1938-06-02

[Stage Direction]
Fourth report of the standing committee on banking and commerce.-Mr. Moore (Ontario).

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

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

Mr. MASSEY:: 1.	How many employees of the Canadian National Railways, in all departments, have been laid off in the past six months?
2.	How many in Ontario?
3.	How many in the past month in:	(a)
Ontario; (b) all Canada?


Mr. HOWE:: The Canadian National Railway management state, in reply to the above questions, that the information is not kept in the form requested, and could only be obtained at the cost of much labour and expense.
The railway does report certain figures to the dominion bureau of statistics showing the count of employees as at the end of each month, and the following figures are taken from such reports:
Number of employees in all classes on Canadian National Railways: April 30, 1938, in Canada, 65,423; in Ontario, 21,705. March 31, 1938, in Canada, 66,456; in Ontario, 21,561. October 31, 1937, in Canada, 70,599; in Ontario, 23.207.
These figures cannot be interpreted to mean that the difference represents employees laid off, as seasonal changes are reflected therein.


QUESTION PASSED AS ORDER FOR RETURN
Mr. LACROIX (Quebec-Montmorency):: 1. What conditions are imposed by the St. Lawrence Stevedoring Company for the use of its unloading plant on the coal wharf set apart for the use of the public in the harbour of Quebec?

Unemployed, Men in Vancouver
2.	Is the St. Lawrence Stevedoring Company a subsidiary of the Canadian Import Company?
3.	Is the president of the St. Lawrence Stevedoring Company an officer of the Canadian Import Company?
4.	What would be the approximate cost of a complete unloading plant if it were provided and installed by the National Harbours Board of Canada?


UNEMPLOYMENT
[Stage Direction]
On the orders of the day:
Mr. C. G. MacNEIL (Vancouver North):: In consequence of a telegram received today, I desire to ask several questions of the Minister of Labour (Mr. Rogers) in regard to the single unemployed situation in Vancouver.
1.	Have the departmental representatives been in direct negotiation with the representatives of the single unemployed to discover some basis of settlement of their grievances?
2.	What was the date of the last issue of deferred pay vouchers, and what was the amount for each individual?
3. Is it possible to undertake a registration of the men to ascertain the following facts: the number of men with domicile in British Columbia; the number of veterans with domicile in British Columbia; the number of those with domicile in other provinces for whom work may be available if transportation is accepted?
Hon. NORMAN McL. ROGERS (Minister of Labour):	The hon. member gave
me notice that he intended to ask this question to-day, but I received the questions in the form in which he has presented them only a few minutes before 'three o'clock. I shall deal with them, therefore, on the basis of such information as I have.
The answer to the first question is that thfe representative of the Department of Labour who has been in Vancouver for some time past has been in consultation with the provincial government but has not been in direct negotiation with the representatives of the single unemployed.
In reply to the second question, according to our information the last of the deferred pay vouchers were redeemable on May 15. I am not able to give the exact amount of money due to individuals, owing to the fact that the amount would depend upon the length of time they passed in the camps.
In answer to the third question, I may say the provincial government did undertake the registration of all single unemployed men
who passed through the forestry conservation camps. It was on the basis of that registration that the minister of labour of British Columbia made his proposal that these men who came to British Columbia from other provinces should be returned to their homes in such other provinces. As to work that may be available for those who entered British Columbia from other provinces, I can only say that these men when they return to their homes will be eligible in the same way as others in the same position with respect to youth training plans and such works projects as may be in progress within the provinces to which they go.


Mr. ANGUS MacINNIS (Vancouver East):: Would the minister answer a supplementary question in this same matter? This situation in Vancouver is no doubt causing just as grave concern to the government as to those of us who represent that city. The meagerness of the information we have at the present time-


Some hon. MEMBERS:: Order.


Angus MacInnis: My question will be very brief, but it needs a little explanation. In view of the meagreness of the information given in reply to the questions asked by the hon. member for Vancouver North (Mr. Mac-Neil) would the government provide an opportunity this week for discussion of this matter, either on an item in the Labour department estimates or by some other means?


Mr. LAPOINTE (Quebec East):: We might have discussed that instead of the padlock law the last two days.


Angus MacInnis: Well, that is entirely in the hands of the Minister of Justice.


Mr. ROGERS:: There was a discussion some time ago on this very question, as my hon. friend is aware, which occupied the greater part of an afternoon. I am far from suggesting that such a discussion exhausted the possibilities of debate on a question of this kind. But I should like to assure my hon. friend, if he needs such assurance, that the government is fully aware of the situation, and certainly members of the government are equally anxious that it shall be remedied quickly and in the proper way.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. SAMUEL FACTOR (Spadina):: May I ask the Minister of Justice (Mr. Lapointe) whether the house will sit on Thursday, June 9, the king's birthday?
3460	COMMONS
Business of the House-King's Birthday


Ernest Lapointe: I have looked over the record of the last ten years as to the sitting of the house on the king's birthday. In four of the past ten years parliament was not in session. In two of the ten years the house observed the holiday by not sitting. In two others the house adjourned for some time during the day. In 1929 we were having morning sittings at that time and the house adjourned at one o'clock. In 1935 the house adjourned from three-thirty to eight o'clock. In 1936 parliament prorogued on the king's birthday, at five o'clock in the afternoon.
The government would be willing to ascertain what the feeling of the house is with regard to this matter, and I think there would be no better way than to instruct the whips to confer together and report. We shall be quite willing to meet the wishes of the house.


Mr. BENNETT:: On some of the occasions to which reference was made the garden party was held in the afternoon, and the house adjourned to permit hon. members to attend.



MEMBER FOR MOOSE JAW


[Stage Direction]
On the orders of the day:
Richard Bedford Bennett: I desire to ask a question of the government. Which member of the government may answer it I do not know, but presumably it would be the acting Prime Minister (Mr. Lapointe).
The press carries a dispatch indicating that a member of this house, namely the hon. member for Moose Jaw, Mr. J. Gordon Ross, stated publicly on May 31 as follows:
I am therefore making this definite statement, that if the Patterson government is returned on June 8 the Saskatchewan river water project will be completed this fall.
My inquiry is whether or not there is any warrant for such a statement being made on behalf of the government of this country.


Ernest Lapointe: Of course my right hon. friend cannot vouch for the accuracy of that newspaper report; neither can I. I think the thing to do first is to-


Mr. STEVENS:: Wait until after the Saskatchewan election.


Ernest Lapointe: -ascertain whether it is a correct statement. Then I shall be glad to give a further answer to the question.


Richard Bedford Bennett: I may say that I have made some inquiries, and I have a telegram- which obviously I cannot read-indicating that it is correct. But it is a rather serious matter for a private member of this house to undertake to promise expenditures of public money which have to be voted by the parliament of Canada.


Ernest Lapointe: Well, the hon. member for Moose Jaw is a pretty intelligent man, I should be surprised if he got himself into such a difficulty.


Richard Bedford Bennett: The right hon. gentleman is the only one who would be surprised.


Mr. STIRLING:: Meantime it is a Liberal joke.


Mr. BAKER:: It is no joking matter.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. A. H. MITCHELL (Medicine Hat):: Yesterday I addressed a question to the Minister of Transport (Mr. Howe) and the Minister of Labour (Mr. Rogers) and asked the Minister of Justice (Mr. Lapointe) to direct their attention to it. Might I have an answer to that question to-day?


Clarence Decatur Howe: My attention has been called to the question, which has to do with staff reductions on the Canadian National Railways. These are not matters of which the Department of Transport has knowledge; they are a detail of railway management. Staff reductions are taking place, partly seasonal and partly due to a serious reduction in traffic in certain areas. If my hon. friend would like to question the management on this and will place his question on the order paper, it will then be referred to the management in the ordinary way for such answer as they may care to give.



PENITENTIARIES COMMISSION


[Stage Direction]
On the orders of the day:
Richard Bedford Bennett: Would the Minister of Justice (Mr. Lapointe) tell the house whether it is proposed during this session to proceed with legislation based upon the report of the penitentiaries commission? Because if it is, obviously we shall have very little opportunity to give the matter the study that its importance demands.

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Ernest Lapointe: I think there may be preliminary legislation as a result of the report, but it would be physically impossible to deal with all the matters and recommendations of the report at this present session. I think when my right hon. friend gets the report he will see that it will necessitate long and careful study and consideration.


Richard Bedford Bennett: When may we expect the report?


Ernest Lapointe: Some
time next week.



MUNICIPAL IMPROVEMENTS


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved the second reading of Bill No. 143 to assist municipalities in making self-liquidating improvements.
Henry Herbert Stevens: Well, Mr. Speaker, is this bill going to pass without any discussion at all? It was presumed the minister would on presentation of an important measure of this kind make a statement in regard to the bill.


Mr. DUNNING:: My hon. friend could not have been in the house the other day.


Henry Herbert Stevens: I was in the house.


Charles Avery Dunning: I made a very complete statement on the resolution, and at this stage I cannot add anything to what I then said. When the bill gets into committee I anticipate a fairly general discussion on the application of the individual clauses. On second reading, however, I can add nothing to the very full statement I made in the debate on the resolution.


Henry Herbert Stevens: One is somewhat under
a handicap in discussing this bill, which is a very important one, particularly on second reading, when the principle is accepted, because naturally in committee we are limited to the discussion of sections and the details of sections. That is particularly so in view of the fact that no notice was given and there has not been any further statement by the minister. At least the minister will remember that when the resolution was being discussed there were several points raised to which the minister replied that these would be disclosed with the introduction of the bill. That I think occurred on at least two or three occasions.


Charles Avery Dunning: I do not think my hon. friend can quote one case where that occurred on this bill.


Richard Bedford Bennett: Yes.


Henry Herbert Stevens: I am quite sure of it, though I speak subject to correction. If the minister says he did not say so, of course I accept his word, but my recollection is that he did. For instance, I am reminded that the question of unorganized districts was raised, and it was said that this would be dealt with when the bill was brought down.


Charles Avery Dunning: No; I said it would be covered in the bill, and it is covered in the bill in so many words.


Henry Herbert Stevens: At least we might have expected some statement from the minister on the introduction of his bill. In any case, despite all these handicaps, I think there should be a discussion of the bill.


Charles Avery Dunning: Very well.


Henry Herbert Stevens: This is the point about which I am concerned, and I am sure other hon. members are concerned about it as well. In the consideration of this bill or any of its sister bills, if I might use that term, we are dealing with the policy of the government in regard to the whole unemployment problem. I have no desire to object in so far as this particular bill is concerned, as far as it goes, to a very limited degree, in dealing with the question of unemployment. It will be recalled that during the discussion of the resolution it was also repeatedly emphasized by the minister, I think, and others, that the very essence of this measure was the question of unemployment, that it dealt with unemployment. Therefore I think it is competent for a member, while approving of this bill, at the same time to call in question the adequacy of this or any other measures I have seen so far to deal properly with the question of unemployment.
I notice that this bill provides for
830,000,000 to be loaned to municipalities for works which are described as self-liquidating projects. While one is naturally inclined to give approval to the move, still one is reminded somewhat of the policy of what are known as small loan companies. There are certain needy borrowers, and these companies hold themselves out as domestic physicians, qualified to deal with domestic problems. They invite the borrowers to come and consult them in regard to the solution of their domestic difficulties; then they lend them money at two per cent per month. Here the federal government, knowing the distress of the municipalities; knowing the domestic
Municipal Improvements

problem, if I might apply that term, that exists in Canada with regard to the financing of the municipalities, says to the municipalities, " Now, we will lend you a certain limited amount of money." In some instances it will be a matter of only a few thousand dollars; in the larger cities it will amount to half a million or more, according to size. But the government says, " You must bring to us first a security that is absolutely self-liquidating and satisfactory to us. Then you must have your note endorsed by the province; and if you comply with these requirements we will lend you the money at two per cent- two per cent per annum."
Well, Mr. Speaker, whatever else may be said about it, certainly this is not a very great contribution towards either the solution of unemployment or the relief of the municipalities from the financial distress under which they are now labouring. During the debate on this general subject some weeks ago-I am not permitted to quote it, but I think there can be no objection to my just referring to it- I took the liberty of pointing out to the house that one of the chief problems in Canada was that municipalities-the same thing applies to provinces, but for the moment I am limiting myself to municipalities-are called upon to bear new burdens in these days, peculiar to the conditions that have existed for the last eight, nine or ten years. They are called upon to bear new and onerous burdens; that is, to pay a substantial share of the cost of general unemployment relief, and, incidentally, to care for ever-increasing numbers of indigent people; because without question the numbers of indigents to-day have increased greatly as compared to the numbers for whom the municipalities were called upon to care a few years ago. That of course is altogether apart from what one might call industrial unemployment.
This bill offers no relief to the municipalities in that regard at all; I think one would search in vain through the measures presented to the house to find any suggestion of giving assistance to the municipalities in that way or for that purpose. I believe it would have been infinitely better at this time had the government provided $30,000,000 or more to, shall I use the word, subsidize the municipalities, to assist them in carrying on their burden of finance in these days of ever-increasing social duties. I know that immediately the answer will be made that this parliament cannot vote money to municipalities, because municipalities are the creature of the provinces. All that is admitted, but I

do submit that where there is a will to achieve an end, ways and means to reach that end can always be found.
What are the municipalities faced with, and what is the effect generally on the country of their condition? In the first place, they have increased taxes upon realty to a point where it is admitted by all that new building operations are virtually an impossibility because of the heavy burden of the realty tax. We are told that another bill will foe introduced, dealing with housing. But at the very root of the housing problem lies the weight of municipal or city taxation, and it is not wholly the fault of the municipality. I will admit that during the years of industrial activity and prosperity, many cities and municipalities were somewhat reckless in their borrowing. But that was not peculiar to municipalities; it was common to them, to provincial governments and to the dominion government; and furthermore it was prevalent in private industrial corporations. All through the economic structure in the days of activity we had a degree of profligacy, if you like to use that extreme term, or recklessness in borrowing which we now realize was improvident and unwise. It does not lie within the right of this parliament to reflect upon the municipalities for having been improvident in the past, because the whole country is at fault in that respect. The failure to move forward in necessary construction is fundamentally due to the heavy taxation on realty in the municipalities. A month ago or more I made the suggestion that parliament might consider subsidizing municipalities to effect a reduction in taxation, in other words, offer to assist them by grants if a corresponding reduction were made in the rate of taxation on realty in the cities. If something of that kind were done-and I submit it would not cost this year more than this amount of $30,000,000-it would be infinitely more effective in starting the wheels of industry through a building program than will the rather left-handed method of assistance suggested in this bill. That is one point I wish to emphasize.
The other point is this question of unemployed single men. What are we going to do about it? Apparently, as near as I can judge, we are going to do nothing more about it than is set forth in the supplementary estimates tabled a week or two ago. In these estimates I see very little for that purpose. There are some other grants in aid to the provinces, but these grants in all probability will-

Municipal Improvements


Mr. SPEAKER:: Order. I think there is too much disturbance in the chamber. I will call upon hon. members to remain in their seats and to be silent during the debate.


Henry Herbert Stevens: Thank you, Mr. Speaker. I submit that, while these observations of mine do not interest hon. members very much, the subject matter must challenge the attention of parliament. I am warning parliament that if we do not grapple with these problems this session we shall invite disaster.
I was just about to make an observation regarding these unemployed single men.


Charles Avery Dunning: I hesitate to interrupt
my hon. friend, but there are many opportunities, on appropriate questions, to survey the whole field of problems of this kind. I gather that the motion for second reading is still before the house. I suggest that, in order to prevent a very wide range in debate over the whole economics of the country, hon, members should at least stick to the principle of the bill, which is the making of loans to municipalities for these purposes. I know that it permits a pretty wide latitude, but I do think my hon. friend is rather exceeding it at the moment.


Walter Edward Foster: Will the hon. member
confine his remarks as much as possible to the principle of the bill, which has to do with the lending of a certain amount of money to municipalities?


Henry Herbert Stevens: Mr. Speaker, no member of the house is more desirous of submitting to your ruling than I am, and if your ruling is that this trend of observation is out of order I shall not pursue it. Nevertheless I am going to say a few words on the bill. I did wish to approve it, but if we are to be precluded from discussing the other elements of unemployment, only one small part of which is dealt with in this bill, I am going to say that I think the bill is wholly inadequate and is not an answer to the demands and the needs of the country.


Charles Avery Dunning: Well, it is not put forward as a complete answer.	*


Henry Herbert Stevens: I know.


Charles Avery Dunning: I so stated in my remarks the other day.


Henry Herbert Stevens: Yes; and the moment I refer to some of the others-


Charles Avery Dunning: Oh, no, no.


Henry Herbert Stevens: Just a moment,-and the moment I refer to some of these other needs, and recite or indicate what provision is made 51952-220
to take care of that condition, a point of order is raised and I am asked to limit myself strictly to this bill.


Charles Avery Dunning: That is cheap.


Henry Herbert Stevens: The minister says "that is cheap." Perhaps I might on a point of order ask you, Mr. Speaker, if language of that kind is warranted, from the Minister of Finance or any other hon. member?


Charles Avery Dunning: It is not. I will anticipate your ruling, Mr. Speaker, and withdraw it.


Henry Herbert Stevens: Well, that is that. Another point: if you want to hair-split on rules,- usually an hon. member rises in his place when he addresses the Speaker. I am not a hair-splitter on rules, and I was not desirous of wandering far afield. I shall take my seat now, but I am going to say again to the house, we are playing with fire-


Charles Avery Dunning: Not on this bill.


Henry Herbert Stevens: -when we disregard the unemployment situation as it applies to single homeless unemployed men. That is what we are doing, and this bill is not an adequate answer to that. I simply close with saying that as far as this bill goes, which is a very short distance, towards the solution of these problems, I welcome it. But the government must not expect that the acceptance of this bill or the meagre votes in the supplementary estimates will be an answer to the demands of this country for a solution of the unemployment problem.


Angus MacInnis: I did not say anything on the resolution which preceded this bill, not because I did not feel there was something which could be said, but because I was and am in agreement with the proposals in the bill. I have no doubt that the Minister of Finance (Mr. Dunning) realizes just as much as the rest of us that the bill is not perfect or adequate to meet the situation now confronting the people of Canada. However, in my opinion the bill is a good start. The principle involved is a good one. I disagree with the hon. member for Kootenay East (Mr. Stevens); I believe that this method of providing funds for the municipalities is much better than to grant subsidies. The time may come when that will be necessary, but for the present I believe that this is the better way of dealing with the problem. It is unfortunate, but the fact is that when a municipality receives money, through either federal or provincial agencies, it considers it as something that has

Municipal Improvements

come right out of the sky and that may be spent without any great regard for economic consequences. I have seen that happen time and time again. As I say, the time may come when this government will have to help the municipalities, through subsidies, but if that is done there will have to be very stringent control over the expenditure of the money.


Henry Herbert Stevens: That was not my suggestion. I said that it would be accompanied by a reduction in taxation.


Angus MacInnis: I disagree again with the hon. member for Kootenay East. I am doubtful of its being possible to reduce taxation in that way. I came here in 1930 when we were just entering the depression. At the special session of 1930 the government decided to appropriate S20,000.000 to meet the unemployment conditions of that time, with which action I agreed. The intentions were good, but I am convinced now that that $20,000,000 did more harm than good. Some municipalities actually went into bankruptcy in order to meet the dollar for dollar provision.
I do not wish to say anything more about this bill. If this session lasts much longer I am sure the government will have to consider other measures to meet the situation that now confronts us. The fact that home building is at a low ebb is not due altogether to high taxation. The poor are without homes, but we must realize that they are also without clothing and without proper food. High taxation does not prevent their getting new clothes. High taxation does not prevent their getting proper food. Some little time ago I attended a meeting where this housing question was being discussed. One gentleman said that the reason why the housing situation was so bad was that the building trades were organized so well and had forced up wages to a point where people were not able to build because of the increased cost. When I heard that statement I thought of the report of the textile commission. No one can say that wages are high in the textile industry. No one can say that wages are high in the clothing industry. No one can say that wages are high in the boot and shoe industry. No one can say that the prices received by the farmers for their farm products are too high. Yet the workers need clothes, they need boots and shoes and they need decent food. The high wages paid in the building or any other industry is not the cause of the poverty of the working class.
Let me repeat that I approve of this measure, but I believe that a great deal will depend

upon the way it is administered. I have already brought it to the attention of the authorities in Vancouver and I hope they will be able to take advantage of it so far as it goes.


Richard Bedford Bennett: Mr. Speaker, this is the second day of June and this house has been in session since January. It sat during the months of February, March, April and May. The government either had a policy or it had not. Its duty was to have a policy. Frequently in days gone by I listened to appeals by members of the present government to the emotions of the people of this country because it was alleged that a policy was not forthcoming. To think that on the second day of June we have one instalment of a policy being introduced into this house to deal with the problem of unemployment in Canada! This one measure is so framed that unless action is taken by the legislature of the province it will not be effective.


Charles Avery Dunning: No.


Richard Bedford Bennett: Excuse me, I have made that statement and I shall support it. I admit that the minister has changed his bill from the statement he made on the resolution.


Charles Avery Dunning: I have not changed it.


Richard Bedford Bennett: Some one has, for he stated positively what was going to be done and that is not what is in the bill. Let us have no misunderstanding about that. Let us go a step further.


Charles Avery Dunning: Mr. Speaker, I must take exception.


Richard Bedford Bennett: You can take exception, but that is not a point of order. Year after year, month after month, week after week and day after day, during the years from 1930 to 1935, complaints were heard from this side of the house, in season and out of season and criticisms bitter and remorseless were launched against the government of the day because of what was said to be the delay in dealing with these matters. Now we find this government, on the second day of June, introducing what the Minister of Labour (Mr. Rogers) described the other day as the policy of the government to deal with unemployment. That policy was to be part housing, part self-liquidating loans and part something else. If this government had this policy, as they should have had, when the house met, why did they let the legislatures of the nine provinces prorogue without being advised of it? Let some one answer that. Why did they let

Municipal Improvements
the legislatures that are to give the guarantees with respect to this indebtedness come and go without taking any action? Let them answer that.
Let them answer one thing more. The municipalities cannot issue their debentures without the authority of the provincial legislatures. They have no power to do so. I had a telegram this morning from the mayor of Calgary pointing out that he could not issue any debentures unless the legislature gave him the power. Had he known of these proposals he would have sought and obtained the necessary power from the legislature before it prorogued. The other day we had the spectacle of the Minister of Finance (Mr. Dunning) rising in his place and telling the people of Canada that this problem, which the Prime Minister (Mr. Mackenzie King) had declared in 1935 to be the most important problem in Canada-he declared that prior to the election-


Charles Avery Dunning: What did I say?


