1939-05-23

CENTRAL MORTGAGE BANK


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved the second reading of Bill No. 132, to incorporate the central mortgage bank.
He said: Mr. Speaker, I find that it is not necessary for m© to spend much time discussing the motion for the second reading of this bill, for the reason that on the resolution I went much more extensively into the principle than I thought I had done, and in Hansard of May 6, at page 3665, hon. members will find a reasonably complete discussion of the principle involved.
There has been some criticism of the lateness in bringing down this measure. In that connection I desire to point out that the financial resolution, after standing on the order paper for some time, was dealt with on May 6 and the bill produced immediately thereafter. I confess to the house that at
that time I had the idea that a month's adjournment of parliament was very likely, and that consequently there would be considerable time during which all interests affected across Canada would have full opportunity to study the provisions of the bill. However, we are here on the 23rd day of May and a sufficient time has, I think, elapsed to enable those who are interested in this type of legislation to gain an adequate conception of what is contemplated by the bill.
Briefly, the principle involved is the use of the national credit in adjusting the mortgage burden and in providing facilities for refinancing mortgages in the future. The bill offers to the farmer mortgage debtor, and the home mortgage debtor, below 87,000 in principal amount, a reduction in the load, which was assumed in many cases years ago undel more favourable circumstances than now prevail. The companies which become members of the bank will be obligated to write off all arrears of interest with respect to such mortgages in excess of two years' interest.
Second, the debtor will be relieved in cases where the mortgage debt exceeds eighty per cent of the value of the mortgaged property by the writing off of the excess over eighty per cent.
Third, the debtor will be relieved by the adjustment of the future rate of interest on his mortgage in those two classes I have mentioned to five per cent per annum, and an adjustment in the length of the term of the mortgage.
To the mortgage company becoming a member the plan involves that the dominion shall share over the next twenty years to the extent of one-half of the losses involved in writing off the arrears of interest and in writing down the principal, where necessary, to the eighty per cent limit. The debentures of the mortgage bank will be given to the member company, bearing interest at three per cent and running for twenty years, to the extent of one-half the losses involved in the write-down provided for by the bill. With respect to future refinancing of mortgages by member companies, to the extent that the member company takes advantage of the refinancing facilities afforded by the bill for the future, the member company must accept the conditions laid down by the mortgage bank with respect to maximum interest rates and conditions as set forth in the bill.
To the provinces this bill offers an opportunity. For a number of years past-probably for ten years-many of our provinces have felt compelled to legislate interfering with the terms of mortgage contracts. I do not believe that any provincial government has done so willingly; it has felt compelled to do
Central Mortgage Bank
[Stage Direction]
so by the stress of conditions which have prevailed during the past number of years. This bill offers to such provinces an opportunity to end undue interference with mortgage contracts as adjusted under the terms of this act. The bill is designed to warrant the provincial governments or provincial legislatures in exempting mortgages adjusted under this legislation from their provincial legislation which would have the effect of interfering with a contract which had been refinanced by the dominion. Obviously when the dominion credit is used in this manner it cannot be made subject to the possibility of a province impairing the dominion's security. I am certain that the provinces, after studying this legislation, will do their utmost to cooperate in giving effect to its terms, because no one is more anxious than provincial legislators, wiho by virtue of their constitutional power have been closest to matters of debt adjustment and mortgage difficulty, to get the situation regularized, adjusted and improved for the future.
Since this measure became public there has been criticism-strong criticism-from the financial press. I do not know to what extent the financial press may be said to speak for the financial organizations which are invited by this legislation to cooperate. I incline very much to the view, following more than twenty-five years' close association with various aspects of the mortgage problem, that we must move in this matter, and that the way open to us, a country governed by a federal constitution, to move must be through the channel of the voluntary action contemplated by this bill.
It will be seen at a glance that this bill exercises no compulsion upon any province. It exercises no compulsion upon any mortgage lending institution-and this, frankly, for the reason that the authority so to do does not rest with this parliament. Matters of property and civil rights, matters affecting mortgages and their terms and so on, are entirely provincial. In my judgment, therefore, we can approach this matter only through the medium of making available the national credit in terms of public need for what is generally recognized as a great national problem, not only in this country but also in the country to the south.
I do not think I can go much further in dealing with the principle of the bill. Hon. members have done me the honour, I know, of studying it, because many of them have spoken to me about it.
I do not pretend that it is an easy matter, but I believe that within the four corners of this bill we have the opportunity to remedy

very largely the confused, difficult and burdensome situation which exists across Canada with respect to mortgage credit. I am thinking to-day not merely of those who have found it impossible to meet their obligations in the terms of the obligations, and who have been compelled to rely for protection upon various provincial enactments or upon the operation of the Farmers' Creditors Arrangement Act; I am thinking as well of those who undertook a burden in more prosperous times and have struggled and are struggling to-day to carry that burden although it is beyond their economic strength so to do. I know from my correspondence how many hundreds of thousands of our home owners and farm owners look with hopefulness upon the measure which is now before the house for second reading, not as a means of evading their just obligations, but as a means of adjusting their honest burden to the back in a manner which will enable them the more easily to bear it.
Hon. R. J. MANION (Leader of the Opposition) :: Mr. Speaker, my remarks on this occasion will be very brief indeed. I said a few-a very few-words at the time the resolution was introduced by the Minister of Finance (Mr. Dunning). At that time I pointed out that this bill did not do anything for the individual lender or the individual borrower.
Mr. DUNNING; If my hon. friend will permit me-not for the individual lender; but it does, of course, for the individual borrower.


Robert James Manion: I mean, the two combined, in the case of the individual borrower from the individual lender. I pointed out at that time, or in some remarks since then, that a great proportion of the lending in the province of Quebec, for example, is done by individuals rather than companies. The same is true of a great proportion of the lending in other provinces. Well do I remember the time when the people of Canada had not become educated, as they did during the war, to the buying of government bonds, when the only form of investment in the small cities of the west was by way of mortgages on farms or buildings or the homes in the small cities and towns. I believe that condition still obtains to a large extent throughout the country. This legislation offers no help either to the individual who has lent the money or to the person who has borrowed it from the individual lender in that type of case; and as a consequence it is, I think, onesided. True, if the legislation is accepted by a number of good companies, if they attempt to

Central Mortgage Bank
carry out the ideas suggested by the Minister of Finance, it will give relief to certain classes of borrowers. But my information at the present time, which I have obtained largely from the press, is that most of the companies will not agree to go into this deal, at least until the legislation is whipped into better shape.
I have here half a dozen clippings from various newspapers. I do not intend to read them all; I will merely cite the heading in the Toronto Globe and Mail:
Dominion government should hold back bill for mortgage rediscount bank until Canadians everywhere have chance to study the proposals.
I regard that as a fair suggestion. The writers in all these newspapers support, as I support, the principle of getting the lowest interest that can be obtained for borrowers throughout the country. Certainly I am not speaking on behalf of the financial companies. I advocate putting the legislation into such shape that it will be useful; and I submit that at this stage in the session there is no possibility of doing so. I said this privately to some of my hon. friends opposite yesterday when they were arguing, and to my mind rightly, that we should be able to finish the business of the session this week. The minister shakes his head. He did not argue that, but some of his friends did, and I agree with them. By the end of this week the session will have lasted well on towards five months, and I believe that it will be reasonable to adjourn within the next few days if we can clean up the legislation before the house- that is, if it can be dealt with in a dignified and proper manner. But I do suggest that it cannot be done if at this stage there is any attempt to force this legislation through the commons and the other house.
I submit that if this legislation goes to the banking and commerce committee, as it certainly should, it will probably take a month to deal with it there. In my opinion we should have representatives not only of the financial institutions-for whom, let me repeat, I am not speaking-who understand the form of legislation of this kind, 'but also of individuals, if, as is our duty, we are earnestly to attempt to make this legislation useful to all Canadians who have borrowed and who have loaned, to the individual borrower and the individual lender as between themselves, as well as to finance corporations. If this legislation is to be of any real value it must include a number of these corporations. I repeat that my opinion is that in its present form it will not achieve this object.
The fact that our party favours low interest rates is proved by the existence of the Farmers' 7H92-276
Creditors Arrangement Act, which we enacted when we were in power. I entirely agree that within reason we should attempt to bring down interest rates for those who have unfortunately borrowed in the past at times when the products of, say, .the farmers were at a much higher price than they are to-day. Everybody realizes that the farmer Who borrowed money when wheat was selling at SI .50 to S2 a bushel, and now has to pay it back in bushels of wheat selling at 60 to SO cents, is certainly not in the same position to meet his obligations as he was under the price levels which prevailed at the time he borrowed the money. Every one realizes that, we do not need to be told that by hon. members from the third and fourth parties. We also sympathize with the desire. I believe that Mr. Bennett, as leader of the party, promised at the last election that if we were returned to power we would bring in legislation favouring the man in city or town with a mortgage on his home, showing that we also sympathize with the dwellers in the cities and towns who require relief. There is no argument, so far as I know, as to all sections of this house favouring the cutting of interest on mortgages. I say that unqualifiedly, without any hidden thought against it or anything of that sort. I am entirely for it, within reason, so long as we do not demand of loan companies that they operate at a rate upon which they cannot subsist. But I repeat that we cannot in the short time now left make this bill into legislation that will be workable. Suppose it goes to the banking and commerce committee, as it certainly should to be whipped into shape, to have the corrections made in it that legislation frequently does need. I imagine that at the very least it would take a month to hear representatives of corporations and individuals who would come forward, or who should come forward, with propositions to make this legislation useful in its application to the individual lender and the borrower from the individual lender, as well as to the financial institutions and their borrowers.
It seems to me that the clauses relating to urban and rural mortgages require greater separation and clarification than exists at present. I mention that merely as an illustration of what may be required before the banking and commerce committee in dealing with an important matter such as this. I heard some murmurs from hon. members on the other side when I said that the legislation should go before the banking and commerce committee. But if not that committee, before what committee should it go?

Central Mortgage Bank


Mr. McLEAN (Melfort):: The committee of the whole house.


Robert James Manion: The committee of the
whole house is not in a position to deal with legislation of this kind.


Malcolm McLean: My hon. friend has not been attending the meetings of the banking and commerce committee very much this year, or I think he would not make that suggestion.


Robert James Manion: I have done what my hon. friend probably has not done; I have read nearly every page of the evidence before the banking and commerce committee.


Malcolm McLean: I compliment
my hon. friend on his diligence and industry.


Robert James Manion: The hon. member said that I have not attended the committee; as a matter of fact I have-not regularly, because I frankly admit that in my position I have not the time; but I did attend it fairly frequently and I have read every page of the evidence except for the last two or three days.


Malcolm McLean: Good work!


Robert James Manion: I was going to point out that we have to-day before the banking and commerce committee probably the best informed man in Canada on such legislation as this, the man who is going to be in charge of it; I refer to Mr. Towers, the governor of the Bank of Canada. No better guide could we have for legislation such as this than Mr. Towers. I submit that with him there and the Minister of Finance present with his deputy minister and his officers, familiar with this subject, the banking and commerce committee is the only proper place w'here this legislation can be properly dealt with.
Now I may say something which possibly is touching on a subject upon which I should not touch. I do not believe that the Minister of Finance expects this legislation to get through parliament at all this session.


Mr. DUNNING:: Oh, well, Mr. Speaker, I must protest. This legislation is dearer to me than anything I have brought before this house this session.


Robert James Manion: All right; I accept the hon. gentleman's word that this legislation is dear to him, but I submit it got dear to him pretty late in the session. If the hon. gentleman was so anxious to get it here I do not question his word, but I do not believe that he expects to get it through this session.


Charles Avery Dunning: Certainly I do.


Robert James Manion: Certainly it will not get through as far as I am concerned without

proper consideration before the banking and commerce committee or the committee of the whole house. I think it should be the banking and commerce committee, because we cannot hear witnesses before the committee of the whole house. This is probably the most important legislation before the house this session, I doubt if there is anything more important.


Mr. THORSON:: We will stay here a month if necessary.


Robert James Manion: All right; do not worry, we can stay as long as my hon. friend. We have not been hurrying at all; it is my hon. friends opposite who have been trying to hurry. If this legislation goes before the banking and commerce committee, as far as I am concerned all the witnesses who should be called must be heard before that committee and the matter dealt with properly. I am not going to take much more time, but I say that a piece of legislation which includes the guaranteeing by the Dominion of Canada of debentures to the extent of $200,000,000 is of far too great importance for us to attempt to deal with it in what are likely to be the dying days of the session.
In his closing words the minister said that there is to be no compulsion on any of these companies. I know that the legislation does not compel any company to go into it. But if a great many of these companies do not go into it, the legislation will be of no use to the vast majority of borrowers. It will not serve the purpose which the government has in view until it brings in practically all the companies that lend money throughout the dominion.
My submission is that this legislation having been introduced by the minister, having been given a chance to be discussed in the interim, should be held over until it can be thoroughly considered at the beginning of the next session. The very fact that the minister himself, in his opening remarks, when he introduced it, said that he thought there would be a month's adjournment, during which time it could be studied, demonstrates how well he himself realizes the necessity for devoting a great deal more time to the consideration of all the details involved in the measure than the house is now in a position to give it. While standing by the principle of obtaining for all the people of the country, whether on the farms or in our cities and towns, lower rates of interest-I am entirely in favour of that- at the same time I do not believe that there is any advantage in bringing in the legislation at this late hour. If it goes through it will be dealt with in a slipshod manner; for certainly it cannot be properly considered at

Central Mortgage Bank
this stage. I submit that it would be far better to take a little longer time considering the whole matter and for that reason I suggest that the bill should be held over until the beginning of the next session.


Mr. McNEVIN:: May I ask the leader of the opposition (Mr. Manion) whether or not the Farmers' Creditors Arrangement Act passed by the Bennett administration was submitted to the banking and commerce committee?


Robert James Manion: I do not remember whether it was, but if it was not at any rate it was brought down in plenty of time to afford ample consideration of it. It was not brought down in the last week of the session. I had nothing to do with that measure except as a member of the government, and I made reference to it only to prove that our government also desired to bring about low rates of interest for the benefit of the Canadian people.


Mr. R. A. PELLETIER (Peace River):: There is no doubt that the questions involved in this measure are of supreme importance, and we readily subscribe to the view of the Minister of Finance (Mr. Dunning) when he says that this type of bill is dearer to him than to anyone else. The record of our party shows that we have been trying to adjust debts on mortgages. That is a matter to which we have given a great deal of attention, and for that reason we are quite sympathetic to any move in that direction, looking to some relief for the people from the burdensome problem which they are now bearing. We are, however, in agreement with the leader of the opposition (Mr. Manion) when he objects to a bill of this importance being brought down at this late stage. We believe it should be submitted to the committee on banking and commerce where it could receive every attention and be dealt with in proper detail.
I intend to show why, in my opinion, the bill should not now be proceeded with. I say this for the following reasons. In the first place we have no accurate information regarding the problem; secondly, the failure to take into consideration the fundamental principle, namely, ability to pay, is a matter that has not been duly considered; thirdly, the cancellation of provincial debt legislation means putting debtors at the mercy of the mortgage companies, because it is impossible to pay even the eighty per cent required on reduced earnings with seventy cent wheat; and in the fourth place, this measure appears to be an invasion of provincial jurisdiction.


Malcolm McLean: That's good.


Some hon. MEMBERS:: Oh, oh.
71492-276J


René-Antoine Pelletier: I am going to deal fully with the constitutional question. I have a few authorities to substantiate the position I take in that regard, though it may require a good deal of time to put on the record all the facts.
First of all I say that we have not the proper information. I believe I am safe in saying so. In the United States a survey was made by certain interested individuals, notably Mr. Robert L. Owen, former chairman of the committee on banking and currency of the United States senate. There, they have at least got together some sort of table showing the amount of mortgages against the various farm properties in the different states. In Canada, we are at present without any accurate information to enable us to judge exactly what the problem is that we have to deal with. We know that interest rates should be revised downwards and we all believe that debtors should be given protection and as much assistance as possible, but we do not know exactly what the problem is, what companies are involved or anything else which it is necessary that we should be fully aware of before proceeding with a measure of this kind.
I said a moment ago that in my opinion legislation of this kind certainly came into conflict with the British North America Act, and looking up the Bank Act I find the following. I quote paragraph (c), subsection 2, of section 75. No bank may:
Lend money or make advances upon the security, mortgage or hypothecation of any lands, tenements or immovable property, or of any ships or other vessels, or upon the security of any goods, wares and merchandise;


Mr. MARTIN:: This deals with existing
contracts.


René-Antoine Pelletier: I will deal with that
Undoubtedly this section was inserted in the Bank Act for the reason, among others, that it might avoid any conflict with provincial statutes. Those statutes having complete control over property and civil rights, they could not be infringed, and therefore, as a safeguard, this section was put into the Bank Act. That may not be the principal reason but it is one of the reasons for it. We have often stated that we are trying to deal with a national problem, but I suggest that we should reflect that the problem is also being dealt with in different provinces; and while we welcome the assistance which we would get from the federal government through a bill of this kind, at the same time we contend that until we have proper information we should not proceed with the measure. We are anxious to deal with the matter but we
Central Mortgage Bank

wish first of all to have the bill submitted to the banking and commerce committee so that it may be studied in all its details. We do not know exactly what it is that we are dealing with.


Mr. POTTIER:: The Social Credit party
has been doing that for four years-dealing with something it knows nothing about.


René-Antoine Pelletier: I suggest to my hon.
friend that it would be better for the government to refer this bill to the banking and commerce committee, and he should support that suggestion, because he may be accused of dealing with something he knows nothing about. I have no doubt that the efforts of Alberta have practically forced this government's hand to adopt some measures that would tend to relieve the situation.


Malcolm McLean: And now you
are opposing it. You do not want to see anything of this kind done.


René-Antoine Pelletier: I am not opposing it.


Mr. McINTOSH:: You are not doing much harm.


René-Antoine Pelletier: I am trying to arrive
at the best method of handling the problem. My hon. friend says that we have been dealing with a question for four years without knowing anything about it.


Malcolm McLean: Not this question.


René-Antoine Pelletier: Let me tell him that in that four years' experience we have come to appreciate the fact that there are involved in a bill of this kind many considerations which do not seem to be apparent to most hon. members of this house.
The question of provincial jurisdiction is one which we should certainly consider. Two years ago Alberta attempted to legislate along certain lines, and what was the result? Not by letters or by lengthy correspondence, but by telegram, the Prime Minister (Mr. Mackenzie King) insisted that the provincial acts be referred to the supreme court. For substantial reasons best known to the people of the province, Alberta was not unanimous on the question. The matter was referred to the supreme court and one of the arguments used against the provincial legislation was that it was an invasion of federal authority. Surely then it behooves us to be careful, in what we are now undertaking, that we do not encroach upon provincial authority.


Joseph Thorarinn Thorson: Where is there any invasion of provincial jurisdiction?


René-Antoine Pelletier: I have about nine quotations, many of them from statements made by the Minister of Justice (Mr. Lapointe) which I intend to use to support the argument I am making.


Joseph Thorarinn Thorson: Where is there any invasion of provincial jurisdiction in this bill?


Mr. BLACKMORE:: Why not give the hon. member time to talk?


Mr. CAHAN:: Mr. Speaker, it seems only fair that on the second reading of a bill such as this hon. members should allow the speaker full opportunity for its discussion without interruption.


Malcolm McLean: We are only asking courteous questions.


René-Antoine Pelletier: We say this bill provides for payment on a crop share basis. It does not say these payments shall be a distribution of assets after insolvency; on the contrary it provides for payment before insolvency, with a view to preventing such insolvency. Therefore it cannot be said to be bankruptcy legislation. In this connection I intend to refer to the matter of a reference as to whether the parliament of Canada had legislative jurisdiction to enact the Farmers' Creditors Arrangement Act, 1934, as amended by the Farmers' Creditors Arrangement Act, 1935:
In the judgment of Lord Selbourne in L'Union St. Jacques v. Belisle (1) we find, at page 38: "The fact that this particular society appears to have been in a state of embarrassment, and in such a financial condition that unless relieved by legislation, it might have been likely to come to ruin, does not prove that it was in any legal sense within the category of insolvency. And in point of fact the whole tendency of the act is to keep it out of that category and not to bring it into it. The act does not terminate the company; it does not propose a final distribution of its assets on the footing of insolvency or bankruptcy; it does not wind it up. An the contrary, it contemplates its going on, and possibly at some. future time recovering its prosperity and then these creditors, who seem on the face of the act to be somewhat summarily interfered with, are to be reinstated."
Their lordships were clearly of opinion that this was not a case for insolvency legislation, but a local and private matter within the provincial jurisdiction.
Applying this test, I would say that the Farmers' Creditors Arrangement Act is one which might be within the competence of the provincial legislature, for the same reasons, applicable in each province to each individual farmer who finds himself in difficulties, which then applied to L'Union St. Jacques, in order

Central Mortgage Bank
to enable him to carry on and, possibly at some future time, to recover his prosperity. But I cannot in view of the accepted aims and past history of the bankruptcy and insolvency legislation reach the conclusion that parliament, in passing this legislation, did not exceed the domain of bankruptcy and insolvency, to which its jurisdiction is limited. It has set up a charitable or eleemosynary institution, to be established in each separate province by proclamation; such local charities are to be established, maintained and managed under provincial legislation by virtue of 92 (7). The legislation has nothing to do directly with agriculture, with the science, the art or the process of supplying human wants by raising the products of the soil.
I submit this quotation to substantiate the argument I am making.


Paul Joseph James Martin: That case does not help you at all.


René-Antoine Pelletier: In addition to this clear-cut opinion I would also support my contention by the words of the right hon. Minister of Justice himself, as quoted at page 107 of L'Avenir Constitutionnel du Canada, by Mr. Ollivier:
(Translation) In most of the decisions, said Hon. Ernest Lapointe, of the privy council regarding jurisdiction which have gone against the contention of the federal parliament, it has been specially stated-and the matter is so clearly expressed in the section there can be no doubt-that those laws for peace, order and good government must be in relation to matters not coming within the classes of subjects assigned to the legislatures. Surely property and civil rights are one subject which is specifically assigned exclusively to the provinces under section 92 of the British North America Act.
And a little further on, on page 114, I find the following paragraph:
Section 91 of the B.N.A. Act, according to Lord Haldane, confers on the parliament of Canada power to deal with subjects which concern the dominion generally, provided that they are not withheld from the powers of that parliament to legislate, by any of the express heads in section 92.
(Text) It would be possible to give quite a number of quotations in support of my contention; and, as I said, this matter is so important that I believe the necessary time should be taken to put the quotations on record. In the volume to which I referred a moment ago the Minister of Justice is quoted again at page 116, as follows:
(Translation) The general power of legislation conferred upon the parliament of the dominion by section 91 of the act in supplement of the power to legislate upon the subjects expressly enumerated must be strictly confined to such matters as are unquestionably of national interest and importance, and must not trench on any of the subjects enumerated in section 92 as within the scope of provincial legislation, unless these matters have attained such dimensions as to affect the body politic of the dominion.
These words of the Minister of Justice (Mr. Lapointe) which I have just quoted are also taken from L'Avenir Constitutionnel du Canada, by M. Ollivier.
(Text) Here is another striking substantiation of the point I am making; I refer to the words of Lord Haldane, also quoted in L'Avenir Constitutionnel du Canada, by Mr. Ollivier, at page 118:
(Translation) The provincial view prevailed also in the Snider case, where Lord Haldane stated: "It appears to their Lordships that it is not now open to them to treat Russell v. The Queen as having established the general principle that the mere fact that dominion legislation is for the general advantage of Canada, or is such that it will meet a mere want which is felt throughout the dominion, renders it competent if it cannot be brought within the heads enumerated specifically in section 91. Unless this is so, if the subject matter falls within any of the enumerated heads in section 92,_ such legislation belongs exclusively to provincial competency."
(Text) There is also the question of the social legislation which was referred to the supreme court, and from the texts of the various judgments rendered in that connection, I quote the following:
That the dominion may impose taxation for the purpose of creating a fund for special purposes and may apply that fund for making contributions in the public interest to individuals, corporations or public authorities could not as a general proposition be denied. Whether in such an act as the present, compulsion applied to an employed person to make a contribution to an insurance fund out of which he will receive benefit for a period proportionate to the number of his contributions is in fact taxation, it is not necessary finally to decide. It might seem difficult to discern how it differs from a form of compulsory insurance, or what the difference is between a statutory obligation to pay insurance premiums to the state, or to an insurance company. But assuming that the dominion has collected by means of taxation a fund, it by no means follows that any legislation which disposes of it is necessarily within dominion competence.
It may still be legislation affecting the classes of subjects enumerated in section 02, and, if so, would be ultra vires. In i t her words, dominion legislation, even though it deals with dominion property, may yet be so framed as to invade civil rights within the province, or encroach upon the classes of subjects which are reserved to provincial competence. It is not necessary that it should be a colourable device, or a pretence. If on a true view of the legislation it is found that in reality in pith and substance the legislation invades civil rights within the province or in respect of other classes of subjects otherwise encroaches upon the provincial field, the legislation will be invalid.


Vincent-Joseph Pottier: What is the pith and substance of the legislation now before the house? In what class does it come?
Central Mortgage Bank


René-Antoine Pelletier: It does not provide for the distribution of assets, and for that reason it cannot be held to be bankruptcy legislation, over which this parliament has authority.


Vincent-Joseph Pottier: But what is it?


Mr. SPEAKER:: Order. The hon. member should not interrupt.


Malcolm McLean: They do not know themselves.


Walter Edward Foster: Order.


René-Antoine Pelletier: It continues:
To hold otherwise would afford the dominion an easy passage into the provincial domain. In the present case their Lordships agree with the majority of the Supreme Court in holding that in pith and substance this act is an insurance act affecting the civil rights of employers and employed in each province, and as such is invalid.
In the matter of decisions of the privy council the hon. member for St. Lawrence-St. George (Mr. Cahan) said this on April 5, 1937, as reported in Hansard:
This opinion if it is valid raises grave doubts as to the validity of appropriations by this dominion parliament of current revenues for such objects as old age pensions, unemployment relief, or for giving assistance to provincial undertakings of any description. If these appropriations are illegal and beyond the competence of the dominion, grave consequence may follow, and the government would be well advised to obtain a direct decision upon this issue at a very early date.
In view of the present situation and the decisions and opinions which have been expressed from time to time by the major courts, both in this country and in Great Britain, I believe that before we attempt to pass this type of legislation we should be very careful to assure ourselves that we are not invading provincial rights or provincial jurisdiction. That is something which I am sure all hon. members will agree to safeguard. I feel that while supporting the principle of a bill of this kind, nevertheless we are bound to secure more information and to hear from all who may be interested. I feel that the question should be submitted for reference to the Supreme Court of Canada.
In connection with the Alberta legislation we find that this telegram was sent by the Prime Minister (Mr. Mackenzie King) to Premier Aberhart on August 15, 1937. There was then in the mind of the Prime Minister a doubt as to whether or not certain legislation constituted an invasion of federal jurisdiction, and for that reason he suggested to

the premier of Alberta that such legislation should be referred to the supreme court. He did so in these terms:
Before submitting question for decision of governor in council would appreciate your letting me know whether your government would be willing to facilitate hearing of a reference to Supreme Court of Canada regarding validity of bills Nos. 5, 6 and 9 and to undertake pending determination of such reference not to take any steps towards enforcement of any of said measures.
The reference would be made under section 55 of the Supreme Court Act which provides for reference by the governor in council of important questions of law or fact touching the powers of the provincial legislatures.
Then after he had received an answer from the premier, the Prime Minister sent a telegram to the premier on August 17, 1937, indicating his decision to refer the matter to the supreme court. That telegram reads in part as follows:
2. We are advised that there is no possible doubt that the measures purporting to control banking and credit by a body or bodies appointed by the province of Alberta, and depriving individual citizens of their established right of appeal to the courts are beyond the powers of the provincial legislature and constitute an infringement upon the recognized powers of the dominion. The fact that under the constitution from which both the federal and the provincial legislatures derive their jurisdiction, the field of money and banking falls to the federal authority, has never been seriously questioned in the seventy years since confederation.
And then, paragraph 4:
4.	The issue in the present instance is that a direct attempt is being made to infringe upon a field of jurisdiction universally recognized as falling to the dominion, and to buttress this action by denying any question of the constitutionality of this section in the courts, except, I gather from your telegram, after acceptance of such illegal infringement.
5.	A reference to the Supreme Court of Canada coupled with an agreement by your government to refrain from action pending the decision, would have met the immediate case.
The point is that while the Prime Minister seemed to be in agreement with the principle of the legislation the government of Alberta was attempting to pass at that time, still, as he himself said clearly and plainly, he felt it his duty to maintain the sacred rights, as he called them, of provincial and federal jurisdiction.
There is no mention here that the Prime Minister was not in agreement or in accord with the principle of the bills he intended to refer to the supreme court. As a matter of fact we know that time and again the Prime Minister has expressed the opinion that there should be a lower rate of interest. He has also said that usury, once in control, will

Central Mortgage Bank
wreck any nation. But when an attempt was made by a provincial legislature to deal with a problem which in their opinion affected usury in money matters, the Prime Minister did not wait to write about it but sent a telegram and carried on correspondence in that fashion. Finally, upon recommendation of the Minister of Justice to the cabinet, the legislation was disallowed.
And so we know that on many occasions in the past legislation of this kind has been questioned in the courts. For instance, we have the words of the Minister of Justice himself, which I have placed on record, to substantiate the argument I am making to-day. And for the Minister of Finance to say that this is simply a voluntary scheme does not make one iota of difference. The question is not whether the act will become operative in a province, or whether the powers given in a statute will be questioned when it is in operation. The fact that it is on the statute book, and that, provided certain conditions are fulfilled, it does give power, are to my mind clear indications that this legislation constitutes an infringement upon provincial authority.
It would be easy for us to relate what has been done in Alberta in connection with debt legislation. Those of us who come from Alberta have felt that there has been great need of a revision of interest rates and an adjustment of debt problems. But we cannot subscribe to a measure which does not take into consideration the factor of ability to pay. In a measure of this kind the debtor, in the event of his being unable to meet his obligations, immediately becomes the prey of the creditor. We know that because of the present prices of farm products, the provision for seventy cent wheat, and like matters, it is not possible for a farmer-and particularly one in the west-to meet his obligations upon a basis of this kind. Until the measure takes into account the ability of the individual to pay, then I say we should proceed with caution, because it can have no effect other than to give the mortgage company a greater hold upon the debtor.
We believe that this is a measure of great importance, and that we should have the time at our disposal to take every detail and item into consideration. For example, we should know how many farms and homes are mortgaged in each province in Canada. We should know exactly what companies are dealing with these matters. We should know about the mortgage companies, what business they are doing, in what part of the country they operate, and where their present loans are
made. We should know, too, how this measure proposes to deal with debts which already have been voluntarily wiped out by certain mortgage companies.
We are told that for the losses they suffer they will regain fifty per cent from the federal treasury, and that the second fifty per cent will be regained in this manner: they are given shares bearing a certain interest rate in this new corporation. So that after a period of time-


Charles Avery Dunning: I know the hon. member wishes to state the facts correctly. The member company will itself lose fifty per cent of the write-off. For the other fifty per cent it will receive debentures of the mortgage bank amortized over twenty years. It will not receive any shares, or anything of that sort.


