1938-06-24

Mr. SPEAKER:: I have the honour to inform the house that I have received the following letter:
Ottawa, 23rd June, 1938. Sir,
I have the honour to inform you that the Honourable Lawrence Arthur Cannon, acting as deputy of His Excellency the Governor General, will proceed to the Senate Chamber on Friday, the 24th June, at 5.30 p.m. for the purpose of giving the royal assent to certain bills.
I have the honour to be,
Sir,
Your obedient servant,
R. R. Stewart,
Deputy Assistant Secretary to the Governor General



REPORTS OF COMMITTEES

[Stage Direction]
Second report of the joint committee of both houses on the printing of parliament.- Mr. St.-Pere.
Fifth report of the standing committee on miscellaneous private bills.-Mr. McPhee.
Farmers' Creditors Act

[Stage Direction]
Mr. MALCOLM McLEAN (Melfort) preseated the second report of the special committee on the Civil Service Superannuation Act, and moved that the report be concurred in.
Motion agreed to.


[Stage Direction]
Right Hon. W. L. MACKENZIE KING
(Prime Minister):	Mr. Speaker, I desire to
move the following, which has been customary at this stage of the session:
That for the remainder of the session all private bills from the senate when received from that house be read a first and second time and referred forthwith, and that standing order 105 respecting the posting of bills be suspended in reference thereto.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Right Hon. R. B. BENNETT (Leader of the Opposition):: Mr. Speaker, I should like to ask the Prime Minister (Mr. Mackenzie King) if anything further has been done in regard to the island of Anticosti.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, a committee of representative officials of different departments have been investigating the situation, and have the matter in hand in a manner in which they believe will fully protect the interests of Canada.



BREN MACHINE GUNS


[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: I should like to draw the attention of the Minister of National Defence (Mr. Mackenzie) to the fact that he promised to table a copy of a contract between the John Inglis Company and the government. When may we expect it? We should like to have it, as the session is drawing near the close.


Hon. IAN MACKENZIE (Minister of National Defence):: There is a motion on the order paper for the production of this agreement, I understand.



ROYAL AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. C. G. MacNEIL (Vancouver North):: Mr. Speaker, what are the intentions of the Department of National Defence with respect to the proposals that training centres for aviators be established in Canada by the British government, and what steps have been taken to aid recruiting for the Royal Air Force?


William Lyon Mackenzie King: The question the hon. member has asked is really one of government policy. I think I should say that it is not usual to make statements of government policy in reply to questions on the orders of the day. I believe that is all I can say.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: May I ask the Prime Minister when he will divulge to the house what the government policy is in regard to this matter?


William Lyon Mackenzie King: Any statement of policy in regard to the matter referred to will be made if and when occasion for such arises.



FARMERS' CREDITORS ARRANGEMENT ACT


Hon. T. A. CRERAR (Minister of Mines and Resources):: Mr. Speaker, earlier in the session Bill No. 25, amending the Farmers' Creditors Arrangement Act, 1934, received its first reading. Section 5 of the amending measure provided as follows:
The said act is amended by inserting therein immediately after section 19 thereof the following section:
20. On and after a date to be fixed by proclamation of the governor in council, no new proposals shall be made or filed by any farmer or accepted by any official receiver in any province in respect of which the said proclamation is issued.
When the measure was before the senate they amended it by striking out the section I have read, and by substituting therefor the following:
No proposal shall be received in any province later than the 31st of December, 1938, except in the provinces of Saskatchewan and Alberta.
Earlier in the session Bill No. 33, to amend the Soldier Settlement Act, was considered and passed by this house. As hon. members will recall, that measure had to do with what is known as the dollar for dollar bonus privi-

Income War Tax Act
lege that had been extended to soldier settlers under legislation passed by the previous government. The period under which the bonus could be paid expired on March 31 of this year.
At the time the legislation was before the house hon. members will recall that strong representations were made from various quarters of the house that the legislation should be continued for another three years. That was not done, largely on the assumption that soldier settlers who were in financial difficulties would and could have recourse under the Farmers' Creditors Arrangement Act for a composition of their debts, and that since that machinery was open to them for that purpose it was not necessary to extend the dollar for dollar bonus privilege right across the board.
I believe I am correct when I say that it was on that assumption the soldier settlement measure finally passed the house. If the amendment proposed by the senate, as indicated in the order now before the house, is accepted, then very largely if not entirely it nullifies the privilege that we thought would continue when the dollar for dollar bonus provision was before the house. For that reason the government cannot accept the amendment suggested by the senate, which I read a moment ago.
There are still in many of the provinces, and especially in all the western provinces, a very large number of soldier settlers who are in arrears. Those in charge of the administration of the Soldier Settlement Act feel that it is necessary and advisable that the soldier settlers should apply under the Farmers' Creditors Arrangement Act for a composition of their debts. Consequently for these reasons the government cannot accept the amendment proposed in the senate.


Richard Bedford Bennett: There remains however a very difficult question in connection with the matter. Assuming that the senate should accept the suggestion made by the minister and extend the exception to applications of those who have loans under the Soldier Settlement Act, would the legislation then be acceptable to the government? The reasons the minister has urged against agreeing with the senate amendment would not apply if the senate were to provide for the exception,- that is, an exception in favour of cases under the Soldier Settlement Act. If that exception were added to the statute, then you would have the act no longer applicable except in Saskatchewan and Alberta, and the minister has not said whether that would be objectionable or acceptable to the administration. He has not referred to that at all.
It would be simple to amend this bill in the senate and say that the act shall not apply to any province in Canada after December 31, 1938, except the provinces of Saskatchewan and Alberta, and to cases which might arise in any province under the Soldier Settlement Act. That would still leave jurisdiction to deal with soldier settlement cases in all the provinces, and would leave the act otherwise operative in Alberta and in Saskatchewan, but not elsewhere. I think the government should indicate, since we are dealing with it in this way and as it will mean an ultimate conference if the amendments are not agreed to, whether or not, if the suggestion now made by the minister is adopted by the senate, he would have any objection to the other provisions of the senate amendments.


Thomas Alexander Crerar: I intended to indicate that that was one reason why the government could not accept the amendment. An additional reason is the fact that it would constitute a hardship on many settlers, apart from soldier settlers, in the western provinces. If a conference takes place it is not the intention of the conferees representing the government to limit it solely to the claims of soldier settlers.


William Lyon Mackenzie King: While we are on the subject I should like to move:
That a message be sent to the Senate requesting a free conference with their honours to consider certain amendments made by the Senate to Bill No. 25, intituled: An act to amend the Farmers' Creditors Arrangement Act, 1934, to which this house disagrees, and upon which the Senate insists, and any amendment which at such conference it may be considered desirable to make to the said bill or amendment thereto.
That the Clerk do carry the said message to the Senate.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house in committee of ways and means, Mr. Sanderson in the chair.
Resolved, That it is expedient to amend the Income War Tax Act and to provide:
1.	That lump sum payments made in Canada, which sever the funds permanently from the assets of the payor company, for the establishment of superannuation or pension fund plans with a view to providing benefits for employees in respect of past years' services, shall be allowed as a deduction to the extent of one-tenth of such lump sum payments in each of ten successive years, commencing the year in which the payment is made; provided that in the case of superannuation or pension fund plans heretofore established by lump sum payments the said deduction shall commence in the year 1938
[Stage Direction]
Income War Tax Act
[Stage Direction]
and' continue thereafter until ten years shall have elapsed from the date. of the initial payment.
Hon. J. L. ILSLEY (Minister of National Revenue):: With regard to this proposed amendment, I may say that at present deductions are allowed in respect to contributions to pension funds made during the current year. That is to say, these contributions are regarded as legitimate items of cost incurred in earning income on which a tax is being paid. There is no provision in the act for allowing in one year a deduction in respect of lump sum payments covering past years of employees' services. Several large companies have expressed their intention of making contributions to pension funds, of the sort here in question, and have argued that an allowance should be made in respect of them. It is believed that through allowing these lump sum payments as deductions, this practice of creating pension and superannuation funds will be encouraged, and that substantial social benefits will accrue through the incentive here being offered. It is realized that this provision should be amply safeguarded, and it is particularly provided that the funds contributed must be permanently severed from the assets of the company making the contribution. This will prevent an unscrupulous company from retaking to itself contributions once made and in respect of which deductions from income tax have been allowed. It was felt inadvisable that the deduction should be made all in one year and it is proposed that the allowance shall be spread over a ten-year period. Moreover, it was felt that an employer who in the past had made a lump sum contribution of the sort here in question and had received no allowance in respect of such contribution should not be excluded entirely from the benefits of this proposed amendment if such contributions were made within the past ten years. Accordingly, in respect of lump sum payments heretofore established, deductions shall commence in the current year and shall continue until ten years have elapsed from the date of the initial lump sum payment. Thus a company that had made a lump sum contribution to a pension fund five years ago would still be allowed five annual deductions, each equalling one-tenth of the original lump sum contribution.


Richard Bedford Bennett: Retroactive legislation is always bad so far as theory is concerned. In practice it frequently is. In this case what will happen will be that those who have made payments ten years ago-and large financial institutes have done that-will receive no benefit. But they will receive a benefit if the contribution happens to have been made dur-

ing the last ten years. They will get one-tenth allowance if it was made nine years ago, two-tenths if it was eight years ago, and so on.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: Is not that an invidious condition that operates unfairly with respect to some and favourably with respect to others?


James Lorimer Ilsley: No.


Richard Bedford Bennett: If you are going to make it retroactive at all, then it seems to me that it should be retroactive entirely. Those that have made lump sum payments and have severed the funds from their own funds should be able, during the period of the next ten years, if you are going to make it retroactive, to deduct one-tenth from their income. That would seem to be the legitimate and reasonable thing to do if you are going to treat it in that way. Any payments that have been made, especially lump sum pension payments which have been severed entirely from the funds of the enterprise, should become a deductible allowance from the income during the period of the next ten years, beginning with 1939. The year 1938 has passed and payments for that year may be regarded as concluded.


James Lorimer Ilsley: In a sense this is not retroactive at all.


Richard Bedford Bennett: It is in dollars, even
though it may not be in cents.


James Lorimer Ilsley: The deduction cannot be
made in one year; it must be divided into ten equal amounts. Where an employer made a lump sum payment five years ago, for taxation purposes we assume that only one-tenth was paid five years ago and one-tenth during each year since then. As far as our purposes are concerned, the payment which was made five years ago is still being made and has four or five years still to run. We are allowing that as a deduction from the passage of this legislation. For the purposes of our deduction the lump sum payment is divided into ten payments. We proceed on that assumption and from the passage of this legislation we shall be dealing with future payments. We are dealing with future payments. The lump sum payment was made five years ago, but it is assumed for the purposes of taxation that it is still being made, and that there are four or five yearly payments still to be made, which we are allowing as deductions. In that sense it is not retroactive.


Richard Bedford Bennett: One does not question
that phase of it. I tried to make clear my

Income War Tax Act
understanding of it. Ten years ago a company having a large income put away $100,000 to a reserve fund. As the law stood it was not permitted to make any deductions of any kind by reason of such action, and would have paid income tax on the $100,000. But if the same company, instead of having done it ten years ago, did it eight years ago it would be allowed to deduct $10,000 from taxable income for 1938-39, and $10,000 for 1939-1940. That would be, I think, unfair. This fixes ten years as the limit of time within which an appropriation can be made to lessen the burden of taxation. But taxes have already been paid upon the lump sum; they were paid when it was contributed for that purpose and severed from the funds of the corporation or enterprise, as the case might be.
It must be known to the minister that there are large financial institutions that have set up voluntary pension funds, severed entirely from the enterprise, and to which from year to year they have made large contributions. To the extent to which they may be regarded as expenses they, of course, as pointed out by the minister, do not pay income tax. But if there is an appropriation of a large sum for that particular purpose, and this applies only to that kind, then my submission is that that company should be placed in exactly the same position, if you are going to be retroactive at all, as those more fortunate companies that are making a contribution of $200,000 or $300,000 now to start a fund, and allow them to deduct one-tenth every year during the next ten years. I do not approve on general principles of the idea of making these matters retroactive, but if you desire to place them all on a parity, and that is what apparently the minister does desire to do, from the standpoint of deduction, then it is clear that if $500,000 was set up as the nucleus of a fund from the accumulated earnings of an enterprise which had paid income tax all the years, it would be fair to say that notwithstanding the fact that the contribution was made fifteen years ago, during the next ten years they should deduct $50,000 annually, to put them in the same position as those now setting up a pension fund for the first time; and one-tenth deductible from the taxable income would place them in exactly the same position with respect to that $500,000 upon which they had paid taxes as though they had commenced to-day to set aside the $500,000 and deducted $50,000 during the next ten years from their taxable income.


James Lorimer Ilsley: I do not agree with that.
The company that made its lump sum payment more than ten years ago must be assum-51952-267J
ed for the purposes of this act to have made all its payments, even on a ten-year basis.


Richard Bedford Bennett: I say they made a flat
contribution of half a million dollars from their accumulated funds. I do not want to name the enterprise; it would be most unfair to do it, but I can give it to the minister for the purpose of illustration.


James Lorimer Ilsley: We are quite willing to treat the company that made its lump sum payment ten years ago as though it had made ten payments beginning with the time when it made its lump sum payment.


Richard Bedford Bennett: But this does not do
that.


James Lorimer Ilsley: Oh, yes. It is not passed
until after the expiration of that time, and therefore there is no deduction that can be allowed that company.


Richard Bedford Bennett: It never has had a
deduction. The lump sum payment has been made, on which income tax has been paid. But here there is an allowance that will free it from income tax.


James Lorimer Ilsley: I do not exactly follow what the right lion, gentleman says. He suggests that there is discrimination against the company that made its lump sum payment ten years ago or more, and that it does not get any deduction under this legislation.


Richard Bedford Bennett: Quite.


James Lorimer Ilsley: We are treating that company exactly the same as any other company. For example, we are willing to treat that company as though, instead of making its S500.000 payment ten years ago, it made $50,000 payments for each of the ten years succeeding that. But it still gets all its payments made before this law is changed, and therefore the company gets no benefit under this legislation.


Richard Bedford Bennett: Surely the minister has
not followed me. I am sorry I have been unable to make myself clear. Company A has in its reserves $2,000,000, upon which income tax has been paid, the $2,000,000 having been accumulated out of profits which were taxable. The directors, with the approval of the shareholders, appropriated $500,000 fifteen years ago for a pension fund, and severed that fund from the funds of the enterprise. They will receive no benefits under this legislation.


James Lorimer Ilsley: No.


Richard Bedford Bennett: And their competitor, which makes an appropriation to-day, or eight years or six or seven years ago, will obtain,
42 IS
Income War Tax Act

if payment is made this year, complete freedom in ten years of income tax for the whole amount; and if made within the period of ten years, freedom from taxation for one-tenth of it for each of the years that represent the difference between the number of years and ten. That is discrimination. Whether it is a discrimination that should be approved is a matter, of course, for the administration to say, but it does clearly put one enterprise in a different position from another.
You must remember that many voluntary non-contributory pension funds, notably one or two very large ones, came into being in this country entirely through the voluntary act of the directors, with the approval of the shareholders. Sums of money were appropriated for that purpose, upon which, of course, if the fund were set up since 1917, income tax has been regularly paid, because the funds were accumulated out of profits. It is for the minister to say whether he thinks that is a form of discrimination that parliament should not take notice of, or whether for a period of ten years the company should be afforded relief.


James Lorimer Ilsley: Even if the act were not retroactive in the sense in which the right hon. gentleman uses the term, there would, of course, be discrimination as between the company that makes its payments hereafter and the company that makes its payments before the passage of the act. The only way that kind of discrimination could be avoided would be to go back to the beginning.
Mr. BENNETT; Omit the ten years prior to to-day.


James Lorimer Ilsley: If we omitted the ten years there would certainly be discrimination between the company that made its lump sum payment last year and the company that made its payments after the passage of this act.
If we were to carry out my right hon. friend's suggestion it would mean going back to the beginning of the Income War Tax Act, and that would be a very expensive thing. I still do not think there is any real discrimination here. This is put on a ten-year basis, and the companies are assumed to have made their payments, not in one year, but in ten successive years. The company that made its payment ten years ago is not dealt with at all. We do not do anything with that company, but we are quite willing to apply the rule that it can be treated as if it made this payment.


Richard Bedford Bennett: But you cannot apply the rule unless you amend this.


James Lorimer Ilsley: The company has not anything to apply it to.


Mr. McCANN:: Would companies which set up a fund for the purposes of medical benefits to their employees be eligible for this exemption? Many companies, particularly mining companies in Ontario, for the purpose of assisting their employees have set aside a fund for medical benefits and payments to their employees when they are out of employment by reason of sickness. It is well known that such cases are well taken care of under the Workmen's Compensation Act when they are out of employment or disabled by accident. I submit that companies which set up funds for such purposes are just as much entitled to exemption as those which establish a superannuation or pension fund. This is something which is very much needed, and could be encouraged by the exemption of such funds from income tax.
Mr. ILSLEY; I am informed that under the law as it stands now, if the company definitely and permanently severs an amount for the purpose of paying the medical expenses of its employees in future years, that severance is regarded as a payment and will be treated as a deduction from the income of the year.


James Joseph McCann: It goes in their current expenses?


James Lorimer Ilsley: Just as if the company paid the actual medical expenses of the employees.


Richard Bedford Bennett: It is chargeable a3 an operating cost?


James Lorimer Ilsley: Yes.


Mr. ISNOR:: What is the position of an employer who takes out a group insurance policy on his employees, say a ten-year endowment policy? Would he be permitted each year to deduct the premium on that policy?


Richard Bedford Bennett: There is a distinction. Does not the department treat it in practice a little differently?


James Lorimer Ilsley: If the policy is general to all the employees of the company, and not limited to executives or higher paid officials, the premium will be treated the same as contributions to a pension fund.


Richard Bedford Bennett: Group insurance premiums, I think, are allowed as an operating cost, but endowment insurance-that is, insurance paid for by the business against the possible loss to the business of some man who

Income War Tax Act
occupies a position of particular importance in it-stands in an entirely different position. As far as I know, endowment policies have not 'been made applicable to group insurance. I think the practice of the department makes a clear distinction.


James Lorimer Ilsley: If it is general it is allowed as an expense.	'


Gordon Benjamin Isnor: Would the same thing apply if it is contributory, by employer and
employees?


James Lorimer Ilsley: The company would be allowed to deduct only its part of the premium.


Gordon Benjamin Isnor: But it would be entitled to that deduction?


James Lorimer Ilsley: Yes.


[Stage Direction]
Paragraph agreed to.
2.	That every corporation, the main business of which is the making of small loans shall, notwithstanding any other provision contained in the Income War Tax Act, be subject to normal corporation rates of tax.
Richard Bedford Bennett: Are they not now?


James Lorimer Ilsley: Not if they are non-resident owned investment corporations. There was an amendment in 1936 to the Income War Tax Act which set up a new category of corporations for income tax purposes, called nonresident owned investment corporations. They are subject to half the normal corporation rate.


Richard Bedford Bennett: They were regarded as investment corporations.


James Lorimer Ilsley: They came within the definition of investment corporations. It was never intended to encourage foreign companies to come in here and carry on a small-loan business and get half the corporation rate. That is the sole purpose of this proposed amendment.


Richard Bedford Bennett: I did not think they regarded these small-loan corporations as investment corporations within that definition. It is clear they should be taxed. That amendment was intended-remembering the explanation given-to refer to enterprises which came into this country to engage in what is known in many provinces as investment business, that is, they afford a medium for the acquisition of shares in Canadian enterprises. It was not intended as being over-the-counter business but rather involved the purchase and acquisition of securities. That was my understanding.


James Lorimer Ilsley: That is correct.


Richard Bedford Bennett: The language is regarded as being too wide, therefore they escape the ordinary corporation tax; is that the idea?


James Lorimer Ilsley: That is the idea.


[Stage Direction]
Paragraph agreed to.
3.	That annuities received under the provisions of any will or trust shall be taxable income of the recipient. Such annuities shall be taxable for the year 1937 and each year thereafter notwithstanding when the will or trust became effective.
Richard Bedford Bennett: I have never known an annuity that was not taxed.


James Lorimer Ilsley: This arises from a court decision, the Whitney case, which decided that annuities payable under a will are not taxable; they are regarded as payment out of the corpus, as being in the same category as bequests under a will, which are exempt under the act. The result is that draftsmen are now preparing wills in such a way that the testators leave annuities instead of a lump sum.


