1940-07-30

FARM LOAN BOARD


Hon. J. L. ILSLEY (Minister of Finance):: I beg leave to present parliamentary return, reference 108, asked for by the hon. member for Mackenzie (Mr. Nicholson), for a copy of all letters, telegrams and other documents with respect to leave of absence, resignation and reappointment of S. T. Shabbits of Canora, Saskatchewan, during the year 1940.
While there is no objection to the production of the correspondence in this case, nevertheless it is not considered generally in the public interest to produce inter-office correspondence, and the production in this case is not to be taken as a precedent.
It is to be noted that the Canadian Farm Loan Board has been constituted by parliament as a body corporate and politic and is vested with full control over the employment and dismissal of all its employees other than chief executive officers whose appointments are subject to the approval of the governor in council. The board, moreover, is charged with the responsibility of carrying on its operations on a self-sustaining financial basis and does not come to parliament for an appropriation of funds for administrative expenses.



REPORTS OF COMMITTEES


[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: I should like to ask the Prime Minister if he would make inquiries as to when the committee on banking and commerce will present its report, seeing that we are so near the end of the session. May I ask the same question with reference to the committee on the defence of Canada regulations? There may be some discussion and I think we ought to have these two reports as soon as possible.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I shall be pleased to do that.



NATIONAL REGISTRATION


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I would ask the Minister of National War Services (Mr. Gardiner) whether it would not be possible to allow women at least to send in their registration cards by mail as is done with income tax forms. That was the procedure in Australia, which I have discussed here for three or four years in connection with the need for a real national register. Women are asked whether they can do plain cooking and other irrelevant questions. All these answers could very well be given through the post office, especially in weather like this, thus saving a good deal of time.


Hon. J. G. GARDINER (Minister of National War Services):: The matter has
been given careful consideration and it is thought advisable that all persons who sign these cards should sign them before a registrar appointed by the government. The declaration at the bottom of the card is signed on one side by the registrar and on the other by the registrant and it is required that all persons shall sign before the registrar after the questions have been explained to them. The reason why questions will require to be explained is the desire to have the answers conform as nearly as possible to certain rules in order that the cards may be properly classified after they have been brought into the department for classification. It is therefore thought wise that all persons should sign before some registrar.


Thomas Langton Church: A lot Hitler will care for such a register. It will only be sent to the archives anyway when it is done.

Canada's War Effort-Mr. Howe



PROCESSING TAX-REPORT AS TO PROBABLE INCREASE IN PRICE OF FLOUR AND BREAD

[Stage Direction]
On the orders of the day:
Mr. T. C. DOUGLAS (Weybum):: In view of the announcement in the press that there will be an increase in the price of flour and in the price of bread, and in view of the statement by the Minister of Trade and Commerce (Mr. MacKinnon) that the recently announced processing levy would not likely have this effect, will the Minister of Labour indicate whether any action will be taken by the wartime prices and trade board to prevent these proposed increases?


Hon. N. A. McLARTY (Minister of Labour):: The hon. member was kind enough to give me notice of the question. The matter is at present under consideration by the wartime prices and trade board.



MINISTERIAL STATEMENTS WITH RESPECT TO

[Stage Direction]
Canada's war effort
The house resumed from Monday, July 29, consideration of the motion of Mr. Mackenzie King for committee of supply.
Munitions and Supply
Hon. C. D. HOWE (Minister of Munitions and Supply):: Mr. Speaker, the purpose of this report is to set out in general terms the scope of the work of the Department of Munitions and Supply in providing the equipment and munitions required for Canada's service branches and by our allies overseas. I will attempt to avoid detail and statistics other than those required to indicate the magnitude of certain projects. In a general way, I hope to give hon. members a fair estimate of what has been, is now being accomplished, and our plans for future development.
The nature of our problems is changing, now that many of our industries are finding their capacity fully utilized. In the days of the defence purchasing board and the war supply board, the problem was largely that of placing orders at reasonable prices. The problems recently have become more in the nature of organizing and initiating sources of production. Secondary industries, that is manufactured products to be incorporated in a finished article, now present great difficulties. At the outset the only primary product difficult to obtain was wool, but we now have serious problems in obtaining steel, lumber, 95826-134
copper, aluminum, and various other minerals to fill requirements for Canada and Great Britain.
The problem has changed materially in another respect. At the outset, Britain appeared to believe that there would be time to build her own munitions industry, without calling on North America in a large way. Within the last few weeks, Britain has been asking Canada for practically anything that can be supplied in the way of munitions and war materials.
The point of view of Canada's armed forces toward this supply problem has also changed. Formerly, it was almost automatic to order naval supplies, coast defence guns and the more intricate electrical devices from Great Britain. It has become all too evident that Canada requires to be self-contained in the production of all such war material, and we are proceeding as rapidly as possible to bring this about.
I find it difficult to convey an appreciation of the magnitude of Canada's present industrial effort in the production of war materials and supplies. All of us are aware that Canada's industrial tempo is at the highest peak in our history. Even this tempo will increase rapidly as factories now under construction go into operation and as plants now tooling for new production begin to produce. During the past few months we have been buying machine tools in the United States and in Canada in a volume that challenges the imagination, all for the purpose of creating new manufacturing capacity for our industry. As I have said, our production to-day of manufactured goods is the largest in our history, but even it is small when compared with what our productive capacity will be six months hence. To illustrate, plants now under construction, involving a capital cost of some 120 million dollars, will have a productive capacity of 500 million dollars of goods per annum.
Our problem of supply deals with three stages: first, the raw material; second, the components or manufactured articles entering into the finished product; and third, the finished product. In the following discussion I shall not attempt to differentiate between Canadian orders and those placed either directly or through this department by the British and other empire governments. All represent an equal demand on our resources of raw materials and manufacturing capacity. While our Canadian demands represent much more than half our programme, the requirements of Great Britain are becoming increasingly important.
I will deal first with the finished products, which are in themselves the munitions of war.



