come to section 11. The leader of the opposition dealt with the question of book value, including franchise, and there was a vehement shaking of heads from some of the ministers interested in the promotion of the bill. I submit that the statement of the leader of the opposition was absolutely correct. Let us, for example, go back to the days when electric railway franchises were valuable. Why did not the city of Toronto expropriate the street railway years before it did? Because it did not want to pay the value of the franchise of the company carried on the company's books. Why did not the city of Brantford expropriate before it did? Why did not dozens of municipalities expropriate private corporations operating electric railways? Because they desired to wait until the franchise expired, so that they would not have to pay the value of the unexpired term of that franchise.
I trust that what I have to say now will not be construed as any aspersion on the present minister or anyone connected with him. I merely point out the loopholes which are left in the bill. Let us assume that the Canadian National Railway, because the government does not see fit to supply it with the money, does not exercise its option to purchase these shares, and that the shares of this corporation fall into the hands of other corporations or private individuals; and they after the selection of a board of directors obtain an appraisal of that franchise by duly qualified engineers and appraisers and write that appraised value on their books as an asset. Surely it would not be contended, at least by the Minister of Justice, that the value of that franchise, written into the books of the company, fixed on the basis of an appraisal, should not be included in the book value if the minister at some subsequent date thought it desirable to acquire all the shares of the corporation. I am inclined to the view that if that occurred, if there was disagreement and the matter went to the exchequer court, the court would hold that the franchise had a value proportioned to its unexpired term, and that value would have to be paid for.
Another section to which I wish to call attention is section 16, dealing with rates. I observe that the minister has power to fix rates. I confess that from reading the section
{Mr. Lawson.]
I could not come to a conclusion whether it was the rates to be paid by passengers and persons who desired to use the air transport or rates in respect of the trans-Canada contract which is defined in a previous section. In any event subsection 2 of section 16 provides that in case of deficit there shall be an increase in rates. To that I have no objection, but subsection 3 provides that as soon as there is a surplus there is to be a decrease in rates. I have no objection to a decrease in rates if there is a surplus, but I do object to arbitrarily fixing, by statute, the decrease which must take place as soon as there is a surplus. Surely if business in general learned one lesson from the depression of the last few years, it learned the wisdom of setting aside a reserve in the days of plenty and of surpluses to meet deficits and losses in bad times. So I suggest to the minister that serious consideration should be given to the question of arbitrarily, by statute, requiring a reduction in rates. If you are going to have a board of directors capable of exercising sound, reasonable business judgment, I think it might at least be left to their dis-. cretion whether or not there should be a recommendation, say, for a reduction of rates having regard to the previous service.
Having dealt with a few sections specifically, Mr. Speaker, I do urge this thought upon the minister and the government with regard to the whole plan. This scheme leaves in the hands of one man, whoever may be the incumbent of the office of Minister of Transport at any particular time, a vast discretion. It leaves in his hands power to embark upon the expenditure of a huge amount of public money at some future date for the acquisition of something we now have. Worse than that, in my view, it leaves in his hands the power to make a deal, while this parliament is not sitting, to acquire at a huge price based on book values-and book values can tell many stories-an enterprise we now have and which costs us nothing. And all that can be done without the sanction of this parliament, and without parliament having one word to say about it until it is all over.
The closest analogy I can think of at the moment-and believe me I do not mention this because of political partisanship-is the approval that was given to the diversion of a huge amount of water from the St. Lawrence in connection with the Beauharnois development. There power was vested in the Minister of Public Works, and without parliament having an opportunity of saying yea or nay or of expressing its views in any manner, a huge quantity of water was diverted. I am not suggesting that this was beyond the

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statutory powers of the then Minister of Public Works, but the water was diverted. It does seem to me that we should not make it possible for such a large amount of the money of the taxpayers of this country to be diverted or used or expended at the discretion of one man, admirable though he might be, without this parliament being able to say yea or nay or having an opportunity to discuss the proposal in detail.


Clarence Decatur Howe: Mr. Speaker, this bill contemplates a type of air transportation that is practically new in Canada to-day. It contemplates a service between centres of population, a service that must run on schedule and must have a very high efficiency if it is to be depended upon for the efficient transportation of mail. While we have in Canada a very highly developed aviation service it is not by any means similar to the service contemplated by this bill. At the present time we have a service into remote districts, operating on floats in summer and on skis in winter, and depending upon natural waterways for landing places. In serving urban centres, of course, a much more highly developed service is necessary.
Some three or four years ago the work of constructing proper landing fields was undertaken, and up to the present some $7,000,000 has been expended in that way. That work is well advanced towards completion. This service, of course, involves operation on wheels for twelve months of the year. To make such a service reliable a very elaborate weather reporting system is necessary. Weather reports must be available to the pilot at almost any moment during his flight, which involves a high degree of development. The pilot must fly by night as well as by day, in fog and storm as well as in clear weather. For that reason- a radio beam must be provided between landing points which will keep the pilot on his course whether or not he has any visible contact with the ground.
All these things are new in Canada, but during the last ten years they have been developed to a very high state of efficiency on this continent. It has been an expensive development, as the history of the industry will show. The companies that have started in this service and have disappeared would number a score or more. Our task in Canada is to set up this service without all the lost motion that has been expended during the past ten years. We cannot afford to spend ten years in bringing ourselves up to present day efficiency. We must start where our competitors are to-day and we must develop an organization in this country as rapidly as possible.
This is a very difficult problem, and before coming to a final conclusion I think I exhausted all available sources of information. I have ridden in every type of equipment used on the mail routes in the United States; I have discussed the problem with the heads of all the successful trans-American companies; I have had the privilege of discussing the problem with the general manager of Imperial Airways and with officers of the British air ministry, and I have read every report in this connection that I have been able to lay my hands on. As a result of all this I have come to certain conclusions. The discussion we have had in the house to-night, all of which I know has been very friendly and offered in an earnest desire to bring about the best possible result, has brought out at least four different views as to how this work should be undertaken. After listening to the discussion I am convinced that this bill offers the most practical solution that can be suggested. I believe we have safeguarded ourselves at every point.
The first suggestion was that we should turn this line over to one of the private air companies. The question which immediately suggests itself is, which company? Well, perhaps there is one company that by its experience and standing in the industry would have a right to be chosen over other companies. but to-day that company is engaged in extensive services quite foreign to the services we are going to develop here. I have not been able to decide how we could ask that company to separate this trans-Canada service in an effective way from the services operated by the same corporation in the north.
We go back to the experience of other countries. England, I believe, has had the least trouble in the development of aviation. What was dpne there? In England a new company was formed, under government auspices* headed by the best business brains in the country. I believe Sir Eric Geddes is the present head, and if my memory serves me correctly he was the first head of the company, and was taken from a high government post for the work. The company was privately financed, except for about 25 per cent, which the government retained. The British government has two directors on the board, the other directors representing the private capital invested. On the other hand, I have in my hand the report of the committee which considered the development of civil aviation within the United Kingdom, and that committee reports that for the development of services across England the cooperation of the railways should be
Trans-Canada Air Lines

sought. Adequate reasons are given why the railways should have a part in the development.
In my view it is only reasonable that the railways should have a part in the development of air transportation. In the first place they are in the transportation business; and in the operation of air lines there are problems in common with the operation of railways. For instance, both must have ticket offices; both must have facilities for soliciting express and passenger business. The legal problems of both are more or less on a par, and a legal staff trained to railway transportation matters would be valuable in air matters. I could set out many other points where the services are more or less parallel. So it seemed to me from the start that in a properly organized trans-Canada system the railways should have a part.
Then came the question of personnel. Naturally the pilots in Canada are working for aviation companies. Were we to set up a company under government auspices, and then bid for the services of the twenty or thirty most experienced pilots? We could take them only from certain places, namely from the businesses using them to-day. That led me to the belief that we should have the cooperation, as shareholders, of one or more of the companies engaged in aviation so that we could have their assistance in setting up the personnel of the service.
The leader of the opposition (Mr. Bennett) has said that the government should own and operate this service, but the experience of other countries hardly indicates that that is a wise procedure. A government directly in the transportation business is under certain handicaps which are not so serious in the case of a wholly owned transportation subsidiary of a government. For instance, going back to the Intercolonial railway, I think everyone will agree that an accident off that line cost the government a great deal more than a similar accident costs the Canadian National Railways to-day. As a minister of the government I shudder over the possibility of being responsible for the crash of a plane-load of passengers travelling on a wholly owned government air line.
In any event, after the consideration of these matters the government has decided that its agency for transportation, the Canadian National Railways, should be the means of organizing this company, just as it was used as the means for operating such shipping as the government has owned, and the means of operating other government transportation facilities.