René-Antoine Pelletier: The debentures will bear interest at the rate of three per cent, and therefore over a period of time the interest which the companies will receive from the debentures will make up almost fifty per cent of the loss they have suffered, so that in the final analysis they will suffer no loss at all. That is one point upon which the house is not clear. No information has been given to the house as to how the bank is to operate.
Believing as I do that a measure of this kind should be submitted to the banking and commerce committee for thorough discussion, and for the three reasons I have given, I move, seconded by the hon. member for Calgary East (Mr. Landeryou):
That the bill be not now read a second time but be referred to the standing committee on banking and commerce.


Charles Avery Dunning: Mr. Speaker, while I am not able to put my hand on the rule at the moment, I doubt very much whether the amendment is in order. Bills are not referred to the standing committees of this house until they have passed the second reading.


Charles Hazlitt Cahan: There is a precedent for :t-in exceptional cases.


Charles Avery Dunning: I merely raise the point now in order that his honour may look into it. I submit that the decision whether or not to send the bill to the banking and commerce committee should be made after the second reading, not 'before.


Mr. LAPOINTE (Quebec East):: Mr. Speaker, the precedents to which the hon. member for St. Lawrence-St. George (Mr. Cahan) alludes are motions that the subject matter of a bill be referred to a committee for consideration and report before second reading.


Charles Hazlitt Cahan: I think that is correct-
439S
Central Mortgage Bank


Ernest Lapointe: But the bill itself, if it is sent to a committee, must first be read a second time.


René-Antoine Pelletier: I am in your hands, Mr. Speaker. If it is a question of a mere technicality as to the actual wording, I am sure your honour will advise me of the correct wording to use in my motion.


Charles Hazlitt Cahan: Mr. Speaker, I have spent some time in reading and re-reading this bill and I confess that on the face of it it is quite impossible for me to ascertain the breadth of the implications of a bill such as this. When the Minister of Finance (Mr. Dunning) was moving the second reading I noted that the gist of his statement appeared to be that the principle of the bill is the use of national credit in refinancing the mortgage burdens of individual mortgagors, which were undertaken in more prosperous times but the service charges of which in times of depression the mortgagors allege that they are unable to carry. That seemed to me, as I jotted it down at the time, to be the substance of his remarks. But the same considerations of policy apply to all long-term indebtedness in a country such as this, and therefore in establishing a precedent, such as this bill would establish, one must take care that we do not establish a new precedent for the dominion, whose credit is not at all times beyond question, assuming all sorts of indebtedness, provided that it is of a long-term nature, and thus open the door to a deluge of this kind of legislation. The policy in the past has been to allow individual creditors or companies to deal by compromise with individual debtors, and that policy has prevailed in this country thus far. I doubt whether it is wise now, without further consideration, to depart from that policy. Certainly this bill in its implications expresses the most extreme legislation ever brought before this parliament. It is a very, very serious measure.
The minister says that the bill makes available national credit for a great public need. That may be doubted, I think. The bill makes available public credit for private and personal needs rather than for public needs, and on that ground it should receive very serious consideration.
The proposed central mortgage bank will not be a "bank'' in the sense in which the word "bank" has been and is now used in Canadian legislation, and this new use of a word to designate a central mortgage company or corporation is confusing and, therefore, to be deplored. This so-called mortgage bank
[Mr. Cahan.J
will be another agency of the dominion government, organized chiefly for the purpose of financing the operations of loan, trust and insurance companies, in respect of loans secured by mortgages, in principal sums of any amount on farms, and in sums not exceeding $7,000 on other homestead properties.
Those companies which become members of the proposed "mortgage bank" assume certain responsibilities which may well deter responsible solvent companies from becoming members, and, on the other hand, this bill encourages companies which are on the verge of insolvency to load their liabilities upon the dominion treasury, as they will be enabled to do by this legislation.
The member company, it is true, must first cancel arrears of interest exceeding two years upon each of its existing mortgages, and then reduce the principal sum of each such mortgage to eighty per cent of the fair value of the property as hereafter appraised under the terms of the proposed act. The principal sum of each mortgage will then represent eighty per cent of the appraised value, plus arrears of interest, not exceeding two years. The principal sum of the new mortgage, as thus ascertained, will be payable with interest not exceeding five per cent per annum over a period of twenty years, or less as agreed with the government agency, by regular equal instalments of interest and principal sufficient for complete amortization of the mortgage within twenty years, or within the lesser term agreed upon with the central mortgage bank.
It is true that there are considerations given to induce these companies to become members:
1.	The central mortgage bank will assume liability to each of the companies for fifty per cent of the aggregate sums written off when the mortgages held by that company are adjusted, and issue to the company nontransferable twenty-year debentures, secured by the credit of the dominion, bearing interest at three per cent per annum, of which the principal will be paid semi-annually on an amortization plan.
2.	The central mortgage bank may buy at par or face value obligations of a member company bearing interest at 3i per cent up to the total amount of the mortgages outstanding after adjustment by that company.
3.	The central bank may subscribe for, buy and sell the preferred stock of member companies.
That, certainly, is a questionable power and should be very seldom exercised. For this

Central Mortgage Bank
government to invest in the stock of loan and mortgage companies is a power which deserves in each case very serious consideration. The government w'ill invest $10,000,000 in the capital of the central mortgage bank, which may also issue debentures fully guaranteed by the government as to principal and interest to a total of $200,000,000. This is a prospective additional liability of $200,000,000 which may be assumed by the dominion government to pull certain of these companies out of their financial liabilities.


Charles Avery Dunning: Oh, no.


Charles Hazlitt Cahan: This policy, if extended to other companies engaged in other forms of business which are equally deserving of government support, will involve the assumption by the government of additional obligations, to an enormous extent.
The government's proposal, it is true, will become effective only if the loan, insurance and trust companies consent to cooperate with the government, and I doubt-although my personal opinion may not be of very much value-whether the stronger companies will consider the proposal of the government, to share one half of their present losses, a sufficient inducement for them to tie their hands in the management of their mortgage business for an indefinite period of time. That is a grave consideration for those companies.
It is also doubtful, I suggest, whether it is a sound policy to apply the same rate of interest to all such mortgage loans in Canada, because of the additional cost of handling loans at distant points, and because of the variations which must always exist in an appreciation of the security of individual loans when made. Experience has shown that the cost of managing farm loans in western Canada is very much greater than that of managing loans on residential properties in Montreal and Toronto, or in the east generally. This may result in the lenders concentrating their efforts to recover their money from certain districts and to seek mortgages only in the most favoured parts of the country, so that those living at distant points and in small urban centres, as well as the farmers in the west, are likely to be deprived in the future of any hope of obtaining money on mortgage under such a universal lending system.
It may be that these loan companies and insurance companies will secure the liquidation of outstanding mortgages, but there is no power in this parliament to compel them to continue to make loans under the conditions in this bill expressed. In those parts of Canada where prospective mortgagors depend1 upon 7H92-277
loans from individual investors, the results, as the leader of the opposition (Mr. Manion) has suggested, may prove very prejudicial indeed to the interests of borrowers.
I do not see how loan companies, for instance, who obtain their funds by the issue of their own short-term debentures-as some of the leading companies do-which mature in from one to five years, can possibly face the situation when their liabilities are short-term obligations and their assets with which to meet their liabilities are long-term government securities upon which it is impossible for them to realize by sale-because, as I understand the bill, these long-term debentures of the government are to be non-transferable securities.


Charles Avery Dunning: That is, so far as those issued for the loan are concerned.


Charles Hazlitt Cahan: Quite so; that is what I am dealing with. Moreover, the task of revaluing the immense number of mortgages, coming under this plan, would present almost insurmountable difficulties if such revaluation is to be made within a reasonably short period.
The policy of amortizing a loan in full in twenty years creates difficulties. The farmer, or home owner, who has not been able to meet his obligations in the matter of interest and taxes, regardless of reduction of capital, at from six to eight per cent interest, could not hope to meet the interest and principal payments on his newly adjusted loan at the rate of ten per cent per annum, which rate, or something near it, would necessarily apply during the earlier years. That would be five per cent for interest and five per cent for amortization of principal. If he could manage this, the principal would, of Course, be reduced by five per cent each year, and the annual interest charge of five per cent on the remaining balance would become less and less as the years go by. No immediate relief of the burden of the mortgagor is proposed in this bill as I understand it. But can the owner who cannot now meet his annual interest charge manage to meet in each month both interest and amortization under the proposed scheme?


Charles Avery Dunning: That is, the urban owner? He is doing that now under the National Housing Act.


Charles Hazlitt Cahan: He is doing it to a limited extent under the National Housing Act.


Charles Avery Dunning: On a wide scale.


Mr CAHAN:: It is to a very small extent in comparison with the number of mortgages now outstanding. That is one reason why I

Central Mortgage Bank

think this bill should go before some committee in order that we may have men there who could give evidence on oath as to the actual facts with regard to mortgage securities now outstanding. I tried to form some opinion, by my opinion may not be valid. I suggest that the insurance companies alone must have about $350,000,000 or more in mortgages now outstanding. It is possible that the standard mortgage and loan companies may have an equally large amount. I do not know, but I do think-


Charles Avery Dunning: I have the figures here.


Charles Hazlitt Cahan: Well, the hon. gentleman will have ample time to produce them. Further, I think they should be produced before a standing committee or a select committee of the house rather than before the committee of the whole house because, while figures are figures, to understand them we need some evidence in relation to them, and reliable evidence can be given only by representatives of the mortgage and loan companies of Canada. I am putting this question: Can the owner who cannot now meet his annual interest charge manage to meet in each month both interest and amortization under the proposed scheme, inasmuch as on the unpaid home loan the member company will be required to collect monthly an amount sufficient to cover interest, amortization of principal and taxes?
It would probably be easier to collect interest on mortgages in Canada if it were collected monthly instead of half-yearly, but it does not seem probable that a mortgagelending company could afford the clerical cost, including stationery, postage, collection of arrears and so on, of collection on a monthly basis. Certainly if the loan companies believed this to be feasible they would have adopted the practice years ago.


Charles Avery Dunning: They are doing it now.


Charles Hazlitt Cahan: Very few of them. I should like to know the name of one leading company that does that generally as a matter of policy.


Charles Avery Dunning: But under the National Housing Act I can assure my hon. friend-


Charles Hazlitt Cahan: I am not dealing with the National Housing Act; this bill does not take in loans under that act. This bill deals with loan and mortgage companies doing business throughout Canada.
Mr. DUNNING; So does the National Housing Act.
fMr. Cahan.]


Charles Hazlitt Cahan: To a very limited extent. If the hon. gentleman will reserve his fantastic suggestions-


Some hon. MEMBERS:: Order.


Charles Avery Dunning: I merely happen to know the facts, and my hon. friend did not have them.


Charles Hazlitt Cahan: I am not dealing with the housing act at all. That is of very short duration and there has been a limited experience under it. I am dealing with the outstanding loans of mortgage companies and insurance companies and other concerns of the kind, which must amount to-well, I do not know, but say $750,000,000.


Charles Avery Dunning: You won't let me answer.


Charles Hazlitt Cahan: I do not think the hon.
gentleman is in a position to answer accurately. If he had been he would have given the information on the two occasions on which he had ample time to discuss the measure in detail, and now he can reserve his announcements until we go into committee, when there will be ample opportunity to reply.
If a mortgage company has to collect one-twelfth of the taxes from the borrower each month, it must assume an obligation to pay the taxes, and this would mean an additional advance in every case in which the loan was not made immediately after one year's taxes had become due and their payment made by the borrower, or applicant for a loan.
While membership is optional with a lending company to decide, yet companies may not have perfect freedom in the matter, inasmuch as companies might well believe that they are more or less forced to join this scheme, even against their better judgment, rather than incur the disfavour of the government agency. It is well-known that the Dominion Mortgage and Investments Association includes representatives of the leading loan companies, life insurance companies and trust companies, and it would be interesting to learn whether and to what extent they have been consulted in the preparation of this bill.


Charles Avery Dunning: Not at all.


Charles Hazlitt Cahan: Well then, it is evident the bill emerged unassisted from the brain of some inexperienced "new dealer" whom the Minister of Finance has called to his aid. In any case, as a leading financial journal suggests, it is a "potentially voracious infant."
Who has demanded this bill of the Minister of Finance? No doubt every lending

Central Mortgage Bank
440!
company has at least a small percentage of its investments in default; but to provide for the adjustment between the lending company and its defaulting borrowers, why should it be deemed necessary to provide, as a sine qua non for the application of this measure, that a compulsory adjustment and revaluation should be made of all mortgages, both good and bad, while certainly, of the standard loan companies and insurance companies, it is doubtful whether ten per cent of their mortgages are at present in default?
Why should the government assume financial responsibility for one-half of the write-off of all losses incurred by those companies whose directors and officers, by lack of foresight and reckless management, have unwisely invested the funds of their bondholders and stockholders? Which of these companies have urged that the government should assume their liabilities as proposed in this measure?


Charles Avery Dunning: None of them.


Charles Hazlitt Cahan: Well, then, this is a case
of sending out and compelling guests to come in to the wedding feast. Certainly it is without precedent. Have the individual investors of the several provinces proposed that they should hereafter be eliminated from the investment field? And, speaking generally, on what grounds is the government justified in imposing upon the general public one-half of the ascertained liabilities of one class of debtors, without also assuming the liabilities of all classes of debtors by establishing in Canada a full-fledged communistic regime? This measure is far advanced towards the adoption of such a policy in respect of all such liabilities throughout Canada.
It is provided in this bill that the board of governors of this central mortgage bank shall include the governor and deputy governor of the Bank of Canada, who shall also hold office respectively as governor and deputy governor of this central mortgage bank; and that the deputy minister of finance, who is also a director of the Bank of Canada, shall also be a director of the central mortgage bank; while the assistant deputy governor of the Bank of Canada shall also be assistant deputy governor of the central mortgage bank. These provisions all serve to emphasize the prospective close connection between the Bank of Canada and the Central Mortgage Bank, and to create a public impression that the Bank of Canada can be utilized and is about to be utilized for purposes of national policy so far in excess of its proper functions as to encourage dangerous abuse of the Bank of Canada's powers.
The proposed board of governors, although some of them are experts in the banking business, have admittedly no experience in and no practical knowledge of the mortgage business. Under the conditions prescribed in paragraph 2 of section 8, it would appear that no person experienced in the mortgage business is likely to become a director of the central mortgage bank. We are likely to have a powerful new government institution operated and managed by novices who have no experience and no previous training in the mortgage business.
Certainly the measure is so novel and yet so wide and complex in its terms that it seems advisable that, as some of my colleagues have suggested, it should be referred to a special select committee or to a standing committee of the house where the evidence of all interested parties can be taken and where the merits and demerits of its provisions may be studied with greater care in the light of the evidence that may be elicited by that committee.


Mr. D. G. ROSS (St. Paul's):: There is no doubt that legislation of this kind is necessary in Canada, and it has not become necessary only within the last two or three months; the need for it has been apparent for a good many years. This government should have been thinking about this legislation for the last four years, instead of introducing it in the dying days of the present session when there is no opportunity for proper discussion.
It is true that there has been a great deal of voluntary and a certain amount of forced adjustment of mortgages throughout Canada. It is also true that there has not been sufficient mortgage adjustment. Reasonable creditors and honest debtors have been endeavouring to get together for this purpose, and as a consequence a good deal of debt has been adjusted. If an honest debtor borrows money, with or without security, he expects to pay it back. The fact that the asset which represented his security has been wiped out does not relieve the honest debtor of his moral obligation to pay the debt if he can. If the circumstances are such that the honest debtor would be crippled by attempting to pay in full, the reasonable creditor will adjust the debt. Many of our difficulties have been brought about by unreasonable creditors and unreasonable debtors. A great deal of difficulty has been caused by unreasonable or unjudicious loans in the first place, and by a desire to exact the last pound of flesh, arising out of the necessity on the part of the creditor of maintaining his solvency. It seems to me that any legislation dealing with this matter
Central Mortgage Bank

must keep in mind the desire to maintain a high moral level. We have had legislation such as the Farmers' Creditors Arrangement Act, which was supposed to be only a temporary measure, and one has only to read Hansard to see the difficulties which have been consequent upon this legislation. We have had moratoria and other legislation of the kind on the part of the provinces subsequent to the enactment of the Farmers' Creditors Arrangement Act, and we have seen advantage taken of this legislation both by creditors and by debtors. If a creditor is without reasonable assurance that his principal will be repaid, irrespective of legislation he is not going to lend his money. This is the case to-day in some parts of Canada. If we look back to some of the causes of the present position of the private debt burden, we find mistakes that were made both by lenders and by borrowers. Many lenders and borrowers did not properly anticipate the future. The lender was willing to lend at high rates of interest on inflated values, and the borrower was anxious to borrow under those conditions in the prospect that he would be able to make sufficient profits to take care of the price he had to pay for the money. They were botl willing, but high taxes and low income returns increased the burden and decreased the ability to pay, with disastrous results both to the borrower and to the lender. Under these circumstances it is necessary and proper that the plight of both borrower and lender should be taken into consideration and government aid of some kind given. But we must remember that if government aid is to be given, the people of Canada must pay for it. Someone has to pay. On the other hand if this accumulated burden can be lightened there will be in consequence a general revival of business which will benefit all the people, and so the government is justified in the contribution thus made.
I am in favour of the general principle of the bill, but not of the attempt under the bill to control future interest rates. Rigid control of future interest rates would mean a drying up of the wells of money for the more speculative classes of loans.
Then there is complaint that it is difficult to get mortgage money except in large centres. This bill will aggravate that situation. The machinery for the adjustment of interest rates is with us in Canada to-day through the Bank of Canada, through its control of the quantity of money. It can and will control this, therefore it is bound to control interest rates- not by establishing a fixed rate, but by recog-

nizing a general rate which from time to time is considered good for the people of Canada.
This bill to my mind does not meet the needs of the present time. It is likely to become another Farmers' Creditors Arrangement Act, with all the consequences which followed that measure. It should be sent to the banking and commerce committee to be properly discussed. The formation and setting up of a central mortgage bank will have just as far-reaching consequences as the formation of the Bank of Canada had, and calls for just as careful consideration by all parties interested as was given to the formation of the Bank of Canada. There is no doubt about the present need for this organization; as I said before, it has been obvious at least since 1935.
The bill, as has been said before, is applicable only to companies which decide to become members of the bank. I think there will be very few that will become members. Moreover, only those mortgagors whose mortgages are held by member companies will receive the advantages the measure seeks to provide.
What are the advantages to the companies on an injudicious loan? Suppose a mortgage claim, including interest, is $4,000, and the present value of the property is S3,000. The write-down would be to 80 per cent of the present value, or 82,400. The write-off would therefore be SI ,600, and the company would receive half of that amount, or $800, in government bonds. The result would be that on a loan on which it would have lost $1,000, the company now has a mortgage of $2,400 and $800 in government bonds, or a gain of $200.
What about the mortgagor? He benefits to the extent of 81,600. But how about the unfortunate mortgagor whose mortgage is held by a non-member company? He is at a disadvantage. There is direct discrimination under this bill to the extent of SI,600 as between those two mortgagors. It is true that all the mortgagors to the member company will benefit by the reduction in the interest rate and the write-down under this legislation. But what about the other mortgagors whose mortgages are held by non-member companies?
Again, what is the advantage to the company? I have some figures, slightly altered in proportion, which are estimated to be fairly accurate, with regard to one life insurance company. If this company becomes a member of the bank there will be a writeoff, in round figures, of 82.000,000, of which the company would get half in government

Central Mortgage Bank
bonds, or $1,000,000. They would bind themselves to an interest rate of five per cent in future. They would lose in interest by the write-down an annual amount of $200,000. They would not become a member of the bank. As a matter of fact the people who would lose would be the policyholders of this company, because this would mean a very large reduction in its profits. This company has already adjusted its mortgages two or three times with respect to both interest and write-down. Even if the company were offered the bait of getting back the write-off that has already taken place, to which I should think they should be entitled, there would not be sufficient inducement to the company to make it desire to become a member of the central mortgage bank.
There is no desire on the part of the majority of mortgagors to ask for the forgiveness of their debt. Why then should the bill be so comprehensive as to force this adjustment at the expense of the policyholders of Canada? To substantiate what I said a few moments ago, I should like to point out that the premium rates on life insurance policies [DOT] are based on the cost of doing business, the life expectancy of the policyholders and the interest rate that can be earned on money invested. The interest rate that most companies consider necessary in order to carry on is 3i per cent. The cost of doing mortgage business runs between one and one and a half per cent, not taking into account any losses which may be incurred. On properties adjusted on the monthly amortization plan over a twenty year period there will be an added cost of at least one-quarter of one per cent, though it is possible that the losses under the monthly payment plan may be less than under the present system. It simply means that this company could not afford to become a member; or, if it did, it would no longer consider it worth while to invest money in mortgages but would invest in bonds and other securities of the kind.
Now I should like to give a few figures with regard to life insurance in Canada. Under the industrial plan we had in this country at the end of 1937 some 4,012,358 policies amounting to $895,299,984, or an average of $233 per policyholder. On the ordinary plans there were 2,470,064 policies in force amounting to $5,178,127,114, or an average of $2,096 per policy. These are the people who are going to bear the burden of this mortgage readjustment. The companies have some $417,238,000 invested in mortgages and sales agreements in Canada, and the scaling down of the interest rate which would take place under this
scheme if these companies became members would amount to $4,172,238. That is the annual interest loss they would suffer by becoming members. So that they will not become members of the bank if the bill remains in its present form.
Then the act provides that if a province passes legislation satisfactory to the central mortgage bank with respect to the mortgages adjusted, the member company shall be obliged so to adjust mortgages in that province. If in any year subsequent to a company becoming a member restrictive legislation should be passed, that company would have no protection or guarantee with respect to such mortgages as had already been adjusted. Again the companies could not possibly enter into a scheme of this kind under those conditions, because in the meantime they might have made further loans on the new basis.
Then the central mortgage bank must make the appraisals, of which there will be thousands. Where are we to get all the appraisers who will be needed? I do not think we have enough of them in Canada at present to take care of the situation. There will also be appeals to be heard; we will have thousands of appeal boards all over the country. One company I have in mind might require anywhere from one thousand to fifteen hundred men on these boards in one province, and they must pay these men. Of course the government pays all the other members of the appeal boards, but believe me we are going to have plenty of appeals. In addition there is no doubt that there will be general dissatisfaction with the appraisals that are made, and how long will it be before the mortgagors will demand the right to appeal also? At present, with the bill as it stands, only the companies have the right to appeal, but before long the mortgagors will insist on that right also. The tendency of appraisals is bound to be downward, with consequent depreciation of property values all over the country. I do not see any other possible result. A man who has his house appraised will try to have the appraisal low, and immediately the property next door will take on the same value. Low values are to the advantage of the debtor.
To sum up, in my opinion the bill does not meet the need at the present time. It discriminates against individual classes of mortgagors, and will force adjustments in many cases where they are not necessary. The other day I met a friend of mine on the street who said, "Isn't it kind of the government to try to give me some money?" He went on to
Central Mortgage Bank

say, "The company have adjusted my mortgage, and I am quite satisfied with the rate of interest. I have a S6,000 mortgage, though the value of my property has depreciated to $5,000. As a matter of fact I am quite willing and able to pay the debt and the interest as it has been adjusted, but what would you do if you were me? I understand that my mortgage can be adjusted to eighty per cent of the present value, which would be $4,000; in other words I can get a present of $2,000 from the company and the government if I decide to take it." That is the situation under this scheme. The only people who are going to be stuck, as this gentleman said, are the policyholders of the company.
As I say, this bill does not meet the present needs. I think it is simply designed to fool the public. I protest against its being passed in its present form. I do not think this is anything more or less than a plain, ordinary vote-catching measure, put out on the dying days of a session. The consequences being so far-reaching, the bill should be most carefully and thoroughly discussed. After all, those who are managing the affairs of life insurance companies have in their trust enormous funds of policyholders-and when we speak of the policyholders we mean, of course, the public. Those policyholders have the right to be heard through the managers of the insurance companies.
I cannot express adequately my views respecting the move made by the government in bringing in a bill of this kind without having first consulted representatives of policyholders. There is no doubt that there is need of some readjustment. I realize that there are many people even in my own constituency who need and are deserving of relief of some kind. I am in favour of giving it to them, but this bill will not help them; on the contrary it will only get us into a sad mess of grief. It is ill-advised, and, as I have pointed out before, no life insurance company can afford to enter into the proposed agreement; so that under this measure it will be impossible to make any adjustment in respect of mortgages totalling a value of $417,000,000.


Walter Edward Foster: With reference to the
amendment of the hon. member for Peace River (Mr. Pelletier), unless the hon. member wishes to make any further observations, I am now ready to render my decision.


René-Antoine Pelletier: Mr. Speaker, on the
point of order, I find that standing order 75 is in these words:
75. Every public bill shall be read twice in the house before committal or amendment.
I Mr. D. G. Ross.]
I realize, therefore, that my amendment would be out of order, and therefore I ask leave to withdraw it. I shall take the opportunity to move it again when the house is in committee on the bill.


Walter Edward Foster: Amendment withdrawn.
Hon. CHARLES A. DUNNING (Minister of Finance):	Mr. Speaker, I should like to
say a word at this time which I believe will facilitate discussion of the bill. I had no intention, of course, of moving the bill to the committee on banking and commerce before second reading. That always follows the second reading of a bill. But after a reasonably full discussion on the motion for second reading, and after the bill has been given second reading, it is the intention of the government to refer the bill to the committee on banking and commerce.
If I am permitted to say so, however, I do not agree with those who think that a month's time will be necessary to investigate the matter before the committee on banking and commerce. The government believes that if there is a sincere desire to pass a measure of this kind it can be put through in a reasonably small number of sittings of the committee. Representative people can speak for a crowd. We do not need twenty witnesses to tell the same story, and I believe it can be effectively done in that way.


René-Antoine Pelletier: Speaking to the point
of order, if the government feels that it should-


Charles Avery Dunning: There is no point of
order.
On motion of Mr. McLean (Melfort) the debate was adjourned.
At one o'clock the house took recess.
The house resumed at three o'clock.



VEGETABLE OILS


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, if I might have the unanimous consent of the house I should like, before the orders of the day are proceeded with, to make a statement with respect to a matter about which I have frequently been questioned by hon. members vitally interested, and that is the reference in the budget address to the report of the tariff board with respect

Loan oj S750,000,000
to vegetable oils. I indicated at that time that the government of the United Kingdom had been communicated with in regard to the matter. Our original communication through the High Commissioner for Canada in London was forwarded on April 18, and the final reply was received on May 17. It was necessary in view of the nature of that reply to communicate again with the United Kingdom government to ask their permission to make public the two major relevant communications, because I felt sure that the members of the house would desire to have before them the actual communications. That permission was received only this morning.
I should have stated that in addition to our communication of April 18, which, of course, was by cable through the High Commissioner for Canada in London, the complete report of the tariff board was also forwarded at the same time by as fast a mail as could be secured. So that the British government had before it all the elements as revealed by the tariff 'board report in giving consideration to the matter. I shall not burden the house or Hansard with the whole communication from the United Kingdom government, because I propose to ask the house that both communications be printed in the votes and proceedings of to-day in order that they may be available to all hon. members. I can, however, indicate the conclusion come to by reading the last paragraph of the letter of May 17 from Sir Thomas Inskip to the Hon. Vincent Massey, High Commissioner for Canada in London. Sir Thomas Inskip says:
We have regretfully come to the conclusion that, for the reasons set out in the memorandum, it would not be practicable for us to concur in the proposed excise taxes, nor in the proposed adjustments of customs duties in so far as they conflict with the trade agreement of 1937. I would, however, add that we realize the special considerations affecting the Canadian dairy and live stock interests out of which the proposed action arose and if any other suggestions could be put forward which would not have the same difficulties from our point of view, we should, of course, be very ready to consider them.
The memorandum is attached, of course, and, if the house consents, will be printed in the voles and proceedings of to-day. There will, of course, be afforded ample opportunity for discussion, if necessary, on some occasion when we are going into supply, but in the meantime I deemed it desirable that hon. members should have before them the complete documents in preparation for any later discussion they might desire.

