1937-01-21

[Stage Direction]
Hon. IAN MACKENZIE (Minister of National Defence) presented the report of the special committee appointed to prepare and report lists of members to compose the standing committees of the house, as follows:

[Stage Direction]
Messieurs:
Anderson
Beaubien
Bennett
Bertrand (Laurier) Bothwell Cahan Campbell Factor Fleming Fournier (Hull) Gariepy Hall Kirk Kuhl Lawson
Maclnnis
Mackenzie (Vancouver)
McCuaig
MeLarty
McNiven (Regina)
Massey
Pinard
Pouliot
Power
Sinclair
Slaght
Thorson
Turgeon
Veniot-29.
(Quorum 10)

[Stage Direction]
Messieurs:
Hansell Hanson Harris Heaps Howden Hushion
Barber Beaubier
Bertrand (Laurier)
Brown
Cameron (Hastings South
Cameron (Cape Breton Isnor Nortk-Vietoria) Jean Clark (York-Sunbury) Johnston (Bow River)
Chevrier Crerar Damude Deslauriers Duffus Dupuis Edwards
Elliott (Kindersley)
Emmerson
Girouard
Gladstone
Grant
Hamilton
Lockhart Maclnnis
MacKinnon (Edmonton West)
MacMillan
McCann
McCulloch
Mclvor
McKay
McKinnon (Kenora-Rainy River) McNiven (Regina City) Marcil
Standing Committees
Maybank
Mercier
Mills
Mullins
Mutch
O'Neill
Parent (Terrebonne)
Pelletier
Pouliot
Ross (Moose Jaw)
St-Pcre
Stevens
Stewart
Streight
Sylvestre
Vien
Walsh
Wermenlinger White Yoirag-60.
Quorum 20)

[Stage Direction]
Messieurs:
Ah earn	Little
Barry	Lockhart
Boulanger	Macdonald (Brantford
Bradette	City)
Brasset	MaeLennan
Brown	Macphail (Miss)
Clarke (Rosedale)	McDonald (Souris)
Cleaver	McGeer
Coldwell	McGregor
Deachman	McPhee
Douglas	Mercier
Dubois	Mulock
Evans	Parent (Quebec West
Fair	and South)
Ferguson	Pottier
Ferland	Robichaud
Gariepy	Ross (St. Paul's)
Girouard	Senn
Glen	Sinclair
Goulet	Taylor (Nanaimo)
Howard	Telford
Hyndman	Verville
Johnston (Bow River) Wilton	
Lacombe	Winkler
Lacroix (Quebec-	W ood
Montmorency)	Young-50.
Lalonde	
(Quorum 15)	
BANKING AND COMMERCE	
Messieurs:	
Baker	Lawson
Bennett	Leduc
Cahan	Macdonald (Brantford
Clark (York-Sunbury)	City)
Cleaver	Mackenzie (Vancouver
Coldwell	Centre)
Deachman	McGeer
Donnelly	MeLarty
Dubuc	McPhee
Dunning	Mallette
Edwards	Martin
Euler	Maybank
Fiset, Sir Eugene	Moore
Fontaine	Perley (Qu'Appelle)
Fournier (Hull)	Plaxton
Fraser	Quelch
Harris	Raymond
Hili	Ross (Middlesex East)
Howard	Rutherford
Hushion	Stevens
Jacobs	Thorson
Jaques	Tucker
Kinley	Vien
Kirk	Ward
Lacroix (Beauce)	White
Landeryou	W oodsworth-50.
(Quorum 15)
Standing Committees


[Stage Direction]
Messieurs:
Ahearn Anderson Bairy Beaubien Betts
Black (Chateauguay-Huntingdon)
Blais
Blanchette
Bothwell
Brooks
Cameron (Cape Breton North-Victoria) Casselman Church Douglas Dussault Elliott
(Kindersley)
Factor
Ferland
Fleming
Fournier (Maison-neuve-Rosemount) Fraser Glen Golding Goulet
Grant
Graydon
Leader
MacKinnon (Edmonton West)
MacNeil
McCann
McDonald (Pontiac) McKinnon (Kenora-Rainy River) McLean (Melfort) Marshall Mullins Needham Patterson Purdy Rickard
Rowe (Athabaska)
Slaght
Stewart
Streight
Taylor (Norfolk)
Thauvette
Tremblay
Turgeon
Verville
Wermenlinger
Wood-50.
(Quorum 15)

[Stage Direction]
Messieurs:
Bcaubier	MacRae
Bertrand (Prescott)	McDonald (Souris)
Black (Chateauguay-	McKenzie
Huntingdon)	(Lambton-Kent)
Blair	McLean (Melfort)
Bouehard	McNevin
Boulanger	(Victoria, Ont.)
Clark (Essex South)	Mitchell
Cochrane	Motherwell
Coldwell	Mullins
Davidson	Needham
Donnelly	Patterson
Douglas	Perley (Qu'Appelle)
Dubois	Reid
Dupuis	Rennie
Evans	Rheaume
Fontaine	Roberge
Furniss	Robichaud
Gardiner	Ross (Middlesex East)
Golding	Rowe
Gosselin	(Dufferin-Simcoe)
Graydon	Senn
Hayburst	Spence
Johnston (Lake Centre)	Stirling
Lacombe	Taylor (Norfolk)
Lalonde	Thompson
Leader	Tolmie
Leclerc	Tomlinson
Lennard	Turner
MacKinnon	Ward
(Edmonton West)	Weir
MacLean (Prince)	Wood-60.
Macphail (Miss)
(Quorum 20) 
Messieurs:
Baker
Barry
Bertrand (Prescott)
Brunelle
Denis
Fleming
Heaps
Isnor
J acobs
Leclerc
McCuaig
Plaxton
Poole
Pottier
Rowe
(Dufferin-Simcoe) Rutherford Thauvette Thompson Turgeon Turner-20.
(Quorum 8)

[Stage Direction]
Messieurs:
Brasset	McCulloch
Brooks	McDonald (Souris)
Brunelle	Marcil
Cameron (Cape Breton Michaud North-Victoria)	Neill
Clark (Essex South)
Farquhar
Ferron
Fiset, Sir Eugene
Gauthier
Green
Hanson
Hill
Kinley
Lapointe (Matapedia-Matane)
MacLean (Prince)
MacNeil
MacNicol
Pelletier
Pottier
Reid
Rickard
Ryan
Stirling
Taylor (Nanaimo)
Telford
Tolmie
Tomlinson
Tustin
Veniot
Ward-35.
(Quorum 10)

[Stage Direction]
Messieurs:
Black (Mrs.)
Blais
Bradette
Campbell
Clarke (Rosedale)
Cochrane
Crerar
Crete
Esling
Farquhar
Ferguson
Hamilton
Hanson
Hartigan
Hayburst
Hill
Hurtubise
Hyndman
Johnston (Bow River) Lacroix (Beauce) Little
MacKenzie (Neepawa) MacLennan MacMillan MacNicol
McDonald (Pontiac) O'Neill
Parent (Quebec West and South)
Patterson
Roberge
Stevens
Sylvestre
Taylor (Nanaimo) Tolmie
Tremblay-35.
(Quorum 10)

[Stage Direction]
Barry
Betts
Black (Mrs.) Biackmore Church Crete
Deslauriers
Messieurs:
Dubuc
Gladstone
Grant
Hartigan
Hill
Howard
Howden

Questions
Isnor
Jean
Lacroix (Quebec-Mont'norency) Leduc Maclnnis MacKenzie (Neepawa) MaeNieo! Macphail (Miss) McGeer McIntosh
Melvor
McKay
McLean
(Simcoe East) Martin Massey Neill
Perley, Sir George Rogers
Rowe (Athabaska)
St-Pere
Tucker-35.
(Quorum 10)
[Stage Direction]
Messieurs:
Esling
Finn
Gauthier
Hall
MacKinnon
(Edmonton West) McIntosh
McNevin
(Victoria, Ont.) Marcil
Perley, Sir George Pinard Pouliot Ryan-12.
Duffus
Emmerson
Fournier
Grant
Green
Hamilton
Hyndman
Johnston
(Lake Centre) Kuhl Lennard Maclnnis MacKinnon
(Edmonton West) MacLennan MacNeil
Macphail (Miss) Mallette
Martin
Mercier
Moore
Mutch
Parent (Quebec West and South) Parent (Terrebonne) Raymond Reid Rennie
Ross (St. Paul's)
Ryan
St-Pere
Spence
Walsh
Winkler
Young-44.
PARLIAMENTARY RESTAURANT (Members to act on the part of the Commons) Messieurs:
(Quorum 7)

[Stage Direction]
(Members to act on the part of the Commons) Messieurs:
Barry
Bertrand (Laurier)
Casselman
Chevrier
Damude
Davidson
Denis
Douglas
Dussault
Elliott (Kindersley)
Esling
Evans
Ferron
Fleming
Fournier (Maison-neuve-Rosemount) Gauthier Green Hausell Hurtubise Hushion Jean Kirk
Lapointe (Matapedia-Matane)
Leduc
Lennard
Little
Maclnnis
MacKinnon
(Edmonton West)
MacLean (Prince) McGregor McIntosh McKenzie
(Lambton-Kent)
McNevin
(Victoria, Ont.) Marshall Mills Moore Mullins Mulock Mutch Pinard Purdy Reid
Ross (St. Paul's) Ross
(Middlesex East) Rutherford St-Pere
Taylor (Nanaimo)
Thompson
Tucker
Tustin
Veniot
Weir
Wilton
Winkler-54.
Barber
Bertrand (Prescott)
Fafard
Fraser
Grey
Hill
Howden Landeryou Maclnnis MacMillan Macphail (Miss)
McLean
(Simcoe East) Moore O'Neill Purdy Roberge Sinclair Spence
Taylor (Norfolk) Tustin-20.
Mr. LAPOINTE (Quebec East) moved that the report be concurred in.
Motion agreed to.

Hon. ERNEST LAPOINTE (Minister of Justice) moved:: That the select standing committees of this house shall severally be empowered to examine and inquire into all such matters and things as may be referred to them by the house and to report from time to time their observations and opinions thereon, with power to send for persons, papers and records.


[Stage Direction]
Motion agreed to.

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

[Stage Direction]
(Members to act on the part of the Commons) Messieurs:
Ahearn
Blaekmore
Blair
Blanchette
Bothwell
Bouchard
Bradette
Brasset
Cameron
(Hastings South) Cameron (Cape Breton North-Victoria) Campbell Casselman
Mr. COLDWELL:: 1.	Is the wheat board functioning as required by statute?
2.	Are members of said board actively engaged in the activities of the said board?
3.	What salary or emolument was paid to each member of the board during the year 1935?
4.	Are said salaries or emoluments still being paid?
Questions


Mr. ROGERS:: 1.	Yes.
2.	Yes.
3.	Board appointed August 14, 1935.
John I. McFarland, Chief Commissioner, August 14, 1935 to December 3, 1935, at rate of 818,000 per year.
D. L. Smith, Assistant Chief Commissioner, August 14, 1935 to December 3, 1935, at rate of $17,000 per year.
H.	C. Grant, Commissioner, August 14, 1935 to December 3, 1935, at rate of $15,000 per year.
* Board appointed December 3, 1935.
J. R. Murray, Chief Commissioner, December 3, to December 31, 1935, at rate of $18,000 per year.
G. H. Mclvor, Assistant Chief Commissioner, December 3, to December 31, 1935, at rate of $15,000 per year.
Dean A. M. Shaw, Commissioner, December 3, to December 31, 1935, at rate of S15,000 per year.
4.	Yes. To members of the board appointed December 3, 1935.


MAJOR B. D. C. TREAT
Mr. POULIOT:: I.	Did Major B. D. C. Treat, M.C., of Surrey, England, spend some time in the Department of National Defence in Ottawa, and, if so, how long?
2.	When did he arrive in Ottawa?
3.	At whose invitation did he come?
4.	Ts he still here?
5.	If not: (a) when did he leave, and (b) will he come back?
6.	If so, when will he come back?
7.	What was he doing in England before coming here?
8.	Previous to his coming here, did he visit other parts of the British Empire, and, if so: (a) in what capacity, and (b) where?
9.	Since his arrival in this country, what has he been doing?
10.	Does he receive any salary, compensation, bonus, gratuity or pay of any kind?
11.	If so, by whom is it paid?
12.	Does he receive any travelling allowances; if so, how much, and by whom is it paid?
13.	Are there other officers from England in the Department of National Defence?
14.	If so, how many are there; since when, and at whose request have they come?
15.	With respect to such officers: (a) what salary, compensation, bonus, gratuity or pay of any kind is paid to them; (b) what travelling expenses are each of them allowed, and (c) by whom are these paid?


Mr. MACKENZIE (Vancouver):: 1.	Yes, on loan, 20 days.
2.	October 3, 1936.
3.	Department of National Defence.
4.	No.
5.	(a) December 15, 1936; (b) Not expected.
fMr. Cold well.]
6.	See 5 (b).
7.	From February 16, 1933, to December 31, 1935, officially listed as Major Instructor in Gunnery, Coast Artillery School, Shoe-buryness, England; otherwise unknown.
8.	Not known, but it is presumed that he did not.
9.	Advising on coast defences.
10.	Pay of his rank from date of embarkation for Canada to date of his disembarkation in England.
11.	Department of National Defence.
12.	(a) Actual travelling expenses; (b) $448.86; (c) Department of National Defence.
13.	Yes.
14.	Ten officers as follows:
Naval Service.-One commissioned gunner since February 24, 1935; one commander since July 30, 1936.
Both these officers have been loaned to the Royal Canadian Navy at the request of the Department of National Defence.
Militia Service.-One captain and brevet major since April 1, 1935; one captain since October 28, 1935; One captain since October
1.	1936; one captain since November 28, 1936; one lieutenant since October 30, 1936.
Air Service.

Three flight lieutenants since April 2, 1935.
The Army and Air Force officers are on exchange for a two year period, and are replaced in the British Service by a Canadian officer in each case.
So far as concerns the Militia Service, the policy of interchange of officers between the Defence Forces of the Dominions and the United Kingdom was affirmed at the Imperial Conference of 1907.
In regard to the Air Service, an interchange agreement was arranged at the Imperial Conference in 1923, and subsequently ratified by Order in Council (P.C. 1424) dated September 2, 1925.
15.	(a) The two Naval officers on loan receive the pay and allowances authorized for officers of similar rank in the Royal Canadian Navy, viz., commander, $16.85 per diem, commissioned gunner, S6.25 per diem.
The Army and Air Force officers on exchange receive the ordinary pay and allowance of the rank or appointment held by them in. their own service, at the rates and under the regulations governing that service. If, however, they are employed by Canada in an appointment other than that which they hold in their own service and for which additional pay would be provided were the appointment held in that service, they receive the additional pay attached to that appointment at British rates.

Questions
(b)	All officers receive transportation and travelling expenses to and from Canada, and for all journeys duly authorized while serving in Canada.
(c)	Naval officers on loan:
Their pay and allowances and all transportation and travelling expenses are paid by the Department of National Defence.
Army and Air Force officers on exchange:
Their ordinary pay and allowances are paid by the British government. The additional pay, if any, for an appointment is paid by the Department of National Defence. At the present time no officer is receiving such additional pay. Transportation and travelling expenses to and from Canada are paid by the British government, and the transportation and travelling expenses while serving in Canada are paid by the Department of National Defence.
Similarly, in the cases of Canadian exchange officers serving with the British forces, the Department of National Defence pays the ordinary pay and allowances and their transportation and travelling expenses to and from Canada, and the British government pays the additional pay, if any, for an appointment and their transportation and travelling expenses while serving with the British forces.


TWEEDSMUIR, SASK., POSTMASTER
Mr. COLD WELL:: 1.	Who -was the postmaster at Tweedsmuir, Saskatchewan, during 1936?
2.	Who is the present appointee?
3.	Was the former postmaster a returned soldier ?
4.	How long has the new appointee been a British subject?
5.	Is he a returned soldier?
6.	Did the former postmaster offer to move his building to a new site if desired?
7.	Were residents circularized regarding the location of the post office?
8.	If so, who supplied a list to which the said questionnaire was sent?
9.	How many residents requested a change in the location of the post office building?
10.	How many desired retention of the services of the present postmaster?


Mr. ELLIOTT (Middlesex):: 1.	Robert K. Hamilton.
2.	A. L. Jacobsen in a temporary capacity.
3.	Yes.
4.	No information.
5.	No record.
6.	No, Mrs. Hamilton, wife of the postmaster, expressed the willingness to do so. The question of postmaster's ability to obtain suitable site entered into this.
7.	Yes, by the local district superintendent of postal service.
8.	The former postmaster, R. K. Hamilton.
9 and 10. Thirty-six were satisfied with the present location and postmaster, thirty-six desired a change, and of these thirty-six, no less than thirty were so insistent on a change that they refused to patronize the Tweedsmuir office.
In the interest of harmony, a change was considered essential and was carried out on the recommendation of the district superintendent of postal service.


SYLVAN LAKE, ALTA.-BREAKWATER
Mr. POOLE:: Will a breakwater be built at Sylvan Lake, Alberta, this year?


Mr. CARDIN:: The proposal is under consideration.


INSPECTION OF CANADIAN PASSENGER BOATS
Mr. WILTON:: 1.	To what extent are Canadian boats which are licensed for passenger service, inspected before being put into service each season?
2.	IIow many inspectors are engaged by the government for this work, and to what extent do they inspect passenger service boats before allowing them to be put into service?
3.	Is it a fact that passenger boats plying in Canadian waters with a carrying capacity of one thousand passengers have only lifeboat equipment for less than two hundred people?


Mr. HOWE:: 1.	(a) The boilers and machinery are opened out for inspection annually.
(b)	The hull as far as can be seen without the ship being taken out of the water is inspected annually, as is the lifesaving and other equipment.
(c)	Where a ship is one plying in salt water, the bottom of the ship, the rudder and sea connections are examined with the ship in drydock annually.
(d)	Where a ship is one plying in fresh water, the bottom of the ship, the rudder and sea connections are examined with the ship in dock every second year or every fourth year, according to the nature of the waters in which the ship is employed.
(e)	The tailshafts are drawn for inspection at periodic intervals varying from two to four years, according to the arrangement of the shaft and the waters in which the ship is employed.
2.	The organization of the steamship inspection service provides for thirty-two steamship inspectors.
The extent to which passenger vessels are inspected is given in answer to question No.
3.	A passenger boat with a carrying capacity of 1.000 passengers might have lifeboat equipment for less than 200 persons. She
Questions

would, however, have other equipment in the way of buoyant apparatus or life rafts, which, with the boats, would provide for a certain percentage of the total complement, ranging from 100 per cent to 40 per cent, according to whether the vessel were employed in open waters or sheltered waters. Every ship is required to carry a lifejacket for each person on board.


BURLINGTON CHANNEL INSPECTORS
Mr. LENNARD:: 1 Who are the inspectors for the government of the dredging of Burlington channel and of the reconstruction of South Pier, Burlington channel?	,
2.	Were these appointments made by the
Civil Service Commission?	.
3.	If so, where did they try their examinations, and when?


Mr. CARDIN:: 1.	(a) W. H. Caldwell, W. S. Costie. (b) W. H. Caldwell.
2.	No, appointments made under authority of provisions of item 425 of special supplementary estimates, 1936-37, page 16.
3.	Answered by No. 2.


WILLOW COVE, ONT., POST OFFICE
Mr. LENNARD:: 1.	Upon whose suggestion was Willow Cove post office, Ontario, so named?
2.	Were the residents of that district con-suited in the matter?


Mr. ELLIOTT (Middlesex):: 1.	J. T. Easterbrook, the incoming postmaster.	,
2.	No information. No objections received by department.


WASHINGTON TEXTILE CONFERENCE
Frank Exton Lennard: Will the government have representation at a conference to be held at Washington, D.C., during the first week of April, 1937, of governments, employers and workers of all countries that are textile producers?


Mr. ROGERS:: The question of Canadian representation is presently receiving consideration.


LETTER CARRIER SERVICE
Mr. LENNARD:: 1.	What is the population or yearly postal revenue required in a town or city, before postal delivery service can be incurred?
2.	What was the postal revenue of the town of Dundas, Ontario, during the year 1936?


Mr. ELLIOTT (Middlesex):: 1. The main factors governing the inauguration of letter carrier service are: (a) population to be served; (b) postal revenue collected;

(c) density of population; (d) postal accommodation for carrying on business; (e) time of arrival of mails; (f) local improvements, such as, sidewalks, receptacles for the receipt of mails, labelling of streets, numbering of houses, etc.
There is no hard and fast rule as regards postal revenue collected or population to be served. The department does endeavour to restrict the inauguration of letter carrier delivery to points where the revenue is approximately $30,000 and the population 10,000.
There are, however, cases where due to the exigencies of the service, letter carrier delivery has been established at points where these limits have not been met.
2. $16,478.40 (fiscal year, 1935-36).


KINISTINO INDIAN RESERVE
Mr. FLEMING:: 1.	How many Indians are there in the Kinistino reserve No. 91?
2.	What arrangements have the Department of Indian Affairs made for the education of the Indians of this reserve?
3.	Who is the medical officer for the reserve?
4.	What was the remuneration in fees that he received in the last year ?
5.	How far does the medical officer live from the reserve?
6 What report did the medical officer make of the health of the Indians on the Kinistino reserve?
7.	What was the total amount of machinery that was purchased in 1935, 1936 and 1937!


Mr. CRERAR:: 1.	109.
2.	The Indian children are eligible for placement in residential schools near the reserve.
3.	Dr. L. W. Brigham, Brooksby, Sask.
4.	$479.50.
5.	36 miles.
6.	Usual diseases, with special reference to tuberculosis, venereal disease and measles. Births-Treaty year May 1935 to May 1936, 3; deaths in same period, 4.
7.
1Q35 			 $165.00
1 Q2fi 			 24.89
1Q27		
$189.89


GRANTS TO FAIRS, QUEBEC
Mr. LACOMBE:: 1.	Does the federal Department of Agriculture make grants to agricultural fairs in the province of Quebec?
2.	If so, what fairs have received grants?
3.	What is the amount of the grant given to each of these fairs during the year 1936?

