1939-02-10

STANDING ORDERS

[Stage Direction]
Mr. W. II. GOLDING (Huron-Perth) presented the first and second reports of the standing committee on standing orders, and moved that the reports be concurred in.
Motion agreed to.


[Stage Direction]
On the order for motions:
Right Hon. ERNEST LAPOINTE (Minister of Justice):: Mr. Speaker, in the absence of the Prime Minister (Mr. Mackenzie King) and on his behalf, I desire to communicate to the house the contents of a cablegram which was sent this morning by the Secretary of State for External Affairs, Ottawa, to His Britannic Majesty's minister, Vatican City. It reads *
Ottawa, February 10, 1939.
Will you kindly convey to His Excellency the Secretary of State of the Holy See the following expression of sympathy of the government of Canada, in the bereavement occasioned the Vatican City and the Roman Catholic church by the death of His Holiness Pope Pius XI.
"The government of Canada desires to associate itself with the governments of other countries in expressing its sense of the loss sustained in the death of His Holiness Pope Pius XI. The profound sorrow felt by members of the Roman Catholic church in all parts of the world will be shared throughout Canada where the devotion of Pope Pius to the spiritual progress of mankind had gained for His Holiness nation-wide admiration and esteem."
To these words of the leader of the nation I desire to add my own personal tribute to the memory of the great pontiff who died yesterday.
In the hours of great crises His Holiness Pius XI has always been a fine model, a powerful personality.
Amidst the disorders generated by war, misery and unemployment, he has preached the crusade of public salvation, defending the family institution, defending order, labour and social peace, fighting all that leads to anarchy, hatred and the domination of blind force. He has consistently defended those who were persecuted and oppressed.
A friend of social progress and modem institutions, he has published pastoral letters and encylicals which are monuments to economic and social reform based on justice, charity and human brotherhood.
He was a great religious leader. He will be remembered as the Pope of Peace, of the poor, and of working men.
I am sure I am reflecting the views of all the members of this house in expressing our sorrow and our deep regret at his demise.


Hon. C. H. CAHAN (St. Lawrence-St. George):: Mr. Speaker, in the unavoidable
absence of the leader of the official opposition (Mr. Manion), I wish to express on his behalf and on behalf of my colleagues and myself, our profound emotion upon learning this morning of the passing from this life of Pope Pius XI. His holiness was a great churchman and a brilliant scholar, who was preeminent in his devotion to the welfare of all classes and conditions of our fellowmen.
As the sovereign pontiff of Vatican City, his influence was ever exerted with the political leaders of all nations for the preservation of peace. As the ecclesiastical head of over 350,000,000 of peoples of all the races of the world, every important movement for the spiritual, moral and social improvement of all classes and conditions of mankind, enlisted his sincere sympathy and his earnest support.
As a prelate of fervent, personal piety and devotion, his compassion was ever extended to the poor, the sick and the afflicted.
818	COMMONS
Bren Gun- Privilege, Mr. Gardiner
As an eminent Christian gentleman, he showed us all an example of steadfast faith and fortitude under physical suffering that continued for several years until there was granted to him a peaceful release late last evening. We unite with all other Christian peoples in our expression of sympathy for all adherents of the Roman Catholic church in their grievous sorrow, and in our gratitude for his personal example of devotion to duty amid the manifold turmoils that have beset this world during recent years.



BREN MACHINE GUN CONTRACT

[Stage Direction]
The house resumed from Thursday, February' 9, consideration of the motion of Mr. MacNeil:
That the agreement between the government and the John Inglis Company, of Toronto, for the manufacture of Bren machine guns, the report of the royal commission dealing with said agreement, and all related documents, evidence, vouchers and exhibits, be referred to the standing committee on public accounts; and the amendment thereto of Mr. Stevens.

[Stage Direction]
Hon. J. C. GARDINER (Minister of Agriculture); On a question of privilege, Mr. Speaker, I have in my hand a news article which appeared in the Regina Leader-Post of February 7, purporting to be an account of my speech delivered in this house as reported in Hansard of February 6. It says in part:
Mr. Gardiner attempted to pour ridicule on a report made by Major General E. C. Ashton, chief of the general staff, for proposing a small arms government factory at Valcartier.
That statement is absolutely false. I pointed out that Major General E. C. Ashton's proposal, made after this government took office, for the purpose of reestablishing defence in Canada, would involve an expenditure of at least §200,000,000. I further indicated that those now attempting to delay this expenditure had opposed even the small estimates of two and three years ago.
I referred to the Ross rifle incident to indicate that even good machinery was not sufficient to guarantee production of Bren guns that would work. You require management, designers, and engineers who know their job. At no time and in no word did I ridicule or attempt to ridicule a report made by Major General E. C. Ashton.
[Mr. Cahan.J
This newspaper report is on a par with most of the misrepresentation which has been peddled to the west regarding discussion of this contract.
Some hon. MEMBERS:: Order.



CONTINUATION OF DEBATE ON MOTION FOR REFERENCE TO PUBLIC ACCOUNTS COMMITTEE

Mr. C. G. MacNEIL (Vancouver North):: Mr. Speaker, I was about to say when the house adjourned last evening that the most disturbing feature of this debate has been the attitude taken by government supporters. We have met with nothing but evasion with respect to the issues presented to parliament by the commissioner. In the hectoring language employed by the minister (Mr. Mackenzie) last evening we recognize the old technique of abusing critics instead of answering criticism. The issues originally stated by the commissioner, and by many members on this side of the house, are still before parliament without any adequate explanation by the government. No criticism could be more destructive of confidence in the defence establishment of this country than the demeanour. and words of the minister last evening. He cannot prove to the country that he is right by the threat to knock off heads, although I notice that his unparliamentary language is not reported in Hansard.
The hon. member for Vancouver-Burrard (Mr. McGeer) stated last evening that in his opinion it was extraordinary that members on this side of the house did not accept the findings of the royal commission. It is his misapprehension on this point that undermines his argument. We do accept the findings of the commissioner. It is because of those findings that we may legitimately ask for further inquiry into the matter, and direct criticism against government policy.
The commissioner made findings on two points. He found that there was no evidence of personal corruption. We accept that finding and have stated so over and over again in this house. We now marvel that government supporters have laboured this point. They must be uneasy about the transactions reported.
The commissioner also found that there was the necessity to recommend the appointment of a defence purchasing board, to provide for a drastic change in the system of awarding contracts of this nature. We accept that finding, and point to the fact that by such finding he condemned the system now in vogue.

Bren Gun-Mr. MacNeil
The remainder of his report is mainly a citation of facts of which direct proof was given, and with regard to which he reported there was no dispute. He pointed to the responsibility of parliament to pass judgment based on the evidence, and because of that I moved the motion which is now before the house.
I again direct attention to the main issues at stake. Whatever may be said for or against the contract, in its substance or form, we must concern ourselves, as the commissioner did, with administrative faults and government policies disclosed during the negotiations leading up to the execution of the contract during the period prior to March 31. 1938. The real issue is whether this country should have established public or private manufacture of the primary implements of warfare, and not all the blustering eloquence of the minister can conceal the fact that he has reversed his policy in this regard. In his remarks last evening he condoned the making of profits in the manufacture of armaments for this country.


Some hon. MEMBERS:: No.


Charles Grant MacNeil: As he shook his fist in this direction and alleged attempts to destroy defence measures, I might remind him now that nothing will wreck defence more certainly than profiteering in war supplies. Nothing will do more to lower the morale of those who may be required to risk their lives in the defence of the country than the knowledge we now have that his department is in alliance with armament racketeers. He has given a plain indication that so far as he is concerned he will make no attempt to establish equality of duty and sacrifice in the event of war.


Mr. MACKENZIE (Vancouver):: It is not
correct; that is all.


Charles Grant MacNeil: He expressed resentment that this discussion has delayed the plans of the department with regard to deliveries of Bren guns. He omitted to mention that this is the first opportunity we have had to discuss the matter with all the facts before us.


Ian Alistair Mackenzie: Why?


Charles Grant MacNeil: The delay of which he complains actually occurred between July, 1936, and March, 1938, when the house was without knowledge of these negotiations, and because of the determination to place this contract to the best political advantage. Members of this house are in no way responsible for the fact that deliveries of the assembled guns will not be made until the latter part of 1940.
I will go a step farther. We will ask the minister in the public accounts committee to confirm or deny the reports that even now the Bren gun is regarded as an obsolescent weapon.


Ian Alistair Mackenzie: Absolutely
incorrect.


Charles Grant MacNeil: The British government is continuing production of the Bren gun, but is it not also providing for the production of a still more modern and reliable light machine gun? Technological advance has been rapid in the armament industry during recent years What assurance have we that, by reason of the policies pursued by the minister, we will not be stuck, to use the language of the street, with 7,000 guns as obsolescent in 1941 as the Lewis gun is to-day?


Ian Alistair Mackenzie: Is my hon. friend suggesting for one second that the Bren gun is not a most modem, efficient weapon?


Charles Grant MacNeil: That is what we intend to ask.


Mr. DUNNING:: And therefore we should do nothing.


Mr. ILSLEY:: Because the hon. member intends asking.


Charles Grant MacNeil: In the light of our experience with the Ross rifle we intend to ask the minister in the public accounts committee as to the accuracy of these reports.


Mr. YOUNG:: Does my hon. friend know of a better gun?


Charles Grant MacNeil: The minister's eulogy of Major Hahn will prompt further investigation into the representations made by Major Hahn to the department and the British war office as to his financial stability and his business connections. When he first went to England he was the head not of the John Inglis Company but of the British Canadian Engineering Company. He was not the head of a company worth two million dollars, as the prospectuses issued on behalf of his company at that time would seem to indicate. As far as the evidence shows, no attempt was made to correct the false impressions created within the British war office at the outset of negotiations. He was simply a promoter astute enough to expand a thirty dollar cash consideration into a financial transaction on paper involving $1,-
400,000.