[Stage Direction]
The house resumed from Monday, May 15, consideration of the motion of Mr. Dunning for the second reading of Bill No. 93, to authorize the raising, by way of loan, of certain sums of money for the public service, and the proposed amendment of Mr. Lander-you, and the amendment to the amendment of Mr. Coldwell.	[DOT]
John Horne Blackmore: Mr. Speaker, I wish to speak to the amendment offered by the hon. member for Rose-town-Biggar (Mr. Coldwell) to the amendment of the hon. member for Calgary East (Mr. Landeryou) to the proposal of the government to raise a loan of 8750,000,000.
Once more we are carrying on a discussion of monetary matters. To people who see things as I and those who agree with me see them, there is no possible solution of the problems that confront us as a nation, or of those that confront the world, until we acquire a more realistic view of the whole question of money and financial administration.
There are several questions at issue in this dominion which have been at issue since I first came to Ottawa, and doubtless before I came here. These questions all centre around the main question:	Can a state or
a government safely create, issue and use debt-free money?


Mr. DEACHMAN:: What does that mean?


John Horne Blackmore: I should be much
better pleased to define it later, but since the hon. member has raised the question I will give an illustration. At page 22 of the report of the royal commission on banking and currency in Canada, published in 1933, the hon. member will find a statement to the effect that between 1915 and 1917 the Canadian government printed 826,000,000 of bills and used them for general purposes. Behind 810,000,000 of those bills there was nothing but the credit of the country. Behind the other 816,000,000 there was nothing but worthless railway securities, securities of no value whatsoever except as the dominion government stood behind them. I contend that that 826,000,000 was debt-free money and interest-free money. That will serve as a concrete instance for the hon. member to keep in his mind all through this discussion.
Just as soon as that 826,000,000 can be explained away, the opponents of the policy
440P
Loan of $,750,000,000

which I advocate will be at least that far along the way to establishing their case. But until they can show that the issue of that 826,000,000 was pernicious and not in the interests of the country, the facts of the case stand against them. Until they can explain why that 826,000,000 might not just as well have been S36,000,000 or S56,000,000 or $106,000,000, I maintain that they are completely impotent to challenge successfully the principles which we as a group advocate. So much having been said, I proceed.
There are three main questions concerning which the house is exercising itself: (1) Will such money as the $26,000,000 cause inflation? (2) Will such money have an adverse effect on the exchanges to the detriment of Canada's trade? (3) If the government commences to issue and to use such money, can the government control the issue so that it will not go to extremes?
Let me deal with the third question first. I refer again to the $26,000,000. The Dominion of Canada undoubtedly had the absolute power to issue five times $26,000,000, but it did not do so. The Dominion of Canada at that time was reputedly a democracy. If a democracy could control itself during the stress of war, it seems reasonable that it could control itself when there is no such stress.
Before proceeding to discuss the question in detail I should attend to several points raised in the debate. Some of them were raised by the hon. member for Rosetown-Biggar, some by the leader of the opposition (Mr. Manion), and some by the Minister of Finance (Mr. Dunning). First let me say that we have no particular objection to the subamendment of the hon. member for Rosetown-Biggar. Our group is prepared to support his amendment. An issue of $100,000,000 is not sufficient by any manner of means. Nor was he quite prepared to say that he was willing to issue it debt free, as the $26,000,000 was issued when Canada was at war. But he did seem to be in favour of issuing it interest free, thereby laying down a principle which is more generous and more realistic than the principles which at the present time govern the financial operations of this dominion. Consequently we are disposed to support the subamendment, feeling that by so doing we are helping to establish the principle of debt-free money.
The hon. member for Rosetown-Biggar, in common with a great number of other hon. members, in spite of everything which can be said to the contrary, in spite of pages by the score in Hansard, persists in maintaining
[Mr. Blackmore.l
that the Social Credit party favour issuing money without reepect to goods and services. That is a fallacy and an absolute misconception; for, from the time we came here until the present, we have never advocated the issuing of money without reference to goods and services. When we first came here we maintained that there was a shortage of purchasing power in the hands of the people. What does that mean? It means that there is too little purchasing power in the hands of the people to enable them to buy the goods and services which are available to be bought -which by implication clearly argues or contends that there is a surplus of goods and services. By issuing new money, all you are doing is matching the goods and services which are now surplus and a drug on the market with corresponding financial tickets to enable the people to obtain those tickets to buy the goods and services which are now surplus and not saleable. I assume I shall have to lay this down a hundred times more before I can get it into the minds of men like the hon. member for Rosetown-Biggar that the purpose of social credit is to create tickets or financial counters to represent goods and services which are available in the land to-day and which are neither purchasable nor marketable because there is a lack of purchasing power in the hands of the people.
May I read a short quotation from a speech of the hon. member to show him why I have interpreted his remarks as I have done. He said, as reported at page 4065 of Hansard:
When I say that, I realize that money has some basis in fact, some basis in real goods and services. I think the mistake our friends often make when discussing monetary reform is, as I have said before, that they tend to mistake the shadow for the substance.


Mr. COLDWELL:: What is wrong with that?


John Horne Blackmore: There is nothing
particularly wrong except that in the light of the. facts it is pure nonsense and absolutely false. In one of the first speeches I delivered in this house I pointed to the fact that in the United States in a given year, which at that time I did not know to be 1918, there were consumable goods to the value of 60 billions of dollars, but there were only 40 billions of available purchasing power to buy the goods. The result was that there were 20 billion dollars' worth of goods which the people of the United States were unable to get purchasing power to buy. The hon. member for Huron North (Mr. Deachman) will remember this quite distinctly, because he took the illustration which I gave and, leaving out entirely the authorities I quoted, so as to leave me entirely to the winds of criticism,

Loan oj $750,000,000
wrote the whole matter up for the delectation of people all over Canada. I remember quite distinctly, however, that the incident establishes conclusively the stand we took, that we have in mind only the issuing of purchasing power when there are goods and services which are surplus.
There is another statement of the hon. member for Rosetown-Biggar with which I shall deal, I refer to page 4066 of Hansard, and will read certain words which he used:
"Free of debt" is really a misnomer. The moment a dollar is issued by the government it is a demand for a dollar's worth of someone's goods or services. Somewhere in our economy someone will have to pay a dollar's worth of commodities or goods to me, the demand for which I hold at the moment, and which is their debt to me temporarily.
Now the hon. member is at perfect liberty to interpret "debt free" in that way if he desires. But if I have a cow, for example, and a man comes to me and offers me S75 for that cow, one of the last things I ever think of is that that S75 is a demand for the cow, that is, that I owe the man who has the $75 my cow. I say he is buying my cow and I am very glad to get the $75.


Mr. WOOD:: You are going to put water in the milk, though.


John Horne Blackmore: I hope that Hansard got that remark and the hon. member who made it. That is all I wish for the hon. member who makes such a nonsensical remark as that.
If the hon. member for Rosetown-Biggar is going to look upon the $26,000,000 as debt, I do not mind taking his definition, but I do not look upon this money as debt to anybody, unless it should be to the government. At the present time every dollar of debt which Canadians issue and use is a debt, in a very real sense, to a bank or a financial institution. The social crediters contend that if you are going to call the money debt, it must be to the government and not to a bank. An illustration of this in monetary history is the Bradburys of England. The British government fought the war and won it with a unique type of paper currency which was issued by the government debt free, was sold at its face value to anyone who chose to buy it, and was backed by nothing except what was known as the treasury notes redemption fund, of which we shall talk later, probably, if we have the occasion or the opportunity. I have heard once or twice hon. members make the statement here that never has there been a government issue of money which did not result in inflation. Now we can challenge any hon. member to show that the Bradburys caused inflation.


Major James William Coldwell: Who said-in the house -that there has never been an issue which did not cause inflation?


John Horne Blackmore: If no one is ready to accept the responsibility, that is all right.


Major James William Coldwell: But who said it?


John Horne Blackmore: I have not under my hand the reference to Hansard. I have the particular hon. members in mind, but I would not name them without verifying it.


Major James William Coldwell: Then do not say it; that is all.


John Horne Blackmore: From which I gather that there is no one here who is prepared to say that state-created paper money has not sometimes succeeded.


Mr. ANDERSON:: In doing what?


John Horne Blackmore: In financing the affairs of the country. Once we grant that the Bradburys of England were a state-created paper money, and were sound, and did not cause inflation, and did not disturb the exchanges, we have gone a tremendous distance towards acknowledging the fundamental soundness of the social credit contention.
It is said that when a dollar is issued by a government somebody has to pay for the dollar-has to "pay the goods." Is that not equally true if the Bank of Canada issues a dollar? If, for instance, the Bank of Canada issues $100 and with that $100 buys gold, the man who takes the $100 for the gold has a demand on anybody's goods. He can go to the farmer next door and buy hay with the money. But no one looks upon that $100 as making the farmer owe the hay. Usually the farmer is very glad to get a market and happy to take the money; he never looks upon the money as being a debt which he has to pay. The thinking of some hon. members has become, to say the least, somewhat warped.


Major James William Coldwell: That is true.


John Horne Blackmore: The contention is
made, and has been made if I remember correctly by the Minister of Finance (Mr. Dunning) that somebody has to pay one dollar's worth of goods or services for that dollar. The same will be true of each dollar of the $750,000,000 which the minister proposes to borrow. At the same time the people of Canada must not only supply goods and services for each of those dollars, but they must be taxed to pay interest on it. They then must be taxed to pay the dollar back, so that instead of owing one debt they will owe three.
Loan of $750,000,000


Charles Avery Dunning: The hon. gentleman fails to distinguish between demand obligation and deferred obligation.


John Horne Blackmore: The minister worries about the demand obligation. When the Bank of Canada issues $100 with which to buy gold or securities, no one worries about that so far as demand for his goods is concerned. I do not have to take any man's dollar for my goods and services unless I choose to do so. The important fact is that the money is there so that I can take it in case I want it, but there is no law compelling me to take it. So much having been said in this regard, we will go on. I hope we hear no more of this argument that somebody has to pay goods for dollars created.
In a passage between the Minister of Finance and the hon. member for Rosetown-Biggar I gathered that the minister was much concerned about the effect on the tariff which would result from the issuing of new money, and the effect it would have on exchanges. It is altogether impossible for anyone to see, if he stops to think, how there could be any greater influence on the tariff as a result of the creation of new money than there would be in consequence of the circulation of borrowed money. Surely if the money is to be spent it will have the same effect on prices when it is borrowed as it would have if it were created; and if you do not increase the prices of goods you will not affect either the exchanges or the tariff. The controlling factor is the prices of goods in the country. I repeat, you cannot affect either the tariff or the exchanges unless you affect the price level within the country. If money can be created and issued in the country without raising prices, it will have no more adverse effect on ' tariff and exchange than if it were borrowed and spent in the country. This is a vital consideration in the whole study of monetary theory.
It is taken for granted by a good many people that the moment a government issues new money it depreciates the currency. The hon. member for Brant (Mr. Wood) implied something of the sort when he said that we would be watering the milk. When the hon. member for Brant knows a little more about money he will not say that. When the Canadian government created the $26,000,000 and put it into circulation in Canada it did not water the money Canada had in circulation any more than it would have done if it had borrowed the money from the banks and spent it. That is another misconception that exists in the minds of men; and in the very minds that cherish that misconception in its 
grossest form there is the greatest indisposition to pay any attention to reason on questions of money.
There will never be depreciation of money in the country provided there is an increase in goods and services to match the new money. That is a fundamental truth. As a matter of fact, if you increase goods in the country without increasing the money you cause prices to fall. The hon. member for Brant will readily understand that. If you doubled the potato crop in Canada you would cut down the price; if you doubled the sugar crop, if you doubled the production of wheat or of coal or of any other commodity, you would reduce the price. If you could double the production of every commodity you would cut the price in half, or very considerably.


George Ernest Wood: And if you doubled the money it would have the same effect. It works both
ways.


John Horne Blackmore: I will give a quotation for my hon. friend by and by. The time will come when we shall all be converted to the view I am now stating because it is the only common sense attitude to take. There is no doubt about that. Men have been converted to truths which, when first promulgated, seemed more absurd.


Malcolm McLean: The trouble is that what the hon. member is stating is not a truth.


John Horne Blackmore: There was a time when men like the hon. member for Melfort (Mr. McLean) did not believe that a machine could fly.


Malcolm McLean: John Law thought the hon. member's theory would work, but it did not.


John Horne Blackmore: The hon. gentleman has a good many things to learn about John Law.


Malcolm McLean: But the theory did not work.


John Horne Blackmore: It did work in an astonishing way. When the time comes I will answer my hon. friend and he will not need a second answer.


Malcolm McLean: You take four years to answer.


John Horne Blackmore: We were dealing with an increase in commodities. When you double the production of wheat and of every other commodity in the country, unless you double the amount of money you will have a fall in prices; but if you double the amount of money or greatly increase it to match the

Loan of $750,000,000
increase in the goods produced, you will not have a fall in prices, nor will you have any depreciation in money. This is the fact which hon. members lose sight of. We have entered an age of plenty in which we can readily increase goods far beyond any point to which we could ever increase them in times past, and therefore we must be able readily to increase the money counters to match the goods or we shall have a fall in prices, called depression.


Mr. MacNICOL:: Then you would increase production as the money increased.


John Horne Blackmore: Yes. That would happen automatically. It is well known that when you increase the money in circulation there follows an increase in the quantity of goods produced.


John Ritchie MacNicol: I should like to ask the hon. gentleman a question after listening to his explanation of his monetary theory. When the government prints enough of these money tickets he speaks of, for the purchase of surplus goods and services, will not production pile up a further surplus of goods and services, and therefore will it not be necessary at once to print more money tickets? If this is done, will not the circle go on expanding into an unlimited, uncontrolled inflation?


John Horne Blackmore: That is an excellent question. The hon. member has moved in the direction of correct reasoning. Just as soon as the government increases the money tickets there will be at once greater production. As soon as that greater production of goods takes place there are plenty of goods and services to absorb all the money without any rise in prices. That is one of the very factors that would prevent inflation, provided the right people got the tickets. I will come to that later. Social credit has proposed that the money shall be distributed to the consumers in the form of dividends or price adjustments. Can you imagine a better place in which to put the money than right there? The hon. member for Rosetown-Biggar the other day made a strong appeal for the spending of the money in public works in order that it might find its way to the consumers.


Major James William Coldwell: And the country would have something in return.


John Horne Blackmore: Perfectly true. If the money goes out into the hands of consumers and they buy and consume and thereby cause the producer to produce more, has not the country something to show for it? If the country has more butter, cheese, coal and all that sort of thing, surely that is better.
Now, to show that there are a good many people who are thinking just along the lines that the hon. member for Davenport (Mr. MacNicol) suggested by his question let me read a statement from Senator Owen, who was head of the finance committee of the United States senate. This statement was made on June 9, 1937 in the United States senate committee on farm commodity prices.
I read from page 141 of the report of that committee:
It is a matter of supreme importance to keep in mind and at all times to remember, that when you double production it has a tendency to decrease the market price of commodities and thereby to offset the rise in the price of commodities which would take place as a result of expanding the money supply. So long as the expansion of the money supply results in the expansion of employment and increased production of commodities, the one offsets the other. The commodity index is diminished by the increase of commodities unless the money supply increases at the same time.
Just as I pointed out to the hon. member for Brant (Mr. Wood).
Increasing the money supply will absorb the unemployed until maximum production is achieved. Maximum production and the absorption into private industry should be our objective.
I remember there was one point raised by the hon. member for Davenport with which I did not deal. He said you would not be able to go on because as you issued money you would increase production and would have to go on until you had inflation. Let us bear in mind that you have inflation only when you have more money in circulation than the goods and services to be purchased. The hon. member's idea was a progressive increase of goods and services beyond the amount of money you have, which indicates a tendency to progressively falling prices instead of rising prices in a land of abundance such as Canada. One of the fundamental principles of the system which we advocate lies right there. Let us remember that we are in a land of abundance, a land of great resources, and in an age when we can produce goods more abundantly and more quickly than ever before in the world's history. We are in a country bountifully provided with machinery of many different kinds, many industries running only part time. The result is that conditions here are ideal for the introduction of the principles of monetary reform. So that then there will be no inflation so long as there are unemployed men and machinery and resources.
I am going to quote two or three men whose names and records entitle them to some respect. First I quote Paul H. Douglas in his book,
Loan of 50,000,000

Control of Depressions. He is professor of economics at Chicago university. On page 148 he uses these words:
Finally if we turn to actual experience we find it simply is not true that the use of paper money invariably leads to runaway inflation.
Hon. members may disregard my words, but he is a reckless man who disregards the words of a man like that.


Malcolm McLean: He is not advocating in that quotation the increase in circulation of paper money that is not required.


John Horne Blackmore: Wait until he is done. I quote from the same author again. Incidentally I am just going to accept the challenge of the hon. member. If he will let me call for a book I will read to him something regarding this same man which will startle him.


An hon. MEMBER:: Never mind; dispense.


John Horne Blackmore: I read now from page 126:
It is indeed on just such points as these that many so-called orthodox critics of a public works program miss the point.
We are arguing directly along the line of the resolution of the hon. member for Rosetown-Biggar.
They tend to assume that all the workers and all of the productive plants are already fully employed and that the creation of additional monetary purchasing power merely increases the money counters for a constant supply of goods, and hence results in a proportionate increase in the price level which cuts down the effective purchasing power of others in the same degree as it builds up the buying power of those on public works.
The real truth is very different. There is much unemployment and a tremendous amount of unutilized capital. The creation of this additional monetary purchasing power enables the two to be brought together, and more goods to be produced. The volume of production increases at the same time as (and indeed because of) the increase in this purchasing power-
The hon. member for Davenport will be pleased to notice this.
-and should increase by very much more than the initial expenditure by the government. Prices, therefore, need not increase by anywhere near the ratio of the proportion of increase to the monetary supply.


Joseph Thorarinn Thorson: If the wheat crop of western Canada were doubled, what would the hon. member do with it?


John Horne Blackmore: Now that brings in the question of surpluses which the country is unable to use. That is another matter which has to be dealt with in a different way.


Some hon. MEMBERS:: Oh, oh.


John Horne Blackmore: Yes, I know the loud foolish "ha-ha's". But the hon. member for Selkirk (Mr. Thorson) will readily remember that in Canada we are not producing anywhere near the amount of honey that we could produce and that the people of Canada could use; we are not using anything like the amount of milk that the people of Canada could use, and there are many other commodities of which enough is not produced, or of which we are not enabling our people to consume enough. It is on that kind of commodity that the effort would have to be concentrated, as I pointed out in the wheat debate, drawing production away from wheat and diverting it to the production of goods which we need and can consume within our own country.
If the hon. member will let me proceed I will deal with his question again at a later time. But the problem of surplus production of a wide variety of products in Canada must be met and solved, and I contend that the hon. member or his party have no solution which is as good as the one I have offered by any means. They are faced with an absolute blank in the matter of dealing with this surplus production. Unless he thinks more than he has said, which probably is the case, his policies would lead to a decrease of the amount of wheat produced, with the result that a large number of farmers who now are producing wheat on the plains of western Canada would be thrown out of employment and on relief.
Since the hon. member for Melfort raised the question whether this man Paul H. Douglas advocates a distribution of money, let me tell him that on page 279 of this book, at the bottom of the page, he can read under division 10 and 11 the following:
10.	The establishment of a system of unemployment insurance so managed that there would be an attendant transfer of purchasing power from periods of prosperity to those of depression.
11.	The use of a social dividend to consumers or an increased expenditure upon cultural services, if the amounts distributed to the purchasers of mass production goods are not sufficient to consume at a profit to industry and under competitive prices the mass production goods and services which are turned out by industry.
The fine progressive thinkers in every part of the world are seeing the necessity of the principles which we advocate.
Let me now turn to the words of another important man whom I am sure no hon. member will recklessly disregard; I refer to Right Hon. Reginald McKenna. In an address delivered at the annual meeting of the bank

Loan oj $750,000,000
on January 29, 1936, as printed in the Monetary Review of January-February 1936, he is reported as saying:
We learnt that a shortage of money may be just as vicious in its effects as an excess though deflation has still a touch of virtue about it in the minds of many people. Nevertheless it is becoming more and more widely recognized that greater productivity calls for an increased supply of money for otherwise prices will fall, business will stagnate and the growing productive capacity will be unused.
How admirably he pictures the unfortunate position in which we in Canada find ourselves to-day. Later he says:
For money to be truly sound there must be enough of it to finance ordinarily growing volume of trade, yet not so much as to give rise to an inflationary movement of prices.
Perfectly true; I do not contend anything else. All I maintain is that under the present system, by which Canada- issues money to consumers and producers only through bank loans, it is impossible for people to borrow enough from the banks to enable them to buy the goods which are there to be bought. Consequently there must be brought into play money from another source, which does not come out of a bank as debt.
The misuse of gold has driven us to abandon fixity of the external value of our currency for a more important benefit of stable internal value. Whereas since 1931, the pound sterling has depreciated by 40 per cent; in terms of gold currencies its purchasing power in the hands of the consumer has been practically unchanged.
Here is another man who has his eyes on realities. That is all we are asking, that the members of this house keep their eyes on the realities of to-day instead of the realities of seventy-five years ago. Now I am going to read another quotation from Senator Owen.


Mr. TOMLINSON:: How about your own
speech?


John Horne Blackmore: I have said plenty of things and will say plenty more. I think I have read this quotation previously, but I did not tell the house where it was to be found.
Inflation does not occur until maximum employment and production is achieved. If it should occur, the volume of money could be immediately reduced by selling bonds, by sales tax and other taxes, and retiring such excess money from circulation.


Charles Avery Dunning: By selling bonds?


John Horne Blackmore: Yes.
-by selling bonds, by sales tax and other taxes,
and retiring such excess money from circulation.
That is at page 139 of the hearings before the United States senate committee on farm commodity prices, June 7, S and 9, 1937.


Charles Avery Dunning: My hon. friend is decrying the selling of bonds, but he now quotes an authority who says the cure for any trouble will be to sell bonds.


John Horne Blackmore: I am objecting to the principle under which the government can get money only by selling bonds. I am not saying that selling bonds is unsound; I am saying that it is unsound for a government to get money only in that way. If there will be no rise in price there will be no harm to the consumer, which point was raised by the Minister of Finance the other day while the hon. member for Rosetown-Biggar was speaking. There will be no adverse effect on tariffs-


Walter Edward Foster: Order. The hon. member has exhausted his time to speak.


John Horne Blackmore: -and no adverse
effect on exchanges.
Amendment to the amendment (Mr. Cold-well) negatived on division.


Walter Edward Foster: The question now is on
the amendment.


John Horne Blackmore: Mr. Speaker, inasmuch as I have not yet spoken on this amendment, I should like to make some observations on it; and inasmuch as I was unable to finish my speech on the previous amendment I shall continue it now.
A good deal was made of the fact that the hon. member for Calgary East (Mr. Landeryou) proposed that $600,000,000 in new money be issued to pay debts. There seems to be an idea that if the government of Canada should issue $100,000,000 of bills to pay off debts, immediately there would be some serious result. I ask how there could be any such result. Let us suppose we took $50,000,000 of the $100,000,000 with which to buy back bonds. Then the money issued to buy back those bonds would go into the banks, and would become additional reserves of the banks, upon which those institutions might create a quantity of credit. The fear that is expressed is that the creation of the credit by the banks at the rate of ten to one would cause inflation. Let hon. members of the house bear in mind that a bank cannot create credit at the rate of ten to one unless it can find a borrower. To-day the banks cannot find enough borrowers to use the money they already have in their possession. How in the world would an increase in the reserves of the banks to the extent of $50,000,000
Loan of $750,000,000

enable the banks to create other loans until available borrowers presented themselves? All arguments concerning inflation on that score are idle because they are not realistic, they do not face the facts of the situation, which is that to-day the banks cannot find enough borrowers.
It is contended that if the government once starts there will be a great tendency to issue more money. That will not be so. The only reason popular pressure has been brought to bear on the government to issue more money is that the people have been ignorant. Once the people as a whole realize that there is only so much money to be issued, that the amount that can be issued depends upon the surplus goods and services which are in the country but which are not being sold, immediately the pressure will cease; for no intelligent populace is going to ask its government to do a foolish thing. People point to the experience in connection with the assignats. Before we get through to-day I intend to point out that even the people who were in charge of the assignats, the very people who were issuing them, the most intelligent people of the period, had not the slightest idea what gave the assignats value. They thought money was given value by land behind it, while as a matter of fact money is given value only by the use a country has for that money; and that use depends upon the power of the people to produce and consume goods and services. Only in the last few years have our most learned men come to realize that. Just as soon as this parliament understood that that was the secret which determined how much money it could issue, you would not get a man in this parliament to vote for the issue of a dollar beyond the safe limit. And the mere fact that to-day they are' so tenaciously resisting the issue of money is clear evidence that the members of this parliament realize their responsibility and are prepared to accept it according to their understanding.
The very first thing a social credit administration would do would be to have a national account drawn up showing in the minutest detail the goods and services on hand which were not being bought, so that everyone would know how much money could be issued. The limit would be set by the limit of the goods and services available.


Joseph Thorarinn Thorson: How would you do that?


John Horne Blackmore: By bookkeeping, just as the bureau of statistics can tell us so many facts to-day. Even the bank reports show us at what percentage of productive capacity

the various industries of this country are working. How can they tell that? If they can give that information surely they can ascertain the amount of surplus goods those various industries have in their storerooms, and the amount the various wholesalers have on their shelves. The very first thing that would be done by a social credit administration would be the compiling of a national credit account, showing exactly where the nation stood physically-the number of surplus shoes, the amount of surplus coal, the surplus of cream, butter, and all that kind of thing.


Joseph Thorarinn Thorson: How can you measure the productive capacity of Alberta, for example, in regard to coal?


John Horne Blackmore: Inasmuch as it happens that I have a good deal of other material which I believe is of greater importance than an answer to the hon. member's question, I would ask permission to disregard his question until the end of my speech. I would say however that that is an easy matter to-day, when there are people who are skilled in figures to attend to it.


Mr. EVANS:: How do you measure the surplus of agricultural products?


John Horne Blackmore: How do you measure the surplus of wheat which remains unsold? We glibly talk about this matter, for every informed person in the country knows the amount of the wheat surplus held as a holdover or carry-over. Only the other day we were talking about a surplus of butter in Canada, and about the issuing of vouchers to use a quantity of that butter to reduce the surplus. To raise a question like that is to reveal puerility.
Let us put it this way: Let us suppose that $750,000,000 of money which is now idle in bank vaults, and not being used, is brought out as new money-and it would be new money, would it not? If that were done, I wonder if anybody would be afraid of inflation? We will suppose we were to distribute the $750,000,000 on a per capita basis throughout the provinces, giving each province its fair share. In that event is there any person in the house or in Canada who would be afraid that there would be inflation? On the contrary, all would rejoice. The great difficulty is that we have not the money throughout the country. There is a decrease of money in the hands of agriculturists.
One matter was raised by the Minister of Finance with which I shall have to deal. He indicated that the monetary matters of this dominion had to be governed by the will of

Loan of $750,000,000
other nations. Mr. Speaker, once we grant that principle we are granting that this parliament has no power to govern Canada.


Joseph Thorarinn Thorson: Not at all.


John Horne Blackmore: If this country cannot manage its own financial affairs without deferring to other countries, then I say Canada has lost the power of self-government. I do not think the minister would care to commit himself to any such proposition.
I shall refer again to the words of Right Hon. Reginald McKenna, which I read previously, to the effect that money in England had fallen in terms of gold forty per cent, but that it had retained its internal purchasing power. The thing which affects Canada is the internal purchasing power of the dollar, just as in England the most vital thing was the internal purchasing power of the pound.
The leader of the opposition had a good deal to say about assignats. I think I must spend a little time on a discussion of assignats. I am sorry I do not see the hon. member in his seat, but I presume he has gone out to perform some of his many duties. What I have before me would be of great value to him. I judged from the reaction across the floor of the house, when the hon. member was mentioning assignats, that the incident connected with assignats is being used by a certain element of the Liberal party to beat down the monetary reformers. They will be glad to learn some of the facts which I shall point out. First of all I shall quote from the very book from which the leader of the opposition quoted. I happen to have spent about six weeks in rather intimate contact with the same author.


William Rae Tomlinson: And wasted a lot of time.


John Horne Blackmore: That remains to be proved. I believe the reverse will be proved in a very few minutes. I turn first to page 1 of the book. It is there stated that under conditions which existed before they commenced to issue assignats:
There was a general want of confidence in business circles; capital had shown its proverbial timidity by retiring out of sight as far as possible; throughout the land was stagnation.
It is important, sir, to point out that those conditions existed before the assignats were issued, because by and by, after the assignats collapsed, for a variety of reasons, the fact that conditions like that returned to the country was used as an argument against assignats.


Mr. FRASER:: What is the hon. member's authority? Put it on the record.


John Horne Blackmore: It is the book quoted by the leader of the opposition, entitled Fiat Money Inflation in France, written by Andrew Dickson White.


Mr. DUFFUS:: How do we know that those are facts?