Questions as Orders jor Returns


Mr. GARDINER:: 1.	Yes.
2.
Class "A" Fairs	Amt. of Grant
Provincial Exhibition of Quebec,
Quebec	 $3,998.35
Canada's Great Eastern Exhibition,
Sherbrooke	 4,000.00
St. Lawrence Valley Exhibition,
Three Rivers	 3,980.00
Valleyfield Exhibition, Valleyfield.. 3,757.15 Class "B" Fairs
Stanstead County Exhibition, Ayer's
Cliff	 1,986.00
Brome County Agricultural Society,
Brome	 1,853.00
Compton County Agricultural Fair,
Cookshire	 2,025.46
Agricultural Society of Jacques Cartier, Montreal (undetermined balance due)	 950.00
Quebec Regional Exhibition, Quebec 1,700.00 Roberval Agricultural Society, Roberval	 2,087.00
Agricultural Society of District of St. Hyacinthe, St. Hyacinthe.. ..	3,168.00
St. Seholastique Exhibition, St.
Scholastique	 1,844.00
Shefford County Exhibition, Waterloo	 1,940.00
Winter Fairs and Spring Shows Lachute Spring Show, Lachute.. ..	4,654.00
Ormstown Spring Show, Ormstown	5,788.50
Canada's Great Eastern Winter
Fair, Sherbrooke	 5,000.00
General
Quebec Provincial Poultry Exhibition, Montreal	 1,125.00
Fox Breeders' Association, Province
of Quebec	 800.00
3.	Included in Answer 2.


REGINA RIOTS, 1935
Mr. COLD WELL:: 1.	What was the total cost of the dominion and provincial authorities in connection with the inquiry into the Regina riots during the year 1935?
2.	What was the total cost to the dominion authorities in this connection?
3.	What are the names of those who were employed by the dominion government in connection with this inquiry?
4.	What payments were made to each of the said counsel: (a) during the fiscal year 19341935; (b) during the current fiscal year?


Ernest Lapointe: Mr. Speaker, of course I canot give any reply as to the cost to- the provincial authorities. As to the other part of the question, I will have the answer ready to-morrow.
Question stands.
CANADIAN WHEAT BOARD ACT*


Mr. PERLEY (Qu'Appelle):: Will the Canadian Wheat Board Act, 1935, be repealed during the present session?


Norman McLeod Rogers: Mr. Speaker, in its-present form this does not appear to be a proper question. I believe it is a well established rule that the government of the day reserves to itself the time for making any declaration as to policy.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. BARBER:: 1.	What was the cost of dental services to Indians m the province of British Columbia during each of the calendar years 1934, 1935 and 1936?
2.	What was the cost of this service in each of the Indian residential schools of British Columbia for each of the said years?
3.	What is the name and address of the dentist or dentists employed for this service in each residential school, during each of the said three years?
4.	What is the tariff of fees allowed?
5.	Has a dental survey been made of any or all of these schools?
6.	If so, what was the result of the survey?
7.	Will this service be supplemented?
S.	Has any change been made in dental services to the Indians in British Columbia by the present government?
9.	Are local dentists given this work?
10.	If not, what dentists will be employed to carry out this service throughout the province of British Columbia, and where do they reside?
11.	Will the same tariff of fees be continued or will a per diem allowance with expenses be substituted?


BANFF NATIONAL PARK APPROPRIATION
Mr. BLACKMORE:: 1.	What is the total amount of the appropriation allotted by the dominion to be expended in the Banff national park for the financial year ending March 31. 1936? (This is not to include any sums specially allocated for public works projects or payments for relief employment, but merely the ordinary annual appropriation.)
2.	What were the total receipts from all sources from the Banff national park during the financial year ending March 31, 1936? (This is to cover all payments by both residents and tourists, including such items as ground rents, sewer and water rates, car licences, hot springs receipts, camping permits, and in fact, all moneys paid into the park offices at Banff.)
3.	What was the total amount of appropriation for the year ending March 31, 1936, which was expended in wages of government employees other than office staff and permanent employees, such as game wardens in this park? (This is merely the total monthly pay rolls made out for Banff.)
Loan of $85,000/)00

4.	What is the total amount of the appropriation for office salaries for the parks branch in Banff, during the year ending March 31, 1936?


Mr. CRERAR:: Return tabled herewith.



TRANS-CANADA HIGHWAY

Mr. MALLETE:: What sums were paid to each of the provinces in connection with the trans-Canada highway during the year 1936?



DEPARTMENT OF NATIONAL REVENUE

Mr. LAPOINTE (Matapedia-Matane):: 1.	Who are the customs, excise, and income tax commissioners in the Department of National Revenue?
2.	What are their salaries?
3.	Are they bilingual?
4.	(a) How many officers of that department
receive a salary above $2,000;	(b) what are
their names, and (c) which are bilingual?
5.	(a) How many officers of said department receive less than $2,000, and (b) how many are bilingual?



LOAN OF S85,000.000

[Stage Direction]
On the orders of the day:
Mr. RALPH MAYBANK (Winnipeg South Centre):: Mr. Speaker, before the orders of the day are called I should like to address a question to the Minister of Finance (Mr. Dunning). I notice advertisements in this morning's papers for an issue of government bonds to the amount of $85,000,000. Is the minister prepared to make a statement touching the matter, or to give any information in relation to it?
Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, the hon. member was good enough to advise me of his question, and I have a statement prepared in the matter which I believe should be made to the house.
The $S5,000,000 dominion government loan which is advertised in the morning papers is being offered for the purpose of redeeming the $89,787,000 five per cent war loan bonds which mature on March 1 next. The new issue will take the form of $30,000,000 seven-year 21 per cent bonds dated January 15, 1937, and maturing January 15, 1944, priced to the public at 99J and accrued interest, to yield approximately 2-327 per cent; and $55,000,000 thirty-year 3 per cent bonds dated January 15. 1937, and maturing January 15, 1967, priced to the public at 98 and accrued interest, to yield approximately 3-10 per cent. The seven-j-ear bonds are redeemable at par as a whole at the option of the government on or after January 15, 1943, upon thirty days'

notice, and the thirty-year bonds are redeemable in whole or in part at the option of the government on any interest payment date upon sixty days' notice at the following prices:
On or prior to January 15, 1942, at 105; thereafter
to and including January 15, 1947, at 104; thereafter
to and including January 15, 1952 at 103; thereafter
to and including January 15, 1957 at 102; thereafter
to and including January 15, 1962 at 101; and thereafter
at par.
In keeping with our general policy, it was considered advisable to make it possible for the dominion to call the thirty-year bonds at any time during the life of the bonds.
The war loan bonds which mature on March 1, and which are to be paid off out of the proceeds of this issue, together with a certain amount of cash from the dominion treasury, are payable in New York and Canada, and it is believed that a very large percentage of the bonds are now held in the United States. As a Canadian offering would have necessitated a very difficult, if not an impossible, exchange transfer problem, the new bonds are being offered in the United States and will be payable in legal tender currency of the United States. The new issue has been registered with the Securities and Exchange Commission, Washington, under the United States Securities Act of 1933. the registration statement having become effective to-day.
The new issue is being offered by an underwriting syndicate under the leadership of Morgan Stanley and Company and consisting of thirty-nine other underwriting houses including a number of Canadian investment dealers.
It will be recalled that the 5 per cent war loan bonds which are being retired by the new issue represent one of the two remaining tax-free issues of the dominion government. The other tax-free issue is the $236,209,800 5J per cent victory loan which matures on December 1 next, and which we intend to refund by means of an issue payable in Canada only. We expect, therefore that the year 1937 will see the last of Canada's tax-free bond issues which were floated during the war period.
The rates obtained on the new issue in New York represent, I believe, the lowest rates ever obtained for a Canadian bond offering of comparable maturities in that market. It will be apparent that the new offering will residt in a substantial saving to

Purchasing Power-Mr. Hayhurst
the dominion treasury, not only because of the reduction of nearly $2,000,000 in annual interest charges, but also because of the increase in income tax revenue as a result of the elimination of the tax-free feature.
The house will be interested to know that reports from New York this morning indicate that the sale of the issue is proceeding very satisfactorily.


Mr. BENNETT:: The minister has failed to indicate the price to the underwriters.


Mr. DUNNING:: I have that information. The price received by the government for the seven-year bonds was 98i, or a yield basis of 2-525, and the price received by the government for the thirty-year bonds was 96, or a yield basis of 3-21.



CANADA-UNITED KINGDOM TRADE AGREEMENT

[Stage Direction]
On the orders of the day:
Richard Bedford Bennett: Mr. Speaker, not as a matter of curiosity but because there seems to be a great deal of uncertainty in business circles regarding the matter, I should like to ask the Minister of Finance (Mr. Dunning) when we may expect to have tabled the Canada-United Kingdom trade agreement. Perhaps, too, he could inform us whether or not, under circumstances of which he only would have knowledge, it is probable that the agreement will be made available before the presentation of the budget. The matter has been brought to my attention recently in several ways, and I promised to ask a question in order to permit a public statement by the minister.
Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, of course the question is a perfectly proper one, but it is rather difficult to give a complete answer. As was indicated in the speech from the throne, while in principle an agreement has been reached, the detailed drafting is now proceeding, and definite arrangements between the two governments have yet to be made with respect to the precise date upon which the agreement can be finally executed and made available. I appreciate the reasons advanced by my right hon. friend for expediting the matter as much as possible, namely business uncertainty resulting from the expectation of changes. The government is considering the matter of whether or not the agreement will precede or form part of the budget.


Richard Bedford Bennett: That is the important matter about which I wished to ask. I thank the minister.



PURCHASING POWER


[Stage Direction]
The house resumed from Wednesday, January 20, consideration of the motion of Mr. Blackmore:
That, in the opinion of this house, the Canadian government should consider the advisability of beginning this year to issue purchasing power, and to use that purchasing power for the improvement of the economic condition of the Canadian people.
Mr. WILLIAM HAYHURST (Vegreville):: Mr. Speaker, it is my privilege on this occasion to take part in this vital and important debate. Yesterday afternoon the hon. member for Huron North (Mr. Deachman) said that Houdini on the stage took rabbits out of a hat, but Houdini could not make a living by selling rabbits. In this kind of language he attempts to suggest that our proposals involving a new economic system are based upon juggling tactics. There is Houdini-like juggling taking place to-day, but it is done by the financiers. They juggle money to please themselves, irrespective of the productive capacity of the nation. Houdini made his living by fooling the public; to-day the financial wizards make their living by doing likewise. They take the profit out of the medium we call money and credit, a medium which should not be based upon a profit motive, but which should be the blood stream of human society. The arguments of yesterday seemed to me to fail because they did not recognize that money should be the servant of mankind and not its master Today we are worshipping the golden calf almost as effectively as it was worshipped in days of old.
For instance, the price of gold has been fixed at a certain point. We know that today gold is worth around $35 per ounce. It is thus made profitable for the gold producers to take great chances in finding new fields. Gold is a metal of intrinsic worth and value, but it should not have such a tremendous importance in our monetary system. If the price of gold can be fixed at $35 per ounce, why should) not the price of wheat, of beef, or of other necessities of life be fixed at an equal standard1 of value? We sell wheat at twenty cents per bushel and at $1.20 per bushel, which on the face of it is an utter absurdity. Some of my hon. friends no doubt think that this wheat must be exported and sold on a market which will depress the price according to the export value of the wheat. Under the new economics we recognize that wheat and other commodities are as valuable



Purchasing Power-Mr. Hayhurst
as gold, nickel, platinum, copper or any other metal. These commodities should have an intrinsic value and worth, and the productive capacity of mankind should not be drastically curtailed by financiers who feel that the piling up of goods is necessarily an extravagance on the part of the people. We cannot build a superstructure on a rotten foundation. We feel that the new economic problem we are facing to-day is something which has been built upon our capital structure. In our anxiety to make the world safe for democracy it is a matter of real urgency that we do not tip the baby out with the bath water.
We realize the capitalism as it exists today can be made to operate both ways, for the good of mankind or for the destruction of mankind. Some people are advocating the discarding of capitalism, but I believe that that is moving too fast. Democracy must be made safe for the individual. Yesterday the hon. member for Huron North was suggesting that we might purchase the Royalite oil wells in Alberta or the Noranda mines in Quebec. That is not the principle of social credit. The principle of social credit is to give back to the people and to the government the absolute control of money, credit and currency. These should be taken away from private individuals, from the banking system as it exists to-day. We are not advocating the ownership of any productive machinery because we believe that if the capitalistic system were made to work for the welfare of mankind it would be quite capable of producing wealth in abundance.
Some people say that we should be niggardly and save in order to buy more bonds with which our country would be put more into debt. I think we might as well attempt to save acorns instead of planting them to grow into great oaks. The capitalistic system of to-day is capable of producing wealth in abundance, therefore we feel that a new economic or monetary system, should be established to take care of that tremendous production, irrespective of booms and depressions. This new system would take care of the welfare of all our people, not only those who are blind or who were wounded overseas in the great war. Everyone would be taken care of irrespective of class and position in life. The people are the basis of the wealth of a nation.
We feel that we should creep before we walk. We are not out to destroy capitalism. We are not communists, neither are we followers of the nazi doctrine. We believe in an economic democracy, but we contend that money should be controlled by the people. Many questions are asked as to

whether sufficient can be produced in this country. I am reminded of the proverb, "consistency, thou art a jewel." I feel that at all times we should be consistent. It is a wrong management of money that restricts production. If we save up or regiment our men to be soldiers and then deliberately sabotage not only the national wealth but man power through international rivalries brought about by the continual struggle for markets and credits abroad, then I say that civilization is doomed.
I feel that we should establish in our minds a wealth creating philosophy as opposed to a debt creating philosophy. Our country is not poor except in terms of money. There is not another country in the world more richly endowed by nature than Canada. Yet here in Canada we find thousands of people who believe in the so-called orthodox economics of scarcity, when in fact the productive capacity of the country is capable of supplying all the needs of her citizens. Many have said that inflation will ruin our nation, but a study of the situation proves that it is deflation rather than inflation that is the cause of untold poverty, distress and suffering. We do not wish for inflation. A shower is better than a flood.
Some say that this creative money would pile up and never be cancelled. It is an extraordinary thing that the same people never complain of a. system under which debt piles up and is never cancelled. At the present time we have a debt economics, but if our money represented the produced wealth of the country we would have a wealth economics, which would in time balance or distribute our debt. There was an old saying of the pioneers on this great North American continent : We raise more grain to feed more hogs to get more money to buy more land to raise more grain to feed more hogs to get more money to buy more land, and so on. It is ridiculous to think that such are the actual conditions in Canada to-day. Here we are consuming less in order to increase our ability to produce more in order to consume less in order to increase our ability to produce more. Surely the old philosophy of tightening one's belt should not prevail in the civilized world to-day when mankind by advancement in technological skill is now able to produce wealth in abundance. Imagine telling people to-day to tighten their belts, to increase their capacity to produce more by consuming less. It is an absolute necessity that purchasing power should be put into the hands of the consumers in order that the consuming capacity will more nearly equal the productive capacity of mankind.

Purchasing Power-Mr. Hayhurst
We have struggled for our liberty in this great empire of ours. We have struggled for the liberty of the individual, and we are no longer slaves. We and our ancestors have fought in order that we may be free men. Our ancestors have struggled in the past and we have continued to struggle for political liberty, for political enfranchisement, for the right to vote. We have won these privileges, and the result is that to-day most of our people have the right to vote, except in the province of Quebec, across the river from here, where they still recognize women as in the same class as the insane and the Indians and have not yet seen the necessity of giving women the vote as persons.
We have struggled for our political freedom and we hold it dear. We have fought for our individual freedom and enjoy that freedom to-day. But we are now facing a greater fight than ever. We are facing a fight for financial freedom and economic liberty. We are now asking that the government exercise the power which they have to create their own credits and take away that power from those who exercise it to-day, further that the government issue those credits free of interest and free of the profit motive. As I said at the outset, money and credit are the blood-stream of society, and if the profit motive is allowed to stay in this great blood-stream of society, civilization itself will fall.
It has been suggested by some that we should be hard, that we should train and discipline our people to be soldiers. They tell us to go back to the old days of the pioneers who ploughed and sowed and reaped, using their own muscular energy and earning their living by the sweat of their brow. But, Mr. Speaker, I say that we shall not see such conditions again. You remember Longfellow's description of the village blacksmith:
The smith, a mighty man is he,
With large and sinewy hands.
In how many villages in Canada do you find the smith to-day? His day is past, and it is impossible for us to think of going back to the days of the pioneers and using their ancient methods. To-day is the day of farm machinery, of technological advancement and great productive capacity; the methods of the old pioneering days are gone forever. The scientific and inventive genius of man has solved our production problem by devising better methods, and we feel that the financial system should now reflect our greater productive capacity.
31111-10}
Before I close I should like to give a quotation from Professor Irving Fisher's book, from which my leader quoted yesterday, " 100% Money." Mr. Hemphill, in his introduction, says:
Our statesmen have consistently declined to study this question and provide a sound monetary system, an adequate permanent currency, scientifically calculated to expand consistently with our increasing population and our increasing ability to produce.
Somehow, the intelligent public of this nation must learn the fundamentals of this question. We can no longer depend upon our banking system to furnish all the money we have to do business with. The principal reason this depression continues is that the banks are not lending, and as a result, the money with which to expand business does not exist. It is so simple that business men largely overlook this fundamental situation and continue to search for some economic "fourth dimension" to explain our distressing situation, but there is no mysterious force defeating our efforts to exchange goods and services. We haven't the money nor any substitute in circulation, and that is the essence of the story.
In Professor Fisher's book, he presents in lucid detail the operation of this erratic banking-monetary system, and the obvious remedy. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and the defects remedied very soon.
It is your problem and mine.
There are probably many, sir, in this new era upon which we have entered who blindly refuse to recognize that great truth. We must remember that if evolution is not allowed to proceed in an orderly way, if it is dammed up first at one point and then at another, the same forces that make for evolutionary progress will likely blast a way by revolutionary methods. And so, Mr. Speaker, we hope that the House of Commons and the people of Canada will give earnest consideration to these new questions which are facing them. The main question before us to-day is who is to control the future monetary policy of this country, and shall not the profit motive be taken away and the credit of the nation be used for the welfare of the people of the country!
Mr. T. J. O'NEILL (Kamloops): In rising to speak to this resolution I may say that I am not an advocate of Mr. Aberhart or of Mr. Douglas, nor am I a supporter of social credit. But I do not believe that this resolution is social credit. I have long been of the opinion that some kind of monetary reform is overdue. I am a Liberal, but not because I believe that Liberalism is a cure for all our troubles. Nor do I believe that party government is a cure-all. It is my

Purchasing Power-Mr. O'Neill
view that if democracy is to survive we must have party government, but I hold that if the principles of the Liberal party are complied with we shall be able to bring about the monetary and other reforms that are required.
The problem of unemployment is, in my opinion, nearly as acute to-day as it was when this government came into power. It is without question the outstanding problem of the times, and it is very closely allied with that of credit. Prior to the election, in fact prior to the nomination, I held practically the same views as regards monetary reform that I hold to-day, and I expressed those views not only in the Liberal party but in public. With the abundant evidence that there is on all sides of poverty and distress, I see every reason for continuing to believe in the soundness of that viewpoint. When anyone to-day dares to voice an opinion that does not coincide with that of advocates of the present so-called sound money system, he is immediately held up to the most belittling ridicule and the most withering sarcasm. I regret that during this debate there has not been shown a little more of the Liberal principle of toleration.
To illustrate the point I am trying to make: during the year 1930 it seemed advisable to the then government that a loan should be floated for the purpose of refunding. I have no intention at this time of criticizing the government of that day, because I believe that any other government would have done the same thing under this system. They required a loan of some hundred million dollars for the purpose of refunding. Not being very sure of the feeling of the people at that time, the premiers of ihe nine different provinces, together with the then acting prime minister, went on the radio as supersalesmen, so to speak, to sell this bond issue to the people of Canada, and without exception, I believe, one of the points they stressed was the wonderful opportunity for a safe investment that that loan presented to our people. It was safe, they said, for the reason that it was backed not only by the government but by all the natural resources of this wonderful dominion. The point is that if it is necessaiy to put up the natural resources of the country as collateral security to guarantee a loan, why does the bank not belong to the people? Why is it necessary to pay a tribute to some private individual in order that we may be able to use something that belongs to us?-because in the last analysis what we are using is the public credit.

I am just as thoroughly convinced as I was prior to the election that if we continue to pile up obligations for public purposes as we are now doing, it cannot but inevitably result in the total collapse of our present financial structure, with all the chaos, misery and privation that will follow such an event. On the other hand if we change the system to one of public ownership of the right to issue currency and credit, I see no reason why there should be any repudiation of the just responsibilities that we have assumed. I believe those responsibilities can all be met, but they cannot be met if we continue to finance as we are doing at the present time.