Richard Bedford Bennett: I read that decision as being dependent on the peculiar language of the will. But it does strike me as strange that an income arising from a fund, payable as an annuity, should not be taxable. If however the annuity was in part contributed by the capital it obviously would not be. I think the language used in the particular case was responsible for the decision; but this restates what I understood to be the law, except that it is retroactive as far as 1937 is concerned. "Such annuities shall be taxable for the year 1937"; that fixes a date, and it is retroactive as far as we are concerned, for the period has passed within which the 1938 return was to be made. If the 1937 annuity is to be taxable, obviously some arrangement should be made with those who have to pay; they should not be chargeable with penalties.


James Lorimer Ilsley: Yes, I agree. That will be done.


Richard Bedford Bennett: And secondly, "and each year thereafter notwithstanding when the will or trust became effective." A will or trust speaks from the death of the testator in the one case and the date fixed by the document in the other. The rule of law is that the will speaks from the date of the death. If it is a trust within the will the contents of the testamentary document may provide that the trust shall not become effective until a future date. Obviously an annuity can be paid only under the provisions either of a will or of a trust that provides for its payment. An annuity cannot be taxable until it is paid.


James Lorimer Ilsley: No.


Richard Bedford Bennett: It is not intended to be.


James Lorimer Ilsley: But unless these words were added it might be said that annuities that had
Income War Tax Act

begun to run, payable in 1932, 1933, 1934, 1935 and so on, would be exempt during the entire period.


Richard Bedford Bennett: But unless the annuity is actually paid under the terms of the will or trust it is not an annuity. If it has accumulated then it is not an annuity. Payment is necessary to make it taxable as an annuity. I think that is almost an elementary statement of the law.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: I think the minister
agrees with that.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: Well, that being so I cannot get the significance of the words "notwithstanding when the will or trust became effective."


James Lorimer Ilsley: It means that even if the course of annuity payments began in 1935, or before the passage of this act, annuities are taxable hereafter beginning with annuities received in the year 1937.


Richard Bedford Bennett: That is a retroactive
provision.


James Lorimer Ilsley: Just for 1937.


Mr. STEWART:: A court or a judge might hold, with respect to a will made in 1910 and annuities arising and continuing thereunder all these years, that the act does not apply to such a will that came into force before the passing of the act. A judge might hold that this act really applies only to wills made after the passing of the act.


James Lorimer Ilsley: A judge might so hold, if the hon. gentleman is stating what the court might hold.


Richard Bedford Bennett: It is money that is taxable, not the promise to pay, and it is on the annuity that the tax is payable and not accumulated capital. There is a special provision of the act with respect to a trust that provides for accumulations, but the general rule would be that a trust that provides for accumulation converts income into capital in terms of the document and thereupon it becomes a capital fund, and of course under our laws the tax is payable on the income that arises from that accumulation fund. But an annuity is taxable only as it is paid as an annuity.


James Lorimer Ilsley: That is right.
'Mr. IlsleyJ


Richard Bedford Bennett: I cannot see therefore what is meant by these words "notwithstanding when the will or trust became effective," unless it is intended to make it retroactive beyond 1937.


James Lorimer Ilsley: It is not retroactive beyond
1937.


[Stage Direction]
Paragraph agreed to.
4.	That the gift tax shall not apply to any gifts made in any year by an individual the aggregate value of which in such year does not exceed an amount equal to one-half of the difference between the income which was subject to income tax in the previous year and the income tax payable thereon. Any enactment founded on this resolution shall be applicable to gifts made in the calendar year 1938 and thereafter.
Richard Bedford Bennett: May I ask the minister whether I understand this aright. A has an income of $250,000. He pays an income tax of $100,000. He is permitted to deduct $50,000 as a gift, and that is free from taxation.


James Lorimer Ilsley: No, $75,000.


Richard Bedford Bennett: Yes, $75,000. Is that what is intended?


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: In other words, he
can give away $75,000 of $150,000 without incurring any taxation, but if he gives away more than $75,000 he is liable to the tax?


James Lorimer Ilsley: If he gave it away within the twelve months.


Richard Bedford Bennett: Yes. The period of time within which he gives it away becomes very important, the idea being that it is out of the current year's income. That is the theory of it, which I think is sound.


James Lorimer Ilsley: The year before.


Richard Bedford Bennett: The tax period, the twelve months tax period. That is to say, in 1937 A's income was $250,000 and he paid income tax of $100,000 for that year, so that there was $150,000 of his income left. Would he have to give away the $75,000 in 1937?


James Lorimer Ilsley: No, 1938,


Richard Bedford Bennett: That is what I want to make clear. His income was, in 1937, $250,000, and the tax on it was payable the next year,
1938,	and he paid $100,000. That meant that there was $150,000 of free money in 1937. He is permitted to give away $75,000 free from tax. Must he give that money away in 1937 or 1938?


James Lorimer Ilsley: In 1938.

Income War Tax Act


Richard Bedford Bennett: Is that clear under the statute?


James Lorimer Ilsley: It is clear here.


Richard Bedford Bennett: There is no doubt about that?


James Lorimer Ilsley: There is no doubt about it.


Richard Bedford Bennett: There is one more question. Here we pay income tax, as the minister will remember, to this government for both Ontario and the dominion. I take it that the words "income tax" here mean federal income tax-or do they mean both? It ought to mean both, properly. Which does it mean? We are collectors for Ontario, and in the illustration I mentioned I used the figure $100,000 as representing the two taxes together; that is, it is an income tax payable to the crown in the right of the dominion as to a portion, and in the right of the province with respect to the other portion. The question is: Are these words "income tax" to be construed to mean what they mean in the return we make, namely, the tax paid to the collector here for income in both the dominion and the province?


James Lorimer Ilsley: It is just federal income
tax.


Richard Bedford Bennett: Is that quite fair?


James Lorimer Ilsley: It is better for the taxpayer that way.


Richard Bedford Bennett: I am thinking of the
matter from two points of view. I am not putting it from the angle of the taxpayer alone.


James Lorimer Ilsley: The right hon. gentleman
asks whether it is fair to the crown.


Richard Bedford Bennett: Yes.


James Lorimer Ilsley: I think so. This is more or less arbitrary anyway.


Richard Bedford Bennett: It is arbitrary. My hon. friend from Prescott directs my attention to something which I really think is worthy of consideration by the committee. The paragraph provides that the gift tax shall not apply to any gifts made in any year by an individual the aggregate value of which in such year does not exceed an amount equal to one-half of the difference, and so on. The twelve months is not specified there. The minister made a clear statement as to what he believed the intention of the legislation was and that is why I was trying to put to him as clear a case as I could so that there would be no misunderstanding. My hon. friend now points out that the use of the words
"in any year" and "such year" without reference to the twelve months period still leaves it ambiguous.


James Lorimer Ilsley: These are two different matters. The fourth paragraph of the resolu-lution very clearly states that it is the previous year that is referred to. The words are "one-half of the difference between the income which was subject to income tax in the previous year and the income tax payable thereon." That will be found in paragraph 4. Paragraph 5 does not relate to exemptions; it relates to rates and has no connection with that other matter.


[Stage Direction]
Paragraph agreed to.
6.	That royalties paid by persons abroad out of royalties received from sources within Canada shall not be allowed as a deduction in determining net royalty income from sources within Canada.
Richard Bedford Bennett: Just what does this mean?


James Lorimer Ilsley: Royalties are paid by Canadian companies to foreign companies, probably chiefly United States companies.


Richard Bedford Bennett: Perhaps the minister
would give an illustration.


James Lorimer Ilsley: Let us say a company in Canada is using a patent which is owned by an American company. Probably it will be a company incorporated for the purpose of holding such patents and letting people use them on a royalty basis. Our Income War Tax Act provides that the non-resident company to which the royalty is paid by the Canadian company must pay an income tax at the regular rate on the net income arising from the royalty, and we have an officer here in Ottawa who has charge of that matter. There is a large revenue from these nonresident companies to which royalties are paid.
The procedure is that when the royalties are remitted 124 per cent of such royalties is paid to the income tax division pending receipt of income tax returns from the nonresident company.	It may be that the
company will have to pay more than 12i per cent. It is much more likely that the company will pay considerably less than that rate. In any case it will pay the ordinary corporation rate on the net income which it derives from the royalties. That is the ordinary procedure; that is what the act intended, but the foreign company holding these patents and licensing Canadian companies to use them may itself have obtained that patent from a German company. It may be necessary for the United States company to pay a royalty to the German company, and
Income War Tax Act

under the law as it stands without this amendment, the United States patent holding company deducts the royalty which it pays to the German company in making up its net income, upon which it pays tax to the Canadian government. We have no way of reaching the German company-and I mention this only as an illustration-to which the United States company pays royalties; yet it is a case, we think, where we are entitled to something like the corporation rate. That is the intent of the law, so this provides that no deduction can be made in regard to royalties paid by the foreign company.
That is what I might call a legitimate case. There might be a case where the American company has set up a corporation to which it pays royalties. The situation is one which lends itself to some manipulation, shall I say, with the view of minimizing the amount payable to the Canadian government. I do not know that this is the case, but certainly it is entirely possible. If a company reports to us that its royalty was $100 but that it had to pay $90 to another American company we do not quite know whether they really had to pay that $90 to that other company. When this legislation is passed we will not have to inquire into that phase of it. We say that we will not allow as a deduction any royalties paid by the royalty receiver.


Richard Bedford Bennett: That they pay here on the royalty received here.


James Lorimer Ilsley: Yes, they pay on the net income earned in respect of the royalty received.


Richard Bedford Bennett: I was going to say that I do not think the word " net " is the best word in the world to use. I think it would be better if you used the term " in determining the taxable royalty income from sources within Canada." The minister knows the line of argument with respect to " net " and matters of that kind, but there can be no such argument with respect to the use of the word " taxable." I have marked it in my copy as being in my opinion a better term, but I only make that suggestion.


James Lorimer Ilsley: I shall bring it to the attention of those who are drafting the bill.


Mr. ESLING:: In 1936 there was an amendment which brought certain royalties down to the equivalent of two per cent instead of five per cent, in connection with rentals or royalties remitted to the United States. Would the minister make that clear? None of us understood it at the time. Let us take it this way. A resident of Canada may own his home. Circumstances arise which make it

necessary for him to move to the United States. He rents his home,- and on those rentals there is a five per cent deduction when the money is remitted. In 1936 an amendment was passed providing for exemptions which brought the deductions on some royalties down to two per cent instead of five per cent. Or take it another way. Persons in the United States put say $10,000 into a mine-as we are inviting them to do-and may receive dividends. upon which the government takes five per cent, for perhaps two or three years. Then the ore peters out. These people lose their total investment, and of course the government loses its five per cent. But in the case to which I refer, in 1936 the government made the deduction on moving picture films from five to two per cent, and there is little chance of that industry petering out because it is a continuing investment.


James Lorimer Ilsley: I remember something about the 1936 amendment, but I will have to read the section that was amended and then read the amendment in order that the committee may see what the hon. gentleman is referring to. In section 9B of the Income War Tax Act, subsection 2(e), we had this provision, that in addition to any other tax imposed by this act, an income tax of five per cent was imposed on all non-residents of Canada in respect of:
(e) (ii) any rights in and to the use of any copyrighted work subsequently produced or reproduced in Canada by way of the spoken word, print or mechanical sound or from paper, composition, films or mechanical devices of any description.
That is a five per cent tax on payments made to non-residents from Canadian debtors in respect of these particular articles. The tax is five per cent. In 1936 there was an amendment. The subsection I have read was repealed, and the following substituted therefor:
Any rights in and to the use of any work, whether copyrighted or not, subsequently produced or reproduced in Canada, by way of the spoken word, print or mechanical sound on or from paper, composition, films or mechanical devices of any description-
The only change being-


Richard Bedford Bennett: From what section does the minister read?


James Lorimer Ilsley: Section 8. of chapter 38 of the statutes of 1936, An Act to Amend the Income War Tax Act. The only change so far is that the section extends to work that is not copyrighted. But there is a proviso in these words:
That in the case of motion picture films, 60 per centum of such payments shall not be subject to the tax under this section.

Income War Tax Act


Richard Bedford Bennett: That is what the hon. member wishes to speak about, and so do I.


James Lorimer Ilsley: In regard to motion picture films it is made two per cent instead of five per cent.


William Kemble Esling: That is the point, and the question is this: Is there any good reason why that should be done? It is a huge institution collecting millions of dollars each year. Why should it be exempt to the extent of sixty per cent, while a person who puts a certain amount of money into a mine, encourages the development of the country, and perhaps loses the whole thing, pays his full five per cent, so long as he receives dividends? When he ceases to receive dividends he has also lost every cent of his investment. It does not seem to me to be quite reasonable.


James Lorimer Ilsley: The explanation is that
the motion picture films were not up to the time of this amendment covered by the five per cent provision, but were covered by the royalty provision.


Richard Bedford Bennett: That is the reason the
hon. member is asking about it now.


James Lorimer Ilsley: And the royalty provision
provided only for taxation of this net income which we speak about in respect of royalties. The motion picture people showed that they had no income, and that when you talk about net income you have to take into account their costs, not the royalties alone. And so we were getting nothing in respect of those companies who had no net income. The effect of the section is to bring motion picture films into it, and to tax them two per cent-not five per cent-on the gross amount.


Richard Bedford Bennett: That is not quite the
point. The minister has not gone far enough. It is the sixty per cent the hon. member is referring to, in the amendment of 1936.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: Is that touched by section 6 now before us? You see, we called them royalties at one time.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: And we taxed them at
a five per cent rate, if I remember rightly; is that right?


James Lorimer Ilsley: We called them royalties,
put them on the net income basis, and taxed them the full corporation rate.


Richard Bedford Bennett: Exactly. Now, in 1936
we said:
Any rights in and to the use of any work, whether copyrighted or not, subsequently produced or reproduced in Canada, by way of the spoken word, print or mechanical sound on or from paper, composition, films or mechanical devices of any description.
And so on. That provides for the taxation. Then we say:
Provided that in the case of motion picture films, 60 per centum of such payments shall not be subject to the tax under this section.
What the hon. member is pointing out is that sixty per cent is entirely too large an exemption. Section 6 says:
That royalties paid by persons abroad out of royalties received from sources within Canada shall not be allowed.
And so on. That does not apply to this ease, apparently. The contention of the hon. member for Kootenay West is that it should, and I agree with him.


James Lorimer Ilsley: We are not dealing with
the resolution before the committee.


Richard Bedford Bennett: But the resolution with
respect to royalties raises the issue whether or not, having taken the steps we have taken with respect to royalties, it follows that we should do something with respect to this other matter. The minister will observe that section 6 says that royalties paid by persons abroad out of royalties received from sources within Canada shall not be allowed as a deduction. That is, if a company abroad which receives from Canada $1,000 says it pays $500 for the same royalty, that is no longer a deductible item, and they are going to pay income tax on $1,000, which seems to be a reasonable basis. If they are doing business in that way and taking from our people $1,000 of income, we are going to take our share of that income as a tax, the same as from any other Canadian enterprise. And we are not going to deduct from that as a taxable item the money they pay to somebody else for royalties. That is their business in the carrying on of their affairs outside of Canada.
The hon. member for Kootenay West draws attention to the fact that what we did in 1936 was to provide that in the case of a motion picture film, as distinguished from other items, sixty per cent of payments made shall not be subject to the tax under the section. The two things are not consistent. The section which we are now considering, and this section, are not consistent. The sixty per cent is entirely too wide an exemption. In fact I am afraid it makes us the laughing stock of the people who are paying it, if I may say so frankly to the minister.
Income War Tax Act


William Kemble Esling: To clarify the situation may I point out that the films which we use in the various picture theatres in Canada are not all brought in as films for each province or each theatre. There is one duplicate negative brought to Canada. On that duplicate negative for the purpose of establishing an ad valorem value the department fixes a rate of eight cents per foot. Now, that is on the negative. From that negative the company reprint in Montreal or Toronto enough prints to take care of the provinces, and then distribution is made from headquarters. The only duty which is paid on the duplicate negative coming from Hollywood would be on the ad valorem of eight cents, plus sales tax and excise-


Richard Bedford Bennett: A specific of eight cents a foot.


William Kemble Esling: No, the tax is three cents per foot on the eight cents per foot ad valorem valuation. Then we have an eight per cent sales tax, and an excise tax. However the ad valorem value would be not much more than 1600. In other words, the whole expense in connection with the negative is not very great. From that negative they make prints-just like one would make prints from an ordinary photographic negative-which are distributed throughout Canada. A rental is secured for each running of the picture at each theatre. The accumulated earnings of those films, less expenses, are remitted to the United States or to some other country. This government should have five per cent on that remittance, but for some reason it has exempt sixty per cent from taxation. The result is that this government receives only five per cent on forty per cent. The result is that these large film concerns are paying only two per cent to this government instead of five per cent on their remittances.


James Lorimer Ilsley: If it were not for this provision the United States company would be paying a tax on an income basis. They would be paying the full corporation rates because they would be receiving royalties from Canadian sources. They would be taxable for the income received in respect of those royalties. They contend, and I think the income tax division is satisfied, that they have no income. The result is that we would not get anything on that basis.


Richard Bedford Bennett: Would the minister just amplify that? What does he mean when he says that they do not make any money?


James Lorimer Ilsley: That is what the income tax division thinks. They believe that if they
'
attempted to tax on an income basis under the section relating to royalties they would not get any tax at all. Therefore it is put upon the basis of gross remittance. The question then is whether five or two per cent is the proper figure, and the income tax division considered that two per cent was more equitable. The income tax division is satisfied that they would not get as much on the income basis as will be obtained on this two per cent basis.


Richard Bedford Bennett: Will the minister look into that?


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: I shall be greatly obliged if he will. Does not it seem amazing to have it suggested that these people are losing money? From what we know of them they would not be here very long if they were.


James Lorimer Ilsley: I know I invested a thousand dollars which to-day is worth only $20.


Richard Bedford Bennett: I congratulate the hon. gentleman upon having had a thousand dollars to invest. I can only say to him that no doubt that was a Canadian company. Since he has mentioned the matter, may I say that I paid $5,000 into one in the hope that I would make some money, but the whole of it has been lost. To-day it has no value at all; it has long since been wiped out. But we were not dealing with these great corporations that have to do with this business when we invested our little $1,000 and $5,000. These people deal in millions and they carry on business in every part of the world. Let us get down to brass tacks. I do not think we could have the matter explained more clearly than has been done by the hon. member for Kootenay West (Mr. Esling). These people bring in a negative-I believe it is really called a positive-upon which they pay duty on the basis of a valuation of eight cents a running foot. Copies are made from that negative which are sent out to theatres all over the country. Their remittance to the home office represents, not the proceeds of one film but the proceeds of all the duplicates they have made and distributed to the different theatres in Canada. They are permitted to deduct sixty per cent before they pay any tax to Canada.


James Lorimer Ilsley: Deducted from what?


Richard Bedford Bennett: From the sum of money they have taken in. It is provided that in the case of motion picture films, sixty per centum of such payments shall not be subject to the tax under this section.

Income War Tax Act


James Lorimer Ilsley: They pay five per cent on forty per cent, which is two per cent on the whole thing.


Richard Bedford Bennett: It is not put that way.


James Lorimer Ilsley: It is the same thing.


Richard Bedford Bennett: I know that things that are equal to the same thing are equal to one another, but that is not what we are dealing with.


James Lorimer Ilsley: It sounds rather bad when you say they pay only on forty per cent. It is different when you say they pay two per cent on everything.


Richard Bedford Bennett: I am reading from the statute.


James Lorimer Ilsley: The result is that they pay two per cent.


Richard Bedford Bennett: I did not draft the amendment. The statute provides that sixty per cent shall not be subject to tax under this section. That fund, of which sixty per cent is free, represents the accumulation of royalties from theatres in which the film has been shown. These films have been produced from a single negative brought into this country and upon which a tax has been paid on the basis of a valuation of eight cents a running foot, as well as other incident taxes. I submit that that is not quite fair and I suggest to the minister that he should look into the matter when dealing with this question of royalties. We are making a declaration with respect to royalties. I think the illustration given by the minister was an excellent one. Here is a company in the United States which has earned $1,000. They say they are not going to pay a tax on $1,000 as they have to pay $700 to Germany. The minister replies that he is not concerned about that, that he is going to tax them on their net royalties earned from sources within Canada. He is treating Canada as a whole and he is not concerned with anything that is paid somewhere else. Then take this other matter, which in a sense is a royalty. Why should that be made sixty per cent free? I cannot see how you can do it.