Mr. GARDINER:: Did Colonel Drew write what the hon. member is reading?
Bren Gun-Mr. MacNeil


Charles Grant MacNeil: I am making this statement on my own responsibility. The minister can make his.
The minister gave no answer to our question as to why it was necessary to set up a series of dummy companies, unless to conceal profitable trading in stock issued. The minister knows as well as I do that in the not too distant future those who have participated in this deal will reap a rich reward quite apart from the profits guaranteed by the contract for the manufacture of the Bren gun.
When the minister repeated his statement of a former occasion that this was the finest contract ever made on behalf of the Dominion of Canada he attempted to justify that statement by asserting that it has effected a saving to the country of something like $1,300,000. When we break this figure down in the light of the evidence given by members of the interdepartmental committee, we find that they claim a saving of capital expenditure of something like $551,000 because the British government will pay one-third of the capital investment. We find that another saving is claimed of $864,000 because the John Inglis Company will carry out a complementary order for the British government. According to the evidence the estimated cost of making 7,000 guns would be $5,402,000, and the estimated cost of making 7,000 guns as part of a production of 12,000 guns would be $4,537,000.
I refer again to the evidence which discloses that the British government in the original agreement with the patentee made provision for manufacture in the dominions provided such manufacture would be carried on in government-operated factories. I submit that this same saving, or one even greater, could be achieved under public manufacture. If the British government was willing to invest over half a million dollars in the capital outlay of a private enterprise to secure a secondary source of supply, it is safe to assume that they would be much more willing to extend the same assistance to public enterprise. It follows that we could have made the same saving on capital expenditure in a government-operated factory. If the British government were willing to place an order for 5,000 guns with a private firm, they would have placed the same order with equal alacrity with a government-operated factory. It follows that we could have made the same saving, under public manufacture, on production.
In addition, under public manufacture, this country would have saved the profits allowed to the John Inglis Company under the contract. Whatever may be said about separate contracts, the contract from the

British government was negotiated with the aid of the Canadian government. The minister stated, in answer to a question put last session by the then leader of the opposition, that it was not through the good offices of the Canadian government, although it has been clearly proven in evidence that Major Hahn acted, while a potential contractor, as the accredited representative of the Canadian government in respect of the Bren gun deal. As a matter of fact the Minister of Agriculture (Mr. Gardiner) described it as a joint contract. If we are to have such joint contracts, why should we have such hypocrisy about the matter? It is vastly preferable that we should accept orders from the British government for manufacture in .government factories than that we should be involved in a profiteering deal such as we are discussing.
I propose to vote against the amendment because I consider it hopeless to continue a satisfactory inquiry into the matter in committee of the whole because of the attitude taken by the government. I can only hope that by persistent endeavour in the public accounts committee the truth about the situation will be made known to the public.


Ian Alistair Mackenzie: Hear, hear. So do we.
On motion of Mr. Pouliot the debate was adjourned.



NAVAL SERVICE ACT


[Stage Direction]
Mr. C. G. MacNEIL (Vancouver North) moved for leave to introduce Bill No. 17, to amend the Naval Service Act.
Mr. LAPOINTE'(Quebec East): Explain.
Charles Grant MacNeil: The purpose of this bill is to amend the Naval Service Act to make it conform with the present constitutional status of Canada.


Ernest Lapointe: Is this the same bill as was introduced last year?


Charles Grant MacNeil: It is the same bill.
Motion agreed to and bill read the first time.



MILITIA ACT AMENDMENT


[Stage Direction]
Mr. C. G. MacNEIL (Vancouver North) moved for leave to introduce Bill No. 18, to amend the Militia Act.
He said: This is in identically the same terms as the bill I introduced last session.

Cattle Shipments
The purpose of the bill is to amend the Militia Act to make it conform with the present constitutional status of Canada as recognized by the resolutions of the imperial conference, especially in 1926, and by the statute of Westminster, 1931. Its object, further, is to provide that Canada shall not become involved in any war beyond Canada without the sanction of parliament.
Motion agreed to and bill read the first time. NATIONAL DEFENCE ACT

[Stage Direction]
Mr. E. J. POOLE (Red Deer) moved for leave to introduce Bill No. 19, to amend the Department of National Defence Act.
Ian Alistair Mackenzie: Explain.


Mr. POOLE:: The purpose of the bill is to provide that moneys voted by parliament for national defence purposes shall be spent by the government, through its own agencies and under its own control.
Motion agreed to and bill read the first time.



NATIONAL FILM BOARD


[Stage Direction]
Hon. C. D. HOWE (Minister of Transport, for the Minister of Trade and Commerce) moved that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to introduce a measure to create a national film board empowered and directed to review and report on government film activities and to discharge such other duties as the governor in council may request; and to authorize the governor in council to appoint, and determine the salary of, a commissioner, to be the chief executive officer of the board. Also to provide for the appointment of an interdepartmental committee to centralize government film distribution.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.


Hon. C. D. HOWE (Minister of Transport) moved:: That a select committee be appointed on radio broadcasting to consider the annual report of
the Canadian Broadcasting Corporation and to review the policies and aims of the corporation and its regulations, revenues, expenditures and development, with power to examine and inquire into the matters and things herein referred to and to report from time to time their observations and opinions thereon, and to send for persons, papers and records; and that the said committee shall consist of the following members: Messrs. Ahearn, Beaubien, Bertrand (Laurier), Bouchard, Dupuis, Factor, Hamilton, Heon, Howe, Isnor, Johnston (Bow River), Lawson, MacKenzie (Neepawa), MacMillan, Martin, Patterson, Pottier, Ross (Moose Jaw), Slaght, Stevens, Thompson, Turgeon, Woodsworth, and that the presence of at least nine members shall be a quorum of the said committee and that standing order 65 be suspended in relation thereto.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. F. E. LENNARD (Wentworth):: Mr. Speaker, I should like to ask a question of the government. In view of the fact that a British reigning sovereign has never before been in Canada, and in view of the approaching visit of their majesties this year, will not the government consider the striking of a special decoration, to be awarded to all members of the defence forces of Canada and all ex-service men in Canada?


Ernest Lapointe: I suggest that this question be accepted as a notice of motion. The hon. member will receive an answer at the proper time.



CATTLE SHIPMENTS


[Stage Direction]
On the orders of the day:
Mr. M. C. SENN (Haldimand):: I should like to address a question to the Minister of Agriculture (Mr. Gardiner). Is the quota of 60,000 head of cattle per quarter which is allowed to enter the United States under the terms of the new trade agreement exhausted for the first three months of 1939? I should also like to ask if the shipments from Mexico help to make up this quota allowance.


James Garfield Gardiner: Mr. Speaker, the answer to the first question is, yes. The quota ran out towards the end of the month. I believe the statement is somewhat as follows:
Cattle Shipments

United States cattle imports, 700 pounds and over, for the month of January, 1939
Number Percentage
Canada	
30,246	55	per	centMexico	
24,769	45	per	centTotal	55,015
It has been the practice of the United States government to give notice of the running out of the quota a few days before the end of the quota is reached. The quota in this instance was 60,000. This notice was given when the number stood at 55,015. But a settlement on the basis of the reduced tariff is made as cattle go in, from that time on, until the number reaches the 60,000 mark. The quota will divide somewhat in the proportions of 55 per cent and 45 per cent.
I might add that there is a provision in the agreement whereby, if quotas work out as this one apparently has, through consultation with the United States government, an arrangement may be made with regard to it in order to make it work as it was intended to work. Officials of the Department of Trade and Commerce and of the Department of Agriculture have already been in Washington, and I believe I can go so far as to say that satisfactory arrangements are in process of being made. An announcement will be made shortly with regard to the whole matter.


Mark Cecil Senn: Was it the intention that
Canada should enjoy the whole 60,000 per quarter, or otherwise?


James Garfield Gardiner: No. Under the old agreement, the one which existed before, provision was made whereby the quota would be for all the cattle imported into the United States. In practice it worked out that the cattle came from Mexico and Canada, and exactly the same terms are in the present agreement. In this particular year the cattle which were prepared to be sent across the line immediately the agreement came into effect were apparently considerably greater in number in Mexico than in previous years.



FOOD AND DRUGS ACT


[Stage Direction]
Hon. C. G. POWER (Minister of Pensions and National Health) moved the second reading of Bill No. 13, to amend the Food and Drugs Act.

Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-" Drug."
Mr. STEVENS:: Would the minister give a sort of general resume of the act, so that as we proceed we may understand the object of the bill?


Mr. POWER:: I shall be pleased to do so. In the bill it is proposed to broaden the scope of the Food and Drugs Act. As will be seen in the first section of the bill, the meaning of the word " drug " is enlarged. It is to take in such things as surgical materials, including sutures and bandages sold as sterile, thereby giving some control by the department of the sale of articles of this description which are sometimes found to be non-sterile and therefore dangerous. It is intended also to give control over diagnostic extracts used in detecting food allergy and introduced into the body through abrasions made in the skin. It will affect glandular extracts administered to produce effects upon the body, even when no diseased condition exists, and will apply to household chemicals, including disinfectants such as javelle water, chloride of lime and cockroach powders. To improve the statutory means for protecting the purchasing consumer against injury to health and against deception in food and drug products, authority is sought to deal in greater detail with matters such as packaging and labelling, advertising, adulteration and the use of dangerous materials. It is sought to obtain some control over cosmetics, which have not hitherto been under the control of any department. Certain matters pertaining to imports and exports are also dealt with, in recognition of international trade practice.
If my hon. friend wishes I could perhaps indicate to him some of the deleterious materials which are to be found in cosmetics. Cosmetics comprise creams, depilatories, shaving creams, hair dyes, eyelash and eyebrow dyes, eye preparations, nail preparations, rouges, et cetera. All these have been known to contain substances which are injurious; some have actually caused blindness. Creams may contain harmful or irritating substances such as mercury or carbolic acid. Depilatory creams may also contain sulphides causing skin burns and rashes. Shaving creams are also marketed as depilatories and for softening

Food and Drugs Act
the beard, and shaving creams sometimes contain injurious substances. Hair dyes are known to contain lead, arsenic, mercury or other injurious substances. I have a long list of substances which might be introduced into cosmetics and cause injury.
I can assure the committee that there is no intention to deprive the fair sex of their inherent right to use any artificial expedient to enhance their natural beauty, but it is intended that they should get a fair break when they purchase articles of that kind, so that at least they may do so with the assurance that some protection is afforded them against illness or injury.


Mr. BARBER:: I think the minister will
agree that his department has had the full cooperation of the pharmacists throughout this country in regard to legislation which has been brought down in previous years. I believe that this measure also, the greater part of it, will receive the cooperation of that profession. There is a certain section, of which I suggest there might be some amendment to remove possible hardship or misunderstanding as far as the profession is concerned. But I shall reserve my remarks on that until we come to the section.


Mr. MARTIN:: This may not be the
right time-perhaps I should have done it earlier-to suggest to the minister that this bill should be referred to the banking and commerce committee in order that opportunity to be heard may be afforded to parties who approve the general purport of the bill but would like to offer suggestions based upon their experience in the trade. In my own constituency there is a large company interested in the manufacture of many of the commodities affected by the proposed legislation. While it is their feeling that generally the bill is to be commended, there are some particulars in which their experience and assistance might be of value. If the minister and the committee should not agree with the suggestion that the bill be referred to a standing committee of the house, I shall have at a later stage in the proceedings certain amendments to suggest. But I rise at this time mainly to ask the minister for an opportunity of having this matter referred to the standing committee on banking and commerce-


Mr. WOODSWORTH:: Why banking and
commerce?


Paul Joseph James Martin: Well, any committee of
the house which might have some concern with it-if not banking and commerce, perhaps public accounts, or a special committee.