Mr. W. A. TUCKER (Rosthern):: I notice that this resolution states:
That, in the opinion of this house, the Canadian government should consider the advisability of beginning this year to issue purchasing power, and to use that purchasing power for the improvement of the economic condition of the Canadian people.
In rising to support the motion I do so with certain qualifications. In the first place I should like to make it quite plain that, so far as I understand social credit, either of the Aberhart or	of	the	Douglas	variety, theresolution is	not	either one of	the two. Itproposes the	use of	national	credit rather
than any system of social credit. I compliment the leader of the social credit party on being broadminded enough to bring forward a proposal which I feel is in line with Liberal policy, rather than a straightforward proposal of definite social credit according to either Aberhart or Douglas.
One of the things I would quarrel with in the wording	of	the	resolution	is the suggestion that the government should consider the advisability of "beginning" this year to issue purchasing power. I have spoken in the house on this question on several occasions and indicated that in my opinion we have done this very thing more than once in the past. I shall refer to the occasions when I think we have done that very thing, and if I support the resolution it is because I think there will be no harm in giving some study to a further understanding of some of the things we have done in the past with no evil results of any kind so far as I can see. You may say, when have we ever issued purchasing power without somebody giving value for it? The first occasion that will occur to those who know anything about the dominion is that up to 1913 we issued thirty million dollars' worth of dominion notes which were legal tender in this country against a gold reserve of one-quarter

Purchasing Power-Mr. Tucker
of that amount. In other words, with gold worth roughly a little Over seven millions, we issued and used as a government thirty million dollars' worth of money; that is, we put out that much purchasing power and placed it in the hands of the people. Shortly after the outbreak of war we raised that amount from thirty to fifty millions, and, on a gold basis of one-quarter of fifty million dollars, were actually putting out purchasing power for the use of the government to the extent of three-fourths of that fifty mtdion dollars, with nothing whatever behind it except the law itself and without employing means of taxation or otherwise to raise the money. I am favourable to a study of extending that principle as far as it is safe to do so without upsetting or .jeopardizing our present democratic system, the so-called capitalist system.
Another occasion on which we made use of this system was when during the great war we issued 816,000,000 worth of our legal tender against dominion railway securities. As the railways had done many times in the past, they came to Ottawa wanting the government, as I suppose, to guarantee another bond issue. The government of that day thought that they would try an experiment, and instead of guaranteeing a bond issue and making themselves liable to pay interest on it, they said to the railways, "You deposit your bonds with us and we will print $16,000,000 worth of money and lend it to you." I asked certain questions in the House of Commons last session in regard to this matter. First, I asked:
Have the railway obligations or securities against which $16,000,000 of dominion notes were issued pursuant to authority contained in An Act respecting the issue of Dominion notes. Statutes of Canada, 1915, Chap. 4 been paid?
The answer was "no." So that the money is still owing the government of the country. Next I asked:
If so, when were they paid?
The reply was that this was answered1 by No. 1. Next:
How much interest, if any, has been paid on said securities to date?
The answer was:
Interest paid by the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company on advances secured by the obligations referred to amounted to $2 327 -945.23.
The next question was:
To whom was such interest paid?
The answer was that it was paid to the Receiver General of Canada. Now that is a different story altogether from many of the other things that have had to be told in
this house. Instead of the country having to pay interest on railway financing, we find that the government itself lent money to the railways-money that cost it nothing except the cost of printing-and on which it has collected to date over $2,000,000. Nothing bad has happened in consequence of that; and if instead of paying interest we can collect interest, I ask every hon. member in this house, why should we be afraid to investigate further the possibility of extending such a system of carrying on the affairs of the country?
Not only at this time did we finance the railways to the extent of $16,000,000, but at the same time the government gave itself $10,000,000 for the purpose of carrying on business. In other words, the government made an issue of $16,000,000 against railway securities a.nd $10,000,000 just on its own securities and it has used that money without resorting to taxation to get it or borrowing and having to pay interest on it.
There is another instance of the issue by the government of this country of purchasing power without first falling back upon taxation or borrowing to get it. I would refer the house to the emergency issue, during the war, against British treasury bills of $50,000,000 for the purpose of buying goods in Canada required by the British government. That was issued solely against British treasury bills. I do not know what rate of interest these British treasury bills carried, but I assume that they carried some rate of interest. These bills were finally paid off in 1927 and, I assume, they were paid off both as to principal and with whatever interest they bore at the time. In other words, we issued $50,000,000 of purchasing power, we stimulated Canadian industry when we did so, and at the same time we collected not only that $50,000,000 but interest on the money. If that is not good business, then I must admit that there is something wrong with my reasoning in the matter.
Let us take another instance in which this policy was followed. We find that under the Finance Act the same method was adopted. The government issued to the banks printed money against dominion government bonds; and any one who will read the Canadian Macmillan report can find the statement as to the amount issued from time to time by the dominion government of money against which the only security that was pledged consisted of dominion government bonds and the guarantee of the banks who pledged them. There was no gold behind it, and there was no limit to the amount of money that could be issued under the Finance Act. They could have issued billions of dollars had they seen

Purchasing Power-Mr. Tucker
fit. Under the Finance Act in July, 1933, the government of Canada had in issue $48,000,000 worth of good legal currency against the bonds of the country and they were collecting interest from the banks on that issue of currency * again, very good business and something which it would do us no harm to study.
As a further instance of the issue of purchasing power, mav I point out that under the last administration there was a change in the Dominion Notes Act which came into force on June 30, 1934. We provided that the backing of our dominion notes should be twenty-five per cent gold, and on the basis of that amount of gold the last administration, led by the present leader of the opposition (Mr. Bennett), increased the dominion notes printed by the dominion government by $53,000,000. I well remember following the discussion of this matter in the press at that time. This money was being used to pay ordinary expenses of government, and many believe that if the government issues money it is a dangerous thing, but that the banks can inflate and expand credit to any extent and no harm is done. Such were wondering what was going to happen to the public financial structure when, as I say, the government led by the present leader of the opposition was so bold as to issue this flood of new money. Well, what happened? Nothing of any distressing consequence. One of the things that happened was that by the end of the following year bank deposits in Canada had risen by $250,000,000. That is to say, there was that much more money to do business with in Canada. Had that policy been followed carefully I think we would have come out of the depression much sooner. I make bold to say that had the leader of the opposition had the courage of his apparent convictions at that time, had he followed that policy instead of the advice of some of his friends in the cabinet, perhaps we would have come out of the depression to a greater extent under his administration than we actually did.
Let us take another example of the issuing of purchasing power by an institution of our own creation. I refer to the Bank of Canada. We have provided by statute that the Bank of Canada may go and buy a dollar's worth of gold and, on the strength of that, issue four dollars' worth of Bank of Canada bills which are legal tender. In other words, it can take one million dollars' worth of gold and with it provide itself with four million dollars' worth of purchasing power. It may be said that this is not of any advantage to the government of the country. I contend that under the Bank of Canada Act, if that policy were followed to a sane extent, of

course, any profits it made therefrom over and above running expenses and dividends on shares would came back to the government of the country. The only quarrel I have with the Bank of Canada is that it is not making use of its power. According to the last statement of the Bank of Canada it had on hand, in round figures, $179,000,000 worth of gold. On the strength of that it could have issued roughly $716,000,000 worth of legal tender and still have been within what is recognized all over the world as the safe limit. According to the last statement of the bank it actually had in issue $134,000,000 worth of notes. In other words with the gold the Bank of Canada has on hand at the present time it could issue $582,000,000 of new money and have that money amply secured according to the best judgment of the nations when last they considered the matter in conference.
The question any ordinary layman will ask is this: Why keep the gold and make no use of it in a country such as Canada, while at the same time you are forced to borrow money internally with which to do internal work and redeem internal debt? I suggest that if that $582,000,000 were issued by the bank and loaned to this dominion to pay on its debt a large sum of money would be saved in interest alone. According to the last Canada Year Book the average interest rate on dominion indebtedness was 4*136 per cent. That would not be quite so high to-day, but for purposes of calculation if we say the rate is 4 per cent, the saving to this country wrould be $23,000,000 in interest alone.
The question we must ask ourselves is this: If we can do that and keep within the limits of sound finance, why do we not do it? The answer always given is, "If we put out that much legal tender and increased our cash reserves to that extent, with the tendency that has grown up on the part of the banks to lend to the extent of ten times the amount of the cash reserves in the country, it would mean a tremendous inflation of credit." The first thing I should like to say in that connection is this: I do not say this amount should be issued all at once. I say we should start and go far enough to bring about some inflation of credit in order to put our young people to work, to develop our great natural resources and to provide some of the things this country needs. An inflation of credit for that purpose would do no harm.
I am reminded of what Germany has done during the last three years. According to the ideas of the orthodox economist Germany wiped out the savings of her people by her policy of uncontrolled inflation, which

Purchasing Power-Mr. Tucker
destroyed the value of her monetary unit. That was not a case of the controlled issue of currency; it was a deliberate issuance of money until the value of that currency was destroyed. The question that strikes one is this: Where is Germany borrowing the money to-day with which to do the vast amount of internal work that is being carried on there, when under that hypothesis the savings of her people were wiped out? Someone in this house may say, "Oh, but Germany wants credit from foreign nations." Germany does want credit with which to buy abroad. Because of her vast armament program she cannot possibly produce and export enough goods to pay for the things she needs to carry on that program, but so far as the internal development of Germany is concerned, she does not want to borrow money from anyone externally. Germany is using every bit of her natural resources to the very limit, as she is using her labour power, her people. It is all very well for us to say that they are not making as great a success of it as we might. I say that Canada, with her tremendous resources, with a population just as able and intelligent as the people of Germany, might well embark on a policy of expansion which would put our unemployed to work. When Germany can embark upon a policy of rearmament which has cost four billions dollars; when Germany can build military roads some of which cost over a hundred thousand dollars a mile to construct; when Germany is making such full use of all her resources, largely I suggest by the use of national credit, I say to this House of Commons that, with our great natural resources, we have no right to say that we will not even consider the possibility of embarking on a policy of expansion, peaceful of course, on a similar basis of use of national credit.
We live in a world of land hungry nations, Mr. Speaker. On the one hand we have countries such as Germany using every ounce of their natural resources, while on the other hand we are not making use of our young unemployed people to develop our great natural resources. In past years we have permitted our young men and women to drift away to the United States, and we are afraid to have people come to our land in order to help develop this great empty country of ours for fear of aggravating the unemployment situation. Our forefathers pioneered this country and placed it in our hands, but we, by refusing to develop it, are fairly tempting the attack of some more powerful nation that thinks it can make better use of our resources than we are making. That
is one of the things that we, representing the Canadian people, have to bear in mind. If as a Canadian people we are not prepared to make use of the natural resources that providence placed within our borders for the benefit not only of ourselves but of all those who wish to come to our shores, and we feel we should properly admit then we are courting the risk of having these lands wrenched away from us some time in the future-perhaps distant-when the pressure of population becomes much greater in some of the overcrowded countries.
Those who simply say that what we have had in the past is good enough, so that we need not examine any new idea, are not being fair to the people who in the past took chances in order to found this land of ours. If there is a sign that this credit inflation is going further than it should, it will be very easy to stop. Under the law at the present time the chartered banks must deposit with the Bank of Canada five per cent of the amount of their deposits. If, when we put out more currency-which does not cost us anything and which bears no interest-we find that the banks are going too far in their policy of credit inflation, we can give the government power to require the banks to deposit more of their own deposits with the Bank of Canada than five per cent. That would cut down such inflation. Let the government take over in that way the absolute power over the issuance of credit by the banks in this country. This will be much more effective than the power we have given it of buying and selling bills. So I submit, Mr. Speaker, that there is a possibility of using over $500,000,000 worth of money without a cent of cost to the country, and that we could easily control any tendency to overinflation that might result. Take again the example of Germany. That country came through a terrible war, into which it put all its resources, and in which it was beaten. It came through a revolution, but it has reestablished itself to on amazing extent largely by the use of national credit. Surely with the experts we have in our government, they could see to it that if we made use of this power it would not be abused by the banks or by anyone else. At any rate I have that much confidence in the leaders of Canadian banking and finance.
The next case to which I should like to refer, Mr. Speaker, is this: The time we used our national credit when the present leader of the opposition was in power. He borrowed $35,000,000 from the banks on treasury bills and had the banks take those

Purchasing Power-Mr. Tucker
bills to the Minister of Finance, who had printed and who issued against those bills
S35.000.000 worth of new money, under the provisions of the Finance Act. In that case we actually paid the banks four per cent interest, and the Minister of Finance charged the banks three per cent interest, so as a result that 135,000,000 cost us one per cent. That was an example of the use of national credit. I have never heard of any harm resulting from that action, and if any harm did come from it I should like to hear about it from responsible people. If no harm has come from it, why should it not be used more extensively?-of course now through the Bank of Canada.
We have authorized the banks to issue purchasing power, by virtue of the powers already given them. I have heard doubts expressed by some people as to whether or not the banks actually issue or create purchasing power. I have before me the first report of the Bank of Canada, and at page 9 I find the following:
Adding to the deposit figure $40,497,965 in Bank of Canada notes, which the banks held in their tills, we find the total cash reserves at December 31, 1935, were $222,133,998, equal to approximately ten per cent of the chartered bank's deposit liabilities in Canada.
Incidentally I am sometimes told that in a system of governmental finance the use of national credit would depend upon the confidence of the people. I submit the people of Canada have just as much confidence in the integrity and solvency of the Dominion of Canada as they have in any bank in Canada. I submit further that the working of our present system depends upon the confidence of the people in the banking system of Canada, because if the deposit liabilities of the banks in Canada are to-day ten times the amount of the actual cash reserves in the country, in the event of the people suddenly asking for their money on deposit from the banks they would receive only about ten cents on the dollar. If banks in Canada can safely do business on that basis, surely the nation can do it on the same basis.
When we read the opinions of people interested in the matter we find one view in one book and another in another. I believe one can gain no great amount of profit from citing opinions of writers of books, because each writer has his own opinion and it is hard to weight the value of each writer's opinion. Possibly the opinion of the Minister of Finance (Mr. Dunning) is worth more than those of writers of some books.


Charles Avery Dunning: I hope so.


Walter Adam Tucker: What then is the use of
citing such opinions to the minister? I do

believe, however, that he would accept as authoritative the opinion expressed by the members of the royal commission on banking and currency in Canada which examined the question. As hon. members are well aware, the commission was composed of very eminent men. I read from page 44 of the report, because I believe the question under consideration does not receive the careful thought it should receive:
If a bank receives from some new or outside source an increase in its "cash reserves," it will in the ordinary course of events proceed to make loans or to buy securities. The public receiving the proceeds of the loans or sales will deposit in the banks all that they do not require for hand-to-hand cash. In so far as these deposits are made in other banks, cheques wili be drawn on the original bank, with the effect of diminishing its reserves and increasing those of its competitors. The latter, provided their cash position be already satisfactory, will then be in a position to make additional loans and investments, if conditions warrant, and this in turn will enable the public to make further deposits. In so far as the loans and investments made by the original bank return to it as deposits, it will be in a position to make further loans or investments. Through this process of lending, investing and depositing, the increased cash reserve is distributed among the banks and the volume of loans and investments and deposits is increased by an amount several times greater than the amount of the original increase in cash reserves.
In other words if the government of Canada through the Bank of Canada lends a bank a million dollars, on the strength of that loan the bank may turn around and buy government bonds to the extent of several times that million dollars. There can be no question about that; as an authority I offer the findings of the royal commission.


Charles Avery Dunning: They did not say that, though. What my hon. friend has just read does not say that.


Walter Adam Tucker: I will read it again.


Charles Avery Dunning: That will not help.


Walter Adam Tucker: It says:
In so far as the loans and investments made by the original bank return to it as deposits,-
And they mostly do.
-it will be in a position to make further loans or investments. Through this process of lending, investing and depositing, the increased cash reserve is distributed among the banks and the volume of loans and investments and deposits-
I repeat, "loans and investments and deposits"-
-is increased by an amount several times greater than the amount of the original increase in cash reserves.


Charles Avery Dunning: That is right.

Purchasing Power-Mr. Tucker


Walter Adam Tucker: Purchasing Power-Mr. Tucker
leader uttered on the evening of the day of the last election. He spoke with moving eloquence and in profound sympathy for human nature and human suffering, in full appreciation of what the people expect of a government in these times, when he said:
In the new era which dawns to-day the struggle for the rights of the people will, in the realm of economic liberty and security, be carried on as never before. Poverty and adversity, want and misery, are the enemies which liberalism will seek to banish from our land. They have lain in wait at the gate of every Canadian home during the past five years, and their menacing mien has served to destroy the souls as well as the minds and bodies of an ever-increasing number of men, women and children in our land. We take up at once, as our supreme task, the endeavour to end poverty in the midst of plenty, starvation and unnecessary suffering in a land of abundance, discontent and distress in a country more blessed by providence than any other on the face of the globe, and to gain for individual lives, and for the nation as a whole, that "health and peace and sweet content'' which is the rightful heritage of all.
In taking the action I intend to take I feel I am following the noble and inspiring words of our great leader. Although I do not quite agree with the wording of this resolution, I propose to support it from my place in the House of Commons.
Hon. NORMAN McL. ROGERS (Minister of Labour): The hon. member for Rosthern (Mr. Tucker) will forgive me I am sure if I do not seek to traverse the ground he has covered in his very interesting speech. I imagine it is needless for me to tell the house that I do not speak to this resolution as an expert on monetary questions. I have studied some of these questions for a number of years and I have nothing but envy for those who are able to discuss them with apostolic certainty.
It seems to me that at this time we must address ourselves to the exact wording of the resolution before the house. The resolution is couched in these terms:
That, in the opinion of this house, the Canadian government should consider the advisability of beginning this year to issue purchasing power, and to use that purchasing power for the improvement of the economic condition of the Canadian people.
As to the latter portion of the resolution I am sure there is no difference of opinion among the various groups in this house. We are all most anxious to improve the economic condition of the Canadian people. I would also say that I share the views expressed by the hon. member for Lethbridge (Mr. Black-more) and the hon. member for Kamloops (Mr. O'Neill), that the existing banking and

monetary system should not be sacrosanct and unchangeable. There have already been some far-reaching changes, not only in the system but in our views regarding it. Obviously as we move forward toward new social objectives we must fashion the instruments of state to meet these new objectives.
In approaching this particular question I am bound to say that I am influenced by certain principles which to my mind have been established in the experience of this country. I cannot conceive of a purchasing power in any real sense apart from the production of goods and services. In a primitive community this was self-evident. You exchanged goods and services and as goods and services were produced you increased the store of purchasing power. Therefore I cannot conceive that it lies within the power of the dominion government to issue purchasing power. It is within the power of the dominion government, or of any government, to create conditions under which the people may themselves increase purchasing power. I may say that that has been the purpose of all governments in this country, however different their policies may have been.
I was much interested a moment ago when the hon. member for Kamloops referred to the unemployment situation in British Columbia. It is within his knowledge and within the knowledge of every member of this house that within the past year there has been a very considerable improvement in the economic condition of British Columbia. That improvement was not brought about by the issue of money purchasing power; it was brought about by the creation of conditions under which the people of British Columbia were enabled to increase their purchasing power in terms of production of goods and services. As a result of several trade agreements-the trade agreement between this country and Great Britain, the trade agreement between this country and the United States, and the settlement of differences between this country and Japan-barriers were removed which theretofore had prevented the free flow of trade, and as these barriers were removed there was an expansion of trade. New markets were established; as a result there was a greater degree of industrial activity and therefore a greater production of goods and services, and the income of the people of British Columbia was increased.


Richard Bedford Bennett: May I interject?


Norman McLeod Rogers: Certainly.


Richard Bedford Bennett: I did not understand the hon. member for Lethbridge (Mr. Blackmore) to make the suggestion that has been

Purchasing Power

Mr. Rogers
attributed to him. He was advocating, as I understood him, that this country should issue currency with which to discharge obligations, and that the money thus in circulation would be additional purchasing power. That is what I gathered. It was not a question of production at all.


Norman McLeod Rogers: Precisely, and I have rather taken this view, that in any real sense of the term purchasing power consists of goods and services produced within the country. You may issue dominion notes, you may expand credit, you may establish titles to goods and services; but let us assume, for example, to take the case of British Columbia, that you had not had created the conditions which resulted in a stimulus of industry, but that in that province in the same period of time you had merely had an issue of dominion notes to this or that extent. Can it be suggested for one moment that the condition of the people of British Columbia, with the issue of purchasing power in terms of currency, would have been as good as it is with the additional purchasing power through the production of goods and services? That is the point, Mr. Speaker, which it does seem to me is vital in the consideration of this question. My point is that essentially the real income of a community consists of the goods and services that it produces, and we are therefore compelled in considering any question of currency inflation to determine how far such a policy is likely to go in its ultimate effect in increasing or decreasing the productive power of the country.
It so happened that following the late war I spent some time in central Europe when the countries there were in the midst of an inflationary boom. I am far from suggesting that there was not an acceleration of production through the inflation of currency, but it was temporary; it was the kind of fever that precedes total collapse, and I do not think anyone who visited those countries at that time could fail to be impressed by the very serious results which followed a policy of that kind.
As I understand this resolution, it proposes, as the leader of the opposition (Mr. Bennett) has just said, the issue of purchasing power in terms either of pocket-book money, as explained by the hon. member for Lethbridge or, as he termed it, cheque-book money. I am bound to say that if the cheque-book money consists of cheques issued by the dominion government to pay in legal tender, then there is no material distinction between the two so far as the effect upon the total amount of credit is concerned.


Charles Avery Dunning: It must be a call on
legal tender.


Norman McLeod Rogers: It must be a call on legal
tender, and so if it is to be used for that purpose I can see no distinction. Surely that dogs mean that we would be inflating our currency, and the hon. member for Lethbridge surely concludes that that policy is going to result in the economic improvement of the Canadian people.


Mr. BLACKMORE:: Will the hon. gentleman allow a question?


Norman McLeod Rogers: Certainly.


John Horne Blackmore: I just wonder if it
would help the economic condition of this country if we were to spend, say, $200,000,000 on public works throughout the dominion. Does the minister think that would improve conditions?


Norman McLeod Rogers: I think that is a very fair question. As a matter of fact that is one of the methods by which it has been proposed at various times to inflate currency-in other words, to expand the dominion note issue in order to carry out a large dominion public works program, and I take it that this is what my hon. friend has in mind at the moment. I would agree that from such a policy you would have a temporary increase in production, and one would have to consider how far an expenditure of the kind would benefit the country in the creation of utilities which could be enjoyed by our people. But I have never been of the view that a public works program of that kind would supply a suitable remedy for unemployment. In the country to the south of us there have been large expenditures on public works, but as year has followed year the administration there has found greater difficulty in discovering public works which could be justified upon economic grounds. I have seen with my own eyes in the city of Norfolk a vast stadium and playing field established through the use of federal funds, and these, at the present time at any rate, are far beyond the needs of that particular community. I might add that they were established not essentially for the city of Norfolk but rather for a small branch of a university at that place. You cannot go on and on and on with a public works program of that kind and be assured that you are diverting a portion of the national income into useful channels. I do not believe that in that direction lies any true remedy for unemployment.


John Horne Blackmore: May I ask another
question?

Purchasing Power-Mr. Rogers


Norman McLeod Rogers: Certainly.


John Horne Blackmore: If $200,000,000 could be caused to be spent by tourists in the Dominion of Canada every year, would the minister consider that that would improve the economic condition of this country?


Norman McLeod Rogers: Certainly. I have no hesitation whatever in answering that question in the affirmative.


John Horne Blackmore: Then may I ask why $200,000,000 spent every year in this country by the government would not also improve conditions?


Norman McLeod Rogers: As I understand my hon. friend's proposal, the $200,000,000 spent by the government on public works, would not be taken from the people by taxation, would not be raised in the way of loan, but would, so to speak, take the form of an expansion of the dominion note issue. That is nothing more or less than inflation. That is nothing more or less than adding to the total amount of credit and currency in the country, and the very fact that a government embarked on a policy of that kind could1 not I think fail to have an effect on the price level.


John Horne Blackmore: May I ask another question?


Mr. ELLIOTT (Middlesex):: It is getting to be a cross-examination.


Norman McLeod Rogers: In this whole situation there is an unpredictable factor, and that is the velocity of circulation. My hon. friend I know is fully aware of that. The velocity of circulation of currency depends to a great extent upon inconstant factors that are absolutely beyond the control of government, that do not lie within the realm of policy. I am quite sure that in the province of Alberta this whole question has received some consideration, because as I read the Social Credit Manual I find it is suggested that the velocity of circulation is going to provide an additional means by which the province of Alberta may tax goods in order that they may raise sufficient to pay the social credit dividends.