Canada's War Effort

Mr. Howe
Shipbuilding.-Since last addressing the house on the development of the naval service, I am able to report that very satisfactory progress is being made in the fifty million dollar ship construction programme. Operations continue to be maintained well ahead of schedule.
Sixteen shipyards, located on the east and west coasts, on the St. Lawrence river, and on the great lakes, are carrying out our construction programme for larger warships.
The major naval programme engaging the attention of these yards includes 54 corvettes for the Royal Canadian Navy, to the amount of $29,400,000; 10 corvettes for the Royal Navy, amounting to $5,500,000; and 28 minesweepers for the Royal Canadian Navy, amounting to $16,500,000. The foregoing include 10 minesweepers of a new type, for which the construction details have recently been completed, and on which work has also begun. Of the corvettes, formerly called patrol vessels, several have already been launched and 10 more will be launched within the next five weeks. The machinery and other equipment required to complete these vessels are being delivered as required, and will be ready for installation on launching dates.
It is anticipated that before the end of the year 28 corvettes and 5 modern minesweepers will have been delivered to the naval service.
In addition to the sixteen shipyards engaged in large boat production, there are eighteen other shipyards working to capacity on a small boat programme. Included in this work are refuelling gasoline scows for the use of the Royal Canadian Air Force, rescue boats, numerous aircraft tenders, bomb loading tenders, 84-foot wooden salvage boats, and many pieces of floating equipment such as scows and supply boats.
Also to be included in Canada's naval force are trawlers requisitioned from their trade which have been converted into minesweepers, and highspeed motor torpedo boats, rescue vessels, and target boats for bombing practice, now under construction. Many merchant vessels have been fitted out with guns and armament to defend themselves at sea. Three fast passenger vessels are being converted into armed merchant cruisers, at a cost of $1,700,000.
Existing shipbuilding yards have been used almost exclusively in the construction programme, and facilities have been developed to permit enlarged operations where shipbuilding workers and technicians are available.
It is of interest to note that some 14,000 men are now employed in Canada's shipyards and allied industries on the ship construction programme. The number of men so employed has trebled itself in the last three months.

Aerodromes and Training Schools.-In October 1939, the responsibility for the selection of suitable sites for the aerodromes required for the training plan, and the preparation of these sites for use, was placed on the civil aviation branch. This branch was then completing a ten-year programme of similar work on the trans-Canada airways during which a wide experience had been acquired.
In the original programme aerodromes were required for 26 elementary training schools;
10 air observers schools; 10 bombing and gunnery schools; 16 service flying training schools; and 2 air navigation schools. Since for each of the service flying training schools 3 aerodromes are required, this means in all 96 projects.
The construction season was already over when the air training programme appeared, and it was only possible during the fall of . 1939, to select the aerodrome sites and have complete surveys made of them. This work was pressed with energy and before the end of the year suitable sites had been selected and surveys put in hand for about 80 per cent of the programme. This saved at least six months in the execution of the programme as satisfactory selections and surveys could not have been made with snow on the ground. All winter, work went on in the office, laying out the aerodromes on the surveyed sites to the best advantage, and preparing plans and specifications so that tenders could be called for, and contracts let in time to take advantage of the whole working season of 1&40.
Selection of aerodrome sites, even on the prairies and in good agricultural land, is not an easy task. Good drainage is an essential; also approaches to the airport site clear of obstructions. The ordinary amenities of civilization are very necessary near these schools. They must, therefore, be easy of access by road or rail and it is desirable that they should be located near some centre of population. This limits the choice considerably.
The selection procedure was as follows: Mountainous and thickly wooded areas were avoided for obvious reasons. A study was made of topographical maps available to determine the areas where approximately a square mile of level, accessible country could be obtained. Geographical distribution across the dominion was desirable, though some sections naturally lent themselves to easier and less costly development than others. After selections had been made from maps in the office, the sites were observed from the air and, if apparently suitable, in greater detail on the ground where observations were made of roads, telephone lines, railways, power and drainage and water supply. Reports of these surveys were then studied in detail and,