Richard Bedford Bennett: He declared it was the
most important problem. Knowing that it was most important,, knowing that this matter had to be dealt with, he allows the legislatures of the nine provinces to come and go. We have the spectacle of the Minister of Finance standing in his place and saying that in order to deal with this bill and other measures the provincial legislatures will call special sessions.


Charles Avery Dunning: No, no; quote me fairly.


Richard Bedford Bennett: They may call special
sessions.


Charles Avery Dunning: Oh, no.


Richard Bedford Bennett: Probably would. Let
us read his words.


Charles Avery Dunning: That is right; read them.


Richard Bedford Bennett: The minister said, as
reported on page 3386 of Hansard:
The security taken by the government will be the debentures of the municipality. The loan, as I indicated before, must be guaranteed by the province in which the municipality is situated, and the project must be approved by the government of the province.
Note those words, "must be approved by the government of the province." This bill does not provide that at all, it provides that the municipality must take steps to get approval. Let us look at it. Section 3 reads:
No agreement shall be entered into under this act unless:
(d) the municipality has obtained an undertaking from the government of the province concerned in form satisfactory to the minister that such province will guarantee to the govern-
51952-220J
ment of Canada the payments for interest on and amortization of the loan, required to be made by the municipality to the minister.
That is not what the minister said the other day. He says now that these municipalities must get an undertaking from the government of the province that they will guarantee these payments.


Charles Avery Dunning: But I did say just that the other day.


Richard Bedford Bennett: Mr. Speaker, I will not
have interference with what I have to say.


Charles Avery Dunning: And I will not be misquoted.


Richard Bedford Bennett: I read a moment ago
what the minister said. He said:
The loan, as I indicated before, must be guaranteed by the province in which the municipality is situated, and the project must be approved by the government of the province.


Charles Avery Dunning: Of course. That is
what I said, but it is not what you said I said.


Richard Bedford Bennett: I read it a moment ago, and I have just read it again, and now I will read, on the second reading of this bill, section 3, subsection 2, paragraph (d)-I will read the whole of the section:
(2) No agreement shall be entered into under this act unless:
(a)	the municipality submits detailed financial estimates demonstrating to the satisfaction of the minister that the project to be constructed or the extensions or improvements or renewals to be made will be a self-liquidating project;
(b)	the construction, extension, improvement or renewal of the project is urgently needed and will assist in the relief of unemployment in the municipality concerned;
(c)	any application by a municipality for a loan under this act and the project to be financed out of the proceeds of the loan have been approved by the lieutenant governor in council of the province in which the municipality is situated; and
(d)	the municipality has obtained an undertaking from the government of the province concerned in form satisfactory to the minister that such province will guarantee to the govern ment of Canada the payments for interest on and amortization of the loan, required to be made by the municipality to the minister.
The onus now, sir, under this statute is placed on every municipality that proposes to use any of this money to secure from the government of the province an undertaking that they will guarantee the payments-not get a guarantee but an undertaking to give one; not an undertaking between the two governments, federal and provincial, but that the municipality will undertake this work. And I have just said that some of the municipalities have no power to issue debentures
Municipal Improvements

without legislative authority. Therefore they are blocked at the very start. There is the end before you start. The municipality of Calgary cannot issue debentures just because they feel like it; they have to have authority to do so. I do not know how it is with respect to other provinces, but I am told from the short inquiries I have been able to make this morning, and I believe the information to be accurate, that in some of the provinces the approval of a board is required for the issue of debentures, and that in other cases there must be direct authorization by the legislature to incur additional debt. That means that if one of our western municipalities proposes to increase its debt by $100,000, and thereby secure the benefits of this act, it has to obtain from the legislature power to increase its debenture debt to that extent. Obviously I am not undertaking to speak for all the provinces. I do not know what the law may be in Prince Edward Island or Nova Scotia or New Brunswick, but I do know this, that the legislatures of those provinces have all met and have prorogued since we came into session.


Samuel Factor: That is why paragraph (d) is put in.


Richard Bedford Bennett: A solon has now come to the rescue of the government. What an absurdity that an observation of that kind should be made, that that would cure this difficulty.


Samuel Factor: Mr. Speaker, I rise to a point of order. The right hon. gentleman said that my statement was absurd, or words to that effect. I say that is the reason paragraph (d) is there.


Richard Bedford Bennett: That is not a point of order, Mr. Speaker, and there is no necessity for the hon. gentleman to demonstrate it.


Samuel Factor: I have the floor, Mr. Speaker.


Richard Bedford Bennett: It is not a point of order.


Samuel Factor: Mr. Speaker will rule on that.


Richard Bedford Bennett: You cannot interfere with the conduct of debate by jumping up and saying, "it is a point of order," just because you do not like the language that is used by the speaker, unless such language contravenes the rules. To say that a statement is absurd does not contravene the rules.


Samuel Factor: I rise to a point of order, Mr. Speaker. The right hon. gentleman has made the statement that my words are absurd. I say that is not proper language to use in this house. I was giving the reason for paragraph (d).


Richard Bedford Bennett: There is no necessity to give it. The hon. member has raised a point of order, and he cannot make a speech. He sa3's the word "absurd" is unparliamentary. That is the point, and the Speaker has to decide it.


Samuel Factor: I have a right to say why
the statement is not absurd.


Richard Bedford Bennett: No. That is exactly what you do not have the right to do.


Mr. MACKENZIE (Vancouver):: Which is absurd?


Walter Edward Foster: I do not see the word " absurd " mentioned in Beauchesne e Rules and Forms, but I may be mistaken.


Richard Bedford Bennett: Mr. Speaker, I said it was absurd to make the observation that was made, and the demonstration of it was wholly unnecessary. But now that it has been demonstrated by the hon. gentleman himself, I direct attention to the fact that that section will not in any sense authorize or confer power upon the municipality which it can get only from the legislature. As the minister himself stated the other day, the legislature creates the municipality. The legislature confers upon it the powers that enable it to function as such. The extent of its powers is determined by the act of the legislature creating the municipality or by the general law of the province, as defined by statute law. The mayor of the city to which I referred directs attention to the fact that he is unable to issue debentures unless he has legislative action. Paragraph (d) does not touch that at all. It asks that the municipalities shall go out and get from the government a promise that they will introduce a bill guaranteeing the payments. The minister said it was a condition that they should be guaranteed. I have read the statement he made the other day, and I will read it again if necessary. He said:
The loan, as I indicated before, must be guaranteed by the province.


Charles Avery Dunning: Of course it must. That is what the bill says.


Richard Bedford Bennett: Does the minister for a single moment suggest that to get an undertaking from a government to a municipality is a guarantee?


Charles Avery Dunning: No.


Richard Bedford Bennett: Well, the minister's
language is that it must be a guarantee.


Charles Avery Dunning: That is right, and it will be.

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Richard Bedford Bennett: And the bill says that the agreement between the municipality and the government of the province must be obtained by the municipality.


Charles Avery Dunning: Yes.


Richard Bedford Bennett: Now I come back to this, and I cannot stress it too strongly. Can any hon. member of this house visualize the circumstances under which the government introduces at the end of May a bill that contemplates these acts being done, involving action by legislatures, and seeing the legislatures come and go, without this government taking any steps? Is this policy a new policy? Was it thought out before the house met? Was it thought out when the legislatures were in session? Was it considered whether they were in session or not? Is it any wonder that the people of this country ask, what is the matter with parliament? Why is no action being taken, they ask, to deal with the unemployment problem? There are inquiries and correspondence everywhere, asking why nothing is being done. And then when the mountain labours and brings forth a mouse, what have we? We are told that what the government is doing is part of a grand policy to deal with unemployment. The Minister of Labour said: Keep that in mind- this is only part of a program. How long have they had the program? How long have they had the policy? Did they have it when the legislature of Prince Edward Island was in session, or the legislature of Alberta, or of British Columbia, or of Quebec, or Ontario? If they had, why didn't they act? If they had not, why did they not bring down a policy that does not contemplate the necessity of the legislatures meeting in special session?
With respect to the meeting of the legislatures the minister used these words, at page 3399 of Hansard:
Perhaps I should at this stage indicate what is in the mind of the government regarding the point raised by the leader of the opposition (Mr. Bennett). In fact, I think I should apologize for not having anticipated it, but I overlooked it completely in making my statement.
The laws of the provinces relating to municipal expenditures vary very widely; the powers vested by the legislatures in the various lieutenant governors in council vary very widely as also do the powers extended to municipalities to do certain things involving capital expenditure. It is quite impossible to frame a measure which would meet all the varying conditions, and I was compelled therefore to visualize the possibility that this scheme might have a sufficient appeal to the various provincial authorities to warrant them even in calling the legislature together for a couple of days to make possible what might be required in their particular case, for the
municipalities on the one hand and for themselves on the other, to enable them to come within the ambit of the legislation.
I will be perfectly frank, Mr. Chairman, and say that I do not think the dominion can extend this credit on any less secured terms than those involved in the bill. As the one charged with the guardianship of the treasury, I should say that I believe the security asked for by this legislation is reasonable and no more adequate so far as the dominion is concerned, especially when we have in mind the fact that each legislature controls absolutely the municipalities within its borders. The municipalities are wholly the creatures at all times of the provincial legislatures. If we proceed to lend direct to the municipalities- and there is some question whether we could, as indicated by the leader of the opposition-it would be open to any provincial legislature so to change the conditions under which its municipalities operate as to make it quite impossible for us to get the money back. We might as well face that. That being the case, seeing that we are rendering this assistance to institutions which are wholly the creatures of provincial legislatures, I think that when we are lending the money so cheaply, when we are taking the degree of loss on the loan which I indicated in my earlier remarks on the subject, the minimum security we should ask is that the province should guarantee that the municipality will keep the obligation it has incurred for a project; and remember, that the project must itself have the approval of the provincial government before it can become eligible for a loan under this statute.
I have read the whole passage in order that there may be no difficulty on that score, and I do point out that nothing short of a provincial statute will meet the conditions imposed in some provinces. Obviously, I cannot speak for all of them, but I say that some of them require an act of the provincial legislature; and what is more, sir, the minister himself recognizes it. He said he thought that they might meet together for two days- it is important enough for that-in special session to deal with the matter. And they allowed the legislatures to meet and prorogue, while they did nothing. That is the policy, that is the program of the government. Do you call that a policy, Mr. Speaker? Do you call that a program? What do you think the Canadian people would have felt like if they had been told in 1935, "Our program is to call parliament together in January and let the months of February, March, April and May go by, and in the closing days of May put a resolution on the order paper, following that up with a bill, the second reading of that bill being moved on the second day of June, contemplating at the same time, both in the resolution and in the bill, that nothing short of an act of the legislature, in some of the provinces at any rate, would comply with the terms of that program or policy." For the Minister of Finance himself, speaking for the government,
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so intimated. But it does not apply to this alone. The Minister of Labour (Mr. Rogers) the other day said, "There is other legislation and the same principle is to be applied." Housing was one matter which was mentioned.
Some day, Mr. Speaker, I will read a few extracts from Hansard of 1934 and 1935, when action was being taken in March, when we called together the provincial premiers and obtained their views as to what had to be done. I am bound to say that I never found any difficulty in dealing with them except in one instance. They pressed their views, and we reached agreements which were loyally carried out by the provinces on the one hand and by the dominion on the other; and if there were differences of opinion they were liquidated peacefully and quietly. But in 1935 the placards declared that there was to be, "Harmony! harmony! There are eight provinces, and we shall have the nine of them wtih the dominion, all one happy family of Liberalism." That was what was broadcast to the electors of the country, and now we have the full fruition of it in a bill that can be made effective in 1938 only in some parts of Canada by an act of the legislature which would involve that body meeting in special 'session, as pointed out by the Minister of Finance. That is the story. And, what is more, as pointed out in the communications that I have been receiving, these contracts and arrangements should all have been made before June; in other words, the time to prepare for them was during the months that have passed. But every time any question was asked with respect to any policy of unemployment relief, we know what answer was given. No wonder there is a smile on the faces of some of my hon. friends. The hon. gentleman at whom I am now looking was in the house from 1930 to 1935 and he will recall some of those historic days. There are the facts, however. Now Mr. Speaker, I commend to hon. gentlemen, who will so vociferously cheer the proposals of their government, a reading of Hansard for the years from 1930 to 1935. If they do, they will see what their party said then, and they will then explain to the Canadian people-


Charles Avery Dunning: They might also look at what the right hon. gentleman said while they are looking up the other speeches.


An hon. MEMBER:: Hear, hear.


Richard Bedford Bennett: You see, Mr. Speaker, precisely what I said would happen has happened. The alleged wit of the Minister of Finance is relied upon to relieve a tension

that has become very desperate. The Minister of Finance says, "Let them read what you said."


Charles Avery Dunning: It would be instructive.


Richard Bedford Bennett: Well, they would find that there was no waiting until the second of June to take action. Of course, one does not expect anything like fairness about these things. When a government is entrenched as firmly as the present administration is, it folds its arms and says, "What are you going to do about it"? I may remind you that you are there with a minority vote of the electorate of Canada to begin with, and-


Mr. BOTHWELL:: It must be a rather wonderful experience to be in opposition.


Richard Bedford Bennett: Yes, it is a wonderful experience to be in opposition but never a new one to me; and I can say to the hon. member for Swift Current (Mr. Bothwell) that it is perhaps more enjoyable than being in office.


Mr. CLEAVER:: May I ask a question?


Richard Bedford Bennett: I see no reason why the hon. gentleman should, but if it will give him any pleasure I shall be glad to answer his question.


Hughes Cleaver: Will you be good enough to indicate whether you are opposing or supporting this legislation?


Richard Bedford Bennett: Either the hon. gentleman is suffering from lack of hearing, or else he does not read, I do not know which; but if he was in the house the other day and listened, then he knows what was said.


Hughes Cleaver: I thought you had a change of heart.


Walter Edward Foster: The hon. member must not address another hon. member personally, but must refer to him by his constituency.


Richard Bedford Bennett: Well, Mr. Speaker, I
think that can be excused in the circumstances. I asked the minister to devote some consideration to the practical problem as to how this necessary legislation should be made available to the people of Canada in the year 1938. After so doing he might also indicate why we now have to wait, at this advanced season of the year, for the benefit of this legislation, when provision should have been made for it and it should become effective now, not later. Lastly he might indicate why, knowing of this policy, if it is intended to use it as a policy, he let the legislatures meet and part-happy to

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meet, sorry to part, happy to meet again- in special session. He might explain that also.


Mr. G. G. McGEER (Vancouver-Burrard):: I must confess that I had some difficulty in following the right hon. leader of the opposition (Mr. Bennett) because I was unable to apprehend the distinction he seemed to have so completely in mind between the language of the Minister of Finance (Mr. Dunning) and the language of the bill with respect to provincial guarantees. Certainly in British Columbia the cities and municipalities require no legislation whatever to authorize them to borrow money from the dominion government or from anybody else. They do have to pass a by-law to cover any expenditure to be made in the form of capital developments, but for a great many works such as are covered by this bill they would not even have to pass a by-law. Had the leader of the opposition directed his remarks to the fact that some legislative assemblies may not have conferred power on the lieutenant governor in council to give the guarantee required in this bill, it would have been more to the point, because I doubt very much whether all our provincial lieutenant governors in council have the power to guarantee municipal borrowings for all purposes covered by this bill.


Richard Bedford Bennett: I pointed out the other day that most of them in my opinion have not. I dealt with that.


Gerald Grattan McGeer: In any event it seems to me that that defect, if it be one, is fully covered in the section, because it provides that the guarantee may be in a form satisfactory to the minister; which means that the minister could accept a provisional guarantee by order in council, which would be subject to confirmation by the legislature sitting at its due time. I can see no reason why any loan under this provision need be delayed for the calling of a special session of a provincial legislature.
There is one item I should like to draw to the minister's attention, and suggest that one of the fields of real employment that could be aided by this kind of financial assistance is the construction of sewers and waterworks facilities. In the city of Vancouver and surrounding municipalities we have established a metropolitan sewer board and metropolitan water board. That organization is the largest employer of unemployed labour in and around Vancouver. It was through the activities of the sewage board and water board that we were able to absorb considerable unemployment; for in such work
a very large number of the men on relief were given the opportunity and privilege of working out their relief. The undertakings are purely municipal, and I think it would be wise to include-


Richard Bedford Bennett: The minister dealt with that the other day by illustration.


Gerald Grattan McGeer: -boards carrying on municipal works as well. While I think that the definition of a self-liquidating project is very wide, there is a class of work in and around cities from which real benefits to the revenue of the cities come but which can hardly be described as self-liquidating developments because the contributions made to them are largely free. I suggest that in the field of tourist trade development there are a great many opportunities for improving parks and beaches and developing tourist attractions in almost every city in Canada, which provide an opportunity to give employment to a large class who are now unemployed, and develop a tourist trade which in itself is a continuing proposition, and one of the best incentives to ancillary activities that we have yet found. I know of several opportunities in my own province on which unemployed could be set to work and the tourist trade greatly facilitated, if only funds were available for developing the kind of attractions which not only draw tourists but keep them in and around our cities for longer periods of time. In addition to the suggestion I made with regard to boards carrying on municipal works I respectfully suggest to the minister that the definition of self-liquidating projects might be extended to include undertakings designed to improve Canadian tourist trade. The tourist trade of Canada to-day is of tremendous importance to the national government. The
20,000,000 tourists who come to Canada annually from the United States and exchange United States currency for Canadian goods and services are helping us to meet our national debt problem on the other side of the line-


Walter Edward Foster: I am sorry to have to remind the hon. member, as I did the hon. member for Kootenay East (Mr. Stevens) that he should confine his remarks to the purpose of the bill, which is to assist municipalities in making self-liquidating improvements.


Gerald Grattan McGeer: I was suggesting that the
bill might include the development of tourist trade. Of course if it is out of order to suggest that the provisions of the bill be extended, I could not discuss that; but I was not aware that the rules limited one, in discussion of the principle of the bill, tc
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exactly what is named in it and gave no privilege of suggesting any expansion. However I have no doubt the minister is just as well aware of what I was going to say as I am myself. So I bow to your honour's ruling and respectfully ask the minister to imagine what I might have said.


Archibald Hugh Mitchell: Mr. Speaker, I do not wish to delay the passage of the bill, and I hesitate to take part in the debate; but there are some things that must be said from this comer. I see no harm in subsidizing the municipalities as a means of improving their public utilities and services; but as a serious means of solving unemployment I do not think this bill can be expected to work very effectively.
In my opinion this bill indicates a tendency on the part of the government to indulge in a mild form of what has come to be known in the United States as pumppriming, which has not solved the unemployment problem in that country and will not solve the unemployment problem in Canada. I do not wish to discuss unemployment now, except to say that it is a world-wide condition, and I believe it is here to stay. But the right of the people to live should have precedence over any man-made rules and regulations, and until some government, this or some other, accepts those two facts and correlates them to our outworn money system, the effect of unemployment will grow and grow'. That I certainly do believe.
So, Mr. Speaker, while I have no objection to the bill now before the house, I feel like pointing out that it is another example of straw-clutching by a drowning, government.


Mr. ERNEST BERTRAND (Laurier):: Mr. Speaker, I was not going to participate in this debate and would not have done so had it not been, for the remarks of the right hon. leader of the opposition (Mr. Bennett). I always enjoy his wit, though sometimes it is very caustic. The right hon. gentleman said, "And they let the legislatures prorogue before introducing this bill." A few days ago one of the members on this side of the house took the time to calculate how long a session would last if all the members of this house were to speak as often as the hon. member for Broadview (Mr. Church) has spoken, taking the hon. member as an example. The result of the calculation was that it would take four and a half years to complete one session. The sessions of the legislatures are short and they generally start before our sessions begin here. I know in Quebec the legislature had started its session at least twenty to twenty-five days before we began,
[Mr. McGeer.J
and the session of the legislature lasts only about three months. So the hon. member for Broadview alone wiould take up enough time in discussing the other laws to cover the period during which the provincial legislatures would be sitting.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Definitions.
Henry Herbert Stevens: Might I suggest to the minister that after the words "local improvement district" the words "or board" might be added?-because in some municipalities there are joint boards which cover perhaps more than one municipality and operate as a body under. provincial charter. For instance, there is the joint sewage scheme and the greater Vancouver waterworks. So if the words "or board" were inserted perhaps it would cover a case of that kind.


Charles Avery Dunning: With respect to joint
works between various municipalities made possible by the existence of a board jointly controlled by them, I am advised that in most cases there would be no difficulty in complying with the language of the act, because in every case such boards are controlled by the municipalities. It would merely become a question, I am advised, of dividing the proceeds of the loan and the liability for repayment between the municipalities controlling the boards in a joint undertaking.
I do not think it is advisable to change the definition, but perhaps in some of the later sections the alteration of a word might make it quite clear that where joint works are contemplated they are not barred because more than one municipality shares in the administration of a board. I must say that was one point arising out of the discussion the other day which caused me to consider changing the bill slightly. The right hon. leader of the opposition unconsciously did me an injustice; up to date there has been no change at all in the bill from the original draft, and in the language I used the other day I gave what I believed to be an accurate description of the bill.


Richard Bedford Bennett: The resolution.


Charles Avery Dunning: The difference between us, however, is so slight-


Richard Bedford Bennett: The resolution itself is not reproduced in terms in the bill.

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Charles Avery Dunning: No, it was an abridgement of the bill.


Richard Bedford Bennett: Quite.