Mr. WOODSWORTH:: May I ask one question before the minister passes from these tendencies toward inflation? Would a loan floated in Canada or a loan floated in the United States tend towards inflation?


Norman McLeod Rogers: I doubt whether they would have the same effect. Much depends upon the significance that is attached to a particular policy that is undertaken. Governments
[Mr. Blackmore.}
have always been in the habit of borrowing money for specific purposes. But when a government departs entirely from the view that it must use money secured by loans or taxation for public purposes, and prints an addition to the dominion note issue for that purpose, I believe that it tends, rightly or wrongly, to destroy the confidence of the people in a more or less stable purchasing power of the national currency.


James Shaver Woodsworth: I am not for the moment on the question of confidence; I am on the question of the effect of the circulation of that much more money. I cannot quite follow the minister.


Charles Avery Dunning: He has only forty
minutes, and he has had ten questions.


Norman McLeod Rogers: I am still more concerned with another aspect of this question. The hon. member for Lethbridge did not seek to explain how this purchasing power would be issued or to whom it would be issued, and that to me is a vital question. I should perhaps correct that statement by saying that just now he has proposed as one alternative a public works program, and obviously additional dominion notes could be issued in that way. But among all the authorities quoted by my hon. friend and those who supported him yesterday, there was one conspicuous absentee; that was Mr. Aberhart, who is the recognized leader of the social credit movement in Alberta, and I do not think that I should be doing violence to the views of my hon. friends if, in seeking to find how this purchasing power was to be issued, I should refer to the Social Credit Manual, published and written by Mr. William Aberhart. I may say that this Social Credit Manual is described in these terms, "Puzzling Questions and their Answers." I have read it through from beginning to end, and I am bound to say that in some cases I am more puzzled by the answers than by the questions. I just want to quote a paragraph from this manual. It refers to basic dividends, and I quote it for the reason that apparently it supplies the means by which, in the view of Mr. Aberhart and those who think with him, there should be this issue of purchasing power to the members of the community. The proposal is in these words:
To enable each citizen to secure these bare necessities-
That is, food, clothing and shelter-
-each of them will receive a pass-book in which at the beginning of each month will be entered the basic dividend for that month, say $25. This is supposed to provide for the bare

Purchasing Power-Mr. Coldwell
necessities of food, clothing and shelter for every bona fide citizen, whether he works or does not work, and he shall not be required to pay it back or work it out.
That to me is a great stumbling block, the thought that the community for its own good should issue purchasing power to those who are not prepared to work at all. And it does seem to me that in considering the whole question we are faced with this problem, that the issue of purchasing power indefinitely-because there is no limitation mentioned in the resolution-the issue of this purchasing power in the manner mentioned in the Social Credit Manual cannot but ultimately have the effect of curtailing production and in that way of decreasing real purchasing power. It may be said, as was said yesterday by the hon. member for Lethbridge, that the mere circulation of social dividends, or whatever you may call them, will tend to create a greater demand for consumer goods. That may be possible. But I would fear greatly the effect upon motivation to production of a free non-repayable gift, as I think my hon. friend described it yesterday, to the members of a community. That proposal does give me great doubt.


Mr. LANDERYOU:: Mr. Speaker, this is not a free gift without any recoveiy. It has been suggested that we recover in case of redundant credit.


Mr. SPEAKER:: Order.


Norman McLeod Rogers: I merely quoted from the Social Credit Manual, which makes it quite clear that the $25 a month is designed to provide for the bare necessities of food, clothing and shelter for every bona fide citizen whether he works or does not work, and he shall not be required to pay it back or work it out.


An hon. MEMBER:: Read it again.


Mr. McNEVIN:: When does that start?


Norman McLeod Rogers: I do not propose to detain the house longer in the consideration of this question. I do not think that we on this side have intended to show any intolerance to the views expressed by hon. members in the far corner. On the other hand there does appear to be a clear difference between us in a matter of principle. Conceivably time may prove that they are partly right and we are partly wrong. I can only say that, with what knowledge I have of the history of countries that have embarked upon the policy
advocated in this resolution, I cannot support it, and I cannot believe that in the long run it would contribute to the improvement of the economic condition of the Canadian people.


Mr. M. J. COLDWELL (Rosetown-Biggar):: First of all I should like to say that we in this group are thoroughly in favour of the present House of Commons considering ways and means of increasing the purchasing power of the Canadian people. Neither the resolution nor the mover of the resolution (Mr. Blackmore) sets forth any specific or definite manner in which that could be done; and although the Minister of Labour (Mr. Rogers) has just read what Mr. Aberhart had to say, the members who have so far spoken in support of this resolution have not placed that very definite interpretation upon it. Therefore I take it that members of this house who do not agree with Mr. Aberhart, who do not believe that the proposals he has made in Alberta are soundly based, nevertheless have the right and the privilege to support the resolution.
There can be no question of the necessity of finding a solution of this very evident paradox of poverty and want in the midst of real and potential plenty. If evidence were lacking, we receive it every day in the House of Commons, and in the speeches that have been made in support of this resolution much confirmatory evidence can be found. The question, as we of this group see it, is how we can meet the present need and proceed to a permanent cure, and it is from that point of view that I wish to discuss the resolution. In doing so I am speaking on behalf of this group and the movement that it represents. Unfortunately, a lack of knowledge of economics-quite understandable in a country such as the one in which we live- and a great deal of very loose thinking in connection with these matters, are leading us into all kinds of by-paths. The unemployed, the distressed farmer, the idle professional man or the bankrupt business man have put their hands into their pockets and have said, " Our trouble is that we have no money." Let us bear in mind that the basic fact of man's struggle with nature is not the fact of money but the fact of producing and using things, in other words, production and consumption. Monetary devices are means which modern men have brought into use-what for? For accounting and reckoning and delivering goods and services. It is the accountancy system within the economic structure in which we live, and many people,
Purchasing Power-Mr. Coldwell

I am afraid, forget this fact. They mistake the shadow of money for the substance of things, and consequently we have a tremendous emphasis placed upon that angle of our difficulty.
I think we may say that money, in a broad sense, becomes to the possessor a readily exchangeable title to goods that have been made or services that may be rendered; and since everybody under the present system does not and cannot produce, though everybody needs to consume, we have money in order that such people may obtain the things which they need to consume at given times and in given places. Hence it follows that if in our society

and I commend this particularly to my hon. friends to the left-some persons consume without producing, they must consume some things which others have produced; and to my hon. friends to the right, let me say that in a capitalist society those who live by rent, interest and profit acquire quantities of goods or titles to goods which they have not produced but which someone else has had to produce. Increase in purchasing power among the great masses of the people, which I take to be the object of this resolution, must result in proportionately lessened returns to someone, and as far as we in this group are concerned, we clearly recognize that as a fundamental fact and we make no apologies for advocating that the lessened return shall go to that group which, through its power, has been able to accumulate vast hoards and stores of wealth. We thus face that fact quite honestly and sincerely and are prepared to disagree with those who disagree with us; we shall nevertheless continue to work consistently toward that end.
A moment ago I used the word "profit. " For the sake of clearing up any discussion which may arise on that point, may I say that I am using that term in a strictly narrow sense. Viewed in the narrow sense, "profit," I think, includes rent and interest and is the essential return which accrues to persons or groups of persons as a result of their ownership of the means of production. Let us bear this constantly in mind when we discuss the matter of profit. I do not mean, when I speak of profit, that further amount added to the price of goods which represents the cost of handling, the services of the man or woman handling the product, and so on. I do not include in the word, therefore, the cost of distribution. And again let me emphasize that you cannot increase the purchasing power of one group unless you take potential purchasing power from some other group. But, it may be said, production progressively increases. That

may be true, but the relative truth of the statement that I have just made is, I believe, plain, and no manipulation-if I may use that word-of currency or credit can falsify that position.
To argue that a form of purchasing power that we call credit is an intangible thing is,
I think, to be quite oblivious to the fact that money in any form is a title to goods and services, the fruit of someone's labour, and that such goods are quite tangible. These goods cannot be created, as is sometimes inferred at the point of a fountain pen, although they may be monetized, represented by figures, through a fountain pen; and I believe that if we could get into our minds very clearly the distinction between goods and money we should have a little less confusion in discussing this important question of finance. I am not saying that bankers cannot and do not create credit; they do. But they create it on assets that may be hypothecated to them; in other words behind the creation we have goods. It may be said, in the example given this afternoon of the government issuing notes, that this was different, that nothing was hypothecated. But I would point out that something was hypothecated. When fifteen, or twenty, or two hundred millions of new dollar titles were issued by the Dominion of Canada that meant that two hundred millions' worth of labour and natural resources would ultimately validate these titles; and somewhere in the economic process that amount would have to be accounted for.
The power we have given the bankers gives them enormous power over our economic structure. Last year we of this group sought to impress upon the house the necessity of taking that power from the bankers and so we introduced a resolution asking for the national ownership of the central Bank of Canada and the chartered banks. Nor am I denying that by the wrong use of this power great economic difficulties and dislocations may arise. They do. Scientific control of our financial system-and we are in thorough agreement with those members of the house who advocate it-undoubtedly would assist in meeting some of the difficulties that are arising. For myself I would be glad under certain circumstances to see a government embark upon a mild inflationary program, but in supporting such a program I would admit that it was such.


Charles Avery Dunning: How would the hon.
gentleman approach that scientifically? He mentioned a scientific approach. What scientific basis has he for the inflation?

Purchasing Power-Mr. Coldwell


Major James William Coldwell: I would use the currency that I was about to issue for some useful public work, let us take housing as an example, and scientifically I would recognize that the issue of that currency in all probability would increase-


Charles Avery Dunning: Science does not deal
with probabilities.


Major James William Coldwell: Oh, yes, it does. May
I say, Mr. Speaker, that science does consider probabilities. Science usually established an hypothesis and either proves or disproves it. That is the scientific method. Having said that, I would add that in all probability the price level would be raised, and that would be a form of taxation upon the community to the extent of that inflation. I think we have to recognize that, although, as I say, I would tolerate it under certain circumstances, and I believe it would be well worth while.


Mr. GARDINER:: That is, inflation is
another form of taxation?


Major James William Coldwell: Yes, it is another form of taxation.


Charles Avery Dunning: How far would the hon.
member go, scientifically?


James Shaver Woodsworth: May I suggest,
Mr. Speaker, that the Minister of Finance (Mr. Dunning) interrupted me a few moments ago and referred to the shortness of the time allotted to the speaker. Perhaps he might remind himself of that now.


Charles Avery Dunning: I beg the pardon of the
hon. member for Rosetown-Biggar (Mr. Cold-well).


Major James William Coldwell: I would have no hesitation in answering that question. I should say I would not go very far, because I am not an inflationist, as perhaps the house will see when I proceed a little further with my remarks.
We hear a great deal about sound money, and perhaps this will answer the minister's question. In my opinion a sound monetary system implies that the total amount of all money, taking into account its velocity, shall equal the value of the goods and services, priced and to be distributed by it. The nearer you can get to that the more ideal your system will be. I may say that I am not taking that definition or that statement from any radical economist. It will be found in many of our standard works on economics.


Charles Avery Dunning: That is an orthodox
statement.


Major James William Coldwell: Yes. Too little money, or money moving too slowly, causes a deflation. On the other hand too much money or money moving too rapidly causes inflation, and both are equally bad. I sometimes accuse gentlemen who are orthodox of being deflationists. I think in reality their frame of mind is rather toward deflation than toward stabilization; and I would call some other monetary theorists frankly inflationists, and recognise them as such. Let us bear this in mind, too, that the flow of money and even the effects of inflation are very difficult to gauge. I think President Roosevelt found that out. For three years he poured billions of dollars into circulation, and it was not until after three years had passed that he began to see those signs of recovery which he sought. Even then that recovery was based, perhaps, upon factors other than the sole monetary factor which was so greatly emphasized.
The lesson of this, it seems to me, is that in order to carry out the purpose of the motion which has been introduced, many more factors are involved and many more things need to be done than some members of the house would seem to realize, if we may judge from their discussion of this question. If we are going to achieve a balanced economy we must assume some responsibility for planning production as well as for encouraging distribution. This, probably, is the point at which we part company with our friends to the left and our friends to the right. Our friends to the left want to issue quantities of titles to goods they neither own nor control, while our friends to the right support the theory of automatic self-adjustments, which tragically enough alternate between booms and depressions. We would endeavour to progress toward an ever-expanding production of goods and services and to an ever-increasing enjoyment of them.
Bearing that in mind, Mr. Speaker, you will see why a few moments ago I spoke of balancing money, tokens if you like, with goods, because that is the only way in which we shall ever achieve anything in the nature of a balanced economic structure. In order to do that, however, we must frankly recognize that we have to institute planning and quite wide measures of economic control. We contend, of course, that though steps may be taken in that direction, this can never be achieved in its entirety under the present price and profit system, because the flow of profit tends to immobilize vast quantities of purchasing power at least temporarily. There

Purchasing Power-Mr. Coldwell
you see the fundamental defect in our economic structure. What the Minister of Labour (Mr. Rogers) said may be perfectly true, that enough purchasing power is issued to enable the goods produced to be consumed; yet always there is a dip, a taking out of a portion in the form of profit, in the economic sense in which I use that term, and as the concentration of industry and finance comes into fewer and fewer hands, that dip becomes a much more serious factor in the economic situation.
There we have the real difficulty that arises. It is the concentration of money in the hands of a few, who cannot spend it and who do not even find safe places in which to lend it, that causes disequilibrium. Were it not for these factors the process of production would itself distribute sufficient purchasing power, as the Minister of Labour has said. For in a properly planned economy if you did not distribute purchasing power in that way, you might distribute it subsequently by a social dividend. May I say to hon. members to my left that that is the only way in which they will ever achieve social dividends. Thus it ought to be apparent that purchasing power involves very much more than some of our friends in Alberta would seem to think.
This is an intricate economic subject. Every hon. member who attempts to debate it in an assembly of this kind must know that it is a difficult subject to place before a gathering. I believe that is one of the difficulties of present day discussions throughout the country concerning money and credit. For this reason I should like to place before the house a resolution passed at our conference held in Toronto last July. The resolution, which I believe summarizes our position, is in these words:
The Cooperative Commonwealth Federation reiterates its policy of credit and investment control in the plainest terms.
In passing, may I observe that the matter of investment control is one to which I would like to believe the government is giving serious consideration. As I look at the stock market fluctuations from day to day I can see all the factors which operated prior to 1929. Unless an attempt is made to meet the situation we shall probably see stocks go higher than they did in that year, and the crash will be just that much greater. The following paragraphs are these:
(l_). Central Bank. We demand the complete elimination of all private ownership and control from the Bank of Canada.
(2). Commercial Banks. Useful as it is, the Bank of Canada is not a sufficient instrument for credit control if the rest of our financial

machinery is left in the hands of big business to be used for private profit. The responsibility for directing most of the country's short-term credit rests with the commercial banks. Their credit policy accentuates booms and depressions by easing credit during "prosperity" and restricting it when business declines. Their position accentuates the present trend towards monopoly in our economy through the system of interlocking directorates which prevails between banks and large scale industrial enterprises. In addition, since their one aim is private profit and not social security, they starve us of credit for housing and other welfare services because these things do not "pay." There must be public ownership and control of the whole banking and insurance system if the credit resources of the country are to be devoted to socially useful purposes. "Social credit" parties, by ignoring this essential issue, are tending to lead our people up a blind alley.
(3)	. Long-Term Investment. In spite of many exposures of the abuses and rackets which go with the present methods of long-term financing of industry, the vital importance of this second great section of our financial machinery has not yet been brought home to the public. "Credit control" is empty talk unless accompanied by the control of investment. Private enterprise makes its big profits through stock-watering, promoters' rake-offs, directors' bonuses, transfers between interlocking companies, stock and bond speculation, artificial raising of the marketability of securities through the "investment trust," manipulation of commodity markets, and such practices. The Cooperative Commonwealth Federation recognizes clearly that managed currency and credit provide only half a policy unless accompanied by drastic regulation of these practices.
A Security Board, such as recommended by the Price Spreads Commission should immediately be set up. But a far more comprehensive national investment board should also be created, as called for in the Regina manifesto in 1933. Unless this form of public control is provided, capitalist "recovery" will merely lead us into another period of hectic and unplanned expansion, with national savings invested where profits are highest and quickest instead of where social advantage is greatest, which will be followed inexorably by another and deeper depression.
(4)	. Finally, it is important to reiterate the policy laid down in our Regina manifesto in regard to the need for the social ownership of the means of production and related industries.
That, it seems to me, summarizes the position we have taken. Thus we realize there are many factors involved in the redistribution of goods and services implied in a resolution to increase purchasing power, such as the one we are now debating.
May I repeat that not the least of the important matters indicated is a security board, so that investments may go into proper productive chanels. Involved also would be fixed prices guaranteeing proper standards of living to our producers and adequate wages to our workers. Added to those factors would be the one which is per-

Purchasing Power-Mr. Coldwell
haps more important at the present time, namely the opportunity to earn money. It follows that wide measures of intelligent planning must be undertaken to replace what we regard as an outworn laissez faire economy. Let me reiterate that the problem is more complex than the mere creation of credits, and must cover the very wide field of the production and distribution of goods. Under the present system it is essentially the ownership by the bank, whether outright or by hypothecation, w7hich gives it power to control wealth, to use it, and to determine the distribution of those commodities which money is supposed to distribute.
Those people who do not own the things they need must labour to live. Either they must work, borrow or accept relief. To them existence depends upon labour, debt or dole. That, I take it, is the misfortune of our present economic situation.
If the means of production were restored to the control of society we believe that then the sum total of production could and indeed would be distributed during the process of production. If it were thought better not to do that, then any surplus accruing to the community, through community effort, could be made available in a form of subsequent social dividend. But to attempt one without the other is. in my opinion, courting economic disaster. If my view is wrong I shall be content to listen to other views. An opportunity has been provided in one of the Canadian provinces to demonstrate that my point of view is wrong, and I can assure hon. members from that province that if they succeed in demonstrating my observations this afternoon are not well founded, I shall be glad not only to admit my error but to assist them in carrying forward their experiment. If on the other hand they see that the experiment is not successful-and I submit they do-they should endeavour to work out something more nearly along the lines of economic reality.
Many will say that the point of view I have indicated involves great changes. Yes, it does, and they will come. They will not all come at once, because that would involve a tremendous and sudden dislocation. I do not believe that at the moment the best land of progress can be made in that way. Very recent history has shown that social and economic changes imply time and steps. And so I say, on behalf of the group for whom I am speaking this afternoon, we are prepared to cooperate with any other group in
this house which might not wish a fundamental change but which is ready to travel even part of the way along the road which we must eventually travel.
In conclusion may I outline some of the immediate steps which we consider to be necessary. First, the national ownership and control of the financial system. Second, the national ownership and control of monopolistic industry. Third, social security measures, including minimum wages for workers and a guaranteed minimum price for the farmer. Fourth, steeply graded income taxes with the lower brackets exempt. Fifth, progressively high death duties and inheritance taxes.
May I say that the last is a method of restoring to society as a whole the ownership of some of those things which have been taken from society by a group. I believe that this offers a painless and effective, if not a most rapid way of achieving that objective. But in imposing death duties we have no right to consider them as current revenue. We ought to consider death duties, which vary in extent from year to year, as a contribution toward the retirement of our national capital obligations.


Charles Avery Dunning: The hon. gentleman believes in federal death duties?


Major James William Coldwell: Yes.


Charles Avery Dunning: In addition to the provincial duties?


Major James William Coldwell: Yes. The next thing required is the refunding of our public debt.
I am glad to see that some refunding is under consideration at lower rates of interest. I was hoping that steps might be taken and means found for refunding the different loans at still lower rates of interest. We have to deal also with the adjustment of private obligations and with the future limitation of rates of interest. It seems to me that by these methods purchasing power can be increased under the present system. There must be inaugurated a process of redistribution and eventual greater production. The house may not agree with everything advocated by our friends to my left, but if we discuss intelligently and without bias ways and means of assisting the Canadian people, not only to make more goods but to consume more goods, then this session will be justified. It is for these reasons that we intend to vote for this resolution.


Mr. NORMAN JAQUBS (Wetaskiwin):: Mr. Speaker, yesterday the hon. member for Huron North (Mr. Deachman) said that a man's purchasing power must be measured



Purchasing Power-Mr. Jaques
exactly by his production. A few years ago a federal minister of the crown was in Edmonton where he broadcast to the farmers the particulars of what his party had done for their benefit. He told them that his party did not wish to claim all the credit for the benefits they had received, that providence must be given some credit because providence had seen fit, through bad weather, to reduce production in other parts of the world. There is an instance where a man's purchasing power was not measured exactly by what he produced; his purchasing power was measured by what some one else had not produced.
I farmed for five and thirty years in western Canada. I always found that when I had a good crop,	there never seemed to be	anyprice.	When	there was a good	price, I neverseemed to have a crop. The same thing was true with regard to cattle. When people wanted to buy cattle and were willing to pay a fair	price,	I never seemed	to have	any.When	cattle	were cheap, of	course I	had
some to sell. It seems to me that our problem is the producing of plenty without penalizing the producers. In other words, it is a problem of selling plenty at a profit.
The only alternative is a dictatorship, either of the right or of the left. If the producers are to be ruined by producing the plenty which science has made possible, then the only remedy is the enforcement of artificial scarcity by means of a dictatorship. The hon. member for Huron North asked us to consider an island where only barter obtained. He told us that under such circumstances production would balance consumption. We do want to dispute that, but the hon. member did not mention such things as machinery, science, savings, investments and all the rest of it, and the price system as well. If I had the time I think I could prove that under the present price system it is impossible for industry to distribute sufficient purchasing power in order that what it produces may be sold.
Money is born as a debt. When I borrow $100, I must pay back $108. Where do those eight dollars come from? I may be told that I have produced a crop of wheat, that it comes out of the wheat deal, but that is not so. I have stooked a good many thousands of acres of wheat and I have never yet found a dollar bill in any stook. You produce wheat, you do not produce money. Savings create a shortage of purchasing power. When a man saves he refrains from consuming and to that extent goods are not sold. We are told that money saved is an investment which eventually will be paid out in wages and salaries. That may be true, but when the
TMr. Jaquea.J	J,	\
money is paid out again in wages and salaries, it is paid out with respect to another cycle of production. We have two lots of goods and one lot of money, and it is impossible for one lot of money to buy two lots of goods.
Why is it that times of greatest prosperity, when everybody is working and production is at its full, are precisely the times when high pressure salesmen go around to sell their goods. It is then that it is found necessary to sell goods on time. It is because under our price system all costs must enter into prices; in those prices must be included costs which are not distributed, and it is for that reason it is impossible for industry to distribute the money which is necessary to buy what it produces. If, as the hon. member for Huron North says, production and consumption balance, I would like him to explain the ever-increasing debt. If industry were self-liquidating, as he says it is, how does he account for the ever-increasing debt not only in Canada but in all countries?
It is still doubted by some that the banks create money. There are still people who tell us that the banks lend simply what is lent to them. Now if 100 members of this chamber go to-morrow morning to a bank and each deposits a ten-dollar bill, there is $1,000. When they come out I go into the bank and I borrow $1,000. If it is true that I have borrowed the money which has just been deposited, then if they will go in and ask the manager where their money is, he will say, "I have lent it to Jaques." But the bankers do not say that. They say, "Of course, your money is here." So there you have S2,000, where only SI,000 existed before, and if that is not creation of money, what is it? I do not know. It is creation in the sense that I understand it.
We hear a good deal about inflation, and I should like to read for the benefit of those who have not done so what the originator of the system which we advocate says about inflation.