Canada's War Effort-Mr. Howe
if approved for development by the headquarters of the Royal Canadian Air Force and by the civil aviation division, a detailed survey plan of the aerodrome site and its surroundings was then ordered. The highway departments of the various provinces lent valuable assistance in this work and the majority of the surveys were carried out with the greatest efficiency by their parties. The engineering plans, showing the contour of the land, were then studied by experienced officers, and the aerodrome laid out to take the best advantage of the site. Plans and specifications for the grading, drainage, hard surfacing and lighting were then put in hand. At the same time, full information was made available to the Royal Canadian Air Force so that their buildings might be planned to fit in with the general development. Rapid progress was made on this work with the result that as soon as the frost was out of the ground, contractors were put to work in all sections of the country. Wet weather in May and June impeded progress to a certain extent % but, in spite of this, satisfactory progress has been made on all projects. Some are already complete and many others nearing completion.
It was found possible on some of the larger aerodromes to accommodate an elementary school on the same airport with one of the air observers schools so that the number of separate aerodromes required has been reduced accordingly.
The original schedule for opening these schools contemplated construction over a period of two and a half years. Recent events have made it necessary to expedite the completion of the whole scheme and accordingly construction on 90 per cent of these projects will have been completed by November of this year.
Extensions of the original programme are now under consideration. Eight additional service flying training schools, each requiring three aerodromes, are now required as well as several aerodromes for active service operation of the Royal Canadian Air Force. This will increase the programme to some 120 separate projects. Of these 77 are already in hand, calling for 47 entirely new aerodromes and the extension of 30 of the existing airports.
The 26 elementary flying training schools where the pupils are taught to fly light aircraft call for all-way fields, that is fields that can be used in any direction. A turf surface is preferable for this class of school, but in special cases hard surfaced runways will be necessary to take care of spring and fall conditions while on some existing aerodromes being used for the schools hard surfaces are already available. The acreage required for this type of school is from 200 acres upwards with clear 9582ft-1344
approaches from all directions. No field lighting is required at the elementary schools and the buildings consist of a hangar, living and messing quarters, storehouses, lecture rooms, and a small hospital, costing on an average of $100,000 for the buildings, with another $100,000 for the aerodrome.
The other classes of schools require much larger aerodromes with hard surfaced runways to provide for all weather flying, lighting for night flying and more elaborate buildings. The average size of such airports will exceed 500 acres. The number and cost of the buildings and cost of the aerodromes for the different types of schools are as follows:-
1.	An air navigation school costs on the average about $300,000 for the aerodrome proper and $500,000 for the buildings;
2.	An air observers school costs $350,000 for the aerodrome and $200,000 for the buildings;
3.	A bombing and gunnery school costs $350,000 for the aerodrome and $800,000 for the buildings;
4.	The service flying training schools, which include three aerodromes-one main aerodrome with a large area of hard surfaced runways and taxiways and on which hangars, workshops, living and messing quarters are concentrated; No. 1 relief aerodrome with a less elaborate system of hard surfaced runways and No. 2 relief aerodrome, with a turf surface for use in fine weather only-will cost for three fields approximately $800,000, and the six hangars plus 31 other buildings on the airport cost $900,000.
These figures include the cost of supplying a system of roads and taxiways inside the aerodromes, provision of power and light, water supply and sewage, and communication services, such as telephones, teletype, etc.
Eight of the elementary training schools are already in full operation, as well as one air observer and one service flying training school. Others will be opened in quick succession. By the close of the year about 40 schools will be in operation and the remainder will follow as quickly as aircraft and teaching personnel are available.
It will be understood that as the aerodrome construction season ends with the commencement of winter, all airports required during the first six months of 1941 must be finished before the snow flies this fall. The progress so far made indicates that this will be possible. The anticipated completion dates of airports in 1940, by months are as follows:-
June	 3
July	 15
August	 18
September	 11
October	 24