James Lorimer Ilsley: Has the right lion, gentleman any reason to think that five per cent would be fairer?


Richard Bedford Bennett: Certainly. I think two per cent is just making a joke of us. The minister probably has reasons for thinking differently. My view may be erroneous; I do not say for one moment that it is infallible, far from it. These are great enter prises and that is why my hon. friend's $1,000 and my $5,000 are worth nothing to-day.


James Lorimer Ilsley: It does not look as though they are making much money.


Richard Bedford Bennett: They may say they are not, but that is not what they indicate quietly. How could they help but make money? They bring in one negative upon which an insignificant duty is paid. They make copies from that negative which are turned loose in every theatre. Then no tax is paid upon sixty per cent of the proceeds, and we collect only five per cent on the balance.


James Lorimer Ilsley: The preparation costs probably amount to something.


Richard Bedford Bennett: No doubt that is so. In fact, some of those concerned are better paid than legislators. Sometimes they provide greater amusement for the populace, but not always. As long as the minister has made a note of it, that is all I desire to say.


[Stage Direction]
Paragraph agreed to.
7.	That if any person or corporation ordinarily resident in Canada effects any transaction which at any stage makes use of any person or corporation ordinarily resident abroad, and which has the effect of reducing the liability to taxation under the act of such person or corporation ordinarily resident in Canada, such person or corporation ordinarily resident in Canada, shall continue to be liable to taxation under this act to the same extent as if the transaction had not taken place. This provision shall apply to any transaction only if the treasury board upon a reasonable interpretation of the evidence available makes a ruling that the transaction was effected mainly for the purpose of avoiding liability to taxation under the act. An appeal shall lie from any such ruling of the treasury board to the exchequer court of Canada.
Richard Bedford Bennett: This section is a distasteful one, but from, necessity it is desirable. It entrusts with the minister for the time being

that means the treasury board in a sense-the power of interpreting the evidence available for the purpose of making a ruling as to whether the transaction was effected mainly in order to avoid liability to taxation under the act. These are matters very difficult to discuss. We read so much in the press with respect to individual cases, but one has to approach the subject without regard to individual cases and deal with it only from the point of view of principle and the effect which it has upon our revenue. For the sake of illustration, A has an income of $4,000,000 derived from the resources of the Dominion of Canada. Under existing law that means a contribution of very large sums of money to the dominion exchequer. But A says: I am not going to do that; it is too large a sum to pay out of my income. I therefore-in the language of the statute-
Income War Tax Act

although ordinarily resident in Canada will effect a transaction by which I make use of a trust, company ordinarily resident abroad, which will have the effect of reducing my liability to taxation under the act. But we say: We are going to try to get some of that money because the action that was taken was intended as an effort to escape liability to taxation.
I see a little difficulty with- the words, "if any person or corporation ordinarily resident-in Canada." The Minister of Justice (Mr. Lapointe) gave an opinion on that point when dealing with the high commissioner's taxes some years ago, that is, the words, "ordinarily resident in Canada." Perhaps the minister will recall it. It is quite clear that these people are no longer ordinarily resident in Canada. They have taken up residence somewhere else. They have left our country, and their lawyers will at once say, when they come before the treasury board, "My client was formerly resident in Canada, but he has left the country. It is true that his income of $4,000,000 comes out of this country, but he is no longer ordinarily resident here." Because he has effected a transaction which has the effect of reducing the liability to taxation under the act, as a person ordinarily resident in Canada. This touches only one case, that of the man who continues to live here.


James Lorimer Ilsley: Or the company that remains here.
u Mr. BENNETT:	I am using the word
"person" as including corporation. This touches only the one case, and that is not the kind of case we should be dealing with. I do not think it is the case that was intended to be dealt with.


James Lorimer Ilsley: Yes, it is.


Richard Bedford Bennett: It touches only one
branch.


James Lorimer Ilsley: The other is very difficult.


Richard Bedford Bennett: I will undertake to prepare legislation for the minister if he will give me an hour to do it.


James Lorimer Ilsley: I am rather inclined to
accept that offer.


Richard Bedford Bennett: I shall be glad to sit down with the minister and in an hour we shall produce the legislation. If the money has its origin in Canada the arm of Canada is strong enough to catch it. That is all I have to say of the principle on which I would act. I do not care where it is. If it comes out of the ground, out of a mill, out of a factory, if it is within the boundaries

of the four corners of this dominion, the arm of this dominion is strong enough to grasp it.


James Lorimer Ilsley: I agree.


Richard Bedford Bennett: And the minister will
agree. I admit it is unpleasant legislation.


James Lorimer Ilsley: That is not the objection to it.


Richard Bedford Bennett: All these things are unpleasant in that sense, but the arm of this country is long enough and strong enough to see to it that new wealth produced out of its resources makes a contribution to the welfare of this country.


James Lorimer Ilsley: I do not want to argue the case, but the objection is not its unpleasantness at all.


Richard Bedford Bennett: I meant unpleasantness from the standpoint not of government but of individuals who have to deal with these things.


James Lorimer Ilsley: That would not worry us much.


Richard Bedford Bennett: It would not worry me.


James Lorimer Ilsley: The objection to it is this. I do not say it is insuperable. In fact, I shall be glad to receive suggestions, but the objection to taxing non-residents at high rates is that we must expect similar legislation to be enacted against persons who are resident in Canada. For example, if we impose a fifteen per cent instead of a five per cent tax on remittances to non-residents, we would be stretching forth our strong arm and taking money that we have a right to take- there is no question about that-but our whole attempt with the United States has been to keep the non-resident tax down. The United States had legislation by which they would have taxed Canadians receiving payments from the United States ten per cent, but we concluded an agreement with them by which we kept that down to five per cent, and we kept ours down to five per cent. We have the power, of course, to make it fifteen or fifty per cent.


Richard Bedford Bennett: I was not thinking of
dealing with it in that way at all.
Mr. ILSLE1 :	But that is what it runs
into. My hon. friend might say:	I am not
thinking of taxing remittances from Canada to people in the United States at high rates of fifteen or fifty per cent; I was thinking of men in the Bahamas or places like that. But the question arises, can you discriminate in your non-resident tax rate between residents of one country and residents of another?

Income War Tax Act


Richard Bedford Bennett: Certainly you can, and I will tell you why. We are dealing with cases of men who made their fortunes here.


James Lorimer Ilsley: Can you discriminate on
that basis?


Richard Bedford Bennett: I do not say on that
basis alone. We can enact legislation, if we so desire, that deals with that phase of it, plus the fact that if the evidence satisfies the treasury board that what was done was for the purpose of evading taxation in Canada, then action may be taken. You are doing that here to-day. I asked the minister whether he was limiting it, and he said: Yes, I am limiting it to people ordinarily resident in Canada. Well, Mr. Chairman, there will be very few, because the question of residence is going to come up at once. The minister will remember two celebrated cases, one that of a great man from India, and the other that of a great shipowner of Liverpool. One spent the last years of his life admittedly saying:	I am going no longer
to be a resident of England. And he provided himself with a magnificent yacht and took up his home in the Channel islands. Well, his widow gave one million pounds to the British exchequer. The other case is reported in the House of Lords. In that case the man was from India. I suppose there is no reason why I should not give his name. It was the Sir David Yuill case. They found his residence was in India but his domicile for taxation purposes, succession duties, was in England.


James Lorimer Ilsley: It is much harder to shake
domicile than residence.


Richard Bedford Bennett: Domicile is always difficult because it involves a number of things. There are two factors in domicile. One is residence. That is matter of fact. The other is evidence as to intention, by speech, conduct and matters of that sort. But in this provision before us to-day we are making just half a bite at a cherry. It is to deal only with those ordinarily resident in Canada, and at once the solicitors in such a case are going to say: "My client is no longer ordinarily resident in Canada. He has a house somewhere else and does not come under this provision at all. What are you going to do about it?" It is something more than that we have to deal with. I see that the minister thoroughly grasps the idea. He must remember that it was the late government, not this government, that started the tax on remittances. What is more, everything the minister said is true as to the cries that were heard about what the effect would be. We said that if money is
made under the laws of Canada, surely some contribution must be made to the revenues of Canada. That is all. And the minister has continued it. We started with 5 per cent under certain circumstances. London people telegraphed that this was going to hurt investments; but go over there and see what happens to you at the source; there is no waiting, you are taxed right at the source, as I know to my sorrow. They take your money then and there.


James Lorimer Ilsley: That is equivalent to our corporation tax; we tax our corporations at the source.


Richard Bedford Bennett: But I am talking about the individual.


James Lorimer Ilsley: They do not have the corporation tax separate from the individual tax there; the individual tax is taken from the company at the source. The English shareholder in a Canadian company finds that we take 15 per cent from the company without saying anything to him, and another 5 per cent on his dividends.


Richard Bedford Bennett: We take it from the company because it is a Canadian company.


James Lorimer Ilsley: I understood it was an English case of which the right hon. gentleman spoke.


Richard Bedford Bennett: No; I am talking about my having shares in an English company; I may say I do not have them now but I had, lest there should be any difficulty on that score. The tax gatherer might think I had omitted that income. But if he looks back he will find that I paid too much; the money was taken at the source and I had to pay here also.


James Lorimer Ilsley: The 20 per cent taken at the source is about equivalent to what we take.


Richard Bedford Bennett: No; that is a different thing altogether. I am dealing with one man, a man ordinarily resident in Canada. I suggest that the minister should consider how he is going to deal with one outside.


James Lorimer Ilsley: I have given a great deal of thought to the matter.


Richard Bedford Bennett: I am sure the minister has. But 5 per cent on the money that goes out is a trifle compared with what we would normally receive. The income tax of those of us who remain here is moderately heavy. If, for instance, one had a fairly large income last year and a small one this year, he would find that a very large proportion of this year's income goes to pay last year's tax. It is not quite fair that large sums made out of the
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production of new wealth in Canada by those who were ordinarily resident here but have left these shores avowedly for the purpose of escaping taxation should be permitted to escape entirely.


[Stage Direction]
Paragraph agreed to.
8.	That dividends received by Canadian parent companies from wholly-owned non-resident subsidiary companies shall be exempt from the corporation rate of tax if at least 75 per cent of the combined capital of the parent and subsidiary companies is employed abroad. Such exemption shall be granted only if and to the extent that the country in which the subsidiary company is located grants a like exemption to parent companies in respect of dividends emanating from subsidiary companies in Canada and shall not extend beyond dividends that are equal to profits that have been subject to tax abroad in the year previous to the year of declaration of the said dividends. Any enactment founded on this resolution shall be deemed to have come into force at the commencement of the calendar year 1938 and to be applicable to the calendar year 1938 and to fiscal periods ending therein and to all subsequent periods.
Richard Bedford Bennett: What does the minister expect now under paragraph 8?


James Lorimer Ilsley: An exemption of a kind
here in question has been requested for many years. It is intended to remove an obvious and severe burden of double taxation on Canadian companies which have been enterprising enough to extend their business activities into other countries to an extent that the foreign operations far exceed the Canadian business. At present Canadian parent corporations pay full double taxation on income received from their foreign subsidiaries. For example, the United States taxes the income of subsidiaries at rates ranging from 15 to 19 per cent. This income, when transferred to the Canadian parent corporation by way of dividends, is again taxed by us at the rate of 15 per cent. Obviously, then, there exists a great incentive for the Canadian parent company to move its head office out of Canada and operate with the parent corporation abroad and the subsidiary in Canada. Particularly is this true in view of the fact that the United States government, for example, allows its parent corporations a deduction in respect of taxes paid abroad by wholly owned subsidiaries. Thus a Canadian parent corporation, by moving its head office to the United States, would escape this double taxation.
It might be further pointed out that a Canadian company doing business entirely abroad, with no operations in Canada, is entirely exempt from tax under section 4 (k) of our act.


Richard Bedford Bennett: Exempt from tax in
Canada?


James Lorimer Ilsley: Yes. Also Canadian companies operating abroad through branch plants are allowed under the Canadian act a deduction on account of taxes paid in respect of its profits earned abroad.


Richard Bedford Bennett: Does that include income tax as well? That is, the taxing authority here allows as a deduction the taxes paid by the subsidiary abroad, including the income tax as a tax?


James Lorimer Ilsley: Yes; but has the right hon. gentleman in mind the situation? The deduction is not allowed as a deduction from the income of a Canadian company, it is allowed as a deduction from the tax imposed on the Canadian company.


Richard Bedford Bennett: That is, if the tax here were SI,000 and I had paid $400 abroad I would have to pay $600 here?


James Lorimer Ilsley: Yes. It is provided in this amendment that where the foreign subsidiary is wholly owned, and where at least 75 per cent of the combined capital of the parent and subsidiary companies is employed abroad, then a deduction will be allowed in respect of tax paid to foreign governments. Provision is made that this allowance depends upon reciprocal action on the part of other countries. It is further provided that the exemption granted in any one year shall not extend beyond dividends that are equal to profits which have been subject to tax abroad in the year prior to the year of declaration of the dividends in question.


Richard Bedford Bennett: Has the minister reason to believe that this may become reciprocal?


James Lorimer Ilsley: It is reciprocal now as far as the United States is concerned.


Richard Bedford Bennett: Company A receives from a Canadian company $1,000 in the way of dividends. It does not pay income tax on that at the present time. But if it receives it from the United States, it does pay?


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: This legislation provides that, under certain conditions with respect to capital, that dividends so received may be deductible here as though the company were a Canadian one, provided other countries treat us in the same way?


James Lorimer Ilsley: Yes that is right.


Richard Bedford Bennett: Have we any reason to believe that other countries will so treat us?

Income War Tax Act


James Lorimer Ilsley: Just the United States. I
have not considered the situation in regard to any other country.


Richard Bedford Bennett: That is not a matter of
agreement; they simply do not tax.


James Lorimer Ilsley: No.


Mr. McNIVEN:: Would the minister explain why, in addition to a company being a wholly owned subsidiary, 75 per cent of the combined capital must be employed in the foreign country? As I understand the minister, this legislation applies to those countries which have a reciprocal provision. In the United States there is that provision now. But there is not that requirement in the law of the United Sates as to 75 per cent of the capital. I can think of Canadian companies operating wholly owned subsidiaries in the United States for the production of raw material which is shipped to this country for the purpose of manufacture and distribution, but 75 per cent of their capital is not employed in the United States, so they would not benefit by this provision.


James Lorimer Ilsley: That is true.


Donald Alexander McNiven: But.if reciprocity is desired, why not give a full measure of reciprocity?


James Lorimer Ilsley: We should lose too much
money if we went as far as the United States goes. This is as far as we can afford to go. It applies to companies that are predominantly American. It is an encouragement to companies that are enterprising enough to extend their operations to other countries to the extent that those operations far exceed their Canadian business. Seveny-five per cent is a matter of judgment.


Donald Alexander McNiven: The companies I have
in mind are of the enterprising type to which the minister has referred. They are Canadian companies; in order to make themselves as nearly self-contained as possible they have organized subsidiaries in the United States to acquire raw materials that are not available in Canada, and they have shipped and are shipping these raw materials to this country for manufacture. These materials subsequently manufactured are distributed solely to the Canadian people. It is true that the parent company remains here and the greater percentage of their capital is still employed in the manufacture and distribution of their products here.


Richard Bedford Bennett: Head office here?


Donald Alexander McNiven: Yes. Some of the companies I have in mind maintain manufacturing plants in at least three of the provinces,
with a Canada-wide distribution system; they bring into Canada raw material that is not available here for the manufacture of their products; yet their subsidiaries are taxed in the United States from 15 to 19 per cent, and when the subsidiary declares a dividend it comes to the coffers of the parent companies and is again taxed under the corporation tax.


Richard Bedford Bennett: Fifteen per cent.


Donald Alexander McNiven: Yes, 15 per cent; and
then when the parent company distributes its dividends to the shareholders the shareholders pay a third tax. I can see no reason why the second clause should be added limiting the investment to 75 per cent, particularly when reciprocity with the United States is desired, and the United States does grant that privilege to wholly owned United States subsidiaries operating in Canada.


James Lorimer Ilsley: The loss would be very
great. I know the class of companies to which my hon. friend refers, but there are other classes in connection with which the circumstances are not the same at all. It is rather a matter of doing some processing in the United States and producing some raw material here. It is difficult to answer what the hon. gentleman has said. If we went the whole way, the loss of revenue would be very great, and we felt that we could not do that. We have gone a part of the way and we may go further yet, but not this session.


Donald Alexander McNiven: Do I gather from what the minister says that he appreciates the fact that this particular provision is a hardship upon certain companies which may be described, in the terms he himself has used, as sufficiently enterprising to invest some of their capital in other countries for the purposes I have named?


James Lorimer Ilsley: I shall not go further than to say that taxation on these companies and their shareholders is heavy under the system.


Donald Alexander McNiven: And it is out of proportion to the taxation that is imposed on corporations generally and upon individuals engaged in similar activities.


James Lorimer Ilsley: I shall not agree with that.


Donald Alexander McNiven: It is double taxation.


James Lorimer Ilsley: There is a good deal of double taxation all through our system. It is honeycombed with double taxation.


Richard Bedford Bennett: Treble in some cases.


Donald Alexander McNiven: That is what this is.


[Stage Direction]
Paragraph agreed to.
Income War Tax Act
[Stage Direction]
9.	That any enactment founded on the provisions of these resolutions shall be deemed to have come into force at the commencement of the calendar year 1937 and to be applicable to the calendar year 1937 and to fiscal periods ending therein and to all subsequent periods, except as otherwise provided.
Richard Bedford Bennett: In a measure this is retroactive for one year, but that may be desirable from the administrative standpoint on account of the broken periods of time.


James Lorimer Ilsley: Yes.
Resolutions reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 164, to amend the Income War Tax Act.
Motion agreed to and bill read the first time.


ELECTIONS AND FRANCHISE
[Stage Direction]
Hon. C. G. POWER (Minister of Pensions and National Health) moved that the house go into committee on Bill No. 91, respecting the franchise of electors and the election of members of the House of Commons.
Richard Bedford Bennett: It will be remembered that when this legislation was introduced into the house it was accompanied by another measure which was complementary to it. I see no report of the complementary measure; presumably it is intended to proceed with the main bill without its complement. A sad fate has overtaken a measure of such grand promise as was indicated by the minister who had the matter in charge on that occasion. It breathed a spirit of altruism which had the effect of lifting the sordid atmosphere of this community into the ether of a higher realm, and made men think in terms of that glorious day when peace should reign and good will should be the dominant factor in all our transactions. Alas, it has apparently fallen by the wayside.


Mr. POWER:: Not fallen by the wayside.


Richard Bedford Bennett: It has only been crippled, I understand. At an early date it may be revived on the way. There may be travelling on the road some good Samaritan who will give it that measure of kindly treatment which will ensure its early recovery. Before we proceed with this legislation, I might ask whether the complementary measure from which so much was hoped is also to be proceeded with this session.


Charles Gavan Power: The bill known as the Political Expenditures Act is being considered by the committee on electoral matters. It was considered at great length yesterday morning, and, I understand, will be still further dealt with. Whether it will be possible to carry to fulfilment this year the high hopes my right hon. friend entertained for this house and the country is something I cannot say. I can say this, however, that all great reforms are not carried out in one hour, or one day, or one session.


Richard Bedford Bennett: That accounts for the budget, I take it.


Charles Gavan Power: I am not dealing with the budget at the moment. It is quite possible that there were contained in that bill certain provisions which did not meet with the entire approval of all the members of this house or even of all the members of the committee. I am under the impression that sooner or later, possibly this year, the committee will accept at least the principle of the bill, and it will perhaps be left for some of us to work out the details in a manner which will be more acceptable to the members of the house generally.


Richard Bedford Bennett: I am told that questions of principle have not been the important matter; that a sufficient gathering of interest was all that was required.


Charles Gavan Power: That might have helped, too.


[Stage Direction]
Motion agreed to, and the house went into committee, Mr. Johnston (Lake Centre) in the chair.
Sections 1, 2 and 3 agreed to.
On section 4-Tenure of office, salary, rank and powers of chief electoral officer.
Charles Gavan Power: I will ask my colleague to move an amendment, that after the word " of " in line 23 there be added the words " eight thousand dollars per annum."