Mr. MARTIN:: Who is that?


Norman Jaques: Major Douglas. He says
this:
There is almost nothing to be said for a policy of deflation as defined by the average banker, except that it provides a breathing space in which to consider what to do; the real argument against it is not that it reduces prices, but that it only does so at the expense of the producer; but a policy of inflation, that is to say a policy of increasing issues of money or credit, in such a manner that it can only reach the general public through the medium of costs, and must therefore be reflected in prices, has one thing and one thing only to be

Purchasing Power-Mr. Jaques
said for it at this time; that it is absolutely and mathematically certain to reduce any financial and economic system to ruins. It is in fact a capital levy of the meanest and most one-sided description since it taxes the purchasing power of those who obtained it by work, for the benefit of those who obtain it by financial manipulation.
That is the statement of Major Douglas, the originator of social credit. I know it is popular to sneer and laugh at the philosophy and economic teachings of Major Douglas.


Paul Joseph James Martin: Mr. Aberhart does. I believe the hon. gentleman's own provincial leader has repudiated Mr. Douglas.


Norman Jaques: I am not a provincial member; I happen to be a federal member.


Paul Joseph James Martin: Yes; I appreciate that.


Norman Jaques: I have nothing whatever
to do with the government of Alberta. I have not been asked for, nor have I offered, any advice as to instituting social credit in Alberta. I understand this, though, that so far the government of Alberta has had all it can do, and more than it can do, to clean up the mess which was left by the policies of orthodox finance.
As I was saying, it is common to rate Major Douglas cheaply, but the bankers of England put a different value on his knowledge and ideas. When his first book was published in 1919 and it came to the knowledge of the financial controllers in Great Britain, the Bankers' Association of Great Britain subscribed $25,000,000 to keep that knowledge from the British people. That list has been published in England; I have seen the list, and everybody knows that if it was not true you could not get away with a libel like that. But it is a fact, and I have Major Douglas' word for it in this book, a copy of which can be found in the library of parliament. The sum of $25,000,000 was subscribed by the bankers to keep these teachings of Major Douglas from the world.


Charles Avery Dunning: What did they do with the money? How did they spend it?


Norman Jaques: They subsidized the press.


Charles Avery Dunning: Subsidized the press?


Norman Jaques: Yes, certainly.


Charles Avery Dunning: Of England?


Norman Jaques: Yes; they bought the
silence of the press. That statement has been made and printed, and no one has ever brought a legal action.


Charles Avery Dunning: They bought the silence of the press?


Norman Jaques: Yes.


Charles Avery Dunning: The silence?


Norman Jaques: Yes, certainly, and they succeeded in keeping out of the British press the knowledge of social credit as preached by Mr. Douglas. Anyone who has had any experience in writing on social credit knows how difficult it is even in this country to get such ideas into the metropolitan press. It is almost an impossibility.


Charles Avery Dunning: I think that is a libel on the Canadian press because the hon. member's party gets more publicity than any other party.


Norman Jaques: I a>m perfectly willing to accept the risk of an action.


Charles Avery Dunning: The hon. member cannot be sued for what he says in this house.


Norman Jaques: I am perfectly willing to say it outside the house; I have done so on many occasions, and so far I have not suffered any ill effects. I should like, while there is yet time, to put this to my credit on Hansard. I have not accumulated very much in my lifetime, but after studying all brands of economics as well as I could-I spent a lifetime on the farm which at least offers an opportunity to think if we can say only " gee " and " haw "-after spending thirty-five years studying practical economics, not the teaching of them but the testing of them, I came to very definite conclusions. I had certain problems to solve which I found to be insoluble, and when I retired from farming, or rather when farming retired me, I said to myself: I have worked .myself into this mess, and now I shall see if I can think myself out of it. So I occupied my time in doing a little economic study. I studied all brands of economics and I could find no solution whatever,^ nothing except a continuation of scarcity. My problem was to find some method by which plenty could be produced without penalizing the producer, so that we could sell -plenty at -a profit; and I gave it up. Then one day I came upon an article by the Dean of Canterbury, Money Basis of Exchange, and

I want to put this to my credit I read the truth there at a glance.


Charles Avery Dunning: In a newspaper?


Norman Jaques: Yes, certainly; in a western paper, the Western Producer, I am glad to give it that advertisement. The article was not in a metropolitan newspaper, but in a western farm paper. From that time on I have read every book that Major Douglas has written. Unlike so many people, I find no difficulty

Purchasing Power-Mr. Jagues
in understanding him; his writings seem perfectly straightforward to me. But then I was thoroughly deflated; I had no preconceived ideas; I had given them up; I was willing to learn. I had, one might say, turned a mental somersault, so that what may appear upside down to some hon. members looks straight up to me.
I believe that Major Douglas is one of the greatest and most original thinkers of all time. It is said that he is not an economist and he cannot know anything about economics. The greatest astronomer who ever lived believed that the sun went around the earth; he never could accept the theory that the earth went around the sun. In spite of that he is justly considered the greatest astronomer of all time, because he spent his life in taking most accurate measurements of the movements of the stars, and it was through the facts that he made available that Newton was able to reduce the study of the whole solar system to an exact science and to prove mathematically, through his discovery of gravitation, that the earth goes around the sun. It is true that Douglas was not a professional economist; he was an engineer and a thinker. Newton was not an astronomer; he was a philosopher, and so is Douglas. I say that Douglas is the Newton of economics, because, as Newton discovered or established the proof that the earth goes around the sun, Douglas has provided the proof that no longer does our economic system revolve around production but that it revolves around consumption, and that if we look after consumption, production will look after itself, but the reverse process will not work, because modern science and modern productive methods have made that impossible. The replacement of labour by machine has upset the balance, so we say that if we look after consumption1, production will look after itself. That is all we wish to do.
We have been called "red." I know from my own experience that the most bitter opponents we have are the communists. We have nothing whatever to do with communism ' we wish to avoid either extreme : we have no use for fascism and no use for communism. We want to preserve all that is good' in this system, which is the productive end of it, and we wish merely to make it possible that whatever the people care to produce they shall be enabled to consume. We say that we, the people, should be able to consume to the limits of our desires or of our abilities to produce, whichever comes first; that is all.
IMr. Jatjuus 1
I should like to read one more quotation, because the hon. member for Huron North mentioned that the profits of the banks were not so great as might be supposed if our ideas were true.


An hon. MEMBER:: What is the quotation from?


Norman Jaques: This is from Warning
Democracy, by Major Douglas, a copy of which is in the parliamentary library. He has this to say:
The complaint which is levelled at the banks is generally that they pay too large a dividend. Now curiously enough, in my opinion, almost the only thing which is not open to destructive criticism about the banks is their dividend. Their dividend goes to shareholders and is purchasing power, but their enormous concealed profits ... do not provide purchasing power for anyone, and merely aggrandize banks as banks. But the essential point in the position of banks, which is so hard to explain, and which is grasped by so very few people, is that their true assets are not represented by anything actual at all, but are represented by the difference between a society functioning under centralized and restricted credit and a free society unfettered by financial restrictions.
We have it from the biggest banker in the British Empire that banks control the policies of the governments and hold in the hollow of their hands the destinies of the people. I do not think anyone in this chamber could successfully deny that statement. We say that that control, that monopoly of credit and money-and without money no one can live, so that, as Mr. McKenna says, those who control money control the lives and hold the destinies of the people in their hands-should be restored to the government in trust for the people.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.
Hon. CHARLES A. DUNNING (Minister of Finance): The resolution now under discussion, as indicated by many of the addresses to which we have listened, is that kind of omnibus resolution which may mean anything. The fact that it may mean anything is evidenced by the manner in which several hon. members, admittedly differing with the mover of the resolution and his exposition of the meaning of it, nevertheless found in it a means of conveying to the house their particular ideas with respect to what is sometimes, rather loosely I fear, called monetary reform; and they were able therefore to

Purchasing Power-Mr. Dunning
indicate their support of the resolution while disagreeing profoundly with the mover of it in his statement of the case in favour of it. The hon. member for Rosetown-Biggar (Mr. Coldwell), for instance, in an address which was admirable so long as he discussed economics prior to embarking upon the political portion of his speech, demolished completely all of the arguments of the mover of the resolution; but he concluded his speech by saying that he would support the resolution because he favoured a mild, small, cautious dose of inflation. The hon. member for Rosthem (Mr. Tucker) and the hon. member for Kamloops (Mr. O'Neill) intimated that they would support the resolution because they frankly believe in currency and credit inflation.
I am opposed to the resolution because I believe that nothing could do Canada more harm in this year 1937 than for the idea to go abroad that this House of Commons favoured currency and credit inflation. Certainly any one reading the speeches delivered to-day in favour of the resolution could reach no other conclusion than that in varying degrees the speakers favoured some amount of inflation. Some describe it as scientific inflation, others as controlled inflation; but always inflation was the end of the road reached by various speakers. Various speakers of the social credit group recognize frankly the evils of inflation, recognize indeed that their proposals involve inflation, and they have various suggestions, just as Major Douglas has, to prevent the human suffering which inflation invariably produces.
Briefly put, the social philosophy, as explained by its advocates, proposes arbitrarily to control the price level, by that means avoiding if possible the evils which admittedly flow from uncontrolled inflation. But inasmuch as an increased price level is the major benefit claimed for inflation, I find it difficult to see how it is possible to get the benefits of an increased price level while by arbitrary means preventing the price level from rising.
I am sorry I cannot agree with the hon. member for Rosthem that Canada should copy German financial and economic methods at present in force. Methods which are tolerated by a people willing to make the sacrifice of lowering their standard of living to the irreducible minimum in order to increase their military strength surely should not be advocated by those who profess to
desire an improved standard of living in Canada. The hon. member for Huron North (Mr. Deachman) expressed my views when he said in concluding his remarks:
You cannot in this world get something for nothing without taking that something away from somebody else.
I think the hon. member for Rosetown-Biggar used words carrying almost a similar meaning. More and more as I have listened last session and this, to speeches by those who call themselves monetary reformers, I see the tendency to preach the doctrine that thrift is unsound, that the man who saves a portion of the proceeds of his labour to-day so that he may have the use of it when he can no longer work is somehow an enemy of society. The whole philosophy of social credit is opposed to thrift; it expresses itself frankly as opposed to life insurance, for instance. To me, it seems that, followed to its logical conclusion, this whole argument leads to the point where nobody need work- the state will provide; nobody need save anything-the state will provide. A sort of brain trust bureaucracy by manipulating pieces of paper will plan to give everybody what he needs from birth to death.
In his reference to the international standard of gold backing the hon. member for Rosthern mentioned twenty-five per cent. That is a correct figure except for the qualification that the twenty-five per cent is internationally agreed upon as a minimum. It is correct to say that Canada is not down to the minimum; Canada still has some leeway from the international point of view. From the domestic point of view parliament has entrusted to the Bank of Canada the function of regulating currency and credit in the public interest. Obviously information regarding the day to day discharge of this function cannot be given, but results show clearly the broad line of policy which has been followed by that bank.
I think it may be said with safety that for credit-worthy borrowers, individual, corporate, municipal, provincial and dominion, there prevail to-day in Canada lower interest rates than ever before were known in Canada's history; and I submit that an easy money policy is the best policy for Canada at the present time, however unpopular it may be to those who have money to lend. But, Mr. Speaker, our testing time will come whenever, by means of a too high price level inducing wild speculation in commodities, stocks, et cetera, it becomes desirable in the public in-


James Shaver Woodsworth: May I ask if we have not already changed the value of the dollar?


Charles Avery Dunning: Yes, Mr. Speaker. One of the results of the great war and what followed was that tendency, that necessity

Purchasing Power-Mr. Bennett
on the part of practically all countries in the world. Some were slower to come to it than others; all hesitated because of what the facts of history teach with respect to it, and it was only when reasonable unanimity of approach to the problem was secured that the world commenced to rise out of the depression. To-day the relative exchange values of the British pound sterling, the American dollar and the Canadian dollar are marching along steadily. They are not subject to the wild fluctuations in relative values which affected them prior to the commencement of the upturn. I think it is correct to say that the financial statesmanship of the world, during the years from 1930 to 1933 or 1934, was much more exercised with that problem than with all other financial problems put together. It was not until, I would not say a solution was reached, but until reasonable harmony was established that it was possible for that confidence to be created upon which is based the exchange between peoples of their surplus commodities. Indeed, I shall go as far as to say that the adjustment, the management which now exists between the leading currencies of the world was an absolutely necessary preliminary to the revival of international trade; that without it I doubt the possibility of the revival measures which have been taken by various governments of various countries being at all effective.
I have little more to say, Mr. Speaker. All history teaches us the appeal which proposals of this kind have to the ears of men and women who are experiencing great hardship. There never has been in any modern country a time of hardship which did not have as a part of its phenomena a development of so-called monetary reform which always received for a time in all countries very wide support. In some countries the effort was made, with results that are written large on the pages of history, results which drove the common people of those countries further into the mire than they were ever driven by any depression. In other countries, notably the great republic to the south, the agitation for monetary inflation lasted in various forms for a long period of years. It was never successful. I would not use the term " monetary reform " because I do not regard inflation as monetary reform. I regard uncontrolled inflation as the worst kind of monetary reaction. It is destructive.
Moreover, sir, I still believe in the virtue of thrift, I still believe that a man in the full flush of his manhood has not merely the right but the duty to himself and to those who depend upon him to set aside in any manner
which seems good to him a portion of the proceeds of his labour to-day in order that he and those dependent upon him may not later be dependent upon the state. To my mind the strength of the state is the strength of that spirit of independence among the individuals composing the state, and nowhere is that spirit of independence stronger than it- is upon the western plains. Nowhere is it stronger; nowhere is it more pronounced; no people will respond to it more readily. Today they are ground under the heel of climatic conditions unprecedented on this continent.


An hon. MEMBER:: And what else?


Charles Avery Dunning: And other conditions, too, conditions which we may be thankful are gradually, slowly but surely being remedied.
I ask the house to defeat this resolution for the reason than an acceptance of it will say to the world that this House of Commons is in favour of some form of undefined inflation of our monetary standards.


Richard Bedford Bennett: Mr. Speaker, I do not propose to speak at length upon the resolution now before the house, but having heard read the careful essay by the Minister of Finance (Mr. Dunning), as representing-


Charles Avery Dunning: What is that?


Richard Bedford Bennett: That is what I said.


Charles Avery Dunning: Would my right hon. friend like to look at it?


Richard Bedford Bennett: Certainly.


Charles Avery Dunning: These are my notes.


Richard Bedford Bennett: It represented the view of the department.


Charles Avery Dunning: It represents the views of the minister.


Richard Bedford Bennett: And of the government. I can only repeat that there is every reason in the world why members who supported the Liberal party at the last election should take the view which has found expression in this house to-day. How could it be otherwise?
What was said from this side of the house during the long years in which we were endeavouring to lay the foundation to which the hon. member to-night referred? What was the Minister of Justice (Mr. Lapointe) doing? What was the Minister of National Defence (Mr. Mackenzie) doing? The avowed exponents of the principles of the then opposition cheered loudly and voci-

Purchasing Power-Mr. Bennett
ferously, yes, cheered day after day, as he attacked the financial policies of the then government, and declared what his party would do had they the opportunity.
I shall not content myself by making that statement, but I shall read from the considered and expressed statement of the present Minister of National Defence as it was made in this city on July 5, 1935, just before the last election.
Canada must, Mr. Mackenzie declared, break down tariff barriers; she must even experiment with international barter if necessary. No, he does not declare for free trade; but for "freer" trade, yes.
Incidental to the housing scheme of the present government which Mr. Mackenzie finds so distressingly half-hearted, he recalls his recent visit to Britain. There, he says, a comprehensive housing scheme promises to eliminate all the slums of London and Glasgow in the next five years.
Ask Mr. Mackenzie where the money is coming from and he doesn't even hesitate with his millions. The government has $110,000,000 of gold now worth $118,000,000. On a 25 per cent reserve basis it can issue notes to the extent of $720,000,000 as against the paltry $259,000,000 now in circulation. Use that extra currency to retire public debt, reduce interest to 2J per cent and you will compel money to seek industrial investment.
That was the statement made by one who is now a responsible minister of the crown, one who has made similar statements in this house, as will be shown by Hansard', and the loud and vociferous cheers of those who sat behind him in the house at that time will be recalled by every member, yes, by every member. They cheered the reading of the Macmillan report, just as it was read this afternoon by the hon. member for Rosthern (Mr. Tucker), and the reading of the Canadian Macmillan report, as it was done this afternoon. Then, amid loud and vociferous cheers, those who now are before me and who were in the house in those days declared that what should be done was to take the action as indicated in the excerpt which I have read. Is it any wonder that when financial leaders of the opposition went into their constituencies and made statements they were believed, as was said by the hon. member for Rosthern this afternoon.
I shall not again traverse the speeches of the first minister (Mr. Mackenzie King). I shall not traverse what I said last session, or the statements that he made in this house in declaring what the policy of the Liberal party was. I shall not repeat the language used in those speeches which were given the house by the hon. member for Vancouver-Burrard (Mr. McGeer). I shall not do that, because it has already been done. But the

language that was used, the very words that the first minister used on those occasions, were the words which were coined, so far as the resolution is concerned, by that member himself, the hon. member for Vancouver-Burrard.
And with that slogan in their ears the Liberal party went out and sought the support of Canada. I say it lies with no good grace in the Minister of Finance to make the statements he has made here to-night when we remember the stand of the chief financial critic of the opposition of that day. He was constantly at it, with the Macmillan report in his hands, both the English one and the Canadian one, and with the approval of his leader, because many times I have sat over there and have listened to the present Minister of National Defence as he made statements analogous to the one I have just read. Hon. members will find them written on the pages of Hansard. Is it any wonder, therefore, that we find members of the Liberal party seeking support in their constituencies in the terms of the resolution now before the house? Is it any matter of surprise that they should do so, in view of the lead that was then given them? I am rising only to direct attention to that fact and to one other. Faced with the greatest difficulties known to this country, difficulties such as never have been known before-and for the first time I have heard a responsible minister opposite make reference to them; the minister made reference to them to-night in terms of the real facts-faced with conditions as difficult as they could be, or as bad as they could possibly be, the government of the day battled on. But whenever we spoke of the efforts we were endeavouring to make to deal with the situation, night after night we were met with criticism almost the same, in terms of the language used, as that offered by the hon. member for Lethbridge (Mr. Blackmore) yesterday and the hon. member for Rosthern today.
When reference is made to the issue of $35,000,000, I say that certainly 835,000,000 were issued under the terms mentioned by the hon. member for Rosthern. He has correctly stated the circumstances in connection with this issue. At one time the conditions of this country were so serious that those responsible for its administration were fearful of what might happen from day to day. Although there is no denying that there was opposition from many sources in the country, the experiment was made. But it was not continued because the Bank of Canada was thought to be clothed with sufficient authority to cope with any condition that might arise.

The minister has stated to-night that the Bank of Canada was capable of dealing with any situation of that kind which might arise with respect to either currency or credit.
It will be recalled that following the world conference we did propose and carry through this house a measure by which it was provided that currency might be issued with twenty-five per cent metal backing up to $120,000,000. After that it was to be dollar for dollar. However, when the Bank of Canada Act was passed and in operation, there was no limitation placed upon it because in the very nature of things that reserve bank, which it is, was regarded as having sufficient powers to deal with the situation. It was satisfactory to hear the minister say to-night that that was so. It was satisfactory to those of us who laboured against such opposition in those days to hear from him the statement he made with respect to the Bank of Canada, the usefulness of which has been somewhat impaired by the tinkering which has since taken place, but which we can discuss at another time. It is desirable that the house should realize that the situation which confronted this country was one of extreme gravity, calling for prompt and effective measures if we were not to become bankrupt.
Let me say to hon. members who are present in such numbers on the opposite side to the one they then occupied, that no bank in Canada closed its doors during those days, and that no depositor who had funds in a bank wrote a cheque which was not honoured. That could not be said with respect to our great neighbour to the south. Then there was the difficulty which was encountered by the Bank of England and which, as was known to all, had upon this country repercussions. the full extent and effect of which few people have any understanding of at all.


Charles Avery Dunning: And which may not be known for years.


Richard Bedford Bennett: I agree with the minister. The effects may not be known for years because in the very nature of things they cannot be. Those of us who had to meet the full force of them at the time


Mr. CAHAN:: On twenty-four hours'
notice.


Richard Bedford Bennett: -less than that-did not receive very much sympathy or support from those who now occupy the treasury benches. That was the position. When we hear members of the Liberal party taking the position they do in this house, we realize that
Purchasing Power-Mr. Bennett
they are but giving voice to the sentiments which week in and week out, month in and month out, were made the subject matter of attacks against the then administration. More than that, when the imperial trade agreements were before this house the Liberal party as a party voted on the amendment of the then hon. member for Macleod, Mr. Coote, that the agreements would be approved if the dollar were tied to the pound. There is the record. They rose one after another, with the present Prime Minister (Mr. Mackenzie King) leading them, and voted for that. That is what happened in this house. When we hear from the mouth of the Minister of Finance a vindication of the policies that were pursued, those of us who were associated together in those dark days rejoice that those now in office are pursuing the policies of their predecessors.


An hon. MEMBER:: No.