Charles Avery Dunning: But I think the difference between us is too slight to quarrel about. The intent is clear, and I think the intention we all have is similarly clear. When considering the matter of the joint boards, however, 1 thought it would be well to have the benefit of the discussion in committee before finally deciding how we should deal with such a situation, for the reason that I have been astonished at the degree of diversity which exists between the provinces in relation to their municipal laws. In attempting to devise a measure under the benefits of which all might come, definite terms have been very difficult to find. That, more than any other one thing, led me to say to the leader of the opposition the other day that I could visualize the possibility of provincial legislatures having to meet for a couple of days because of the wide differences in their own legislation with respect to municipalities and of course the great variations in the degree of authority one legislature has extended to its lieutenant governor in council and the degree of authority extended in another province. The main question that was in my mind, however-and I ask the right hon. leader of the opposition to believe this-in making that statement the other day was the wide diversity in municipal law.


Richard Bedford Bennett: I think the hon. gentleman made that quite clear.


Charles Avery Dunning: I thought that in committee we would hear from members from all parts of Canada as to the particular types of institutions which exist. If it is possible to put this legislation into such shape as to make it absolutely certain that no legislature will be required to meet, that will be a good thing; but I do seriously submit that it is not allimportant. The all-important thing is to have this legislation right from the standpoint of the parliament of Canada. We cannot expect to develop it in a manner which will fit the peculiarities of the municipal law of any particular province. We can go as far as is reasonable.
In the matter of the boards mentioned by the leader of the opposition the other day, and by the hon. members for Vancouver-Burrard (Mr. McGeer) and Kootenay East (Mr. Stevens) to-day, undoubtedly there is a sufficient common interest or common experience with regard to joint boards to make it
desirable to see to it that municipalities should not be debarred from the benefit of this act because they are operating jointly.


Richard Bedford Bennett: Not jointly.


Charles Avery Dunning: In fact I think we would desire quite the reverse.


Richard Bedford Bennett: I hardly think that is it. Would I be interrupting if I suggest that with respect to that definition of municipality, the difficulty which was referred to by me the other day, and which was again referred to this afternoon by the hon. member for Vancouver-Burrard, is a very real one. Why should we not say that it "includes a city, town, or any agency or board of such incorporated city or town"? The minister sees what I mean?


Charles Avery Dunning: But we have to go further and make provision for them, jointly.


Richard Bedford Bennett: That can come later when you are dealing with it, but the point I want to make is that there is no doubt that some of these metropolitan boards issue their own debentures.


Charles Avery Dunning: Yes.


Richard Bedford Bennett: I do not know how many do-probably very few.


Charles Avery Dunning: Very few.


Richard Bedford Bennett: That is the point I made the other day, and I thought the minister dealt with it fairly. They issue their own debentures, and in some instances they are guaranteed by the city or town.


Charles Avery Dunning: Yes, they are guaranteed jointly.


Richard Bedford Bennett: No, their obligation is direct, and the guarantee is by the city or municipality of which they are an agency.


Charles Avery Dunning: Or by several of them.


Richard Bedford Bennett: It might conceivably be by several of them.


Charles Avery Dunning: It is in some cases.


Richard Bedford Bennett: I am not sure of the situation concerning Winnipeg. I had to do with that in connection with a sewage disposal project. The minister will remember that there are a large number of municipalities surrounding the central municipality of Winnipeg. But I have such indefinite information that I cannot speak with any authority.


Charles Avery Dunning: I thought I had covered that in section 5 by the use of the term " other securities."
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Richard Bedford Bennett: Yes, I think that covers that side of it, but I am talking about whether or not you are going to include an agency or board of an incorporated city or town. It does not apply to villages; it applies just to cities or towns.


Charles Avery Dunning: "Incorporated village" is included there.


Richard Bedford Bennett: I see it is. That is why I say it does not require any board. I suggest they have them only in cities or towns.


Charles Avery Dunning: No, there was an application this morning for a group including a village who wished to come in a scheme with respect to a hospital which they could demonstrate was self-liquidating. That was by a board. It was a new type of board to me.


Richard Bedford Bennett: As a matter of fact I had not thought of this covering a municipal hospital, but clearly it is broad enough.


Charles Avery Dunning: Provided it is selfliquidating.


Richard Bedford Bennett: Quite, and provided the work is essential or desirable. I am a little perturbed as to whether or not the limitation which may be imposed by the definition of " municipality " may not shut some of these out. I say that with hesitancy to the minister.


Charles Avery Dunning: I intend to let section 2 stand, after an expression of opinion with regard to it.


Richard Bedford Bennett: May I say this?-the minister will get my point. Not many years ago a public minded citizen in one of our cities brought action to restrain the city council from utilizing money to send a delegation somewhere. The case went to the supreme court, and his view was sustained; the council were personally liable. Now there are those who do not agree with this general idea of our dealing with municipalities, and it may be that we have to contemplate someone taking proceedings. Therefore I am making these observations with the hope that we shall foresee as far as possible these difficulties and, by foreseeing them, prevent any possible interference with the operation of what in my judgment is a desirable plan.


Henry Herbert Stevens: Might I add one or two
sentences?


Charles Avery Dunning: I should appreciate a full discussion on that matter of definition, because I want to let it stand.


Richard Bedford Bennett: Before the hon. member speaks: I was pleased to see one thing which is the greatest departure this government has made in policy that I know of. It is going to permit estimates to be made by Conservatives, for on the second line it says, " on the basis of conservative estimates."


Charles Avery Dunning: Not your kind, though.


Richard Bedford Bennett: It is the greatest change on a question of policy that I have seen.


Henry Herbert Stevens: I was going to add a sentence or two. I confess that I am not right up-to-date regarding the situation on the Pacific coast as respects these joint boards, but this is as I recall it. It is about thirty years since the joint sewerage scheme was organized. It took in the then municipalities of Vancouver, Point Grey, South Vancouver and Burnaby. Three of those have been merged in a single city. Burnaby is still on the outside. This joint sewerage board was erected by a special bill of the provincial legislature. I cannot from memory say precisely how the municipalities pay their share, but I know that the joint board issued its own debentures or securities. Now, this situation may possibly arise. The city of Vancouver, which now represents three of those municipalities, they having in recent years been amalgamated, might be quite agreeable: the municipality of Burnaby, which for the time being is in rather serious distress, but is quite a minor factor in the board's operations, might find itself unable to contribute, but the other very preponderating part might be willing to absorb any part of the share of the municipality of Burnaby. Therefore it should be made possible for the agreement to be made with the entity, namely the sewerage board, which has its own powers and its own rights.
With regard to the waterworks, which is still more in line with this objective, I think it applies to North Vancouver. I wish the hon. member for that constituency were here, but he is not. The waterworks is located in the municipality of North Vancouver. It passes close to, and part of it passes through the city of North Vancouver; those two municipalities are involved; and I imagine its service extends also to West Vancouver. Then it crosses the Narrows and serves the city of Vancouver, and Burnaby, and, I think, the municipality of Richmond and Lulu Island as well.


Mr. REID:: And New Westminster.


Henry Herbert Stevens: New Westminster is now connected up; that is true. New Westminster used to have its water from another section.

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Charles Avery Dunning: Who owns the waterworks?


Henry Herbert Stevens: It is now called the Greater Vancouver Waterworks system.


Charles Avery Dunning: Do the individual municipalities do their own laterals?


Henry Herbert Stevens: Oh, yes. They do in the sewerage and, I imagine, in the waterworks as well.


Charles Avery Dunning: That solves it.


Henry Herbert Stevens: The point is that it may be found highly desirable and the opportunity may arise for a refinancing of .that which would result in a lowering of the charges. As far as the security is concerned it would be one of the best that could be offered in Canada for one of these projects.


Charles Avery Dunning: Refinancing under this
project?


Henry Herbert Stevens: For instance, if they had debentures maturing. But I presume that that means reconstructing?


Charles Avery Dunning: Oh yes.


Henry Herbert Stevens: There might be additions and extensions made which would enable the board to take advantage of this act. My opinion, frankly, is that it is very nearly approached now. "Local improvement district" is a pretty wide term in itself, but I think it would be well to add in there "or joint municipal board", because the security is even better than that of a single municipality. There should be no objection to it.


Charles Avery Dunning: If my hon. friend will permit me I should like to develop the difficulties that I have run into in that connection. I do not do this with any desire of declining to give further consideration to his suggestions. Here is the first difficulty with respect to the joint boards. We have had to place a limitation upon the amount which any one municipality can get. This limitation is based upon the relation of its population to the population of Canada. It would be possible to have a joint board made up of one large municipality and several small ones. If each municipality deals separately with the minister with respect to some self-liquidating project, the small municipalities, in spite of not .having sufficient population, could borrow up to $200,000. The large municipality would be subject to the limitation which works out at about $3 per head. The difficulty of adjusting a joint project to what I know the individual municipalities will want to do, that is, take advantage of what they would be entitled to, will in practice be
overcome in the case of most joint water boards by the fact that the individual municipality cooperating in a joint waterworks undertaking almost invariably builds its own laterals within its own borders. That is to say, the joint water board exists for the purpose of delivering water to the boundary of the municipality, or to some agreed-upon point. The development of the distributing system would in many cases offer opportunity to the municipality to take advantage of this scheme. This would be particularly true in connection with the repair and renewal necessities of old lateral distributing systems. I know of many cases where old wooden stave pipes are being used at a tremendous maintenance cost. It has been demonstrated to me that in some cases the maintenance cost considerably exceeds the two per cent interest and carrying charges on these loans. This is the type of work that would create employment.


Richard Bedford Bennett: It must result in an increase in the annual net revenue. A project might be self-liquidating without adding anything to the net annual income of a municipality.


Charles Avery Dunning: Have you considered the words, "either by reductions in the annual operating and maintenance charges"?


Richard Bedford Bennett: The principal words are, "will on the basis of conservative estimates result in an increase in the annual net revenue." I was wondering whether all these projects could be said to operate to result in an increase in the net annual revenue of the municipality.


Charles Avery Dunning: "Either by reductions in the annual operating and maintenance charges."


Richard Bedford Bennett: That is only descriptive of the method.


Charles Avery Dunning: I spent more time over this section than over any other. I want to have the benefit of everyone's view. The governing words are, "increase in the annual net revenue of the municipality."


Richard Bedford Bennett: Those are the governing words.


Charles Avery Dunning: But let us jump from there to the words, "sufficient to pay the annual charges for interest on and amortization of the loan." How is that sufficient amount to be raised? It has to be raised either by reductions in the annual operating and maintenance charges or by service charges
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paid by those benefiting. That was the process of thinking I went through in arriving at this section.


Richard Bedford Bennett: I do not say it is not sound. I only thought it might give rise to a little difficulty.


Charles Avery Dunning: I shall have it reexamined. I shall also give consideration to what has been said in the committee wth respect to these joint boards. Frankly, I can see some difficulty with respect to the joint boards in apportioning the amounts. I believe that all the municipalities that might be partners in a joint board would have plenty of self-liquidating projects other than those which might be joint in character.


Richard Bedford Bennett: I was thinking of my own city where there is a street railway that is not profitable at times, while there is an electric light system that is profitable at all times. In the net result the city has to take care of the situation by means of taxes. How would they be treated, having regard to the fact that they are not separate entities? Would the city be able to ask for assistance in expanding the street railway system if it was able to show that as a result of that expansion there would be an increase in the net annual income of the city by reason of the improved facilities thus provided? Of course the credit of the city as ai whole, of the taxpayers as a whole, would be responsible for repayment. It would not be just the system, which might not be profitable one year or another, but the taxpayers as a whole.


Charles Avery Dunning: But "on the basis of conservative estimates" would over the period-


Richard Bedford Bennett: I hope it will continue that way in Calgary. At any rate this is a subject of some difficulty.


Mr. MARTIN:: The matter referred to by the right hon. gentleman gives rise to a question I should like to ask. In the city of Windsor the street railway is operated by the hydro-electric commission.


Charles Avery Dunning: Owned by?


Paul Joseph James Martin: It is owned by the city, but there is some scheme of operation which has been entered into 'between the city and the local hydro-electric commission. I should like to know if the present system could be expanded or a substitute bus system brought into being under subsection (c) of section 2. Would that be considered a self-liquidating project?


Charles Avery Dunning: To ask me to describe what is a self-liquidating project without critical examination of what is involved is more than I can do. I find it difficult to think of a municipality attempting to develop transportation under the auspices of a scheme of this sort. I would not definitely debar it, but the self-liquidating project that we have in mind is in connection with facilities generally in use by a municipality. Exceptional cases, such as the one mentioned by my hon. friend, and the case of Calgary, referred to by the leader of the opposition, would have to be studied. I may state frankly to. the committee that I am not anxious to widen the definition of "self-liquidating works." I do not want to be put in the position of being accused of agreeing to lend to this municipality and not agreeing to lend to that municipality. I should like to have one rule that will be generally applied. I fear that to widen the definition would add very materially to my responsibility.


Mr. TAYLOR (Nanaimo):: I agree with what the minister says about desiring to keep this within bounds, but I should like to have his reaction to this picture. A certain municipality at the present time is circumscribed by Indian reserve lands. It is tending to outgrow its present boundaries and unquestionably it will come before the Indian department to ask for permission to purchase certain of these reserve lands. In doing so it will add to its area and increase its taxes. Would that picture come within the provisions of this bill?


Charles Avery Dunning: Absolutely not. I can answer that quite positively. The purchase of land is not a work creating project.


James Samuel Taylor: Taxes would develop immediately by the purchase of these lands. I just wanted to be clear about it.


Charles Avery Dunning: My hon. friend is very persuasive, but I am quite sure that such a project would not come within the requirements of the bill. It would not have the effect of creating employment.


Mr. NEILL:: How about a sewage system?


Charles Avery Dunning: If they borrowed for that purpose, that might be conceivable.


Archibald Hugh Mitchell: I see that paragraph (b) of section 2 defines "municipality" as including:
-a city, town, incorporated village, county, township, rural municipality, local improvement district or a province where such province is administering directly territory not organized into county or municipal units.

Municipal Improvements
Irrigation projects have not yet been mentioned in the discussion, and I was thinking of the possibility of irrigation projects being undertaken on the prairie. I have one in mind which would be larger perhaps than would be allowed under the bill, but would an irrigation project be considered by the minister, who is a westerner, as self-liquidating?


Charles Avery Dunning: It would depend somewhat on the financial set-up proposed for the irrigation district. As my hon. friend knows, there have been many irrigation projects which have not been self-liquidating by any means. I think, however, that an irrigation project oould scarcely come within the purview of this legislation for another reason. The limitations imposed in the matter of population as to the amount which could be secured would scarcely, I think, make possible an irrigation scheme of any size under this act.


Alan Webster Neill: Reverting to sewerage systems, the bill requires the scheme to be self-liquidating. AVould' the minister regard a scheme as coming within the terms of the bill if the municipality put on a special rate to cover the interest charges? Usually there is no charge for the use of the sewerage system. It is general to the municipality. But suppose a municipality undertook to earmark a mill rate sufficient to meet the interest charges per year, would that be regarded as self-liquidating?


Charles Avery Dunning: No. The object of the bill is not to encourage municipalities to add to their general municipal rate. Sewerage systems that are built on a service charge basis, whereby those benefiting from the sewerage extension over a period of years pay for it, would be within the purview of the bill as being self-liquidating, but not a project proposed to be dealt with by the imposition of an additional mill rate on the whole municipality through the medium of the general tax. That would not be self-liquidating.


Alan Webster Neill: I suggested a mill rate specially earmarked for the project.


Charles Avery Dunning: I shall be glad to look into it, but I do not think it would be within the purview of the bill because it would have the effect of increasing the general rate of the municipality. If my hon. friend will study the language of paragraph (c) he will see that it says:
"Self-liquidating projects" means a project which when completed will .	.	. either by
reductions in the annual operating and maintenance charges . . . or by increase of revenues from persons using the services of or otherwise benefiting from the project-
And so on.


Mr. HAMILTON:: I should like to call
the minister's attention to the wording of paragraphs (b) and (c), having in mind that in Ontario, at all events, in a good many municipalities waterworks and electric light systems are handled by a public utility commission. A public utility commission is an incorporated body, but when it comes to raising money for the purposes of the utility, that I think is up to the municipality as such. The revenues, I think I am correct in saying, go to the public utility body, which at a later date, when they have no further need of them, turns them over to the municipality. It occurs to me that in order to take care of that situation the wording of paragraph (c) might require to be slightly revised, since it does not necessarily mean an increase in the annual net revenue of the municipality. Some provision perhaps should be made to take care of cases where the public utility body receives the revenues from an extension of the water service or something of that kind, and turns over the surplus revenues from time to time to the municipality.


Charles Avery Dunning: But surely the annual
revenue of such a public utility body is calculated to be sufficient to take care of the debt charges created by the utility. Surely it must pay over annually to the municipality an amount sufficient to take care of the carrying charges. As far as I am familiar with public utility commissions, they are put in the relationship to the municipality generally of having to contribute to the general treasury an amount equivalent to the carrying charges on the utility which they are administering; but they may hold in reserve, as a branch of municipal government, their earnings over and above those fixed charges. In any case I do not anticipate any difficulty in working that out. From a conservative estimate-not a political conservative estimate. but an economic conservative estimate -of what we can expect over a period of years with respect to the utility, I do not anticipate any difficulty such as my hon. friend mentions. The difficulty would come in connection with boards that have to deal with several municipalities.


Mr. LAWSON:: The answer of the hon.
minister to the member for Comox-Alberni (Mr. Neill) leaves me with considerable confusion in my mind as to a kind of project in respect of which I think the minister will receive many applications from Ontario. In order to illustrate clearly the one which I wish to know about, in view of this definition, I will mention very briefly one which I
Municipal Improvements

think would clearly come within it. Suppose the municipality desires to construct a waterworks system.


Charles Avery Dunning: To construct one?


James Earl Lawson: To construct a waterworks system. Ordinarily a municipality in Ontario charges each user of the water either a flat rate per month or on the basis of a water meter, a gallonage basis.


Charles Avery Dunning: Or on the basis of a
frontage tax.


James Earl Lawson: That is possible, but not
usual in Ontario in respect of water systems. I assume that that would be a self-liquidating project.


Charles Avery Dunning: Clearly.


James Earl Lawson: But now I want to mention a project that is very different and ask for the minister's interpretation. Assume that a municipality wants to instal a sewer and sewerage system. In that case there is no monthly rendering of accounts and no monthly payment by the user, but in lieu thereof a proportion of the cost of the construction of the sewers and the sewerage disposal works is assessed per foot frontage against the property benefited, and there is taken into the general rate of the municipality that portion of the cost which is represented where the sewers have to cross streets at intersections. Would a scheme of that kind be considered self-liquidating, bearing in mind that the cost thereof is specially assessed against the property owner and included in the tax bill along with the general rate, and payable over the term of years which the engineer estimates to be the life of the work?


Charles Avery Dunning: I attempted to meet that, as will be clear later on in the bill, by making provision for paying part of the cost out of the proceeds of a loan under this bill. What I visualized was this, that the part of the cost of the sewerage system cited by my hon. friend-*


James Earl Lawson: Specially assessed.


Charles Avery Dunning: -which is specially assessed could be financed under this scheme. The rest of it the municipality generally would have to take care of. But I would not like to be too definite in saying yes to specific cases that are put to me across the floor. My hon. friend understands that I am not now saying that municipality so-and-so can come along and get a loan. The class of cases I contemplated when framing the bill did include the possibility of a portion of a facility being on a basis which would come
[Mr. Lawson.1
within the purview of the act, and another portion of the same facility being on a different basis; and in order to make possible the consideration of assisting any such work " partly " was put in.


Mr. HEAPS:: How about the security in that case?


Charles Avery Dunning: There would be no
difference to the security.


Abraham Albert Heaps: In another section it is provided that the government shall receive a mortgage.


Charles Avery Dunning: "May"; that is for an entirely different purpose, to meet a different case in some provinces, where the only kind of security that could be taken would be a mortgage or hypothec. I do not expect that the mortgage or hypothec provision will be frequently made use of, but it is there in case other security cannot be given.


James Earl Lawson: In which event the
municipality in the ordinary course of events would issue debentures for payment for the very work we have been discussing, and I assume that the government would take from the municipality a proportion of those debentures to secure the amount advanced.


Charles Avery Dunning: Yes.


James Earl Lawson: I wish to point this out to the minister-and he will bear in mind that when I asked the original question I wanted to know what the government had in contemplation; that was all. If I understood his statement a few minutes ago, in answer to the hon. member for Comox-Alberni (Mr. Neill)-and that is what prompted me to ask the question-the minister said that the government would not favour under this scheme works that imposed additional taxation upon the municipal property or home owner.


Charles Avery Dunning: The general municipal rate.


James Earl Lawson: Of course a special assessment would be an extra burden of taxation on the municipal property owner.


Charles Avery Dunning: Those benefiting from it.


James Earl Lawson: Yes.


Charles Avery Dunning: We have no objection to that.


Mr. LEADER:: There are two questions which I should like to ask the minister. When any municipality desires to extend its sewage system or its waterworks, will that municipality be able to borrow under this bill for that purpose?

Municipal Improvements


Charles Avery Dunning: It would depend upon whether it was self-liquidating.


Harry Leader: If it were specially assessed I presume it would be.


Charles Avery Dunning: If it were specially assessed on those whom it benefited, yes.


Harry Leader: The other question is this: If a town or a city desires to hard-surface its main street, will it be possible for that town or city to borrow money under this bill?


Charles Avery Dunning: Again, if it were a self-liquidating project which conceivably might occur in such a case partly in one way and partly in another. Assume that the present street is all broken up and requires a very heavy expense of maintenance year by year, an expense of which there is record which is ascertainable. Assume further that the cost cf the paving is to be assessed on a frontage basis against the property on either side. The combination of those two factors, (1) a lowering of maintenance costs as a result of the work and (2), the assessing of the cost of it on those benefiting, might very well bring such a project within the terms of the act. But remember again, I repeat, I do not want to give specific assurances which will be taken to mean that anyone can come along and ask for a loan to pave a street. It must be demonstrated that the particular project does fall within the definition of self-liquidating public work.


Harry Leader: I wish to thank the minister for his reply. I have in mind a special case, and his answer is really encouraging.


Mr. WEIR:: Reference has been made to self-liquidating projects where a municipal levy may be used for waterworks or sewage disposal undertakings. What will happen with respect to applications made for repairing school houses?


Charles Avery Dunning: I had not contemplated that.


William Gilbert Weir: I think it had better be contemplated. Do I understand that the minister is definitely ruling that feature out of this legislation?