Ian Alistair Mackenzie: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 5 and 6 agreed to.
On section 7-Writs of election.
Mr. NEILL:: We are passing these sections without the slightest consideration. Might I ask if the report of the committee was unanimous about all these matters?


Mr. BOTHWELL:: So far as any sections so far carried are concerned, the vote of the committee was unanimous. There are certain

Elections and Franchise
sections of the bill on which the committee did not vote quite unanimously, but I would suggest that when we arrive at those sections those who were opposed will have something to say regarding them.


[Stage Direction]
Section agreed to.
On section 8-Appointment of returning officers.
Alan Webster Neill: I do not know what the people will think about this. Is this a proposal to fire all existing returning officers and appoint new ones; or is there that possibility, in any event?


Charles Edward Bothwell: 'The situation under this
as under past elections acts, is that the returning officers will have to be appointed again. Whether it will be the same or different officers will depend upon the powers that be.


Alan Webster Neill: I did not understand the hon. member. Would he mind explaining that more fully? Does the legislation require all positions to be made vacant?


Charles Edward Bothwell: It does.


Alan Webster Neill: Why?


Charles Edward Bothwell: I might explain that in arriving at the general principles which are embodied in this new measure, the committee followed the act of 1930 to quite an extent. This is an entirely new bill; it is not an amending bill in any sense of the word, and officials who are appointed under this bill will have to be appointed again. No matter who have held positions in the past, we have to make provision here for either appointment or reappointment.


Mr. STIRLING:: Is it not the case that until to-day a returning officer holds office under a certain act which is about to be repealed and replaced by this bill? Consequently, as I understand it, he must receive appointment under this measure.


Charles Edward Bothwell: That is so.


Alan Webster Neill: This section states:
The offices of all returning officers appointed prior to the passing of this act shall be deemed to be vacant-
If we are doing away with the old act, they would become vacant automatically, would they not?
-and the governor in council may appoint to such offices either the same persons as now hold them, any of such persons or any other persons.
A number of years ago an attempt was made by the party now in power to take the appointment of these officers out of politics 51952-268
and make them permanent appointees. They held office during good conduct, as I understand it. When the party that is now in opposition came to power I believe they did away with that act, possibly for the reason that is now alleged in connection with this one; at any rate it was essential under the new system then introduced. But I think it is common knowledge that they did not take full advantage of the opportunity they possessed of appointing all partisan officials, and I think it would be a retrograde step if the party now in power adopted any other system. Would the minister be prepared to give an undertaking that they would not be all straight partisan appointees?


Charles Edward Bothwell: If the hon. member will look at paragraph (e), it might explain the situation to some extent. So far as this section of the bill is concerned, may I point out that it is taken almost entirely from the act of 1934, part of which the hon. member will see on the opposite page, which stated:
The offices of all returning officers heretofore appointed shall be deemed to be vacant and the governor in council may appoint to such offices either the same persons as now hold them, any of such persons or any other persons.
In so far as this particular section is concerned, may I point out that it follows rather closely the legislation passed in both 1930 and 1934.


Alan Webster Neill: But I was pointing out that the late government did not take full advantage of their opportunities to make partisan appointments. I was hoping the minister would be in a position to express his opinion, conviction or determination that the same policy would be followed.


Charles Gavan Power: My conviction is expressed in the legislation of 1930, at which time I was chairman of the elections committee, and brought down to the house a bill which was accepted. In it provision was made for the non-partisan appointment of returning officers. That example was not followed.


[Stage Direction]
Section agreed to.
On section 9-Election clerk.
Mr. MacNICOL:: I would like to say a few words at this point, and shall commence by referring to what the minister said a few minutes ago. He pointed out that he was chairman of the elections committee of 1930 which brought down a bill acceptable to the house. I understood him to say it was his proposal that the enumerators be of two different political parties.
In this connection I suggest to the minister, and I hope he will agree with me, that the

Elections and Franchise

same principle should be followed in the selection of poll clerks. For a long time I have been of the opinion that the time has come when in the polling subdivisions there should be officials appointed by more than one political party. I find that principle is now almost universal. So far as I can ascertain, Canada is almost alone, of English speaking countries, in insisting that the deputy returning officers and poll clerks attending polls be of the one political party. I know of no other such country which follows that plan, and I had hoped the time had come when under the guidance of a minister eminently qualified in connection with election matters we might have his approval of the suggestion whereby in Canada the deputy returning officers and poll clerks would be of two political parties.
I cannot speak with respect to all the states in the union, or even with respect to the majority of them; but certainly I know that all the principal states of the American union now follow the plan of having two political parties represented in the conduct of the poll. The reason advanced is that with two political parties represented at the poll there could be no collusion in connection with ballot stuffing, ballot switching or impersonation. It would be difficult to attempt anything like that. But where both the deputy returning officer and the clerk are of the one political party many injustices have been done in Ontario, and perhaps elsewhere; it is not necessary to mention the scores of instances. This will occur again until the two officers within the poll are of different political parties.
They found that in the United States, and overcame many of the impersonations, ballot stuffing and ballot switching by having the deputy returning officer and the clerk of different political parties. The Election Act of Missouri uses these words:
Chosen by the county court-
Not by the government-
-from lists supplied by the political party having the largest number of votes at the next preceding general election, and by the party having the next largest number of votes.
It is indicated that the officers who are to conduct the polls shall be elected in that manner, namely from two political parties.
I shall not take up the time of the committee in a detailed discussion of the point, because I appreciate the fact that the minister wishes to make progress with his bill. I must point out, however, that the state of New Jersey has a similar law. Similar laws are found in Wisconsin, Oregon, Ohio, Massachusetts and Montana. In each of those states, and perhaps in many others the election acts

of which I have not had time to read, the situation I have described obtains. The deputy returning officers and clerks in those states must be of two political parties, and are from the two parties which had the first and second largest numbers of votes in the next preceding election.
I brought this matter before the elections committee. At this time may I avail myself of the opportunity to compliment the minister and members of the house generally upon the appointment to the elections committee of an efficient, kindly and courteous chairman. He has every qualification to be chairman, and, when I suggested this change, was most courteous. I must point out further that in the beginning I believe the majority of the elections committee were in favour of bringing the Canadian methods up to the high standard in this regard which prevails throughout the world in English speaking countries outside Canada. I might point out that in Australia these officials are permanent and are subject to dismissal at all times for irregularities. In Great Britain they are not appointed by the government at all; rather they are appointed by the mayors or municipal authorities throughout the old country. Naturally the appointees are of different political parties.
But Canada has not attained the high standard I had hoped it might. I was hoping at this time, in view of the minister's wide knowledge of election law, and in view of his having been chairman in 1930, something along this line might be done. I remember that when the elections measure was being discussed in the house in 1934 there was no use in my saying anything on the government side of the house, because the minister piloting the bill through the house would simply look across at the hon. member for Quebec South and use words-probably not in these exact terms, but having the same meaning-"if the hon. member for Quebec South is satisfied, carried." Matters would be referred to him. I could not get anything through, because my knowledge of the elections act did not cut any figure.
So I had hoped that with that eminent authority piloting the elections act, in this government, this year we might expect to find real improvement in that act. Before going farther I wish to point out that I believe we are now getting close to a real elections act- at least in ninety-nine per cent of the cases. Any criticism I may have would be about the one per cent remaining.

Elections and Franchise
My submission with respect to clerks, which I moved in committee-and upon which I shall not divide the committee of the whole- was in these words:
At least five days before he proposes to appoint the persons who are to act as poll clerks as aforesaid, the returning officer shall give notice accordingly to the candidate who, representing at the next preceding election in the electoral district a different and opposed political interest to the candidate mentioned in the next 'preceding subsection, received the highest number of votes, whether or not such candidate was elected. Such candidate may, by himself or by representative, nominate a fit and proper person for appointment as poll clerk for every polling station in the electoral district and, except as hereinafter provided, the returning officer shall appoint such persons to be poll clerks for the polling stations for which they have been nominated.
Even at this late date I think the minister should consider this matter. Perhaps this section could be allowed to stand in the meantime, and we could return to it later on.


Charles Gavan Power: I have no objection to it
standing.


Mr. McCUAIG:: The hon. member (Mr. MacNicol) is speaking to the wrong section. What he refers to is dealt with in section 26, subsection 4.


John Ritchie MacNicol: I should like to see this considered because its adoption would put our elections act on a par with other election acts. I think in the main it is one of the best anywhere, but in my opinion this would make it nearly one hundred per cent perfect.


Charles Gavan Power: The objection raised by the hon. gentleman would appear to be a good one were it not for the fact that this section refers not to poll clerks but to election clerks who are assistants to the returning officers. Perhaps my hon. friend would indicate his objection when we reach the section referring to poll clerks.


John Ritchie MacNicol: That will give me a double opportunity to express my objection.


[Stage Direction]
Section agreed to.
Sections 10 to 13 inclusive agreed to.
On section 14-Qualifications.
Charles Grant MacNeil: Might I have an explanation of paragraph (j) ?


Charles Edward Bothwell: This paragraph is taken from the 1934 act, but its wording is made more definite. It deals specifically with a particular class of people, those who are dealt with under a certain order in council. This paragraph was discussed at great length in the 51952-268i
committee and its wording was agreed upon. It has to do with the Doukhobors who were disqualified by the 1934 act.


Charles Grant MacNeil: What is their position at the present time?


Charles Edward Bothwell: They are disqualified if they are disqualified by the province.


Mr. HEAPS:: I should like to make a few remarks in connection with paragraph (k). As I read this paragraph, it would disbar any person living in an institution maintained by any government or municipality; any person living in an old folks home would be disbarred from voting in certain provinces. I object to our elections act being chopped up in such a way as to make the application of its provisions different in one province from what it is in another. It would be an anomaly if a person living in an old folks home in Ottawa were disbarred from voting in Ottawa, but permitted to vote in Hull. Many of the people in these homes are quite capable of exercising their rights as Canadian citizens, and I do not think they should be disbarred from voting simply because they happen to be inmates of such an institution.


Charles Edward Bothwell: The Dominion Franchise Act, 1934, contains the following provision:
Provided that the following persons are disqualified from voting at an election and incapable of being registered as electors and shall not be so registered, that is to say-
(x) every person who is an inmate of an institution which is maintained by any government or municipality for the housing and maintenance of the poor;
In this new bill we have limited the disqualification to those provinces where such persons are disqualified. Evidence was given before the committee that institutions have been set up in certain provinces by the provincial authorities, and it was almost the unanimous opinion of the committee that people in certain of those institutions were not interested in electoral matters and were not in a position to form an opinion as to how a vote should be cast. It was thought that if the province prohibited them from voting because of their being in a particular type of institution, then we should also restrain them under the federal act.


Mr. BAKER:: Would it not be more correct to exclude them in the same way as the doukhobors are excluded?


Abraham Albert Heaps: Many of these people take considerable interest in public affairs. Any one who has visited an old folks home knows that older people who have possession of
Elections and Franchise

their faculties usually take considerable interest in public affairs. During their spare time they discuss these matters at great length and with a great deal of understanding. There .may be instances where, because of their mental condition, they would not be able to vote, but I believe those cases would be covered by other sections of the bill. We are penalizing these people because they happen to be living in an institution of this kind. I know of many instances where an old person has preferred to live in such an institution. If he were living with his near relatives, he would be entitled to vote, but simply because he happens to go to an institution he is being denied that right. I think that is a most unfair discrimination against the older section of our population who have given the best years of their lives to building up this country. If a provincial government wants to take action of that kind, then we have no jurisdiction nor have we any cause to complain in this chamber, but I do not think this federal parliament should follow the lead of the provincial governments. I believe this is a retrograde step.


Charles Edward Bothwell: If I might interrupt my hon. friend at that point, this clause has been worded in this particular way because in certain provinces there are certain institutions, the inmates of which the provincial authorities feel should not be given this right. We worded the clause in this way, rather than make the prohibition apply in all the provinces as was done by the old act.


Abraham Albert Heaps: Simply that a provincial
government does a certain thing is no reason why we should follow the same course. The women in the province of Quebec are not permitted to vote in provincial elections, but that is no reason why we should say that they should be disbarred from voting in dominion elections. That is no excuse at all. In a federal law we should stick entirely to the federal jurisdiction and not follow what may happen to be done in a particular province. That is my complaint. These people may be entitled in every way to vote; they may have full knowledge of everything that is going on in the political field in this dominion. We spend thousands and thousands of dollars trying to get votes out on election day. We discussed the question of absentee votes, and in the last election we spent an enormous sum of money to get absentee votes recorded in different parts of this dominion; yet here are men and women quite capable of casting an intelligent vote, and we are depriving them of it simply because the provincial government says they are not entitled to

vote. We are simply following the lead of the provincial government, and that is my complaint. I hope the minister will see to it that these old people in the latter years of their life are not deprived of something which I know in many instances they prize very highly indeed.


Mr. FAIR:: Two wrongs can never make
a right, and the fact that this paragraph was in the old act is no reason w'hy.it should be continued in this new measure, which the hon. member for Davenport (Mr. MacNicol) claims to be one hundred per cent perfect. But I say, Mr. Chairman, that with a provision such as this no electoral act can be one hundred per cent perfect. Many of the inmates of these old people's homes are there because of unscrupulous methods employed in many instances by other people who are outside and who are still privileged to vote, and I believe it is our duty to see that these old people in the homes are given the right to vote just as much as some unscrupulous people outside of whom they have been the victims. If you disfranchise these people, why not disfranchise those on relief in the cities, whose food and rent and clothing are paid for by the respective governments? This is just the thin end of the wedge, in my opinion, to disfranchise those who, through no fault of their own, are compelled to go on relief to-day, and no country which boasts of democracy-and this highest privilege of democracy can be exercised only on election day, once in every few years-should stand for any such paragraph being kept in the act. I trust that the committee will amend the legislation so that every legitimate Canadian shall have the right to vote.


Mr. MacINNIS:: I wish to support everything that has been said on this question by the hon. member for Winnipeg North (Mr. Heaps). I do not agree with the hon. member who has just spoken (Mr. Fair), that this is the thin end of the wedge.
Section stands.
Progress reported.


THE ROYAL ASSENT
[Stage Direction]
A message was delivered by Major A. R. Thompson, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Honour, the deputy of His Excellency the Governor General, desires the immediate attendance of this honourable house in the chamber of the honourable the senate.
Accordingly, the house went up to the Senate.

The Royal Assent
And having returned,
Mr. SPEAKER informed the house that the deputy of His Excellency the Governor General had been pleased to give in His Majesty's name the royal assent to the following bills:
An Act for the relief of Gerda Ellen Morrison.
An Act for the relief of Hilda Elsa Maeke Schneider.
An Act for the relief of Margaret Robinson Mathieson Megee.
An Act for the relief of Rachel Tencer Silberberg.
An Act for the relief of George Brunet.
An Act for the relief of Mary Elizabeth Fletcher Meigs Ballantyne.
An Act for the relief of Ada Alice Burns.
An Act for the relief of Marjorie Isabel Meldrum Andersen.
An Act for the relief of Alice Pearl Shaver Booth.
An Act for the relief of Mary Grace French Clarke.
An Act for the relief of John Gerard Ahern.
An Act to amend The Copyright Amendment Act, 1931, and the Copyright Act.
An Act respecting The Restigouche Log Driving and Boom Company.
An Act to amend the Exchequer Court Act.
An Act to amend The National Harbours Board Act, 1936.
An Act to amend the New Westminster Harbour Commissioners Act.
An Act to amend the Railway Act.
An Act respecting the Registration of Shop Cards by Labour Unions.
An Act to amend the Canada Shipping Act, 1934.
An Act to assist Municipalities in making self-liquidating Improvements.
An Act to amend The Manitoba Natural Resources Act, The Alberta Natural Resources Acts, and the Saskatchewan Natural Resources Acts.
An Act to incorporate The Maritime Provinces General Insurance Company.
An Act to incorporate The Roman Catholic Episcopal Corporation of Hudson's Bay.
An Act respecting The Mail Printing Company.
An Act respecting the Globe Printing Company.
An Act for the relief of Paul Sanson White.
An Act for the relief of Louise Maud Thomas Gregory.
An Act for the relief of Emma Kathleen Lavery Forester.
An Act for the relief of Edith Margaret Campbell Quinn.
An Act for the relief of Dorothy Maud Doran Gay.
An Act for the relief of Kathleen Barnsley Prichard Hartney.
An Act for the relief of Thomas Russell
An Act for the relief of Marie Marguerite Agnes Marcelle Dupont Ross.
An Act for the relief of Wilfred Augustus Cottle Stead.
An Act for the relief of Celia Caplan Tucker.
An Act for the relief of Irene Thomas Smith,
An Act for the relief of Sylvia Salzman Udashkin.
An Act for the relief of William Dougald Stanley Campbell.
An Act for the relief of Mildred Varner MacLeod.
An Act respecting the High Commissioner for Canada in the United Kingdom.
An Act to amend The Excise Act, 1934.
An Act to regulate the Inspection and Sale of Binder Twine and to establish Weight of Bushel for certain Commodities commonly sold by the Bushel.
An Act to amend the Indian Act.
An Act to amend The National Parks Act, and The Nova Scotia and Prince Edward Island National Parks Act, 1936.
An Act respecting the North Pacific Pelagic Sealing Convention.
An Act to amend the Northwest Territories Act.