Charles Gavan Power: I think I can say frankly
that so far as the principle of this bill is concerned we have had the support of the manufacturers of preparations and of the Canadian Pharmaceutical Manufacturers Association, which includes them all. But on certain sections of the bill I have had representations which indicate the opinion that the powers sought to be obtained from parliament to make regulations is perhaps too arbitrary. I have no objection to making the greatest possible effort to meet those objections. I propose to introduce an amendment to section 5, subsection (k), which is the one to which objection was taken. We shall come to that subsection in a minute, but perhaps I may have permission to say that under section 5 power is given to the department to make regulations prohibiting the sale or defining the conditions of sale of any substance as a food or drug, or to restrict in like manner its use as an ingredient. It was represented to me, and I think very properly, that this power of regulation would be excessive, and I have been asked to specify that the substances to be covered by these regulations should be qualified by some such word as "deleterious," or their "indiscriminate use" possibly dangerous to the public or prejudicial to health. I think we can work out an amendment along those lines which, if it is not entirely satisfactory to everyone concerned, will at least meet the wishes of this committee.
In reply to my hon. friend who asked that the bill go to a committee, I am at a loss to know to which of the standing committees it could be referred. I doubt whether it would properly come under the jurisdiction of the committee on banking and commerce. With regard to setting up a special committee, it seems to me the committees of the house will be pretty busy this year with others matters, and it would not be desirable to set up a special committee for the purpose of dealing with one or two subsections of a bill which, however important it may be, can hardly be said to be important enough to keep hon. members away from the sittings of the house. Personally I have no objection to its going to a special committee, but I should like to have an expression of opinion from hon. members as to whether they consider it should be
Food and Drugs Act

so committed. I believe we could go along and make some progress with the bill, and if there is objection to any section or subsection I shall be quite willing to meet hon. members or those on behalf of whom they speak and endeavour to iron out the difficulty. The Canadian Pharmaceutical Manufacturers Association did in fact meet the officers of my department yesterday and had some discussion with them. I cannot say that they were satisfied, but I think on most points there was substantial agreement. On the subsection mentioned a moment ago I do not think they agreed, but I am quite willing to hold that over for further discussion.


Harry James Barber: I do not see any particular reason why the bill should be referred to a special committee if the minister will undertake to make a few minor amendments. As he has mentioned subsection (k), I should like to suggest to him a wording something like this-*


The CHAIRMAN:: Order.


Charles Gavan Power: Would my hon. friend wait until we come to that?


Harry James Barber: The minister referred to that section.


Charles Gavan Power: I was discussing it only in general terms, in regard to sending it to the committee. We will come to that later.


Mr. GREEN:: Will the provision respecting material that may be used for "disinfection in premises" or for the control of vermin cover the disinfection of homes? In Vancouver a few months ago several children died as the result of getting into a house that was being disinfected. Will this amendment give the department any control over disinfectants used for such purposes?


Charles Gavan Power: We are endeavouring to obtain control of the disinfectant itself, not the manner in which it is applied, that is to say, the precautions which should be adopted when disinfecting is going on, or after disinfection. I would say that would be almost entirely covered by police or municipal regulations. We would control the strength, if I may put it in non-technical terms, of the material; but I doubt whether this federal department could set up guards to prevent people from going into a house that had been disinfected.


Howard Charles Green: But can you say what disinfectant shall or shall not be used for these purposes?


Charles Gavan Power: I hardly think we could; I do not think we have any authority under the act. The word "drug" here includes any

material that may be used for disinfection in premises in which food is manufactured, prepared or kept, or for the control of vermin in such premises. I do not know that we could interefere with the municipal health authorities in their work of disinfecting houses or in the selection of the particular kind of disinfectant which they should use. I am afraid we would not have authority to do that.


Howard Charles Green: Under this section you are taking power to control the material used in premises in which food is kept. Would it not be wise to extend that to cover any premises in which people live?


Charles Gavan Power: I hardly think we could go that far. This control which we wish to exercise is control over certain insect poisons which in appearance resemble food materials. I think it was in Vancouver that an incident occurred not very long ago in which I believe cockroach powder was mistaken for baking powder, and several fatalities resulted. Some of these insect powders resemble starch, baking powder and flour, and we hope to be able to perhaps give instructions to the manufacturers that they must label these insect powders or colour them so that they will not be dangerous. Ordinary insecticides used in agriculture are controlled by the Agricultural Pests Control Act, but that does not cover the poisons employed in households, restaurants, hotels, food warehouses and factories. Certain poisons used for the destruction of rodents are likewise so dangerous to human beings that they should not be employed except in places where there is no possibility of food being contaminated. That is the object, so far as they are concerned.


Mr. McCANN:: How does the minister
expect to control the use of these poisons, except through the sale, if they are allowed to be sold?


Charles Gavan Power: Through the sale only, and of course, as I suggested, we might insist that the manufacturers colour these insecticides so that they will have a different appearance from materials used as food.


[Stage Direction]
Section agreed to.
On section	2-"Medicine",	"cosmetic",
"manufacture".
Paul Joseph James Martin: Subsection 1 reads:
"Manufacture means manufacture for sale." I do not suppose the intention is that sales to physicians or hospitals should be included. Would it not be better to have this subsection read: "Manufacture means manufacture for sale to the general public"? Any drug may be sold to a physician or hospital, and

Food and Drugs Act
obviously the purpose of the legislation is to protect the public, rather than those who may be presumed to know the character and chemical content of the commodity sold.


Mr. SLAGHT:: Would this subsection prohibit the manufacture of a drug which is being distributed free, the cost of which is being defrayed through philanthropy? I have in mind an instance in which that is being done. I do not propose to mention the drug or the present manufacturers of it, but with the approval of the department this drug has been manufactured for some two and a half years and distributed through physicians only, free in all cases. That has been made possible through the very generous contributions of a philanthropist in Philadelphia, outside this country altogether, and it would seem to me a pity if, perhaps by inadvertence, this amendment should go so far as to make it illegal to continue to manufacture and distribute this product, which in my view, after considerable investigation, has great therapeutic value. The minister may or may not have considered the effect of this subsection in an instance such as I have outlined.


Charles Gavan Power: Some time ago our attention was directed to the matter to which my hon. friend refers, and we in the department had some doubts as to whether we had any authority over the free distribution of products which were still, so to speak, in their experimental stage. We came to the conclusion that it was doubtful whether we had any authority, but in order to make the matter clear the definition herein contained was introduced, which is not the full dictionary value of "manufacture." Taking the full definition, we probably would cover the point raised by my hon. friend, and in fact would go beyond it. Probably we would go into the private business of physicians who compound their own prescriptions, and incidentally, perhaps, charge something for the medicine which they give the patient as well as for their services as physicians. We felt that it would be too much to ask the department to go into that field; therefore we confined ourselves to the words "manufacture for sale," so that if there is no sale involved we have no jurisdiction over the operation.
The hon. member for Essex East (Mr. Martin) has suggested that we extend the definition of "manufacture" to cover manufacture for sale to the general public. Many products which are packaged and sold to physicians carry more or less misleading advertising. In most cases the physician has not the laboratory or instruments at his disposal with which to test the claims made for
a particular product. I should think that a large number of the medical profession would be ready to give the department the right to check up on some of the claims made for certain materials and substances. It would be extremely difficult to have one rule for the physician and hospital and another for the general public. As I have said, many physicians, particularly those in rural districts, have no means of testing these products. We would be assisting them if we could submit some of these materials to laboratory tests in Ottawa or in other parts of the country. For that reason I regret that I cannot agree with the suggestion made by the hon. member for Essex East.


Mr. TAYLOR (Nanaimo):: I have some doubt as to the definition of "medicine" in subsection (j). It appears to me that if the word "stimulating" were added after the word "restoring" the whole definition would have greater value. The three words now used do not entirely cover the field.


Charles Gavan Power: I imagine that the word
"modifying" would cover "stimulating."


James Samuel Taylor: "Modifying"
seems to suggest modifying downward rather than upward.


Charles Gavan Power: I have no objection to putting in the word "stimulating" if my hon. friend wants it in, but I do not think it would make any difference. I believe the present definition is broad enough. "Modifying" means to modify either by lessening or by increasing.


James Samuel Taylor: I do not think there is any word in the definition which definitely covers the meaning of "stimulating." I make that suggestion.


Paul Joseph James Martin: Has the minister given consideration to the constitutionality of this whole provision? It will involve some violation of the private property principle of the British North America Act. Has the Department of Justice given consideration to that aspect of it?


Henry Herbert Stevens: This is only a definition.


Paul Joseph James Martin: I am just using this section as an opportunity of making a comment. As the minister is anxious to cooperate in the matter, will he allow this paragraph (I) to stand?


Charles Gavan Power: I have no objection, but I must say to my hon. friend that it will take a lot of argument to convince me that the definition is not a correct one, in view of the purpose sought to be attained by the section.
Food and Drugs Act


Mr. HOWDEN:: The hon. member for Parry Sound (Mr. Slaght) referred to substances which might be distributed gratis to the public. As I understand it, if such a substance should have a deleterious effect or non-desirable content, this department would have no control.


Mr. BAKER:: Because it is not sold.


John Power Howden: Because it is not sold.


Charles Gavan Power: Perhaps I can answer my hon. friend. Section 31 of the Food and Drugs Act as it now exists reads:
No person shall distribute, cause or permit to be distributed from door to door or in a public place or on a public highway or through the mail, any sample of any drug: provided that this section shall not prevent manufacturers or wholesale dealers from distributing samples by mail or otherwise in compliance with individual requests for same, or from distributing samples to physicians, veterinary surgeons, dentists, registered nurses, hospitals, or to retail druggists for individual redistribution to adults only.
I do not think that covers the point raised by my hon. friend.


John Power Howden: If the Food and Drugs Act does not contain a provision for the control of such, shall we say, philanthropic distribution, then I suggest that an amendment should be made to the act.


Charles Gavan Power: I am afraid that if such an amendment were made we should be accused of endeavouring to obtain jurisdiction over research laboratories and the work of private physicians. After all, many physicians are devoting a great deal of their time in an effort to bring about better conditions in the medical field. The department may not be qualified to pass judgment on a new product manufactured by a laboratory because it may not have been brought to our attention, either here or elsewhere. I can see difficulties in the way of carrying out the suggestion of my hon. friend, but I have no objection to submitting it to the officers of the department. When we return with this bill I can let him know whether it will be possible to meet his wishes.


John Power Howden: The department now has full control over such substances as may be sold; the department certainly controls the sale of any doubtful substance or one which may be dangerous to the public if consumed, and it seems reasonable that it should have control over distribution without sale. I merely suggest that the department should take authority to control such distribution.


Mr. LANDERYOU:: There are provisions in the act to control the sale of many materials used in medicine, but is there any provision in the act, and if not does the minister contemplate putting one in, for control to prevent people from being exploited by exorbitant prices? For instance, it is a matter of common knowledge that aspirin tablets can be made for eight or ten cents a hundred, yet they are retailed at twenty-five cents for a box of twelve; and coloured water is being sold at high prices.


Charles Gavan Power: I should like to have controlled what has been called the cosmetic racket, where ten or fifteen cents' worth of powder and grease is sold for four or five dollars. But I doubt whether the federal parliament would have authority to fix those prices, and I should hate to have control of the department which fixed the prices of such materials. If for the moment we see to it that there are no substances in food or drugs or other articles of the kind which might be deleterious to human life, I think we shall have gone about as far as we can. I have every sympathy, however, for the plea of my hon. friend.