Charles Avery Dunning: I am not ruling out anything which can be demonstrated to the government to be self-liquidating within the language of the statute. It must be self-liquidating.


Mr. LOCKHART:: I appreciate what the minister has said with regard to the self-liquidating aspect of this matter. May I briefly recite for his information a case that is
now before the Department of Transport in connection with the Niagara peninsula. I am referring to a very definite sewage disposal scheme which is necessary in consequence of a condition that has been brought to the attention of the municipality by the department of health of the province of Ontario. In the hands of the engineers of the Department of Transport there is now the report that has been prepared in conjunction with the department for an extensive sewage disposal scheme which is to take in a group of municipalities. It has been brought about quite definitely by representations from the department of health in Toronto, who object to the raw sewage and industrial waste emptying into lake Ontario. If these municipalities collectively enter into some scheme of providing a trunk sewer that will take care of all this industrial waste and sewage, treated to an extent probably approved by the provincial government, will the minister go so far as to suggest that, by reason of the fact that the federal government is more or less involved in consequence of certain conditions that have grown up over a long period of years in connection with the establishment of industries and so on, consideration could be given to a large joint scheme such as this, undertaken by the municipalities? Would it be possible to assist them in advancing such a scheme?


Charles Avery Dunning: From the manner in which my hon. friend sets it out I doubt very much whether it could be arranged. Of course, no one can tell until the actual concrete proposition is submitted. When that is done one will look at the actual proposition and ask whether it is a project which, when completed, will on the basis of conservative estimates result in an increase in annual net revenue to the municipality either by saving money or by a service charge on those benefiting. I am sorry I cannot give a categorical answer, because my hon. friend is outlining something which is still in embryo. Let me say, however, that he must not forget that the degree of financial assistance which would be possible for qualified projects is limited by the populations affected. What would be the population in the municipalities to which my hon. friend is referring?


Norman James Macdonald Lockhart: About 50,000.


Charles Avery Dunning: Well, the maximum loan that they could get even with a qualified project would be $200,000.


Abraham Albert Heaps: For each municipality or
for all?


Charles Avery Dunning: That is a question which, as I have pointed out, is giving me some
Municipal Improvements

difficulty. Certainly it is difficult for me to see how five municipalities can call themselves five separate entities and get the maximum for small municipalities, when they have by their own action made themselves into a large municipality. It is very difficult for me to answer. Certainly, if they deal with self-liquidating projects of their own individually, they could go up to $200,000. But to say that by merging their populations they are still able to take the advantage which accrues only to those of small populations is a doubtful thing for me to promise at this stage.


Abraham Albert Heaps: Why should there be such a provision in the bill? I intended raising that point on. another section.. There should be some flexibility.


Charles Avery Dunning: Would my hon. friend mind leaving that until we reach that section? We might let section 2 stand. I think I have all the suggestions I am likely to get on the definition of the term "self-liquidating." They will all be carefully considered.
Section 2 stands.
On section 3-Loans to municipalities.


Mr. McIVOR:: In the words of another, I should like to make a few observations. Perhaps this bill is late in coming. But it is better late than never. Jacob-I mean the first Jacob-waited fourteen years for Rachel, and Jacob thought she was worth waiting for. I would say that this bill was well worth waiting for.
I took considerable interest in the convention held some time ago of mayors and aldermen of the cities of Canada. They made some great speeches, speeches which I suppose would compare favourably with the oratory in this house, in demanding something from the dominion. I say this bill is something. It may not be a great deal, but it is something. It is now up to the civic officials to show their business ability. Let me give a concrete example of what a man was able to do with S30. He is the Reverend Richmond Craig of Winnipeg. He began with $30 and a heap of junk and rubbish; he gave a man a meal for sorting this heap, and with his business brain-I think ministers compare favourably with mayors in business ability- he organized a business employing the down-and-outs of Winnipeg. Hon. members from Winnipeg will bear me out. He set them to mending old boots and shoes, clothes, beds, clocks, stoves, etc. He paid the minimum wage to men who could not get a job anywhere else and were down and out. In 1933 his payroll amounted to $13,000. In 1937 the

Good Will Industries showed interesting growth; during a period of six years the sum of $150,000 was paid out in wages, the minimum wage being paid, and a six storey building is now occupied. This shows what an ordinary individual could do. Why cannot our mayors and civic authorities borrow some of this money at two per cent and make it live? Why cannot they use it, not for something that will start and stop never to go again, but for something that will keep going and make work. I do not mean sewers and electric light plants. Let them use their business ability to find something that will be a going concern. I commend the minister for this step; it is only a small thing yet, but it is bound to grow.


Norman James Macdonald Lockhart: This clause brings us back to the scheme I suggested. It includes waterworks, etcetera. The minister probably did not understand that the project I have in mind is proposed by a group of municipalities which will act independently.


Charles Avery Dunning: They will act separately?


Norman James Macdonald Lockhart: They will have to act separately. Let me be more explicit. The project starts at the outlet of the Welland ship canal; the old basin is being polluted, and the municipalities of St. Catharines, Port Dalhousie, Merritton and Thorold, all separate municipalities, are now considering this large scheme of treating their sewage and industrial waste. They will have to act separately, but they have had a joint meeting-


Charles Avery Dunning: To coordinate?


Norman James Macdonald Lockhart: -to coordinate their interests. It seems to me it should be possible-


Charles Avery Dunning: Provided it is selfliquidating.


Norman James Macdonald Lockhart: That is the point I am coming to. This will replace some of the old trunk sewers of these several municipalities. They have to replace them; the provincial government says they must be replaced, that this condition must be cured in some way. Each municipality will have to assume part of the cost of this main trunk sewer which is to carry the sewage in a treated condition into lake Ontario. The present system is on a basis of contributions by each one that uses it. I wished to get some direction as to whether in such a scheme as I have outlined a group of municipalities could come under the provisions of this bill by coordinating their interests.

M unicipal Improvements


Charles Avery Dunning: We are not concerned about whether a municipality coordinates a self-liquidating project with one of another municipality; if within each of the municipalities concerned it can be demonstrated that such a project as my hon. friend outlines will be self-liquidating within the language of the section, it will qualify. Otherwise it may be possible, as mentioned by the hon. member for York South (Mr. Lawson), that parts of the project might be self-liquidating within the definition and other parts not. That would not, in my opinion, bar the municipality from taking advantage of this scheme for the parts that are self-liquidating. It is difficult to deal positively with a hypothetical case; I cannot speak positively about it.


Abraham Albert Heaps: On many occasions when requests for public expenditures were made the minister asked hon. members where the money would come from. Would he explain to the committee how the money is to be raised for the expenditure involved in this bill? Does he intend going on the open market to raise the money, or to follow the precedent adopted by the government of 1934, which expended a large sum for public works and printed new currency for it? I am not pretending to be an expert on money, but I am tempted to ask the question because of the success which apparently attended the experiment tried in 1934. I think the government still have power to issue a certain amount of currency, and if that could be done, instead of showing a deficit on the proposed scheme, I think they would actually have a profit.


Charles Avery Dunning: I am afraid my hon. friend cannot, on a bill of this kind, get an answer to a question on monetary policy. I would call his attention to the first words
of the section now under discussion:
The minister . . . may enter into an agreement with any municipality to make a loan or loans to such municipality out of any unappropriated moneys in the consolidated revenue fund. . . .
That is the authority conferred upon the minister by this bill. I cannot indicate the manner in which the consolidated revenue fund will be replenished. I cannot indicate that there will be any change in the methods followed hitherto by the present government to replenish the consolidated revenue fund. Perhaps if my hon. friend would read my remarks of the other day with respect to the cost of this scheme to the government, he would see that there I contemplated the payment of interest upon the money by the dominion government, and that is the basis of the calculations.


Abraham Albert Heaps: That is why I said the government might have made a profit instead of showing a loss, as was stated by the' minister, because I had in mind the remarks of the minister the other day when he introduced the resolution. Is there really any objection on the part of the government to issuing new currency, as was done in 1934?


Charles Avery Dunning: I certainly will not go into a discussion of major monetary policy, Mr. Chairman, nor do I think my hon. friend really expects me to do so. He is asking what might be called a general question without expecting me to say that it would be beneficial or otherwise to Canada for so much more-so much more-or so much more than that-of money to be printed and used for this purpose. I do not feel inclined to go into a discussion of that. The management of credit and currency in the country through the central bank is being conducted on scientific lines with the best interests of the whole economy in view. A few weeks ago I indicated the manner in which that had been conducted so far, the expansion that took place in the credit base, and the general reasons underlying it. I do not think my hon. friend would expect me to go further.


Abraham Albert Heaps: It was done in 1934; a precedent was established then, and on that occasion I think it worked out fairly satisfactorily. All the harm that was predicted did not come about, and without knowing a great deal about the subject I still have a feeling that if the principle were extended a little on this occasion the same good results might be obtained.


Mr. ESLING:: I was quite enthusiastic in connection with the former housing act, which contemplated that the municipalities would participate as lending authorities. Many of them were keen to do so, but an obstacle arose through the fact that there was no possibility of transactions taking place as between the municipal government and the federal government. At the last meet-irg of the union of municipalities of British Columbia a proposal was presented to have the municipal act amended to permit such transactions; but the union of municipalities had in mind the unfortunate financial position of some of the smaller municipalities, and refused to act upon the resolution.
I should like to ask in a general way what course is to be pursued by a municipality which desires to construct a complete sewerage system. It cannot do business directly with the federal government and under this act it

Municipal Improvements

must have the approval and guarantee of the provincial government. That municipality must have an outlet for its sewerage. In the case to which I refer the only outlet is the Columbia river, some five or six miles distant. Between the first municipality, serving about five thousand people, and the next municipality, serving about eleven thousand people, there is a district containing three or four thousand people, and there must be a trunk sewer. Some of it would be in organized municipalities, and a proportion would be in a provincial district. The question is who applies for the loan? Certainly the main portion of the trunk sewer, serving the municipalities, will be self liquidating; but there is that portion between, and the question is how that, would be cared for.


Charles Avery Dunning: The general credit of the municipalities otherwise might be used for those portions which would not qualify under this legislation, but certainly I do not think we can widen the definition of "self-liquidating", and at the same time leave the measure a practicable piece of legislative machinery, especially having regard to the first remarks of my hon. friend. He spoke of the experience under the old housing act, which set up municipal authorities as lenders. But no municipality has come within that provision of that old act, because the provincial legislatures, from which the municipalities derive their powers, have not empowered them to do so. As I said in my remarks on the resolution the other day, we are dealing with institutions which are wholly the creatures of the provinces. We can deal with them only in such manner as will take that into account at all times. That is why we say in this bill that the project proposed by a municipality must have both the approval of the government and its guarantee of repayment. I do not think I can add anything to that.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Securities for loans.
Charles Avery Dunning: I should like this section to stand, in order to give consideration to the points which arose under the definition section, with particular reference to boards, which might involve a change in this section.
Section Btands.
On section 6-Aggregate amount of loans.


Abraham Albert Heaps: Under this section I should like to raise the point I brought up a few moments ago, the question 'of the rigidity with which the bill seems to be worded. A municipality can borrow at approximately

the rate of $3 per head of its population. A municipality, of say two hundred thousand people would be able to obtain a loan of about $600,000 for a project which it favoured. I do not see why the measure should be as rigid as that, and why there should not be in some section of the bill a clause providing a certain amount of flexibility where some worth while project is to be undertaken by a municipality, so that such municipality would be permitted a larger sum than is definitely provided in this measure. I think I can envisage many difficulties which might arise where a municipality of, say two hundred thousand people would require a loan of, let us say a million dollars for some good project. Under the existing bill that could not be done, and I would suggest that the minister take into serious consideration the question of developing some method so that, in a case such as I have mentioned, the amount stipulated in this bill might be increased.


Charles Avery Dunning: That clause is vital. I shall be perfectly frank with my hon. friend: I do not desire and the government does not desire to be placed in a position of even appearing to discriminate between the thousands of municipalities in this country. It is all very well for my hon. friend to rise in his place in the house to-day and say, " There might be a very good project in this municipality which ought to have a larger amount allowed, and there should be some flexibility." I can well imagine what would be the situation next year when some municipality had received more than another. There would be charges of political considerations, and of influence by hon. members, and all that sort of thing. This is a case in which the government and particularly the minister desire to operate within reasonable limits fixed by statute. I really wish to have this scheme worked on an economical basis and to have political considerations of preference here and there removed as far as it may be possible to do so. If in this legislation we make it possible for'one or two of our great cities to take larger amounts than their proportion of the whole population, I am afraid we shall seriously lower public confidence in the scheme. On the other hand, the exception which is provided in favour of the small municipalities is one which is, I think all hon. members will agree, very necessary in order to make it possible for small municipalities to take advantage of the legislation at all.


Abraham Albert Heaps: In the very last sentence of the statement the minister has just made, a form of discrimination is indicated. When

Munieipal Improvements
34S1
you allow a small municipality, which is probably in a poorer position to take care of its obligations than is a larger one, the right to obtain $200,000 as its share of this vote, it may mean that in the small municipalities there will be allowed as much as six to ten dollars per head. In fact, at the present time there is no definition in the bill stating to what particular municipality that $200,000 limit refers; that is, the size of the municipality. It may be one having a population of two or three thousand, or it may be one with a population of ten thousand.


Charles Avery Dunning: Yes, and while my hon. friend is objecting to my having so much discretion, he desires me to have discretion to give millions to the larger centres.


Abraham Albert Heaps: No.


Charles Avery Dunning: That is what it looks like to me.


Abraham Albert Heaps: I am pointing out to the minister that although he says he does not want to discriminate between one municipality and another, the bill already contains a section of that kind. I myself have sufficient confidence in the minister-


Charles Avery Dunning: Oh, yes!


Abraham Albert Heaps: -to know that he will put his approval only upon municipal projects which are self-liquidating and will produce the maximum amount of employment. Although I come from a large municipality and I do not know whether it will be able to take advantage of the provisions of this bill, I would not have the slightest objection to the minister and the Department of Finance being given discretion to allow, under certain circumstances, larger appropriations to be made.


Charles Avery Dunning: What circumstances?


Abraham Albert Heaps: Where the project is shown to be desirable.


Charles Avery Dunning: What circumstances would the hon. member write into the law?


Abraham Albert Heaps: I do not know how I would put it in the law.


Charles Avery Dunning: That is the trouble.


Abraham Albert Heaps: I do not pretend to be a lawyer.


Charles Avery Dunning: It does not require a
lawyer.


Abraham Albert Heaps: 
Charles Avery Dunning: But surely my hon. friend can state the circumstances. If he would do so, possibly I could-


Abraham Albert Heaps: Surely. I will give the circumstances which were referred to by one of the previous speakers. There was the case of the Welland canal area, where they considered having a joint undertaking by a number of municipalities, and where they were allowed 850,000; but if the amount were
S150.000,	it would not be sufficient to take-care of what is possibly a very neeessary as well as a self-liquidating project. I suggest that if, under circumstances of that kind,, the larger amount were appropriated by the government, it would be doing a very wise thing and one to which no objection could be taken.


William Kemble Esling: With which government will the municipality do business-the federal government or the provincial government? It must have the guarantee of the provincial government, and I think it will be found that the municipality must give a chattel mortgage to the federal government. You have two governments concerned.


Charles Avery Dunning: Under what statute is that?


William Kemble Esling: Is there not a clause in this bill providing for a chattel mortgage to the federal government for any project which the municipality undertakes? I think so.


James Earl Lawson: Not a chattel mortgage.


Charles Avery Dunning: No; there is no provision for a chattel mortgage.


William Kemble Esling: Oh, I think so.


James Earl Lawson: "Chattel mortgage" only in the sense, I might suggest to the hon, member, in which a debenture might cover chattels incidental to the work or the project.


William Kemble Esling: Since the provincial government must guarantee.


Charles Avery Dunning: The provincial government must guarantee, but there is in addition the power given to the minister to take a mortgage or a hypothec on the particular utility, but that is merely a permissive power in order to enable the minister to deal with cases where the law of the province may be such as to render that security more desirable than some other type.
Municipal Improvements


James Earl Lawson: I would question the wisdom of and suggest to the minister that he reconsider the soundness of the principle which he enunciated here a few moments ago, of basing the limit of contribution on a ratio of population. The primary purpose of this bill as I understand it is to relieve unemployment or to create employment, and population in municipalities may have no relation in the world to the number of unemployed in any municipality. I think we know from experience that a much larger ratio of population is unemployed in the large centres than in the smaller centres of population. Surely that is so. I have listened in this chamber to members of the government explaining why we have this difficulty with the unemployed in British Columbia. In Vancouver they are congregated from all over Canada and particularly from all parts of British Columbia. I believe that every census which has been taken, including the census of the employment commission, indicates that the proportion, of unemployed to population is much greater in the larger centres than in the smaller. If the primary purpose of this bill is to provide employment, surely the basis on which a limitation of contribution or loan to any particular municipality should be fixed is the ratio of unemployed to the population in the particular place, rather than the population of a particular place to the whole population of Canada. I suggest that the minister might .-seriously consider that point.


Mr. ROSS (St. Paul's):: Just following
that, 1 might point out to the minister that the percentage of unemployable in the country and the small towns is twenty per cent, -while in the cities the percentage of that type of unemployed is only five per cent.


Mr. KENNEDY:: I am wondering how
the minister can tell when to give the smaller municipality a larger loan. For instance, if it is on a per capita basis, you will have to wait a certain time to tell whether any municipality is going to take advantage of the loan. Is there a time limitation upon a municipality taking advantage of the provi-1 sions of this bill before you allow the smaller municipalities to take loans up to the $200,000 limit?


Charles Avery Dunning: There is no time limit.


Orvis A. Kennedy: Every municipality
may be given an opportunity of obtaining a loan, but how long are you going to extend that privilege before you start to divide the surplus?


Charles Avery Dunning: We will deal with all
applications as they come in until the $30,000,000 is exhausted. I do not expect to have

the financial problem my hon. friend points out. It must be remembered that the relationship is to the total population of Canada. It is expected that there will be large areas in Canada which in the nature of things cannot take advantage of this legislation, and I am quite sure that I shall have sufficient leeway to be able to take care of the small municipalities that will want the limit of $200,000 without in any way impairing the ability of the larger ones to secure what may be needed. I may tell my hon. friend that I would be pleased-I speak for myself alone, if a minister ever can speak for himself alone-to see such a development in schemes of this sort within the next twelve months as to involve the necessity of my coming back to parliament and saying that more money is needed and should be voted. I am reasonably sure the difficulty anticipated by the hon. member for Edmonton East (Mr. Kennedy) will not arise.


Abraham Albert Heaps: Could the minister define
just what is meant by a small municipality?


Charles Avery Dunning: It is defined automatically. My hon. friend will note these words, "a loan not exceeding two hundred thousand dollars may be made to any municipality of whatever population." If we take the rule of thumb of $3 per head being the approximate amount, a municipality of 60,000 population would be entitled to only $180,000. Nevertheless, such a municipality will be able to obtain up to $200,000. By that method of computation, a municipality of 10,000 population would be able to get only $30,000; but if the other conditions are satisfactory, it will be able to obtain up to $200,000. The small municipality is defined by the break point of $200,000. I may tell my hon. friend that the figure in the first draft bill was $250,000, but it seemed to me that was too high a limit. Putting the break point at $200,000 means that municipalities with populations below 60,000 will be able to get $200,000. If we carried the other computation below that point, we would reach a figure which would be of no use at all.


William Kemble Esling: Would it not save the
minister a great deal to make these loans directly to the provinces? The province has the last word. It does not make any difference how generously disposed the minister may be; if the provincial government does not approve the project and is not willing to guarantee the loan, that is the end of it.


Charles Avery Dunning: I do not think we should make loans to the provinces to carry on this class of work. The dominion is making these

Municipal Improvements
loans for the purpose of enabling municipalities to carry out self-liquidating projects to relieve unemployment. We must have as much control of expenditures as our constitutional position will permit. I believe that is the general view of the members of this house. We have attempted in this measure to conserve the right of this parliament over the disposition, of moneys voted, and at the same time conserve the autonomy of the provinces in acknowledging their powers within their own field.


[Stage Direction]
Section agreed to.
On section 7-Limitation of time.
Richard Bedford Bennett: Is this section absolutely necessary in view of the fact that there is a limit of 830.000,000? As soon as that is gone, the minister can no longer make loans. Why is it necessary to say that the governor in council may at any time fix and determine the date? Does that mean that before the 830,000,000 is expended, the governor in council may say that there is to be no more money expended? It is open to that construction?


Charles Avery Dunning: Yes; it does mean that. I shall be frank with my right hon. friend. This bill is one of several in which the same provision will appear. It is considered that under the conditions which prevail to-day it is desirable that the governor in council should have the definite power to stop expenditures.


Richard Bedford Bennett: I just wanted to have it clear.


[Stage Direction]
Section agreed to.
On section 8-Staff and salaries.
Richard Bedford Bennett: An hon. gentleman sitting beside me said the other day that surely there was staff enough in this city to take care of all requirements without adding a single person to the payroll of this country. 1 think the minister should say that this new work will be carried on by existing staffs in Ottawa.


Charles Avery Dunning: Not in the Finance department.


Richard Bedford Bennett: No.


Charles Avery Dunning: I think my right hon. friend will acknowledge that.


Richard Bedford Bennett: Some of the work has been taken over by the Bank of Canada.


Charles Avery Dunning: The staff went over to the bank.


Richard Bedford Bennett: This raises the old political question. There will be a couple of hundred
applications in the hands of the minister at an early date, and perhaps my estimate is too small. There should be no difficulty about using existing staffs without adding to the payroll of this country. This work could be taken care of by a little judicious cooperation between departments. The civil service commission have lists of temporaries who are being released from time to time.


Charles Avery Dunning: We could not take advantage of those temporaries without having the authority contained here. I would point out to my right hon. friend that this provision is necessary in all of these schemes. It was necessary with the Dominion Housing Act to make provision for a staff. However, I am rather proud of my reputation for staff parsimony. The Dominion Housing Act and the home improvement plan have been carried on with a staff of seven, if my memory serves me aright.


Richard Bedford Bennett: There are very few people needed in Ottawa in connection with the Farmers' Creditors Arrangement Act. Most of the work is outside Ottawa.