John Horne Blackmore: Well, it is the material used by the leader of the opposition. I have come in contact with this book in every citadel of high finance I have ever entered in Canada, and it has been cited as the absolute evidence that all my theories were an indication of foolhardiness. So if it is accepted by those people I suppose it would be safe enough to accept it to prove what I am saying. When there happens to be some evidence on our side, then certainly I suggest we ought to be permitted to take advantage of it.
I draw attention particularly to three facts herein set out. Capital had retired out of sight, as far as possible. This is the thing which they say will happen when we have inflation. Then it is said that there was a general want of confidence in business circles. That is the sort of thing that is supposed to happen when we have inflation. And then it is stated that throughout the land there was stagnation.
I shall read another quotation. Implications and innuendoes have been thrown out in the house on many occasions to the effect that social crediters are an ignorant lot, and do not know much about the facts. I shall read from a book entitled The Encyclopaedia of Social Sciences, volume 2, page 279-this book is available in the parliamentary library. An article written by G. Salvemini, bearing upon assignats, has this to say:
In the early stages of the revolution the national assembly was confronted with a large public debt, inherited from the aneien regime, and a growing deficit in the current budget. As a matter of principle it would not repudiate the former, and for reasons of political expediency it could not raise taxes. It appealed to the nation for a contribution patriotique and pending the sale of crown and church lands, which had previously been proclaimed to be at the disposal of the nation, issued short time obligations to be redeemed with the proceeds of the sale. In December, 1789, the national assembly authorized an issue of 400 million livres of five per cent treasury bills called assignats. Printed in very large denominations, they were intended for discount with the Caisse d'Escompte, which had the monopoly of legal tender note issue. The assignats were to have no circulatory power, except that they were to be accepted from purchasers of national land. When received in this way they were to be destroyed, but no provision was made for the automatic withdrawal of assignats when the land was paid for by other means. In April, 1790, when interest on them was reduced to three per cent they were declared Iega] tender, without, however, the obligation to receive them at par with other types of lawful money.
Loan of S750,000,000

All we need to do is to ponder that passage to see that at the beginning the assignats had scarcely a ghost of a chance of succeeding. Practically every card that could be stacked against them was so stacked. Let us review the facts which were brought out. In the first place, the new government could not raise taxes. Then, again, there was a large public debt. There was a growing deficit, which means that when they commenced to issue assignats, they had no alternative; they had to issue them. Naturally after they issued and used the first issue, the same pressure which caused them to make the first issue was on them again.


John Ritchie MacNicol: Could they not sell the property?


John Horne Blackmore: There was no place to sell it; that is where the trouble lay; people did not have the money to buy. We must remember that the French revolution had started, and anyone who knows the conditions of that time must realize in what a precarious state the country and government was. It is strange that Mr. White never refers to that, and significant that the leader of the opposition failed to emphasize it. But if we want to understand the facts, these are things that we must know.


Malcolm McLean: If it was so impossible to raise money for governmental purposes, why was the majority in favour of the issue so small and the opposition against it so strong?


John Horne Blackmore: I think the hon. member will best appreciate the situation by an analogy. If there were to develop in the Liberal party a sufficient number of courageous people who said, "We must find a solution; there is something in social credit; there is some germ of truth in monetary reform"-as the leader of the opposition implied the other day

and that movement grew until there was a majority in the house in favour of it, I fancy that the proposal would carry by a slender majority against undoubtedly bitter opposition. Similar conditions existed in France.


Malcolm McLean: My hon. friend said that there was no money available in France. How then could the government collect it by taxation?


John Horne Blackmore: The hon. member is attempting to question what this book says. If he disbelieves the authority chosen by the editor of this great book, the quarrel is between him and that authority. When this man says that they could not collect taxes, I would say they could not collect taxes.

The assignats were short-term obligations. Again, there was an issue of 400,000,000 livres, five per cent treasury bills. Why did not this man White tell us they were treasury bills? The implication is that they were just ordinary money, which they were not. Let this Canadian government issue treasury bills and try to finance the business of the country on treasury bills alone, finance unemployment relief on treasury bills, and how long would it be before treasury bills would be discredited? They could not succeed. This total first assignat issue amounted to about $80,000,000 in our money, the livre being worth about 20 cents. Now $80,000,000 for that age in France was a colossal sum of money. It was sufficient to tax the productive power of the country almost to the limit to absorb it. Bear in mind that that amount of money was issued in treasury bills.


Malcolm McLean: How much was issued in the other form?


John Horne Blackmore: They were all treasury bills.


Malcolm McLean: What was the total amount issued in the other form?


John Horne Blackmore: I will come to that after a while, step by step, if I have time.
The next point is that they were issued in very large denominations. We have a little evidence as to how many of them were in large denominations in the fact that when the Jacobins took power in 1793 they undertook to withdraw or demonetize all the assignats that were over 100 livres in denomination, and they withdrew 558 million livres; 558 million livres were in denominations over 100.


Mr. STEVENS:: What was that? Francs?


John Horne Blackmore: One hundred livres I take it. Suppose Canada began to issue a new form of money and each of the new units issued was over twenty dollars, and a man went out on the streets of Ottawa and into the stores of this city to spend that money. Look at the difficulty he would have. Many of the stores would not dare cash that unit. Many business houses have difficulty in cashing a large number of twenty-dollar bills unless the bank is open at the time.
Here is another important point. Every assignat had to foe discounted by the Caisse d'Escompte, the bank which had a monopoly of legal tender note issue. In other words every one of these assignats had to be taken to a bank and changed into legal tender notes because the assignats were not legal tender. Any hon. member can see the handicap under which the assignats were placed. What a marvel it is they did as well as they did!

Loan of $750,000,000
The next point is that the assignats had no circulatory power. The assignats when first issued were never intended to 'be circulated from hand to hand. They could be accepted only for land; they were redeemable only in land. Take any credit instrument whatsoever, any kind of monetary counter ever used on the face of the earth, and let it be issued by the best bank in the world; and with the handicaps under which the assignats were issued it would fail.
There were in addition special handicaps.


William Alexander Fraser: Are not our problems
comprised in two compartments, perhaps three? First, whether as a dominion we should issue debt-free money or currency; second, how much of that currency we should issue; third, how we are to get it into the hands of the purchasers. I think these are three pertinent questions.


John Horne Blackmore: I think the hon. member was not in the house when I began my remarks. I dealt with that then, and he will be able to read it in Hansard. If he does not mind, I will proceed.
In addition to the handicaps to which Mr. White referred, the assignats were under certain special handicaps. In the first place the government was unstable. Everybody knows that people mistrust the money of a government that is unstable. The government had just established itself in France as a result of a successful revolution, but it was insecure. Again, the whole world was against it, both in sentiment and by war. We can readily understand what that means when we remember the position of Russia. The world was against France in sentiment and against her in war, but before very long a new government in that country had to marshal its forces and fight almost every civilized nation on the earth. Imagine the strain that was put on the assignats! Besides, there was civil war within the country. Then this handicap existed, that people thought the value of money depended on the backing of the money; they thought it was the land which gave the money value. Hon. members will realize that if a given, country had too much money all of solid gold, the gold would depreciate because there would be too much of it. It is not the backing behind money which gives it value; it is the need people have of that money to effect exchange. The people of France did not understand that. As a result they issued money beyond a reasonable limit, as I shall indicate when I come to deal with the amount which was issued. Finally the assignats gravitated into the hands of the poorest people. Let any hon. member imagine himself to be living in Paris back in those
days. We will suppose that he gets $500 worth of assignats, redeemable in land two hundred or a hundred miles away, say as far away as Pembroke, but he cannot leave Paris; what good is that money going to be to him?


An hon. MEMBER:: Let him go to Pembroke.


John Horne Blackmore: He cannot go to
Pembroke. The result will be that he will not want to take the land, he will hesitate to take the money, and the money will depreciate in value.
I have set out some of the handicaps under which the assignats issue operated. Robert McNair Wilson says at one place that with these assignats fourteen armies were maintained in the field by the French government. With the assignats that new government beat back its foes. The marvel is that it succeeded so astonishingly, and at a time when civil war was raging over a large part of France.
How many assignats were issued? The dates and amounts of the main issues are as follows:
Livres
April, 1790	 400,000,000
September 29,	1790	 800,000,000
June 9, 1791	 600,000,000
December 17,	1791	 300,000,000
April 30, 1792	 300,000,000
July 17, 1792	 300,000,000
Up to December 14, 1792, there were several issues, and issues went on. Between April 11 and May 11, 1793, 1,200,000.000 more were put forth. Month after month, year after year, new issues were made. Towards the end of 1794, 7,000,000,000 livres were in circulation. By the end of May, 1795, 10,000,000.000 were in circulation. By the end of July, 1795, 14,000,000,000 were in circulation. By the beginning of 1796, over 45.000,000,000 had been issued. When you bear in mind that the country had only a limited productive power, you can see without difficulty that there was more money there than the simplest kind of common sense would have caused the government to issue. The chief reason why these people continued to issue assignats was that they had to. They were fighting for their very existence. It was not mainly because there was popular pressure or that the issues got out of hand.
Now, what was the effect of the assignats? Up to the end of the second issue the effect was good. I am going to read from the same book from which the leader of the opposition read, at page 25:
It is true that at first the assignats gave the same impulse to business in the city as in the country, but the apparent improvement had no firm foundation even in the towns.
Loan oj S750,000,000

He does not prove that.
Whenever a great quantity of paper money is suddenly issued we invariably see a rapid increase of trade. The great quantity of the circulating medium sets in motion all the energies of commerce and manufacturers; capital for investment is more easily found than usual and trade perpetually receives fresh nutriment. If this paper represents real credit-
And social credit contends that the credit they issue will represent goods and services, which are real credit.
-founded upon order and legal security from which it can derive a firm and lasting, value, such a movement may be the starting point of a great and widely-extended prosperity, as, for instance, a splendid improvement in English agriculture was undoubtedly owing to the emancipation of the country bankers. If on the contrary, the new paper is of precarious value, as was clearly seen to be the ease with the French assignats as early as February, 1791, it can confer no lasting benefits.
There are other passages in this book and other books to which I could refer, but which I have not the time to read, indicating that up to the point at which about the third issue had been circulated the effect upon the country was entirely beneficial. Manufacturers increased their production to the point at which they had more produce than they could sell. Then the same kind of condition began to exist which exists among us. Unemployment began to result; and that was one of the main reasons why the assignats fell in value. Factories were closed; the assignats were piled up more or less in certain places, and altogether a disastrous result followed. Mr. Speaker, how much time have I?


Walter Edward Foster: The hon. member has
seven minutes.


John Horne Blackmore: I believe that what I have said with regard to the assignats is sufficient without further comment to show that when any man undertakes to say the incident of the assignats is an argument against monetary reform, either he is inadequately informed, or he is selfishly using the instance to establish a false impression. There is simply no likeness in any respect between the Dominion of Canada and France when the assignats were issued. If dollar bills were issued by this government where the French issued the equivalent of twenty dollar bills; if those dollar bills were made legal tender where the French assignats were not legal tender, there is no reason why the things which happened at the time of the assignats should happen in this country at all.


William Alexander Fraser: Will my hon. friend tell me, for I am interested, how he proposes to get these dollar bills into the hands of the purchasers?


John Horne Blackmore: Social credit advocates the dividend. There are two main devices which social credit advocates. The first is a modification of the arrangement as to price. Where Canada is now paying twenty cents of tax money from the dominion treasury on every bushel of wheat out there in the west, social credit would pay that twenty cents with government-created money. That certainly would put money into circulation right where it is needed, would it not? That is the first thing. Do I make that quite clear?


Mr. GRAY:: No.


John Horne Blackmore: Does the hon. member have difficulty in hearing? I want to repeat that statement. The money would be issued exactly as to-day we are being forced to issue it. The other night, when we undertook to use vouchers to distribute the butter, the first step was taken towards the method of procedure which will be universally applied in the new era. The United States are doing exactly the same thing. They will issue purchasing power to the people to enable them to buy surplus goods, and they will issue that purchasing power because the goods are there.


William Alexander Fraser: In other words, the money which is issued for the butter is a straight case of a dole, is it not?


John Horne Blackmore: Yes, but the money which is now being allotted and will be spent for the butter could be state-created debt-free money. It could not cause inflation because the butter is there; the very minute the money came to the people's hands the butter would be there to be bought. There would be, there could be, no rise in the price of butter. The money could be issued through two channels. First, it could go into the price of commodities. Wheat in Canada in 1939 is to be given a fixed price. The government has to provide from taxes twenty cents a bushel to give that fixed price. If the government were to pay the twenty cents from newly created money, the mere fact that the wheat was there to back the money would be a guarantee that the money would not cause inflation. A similar thing could be done with other commodities like milk, cream, butter, cheese, eggs, coal and other primary products. This would raise the price of products to the primary producer to a living standard without causing the people in general any taxation; there would be no rise in pricea because the goods were there.


Joseph Thorarinn Thorson: Do you mean the government will buy all the goods?

Loan oj ITBOfiOOflOO


John Horne Blackmore: No. It will give the producers a subsidy, pretty much as we expect to do in connection with wheat.


An hon. MEMBER:: Bonus everybody.


Ross Wilfred Gray: And that is no inflation?


John Horne Blackmore: No. You cannot have inflation unless there is a rise in prices. Does the hon. member admit that? If you have sufficient goods to match the money you have in circulation you will not have a rise in prices and you will not have inflation.
Most of the goods now on the market are being sold at too high a price, and the sales tax accentuates that handicap. There is great need for a reduction in the price of goods. Producers generally and distributors are unable to sell any cheaper than they are selling now. Under a new economic arrangement new created money would be used to pay a part of the price of the goods sold over the retail counter so that the consumer could buy those goods at reduced prices. Surely hon. members can see how that would put money into circulation. That was the question the hon. member wanted to have answered.
Another point is this. The hon. member says that the issuance of vouchers to enable people to buy butter constitutes a dole. You may call it a dole if you wish, but the day will come when we shall recognize the necessity of doing what Professor Douglas of Chicago university advocates on page 279 of the book from which I have already quoted. There will be a social dividend, issued for the express purpose of enabling the people to buy goods and services, to supply the money without which they cannot now obtain goods and services-a lack of money due to their inability to get work.


Mr. HEAPS:: Suppose people will not sell their goods.


An hon. MEMBER:: Everybody will go on the dole.


John Horne Blackmore: Call it a dole if you will, but the day will come when we shall all recognize the force of Professor Douglas's observations. I believe the Minister of Finance wanted to ask a question.


Charles Avery Dunning: Oh, no.


John Horne Blackmore: The leader of the
opposition the other night put this question: Why has no other country issued money and spent it? Let me tell the hon. gentleman that no other country in modern times has issued money and spent it because-and it is exactly the reason why this government
will not issue and spend money-it would take away from the bankers the most lucrative privilege that they possess.


Charles Avery Dunning: That is not the reason.


Mr. LANDERYOU:: Why do the banks buck it, then?


John Horne Blackmore: And the people who are opposing the introduction of government money are the financial and banking interests without exception, save for such men as Reginald McKenna and a few others who have seen the light and have come to realize that the banking and financial institutions in this country will themselves inevitably go down unless the system is changed. The question was asked:	Why has England never
done it? The hon. member was not in his seat when I pointed out that England had undertaken the Bradburys experiment. Hon. members would be impressed, I am sure, if they read an account of the wonderful Bradburys experiment whereby the government issued money that did not constitute a debt, and with that money fought and won the war. The British abandoned it after the declaration of peace, no one knows why, though I presume it was because certain interests were finding their profits jeopardized.


Walter Edward Foster: The hon. member has exhausted his time.


John Horne Blackmore: May I finish the sentence?


Walter Edward Foster: Not without the unanimous consent of the house.


Some hon. MEMBERS:: Go ahead.


Walter Edward Foster: Do I understand that the hon. member has unanimous consent?


Ernest Lapointe: To finish the sentence.


John Horne Blackmore: The hon. member says that goods are the only real wealth. Unquestionably that is true; no one has ever said anything to the contrary. Those who maintain that social credit has taken any other view are either misinformed or deliberately misrepresenting us. But let me point out that goods and services are real wealth only when you can sell them; otherwise why worry about surplus wheat and butter and all the surpluses that we have? We worry about them because we know that they are a drug on the market and are of no special value except potentially, unless we can consume them. Let me ask one more question-


Walter Edward Foster: Order.
441S
Loan of 6750,000,000

Mr. JEAN-FRANQOIS POULIOT (Temis-oouata): In order to understand something of the assignat question I have obtained Larousse's encyclopaedia, letter A, in which I find a description of the assignats and what happened to them. Of course, it is in French. The assignat was the French way of dealing with credit, and I hope the house will be indulgent while I attempt a translation off the bat. It may not be elegant, but I believe it will 'be accurate.
In accordance with the bankers' theory the constituent assembly ordered the disposal of national property at a value of 400,000,000 francs, the proceeds of which were to be centralized in the caisse de l'extraordinaire, or the emergency bank. By the decrees of December 19 and 21, 1789, there were created 400,000,000 assignats of 1,000 livres. The livre is not a pound, I may explain. This was special currency which was used in France at that time, bearing interest at five per cent. The assignat bond, guaranteed, was supposed to be refunded. The decree of April 17, 1790, reduced the interest to three per cent. The coupons were of 1,000, 300 and 200 livres and then of 50 livres following the decree of October 8, 1790. Then there were coupons of 5 livres, according to the decree of May 8. 1791. At the beginning of 1792, large coupons were exchanged for smaller currency in the denominations of 10 sous, 15 sous, 25 sous and 50 sous. The sou was not the same as a cent; there was a slight difference. From July, 1791, on, the farmers wished to be paid in metal money and not in assignats. Assignats were considered legal and forced currency. They were to be received in public and private banks. " Caisse " means rather a branch bank, but " bank " is quite a good translation. It reminds me of what happened to the " free " money issued by the Alberta government. Civil servants of Alberta were paid part of their salary in that special money; they were bound to accept it and put little stamps on it.


John Charles Landeryou: That is not true.


Mr. POULIOT:: It has been changed since.


John Charles Landeryou: It was never true.


Jean-François Pouliot: I am glad to hear my hon. friends; it shows that they follow what I say. What I tell them comes from a very good book, which is used by all scientists. They will enjoy it more in a moment.
From the beginning of the period of the revolutionary wars, April 20, 1792, the issue increased. On September 22, 1792, nearly two billion were in circulation. On May 1, 1794, 5,891 million assignats were in circulation, and

on January 1, 1796, 27.505 million; in less than two years the issue had increased by nearly 22 billion. On September 7 of the same year, that is in eight months, the issue had increased from 27 billion to 45 billion-quite an increase in eight months.
Then depreciation came. The hon. member for Lethbridge did not mention the depreciation.


John Horne Blackmore: He surely did. The hon. member was not here.


Jean-François Pouliot: Oh, no; not precisely. In spite of the forced loan of one billion from "les riches" the depreciation went to 97 per cent. From 1793 it was 82 per cent. The depreciation was recognized by legislation. They fixed the value of assignats at one-thirtieth, then one one-hundredth of their nominal value. Then after the legislation concerning the maximum and the institution of the great ledger and the forced loan which brought in 10 billion of assignats, the creation of 2,400 million of territorial mandats bearing a mortgage on national property valued at 10 billion permitted the exchange of 30 francs of assignats against one franc of mandats. Mark you, the depreciation was 30 assignats for one mandat. Then the depreciation of the mandat was 65, then 80, then 90 per cent. The bearers of mandats bought at low prices national property. The law of 16 pluviose, year V, or February 4, 1797, demonetized the mandat. The legal currency of assignats and mandats was suppressed. And here is the depreciation: 45 billion 500 million in assignats had melted into 2 billion 400 million in mandats, and that fell to 240,000 francs in currency. The depreciation was 45 billion divided by 240,000, which means that assignats were worth at last two billionths of one franc. It means that with one franc you could buy more than 2 billion assignats. Great success! One franc, 20 cents, equal to 2 billion in assignats. Neither the German mark nor the Russian rouble did so well as that.
It is very dangerous to play with money and currency. Of course my hon. friends are sincere, I am sure of that. But there is one tabulation to which I call their attention-


Ernest Lapointe: These people also were sincere.


Jean-François Pouliot: Oh, they were the sincerest people; they meant well, just as my hon. friends mean well. But they were what we call in French "illumines."


John Ritchie MacNicol: Please say it again.


Jean-François Pouliot: This is easy to understand. The hon. member for Lethbridge just read an "illuminated" address. It means, not that

Loan of $750,000,000
they are cranks-the word is not parliamentary and I will not use it. But they are people who think that all others are going the wrong way, and when we tell them there is danger in the way they would go, they will not listen to us.


Mr. KUHL:: The hon. member says that, but why does he not do something about it?


Jean-François Pouliot: Money is not manna.


An hon. MEMBER:: What is it?


Jean-François Pouliot: I will ask my friends to take their time. I listened patiently to the hon. member for Lethbridge; I was anxious to ask him some questions, but I refrained.


Mr. JOHNSTON (Bow River):: We have listened for years to your arguments; you should listen to ours.


Jean-François Pouliot: I have something more to do than to listen to those speeches, but sometimes I come in, and it is relaxation to me to listen to my hon. friends. When I listen to them and try to understand them I feel a great sense of humility. I say to myself: Well, I am not sufficiently gifted to understand such sublime utopian expressions.
I come now to a tabulation which I have just obtained after the friendly discussion with the leader of the Social Credit group. It relates to the circulation of money. Of course the circulation of money is not confined to currency only. My hon. friends know very well that the number of financial transactions in currency is almost infinitely small. Most of the transactions are in cheques. When there is confidence among the people there is a freer exchange of money; it is the old story of the dollar that goes from pocket to pocket enriching all those who have it. And the more the dollar travels the better those who have it from time to time feel. My hon. friends know that the total of current accounts and savings accounts in the banks is small compared to the amount of the bank clearings. For the last three years bank clearings at the end of the year averaged about fifteen times the amount of savings and current accounts, which means that this amount of money passed from hand to hand by means of cheques, without taking into account transactions in which bills or metal coins were used. That varies from year to year, but the average was never less than ten times the total amount of deposits. Therefore what should be encouraged is simply the confidence of the people. They must be encouraged to do the work they think they can do.


Mr. JAQUES:: Every confidence man knows that.


Jean-François Pouliot: I have not only the pleasure of being followed by my hon. friend; he agrees with me on that point. Therefore I am a little in doubt as to the soundness of my argument, but still I appreciate the fact that he agrees with me.
There is one other point I should mention. Money is not an essential. Money may play quite an important part, but money is the accessory rather than the principal. My hon. friends know that. The great mistake of the professors who have taught social credit, who have tried to split hairs, has been that fundamental mistake of considering currency as the principal rather than the accessory. History tells us that since the beginning of time, when stones were used as a medium of exchange, barter has been the principal; and that currency in the form of stones, of camels or of metallic coins has been used simply to adjust the difference in the barter. Let us suppose my hon. friend wishes to buy from me an inkstand and offers in return a penholder. The penholder is worth less than the inkstand; therefore he will have to give me something to compensate for the difference between the value of the two articles. The reason for trade has not been currency. I am willing to sell this inkstand to my hon. friend-of course I speak figuratively, because both the inkstand and the penholder belong to the country and not to me, but I am anxious to make a comparison in order that we may come to an understanding. We want to come to an understanding with my hon. friends, and I am sure we will.


John Charles Landeryou: May I ask a question?


Jean-François Pouliot: As soon as I finish my
illustration. Currency is a secondary thing, whether in. the form of stones if we are in the stone age, in the form of camels if we are in the patriarchal age or in the form of metallic coins if we are modern; and if my hon. friend wants to buy this inkstand and offers in return a camel, then I shall have to supply currency to make up the difference in value, because the camel is worth more than the inkstand. In the first transaction the principal is the barter of the penholder and the inkstand; in the second transaction it is the barter of the inkstand and the camel. Those are the principals; the currency is in second place. Now I am ready to answer my hon. friend's question.


John Charles Landeryou: I believe my hon.
friend will admit that in this country, as in practically every other country in the world,
Loan of 5750,000,000

there is a surplus of labour and a surplus of unused material. How are you going to put the idle labour and the unused material into production without money?


Jean-François Pouliot: There is one thing we
should not forget; that is, private initiative.


Walter Frederick Kuhl: Not without money.


Jean-François Pouliot: There are many millionaires who started with very little. I remember that Sir Thomas Shaughnessy, who was president of the Canadian Pacific Railway Company, borrowed his first hundred dollars and died a millionaire. The same can be said of many people in the United States and Canada. If my hon. friend will look at a list of the well-off people of this country he will see that without social credit they have done very well.


Walter Frederick Kuhl: But they had money.


Jean-François Pouliot: No; they earned it. The
ways in which they earned it cannot always be praised, but they did earn the money themselves without any other doctrine than that of their own intelligence and shrewdness in business. For instance, Rockefeller, who died two or three years ago, started with nothing and became a multi-millionaire. So did Andrew Carnegie.


John Charles Landeryou: Is that the answer to my question?


Jean-François Pouliot: No. I am just starting.
There is always a preamble to my answer. Andrew Carnegie was bom in a very small cottage at Dunfermline; he came to America and made a success of his life. That is the story of many other successful men who shorred private initiative.


Walter Frederick Kuhl: That is aside from the
argument.


Jean-François Pouliot: I would ask my hon.
friend to be patient, because I want him to understand what I am trying to say. That is why I am taking my time, as the leader of my hon. friend's group took his time. I am here to discuss this question and either to be convinced by my hon. friends or to convince them.


William Alexander Fraser: You are optimistic.


Jean-François Pouliot: No, it is going fine. The question of the hon. member for Calgary East (Mr. Landeryou) was this: What can you do with a surplus of goods and labour? Well, the question of goods is not the question of currency at all. It is just because agriculture in this country is not nationalized, and has

not been carried on by zones, to supply the demand. That is why I cannot understand why, when there are so many hogs in the country, we import lard from the United States. Then, too, we import vegetables and fruits out of season. I must say, however, that I do not see why we should import goods that could be produced in the country.
This is not a matter of social credit, but of adopting better methods in agriculture. The best thing to do is to see that agriculture is carried out in zones, so as to answer the demand. There should be a study of the soil to find what certain soils can produce to best advantage.


Mr. QUELCH:: And does the hon. member believe in high tariffs to keep those things out of the country?


Jean-François Pouliot: I am leaving tariff aside for the moment. If the hon. member would be courteous enough to wait, and to give me an opportunity to express my views, I should be pleased. My views are just as respectable as the hon. member's. I wish to express them freely. I do not complain, however, about the little questions from hon. members, because it shows that they are following what I am saying, a fact which I appreciate.
They have read the British North America Act, and according to that act agriculture and immigration are matters of provincial concern. In my humble view each provincial government should see to it that farming is done by zones so as to answer the demands in the country, and then to be in a position to export the surplus production. This program would require detailed study of soil conditions by experts in each province, and I believe the Minister of Agriculture (Mr. Gardiner) should consider it his duty to establish such a system.
We may now consider the production of fish, and the products of the mines and the forests, leaving aside for the moment manufactured products. So far as fish is concerned we know that the fisherman on the Gaspe coast suffered a curtailment of his market in Italy, where he sold salt cod, smoked finnan haddie and other kinds of fish. That market was lost at the time of the Ottawa agreements. We know that those fishermen need a market in which to sell their surplus production, and because of their inability to do that they have lost money.
At one time we had a good lumber market in England, but there came a time when many producers of lumber preferred to trade with the United States. Then there was the Panama canal, which had its effect on the export of lumber. I would point out, generally, that everything depends on demand.

Loan oj $750,000,000
As long as there is a demand for a product, whether it be the product of the sea or land, men will be engaged in the production of it. There will be a demand for that product, which will dispose of surplus labour.
I hope the hon. member for Calgary East will think of these facts at times. If he does, he will realize that it is not an issue of debt free money, or any principle which has been set out by the social credit party which will cure unemployment in Canada. Hon. members in the group to which he belongs must know that very well. I see the hon. member looks nervous. Has he a question to ask?- No.
A few days ago I referred to hon. members in the social credit group who have come from the British Isles. That reference was not made with any intention to offend. I am surprised, however, to find that, while they come from the country in which is found what is described as the mother of parliaments, they waste their efforts in this country. They should try to do something for the restoration of responsible government and ministerial responsibility-


An hon. MEMBER:: In Canada.


Jean-François Pouliot: Yes, in Canada. I appeal to those gentlemen, as a good Liberal who believes in the traditions of our country. In my family we have the greatest respect for British parliamentary institutions, where ministers of the crown are responsible for every cent spent in their respective departments. To be responsible I say they must be responsible for payment. Now they are not. I make a special appeal to hon. members who have been born in the British Isles to stand as one for the restoration of ministerial responsibility and free speech. I am all for that. I am not in favour of new parties, because I do not believe in them.
One of our greatest troubles to-day is that we are departing too far from the old traditions we used to respect. I find it absurd that the Bennett policy respecting the comptroller of the treasury is still in effect. As a member of parliament who is true to British parliamentary traditions I find it absurd that, with the exception of the Minister of Finance, there is not one minister responsible for a cent of expenditure, on his own authority. Hon. members must know that in every department there are accountants, and that each is under the Minister of Finance.


Norman Jaques: Whom is he under?


Jean-François Pouliot: I mean that every accountant, even those in the House of Commons and the Senate, is under the Minister of Finance.


Mr. MARSHALL:: To whom is he responsible ?


Jean-François Pouliot: He must be responsible to the house. But my contention is that all estimates should be submitted to the house by the Minister of Finance, who is responsible for payment. At the beginning of the session every member of parliament received from me a quotation from the report of the committee on national expenditure of the House of Commons of Westminster, in which the plan of putting representatives of the treasury in departments other than the treasury was strongly condemned. I do not see why we must stand for that old Bennett policy of the comptroller of the treasury. I stand for responsible government. I want my ministers to be responsible to the house for everything that is done in their respective departments. Moreover, objections were made in certain quarters when I spoke about that, but I do not see how we can stand for it any longer. Why should we stand for a dictatorship in dominion finance?
Coming back to what I said in the first place, I am not in favour of a new party, although I sincerely believe that we are far removed from the victory that was won a hundred years ago when Baldwin and Lafon-taine secured responsible government for Canada.