[Stage Direction]
Bill	No.	165,	for	the	relief	of	Aldege
Nault.-Mr. Jacobs.
Bill	No.	166,	for	the	relief	of	Muriel
Gladys Jones Roberts.-Mr. Jacobs.
Bill No. 167, for the relief of Virginia Amelia Loomis Wadsworth.-Mr. Walsh.
Bill No. 168, for the relief of Jennie Erdrich Ettenberg.-(Mr. Jacobs.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILLS

[Stage Direction]
The house in committee on Bill No. 7, respecting Industrial Loan and Finance Corporation-Mr. Vien-Mr. Sanderson in the chair.
On section 1-Rate of charge on loans not exceeding $500.
Mr. TUCKER:: Mr. Chairman, first of all I submit that these bills dealing with small loan companies should not be proceeded with until the general policy of the government has been finally decided. There is upon the order paper the following resolution, standing in the name of the Minister of Finance:
That it is expedient to introduce an act to regulate the cost of small loans, also with respect to the incorporation and powers of small loan companies, and to provide for the annual licensing of money-lenders, for the administration of the said act, and the annual assessment of each licencee for the purpose of meeting the expense incurred by the government in such administration.
Industrial Loan and Finance

As will be seen, this foreshadows a definite outlining of the policy of the government, in the words of the resolution, "with respect to the incorporation and powers of small loan companies." I submit that there is no object in passing a special act giving this company certain added powers when on the order paper there is a general bill which deals with the whole question.
The next point I submit is this: In connection with questions of interest and so on I doubt that special privileges should be given by special acts of parliament. Under the special act, already law, which this bill proposes to amend, the Industrial Loan and Finance Corporation has the following powers:
(i)	lend money secured by assignment of choses-in-action, chattel mortgages or such other evidence of indebtedness as the company may require, and may charge interest thereon at the rate of not more than seven per centum per annum, and may on all loans deduct the interest in advance and provide for repayments in weekly, monthly or other uniform repayments: Provided that the borrower shall have the right to repay the loan at any time before the due date, and, on such repayment being made, to receive a refund of such portion of the interest paid in advance as has not been earned, except a sum equal to the interest for three months,
(ii)	charge, in addition to interest as aforesaid, for all expenses which have been necessarily and in good faith incurred by the company in making a loan authorized by the next preceding sub-paragraph (i), including all expenses for inquiry and investigation into the character and circumstances of the borrower, his endorsers, co-makers or sureties, for taxes, correspondence and professional advice, and for all necessary documents and papers, two per centum upon the principal sum loaned,
(iii)	notwithstanding anything in the next two preceding sub-paragraphs (i) and (ii) the company shall, when a loan authorized by the said sub-paragraph (i) has been made on the security of a chattel mortgage, or of subrogation of taxes, be entitled to charge an additional sum equal to the legal and other actual expenses disbursed by the company in connection with such loan, but not exceeding the sum of ten dollars,
but, no charge for expenses of any kind shall be made or collected unless the loan has been actually made, or unless such a loan has been renewed after one year from the making thereof or after one year from the last renewal thereof;
The explanatory notes to this amending bill state:
The main objects of this bill are:
To change the operation of the company from a discount to an interest plan and to vary and clarify its charges.
I submit that this explanatory note is and must be misleading. The note states that it is desired to change the operation of the company from a discount to an interest plan. In the subsections I have just read it is stated

quite clearly that at present this company is entitled to charge 7 per cent per annum as interest.. The only thing that would justify anyone in claiming that to be a discount plan is that it is provided that interest may be deducted in advance. But the bill goes on to indicate definitely that the intention should be to permit a charge of only 7 per cent per annum; for if the debt is paid ahead of time the act provides that only 7 per cent per annum shall be allowed, plus interest for three months. This indicates that when parliament passed this special act it intended that this company should be allowed to charge only 7 per cent per annum, and as interest. Then it goes on to provide that they may charge two per cent for expenses of inquiry and investigation into the character and circumstances of the borrower, but those must be expenses which have been necessarily and in good faith incurred by the company.
We find that this company have been doing this: They have been charging 7 per cent interest in advance; and. because of that fact, in effect they have been getting 14 per cent per annum. Then, by charging two per cent in advance for investigation and inquiry, whether or not they have actually incurred any expense in that connection in regard to a particular loan, they really get 4 per cent per annum under that heading. They claim they have a right to do this, to charge 14 per cent, though the act says that the rate shall be 7 per cent per annum, and they also claim they have a right to charge 4 per cent whether or not they make any investigations at all. Under those headings they are able to run their charges up to eighteen per cent per annum. We know that this company largely operates in the province of Quebec, where it does not take chattel mortgages and where it cannot make charges under that heading; that is, under subsection 3 above referred to. So to-day in my opinion this company violates the act of parliament and charges 18 per cent per annum when it has no right to do so. But that is certainly the limit of what the company can charge at present.
Now the company comes to parliament, having formerly obtained the charter for which it asked and which, in my opinion, it has been violating, and wants the right to charge two per cent per month, an effective interest rate of 26i per cent per annum. Obviously the effect of this is to raise the rates which it is permitted to charge to-day, but there is more to it than that. This company has been charging 18 per cent, and I take it that it has become rather nervous as to its

Industrial Loan and Finance
position, because there have, been decisions which indicate that it has absolutely no right to make these charges. For instance, there is the case of Kelly v. the Industrial Loan and Finance Corporation, which finds that it has been transgressing the law in connection with these charges. I would refer hon. members to page 90 of the report of the superintendent of insurance, for the year ending December 31, 1936, in regard to small loan companies, where a reference to this case will be found. It is also cited in 1937, 1 Dominion Law Reports, page 57. The case was tried before Judge Stackhouse of the Montreal circuit court, and this is what the head note of the case says:
A loan company operating under special statute (1930 (Can.), c. 68), and limited to a rate of interest not exceeding seven per cent plus charges for "expenses necessarily and in good faith incurred" in making the loan, cannot charge any greater rate of interest or for expenses not so incurred. On a loan of $150 repayable in ten monthly instalments, held illegal to deduct interest for the whole loan in advance and to charge for investigation expenses not incurred and for insurance not issued in accordance with the application, in the total of $16.50, entitling the borrower to Tecover back the excess charges.
That definitely holds that this very company, by charging interest in advance and regarding it as a discount, and by charging for disbursements regardless of whether or not they have been made, has been violating this act. Not content with that, it now comes before this parliament asking the right, under the heading "cost of loans," to charge two per cent per month, which is an effective Tate of 264 per cent per annum.
One of the points I should like to emphasize now, Mr. Chairman, is this:	I do not
think at this session of parliament we should sanction such a rate of interest. As far as I am concerned, coming from western Canada where we have been struggling with what we regard as high interest rates of 8 and 9 per cent on mortgages, if we in this parliament sanction a rate of 26i per cent per annum we take away our whole case in demanding that interest rates be reduced to the people out west. How can we say in one breath that it is all right for this company to charge 261 per cent per annum interest on loans up to S500, and in the next breath say to the banks, for example, that they should not charge over 7 per cent and to the mortgage companies that their rates should not be as high as 8 or 9 per cent? As a matter of fact, as is known to members of the house, the Saskatchewan government recently managed to get the loan companies to agree to reduce rates of interest down to six per cent. And a good many of us feel that
the farming population of western Canada cannot afford to pay interest of even six per cent per annum.
Now then, if parliament authorizes one group of people to charge an effective rate of 26J per cent per annum, what chance have we to make an appeal to public opinion which will back us up in getting interest charges cut lower than 6 per cent per annum? If we give those people the right to charge an effective rate of 26J per cent per annum, what is the next thing we are up against? The argument will be raised: Why in the world should those people be permitted to charge that rate, and the banks be limited to 7 per cent per annum and the mortgage companies to 6 per cent? Immediately we are going to be met with a demand all along the line for an increase in rates of interest.
I think at this stage of Canada's development it would be a most retrograde step if parliament were to give sanction to an effective interest rate of 26i per cent per annum. It might be said that this is not what we are authorizing, because the proposed amendment suggests that the "cost" of a loan shall not exceed two per cent per month. Well, the "cost" of a loan is nowhere defined in the proposed amendment, and that is one of the reasons why it is not expedient to pass the bill at. the present time, before the general bill, which does define "cost" of loan, goes through.
What would be the position of affairs if parliament should not see fit to pass the general bill in which the "cost" of a loan is defined, and passed this bill, which refers to cost of loan, but nowhere defines the term. In other words, we would be passing something which has no meaning. But in order to make my argument plain, I suppose I should refer to the meaning of "cost" of loan, as it is defined in the general bill. It is set out at page 427 of the report of the banking and commerce committee:
2. In this act unless the context otherwise requires,
(a) "Cost" of a loan means the whole of the cost of the loan to the borrower including interest or discount and expenses and charges for commission, brokerage, chattel mortgage and recording fees, inquiries, defaults, renewals, fines, penalties, or other similar costs, whether paid to or charged by the lender or paid to or charged by any other persons, and whether fixed and determined by the loan contract itself or in whole or in part by any other collateral contract or document by which the charges if any, imposed under the loan, contract or the terms of the repayment of the loai are effectively varied.
That, I take it, is what "cost" of loan means in this bill. I draw particular attention to
Industrial Loan and Finance

the fact that cost of loan there includes interest and every other charge. If any company can charge two per cent as cost of loan and is brought into court under the MoneyLenders Act or under any other act, it can say that the whole of that cost was interest. What is the effect of that? The effect of it is this: As the charter now stands, any province can forbid those charges set out in subsections 2 and 3. That is, this parliament has power to legislate in regard to interest; but although we give a company power to charge for expenses of investigating a loan, and to charge for expenses of drawing documents- although we give this company power to do that, any province under its jurisdiction over property and civil rights in the province can step in and forbid those charges on the part of any company operating within any province.
What are we doing here? At the present time no company can come in and charge more than the amount set out in the MoneyLenders Act, namely 12 per cent per annum. We have said further to this company, "We only give you power to charge two per cent for making investigations and to charge up to S10 for drawing the documents, provided you pay the money out; but any province can forbid any charge set out in subsections 2 and 3." In other words, a province could limit the company to 7 per cent per annum. But by passing this amendment we take out of the hands of the province the power to prevent a company from charging more than 7 per cent per annum and give it the right, regardless of provincial law, to charge 26J per cent per annum.
In other words, for example we may say to the province of Quebec, "Although you have control over property and civil rights, and power now to prevent this company from charging more than 7 per cent per annum, once this measure is passed this company whether the province of Quebec likes it or not or whether the people of Quebec like it or not, can come in and snap its fingers in the faces of the government of Quebec, and charge an effective rate of 26J per cent interest." Under present conditions I submit this parliament should not lay itself open to attack by doing that.
In Saskatchewan we passed the Credit Unions Act a year ago. There is a department of government which is charged with the duty of promoting the development of cooperative institutions including credit unions in Saskatchewan, and an officer is paid for that purpose. What would happen if this bill were passed? It would mean that this company can go into Saskatchewan and charge an effective

rate of 26J per cent interest. .There is nothing our legislature can do about it, because we are giving them the power to charge the rates of interest I have indicated.
If we pass this bill, they can go in there and spend a large sum of money on advertising, and prevent the growth of cooperative lending. We had different witnesses appear on the question of cooperative lending before the banking and commerce committee. For example, we were told of the great development in the province of Quebec in regard to the caisse populaire, and how they are actually extending their activities and by cooperative enterprise are providing money to the people at 7 per cent per annum. Mr. Vaillancourt gave us to understand that any person worthy of credit can get credit in the province of Quebec by joining a credit union or caisse populaire and, if he is credit worthy, he can get credit at that low rate of interest, 6 or 7 per cent per annum. Of course that is not low, but it is much lower than 26J per cent per annum.
At this stage of our development should we as a parliament say to a company that whether a province likes it or not we shall give them the right to go into the province, undermine the full development of cooperative credit institutions and charge 26j per cent per annum? I do not think we should do that.
It might be urged that there is a great deal of abuse in regard to small loans, and for a moment or two I should like to deal with that phase of the matter. The suggestion is that money-lenders to-day are charging more than 26i per cent per annum, and that therefore, by permitting this company to operate at that rate, we are doing a good thing for the people.
I suggest to you, Mr. Chairman, that people who are paying, say 100 per cent per annum or 150 per cent per annum are people who are not credit worthy. If we set up this company we shall not be helping these people at all, because these companies are very careful to whom they lend money, and would not lend to doubtful people who to-day borrow from loan sharks. These small loan companies lend money only to people who actually pay it back again, with few exceptions. I should like to give the committee some figures on this very point. I read the following from the evidence:
The record of the dominion licensed small loan companies up to date would indicate that that estimate is correct. Over a period of four years from 1934 to 1937 inclusive the total amount of loans made by the three companies was $28,919,630 and the total amount written

Industrial Loan and Finance
off loans as losses, $97,878, of which $56,005 was later recovered, leaving a net realized loss of $41,873 or -14 per cent of the amount of loans made.
In other words, these three small loan companies have been so careful as to whom they would lend money that over a period of four years they actually lent out almost $29,000,000 with a loss of slightly over one-tenth of one per cent per annum.


Mr. MacLENNAN:: What were their
profits?


Walter Adam Tucker: I shall come to that in a moment, but their losses were slightly over one-tenth of one per cent per annum. Does anyone seriously suggest that if these companies were so careful as to whom they would lend money as to keep their losses down so low, we are going to stop the loan shark evil by setting up such companies? Obviously these companies are lending money only to credit-worthy people. Even though you set up these companies you will still have people who are not good risks going to the loan sharks to borrow money. I was asked how much these companies made. I did not intend to give these figures at this stage, but I might as well. Mr. Finlayson had this to say in his evidence:
The experience of the dominion companies shows that for the four years 1934 to 1937 inclusive the companies earned after interest 11T per cent on their mean net assets. The rate for the largest company was 16'66 per cent.
Treating the "supervising" fee as equivalent to a return on capital and assuming a reduction of fifty per cent in advertising costs an addition of six per cent is made to the return of 11 1 above mentioned.
That would give them a profit of 17-1 per cent on their capital. I might be asked what I would suggest to eliminate the loan shark evil. I think this matter could be properly considered at this time. We are being asked to approve this bill as an alternative to a general policy of controlling the loan shark evil. This is an alleged attempt to minimize that evil.
I should like to suggest what I think is the proper way to deal with this problem. I am sorry the Minister of Finance (Mr. Dunning) is not in his seat. I hope he will soon be able to be back. First of all let me say that usury is one of the oldest crimes known to civilization. We should make exorbitant charges a crime. Those private individuals who take advantage of the need of people to obtain credit would not be the ones to register under the Money-Lenders Act. They make individual deals here and individual deals there. How in the world are
you going to stop that sort of thing unless you make it a crime? The man who thinks he is pressed for credit goes and gets it from one of these individuals and pays a rate of probably 200 per cent per annum. These individuals take advantage of the needs of people, and once a transaction is completed the latter are worse off than they were before. I suggest that you write into the criminal code a provision that anyone who charges more than a certain set rate-it has been suggested that two per cent per month would be proper; personally I think that is too high -shall be deemed to have committed a criminal offence. It seems to me that this is the way to deal most effectively with these loan sharks.
Shortly after the attorney general of Ontario came into office he found the loan sharks were giving considerable trouble in the city of Toronto. He laid several charges under the Money-Lenders Act, but what happened? The judge found that he could not definitely distinguish between what was charged as interest and what was charged to cover investigation fees and so on. So he could not convict. Here is what His Honour Judge O'Connell, who presided at the county court judges' criminal court of the county of York had to say:
These harsh and inequitable transactions might be effectively dealt with, if not actually stopped, by legislation making it a criminal offence, witli appropriate penalties, to charge, impose or collect in respect to a loan for less than $500, interest, and for services of any kind, nature or description whatsoever in connection therewith, a sum of money amounting in the aggregate, in respect to both interest and charges, to more than two and one-half per centum per month on the monthly balance owing by the borrower. This, of course, is merely a suggestion prompted by the evidence coming before me during the present trial.
There we have a judge having to find that he could not convict because of the loose manner in which our laws have been drawn. His honour suggested that some provision should be made in the criminal code to deal with those people who take advantage of the needs of their neighbours. That is the first thing I would suggest. A definite limit should be placed upon the cost of a loan, and it should be made a criminal offence to charge more than that limit.
There is a further useful step that can be taken. Giving evidence before the banking and commerce committee, the attorney general of Ontario had this to say:
I understand that this proposal has been made on the ground that prima facie these matters of service charges are matters of
Industrial Loan and Finance


Walter Adam Tucker: Let me explain what I mean by that. Property and civil rights are primarily within the jurisdiction of the province; but if the federal parliament can only deal effectively with legislation in its field by passing ancillary legislation in the field of property and civil rights, it can do so even though it does invade that field. If you do so invade the field of provincial jurisdiction, the provincial law in the matter falls to the ground as against the dominion law.
We have legislation to-day in Nova Scotia, Manitoba, Quebec and some of the other provinces dealing with the question of these charges, and the moment we enter the field under the heading of interest or any questions ancillary to interest we invade a field which the provinces have already covered. This would mean that their law would be of no effect. If we did that in order to cut down the high interest rates, I would not mind so much, 'but here we are proposing as a parliament to enter that field in order to enable these small loan people to raise their interest rates to the exorbitant rate of 26i per cent per annum, and I submit we should not do that.
There is another matter I would draw to the attention of the committee. If we reserve this field entirely to ourselves, it means that we do so against the wishes of the province of Ontario. The representative of the government of Quebec also took a similar stand, that the province wanted to reserve that field to themselves. The Minister of Justice will know that this question is dealt with in the civil code of Qudbec, and that if we enter that field we interfere with that provision of their civil code. The province of Quebec objected to our doing that; nevertheless we are here asked to do it. I submit that it is not wise for us to do so; that it is wise at this present stage of our development to restrict ourselves to controlling the top limit of cost of loan and also interest rates and leave the province to say whether these small loan companies shall be able to charge anything at all by way

Industrial Loan and Finance
of service charges and the like, always, of course, below the limit of cost of loan fixed in the criminal code.
Furthermore, the provinces have the means of administering the law, and if we enter that field against their wishes, are they going to show the same desire to enforce the law? In other words, if we put something in the criminal code, they can, by administering the criminal law, absolutely wipe out the loan shark people. They have their attorney general's department, their police courts, and their crown prosecutors to prosecute these people in the courts. But if we enter the field and undertake to look after the whole thing, are we going to set up a parallel system of administration of justice to make sure that these small loan people do not break our small loan legislation and loan sharks do not operate? That is something I would ask the Minister of Justice to consider.
I have suggested already that I think cooperative lending is one of the solutions of our present difficulties. I think it is the solution of many of our difficulties to-day and it should be encouraged, in every way. We have to-day a very valuable institution, the Canadian Association for Adult Education, started, I believe, under the aegis of the extension department of St. Francis Xavier university, and that association would be pleased to extend its activities in the field of educating the people in regard to the benefits of cooperative lending institutions. In the United States they have a federal credit union law, and the federal government actively promotes these institutions. Their growth in the United States has been very fast and the people are encouraged to save and provide for their future. By so doing they are also able to provide for the. credit needs of their friends, who get credit cheaply, and the depositors get a good return on their money. I further suggest that this government should appoint some person actively to promote the spread of credit unions throughout Canada. I go further and suggest that the government should legislate, to set up a federal credit union law. If it does not see fit to do that, I submit it should make a grant of at least
810,000	to enable the Canadian Association for Adult Education to preach this doctrine of cooperative credit throughout Canada. I am glad, that the Minister of Justice applauds that. It would be something in the way of really constructive legislation-much better than this business of giving special privileges to a few companies, with their exorbitant demands.
There is another angle with which I want to deal before I conclude, and that is the question of the extent to which the chartered banks of Canada should fill the needs proposed to be filled by these companies. We know that the Canadian Bank of Commerce has entered the small loan field and that it is lending money at a lower rate of interest than is charged by the small loan companies. Mr. Stewart gave evidence before our committee indicating that their effective rate of interest was 10-5 per cent. I quote this from the evidence of Mr. Stewart, of the Canadian Bank of Commerce:
Well, Mr. Chairman, the Canadian Bank of Commerce entered the personal loan field in Toronto in June of 1936. Before the end of July of that year personal loan departments were opened at Halifax, Montreal, Winnipeg, Calgary and Vancouver. It is true, as Mr. Dobson says-as all banks have I should imagine -that up to that time we made small loans; but it seemed to us that there was a wider field. There was a considerable amount of criticism against the banks because of the fact that credit facilities were not available to wage earners; and to some extent with a view to dissipating any such criticism we entered the personal loan field. There was also probably a selfish motive too in that it built up a substantial amount of good will for the bank. The system, as I say, is in vogue throughout Canada. The loan departments are at Halifax, Montreal, Winnipeg, Calgary and Vancouver, but each and every branch bank is equipped to handle such small loans although the department is the last word in the confirmation or the refusal of the loan. The branches, however, work up the application, send it into the central department and there it is accepted or declined. In so far as volume is concerned, since the department was started we have made 60,423 loans, for a total amount of $8,800,000. The average amount of loan made is $146.
Then he said that "off-setting the savings balances on which interest is allowed the effective rate is 10-5 per cent."
He goes on to show what these small loans are made for:
Per cent
Medical, dental and hospital bills	15-73
Consolidation of debts	28-0
Outside loan liquidation	 6^
Taxes, real estate, mortgages and interest,
insurance premiums	 8-6
Travel and education	 3-4
House improvement expenses	1,1-7
Clothing	 2-3
Motor cars	 7-03
Miscellaneous	16-0
He goes on to say:
I think we can make a little money from now on provided we keep to the present figures.
On the question of whether the other banks could be encouraged to enter this field, I suggested in the committee that if they were encouraged to enter the field they would meet the need for credit now being met by these
Industrial Loan and Finance

companies. In this connection Mr. Dobson, president of the Canadian Bankers' Association said:
Now, if your committee should recommend and the government should decide to ask us to cooperate in the small loans field and provide an increased rate for monthly payment loans, I believe it is quite possible and probable that some other banks might then decide to take up that extended loan field. I do not mean to say they are going to take the business away from the small loan companies and go right through with that type of business. I do not believe for a moment that the small loan companies are not going to stay in business. I believe they are required there, but the banks might extend their field further, that is all.


The CHAIRMAN:: I regret to have to
interrupt the hon. member, but he has exhausted his time.


Mr. VIEN:: As sponsor of Bill No. 7, at present under study, a good purpose might be served if I summarily gave the committee the genesis of these bills.
The Industrial Loan and Finance, the Discount and Loan and the Central Finance corporations are small loan companies incorporated under the laws of the dominion. Their charters are on our statute books. The hon. member who has just resumed his seat (Mr. Tucker) addressed himself to the subject under study as if we were introducing here a new principle; as if we were raising the rate of interest which, if this bill passes, these small loan companies could charge their borrowers. Nothing is further from the truth. In the first place we are not granting these small loan companies or any money-lender the power to charge an interest of two per cent per month. There is nothing to that effect either in this 'bill or in the general legislation recommended by the standing committee on banking and commerce.
Last year, contradictory decisions were rendered with respect to certain lawsuits, originating in Quebec and Ontario, regarding loans made by small loan companies. My learned and hon. friend quoted a judgment in the Kelly case, in the circuit court, Montreal. I am sorry he did not proceed a little further and quote judgments of superior tribunals. I have the greatest possible respect for the circuit court of the district of Montreal, but that court is limited in its jurisdiction to matters not exceeding $100. It is a tribunal of inferior civil jurisdiction. There is no appeal from its decisions. This shows that, generally speaking, in the province of Quebec, we do not consider matters coming before that court to be of more than trifling importance, not important enough, at least,

to warrant the right of appeal. In a subsequent case, in the Jackson case, which my hon. friend has quoted, and in which the Industrial Loan was interested, in the superior court. Hon. Mr. Justice Casgrain rendered a decision very different from that of the circuit court, in the Kelly case.