John Charles Landeryou: In other words, the minister is doubtful whether we have the constitutional right to fix prices. In the province of Quebec an act was passed to fix the price of shoe repairs, and I read in the press-I have not studied the evidence-that the legislation has been set aside by a court decision as ultra vires of the provincial government. Just how far does the minister believe we can go in fixing prices in respect of the manufacture and sale of these ingredients?


Charles Gavan Power: I do not know. I should not be prepared, either now or perhaps at any other time, to give a legal opinion as to the value of the decision given by the courts with respect to shoe repairs and its effect on pricefixing in respect of other articles. I will not go so far as to say whether or not this parliament has authority to fix prices, but I do know that as a matter of public policy, price-fixing is extremely difficult to carry out, and for the moment at least I should not like to undertake it. If we fixed prices of cosmetics we should probably be asked- and the public would have a right to ask it- to fix the prices of nearly everything else. I do not know that I should be prepared to go into the job of fixing the price of sausages and any number of other articles of food which the hon. gentleman might mention. I do not wish to attempt it at the moment, anyway.

Food and Drugs Act


John Charles Landeryou: Would it be fair to say that the minister would *be in favour of regulating prices to prevent such exploitation of the consumer as is taking place in the sale, for example, of cosmetics and many drugs?


Charles Gavan Power: It rather appeals to me as a theory, but I do not know how it would work out in practice. I have an amendment to paragraph (j) of section 2, which I will ask my colleague to move.


Charles Avery Dunning: I move that paragraph (j) be amended by deleting the word " or " in the third line and adding the words " or stimulating " before the word " organic " in the third line of the said section.


Henry Herbert Stevens: How will it read now?


Charles Gavan Power: It will read:
(j) "medicine" means any substance or mixture of substances that may be used in restoring, correcting, modifying or stimulating organic functions.


Henry Herbert Stevens: The amendment does not fit in.


James Samuel Taylor: The proper place for " stimulating " would be after " restoring."


Charles Gavan Power: We will let the clause stand and I will see that it is drafted to meet the wishes of mj' hon. friend.
Section stands.
On section 3-Regulations.


Howard Charles Green: Why is the word "net"
used in the second last line before "contents"?


Charles Gavan Power: Because under section 7 (f) of the Food and Drugs Act, they are exempted from the necessity of giving a statement of weight, measure or number on the package or container, packages and contents which are under two ounces. In view of the fact that cosmetics are put up in packages of very small sizes we now intend- we may have some difficulty in achieving it -to insist that the makers of cosmetics give a statement of the weight, measure or number on even the small containers. We are therefore inserting in the bill a provision which will force the manufacturers of cosmetics to do what manufacturers of other articles are compelled to do under the Food and Drugs Act.


An hon. MEMBER:: That is so that the
lady will know what her lipstick weighs?


Charles Gavan Power: Exactly-the weight of
lipstick on the lips.


Howard Charles Green: The words "net contents"
really mean weight, measure and number.


Mr. REID:: I hope the minister will give consideration to the size of the lettering required on the container. One almost requires a microscope to read the statement of ingredients, which the manufacturer wants you to skip, on some of these packages.


Charles Gavan Power: That is true.


John Charles Landeryou: Paragraph (b) reads:
(b) respecting the packaging and labelling of any article of food or drug and the design of any such package or label with a view to preventing the public or the purchaser being deceived or misled as to the character, strength, quality or quantity of the article and requiring, notwithstanding anything contained in paragraph (f) of section seven of this act, a declaration of net contents upon any package containing a cosmetic;
I find myself in accord with the section, although I repeat that I should like to have the minister consider the insertion of words which would prevent exploitation in respect of price.


Charles Gavan Power: I am sorry I cannot do that. But we are doing this-and perhaps this will meet the views which have been energetically expressed by the hon. member for Kootenay East (Mr. Stevens). In practice we have been endeavouring to prevent misrepresentation in packaging. That is to say, certain things are sold in large packages on which the contents are properly described, but the packages are only half filled. I believe the term is "slack filling."


Henry Herbert Stevens: Deceptive.


Charles Gavan Power: I believe the technical term used in the trade is "slack filling." We have in some cases prevented that. We have made seizures of packages which did not contain a quantity sufficient to fill the box. We are not sure whether we have legal authority to do it, and we are endeavouring by this section to get it.
As to fixing prices, again I am sorry to say that I do not think I can agree with my hon. friend.


John Charles Landeryou: I suggest that we could request the manufacturers to print on the package the actual cost of the materials which go into the manufacture of cosmetics and drugs. It would not necessarily mean setting the price, and the people would be protected from exploitation by knowing the actual cost of the ingredients used. As the minister has said, they may throw together a little chalk and some other cheap ingredients and offer them at three or four dollars an ounce. Could not the government insert a provision which would force these exploiters of the consumer
Food and Drugs Act

to state the actual cost price of the ingredients -not necessarily the cost of their overhead, if they wished to separate the items-which go into the manufactured drug?


Charles Gavan Power: There is an old rule, caveat emptor. After all, if we by regulation go to the extent of seeing to it that the product is pure and that the quantity is that which is specified on the package, really the responsibility for the price he is going to pay devolves on the purchaser. With every sympathy for the suggestion of my hon. friend, I think if he will allow us to go to-day as far as we are going in this bill, in years to come perhaps we may be able to meet his wishes by amendments to other legislation. I doubt whether an amendment of the Food and Drugs Act alone would be sufficient to bring about such a price regulation as, to be effective, would need to be general.


John Charles Landeryou: Does the minister think it is better for the consumer to be deceived or misled as to strength or quality, or deceived or misled as to the actual value of the article he is buying? Which does he think is the more dishonest proceeding?


Mr.   POWTER@: Frankly I would not judge as between standards of morality or honesty. My hon. friend may have standards which differ entirely from mine. My standards might not fit the peculiar puritan mentality of my hon. friend, and his-perhaps-more narrow ones might not fit my wider views of morality and honesty.


John Charles Landeryou: That is not what I meant. Why not give this protection as regards both phases? I am not going to say which we should preferentially protect. But here is the point. Many people in Canada to-day have hardly enough money to buy necessary food, clothing and shelter, to say nothing of drugs and other preparations; nevertheless they do it. Millions of dollars are spent on cosmetics by flappers and others.


Paul Joseph James Martin: Will the hon. member permit a question? What does "flapper" mean?


John Charles Landeryou: It is a term which has been given to young girls who use cosmetics and articles of that kind. Not being as expert in these matters as is my hon. friend, it is rather difficult for me to tell him.


Paul Joseph James Martin: I thank the hon. member for his information.


Mr. MacNICOL:: They are usually called "chickens," are they not, Mr. Chairman.


Mrs. BLACK:: With all due respect to the minister and to the hon. member who has

just spoken, I think I may be allowed to say that I know as much about cosmetics as any man here. I use lipstick when I like it;
I do not care how much it weighs, or how little. The hon. member has spoken of flappers and of young people. The girls of to-day, and the same applied even to those of my day, from the time they are old enough to know anything about titivating, want a little powder. In my day we used rice powder, or even com starch. To-day the girls want a pretty compact; and if I like a compact I do not think about what I am going to get inside of it. Let me give hon. members a practical demonstration. I open my bag, I take out my compact, and I use it as much for the show and the beauty of it as for what it contains. While unfortunately I am not a flapper, I believe the minister can protect us by seeing that we do not use poison,-


Charles Gavan Power: That is it.


Donald Elmer Black: -as we would if we used preparations containing arsenical ingredients.


An hon. MEMBER:: That is the idea of the bill.


Donald Elmer Black: Finally, after giving an
example of what is fairly good, I will leave the matter in the hands of the minister.


Ernest Lapointe: That is a pretty nice box, too.


John Charles Landeryou: This is not a question of a difference of opinion about the morals of the business; my contention simply is that we should give the consumers protection as regards price. I again ask the minister to consider the advisability of protecting people against price exploitation. I do not think such action would necessitate the establishment of just prices for sausages or anything else except the items under discussion. Let manufacturers be forced to place on the carton the actual cost of the ingredients.


Mr. WALSH:: The hon. member who last spoke used the term "consumer". I am at a loss to understand to whom he refers-whether it be the person who purchases the article and applies it to her face, or the person who might otherwise come in contact with it. Personally I think the minister is going quite far in protecting both parties if he protects against serious danger to the person who uses cosmetics. I am sure that the person who is anxious to use them will be wise enough to see that she gets what she is looking for and is able to pay for it. If she cannot afford a four dollar or three dollar article she will accept a product that costs a dollar

Food and Drugs Act
and fifty cents. As she grows more accustomed to cosmetics and wealthier in this world's goods, she will protect herself to better advantage when she can afford to go into the higher priced field. I believe that the hon. member's question has been amply answered by the minister, and that sufficient protection is being given under the amendments which have been proposed.


[Stage Direction]
Section agreed to.
On section 4-Regulations.
Mr. KENNEDY:: Does not the last part of the paragraph refer only to a dominion analyst, and exclude provincial or municipal analysts? Would it not be better to change the wording so as to designate any qualified analyst as a dominion analyst?


Charles Gavan Power: Our inspectors are comparatively few in number, and it sometimes happens that sampling and other operations, through an unavoidable combination of circumstances, must be carried on during the absence of an inspector. Tentative arrangements have been made from time to time to cover this difficulty, but they have been without statutory authorization. The statute provides that in certain circumstances the inspector shall take certain action, and we wish to enlarge the number of people who may be named as inspectors. There is no question of any new appointments in the department. The change is made so that, if necessaiy, our officers may be named as inspectors for purposes of prosecutions or making seizures.


Orvis A. Kennedy: I agree with that. But the term "dominion analyst" means an employee of the dominion government. It may at some time be necessary for a municipal or provincial employee to act as dominion inspector. Could the wording not be changed to "designating any qualified analyst"?


Charles Gavan Power: Did the hon. member read the section? That is what it is for.


Mr. BLACKMORE:: I can understand what is causing the difficulty of the hon. member. One finds some trouble in understanding the underlined words, in view of what is said earlier in the section. I am not sure that I see the connection. As I read the section it does not seem to be in harmony with the underlined words.


Charles Gavan Power: We had no authority to name any of our own people as inspectors, until we took it under this act. An inspector means any person duly appointed for the
purpose of carrying out the provisions of the act. It would have been necessary for me to go to the civil service commission and obtain the appointment as inspector of a special man. Under the authority conferred by the bill it will be possible to take any of the qualified officers of the department, and to say, "Y'ou are an inspector for this purpose." Otherwise I would have to name a new inspector under the provisions of the Civil Service Act.


Henry Herbert Stevens: That is, any dominion analyst may at any time be authorized to act, under the terms of the act.


John Horne Blackmore: We are wondering whether or not this means the minister could select an inspector appointed, for example, by Ontario or Saskatchewan, or an inspector in the employ of some municipality, and whether that inspector could act as a dominion inspector. The wording does not make it clear.