I have said it is intended to place the organization of the company in the hands of the Canadian National Railways. There has been a great deal of objection to-night to the power the minister would have in selecting shareholders and directors of the company. But surely in turning the problem over to the directors of the Canadian National Railways, the minister is turning it over to seven able business men who have a certain responsibility to the government, and who would be well qualified to handle the problem.
There is one point the bill does not make clear, but which it will make clear, namely that the Canadian National Railways will retain at least fifty-one per cent of the stock of the company. It will be noted that the government has three directors and the shareholders have six, which would mean that even if the railway disposed of the full forty-nine per cent, the government would have three directors, the railway company would have three, and such private aviation interests as may come in would have not more than three. So that at all times we would have government control.
You might say: Why is the government entitled to three directors if it is not an investor? I think the reason is that the investment of the government in air fields and facilities will be three or four times as great as the investment to be made in facilities by the aviation company. In other words, the investment in landing fields will be vastly greater than the investment in flying equipment. Further, the government has committed itself to provide weather and beam service, or radio-telegraphic service on the route. The operating costs to which the government is committed are certainly fifty per cent of the total operating costs falling upon the aviation company. Further than that, the government has undertaken that the company shall operate without loss; in the same direction they have provided that it shall operate with a very limited profit, provided the operation develops in the direction of reduced operating expenses.
Perhaps no set-up is perfect, but I do believe we have adopted the soundest possible arrangement, and in the end I believe it will be generally agreed that we have arrived at about as sound a method as could have been found of setting up the company to achieve the results we want.
The question now arises: Have we invited the private interests to participate? That question was asked. May I say we did not need to invite them. They came from every part of Canada and the United States, and put on the most persistent lobby in Ottawa

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that I have ever seen. The only way we could make progress was to absolutely refuse to talk to them. We said, "Go back home. We will write our bill, and when we get it written and bring it down you will see it. If you then want any part in it we will give you the chance to discuss the matter." How could we make a deal on the one hand with perhaps a dozen clamouring aviation companies, or with one or two of them, and on the other hand bring down a bill which the government or parliament would approve? The thing was absolutely impossible. Someone had to make up his mind as to the proper set-up, pick out the responsible people to take care of the initial financing, and after that sit down and see what these services had to offer in the way of experienced personnel, trained operators, and so on; and then decide whether one, two, four or some other number of private companies should be associated in the new organization, whether each would give it strength or otherwise, and then determine the final set-up accordingly. I do not see how any other method could have been used, and I may say I have been living with this problem for several months.
There has been some worry as to the book value. I may say that we undertook at first to have two companies as shareholder's, and that we split with one of them on the question of book value. One of them said that if they built up an efficient service it would be considered to have a valuable franchise, which franchise should be considered in any final settlement. We replied that the book value alone would be considered.
The books will be audited by the government every year. If the bill is read carefully it will be seen that it will be impossible to write one dollar into the books which has not been earned in one way or another. We have provided that if for reasons of defence or otherwise it is thought desirable that the government should own this enterprise, it can be taken over at book value. That is, the actual investment less such depreciation as is determined by the contract. The rates of depreciation, the purchase price of equipment, and so on will be covered by the contract. We are providing that the company can get back only the earnings that are allowed it for the period that it is operating the lines. We believe that as long as we designate the routes and provide free service on those routes, it is we who make the franchise valuable, and not the company. I believe this phase is amply safeguarded.
I think we are getting the best features of government ownership without the obligation of direct government operation, which in the
past has been troublesome. A year or two ago the United States found themselves in an impossible position in connection with the private mail contracts. Almost over night they cancelled those contracts and turned the carriage of mails over to the military services. However, the disasters of the next few months were so appalling that the government hastened to revive the private contracts. It may be that the government had not the time to bring the carriage of mails to a high state of efficiency by providing the proper personnel, but the fact remains that the people of the United States were shocked beyond measure at the number of pilots who were killed in that short period in carrying the mails.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Short title.
Clarence Decatur Howe: I move that the committee rise, report progress and ask leave to sit again.


James Earl Lawson: I should like to ask one or two questions before the committee rises. I refrained from interrupting the minister when he was speaking-


Frederick George Sanderson: I would direct the attention of the hon. member to the fact that this motion is not debatable.


James Earl Lawson: It will only hold up things that much longer when we are in committee.
Progress reported.



FURTHER SUPPLEMENTARY ESTIMATES FOR THE FISCAL YEAR ENDING MARCH 31, 1937

[Stage Direction]
The house in committee of supply, Mr. Sanderson in the chair.

[Stage Direction]
Naval service-To provide for the maintenance of the ships and establishments of the naval service, including the Royal Canadian Navy, the Royal Canadian Naval Reserve and the Royal Canadian Volunteer Reserve-further amount required, $2,201,000.
Richard Bedford Bennett: Will the Minister explain this item?


Ian Alistair Mackenzie: This vote of $2,201,000 is required because of the purchase of two destroyers from the British admiralty. The cost of these destroyers was $1,068,000 each; $40,000 is needed for recruits, and $25,000 to pay the passage of the crews to England.
Mr. BENNE.TT: This vote does not state that any ships are to be purchased.

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Ian Alistair Mackenzie: That is a mistake in the wording of the item.


Richard Bedford Bennett: It should be corrected,. The item simply states that it is to provide for the maintenance of the ships.


Ian Alistair Mackenzie: This item is for the purchase of the two ships.


James Earl Lawson: There is no mention of maintenance in the item.


Ian Alistair Mackenzie: It is to cover the purchase price, some refitting in England, and the cost' of sending the Canadian crews to England.


Abraham Albert Heaps: What will be the total cost of these boats when they are completed?


Ian Alistair Mackenzie: The
total cost will be $2,201,000 less the amount necessary for personnel expenses. The actual price is $1,068,000 each, which includes a certain amount for refitting.


Abraham Albert Heaps: What will be the total maintenance cost for these boats?


Ian Alistair Mackenzie: Because of their larger size, there will be an additional maintenance cost of about 8230,000 per annum for the two boats.


Abraham Albert Heaps: That is over and above what it cost to maintain the other two?


Ian Alistair Mackenzie: That is correct.


Abraham Albert Heaps: What will be the total cost of maintaining the two new boats?


Ian Alistair Mackenzie: The
maintenance of each destroyer will run to about $296,175 per annum.


Howard Charles Green: One of the old destroyers, which I understand are to be broken up, was named the Vancouver. The suggestion has been made that some memento from that ship should be given to the city of Vancouver. Will the minister take this suggestion under consideration?


Ian Alistair Mackenzie: I shall be delighted to see that it is carried out.


Richard Bedford Bennett: I think the item should contain the proper description before we vote the money. Put it in some sort of shape which adequately explains what it is for.


Charles Avery Dunning: I move, Mr. Chairman, an amendment to the wording of the item, to read as follows:
To provide for the purchase and refitting of two destroyers for the Royal Canadian Navy.


Charles Grant MacNeil: What is the total personnel of each destroyer?


Ian Alistair Mackenzie: I gave that information in full in the main estimates. I believe I have it here. The total involved, on the estimates of this year, will be 1,212 officers and men of the Royal Canadian Naval Volunteer Reserve, and 1,339 officers and men of the Royal Canadian Navy, an increase in the Royal Canadian Volunteer Reserve of 161, and in the other branch, of 373, or a total increase of 534.


Grote Stirling: Would the minister be good enough to report progress on the mine
sweepers?


Ian Alistair Mackenzie: As far as mine sweepers are concerned, it is expected that tenders will be called for within the next two weeks for their construction in Canada.


Grote Stirling: Both east and west?


Ian Alistair Mackenzie: It is expected to divide construction territorially as far as possible.