Charles Avery Dunning: I should like to have this latitude because I think it would be difficult to operate without it. I appreciate the force of my right hon. friend's remarks, and I intend to draft for such work any who may be free to come from other places.


[Stage Direction]
Section agreed to.
On section 9-Orders and regulations.
Richard Bedford Bennett: I wonder if the minister would not think it desirable to insert a paragraph in terms similar to that we inserted in a bill of the Minister of Transport the other evening, that regulations made hereunder should be published in the Gazette and have the force of law a given number of days after they have been published. I am only giving the minister the benefit of my own actual experience. It is unfair to ask people to be bound by regulations of which they have had no means of knowledge, and which have become effective without having been published in any way and with no time given to the public to understand what they mean. We made it ten days, I think, in connection with the bill of the Minister of Transport. He thought it was reasonable and I think it is.


Charles Avery Dunning: The only objection I
would have is on account of the different nature of the regulations which are here involved. Would any good object, for example, be served by publishing in the Gazette the form of agreement?
34S4
Municipal Improvements


Richard Bedford Bennett: It might be very useful. I would point out to the minister this, if he will permit me to do so. I arrived at this conclusion in my short experience, that any order in council which has the effect of law under a statute should be published.


Charles Avery Dunning: But a detailed agreement in the Gazette?


Richard Bedford Bennett: If it is going to have the force of law under a statute, I have no doubt that it should be published. The old practice was always to have the agreement appear as a schedule. Then we went further and said that the governor in council had the power to do it. Then we cut the Gazette out entirely, and the result is that you issue orders which have the effect of law and with respect to which the public knows nothing, and without the average citizen having an opportunity to know anything about it. I am sorry to say that, but I am saying it in the light of my own experience, and not directed against any government.


Charles Avery Dunning: You have read Lord
He wart's book, too.


Richard Bedford Bennett: Yes, but of course you could not conduct government in England unless you had recourse to certain discretionary powers being exercised by the treasury and other bodies. But this is a little different. This is a case in which you authorize a body of men to discharge really legislative duties without affording any opportunity to the people affected to know what the legislation is. That part of the criticism of Lord Hewart I think is fair criticism. We used to publish in the Gazette all agreements, and it may be very important to citizens and ratepayers to have an opportunity to see what land of agreement you are making. It is important that the general form of agreement should be known.


Charles Avery Dunning: The general form, yes. But the agreement with any municipality?


Richard Bedford Bennett: They are all the same.


Charles Avery Dunning: They could not be, of course.


Richard Bedford Bennett: Section 9 gives the
governor in council power by order or regulation to:
(a)	determine the form of the agreement between any municipality and the minister;
(b)	determine the form of the guarantee to be given by a provincial government.
That is very important:
(c)	prescribe the conditions under and the manner in which the proceeds of a loan may be advanced to a municipality.
(Mr. Dunning.]
That would be an arbitrary exercise of power applicable to all. It might be 10, 20 or 30 per cent. It is important, in order to allay suspicion and to ensure public confidence, that you should know from the regulations that all municipalities are receiving the same treatment, and I say frankly to the minister that he knows that is so. And then:
(d)	make provision for any other matters concerning which orders or regulations are deemed necessary or desirable to carry out the purposes and intentions of this act.


Richard Bedford Bennett: That is one of those basket subclauses,


Charles Avery Dunning: That you have to have but do not want to use.


Richard Bedford Bennett: If you are in opposition you object to anyone else using it, but in office you use it.


Charles Avery Dunning: We will let section 9 stand so that I shall have an opportunity to give consideration to the points raised by my right hon. friend. I should say to him that the form of agreement between any municipality and the minister was put in, in that sense, because it was contemplated that there would have to be a great variety of agreements and it might be very difficult to evolve a standard form, and if we did not evolve a standard form we might have to put in the Gazette the details of a special agreement with, say, a small municipality on Vancouver island or in Prince Edward Island. But I appreciate the motive of my right hon. friend.


Richard Bedford Bennett: I do not say that some of these agreements cannot be varied.


Charles Avery Dunning: I should like the section to stand for consideration from the point of view of publication of essential information in the Gazette.


Richard Bedford Bennett: Information that controls the exercise of the law-making power.
Section stands.
On section 10-Report to parliament.


Richard Bedford Bennett: I think the calendar year is better than the fiscal year. As things now stand, the report would cover the fiscal year ending March 31, 1939, and next year it would be received by the house within fifteen days after the beginning of the session. But that will be next year. It is not a case like the auditor general's report. The auditor general's report at the present time is of no use to us at all in the sense of giving us information during the session of parliament for which we are here. I noticed that once or twice the

Supply-National Revenue-Customs
minister has used the word " calendar " instead of " fiscal " year; and if you made this the calendar year we would next session get the report on what was done up to the end of 1938, and then the following year we would have a report for the complete calendar year. I forget which one it was, but in connection with one other matter it was found of great advantage to make it the calendar year.
Section stands.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.

The house in committee of supply, Mr. Sanderson in the chair.



DEPARTMENT OF NATIONAL REVENUE

[Stage Direction]
Customs and excise division-General administration, $1,106,150.
Grote Stirling: There seems to have been a considerable alteration in the number of those employed and a general increase in the total. Would the minister give a description of what the alterations amount to?


Hon. J. L. ILSLEY (Minister of National Revenue):: It has already been given. The information was given some months ago.


Grote Stirling: The item has already been called?


James Lorimer Ilsley: Yes.


Grote Stirling: Then, do not do it twice.


James Lorimer Ilsley: It will be found fully dealt with in Hansard of February 15.


Richard Bedford Bennett: This is an item that covers the whole administration of the department in question. Would the minister indicate in a few brief sentences the extent to which seasonal duties are maintained, and the extent to which the dumping duties are being operated, if at all, in his department? Would he give us at the same time a general idea regarding rebates? Unfortunately, as perhaps the minister knows, the auditor general's report, upon which we must rely, does not afford us any information subsequently to March 31, 1937, and inasmuch as we dealt with estimates in this house in 1937, we are, in the auditor general'ls report, dealing with something that has already been disposed of by the house. Hence I am emboldened to ask him now as to the general principles under
which the administration is now carrying on with respect to the matters to which I have referred.


James Lorimer Ilsley: The first matter to which the right hon. gentleman has referred is that of seasonal duties. Seasonal duties relate only to fruits and vegetables, and the system in force, as has been explained to the committee on several occasions, is that at certain times in the year, when the competition of United States fruits and vegetables is particularly serious, valuations for duty purposes are fixed by the Minister of National Revenue acting under the authority of an order in council that was passed some years ago. The values that are fixed are for the most part regional and for the most part, if not wholly, seasonal. The reason they are regional is that the season varies for different parts of Canada, and there are times when it would be very inconvenient and undesirable for United States fruits and vegetables to be shut out of certain parts of the dominion, even though it might be desirable for some action to be taken with respect to them in other parts of the country. For that reason the country, for administrative purposes, is divided into three districts: one comprising the four western provinces of British Columbia, Alberta, Saskatchewan and Manitoba; another being the provinces of Ontario and Quebec; and the third, the maritime provinces. Sometimes values are fixed for the whole nine provinces, sometimes for the four western provinces and not for the others, sometimes for the two central provinces and not for the others, and so on, depending upon the supplies available in these districts. I believe the practice is well understood by the members of the house.
For a great many years there has been considerable dispute as to the application of fixed values and seasonal duties, and there have been many experiments looking to the best method of giving the fruit and vegetable growers of British Columbia, the central provinces and the maritime provinces reasonable protection without at the same time imposing undue hardship upon the importers, who must import large quantities of fruits and vegetables at all times. Since this government has been in office the Minister of Finance has stated on several occasions, as I too have done, that we carry on the protection of the fruit and Vegetable growers in as reasonable a way as we can by this method. The duties have been reduced as compared with those which were imposed by the previous administration. At the time of the negotiations with the United States, when the trade agreement was entered into, it was provided that advances on invoices
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Supply-National Revenue-Customs
should in no single instance be more than 80 per cent of the smallest advance made during the three previous years, and that has been carried out and more than carried out. In a number of instances they are not more than 60 per cent, and in one case not more than 40 per cent. Great care is given to the periods during which these values are imposed, and equal care is given to the amount of the advance that is regarded as proper.
The next subject on which the right hon. gentleman asked me to say a few words is that of dumping duties.


Richard Bedford Bennett: And their application.


James Lorimer Ilsley: Dumping duties date from about 1907.


Richard Bedford Bennett: From 1906-07.


James Lorimer Ilsley: And the principles are now well understood by importers and producers in Canada. The section which provides for the collection of special or dumping duty is section 6 of the customs tariff.


Richard Bedford Bennett: Much modified since it was first passed.


James Lorimer Ilsley: Yes; there have been amendments from time to time. But the principle which underlies the application and collection of dumping duties is this, that if the price at which the goods are purchased by the importer is less than the fair home market value, the difference between the invoice price and the fair home market value of the goods is collected in the way of special or dumping duty. But there is a provision that the amount collected shall in no case exceed 50 per cent of the value of the goods for duty purposes. There are various other provisions; that is the general principle. This applies only to goods of a class or kind produced in Canada.


Richard Bedford Bennett: That principle may be said to underlie the whole structure of dumping duties?


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: The question I particularly wanted the minister to deal with was that which arises out of the determination of market value. It will be recalled that there was a reference before the tariff board-I saw something of it in the press; I have not had time to read the details-as to what price should be taken as the market price. That is, I buy in carload lots; someone else buys in smaller lots, and some other person buys in some other kind of lots. For the purpose of determining whether or not dumping duties should be paid, what is the governing price?


James Lorimer Ilsley: There is no problem more
difficult than that. The practice of the department for years has been this:	The trade
status of the importer is first ascertained. If the importer is a consumer, the value for duty is the fair home market price as paid by consumers in the country of origin. If the importer is a retailer, the value taken for duty purposes is the price paid in the principal markets of the country of origin by retailers. If the importer is a wholesaler, the value taken for duty purposes is the price paid by wholesalers in the country of origin. If the importer is a distributor-


Richard Bedford Bennett: Or jobber.


James Lorimer Ilsley: Well, I do not know the
difference between jobbers and wholesalers. I take them as meaning the same. But there is a trade status known as distributor, and distributors ordinarily are able to purchase goods at a lower price than wholesalers. If the importer is a distributor, the practice of the department has been to allow him to import at the distributor's price in the country of origin. In some instances there is no distributor in the country of origin; all the sales are to wholesalers, or perhaps to retailers or consumers. But the conditions are such that the merchandising of the goods through distributors in this country is the natural and proper way in which they should be merchandised. In that case we allow what are called distributors' discounts; there are a few such cases. We are authorized to do that under section 41 of the Customs Act.
I must say that the practice of the department has been challenged. A recent case before the tariff board has brought all the principles under review. A recent decision of the board-


Richard Bedford Bennett: In what case?


James Lorimer Ilsley: The insulating board case.


Richard Bedford Bennett: Has there been a decision?


James Lorimer Ilsley: Yes. The decision was that in that particular case the fair market value must be taken to be the price at which the greatest volume of goods moved into consumption in the country of origin.


Richard Bedford Bennett: Could be purchased by
anybody in that country?


Mr. THORSON:: The greatest volume.


James Lorimer Ilsley: I must say I do not know
what interpretation to put on the decision. If we divide the goods into five classes in that particular instance, in the country of origin perhaps 35 to 40 per cent are sold to wholesalers; those sales are greater than to any

S up pi y-iXa lional Reven ue-C us toms
other single class. The meaning of the decision probably is that we must take as the value for duty the price to the wholesalers in the country of origin because it is to that class of purchaser that the greatest volume of goods is sold. But it may be that the decision means something else entirely. It may be that the board had in mind two classes only, putting in one class the wholesalers and retail lumber dealers, who are almost wholesalers; they sell to contractors who in turn use the product in the building of houses. If that is what the tariff board meant, then we have wholesalers and retail dealers in one class. The sales to them hover around 50 per cent, and the application of the decision of the board may depend upon whether more or less than 50 per cent is sold to that class of wholesalers and lumber dealers.
Mr. BENNETT; Why would that follow?


James Lorimer Ilsley: I think the decision uses the term "wholesalers and jobbers," but possibly they mean wholesalers and dealers or jobbers and dealers. The reason given in the decision is that, more than half of the output being sold to these classes of purchasers, they constitute the principal market in the country of origin; and when section 35 refers to the sale in the principal markets of the country of origin, it means to the largest class of purchasers. If we adopt that principle for value in the future, it will make some change in the practice of the department. But I am glad to say that the tariff board was very careful to point out that they were not laying down a general principle but simply saying that in that particular instance they think the "fair home market value in the principal markets" means the price at which the greatest volume of goods moves into consumption.


Richard Bedford Bennett: I am obliged to the minister. Some people resident in the constituency I have the honour to represent were interested in a motion which has been pending in this house since February 16 in connection with the application of the customs tariff by the officers and clerks of the Department of National Revenue. I was not aware that the insulating board case had been decided until the minister was good enough to say so. The effect of that decision I understand to be that the market price which has to be considered in determining whether or not dumping duty should be applied is the price at which the largest volume of that commodity was being sold in that country and could be purchased by anyone who qualified as a purchaser. That would be correct?


James Lorimer Ilsley: Yes; that is it exactly.


Richard Bedford Bennett: Then it would seem to me that if this rule were applied reasonably, it would prevent the inquiries that have been going on as to whether John Smith was just a casual purchaser or whether he was a purchaser of ten gross or of a thousand gross, we will say, of a given commodity. The only matter that should be inquired into when I lodge my invoice with the department is whether or not I actually could buy that commodity in the market of origin at the price indicated.


Joseph Thorarinn Thorson: Buyers in the same
category.


Richard Bedford Bennett: No; that is what I want to get away from. That is what I want to find out about, because that is the matter about which there has been so much difficulty.
I buy goods in New York to-morrow; I come to the customs house here and hand in my invoice showing that I bought them at a store on Broadway, and showing what I paid for them. The department says, "We want dumping duty from you, Mr. Bennett." I say, "You are not entitled to dumping duty, because I bought those goods at the price at which anybody else could buy them in that store on Broadway, and therefore the section does not apply." That is the contention I want to put fairly up to the minister, as it is put up to me by those who are interested in the matter in the part of the country in which I live.
Have I made myself clear? I purchase a bill of goods in a store in New York; I get my invoice and hand it in here, and I am told, "Oh, no, you cannot have that at that rate; you have to pay dumping duty." But I say, "I am not going to pay dumping duty; you have no right to ask me for it." Then the official says. "Let us see. Are you a retailer or a consumer, or what are you?" I say, "That is none of your business. I bought these goods, and anybody else could buy them in that community for exactly the same price. Therefore I have come within the statute; that is the market price at which those goods can be bought in that community." I am talking about the legislation as it now stands; I am not saying what it might be. That is the position taken by those who are keenly and deeply interested. They say, "This statute does not allow them to do this; this statute does not permit officials to make inquiries," and it will be remembered that the hon. member for Moose Jaw (Mr. Ross), in his resolution of February 16, dealt with that particular phase of the matter, and in a moment I am going to say something about another phase of it.
3488	COMMONS
Supply-National Revenue-Customs
How do we find ourselves, in the administration of this act, authorized to take dumping duties from an importer when he has bought his goods at a price at which, Smith, Jones and Brown in New York can buy them on the same day in the same store? Surely we cannot take a dumping duty in that case; yet I know of instances that have been brought to my attention in which the department have been saying, "You have to pay dumping duty, because you are not the same type and class of purchaser as the other person who bought them in New York." I say that is not your business; if these men can walk into a store in New York and buy those goods at the same price. I buy them for that price; it is on my invoice, and 1 pay my duty on that price. In that statute there is no power given to enable the department to exact a dumping duty from me.
I am putting this to the minister because it is not a conjectural case; it is the position that is put to me, that the law does not authorize it. I apologize for taking time on it; but it is a vital matter to people who find themselves coming across the border, who are not within the exemption, and who are paying duty from day to day. I remember how bitter was the complaint in one instance, and on inquiry I found that this citizen who was importing these goods was paying exactly the price that Smith, Jones and Brown would pay for these goods in that store in New York, although it may be said that Smith, Brown and Jones bought in larger volume than my friend did. But I say, under the law as it stands, that is not the concern of the department. They have one question to decide; that is whether I bought these goods honestly and openly for what was the market price of those goods in that city, and "market price" means the price at which the goods could be marketed by the seller to a buyer in that city. Have I made myself clear?


James Lorimer Ilsley: The right hon. gentleman has made himself perfectly clear, and I agree as to the importance of the question he has raised. I am not at all sure just what the act does authorize the department to do, but I am of a contrary opinion to the right hon. gentleman.


Richard Bedford Bennett: Perhaps if the minister has the section before him, he might read it in order that I might better follow his observations.


James Lorimer Ilsley: It is section 35. Needless to say, I have given a great deal of thought to this very matter. I do not know whether the right hon. gentleman is expressing these views as his own or whether he is putting [Mr. Bennett.J
forth what might be a reasonable interpretation of the act and suggesting that he would like me to give my views on it. I do not agree with that construction of the act. When the right hon, gentleman goes into a store in New York and buys goods which he brings to the border, or which he has sent to him, we are confronted with the duty of ascertaining whether he has paid the fair market value of the goods when sold for home consumption in the principal markets of the country of origin, which would be the United States.


Richard Bedford Bennett: That is why I selected New York.


James Lorimer Ilsley: In order to give a reasonable and workable interpretation of that section, we must take sales under substantially similar conditions to purchasers in the United States. I think that is the only reasonable interpretation which can 'be placed on the act. We ask ourselves: What do United States purchasers pay for those goods when they go into a store in New York and buy them?
Mr, BENNETT: In my illustration they went into that store that day, bought these goods and paid the price I paid for them. The minister perhaps did not follow me. I bought my goods in New York. Brown, Smith and Jones bought their goods in New York in the same store on the same day, and paid for them x price. I paid the same x price. It is true that the price which Jones, Smith and Brown paid was a price which they paid because they bought in large volume in the United States, but it is also true that I was given that same price; and having been given that price, that was the market price in that city to United States citizens for those goods.
Mr. ILSLEY': Yes, but not to United States citizens generally.


Richard Bedford Bennett: Where is there anything like that in the act?


James Lorimer Ilsley: It does not say it, but I say the section must be interpreted in that way; otherwise it is entirely unworkable.


Richard Bedford Bennett: No.


James Lorimer Ilsley: I think it is.


Richard Bedford Bennett: Section 35 states:
1.	Whenever any duty ad valorem is imposed on any goods imported into Canada, the value for duty shall be the fair market value thereof, when sold for home consumption, in the principal markets of the country whence and at the time when the same were exported directly to Canada.
2.	In the case of importations of goods the manufacture or produce of a foreign country,

Supply-
-National Revenue-Customs
the currency of which is substantially depreciated, the value for duty shall not be less than the value that would be placed on similar (roods manufactured or produced in Great Britain and imported from that country, if such similar goods are made or produced there.
3.	If similar goods are not made or produced in Great Britain, the value for duty shall not be less than the value of similar goods made or produced in any European country the currency of which is not substantially depreciated.
4.	The minister may determine the value of such goods, and the value so determined shall, until otherwise provided, be the value upon which the duty on such goods shall be computed and levied under regulations prescribed by the minister.
The first subsection, is the one in which we are interested; that is:
Whenever any duty ad valorem is imposed on any goods imported into Canada, the value for duty shall be the fair market value thereof, when sold for home consumption, in the principal markets of the country whence and at the time when the same were exported directly to Canada.
This was brought to my attention by an importer, and as a matter of fact I did turn up this section. I have no excuse to give him when he tells me that they gave him a price in New York which was the same price that Jones and Smith and Brown paid for those goods.


James Lorimer Ilsley: What was the status of the sellers? Were they manufacturers or wholesalers?


Richard Bedford Bennett: They were wholesalers. There are two lines of cases, both of which have been presented to me, but for the sake of this discussion I had better deal with the wholesaler rather than the manufacturer. I will deal with the manufactured goods in another way. I am not talking about what the statute should say; I am talking of what it does say. The minister appreciates that point. Jones and Smith and Brown were ahead of me in that store on Broadway, that wholesale shop. They bought an invoice of goods. I was there; I saw their invoices, and I said to them, "Is this the price you paid without discount or anything else, buying these goods in the United States"? And they answered, "Yes, that is what we paid." 'fit is not a fire sale; it is a regular sale by this wholesaler"? "Yes." I say to the clerk, " I want an invoice of ten dozen of these' goods." "Well, the price should be a little higher than that, should it not '? he will probably say to me; " you are going to use them here"? That has been said to me. I sav, "No; I am taking them out of this country." "Well, then, you can have the same price as is paid by the Americans who
use them in this country." It is within the knowledge of the minister that sometimes they offer to shade the price, but we are not talking about shading the price. They give me my invoice for exactly the same price. My contention is that when my goods reach this city and I go down to the long room with my invoice, as the law now stands there is no power given to the Dominion of Canada to take any more money from me by way of duty than upon the computation of the price which is in that invoice, because it is established that three people bought those goods at the same price for use and consumption in the United States.


James Lorimer Ilsley: Resale. Undoubtedly, in the case put, the Americans bought the goods for re-sale. They were retailers buying from a wholesaler.


Richard Bedford Bennett: They come within this,
" the fair market price for home consumption," at any rate.


James Lorimer Ilsley: Oh, well, yes.


Richard Bedford Bennett: It may be that cases might arise which necessitate a change in the law; but just where an official of this country is given a right to say to me or to my friends, "Although you 'bought your goods at the same price as that which Jones and Smith and Brown paid for theirs, and although they are using theirs in the United States and you have taken yours to Canada, I shall ask you to pay a dumping duty or an increased duty on them," I do not know; I say I cannot find it in the four corners of the statute. If it is desired to put it there, it should be put there. I take it that that was what was in the mind of the mover of the resolution with respect to this matter. The minister asks me my opinion with respect to it. I am bound to say that when I read the discussion which took place in the newspapers with respect to insulating board I was rather surprised. I could not think that there is anything in the statute which permits officials of the department to go beyond the language of the act. There is nothing there about volume or substantial conditions or anything else; it is the fair market price paid by consumers or purchasers in that country.
Let me now take the retail case, which brings it nearer home. I have known, as most hon. members of this committee have, people who sometimes secure bargains, very great bargains, on a bargain day in one of the large New York stores. My contention is that, under the law as it stands, there is no authority in this country to take from me a larger duty than the invoice calls for, because

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that was a bargain sale that everybody could avail themselves of, and it was a retail sale. That is the position which I hope I have made perfectly clear to the minister. I am 'bound to say I believe that if it is desired to apply some other principle, the statute should be amended, because I do not believe that, under the terms of the statute as it stands, that power is there. That is the submission I have to make.