Charles Gavan Power: I can see that perhaps there would be some administrative difficulties in our appointing as inspectors people named by some other authority. We feel that with the extra authority given to us by the section we will have less trouble than we had before. It is only a technical requirement and is intended to cover cases where an inspector has specific duties to perform under the provisions of the Food and Drugs Act. For instance it would apply to section 9 of the act which has to do with the procuring of samples. In the different cities of the dominion we have what are known as food and drug inspectors. It is their job to procure samples of foods or drugs from persons who may have such articles in their possession for purpose of sale, or exposed for sale. The inspector may procure such articles either by purchase or by seizure. We want to enlarge the field of the inspector so that a dominion analyst, for the purpose of giving evidence in a court, could, if we so desired, be called an inspector. That is all we wish to do under this section of the bill.


[Stage Direction]
Section agreed to.
On section 5-Regulations.
Paul Joseph James Martin: The minister has given the impression that because of a desire for greater clarity in connection with the section he proposes to let this matter stand.


Charles Gavan Power: I propose to let paragraph (k) stand.


Paul Joseph James Martin: With that in view I wish to offer two amendments in respect to the
Food and Drugs Act

same matter, so that the committee may be given an opportunity to consider which is the more desirable, if indeed either of them is desirable.
Paragraph (k) as it now stands gives the governor in council unlimited powers of prohibition and of determination of conditions of sale, not only of dangerous foods and drugs but also of perfectly harmless ones. I think clearly the intention of the section is to restrict the regulation to harmful substances, and with that in view I would suggest an amendment along these lines:
Prohibiting the sale to the general public or defining the conditions of sale to the general public of any substance dangerous to life as a food or drug, or restricting in like manner its indiscriminate use as an ingredient in the manufacture of food or drug.
After the word "substance" I have suggested the addition of the expression "dangerous to life," the intention being to guarantee the protection of society against substances which may be dangerous to the lives of individuals.


James Joseph McCann: Why not substitute the
word "health" instead of "life"?


Paul Joseph James Martin: With this suggestion before us in writing we can see it in proper perspective. Then, there is the stronger suggestion that after the word "substance" as it appears in paragraph (k) of the section we add the words "injurious to life or health" or, perhaps, the words "the indiscriminate use of which may be dangerous to life or a menace to the public" I suggest that we should have an opportunity to have the proposed amendments before us in writing, together with others which may be suggested, so that we may have a clear perspective of the whole thing.


Charles Gavan Power: I shall be glad to consider
the suggested amendments.


Howard Charles Green: Apparently paragraph (j)
provides for the licensing of manufacturers of cosmetics. The explanatory note states that not only are manufacturers to be licensed, but also the sale must be licensed. Which is correct?


Charles Gavan Power: I do not think it is intended to go so far as to license the sale. The intention at this time is simply to ask the manufacturers of these preparations to take out licences, so that we may have some means of control.


Harry James Barber: Would that be the same as under the Proprietary and Patent Medicines Act?


Charles Gavan Power: We are not going as far as that goes. Under that act I understand they ask for a licence number for each preparation. It is very difficult to do that here, but we want to know who are manufacturing these articles. Then, if we find through our inspectors or otherwise that some of these are dangerous, we have some hold on the manufacturer by telling him that we will not renew his licence another year. These are yearly licences. I do not know that we could license the sales of an individual preparation.


Howard Charles Green: Should not importers be licensed also?


Charles Gavan Power: We have a section for that in the Food and Drugs Act.


Henry Herbert Stevens: I quite agree with the hon. member for Vancouver South (Mr. Green)-


Charles Gavan Power: The explanation is bad.


Henry Herbert Stevens: Yes, but is it clear that importation is controlled as carefully and fully as manufacturing? Otherwise some of the variety chain stores, which sell a great deal of cosmetics, might import goods which were not properly controlled.


Charles Gavan Power: Section 10 of the Food and; Drugs Act provides that:
Any inspector when authorized thereto by the minister shall have the right to examine any customs entries of imports of food or drugs into Canada and to take samples of any food or drug sought to be imported into Canada and to submit such samples for analysis to a dominion analyst for examination and report.
2.	In any case where samples are taken such food or drugs shall not be delivered to the importer or consignee until the dominion analyst has reported upon the samples taken.
3.	If he reports that the food or drug is adulterated or misbranded, such food or drug shall not be admitted into Canada for use as a food or drug.


Henry Herbert Stevens: But that will not cover the matter. Under this clause you are making it mandatory to license the manufacturer. I am not objecting to that. But what the minister has just read is permissive only; an inspector "may" if he wishes-


Charles Gavan Power: When authorized.


Henry Herbert Stevens: But there might be a hundred importations which would pass without any inspection at all. The imported article ought to be subjected to just as close regulation as the article made in Canada.


Charles Gavan Power: Under clause 6, section 10A of the bill provides that:
10A. The department may order that the manufacturer of any article of food or drug shall furnish a declaration in prescribed form

Food and Drugs Act
asserting that the article in question as manufactured by him has been made in accordance with all requirements of this act and the regulations thereunder, and if importation is sought for any shipment of such article of food or drug, customs entry shall be refused if the shipment invoices and bills of lading are not accompanied by duly certified copies of such declaration.
We take power to ask the importers to give us much the same assurances and guarantees as the Canadian manufacturer is obliged to give. If it is not strong enough I am willing to strengthen it. I agree that we must watch importations just as much as articles of Canadian manufacture. There is no question in my mind as to policy.


Henry Herbert Stevens: There should be just as exact and mandatory powers. You are going to license, and that licensing will apply to all manufacturers; there will be no escape. But both the clause previously read and this one provide that the department "may" order; it is not mandatory. If the licensing feature is adopted there should be a licence before anyone could clear from the customs or sell an imported article.


Charles Gavan Power: I am quite willing to let the paragraph stand and consider that feature, because I repeat that we have every intention of making the regulations as drastic for those who import as for those who manufacture. We shall do whatever we can to see that they are subject to exactly the same regulations.


Howard Charles Green: The proposed section 10A provides for a declaration by the manufacturer, but not the importer. So there is no direct control over the importer.


Frederick George Sanderson: Order. We are not on section 10A yet.


Howard Charles Green: But the minister referred to it.


Frederick George Sanderson: Do I understand that
paragraph (j) stands?


Charles Gavan Power: Paragraph (k) stands.


Mr. NEILL:: Before paragraph (k) stands I wish to call attention to this illustration of what I have so often complained of, the tendency of departments to introduce a bill dealing with some specified change, which is thoroughly discussed and agreed on, and then along about the end to slip in a little clause giving the department power to make regulations under the act, and under these regulations they go to work-wide open-and very often make practically a new act. In some instances it is totally at variance with
the act passed. I may give two illustrations. Some years ago we passed an amendment to the shipping act, about as big as a family bible. Two years later I and others were met by indignant vessel owners asking, "What on earth have you done? Here is a regulation which, if we follow it, makes it absolutely impossible to use the boat for the purpose for which we want it," fishing or some other purpose. Then we look the matter up and find that we were not a party to that at all; it was done under this power of putting in regulations.-
Another case arose in the last few weeks. Apparently power was taken in connection with this matter of drugs to prohibit the importation of a certain drug. It is administered by the Department of National Revenue. A man wrote to me saying, "I have been taking a certain drug, you know how crippled I used to be." He had some form of arthritis or sciatica, I know he was badly crippled. He tells me, "I have now been able to throw away my crutches. I used to be able to get this preparation in Toronto, but they stopped making it and referred me to a firm in the States. I bought some from them, but it was held up by the customs on the ground that it was prohibited." I made inquiry and the answer was that an exaggerated statement was made about it on the label they called it a "cure," and in the opinion of the official of the department it was not a cure. But the man who took it said it was a cure. It was a ease not of saying the stuff was deleterious, but simply that the advertisement on its face said it was a cure, and they objected to that as an exaggerated claim. Now that unhappy man has to go without something that he believes cured him. It may be a case of faith-healing, but he knows that it made him better. A provision like that would never have gone through this house; it was done under a regulation.
Paragraph (k) deals with "sale of any substance as a food or drug." "Any substance"- it might be potatoes. That is going further than the original act. It defines half a dozen things in regard to which regulations may be made, but none so sweeping as this little paragraph.
Then I call attention to another phase. How are we to discover these things? This deals with any substance of food or drug. How is the general public to be advised of it? Ordinarily at least we would have the protection of having it published in the Canada Gazette, and while ordinary people do not read the Canada Gazette perhaps the newspapers would
Food and Drugs Act

copy it. But under section 3 of the Food and Drugs Act the only obligation to publish regulations made under it in the Canada Gazette is limited to those made under paragraphs (a) and (b). If we are going to do anything so drastic as give the government or the department power to prohibit the sale or define conditions for sale of any substance used as a food or drug, at least it ought to have that much publicity that it would be published in the Canada Gazette. It would require amendment of this paragraph and of section 3 of the original act. Will the minister look into that? Because if it is carried out in the terms of paragraph (k) it will be quite drastic.


Charles Gavan Power: I have every sympathy
with my hon. friend's point. Many a time when I was sitting on the other side of the house I had things to say about the bureaucratic system of passing legislation and then providing by regulation that almost anything could be done. It was for that reason that, when my attention was called to paragraph (k), I agreed to endeavour to meet the wishes of those who might represent that it was too wide. But, by way of excuse or justification, I submit that it would be absolutely impossible to make statutory enactments for everything that might come up under a food and drug act.


Alan Webster Neill: I admit that.


Charles Gavan Power: With the advance of science; with new discoveries in these lines, it would be absolutely impossible-without coming to the house perhaps every six months for amendments-to cover everything. After all, the object of this legislation is to protect the public health. In some instances it is essential that some power and authority rest with the officers of the department in order that they may be able to exercise their function of protecting the public health. I do not know how we could carry on the administrative functions of this department unless we had certain power to make regulations under the statute. It would be impossible. The whole difference between the hon. member for Comox-Alberni and myself is the extent to which the authority given by parliament should go. I do not want any excessive authority, I am sure, but I believe we should have such authority as will enable the officers of the department by regulation to carry into practice what I consider are the wishes of the members of this house.


Alan Webster Neill: At any rate the minister
would consider publishing the regulations in the Canada Gazette ? That would not cost much.


Charles Gavan Power: I think that is provided for, is it not?


Alan Webster Neill: Not under section 3 of the
old act. It only says those under paragraphs
(a)	and (b) must be published; not the others.


Charles Gavan Power: As a matter of actual practice we have extended it to others, I am informed by my officials, but I see no particular reason why we should not consider publishing in the Canada Gazette all the new regulations; as a matter of fact, I am informed that this is what we do now. I would not, however, object to another amendment providing that all regulations should be so published.


Harry James Barber: Before paragraph (k) is permitted to stand, when this bill was introduced earlier I suggested that I would present certain amendments. The hon. member for Essex East has presented one amendment which I think came from the same source as mine,, and all I wish to do now is submit that these powers should be restricted to the regulation of harmful substances. As the paragraph reads, it undertakes to restrict the use of what might be termed harmless drugs. Bicarbonate of soda or epsom salts might be included, even, and I do not think that is the intention of the department. So I believe, if the first amendment were accepted, it would cover the case. *


Charles Gavan Power: I shall be glad to consider the suggestion of my hon. friend.