Richard Bedford Bennett: This seems to me an opportune moment to make a few observations with reference to our naval policy. I was hopeful that the minister would regard it as desirable to postpone any definite commitments to purchase mine sweepers or other naval craft until such time as he had had an opportunity to discuss matters with the British admiralty. I also desire to point out that during the recent weeks we on this side of the house have refrained from making any observations on this subject believing that the government was best able to determine what was desirable in the public interest with respect to defence. But I have long felt that it is desirable that there should be some measure of agreement between parties with respect to this matter. Feeling that as strongly as I do, we refrained from pointing out that the secret memorandum to which the minister referred in connection with the military estimates was one that had been prepared and delivered to the then Prime Minister in May of 1935, and that in consequence of armament having followed disarmament efforts we were then, in a different situation from what we had hitherto been in.


Ian Alistair Mackenzie: There
were two memoranda-one in 1932 and one in 1935.


Richard Bedford Bennett: I am dealing with 1935. In speaking of the naval situation I purpose to refrain from making any observations that can be regarded as contentious; rather I am going to rely entirely upon quotations from the speeches of Sir Wilfrid Laurier, both when

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in -office and out of it, for the purpose of endeavouring to direct the attention of the committee to the importance of our having a clearer appreciation of what has been done in Canada in days gone by with respect to naval defence, what our commitments are at the moment, and why, in the language of that great leader of the Liberal party, we should pursue a policy of close cooperation as respects naval defence with the British authorities.
In 1909 Sir George Foster-then Mr. Foster -moved in this hftuse a resolution on naval defence. It will be found in the journals of the House of Commons of 'March 29, 1909. It was seconded by Mr. Haggart, of South Lanark, and is in the following terms:
That in the opinion of this house, in view of her great and varied resources, of her geographical position and national environments, and of that spirit of self-help and self-respect which alone befits a strong and growing people, Canada should no longer delay in assuming her proper share of the responsibility and financial burden incident to the suitable protection of her exposed coast line and great seaports.
On that occasion Sir George Foster made a speech which Sir Wilfrid Laurier described in 1913 as one of the best of the many good speeches he had made. Sir Wilfrid at that time did not think that Sir George Foster's resolution went far enough, so he moved in his own language an amendment, seconded by Mr. Faterson, and in his discussions he had the aid also of Sir George Foster in making certain other additions to the resolution finally adopted, which was in these words:
This house fully recognizes the duty of the people of Canada, as they increase in numbers and wealth, to assume in larger measure the responsibilities of national defence.
The house is of opinion that under the present constitutional relations between the mother country and the self-governing dominions, the payment of regular and periodical contributions to the imperial treasury for naval and military purposes would not, so far as Canada is concerned, be the most satisfactory solution of the question of defence.
The house wall cordially approve of any necessary expenditure designed to promote the speedy organization of a Canadian naval service in cooperation with and in close relation to the imperial navy, along the lines suggested by the admiralty at the last imperial conference, and in full sympathy with the view that the naval supremacy of Britain is essential to the security of commerce, the safety of the empire and the peace, of the world.
The house expressed its firm conviction that whenever the need arises the Canadian people will be found ready and willing to make any sacrifice that is required to give to the imperial authorities the most loyal and hearty cooperation in every movement for the maintenance of the integrity and honour of the empire.
That was carried unanimously, and Sir Wilfrid Laurier refers to it in a speech from which I desire to make a few quotations. Next year Sir Wilfrid Laurier's administration placed upon the statute books the naval law of Canada. The act, which is chapter 43 of the statutes of 1910, is well known, I take it, to most hon. members; its short title is the Naval Service Act. This act provided practically for a Canadian navy. In 1911, before his administration was defeated, Sir Wilfrid Laurier, in accordance with the provisions of the Naval Service Act, called for tenders for four cruisers and six destroyers to be built in Canada. Those ships were tendered for, and the date fixed for the expiration of the receipt of tenders was in the fall of 1911. As a matter of fact the day fell after the defeat of his administration and Sir Wilfrid Laurier did not accept the tenders.
In 1912 the government of Sir Robert Borden considered the question of our naval defence, and in consequence of the information imparted to the representatives of his government introduced into the House of Commons a resolution providing for the construction of three dreadnoughts at an expenditure of 835,000,000. That was done on the basis of an alleged emergency. Sir Wilfrid Laurier denied that there was an emergency, and upon that question the parties joined issue. During the course of the debate Sir Wilfrid made a speech to which I should like to direct the attention of this committee, for in that speech he reviewed the past in the light of seventy years of a life which he said he hoped he had not lived in vain, and he gave to the Canadian people his view of their obligation and duty in relation to naval defence.
At page 1022 of Hansard of December 12, 1912, Sir Wilfrid referring to the resolution introduced by Mr. Foster speaks as follows:
When four years ago my hon. friend from North Toronto (Mr. Foster) introduced this subject in a concrete form, we were in control of the house, and the house will agree with me that we did not receive his motion in any carping spirit. The motion moved by my hon. friend was to this effect.
Then he read the resolution which I quoted a few moments ago. He went on:
We received the proposition of my hon. friend quite sympathetically, and we suggested to him that it would be advisable to enlarge it and to bring it to the broader basis of imperial defence, in view especially of the new conditions which were then and had been for some time arising in Europe. I am bound to say that our suggestion was well received by our friends on the other side, and they in turn offered us some amendments, which we were

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only too glad to receive. The original motion of my hon. friend, thus amended, was passed by the unanimous voice of parliament. It was in these terms.
Then he read the terms of the resolution I have already given to the house. He then discussed certain questions dealing with the recent election and the difficulties that had been experienced in Quebec and elsewhere in connection with his naval policy, and he said:
It has also been said in the province of Quebec during the last contest that we could rely on the Monroe doctrine. To anyone who would rely upon the Monroe doctrine, I would say, let him examine the record of Cuba after the Spanish-Ameriean war. When the Cubans were desirous of removing the yoke of Spain, they appealed to the United States for help, and they got it, but -when, with the assistance of the United States, they had freed themselves from the control of Spain, they found that they had a rather high price to pay for the help they had received. That price was the abridgement of a portion of their independence. After the war was over, the people of Cuba naturally wanted to establish a regular government of their own. They called a convention and adopted a constitution, but that constitution had to go to Washington for revision, and there after three months' discussion, certain conditions were imposed upon Cuba, which to the people of that country were extremely distasteful, which convention they adopted by a narrow majority of five. The following conditions were made part of the constitution of Cuba:
Cuba shall not make any foreign treaty which may tend towards placing the independence of the island or any portion thereof in jeopardy; no loans can be issued unless a surplus of revenue is available for the service of such obligations; the United States can intervene to preserve the independence of Cuba or to ensure protection for life and property; the acts of the United States military administration in Cuba since 1898 are recognized as valid; proper hygienic precautions must be taken to protect public health on the island; the ownership of the Isle of Pines is left for future consideration; coaling stations shall be sold or leased to the United States in localities to be hereafter decided.
This shows how much Cuba had to discard of her sovereign power for the sake of the Monroe doctrine. We have to take our share in the defence, not only of our native shores, but of the empire as a whole. We can defend ourselves only by the assistance of the mother country.
The foregoing was followed by these words, after he had spoken of the Australian navy:
I insist once more upon what is stated in the memorandum: There is no emergency, there is no immediate danger, there is no prospective danger. If there were an emergency, if England were in danger-no, I will not use that expression; I will not say if England were in danger, but simply if England were on trial with one or two or more of the great powers of Europe, my right hon. friend might come and ask, not $35,000,000, but twice, three times,

four times $35,000,000. We would put at the disposal of England all the resources of Canada; there would not be a single dissentient voice. . . .
Sir, I remember very well the question on that occasion, and those who were present in the house at that time cannot have forgotten it. This question gave rise to one of the most important debates, which, in the some thirty years of my experience, the parliament of Canada ever saw. I remember the speech of my hon. friend from North Toronto (Mr. Foster), an excellent speech, one of the very best he ever made, and that is paying a great compliment, well-deserved.
He was speaking of the debate on the resolution to which I have just referred:
I remember the speech of my right hon. friend (Mr. Borden) the present Prime Minister, and if ever a man gave reasons against the policy which he has now introduced, my right hon. friend gave those reasons on that occasion.
He was dealing with the question of there being no emergency. He proceeds:
Now, sir, I ask, why is it that my right hon. friend and his first lieutenant, the leaders of the opposition then, who to-day have the responsibility' of office, will not go on with the policy so forcibly put forward by them, instead of a policy under which, in the language of my right hon. friend, there will be no preparation of the soil or beginning or growth of the product of defence? The reason. sir, is not far to seek. The reason is well known: there is one, and only one, and it is because this subject of imperial defence has been made the subject of contentious politics.
That position he amplified in the course of his speech, and he proceeded with the following statement:
I hope it is true, but would not the impression be much greater yet, if, instead of thin money contribution, the nations of Europe were to see the young daughters of the empire, the young nations scattered over the whole world, building fleets of their own, to use the language of the resolution of 1909-
"in cooperation with and in close relation to the imperial navy, along the lines suggested by the admiralty at the last imperial conference, and in full sympathy with the view that the naval supremacy of Great Britain is essential to the security of commerce, the safety of the empire, and the peace of the world."
After referring to the ships at sea and the unfurling of the white ensign, he then proceeded :
Australia has adopted the same policy, and she has adopted it for the reason stated by my hon. friend in the debate of 1909: that having tried contribution, she found that contribution would not work. Australia, therefore, came to the conclusion which we came to: she came to the conclusion that gentlemen now sitting on the government benches came to, but which they have abandoned, and abandoned for what reason? For no other reason than the well-known reason of their alliance with the Nationalist party of Quebec.