Charles Edward Johnston: Why not talk to the rest of your own party?


Jean-François Pouliot: I say that to all. I am a Liberal. Someone asked me once to define my position. I do not define it; I describe it. I can define it when the occasion offers. I have been against all Bennett policies, not for personal reasons but because they were fundamentally wrong.


Charles Edward Johnston: Were
they any different from Liberal policies?


Jean-François Pouliot: I do not want my party to follow Bennett policies. I want them to come back to the policies of Jim Robb and of Charlie Dunning, until 1930. When I think of all the damage that has been done not only to the civil service but to the country at large by some half-baked professors who have come here to split hairs after most unsuccessful careers as directors and treasurers of most important and reputable American concerns, I simply cannot understand it. I cannot understand why I am blamed here for condemning strongly some civil servants on the pretext that they are not here to defend themselves. Yet every one of them is represented here by his minister. According to sound parliamentary practice there is not a
Loan oj $750,000,000

civil servant receiving emolument from the crown who cannot be praised or censured here according to his behaviour and the facts of the case. The fact that a man receives ten or twelve or fifteen thousand dollars a year does not put him beyond the criticism of parliament.
My concluding words are these: If we have some trouble in dominion finance and in finance at large, in England as well as in Canada to-day, it is because we have departed from the sound theories of Jim Robb and of Charlie Dunning until 1930; it is because there are some cranks in universities who are paid more respect than they deserve and who expound theories to which no sane thinking man can subscribe. I am not blaming my friends of the social credit group for having been deceived by them. But they should object strongly.


Charles Edward Johnston: We do, to the Liberals.


Jean-François Pouliot: Do not take it that way, Mr. Bow River. It is not a question of being against a man. It is a question of removing obstacles in the way of progress. The idea is not to waste time splitting hairs but to go back to sound responsible government, to sound British ministerial responsibility; to teach respect for parliament to all those who believe they are above parliament and cannot be censured in this house, to advocate free speech, to speak earnestly and not extravagantly-


Walter Edward Foster: The hon. member has
exhausted his time.


Norman Jaques: Mr. Speaker, I should like to take a few minutes to clear the minds of some hon. members. The last speaker (Mr. Pouliot) has quoted from an encyclopaedia. If he will look up the subject of bank credit in that encyclopaedia he will find these words, that banks lend money by creating the means of payment out of nothing.


Some hon. MEMBERS:: No.


Norman Jaques: Oh, yes. In the Encyclopaedia Britannica, in an article written by one of the secretaries of the British treasury, you will find the statement that banks lend money by creating the means of payment out of nothing. Those are not my words but the words of the writer of the article on bank credit in the Encyclopaedia Britannica.


Malcolm McLean: Who is the
writer?


Norman Jaques: His name escapes me at
the moment, but he is a secretary of the British treasury at the present time.
It is a strange thing that whenever the subject of money comes up in this house we are always reminded of the terrible effects of inflation, but we never hear one word about deflation-never. A great deal has been said this afternoon about the French assignats. I am not here to deny that they failed and that they caused inflation. But may I quote from a man who should command the respect of every member of this house, Mr. Vincent C. Vickers, late director of the Bank of England, and to-day a director of one of the great insurance companies in London, England. This book was written in 1936.


Mr. DUPUIS:: What is the title?


Norman Jaques: The title is Finance in the Melting Pot, by Vincent C. Vickers, late director of the Bank of England. He says:
I have watched for ten years every move, every wriggle, of financial policy. I have seen the effects of the greatest financial blunder the world has ever known-our return to the gold standard after the war-and its effect upon our basic industries, coal, cotton and agriculture.
That is pretty plain language. As I said, it is an extraordinary thing that we never hear anything about deflation. From what have we been suffering these last ten years if not from deflation? I will put this question to hon. members; when has this country or Great Britain ever suffered from inflation? All we ever hear are two examples from other countries. One of them was 150 years ago, from France, when it was in the throes of one of the greatest revolutions the world has ever known, and when the government itself was unstable. The other example is from Germany, which had also been through a revolution, whose government was not very stable, and had had imposed upon it war indemnities in an impossible amount.


William Alexander Fraser: We suffered from inflation after 1929.


Norman Jaques: Pardon me; I would say that we have suffered from deflation ever since.


William Alexander Fraser: As a result of inflation.


Norman Jaques: I would not call prosperity inflation. It seems extraordinary that if the world is prosperous, if people generally are doing well, then somehow there is a feeling that we ought to be punished for it, that we do not deserve it, and if deflation is imposed on a country we are told that we are paying for our sins-as though prosperity were a sin.
The leader of the opposition (Mr. Manion) described the other day, as I recall it, the

Loan of V50,000 flOO
issue of paper money as the same as the effect of taking opium, that it requires ever-increasing doses.


Robert James Manion: I said that was the result of the excessive issue of paper money, not of an ordinary issue of paper money, because we have that at the present time.


Norman Jaques: Quite. I do not wish to misquote in the least the hon. gentleman. Although I am not a doctor, and I believe he is, I would say that a better simile would be that inflation is a fever. It is short-lived and sometimes violent, and it leaves the patient in a weakened condition, but I believe it does purify the system in that it burns up a lot of debt. Now, how can we describe deflation? I would liken deflation to a certain social disease which is insidious and is not of short duration. As a consequence of that disease the various members of the body politic decay and rot. We see to-day that large masses of people are decaying. If that disease is not checked it ends in general paralysis of the insane. I 'believe that democratic governments generally are displaying at this very moment every symptom of general paralysis of the insane, because they seem incapable of taking any active steps to cope with tihe disease, and the policies which they are backing and endorsing are policies which are leading up to a general destruction of the whole world, beginning with rearmament.
I have said that every time any new idea in the domain of monetary policy is introduced, immediately the cry of inflation is raised unless the money to be issued is first created by the banks. Often after one of our group has spoken the Minister of Finance (Mr. Dunning) will get up, he will turn around to his followers, and will warn them of the evil effects of what we are advocating. He says in effect, " Do not listen to those people. Their money is no good. They have not the art, the magic; their ideas will not work. Only the banks-"


Charles Avery Dunning: Now, Mr. Speaker, I
must object to what is being put in my mouth. My hon. friend cannot represent me to the country as using language like that. I never have said what he i3 now stating. If he wants to quote me he is at perfect liberty to do so. What I have said I stand by. But again I object to being interpreted by my hon. friend; I have no objection to being quoted.


Norman Jaques: I do not wish to misquote
anybody. I can only say that I listened as 71492-278
carefully as anybody else in the house and that is the impression which I get of the minister's meaning.


Walter Edward Foster: The hon. member must
accept without qualification the explanation given by the Minister of Finance.


Norman Jaques: I accept it, of course. I
have no wish to misquote anybody. Apart then, from the minister himself, the impression is genera! throughout the world, at any rate through Canada-and that is the country of which I have experience-that if governments interfere with finance, if they issue money, inflation is bound to follow.


Malcolm McLean: Did not the
government of Canada always issue money before the Bank of Canada was established to do it?


Norman Jaques: I w-ould not say sis to the
government of Canada. But I believe this is right, that before the formation of the Bank of England the government, or at least the king of England, issued the currency. That is why we see a king's head on coins; nobody else had the right to create or issue any money at all.


Malcolm McLean: In Canada?


Norman Jaques: I am speaking of Great
Britain. But since the formation of the Bank of England the government has issued less and less and the Bank of England has issued more and more, until, I believe, the Bank of England has sole control of the finances of Great Britain. That statement may be objected to, but all the same I believe it is true.


Malcolm McLean: It is not correct.


Norman Jaques: The Bank of England is
a private corporation, all of whose shareholders are not known, I believe, and some of the directors are not British.
Let us consider Britain's program of rearmament. They are spending something like S10,000,000,000 a year on rearmament. The money is being distributed to the workers, not in respect of retail goods but in respect of goods which the people will never have an opportunity of buying and which, could they buy them, would be of no use to them.


William Alexander Fraser: But the mechanic is giving his labour and services in return for the money.


Norman Jaques: Quite. I am not saying that he is not earning the money. I merely say that the vast sums of money which are being distributed in Great Britain to-day through

Loan of $.750,000,000

this policy of rearmament are not resulting in a direct increase of retail goods, so therefore the money distributed raises the ratio of money to the amount of retail goods which is being created at the present time. The money itself is being expended on the making of arms and ammunition which do not come on to the retail market. And yet, in spite of that enormous distribution of money, they have no inflation in Great Britain; in fact they still have two million unemployed. As has been said by the Right Hon. Reginald McKenna, until such time as the unemployed are absorbed into industry there is no possibility of inflation.
I have read Doctor Schacht's statements in a paper which he delivered in Germany. I have read the English translation. In that paper he explains exactly the way in which he financed German rearmament, and it was done purely through the creation of credit, which was used to rearm the country. The wages were distributed among the workers who used them to buy the goods and services they needed. That rearmament policy was financed in that way until the unemployed in Germany were all reabsorbed. Of course, when that point is reached there is no sense in creating and issuing more credit because inflation must then ensue. But until the unemployed are absorbed-I do not say every single man, but taking the problem as a whole-there is no danger of inflation unless it is deliberately brought about. That is possible, and it has happened in the past, and I suppose it could happen in the future. There is, however, no necessity for it. There are more than a million on relief in Canada and there are a good many men who are unemployed although they are not registered.


Charles Avery Dunning: That includes men,
women and children. Even the two-year olds are unemployed, according to my hon. friend's calculation.


Norman Jaques: I say a million, because the number on relief bears a relation to the number of unemployed. Making a rough estimate, I should say there are probably half a million men either unemployed or employed to very poor ends, and I say that if industry were given a chance and properly financed we could reabsorb possibly half a million in useful production. I do not mean public works, because personally I do not believe in large programs of public works. I should like to see industry itself working full blast employing every man who is employable. Our opinion in this corner, an opinion shared by a great many people not only in Canada but [Mr. JaquesJ
throughout the world, and proved in Germany, is that the only way in which this can be done is by adapting finance to the needs of industry.


Mr. LAWSON:: When the hon. member uses the word "money," is he including credit? When he talks about great quantities of money put into circulation in Great Britain on a rearmament program, does he include credit or does he mean specie?


Norman Jaques: I mean practically one hundred per cent credit.


James Earl Lawson: All credit?


Norman Jaques: Practically all credit. I believe the percentage of business in Great Britain done by means of credit and cheques is 98 or 99 per cent.


James Earl Lawson: I mean borrowed money. Is that included in the credit to which the hon. gentleman refers-not simply bank cheques, because they are only mediums of exchange.


Norman Jaques: I imagine that the rearmament program has been carried out pretty much in this way. Suppose I have a small factory making cars and the government decides on a program of rearmament. A call goes out for tenders for the making of aeroplane parts or something of that kind. I tender and am successful. I go to my local bank manager and show him my contract, and if he thinks I am a capable and honest man, seeing it is a government contract, he agrees to give me credit and asks how much I want. I tell him, and I start production by means of the credit he gives.


James Earl Lawson: The reason why the banker lends the credit to the hon. member, a manufacturer, is that he knows that in due course the hon. gentleman will be paid by the government.


Norman Jaques: That is true.


James Earl Lawson: And in order that the
government may get the money with which ultimately to pay the manufacturer, it must borrow the money somewhere.


Charles Avery Dunning: Or tax for it.


James Earl Lawson: Either way. What the
government in England is doing is borrowing.


Norman Jaques: I was referring to what is being done in England at the present time.


James Earl Lawson: Well, that is the basis on which Canada is proceeding except that wre are not spending as much on armaments.

Loan oj $750,000,000


Norman Jaques: That is roughly the way in which the matter is being dealt with in England, but even as it is they still have two million unemployed.


William Alexander Fraser: Why does the hon. member use that as a comparison with social credit?


Norman Jaques: As a matter of fact I am not putting forward social credit proposals and I have not done so during this session. I do not remember ever having done it. We are merely suggesting that steps might be taken under the existing set-up without going into social credit itself. We are suggesting something which this government could do if they wanted to.


James Earl Lawson: They would have to increase the national debt to the extent of the borrowed credit.


Norman Jaques: Yes; under our system they would. But if, as I believe is intended, national debts are never to be paid, as Mr. Towers told us the other day in the committee-


Mr. GOLDING:: Order.


Norman Jaques: Am I out of order?


James Earl Lawson: No.


William Alexander Fraser: What the hon. member is talking about is debt-free money.


Norman Jaques: We say that instead of borrowing money, the government through the central bank could just as well and with a great deal more profit to the people create the money and issue it as debt-free money.
'Mr. FRASER: Print it.


Norman Jaques: There is no need to print it.


Mr. EULER:: Without any limit?


Norman Jaques: There are absolute limits. One limit I pointed out is the limit of unemployment. Until the unemployed are absorbed there is no danger of inflation; but as soon as unemployment ceases and everybody is at work, the issue of more money will result in inflation, because you cannot increase production beyond that point. Until that point is reached, however, the more people who go to work, the greater the production and the greater the quantity of goods, and therefore there is no danger of inflation.


James Earl Lawson: But does not my hon.
friend realize that when you swing from a discussion of borrowing credit to a discussion of the central bank issuing money, you are swinging from credit which represents goods and services to something which is merely a medium of exchange? That is where the confusion lies.
71492-27SJ


Mr. POOLE:: They are both the same;
what is the difference?


James Earl Lawson: The difference is that
when the bank extends credit to me, the bank is lending me a given quantum of goods and services for which someone is entitled ultimately from someone else somewhere in Canada; and when the Bank of Canada issues a piece of specie it is not issuing something that represents goods and services but merely issuing something that is a medium of exchange for goods and services.


Norman Jaques: As for the chartered banks, I can remember at one time borrowing some thousands of dollars to buy a piece of real estate, and that was done over the telephone. I did not even sign a note.


William Alexander Fraser: The bank gave you a transfer of held wealth, converted wealth.


James Alexander Marshall: No, they created it.


Mr. ROWE (Athabaska):: They made an entry on the credit side of the ledger in your account.


Walter Edward Foster: I must remind hon. members that the house is not in committee. When the house is in committee will be time for questions, not now.


Norman Jaques: We have heard a great deal about wooden money and wildcat money; I wonder how many hon. members realize just how the money systems of the world really do work.


Some hon. MEMBERS:: Oh, oh,


Norman Jaques: Yes, there are groans, but these matters are worth knowing. I was sent here for the sole purpose-


Vincent Dupuis: Of evangelizing the house.


Norman Jaques: of spreading these ideas to the best of my ability.


Joseph Thorarinn Thorson: The hon. member has certainly done his best.


Norman Jaques: I have in my hand the report of the hearings before the committee on banking and currency of the house of representatives in Washington. The United States is no small country, it is bigger than this. And let me say that possibly the banking and currency committee in Washington may know as much about money as we do in this house.


Walter Edward Foster: I think the hon. member has already referred to the proceedings of that committee. I do not think he has the right to repeat what he has already quoted in the same debate.
Loan of 8750,000,000


Norman Jaques: I have not already quoted this.


Vincent Dupuis: Just another quotation!


Norman Jaques: Yes, a quotation if you
like. But there is one thing. I do not read my speeches.


Ernest Lapointe: The hon. member reads the speeches of others.


Norman Jaques: Very little. I do not think I can be accused of that.


James Earl Lawson: I may tell my hon. friend that the reason why I listen to him is that he does not read, he reasons.


Norman Jaques: Mr. Ford, who is a member of the committee on banking and currency in the United States congress is speaking of the time when the Roosevelt government was first elected. He said, as reported at page 376 of the report:
. . . the banks were broke, but the treasury borrowed from the banks. . . .


Charles Avery Dunning: This is just one man's opinion; this is not the committee's report?


Norman Jaques: Well, they all seemed to agree to it.


Charles Avery Dunning: Who is the man?


Norman Jaques: A man called Mr. Ford.


Charles Avery Dunning: Who is he?


Norman Jaques: A member of the committee on banking and currency, and I suppose a representative in congress.


Charles Avery Dunning: Just as my hon. friend is a member of this house.


Norman Jaques: Mr. Ford continued:
What happened was that the banking system of the United States, which was broke, loaned to the treasury of the United States-let us say it was a billion dollars, for convenience- a billion dollars at 2f per cent. Then the treasury loaned to the R.F.C.-
That, I believe, means the reconstruction finance corporation.
-that billion dollars at 3 per cent, giving them a quarter per cent margin. Then the R.F.C. turned around and loaned that money, which did not exist originally, to the banks at 3i per cent.
He says the treasury borrowed that from the banks, paying 2| per cent; the R.F.C. got it for 3 per cent and loaned it back to the banks at 3i per cent, and he says:
I want to ask this simple question: Was that a Houdini operation?
Mr. Goldsborough-


Charles Avery Dunning: Who is he?
.


Norman Jaques: It was Mr. Ford who asked this question.


Charles Avery Dunning: Was there a witness
before the committee?


Norman Jaques: No, they are all members of the committee on banking and currency.


Charles Avery Dunning: All talking among themselves?


Norman Jaques: In committee, yes.
Was that a Houdini operation?
Mr. Goldsborough: Of course, I do not think that Houdini, as skilful as he was, could ever perform gymnastics the way the treasury performs them. If everybody in this room were to chain Houdini and lock the chains and throw him in Chesapeake bay, he would come up in three minutes without a thing on him, but that does not begin to touch what can be done with our system of financing.
Mr. Ford: But isn't that the actual situation?
Mr. Goldsborough:	Yes sir. These banks
were actually busted, and yet the federal government borrowed the money from busted banks and loaned it back to the same busted banks in order to reestablish them and put them on a sound foundation.


Malcolm McLean: Do I understand the hon. member to say that the government loaned it back to the banks at a higher rate of interest?


Norman Jaques: Yes.


Malcolm McLean: The banks then promised to pay a higher rate of interest than they received?


Norman Jaques: That is what it says. They borrowed it from busted banks and then loaned it to the government, and the government lohned it back to the banks to put them on a sound foundation.
Mr. Goldsborough: In other words, they did what could not be done.
Mr. Meeks: It can be done.
Mr. Ford: It was done.
That is no fairy story; that is the way in which the finance of possibly the greatest country in the world is conducted.


Charles Avery Dunning: Does my hon. friend stand by that? He. has quoted from the proceedings of a congressional committee in another country, the individual opinions of those members. He places it on record, saying. "This is a report of the banking and currency committee of the United States." And when we hear it we find it is merely individual expressions of opinion, just such as might be heard in this house or in any of its committees. Can my hon. friend guarantee the authenticity of the statements there made?


John Charles Landeryou: They are made by responsible men.

Loan of $750,000,000


Norman Jaques: I can only say that no member of the committee contradicted it. The record is here, every word.


Charles Avery Dunning: My hon. friend quoted one who said, " It cannot be done."


Norman Jaques: And the other one said it was done. In other words, as this member said, they achieved the impossible.


Malcolm McLean: He thought it could not be done.


Norman Jaques: But you do not believe-


Walter Edward Foster: I ask the hon. member to address the chair.


Norman Jaques: I beg your pardon, Mr. Speaker. The hon. member does not believe, or some hon. members do not believe, or at least I judge that they do not from their remarks when I started this afternoon, that the statement is made in the Encyclopaedia Britannica by a responsible public man that when banks lend money they create the means of paying it out of nothing. That is exactly what this man in this committee says. I have always understood that you cannot make something out of nothing, yet it seems that it is done. That is what they say here; they achieved the impossible.


Mr. CLEAVER:: Then why do banks go broke, as they do sometimes?


Norman Jaques: That is simple. It stands to reason that if the banks create more money than there is in existence, which they do; that is to say, if they expand their credit to ten times their cash reserves, which is a common practice, and by law they can expand it to twenty times, that is perfectly all right so long as only 10 per cent of the depositors demand their deposits in cash. Experience has taught the banks generally that they can safely go to that limit of 10 per cent. But if there is a panic, and there was one in Great Britain in 1914 when the war broke out, or in the United States a few years ago, and too many people want their deposits in cash, the banks must fail because there is only 10 cents in cash behind every dollar of credit which is out in the country.


William Henry Golding: Why could they not create some more credit out of nothing?


Norman Jaques: So they could, but the people aTe demanding cash. Ordinarily they are quite content with credit. If I owe a bill and pay that bill with a marked cheque, ordinarily people have no objection; they are extremely glad to get it. But if there is any doubt in the mind of the general public as to whether or not they can get real cash for their cheques
they immediately run to the banks and want to withdraw their deposits in cash. The Bank of England went broke in 1914. I remember that during all the years I lived in England I really believed that behind every five pound note were five pounds in gold. More than once I went to the Bank of England, handed in a five pound note and received in return five sovereigns, and I believed everyone could do that. So I was surprised when in August, 1914, too many people went to the Bank of England to trade their paper for gold, and the bank closed its doors; it was broke. Of course in such a situation no government could see its biggest bank stay broke, so they got their heads together and printed so many hundred million pounds worth of paper notes. Then, when the bank opened its doors, the depositors received those notes instead of the sovereigns; and because the paper money had behind it the authority and credit of the bank and the government, the people accepted paper instead of gold with the result that confidence was restored.
We do not say there is anything wicked about that; in fact, without that provision for the creation of credit, business would be impossible to-day, because there is less than the tenth part of the necessary money available. But there is this danger, that if there is a panic and more than 10 per cent of the deposits are demanded in cash, the banks must close their doors. That cuts both ways. It also follows that if the banks loan more money than there is in existence, the people borrow more money than there is in existence, and when there is a depression, when deflation is decided upon and the banks call in their loans, or, in other words, when the banks make a run on the people, they cannot pay back what they borrowed because they borrowed more money than there is in existence. That is why during a period of deflation the borrowers lose their securities to the banks. They borrowed more money than there was in existence and they cannot pay it back, because the money is not there. And you do not pay in goods; you pay in money.
I hope I have made clear to hon. members that we have no intention of permitting any wild inflation, and so long as there is an unemployment problem there is no danger of inflation up to the time when all the unemployed are absorbed in industry. When that point is reached, any further issue of credit or money undoubtedly would result in inflation.


John Charles Landeryou: Mr. Speaker-


Walter Edward Foster: I do not think the hon.
member is in order in speaking now, because
Loan oj $750,000,000

he moved the amendment and spoke on both the main motion and the amendment. The hon. member cannot speak again.


John Charles Landeryou: I moved the amendment, but I thought I could speak on it.


Walter Edward Foster: The hon. member has
not the right to speak. I refer to paragraph 2 of standing order 43 of Beauchesne:
A reply shall be allowed to a member who has moved a substantive motion, but not to the mover of an amendment.


Mr. FINN:: Mr. Speaker, I was paired with the hon. member for Red Deer (Mr. Poole). Had I voted I would have voted against the amendment.
NAYS . Messrs:
Anderson
Baker
Barber
Bercovitch
Bertrand (Prescott)
Bertrand (Laurier)
Blanchette
Bonnier
Bothwell
Boulanger
Bradette
Brasset
Cahan
Cameron
Cardin
Casselman
Chevrier
Clark (Essex South) Clark
(York-Sunbury) Cleaver Cochrane Coldwell Cote Damude Davidson Deslauriers Dubois Dubuc Duffus Dunning Dupuis Emmerson Esling Euler Evans Factor Fafard Farquhar Ferguson Ferland Fontaine Francceur Furniss Gauthier 
Glen
Golding
Gosselin
Goulet
Grant
Gray
Green
Hanson
Harris
Hartigan
Heaps
Hill
Hurtubise
Ilsley
Isnor
Johnston
(Lake Centre) Kinley
Lacroix (Quebee-Montmorency) Lalonde Lapointe
(Quebec East) Lawson Leader Little McCallum McCann McCuaig McCulloch Macdonald
(Brantford City) McDonald (Pontiac) McDonald (Souris) McGregor Maclnnis McIntosh
MacKenzie (Neepawa) McKinnon (Kenora-Rainy River) McLarty
MacLean (Cape Breton North-Victoria) McLean (Melfort) McLean (SimcoeEast)
Motion (Mr. Dunning) agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Short title.


René-Antoine Pelletier: Mr. Chairman, it is six o'clock.


Charles Avery Dunning: Apparently there will be objection to proceeding even with committee on this bill in spite of a long discussion on the second reading. There is only one section, but if there is objection I am willing to move that the committee rise. Is there any objection to proceeding?


Mr. WOODSWORTH:: Mr. Chairman-


Charles Avery Dunning: I move, Mr. Chairman, that the committee rise, report progress and ask leave to sit again.
Section stands.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



POST OFFICE ACT


[Stage Direction]
The house resumed from Friday, March 24, consideration of the motion of Mr. Wilfrid Lacroix (Quebec-Montmorency) for the second reading of Bill No. 4, to amend the Post Office Act.

Post
Office Act-
-Communistic Literature
Mr. ANGUS MacINNIS (Vancouver East):: When this bill was introduced it was my intention to speak to it at considerable length. To-night, however, I shall confine myself to a very few remarks upon the measure.
It seems to me strange that in a country such as Canada a bill of this kind should be introduced at all. It is particularly strange, when we have doctrines from the right and from the left which in some respects are equally obnoxious, that this bill aims only at the suppression of one kind. It seems to me that this indicates an unhealthy state of affairs; it suggests that Canada has not been able wholly to escape the virus of totalitarianism, which clearly shows in this bill. The bill indicates that we have among us people who would suppress the propagation of one set of social ideas while they would allow to flourish unimpeded another and equally objectionable creed.
The purpose of the bill is to prohibit the distribution of communistic literature through the mails. I am absolutely opposed to the purpose of the bill, not because I favour communism, for I do not. I have been in public life more or less for the past twenty years and have been speaking on public platforms almost continually during that- time, and on only two occasions has there been an attempt made to prevent me from speaking, and in both instances the attempt was made by the communist party or communist sympathizers. But after all, that is no reason why I should favour the suppression of the communist party. When I advocate the suppression of ideas which I do not like I come down to the level of those groups who wish to suppress ideas with which they do not agree. I was interested in hearing the leader of the opposition (Mr. Manion) when he spoke on this bill say that he was opposed to the communist party because they advocated revolution. It seems to me that a country which has not a revolution to look back upon has not very much to look back to.


Mr. POWER:: Particularly the country of the leader of the opposition!


Robert James Manion: It was the revolution I was afraid of looking forward to, not the one that I was looking back to.


Angus MacInnis: I quite agree. Every
country which has had a successful revolution is proud of it. I am reminded of an organization which they have in the United States. They had a great revolution there at one time, somewhere around 1776; there is in the United States an organization which calls itself the Daughters of the American
Revolution, and the whole purpose of that organization seems to be to prevent any further revolution from ever taking place in that country. My opinion-it may be wrong -is that there is more reason for revolution in the United States to-day than there was in 1776-


An hon. MEMBER:: Maybe they regret the last one.


Angus MacInnis: -because there is more injustice there to-day than there was in 1776. That does not mean that I advocate that they should have a revolution. That is for them to decide.
The objectionable thing about restrictions of this kind is that you begin by restricting a certain set of ideas and you end up by prohibiting the circulation of all ideas. I do not know just where the communists stand at the present time, but a few years ago they were extremely intolerant of views other than their own. The danger of suppressing ideas which we do not like was very well put in an editorial in the New York Times, on June 7, 1938. It said:
Conservatives and radicals are both shortsighted when they encourage or tolerate the suppression of the opinions that they do not like to hear. In no country in which freedom of speech has disappeared in recent years has it been wiped out with one stroke. Suppression either has moved from Right to Left or from Left to Right. That is it has either begun, as in Russia, in suppressing conservative opinion and moved on until it suppressed every opinion but that of the ruling clique; or it has begun, as in Germany, in suppressing "Communist opinion and has moved on to suppressing liberal and finally even conservative opinion. Freedom is not protected unless it is protected on all fronts.
Another reason for caution in suppressing opinions was fairly well put a short time ago in this chamber by the Minister of Justice (Mr. Lapointe) when he remarked that it was very difficult to draw the line as to when you should limit freedom of speech and when you should limit freedom of action. I believe those were his words; at least it was the import of them. The truth of that must be very clear. Of course a time may come when that line will have to be drawn, and I think in that connection I might refer to a case which occurred not long ago in Great Britain. In the fall of 1936 the fascists under Sir Oswald Mosley began to make themselves obnoxious by holding street parades in uniform. The British government came to the conclusion that such parades were a menace to the peace of the community, and it decided that parades in uniform would not be allowed, but the government did not suppress freedom of speech for the fascists or the members of
4430	COMMONS
Post Office Act-Communistic Literature
Sir Oswald Mosley's party. To-day not many people in Great Britain pay much attention to Sir Oswald or his party.
We have in this country at the present time propaganda which seems to me more pernicious than anything which has 'been circulated so far by the communist party, but this bill makes no attempt or no suggestion that such propaganda is to be suppressed. I have in my hand a translation from Le Combat National-I do not know whether that is anywhere near the French pronunciation.


Ernest Lapointe: Oh, that is all right.


Angus MacInnis: It is the organ of the national unity party of Canada, published in Montreal, and to me it is the vilest stuff that I have ever seen.


Ernest Lapointe: That is right.


Abraham Albert Heaps: By whom is it published?


Angus MacInnis: It is the organ of the national unity party of Canada.


Abraham Albert Heaps: Who are they?


Angus MacInnis: I do not know. In the issue of April, 1939, I find this:
To boycott the Jew is not sufficient. When you buy from a non-Jewish merchant, make sure that the merchandise does not come from a Jewish manufacturer. All Jewish products must be boycotted.


Ernest Lapointe: I hope my friend will not read what they say about me.