Paul Joseph James Martin: An analysis of the whole act will reveal provisions for prohibiting false and exaggerated claims. Having that in mind I suggest that paragraph (m) be amended to read: "respecting false, exaggerated or misleading claims which may be made for any article of food or any drug." That would be consistent with the general provisions of the act dealing with false and exaggerated claims in connection with any commodity.


Charles Gavan Power: What is the objection to the present paragraph?


Paul Joseph James Martin: I do not think it is sufficiently far-reaching, nor do I think it is consistent with the basic provisions of the act.


Charles Gavan Power: I shall be glad to let paragraph (m) stand also.
Section 5 stands.
On section 6-department may require declaration by manufacturer.


Charles Gavan Power: Perhaps the hon. member for Kootenay East would prefer to have this stand also.

Food and Drugs Act


Henry Herbert Stevens: I do not want to delay the minister, but there is the point that was raised by the hon. member for Vancouver South. I think if the minister would have a careful examination made of the last four lines of the section, in order to try and harmonize them with the first part of it, it might be helpful.


Charles Gavan Power: Very well; the section will stand.
Section stands.
On section 7-Offence.


Mr. HAYHURST:: Section 32A provides:
Every person shall be guilty of an offence under this act who advertises any food or drug in a manner which is in any respect misleading or likely to create erroneous impressions regarding its value, composition, merit or safety-
In regard to the composition of a drug or a cosmetic, is there any provision in the act which will protect the public health by requiring that the ingredients entering into a cosmetic, let us say, shall be given on the label?


Charles Gavan Power: Under the regulations we
can require that to be done, but I do not know that we would go to that extent in connection with all cosmetics. In some instances it would be very difficult to have all the ingredients enumerated on the package.


Henry Herbert Stevens: You prevent the use of injurious ones.


William Hayhurst: You might have the manufacturers mention the injurious ones.


Charles Gavan Power: We are preventing the use of injurious ingredients altogether, if we can. This is principally to cover advertising by device, which has not been covered so far.


Henry Herbert Stevens: I think a great deal of discretion should be exercised in administering this section. Sometimes the inspectors, who, after all, are in the position of a judge, arbitrarily interpret the regulation under the very broad wording:
Every person shall be guilty of an offence under this act who advertises any food or drug in a manner which is in any respect misleading or likely to create erroneous impressions-
That is language which it is almost impossible to define. The courts will interpret this fairly, but very often these matters do not get to the courts. The inspector goes in and says, " This is wrong; cut it out," or " We will not allow you to sell this." And of course a great many of those who handle these commodities do not want to challenge the inspector and fight it out in the courts; they 71492-53
want to conform to the law. Very often the inspectors are a little too arbitrary, shall I say, or too exacting, and a great deal of restraint should be exercised in regard to this discretion.


Charles Gavan Power: We endeavour to use a great deal of discretion; but my hon. friend will agree that one of the great complaints we have heard in recent years is that advertisers sometimes run wild in the claims they make on behalf of food products and cosmetics, and we must take some authority to regulate that. I quite agree with my hon. friend that a great deal of discretion must be used. After all, advertising is a fair, legitimate commercial business, and we must not interfere too much.


Howard Charles Green: It seems to me that the section goes very far. I would ask the minister to consider whether it would not be better to delete the words " is in any respect " as applied to " misleading." Those words do not appear in the corresponding section 32 of the act.


Charles Gavan Power: We put them in purposely.


Howard Charles Green: I suggest that the three words " in any respect " cover a great deal of ground.


Charles Gavan Power: I quite agree that you can fool some of the people some of the time, but you cannot fool all of the people all of the time. The intention of the department is to prevent people from being misled by claims which are not warranted, in connection with food or drugs or cosmetics. In order to do that we must have wide authority, but, on the other hand, that authority should be used with discretion. As the hon. member for Kootenay East pointed out, very few of these ca&es ever reach the stage of prosecution. What happens is that we call in the person or the firm advertising in this way and say: "Look here, you are claiming too much; we think you are trying to fool the people; there is such a thing as playing the game fairly; will you please delete from your advertising such and such a paragraph or such and such words?" We have not had any great difficulty in the matter, but we want to have some kind of stick which we can use in case we need it.


Howard Charles Green: You would still have the stick in the words, " misleading or likely to create erroneous impressions." With the words " in any respect" in the section, it means that a person would be found guilty even if making only the slightest mistake in a description.

Loan of $750,000,000


Charles Gavan Power: Does my hon. friend wish this section to stand?


Howard Charles Green: Yes.
Section stands.
Sections 8 and 9 agreed to.
Progress reported.



LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UN MATURED SECURITIES, AND FOR GENERAL PURPOSES

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee to consider the following resolution:
That the governor in council be authorized to raise by way of loan under the Consolidated Revenue and Audit Act, 1931, an amount not to exceed in the whole the sum of seven hundred and fifty million dollars for paying or redeeming the whole or any portion of loans or obligations of Canada, and also for purchasing and withdrawing from circulation unmatured securities of Canada, and for public works and general purposes.
Henry Herbert Stevens: Mr. Speaker, this is an extremely important motion. It is not extraordinary in its form, and I want it understood clearly that I am not rising to find any particular fault with the manner of its introduction or with its form. The resolution is quite a normal one for this sort of thing. We are being asked to give the Minister of Finance absolute authority to borrow and use $750,000,000 for the purposes indicated. I have no doubt that when we come to the committee stage the minister will outline in detail the purposes for which he intends to use these large sums. My purpose in rising is to draw attention in a broad and general way to the principles which have governed our dealings with matters of this kind, and to invite the discussion of hon. members thereon. I should like to ask the house to consider with me a few questions. I shall express my views in regard to these questions as I proceed.
First, what is the policy of the government in respect to government financing? When I say "government" I am not using the term in any critical sense. I might just as well have asked, what is the policy of Canada? Much the same sort of policy which the minister will perhaps follow in dealing with this matter has been followed by previous governments. In common with other countries, during the past few years we have passed through a period of transition. We are to-day operating under an entirely different economic structure from what we were fifteen, twenty or twentyi Mr. Green.]
five years ago. The control of finance to-day is different from what it was before. This change has been a gradual and evolutionary process, but it has been very real. I think one of the things we must do to-day is to try to adapt our present modem economic, and particularly our financial machinery, to the needs of the times.
At this point let me say that I am not inclined to share the views of some that the financial machine-I could refer also to the economic machine, but we are speaking of finances-of to-day is outmoded, or that we have not a good machine or a good system. I am inclined to the view that we have an excellent financial machine, that is, the banks, trust companies, loan companies and the various other methods by which it operates. But I have some doubt whether that machine is geared to modem needs. That is something which we ought to consider very carefully. So I ask the question: What is the policy of the government in respect to government financing?
I shall pause here and ask three questions. Are we going to New York for this money? Are we going to seek to raise these finances within Canada by domestic loans? Are we going to seek this money in the London market? These are the three possible markets where finances can be secured. In regard to the first method, I think we ought to ask ourselves this: If it is contemplated to raise these finances in New York, is this the wisest course? I am quite aware that it may be suggested that by merely mentioning these matters we are endangering the credit of Canada, but I do not think so. There is no such intention. I want to ask this question in a rather searching way, but I ask it with a perfectly clear mind, with no prejudices, and without reflection upon anyone:	In view of
economic conditions prevalent to-day, is it wise to go to New York for this money? Then we should ask this question: What is our present indebtedness to the United States? I am not going into a great deal of detail.


Charles Avery Dunning: If I am not answering my hon. friend at this stage I hope he will remind me when we get into committee, because I shall be glad to give him that information.


Henry Herbert Stevens: Yes, I am mentioning it now to give the minister an opportunity when we come to the committee stage to deal with these questions more in detail.
I ask, what is our present indebtedness to the United States? I have not analysed the public accounts so as to give it from a dominion government standpoint; but taking it from the broad, general, national standpoint,

Loan of $750,000,000
we owe to the United States in the way of bonded indebtedness or high-class securities, government, private and corporate, roughly speaking, about four and a half billion dollars, and that has been substantially the amount for the last ten years. In some years it has varied somewhat; for instance, there is a slight diminution this year, which should not amount to much more than twenty or thirty million dollars.


Charles Avery Dunning: My hon. friend must not forget to qualify that figure by Canadian investments in the United States. That is a very important qualification.


Henry Herbert Stevens: Of course, there is a substantial investment by Canadians in the United States; nevertheless the fact remains that we have a substantial mortgage indebtedness to the United States, particularly in public and semi-public financing, such as dominion, provincial and municipal, also public utilities, and especially large power corporations, and pulp and paper company securities.
I am under the impression-I am not going to dogmatize-that as a going concern Canada has borrowed from the United States just about as much as she ought to borrow, having in mind the trade relations between the two countries.


Charles Avery Dunning: I agree entirely.


Henry Herbert Stevens: I think that is a fair statement.


Charles Avery Dunning: Not speaking governmentally, but as a people, on all accounts.


Henry Herbert Stevens: I am speaking simply as a Canadian, not in a political sense.
How are we going to repay the United States or repay any other creditor? We must repay-and I am sure my hon. friends opposite will welcome this statement-our debt with goods. That, I think, is almost platitudinous. Nevertheless it is a vital statement when we are faced with this particular problem. Over a long period of about fifty years-I think we should take a fairly long view in these matters-I found, when I checked it up some time ago, that we had an adverse balance of trade with the United States, limiting the term to trade in commodities, amounting to about two hundred million dollars a year. That has been a pretty definite trend. While in recent years there have been fluctuations, the adverse balance remained very steady for a great many years. Of course, during the years when the adverse balance was steady year after year, those were periods when we were borrowing most heavily from the United States, and of course the-amounts we borrowed
71492-53J
were reflected in imports. But that having been the trend year after year for some fifty or sixty or seventy years, I believe that we have come to the time when we ought carefully to analyse and review the economic relations of Canada and the United States, and certainly before we make any new extensive borrowings there.
But in addition to trade balances, in addition to the interest on the four and a half billion dollars that we owe to the United States, and repayments of principal on that capital, because year after year a portion of the capital must be repaid, we have certain services such as insurance, because a large number of our people have policies in the Metropolitan Life, the Travelers Insurance Company, the Guarantee Company, and so on, large insurance companies with head offices in the United States but doing business in Canada, and the Canadian premiums flow over to the United States. Of course, there is a reserve held in Canada and all that sort of thing; nevertheless this service constitutes an indebtedness to the United States which must be recognized. On the other hand, of course, there are certain imports, shall I say, of credits, such as the purchase of United States securities by Canadians, services by Canadians to Americans, and some insurance which may flow from the United States to Canada.
But, if we take it by and large, there is no doubt that the United States is a veiy heavy creditor of Canada, and our exports of goods have not in my opinion anything like kept pace with the requirements of meeting these other obligations. Therefore I am convinced that we ought to approach the United States authorities very frankly; for I suppose we are their most cherished debtor and the best trader they have, except on occasion Great Britain; but undoubtedly we are a good customer and a good debtor of the United States. We have paid our debts and are looked upon as a pretty safe investment. So the United States as a nation ought to be definitely interested in Canada, and we should discuss with them our situation with a view to enabling us so far as possible to pay our indebtedness to them through the export of goods.
I go a step further and come to the next question. How are we going to raise this $750,000,000 in Canada? Is that the program or policy? I am going to say something in respect to that which I have hesitated to say for the last couple of years. It has been on my mind to say it, but I have hesitated because one may be misunderstood, yet it is something that I think ought to be said.
Loan of $760,000,000