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That was part of his speech. Proceeding to deal with the question of there being no emergency, he said:
Well, Mr. Speaker, we went on with the execution of our policy. We asked for tenders, with the intention of having ultimately a double unit, one on the Pacific ocean and one on the Atlantic ocean; we asked for tenders for four cruisers and six destroyers, which would cost $11,280,000. We did not choose to award the contract, in view of the impending change of government . . .
Yes; we thought as the general elections were coming, that it would not be fair, in a matter of this kind, which was at issue between the two parties, to award the contract in case there might be, as there was, a change of government. I say now that the government in power would have been better advised if they had awarded the contracts, and, had they done so, we would at the present time have under construction on the stocks in Montreal four cruisers and six destroyers.
He proceeded further, and dealing with the building of ships in Canada said there was a better way than making a contribution -let us have a Canadian navy as soon as practicable and have all our ships built in Canada. Then came these words:
I now come to another subject, which I would not have mentioned at all were it not for some observations made during the debate on the address by the hon. member for Kingston (Mr. Nickle). During the last electoral contest, I heard it many a time, and I read it many a time, that our Canadian navy was a separatist navy, and that it was, on account of something which was to be found in the act, liable to be neutral in time of war. I have been too long in the fight to care very much for what may be said of me during an electoral contest: but when a thing is repeated upon the floor of parliament within my hearing, I owe it to myself to take notice of it. And, just here, apropos of this, let me recall a classical and historical incident.
Then he gives the classical story of the conditions on the eve of the battle of Salamis, of how when the commander would not listen to what was said to him Themistocles said, "Strike, but hear me first." And he concluded with these words:
I do not entertain, at the age of seventy, many of the ideas I had at twenty, or at thirty, or even at forty; but I trust I have not lived in vain, and that in the course of my long career I have learned something from observation and experience. Let the matter be settled once and for all, not only for myself, but for my friends here and outside, by my declaration: That any thought of separation from Great Britain, if any such thought exists anywhere, and I do not believe it does-would be a folly and a crime. As to the contention of my hon. friend from Kingston that in case of war our navy would be neutral. I have only this to observe. I said a moment ago that I hope I have not lived in vain, and I hope I am to be given credit for some common sense and some knowledge, and my answer to
that contention is: when England is at war, we are at war, and the thought of being neutral would be like the command of King Canute to the sea to recede from his feet. No action of ours could bring that about. When England is at war, we are at war; but it does not follow that because we are at war, we are actually in the conflict.
Some hon. members: Oh, oh.
Sir Wilfrid Laurier:	We can be in the
conflict only through two things, namely, actual invasion of our soil, or, the action of the Parliament of Canada. That seems to arouse the hilarity of gentlemen on the other side of the house.
Mr. Graham:	They have not read much
history.
Then Sir Wilfrid proceeds to deal with other questions relating to stories of the wars, and various wars in the world, and participation in the Boer war, to which I shall not refer. On page 1035 he continued:
Some objections have been made to our Naval Act, because it was said that the British admiralty could not count at all times upon the support of the Canadian navy. I simply say that the admiralty can count at all times upon the Canadian navy, because last year we passed an agreement with the admiralty, whereby naval stations were created for the Canadian navy. The Canadian Atlantic station would include north of 30 north latitude and west of the meridian of 40 west longitude. The Canadian Pacific station would include north of 30 north latitude and east of the meridian of 180 west longitude. So the admiralty knew that at ah times in those bodies of water there were Canadian ships to guard the waters; and the moment the ships of an enemy of England appeared in those waters it was the duty of our navy to pounce upon them, to grapple with them and to sink them, in the same manner as if they had been in the harbour of Halifax. That is the interpretation placed upon that act. My hon. friends, however, have to-day the administration of the act; they can interpret it themselves; but surely they will not interpret it in the way it is said they could. They can amend it as they please; but, whatever they do, if they are sincere as i hope they are, they cannot put any other construction than the construction I put upon this act.
That act is still in force in the terms in which it was passed. There have been no substantial changes in it during revision or otherwise. It has had placed upon it by Sir Wilfrid Laurier the construction to which I have referred.
Then, dealing with armaments in Europe, he proceeded to say:
The problem that you have to deal with is one which demands a permanent policy

a policy for to-day, for to-morrow, and for every day, so long as the armaments grow in Europe; and the duty which you owe to yourselves to Canada, and to the empire, is the enactment
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of a permanent policy. As regards the creation of a Canadian navy, you have apparently decided against that. In respect to contribution, does anyone imagine that you will have only one contribution?
He goes on to say that we have the question of defence to deal with, and he discussed that at some length, and wound up his speech by moving a very significant motion which I think should be within the memory of many members of this committee. The amendment he moved was:
That all the words after the word "that" be struck out, and the following be substituted therefor:-
" This house declines to concur in the said resolution and orders that the same be referred back to the committee with instructions to amend the same in the following particulars, namely, to strike out all the words after clause (a) and substitute therefor the following:
The resolution provided for the expenditure of S35,000.000 for the construction of three dreadnoughts as an addition to the British navy, and he was moving to strike out all the words after clause (a) and substitute the following:
"The memorandum prepared by the Board of Admiralty on the general naval situation of the empire and communicated to this house by the right lion, the Prime Minister on December 5th shows that several of the most important of the foreign powers have adopted a definite policy of rapidly increasing their naval strength.
"That this condition has compelled the United Kingdom to concentrate its naval forces in home waters involving the withdrawal of ships from the outlying portions of the empire.
"That such withdrawal renders it necessary that Canada without further delay should enter actively upon a permanent policy of naval defence.
"That any measure of Canadian aid to imperial naval defence which does not employ a permanent policy of participation by ships owned, manned and maintained by Canada and contemplating construction as soon as possible in Canada, is not an adequate or satisfactory expression of the aspirations of the Canadian people in regard to naval defence, and is not an assumption by Canada of her fair share in the maintenance of the naval strength of the empire.
"This house regrets to learn the intention of the government to indefinitely postpone the carrying out by Canada of a permanent naval policy.
"It is the opinion of this house that measures should be taken at the present session to give effect actively and speedily to the permanent naval policy embodied in the Naval Service Act of 1910 passed pursuant to the resolution unanimously approved by this house in March, 1909.
"This house is further of the opinion that to increase the power and mobility of the imperial navy by the addition by Canada under the above act of two fleet units, to he stationed on the Atlantic and Pacific coasts of Canada, respectively, rather than by a contribution of
IMr. Bennett.]
money or ships, is the policy best calculated to afford relief to the United Kingdom in respect to the burden of imperial naval defence, and in the words of the admiralty memorandum, to restore greater freedom to the movements of the British squadrons in every sea and directly promote the security of the dominions; and that the government of Canada should take such steps as shall lead to the accomplishment of this purpose as speedily as possible."
An acute difference of opinion between the government of Sir Robert Borden and Sir Wilfrid Laurier and the Liberal party was first as to there being an emergency. An hon. gentleman in this house a few days ago suggested that no member of the House of Commons at that time could have foreseen the possibility of a war. I do not know whether that hon. member was present in the house or not, but I think no man who visited England in 1912 and was familiar with the conditions had any doubt in his mind that with the completion of the Kiel canal and the changed methods of construction of battleships, the great German empire found herself practically on a parity with England, because England had begun the construction of dreadnoughts, thereby making obsolescent a great number of her ships, and thus enabling Germany to be more nearly on a parity with her than theretofore; and having regard to the provisions of what was known as the Cawdor report, it was quite clear that a new condition had arisen.- When the imperial conference of 1911 met, with Sir Wilfrid Laurier and others representing the Dominion of Canada, it will be recalled that some discussion took place in respect to these matters and that Sir Wilfrid in the resolution he moved made the declaration to which I referred. So far as I know there was no change in those declarations, and the agreement that was made by the government of Sir Wilfrid Laurier for the creation of North Atlantic and South Atlantic areas which would be protected by a Canadian fleet still stood.
It is true beyond peradventure that the action taken by the government of Sir Robert Borden in 1912-13 made it impossible for the moment to continue the policy which had been outlined by Sir Wilfrid Laurier. But he did outline the policy, which was an agreed policy, and my reading to-night to the Minister of National Defence and the members of the committee who are of the Liberal persuasion of what Sir Wilfrid Laurier said is done with the hope that there may be some measure of unanimity with respect to the action we take in connection with our naval defence. I have outlined the attitude which Sir Wilfrid Laurier then took and which he maintained even until the end. When par-