James Lorimer Ilsley: It would probably be desirable to have the act clarified in some way, because the dispute which took place over insulating board showed that the problem was very difficult, and I do not know whether the reasons given by the department for the practice were altogether valid or sound.


Richard Bedford Bennett: I think it is only fair to say that the practice is nothing new; it did not arise since the minister took office.


James Lorimer Ilsley: I think the practice of the
department is authorized by the section. I shall try to explain why I think so, although I may not meet the right hon. gentleman point by point.
The duty of our appraisers is to "ascertain, estimate and appraise"-those are the words -the fair market value of the goods when sold for home consumption, and so on. Now there will be several fair market values of those goods in the country of origin.


Richard Bedford Bennett: And I say that Canadians can always take the lowest.


James Lorimer Ilsley: Yes; they will likely get
the lowest, because the sale will be made in that way and there will not be any undesirable consequences to the sellers; that is the reason they will get the lowest. But sometimes there will be three levels, each of which is the fair market value of the goods when sold for home consumption, depending upon what? Upon the status or class of the purchaser. That is what it depends upon.


Richard Bedford Bennett: Yes; but the statute
does not say so.


James Lorimer Ilsley: As yet I am a thousand
miles from what the statute says. I am simply stating what the facts are. The facts are that, taking that area in the United States in which he has bought the goods he will find certainly two and probably three price levels ordinarily prevalent. If the man is a consumer, he will find he has to pay so much for the hat or whatever it is; if he is a retailer, he will have to pay a lower price; and if he is a wholesaler, he need only pay still less.


Richard Bedford Bennett: And if I am fortunate
enough to buy at the lowest of the three prices, I am penalized for doing so.
Mr. ILSLE1 :	The right hon. gentleman
is not logical there. He has branched off on to a matter of policy when we are discussing at the moment a question of law, and law only. We can reach the question of policy later. What I am saying is that in the case I have put there are three levels of prices. How are our officers going to determine what is the fair home market value of these goods for customs purposes? Well, there is only one way if the section is to be operated at all, and that is to consider what class the purchaser was in; -what his status was in purchasing. We have to consider what the price would be under similar conditions, that is, the fair home market value so far as that particular instance is concerned.


Richard Bedford Bennett: That is not what the statute says.


James Lorimer Ilsley: That is a reasonable interpretation to place upon the statute, just as reasonable as the right hon. gentleman's interpretation. Why does the right hon. gentleman say that the price he paid as a consumer buying from a wholesaler was the fair home market value, when the fair home market value to consumers, to people in the same position as he, was so much higher? It is our duty to find out how much higher that price is. When we find out how much they are paying, then we know what is the fair home market value. That is the reason why that rule has been adopted by the department. The right hon. gentleman says that he is penalized because he buys these articles. Of course he is because that is the principle of the dumping clause. It has been debated for thirty years whether it is fair to penalize buyers for buying too low in a foreign country. The principle is settled, and observations of that kind are off the track.


Richard Bedford Bennett: The minister will observe that I did not make any objection to the dumping clause. I have supported it too many times. Perhaps the hon. gentleman was not always as warm in his support as I was.


James Lorimer Ilsley: I am not warm about it; I am simply arguing a legal point.


Richard Bedford Bennett: I said he was not as warm in his support of the dumping duty as I have been. The principle of the dumping duty is not quite as the hon. gentleman states. The principle of the dumping duty was to protect us against surplus products being dumped on our market at prices that bore no relation to

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the market value. I could give case after case. Here is a factory which sells 80 per cent of its production at home. It may be that in cider to keep the factory going at full time, the remaining 20 per cent of the production is sold at a 30 per cent discount under what it is being sold for in the United States. I think Mr. Fielding was the father of the dumping duty. I remember reading his speech about it and thinking it was a very fair statement of the situation.
Let me give another illustration. There is a great sale going on in New York, to last all this week. I go down there, and as one of a million other people I buy certain goods at a tremendously low price. I cannot find any authority in the statute that will enable this government or the officials of this department to charge any rate of duty that may be called a dumping duty with respect to those goods. The price I paid was the fair market price. Tou say, "That is not the fact." Of course you say it is not the fact. It is the old story that was dealt with by the price spreads committee. It is a matter of selling goods to clear them out and thereby make it difficult for the smaller retailer to continue in business. I am only pointing out to the minister that however laudable it may be-he will observe I have been careful not to say it was not-there is no provision in the statute that enables this to be done. These are not importers I am talking about; these are people who went across the line and bought goods in a store on Fifth avenue or Broadway. But they found they could not get the goods through on the invoice price because they were told it was a bargain sale. The fact is that this was the price at which anyone could buy them.


James Lorimer Ilsley: The right hon. gentleman is talking about a purely theoretical case. It would be news to me if we had ever attempted to collect a dumping duty from a consumer because of the price he paid in the country of origin.


Richard Bedford Bennett: I will admit he did not consume them all.


James Lorimer Ilsley: The right hon. gentleman
spoke about going down to a bargain sale and being asked to pay a dumping duty. That has never happened in the history of the department.


Richard Bedford Bennett: Not as against an individual consumer, but I am talking about a consumer who purchases more than his own requirements. Some he gives away, and he lets somebody else reimburse him in connection with some of the rest. I must say
that I do not believe the department has any right under that statute to charge any more than the invoice price.


Abraham Albert Heaps: The question of insulite
products has been mentioned during the course of this discussion, and possibly the minister might be in position to give the committee further details in this connection.
I have in my hand a communication which I received from a firm of distributors in the city of Winnipeg who are protesting strongly against the new regulations put into effect with regard to the valuation. Possibly if I read this communication it would explain the situation much better than I could. It is from D. Ackland and Son, Limited, under the date of May 19, 1938, and reads:
A further development has taken place in regard to the importation of insulite products, a matter which the writer took up with you a short time ago.
It is evident that there has been pressure brought to bear by eastern Canadian manufacturers to have the value for duty purposes of insulite products raised, and we are given to understand that a recommendation to this effect has been made to the Minister of National Revenue by the tariff board. This is a reversal of a ruling made by the tariff board about one year ago.
This affects very considerably the consumers of these products in western Canada, inasmuch as we-in conjunction with other distributors in the west and the Insulite Company-were able to reduce the price of insulite products, effective March 19, 1938, and it was neeessary for eastern manufacturers, in order to compete, to lower their prices. This, naturally, does not please them and the pressure they have brought to bear is the result.
When you take into consideration the fact that duty and excise tax on these products amount to 28J per cent and in the face of this we are able to import these products from United States, make a satisfactory profit and still reduce the price to the dealer and consumer, it is very apparent that eastern manufacturers are either away behind in their manufacturing methods or are making an exhorbitant profit.
We think the action taken to increase the value for duty purposes entirely unfair to both the Insulite Company and western Canadian distributors and consumers.
Perhaps the minister is able to give the committee some more information about this particular case. Evidently this regulation is working a hardship upon those who are compelled to buy this product from the western distributors. I am not in a position to say anything with regard to the definite statements made in this communication as to representations made by the eastern manufacturers to the government or the tariff board. I should like to have from the minister the real reasons that lay behind the
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tariff board giving a ruling for an increase in the duty on this particular commodity. Also, can he advise whether the western distributors were able to purchase these goods in the United States at the fair market price at which they were being sold in that country?


James Lorimer Ilsley: The letter just read by the hon. gentleman contains certain inaccuracies or misstatements. In the first place, the tariff board has made only one decision. It did not make the decision a year ago which was at variance with the present decision. That decision was made by the department applying the principle which I have just tried to state to the leader of the opposition. The decision was that the value for duty purposes to the Canadian distributors, of which there are two, one in western and one in eastern Canada, should be the price at which the manufacturer sold to the two distributors in the United States, one being on the west coast and one in one of the gulf states. There was considerable difference between the price to the distributors in the United States and the price to the wholesalers.
When the department came to the decision it did and gave the ruling it did, the Canadian Manufacturers immediately px-otested very strongly because they said that as only a small proportion, less than 15 per cent, of the output of this particular product was sold in the United States to distributors, that price was not a fair home market price in the markets of the country of origin; that those markets were not the principal markets, and they went to the tariff board to have the matter decided. The tariff board heard argument upon it, deliberated, and finally delivered its decision that the department was wrong; that the price tve had taken as the fair home market price was not the home market price but a special price given on a small part of the product to two distributors in the United States in consideration of certain services which the distributors performed, and that the price which we should take as the value should be the price at which the greater part of the product moved in the country of origin. There is an ambiguity in the board's decision,
I think, and because of that ambiguity, as I tried to explain to the leader of the opposition a few minutes ago, we have not as yet made any change in our ruling. We are prepared to accept the finding of the tariff board, but we are in great doubt how to apply it. We do not know how to apply it, and until the decision of the tariff board is clarified in some way or another, either by reargument or otherwise, we do not intend to change the present ruling of the department.

When the correspondent of the hon. gentleman says that effect has recently been given to the finding of the tariff board, he is incorrect. Effect has not been given to it, although it has been approved by myself as minister in the normal course as the decision of a judicial body.
I do not like to let go unchallenged the statement that pressure was brought by eastern manufacturers. In a sense pressure is brought by everybody who goes to the department or the tariff board. We have representations continually from the two conflicting interests, those of the importers and those of the Canadian manufacturers. It would have been much better if the hon. gentleman's correspondent had said that application was made and argument heard before the tariff board, as a result of which they came to a decision. It is a carefully reasoned judicial decision, and the declaration of the tariff board is this:
The insulating board under consideration in this appeal should be appraised for duty purposes on the basis of the prices at which the greatest volume of the exporter's production moves into consumption in the home market.


Abraham Albert Heaps: If such is the ruling of the
tariff board on importations of this commodity, would not the same ruling apply to every other commodity that is imported into Canada?


James Lorimer Ilsley: Conditions vary so greatly
that it is almost impossible to answer that question in the affirmative. I would not care to answer it in the affirmative. It may apply in one case and not in another.


Abraham Albert Heaps: The tariff board evidently
claim in the decision they gave in regard to insulite that the value for duty purposes should be based on the price at which the largest volume of the goods was sold in the United States.


James Lorimer Ilsley: Yes.


Abraham Albert Heaps: If that is their decision, would it not be precedent in regard to other commodities as well? I am wondering if there are not many similar cases of goods being brought into this country where you would not have to increase the value for duty purposes. Personally I think a hardship is worked in this case because the manufacturers have quite a substantial protection already, 28} per cent, and on top of that there is the haul of four hundred miles from Minneapolis to Winnipeg, which adds to the cost, and therefore to the protection; so I think 28} per cent is ample protection for the manufacturers without having to increase the value for duty

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purposes. While I do not personally know very much about the main contents of the letter, I must say as regards the general principle underlying the communication, that a protection of 28|- per cent ought to be ample for the manufacturers.


James Lorimer Ilsley: It largely depends on the '[DOT]alue upon which it is based.


Abraham Albert Heaps: I assume that there is the usual differential which manufacturers' have to give between the distributor and the wholesaler, which is not very great as a rule.


Thomas Reid: Complaints have reached me from British Columbia from fruit and vegetable growers regarding the application of seasonal duties. They say that seasonal duties are applied for Ontario, Quebec and the maritime provinces, and that British Columbia's produce is six weeks ahead of these other provinces, and they complain against seasonal duties being imposed on importations into these eastern provinces and not upon importations into British Columbia. It may well be that there is an explanation for that. If so, I think it should be indicated because I feel that consideration should be given to their appeal.


James Lorimer Ilsley: There is nothing unusual about receiving complaints from British Columbia, or for that matter from Ontario, the maritimes and everywhere else, about these matters, but it is not correct to say that duties are not put on in the western district until they have been put on in the eastern district. In some instances they are put on considerably before, and, in some instances, some time afterwards. The time at which the fixed values become effective depends upon the reports that are received as to climatic conditions, the stage to which crops are advanced on a certain date, and so on. If the hon. gentleman will tell me what particular commodities he has in mind-


Thomas Reid: Strawberries, cabbages and
cauliflower.


Some hon. MEMBERS:: Louder.


Mr. SPENCE:: We might as well sit outside.


Richard Bedford Bennett: I suppose the minister would agree with that.


James Lorimer Ilsley: I would not say that. It is difficult to make myself heard at the same time by those sitting behind me and those sitting in front.


Thomas Reid: Have seasonal duties been placed against the importation of strawberries into British Columbia?


James Lorimer Ilsley: Yes.


James Earl Lawson: I was wondering if my ears deceived me or if my mind misconceived the statement made by the minister in reply to the hon. member for Winnipeg North (Mr. Heaps), because as I understood it the minister said the tariff board had reached with regard to insulite board, a decision which he as minister had formally approved as a judicial decision, but that the department was going right on in its own sweet way, carrying on exactly as before, although the tariff board had held that it was in error. Did I misunderstand the minister in that regard?


James Lorimer Ilsley: Yes; the hon. gentleman misunderstood the minister if he is stating what he understood the minister to say.


James Earl Lawson: Well, I am.


Richard Bedford Bennett: I am bound to say I understood him to say that too.


James Lorimer Ilsley: This is the situation. All that .the tariff board did was to lay down a principle. They made no particular finding as to any particular value. They laid down a principle; as it is in the application of that principle that the difficulty arises, and until we are able to apply the principle to the peculiar facts in this case, no change is being made in .the existing situation. If the decision of the tariff board had been that the value for duty purposes, so far as these particular importers were concerned, should be $35 or $30 a thousand, it would be applied, but they did not say that at all. The tariff board's decision was that it should be the price at which the greatest volume of the exporters' production moves into consumption in the home market. The question is whether that means the greatest volume as between five classes or two, and until that point is settled we cannot apply the decision.


James Earl Lawson: Is it not a fact that the tariff board always determines principles and never the application of principles?


James Lorimer Ilsley: No; usually they determine the application.


James Earl Lawson: By decision?


James Lorimer Ilsley: Yes.


James Earl Lawson: Has the department asked the tariff board in this particular case to deal with the application of the principle now that they have determined the principle?


James Lorimer Ilsley: We have notified the parties and they are entitled to be heard. We could not go to the tariff board in any hole-and-corner way and ask them what they meant, because one person will lose and the other win. They are entitled to be heard.
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James Earl Lawson: I do not mean in any hole-and-corner way. I meant whether the department had asked the tariff board, upon notice to the other parties, to clarify the application of the principle.


James Lorimer Ilsley: We have notified the parties.


James Earl Lawson: Which leaves it up to the parties.


James Lorimer Ilsley: Yes.


Abraham Albert Heaps: Do I understand that there will be another hearing?


James Earl Lawson: It is the old system of passing the buck.


James Lorimer Ilsley: There will be no delay from these parties.


Abraham Albert Heaps: Is there to be another hearing before the tariff board before the question is finally disposed of?


James Lorimer Ilsley: That depends upon what the parties want.


Douglas Gooderham Ross: I have figures from the bureau of statistics with respect to imports of finished manufactured articles from the United States. In 1935 we brought in 8172,165,535; that is, 56 per cent of all articles imported were finished manufactured articles.


James Lorimer Ilsley: For what period-the calendar year 1937?


Douglas Gooderham Ross: That was for the fiscal year ended March 31, 1935. For the fiscal year ended March 31, 1936, we brought in finished manufactured articles amounting to $189,341,680, or 59-3 per cent of the total imports. In 1937 that had increased again until it was $247,207,956 or 62 * 8 per cent, and by the end of March this year we had imported finished manufactured articles amounting to $317,851,663, or 65-2 per cent. That seems to be a very large proportion of finished manufactured articles, and I do not think there would be very much unemployment in Toronto if we had $100,000,000 worth of that made in our city.


Joseph Thorarinn Thorson: Has the hon. gentleman the corresponding exports?


Douglas Gooderham Ross: In view of the fact that our balance of trade -has gone from $52,000,000 in our favour with the United States at the end of March, 1937, to $52,000,000 against us by the end of March, 1938, I should like to know what steps the department has taken to see, now that our exports to that country have been greatly curtailed, that our imports shall be curtailed to a corresponding extent in order that we
IMr. Ilsley.l
may get in our urban centres some of the benefit in connection with the production of these finished manufactured articles amounting to $317,851,663, or 65 per cent of the total imports. We should like to have an opportunity to manufacture some of those goods here. What is the department doing to correct this situation?


James Lorimer Ilsley: The Department of National Reveque is an administrative department whose duty it is to apply the law, and that is what we do to the best of our ability. I do not know what more there is for my department to do.


Richard Bedford Bennett: In other words, you pass them on to the Finance department.


James Lorimer Ilsley: It would not be proper for the Department of National Revenue to be trying to make tariffs. It is our place to collect duties.


Mr. EULER:: I would remind my hon. friend opposite (Mr. Ross, St. Paul's) that we had a total favourable balance of trade with all countries of $316,000,000 in 1937.


Mr. WARD:: I wish the minister would tell us exactly what methods are being employed to ascertain the true market value of goods entering Canada where the dump clause is applied.


James Lorimer Ilsley: Various methods are followed. Very often price lists and catalogues are available, and investigations are made by our investigators in foreign countries and by those who endeavour to find out in difficult cases what the fair home market value is.


William John Ward: Take a country like Japan or China. Have we officials there to report to the department as to the home market value of goods in those countries ?


James Lorimer Ilsley: We have no investigators in Japan or China. We use such information as we can get, keeping in touch with invoices and using the services of trade commissioners where possible.


William John Ward: A great deal has been said in this house, especially by my hon. friend to my left, in defence of dumping duties. I have been informed by many business men in the country that Canadian manufacturers are about as successful in dumping goods in other countries as the manufacturers of any other country. Is that a fact? I am told that Canadian manufacturers can successfully dump goods in other countries, and still they complain so bitterly about goods being dumped into Canada when they might benefit the consumer slightly.

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James Lorimer Ilsley: I have no precise or complete information about the practices of our manufacturers because the matter does not come within the purview of the Department of National Revenue. We are concerned with imports and not with exports-that is, in an administrative way. I have been given to understand, however, that some dumping goes on, that there is some selling of goods in foreign countries at less than the price charged in the home market; and that more or less goes on the world over.


Mr. HARRIS:: The minister will probably get the answer at the Canadian Manufacturers Association convention at the Chateau Laurier. The Minister of Trade and Commerce is just back from the convention, and perhaps he could answer the question.


Richard Bedford Bennett: Probably the minister
could say from his own knowledge or the in-formatioin in his department that other countries have the same law against dumping in their markets, sometimes a little stricter than ours.


James Lorimer Ilsley: Some of them have.


Richard Bedford Bennett: During my absence from this country some Canadians referred me to the strict provisions that prevail in another country which absolutely prevent the importation of goods from Canada except at the market price, and that market price as fixed was a rather high price. There was no country that I visited which does not make the same provision we have, or a more drastic provision, against the dumping of our surplus products on their market. That is true at least about Great Britain.


William Daum Euler: Great Britain has no dumping law.


William John Ward: If the statement of the leader of the opposition (Mr. Bennett) is correct, it should help our low tariff people, because I have been assured by many business men in this country that our Canadian manufacturers can dump goods against these very stringent laws of other countries; so surely they might be a little more generous with the Canadian consumers, and do a little more dumping in Canada, which might do something to relieve the strain in the rural districts.


Richard Langton Baker: Would the hon. member
give any specific case of a Canadian manufacturer who has been successful in dumping goods in other countries below the Canadian price?


William John Ward: I cannot give any specific
case. The cases given to me were in con-51952-222
versation with business men who have travelled widely throughout the world. I was talking to a man just the other day, and he made the statement that he believed there was no country in the world more successful than Canada in dumping goods in other countries. I thought it was rather a compliment to the Canadian manufacturers, but I thought that if they were able to dump so successfully as this man claimed, they ought to be able to do a little better for the Canadian consumer.


Joseph Henry Harris: The observations made by my hon. friend are very far from the mark. I understand he made some reference to Great Britain. Let him come nearer home and tell us something in regard to our great neighbour to the south. Anyone who has had occasion to make shipments to the United States knows it is a common practice there that if there is any question about a commodity which is being imported, whether it be a carload or a trainload or a small shipment, interfering not only by way of dumping on that market but with the trade of that country, the shipment is held up at the border; a questionnaire is sent through to Washington, and Washington rules as to whether the goods might be considered as being dumped, or whether their importation conflicts in any way with the interpretation of the customs laws of that country. I can tell my hon. friend that in 90 per cent of the cases the interpretation by the authorities at Washington is such that the United States market receives every possible little bit of protection there is in their schedules. The Minister of National Revenue says he is just an administrator of the statute. I have heard that answer many times in this chamber during the last decade and a half. We want a little more than administration. We want in that department a minister who has a vision of his responsibilities to the Canadian people, apart from administering the straight letter of the law.


An hon, MEMBER:: That is what we have.


Joseph Henry Harris: I am glad to hear it, and I hope he will continue so. When he has a problem of this kind before him, let him give some thought and consideration to what effect these goods coming into this country is going to have, net only on the manufacturer or dealer who is handling them, but on the thousands of our citizens who should be finding their vocation in manufacturing goods of a kind that we can manufacture in Canada. My hon. friend is smiling to himself, but if he will just stop and think what has been

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shown in some of the reports that have come before this chamber during the last three or four months; if he will remember that the increase in free imports of iron and steel products alone was from some $42,000,000 last year to $75,000,000 this year, and if he will consider how much employment that difference would give to men in our urban centres, and remember that in that particular trade alone, whereas they had some 99,153 employed in 1929 we find now 35,000 unemployed-


Mr. DEACHMAN:: How many did they have in 1933?


Joseph Henry Harris: They had 99,153 in 1929.