If we are thinking of raising this sum or any large portion of toy domestic loan in Canada we ought to pause and ask ourselves definitely, and ascertain exactly, what effect upon our economic structure raising these domestic loans in Canada has had in the past, and what is likely to be the effect if we raise this proposed issue in Canada at this time.
Let me give the house a few figures which .-are easily grasped and yet they are to me : among the most vital factors that ought to toe studied to-day in connection with our -economic life. In 1926-I take that year as the one commonly accepted by economists to-day as the zero or standard year for economic tables-the banks of Canada held dominion and provincial government loans of $324,000,000; in 1931, the amount was $396,000,000-virtually no increase, or a very slight one. But in 1936 the banks held dominion and provincial government loans of $1,097,000,000, and in 1938 the banks held dominion and provincial government loans, together with treasury bills, amounting to $1,287,000,000. I pause there to point out that there was a jump between 1931 and 1936 of about $700,000,000, and that was the period in which we floated a domestic loan of $600,000,000, around 1932 or 1933-1 am not sure of the exact date. That domestic loan in Canada is reflected largely, I think, in the amount held by the banks, because when we float these loans in Canada it is very necessary, as I believe the minister will agree, for him to ensure their success, and this is done now by the Bank of Canada, and formerly through the finance department, ensuring that the banks and insurance, loan and trust companies will absorb the issue, whatever it may be.


Charles Avery Dunning: I would not accept that fully. It requires qualification.


Henry Herbert Stevens: I am not going to quarrel over that to-day; but generally speaking, whoever issues the loan, the finance department or the Bank of Canada, must have received assurances that the loan will go over, and you can only get that assurance by the banks and others more or less undertaking that they will absorb the issue.


Charles Avery Dunning: No.


Henry Herbert Stevens: My language may be unfortunate, but I think I am not very far out. Anyway we shall not quarrel about that point. Let us come back to the facts.


Charles Avery Dunning: Perhaps, in order to avoid a possible wrong impression, my hon. friend would permit me just one word on that point. In connection with a popular issue through

the Bank of Canada to-day and for some time past, dealers all over Canada become the purchasers. What you might call institutional purchasing is a relatively small proportion of the whole. But, if my hon. friend will permit me to say so, he is right in a different way. Undoubtedly a great many purchasers of bonds finance their purchases by arranging for a part of the sum of money required by way of a loan from a bank or trust company. But the banks themselves cannot give us any assurances at all-


Henry Herbert Stevens: No; I said "banks, insurance companies, trust and loan companies;"
I should have added, of course, brokers. In any case the figures show that the banks were a tremendous factor, because the amount of the banks' holdings of dominion and provincial loans between 1931 and 1936 jumped $700,000,000.


Charles Avery Dunning: That is right.


Henry Herbert Stevens: Let us turn to the other
side of the picture. In giving the next set of figures I want the house to remember that this is the vital, day-to-day business of Canada to which I am about to refer. In 1926 commercial loans by the banks amounted to $983,000,000. In 1931 they were $1,141,000,000. In 1936-and remember the jump on the other side, from $396,000,000 to $1,097,000,000-commercial loans had dropped to $707,000,000; and in 1938 the figure, as I have it here, was $731,000,000. I think that is of about October, and represents a fair average of the year. They were up a little at the end of December and January.


Charles Avery Dunning: Rising.


Henry Herbert Stevens: But for my purposes
these figures may stand. They are accurate, although they may not be right up to the minute.
What does this mean? It means that to-day or in the latter part of 1938 loans by our banks to commercial institutions were $250,000,000 less than in 1926, or about thirteen years ago.
Let me make it abundantly clear that I am not now reflecting on the banks. I believe that as sound, careful, well administered institutions they are as good as any banking system in the world. Not for one moment should we disregard that fact. But what I ask myself is, have we as a country followed a financial policy or practice which is permitting the banking and other financial institutions of this country to function so as to maintain a maximum of service to the commercial interests of Canada? I confess

Loan oj $750,000,000
that three years ago, the first time I got these figures out, I was quite startled. I have studied them ever since.


Charles Avery Dunning: They were much worse
then.


Henry Herbert Stevens: No, they were not.


Charles Avery Dunning: Between 1931 and 1936
there was a very considerable drop, and then a rise again.


Henry Herbert Stevens: Yes; well, the rise is not
very marked.


Charles Avery Dunning: It is not big.


Henry Herbert Stevens: I ask my hon. friendskeeping in mind the object I have, to see whether the financial credit structure is functioning to-day so as to give a maximum of service to commerce-whether these figures are not startling. Let me make it abundantly clear that I am not criticizing the banks, because I believe that we as a country, whether we did it consciously or not, have pressed on the banks our government securities, and I am firmly convinced that to-day the banks are holding too large a quantity of dominion and provincial government securities-


John Horne Blackmore: Hear, hear.


Henry Herbert Stevens: -for somewhere around October or November last, the figure, I believe, was $1,087,000,000. It is not very much different to-day. Some say that this means a liquid condition of the banks. It does not mean anything of the kind, because we know, if the banks undertook to sell, that is to liquidate, any substantial proportion of the Ijonds they hold, they would break the bond market.


Charles Avery Dunning: The liquidity does not,
of course, arise from that fact.


Henry Herbert Stevens: Very good. The Minister may argue that the banks may come to the Bank of Canada, deposit bonds and secure currency for them. As a matter of fact, I have other figures, not under my hand, but I can give them from memory. They show this startling situation. I have been told that there was no shortage of funds for commercial loans. That is the assurance we were given. It is further stated that there is no need for the issue in Canada of a larger amount of currency in the hands of the public. That statement is commonly made. All right. I view these facts which I have just given. Then I view this fact, that the circulation of currency in the hands of the public in Great Britain amounts to about $41 per capita; in the United States, to about $42 per capita; in Australia, to about $40 per capita-in all
instances the amounts are translated into dollars-but in Canada over the same period it amounts to less than $22 per capita. I ask myself this question. Here are three countries, similar to ours in their economic structure and their financial system; yet each of them has in the hands of the public about twice as much as the per capita amount in Canada.


James Lorimer Ilsley: But do not Canadians use commercial bank notes as part of their currency?


Henry Herbert Stevens: Does my hon. friend mean cheques?


James Lorimer Ilsley: No, I mean notes of the commercial banks.


Henry Herbert Stevens: That is included.


James Lorimer Ilsley: Is it?


Henry Herbert Stevens: Oh, yes. Those are figures I worked out, through the bureau of statistics, of the currency of all kinds in the hands of the public.


Charles Avery Dunning: All forms of authorized currency.


Henry Herbert Stevens: In the compilation which I have in my room-it is quite an elaborate sheet-we relate exactly the same conditions and the same type and form of circulation in the four countries I have mentioned. I am not prepared to say that it is right or wrong, but I do say that the factor I have mentioned, of the paucity of bank credits to commerce and the heavy holding of government bonds, provincial and dominion, by the banks, plus the other factor of the low per capita circulation of currency in the hands of the public, challenge the study and attention of the best minds in this country, because my own feeling is that there is something definitely wrong.
Let me go one step farther. I go over the affairs of Canada and ask myself: What is wrong? This is perhaps platitudinous, but I must repeat it: We have a great country, one with marvellous resources. We have man power; we have brains; we have machinery, and we have a financial structure second to none. We have everything which ought to make a great and prosperous country, but it is not functioning. There is something wrong.
I believe my hon. friends to the left have a certain foundation for their theories which is perhaps worthy of thought and consideration. I tell them frankly, as I have told Major Douglas, Mr. Aberhart and other leaders in the movement, that I cannot understand the application and the working out of their theories. I do not make that observation offensively. But there is this to say, that
Loan o] $750,000,000

obviously the burden of debt, the high rates of interest and the paucity of purchasing power in the public, are factors which are vitally affecting Canada to-day, factors which my hon. friends constantly emphasize and which form the basis upon which they erect their theories of credit.
I am not prepared in any dogmatic way to say what ought to be done, but I do say now to the minister, to the government and to parliament-


John Charles Landeryou: Would the hon. member permit a question?


Henry Herbert Stevens: I should like to finish this statement. I do say to the minister and to the house that at this time, when we are facing the borrowing of this $750,000,000, we ought to give careful study to the factors to which I have referred. Now, the hon. member had a question, although I have not yet completed my observations.


John Charles Landeryou: Has the hon. member any concrete proposals to offer as a substitute for the principles we have stated definitely in the house?


Henry Herbert Stevens: I will say this to the hon. member-and in saying it I do not wish to appear rude either to him or to the minister -that I have some ideas. I doubt very much, however, whether it is worth while giving expression to them here.


John Charles Landeryou: I think it is.


Henry Herbert Stevens: What I am about to say may sound a little vainglorious, but may I put it in this way: If to-morrow I were in the position of the Minister of Finance (Mr. Dunning), I know certain steps I would take which I believe would be helpful.


An hon. MEMBER:: Let us have them.


Henry Herbert Stevens: I am not prepared to give them at the present time.


Mr. DOUGLAS (Weyburn):: I was interested in the hon. member's statement with reference ' to the different amounts of money in circulation in the different countries. Is the velocity of turn-over relatively the same in those countries, or is it higher in Canada?


Charles Avery Dunning: That is a tough one.


Henry Herbert Stevens: Yes, it is a tough one. The question of velocity is perhaps one of the most intricate of all questions in connection with credit and monetary matters. May I point out that the velocity in Canada has varied in the last ten years from seventeen to twenty-six times. I think at present it stands at about twenty-two, or in that neigh-

bourhood. But, so far as I am able to ascertain, the velocity is not very much different in any of the four countries to which I have referred, although I would be inclined to say that in all probability the velocity in Great Britain would be greater than elsewhere. In the eastern states it would be greater than in the western states. But if we take the United States as a whole, the velocity there would not be much, if any, greater than in Canada. But if it were greater it would only emphasize the differentiation to which I have referred.
I wish to turn more directly to the resolution which calls for the raising of the very large sum of $750,000,000. I find that the funded debt of 'Canada is, in round figures, $3,252,000,000. The maturing bonds in the next year or year and a half, so far as I can learn from the public accounts, stand at about $425,000,000. Then there are treasury bills amounting to $150,000,000. These two items call for about $575,000,000, which leaves $175,000,000 out of the $750,000,000.
When we come to the committee stage I should like the minister to be prepared to answer this question: What is this additional sum to be used for? We find reference in the resolution to "public works and general purposes." Perhaps I am now getting out of the realm of wholly impartial economic discussion and approaching that of political-


An hon. MEMBER:: Politics.