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liament met in 1914, in connection with the war, on the 19th day of August, 1914, Sir Wilfrid Laurier used these words:
This session has been called for the purpose of giving the authority of parliament and for the sanction of law to such measures as have already been taken by the government and any further measures that may be needed to ensure the defence of Canada and to give what aid may be in our power to the mother country in the stupendous struggle which now confronts her. Speaking for those who sit around me, speaking for the wide constituencies which we represent in this house, I hasten to say that to all these measures we are prepared to give immediate assent. If in what has been done or in what remains to be done there may be anything which in our judgment should not be done or should be differently done we raise no question, we take no exception, we offer no criticism, and we shall offer no criticism so long as there is danger at the front. It is our duty, more pressing	upon	us	than all otherduties, at once, on this first day of this extraordinary session of the Canadian parliament, to let Great Britain know, and to let the friends and foes of Great Britain know, that there is in Canada	but	one	mind and	oneheart, and that all Canadians stand behind the mother country, conscious and proud that she has engaged in	this	war,	not from	anyselfish motive, for any purpose of aggrandisement, but to maintain untarnished the honour of her name, to fulfil her obligations to her allies, to maintain her treaty obligations, and to save civilization	from	the	unbridled	lust
of conquest and domination.
We are British subjects, and to-day we are face to face with the consequences which are involved in that proud fact. Long we have enjoyed the benefits of our British citizenship; to-day it is our duty to accept its responsibilities and its sacrifices. We have long said that when Great Britain is at war we are at war; to-day we realize that Great Britain is at war and that Canada is at war also. Our territory is liable to attack and to invasion. So far as invasion is concerned, I do not see that there is any cause for apprehension, for it seems to me obvious that neither Austria nor Germany, our foes in this war, can command any force able to make an attack so far from their base.
It will be remembered that Germany did lay mines from Cape Breton to Halifax.
n?, Pretends that our maritime cities on the Pacific and the Atlantic are free from the possibility of insult by an audacious corsair, who, descending suddenly upon our shores, might subject them to an insolent raid and decamp with his booty before punishment could reach him. This is not an unfounded dread of danger; this is no mere illusion; it is a real and indeed a proximate danger, since it is a matter of notoriety that both on the Pacific and on the Atlantic there are German cruisers whose mission is to inflict all the injury they can upon our commerce, and even to raid our cities should they find our harbours unguarded. We are aware that the government has already taken measures^ and very appropriately, to guard against this danger. We know that one
9f our battleships on the Pacific has been seeking the enemy, and if she has not yet engaged him it is because the enemy has eluded her pursuit.
Then he said:
Upon this occasion I owe it to the house and to myself to speak with absolute frankness and candour. This is a subject which has often been an occasion of debate in this house. I have always said, and I repeat it on this occasion, that there is but one mind and one heart in Canada. At other times we may have had different views as to the methods by which we are to serve our country and our empire. More than once I have declared that if England were ever in danger-nay, not only in danger, but if she were ever engaged in such a contest as would put her strength to the test-then it would be the duty of Canada to assist the motherland to the utmost of Canada's ability. England to-day is not engaged in an ordinary contest. The war in which she is engaged will in all probability-nay, in absolute certainty- stagger the world with its magnitude and its horror. But that war is for as noble a cause as ever impelled a nation to risk her all upon the arbitrament of the sword.
He concluded his address by declaring that the union of hearts which exists in the United Kingdom exists also in Canada, Australia, New Zealand and South Africa, and that it was the inspiration and the hope-
-that from this painful war the British Empire may emerge with a new bond of union, the pride of all its citizens, and a living light to all other nations.
That was at the beginning of the great war. So far as I know until the time of his death Sir Wilfrid Laurier, as leader of the Liberal party, always held the sentiments to which I have alluded. He believed, as I believe, and as I think thoughtful Canadians everywhere believe, that if possible there should be a unity of purpose with respect to the policy of naval defence. I see no reason to qualify in any sense the approval which on more than one occasion I have given, for myself, of the words used by Sir Wilfrid Laurier at the time he supported and enlarged the resolution of Sir George Poster. The observations he made as to the position which Canada occupies with respect to the British Empire were observations which I think, in the light of his great experience and his age of seventy years at that time, are worthy of every consideration by the Minister of National Defence.
_ I suggest to the minister at this time that in dealing with the problem of naval defence he should bear in mind the provisions of our Naval Service Act and the language of Sir Wilfrid Laurier, which I have taken the trouble to read at some length in order that there may be no misapprehension as to the position
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which he then took; that we should so coordinate our efforts in naval activity with those of the motherland as to ensure the defence of the British Empire as a whole. That was the opinion which Sir Wilfrid Laurier presented to the House of Commons and which received unanimous support when the resolution of 1909 was adopted. Sixty-five members from Quebec united with some eighty members from Ontario and all the members from the west and the maritimes to pass unanimously the resolution upon which in 1910 was based the Naval Act.
I do plead that we might again endeavour to forget some of the animosities and differences that have too frequently been manifest when dealing with a problem of the magnitude of the naval defence of this country, and that the memory of a past which is now ancient might be overcome by the memory of the stirring words to which I have alluded. I can remember, as I heard some of them, the impression they made upon my mind at the time. I suggest that the minister, when he goes to England to deal with problems of imperial import-and I use the word " imperial" in the same sense that Sir Wilfrid Laurier used it-should keep in mind the desirability of there being unity of purpose and unanimity in point of fact. I think there will be no difficulty about unanimity and unity if we bear in mind the fundamental considerations which, in the opinion of the veteran leader of the Liberal party, were the source of his views and his policies with respect to such matters.
There were differences in 1912 and 1913, arising out of the question whether or not there was an emergency. Subsequent events indicated that there was indeed an emergency; but that need not now be discussed. We can forget that, as we pass this appropriation to-night for the purchase of two destroyers.
The minister says he contemplates calling for tenders for four mine sweepers; and we have the training ship now being built for which we made provision in place of the Aurora, the magnificent ship we obtained from the admiralty at the end of the war and which went out of commission. Now, in the face of the admitted danger to which .Sir Wilfrid Laurier referred in 1913, in view of the admittedly disturbed conditions in Europe, in view of the threats that have been directed at the very life of this empire, I do not see why by displaying a unity that would indicate to all the world that we had forgotton ancient grievances and animosities that had sprung out of the war, we should not hope that when the Prime Minister and his delegation go to England and confer with

the admiralty they might be able to arrive at a common understanding which would look not merely to the defence of our own shores but, in the words of the late Sir Wilfrid Laurier, more to the defence of civilization and the maintenance of world peace by the defence of the British Empire itself.