Robert John Deachman: In 1933?


Joseph Henry Harris: No; in 1929.


Richard Bedford Bennett: Perhaps the hon. member for Huron North will recall that there was a depression.


Robert John Deachman: There could not possibly have been a depression, because my right hon. friend was elected to cure unemployment.


Richard Bedford Bennett: No; he was not. That does not answer the question.


Joseph Henry Harris: If we could inculcate in the mind and heart of the minister and the men administering this department that one idea, that they are charged not only with the responsibility of administering the statute but also with the responsibility of seeing that Canada's interests are best served in like manner as obtains in the United States, Canada could be helped very considerably; and the minister would not be departing from the statutes, but would be interpreting and administering them in the interests of Canada rather than sticking rigidly to the letter of the law rather than the spirit, as sometimes happens. Large quantities of goods are dumped in this country when consideration should be given to the effect they are having.


Robert John Deachman: A few minutes ago the hon. member for St. Paul's (Mr. Ross) was very anxious about our adverse balance of trade. I think the Minister of Trade and Commerce might give us a little information in regard to that. As I recall his figures, he said our favourable balance of trade during the past year was $360,000,000.


William Daum Euler: No; $316,000,000.


Robert John Deachman: Does that include our favourable balance in tourist traffic, or is it limited solely to our commercial balance?

The hon. member for Danforth (Mr. Harris) is anxious to know whether the minister could not violate the letter of the law-


Joseph Henry Harris: On a point of order, Mr. Chairman, I did not say that.


Robert John Deachman: I beg the hon. member's pardon, I withdraw that. Violate to some extent the spirit.


Joseph Henry Harris: I did not use the word "violate" at all. I ask the hon. member to withdraw.


The CHAIRMAN:: I understood the hon. member to say that if he did use the word he would withdraw it.


Robert John Deachman: The hon. member for Danforth suggested that the minister should go a little further than the letter of the law-am I right-and that he should try to interpret the spirit of the law in keeping with what the hon. member for Danforth deems to be in the interest of the Canadian people, going beyond the exact letter of the law as enacted by the parliament of Canada. Let my hon. friend recall that during the years 1932, 1933, 1934, 1935 and 1936 our imports were decidedly lower than they were in 1937, and yet employment in Canada in 1937 was greater than it was in any of these years mentioned. If shutting out goods could create employment, then employment should have risen with a swelling tide from 1930 right down through 1931, 1932 and 1933; those were the periods when goods were shut out of the Dominion of Canada. You called upon your gods then to bring down the fire from heaven; but the gods were off at a chess game, and they paid no attention.
Then my hon. friend said we should shut out goods now. I only want to direct the attention of the committee to this fact, that for the first three months of this year imports into the United States fell by $300,000,000 as compared wih the same period in the previous year, and again unemployment increased tremendously in that country, until to-day it is almost as serious as it was at any time during the past five years.
For some reason or another this is one of the remedies that do not work; it is one of the remedies that never work. I ask the hon. member for Danforth to do this: Will he take the record of the trade of Canada; will he go over it year by year; will he put his finger on the year which shows the greatest volume of unemployment? He will find almost invariably that it was a year in which imports were at a very low level. Why is

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that? The reason is simple. When goods are coming into this country we are shipping goods out in payment for them, and the result is expanding trade, developing opportunity, expansion of business and relief from unemployment. But when, either from some outside cause or from your own action, you deliberately reduce the volume of imports, whether by tariffs or by some other form of taxation, then I want to tell you that you are budgeting for unemployment. As surely as economic laws are true, so surely will you get that unemployment. I ask the hon. member for Danforth if he will consider these facts and look over these figures. Then, when he has presented the figures to the house, will he tell us why these claims of his fail to work and why he cannot get that remedy applied in such a way as to produce results?
When a political party has been offering a remedy for a considerable time and it has failed; then, when they have a convention coming on, I suggest a very wise procedure, which will bring them support in this country. I do not often give advice to the Conservative party. Sometimes I give it to my own party; sometimes they do not accept it. Perhaps if the Conservative party could be induced to accept the advice I am about to give, they will not remain here in a little band, hopeless, bewildered and forlorn. I suggest that they consider their policy of the past. I suggest as a slogan for them, "Back to the tariff of Borden and Meighen." That is a nice sounding phrase and one that should bring support. Why do they not accept it?


An hon. MEMBER:: You tell them.


Robert John Deachman: I should be delighted
to tell them; I expect an invitation to the Conservative convention myself. But the hon. member for Danforth mentioned one or two other matters which demand a word or two of explanation, and I am glad to give it. The hon. member said that imports of free goods have increased. They have. We are importing about 10 per cent more free goods than we were back in 1930. We have shifted too far towards a protective and too far away from a revenue tariff. That is the truth, but I want to point out to the hon. member for Danforth that these goods coming in are the raw materials of the manufacturers. These men, who sometimes accuse me of being extreme, are themselves extreme. The increase in the imports of raw materials is largely the result of the pressure upon this and past governments to increase these imports. I am glad to welcome to my side the army of Canadian manufacturers. I am glad 51952-222 J
to see that they are meeting in Ottawa at the present time. I hope, however, that they will exert the pressure just a little further, and that the medicine which they like so well when it is applied to the things they buy, will be applied also to the things they sell. Frankly, I believe they will do it in time, because the application of a high protective policy leads to increased unemployment and to increased taxes. It leads to the application of a high sales tax and a high income tax, and to large expenditures by governments. Some year, when he has a little more time and a little more experience in the inner workings of protection, the Canadian manufacturer will come to a conference and will tell the people of this country, "We have gone far enough. Protection is costing the manufacturers too much." Then they will come before a government headed by the hon. member for Danforth and the hon. member for St. Paul's- and I hope, if he stays with the party, by the present right hon. leader of the opposition-and ask in the name of the manufacturers themselves that we have a little closer approach to free trade than we have had at any time in the history of the dominion.


Joseph Henry Harris: We are still dealing with the item concerning general administration, and I still adhere to the point I raised a moment ago. But I should like to straighten out a few of the ideas of the hon. member for Huron North. A moment ago the hon. gentleman said that the figures of total trade revealed that the imports under the present administration were less, and without reciting any figures he went on to elaborate some of his free trade ideas. I should like to put on record the imports into Canada, using round figures:
1933		$406,000,000
1934		 433,000,000
1935		 522,000,000
1936		 562,000,000
1937		 671,000,000
1938		 799,000,000


Robert John Deachman: Would my hon. friend be good enough to put the unemployment figures alongside those?


Joseph Henry Harris: There is the increase in imports into this country. That does not go far enough, Mr. Chairman. As I see it, the difference between the party that sits here and my hon. friends who sit opposite, together with the rump which sits to my right-this rump which kicks over the traces because the breeching is not on the shaft, much to the embarrassment of my hon. friends on the treasury benches; this rump which emphasizes the line of demarcation between the party to
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which I belong and my hon. friends on the treasury benches-is this: Your god as far as this matter is concerned is total trade, no matter what kind of trade that may be. To go a little further, and give our ideas as I see them, the ideas of this very important group, they are these: Trade, yes. We want trade ; but we want trade of a kind that will not take away from our citizens their artisan-ship and their vocations. We are a people very similar to the people to the south. We have at hand goods to work with similar to the goods they have. Their standard of living is similar to ours; their trades and callings are the same as ours. There is a difference in our situation with reference to the United States as compared with what obtains regarding our possibilities of markets elsewhere. The main difference as I see it may be illustrated by a few figures which I should like to put on record.
Our total trade with foreign countries, of which the main portion is with the United States, shows some illuminating facts. When the party led by the right hon. leader of the opposition was in power, what were the imports of fully manufactured goods? I refer first to these because there is about fort)' dollars' worth of labour in each one hundred dollars' worth of manufactured goods, whether they are made in the United States or in Canada. In 1933 manufactured goods of the value of $173,000,000 came into this country. In 1934, although total imports increased by $25,000,000, our fully manufactured imports receded, as the bluebook shows, to $166,000,000. At the same time imports of raw materials increased from $99,000,000 to $108,000,000, and imports of partly manufactured goods, which represent twenty dollars' worth of labour in each one hundred dollars, increased by only $5,000,000. With the advent of the hon. gentlemen who now' lead the government, what do we find? Increases almost by leaps and bounds in importations to this country, but what kind of imports? Imports of fully manufactured goods, which amounted to $166,000,000 in 1934, rose to $288,000,000 last year. That, to my mind, takes away from our citizens a chance to apply their artisan-ship to goods which they can make in this country.


Charles Edward Bothwell: Why not compare
similar years instead of referring to 1934?


Joseph Henry Harris: I will give them all, although I do not want to delay the committee. The hon. member for Huron North used the figures for the year I have quoted. However, I will give the hon. member all the figures: 1933, $173,000,000; 1934, $166,000,000; 1935,
[Mr. Harris.)
$207,000,000; 1936, $227,000,000; 1937, $289,000,000. Partly manufactured goods:	1933,
S13,000,000; 1934, $18,000,000; 1935, $25,000,000;
1936,	$25,000,000; 1937, $27,000,000. Raw materials: 1933, $99,000,000; 1934, $108,000,000; 1935, $132,000,000; 1936, $132,000,000; 1937, $156,000,000. To get a clear view of this picture it is necessary also to think about our exports, and what do we find? My hon. friend wants figures; I hope he will take note of these. Our exports or raw materials were: 1933, $91,000,000; 1934, $92,000,000; 1935, $97,000,000; all in the nineties; 1936, $104,000,000;
1937,	$179,000,000; whereas our exports of manufactured goods rose from $116,000,000 to $145,000,000 in 1935, $163,000,000 in 1936, and $194,000,000 in 1937. That, one might say, is a reflection of the expansion of the primary industries, those industries which take out of mother earth her raw materials and ship them to foreign lands. Every time you take a dollar's worth of goods represented by shipments from primary industry you deprive one citizen of the opportunity of exercising his handicraft. When you get into the secondary industries, for every dollar's worth of raw material in the primary industries you have ten dollars' worth of labour produced by the secondary industries in completing the manufacture.
In making mention to the Minister of National Revenue of his interpretation of the act and his construction of the dumping duties, I would like to say not only to him but to those who surround him, give some thought, not to the manufacturer-he will take care of himself-but to our artisans who in thousands are walking the streets wanting work. They do not want to be unemployed. Give them every possible consideration by interpreting the act as it was meant to be interpreted when the statute was enacted and when the dumping duties were imposed. Dumping duties were not inserted on the record just for the sake of the letter; they are not intended to be lived up to merely in the letter; they are put in because behind the statute was the demand of public opinion that we should protect our citizens against the inroads of other countries that want to dump their goods into this country. That is why the statute is there. The minister as an occupant of the treasury benches does his best to interpret the letter of the statute, but public opinion requires that he shall interpret it in the way which was intended by those upon whose demand the law was placed on the statute book.
The difference between our party and that of our friends who at present occupy the treasury

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benches can well be shown by their actions in the matter of commercial treaties. I know I may be a little out of order, but I am now addressing those charged with the responsibility cf administering the Department of National Revenue. With that thought in my mind I ask them to reflect for a minute upon the effect which treaties negotiated by the present government have had upon the trade of Canada, compared with those which were negotiated by the previous administration. What are the facts, broadly speaking? Consider first our trade with Great Britain. Britain is unable in a large measure to compete with and dump on this market. In the first place Great Britain is so far away; in the second place it contains so large a consuming population; in the third place it supplies world markets which have been dependent upon it for centuries, in Africa, Asia and elsewhere. It was my pleasure the other day to meet a gentleman who was just returning from a district two thousand miles in the interior of China where he had been for sixteen years, selling goods produced in Great Britain. Having these other markets, Britain is not so wont to dump goods on our Canadian market as are our friends to the south. In that connection, consider the treaty of 1932, otherwise known as the empire trade treaty, keeping in mind the problem that I have tried to recite in the earlier part of my remarks, namely that raw materials do not make for work as much as partly manufactured goods, and only half as much again as fully manufactured goods.
We find, this to be the fact. Imports of raw materials from Great Britain increased from $19,000,000 in 1933 to $38,000,000 in 1937, or an increase of 100 per cent. Imports of partly manufactured goods from Great Britain increased from $18,000,000 to $37,000,000 in the same period, or an increase of a little over 100 per cent. But the imports of the great class of commodities which represents work, which represents the opportunity for the unemployed to find employment, the fully manufactured goods, increased only 50 per cent. The imports were valued at $81,000,000 in 1933 and $121,000,000 in 1937. I say without fear of contradiction that that was not a treaty which took away from our working people the opportunities of obtaining a livelihood.
At the same time I put on the record the other side of the picture. Our exports of raw materials increased slightly during the period 1933 to 1937, from $112,000,000 to $201,000,000, a total of 80 per cent. The increase in the exports of partly manufactured goods from 1933 to 1937 under that particular
trade treaty amounted to 400 per cent. For every $100 worth of partly manufactured goods that left this country, there was $20 paid out to Canadian labour. A moment ago I stated that the imports of manufactured goods from Great Britain had increased only 50 per cent, while our exports of fully manufactured goods increased from $85,000,000 tc $189,000,000, a total of 120 per cent. Those exports meant more work for Canadian workmen. For every $100 worth of fully manufactured, goods exported, a total of $40 was paid to our Canadian workmen who need their jobs so badly during these difficult times.
Contrasted with this picture is the fact that to the south of us are people very similar to us, with raw materials much the same as we have at our disposal. They are eager and willing to trade with us, but we should not let that trade be the kind that brings only customs duties into the Canadian treasury. It should be the kind of trade that will not take away from the Canadian workman the opportunity he now has to make a living in this country.


James Earl Lawson: Mr. Chairman, the hon.
member for Huron- North (Mr. Deachman) skated around the subject matter concerning which I desire to ask a question of the minister. Before doing so, I cannot refrain from a comment or two in connection with the criticism which the minister for Huron North levelled against the administration.


An hon, MEMBER:: The member.


James Earl Lawson: I beg your pardon, the
member for Huron North. Even with his free trade doctrines he may be a minister of this government some day because anything is liable to happen the way they carry on. If I understood him correctly, the hon. member for Huron North was criticising the administration because they did not so administer the law as to bring about the greatest amount of imports into Canada. He told us that if we looked at the record of the years in which we had our greatest importations into Canada, we would find that those were the years of greatest prosperity. I suggest that that is not going far enough. If you look merely at the importations into Canada and have no regard for the exportations or for the trade balances, you do not get a true picture.
The hon. gentleman forgets just what happened to us in this country. If you will go back to the years 1926 to 1930, you will find that our imports were mounting steadily, but so were our adverse trade balances. With what results? Wc had to pay the ultimate price in 1930. Let me give a simple illustration. It always seems to me that many
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national problems can be reduced to the problem of the individual. Let me assume that an individual in this country has an income, a wage, or anything you want to call it, of $25 a week, and he goes on spending $30 a week. How long can he last? Only until his credit is exhausted. When his credit is exhausted, he is broke, and when he is broke, he is down and out. That is exactly what was happening to us prior to 1930, until the Conservative administration came into power and created favourable trade balances instead of adverse.
The hon. member for Huron North offered some sympathy to those of us who sit on the Conservative side. I suggest to him that he take the Liberal party, of which he is a member, stand them up in front of a mirror and let them have a look at themselves. We may be small in numbers, but at least we do not present the spectacle we have had presented here. We have heard the hon. Liberal member for Brantford (Mr. Macdonald) urge upon the treasury benches that they should maintain the tariff, while other members of the Liberal party have asked the treasury benches to reduce or eliminate the tariff altogether. At least we have a consistent policy .and some measure of unity.
I come now to my question which concerns dumping duty, the matter around which the hon. member for Huron North skated. As I recall it, prior to 1935 there were three :sections in the act in connection with which dumping duties were imposed. My recollection is that those were sections 35, 41 and 43. Since this administration came into power, one of those sections has been repealed, I understand section 43.


James Lorimer Ilsley: No.


James Earl Lawson: I know one section was repealed. I have not the act in front of me, so I cannot pick out the section. Will the minister be good enough to outline to the committee any difference in the principles of administration in the imposition of dumping duties which he has carried on as a minister of the crown, representing the Liberal government, since his government came into power, as compared with the principles of administration in effect from 1930 to 1935, under the Conservative administration?


James Lorimer Ilsley: That is a large order, and it would take considerable time to answer. The hon. gentleman is not correct in his statement that we repealed section 43, but we did make some changes in the Customs Act. Section 36 is important. It states that the value for duty purposes shall not be less than the cost of production, plus a reasonable advance for

selling costs and profit. While I am not intimately acquainted with the practices that existed prior to October 23, 1935, I understand there were many complaints that the advances added iby the Department of National Revenue in 1935 and prior years were unreasonable. At any rate the negotiators at the time the negotiations were going on between Canada and the United States requested that a change be made to the effect that the advance added to the cost of production would not be more than was usual in the trade; that section was amended accordingly, and a great many valuations outstanding under section 36 were made accordingly.
I come now to section 37. It authorized the governor in council to provide that in arriving at the value for duty purposes of any particular commodity the discount from the list or published price should be limited to a certain amount. It had particular reference to automobiles, and, I think, to radios.


Richard Bedford Bennett: And plated silverware.


James Lorimer Ilsley: It could apply to anything, but I was told that the chief commodities were automobiles and radios. The discount fixed from the list or published price on automobiles was 20 per cent. As most members of the house know, the ordinary discount to a dealer from the list price is considerably more than 20 per cent. It ranges from 24 to 28 per cent, or something like that.


James Earl Lawson: May I suggest to the minister that that order in council with respect to the discount on automobiles was repealed before his government came into power?


James Lorimer Ilsley: I do not know whether it was repealed or not, but the section of the act remained there.


James Earl Lawson: I know, because I had the pleasure of recommending its repeal.


James Lorimer Ilsley: Section 37 was repealed by us, and it is impossible to limit these discounts under the law as it stands at present.


Richard Bedford Bennett: They are limited, though, by section 35.


James Lorimer Ilsley: Discounts?


Richard Bedford Bennett: Yes, because the fair
market value, as determined in the country in which the goods are sold, as compared with the price at which you get them, prevents a discount from being made. That creates a price which is below the fair market price in the community where it is sold. So it is the same thing in the end.

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James Lorimer Ilsley: It is not the same thing at all. The value for automobiles under my right hon. friend's administration was higher than the price charged dealers in the United States, because the discount allowed here was only 20 per cent and dealers in the country of origin were getting from 24 to 28 per cent. That meant that dealers importing automobiles were paying on a higher value than the home market value, and that is what we put an end to.
My hon. friend asked me to state the difference in the principles of administration under the former government and this government. When we came in we found outstanding, I forget just how many, but I think there were from twenty-five to thirty-five valuations on manufactured goods under section 43. They were arbitrary valuations, with no relation to the home market value or to the cost of production in the home market, nor were they intended to have any relation to it. The valuations were put on purely to prevent importations. Some were put on for the protection of very small industries, and some for the protection of large and substantial industries. All these valuations have been cancelled by this administration in respect of importations from most-favoured-nation treatment countries and intermediate tariff countries, and no valuations under section 43 have been imposed at all by this administration except on fruit and vegetables and for a few months on coronation souvenirs, for what were alleged to be patriotic purposes. The whole practice in respect of manufactured goods which were the subject of fixed or arbitrary valuations has been changed. All with the exception of three have been cancelled, and none has been imposed. We have had I do not know how many applications to impose them, and continue to have them; but section 43, so far as the imposition of new valuations is concerned, has been a dead letter. It is continued with regard to fruits and vegetables in the way I explained to the leader of the opposition.


James Earl Lawson: To save another question later on, would the minister be good enough to tell me where there is any difference in principle between maintaining twenty-seven valuations under section 43 and maintaining three? It is merely a difference in the quantum, not in the principle.


James Lorimer Ilsley: There is a big difference to
the public.


James Earl Lawson: You did not repeal section 43.


James Lorimer Ilsley: No; we used section 43 in respect to fruits and vegetables because .it is the most feasible way to protect the fruit and vegetable growers. This has been explained in the house time and time again.


Richard Bedford Bennett: It was there when you came in.


James Lorimer Ilsley: Yes; but we have provided an appeal to the tariff board from valuations under section 43, something which did not
exist before.
I was not prepared to answer to-night such a broad question as the hon. gentleman asked me, and I am simply gathering up my thoughts as I go along. There have been amendments to section 6 of the customs tariff to provide that before goods can be classified as of a class or kind made in Canada they must be made in this country. Under the former administration it was common to make a ruling that goods were of a class or kind made in Canada before they were made in Canada, simply because they were getting ready to make them in Canada.


Richard Bedford Bennett: The Liberal tariff of 1930 made special provision for a certain rate to prevail until such time that it was apparent Canadian manufacturers were producing in quantities to meet Canadian demand, and that then the rate of duty should be determined. That is not a device which was created by the late administration. It has been used by both administrations. It was to anticipate the time when production would be sufficient to meet Canadian demands, and it was an advice in advance to those putting money into factories that when the factory was producing, a certain rate of duty would prevail.


James Lorimer Ilsley: That may be a provision of some item of the customs tariff, but that is not what I am talking about. I am talking of rulings, of hundreds of thousands of applications that have 'been made for the application of dumping duties; decisions have been made by the department, and hundreds, certainly a great many instances can be turned up where a ruling was made that the goods were of a class or kind made in Canada when the manufacturers were not in a position to produce. Rightly or wrongly we have provided not only that they must be ready to produce them, not only that they must have the factory capacity to produce the goods, but that they must actually have a foothold in this market to the extent of 10 per cent of the normal Canadian consumption.
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James Earl Lawson: You did that to make a trade treaty with Japan.