Richard Bedford Bennett: I say, the policies of their predecessors with respect to financial matters. Who but the late government initiated the policy with respect to financial administration that is now being pursued by this administration? Who commenced the policy of conversion which has saved the taxpayers of this country $16,000,000 per annum in interest charges? Who commenced the sale of short term treasury bills? The government of that day was told that it could not be done, but we said that we were going to sell them and we succeeded in doing so. The government of that day commenced a program which -has been of the utmost value to this country and which is now being followed by the government of the day.
It is true that the capital of the Bank of Canada has been increased by $5,000,000. Of course that is very hopeful and helpful when it was not required. Coincident with that there is to be a reduction in the capital of the Canadian National Railways, I suppose ' as a sort of balance. It is a case of reducing one and increasing the other; one will offset the other. It is quite obvious-I am quite happy to be able to say so-that the whole financial policy followed by the government of the day is the policy followed by their predecessors in office. It is not the policy which they advocated in opposition. I shall not trouble to read at great length from the many speeches of that sort which will be found on Hansard. Of course I do not propose to vote for the resolution.
There were long years when we had to meet most difficult conditions, when the Australian situation was being pressed upon our

Purchasing Power-Mr. Bennett
attention, when conditions which arose in England were constantly being presented for our consideration and when we were told that inflation was the thing to pursue and that we should pursue it. Professor Kam-rnener of Princeton university has been called the money doctor of the world. He is responsible for having done a great deal in connection with currency matters in many countries. In his book on money he points out that uncontrolled inflation has always led to one result. It will be observed by those who desire to read that just a single cent of United States currency was capable of acquiring the entire mortgage debt of the German Empire in the March before the war. "Easy is the descent to hell" is an old maxim.


Charles Avery Dunning: Before the war?


Richard Bedford Bennett: In the days of inflation a single United States cent was capable of purchasing marks sufficient to equal the prewar mortgage debt of the German Empire. When I read that I thought it was a misprint, but I found that it was correct. Professor Kammener points out the reasons why uncontrolled inflation has always led to one end. Inflation has been practised in this country and in other countries, and will probably be practised in the future in still other countries; but for some strange reason, once you start people on the road to inflation there never seems to be an end until bankruptcy and ruin are reached. That is the history of the world.
Canada is now showing signs of recovery. When I think of the revenues of to-day and compare them with what we had to endeavour to get along with in days gone by; when I think of the shrinkage in trade, not only of this country but of the whole world, and how international trade fell to one-third of what it was before the depression; when I think of the conditions under which we had to struggle, I cannot 'but feel, whatever it may have been necessary to do in times of strain and stress and peril, there is, so far as I can observe, no occasion or necessity for any such action at the moment. I trust that the occasion may never again arise in this country. I trust that we may be able to continue the course which we are now following. But when leaders of public thought and opinion induce their party when in opposition to believe that certain things are possible, and that because they are not done by the government certain evil results follow, they cannot when in power blame those who believed that they were listening to sound statements of the party's view when in oppo-

sition. That, I think, is clearly apparent tonight, but the fact that it is apparent is no reason why for a single moment I should do other than vote against this resolution, not only for the reasons that have been' given by the minister and others, but because I have not changed the opinion which I held when responsibility was ours, nor do I think any of my colleagues have changed their opinions. However great may have been the necessity for taking action of an exceptional nature to deal with exceptional conditions, this is neither the time nor the place nor is it desirable to depart from known, sound rules that will enable us, I trust, not only to continue to revive the fortunes of this country but to make them even greater than they have ever been. That, I believe, is the earnest desire of every member of the house. The fundamental principle is that we must have soundness at least in finance. Many improvements have been and are being made from time to time throughout the world, and we in common with other nations are improving our views and our technique in the general administration of these problems, but we are not departing, I trust, from a rule which is salutary and sound, and which is fundamental to the peaceful and orderly development of our resources and the revival and improvement of our economic conditions.


John Horne Blackmore: Mr. Speaker, in rising to close this debate I feel moved to make one observation. I am the more persuaded that the fundamental principles underlying this resolution are sound by reason of the apparently deliberate attempt by those who have spoken against the resolution to distort it. I believe before I get through I shall be able to show that those who have opposed this resolution have consistently distorted it. As one simple illustration, the right hon. leader of the opposition (Mr. Bennett) has just been talking of "uncontrolled inflation." There has not been one member of this house or, so far as I know, anybody in this dominion who has advocated for one single minute uncontrolled inflation. I said the other night time and again that we do not advocate inflation at all. It is easy enough to laugh at matters that we know little about. The word inflation has two meanings: first, a rise in price of goods or a fall in the purchasing power of the dollar or other monetary unit; second-the meaning which the banking fraternity are endeavouring to impress upon the people, and which they have even succeeded in bringing into the dictionaries-that inflation means any kind of money whatsoever which the bankers

Purchasing Power-Mr. Blackmore
do not themselves make. No one, I repeat, is advocating uncontrolled inflation, nor is anyone from this side of the house advocating inflation at all. I have enjoyed this discussion tremendously, but it is altogether too bad that the intelligent minds of this house could not have concentrated their attention on realities instead of on a great many foolish distortions.
Let me proceed now to take up some of
them.	In my remarks to-night I think I shall hardly do more than simply point out some of the silly things that have been said. In the first place the hon. member for Huron North (Mr. Deachman), who is rapidly gaining in this house a reputation for extravagant and radical remarks, made several statements the other night. Some of them I shall not deal with at all because they are beneath contempt. But take that remark when he said, "What will be purchasing power in that island? It will be production." Well, everyone in his senses agrees that production is purchasing power; everyone knows that. I pointed that out time and again. But the trouble is. if I raise a steer out on the Alberta range, and a man down in Toronto or some other eastern city manufactures shoes, while the steer should be purchasing power for the shoes, and the shoes purchasing power for the steer, nevertheless under the highly complex organization of society to-day, unless there is money between the two, there will never be any means whereby the steer can be purchasing power for the shoes. It is precisely as the hon. member for Vegreville (Mr. Hay-hurst) pointed out the other night. He told the story of an island which had languished because it could not get shark's teeth. Did that island languish because there was not plenty of production on that island? Of course not. It was because there was no medium of exchange on the island. I shall deal with that further as I go along.
Let me say to the hon. member for Huron North, if production is purchasing power, why,
then,	cannot production be used as purchasing power-the coal, for example, of which we have an unlimited quantity in Alberta, and our wheat, our meat, wool, butter and all the other commodities that we produce? Why cannot we use these as purchasing power? Simply because we have at the present time no means whereby we can equitably market these goods without a medium of exchange which we call money. We should be able to buy shoes with this production, this purchasing power, but we cannot do so, and the reason is that our monetary system is not functioning as it should.
Here is another point. The hon. member for Huron North asks: "Why cannot you buy a Royalite well?" Why cannot the government buy a Royalite well when the Bank of England, simply by writing an order on itself, can buy gold and get the gold for nothing? Some people will laugh at that statement, but it is strictly true. For if the Bank of England writes a cheque upon itself for gold, and the man who presents that cheque gets Bank of England bills which cost the Bank of England nothing to print, where has the Bank of England paid anything for the gold? This idea has been gone over time and again, but I shall go over it a little more: This is a statement of the assistant under secretary of the British treasury:
I agree with Major Douglas that banks create money and that trade depression arises from faults of the banking system in discharge of that vital function.
The Right Hon. Reginald McKenna, exChancellor of the Exchequer and chairman of the Midland bank, said:
The amount of money in existence varies only with the action of the banks in increasing or diminishing deposits. They who control the credit of the nation, direct the policy of governments, and hold in the hollow of their hands the destiny of the people.
That should be clear enough. Why all the sidestepping? Why the silly distorting in such a childish manner? The issue is straightforward. Either that man knows what he is talking about, or he does not. If he does, then it is time we sat up and paid close attention to it. If he does not, then it is time we proved it. Major Douglas, in his Monopoly of Credit, has made this statement at page 15:
It may be noted in passing, that this is the same thing as saying that a bank acquires securities for nothing, in the same way that a central bank, such as the Bank of England, may be said to acquire gold for nothing. In each case, of course, the institution concerned writes a draft upon itself for the sum involved, and the general public honours the draft by being willing to provide goods and services in exchange for it.
Those words are straightforward and clear and the meaning is beyond question.
Again, the hon. member for Huron North sneered about the prosperity certificates which Alberta attempted to use. I should like to know why hon. members have dragged Alberta into this debate, which is a purely dominion one.


An hon. MEMBER:: The same theory.


John Horne Blackmore: We have not mentioned Alberta for one minute, nor have we mentioned Aberhart.

Purchasing Power-Mr. Bleickmore


Mr. FRASER:: You do not want to.


John Horne Blackmore: Of course we do not want to, until the proposal has been tried out. If some of the members would have sense enough to open their minds and pay attention to some of these matters we should get somewhere.


Some hon. MEMBERS:: Order.


William Alexander Fraser: Will the hon. member permit a question?


John Horne Blackmore: Surely.


William Alexander Fraser: Will he kindly explain to the house why he applies the word "silly" to all statements or remarks coming from somebody else, in which he does not believe, assuming that everybody else in the house has no sense and that he has a monopoly?


John Horne Blackmore: I cannot remember any time having said that, everything I did not agree with was silly. The hon, member for Huron North made this remark, " Give us the way. We want to know how to do it." Suppose I showed him that an automobile would work, that the automobile was a reality, that the fact was testified to by a hundred pepole; the hon. member, I suppose, would be unwilling to take the automobile unless I could show him exactly how to make it. An hon. member has asked me why I use the word " silly." If that is not evidence enough, perhaps he will get some more as we go on. Certain it is that the men who have worked this proposal out have devised currency commissions and a great number of mechanisms as a result of which it can be put into effect. The trouble is that the majority of these people who are having so much to say about it have never in their lives read a book on economics, and consequently know nothing about it, Another statement, made by the hon. member for Huron North is, "You cannot increase the purchasing power of one group without taking it away from some other." When money was issued by the dominion government and was given out to certain people, did it take anything away from anybody? Of course it did not. A little thought will show that that is egregiously silly. The hon. member will soon find out why the word "silly" was used.
Of course, production is the basis of money, and where goods and services are, money ought to be, because money merely represents goods and services. The hon. member blames Alberta because of the effort she is making to establish a system which properly should be created by a sovereign country. We out in Alberta fully recognized that we should be

facing grave difficulties if we undertook to put social credit into effect in that province, for the simple reason that we had not the power to legislate in regard to legal tender. I say we knew that. But we knew also, from the rate at which intelligence and understanding of this matter were developing over the dominion, that Canada would probably go down to complete ruin before anything was ever done, unless we started to do it. It is an interesting fact that the hon. member for Huron North was busying himself most industriously all through the Alberta campaign writing endless articles to show that it could not be done. Since Mr. Aberhart has been mentioned, I may say that he said, " It cannot be done inside eighteen months." He has been in office only sixteen months, and the hon. member is now trying to force Mr. Aberhart to go a little faster, notwithstanding the fact that in that time we have had two terrible crop failures, the worst failures in the history of the land. All that social credit is is a proposal for distributing goods you already have. We know perfectly well that when you are not producing the goods you cannot distribute them. But the situation we found ourselves faced with was that we could produce goods in limitless abundance but we could not distribute them, and we are getting no assistance. And that sounds perfectly right, nothing at all to laugh about.
In addition, throughout our efforts w.e have had an apparently secret but determined influence exerted against us, in connection with the use of the prosperity certificates, and in preparations to block the use of Alberta credit. Even with regard to the signing of the covenants and getting ready for the voluntary introduction of social credit we have had the same opposition to contend with. Talk about giving a country the right to govern itself! Talk about there being no financial influence over countries and governments! It is terrible.
I turn now to deal with one or two matters that came up the other day in debate. The hon. member for York South and I had, quite good-naturedly, a little disagreement, which I think I had better spend a minute or two to clear up. As appears in Hansard, at page 131, column 1, a little passage occurred between the two of us. I am afraid that unless we clear this matter up there will be doubt in the minds of those who read it later on as to which of us was right or whether we were both wrong.


An hon. MEMBER:: You are always right.

Purchasing Power-Mr. Blackmore


John Horne Blackmore: You said it. You are learning fast. I read from Hansard:
Mr. Lawson: But I have read it, and I am trying to get my bon. friend to explain to my satisfaction that there is no intrinsic value behind this credit which he is going to set up.
Referring to the orders in the island backed by the block of gold.
Mr. Blackmore: Very good, but you will find that the backing of that money was the goods and services, the producing and consuming power of that island-
In the light of that definite and clear pronouncement, can one term the kind of opposition that the hon. member for Huron North made to my speech as anything but silly?


Walter Edward Foster: Order.


John Horne Blackmore: Going on-


Walter Edward Foster: Order. I have heard the hon. member once or twice use that word. In my opinion it is not proper; it is not parliamentary.


John Horne Blackmore: I will not use it any further; I have several others just as good. To continue the quotation:
. . . the producing and consuming power of that island, the exchanges, as Sir Norman Angell says. It will take a good deal of laughing to explain that away.
Mr. Dunning:	Sir Norman Angell did not
say that.
I did not at that moment wish to contradict the Minister of Finance, but I did think it would probably be a good thing for this house to nave that point cleared up, and therefore I have brought into the chamber on this occasion the pamphlet from which we were quoting, Your Money-Plain Facts in Plain Words by Sir Norman Angell. I believe it would be in the interests of certain hon. members to hear certain passages that appear in that book. I would quote the passage at the top of page 20 which closes the story of the sailor who issued the orders. These are the author's words:
Everybody forgets about it-
That is gold.
Everybody forgets about it since the paper is accepted without question. The gold might have been a bit of gilded lead for all the islanders knew. But it did the trick, and the sailor was wise enough not to "inflate" his currency.
That deals with the first part of it. Now may I turn to page 13 at the bottom of column 2. I fancy that the orthodox financial
people in this house will be astonished to learn their great hero, Sir Norman Angell has this to say on the subject:
Now, it would make no difference to the value of Law's money that it should be "backed" by the resources of the Mississippi valley, or to the French revolutionary money that it should be a mortgage upon the national possessions-
Mark the words:
-if the money were issued ill too great a quantity in relation to the exchange of goods to be effected. Both of the moneys just mentioned became utterly worthless-
These are two of the moneys to which the Minister of Finance referred in such eloquent indignation. Notice what Sir Norman Angell says about them:
Both of the moneys just mentioned became utterly worthless, although all the resources of France and the French empire did "stand back of" them.
If the quantity had been limited it would not have mattered in the least that nothing stood behind them in the material sense.
This must be hard on the hon. gentlemen who contend that there must be a backing.
So long as they were legal currency, and their quantity was limited, their value would have been maintained.
You have noticed, Mr. Speaker, how consistently hon. members who oppose this resolution have tried to bring in uncontrolled inflation. We propose nothing of the kind. Let me continue the quotation:
What wrecked them was their excessive quantity. If the effect of putting material wealth "behind" money is to limit the quantity, to cause it to bear some quantitative relation to goods, the device, of course, serves the purpose of limitation. But it is the limitation of quantity which constitutes the guarantee of its value. Ricardo saw this quite clearly when he wrote:
" There is no point more important in issuing paper money than to be fully impressed with the effects that follow from the principle of limitation of quantity. It is not necessary that paper should be payable in specie to secure its value; it is only necessary that its quantity should be regulated."
Now this truth, that the value of money depends in the last analysis, not upon the material of which it is made, or upon being "backed ' by this or that commodity, but upon its quantity, opens up great possibilities for man.
What we are contending now is that this country should begin to use the possibilities which are open to us.
He is not necessarily in this vital question or money the slave of a circumstance outside his control like the discovery or the failure to make adequate discovery of gold. He can control his money, make it his servant instead ot his master, if he can learn the trick, the technique.
174	COMMONS
Purchasing Power-Mr. Blackmore
There are several other interesting points which I could touch upon, but I suggest that hon. members read the account given in this book of what was done on another island the island of Uap of the Carolines. An interesting story is told showing that the islanders used large stones as money.
I turn now to the comments of the Minister of Labour (Mr. Rogers), who referred to the cause of inflation. I contended time and again, in the quotations I gave the other night, that when you issue money you must be sure that you have plenty of goods; but when you have plenty of goods you can have plenty of money. That point was entirely ignored by the Minister of Labour. I will ask him this question: Would you give $200,000,000 as bonuses to widows if you had it given to you as a free gift from some great financier like Ford? I think anyone would answer, yes, surely. Well, if you can give $200,000,000 as bonuses to widows would it cause inflation? No, of course not, because we know that there are enough goods and services in the dominion to absorb $200,000,000. Would you consider tourist traffic money sound? Yes, surely. Would you consider public works money sound? Yes, it is sound. The Minister of Labour said it was sound; he saw no way in which it would serve as a real solution, though nevertheless it was sound. Therefore I say it would not cause inflation.
Mr. Aberhart and the question of dividends have been dragged into this discussion. I do not see the reason for all this restless haste on the part of some hon. members. If they will wait long enough we will bring in dividends. They do not need to run ahead of us, for I fancy that we are now going as fast as they can keep up with us. They can leave the matter entirely to us.
Not more than two or three years ago men were talking about over-production; we had more goods then than we knew what to do with. To-day in Alberta you can go into the yards of many manufacturers and find stacks of goods that will never be sold. Why should there not be money to move these goods? We already have production; why not have the money that represents that production?
I am going to read a word or two more about inflation. That seems to be the thing people are determined to talk about, and so I shall quote a passage which I read yesterday and which apparently has not been noticed. It appears in World Finance Since 1914, by Paul Einzig, published in 1935.

I quote from page 17:
The more advanced definitions of inflation duly allow for any change in the volume of real wealth. Thus if the volume of currency and credit increases, and the production of real wealth increases in the same proportion, then there is no reason why the expansion of currency and credit should produce an inflationary effect, even if it affects the spending power of the community. It is only if the increase of currency and credit is in excess of the additional production of real wealth that it is defined as being of inflationary character.
The whole contention of the social credit advocates is that we are now living in an age of abundance, and what we have not at present we can produce; consequently the danger of inflation which might have prevailed in the past is now in large measure removed because of our tremendous ability to produce goods.
This is another passage which appeared in the Midland Bank Review for July and August, 1935, at page 3:
In the circumstances now existing there need be no fear that an expansion of note circulation, even if it demands an increase in the fiduciary issue, is inflationary. In this country inflation, if it comes at all, comes not through the note issue, but through bank deposits which are the governing portion of the money supply.
Let m,e break in here, Mr. Speaker, to point this out:	This is the danger which
we face. It is inflation from bank deposits. We lift our hands in horror in this house at the thought of producing a hundred million dollars of national money, but we would not hesitate at all to allow the banks, for example, to produce four hundred million dollars of bank money. That could not cause inflation at all'. You see how inconsistent this kind of thinking is. Now I continue quoting:
Nor can expansion of the note issue be taken even as secondary evidence of inflation unless commodity prices' show a strong upward movement, gathering momentum and threatening to require strong measures for its arrest. So long as a pound note buys a steady amount of goods and services there can be no inflation even though a larger population and a higher standard of living call for more and more numerous pound notes.
I believe that ought to be sufficient for all those who read with care. It is quite clear.	_
There are certain questions about which I believe we should talk. It is noteworthy that Where money supply falls off production falls off. This has been discovered to a surprising degree in the United States, and they are quite astonished at it. They lost a tremendous amount of their national production because a great deal of their money was withdrawn. The question which naturally

Purchasing Power-Mr. Blackmore
arises in the minds of ail those thinking about this matter is why, by some means or another, the money supply could not have been kept up and thus the production kept up and used to supply the needs of the people suffering in poverty. That is the whole contention, and the chief point to ibe considered. In Canada to-day we have unemployment and suffering, but not because we cannot produce all the things we need. We can produce all the beef, flour, milk and cream, eggs, butter and coal that we require. I do not know how many different commodities there are; there must be scores and scores of them. We can produce them in abundance, more than we can possibly use; yet we allow people right in the presence of these goods to suffer. Only money can distribute these goods, and the problem is to get that money into circulation. The banks cannot circulate it for the simple reason that bankers cannot let out money except as loans. That is where the problem lies.
Now I come to the remarks of the hon. member for Rosetown-Biggar (Mr. Coldwell). From the way this hon. gentleman spoke it appeared to me that there must be a terrible fear that someone will consume something he has not produced. Well, no one seems to be concerned about the amount consumed by those men who receive huge pensions. No one is worrying at all about that. If we had a multimillionaire in Canada whose property passed on to his children, no one would ever worry because they consumed what they had never produced. But some poor person who is out of employment, and who is unable to get a job no matter where he goes, must not use what he does not produce. Does that sound wonderfully intelligent?
There is another very important point, the concentration of money, which the hon. member also mentioned. We are aware of the concentration of money. What advantage would it be to a community if there were a million dollars in that- community and all that money was in the hands of ten people, while there were thousands who needed the money? If they could not get the money out of the hands of those ten people what should they do, just stand there and starve to death? Why not have new money, as they had before these few men got the million dollars? There is the problem. How can you get the money away from the man in whose hands it is now concentrated? You have no right to confiscate that money or tax it all away. If you borrow it you must pay it back with interest, and go into debt, and then you have to keep their commandments both before and after you borrow it. What are you to do? That is the question. You are at their mercy. The hon. member for Rosetown-Biggar does not seem to have taken that into account at all.
There is another point that I have noticed particularly in connection with the members of the Cooperative Commonwealth Federation group. I have not said anything to them about it as yet, but these people appear to be tremendously worried for fear the social credit people will not be able to tell this house what they believe in. Consequently these gentlemen are bobbing up three or four times every month trying to tell this house what members of the social credit party believe in. Let me say, Mr. Speaker, that social credit is completely capable of speaking for itself.
Then the Minister of Finance (Mr. Dunning) made some statements which, I think, were probably rather ill considered. He has been extremely good natured and tolerant about this matter; he and I have had a little difference, but I feel very kindly towards hon. members opposite even though I did use the word "silly." But if my ears did not deceive me the Minister of Finance made the positive statement that social credit opposes life insurance. I cannot remember ever hearing that social credit opposed life insurance. Certainly no member in this house has said anything about that. Why make a remark of that kind to divert the attention of the people away from the real issue?
Then the Minister of Finance made the remark that our well-being depends upon our national income. The other night I quoted figures from good authorities in the United States, where men have investigated this question with great care, to show that the income of the country depends directly upon the amount of money in circulation in the country, and for every S3 of income, wages, salaries, dividends or anything else, there must be $1 in circulation. If the Minister of Finance and the government are so completely desirous of increasing the national income, it seems to be strongly suggested that they could do so by increasing the money in circulation, which apparently they are not at all disposed to do.
I maintain that national money gradually issued will not cause inflation or, in other words, a rise in prices. No evidence, has been brought forward during the course of this debate to show that this result will follow. In this chamber no one has risen, in connection with any of the issues of money mentioned this afternoon by the hon. member for Rosthern, to say that this caused inflation, and

Purchasing Power-Mr. Blackmore
no one can prove that it did. If anyone can do so I shall be a ready listener. If $50,000,000 or $35,000,000 were used with no dangerous results, who is to say that $35,000,000 a month for a number of months necessarily would bring about dangerous results?
In consideration of the matters I have mentioned, Mr. Speaker, I believe I am justified in saying once more that whereas it is legal for this country to issue national purchasing power; whereas there is no sufficient and conclusive evidence that the issue of national purchasing power would cause inflation, and whereas the need for new money is very grave in this country, for a great number of reasons, I do not hesitate to ask the members of this house to support this resolution. But before taking my seat there is one further point to which I should like to direct the attention of the house, another slight discrepancy in the remarks of the Minister of Finance. The hon. gentleman said that if this house adopted this resolution it would commit itself to the idea of inflation.