William Lyon Mackenzie King: Mr. Chairman, at this hour of the night, at this stage of the session, and after having spoke on defence policies at considerable length on the main estimates I do not wish to say more than a few words at this time in reply to my right hon. friend. Perhaps I would more accurately describe my own feelings at the moment were I to say a few words in association with what my right hon. friend (Mr. Bennett) has just said.
It would be impossible to have heard from the lips of anyone a more complete endorsa-tion of the Liberal policy with respect to naval defence than that which has been given to-night by the right hon. leader of the opposition. He has quoted the records with respect- to naval defence, from the time the policy was introduced in 1909. With one possible exception, which I think ought to be mentioned, namely in reference to what he said as to emergency being the cause of any change of policy which took place, I believe he has fairly stated the significant facts.
The Laurier policy, so-called, was a policy of the defence of Canada's coasts by Canadians, by ships made as largely as possible in Canada and manned by Canadians, a service controlled by the government of Canada, and one which could be placed at the disposal of the British admiralty whenever this parliament decided it was desirable that the service should be placed so as to act in cooperation with other services within the empire.
I was a member of Sir Wilfrid Laurier's government at the time it was decided to introduce the Naval Service Act, and I remember quite vividly the discussions which took place both in cabinet and in parliament with respect to the measure. In considering what it was advisable to do by way of an initial step, the choice lay between making provision at the outset for destroyers and cruisers, and the purchase of dreadnoughts. I recollect that as stated the complete policy was for a fleet unit on the Atlantic and on the Pacific, such service when finally constructed to consist of destroyers, cruisers and battleships. It was thought advisable to begin with the smaller ships, aiming ultimately at a service which would embrace the different classes I have mentioned.
My right hon. friend's observations tonight with respect to tenders not having been

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awarded prior to 1911 brings back to my mind how scrupulously honourable Sir Wilfrid Laur-ier was in dealing with public matters. He sought to avoid even the appearance of questionable dealings with respect to any public matter and more especially transactions of national significance, and the defence policy was in that category. I well recall tenders being placed before the cabinet for consideration prior to the election of 1911, and Sir Wilfrid Laurier taking very strongly the position that while for many reasons it might be advisable to award tenders before the election so that there might be no question about the government's intention of going on with the naval service, nevertheless to award contracts of the magnitude involved on the eve of a general election would mean taking a step which in the minds of the public might be misinterpreted. On this ground he held that it would be preferable to leave the awarding of tenders until the election was over. For that reason the date upon which tenders were to be awarded was fixed, as my right hon. friend has pointed out, at a date shortly after that fixed for the election itself.
Hon. members will recollect that 1911 was a year of a general election in which political contest the main subject of controversy was the question of reciprocity. Those who participated in the campaign in the provinces of Ontario and Quebec will recall that in addition to the question of reciprocity the whole question of the naval service, and what it suggested in relations between Canada and other parts of the world, and the British Empire in particular, was very fully discussed. In Ontario Sir Wilfrid was bitterly criticized throughout the campaign for what was termed his separatist policy and his tin pot navy. What was being attempted was described as something absolutely useless and having a separatist tendency. In the province of Quebec a different campaign was waged. There it was stated that the Laurier policy was intended to force Canadians into'European wars, that it was a species of jingo imperialism, that Sir Wilfrid had become a jingo imperalist, that a jingo imperalist was at the head of the Liberal party and must not be supported any longer as leader of the government of the country.
Hon. members will also recall that out of the agitation in the province of Quebec a third party, a new party developed. That party was not known as the Conservative or the Liberal party, but was called the Nationalist party. That party, as subsequent disclosures proved, had been financed during the campaign by the Conservative party and was in alliance with it. There was a secret 31111-141
understanding that if the Liberal administration was defeated in the campaign by the Nationalists in the province of Quebec and Conservatives in other provinces, the two would unite after the election to form a government to control the affairs of the country.
As results proved, from the standpoint of political strategy the course which had been adopted was successful. A large number of candidates returned as Nationalists were seen to be Conservatives, when it came to their being seated in the house and arrangements for government were in the making. The two parties combined, the Conservative and the Nationalist, were sufficiently large in numbers to defeat the Liberal administration.
What I want to say this evening is that there is something in the nature of poetic justice in the fact that at the end of a little more than a quarter of a century, after all these divisions have taken place and, fortunately, have been largely forgotten, it should remain to the leader of the Conservative party, the party which defeated Sir Wilfrid Laurier on his naval policy, to be the one to pronounce a strong eulogy with irespect to every aspect of the policy put forward by Sir Wilfrid at that time. I want to express to my right hon. friend my appreciation of his manliness in standing up as he has to-night, and crediting Sir Wilfrid Laurier with wisdom and consistency from beginning to end with respect to his policy of naval defence, a consistency which the Liberal party as a whole can also claim. I say that, because we have never at any time departed from our belief that the Laurier policy was the wise and the sound one.
More than that, looking back on the events of the great war, we have reason to know that had the Laurier policy been continued, as it should have been, and had there been that same feeling of loyalty of all parties as has been expressed by my right hon. friend, the fleet unit on the Pacific coast would have played for Canada a part comparable to that which one or two of the ships of the Australian naval service, created at the same time, played for Australia in the course of the great war.


Richard Bedford Bennett: I believe they were a little ahead of us.


William Lyon Mackenzie King: As a matter of fact, the two services were decided upon at the same time, but the work of construction of the Australian naval service commenced at a date earlier than that on the Canadian naval service.


Richard Bedford Bennett: They had their ships afloat when the war began.



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William Lyon Mackenzie King: Yes, that is
correct, and we would have had our ships afloat when the war began had it not been for the attitude of those who opposed Sir Wilfrid Laurier's policy at the general election of 1911. That is the point to which I wish to draw attention. That concerns the one representation, in what my right hon. friend has said to-night to which I take exception. He said that the reason for the change in policy was because of an emergency.


Richard Bedford Bennett: That is so.


William Lyon Mackenzie King: That was not the reason. The reason was that after the Conservative party came into power because of the attack on the Laurier naval policy, it found it could not unite on any naval policy. There was a wide division in the party which made it necessary to find some other means of dealing with and at the same time shelving the question of naval defence. Unfortunately there are not many in the house to-night who were here at that time, but there will be some who will recall that when Sir Robert Borden formed his cabinet he took in the Hon. Mr. Monk, who was one of the leaders of the Nationalist party. Mr. Monk was a leading Conservative, but he left the party assumedly to lead the Nationalist party in the province of Quebec. There was Mr. LaVergne and others who claimed they were entitled to seats in the cabinet for the part they had played as Nationalists. For a year nothing was done with respect to defence but Sir Robert Borden was ultimately obliged to take some action with regard to naval defence. The minute that he took any action, that minute Mr. Monk resigned from the government and a serious situation was created for the administration.
In order to do something, Sir Robert Borden determined upon the policy of making a contribution in the form of three of the largest dreadnoughts in the world, to cost $35,000,000. How was that action construed? Was it construed as being a policy of Canadian defence or was it construed as being a policy of imperial defence? The answer given to that question depended upon the part of Canada in which the question was asked. When it was asked in the province of Quebec the answer would be: We are making a contribution to get rid of this business of defence once and for all; that is what Sir Robert Borden has in mind; he does not want to start a naval service in Canada and have a navy on our Atlantic and Pacific coasts as a result of which Canada will certainly be drawn into European and Asiatic conflicts that may take place; he wants to get rid of what has been

begun, so he makes this contribution. On the other hand, - if the question was asked in Ontario, the reply would be that this was to meet an emergent condition; that the situation of the empire was so serious that we could not wait to construct a Canadian naval service; we had to make an immediate contribution.


Grote Stirling: Surely reference should be made to the great difficulty connected with the manning of the two cruisers which had been provided under the 1910 act; they were undermanned.