Mr. LAPOINTE (Quebec East):: Who was the judge sitting in the circuit court?


Thomas Vien: His Honour Judge Stackhouse, for whom I have great respect. But a judge whose judgment is not subject to appeal may, sometimes, take into account other considerations than the law.


Mr. THORSON:: Does the hon. member suggest that Judge Stackhouse did that in this case?


Thomas Vien: I am not suggesting anything. I am only saying it so happens, sometimes. I think my learned friend knows it better than anyone else. Therefore, a reference to Judge Stackhouse's judgment, without reference to the reverse judgment rendered by a higher tribunal, does not convey complete information to the committee.
A certain propaganda, carried out in committee and outside thereof, and the tone of my hon. friend's speech of to-night, tend to create the impression that the sponsors of these bills and the standing committee in recommending general legislation are attempting to raise the rate of interest which small loan companies may charge to their borrowers. The contrary is true. For a number of years the superintendent of insurance has had complaints about the exorbitant rates of interest and other charges which are being collected from borrowers by certain money-lenders who have been properly styled "loan sharks." In the committee Mr. Finlayson has spread on the record a few examples of exorbitant charges: Three, four, five, six per cent per month are not uncommon. Instances of charges of 600, 700 and 800 per cent per annum were revealed. Indeed, there was a case of
11,000	per cent per annum. These were not isolated cases.
This condition, which to-day obtains in Canada, is not unprecedented elsewhere. In the United States, some years ago, a similar situation was revealed. Russell Sage died and left a large fortune to his wife. She was snowed under by applications for loans. She began to investigate some of these cases. She discovered that thousands of people were being mulcted of large sums of money by loan sharks. For a purely philantropic purpose and a desire to help the small borrower, Mrs. Sage created what is now known as the Russell

Industrial Loan and Finance
Sage Foundation. A thorough study was made in every state of the union; experts were sent to Europe to investigate conditions there, and the effect of the remedial legislation which had been passed in various European countries. In the United States, this question comes within the jurisdiction of the various states. Legislation had to be introduced in state legislatures. We have a statement of the rates of interest which now prevail in the United States. They were arrived at as a result of exhaustive investigation. After long years of study and effort, legislation was passed, and, now, the rates in the United States vary from one, two and three per cent per month, in graduated rates, based on the amount borrowed, or, in other states, on a flat basis ranging from 2^ per cent to 3i per cent per month, in most cases.
In Great Britain, the same condition had obtained. The same study was made; remedial legislation was enacted. What is the situation in Great Britain? In Great Britain there is no maximum rate of interest fixed. The question resolves itself into a question of procedure:	On whom shall the burden of
proof rest? The rate must be reasonable. If it does not exceed 4 per cent per month, the complaining borrower must prove that the rate is unreasonable. If the rate exceeds 4 per cent per month, upon a complaint being filed, the money-lender must prove that the rate is not exorbitant, In Great Britain, therefore, the law assumes a rate of 4 per cent per month to be fair and reasonable, subject to the courts reducing it or increasing it as the circumstances may warrant.
In the United States, where a flat rate has been fixed, it varies from 2 to 31 per cent per month, with very few exceptions higher or lower.
In Canada, the superintendent of insurance thought it advisable to compel these companies to come to parliament to have their charter powers clarified. These companies did not come here of their own motion. They were urged by the superintendent of insurance.


Walter Adam Tucker: Is it not a fact that the
superintendent of insurance told these companies that if they wished to continue making the charges they were making they should get an amendment to their charter authorizing them to do so?


Thomas Vien: My hon. friend should not
interrupt. He is wrong in his facts.


Walter Adam Tucker: And I sav that you are
wrong.


Thomas Vien: Please; I have only forty
minutes at my disposal. I say that my hon. friend is wrong in his facts. One of these companies, as I mentioned in opening my remarks, had had an adverse judgment of the circuit court at Montreal. Since, then, however, a favourable judgment of the superior court has been rendered and it is to the effect that they had not charged exorbitant rates.


Walter Adam Tucker: May I ask the hon. gentleman a question?


Thomas Vien: No; I cannot afford the time
of my hon. friend's interruptions.


Walter Adam Tucker: I just wish to ask the
hon. gentleman-


Thomas Vien: Please do not. My hon.
friend cannot challenge my facts. He has had an opportunity to speak. I did not interrupt him, although I felt that he was wrong, inaccurate. I say that in view of the conflicting decisions of the courts, the superintendent urged these companies to come to parliament. He wanted to have the charter powers of these companies clarified. These small loan companies lending money in amounts below $500. could not carry these judgments to the Supreme Court of Canada. You cannot come to that court unless a sum of $2,000 or more is involved. The superintendent was not satisfied with the decision of the circuit court; he was not satisfied with the decision of the superior court.


Walter Adam Tucker: I should like to ask the hon. gentleman-


Thomas Vien: Will my hon. friend please
allow me to finish?


Miss MACPHAIL:: Take it easy.


Thomas Vien: I am asking him to take it easy and to hold his soul in patience.


Walter Adam Tucker: On a point of order, my hon. friend has suggested that the superintendent of insurance said certain things. I am asking him where his authority is for that statement and where the superintendent of insurance said those things.


Thomas Vien: I am not here to be cross-examined. If my hon. friend will read the record, he will see the statement of the superintendent to the effect that these companies were requested to come to this parliament to have their charter powers clarified, because there had been conflicting judicial decisions, and because it was impossible to take the matter to the Supreme Court of Canada, the amounts involved being too small.
Industrial Loan and Finance


Mr. GOLDING:: Who requested them to come to parliament?


Thomas Vien: The superintendent of insurance.


Walter Adam Tucker: If they wished to make these charges.


Thomas Vien: If they wanted to continue to exercise their charter powers, they had to come to parliament to have them clarified. Their licence, instead of being renewed for a period of one year, was renewed periodically, a few months at a time, as a compulsory measure. These private bills have consequently been introduced. It is not requested that the power to charge interest be increased. At the request of the superintendent, by these bills the basis of operation is changed. At present, when a loan is made, the amount of interest is deducted from the amount of the loan. That is what is called the discount basis. The department desires that basis to be changed into a straight interest basis, the interest being charged on the outstanding and reducing balance only, and that is what this bill purports to accomplish.
Last year, in the standing committee on banking and commerce, we gave a great deal of thought to this whole matter, and after several weeks of study we brought in this legislation.


Mr. MARTIN:: Twenty-eight meetings
this year.


Thomas Vien: I see that it is nine o'clock.
Progress reported.


ELECTIONS AND FRANCHISE
[Stage Direction]
The house resumed consideration in committee of Bill No. 91, respecting the franchise of electors and the election of members of the House of Commons-Mr. Power-Mr-Johnston (Lake Centre) in the chair.
Frederick George Sanderson: Section 14 was under consideration at six o'clock.


Angus MacInnis: When I was interrupted before recess I was about to say a few words in connection with paragraph (k) of subsection 2. This paragraph provides that if the electoral act of any province disqualifies for voting purposes a person who is receiving aid from the government, the same provision shall apply under this. bill. When the hon. member for Battle River was speaking to this point

he expressed the view that this was the thin end of the wedge, and that later on it might be applied to unemployed persons. I do not believe that is so; I do not think the committee had that in mind at all. As a matter of fact, this is a survival of the days before we had universal suffrage, when suffrage was based on property qualifications, and it was designed to prevent paupers from having the franchise. However, I am opposed to the principle. To-day we have universal suffrage, which is not refused to such people as those who receive old age pensions, judges who have retired and are in receipt of pensions, and so on. Such people are allowed to vote, even though they are living on the bounty of the state. I do not see why the provision in paragraph (k) should apply to old or destitute people just because they happen to live in certain institutions. I remember that some years ago, when I had something to do with municipal affairs in Vancouver, old people in receipt of old age pensions would assign such pensions to the city and would be taken into the old folks home as a result. If this law applies, a person who has done that will be prevented from voting, while on the other hand a person in receipt of an old age pension and not living in an institution would have a vote. I think this is a provision which should be removed from the measure, because I do not think it serves any useful purpose to-day. Probably we have disregarded the principle and idea which first brought it into being. So I would ask the minister to give consideration to the desirability of deleting this paragraph altogether.


Charles Gavan Power: I have no objection to permitting paragraph (k) to stand.


Frederick George Sanderson: Shall the other subsections of section 14 carry?


Alan Webster Neill: No. I thought the minister was going to allow the whole section to stand.


Charles Gavan Power: If there is any objection to it, I am willing to do so.


Alan Webster Neill: I wanted to make some remarks in regard to subsection 7, and perhaps I might make them now so that the minister can consider the whole section at once. I am afraid I am presumptuous in finding any fault with this bill. I have some little knowledge of the time and trouble that have been spent on this bill by the committee and its most efficient chairman, and under ordinary conditions I would swallow the bill as it stands. But there are, perhaps necessarily, in a bill of such wide scope, one or two small matters of considerable importance in particular districts which may have escaped the attention of the

Elections and Franchise
committee, because I understand there was no representative from British Columbia on that committee.


An hon. MEMBER:: Oh, yes.


Alan Webster Neill: Then, perhaps he was an interior man who was not familiar with conditions on the coast, or perhaps he was overruled. At any rate the position I want to suggest is this:	Any measure of this kind
surely ought to be based upon two fundamental points. I do not know which should be put first, but the one is to prevent corruption as much as possible and the other is that it should give a vote to everyone entitled to it. I believe those principles should be carried out to the fullest extent, regardless of whether the voter be rich or poor, educated or illiterate.
The subsection to which I object reads as follows:
Save as hereinafter provided every person, man or wpman, shall be qualified to vote and be entitled to be registered as an elector on the list of electors for the polling division in which he or she ordinarily resides at the time of the preparation and revision of the list of electors-
It is the word "ordinarily" to which I object, because it makes a fundamental change in the act. According to the explanatory note, the old act was the same with the exception of the word "ordinarily," and it is the insertion of that word which makes all the difference.


Grote Stirling: To what subsection is my hon. friend referring?


Alan Webster Neill: The first few lines of subsection 1. I think this would come home particularly to any one from the district I represent and also the hon. members representing the constituencies of Nanaimo, Vancouver North, Cariboo and to a certain extent Skeena, because they all have people who will be disfranchised because of the insertion of that one word. I do not suppose the number will be very great; it may total a couple of thousand in British Columbia; but surely the logger, the miner, the fisherman or the seaman is entitled to his vote once we start out with the idea that we have more or less universal suffrage.
Perhaps I had better explain how this works. A man lives in one part of a constituency; take Vancouver North, for example. His home, where his wife lives, is in Vancouver North; but in the summer season, when logging operations are going on, he goes to the northern portion of that constituency, which covers a large area, and gets a job in a logging camp, where he spends perhaps six months of the year. Previously, when the election came
along, he registered in the ordinary way at the place where he was working, but under the interpretation that must be placed upon the word "ordinarily" he can be registered only at Vancouver North. You may say, "Well, he can go back there and vote." It is all very well to say that, but in point of fact he cannot, and we know he cannot. To do so, he would have to throw up his job; for what concern would put up with a man being away for that reason? He must be away for one or two weeks, which means that he will lose his job and have to pay $25 or $30 to go back home in order to vote. That makes it impossible, so we are depriving that man of his vote. When we say "ordinarily resides," that is interpreted in another section of the bill as the place where he has his wife. Someone said that was not so, because there was a clause dealing with men separated from their wives; but we are not dealing with that class of people at all; we are dealing with men who have their wives in one part of the district, but who are forced by circumstances to work in another part.
In previous acts, and again in this bill, the principle is recognized that consideration should be given people of this kind, because special privileges are extended to three classes, ecclesiastics, school teachers and students. It is expressly provided that although they are not resident at the place where they are ordinarily resident, they can register where they then are. That is class legislation. If a man of the gospel, who is getting a permanent salary presumably a little better than that of the average workingman, and who is better able to go to the expense of returning to his regular home, is permitted this privilege, why should it not be extended to the people I have mentioned? The minister could probably return during the week without depriving his church of his services, and the same would apply to the teacher and the student. If it is right that we should not deprive the teacher, the parson or the student of his vote, why should the same thing not apply to the logger, the miner and the fisherman? I can see no reason why it should not. As I say, there is no reason. This act goes back quite a number of years. Originally, perhaps, the matter was not of so much importance, because there were times when a move of population was what might be described as more definite and permanent in its trend. If they did move to a certain place, it was a permanent move for reasons of work, and there was a tendency to stay in that place. Nowadays the trend is variable. Men are laid off on an hour's notice because an engine breaks down. Nowadays men are
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flown to their work and back again. There is more need to provide for new conditions.
I have not yet heard any suggestion as to any impropriety in connection with the matter, or of any abuse in any way at all. It is closely watched, and there are plenty of safeguards. There is no chance of the intrusion of a large body of men in there, in order to swing a vote, because the condition says that they must be resident for a certain period. There is no danger either in theory or in practice, because that has been the law for many years in British Columbia, and it has never been abused. It has never even been possible to make it the means of abuse. I would like the minister to look over the situation and consider the matter. If he has determined to go on. I would ask him why the word "ordinarily" has been inserted, and who asked for it.


Mr. REID:: Would the hon. member
answer a question? Would it not be worked the other way? The hon. member was talking about a logger. We will suppose that a logger had registered in the interior but happened to be home; that is, at his ordinary home. How would he vote?


Alan Webster Neill: He would still be able to
vote at home, if he were there. This is in a case where he find himself in a distant place, and unable to go home. The average logger is not in a position to take a week off.


Grote Stirling: He can be sworn, can he not?


Charles Edward Bothwell: Possibly I could explain something of the discussion which took place in committee in connection with this particular section. In the 1934 act we endeavoured to take care of these voters by absentee voting provisions.


Alan Webster Neill: Yes.


Charles Edward Bothwell: The committee found that the expense of absentee voting did not warrant our including it in this bill. For instance, in the election of 1935 there were 5,334 votes polled under the absentee voting provision. We found that 1,533 of them were rejected. The cost of absentee voting was approximately $250,000, or $65 plus, per vote. And it was by reason of the expense which was incurred in connection with absentee voting the committee decided that for the sake of a vote of that size we would not be warranted in inserting a clause which would deal with absentee voting.
Now, coming to the words "ordinarily resides" in the first subsection of section 14, may I point out that that term is defined in

section 16 of the bill. The rules are stated in connection with the residence of electors. In the 1930 act we used the same words, namely, "ordinarily resides," and we defined them in much the same way as they are defined here. So that really, Mr. Chairman, the only difference between this bill and past acts in connection with residence of electors is that in this measure we have done away with the absentee vote.


Alan Webster Neill: Dealing with the absentee
vote for a moment-and I do not know why we should, because it does not in the least resemble the matter I brought up; there is no resemblance whatever-however, if the hon. member wishes to go into it, I will do so. It has no relation to this matter at all. The absentee vote was introduced in order to deal with a changed condition caused by the act of 1934 which provided for what was called a fixed list. .


Charles Edward Bothwell: I would direct the attention of the hon. member also to the explanatory note on the page opposite page 12 of the bill. It would indicate that in 1934 we used exactly the same words, namely, "ordinarily resident."


Alan Webster Neill: No.


Charles Edward Bothwell: It says "has been
ordinarily resident in Canada."


Alan Webster Neill: I will deal with that in a moment. I am surprised the hon. member f_ys that. We are talking about the absentee vote, and I say it was introduced to meet a condition caused by the act of 1934, which made a fixed list. Therefore it was felt that a large number of people would be disfranchised.
The hon. member has said that it caused great expense, and that a great many votes were disqualified. The reason for the disqualifications was that deputy returning officers were not sufficiently informed of their duties; that was the reason for the disqualification of a large number of them. Apparently they had been instructed that when a man came along and wanted to vote in a district in which he was not then resident, they were to get a blank ballot, and that the deputy returning officer's duty was to write on the blank ballot a facsimile of the ballot of that particular district.
These deputy returning officers are not lawyers. They are not men of great business ability, and they take a reasonable, by-and-large view of it and put down Smith, Jones and Brown. And if a man voted for Smith, Jones or Brown, his vote was thrown out

Elections and Franchise
because it bad not said that John Smith was an auctioneer or that Bill Brown was something else. I know of one case which came to my attention where the deputy returning officer had evidently said to the would-be voter, "Whom do you want to vote for, old man?" And the man said "Brown." So the officer just wrote down "Brown," and no other name was put on the ballot. Hundreds were thrown out in my district because the ballots were not properly drawn up, either because of a misconception or because of ignorance on the part of the deputy returning officer.
As to the cost of it let me say this: The hon. member has noted the cost as being so much per head. Did he ever figure out the per head cost of advance polls? If he would, perhaps he would find that the cost per head was more than that of the absentee vote. The machinery which is set up is expensive, and in a small place if you get four or five votes in an advance poll you are lucky. I suggest the hon. member had better look into those facts.
But the whole subject is not pertinent, because no one has asked him to introduce the absentee vote. I have asked him only to go back to the procedure that was current before the act of 1934. I have asked only that we go back to it and stick to that phase of it. The hon. member has said-and I hope he was not imposing upon my simple layman's ignorance, although it looks like it- that we should look at the explanations, which is to me a painful subject anyway, opposite page 12 of the bill, and we would find the words "ordinarily resident". That is simply a play on words. It is there, but it does not apply to what I am talking about. It reads to indicate that a person has to show that he was ordinarily resident in Canada for at least twelve months-ordinarily resident in the electoral district at the date of the poll.


Charles Edward Bothwell: That is the same thing as we have here.


Alan Webster Neill: But when he came to take an affidavit all he had to swear to was that he was a "resident" of a polling division. Surely the 1936 act takes precedence over that of 1934. And here I find that section 46A in chapter 35 of the 1936 statutes reads as follows:
46A. (1) Subject as herein provided, any person who pursuant to the provisions of section four of the Dominion By-Elections Franchise Act, 1936, is qualified to vote in the electoral district in which a hy-eleetion is pending, and is, on polling day, resident-
Resident-
-in a rural polling division-
And so on. Then, at page 219 of the volume we find the form, in these words:
You swear that you are a British subject ordinarily resident in Canada-
And so on, and so on. Then it says: "that you now reside in this polling division." That is all they had to do. They had to swear that they "now reside" in the polling division, and that is all I am asking. Let us carry out the act as we have been doing for many years. It was not objected to, and the source of no corruption or impropriety. This action will certainly cut off hundreds of voters in the districts I have named. I do not know what effect it will have upon voters in the northern areas of Ontario, but hon. members from that part of the country will be more familiar with conditions than I. In the districts in British Columbia to which I have referred I know there will be hundreds of men, many of whom will vote against me- that is their privilege-who will be deprived of their vote. I think the general basic principle of this measure should be to give the greatest opportunity to people to vote, providing the proper safeguards are taken against corruption and impersonation,


Charles Grant MacNeil: I desire to associate myself with the remarks of the hon. member for Comox-Alberni (Mr. Neill). In reading subsection 1 of section 14 in conjunction with section 16, I cannot find any provision being made for the class of workers described by the hon. member for Comox-Alberni. These workers engaged in the logging and fishing industries must of necessity move from district to district according to the requirements of their industries. In many instances, while these men are absent from home, their families are compelled to move from one electoral district to another. Therefore, it is extremely difficult for them to define residence. I should like to have the minister or the chairman of the committee on elections explain how they propose, under the terms of this bill, to extend the franchise to these people.


Charles Gavan Power: The section can stand.