James Lorimer Ilsley: My hon. friend wants to
know where we have differed from his administration. If I had had a little time for preparation; if I had known that these questions were going to be asked, I could have given him a great many more instances. We amended section 6 of the customs tariff, giving power to the governor in council, in cases where goods were not available through the ordinary channels of distribution in this country, to order the application of special or dumping duty. There were certain monopolies in this country; only they were selling the goods, and they did not offer them through the ordinary channels of distribution at all. We provided in the case of one particular commodity which is quite important, that dumping duty should not apply, so that that monopoly should have foreign competition, though it was brought about by quoting below the home market price. I could go through the whole list if I had time, but undoubtedly there has been a change in the spirit of administration. It would not please the hon. gentleman who spoke here to-night; it would not please the two hon. members from Toronto who spoke, because they think we are on the wrong track. But I have laid down in speeches that I have made-and the officers of the department pretty well know my views on these matters-that the Department of National Revenue is primarily a revenue-collecting rather than an industry-protecting agency. That is exactly what the hon. member for Danforth says it should not be, and exactly what I say that it should be, primarily a revenue-collecting rather than an industry-protecting agency. Otherwise we get into the realm of lawmaking; and we are not lawmakers; we are law administrators.


James Houston Spence: You take your orders from the other departments.


James Lorimer Ilsley: We administer the law
passed by this parliament, not by the other departments at all, but by this parliament; and that is where we should take it from instead of from persons who call on us from day to day asking us to shut out or to let in goods by arbitrary rulings. That is the first principle. The second principle is that we should not be astute to devise ways of shutting out imports. There are a great many ways in which this can be done. It can be done by making regulations, by notifying collectors, by notifying importers

that everything must be taken subject to amendment; it can be done by delays in appraisals. As a matter of fact, there are all sorts of ways in which imports can be shut out if it is desired. But the principle we have adopted is that no undue administrative regulations should be placed in that way upon imports.


Mr. FRASER:: To be consistent with his remarks to-night-


Some hon. MEMBERS:: Louder.


William Alexander Fraser: -why does the minister
not apply the same principle to the fruit growers in the Annapolis valley? He maintains a fixed valuation in connection with that. Why discriminate against the manufacturers?


James Lorimer Ilsley: There is no fixed value on
apples at the moment.


Henry Herbert Stevens: Louder. We cannot hear this interesting conversation.


Richard Bedford Bennett: A little louder, please;
those pearly words of wisdom we would not miss for anything.


William Alexander Fraser: I am seeking information, and it is certainly enlightening to have the minister tell me that the fixed valuations have recently been discontinued. He will have to answer for that in the Annapolis valley.


James Lorimer Ilsley: No.


Douglas Gooderham Ross: Can the minister
give a list of the arbitrary values that have been taken off?


James Lorimer Ilsley: I can get it for the hon.
gentleman.


Henry Sidney Hamilton: The discussion has taken a wide field, but there are one or two things I should like to mention in connection with some points that have been brought out. The hon. member for Danforth referred to the great increase in the imports of steel. Well, if imports of steel should cause any member of this house to worry, they ought to cause me to worry. I am one of those to whom the hon. member for York South (Mr. Lawson) referred as possibly having different views on tariff matters from those held by other members of the Liberal party, but I have found that out of the differences in these views, which have undoubtedly existed in the Liberal party from the days of the first Fielding tariff to the present minute, the compromise that has been effected, and the resulting policy that has been enacted and

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put upon the statute books, has been a tariff that has generally brought prosperity to the country during those years I wish to refer for a moment to one remark of the hon. member for Huron North (Mr. Deachman). I do not agree entirely with that hon. gentleman when he suggests that increased imports are necessarily the cause of increased prosperity, but I have noticed one remarkable fact in connection with steel. It may be a coincidence, but it is certainly a remarkable fact. It is rather dangerous to look for cause and effect, because sometimes there may be several effects from one main cause. I do not think increased imports are a cause of prosperity; but I do know this, with refernce to the steel industry-and as I say, it may be a coincidence

that with increased imports there has been very largely increased production within Canada. In the last few years, the hon. member for Danforth states, there has been an increase in imports of steel. That is true, but it is also true that the steel industry in Canada has been operating at the same time to a very high degree of capacity. In fairness to the government, in fairness to a proper understanding of the effect of imports of steel, I consider it not out of place to say that the steel industry in my city in 1934 had total days work of 389,865, whereas last year the number was 789,758. Hours work in 1934 were 3.299,000 odd and last year,
6,415,000	odd. The number of men employed in 1934 was 2,009 and in 1937, 3,011. That has been during the time the steel imports have been increasing. I will not venture to say what the operation of the steel plant in the maritime provinces has been, but I am informed and I believe that they have had a very high average of operation based upon normal capacity. But I wish to go behind that and to point out that between 1921 and 1929, the peak, imports of iron and its products increased by the figures I am about to give. We imported in 1921, $245,625,703, and by 1929, skipping the intervening years, that had risen to S349,194,597. But during the same period the selling value of the production of iron and its products in Canada had jumped from $382,398,000 odd in 1921 to $738,012,000 odd in 1929. It may be a coincidence, but it is a fact that when there was a dollar's worth of increased imports there has been several times a dollar's increase in production of iron and its products within Canada.
When it is said that, if imports of any commodity amounted to $100,000,000 in 1936 and jumped to $150,000,000 in 1937, had we not allowed that extra $50,000,000 to come into
Canada there would necessarily have been increased prosperity or production in Canada, I must question the accuracy of that theory. I think the statistics and records of Canada indicate the contrary. Not that I advocate as a cure for depression seeking to open our doors to imports, but it is not correct to suggest that increased imports necessarily mean decreased production and less prosperity in this country.


James Earl Lawson: The minister says that by reason of certain revisions in the act since the Liberal government came into power he can no longer limit the discounts. I cannot accept that statement. On another occasion I shall give specific instances to show that discounts are limited, and limited effectively under provisions which still remain in the act.


James Lorimer Ilsley: That is because they are
limited in the home market.


James Earl Lawson: Nor can I, much as I
should like to do so, give the minister or his government credit for the change in the spirit of administration in the Department of National Revenue. I occupied that position I think for a shorter time than any other minister who ever held it; but I have had associations with the department for a good many years, and I think the change in the spirit of administration started and was consummated as the effect of the courtesy, capacity and ability of the present commissioners began to be felt within a couple of years after their appointment.


[Stage Direction]
Item agreed to.
Inspection, investigation and audit services, $1,102,730.
James Earl Lawson: Is the increase of almost
$100,000 attributable to statutory increases, increases in staff or what?


James Lorimer Ilsley: The increase is $97,115.
There is an increase of $52,231 in the salaries of permanent officers. It is made up of restoration of the five per cent deduction, $44,746; living allowance, $300; and statutory increases, $19,530. That makes $64,576. There is a saving in another way that brings the total increase down to $52,231. Then there is an increase of $13,585 in the salaries of temporary officers.


James Earl Lawson: That would be occasioned by more appointments than in the previous year?


James Lorimer Ilsley: It is occasioned by the
appointment of additional excise tax auditors, who have more than paid for themselves.
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There is an increase of S300 in living allowance, that is for one officer in the Yukon. There is also an increase of $30,999 in travelling expenses. That is due largely to the appointment of these additional auditors. That makes the total of $97,115.


[Stage Direction]
Item agreed to.
Ports, outports and preventive stations, including pay for overtime of officers, notwithstanding anything in the Civil Service Act; and temporary buildings and rentals, $7,548,200.
James Earl Lawson: What is the cause of the increase of $396,700? How much is restoration of salary deductions, statutory increases, and what proportion relates to new appointments?


James Lorimer Ilsley: Restoration of salary
deductions and statutory increases account for $384,012.


James Earl Lawson: It would appear, glancing at the details on page 144 of the estimates, that the number of appraisers in the department has been greatly increased. I am wondering whether the appointment of these additional appraisers is responsible for the difference between the figure for restoration of salary deduction and statutory increases, and the total increase. For example, halfway down page 145 we find there are thirty-five customs appraisers as against thirty-two in the previous year; 112 assistant customs appraisers as against 101, and several increases in the appraisal division. Why the additional appointments, why the necessity for a greater number of appraisers?


James Lorimer Ilsley: The increase is due almost wholly, if not wholly, to changes in classification which might be described as promotions.


James Earl Lawson: So that there will be decreases in other classifications?


James Lorimer Ilsley: Yes.


Grote Stirling: What is the explanation of this very considerable saving in overtime?


James Lorimer Ilsley: That is due to an important change of policy effected in the department April 1, 1937. The policy of the department prior to that time was to get a substantial amount of the work at many of the frontier points done in overtime. It was always a question which was the best or most economical way to get the work done. But from April 1, 1937, a great deal of the overtime was abolished and additional officers taken on. The advantage from the standpoint of dollars and cents of having the work done in overtime is that you can fit your officers in and so may be able to keep a 
smaller staff. But the disadvantage from the economic standpoint is that you pay a higher rate. We pay ordinary examiners seventy cents an hour. So we changed the system. We eliminated a great deal of the overtime; we took on something like 150 of additional staff to do the work that had been done in overtime by the others. That has resulted in an economy for the department, and not only that, but we believe it is a much better system because many of the officers at the frontier ports were working long hours. They did not have any time to do anything else at all. They were working seven days a week, and their usefulness as citizens was impaired to a considerable extent, which I think is generally admitted to be the wrong way to arrange work if it possibly can be avoided.


Grote Stirling: And that change, I take it, would be of considerable assistance to the travelling public?


James Lorimer Ilsley: I do not know that there was any particular neglect of the travelling public before.


Grote Stirling: I was not suggesting that, but sometimes you had to telephone for an official.


James Lorimer Ilsley: I think that is quite true.


James Earl Lawson: Also in the details for this item, at the top of page 147, I notice an increase in the number of clerks from fifty to 103, with an increase in salaries of approximately $36,000. In the very next item I notice that the number of office boys has been reduced from forty-five to one, so I assume that the forty-four office boys must have been made clerks, grade 1, and in addition the minister must have appointed seven or eight other clerks in order to get the number of 103.


James Lorimer Ilsley: That is about the picture, I think.


James Earl Lawson: Why would these office
boys be moved up? Would it be because by service they had acquired knowledge and were entitled to the higher classification?


James Lorimer Ilsley: Yes. After two years of
service as office boys they expect to be promoted to clerks if they can pass the examinations and otherwise qualify.


Robert John Deachman: I should like to ask the minister if the increase in the number of appraisers might have been due to the importation of a power shovel into Huron North. The value of the shovel was $700. For duty purposes they valued it at $900. The actual

Supply-National Revenue-Income Tax
cost of bringing it into Canada, including duty, excise tax and so on, amounted to close to 50 per cent of the cost. I checked up on the general average rate of duty on machinery other than agricultural machinery coming into Canada, and during 1937 it amounted to approximately 17 per cent. Machinery generally enters the dominion at a very low rate because it is held by the manufacturers to be important that machinery coming in for their use should have a customs rate not very closely related to the rate which applies on consumers' goods. We have ditching machines admitted duty free, I think, and it strikes me as peculiar that you can bring in a ditching machine duty free, but when you bring in a machine to shovel the clay which goes to make the tile, the tariff rate, on a second-hand machine, amounts to nearly 50 per cent.
There should be, I suggest, something approaching consistency in regard to items of that kind; that is, we should try to get a tariff which reflects adherence to a certain code, if I may put it in that way. If we believe that a manufacturer of cotton goods or a person operating a sugar beet factory should be entitled to a relatively low tariff rate, then the manufacturer of brick or tile should be entitled to the same consideration. There is another factor which applies in that case. The manufacturer of brick or tile may have a tariff on the product which he produces, and it may be argued that he, having an opportunity to exploit other people, may submit with a certain degree of tameness to the exploitation of himself. But in regard to tile, for instance, it is not a product which would come in from very long distances, because the freight cost and transportation risk rather operate against it, whereas some other products might enter the country more readily. I suggest, therefore, that a machine of that kind should receive some consideration, and that applies equally whether the machine is new or second-hand. We must remember that we have passed through a period of depression which resulted largely from the artificial restriction of trade; but we are entering another period of depression on account of the continuance of trade restriction, and therefore there is more demand for second-hand machines than was formerly the case. So I think the government should give particular consideration to second-hand machines of this type.


[Stage Direction]
Item agreed to.
Income tax division-General administration, including authority to create positions and make appointments within the division, notwithstanding anything contained in the Civil Service Act and the said positions and staff so appointed are hereby wholly excluded from the operation of the said act, $310,335.
Hughes Cleaver: The textile probe brought to light many millions of dollars of undisclosed profits. What steps, if any, have been taken to collect the taxes which should have been paid on these profits?


James Lorimer Ilsley: We have eight suits pending against textile companies for sums aggregating slightly over a million dollars. Whether or not we recover that amount depends on whether we win the suits.


James Earl Lawson: Would the minister be good enough to repeat his answer? I am very sorry, but I could not catch it.


James Lorimer Ilsley: My answer was that we have eight suits pending against textile companies for the recovery of income and business profits taxes for sums aggregating slightly over a million dollars. I went on to say that whether or not we recover that amount depends on whether we win those suits.


Mr. ROWE (Dufferin-Simcoe):: Would the
minister say how many suits are pending with reference to other industries or businesses?


James Lorimer Ilsley: Oh, no; I could not say. I do not know. I could not answer that. I happened to know this because the suits arose out of the evidence given before the Turgeon commission on the textile industry.


[Stage Direction]
Item agreed to.
District offices, $2,005,708.
James Earl Lawson: Is the increase attributable to increase in staff?


James Lorimer Ilsley: The increase is $126,874.25. Of that amount $44,340 is due to increase in staff; there has been an increase of forty-one employees. There is $16,326.35 due to general salary adjustment increases to be applicable to 1938-39. That makes $60,666.35. The reinstatement of the five per cent salary deduction in 1938-39 accounts for $57,727.90, and there is an additional $2,600 for travelling expenses. Then there is $5,400 in addition for sundries, $300 in addition for telegrams and telephones, and an increase of $180 for one official in Montreal, making in all $126,874.25.


James Earl Lawson: The reason I asked the question specifically with relation to this item is that I thought possibly the minister might
3506	COMMONS
Supply-National Revenue-Income Tax
have done something to rectify a condition which existed when I was in the department and towards the adjustment of which some effort was made by the previous government. By reason of the fact that the income tax branch of the Department of National Revenue is not under the Civil Service Act, those who are employed in that branch have not the advantage of statutory increases and so forth. I know that prior to 1935 it had been found that on the average the salaries paid for positions were less than for similar positions in the other two branches of the same department, namely the customs and the excise branches, and some effort was made to readjust that situation. I had in mind that some further efforts would be made, and I should like to know if anything has been done in that regard. If so, has it been given effect to; and as a result of what has been done, if anything, are the salaries in the income tax branch now commensurate with those in the other two branches of that department?


James Lorimer Ilsley: There is a scheme of reclassification which has not yet received the approval of the treasury board. It was recommended by a committee from the income tax division, sent to treasury board and then referred to the civil service commission, who made a report on it. It is back before the treasury board and is being considered, in regard to some of its phases, at the present time. If it receives approval, it will substantially correct the anomalies to which the hon. gentleman has referred.


William Earl Rowe: In view
of this $126,000 increase, is it the intention of the department to cooperate more closely with the provincial government of Ontario, bearing in mind the statement of the premier of Ontario last year that he could obtain no cooperation from the Department of National Revenue at Ottawa in his efforts to collect succession duties.


James Lorimer Ilsley: The cooperation has been whole-hearted and thorough throughout.


William Earl Rowe: It has been improved since then, has it?


James Lorimer Ilsley: Well, throughout it has been good.


James Earl Lawson: I should like to make it clear, that if " cooperation " means that information on people's income tax returns is supplied by the income tax department to the succession duty department of any province, I am absolutely and irrevocably

opposed to it. I hope that is not what is meant by the minister's assurance that any province is getting a large measure of cooperation.


James Lorimer Ilsley: The circumstances under which information is supplied are very carefully defined, and, I think, provide for all the necessary safeguards.


Grote Stirling: How successful does the minister consider he is in the matter of dealing with evasion of income tax? Income tax in this country is such a new tax that not so very many years ago it was fairly common to meet somebody who would tell you that he had no intention of even making a return until his neighbours did so.


James Lorimer Ilsley: Inevitably there is some evasion, but I have no reason to think that that evasion is on a wide scale or is substantial. The hon. gentleman may remember that the president of the United States on June 1, 1937, delivered what was called, I think, a tax evasion message, to which he attached a memorandum of Mr. Morgenthau setting out eight ways in which income taxes were evaded in the United States. We immediately went into the matter here to see whether by chance Canadians might be evading income tax by any or all of those methods, and we concluded that by reason of the provisions of our act it was practically impossible for them to use at least those methods of evading income tax in this country. I have no reason to think there is more than a minimum of evasion here.


Grote Stirling: What policy does the department adopt with regard to prosecutions? As regards the 1935 return, how long can a person escape who has not made due return or has incurred penalties?


James Lorimer Ilsley: Prosecutions take place all the time, right along, for failure to make returns. There is a limitation of three years upon prosecutions for false returns. If falsity in returns is ascertained within that time, as a general rule prosecution takes place.


Grote Stirling: The prosecution does not take place until after three years?


James Lorimer Ilsley: Oh no; that is not it. It cannot take place after three years. There is a limitation of three years.


William Earl Rowe: If I understood the minister aright, the hon. member for York South having said that he did not agree with a certain practice of the government, the minister said that at no time did the government refuse to cooperate fully with the

Supply-National Revenue-Customs
provincial government at Toronto with reference to the collection of succession duties, so far as the income tax branch could cooperate.


James Lorimer Ilsley: Well, within the limits that were laid down. It depends on what the hon. gentleman means by " full cooperation." If he means that we have always been prepared to throw open all our files upon request, that is not the case; but under conditions which are carefully specified in the agreement with the province of Ontario we make certain information available, and that has been the case since, at least, the early part of 1936.


William Earl Rowe: I would go this far in support of what the hon. member for York South has said, that I believe some of the tactics which were used in the collection of succession duties might require too much information from the Department of National Revenue. I do not know how far the government can go or what restrictions are embodied in the so-called agreement.


James Lorimer Ilsley: Well, it is not a "so-called" agreement, it is an agreement. It is an agreement under a statutory provision passed by this parliament. The restriction is simply this, that if a minister of the crown in the government of not only the province of Ontario but certain other provinces as well certifies he has reason to think he has evidence that fraud exists and an inspection of income tax returns is required for detection of that fraud, they are shown to the government.


William Earl Rowe: Well then, I think there has been an erroneous impression spread throughout Ontario, by the premier of the province stating that in cases where be was sure there was fraud and refused to settle succession duty taxes, he received absolutely no cooperation from the department at Ottawa.


James Lorimer Ilsley: Well, I have stated what the facts are.


William Earl Rowe: Thank you.


[Stage Direction]
Item agreed to.
General-Amount to be paid to the Department of Justice to be disbursed by and accounted for to it for customs-excise and income tax secret investigation services, $15,000.
James Samuel Taylor: Will the
minister kindly say what this vote is for? I cannot understand the phrasing.


James Lorimer Ilsley: This is to enable the department to obtain information in connection with the collection of revenue.


Grote Stirling: Through the mounted police.


James Samuel Taylor: I am a little
troubled by the phrase "to be disbursed by and accounted for to it for customs-excise and income tax secret investigation services." Should not that be "accounted for by it"?


James Earl Lawson: It means accounted for to the Department of National Revenue.


James Lorimer Ilsley: The Department of National Revenue tells the Department of Justice to whom to pay the amounts. That is what is meant by the words "accounted for to it." The amounts are paid by the Department of Justice at the request of the Department of National Revenue. The Department of Justice must be furnished with the names of the persons and the reasons for payment.


[Stage Direction]
Item agreed to.
Customs and excise divisions-To provide for payment to C. P. Blair, formerly assistant commissioner of customs, comnensation for services in connection with the revision of the Customs Act, in the event of same being required, $1,250.
Grote Stirling: What do the last seven words mean, "in the event of same being required"?


James Lorimer Ilsley: If the revision of the Customs Act is completed before six months, that amount will not be required. The amount paid last year for the full year was $2,500, and the expectation is that it will be completed within six months.


James Earl Lawson: You are providing for the maximum payment you may have to make?


James Lorimer Ilsley: Yes.


[Stage Direction]
Item agreed to.
To provide, notwithstanding anything contained in the Consolidated Revenue and Audit Act, or any other act or law, for payment out of the consolidated revenue fund to Hector Hamel, formerly assistant customs appraiser, Montreal, the amount of his contributions to the civil service superannuation fund, $2,759.61.
Grote Stirling: What is the explanation
of this?


James Lorimer Ilsley: Mr. Hamel was an old
employee of the department who was dismissed. I am sorry the hon. member for St. Antoine-Westmount (Mr. White) is not here this evening. He spoke to me about this matter and said he would support me on it. I do not think he will mind my saying that he told me he felt that the dismissal was
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Supply-National Revenue-Income Tax
unjust. An effort was made to have the contributions made by Mr. Hamel returned to him, and it was found that this was the only way in which this could be done. This man is seventy-three years of age and his dismissal was not warranted. It was accompanied by a confiscation of his contributions to the fund, and for that reason we felt that we should vote this item for the return of the contributions.


Grote Stirling: When was the dismissal?


James Lorimer Ilsley: In 1932.


[Stage Direction]
Item agreed to.
Income tax division-district offices-further amount required, $41,742.
James Earl Lawson: What is the reason for
this general provision?


James Lorimer Ilsley: Most of this is for the
scheme of reclassification to which I referred. I thought it had to do with the inauguration of a technical branch, but I have been told that is covered by another item.


[Stage Direction]
Item agreed to.
James Lorimer Ilsley: The hon. member for St. Paul's (Mr. Ross) asked me to give him a list of items. These are as follows:
Meats, fresh, prepared or preserved.
Eggs, frozen, desiccated, powdered, etc.
Slack cooperage stock.
Lime.
Hardwood doors.
Women's and children's clothing.
Cotton fabrics and artificial silk fabrics.
Fringes, gimps, tassels, etc.
Electrical lighting fixtures, lamps and shades.
Cut roses.
Canned asparagus.
Eggs in shell.
Baby chicks.
Dried peas.
Dried beans.
Market poultry.
Live stock.
Canned salmon.
Sugar of milk.
Wicker furniture.
Cotton wiping rags.
Umbrellas.
Sheet rubber goods.
Wood lead pencils.
Wool jersey cloth and cotton stockinette.
Metal pot cleaners.
Thumb tacks and furniture nails.
Casein.
Wire rope.
Progress reported.
On motion of Mr. Crerar, the house adjourned at 10.52 p.m.

Friday, June 3, 1938