Angus MacInnis: I will confess to my right hon. friend that I had in my hand one evening something which I was going to use against him, but when I saw this, I decided not to do so. The reference to him which is made here is one which certainly should not be made in the public press about any individual.
If you discover that the confectionery industry in Canada is in the hands of Jews-you are an agent of Hitler.
If you complain because the monopoly of amusements, theatres and corrupting movies is 100 per cent Jewish in Canada-you are an agent of Hitler.
If you wish to work to give back to Canadians the monopolv of their forests, their mines, their food industry, their furniture manufacture, their meat industry, their grocery business- you are an agent of Hitler.
, If yon find that the Jews usurp a disproportionate part of the liberal professions in this country-you are an agent of Hitler.
The whole trend of this article is to attempt to make people believe that the Jews in Canada have a monopoly of the wealth of the country, although, as a matter of fact, [Mr. Maclnnis.l
nothing could be further from the truth. Anyone who will read the lists of the directors of our banks, our great industrial institutions, our mining companies, can easily ascertain who the directors are, and very few of them are Jews. I do not know whether it is worth while reading any more from this publication, but I would point out that while the bill would prohibit, say, the circulation in the province of Quebec of The Clarion, in which, so far as I can see, there is nothing objectionable to anybody, it would allow the free circulation of the sort of thing I have mentioned. In my opinion, it is deplorable that we should have to discuss a measure of this kind in the Canadian parliament.
For many years I have found great pleasure and sometimes have derived instruction from some of the writings of Lord Macaulay, and I should like to read briefly from his Essay on Milton. The paragraphs on liberty constitute, in my opinion, one of the finest passages in English literature. Lord Macaulay here is discussing Milton's share in the civil war in England in 1648 and 1649, when King Charles was beheaded-and not many Englishmen are ashamed of that revolution or of its results. He says:
If it were possible that a people brought up under an intolerant and arbitrary system could subvert that system without acts of cruelty and folly, half the objections to despotic power would be removed. We should, in that case, be compelled to acknowledge that it at least produces no pernicious effects on the intellectual and moral character of a nation. We deplore the outrages which accompany revolutions. But the more violent the outrages, the more assured we feel that a revolution was necessary. The violence of those outrages will always be proportioned to the ferocity and ignorance of the people; and the ferocity and ignorance of the people will be proportioned to the oppression and degradation under which they have been accustomed to live. Thus it was in our civil war. The heads of the church and state reaped only that which they had sown. The government had prohibited free discussion; it had done its best to keep the people unacquainted with their duties and their rights. The retribution was just and natural. If our rulers suffered from popular ignorance, it was because they had themselves taken away the key of knowledge. If they were assailed with blind fury, it was because they had exacted an equally blind submission.
I do not think any words could more accurately describe what happened in Russia in 1917 than these words, penned in 1825. The leader of the opposition referred to the suppression of the church in Russia, but the church in Russia associated itself with and became part of the power in Russia which was suppressing the people and keeping them in poverty and ignorance.


Paul Joseph James Martin: What church?

Post Office
Act-Communistic Literature


Angus MacInnis: I believe it was called the Greek Orthodox church. Macaulay goes on, referring to freedom and its effects:
A newly liberated people may be compared to a northern army encamped on the Rhine i?r the Xeres. It is said that, when soldiers in such a situation first find themselves able to indulge without restraint in such a rare and expensive luxury nothing is to be seen but intoxication. Soon, however, plenty teaches discretion; and, after wine has been for a few months their daily fare, they become more temperate than they had ever been in their own country. In the same manner, the final and permanent fruits of liberty are wisdom, moderation, and mercy. Its immediate effects are often atrocious crimes, conflicting errors, scepticism on points the most clear, dogmatism on points the most mysterious. It is just at this crisis that its enemies love to exhibit it. They pull down the scaffolding from the half-finished edifice; they point to the flying dust, the falling bricks, the comfortless rooms, the frightful irregularity of the whole appearance; and then ask in scorn where the promised splendour and comfort is to be found.
We have heard a great deal of that in the last few years.
If such miserable sophisms were to prevail there would never be a good house or a good government in the world.	.
Ariosto tells a pretty story of a fairy, who, by some mysterious law of her nature, was condemned to appear at certain seasons in the form of a foul and poisonous snake. Those who injured her during the period of her disguise were for ever excluded from participation in the blessings which she bestowed. But to those who, in spite of her loathsome aspect, pitied and protected her, she afterwards revealed herself in the beautiful and celestial form which was natural to her, accompanied their steps, granted all their wishes, filled their houses with wealth, made them happy in love and victorious in war. Such a spirit is Liberty. At times she takes the form of a hateful reptile. She grovels, she hisses, she stings. But woe to those who in disgust shall venture to crush her! And happy are those who, having dared to receive her in her degraded and frightful shape, shall at length be rewarded by her in the time of her beauty and her glory!
There is a great deal more in the same strain. I suggest that some of our people who are fearful of the excesses that may sometimes attend the extension of liberty should read this essay of Macaulay. If they do they will realize that as people become accustomed to their liberties they take them in moderation as they take other things to which they are used, and if there at first be excesses, out of these excesses there will emerge an orderly society.
If we in Canada are going to avoid what has happened in many other countries; if we are not only to keep our democratic institutions but to extend them, make them more real and complete where to-day [DOT] they are lacking, we cannot do it by passing legislation of this kind. We can do it only by 71492-279
granting more and more freedom, extending education, extending the privileges of the under-privileged, giving our people the right to take part not only in the work of production itself but in the operation of industry, bringing them into full citizenship; and then we need have no fear of subversive elements whether from the right or from the left. A contented people cannot be driven to revolution or to acts of violence under any circumstances whatsoever. Uprisings and acts of violence take place only when people are fearful, insecure and suppressed; when they feel they have nothing to lose.
I ask this house to turn down this bill so emphatically that any hon. member would hesitate before introducing such a bill in this parliament again.


Malcolm McLean: In rising to discuss this bill briefly to-night, I am interested in the avowed objects thereof. The bill is to amend a paragraph in the present act, and for greater clarity of understanding I shall read the paragraph; there is only one. The subsection to be amended gives the Postmaster General power to do certain things, to make regulations to keep the mails free from certain substances which should not be carried, to restrict within reasonable limits the weight and dimensions of mailable matter and to prohibit and prevent the sending of explosives and dangerous, contraband or improper articles. This bill proposes to amend that subsection by adding the following words:
and for prohibiting and preventing the sending of any newspaper, periodical, pamphlet, circular, document or writing whatsoever advocating, propagating or tending to propagate communism, and for greater certainty but not so as to restrict the generality of the foregoing expression "communism," advocating, propagating or tending to propagate the doctrines or axioms of the third communist international, the communist party of Canada, section of the communist international, or of any group or organization having similar aims and professed purposes.
One of the weaknesses of this amendment is that it deals with only one type of propaganda or agitation that is obnoxious to the great majority of the people of Canada. There are several other types, several other political organizations, advocating doctrines that are not in accord with the democratic ideas of the great majority of our people. This is not a logical amendment because it touches only one of those creeds or types of political ideology that never had their genesis on this continent or among the people who first came here, who developed this continent and made it what it is to-day; but

1432	COMMONS
Post Office Act-Communistic Literature
were doctrines that were imported from Europe at a later date, that had their origin in the slums, in the serfdoms, in the ill treatment of the people in those European countries by the powers that were in existence. Those doctrines are not of British origin; they are not of French origin; they are not of northern European origin, and they are not in accord with the beliefs of our citizens who came to Canada from other parts of Europe to escape the excesses that brought about in the countries they left in central and eastern Europe the doctrines about which we hear so much and which are so much opposed to the ideas of Canadians at the present time.
I see no reason why only one type of these hateful ideologies should be prevented from using the mails. In addition to communism as we know it at the present time we have the doctrine of nazism, the doctrine of fascism, and many even fair-minded people would say the doctrine of socialism, which they believe to be injurious and harmful. But nothing is said about preventing access to the mails for literature or propaganda advocating these types of political ideas. '
There are two or three points which we should always keep in mind when discussing legislation of this kind. The first is that above everything else and in regard to everybody else we must not allow ourselves to be frightened unduly, to become panicky because of such propaganda. We in this country are suffering from some of the disease germs that are floating round Europe at the present time, due to different causes. Much of the unrest we have in Canada is not deeply rooted; a great deal of it is on the surface. Clever agitators, by every means they can devise, are stirring up discontent with conditions that have no relationship whatever to European conditions which caused the disease from which many people are at present suffering.
The remedy for the troubles that do affect us in this country is not to be found in oppression or in preventing the transfer of thought either over the air by public speech or by literature through the mails. All that such legislation can do is to force these ideas underground, and when they are forced underground they become exceedingly dangerous.
I do not believe that any force, either physical or legal, can counteract ideas. If the ideas are wrong they must be counteracted by right ideas, and if they are wise in whole or in part they should be given an opportunity to circulate so that everyone may have a chance to judge them and perhaps adopt them with

or without modification. But to prevent ideas from circulating freely, to drive them underground, does no good whatsoever.
We have seen examples of this in Canada. There is a gentleman in public life to-day who a few years ago was resting in one of our penitentiaries for having expressed his opinions in a public place in one of the provinces of the dominion. To-day, instead of being an insignificant person of whom few people had heard until he was arrested and condemned to serve a term in the penitentiary, he is a hero to large numbers of people. I do not think he has yet attained to public office; but it would not have been remarkable if he had, because in several elections he has polled a very large percentage of votes, certainly not all from people who believe in his doctrines, but people voted for him largely out of sympathy for his having drawn on himself the anger of the authorities for expressing his views in a way that perhaps was not prudent. The result of that action was certainly not what was intended; it gave him publicity and notoriety. So one could find in this country hundreds of cases in which, instead of stopping the spread of ideas that it was hoped to stop, they were simply encouraged. I am glad that this government and this parliament are too wise to believe that the spread of ideas can be stopped in that manner.
Take the one country in Europe which has adopted the creed of communism to as great an extent as possible, professes it as its political doctrine, has made of it a religion and has sought for the past twenty years not only to exalt that doctrine among its own people but to get other countries to believe and accept it. What do we find? We find that Russia was the country in Europe that exercised the greatest pressure on its citizens to prevent freedom of thought, freedom of speech, freedom of association and every other-type of freedom. So, because these people were driven underground, because they had no outlet for their opinions, they were driven to associate together and form their plans in the darkness. There were anarchists, nihilists, syndicalists, socialists and all the other " ists " formed by people who were not free to come into the open to talk and plan about what they wanted. I am quite sure that had it not been for that suppression the Russian people would not have acted as they have during the last twenty years. The Russians are among the most democratic people in the world. I do not believe an3' white people are more democratic at heart than the people of Russia, and I am quire

Post Office Act-Communistic Literature
satisfied that they did not enter upon that revolution deliberately desiring to inflict pain, hardship and death on millions of their people. But because they had been kept under; 'because they felt as one man felt who, tapping his forehead, said to me, "I am a dark man and I don't understand very much about what is going on," when their primitive passions were unleashed they went to extremes to which people in democratic countries are not usually inclined to go, thanks to then-long training in controlling their emotions and sentiments in public. That control has been lacking in what are now called the totalitarian countries.
I say the Russian people did not want to go as far as they did. They had one slogan, one battle cry; land and freedom were the two things they wanted. It was to gain these things that millions of people came from Europe to Canada and the United States. Having come here and found what they could not find elsewhere; having acquired land which, in spite of any mistakes they or we may have made, is still in their possession; or if it is lost, being still able to acquire more land; having acquired and retained that freedom they could not secure in their native lands, I believe they do appreciate the benefits of living on this continent. And so long as we maintain those fundamental principles under which they are able to live and move and make a living; so long as they have access to the land with all its resources, I do not believe they are going to be very dangerous.
So, to come back to what I said in the beginning, the worst thing we can do is panic ourselves into a state of fear in regard to these communists and the doctrines they may seek to propagate. That has happened before in the history of the world. For many years prior to the great war the German government taught its people to believe they had to maintain an immense military machine because of the great Russian bear to the east, which was liable to swoop down and destroy them overnight. They talked of that danger so much that they came to believe in it themselves. So, when the war came, as a result of this fear and their own panic, they were compelled to leave large numbers of their best troops on the eastern front. As it happened, this was a good thing for us; otherwise matters might have been very much more serious for the allies. So I say the worst thing we can do in connection with movements of this kind is to become overly fearful of them.
I do not like communism; I do not like to have it preached in a country like Canada, but I do not believe the ground on which
the seed distributed by these communists will fall is sufficiently fertile to produce anything that might become a menace in Canada. It may be that there are spots here and there throughout our dominion where conditions are more favourable for this sort of thing than they should be, but the remedy is to neutralize and sterilize the soil in which these seeds might be planted. I believe it is a bad thing for our country to have such a large percentage of our people gathered in four large cities. Canada is more than three thousand miles in width, much of it very rich soil, much of it containing great resources which, however, are not capable of easy development. We have a population of about eleven million people, of whom twenty-five per cent are located in four large cities, where even in prosperous times many are barely able to make a living. As soon as times cease to be prosperous they are unable to do anything for themselves and have to be assisted by the municipality, the province or the federal government. To stop the spread of communism, fascism and all these other subversive doctrines, I believe we should adopt policies which would induce these people to go back into the open; to get out into the sunshine, the rain and the fresh, clean wind; to get their feet on the soil, where they would be so much more immune to propaganda of this kind. If we could move fifty per cent of the people from our large cities to smaller cities and towns and into the open country we would not hear so much of these things of which we are sometimes afraid.
I believe this bill, if enacted, would be bad legislation. In the first place it would be ineffective. Anyone clever enough to devise a brand of propaganda that will upset the democracy we have enjoyed for so long in this country and in the land of our forefathers will be clever enough to get that propaganda through the mails without a great deal of difficulty. And if it is made more difficult to pass material of this kind through the mails there will be an added premium on that portion of it which does succeed in evading the censor and reaching those to whom it is addressed. I believe that such legislation would be ineffective, that it would be costly, that it would delay the mails and that it would cause legitimate users of the mails to curtail using them in greater or les3 degree. If such legislation should pass I can imagine in years to come critics on the opposition side addressing the Postmaster General of the day. Of course I am not referring to this parliament or to any of the parties represented here. I can imagine the
4434	COMMONS
Post Office Act-Communistic Literature
Postmaster General personally being condemned because he did not see to it, aside altogether from his officials, that letters, newspapers and literature of this type were prevented from using the mails.


Abraham Albert Heaps: And even Hansards.


Malcolm McLean: Yes, or books
even more sacred than Hansard. I can imagine the difficulty there would be and the blame that would be attached to the Postmaster General. On the other hand one can imagine the reaction there would be if the Postmaster General, either himself or through his officials, opened and inspected letters addressed to private citizens, for instance during a general election campaign. I do not think any of my hon. friends opposite would accuse the Postmaster General (Mr. McLarty) of anything of that kind. But it would not be hard to imagine that I, for instance, might complain of one of my hon. friends opposite if he were Postmaster General-for example, my good friend from Toronto, over there, if it were suspected that while he was Postmaster General he or his censors opened my letters. There would be that constant state of fear, suspicion, discontent and hatred, with the result that we would find other ways of sending messages, other ways which would be irritating and expensive, and would not be of much value.
At the same time we would be increasing that bad and poisonous effect, of which I spoke earlier, of allowing ourselves to be overly afraid. My hon. friends know well that every time the toxic germs of fear course through our veins we weaken and lessen our effectiveness.


Robert James Manion: Did the hon. member say "fear" or "beer?"


Malcolm McLean: I think "fear"
was the word I used. I am not afraid of being here, although sometimes we get tired of it. I know we all get tired of being here so much, but in this instance I was speaking of fear.


An hon. MEMBER:: Beer.


Malcolm McLean: There are so
many "here's" that one is sometimes liable to be mistaken.


John Ritchie MacNicol: It sounded like "beer"
over here.


Robert James Manion: That is what I thought
the hon. member said.


Malcolm McLean: I think it is
quite often the case that on occasions hon. members-including myself-hear that in which they are most interested.


John Ritchie MacNicol: It was I who interrupted the hon. member and I assume his reply is directed to me. I can tell him I
never even tasted beer.


Ernest Lapointe: So much the worse.


Malcolm McLean: Oh, the last
thing in the world of which I would accuse the hon. member for Davenport would have been anything like that. He and I are on common ground there. And we meet on another ground, because we share a common ancestral home where the brew was a good deal stronger than beer. Possibly he and I are on common grounds again, because we knew that while our capacity for consumption must be limited to the day time or part of the evening, the capacity of the distilleries was never less than twenty-four hours a day, and we did not enter into competition with them.


Mr. STIRLING:: And so you emigrated.


Malcolm McLean: In closing, I would say this: The ancestors of the great majority of Canadians, who love the freedom and democracy they knew as children, and which they inherited from their forefathers in the British isles and the great land of France, as well as from liberty loving people in other nations, have left us a great heritage, which we must preserve within ourselves. If we have in us the love of democratic government and free institutions, a love of freedom, im so far as we can wisely use it, and if we respect the possession of land and freedom-those things for which revolutionaries in Europe have always been willing to risk their lives- there is not much danger, if we do not allow ourselves to be carried away or destroyed by the toxic germ of which I spoke a moment ago.
A few days ago in this city of Ottawa, shortly before that in the old cities of Quebec and Montreal, and yesterday in Toronto-tomorrow it will happen in Winnipeg, and later on in other points in Canada-we saw evidence of what the people of Canada think in regard to our system of government, in regard to the head of the state. The peoples of the world were looking on. They are watching the way in which the crowds in this dominion are behaving. They see the way in which our rulers, our governors and our common people conduct themselves. When it comes to

Post Office Act-Communistic Literature
the use of discretion, and not exceeding the bounds of liberty, our common people and our rulers meet on common ground. The spectacles we have watched in the last few days in Canada have never 'been seen elsewhere in the world at any time.
The spirit responsible for the glorious celebrations we are now enjoying will be more efficacious in preserving our rights, freedoms and liberties than all the censorships that any or all branches of government could enforce. It will be more effective than any espionage which might be enforced by the Postmaster General, if he and his department were to labour day and night in an effort to smell out heresy, as was done in some parts of the world not long ago.
For these reasons and for others with which I have not had time to deal to-night, I would oppose the bill. I may not agree with the people against whom the bill is directed, but as an old philosopher has said, I would hold myself responsible for advocating their right to express their opinions, much as I disagree with them.


Paul Joseph James Martin: Mr. Speaker, I rise to speak on this bill for two reasons, one that concerns the nature of the bill itself, and the other because I feel that as a younger member of the house, fully appreciative of the high qualities of the Minister of Justice (Mr. Lapointe) who spoke against the bill on February 21, I should make some comment at this time. Perhaps comment should be made from all sides of the house in respect of the editorial opinion expressed in many papers throughout the country as to the attitude taken by the Minister of Justice in opposing the bill.
I have read editorials and letters in newspapers-some of those letters have been duplicated elsewhere-to the effect that when the right hon. gentleman came to this chamber as a young member he was full of ideals consistent with his own particular religious faith -which is also mine-and imbued with a political idealism which did him justice, but that in the long term of public life he had withdrawn from some of those beliefs and principles. I look upon the Minister of Justice as one of the finest characters in our public life. To me as a young parliamentarian, in fact to me, long before I came to the House of Commons, he appeared as a figure which might well serve as an example to many young men who aspired to serve in the public service of their country.
I know him in that capacity. I also know him as a co-religionist, and speaking in the house to-night I take this opportunity to
tell my co-religionists throughout Canada, and particularly those in his own province, that he has not strayed from his earlier principles, and that in opposing this bill it is because he believes in the inviolability of those principles that he does not wish to see a measure well intentioned and, I am sure, misdirected, cause a mistaken conception of his true position in this respect. There is no man in Canada who has fought more effectively the forces of communism, against whom this bill is directed, than the Minister of Justice. But he has fought those forces according to his conceptions and according to the conceptions of his political faith. That political-faith, sir, is Liberalism-


Some hon. MEMBERS:: Oh, oh.


Paul Joseph James Martin: Well, some hon. members' laugh. I hope they do not think I use the w-ord in a narrow sense. I speak of liberalism, with a small "1", if you like, liberalism without which democracy cannot possibly exist, and in which we all believe. His opposition to this bill is not because he prefers communism and it is not because he finds anything in it that occasions his sympathy, but it is because he realizes that the effective way of stopping an error, as he sees it and as I see it, is not by using the very instrument that was used to try to erase the spread of Christianity in other countries. It is because he knows that an idea cannot be killed by a hammer or a gun, that an idea will persist, and that if it is a truthful idea it will withstand the cold and chilly blasts of winter. That is why, Mr. Speaker, I make no apology for rising in my place tonight to say a few words in opposing this bill.
I think I should correct the hon. member for Vancouver East (Mr. Maclnnis) just in order that the record may be clear. He said that in Russia the church had associated itself with the desire to maintain a level of ignorance which was characteristic of the previous regime in that country. I do not know of what church he was speaking, although I think he did say the Greek Orthodox church, but if he for a moment meant the Catholic church-


An hon. MEMBER:: Cut religion out.


Paul Joseph James Martin: An hon. member says, " Cut religion out." I am not playing religion; but as a good Catholic, if the hon. member was referring to that particular church, I should not hesitate to say on the floor of this house that what he suggests is not the case.
I am opposed to communism. So far as the materialistic interpretation of that doctrine is concerned, communism stands for something
4436	COMMONS
Post Office Act-Communistic Literature
that is fundamentally abhorrent to my training and my convictions, and I would do everything I could to resist its onslaught or its normal course. But the effective way is not, I believe, to be found in this bill. Nor do I believe the effective way is to be found in some of the measures which have been resorted to in other parts of this country. I believe the effective way of destroying error of this type is to allow it to compete freely in the open market, as it does in other countries, as indeed it does in our own country, generally speaking. The result of that free competition will be the death blow of communism or of any other evil.
I understand perfectly the motive that actuates the hon. member for Quebec-Mont-morency (Mr. Lacroix) in introducing this bill. He believes as I do, and as the Minister of Justice, does, that communism is a great danger. The hon. member believes that communism, if accepted in Canada, would destroy some of the dearest traditions and convictions of most of our people, and I believe he is sincere when he tries by this method to prevent its spread. I say to him, however, that finite men are not always Ale to judge as to the best methods of arresting error of this sort. But history should be our guide. Every time an attempt has been made by the use of force, by the denial of freedom, to restrict this sort of thing, that purpose has *always been defeated. Century after century ds replete with instance after instance that every time force and the iron heel were used, no matter how powerful, actually or potentially, the so-called doctrine of error survived iny attempt at oppression.
We shall not stop communism by using a department of government, a department that is intended as a means of transporting the written word of one individual to another, to stop its course. The moment the principle of that department is thus interfered with, its effectiveness as a department is destroyed and no real effort at curbing the error will result. The function of the post office is clearly one of transporting the mails. If I thought this was the effective way to curb communism I would be all for this bill. But it will not and cannot be an effective way. Rather it will lend itself to all sorts of abuses, abuses which, if weighed along with the advantages, will clearly indicate to the hon. gentleman and to others the reason why we should be prepared to resort to other measures to stop the spread of communism. But as the hon. member for Melfort (Mr. McLean) said, why stop at communism? Why not step along, if you are going to deal with commun-

ism, and deal also with fascism and other isms which are almost, perhaps not fully, as dangerous to the conceptions and convictions of the hon. member for Quebee-Mont-morency and myself as communism itself?
The Minister of Justice, speaking at an anti-communist meeting in Montreal, in an attempt to oppose communism, used these words, and I commend them to the hon. member for Quebee-Montmorency as the most effective method of dealing with this problem:
(Translation)
To ensure our political stability as well as our economic stability, to repel victoriously the attacks of the trouble makers we must rely not so much on the criminal code, the officers of justice and the gaols as upon the personal dignity, the individual effort and the social cooperation which are the substance and soul of a free nation. The adepts of the strong manner to the contrary notwithstanding, ideas, whether they are good or bad, cannot be killed with guns or machine guns. There must be an enlightened acceptation of the changes to make and the reforms to accomplish to take away the weapons which certain abuses and certain mistakes have placed in the hands of the enemies of order.


Mr. W. A. WALSH (Mount Royal):: Mr. Speaker, I was going to pronounce myself in favour of this bill and advance reasons for it, but previous speakers have monopolized the time successfully. I see it is nine o'clock.

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



DEPARTMENT OF PENSIONS AND NATIONAL HEALTH

[Stage Direction]
Pensions branch-Direct payments to veterans and dependents.
284. Unemployment assistance, $2,350,000.
Mr. GREEN:: Is the government this year accepting responsibility for the front line man who, though fit and willing to work, cannot find work and is destitute?


Charles Gavan Power: If my hon. friend will be kind enough to tell me to what extent he thinks we should accept responsibility, I shall be only too glad to answer him in detail.


Howard Charles Green: If I were in the happy position of being able to tell the minister what he should do, I think the troubles of this class of returned men would soon be over. Last year the minister made a statement of the policy of the government, which is found at page 1640 of Hansard, and he said this:
Most hon. gentlemen will agree with me in considering that the one hundred per cent fit

Supply-Pensions and National Health
man is not the responsibility of the federal government. If he is out of work at the present time it is due to economic causes and not to war causes.
I should like to know whether the policy of the government has been changed since that statement was made last year.


An hon. MEMBER:: Why should it be?


Charles Gavan Power: It is very much the same.


Mr. MacNEIL:: Does the minister receive reports through the various departments of the government as to the number of exservice men on unemployment relief? If so, what is the latest report of the number on relief?


Charles Gavan Power: My hon. friend means unemployment relief by the municipalities or unemployment relief carried under this item?


Charles Grant MacNeil: I mean unemployed on
relief in the municipalities.


Charles Gavan Power: This item, of course, is to cover relief to pensioners of the department, small pensioners whose pension is supplemented by the government to bring it up to the scale set by the department; and it amounts to $2,350,000. The persons referred to by my hon. friend are those who are not being looked after by the department because they are not suffering from any war disability. If they were, they would be looked after through the Pension Act. They are not suffering from any civil disability or any disability which would impair their working capacity, because if they were suffering from any such disability they would be looked after under the War Veterans Allowance Act. So there remain the ex-soldiers who are fit but who unfortunately are not able to obtain employment at the present time; they are men who are not in any way incapacitated as a result of their service to the state during war or as a result of circumstances which have arisen since the war. The figures which we have been able to get through the national registration under the Department of Labour relate to cities of over 25,000 population, and show that there were in September, 1936, 14,336 veterans, that is men who saw service in the great war in the Canadian expeditionary force, the British expeditionary force and the allies, regardless of field of service, who were not in receipt of pension, not in receipt of war veterans' allowance, and were drawing the ordinary civilian relief from the municipalities. In September, 1937, the number in the same category was 8,773, a decrease of approximately 4,500; in September, 1938, there were 7,180. I believe I have somewhere here a break-down dividing the numbers among
those who served in the British forces and those who served in the Canadian force; also of those who served in a theatre of actual war, and those who served in Canada or England only. I have the numbers by cities, but I do not think it is absolutely necessary to give those details.


Howard Charles Green: For what year is that?


Charles Gavan Power: I have the comparison here between September, 1938, and September, 1937. This relates to men in cities of over 25,000. Of the 7,180 I mentioned as of September, 1938, the total number of those who served in the Canadian expeditionary force was 5,565; those who served in a theatre of actual war, 3,165; served in England and Canada, 1,001; served in Canada alone, 1,399. I might as well put also on record the figures for September, 1937. Those who served in the Canadian expeditionary force total 6,579; in a theatre of actual war, 3,771; in England, 1,216; in Canada 1,592.


Howard Charles Green: Are there any figures for the smaller cities or towns?


Charles Gavan Power: I do not believe I have the figures for cities of less than 25,000. I was under the impression that somewhere I had the number on agricultural relief, but probably that would not give my hon. friend exactly the picture he wants.


Charles Grant MacNeil: To complete the picture, would the minister give the number of those men receiving unemployment assistance as pensioners?


Charles Gavan Power: I can give it month by month for a period of three years. In April, 1936, there were 9,642 being assisted; in April, 1937-38, 9,011; in April, 1938-39, 8,292; and in April, 1939-40, 7,394. There is a considerable and steady decrease.


Howard Charles Green: In the last report of the department, page 33, there is a statement showing the number of men and the number of issues, the average number of issues per man and the expenditures on orders issued for the last four fiscal years ending on March 31, 1938. Can the minister give us the same figures for the fiscal year ended March 31, 1939?


Charles Gavan Power: I think so. I do not quite understand what is meant by "issues." Does the hon. member mean clothing issues?


Howard Charles Green: No. There is a statement, at page 33, of this unemployment assistance.


Charles Gavan Power: As of March, 1939, there were 7,536 assisted. The value of the assistance was $187,084.
4438	COMMONS
Supply-Pensions and National Health


Howard Charles Green: That is for a month only. But could the minister give us the information for the year 1938-39?


Charles Gavan Power: Eor the whole year, yes. From April until March the number is 10,732, the amount is $2,186,682.93.


Charles Grant MacNeil: What are the regulations in regard to unemployment assistance for those engaged in casual employment? A number of cases have been brought to my attention. Men have been getting a small pension and doing casual work. One single man was receiving $15 a month and-I commend him for his effort to keep his self-respect-he secured employment putting in fourteen hours a week during which he received his meals. It was employment limited to a few hours each week by which he earned $9 a month extra, and for that reason his unemployment assistance was discontinued. I brought the matter to the attention of the war veterans' allowance board, and I am pleased to say that my representations were courteously received. I am somewhat concerned about the regulations with regard to men who make an honest and legitimate effort to secure employment and who, in consequence, seem to be penalized.


Charles Gavan Power: I do not think anyone is deprived of his allowance or assistance because of ordinary, casual earnings. The broad line is something like $10 a month. If he earns less than $10 a month he does not lose any of the assistance given him, but each case is judged on its merits. I would not venture to discuss any individual case. Instructions have been given to the officers of the department to exercise the broadest possible discretion, and I do not know what they do in any particular instance.