Charles Edward Bothwell: The committee came to the conclusion that no matter what words were used there would be a certain number of electors who would be disqualified or disfranchised in any event. It was not possible to cover every person in Canada who was entitled to vote. The minister is agreeable to having this section stand, and perhaps section 16 could stand also, in order that these sections might be considered before the next meeting of the committee.
revised edition
Elections and Franchise


Mr. DOUGLAS (Weyburn):: Paragraph (j) reads in part:
-because the doctrines of his religion make him averse to bearing arms, and who is by the law of that province disqualified from voting.
To what provinces would that apply?


Charles Edward Bothwell: To British Columbia only.


Thomas Clement (Tommy) Douglas: There are quite a number of people who are adherents to the Society of Friends, commonly known as Quakers.


Charles Edward Bothwell: This section would not apply to them at all. We have included in this section the particular order in council which refers only to Doukhobors.


Thomas Clement (Tommy) Douglas: In the province of British Columbia?


Charles Grant MacNeil: I should like that to be understood absolutely.


Charles Gavan Power: I am quite clear on it because I gave it a lot of thought. This refers only to Doukhobors in British Columbia.


Charles Grant MacNeil: It does not refer to those who were exempted under the Militia Act because of religious belief?


Charles Gavan Power: It does refer to those who came in under certain conditions in 1898 and whose religious beliefs prohibited them from bearing arms.
Section stands.
Section 15 agreed to.
Section 16 stands.
On section 17-Preparation of lists of electors.


Abraham Albert Heaps: I do not think we should be asked to agree to a long section at one time.
I think the subsections should be named one by one.
Subsections 1, 2 and 3 agreed to.
On section 17, subsection 4-Receipt and disposal of copies of preliminary list received from enumerators.


Abraham Albert Heaps: As I understand it, these lists are to be printed in the various constituencies?


Charles Edward Bothwell: It is the intention to do that as far as possible.


Abraham Albert Heaps: Are you doing away with the printing at Ottawa?


Charles Edward Bothwell: There is nothing in the bill to prevent the printing of lists in Ottawa where this is more convenient, and where the 
lists can be prepared in time, but the intention is to have them printed locally as far as possible.


Abraham Albert Heaps: Has the hon. member or the minister any information as to the relative cost of printing in Ottawa and in the individual constituency?


Charles Gavan Power: That information was
presented to the committee, but I have not it with me at the moment.


Charles Grant MacNeil: Would the minister give a simple outline of the procedure to be followed in the preparation of these lists in urban and rural districts? It is difficult for those of us who were not members of the committee and who saw the bill for the first time only a few days ago to understand the method of procedure.


Charles Gavan Power: It goes back to the 1930 elections act, which I understand met with general approval. I have not gone into all the details; but in urban areas with populations of more than 3,500, two enumerators representing two adverse political parties go around together from house to house to take an enumeration of people qualified to vote.


Charles Grant MacNeil: When?


Charles Gavan Power: Within plenty of time prior to the election to give the electoral officers an opportunity to prepare printed lists. When that enumeration is completed, there is a revision before the revising officer and then a final list is prepared. In order to avoid difficulty in connection with impersonation, in cities over 25,000 of population lists are furnished to every elector so that he will know who are his neighbours and which of them are entitled to vote. In cities under 25,000, lists are furnished to every householder. Rule 7 provides:
Each pair of enumerators, after taking their oaths as such, shall, on Monday, the 49th day before polling day, proceed jointly to ascertain the name, address and occupation of every person qualified to vote.
As I said before, when that has been done there is a revision and then the final list is prepared. There is only one enumerator in the rural constituencies. He has an office at a central place within the polling division, and during office hours those who claim to be entitled to vote call upon him and he places their names upon the list. There is a revision shortly before the election, but even on the election day a person who considers himself qualified to vote may come to the poll and he will be entitled to vote if he is vouched for by a qualified elector. We have returned to the old system of open voting which existed in 1930 and prior to that year.

Elections and Franchise


Thomas Reid: That is just in the rural districts?


Charles Gavan Power: That is covered by schedules A and B of section 17.


Alan Webster Neill: What would be the contemplated period under ordinary conditions between the issue of the writ and the election?


Charles Edward Bothwell: At least fifty-two days.


Mr. GRAYDON:: I have one question with regard to the distinction between rural and urban districts. Take the case of a large country municipality with an electoral population of more than 3,500.


Charles Gavan Power: That is urban.


Gordon Graydon: It is not a question then of having any concentrated population but of a municipality having a population of more than 3,500?


Charles Edward Bothwell: It has to be a concentrated population except, we will say, in such districts as surround Montreal where you have small urban communities that may not have 3,500 of a population. The chief electoral officer is authorized in a case of that kind to declare that that particular area is an urban polling district, and it is treated accordingly. Closed lists will be prepared for these places just the same as for the city of Montreal.


Gordon Graydon: What procedure has to be taken in order to have the chief electoral officer make the declaration that it is an urban area?


Charles Edward Bothwell: I cannot find the section at the moment; but within five days after the writ of the election, or at any time prior to that, representations can be made to the chief electoral officer to have him declare the district an urban instead of a rural area.


Alan Webster Neill: What is the definition of population? Is it determined by the last federal census, by the municipal census, or what?


Charles Gavan Power: The chief electoral officer gets his own information as to population.


Alan Webster Neill: And his word is final?


Charles Gavan Power: Yes.


Angus MacInnis: By whom is the enumerator in rural constituencies appointed?


Charles Edward Bothwell: The enumerators are
appointed by the returning officer.


Abraham Albert Heaps: I want to revert to the question of the printing of the lists. I should like to know what the comparative costs are of having the lists printed in the locality, 51952-2691
as is intended by this bill, and by the printing bureau at Ottawa. Prior to the last enumeration the printing bureau had some equipment installed, in order to take care of the printing of the lists. I do not know whether it is useful for any other purpose; but I know that a large expenditure was incurred in purchasing this equipment, and if it is intended now that this equipment shall not be utilized for the printing of the lists, it will mean that a very large-expenditure has been made that we are getting: nothing out of, unless it can be used for some other purpose. It was claimed in the committee that the lists could be printed at the-printing bureau at Ottawa much cheaper than in the various localities throughout Canada. Probably the minister or the chairman of the committee has figures to show what the relative costs are.
I should also like to know whether there is going to be any stipulation at any time by the chief electoral officer as to the amounts that will be charged for the printing of the lists, because my understanding is that the costs are roughly twice as high locally as when the work is done by the printing bureau. I know that at the last election there was a good deal of complaint over the printing of the lists at Ottawa, because in some cases they were not satisfactory and they were late in being delivered. That was no doubt caused by the fact that it was an innovation. If it is intended now to change the system completely and have the lists printed locally, I should like to know the difference in cost between having them done locally and in Ottawa.


Charles Edward Bothwell: Evidence was given in the special committee as to the relative costs, and as to the time that would be required to have the lists printed in Ottawa. One of the deciding factors with the committee was that it was impossible for us to get the lists printed in Ottawa within the time limit provided for in this bill. The evidence that came to us from the printing bureau was that it would take them something like three months to print the lists. The time that has been provided in the bill is for an election to be conducted from start to finish within fifty-two days. While it is not definitely fixed yet what the cost will be for having the printing done locally, it is estimated that the printing will be done at about seven cents per name. The cost of having the work done at the printing bureau, even with them taking additional time, was something around six cents. So it costs more to have the printing done locally by almost one cent per name.
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It is really a fraction of a cent more, but the work can be done very much more quickly locally.


Abraham Albert Heaps: Does the hon. member know what was charged for the printing of the lists for the last by-election in the city of Montreal?


Charles Edward Bothwell: I understand it was
eight cents per name.


Abraham Albert Heaps: I understand that it was
considerably higher than seven cents.


[Stage Direction]
Subsection agreed to.
.Subsection 5 agreed to.
'On section 17, subsection 6-Copies of preliminary printed lists for candidates.
Thomas Clement (Tommy) Douglas: I notice that
the lists must be printed twenty-six days before polling day, but there is nothing in this subsection to say how many days before polling day the lists shall be given to the candidates. Should there not be such a provision?


Charles Edward Bothwell: That is provided for
in the bill. I have not the section in mind at the moment.


Thomas Reid: Subsection 6 provides that
the returning officer shall provide the candidate with twenty copies.


Thomas Clement (Tommy) Douglas: But it does
not say how many days before polling day.


Charles Gavan Power: But it says "immediately
after the preliminary lists of electors have been printed." I do not know whether it is the twenty-second or twenty-third day, but it will be in plenty of time.


Charles Edward Bothwell: The lists are being
distributed in all the urban divisions. I do not think there will be any complaint along the line of not having a sufficient number of the lists.


Thomas Clement (Tommy) Douglas: What I was
concerned about was that the candidate should receive the lists in time.


Ernest Lapointe: It could not be sooner than immediately after they are printed.


Thomas Clement (Tommy) Douglas: "Immediately" may be a long time.


[Stage Direction]
Subsection agreed to.
Subsections 7 to 18 inclusive agreed to.
Schedules A and B to section 17 agreed to.
Section 17 agreed to.
Sections 18 to 20 inclusive agreed to.

On section 21-Polling day, nomination day and nomination of candidates.
Charles Grant MacNeil: Will the chairman of the
committee on elections kindly explain the change in regard to nominations?


Charles Gavan Power: There is no change.


Charles Grant MacNeil: The explanatory note says
"S.S. 5. Changed at the suggestion of the chief electoral officer."


Charles Gavan Power: I think it has to do with
obtaining the consent of the candidates. There is no material change; the section has been reworded. At present this section appears as section 18 of the act.


[Stage Direction]
Section agreed to.
Sections 22 and 23 agreed to.
On section 24-Return by acclamation.
Mr. ROBICHAUD:: I think there is a
grammatical error on page 43, second line, "nominated with the time," it should read "nominated 'within' the time."


Charles Gavan Power: Yes. I do not think we
need move an amendment for that.


[Stage Direction]
Section agreed to.
Section 25 agreed to.
On section 26-Deputy returning officers and poll clerks.
John Ritchie MacNicol: I want to elaborate-


Charles Gavan Power: Would the hon. member care to have it stand?


John Ritchie MacNicol: I might not be in the house when it comes up again. The matter is of such transcendent importance, and the minister has such transcendent knowledge of elections acts, may I refer to it now? I refer to subsection 4 only, which now reads:
Each deputy returning officer shall, forthwith after his appointment, appoint by writing under his hand, in form no. 30, a poll clerk, who, before acting as such shall take the oath printed on the said form no. 30. Such forms of appointment and oath shall be printed in the poll book.
Rule 3, on page 21, which we passed unanimously a few minutes ago, relating to the appointment of enumerators, is, I believe, a very fine and practical rule. I should like to see subsection 4 of section 26 changed to redd similarly in intent to rule 3 of section 17, which reads:
At least five days before he proposes to select the persons who are to act as enumerators as aforesaid, the returning officer shall give notice accordingly to the candidate who, at the then last preceding election in the electoral district, received the highest number of votes,

Elections and Franchise
and also to the candidate representing at that election a different and opposed political interest, who received the next highest number of votes. Such candidates may each, by himself or by a representative, nominate a fit and proper person for appointment as enumerator in every urban polling division comprised in the electoral district, and, except as hereinafter provided, the returning officer shall appoint such persons to be enumerators of the polling divisions for which they have been nominated.
I should like to see that principle incorporated in subsection 4, of section 26. I cannot see any reasonable argument against it. If it is sound for section 17, it ought to be sound for section 26. In my opinion it would be even more sound in section 26 than in section 17, because in section 17 the poll itself is referred to. I should like to see the principle of having two watch-dogs instead of only one in the poll. When the deputy returning officer and the clerk are appointed by the same party, you have only one watch-dog; but if the deputy returning officer and the poll clerk are appointed by two different parties, you have two. It would certainly eliminate ballot stuffing, and impersonation and so on.
I have no. desire to continue any further. I have no intention of trying to force the adoption of what I suggest; I could not do so if I would; for the government majority is too large. But I hoped that hon. members on the government side would see the light and be willing to raise this bill to the high standard to which I referred. This is now done in practically all English-speaking countries: Great Britain, Australia, New Zealand and throughout the United States. I believe we are the only English-speaking country that does not now protect the ballot box .by officers of two opposite political parties.


Mr. McDONALD (Souris):: I should like to agree with the hon. member for Davenport (Mr. MacNicol). It would be a very fine thing to raise the standard of elections and make everything as fair as possible, but after the gerrymander of 1934-


Some hon. MEMBERS:: Oh, oh.


George William McDonald: That cannot be remedied here; it is a contentious matter, and it is too late now as far as my constituency is concerned; but in improving the elections act, why should we allow any party to gerrymander the constituencies, and then they cannot be changed for the next ten years? Certainly an attempt was made to steal the seat which I hold, and they nearly got away with it. What is the use of talking about a fair act when there is so much of that?


John Ritchie MacNicol: We are trying to make it fair now.


George William McDonald: Yes; if we ever want to have a fair act, we had better have the Liberal party undertake the work.


Thomas Reid: Some further consideration
should be given to this question. I have in mind the constituency I represented in the last election. The second highest candidate was a representative of the Cooperative Commonwealth Federation. He left that party, joined the communistic party and then left the district. If an adherent of the communistic party has anything to do with choosing the enumerators, when he does not even live in the district, I can foresee all sorts of complications. I do not believe even the Cooperative Commonwealth Federation would elect him to choose enumerators for the constituency of New Westminster.


John Ritchie MacNicol: Under the amendment I suggest, the returning officer does not surrender all his powers. If he is not satisfied with those named by anyone else, he can still make appointments under the circumstances mentioned by the hon. gentleman.


Charles Gavan Power: I know that this matter was fully discussed before the committee, and I suppose my best answer to the hon. member (Mr. MacNicol) would be to refer them to the committee.


John Ritchie MacNicol: I had the committee with me at the beginning.


Charles Gavan Power: It would not help very much if my hon. friend had the committee with him at the beginning and argued them out of their sympathy. On the principle of the proposal, might I suggest to the hon. gentleman that there is a vast difference between the duties of the enumerators and the duties of the deputy returning officers. The enumerators go together. They decide who shall be on the list; if there is a dispute, there is a third part}', and the enumerators are not in the polling booths on election day. On the other hand, the deputy returning officer is to some extent in a judicial capacity.


John Ritchie MacNicol: So he is in England and in the United States.


Charles Gavan Power: Well, in England, as my hon. friend knows, the returning officers are appointed by law, being sheriffs, prothonotaries, city clerks and so on, public officials. As to the deputy returning officers, I have no knowledge, but I should be very much surprised if you could find anywhere in the English law any reference to any political party, because that is contrary to the principle of their law.
Elections and Franchise


John Ritchie MacNicol: They are appointed by the municipal authorities.


Charles Gavan Power: But there is no question of appointing a person from an opposite political party, as my hon. friend wants us to do. The deputy returning officer is in a judicial capacity. He is in control of the polling booth on election day, and my hon. friend's suggestion is that there be two in control of the polls. There is trouble enough now with one in addition to four or five scrutineers, without having two judges and no referee. The enumerators can submit a list to the returning officer who may come to a decision. Suppose, however, there is a dispute as to who has a right to vote, or who has not, or as to the conduct and discipline in the poll, it would not be possible in most rural constituencies and in a large number of urban constituencies to get the returning officer there himself to decide who was right as between the poll clerk and the deputy returning officer. It would appear to me to bring about a conflict in the polling booth rather than to promote peace, good order and discipline. If the poll clerk has not the same power and authority as the deputy returning officer, then he becomes a mere spy on the deputy returning officer and there is no value to the position at all. I should like to meet my hon. friend because he has taken a deep and sincere interest in this measure; I know that in anything he says his motives are the highest, and he firmly believes that the bill would be improved by some such amendment as he suggests. But with all credit for his sincerity, I cannot believe that the general economy of the elections act would be improved by any such set-up as he proposes.


Louis-Prudent-Alexandre Robichaud: The hon. member for Davenport tells us that when he first brought forward the suggestion he thought he had the unanimous support of the committee.


John Ritchie MacNicol: Right.


Louis-Prudent-Alexandre Robichaud: Well, I do not think the members have changed their minds at all; but out of deference to and affection for the hon. gentleman it may be that we showed too much sympathy at first for his views, which led him to believe that he had the unanimous support of the committee. I am sure, however, that we have not changed our minds. One of the reasons for the view we take of this matter, at any rate so far as I am concerned, is this. We are all agreed' that partisanship should be kept out of the conduct of elections, and if the name of any political party, either the Conservative party or the Liberal party, were mentioned, I think it would be running

counter to the idea we have in mind. Another point I have in mind is this. I know that in my own county there are men who have been acting as deputy returning officers for twenty-five or thirty years irrespective of the party in power. They can be said to be neutral, because nobody can tell what side they are on.


Ernest Lapointe: They must be Conservatives.


Louis-Prudent-Alexandre Robichaud: No; we have had them as deputy returning officers for years; they are agreeable to both parties, and we do not know what their politics are. By adopting the suggestion of my hon. friend we would be ruling these men out, because they would then be either Liberal or Conservative. As things are now, they are neutral. I say, therefore, that these men, who for many years have been satisfactory to both parties, would be ruled out. I do not think that partisanship should be allowed to enter into the matter at all.


Abraham Albert Heaps: The minister was right when he said that in Great Britain they did not recognize political parties in elections and that in their acts you would not find any reference to a political party as such. Here, however, we seem to be getting away from that principle which is so definitely fixed in British election law. We have got away from it in our recognition of an official leader of the opposition and by allowing the official leader of the opposition and the leader of the party in power to speak as long as they care to, while other members are limited to a certain length of time.


Charles Gavan Power: That is an abuse.


Abraham Albert Heaps: I do not know whether it is an abuse, but that is the practice which is recognized now. We have gone a step further in the elections act, because we recognize parties, if not by name, then by the appointment of enumerators, and once you begin to recognize that principle it is not going very far to recognize the principle contained in the proposal put forward by the hon. member for Davenport. These officials are almost all partisan appointees. There may be instances in which they are not, but generally speaking they are partisan appointees. In the last elections act, when the returning officers were appointed for the various constituencies we managed to a certain extent to get away from a complete partisan slate across the country, and we had in Canada after the last elections act returning officers representing at that time approximately the numerical strength of parties in this house.

Elections and Franchise
There were so many Conservatives appointed, so many Liberals, and, I understand, so many of the group to which I happen to belong, though I had nothing to do personally with the appointment of any of the returning officers. The returning officers will no doubt appoint their own deputies from the party that is in power, and for my part I can see no harm, but rather good, resulting from the suggestion put forward by the hon. member.
I remember in one election the deputy returning officer in conjunction with his poll clerk actually stole the election. They put in between them a sufficient number of fake ballots into the ballot boxes to convert what otherwise would have been a minority for their candidate into an absolute majority. At that time, had there been representatives of the two opposing parties in control, an occurrence of that kind would have been entirely obviated. I cannot see what difficulty there would be in having the deputy returning officer appointed from one political party and having the candidate with the next largest number of votes appoint the clerk in charge. From my experience I think it would work towards the holding of cleaner elections, and I am sorry the minister has definitely taken an opposite view to that of the hon. member for Davenport.


Charles Gavan Power: The committee took that
view.
Mr, HEAPS: But I am sorry the minister has taken it.


Charles Gavan Power: I was influenced by the
committee; I have taken it since.


Abraham Albert Heaps: I never thought the minister could be influenced so easily. I am afraid his mind was pretty well made up, though of course he may have been influenced by the majority recommendation of the committee. Perhaps, on more mature reflection, he might have changed his mind, because I want to say that when I first heard the suggestion of the hon. member for Davenport I was also opposed to it, but on more mature thought I came to the conclusion that it would be a good thing. Personally I would far sooner have nothing to do with the appointment of deputy returning officers, enumerators or anyone else. It is a nuisance as far as any candidate is concerned; it is more trouble than it is worth. I should like to take all these appointments entirely away from the candidates or parties, if ways and means could be devised of doing so. But since we appoint the enumerators as representing the two parties, I think we would be taking a
logical step if we had the poll clerk appointed by the party other than the one which appointed the deputy returning officer.


[Stage Direction]
Section agreed to.
Section 27 agreed to.
On section 28-Ballots and their form.
Richard Langton Baker: This section refers to form 32, which is set out at the back of the bill. Did the committee consider whether it would be advisable to show on that form whether Brown or O'Neil or Hamon was a Conservative, a Liberal, a Cooperative Commonwealth Federation candidate, or whatever it might be? I am satisfied that a great many people who go to the polls are not particularly concerned with the names of the candidates, but they do know the party for which they desire to vote.