Charles Avery Dunning: No, no; my hon. friend is misquoting me.


John Horne Blackmore: I shall be glad to be
corrected.


Charles Avery Dunning: I said that, in the light
of the speeches which have been made in support of the resolution, the idea most certainly would go abroad that this house was favourable to inflation.


John Horne Blackmore: The resolution says specifically that this house should consider-


Charles Avery Dunning: Consider?


John Horne Blackmore: Surely in a time like this, when conditions are changing so rapidly, hon. members of this house could with advantage take time to consider the question of issuing national currency.
Motion negatived, on division.



MOTIONS FOR PAPERS


Mr. REID:: For a copy of all letters, telegrams and correspondence from January 1, 1936, to December 31, 1936, between the Canadian Pacific Railway and the Department of Trade and Commerce, regarding the matter of subsidies to boats operating between the Pacific coast ports of British Columbia and the orient.



WAIN WRIGHT BUFFALO PARK-DISMISSAL OF H. B. KNOX

Mr. FAIR:: For a copy of all correspondence, since April, 1936, in connection with the dismissal of H. B. Knox from the Wainwright buffalo park, in June, 1936.
[Mr. BlackmoreJ



WAINWRIGHT BUFFALO PARK-DISMISSAL OF H. B. WALKER

Robert Fair: For a copy of all correspondence and other documents, since August, 1936, in connection with the dismissal of H. B. Walker, farm supervisor at Wainwright buffalo park.



WAINWRIGHT BUFFALO PARK-GARIEPY INQUIRY

Robert Fair: For a copy of all correspondence, evidence and other documents since August, 1936, in connection with the inquiry held by Mr. Gariepy at the Wainw-right buffalo park, in October, 1936.



CANADIAN WHEAT BOARD ACT-ORDERS IN COUNCIL

Ernest Edward Perley: For a copy of all orders in council passed pursuant to the Canadian Wheat Board Act since October 23, 1935.



PURCHASING POWER


Mr. VICTOR QUELCH (Acadia) moved:: That, in the opinion of this house, the time has arrived in Canada for the adoption of a definite, scientific, nation-wide scheme for financing consumption.
He said: Mr. Speaker, I am moving this resolution in recognition of the fact that today we are living in a country in which in practically every sphere of industry our powers of production are greater than our powers of consumption, and in recognition of the fact that there can be no justification whatsoever for industrial stagnation and unemployment in the midst of actual demand for goods. I believe the reason lies in the fact that we are operating under a system which was evolved' in a time of scarcity, one which has not been able to adapt itself to an era of potential plenty.
The major problem, as I see it, is how in a practical manner, while giving full range to individual freedom and initiative, to distribute the abundance of wealth that science has made available. I realize that perhaps many hon. members may deplore a further discussion of economics. I remember that at the last session the hon. member for Parkdale (Mr. Spence) said we should stop talking economics and get down to business. I think he stated, as a matter of fact, that what we wanted was economy. We must realize, however, that acts of economy may very easily prove to be false economy, unless there is a thorough understanding of the situation.

Purchasing Power-Mr. Quelch
For example, what would be the result upon the economic structure of Canada if all relief were abolished to-morrow? Entirely apart from the terrible and distressing conditions which would result to many of our people, what would be the effect upon industry? What would be the effect upon the small merchant, and especially those merchants in the distressed areas who are dependent upon the receipt of relief payments to carry on. their business? What would be the effect upon employment? I am satisfied the result might put us right back into the depths of the depression. To-day I believe we are too prone to consider the cost of relief, and we do not give full consideration to the great benefits accruing to our people through the injection of this purchasing power into our system.
Coming back to the matter of getting down to business let me ask this question: What is our problem to-day? Can any person say it is just a matter of getting down to business? Let us draw a brief picture of Canada as we see it to-day. On one side of the picture we have the great productive plants working at only a small percentage of their capacity, great natural resources scarcely touched, tremendous reserves of energy and a vast surplus of unused labour. On the other side of the picture we have a vast multitude of people on the verge of starvation, the majority of them having to accept a standard of living considerably below that which they would ordinarily accept. If it is just a simple business proposition, why do we not put that unused labour to work in the factories or industries which are operating only part time, using our natural resources and our reserves of energy to produce the goods that our people are so sorely in need of? I say this: If it is just a business proposition, why do we not do as I have suggested?
The answer is that the problem is one of economics, or as Professor Soddy has described it, the riddle of the sphinx. A good1 example of the peculiarities of the problem may be found in a speech by the Right Hon. Reginald McKenna to the American Bankers' Association on October 5, 1922, which reads as follows:
For over two centuries British capital, that is credit, had been lent to other countries. Year by year England produced more than she either consumed herself or could exchange for the products of other nations, and she could not obtain a market for the surplus unless she gave the purchaser a long credit. Foreign loans and foreign issues were taken up in England, and the proceeds were spent in paying
for the surplus production. British factories and workshops were kept in good employment, but it was a condition of their prosperity that a part of their output should be disposed of in this way.
It is significant that, according to Mr. McKenna, England's prosperity was dependent, not upon the amount of wealth she could make available to her people, or upon the amount of wealth she could exchange for the wealth of other nations, but upon her shipping out of the country more wealth than she received in return. And the reason is obvious. It is in order that the salaries, wages and dividends paid out in the production of that wealth might be available to make up the deficiency of purchasing power which existed as between the total prices of goods available for distribution within the country, and the amount of purchasing power distributed in their production.
I would say that undoubtedly the greatest condemnation of the present system lies in the fact that it is considered good business to ship out of the country more wealth than is brought in, even though there are people within the country who are sorely in need of that wealth. While on the question of foreign trade perhaps it would be to our advantage to recall the words of Napoleon who said:
Agriculture is the soul, the foundation of the kingdom. Industry ministers to the comfort and happiness of the population. Foreign trade is the superabundance, it allows of the due exchange of the surplus of agriculture and industry. Foreign trade, which in its results is infinitely inferior to agriculture, was an object of secondary importance in my mind. Foreign trade ought to be the servant of agriculture and home industry. These last ought never to be subordinate to foreign trade.
I believe that the majority of hon. members will agree with the soundness of that statement. And yet to-day it is not so much a question of exchanging our superabundance for that of other nations, as it is of our attempting to ship more of that superabundance out of the country than we bring back in. Foreign trade can no longer be called the servant of trade and industry; it has become the master demanding from the nation a toll in wealth for which no wealth is given in return.
Agriculture and industry may be said to have two distinct functions-to produce the necessities of life and to give us the means to purchase the same. In addition to that, a profit must be shown, which means that labour costs must be reduced to a minimum in order to meet keen competition. The point is, is it possible to meet these three



Purchasing Power-Mr. Quelch
requirements? In order to keep down expenses, labour costs must be reduced to the minimum and wherever possible labour saving devices installed, which means that the purchasing power of the people is less able to buy the products of industry.
Undoubtedly we have the ability to produce an abundance of wealth, but there is insufficient purchasing power to absorb same. I think it is greatly to be regretted that in many quarters an attempt is being made to retard progress by going back to out of date methods. Mr. Butler, the director of the International Labour Office, points out in the June Labour Gazette that in many European countries legal restrictions have been placed upon mechanical developments. He points out that similar action has been taken in the United States of America under the various codes. He comments upon this action as follows:
Such measures may have some temporary result, but technological unemployment cannot be combated by preserving antiquated methods by artificial means. The real problem is to ensure that the economies in wages effected by mechanical improvements do not reduce the volume of available consuming power.
For generations past we have been endeavouring, by the use of scientific inventions, to increase the productivity of man until today we have become so successful that we are able to produce an abundance of wealth. Are we going to be so lacking in intelligence as actually to reduce the amount of that wealth by doing away with labour saving devices and going back to the use of manual labour? Is that as far as the intelligence of man can go to-day? According to Mr. Butler, that is what is being done in Europe to a great extent. Canada has followed the same practice to a limited degree. We find in many of the labour camps that men are doing with shovels and wheelbarrows work which could be done far more quickly by modern excavators and steam shovels.
Our main argument rests upon the fact that owing to certain practices inherent within the system, industry fails to provide sufficient purchasing power to buy back its own production. I shall deal with a few of the main faults in the system as we see them. First, the present system is a debt creating one. Practically all new money emanates from our banks in the form of debt. This is an interest bearing debt and our bankers do not issue the necessary money with which to pay that interest. Therefore, the debts of the world to the banking system are increasing steadily year by year. Professor Rautenstrauch of Columbia university has pointed out that the debts of the world to the banks increased

by 47 per cent in the seventeenth century, by 466 per cent in the eighteenth century, and by 12,000 per cent in the nineteenth century. In the past, in order to pay off any part of these debts it has been necessary either to incur new debts or to withdraw money from circulation, thus reducing the standard of living of the people.
For example, in the period 1929 to 1933 over $900,000,000 was drawn from circulation, resulting in a tremendous falling off in the standard of living of the people of this country. No matter from what angle we approach this subject we are bound to come to the conclusion that so long as we continue to operate under this system we are bound to have one of two things, either a steadily increasing debt or a steadily decreasing purchasing power. Of course there is a very definite limit to which the purchasing power of a country can be decreased, and then our debts are bound to increase at an even greater rate. I was discussing this matter recently with one of Canada's prominent bankers and he took exception to that statement. He said it was not necessary to incur new debts in order to meet all our maturing obligations; that there was plenty of money in existence and that we could use a certain amount of this in liquidating our debts. I asked him what would be the result on industry if money were taken from circulation and he replied that industry could borrow from the banks the necessary moneys with which to finance its production. That is just what I have pointed out, that such action is bound to be followed by an increase in debt.
The second point to which I wish to direct attention is the tremendous deficiency in purchasing power brought about, by the centralization of industry. Before the machine era the profits of the individual craftsman were small, but as such they were available as purchasing power. But there has been a progressive displacing of man power by the machine, and the wages which used to go to the man now go to the owners of the machine. Owing to the centralization of industry, the profits of the machine owners have become so great that even though they explore every avenue of luxury they cannot spend their entire income. Therefore, income to that extent is not available as purchasing power. So long as we have such distressing conditions as we have to-day throughout the country, the gov ernment should take definite steps to tax these redundant credits back into circulation. I know it may be suggested that we have already a very high income tax; nevertheless until the government is prepared to issue the necessary purchasing

Purchasing Power-Mr. Quelch
power to balance deficiency caused by these redundant credits, the least the government can do is to tax them back into circulation. I do not for one moment suggest that such action by itself will relieve the deficiency in purchasing power. It certainly will not, but it will ait least relieve to a certain extent the distress so prevalent to-day throughout Canada. An orthodox viewpoint is very often expressed similar to that of Mr. J. A. Hobson in his book entitled Rationalization and Unemployment. I should like to quote from page 17 as follows:
As the processes of converting raw materials into finished goods -whether for human consumption or for utilization in production, are carried on in a business world, money is concurrently distributed to the persons who apply their labour, ability, land, capital in the different productive processes or as profit. These payments proceed pari passu with the productive processes, and, as wages, interest, salaries, rents or profits, constitute the cost or expenses of production, on the one hand, and the "income" of the recipients on the other. If, as I urge, it is convenient to include profit among these expenses, the whole set of payments amounts to selling price.
So regarding it, we may say this selling price has been paid away in the various expenses of production. Those who have received these payments in their money incomes possess the wherewithal to buy all the products, alike the consumable part of it and the capital goods that constitute the other part.
This argument I quite realize sounds plausible, but it altogether ignores certain fundamental truths which completely upset the conclusions arrived at by Mr. Hobson and his colleagues. Among other things it ignores the question of time, savings, and the reinvestment of savings, and as this contention has been attacked in the house in the past I should like to deal with it shortly because our whole philosophy is based to a very large degree on the understanding that industry, owing to certain practices which are inherent in the system, fails to make available sufficient purchasing power to buy back its own production.
Take the question of time. Mr. Hobson states that payments from industry equal total of prices providing you include profits among expenses. If that is the case, how can we possibly pay off debts incurred in the past to the banking system, for instance, war debts. The goods that represent these debts have long since been consumed or destroyed. The salaries and wages paid out in the production of these goods have in the majority of cases been spent and gone back to the banking system, but the debts representing these war materials are still with us and must be met out of current production.
If payments by industry to-day are used to pay off these debts then the total payments from industry will not be available to meet total prices, and therefore goods to that extent will be left unsold.
Put it in another way. In order that these debts may be liquidated it will be necessary to include in the price of goods certain debt-charges, made either directly or indirectly by the government through taxation. But when these debt charges are included in the price of the goods no purchasing power is distributed to balance these debt charges. Therefore, when the total amount of purchasing power distributed has been spent upon these goods, goods to that extent will be left unsold.
Some people imagine that the repayment of debts to the bank will recreate purchasing power, but as Mr. Reginald McKenna has said, every repayment of a loan cancels and destroys a deposit. Therefore it destroys purchasing power to that amount. Accordingly it is quite evident that the practice of including debt charges in the price of goods completely upsets the calculations arrived at by Mr. Hobson and his orthodox colleagues. So far as savings are concerned, the deficiency of purchasing power caused by them is bo evident that I deal with it only very briefly. If, as Mr. Hobson states, the total payments equal total prices, then, when any portion of these payments is saved, goods to that extent will be left unsold. On the other hand, if savings of the past are being spent at the same rate as savings of to-day, then the two will balance each other. Nevertheless it is generally conceded that the practice of saving to-day is going ahead at an accelerated rate, and therefore a deficiency of purchasing power is caused to that degree.
The question of the reinvestment of savings, however, comes under an entirely different category. The reinvestment of savings to-day causes a permanent deficiency of purchasing power, equal to the amount of the reinvestment where it is used as working capital. For instance, taking all industries as one to make it easier to follow, suppose a total of $12,000 paid out for salaries and wages in industry was saved and then was reinvested in a shirt factory, used as working capital, paid out in salaries and wages, producing $12,000 worth of shirts, and then suppose these salaries and wages were immediately afterwards reinvested in a boot factory, paid out again in salaries and wages, which then, instead of being used to purchase the boots, were reinvested in a hat factory producing $12,000 worth of hats. You have reinvested this

Purchasing Power-Mr. Quelch
$12,000 three times and caused a permanent deficiency of purchasing power equal to $36,000, because you have left behind unsold $12,000 worth of boots, $12,000 worth of shirts and $12,000 worth of goods produced in the first cycle. In support of my argument I should like to quote from a book by Professor Soddy, 'entitled, Wealth, Virtual Wealth and Debt. At page 251 he says:
In general terms, the only possible way to increase the stocks of wealth in the system, whether precedent to producing a larger output or to accumulate capital in the first instance, is to by-pass money past the consumers' mart, so that it passes through the productive system twice in its circulation instead of once. This puts into the system twice the value of wealth which it takes out. But it creates debts to the individuals who give up their purchasing power, and. however we struggle with the problem, we have to arrive at the conclusion that these debts can never really be repaid.
It is undeniable postulate that all the wealth put into the system, reckoned in terms of the costs of production, not only does not but cannot come out.
It has been stated that we are opposed to the idea of savings and the reinvestment of savings. We are not, however, opposed to these practices. We merely wish to point out the fact that the practice of saving and reinvestment of savings is bound to cause a deficiency of purchasing power. This resolution, therefore, is aimed to relieve industry of the sole responsibility of creating purchasing power. Industry, as I have already pointed out, fails to distribute sufficient purchasing power to buy back its own production. Therefore we propose that the government shall issue additional purchasing power outside the industrial system in order to balance this deficiency, and as a first step we would urge the necessity for a thorough survey of the productive capacity of Canada. It might be carried out along similar lines to that of the National Survey of Potential Productive Capacity carried out in the United States of America and financed by the federal government there.
I should like to quote from a foreword to the report of the Director of the American Survey by Mr. Stuart Chase:
Now, with the publication of Mr. Loeb's book, we have for the first time in our economic history a concrete answer to the question. After almost a year of research by sixty technicians, financed by the federal government, the National Survey of Potential Productive Capacity has released its findings. Official publication will follow in due course. Preliminary thereto, Mr. Loeb, the director of the survey, here describes the results and gives his personal interpretation of what the figures mean. The interpretation you may accept or reject as you choose. The figures you cannot reject without subjecting the survey itself to intensive, critical analysis. As

the policy throughout has been to take the more conservative choice where choice was possible, I think you will have some difficulty in minimizing the conclusions reached. But as a taxpayer you helped to finance this study, and you have the right to whip out your slide rule and find errors if you can. I have watched it from its inception, and it looks like a reliable, conservative piece of work to me.
The results are briefly stated. If the existing plant and man-power in the United States were fully employed in the production of honest goods and services for the consumer, the total output, valued in 1929 dollars, would be not less than $135,000,000,000, or an average per family of approximately $4,400. This estimate does not presuppose any considerable change in the physical plant, the introduction of new processes, or the modernization of old factories.
The wealth of Canada is probably just as great as that of the United States, and there is every reason to believe that in a properly balanced economy a similar standard of living might be made available to the people of Canada. We do not wish to be dogmatic in any way as to how this might be accomplished. We are satisfied however, that full cognizance will have to be taken of the facts to which I have referred. We believe that the government, once having made a survey of the productive capacity of this country, should take immediate steps to stimulate the purchasing power of the people up to the full capacity of industry to satisfy that demand, and then, as the ability of the country to produce more goods increases, to see that the ability of the people to obtain these goods should be increased to a like degree. So long as the effective purchasing power of the people is raised only up to the capacity of industry to satisfy that demand there can be no real talk of inflation.
We believe that the government should take immediate steps to control prices, to set fair wages, that is, to establish a fair relationship between prices and wages as between one industry and another, and to guarantee a minimum price based upon the cost of production for the primary producers. A deficiency of purchasing power may undoubtedly be made up in many ways, but the main essential is to guarantee a minimum standard of living to the people based upon the ability of the country to satisfy that demand. This is where we may differ, perhaps, from our socialist friends on the right. We believe that a survey will show that this dominion can produce a sufficiency of goods to give everybody a decent standard of Living, without having to reduce the standard of living of any one. However, should this survey show that wf have not that ability, I would immediately agree that it is only right and just that the standards

Redistribution-Mr. Brunette
of living of the rich people should be reduced' in order to make it possible for the standards of living of the poor people to be increased. But when we recall the conditions of 1928 and when we remember the tremendous strides made by science since then, we have every reason to believe that we have the ability to raise the standards of living of the people of this country without having to reduce the standard of living of any one.
As a first step we would urge that action be taken to reduce the age for old age pensions, as was suggested in the last session by, I think, the hon. member for Winnipeg North Centre (Mr. Woodsworth) from seventy down to sixty, and probably in time it might be reduced from sixty down to fifty-five, or fifty, guaranteeing a pension of probably 850 per month. Also we should guarantee pensions to all those people who, whether because of blindness or any other form of disability, are unable to care for themselves. Then, in view of the fact that we are living in a new country in which there is a tremendous amount of work to be done, we should urge that national' projects be carried out, financed by the national credit and utilizing the minimum amount of labour, that is to say, utilizing labour-saving devices wherever possible. We would advocate projects such as slum clearance with the objective of a decent house for every one; better roads, bridges, railroad crossings; reforestation, and various other useful and necessary projects. Of course we realize that there is a definite limit to the extent to which these projects can be carried out, and we propose only that they be proceeded with to the point where the purchasing power of the people will be stimulated to the full capacity of industry to satisfy it. So long as that is done there can be no real danger of inflation. Or to put it in other words, the volume of capital goods production should be sufficiently great that the salaries, wages and dividends paid out in that production are equal to the deficiency of purchasing power as between the total prices of consumption goods and the amount of effective purchasing power distributed in their production.
In closing, I would urge that first of all a thorough survey of Canada's productive capacity be made, and then a definite program be instituted to increase the effective demand of the people up to this capacity, or to a point where economic security may be gained for all, whichever comes first.
Looking to the future, as science and. technological improvements increase the productivity of man. I believe that it will be possible to steadily reduce the hours of labour
and supplement the incomes of the workers by a national dividend, so as once and for all to remove that ever-haunting fear of starvation and poverty from the minds of the people.
Motion (Mr. Quelch) negatived. REDISTRIBUTION



MOTION FOR SPECIAL COMMITTEE TO STUDY MORE EQUITABLE READJUSTMENT OF REPRESENTATION

Mr. H. E. BRUNELLE (Champlain) moved:: That, in the opinion of this house, it is expedient that the Representation Act, 1933, should be amended in such manner as to bring about a more equitable readjustment of the representation in the House of Commons and to effect thereby a more just redistribution of Canada's electoral districts, and that a special committee be appointed to study this matter.
He said:	In moving this resolution, which
is seconded by the hon. member for Jacques-Cartier (Mr. Mallette), I wish to be as brief as possible. It is also my hope to be as composed as possible when referring to the last Representation Act of 1933, and when giving some instances of the flagrant injustices committed by the late government in making that redistribution.
Every one will admit that in framing a representation act the party in power, whichever it may be, will be naturally inclined to abstain from favouring the opposite party and to adopt the course most favourable to its cause. But to be normally interested and anxious to help a party is one thing, and to be so unreasonably ambitious as to adopt a system utterly subversive of the spirit of representative institutions is quite another.
When one reads the past debates of this house, one is struck by the fact that the Conservative party is a strong believer in the motto that God helps those who help themselves. That belief became particularly apparent when the last redistribution was made. It became manifest in 1882 when a scandalous representation act was passed and it also became evident in 1892 when another representation act was put through, an act which, according to authentic reports, was simply iniquitous. Though the 1933 act was as bad as those just mentioned, I shall be charitable and simply say that it was most unfair. There was then adopted a system which every man on either side of the house should condemn, because it is apt to help or even to elect to this house any party against the will of the majority of the people. Having given some study to what was done in 1933 when the last redistribution took place, I

Redistribulion-Mr. Brunelie
venture to say that whoever adopts or defends such a method for the sake of party advantage surrenders every semblance of political decency, because such a method aims at destroying popular democratic government and tends to replace it by autocracy.
One may differ with another as to fiscal policies or as to monetary policies, but I am afraid that the act of 1933 went, at least in Quebec, so far beyond the limits of the most elementary justice that it is hard, if not impossible, to find in it any trace of fair play. I do not want to be looked upon as one who fights his own case. The constituency of Champlain, which I represent, was not treated any worse or any better than the other constituencies in the province, and the fingers of the manipulators of the 1983 redistribution have left their ugly mark upon my constituency just as they have done upon other constituencies in the province.
It was a man named Gerry, an ex-governor of the state of Massachusetts, who gave his name to that sort of manipulation. In 1811 he framed his state or constituency or riding -I do not know which-in such a way as to take unfair political advantage of his opponents, thereby becoming famous among those whose names appear in the rogues' gallery. Would it be going too far if I were to say that in 1933 old Gerry had some fair imitators in this House of Commons? To prove that the redistribution of 1933 was unfair and was engendered with a view to party advantage to the late government, I shall quote in a few moments certain statements of the leader of the opposition (Mr. Bennett), who at that time was Prime Minister.
I have before me a map of Quebec showing the sixty-five constituencies which lie therein. I have a good knowledge of French and a fair knowledge of English, and these two languages do not afford me any expression to qualify that sort of work. A Chinese puzzle is the only thing to which it can be likened. Such a division of constituencies has no sound justification. We find gerrymander on such a scale that it is hard, if not impossible, to recognize many of the old constituencies. No attention was paid to existing limits. Parishes that had been together for years and years were divided or jumbled into different counties. Some constituencies were added to and others were subtracted1 from, and parishes, counties and districts were cut up for the manifest purpose of softening the beds which turned out to be the tombs of the Conservative members or Conservative candidates.