Henry Herbert Stevens: Yes, politics, if the hon. member likes that word. I am wondering whether or not in the closing session of this parliament we are going to be treated to very rich supplementary estimates, and whether in this authority to borrow $750,000,000 we are providing the minister with a mighty handsome election fund.


Ernest Lapointe: Is it a hope or a fear?


Charles Avery Dunning: The hon. member for Kootenay East does not mean that.


Henry Herbert Stevens: Well, I am just a little
concerned.


Charles Avery Dunning: Not in relation to this matter.


Henry Herbert Stevens: I have noticed the words "general purposes" and have studied them with care. I have a high appreciation of the wonderful virtues of the Minister of Finance, and of his transparent honesty. But when I see the expression "general purposes" mixed in with a sum of around $175,000,000-

Loan of $750,000,000


Charles Avery Dunning: But this is not the authority, and the hon. member knows that. The authority must be specific.


Henry Herbert Stevens: Oh, no, not so specific.
Of course, we shall see when the bill comes. I have the act, and I shall read it. I do not wish the minister to misunderstand me, because what I am saying is not said by way of carping criticism. I believe we must look at these things seriously. The resolution refers to "public works and general purposes," and also "The Consolidated Revenue and Audit Act, 1931," which I have in my hand. Section 13 of that act, the authority under which the minister is asking power to borrow, and the authority which will govern, reads:
(1) The governor in council may, from time to time, as the interests of the public service require, change the form of any part of the then existing funded debt of Canada, including any securities for which Canada is liable by substituting one class of the securities aforesaid for another, if neither the capital of the debt, nor the annual charge for interest is thereby increased.
That is, the minister may refund or manipulate so as to get a lower rate of interest- a perfectly proper procedure. Then, the section states:
Provided that in any case where securities bearing a lower rate of interest are substituted for securities bearing a higher rate of interest, the amount of the capital may be increased by an amount not exceeding the difference between the then present value of the security bearing the higher rate of interest and that of the security substituted for it.
That, of course, is perfectly clear and one of the provisions which no doubt the minister has in mind. Then follows the subsection stating that no substitution shall be made, and so on. Then we find this, under section 14:
(1) The governor in council may, from time to time, as the exigencies of the public service require, in the event of the consolidated revenue fund being at any time insufficient to meet the charges placed thereon by law, direct the proper officer to raise, by temporary loans chargeable on the said fund, or by the issue and sale or pledge of securities, in such manner and form, in such amounts, for such periods, and at such rates of interest, as the governor in council directs, such sums as are necessary to enable the said fund to met such charges.
That is a wide open power. Of course, the matter has to be reported to parliament; I do not question that fact. What I say is that in this resolution we are giving the minister very wide power. The reason why I emphasize this now is that he may favour the house, or the committee when we reach that stage, with as full a declaration as possible of the distribution of these funds when they are borrowed.
With no intention of delaying the house, I feel that we should pause before this resolution is passed and give consideration to the broad question of the policy of this country in connection with its finances, and I see no better place to do it than here. When we come to the budget discussion there will be all kinds of, shall I say, political prejudice, which will influence the debate. But there is no reason why we should not under this resolution consider carefully the policy of Canada and the general principles upon which we shall authorize the government to carry on this very large financing measure.
Hon. CHARLES A. DUNNING (Minister of Finance): It was my intention to be prepared, and I am prepared with respect to almost all, if not all, of the matters mentioned by the hon. member for Kootenay East (Mr. Stevens), to give information to the house in the committee stage. I think it would be more convenient for hon. members as well as for myself if we could take questions and answers in that institution of the house which is adapted for that purpose, rather than have a general exposition by myself just now, interrupted as I know it would be by requests for information; it would be easier, I believe, for everyone concerned to deal with that in committee. I have only this general observation to make. I know the hon. member for Kootenay East did not wish to convey the impression that this resolution precedes legislation of a new kind, or represents any departure in method of using the machinery we have for taking care of financing the needs of the country in so far as those needs require to be met by borrowing.


Henry Herbert Stevens: I said so.


Charles Avery Dunning: My friend said so quite plainly, but one or two of the questions might have raised implications of a different kind. The Consolidated Revenue and Audit Act is our general controlling financial statute. It is the statute which places upon the government and the Minister of Finance precise limitations as to the exercise of the financial functions of government. Then parliament itself from session to session decides by individual vote in the estimates precisely what sums of money shall be spent. So what we are here deciding is not that 8750,000,000 shall be spent; we are here deciding upon the method of raising $750,000,000. In other words, this is not a voting of expenditure, but the provision of means whereby the expenditures authorized by parliament at various times may be met whenever the necessity arises to borrow. I wanted to clear the air to that extent.
Loan of $750,000,000

With respect to all the matters of detail mentioned by my hon. friend, I would appreciate it if hon. members interested in them would permit me to answer them in committee. I have all the information before me. It would help materially. There is no intention on my part to avoid discussion- quite the reverse-with respect to what ought to be from time to time the financial policy of the country. Indeed I make, with some trepidation, a suggestion, speaking now with respect to financial methods and what we should do from time to time in that regard. The hon. member for Kootenay East mentioned various matters which he said we as a parliament should examine carefully and endeavour to decide as matters of policy. Nearly all the matters to which my hon. friend made reference are of necessity under continuous study and examination, not only by the officers of the Department of Finance, but particularly by the officers of the Bank of Canada. The suggestion I thought of making is that it might be a good idea to give the officers of the Bank of Canada opportunity to appear, say before the banking and commerce committee, not for the purpose of the kind of discussion which might create impressions detrimental to our credit abroad, but for the purpose mentioned by the hon. member for Kootenay East. In that way his suggestion with respect to the desirability of wider public information as to financial methods-I prefer to use the term " methods " rather than " policy," although it is difficult to decide where method ends and policy begins-might be met without detriment to the best interests of Canada. I make that suggestion without having consulted the governor of the bank; it may be that he would not care to do it, but after all he, like myself, is a servant of the public and I am sure would take the same attitude. While the governor or his officers would have to be allowed discretion with respect to giving certain kinds of information the giving of which might be prejudicial to the interests of the country, I am convinced that if that could be done the understanding by hon. members of this house of financial operations connected with the government of Canada, as well as the much broader aspect of general economics of the country in relation to government finance, might be much improved. I say that with no reflection upon anyone, but just throw out the suggestion.
Meantime, with regard to this authority, I would say before we get into committee that our funded debt maturities, irrespective of any new money which may be required to meet expenditures authorized by parliament,

and including issues which are callable prior to 1940, which of course we must take into account in order to be able to substitute securities bearing a lower interest rate if there is opportunity to do so, down to December 31, 1940, amount to $649,000,000. In addition we have $155,000,000 of treasury bills outstanding at the present time, so it will be seen that this $750,000,000 will not provide an election fund-my hon. friend was not serious about that, I know-because, in fact, the total maturing and callable securities prior to December 31 of next year amount to $804,000,000.


Mr. HARRIS:: Would the election fund make up the difference?


Charles Avery Dunning: I am afraid the election fund which would be arrived at by that method would be a debit instead of a credit. I shall be glad to give detailed information regarding any bond issue or any aspect of the matter when we reach the committee stage. I do not suppose I can get the bill introduced tonight, but there will be two other opportunities for discussion, on second reading and in committee of the whole, which is virtually the same as being in committee of the whole on the resolution.


John Charles Landeryou: I had intended asking the minister a question which is important to me because I intend to speak on this matter before we get into committee. Would the minister, in the short time left before six o'clock, break down the $750,000,000 and give me a rough estimate of the amount of money that will be used internally and the amount to be raised externally to meet these obligations? I will put it in this way: What portion of this amount can be met internally, with Canadian funds?


Charles Avery Dunning: That is just why we have the committee stage, Mr. Speaker; there is a great deal of information of that kind that I may give, and one question will lead to another. I never evade a question, as my hon. friend well knows-


John Charles Landeryou: I am not suggesting that; but I intended to speak on the resolution.


Charles Avery Dunning: The hon. member may ask his question immediately the chairman takes the chair.


John Charles Landeryou: I really intended to speak on this resolution before we went into committee, but since it is five minutes to six I would ask that it be called six o'clock.


Charles Avery Dunning: Surely we can get into committee of the whole.

Loan oj $750,000,000


Mr. SPEAKER:: It is not six o'clock yet. The hon. gentleman may speak.


John Charles Landeryou: Perhaps I am wrong, but I had the understanding that it was impossible to enter into a general discussion of the principle in committee of the whole.


Charles Avery Dunning: No; that is just what we are there for. My hon. friend is quite wrong. There will be no possible limitation of his right to speak merely because we are in committee on the resolution. The reason for getting into committee is to permit the question and answer method. That is all.


Charles Hazlitt Cahan: In committee he may speak as frequently as he wishes.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.


Charles Avery Dunning: Now, if my hon. friend will ask his question again, I shall be glad to answer it.


John Charles Landeryou: I wanted to have a break-down of this 8750,000,000 in order to ascertain what portion of it can be met in Canadian currency.


Charles Avery Dunning: My hon. friend will forgive me if I say his question is not really intelligible. If he means what portion of the maturing indebtedness of Canada which this authority is sought to meet, at least in part, is due in terms of Canadian funds, what portion is due and payable in terms of United States funds, and what portion in terms of British funds, I have that information.


John Charles Landeryou: The resolution reads:
-seven hundred and fifty million dollars for paying or redeeming the whole or any portion of loans or obligations of Canada, and also for purchasing and withdrawing from circulation unmatured securities of Canada, and for public works and general purposes.
I want to know what portion of this can be met in Canadian funds. For instance, if the obligations can be met in United States and Canadian funds, I want to know what portion of this 8750,000,000 can be met in Canadian funds.


Charles Avery Dunning: I cannot say what portion can be met in Canadian funds; that will depend upon the financial condition of the treasury from time to time during the period we are operating under this authority. But I can tell my hon. friend what amounts are due in United States, Canadian and British currency, during the period between now and December 31, 1940. In London we have no issues within that period which fall due for payment; but we have two issues in connection with which we have the right to call the outstanding bonds, by the terms thereof. If we decided to call we would have 3137,000,71492- 54	revised
000 plus 893,000,000, in round figures, to meet in London in terms of British funds. During the period in question we have no maturities in United States funds and none callable in terms of United States funds. So, with the exception of $137,000,000 plus $93,000,000, the balance of $649,000,000 is due in Canadian funds, roughly about $400,000,000 in Canada, and over 8200,000,000 in London if we exercise the call privilege with respect to those securities. In addition, of course, there is $155,000,000 of treasury bills, which are wholly within Canada. These are three months bills, in connection with which I follow the practice of calling for tenders each three months and thus renewing, if you like to use that term, the obligation in terms of Canadian funds.
Progress reported.
On motion of Mr. Lapointe (Quebec East) the house adjourned at six o'clock.
Monday, February 13, 1939