Charles Gavan Power: No. 3 would be the Tory there; you would not have to designate him.


Richard Langton Baker: With the intelligent people there would be no trouble at all, but I am thinking about the others.


Charles Edward Bothwell: The matter was discussed, and the decision was arrived at that we should not make a change in the ballot by setting out the particular political belief of any candidate.


[Stage Direction]
Section agreed to.
Sections 29 and 30 agreed to.
On section 31-Polling stations.
Thomas Reid: I desire to move an amendment to subsection 5, putting it back as it was before. It will then read:
The poll shall be opened at the hour of eight o'clock in the forenoon and kept open until six o'clock in the afternoon of the same day, and each deputy returning officer shall, during that time, in the polling station assigned to him, receive in the manner hereinafter prescribed the votes of the electors duly qualified to vote at such polling station.
In my opinion the present provision, if it goes into effect, will disfranchise hundreds of workers. I have attended many polling booths during many elections, and I think the committee will agree with me that generally very few people turn up to vote at seven o'clock in the morning, while on the other hand many electors go to the polls from five o'clock on.


Charles Grant MacNeil: I most heartily support the amendment of the hon. member. I live in a suburban district, most of the residents of which work in the city, to which they must cross by ferry. The two hours allowed during
Elections and, Franchise

the day does not give them sufficient time to return from work to vote, and their only opportunity is just before the polls close, as they did under the old act. With this change it is literally true, as stated by the hon. member, that thousands of people will be disfranchised. As an alternative I would suggest that there be a statutory half-holiday on election day. In that way the point the committee desired to cover could be satisfactorily dealt with.


Charles Gavan Power: How would that cure the situation which has been objected to? What difference would a statutory half-holiday make in regard to the point brought up by certain British Columbia members, namely, that before the polls are closed there, results come in from other sections of the country?


Charles Grant MacNeil: If there were a statutory half-holiday, the polls could be closed at five o'clock and the workers would have an opportunity to vote between one o'clock and five o'clock. As matters now stand, however, in regard to employment, they dare not take any time off, even though employers may not exercise intimidation. In my case they certainly do not have sufficient time for a long street-car journey, a half-hour ferry trip and another journey by bus in order to vote before five o'clock.


Charles Gavan Power: The answer to the suggestion for a statutory half-holiday came out during the discussion of previous election acts. I do not believe it is within the power of the federal government to enforce a statutory halfholiday. I do not think we can do that in any province, because that is a matter entirely under provincial jurisdiction. That matter was discussed at great length in 1930 and again in 1934.


Mr. KINLEY:: Subsection 5 states:
In the provinces of Nova Scotia, New Brunswick and Prince Edward Island, the poll shall be opened at nine o'clock in the forenoon, and kept open until seven o'clock in the afternoon.
I do not like that. I think we should be able to hold an election during the daytime. In the rural districts there are no lighting facilities in the schoolhouses and many other places where the polls are held; lights must be brought in, creating fire hazards, and that is not good. The electors have a habit of collecting around the polls, feeling that the day's work is over; excitement begins to mount, and it is just as *well to have the ballots counted and the decision announced as soon as possible after six o'clock. I do not like this provision; as far as Nova Scotia is concerned, the old act was very good. I
[Mr. MacNei'l.}
believe we should open the polls at eight o'clock and close them at six o'clock in the afternoon.


Donald MacLennan: As I understand the
hon. member for New Westminster, his amendment would simply restore the old provision, and I must say that this would suit us in Nova Scotia far better indeed. Sometimes, depending upon the time of year when the election is held, it is dark and, indeed, long after dark by seven o'clock in the evening.
There is another point to which I should like to direct attention. In the rural districts, after the voters deposit their ballots they usually migrate to the towns, particularly the mining towns. By six o'clock there is quite a number around, and I have always noticed that whatever noise or disagreement there may be, it usually occurs between five and six o'clock. Before five o'clock everything would be going quietly; but between five and six o'clock the people from the country came in, gangs began to collect around the polls and josh one another, if you understand what I mean by the word "josh." These people would be getting a little out of hand. If that situation is to be continued for another hour, I am sure it would not be satisfactory. I must ask the committee to leave the maritime provinces alone in this regard. We are not asking for the change. Not one man from the maritimes is asking for it, and in view of that fact I would ask the committee to restore the law to its former state.


Some hon. MEMBERS:: Carried.


Hugh Alexander Stewart: No; it is not carried.


Mr. BROOKS:: I take this opportunity
to express agreement with my colleagues from the maritime provinces. I was not a member of the committee, but I believe that this change would be prejudicial to the electorate of the maritimes. We are seventy-five per cent rural; thus most of our electors come from country districts. Nine o'clock in the morning is approaching the middle of the day for the farming communities, and the people in rural districts like to get to the polls to do their voting as early as possible. To ask us to close the polls at seven o'clock simply means that we are closing them at six o'clock, because six o'clock is the supper hour in rural communities. Wives and their husbands have gone home to get supper and to do the chores. I believe many votes would be lost in the maritimes if this section were permitted to remain as it is. I would join with the other hon. members from the maritimes who are objecting to it. Surely the committee in its fairness will not permit the section to be passed.

Elections and Franchise


Hugh Alexander Stewart: The section as reported in the bill was the subject of considerable discussion in committee. The object of drafting the section as it stands is one with which I am sure every hon. member of the committee will agree, if it is capable of accomplishment. All hon. members desire that elections should be free; that there should not be injected in the last hours of a campaign an influence which may have an effect in one part of Canada different from that in another.
There are four hours difference in time between the maritime provinces and British Columbia. It was pointed out in committee that at least on two occasions the results of elections in the maritime provinces had been telegraphed to British Columbia and scattered broadcast. The news was made known through the medium of special issues of newspapers placed on the street two or three hours before the close of the polls in British Columbia. It was said that on one occasion the effect was to the disadvantage of one political party, on account of the report that the mari-times w'ere all going in a certain direction. On another occasion the result was the opposite and was in favour of the other party.
It may be, unfortunately, that some constituencies or provinces think it would be to their advantage to be supporting the party which would be in power and would control the country for the next four years. Reports might not always be accurate; there is no guarantee that they are. Statements as to results may be misreported, or abused. I wonder if there is any member of the committee who does not desire to make that condition impossible? It was just for that purpose, and with the idea of preventing any possible abuse which might arise through an announcement of that kind being made, that these hours were changed.


Donald MacLennan: Would one hour help?


Grote Stirling: It is two hours.


Hugh Alexander Stewart: We have changed to different hours for different sections of the dominion. The result is to give in the mari-times one hour longer for polling than otherwise would be the case. In many parts of the dominion that is thought to be an advantage ; it would give an extra hour for polling in the maritimes. They would have an hour longer than voters in other parts of Canada would have.


Louis-Prudent-Alexandre Robichaud: The same number of hours.


Charles Gavan Power: It would be the same number of hours.


Hugh Alexander Stewart: Yes, but extending an hour later.


Donald MacLennan: But we do not want it.


Hugh Alexander Stewart: Possibly the hon. member does not; but, after all, I think in the interests of what is best for the whole of Canada the maritime provinces would be prepared to make some concessions.


Louis-Prudent-Alexandre Robichaud: Apparently British
Columbia does not want it.


Hugh Alexander Stewart: They may not want it. Some may not want it; but I know that some of the British Columbia members have complained of the abuses which have taken place in years gone by, and have supported this change. The effect is a compromise all around, staggering the hours so that it becomes impossible for the maritimes to telegraph to British Columbia either an accurate or an inaccurate statement as to the result of polling in eastern Canada. It becomes impossible to have the information published and distributed two or three hours before the close of the polls in British Columbia, a condition which might probably affect the result of polling in the western province.
I wonder if there is any member of the committee who objects to the object the committee had in mind when it drafted this section? Is it desirable, in the interests of British Columbia, or any other part of the dominion, that what I 'have indicated should happen? I must point out that it has happened, and it has been for the purpose of making a repetition impossible that the section was drafted. It was agreed to almost unanimously by the committee, after long discussion, compromise and general agreement, that the object the committee had in mind was a worthy one, and that this was the best way to accomplish it.


Mr. PURDY:: As one of the members of the elections committee perhaps I might be permitted to say a word. I attended diligently the meetings of the committee; in fact, I believe I missed only two sittings in two years. Every time the question of shoving Nova Scotia, New Brunswick and Prince Edward Island into a dark vote was suggested, I voiced my opposition as strenuously as I could. Unfortunately I was unavoidably absent when the matter was brought up on the last occasion, and when the compromise as indicated by the hon. member for Leeds was arrived at. Had I been there, I would have objected to the best of my ability, because I think we in the maritimes are at least entitled to the sun.
[DOT]4256
Elections and Franchise


Mr. GREEN:: This is particularly a British Columbia problem because the time changes at our boundary, which means we are from one to four hours later than the other provinces. We are even one hour later than Alberta. I would ask that hon. members of th' committee give this matter careful consideration because it is a serious problem. The effect is to make the elections at the present time quite unfair. The last election was a hard-fought one for a Conservative anywhere in Canada; but shortly after three o'clock, when we had still three hours to go, returns started coming in from the maritimes. I know what effect that had upon myself. I felt that after we had put up such a battle, it was exasperating that our electors were not being given an opportunity to cast their ballots without knowing the results in the east. By six o'clock we had dozens of the Quebec and Ontario results. The radio has changed the whole position because the returns come right into the homes. Previously they had to be sent in over the telegraph wires and then papers had to be printed. It hurt me this time, but next time it may hurt the Minister of National Defence (Mr. Mackenzie) when the returns from the maritimes are known. I do not think the proposed method of remedying the situation is the proper one. It will mean disfranchising a number of people. But would it not be possible to provide that the ballot boxes in the maritime provinces shall be held for two hours, and those in Ontario and Quebec for one hour? That would help in solving this problem.


Charles Gavan Power: Who is going to hold the maritimes?


Howard Charles Green: Surely they have enough self-control in eastern Canada to work that out.


Angus MacInnis: I rise to support the amendment moved by the hon. member for New Westminster (Mr. Reid). I was not a member of the committee that considered this bill, but I am not unmindful of the reasons that prompted it in trying to remedy the situation complained of by the hon. member for Vancouver South (Mr. Green) and the hon. member for Leeds (Mr. Stewart). If it is intended to remedy this situation by the change now suggested, the result will be the disfranchisement of a great many people in British Columbia. Any one who has any understanding at all of the conditions under which the manual labourers work must realize that it would be quite impossible for them to get away from their work and reach the
[Mr Purdy.]
polling booths before five o'clock. It will mean the disfranchisement of thousands of people all over the province. It will take many of these people two or three hours to reach the polling booths in order to exercise their franchise. I have no objection to the suggestion made by the hon. member for Vancouver South, provided, as the minister said, you can keep the maritimes down. Being a maritimer myself, I know that they take their politics more seriously than their religion, and it may be rather difficult to hold them down. I do not think the solution of this problem is the one provided in the bill, and I am whole-heartedly in support of the amendment moved by the hon. member for New Westminster.


Mr. McLEAN (Melfort):: I believe the fear that has been expressed by hon. members is overstated. In 1930 the government of the day lost a number of seats in the maritimes, but they gained a number of seats in British Columbia.


Howard Charles Green: False news was published in British Columbia.


Malcolm McLean: News of that kind could still be published. In 1935 the situation was different. The government that had been in power between 1930 and 1935 lost seats in the maritimes, and yet they did better in British Columbia than elsewhere, as is evidenced by hon. members opposite who came here for the first time. Seven o'clock in the morning is pretty early in a province like Saskatchewan, which is largely rural, for people to be getting out to vote, and five o'clock is too early an hour to close the polls. There is always a rush at the last hour, and the closing hour of six o'clock has worked very well in former elections.


Charles Grant MacNeil: I should like to present a practical problem to the minister. If the polls are closed at five o'clock in British Columbia, the result will be the disfranchisement of many voters in the districts in the vicinity of Vancouver. Across Burrard inlet there are a number of important municipalities, such as North Vancouver. A large part of the population in these municipalities work in the city of Vancouver. The Minister of National Defence (Mr. Mackenzie) knows very well that many people in Vancouver go to points like White Cliff and Fisherman's Cove from May to September. The bus leaves there at seven o'clock in the morning, and these people must catch either the North Vancouver or the West Vancouver ferry; they must make street-car connections, and many of them have a street-car journey of three-quarters of

Elections and Franchise
an hour, allowing time for necessary connections. Even with two hours off, they cannot possibly get to the polling booth in time. They can just barely make it by six o'clock. It has been usual to expect a very heavy vote just before six o'clock, because it is understood that many people can just make it by that time, even though they leave their work at four o'clock. I suggest to the minister that as this parliament has power to stipulate that employers shall grant two hours to their employees, it has power to stipulate that they shall grant four hours.


Charles Gavan Power: The trouble is to discover how to enforce it in the law courts.


Charles Grant MacNeil: This legislation will definitely disfranchise many of the residents in these important districts. I have no alternative than to support the amendment moved by the hon. member for New Westminster.


Ian Alistair Mackenzie: I support the amendment moved by the hon. member for New Westminster. I agree with what has been said by hon. members on the other side. It is quite true that many workers in Vancouver and North Vancouver have found it impossible to reach the polling booths by six o'clock. There is no doubt that many voters will be disfranchised.


Charles Gavan Power: Perhaps this section could be allowed to stand, and then we could have a further discussion of the matter.


Howard Charles Green: Would it be possible to make it an offence under the act to publish the returns by radio or by telegraph before the vote is completed in British Columbia?


Charles Gavan Power: I understand that was studied carefully by the committee. Apart from the fact that it would involve some interference with the liberty of the press, it would be most difficult to enforce.


Hugh Alexander Stewart: As I have said, this matter was the subject of careful study by the committee. Not one hour or two, but many hours were spent upon it, and every contention that has been advanced here to-night was given careful consideration by the committee. There is a provision in the bill that every labouring man shall be given two hours off from work, without deduction of pay, to vote, and with our modern rapid transportation-and I understand that in the city of Vancouver many polls are centred in one building-surely that gives ample time to every man to vote. I should like to know what poll you could not reach in two hours.


Malcolm McLean: Plenty of them.


Hugh Alexander Stewart: In a city?


Charles Grant MacNeil: How about the suburban
districts?


Hugh Alexander Stewart: It is the cities where the working men are congregated that have been complaining. I submit that two hours off from work is ample time to enable a man to go to the polls and vote and that no one would be deprived of his vote. Is there any abuse in having the results in one part of Canada published in another part of Canada with a view to influencing the election results there? The fundamental principle of elections is the secrecy of the ballot.


John James Kinley: Individually.


Hugh Alexander Stewart: Individually and collectively. If it is fair to have it secret individually, it is more fair to have it secret collectively. It has been suggested that you might prohibit the giving of results by enacting a law against the publication of the returns prior to a certain hour. That suggestion was carefully considered by the committee, but all you would have to do would be to have the returns sent to the United States and announced from Seattle. What are you going to do about announcements from Seattle? What jurisdiction have you over there? There is nothing political in this. It may affect one party in one election, and another party in another election.


John James Kinley: It is no advantage.


Hugh Alexander Stewart: If there is an abuse, let
us stop it.


Malcolm McLean: Why penalize
the electors elsewhere just because there is a fear of somebody being influenced?


Hugh Alexander Stewart: There is no desire to
penalize anybody. In the maritimes they are given one hour later, which in many instances is considered an advantage. In Ontario the polls close, under the provincial act, at seven o'clock. The hours of polling in the different provinces for provincial elections vary considerably. In some provinces the polls close at five; in others, at six; in others, at seven.
There was an earnest desire in the committee to overcome the abuse that has been experienced by both political parties, and as I have said, a compromise was reached on the part of British Columbia and on the part of the maritimes. I think we ought not to lose sight of the general principle. Is it desirable that the election results in Nova Scotia should be telegraphed to British Columbia to the possible disadvantage of any political party in British Columbia? If that is not desirable, what is the remedy? Here we have the remedy that commended itself to the committee after all the other sugges*
Elections and Franchise

tions had been, weighed, and the committee was practically unanimous-I think there were only three opposed to it-in arriving at this conclusion after a careful and exhaustive consideration of the whole question.
It may be a matter primarily for British Columbia, but at the same time it undoubtedly affects the whole dominion. We are all interested in it whether we are inconvenienced or not; and if the maritime provinces feel that possibly they are giving up something, and if British Columbia is called upon to give up something we ought to be prepared to do that in the interests of Canada if the object to be accomplished is a worthy one. I put it to every member of this committee, and I do not care what the political effect is in this election or the next election, Is it desirable that any person or organization in one province for purely partisanship purposes should be able to send out to British Columbia either accurate or inaccurate information about the election results, for the purpose of influencing the vote in that or some other province. If the committee thinks it is desirable to leave the matter wide open and to permit the repetition of what has occurred on two occasions, once to the advantage of one party and once to the advantage of another, then possibly there should be no change. But after a careful study the committee came to the conclusion almost unanimously that it was desirable to prevent that situation, and in order to accomplish it the committee agreed upon this compromise. If there is any other way of doing it, let us hear it. Let us not dismiss this as a matter of trivial concern or of merely local convenience. It is of interest to the whole of Canada. What we want is clean elections. We want elections that are not influenced improperly by messages sent from one part of Canada to another.


Mr.   POAVER@: I doubt if there is any possibility of our coming to an agreement on this clause to-night, so I would ask that it stand.
Section stands.
Sections 32 to 45 inclusive agreed to.
On section 46-Vote by elector whose name is not entered in the official list of electors for a rural polling division.


Alan Webster Neill: This section ought to be allowed to stand for consideration with section 14, because the same thing applies, the words "ordinarily resident." The explanatory note on the right hand page says, "no change," which is not correct; there is a change.
Section stands.

On section 47-Time to employees for voting.


Charles Grant MacNeil: Would the minister agree to allow this section to stand?
Section stands.
Section 48 agreed to.
On section 49-Strangers not to enter polling districts armed.


Alan Webster Neill: In regard to flags, the old section covered just during the polling. If people want to run around and celebrate after an election, I do not see why they should not have all the banners they want. This only means that some unhappy man will be punished for not knowing the law.


Charles Gavan Power: The objection I think is well taken. Let subsection 4 stand for correction.
Section stands.
On section 50-Counting and reporting the votes.


Charles Grant MacNeil: Should this section not stand so that we might give consideration to the idea advanced by the hon. member for Vancouver South (Mr. Green) about holdings the boxes for two hours at certain points?


Mr.   POAVER@: Frankly, without being in the least facetious, I do not think it would be possible to hold the ballot boxes in a polling: booth anywhere in eastern Canada for two hours after the polls had closed. It would be asking too much of people's patience and placing too much reliance on the impartiality of the people of the maritimes-and even of Quebec-to ask them not to get the results of the polls the minute they can be announced.


Major James William Coldwell: I am in sympathy with, those who suggested the amendment. I think, the minister might consider the suggestion. I take it that the people of Great Britain are just as impatient as Canadians, and there they hold the ballot boxes from the counties until the next day. They all come to a centra! point the morning after the election.


Charles Gavan Power: I think it would be very difficult not to give the results of the polling,, say on the island of Cape Breton, within fifteen minutes after the ballots are counted.. However, I am content to let the section stand.


Howard Charles Green: It might be a good way to-help the people of eastern Canada to realize-the extent of this nation, if the boxes were-held.
Section stands.
Sections 51 to 55 inclusive agreed to.

Loan Companies Act
On section 56-Election returns.


John Ritchie MacNicol: The minister might let section 56 stand for the same reason as some others were left.


Charles Gavan Power: No; this is a return made by the returning officer six days after the election.


[Stage Direction]
Section agreed to.
Sections 59 to 111 inclusive agreed to.
Schedules 1, 2 and 3 agreed to.
Progress reported.


William Lyon Mackenzie King: Resolved that Messrs. Crerar, Euler, Ilsley and McLean (Melfort) be appointed managers on behalf of this house of the free conference with the senate with respect to the amendments made to Bill No. 25, intituled: An act to amend the Farmers' Creditors Arrangement Act, 1934.
That a message be sent to the senate to acquaint Their Honours therewith.
That the clerk do carry the said message to the senate.


[Stage Direction]
Motion agreed to.
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Monday, June 27, 1938