Charles Grant MacNeil: But this man was not making $10 a month; he was earning only $9. During the course of his casual employment, however, he got a few meals because he happened to be working in a lunchroom, and it was contended that although he did not make $10 a month he was in permanent employment in that he worked a stated number of hours each week and received a stipulated remuneration each month. I understood the regulations excluded men who received a little additional employment if it could be regarded as permanent.


Charles Gavan Power: We have no rigid regulations in that regard. I do not believe the officer in charge would have interfered to any great extent with the man's unemployment assistance. I would not have done so. Some

over-zealous official may have acted in the manner, and it is only necessary to call attention to it to have it straightened out.


Howard Charles Green: The minister assured us last night that on this item we could bring up some of the other items which were passed while several hon. members were away in the public accounts committee. Can he tell me why the vote for probational training, item 236, has been reduced from $120,000 last year to $70,000 this year?


Charles Gavan Power: Largely because the $120,000 was not all expended. Last year only $39,477.44 was expended, so that we had an unexpended balance of $80,522.56.


Howard Charles Green: How much of that $39,000 was paid in salaries?


Charles Gavan Power: Does my hon. friend mean salaries of officials of the department? None. That is entirely devoted to payments of wages in connection with probational training.


Howard Charles Green: I take it there is no extension of plans for the coming year in the probational training scheme.


Charles Gavan Power: As a matter of fact Toronto has taken on probational training with new zeal and seems to be achieving considerably more success than in former years. It is left to a large extent to the voluntary committees composed of business men in each of the larger centres. In Toronto they are pushing it quite energetically and are having great success. In other centres the committees have perhaps not taken it so seriously, but we believe we have sufficient money in the vote to cover the requirements. The sum of over $80,000 was unexpended last year, and we saw no necessity for asking for any more than we could spend.


Charles Grant MacNeil: This is a project that should receive the endorsation of the committee. The work conducted under this scheme has proved a highly satisfactory approach for many a man to employment that may be regarded as permanent. I was going to urge upon the minister the desirability of the department assuming some leadership in connection with the work of local honorary committees, especially in view of the fact that results have .been so beneficial where the work has been efficiently promoted. Could the minister explain why, seeing that there were so many men seeking the advantages of the scheme, it was not more generally applied in the last year?


Charles Gavan Power: There is no desire to curtail it. In 1938-39 the vote was $120,000, of which $80,000 was unexpended and this year we are

Supply-Pensions and National Health
asking for $70,000. There is no intention of curtailing expenditures, but what is the use of asking for more than we believe will be spent? The work is an effort on the part of committees of businessmen throughout the country, and we do not interfere with them in any way except to give them every possible encouragement. We give them grants to advertise in the newspapers if they wish to impress upon returned men that they should try to get jobs, and to inform employers of labour that returned men are willing to take jobs. We place every facility at their disposal. We have a staff in each large city. If we are not going to spend1 the money, however, I do not see any sense in asking for more than we require.


Howard Charles Green: Is the situation fairly summarized when one says that outside Toronto the probational training scheme has pretty well petered out?


Charles Gavan Power: No, I would not say that. I will give the figures for all Canada, from May, 1937, to March 31, 1939. In Montreal 100 commenced, and 18 discontinued; employed as trained, 34, and employed elsewhere, 2; tourist guides, 45; not retained by employer, 1. In Halifax 120 commenced, and 10 discontinued; employed as trained, 80. I need not give the whole line for the rest:
Employed Commenced as trained
Charlottetown
Ottawa	
Toronto..	..
Hamilton.. . London.. .. Windsor.. .. Winnipeg.. .
Regina	
Edmonton.. . Calgary.. .. Vancouver.. . Saint John..
2	2
35	23
440	231
47	31
14	10
7	5
84	66
9	8
4	4
23	19
72	49
1	1
The total of those who commenced is 958, of whom 149 discontinued and 563 obtained employment as trained.


Howard Charles Green: What is the total under training now?


Charles Gavan Power: One hundred and seven.


Howard Charles Green: Another vote I wish the
minister would explain is item 241 dealing with the continuation of projects for work for these unemployed veterans. This year the vote is continued at the same figure as last year, namely, $150,000. How is that vote to be split up?


Charles Gavan Power: We have not yet come to any definite conclusion this year.^ Some projects have been submitted. I think there is
only one being considered at the moment; it is a project for further land settlement on small holdings in Winnipeg. In Vancouver there are several projects, to some of which certain moneys have been allotted, but they have not yet been put into operation. One of them is in connection with auto parking. I think $5,000 was allotted to the Vancouver honorary committee; and so far as I know, they have not yet spent it. We have set aside $85,000 for projects and schemes this year, of which amount I would say offhand $20,000 would go to Montreal workshops, some to the corps of commissionaires, some to Regina where they have been very successful, perhaps some to Moose Jaw where they are carrying on something in the line of workshops; Windsor may require further assistance, and possibly Toronto may require some in connection with their advertising scheme. So far as Toronto is concerned, I do not know of any project which they have immediately under consideration, at least they have not submitted any to me other than the continuation of their advertising campaign.


Howard Charles Green: Then there is only the one new project in prospect now for the whole of Canada?


Charles Gavan Power: That is all that has been submitted to us. It is about this time of year that the committees submit their projects. They can do so at any time, but generally speaking they seem to become more active just about now, have more meetings of their committees and decide on the projects which they support.


Howard Charles Green: Apparently the vote for
projects is $85,000?


Charles Gavan Power: About that.


Howard Charles Green: And the vote for overhead, paying help and so on, is $65,000?


Charles Gavan Power: Approximately.


Howard Charles Green: How much was spent last year on overhead and on projects?


Charles Gavan Power: Grants, $85,750; salaries and staff, $41,252. Of course that is all outside the department; there is no departmental staff included in that. These people are not employees of my department, they are all employees of these committees; all we do is pay them.


Howard Charles Green: That includes employees in the different centres?


Charles Gavan Power: Yes, employees of the honorary committees, secretaries, stenographers and clerical assistants of the committees in the different centres.

Supply-Pensions and National Health


Howard Charles Green: How many employees are there on that payroll?


Mr. POV  ER@: There are two in Halifax, one in Charlottetown, three in Montreal, four in. Toronto, two in Hamilton, two in London, two in Windsor, two in Winnipeg, two in Regina, two in Calgary, two in Edmonton and three in Vancouver.


Howard Charles Green: The situation is that these projects are not likely to bring about the employment of many more men in the coming year than were employed in the past year; is that correct?


Charles Gavan Power: It depends largely on the
efforts of the individual committees and the zeal and activity of the secretaries. If the opportunities present themselves I have no doubt these men will be able to find employment for a large number of people. I have not the figures before me, but I was astonished at the number of men employed, for example, in Charlottetown, where one would not expect it. They found work for men on road work, provincial works and federal government works, in agriculture and on the railways. So that although we may not actually have projects, the value of these committees lies in the fact that there is someone who can look for work for returned men and do nothing else.
Mr. MaoNEIL: Has the minister a record of those who secured permanent employment and casual employment through the committees last year?


Charles Gavan Power: There were about twenty
thousand placements, of which about four thousand were permanent. Yes, I have it here; April, 1937, to March 31, 1939: permanent, 3,710. temporary, 6,443; casual, 12,367; total, 22,520.


Charles Grant MacNeil: Is there any break-down
for the activities of the last fiscal year?


Charles Gavan Power: Permanent, 1,329; temporary, 1,566; casual, 7,258; total, 10,153.


Mr. McNIVEN:: Is any part of that money of which the minister spoke a moment ago to be devoted to the land settlement scheme or assistance to veterans in market gardens or projects of that kind?
The minister was good enough to mention what had been accomplished in Regina. The honorary committee there, composed, as the minister stated, of business men, has devoted a great deal of time to this work and has done excellent work. Likewise the secretary of the committee, Mr. Lamont, has done his work in an excellent manner. In recognition

of the work that has been so well done by the committee there, would the minister be so good as to place on record what has actually been accomplished for the veterans at that point?


Charles Gavan Power: The chief activity of the
T eterans orkshops Limited, Regina, has been what might be termed salvage operations; that is, the demolishing of old buildings and the sale of the material so salvaged for building operations. In addition, the workshop has been doing quite a satisfactory business in building garages, small cottages, grain boxes, kitchen tables, et cetera.
The financial report of the workshops for the year ending August 27, 1938, reflects the fact that they made a small net profit during their year's operation and that their current assets at that time totalled $12,000; or, in other words, a sum almost equivalent to the funds advanced by the government in the way of grants, which totaled $15,000.
Wages paid during the year to veterans amounted to $14,000, there having been approximately seventeen permanent employees in the workshops, and casual employment was given during the year to some two hundred odd veterans.


Charles Grant MacNeil: Is any part of this vote
to be set aside for tools, equipment, transportation, repayment fund, under the vote for projects?


Charles Gavan Power: That is under the $85,000.
It was not used to any extent.


Charles Grant MacNeil: How much would be set
aside for that fund?


Charles Gavan Power: We have not allotted any specific sum, because unexpectedly there really was very little demand; the honorary committees did not find that they could use the money we gave them. Last year it amounted to a mere bagatelle.


Charles Grant MacNeil: What was the number of loans granted during the last fiscal year?


Charles Gavan Power: At the end of December, 1938, from the appropriation of $1,000 to provide tools and equipment, the sum of $278 was outstanding on equipment repayment account and $130 on transportation repayment account. The total unexpended balance is $590. From this it will be seen that a comparatively small amount was expended, but it has been the means of assisting some veterans to secure employment which otherwise they might not have had.
_ Mr. McNIVEN: The Regina committee has given a good deal of thought to a land settlement scheme, and also to establishing certain

Supply-Pensions and. National Health
veterans as market gardeners. Would the minister favourably consider such a scheme if recommended by the honorary committee, or is there some other method of approach?


Charles Gavan Power: I would suggest to the honorary committee that it had better study any such scheme very carefully, because I am not yet convinced that those which have been started elsewhere will be a great success. But if they have made a thorough study of it and are convinced that they have something which will be of value to the returned men and not merely another project for the sake of calling it a project, it will get the very best consideration we can give. We will have the money for it, but I doubt if the department will be inclined to go into any such scheme unless it is pretty well convinced that the scheme has a fair chance of success.


Donald Alexander McNiven: The minister mentioned a scheme. Would that include individual cases, supposing there was a veteran with previous farm experience who lacked the necessary capital to undertake that venture?


Charles Gavan Power: Those are matters which would have to be studied by the committee and recommended by it before I would touch them at all.


Howard Charles Green: This item in the estimates of the Department of Pensions and National Health covering unemployment assistance brings up a returned soldier problem of great importance. The problem is: What is to be done about the Canadian front line man who, although fit and willing to work, cannot find employment and is destitute. That has been the main soldier problem facing this parliament during its whole life, from 1935 to the present time. It was brought to the attention of the government during each of the sessions, in 1936, 1937 and 1938. During the sessions of 1936 and 1937 it was dodged and sidestepped. Last year the minister stated the policy of the government in the words I quoted to-night from page 1040 of Hansard for that year, as follows:
. . . that the one hundred per cent fit man is not the responsibility of the federal government. If he is out of work at the present time it is due to economic causes and not to war causes.
To-night the minister has confirmed that government policy announced last year, which means a denial by this government that any responsibility in connection with these men rests with the dominion. In other words, under the present administration the destitute veteran who served in a theatre of war-and incidentally served Canada, not a province or a municipality-need not look for help to the government of the nation but must look to his
province or his municipality. Despite his war service and his advancing age he must take his chance with all others on the ordinary relief rolls of the provinces and municipalities. This means that this Canadian government will continue to foist the responsibility for these veterans on the provinces and the municipalities.
I am convinced that the policy of the government, which seems to be to wash its hands of the problem, is both unfair and unsound, and that it should be changed at once. One need not look far for support for such a conviction. In the first place the policy of the government, as announced by the minister to-night and last year, is exactly the reverse of the policy recommended by the government's own veterans' assistance commission, known as the Rattray commission, which was appointed in July, 1936, as a result of recommendations of a special parliamentary committee of that year and of the Hyndman committee appointed by the Bennett government in 1935. This Rattray commission was given the duty of investigating unemployment among veterans and of making suggestions for meeting the problem. It did a thorough job. It held public sittings in about twenty centres, going from coast to coast; it set up honorary advisory committees of representative citizens in about the same number of our Canadian cities; it initiated different schemes to give employment, and to-night we have heard of more or less the fag-end of the schemes initiated by that commission. Finally, in December, 1937, eighteen months after its appointment, the Rattray commission brought in a comprehensive report. The principal recommendation contained in that report is at page 63, as follows:
After giving the matter considerable thought and bearing in mind the representation made by organizations throughout the country, by honorary local committees, and information obtained from various sources, the commission has come to the conclusion that it can do no less than recommend that the dominion government accept responsibility for all indigent unemployed veterans who were domiciled in Canada at date of enlistment and who saw service in a theatre of actual war.
This refers to our fighting men; and the key words of this recommendation by the government's own commission are these:
. dominion government accept responsibility." That recommendation is in line with the recommendations of the Hyndman committee which reported in 1935. In order to show the stand that committee took even at that early date I will read from page 5 of the report:
... we are of the opinion that Canada as a whole would shrink from any policy which would permit these unemployed non-pensioners
Supply-Pensions

and National Health
to remain in want and dire distress, as some of them undoubtedly do, and would approve of reasonable assistance being extended to them during temporary unavoidable idleness, until such time as occupations suitable to their ability can be found.


Charles Gavan Power: Where is that to be found?


Howard Charles Green: On page 5 of the report of the Hyndman committee, in the second paragraph from the top of the page. It is also in line with the recommendations of the special parliamentary committee of 1936 and with at least the spirit of the Veterans' Assistance Commission Act passed by this very parliament in 1936, being chapter 47 of the statutes of that year. All these bodies recommended or contemplated that the dominion government would accept at least some responsibility for the indigent, unemployed, front line veteran.
There are other reasons for saying that the policy of this government, that of washing its hands of the problem, is unfair and unsound. In the first place these veterans who, remember, must have seen service in a theatre of war, were pre-aged by that service. In his statement last year the minister said that the war had nothing to do with their being unable to get work. One actual fact is, (however, that these men are pre-aged. Dominion governments admitted that, to the extent of ten years, when they provided for an allowance for these men at the age of sixty, instead of at the old age pension qualification age of seventy.
Further, these men are handicapped by their service through loss of training, in the case of the younger men, and through being away from their employment, in the case of the men who were employed before they enlisted and they had difficulty in readjusting themselves when they got back. The men here concerned are the men who fought for Canada, but who have been unable to readjust themselves and to get established since coming back.
Another reason why I say the policy is unfair is that the average age of these unemployed veterans is about fifty years, and it is almost impossible to-day for any person, whether he be a soldier or a civilian, to get work at that age. Another reason is that these men served Canada-not a province or a municipality, as I said before. While this fact is not recognized by the dominion, it is very clearly recognized by the provinces and municipalities, and also by the veterans. I would refer the committee again to the report of the Rattray commission. This time I turn [Mr. Green.)
to page 19 where the situation is summed up in a few words, as follows:
. To the veteran, relief is something which is given reluctantly-
And I stress that word, because it is absolutely true, and expresses the situation.
-by a governmental body-usually his municipality which he does not consider the governmental authority that really should look after him.
Another reason is that the number of veterans affected by the recommendation is under 10,000. According to the minister tonight, the numbers are dropping all the time. At present there may be several thousand less than 10,000, so that there are not many men involved, and under its ordinary relief payments to the provinces the dominion government is already paying a substantial portion of the relief for these men.
Finally, I say the government's attitude is unfair and unsound, on moral grounds. I think the picture may best be presented by quoting from a letter I received a few days ago from a veteran who served in the first Canadian division, one of those men who belonged to the old red patch division. He said this:
I would be very glad if you could give assistance in a matter affecting veterans of original first Canadian division now on relief rolls through Canada.
Think of the disgrace of that-that we should have men of the old division on the relief rolls of Canada.
In order to commemorate in a fitting manner the twenty-fifth anniversary of our formation for overseas service, and also the visit of their majesties, your aid as an M.P. and a veteran is asked, to have such veterans of original first division removed from relief rolls by having the benefits of war veterans' allowance extended to them.
One cannot, of course, ask for preferential treatment for the men of one division over those of another. I point out, however, that this letter sets out the moral obligation of the Dominion of Canada. On Sunday morning, at the unveiling of the national war memorial, I was struck with the thought that probably there were war veterans in the group on parade who were unemployed, could not get work, and were on relief rolls. Those men would have to go back from the parade, where so much fuss was made over them, to a life in which there is no hope for themselves and in which there is not a fair opportunity for their children.
The government having denied responsibility for these veterans, there is not much point in suggesting methods of aid. In any event the

Supply-Pensions and National Health
methods are for the government to decide, once they get over the hurdle of accepting responsibility. I suggest, however, there are several methods by which aid could be given to these veterans, and I would ask the minister to set out the attitude of the government towards the methods I shall enumerate.
First of all, there was the recommendation of the Rattray commission that these men be paid by the Department of Pensions and National Health-they asked that because the men are soldiers they be paid by that department-a provisional economic allowance for such time as they may be unemployed. That was one method. Another method would be to make provision for these veterans by an extension of the war veterans' allowance, and to show the committee the attitude-


Charles Gavan Power: Did the hon. member say the Rattray commission recommended that we should extend the war veterans' allowance?


Howard Charles Green: No. I said that was a second possible method of assisting these men. I had dealt first with the recommendation of the Rattray commission, and I have now gone on to a second suggested method.
In the report of the department for the fiscal year 1937-38, at page 85, we find a statement by the chairman of the war veterans' allowance board, for whom everyone who has had any dealings with the board has a kind word to say. I think his opinion is worthy of consideration, and this is what he said:
Receiving assistance in the form of war veterans' allowance has removed anxiety with respect to the future, from the minds of a great number of ex-service men, and will undoubtedly result in prolonging their days. They display a decided preference for this form of assistance granted in recognition of their service, than for any other form of social security.
A third possible method of aiding these unemployed, fighting men of Canada would be that of greatly extending the government's activities to rehabilitate these veterans. The government made a start in this direction, but it soon grew weary. After listening to explanations given to-night as to just how far this scheme has gone and that scheme has gone, it is absolutely clear that no new jobs, or very few such jobs, can be expected by these men, if the department continues along in its present course. Last year the minister admitted that no, or very little, further provision was being made for new jobs.


Charles Gavan Power: I did not say that.


Howard Charles Green: Well, I will just read what the minister said as it appears at page 3281 of Hansard for 1938:
Mr. Green: These schemes are all very much worth while, but does not the minister think that during this coming year it is likely that
very few additional men will be helped by the .projects; that it will be largely a matter of continuing help to men already working under them?
Mr. Power: It is quite possible.
Mr. Green:	For that reason it seems important that every effort should be made to work up some new projects.
Mr. Power: I must have a project in order to spend money on it. We have explored pretty thoroughly every project submitted. I cannot just spend money for the sake of spending it.
Mr. Green:	The result, I suppose, will be
that a great many unemployed veterans will not be placed in any work or covered by any government provision.
Mr. Power: It is quite possible.
To-night the minister said we have only one project in contemplation across the whole of Canada.


Charles Gavan Power: That does not mean to say they will not get employment.


Howard Charles Green: The vote this year for pro-bational training is $50,000 less than last year's vote, and the vote for new projects is $85,000, the same as last year. That is a very small gun to shoot this big bird of veteran unemployment. There is little chance of additional jobs, and it is obvious to all that the present projects and schemes cannot do the trick. Doubtless there are other methods of aid, but the government makes no proposal whatsoever, and actually denies any responsibility for these men.
In conclusion, may I say this? As a returned man it is all rather discouraging and hard to understand, especially when one remembers the pride Canada took in these same fighting men not very many years ago, and when one remembers the services which these veterans and their more fortunate comrades have rendered since the war in holding Canada steady and in being prepared to make further sacrifices for their country should the need arise. That was shown clearly by their attitude during the crisis of last September, and more recently by their action within the last few weeks in registering for service under the veterans' survey.


Charles Grant MacNeil: I wish to compliment the hon. member for Vancouver South (Mr. Green) upon his vigorous plea on behalf of the unemployed veterans, and I associate myself heartily with his words. For three years we have urged that definite steps be taken by the government to assume a larger measure of responsibility with respect to the unemployment needs of the Canadian veterans who are destitute. Our plea for the ex-service men in these three sessions has been based on the reports of two commissions which investigated the problem thoroughly, and
4444	COMMONS
Supply-Pensions and National Health
which were appointed by two different administrations. The reports of these commissions revealed the pressing and tragic nature of the problem. Of that there can be no dispute. Both these commissions made admirable attempts, in my opinion, to formulate constructive proposals which might meet the situation.
Coupled with the representations of these two commissions has been the cooperative endeavour of the organizations of ex-service men, which patiently and quietly have placed evidence before the government in recent years with respect to aspects of the unemployment problem which have caused them grave concern. It must be said to their credit that their representations have been reasonable as well as convincing. It is an open secret that conference after conference has been held to pave the way towards a satisfactory solution of this vexatious question. Until recent weeks there was a general expectation that the government would make some attempt to ameliorate the existing distress amongst unemployed veterans. The minister has introduced other measures which have proved of great benefit, and for these I desire to give him full credit. But in addition there has been an almost pathetic confidence that in this particular he would round out the departmental program and deal with the most vital problem confronting veterans to-day.
The minister's statement to-night rejecting any acceptance of responsibility in this matter, and as communicated to the veterans only a few weeks ago, has caused general dismay and even alarm. I have had abundant evidence in letters and telegrams I have received in recent weeks that there has been indeed more than dismay and alarm. In these letters and telegrams there has been a note of indignant protest that no action has been taken by the government to implement the main recommendations of the veterans' assistance commission as well as of the Hyndman committee. In this respect the government has brushed aside, as it were, the earnest and reasoned plea advanced on behalf of the men in urgent need. From my knowledge of conditions in Canada to-day I am bound to join in this protest. I am convinced that if the government so desired it could have taken steps in the direction indicated by the veterans' assistance commission which would have relieved the situation without placing too great a burden on the national treasury.
I submit that the situation presents a problem which can be dealt with only by the federal government.

It has been reliably estimated from reports which have reached me that there are over twelve thousand veterans with meritorious service to their credit who are at present unemployed and on relief, including those in both urban and rural districts. We know, as a result of an estimate based on a special registration that the Rattray commission found that at least ten thousand veterans were in this category. This is in addition to the five thousand which were provided for by last year's amendment to the War Veterans' Allowance Act.
I would point out that the unemployment problems of the veterans have been greatly aggravated in consequence of the services which they rendered to the country. They now average fifty years of age and find it increasing!}' difficult to compete in the general labour market. They are not now regarded as eligible for the war veterans' allowance, or pension with unemployment assistance from the federal department. A special effort on the part of the federal government might even now place many of these men in employment for which they are adapted. Direct and temporary aid is an essential requirement in order to carry [DOT] through any general plan of rehabilitation.
Two commissions have advanced cogent reasons why this problem is the special responsibility of the federal government, and as the hon. member for Vancouver South said, their reports were made after evidence had been heard from all parts of Canada, and had been carefully analysed, and all proposals and suggestions carefully appraised.
The enactment of the Veterans' Assistance Commission Act laid the foundation for a national enterprise which, by relating various forms of assistance, might have brought us within striking distance of a final solution of the problem of the veterans. Honorary committees of representative business men were enlisted in the scheme in order that the full cooperation of employing interests might be obtained.	The commission has now been
discharged and its report has been shelved. The whole scheme is being allowed to fall to pieces because of the unwillingness of the federal government to assume responsibilities that properly rest upon it. The unemployed veteran is faced with the bitter realization that the government is not interested, and as a matter of fact never was interested, in his unemployment needs. The issue is not whether this or	that	proposal is satisfactory
to the government. The issue is whether the federal government should accept in whole or in part any further responsibility with

Supply-Pensions and National Health
regard to the unemployed needs of the veterans now rated as fit and therefore not eligible for benefits under existing legislation.
Two commissions have said that in the national interests this responsibility should be assumed by the federal government at least in part on a temporary basis. But on one pretext or another these representations have been flatly rejected because the government will not admit that the federal government has any further responsibility in the matter. The practical result is that thousands of veterans are thereby condemned to a hopeless destitution until they are so broken down that ultimately there is no alternative to making them recipients for the rest of their days of the war veterans' allowance. No steps are being taken now to alleviate their distressing condition, and I urge that action be taken by this federal government before it is too late to seize the opportunity of rehabilitating these men.
I believe, as does the hon. member for Vancouver South, that our veterans, particularly the front line men, are deserving of better treatment. They have recently given a remarkable demonstration of their loyalty and devotion to the national interests. The nationwide response to the veterans' survey, which was welcomed by the government, has revealed their readiness to serve their country again. The spirit and discipline shown by ex-service men not only recently but during the depression have been exemplary and have earned commendation on all sides. Their offer of service was freely tendered, without any suggestion of bargaining. Through all these years all they have asked on their own behalf is the opportunity to make a decent living. There is abundant evidence in almost every community that a large percentage of them are without that opportunity to-day, and will never gain any such opportunity except through action by the federal government.
A distressing situation has existed in all our principal cities in recent months, during which the hostels and billets maintained by charitable organizations were taxed to their utmost capacity to shelter ex-service men. It has been particularly distressing to note that the transient unemployed have included a large number of our ex-service men. It is particularly heart-breaking that during recent ceremonial parades many veterans were reluctant to participate because they felt keenly about their shabby appearance. Certainly it is true, as I found by mixing with them during recent days, that many more than the general public realized are on relief and under a distinct handicap in showing their loyalty at this time. I submit that
the government could make no better investment than by generous action which would maintain the morale of Canada's ex-service men. That morale can easily be destroyed by the evidence that men who have served and are still willing to serve are left in misery and want. Such a situation is a national disgrace. One aspect of it has been stated in admirable language in an appeal published by the Canadian Legion in the Vancouver press. It is headed, "Canadian legion appeals for justice." They felt it necessary to bring their case to the attention of the public, and I think it states the case so well that I am justified in detaining the committee while I read this statement:
Canada has done much for her veterans, but Canada has not yet completely acknowledged the obligation accepted by Sir Robert Borden, war-time premier of the dominion, on behalf of our people, nor has Canada fulfilled the promises made in an address given by Sir Robert to the troops in France in the year 1917. We quote from that memorable speech:
"You are men actually facing the enemy day and night. You are suffering greatly from fatigue, over-strain, and lack of rest. The marvel of it is that men could undergo such a strain without breaking; but you have never yet broken, and history will appreciate that in days to come.
"You men are about to enter one of the most serious engagements that ever faced the Canadian corps. I can not, at this moment, give any information as to where this attack will be staged. Whether it be successful or not, it is to be borne in mind that it will not be an easy success. . . . AVe feel confident that you will succeed where others failed; for you have never yet failed in anything you have set your hand to, as a Canadian corps.
"You can go into this action feeling assured of this, and as the head of the government, I give you this assurance: that you need have no fear that the government and the country will fail to show just appreciation of your service to the country and empire in what you are about to do and what you have already done.
"The government and the country will consider it their first duty to see that a proper appreciation of your effort and of your courage is brought to the notice of the people at home, and it will always be our endeavour to so guide the attitude of public opinion, that the country will support the government to prove to the returned man its just and due appreciation of the inestimable value of the services rendered to the country and empire, and that no man, whether he goes back or remains in Flanders, will have just cause to reproach the government for having broken with the men who won and the men who died."
The fact is that there are some thousands of ex-service men who served in a theatre of actual war, some with dependents and some without, who are on the verge of destitution, and have been in that position for a year or two.
For a number of years the Canadian Legion and other veteran organizations have been active in directing the attention of the government to the unfortunate plight of these men.