William Lyon Mackenzie King: I must say that I regret having to bring this matter into the discussion because it relates to something that is not creditable and that fortunately belongs to the past. I am crediting my right hon. friend with having given a true outline of the policy of Sir Wilfrid Laurier with regard to Canadian defence and imperial defence. He has stated it very clearly and fairly, but it must not be forgotten that Sir Wilfrid Laurier suffered political defeat at the instance of the Conservative party for taking the stand he took at that time. He suffered defeat in his own province and lost the confidence of men who were dearer to his heart than those in any other part of the dominion. He suffered defeat and his policies alike of trade and defence suffered defeat-because he was so completely misrepresented. I feel it due to his memory to recall the circumstances. It is now said that it was simply a question of emergency; but that is not so. The political warfare of that time created a chapter in our political history which I am sure many of those who figured in it have often wished might never have been written.
However, let the past be past. May I say again that nothing could have vindicated Sir Wilfrid Laurier's memory and his position with respect to the defence of Canada, and the relations of Canada to the British Empire, more splendidly or eloquently than the words uttered this evening by my right hon. friend. I join with him in his view that so far as the future of the naval defence of Canada is concerned, the policy cannot be better expressed than it is in the Naval Service Act. That act was passed during the administration of Sir Wilfrid Laurier and as my right hon. friend has said, it has remained upon the statute books up to the present time with very little, if any, material change.
The act contemplates the gradual development of fleet units on the Atlantic and the Pacific. It looks to Canada taking an increasing share in the protection of her own coasts. This is why, in bringing forward the defence measures which the government

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brought forward this year, we stressed as strongly as we did the fact that these measures were for the defence of Canada. At the close of the debate I was very careful to say that one of the reasons why it had been necessary to stress so strongly that these measures were for the defence of Canada was because it had been represented in many quarters that they were not for the defence of Canada, that the government was taking the action it was in order to be prepared to send another expeditionary force overseas. That was a ground of opposition to our defence policy.
I may be entirely wrong, but I doubt very much if the British government itself will ever send another expeditionary force to Europe. I think it is extremely doubtful if any of the British dominions will ever send another expeditionary force to Europe. Were war to come on suddenly, I think we would find that the conditions of a world conflict would be so different from what they were in *the last war, that anything in the nature of expeditionary forces to be sent from one continent to another would occasion a good deal more than second thought.
However, that is apart from the question. What I have risen also to say is that the minister in asking for this appropriation to purchase the two destroyers is doing so to enable us to increase the Canadian naval service under the Canadian Naval Service Act. The Canadian Naval Service Act has since the time it was passed until to-day stood consistently as the expression of Liberal policy, now Canada's policy on naval defence. It will continue so to stand.


Richard Bedford Bennett: I may suggest to the right hon. leader of the government that section 20 of the Naval Service Act provides:
In case of an emergency the governor in council may place at the disposal of His Majesty, for general service in the Royal Navy, the naval service or any part thereof, any ships or vessels of the naval service, and the officers and seamen serving in such ships or vessels, or any officers or seamen belonging to the naval service.
That action by order in council would indicate an emergency. However, that is a matter of unimportance in one sense as parliament would be called in any event within fifteen days. I think it is highly undesirable to discuss that disputatious matter in connection with this question. There should be some effort at coordination and cooperation between the government of Canada and the government of Great Britain at the approaching conference. We are replacing two worn out destroyers which were loaned to us with two which we are buying at a cost of one mil-31111- 1411
lion dollars each. Four destroyers and four mine sweepers are insignificant compared with what was contemplated by Sir Wilfrid Laurier. In that regard it might be well to point out that the initial action was taken by Sir George Foster. It is a little difficult to understand how the replacement of a couple of worn out destroyers by the purchase of four-year old destroyers can be regarded as in any sense coordination or cooperation in the sense in which Sir Wilfrid Laurier intended.
My purpose in speaking, however, was rather to invite the government to avail itself of the opportunity than to engage in contentious discussion with respect to these matters. It is a sharply contentious question whether or not there was an emergency. I thought in 1912 that there never was a greater emergency-with the completion of the Kiel canal, the beginning of the construction of dreadnoughts, and the passing of the naval act in Germany. That was my view then; it is my view still, and we could not have had a fleet unit ready had we let the tenders in September, 1911, for that purpose. But there are matters which have to do with what you might call the narrow and contentious side of what is after all an issue far larger than individuals or parties, affecting as it does so supremely the preservation of civilization and the peace and happiness of the world. My object was to avoid as far as possible any contentious element and keep within the language used by Sir Wilfrid Laurier, to which I have given adherence on so many occasions, and to which I still adhere, because it met with the approval of the Conservative party in 1909 and 1910; in 1909, when the resolution was brought forward and accepted unanimously by the House of Commons; and in 1910, when the Naval Act was passed in furtherance of the resolution passed in 1909. That is why, instead of using my own words, although it is painful to the house to listen to so much reading, I have quoted from the speeches of Sir Wilfrid in 1912 to indicate the history that brought about the passing of the Naval Act.
I do not desire to get into any discussion of nationalist issues or the difficulties that were experienced, but I again urge upon the Prime Minister and his ministers the great necessity at this time, in view of the similarity of the conditions now existing with those to which Sir Wilfrid referred, of coordinating if possible our effort with the larger effort, and of cooperating by every means within our power with the British government for the purposes indicated in the speeches to which I have referred, and which fully express my opinions with respect to this matter.	:
2228 ^	COMMONS
Supply-Governor General's Warrants


Charles Grant MacNeil: Would the minister indicate when these destroyers will be commissioned in the Canadian Naval Service?


Ian Alistair Mackenzie: Oh, they have been commissioned since some date early in March, and they are now on their way to Canadian shores. I believe that yesterday they were in Barbadoes.


Mr. DOUGLAS:: Could the minister tell us how old these destroyers are, and what they cost when originally built by the British admiralty?


Ian Alistair Mackenzie: They are a little over four years old. They were completed in 1932 at a cost of 81,384,300 each.


Charles Grant MacNeil: Are they classified as obsolete by the British naval service?


Ian Alistair Mackenzie: No, they are absolutely modem and in first-class condition.


Charles Grant MacNeil: What refitting was necessary before their dispatch to Canada?


Ian Alistair Mackenzie: Just a general observation of their condition as regards engines and other equipment, in the dockyards in England.


[Stage Direction]
Item agreed to.
Governor General's Warrants-To provide for direct relief expenditures in the drought areas of the provinces of Manitoba, Saskatchewan and Alberta (Governor General's warrant of October 7, 1936): $7,300,000.
William Lyon Mackenzie King: These are
governor general's warrants. My right hon. friend said the other evening that he thought it was quite proper to use the governor general's warrants for the purposes of drought relief, so he might be prepared to let this item pass.


Richard Bedford Bennett: No. The point upon which I want information is the extent of the expenditures and for what purposes they were made, up to and including the present month, so that there may be on the record a memorandum of what money has been spent. I have regard to what the Prime Minister has often pressed very strongly upon us, namely the desirability of keeping within the terms of that section with respect to the expenditures themselves. It will not take long.


Charles Avery Dunning: Under feed and fodder expended under governor general's warrants-this is up to March 23, and my right hon. friend will understand, of course, that expenditure is going on continuously-


Richard Bedford Bennett: I do.


Charles Avery Dunning: With respect to the feed and fodder agreements, if we add together the

total disbursements already made, and commitments registered with the comptroller, we reach a total for the three provinces of $4,060,000, which is expected to be the total to the end of the fiscal year, as against the warrant amount of $4,700,000. With respect to direct relief agreements for the three provinces, including disbursements already made and commitments registered with the comptroller, we reach a total of $5,325,000 as the estimated cost to the end of the year, as against warrants of $7,300,000.


Richard Bedford Bennett: By what method was the fodder and feed purchased?


Mr. GARDINER:: The method under which it is distributed?


Richard Bedford Bennett: No, purchased.


James Garfield Gardiner: The provincial government made the actual purchases of the feed and fodder.


Richard Bedford Bennett: In all the three provinces?


James Garfield Gardiner: Yes, in all three provinces. The federal government did the grading of the hay in all three provinces; that is, we had graders grading the. hay in the parts of the provinces where the purchases were made. The payments of freight, of course, were made by the provincial government to the railway companies, shipping from the northern parts of the province to the southern areas. The distribution was made at the point of distribution through the municipal council, and again the distribution was checked by federal inspectors, and the payments when made were on the basis of prices that were established in the agreements entered into. That is, maximum prices were established for the different grades of fodder; the prices paid for grain were the market prices plus the freight. I think the way in which it is stated is this: It is the market price at Fort William less the freight from the shipping point to Fort William, plus the freight from the particular point at which the grain was purchased to the point at which it was distributed, plus a premium of three cents per bushel. That, I think, pretty well covers it.


Richard Bedford Bennett: Will the particulars of the $7,300,000 and the $4,940,000 appear in the auditor general's report, or just as lump sum distributions to the provinces?


Charles Avery Dunning: So many thousands of accounts are involved that I doubt if particulars can be given. I appreciate the desirability of doing so.


Richard Bedford Bennett: The minister sees the point, having regard to the terms of the statute regarding governor general's warrants.
MARCH 25, 1937	2229 [DOT]
Supply-Governor General's Warrants


Charles Avery Dunning: I shall be glad to take up that point. I may tell my right hon. friend that, in order to cover the matter as fully as possible, the comptroller of the treasury was instructed at the commencement to put his whole organization in to control expenditures, having regard to the fact that we were through the provincial governments, even under the regulations that the Minister of Agriculture has already described, expending funds under governor general's warrant. There is, of course, pre-audit continuously going on by the comptroller general's agents at the various provincial capitals.