Let me give the house some examples of the way in which the constituencies were framed.
I hold up to view a picture showing the limits or boundaries of the constituency of Drum-mond-Arthabaska, and I show the house another one indicating the limits or boundaries of the constituency of Dorchester. Was I wrong when I said that whoever adopts or defends such a method for party advantage surrenders every semblance of political decency? I believe that if the inventor of this system, Gerry, saw this work, he would turn green with envy at the ingenuity of the members of the late government. The redistribution measure of 1933 was passed in spite of the most vehement protest of the opposition and, I might add, of the press and of the people. It is indeed an unpleasant duty to describe such an act of parliament but I must denounce it as arbitrary and unjust. I claim justice for the majority of the Canadian voters, nothing more and nothing less. It is true that the injustice did not profit the late government; it is true that the end did not justify the means. But the injustice remains; the weapon is still there, and for the sake of preserving our present voting system that weapon must disappear, so that the voice of the people at election time may be heard and that their will shall be unfettered by the ingenious and cunning devices of the late government.
As I have said, the Redistribution Act of 1933 passed amid an uproar of general protest; and the then Prime Minister (Mr. Bennett), when he realized that there was so much opposition to it, said that the only way to pass it was to invoke the aid of the brute majority-a very edifying statement indeed. The act came up for approval at the end of the session. Some Conservative members who had been members of the committee had given the house the impression that the bill would not pass in 1933, but they proceeded with it and in doing so were quite in conformity with the tactics adopted in 1882 and again in 1892. Did the late government try to display any trace of sincerity and fair play in passing that act? The answer will be found in a remark made by the present right hon. leader of the opposition, who was then Prime Minister. In a debate on the imperial agreements the then leader of the opposition, now the Prime Minister (Mr. Mackenzie King), said to the right hon. gentleman:
I challenge you to go to the country on the issue of those agreements.
This was what the then Prime Minister replied:
Wait till we pass the Representation Act.

Redistribution-Mr. Mallette
Was that not a warning; was that not a threat that the bill was intended to be used as a weapon against the Liberals at the forthcoming election? The Representation Act of 1933 was admittedly unjust and erroneous. Almost every act following a decennial census since confederation has been amended on the ground of error, and in order to avoid injustice. For instance, the 1914 act was amended in 1915, and the boundaries of the constituencies of Nipissing, London, Quebec East, Quebec West, Jaeques-Cartier, Labelle, Hull. Wright, Portage la Prairie and Springfield were altered. This was done by a Conservative government. I claim that the 1933 act was practically all in error, and a great injustice. I do not ask for a new representation act; I know the British North America Act would not permit that to be done, but I do ask that certain wrongs be righted by amending the boundaries of certain counties. An injustice is always an error, and it is the duty of this government to correct all the errors of the late government, since we have been given a mandate by the people to do so.
In 1872 Sir John A. Macdonald laid down the principle that the first object of redistribution was to retain county boundaries. In 1933 in Quebec no attention was paid to that principle. At any rate the act of 1933 in general had practically no raison d'etre in Quebec. The number of our constituencies is set at sixty-five, and surely there was no real need for changing the boundaries of all our counties in 1933. I do not contend that the number of constituencies should be increased or decreased; I know that can be done only following a census, but I think there is authority by which parliament may alter the boundaries of constituencies. Clement on Canadian Constitution says that the electoral districts may be altered at any time, and that the total number of members may be increased by the parliament of Canada providing the proportional representation of the provinces prescribed by the British North America Act is not thereby disturbed.
In conclusion, Mr. Speaker, may I say that the present composition of our constituencies is such that it might shut out of public life some outstanding men whose services are very much needed iby the country; it is such that with a minority of the votes the Conservative party might have a majority of the representatives of the people. God help our country then. In the third place, it is such that, in spite of the improvements which this government may bring about in our public affairs, so tragically
bungled up by the late government, the wish of the electors to acknowledge such an improvement by their votes may not be accurately expressed during an election. Proud of our record, at the expiration of our term of office we want to meet our opponents in a fair fight. We do not want, and regardless of his party allegiance no one should want, the free vote of the majority of the electors, to be detrimentally affected in its expression by the present arbitrary and false boundaries of our constituencies.


Joseph Léon Vital Mallette: Mr. Speaker, at the last redistribution of constituencies considerable changes were made in the territory then comprised in the riding of Jacques Cartier. In my humble opinion, these changes were not all in the best interests of the constituency. However, I do not intend at present to enumerate all the errors committed to its prejudice in this redistribution.
These details I will give to the committee requested by the present resolution, if the house grants it to us.
I may be permitted, however, to mention the case of Lachine. As regards the counity of Jacques Cartier, there is no doubt that a redistribution was necessary at the time, inasmuch as the city of Verdun alone had a population of 65,000, which certainly entitled it to a representative in this house. Verdun was therefore removed from that riding, as well as the sections of Montreal known as Cote St. Paul and Ville Emard, regarding which the change was also justified. But as regards the city of Lachine, which historically belongs to the county of Jacques Cartier, the committee acted in a different manner. Lachine has a total population of about
18,000.	As a result of the redistribution, some 4,500 of its 9,500 voters were placed in the constituency of Jacques Cartier and about 5,000 in the Mount Royal constituency of the city of Montreal. The redistribution has placed most of Lachine's large industrial plants, such as the Dominion Bridge Company, Limited, the Steel Company of Canada, the Dominion Wire Works, in Mount Royal, while their employees, workers and managers reside in Jacques Cartier. These people therefore have two members at their service, when they should, like the rest of the country, be satisfied with one. During the last campaign this redistribution was referred to as a second " Massacre of Lachine." Some wags went so far as to call it a caesarian operation.
These redistributions were certainly attended by lack of care. Any hon. member who wishes to verify this fact needs but to con-
Redistribution-Mr. Leader

suit the proceedings of the special committee on Franchise and Election Acts at its sitting of Thursday, March 5, 1936. On page 5 they will find, in paragraph (2), concerning Jacques Cartier and Mount Royal, that the Chief Electoral Officer had to be called to render a decision on the situation of the boundary line between Jacques Cartier and Mount Royal in the village of Cote St. Luc. I have been informed also that a section of the city of Lachine lying south of the Lachine canal had been completely omitted, but that the error had been rectified later.
It therefore gives me much satisfaction to see the ho.n. member for Champlain (Mr. Brunelle) take up this matter, and I assure the house that he has my entire support. I hope the committee will be made up as impartially as possible, as we have important matters to submit to its consideration. In the constituency of Jacques Cartier, I repeat, errors have been committed which call for rectification, and it would be only right to submit these matters to this committee, if the house will grant it to us.


Mr. HARRY LEADER (Portage la Prairie):: Mr. Speaker, I have very little to say on this resolution, but I believe that if irregularities occurred during the last redistribution they should be corrected either this year or next year, and not on the eve of an election when our judgment is perhaps more or less warped. Speaking for the constituency of Portage la Prairie I believe I may state safely that an old fashioned gerrymander was perpetrated. A gouge was taken out of our southern boundary. They did not take a strip from one end to the other, but simply took a gouge out of the centre and placed it in the constituency of the hon. member for Macdonald (Mr. Weir) who, I believe, appreciates it very much. I am not speaking only for myself when I say that the territory should be placed back in the constituency of Portage la Prairie to which it once belonged. I am not concerned about my own political welfare, because in western Canada I do not believe boundaries mean very much. If a man is entitled to return to parliament I believe the electors of western Canada will vote for him irrespective of his political affiliations.
The population of Portage la Prairie constituency is slightly over 25,000, while that of Macdonald is in the neighbourhood of
37,000.	Selkirk constituency received part of Portage la Prairie constituency, and now they have a population of 52,000, or more than twice that of my constituency. This would appear to be a glaring irregularity and does

not bring about proper representation. I believe that, if the matter were put to a plebiscite, ninety per cent of the electors who were taken out of Portage la Prairie would vote to be placed back in it. I speak particularly of that part which was placed in the constituency of Macdonald, because in that instance there was a division of a community, the interests of which were common. The community was divided, and for the welfare of the constituents, to say nothing of the member in parliament, I suggest that the community as a whole should be placed in the constituency of which it once formed a part. My opinion is that the matter should be placed before an impartial committee, the judgment of which should not be warped politically. It is my opinion that a body of fair-minded members of this chamber should sit in judgment and see that the boundaries are placed where they should be, keeping in mind the welfare of the constituents.
Mr. G. AY. MCDONALD (Souris):	Mr. Speaker, I wish to say only a few words with reference to the constituency of Souris. I endorse everything that has been said by the mover of the resolution and by the other hon. members who have spoken. The constituency of Souris is small, and any change should have been by way of enlargement. Despite that fact, the constituency was made smaller by cutting off from the northeast comer, six townships which, on the basis of the 1930 election, gave a Liberal majority of 187 and on the basis of the 1935 election one of over 300. To the constituency was added four townships to the east, making it six miles longer and taking in a piece of territory dominated by the Cooperative Commonwealth Federation. That was a generous addition, particularly when we remember that the sitting member of that time enjoyed a majority of nearly 500. He was taking away 187 votes, and giving us 24.
Part of the constituency of Souris wras put into the constituency of Macdonald, which was Liberal. AYe thought the days of gerrymandering were over. Like the mover of the resolution, I cannot help thinking that any person whose sense of fair play was so slight could not be a fit or proper person to represent any riding. I protested strenuously at the time to the Liberal members from Manitoba, and was plainly told by them that nothing could be done about it. They said: "AYe had better accept it, because if we do not we will get a worse deal." Surely we are not going back to those days.
I am not a member of the privileges and elections committee, or of one dealing with

Iiedistribution-Mr. Stewart
the franchise, but I have -been asked to speak on behalf of those people who have been in the constituency for over twenty-five years and are now disfranchised. They had never had the boundaries changed, nor had they sought any change. The change was made without their consent. As I am not a member of the committee I can say only that I hope the constituency of Souris will be brought to its attention, that our boundaries will be enlarged, and that we shall get back the piece we lost.


Mr. DONALD MacLENNAN (Inverness-Richmond):: Mr. Speaker, I wish to say a word in support of the motion. In the 1033 revision the counties of Inverness and Richmond were joined to make the present constituency of Inverness-Richmond. This constituency is over 300 miles long. A man would need a good automobile and would have to be a tireless driver to go from one end of the constituency to the other in a single day. On the other hand, the constituency represented by the hon. member for Cape Breton South (Mr. Hartigan) is so small that he can drive from the centre to the end in any direction in one hour and a half. I am not complaining about the number of people who live within a district; all I say is that it is utterly impossible for anyone to look properly after the constituency which I represent. There are more than 300 miles of shore line filled with coves and inlets, and a man would have to spend his entire time and even then would find it impossible to go over the constituency as he should.
I was very glad to hear the hon. member to my immediate right say that the boundaries of a constituency could be changed by parliament without a new census being taken. If that can be done, I think the house should pass this resolution and refer this whole matter to a committee in order that it may be studied. If nothing can be done this year, perhaps the matter may be considered at the next session. In the meantime, we would have an opportunity of looking into these matters and suggesting necessary corrections. I am not finding fault with what has been done nor am I imputing motives, but I must say that it seems almost ridiculous to have such a large constituency territorially as the one which I represent. I therefore have pleasure in supporting the motion.


Hon. H. A. STEWART (Leeds):: Mr. Speaker, as chairman of the redistribution committee upon the report of which the redistribution bill was based, I consider it my duty to say something in reply to the hon. gentlemen who have spoken on this resolution. Under our constitution redistribution is made compulsory after the taking of a census. A census was taken in 1931 and redistribution followed.
Redistribution is always a difficult matter. No hon. gentleman who has had anything to do with it will deny that it is an extremely difficult proposition. From time to time there have been differences of opinion as to how redistribution should be made. There are those who contend that it should- be made by a committee of judges and there are others who contend that it should be made by the House of Commons. For some time past the practice has been adopted, I think a fair and a reasonable one, of referring the matter of redistribution to a committee upon which all the groups in the house have representation.
After certain censuses it has been found necessary to reduce the number of seats in some of -the provinces, while an increase was necessary in others. We are faced with the difficulty of maintaining the balance of representation as between the country and the towns. There are those who contend that the city representation should be much larger than that of the country, but I think that would be a negation of the principle of representation -by popidation. However, there may be some point to that argument because of the concentration of population in the cities as compared with the rural districts. Then we have thickly populated rural districts and thinly populated rural districts. We must also consider the natural barriers such as rivers and lakes. When all these things are taken into consideration they present a difficult and almost baffling problem to any committee undertaking redistribution.
Plenty of time was devoted to the last redistribution. It was not rushed through. It was started in one session and finished in the next. I recall that the bill was, in a very large measure, the result of agreement between the parties.


An hon. MEMBER:: Oh, oh.


Hugh Alexander Stewart: I am going to mention the exceptions. There was not absolute agreement in Quebec, and the same applied to Saskatchewan. I believe there were two constituencies in Saskatchewan and a number in Quebec in connection with which there was not complete agreement. I remember being a member of the redistribution committee which sat ten years previously. Quebec has a fixed number of seats, sixty-five, and for years there had not been any change in the boundaries of the constituencies of that province. I remember pointing out some of these discrepancies in
1S6
Redistribution-Mr. Ryan

1922, but I was told that as there were sixty-five seats in Quebec it really did not make any difference. It was contended that the same boundaries should continue to apply, and they did. The result was that the representation was out of balance, and still is.


Ernest Lapointe: It has been made worse.


Hugh Alexander Stewart: My hon. friend may think so.


Ernest Lapointe: I know it has.


Hugh Alexander Stewart: That was not the intention or the disposition of the committee. The hon. member who moved this resolution (Mr. Brunelle) has produced some maps. I can recall maps showing the boundaries brought about by previous redistributions which were just as grotesque and irregular as the ones he has produced. As I have said, there was a very substantial measure of agreement in this committee and when we consider the difficulties of redistribution, I think the final result was quite fair.
We are now in the year 1937, only three years away from another census. There will be a redistribution following that census, and I submit that it is not in the interests of Canada as a whole to reopen this very difficult and controversial question at this time. I am sure that if the question were reopened, any partial redistribution which might result would be subject to the same criticism as has been levelled to-night against the work of the committee of 1933. As the redistribution accomplished in 1933 was to a large extent the result of agreement after long conferences and represented a difficult bit of work-and surely those who are sitting on the opposite side of the house cannot complain of that redistribution so far as they are concerned-considering everything I think the house would be well advised to leave matters as they are. I fear that to reopen the question would not bring any better results.


Mr. W. M. RYAN (Saint John-Albert):: Mr. Speaker, I want to congratulate the mover of this resolution (Mr. Brunelle) upon bringing this matter to the attention of the house. I represent the constituency of Saint John-Albert. Prior to the last election that constituency had the honour of returning two members, but when the redistribution took place, Saint John-Albert lost one member, without there being any division of the area. I was surprised to hear the hon. member for Leeds (Mr. Stewart) state a moment ago

that there was agreement in the redistribution committee in respect to all the provinces with the exception of Quebec.


Hugh Alexander Stewart: And Saskatchewan.


William Michael Ryan: And Saskatchewan. The
city of Saint John, the metropolitan city of New Brunswick, which I have the honour to represent, is in the constituency of Saint John-Albert, and the people there felt that the last redistribution was somewhat of a slight to that constituency as it meant a reduction in the number of its members.


Richard Bedford Bennett: One member had to go.


William Michael Ryan: The right hon. leader of the
opposition says that one member had to go, and asks how that could be adjusted. But in Manitoba, apparently, in redistributing the constituencies a division was made of certain territory, and something like that might have been done for New Brunswick. At all events Saint John-Albert was formerly represented by two members, one a minister of the crown, and another a gentleman who had been in public life for a great many years. I take it now, from the explanation which has just been given the house, that those who represented New Brunswick in the last parliament, including possibly the former minister, were agreeable to the proposal that Saint John-Albert should lose one member. If that is so, it is an explanation which we have long been seeking.
With all due respect to the hon. member for Leeds, I do trust, when this matter is brought before the committee for consideration at an early stage, as I hope it will be, that the wrong which was done to so important a constituency as Saint John-Albert will be righted and that it will be accorded the representation which it had heretofore.


Mr. A. A. HEAPS (Winnipeg North):: Mr. Speaker, I was a member of the committee of this house a few years ago which was responsible for redistribution. I really cannot see that my friends of the Liberal party have any cause for complaint because I feel sure that if they had made a redistribution to suit themselves they could not have secured better results than they did in the last election.
There was very little friction on the redistribution committee. It is true there was a little behind the scenes, and a number of seats were in dispute in Quebec and Saskatchewan, but I maintain that whatever committee might be appointed by this house to effect a redistribution, if they continued to follow the same methods which we have followed

Redistribution-Mr. Heaps
in this house in the past, the same squabbles would occur as took place in the last redistribution in regard to a few seats. I say that for the simple reason that we have no definite method of creating constituencies. There is no basis of population on which constituencies are created. We have no definite method at all of creating constituencies in the Dominion of Canada, and for that reason we have chaotic conditions in the laying out of constituencies in practically every province.
Manitoba has just been mentioned. I was not satisfied with the way the seats in that province were redistributed. Can any member say why one member from Manitoba should have a seat with a population of approximately 75,000 people, and another seat almost adjoining it should have a population of only 30.000? There is no basis of equity in such a redistribution. There is no reason why one man's vote in one constituency should be more valuable than another man's vote in another constituency. In fact, the whole basis of representation in Canada represents anything but equality.
Prince Edward Island, for instance, returns four members. True, that is fixed by statute, but is there any good reason in equity why Prince Edward Island with a population of about 85,000, no larger than some of the single member constituencies in Canada, should have four seats while a constituency of 85,000 people in an industrial centre should return only one member? That cannot be defended on the basis of equity, and until such time as we have in Canada a definite understanding as to how we are going to redistribute seats we shall always be having some member from his seat in this house saying this is unfair or that is unfair. We all can understand that some hon. member may want to get rid of a little corner of his constituency and pass it on to some other constituency. That is only natural when a member has, perhaps on the boundary of his constituency, a district which has always given him an adverse vote. It is only natural that he should be anxious to get rid of that portion of his constituency.
It has been suggested, Mr. Speaker, that there should be in Canada as there is in other parts of the world, some other body which should be charged with the redistribution of seats, that the task should be taken away entirely from members of parliament and handed over to some permanent body. There is some merit in a suggestion of that kind. The committee that was working last year considering the elections act-


Ernest Lapointe: Proportional representation.


Abraham Albert Heaps: We turned down proportional representation. There was only one member of that committee who tried to get the Liberal party to stand by their promise on proportional representation, and that was my humble self. I know the Liberal party has had proportional representation in its platform, but when the question came before the committee only one member of the whole committee was willing to do justice to that old principle.


Ernest Lapointe: I was not there.


Abraham Albert Heaps: I am sorry the minister was not, but the fact is that the committee turned down proportional representation, and evidently it has gone for some time.


Mr. MacNICOL:: And the alternative vote.


Abraham Albert Heaps: Yes. So we are left with practically the same method of election that we have had for years. I am going to suggest to my hon. friends who are anxious now to have a change in the redistribution that it would be adopting a rather dangerous policy to ask for a change in the redistribution after each election. I fear it W'ould ultimately lead to a gerrymandering of seats, which I object to very much.
From my own particular viewpoint I have no cause for complaint. I have represented the district I now represent in this parliament and on other public bodies for quite a number of years, and if they chop off a little here or a little there it makes no great difference so far as I personally am concerned. But I feel that if we are to have some permanency in the constituencies once they have been distributed, it is a bad policy to reopen the question of redistribution immediately an election has taken place. If there are to be changes in one constituency here and another one there, the whole question is opened up. I for one would like to see redistribution carried out, not from motives of local expediency but on the basis of true equity in all parts of the dominion. I admit that a. good case can be made out for the contention that a rural seat should have a smaller population than an industrial centre; I am willing to concede that point. But I am opposed to the idea that in one area a rural seat should have a population of twenty or twenty-five thousand and in another section it should have a population of fifty or sixty thousand. In my opinion that is where the inequality lies.
Dairy Industry Act

If it is the intention of the hon. members who have supported this resolution to bring about a more equitable redistribution of population so as to have our seats as nearly equal as possible in all parts of Canada, I would be in favour of the motion. But if, on the other hand, their idea is merely to have a redistribution of two or three of their own particular seats which they think have not been fairly dealt with, I am totally opposed to the motion; and until we get some assurance from my hon. friends as to what is intended by this resolution I could not, for the time being, consent to support it.
On motion of Mr. MacNicol the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, January 22, 1937