Supply-Pensions and National Health
In March, 1935, the legion's representations were given attention by the R. B. Bennett government, and the Hyndman committee was appointed to carry out an investigation into existing facilities for the care and maintenance, while unemployed, of ex-service men.
In a report dated May 23rd, 1935, the committee recommended that the dominion government should assist in payment of relief assistance to the unemployed veteran. The recommendation was not accepted by the government.
As unemployment conditions had not improved, the Canadian Legion approached the Mackenzie King government in regard to the problem, and on June 23rd, 1936, the Veterans' Assistance Act was assented to, and a commission of three appointed to investigate the situation.
The veterans' assistance commission spent about eighteen months investigating the existing facilities for the care and maintenance of unemployed veterans, and in the course of its duties travelled Canada from coast to coast.
The commission, in referring to the claim of the veteran to special privileges, said:
"We feel that the veteran has a valid claim to special privileges. Not only is the dominion government under a heavy debt of obligation to the veteran because of his response to Canada's call in her hour of greatest need, but there has been repeated recognition of that obligation. We have already urged that the obligation is not merely sentimental, but contractual. We feel, as we are confident the country at large feels, that no matter what Canada has done to requite the services of her veterans, her obligation to them is not discharged while one of them walks the streets vainly in search of work, or while one of them is in distress. Canada has a general obligation to all her citizens to provide them with work and to keep them from actual want. Canada has a special obligation to her veterans."
The conditions that the commission found amongst unemployed ex-service men and their dependents in Canada, amply corroborated the views as expressed in the Hyndman committee report of May, 1935, and the veterans' assistance commission in its final report dated December 1st, 1937, made the following recommendation concerning employable or supposed to be employable ex-service men:
"That in the case of unemployed indigent veterans who are not in receipt of disability pension and who served in his majesty's forces in a theatre of actual war and were domiciled in Canada at time of enlistment, unemployed assistance in the form of a provisional economic allowance be granted during such time as they are unemployed, through the Department of Pensions and National Health."
The Canadian Legion feels that a man who answered his country's call and saw service should be entitled, as of right, to remunerative employment, and failing such employment, to adequate maintenance, providing he has the will to work.
The legion through its membership has exercised a steadying influence in Canada throughout the years of depression, and we have reason to expect that recommendations of the veterans' assistance commission, as endorsed by the legion, should receive kindly consideration from the Mackenzie King government.
We are not forgetful of the attention given to some of our requests by governments of [Mr. MacNeil.l
Canada, but we have in mind that Canada carried out its promises as contained in victory bonds to investors during the great war, and we therefore believe that it is quite fair and just that we now ask the present government to honour the promises made on the battlefields of Europe by one of Canada's distinguished men-the late Sir Robert Borden.
We believe that the people of this dominion agree with us that there should be no repudiation in this regard.
Published by authority of the British Columbia provincial executive council, Canadian Legion of the British Empire Service League.
Wm. McKinstry,
president, Robt. MacNieol,
executive secretary.
I agree with the conclusions expressed in this appeal to the general public.
But there are, in my opinion, otiher important reasons why unemployment among veterans has a special claim on the federal government. In the majority of cases of which I have had experience, service was definitely a contributing factor to their present distress. The average veteran lost time while on active service. He lost educational advantages. He was uprooted from his moorings industrially. He probably lost the advantage of technical training. He experienced extraordinary difficulty in securing a foothold in the national enterprises on his return from service. Many of them had not become firmly entrenched in industry when the depression overtook this country, and they were therefore placed at a special disadvantage during the depression. There is now, as pointed out by the Rattray commission, a residual number of somewhere between ten and twelve thousand who are still under that special handicap.
Usually, although these men are described as being fit, there is some degree of incapacity related indefinitely to service. That has been my experience, and that fact is mentioned repeatedly in correspondence which is directed to me. I think that is clear as we analyse the statistics recently made public by the war veterans' allowance board. I understand that when the new amendment was finally made operative they were deluged with applications. From April 1, 1938, to December 31, 1938, some 12,793 applications were received in Ottawa. As of December 31, 1938, the board disposed of 10,000, of wihich 5,550 applications were approved. I understand there are some still outstanding, but I think it must be admitted that while it is not possible to prove that in many of these cases which were rejected the men were incapable of maintaining themselves through economic handicaps combined with physical or mental disability,

Supply-Pensions and National Health
nevertheless they were pre-aged, there was some degree of incapacity, some contributing factor consequent upon service, which has placed them at a special disadvantage in seeking employment. In addition to that, there is the fact that they are now of the average age of fifty years, an age when their absorption into industry is becoming increasingly difficult. As a matter of fact there is no form of economic recovery in this country which would now provide for their absorption into industry on anything like a permanent basis without a special dominion effort. These I think, are important reasons why the federal government should assume some additional responsibility.
In the Rattray report an important point was made, of which no official cognizance has been taken. I think it should be repeated here now. There is no constitutional barrier which prevents the federal government from taking definite action in this respect. The Rattray commission reviewed social legislation generally in Canada and referred to the difficulties arising from a conflict between dominion and provincial jurisdictions. They had this to say:
The typical veteran wants no special privileges. He was glad to serve his country. He asks no reward for services. We think that we express the feelings of the vast majority of our fellow ex-service men when we say that the veteran resents bitterly having to come cap in hand to the government for benefits that should be within the reach of every citizen of the country. In pleading for social legislation the veteran pleads for legislation that will reach all classes.
But unhappily far-reaching social legislation is not within the power of the dominion government. The veterans' assistance commission is hopeful that, as a result of deliberations of the royal commission on the relations between the provinces and the dominion, there will come a formula for amending the constitution in such a way as to make constitutional a program of legislation that will include unemployment insurance, health insurance, and a revision of the old age pension laws. The veteran, however, cannot wait for legislation of that type.
They go on to say that the veterans as a group present no constitutional difficulty with respect to action dealing with unemployment needs. The federal government could, in my opinion, assume this responsibility, and in doing so, would meet with the general approval of the Canadian public and would not precipitate any serious difficulty with regard to dominion-provincial relations. As a matter of fact I cannot see any great obstacle in the way of a program of general rehabilitation. From time to time the minister has raised objections to a number of recommendations of the Rattray commission. He said it might lead to the establishment in Canada of what
would be the equivalent of a general service pension. That was not contemplated in the recommendation, nor can I see that the recommendation leads to that result. They suggest a temporary economic allowance, and they suggest further that such direct aid should be extended in definite relation to various employment schemes to be conducted under the local honorary committees. There is a distinct difference 'between granting a pension or an allowance merely for service and granting direct aid as a scheme auxiliary to a general program of rehabilitation. I consider direct aid from the federal government an essential requirement of any program of rehabilitation that may ibe initiated by the government at this time, and if the two are related in a common sense way, and if the government will stimulate rather than discourage schemes or projects for sheltered employment or for special employment placement of veterans in industry, there will be no danger of creating the establishment of a general service pension.
Again, the minister said that the veterans themselves were not in agreement as to the details of the scheme. I think the negotiations during recent months have shown that all organized veterans are essentially in agreement on the underlying principle, that is, that the federal government should accept responsibility for this problem; and only by the government's acceptance of such responsibility can the problem achieve solution. Certainly that quibble as to disagreement with regard to the details of the scheme should not be seized upon as a pretext for unwillingness to accept the underlying principle.
If the proposal of the Rattray commission is not acceptable to the government, the onus rests with the government to advance a satisfactory alternative. On several occasions the minister has admitted the existence of the problem. He admitted, and I do not think an attempt is made to deny it, that there is acute distress among this particular group of veterans; but he said that he could not accept these recommendations, and as yet he has not advanced any other alternative. True it is that many have benefited by the enactment of the recent amendment to the War Veterans' Allowance Act, but that still leaves untouched the problem stated by the Rattray commission, which at that time affected 10,000 men with service in a theatre of actual war.
The hon. member for Vancouver South has given all the principal arguments in support of the acceptance of this principle. I will not traverse the same ground, but there is one point which I think should be emphasized. If the government fails to accept responsibility
4448	COMMONS
Supply-Pensions and National Health
in this regard, the only remaining alternative will in the end prove quite as costly. The only alternative left for these veterans is to apply for relief in the municipalities in which they reside. That relief is not usually administered in such a way as to bring them into contact with employment opportunities of which they can satisfactorily avail themselves. As a matter of fact, by reason of their age, and of the general attitude of the municipalities, they are at a special disadvantage at this time in securing employment. Many of them are employable and are willing to work. Many of them, as has been proved by the work of the honorary committees, can be placed in employment if satisfactory or efficient employment placement methods are followed. But if they are left on relief and are allowed to drift along, suffering the deterioration that inevitably follows life on relief; if they are compelled longer to endure these distressing handicaps, they will break down and lose the opportunity for rehabilitation.
My whole argument is based on the idea that if action is taken now, many more men may secure permanent employment and make some provision for their old age or for the future of their families. But if they are left to drift under present circumstances on relief in the municipalities they will ultimately break down and will ultimately have to be taken care of under the provisions of the War Veterans' Allowance Act. That is why I urge that action at this time would be less costly and less wasteful than to leave the problem untouched.
In this connection I wish to put in a word or two on behalf of the imperial ex-service men. Since last discussing this matter in the house, I have had an opportunity of visiting the homes of many of these men in the constituency I represent. I have gained a more intimate knowledge of their circumstances, and I feel more keenly than ever that while the government may not be prepared to assume direct responsibility for their condition, certainly their condition is so tragic that more than ever is it imperative that the government should negotiate with the British authorities on their behalf. They came here hoping to find a land of opportunity. For a while many of them made a most commendable effort to secure a footing in Canada, but now they are disowned by everyone; and among the transients in Canada, those who are trekking back and forth from point to point, unable to obtain any recognition for work or relief, are included many of these imperial ex-service men. I am not suggesting that those without domicile prior
[Mr. MacNeil.3
to enlistment should be cared for as a complete responsibility of the dominion government, but there is nevertheless some responsibility on the part of the government, because of the circumstances under which these men came to Canada, to make still more forceful representations to the British government on their behalf with a view to having steps taken to relieve their distress.
These are matters with regard to which we should have a statement from the minister. On a former occasion he said something by way of criticism of veterans' organizations in this regard. I do not think that criticism is well grounded during the present year, because they have not resorted to what may be termed pressure group tactics in regard to this matter; they have relied almost wholly on the careful, well-reasoned presentation of the facts within their knowledge to the government and the presentation of constructive proposals, and have placed themselves entirely in the hands of the government. At this stage I think they have reason for disappointment. So far as the organizations are concerned, it should be stressed that their endeavours in this regard are purely altruistic. I have had the privilege of attending a large number of conventions as well as meetings of ex-service men of various organizations, and I find the men in charge of these organizations are themselves generally in fairly comfortable circumstances. They are concerned solely in rendering service to their less fortunate comrades. That is a spirit of service which should be recognized, commended and encouraged. It is in that spirit of service that the government has been urged by these organizations to take action in this respect. I feel it a privilege to support the representations of the organized veterans on this question.


James Alexander Marshall: I shall not detain the committee very long, because we in this group endorse entirely the views and sentiments expressed by the two previous speakers. The problem of the returned man who finds himself out of work and unable to obtain work is, we believe, entirely a responsibility of the dominion government, not of the provincial governments or of the municipalities. It is quite true that unemployment among returned men is only a part of the larger problem of unemployment. That is something which is admitted by all. Recommendations have been made to this parliament by a committee set up by this parliament early in its life. One of those recommendations was that returned men who were out of work should be given a provisional economic allowance. We in this corner heartily endorse that recommendation.

Supply-Pensions and National Health
We commend it to the minister; we should like to see him pay that allowance to these returned men who find themselves out of work. We believe, and I think the minister will agree with us, that it is entirely a question of money, and the failure of the minister to put into effect this particular recommendation is on account of the fact that his hands are tied. We suggest to him that he take a definite and vigorous stand on this matter. Let the Minister of Pensions state honestly that he cannot carry out this recommendation because the money is not available. Let him tell this committee that he would take care of this matter if the money were available. Then we believe it to be the duty of this parliament to bring pressure to bear upon the Minister of Finance to find the money to bring economic security to these men, who at one time fought so nobly for their country, and to their families.


Charles Gavan Power: I do not know that I should detain the committee long to discuss this particular matter, which has been dealt with very fully in previous discussions by my hon. friends of the salmon pink-baby blue axis from Vancouver, co-workers in the vineyard of discontent-


Howard Charles Green: Have a heart!


Charles Gavan Power: -who have this evening as usual been eager to cooperate with and assist me in my efforts on behalf of returned soldiers by adopting the Oliver Twist tactics of asking for a little more and a little more, and continuing to do that as they have done ever since this parliament started. But I think they, as well as other hon. members, will realize that when this country votes something like 856,000,000 a year for returned soldiers, the people of the country have an idea that this money is going to soldiers who suffered in some degree from their war service. I do not think there is any question in the mind of any hon. member listening to me to-night that when we talk of pension legislation or of ex-soldier problems he as well as all his neighbours have before their minds the picture of some man who was crippled or disabled or who suffered some disability as a result of his war service.
The hon. member for Vancouver North quoted from the speech of Sir Robert Borden in which he said that "no man, whether he goes back or remains in Flanders, will have just cause to reproach the government for having broken with the men who won and the men who died." It is because I do not want any of the men who suffered through their service to this state to have just cause to reproach the government that before I deal
with the man who has nothing wrong with him, before I give out doles to the man who is absolutely fit, who has returned from overseas without any incapacity, I want to see to it that every man who suffered in any degree as a result of his service to Canada is well looked after. My hon. friends, neither last year nor the year before last, when they were asking for this so-called economic allowance-which they would not support if I were to bring it in, because it means only $18 a month for an unmarried man and $30 for a married man-


Howard Charles Green: I know the minister does not wish to be unfair. If he will read what I said last year, I dealt specifically at that time with the question of whether the responsibility rested with this government, not with the manner in which that responsibility would be faced.


Charles Gavan Power: I will not be diverted from the point I was making, but I will return to that. The point is that we still have thousands of ex-soldiers whom we must look after in some way. Whether my hon. friend thought of it or not, had it in his mind that they were worthy of being looked after, he has not advocated that which I effected in January last, by taking in disabled, non-pensioned, theatre of actual war ex-soldiers and placing them in hospitals.


Howard Charles Green: I urged that last year.


Charles Gavan Power: Probably my hon. friend heard that I was considering it.


Howard Charles Green: I think the minister should withdraw that remark. It is a deliberate reflection. I can assure him that was not the case at all; I advocated it because I believed in it. If there is anything of that sort to be said, it is perhaps that it was because we advocated it that he brought it in.


Charles Gavan Power: My hon. friend has been spending his time during the last two or three years in endeavouring to appeal to those who want doles of some kind. We have not heard him raise his voice with anything like the same earnestness on behalf of disabled soldiers.


Howard Charles Green: I ask the minister to be
fair. Whatever I have urged since I came to this parliament in the spring of 1936 has been urged because I believed in it, not with any motive such as the minister is imputing. I ask him not to make statements of that kind, because they are not true.


Charles Gavan Power: 1 have not yet imputed
any motive to my hon. friend.


Howard Charles Green: You are getting pretty close to it.
4450^	COMMONS
Supply-Pensions and National Health


Charles Gavan Power: Yes, and when I do I will
impute them. This house is getting too sissy altogether about imputing motives. When I impute a motive I will accuse; I will not go along in the insidious way to which we have become accustomed during the past two or three years, saying "There is a rumour about this" and "public opinion is becoming alarmed about that." I have a high appreciation of a man who will rise in his place here and say what he thinks of the fellow on the other side. I can even appreciate a good liar, but I cannot appreciate men like some of my hon. friends, who are not even good liars.
I will now return to the subject which I was discussing. Our first duty is to those who suffered during the war, and their dependents. I have endeavoured through pension legislation, through the War Veterans' Allowance Act, and through the extension of hospitalization privileges to front line veterans, to look after those people first. That is my duty; that is my job. That is the duty the people of Canada think devolves upon the Minister of Pensions. I am quite sure the very great majority of the people of Canada have no idea of what is meant by economic allowance; that economic allowance, a term which as yet is ill defined, in the minds of those who are asking for it means a pension, a service pension, or whatever you like to call it, an allowance to the fit man. When we present that case fairly to the people of Canada, I would not care where I went; I would be glad to present my side of that case anywhere in this dominion.
I am looking after the disabled first, the disabled on account of their war service, through pension; the disabled on account of other circumstances, through the war veterans' allowance. We are hospitalizing our pensioners for their war disabilities; we are hospitalizing our pensioners for their nonwar disabilities; and now, by an extension of that privilege which was made effective in January last and which will cost almost as much as it would to look after two or three thousand unemplos'ed fit men, we are looking after theatre of war ex-soldiers who are indigent and cannot get medical attention. I think that program is worth far more, from the point of view of the benefit to the soldier, than a program of looking after the fit soldier.
How are we looking after the soldiers who are unemployed? Last year my hon. friends were not any too eager to accept the amendment to the War Veterans' Allowance Act which I brought in. They fought it in this house.


Howard Charles Green: That is a misstatement of
fact. We made suggestions for the improvement of the amendment. We did not fight it at all.


Charles Gavan Power: Then why in the world
did they keep me here for two or three days? Was there one word of approval spoken by my hon. friend or any of his friends?


Howard Charles Green: If the minister will take
the trouble to read what was said he would not be making misstatements like this. We did approve the amendment, but we wanted to improve it.


Charles Gavan Power: Then it comes back to the
same old story; always whimpering for more.


Howard Charles Green: Put it that way if you like, but stick to the facts.


Charles Gavan Power: I am sticking to the facta
My hon. friend gave it no support whatever, although it was the best piece of legislation to be brought down in this house since pensions were commenced.


Howard Charles Green: Read Hansard and you will find out.


Charles Grant MacNeil: If the minister will permit me, I repeatedly said I heartily commended him for that amendment, and I supported it.


Charles Gavan Power: I should like to have heard my hon. friend say that during the time the discussion was going on last year. As a matter of fact that amendment was designed to take off the relief rolls and place on a permanent allowance basis all the men who were unfit. I figured that it would take off five thousand such men. Actually from April 1, 1938, when it came into operation, to April 1, 1939, it took 7,717 men off the relief rolls. It is the eventual solution of the unemployment problem of the ex-service men. As soon as they become so incapable that they can be no longer employed they go under the War Veterans' Allowance Act. The moment they suffer some physical disability, be it due to war service or to any circumstance whatsoever, they become a charge on the Dominion of Canada and receive $20 or $40 a month as the case may foe. We now have 20,010 recipients of war veterans' allowance on our rolls. This year the bill will be $7,100,000, as compared with something like $3,000,000 only three or four years ago. The number is constantly increasing; they are coming on at the rate of about 500 a month, and during the month of March I think they came on at the rate of seven or eight hundred.


Mr. HOMUTH:: Age is doing that.

Supply-Pensions and National Health


Charles Gavan Power: As a matter of fact, out of those 7,717 only about 2,000 went on because of age; the remaining 5,000, the number I figured would come on, did so under the amendments to the act passed at the last session of parliament.
When the War Veterans' Allowance Act was introduced in this house, it was figured that in 1949 the number of returned men coming under it would be 20,000. We are now ten years ahead of the estimates made at that time. That covers all those who might have suffered in any way from their war service. Pre-age was mentioned by my hon. friend; pre-age is covered. Intangible disabilities were mentioned by my hon. friend; intangible disabilities are covered. My hon. friend says some of them have to produce evidence, and they cannot do so. His friend from Vancouver said he had every confidence in the chairman of the board, Mr. Walter Woods. So have I; and I think he has also. I know that Mr. Woods, in his discretion, will interpret this act in the broadest possible manner, so if there were any disabilities present in the man, I do not think he will be disqualified from obtaining the veterans' allowance.
That leaves only the fit man. What is proposed for him by the two commissions of which we speak? It is not that the government take full responsibility. The Hyndman committee proposed that the government supplement the municipal rate to the basic rate of $18.75 paid by the department to pensioners. If the recommendations of the Hyndman commission, about which so much has been said, were put into effect to-day in Saskatchewan, it would mean 75 cents a month to a single man. That man would still be on relief. The hon. member for Vancouver South spoke of the disgrace of being on relief. Would the disgrace be any the less if he received from the federal government 75 cents a month in addition to what he is receiving now? That was the report of the Hyndman committee.
The Rattray commission went at it the other way round; they said the first $18 should be paid by the federal government, and if there was to be anything supplementary it should be paid by the municipality. That does not apply to any great extent in the case of the unmarried man, but in the case of the married man the Rattray commission said the federal government should pay the first $30, while anything required in addition to look after the wife and children should be paid by the municipality. That does not involve taking very much responsibility. The stigma of being on relief, if my hon. friend wishes to call it that, remains. It is true
that the Canadian Legion, at its convention, suggested in a much broader way that the federal government take on responsibility. We were then face to face with this situation, that in many instances the non-disabled, nonpensioner, absolutely fit and capable man would be receiving from the Dominion of Canada, provided he had enough children, far more money than a man who had lost a leg or an arm in battle. I still refer to what I said; I do not wish any man who served at Vimy to have just cause to blame me for what has been done when he returned from overseas. I suggest to my hon. friends that if we were to give to the uninjured persons better treatment than we give to those who were actually injured in the service of their country they would have a perfect right to say that they have just cause to blame the government of Canada for the manner in which they were treated.
This is a matter I dislike to mention- but I have to do it, because daily, through telegrams and through agitation which is going on throughout Canada, it is brought to my attention. Daily I am receiving telegrams and threats that votes will soon count, and that if matters are not adjusted along these lines in the way in which those who send the telegrams and pass the resolutions think best, we will suffer for it. Those who like to take advantage of that situation may do so, if they desire. But so far as I am concerned, there is a clear and definite plan of action in the department, so long as I remain the minister of it, and that is to treat the injured and their dependents first, to endeavour to look after war veterans who are suffering from some disability; to hospitalize those who require treatment, and to endeavour to find work at various occupations for those who are unemployed. We have succeeded to the extent that the ratio of the unemployed among ex-service men is far lower than it is among the rest of the people in Canada.
Those are my jobs, and I propose to do them. Whatever may be the political pressure in a so-called election year, I propose to do them just the same. I have repeated that to legion conventions and to soldier gatherings; I have said that this program will not be modified, it will not be altered and it will not be accelerated by political pressure, from whatever source it may come, either within or without this House of Commons.


John Horne Blackmore: Has the minister taken into consideration the possibility of recognizing Buerger's disease as being traceable to war experience? I think up to the present time it has not been so recognized, and it seems to me it ought to be.
4452	COMMONS
Supply-Pensions and National Health


Charles Gavan Power: I have discussed the matter. As a matter of fact I have seen some cases at Christie street hospital, and have discussed the disease with medical men both there and here. I am sorry to say I cannot get an opinion from them to the effect that they believe it to be a war disease. But if it is any consolation to the hon. member I have rather come to the conclusion that they cannot say it is not. So some of us think we may be able to convince them along the lines suggested by the hon. member. I do not think there is a definite medical opinion that it is a disease of what might be called sudden onset. I am under the impression that they are not so sure now that it could not have been the result of slow growth over a period of years.


John Horne Blackmore: I appreciate the minister's response, and I find myself in hearty accord with him when he says they cannot prove that it is not traceable to war experience. Is he in a position to state what attitude has been taken by other leading countries; for example, what is the position taken in Great Britain and the United States?


Charles Gavan Power: I would say that in England Buerger's disease developed now would receive no consideration whatsoever.


John Horne Blackmore: Not even Buerger's disease developed in a returned soldier?


Charles Gavan Power: No, none whatsoever.


John Horne Blackmore: What is being done in the United States?


Charles Gavan Power: I do not know.


John Horne Blackmore: Or Australia?


Charles Gavan Power: I cannot say.


John Horne Blackmore: I have some information, which I have not taken the opportunity of verifying, which would tend to show that the United States do recognize Buerger's disease as one of war origin.


Mr. LENNARD:: I have been waiting all night to ask a simple question. I refer to the case of a man who received war veterans' allowance, and who had a few dollars in the bank. The money in the bank-and much more than that-was required to pay for hospitalization of his own wife. Yet apparently he is being discriminated against. His war veterans' allowance has been stopped because of that small amount of money in the bank.
I wonder if that is the policy which is to be followed.


Charles Gavan Power: It is a matter of statutory law. But it would be reinstated, I imagine, as soon as the money was spent.


Frank Exton Lennard: But is it within the act to allow that man to pay his legitimate debts?


Charles Gavan Power: The statute is there; I would not know, offhand. But he is not allowed to have capital of more than a certain amount, as in the case of old age pensions.


Frank Exton Lennard: What would that amount be? He is not able to work, and is not working.


Charles Gavan Power: The amount is $730, I
believe.


Frank Exton Lennard: This man has only $300.


Charles Gavan Power: I am sure, if the hon. member presents his case to Mr. Walter Woods as he has presented it to me, he will win it


Frank Exton Lennard: Some mention was made of Mr. Woods a few minutes ago, and I am sure all hon. members have the highest respect for him. But if there is any discrimination against certain veterans I believe it would come through local inspectors who, in certain odd cases, might be trying to make a good showing with the department.


Howard Charles Green: Mr. Chairman,-


Some hon. MEMBERS:: Carried.


Howard Charles Green: No, it will not help to shout "carried." We were told last night we could carry on a general discussion under this item. Under item 237, which covers treatment, there is a new class 18; does that include the imperial veteran who might have been domiciled in Canada before the war?


Charles Gavan Power: Not yet. We may be able to extend it later on, but at this time we have all we can do to handle our own people. Besides, there would be some difficulties in our way on account of the fact that we cannot get at the war service records of those imperials. Those records are in England at the war office. At this time this privilege is being confined to those who served in the Canadian expeditionary force, but I have no doubt that after it gets under way we shall be able to apply it to the imperials.


Howard Charles Green: With regard to the qualification in connection with having seen meritorious service, who decides what meritorious service may be? Is there any basis upon which the decision is made?


Charles Gavan Power: 
Howard Charles Green: Who decides whether or not active remedial treatment is needed? Is that decided in Ottawa, or by the medical officers in the different centres?


Charles Gavan Power: The medical officers in the different centres.


Howard Charles Green: Apparently treatment must be given in a departmental hospital, or a hospital with which the department has contact, and where there is a salaried medical officer. How many of those hospitals are there in Canada, and where are they located?


Charles Gavan Power: There are 600 or 700, but
not so many salaried medical officers. As I said last night, we are endeavouring to extend the system having to do with salaried medical officers so that it will cover even the more remote districts. At the present time we have all we can do to handle the larger cities. Only last week I called on the civil service commission to appoint a medical officer at Yorkton, and we will go right down the line.


Howard Charles Green: Where there is no salaried officer, has the local doctor any power to deal with an urgent case?


Charles Gavan Power: No, not a non-pensioner.


Howard Charles Green: There has been some
announcement with respect to a new military hospital at Vancouver to replace the Shaugh-nessy hospital. Would the minister give me particulars?


Charles Gavan Power: If the hon. member would let me pass an item for the Minister of Public Works I could give the particulars right now. There is a vote of 8200,000 in public works estimates for building a new hospital at Shaughnessy heights in Vancouver.


Howard Charles Green: Is that the total cost?


Charles Gavan Power: No; it runs over $600,000.


Howard Charles Green: The total cost will be over $600,000?


Charles Gavan Power: Yes.


Howard Charles Green: Where is it to be built?


Charles Gavan Power: On the same site. We have purchased property there.


Howard Charles Green: Is the old building to be torn down?


Charles Gavan Power: Yes.


Howard Charles Green: Can the minister give the number of applications for pension in 1938-39? In the previous year it was 10,450, as appears from the table at page 68 of last year's report. I should like the corresponding figure for 1938-39.


Charles Gavan Power: From April 1, 1938, to March 31, 1939, the number of applications was 10,109.


Mr. WERMENLINGER:: The minister a few moments ago said that he had received some threatening letters. May I humbly ask him if they came from individual veterans or from organizations such as the British Empire Service League, the Canadian corps or the A.rmy and Navy.


Charles Gavan Power: I have had some from associations but not from such organizations as the Canadian corps, the Army and Navy or the British Empire Service League. I have had what practically amount to threats from certain members of the Canadian Legion. Whether they were acting in their official capacity, I have yet to ascertain, and undoubtedly shall in a short time.


[Stage Direction]
Item agreed to.
Pensions branch-Direct payments to veterans and dependents.
B33. War veterans' allowances, $6,800,000.
Howard Charles Green: Under section 13 of the
War Veterans' Allowance Act as it now stands, a single man cannot get any part of the allowance if he is in hospital. A number of these men have a house or room rented, and the rent for these quarters goes on while they are in hospital. Is it not possible to make provision for payment of at least a small portion of the allowance in such instances?


Charles Gavan Power: That is something which
could be studied. We might perhaps make some progress along that line, but for the moment I call attention to the fact that the twenty dollars which the veteran receives is maintenance, and when he is being kept in hospital he receives three meals a day and his bed, so he is being maintained. Besides that, he gets the comfort allowance of seven or eight dollars a month.


Karl Kenneth Homuth: The unfortunate point is that many of the single men who have to go into hospital have a room containing their clothing and, in some instances, furniture, and if that is going to be the attitude of the government, the veteran will have to move everything from his room into the hospital or else be out of luck.
4454	COMMONS
Supply-Pensions and National Health


Charles Gavan Power: It was not until a year ago that he could receive treatment, and if my hon. friend will let me go ahead and see how I can extend the treatment privileges I shall perhaps be able to make arrangements to transport his furniture into the hospital for him. In the meantime I think he is doing fairly well.


Howard Charles Green: Is provision made under the War Veterans' Allowance Act for the payment of transportation of applicants who have to travel to be medically examined for the allowance?


Charles Gavan Power: We can make such arrangements.


Howard Charles Green: Apparently the minister has power under the act to take out of a retroactive pension awarded, all the money that had previously been paid as an allowance. Would the minister look into the question of having that altered so that you take out only the allowance for the period for which the pension was made retroactive?


Charles Gavan Power: That is one of the amendments that will have to be made to the act some day. It is an amendment that, I think, is really needed.


Karl Kenneth Homuth: Why not make it now?


[Stage Direction]
Item agreed to.
Pensions branch-Direct payments to veterans and dependents.
6S0. War veterans'	allowances - further
amount required, $400,000.
Charles Gavan Power: An additional $400,000 is
required for this purpose this year.


[Stage Direction]
Item agreed to.
Pensions branch-Services to veterans and dependents.
SSI. Care of patients-further amount required, $312,340.
Howard Charles Green: What is this for?


Charles Gavan Power: It is an additional amount required for the care of patients on account of the new hospital provisions.


[Stage Direction]
Item agreed to.


[Stage Direction]
Bill No. 145 for the relief of Lucy Violet Siggins Hopson.-Mr. Walsh.

Ernest Lapointe: To-morrow, if the Minister of Finance is able to attend-he has an engagement that may prevent him-we shall take Bill No. 93, to authorize the raising of $750,000,000, and then the various bills arising out of the budget; the second reading of Bill No. 130 to constitute a salt fish board, and possibly the amendment to the Dominion Elections Act, which is the child of the Minister of Pensions.


Karl Kenneth Homuth: There is no question that it will be proceeded with?


Charles Gavan Power: The answer is definitely, yes.


Ernest Lapointe: In the evening we shall proceed with supply-post office, fisheries, and trade and commerce.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, May 24, 1939