Thomas Clement (Tommy) Douglas: I should like to take this opportunity of drawing to the attention of the government something which I have already referred to the Minister of Agriculture; I allude to the very pressing need at the present time of seed and feed for seeding.


Charles Avery Dunning: If the hon. member was in the house he must have heard the Prime Minister indicate to-night that one of the measures to be brought down this session is with respect to the guarantee of seed grain. If my hon. friend would be good enough not to confuse that issue with this, it will make it a great deal easier for all of us.


Thomas Clement (Tommy) Douglas: I am not intending to
confuse it. I understand from the statements of both the Prime Minister and the Minister of Agriculture that a bill is being brought down to that effect. I merely wanted to touch on the fact that while this is going to provide for feed and fodder for the year which is just about completed, there is at this time a very great need of seed and feed, and immediate action in that respect is necessary. I have had a number of letters and telegrams particularly from municipal bodies, who are usually responsible men and who are feeling the pressure of circumstances. I have one here which I would call to the attention of the committee:
Council R. M. Weyburn very much opposed to reduction seed and seeding supplies revised schedule of distribution wholly inadequate feed situation deplorable ratepayers enraged by government action reversion of reductions imperative to forestall otherwise probable drastic outbreaks seriousness of situation cannot be over estimated immediate action dominion government absolutely necessary.
L. D. Kusch,
Secretary Treasurer.
I shall have something further to say when the actual legislation is before the house, but I do think that the present situation in the drought area ought to impress upon the house the necessity for the money that was spent last year and the importance of keeping in mind the necessity for a large grant when
we come to discuss this matter in connection with the minister's bill.


Mr. QUELCH:: Can the minister say where the responsibility lies for defining a drought area? It is hard to draw a line and say that drought relief shall be given on one side and not on the other. Several instances have been brought to my attention where injustice has been done. I drew the matter to the attention of the provincial government and they referred me to the federal government as the responsible authority. I then took it up with the representative, Mr. Chester, who informed me that the provincial government was responsible. I found it almost impossible to get either side to take the responsibility.


James Garfield Gardiner: The responsibility can
scarcely be said to rest wholly either on the provincial government or on the federal government. The representatives of all three western governments came to Ottawa last September and conducted negotiations with the federal government for assistance. At that time we made a check of the conditions in the west, and the provincial governments also had a check made. They presented to us a list of the municipalities which they estimated would require feed and fodder and direct relief during the winter months. We checked up on their representations with regard to municipalities, and I believe the number presented first by the government of Saskatchewan was in the neighbourhood of a hundred and fifty municipalities, and in Alberta one hundred and twenty-five; in Manitoba there was a group that represented probably about thirty or forty municipalities to begin with.
After we had made our final check, both federal and provincial, the province of Alberta was inclined to the belief that about eighty would have to come in before the end of the season, Saskatchewan about one-hundred and twenty-five, and Manitoba about twenty-five.
Then we went over the entire list againt and reduced the number for Alberta to about sixty-eight or seventy at most, the numbef for Saskatchewan got down to about one hundred and four or one hundred and five, and the number for Manitoba to eight and a half municipalities.
It was undertaken in the agreement-I have copies of these agreements-that these municipalities were to be admitted immediately, and they were so admitted as from the first of the relief year, that is the first of September; and the federal government took responsibility for any relief that was necessary in that year, either direct relief or feed and fodder, down to the end of the fiscal year, March 31, a few days hence.
Supply-Agriculture-Feed

* We then entered into an arrangement whereby any municipalities that desired to enter in addition to these, might make application to the provincial government, which application had to be accompanied by all information with regard to the amount of feed and fodder that was in the municipality, the number of people who were there, the number requiring assistance, and all other information with regard to the financial position of the municipality. There was a regular questionnaire that had to be filled out by any municipality desiring to come in. The province then formed its judgment in the matter, and the information it had obtained from the municipality it passed on to our office, the P.F.R.A. office in Regina, which was placed in charge of the inspection staff. When Mr. Mann of that office obtained a request, whether it came by way of Ottawa or direct from the provincial government, he sent out our inspectors to check up on the municipality so as to find out whether or not the information that had been sent in was reliable and in accordance with the facts, and we made the final decision whether any other municipality was to be admitted. But all parties to the arrangement took some (responsibility in the matter and I believe ;tbere was a fairly unanimous agreement with sregand to the admissions that were finally jmade.


[Stage Direction]
Item agreed to.
"To provide for expenditures for feed and fodder, freight charges on shipment of cattle, etc., in the drought areas of the provinces of Manitoba, Saskatchewan and Alberta (governor general's warrant of October 7, 1936), $4,940,060.
Thomas Clement (Tommy) Douglas: What arrangement was made for the disposal of cattle in the southern part of the drought area of Saskatchewan? Was it done through the packing houses?


James Garfield Gardiner: Three plans were followed. One was to pay the freight on the shipment of cattle to the abattoirs, guaranteeing the abattoirs at least a cent a pound on any meat that was shipped in under that arrangement. That provided for getting rid of the poorer classes of cattle. These were to be canned or otherwise processed and shipped out of Canada for marketing. I understand it was impossible to market it all in that way and a small proportion has been marketed inside Canada by permission of both the federal and the provincial governments.
By another arrangement we were to pay the freight on cattle to be shipped out of the drought area into any other part of western Canada where feed could be obtained, the province and the federal government sharing fifty-fifty the cost of shipping the cattle.

There was a third policy. We paid half the freight on fodder cattle shipped out of that area if purchased in the area and shipped anywhere in eastern Canada. The province paid the other fifty per cent of the freight, making it possible for persons going from the province of Quebec to the west to buy cattle and have the freight paid outright from the west to Quebec.


Thomas Clement (Tommy) Douglas: Has the minister any idea of the number of head of cattle under each of these classifications?


James Garfield Gardiner: About 18,000 cattle came down to eastern Canada under the arrangement, as far as we have been able to check to date. There is no payment due on them until three months after they have been shipped. That three months is about up; most have been checked, and I think about
43,000	head of lambs came under the same arrangement.


Thomas Clement (Tommy) Douglas: Are there any figures as to the other two?


James Garfield Gardiner: The numbers were comparatively small this year as compared with 1934. I have forgotten the number but there was not any large shipment.


Thomas Clement (Tommy) Douglas: I had a number of complaints as I went through the southern part of the province concerning the packing companies handling cattle. I cannot vouch that the statements are accurate, but farmers who spoke to me said the representative of the packing houses went through and said: Can-ner, canner, canner-occasionally feeder, here and there-and they were compelled to accept their grading, and they got a cent a pound for feeders.


James Garfield Gardiner: The fact is that one of the reasons the number was so low was that very few went in at the beginning of the season, for persons went out and paid more for cattle than was being paid under the cannery policy. In addition there was opportunity to dispose of cattle under other policies which tended at least to obviate any such difficulty.


[Stage Direction]
Item agreed to.

William Lyon Mackenzie King: Before the
house adjourns, hon. members will perhaps grant their unanimous consent to my presenting a resolution to advise the Senate that we passed two resolutions to-day in relation to external affairs, and to ask their honours if they will unite with us. I need not read them.


Richard Bedford Bennett: The usual form.

Questions


William Lyon Mackenzie King: The orders of the day for the next meeting of the Senate I believe have already been made up. I move, Mr. Speaker:
That a message be sent to the senate informing their honours that this house has adopted a resolution approving of the provisions of the convention between Canada and the United States of America for the protection and preservation and extension of the soekeye salmon fisheries in the Fraser river system, signed at Washington. May 26, 1930; attached hereto being the understandings set forth in said resolution; and requesting that their honours will unite with this house in the approval of this said resolution.
And that the clerk of the house do carry the said message to the senate.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: That a message be sent to the senate informing their honours that this house has adopted a resolution approving of the provisions of the convention between Canada and the United States of America, concerning rates of income tax imposed upon non-resident individuals and corporations, signed at Washington, December 30, 1936; and requesting that their honours will unite with this house in the approval of the said resolution.
And that the clerk of the house do carry the said message to the senate.


[Stage Direction]
Motion agreed to.
It being six minutes after eleven o'clock the house adjourned, without question put. pursuant to standing order.
Monday, March 29, 1937.