Canada's War Effort-Mr. Howe
The anticipated cost of aerodrome construction on the 77 projects now approved for construction is $15,500,000. Up to the present it has involved the purchase of 30,000 acres of land at a cost of approximately $2,000,000. The grading of these aerodromes will involve the moving of 14,500,000 cubic yards of earth and the paving programme amounts to 8,500,000 square yards of pavement, equivalent to nearly 700 miles of standard highway 21 feet wide.
Aircraft.-From small beginnings, the aircraft industry of Canada is being developed to sizable proportions. Last week our factories delivered 25 finished aircraft, and, as new plants come into production, these deliveries will increase rapidly. Eight Canadian aircraft companies have in hand orders totalling some 3,200 planes, of which 257 have been delivered. Contracts in hand involve approximately 110 million dollars. Early in 1941, we expect to have a production of 360 planes per month, or about 12 planes per day, Sundays and holidays included, on the basis of production now arranged for. A further production programme is now being discussed between Great Britain and ourselves which promises to materially increase this output.
We are still dependent on importation of aeroplane engines, propellers (except wooden propellors), and instruments. An exhaustive study of. the aeroplane engine situation has not convinced us as yet that the production of aeroplane engines in Canada is warranted, having in mind the very large capital involved, and the drain on our resources of machine tools and skilled mechanics. Sources of supply of aeroplane instruments in Canada are being developed, and the production of metal propellors is under consideration.
As to types of planes, the present production includes Fleet primary trainer, Tiger Moth trainer, Fleet 60 advanced trainer, Norseman, Harvard trainer, Anson twin-engine trainer; and for fighting planes, Lysander, Hurricane fighter, Bolingbroke bomber, Hampden bomber, and the Stranraer flying boat.
The British commonwealth air training plan had involved the supply from Great Britain of some 1,500 Anson twin-engined trainers, as well as other training aeroplanes. Some two months ago, we were advised that the present emergency situation there had made it necessary for Britain to suspend shipments for a time, and immediate arrangements were made to manufacture substitute planes here. Some 5,000 aeroplane engines were purchased in the United States on this account, and nine Canadian firms have been put in production on components and assemblies of the Canadian Anson programme. In order to coordinate the work of these nine firms and to

ensure a supply of raw materials, engines, and instruments, as required, a wholly government-owned company, Federal Aircraft Limited, has been formed to take over the responsibility of the government for the production of aircraft of this type. It is anticipated that Canadian production of Ansons will commence before the end of this year. In the meantime the gap in the training programme is being filled partly by the purchase of new or used aeroplanes in the United States, and partly by Britain resuming shipment of the minimum number of training planes that will be required until Canadian production can supply the needs.
The supply of skilled labour for the aircraft industry is coming chiefly from our universities and technical schools, many of which have special summer courses directed toward increasing the supply. That is, of course, in addition to the winter courses. The extent to which our aircraft industry can be expanded will depend on how rapidly this trained personnel can be built up. At present the department is negotiating for the production of the . latest types of long-range bombers, fast fighters and modern flying boats, all of United States design, and with components obtainable on this continent.
Building Construction.-Our engineering division has, in addition to its work on buildings for the British commonwealth air training plan, placed large contracts for hutments for the troops, coast defence fortifications, aeroplane overhaul depots, buildings for new industrial plants, and a wide variety of less important projects. The building industry of Canada is working at the highest rate in its history, to meet our requirements for new construction. During the month of July the department awarded 72 contracts for building construction, totalling 11 million dollars.
Automotive Equipment.-Perhaps no country in the world is producing automotive equipment in the volume that now obtains in Canada. At present about 600 mechanized units per day are being produced, and in another month or two this figure will be substantially increased. Canadian government orders now placed for mechanical transport alone amount to S54.500.000, and Great Britain, South Africa, India, and other parts of the British empire are also large buyers in this market. The types of equipment being manufactured include several types of service trucks, gun towing vehicles, ambulances, station wagons, and service motor cars. Canadian motor transport is acknowledged to be the best that has been produced in this war.
The production of universal carriers is well advanced, and deliveries will begin before the

Canada's War Effort-Mr. Howe
end of this year. Six Canadian firms are cooperating in this production, and a high rate of output will be realized. The Ford Motor Company of Canada will be responsible for the assembly of these units, and this company is now building a large factory especially for that purpose. These universal carriers will be of Canadian manufacture throughout.
The Canadian Pacific Angus shops have undertaken the production of British "Mark III" tanks and have associated a number of other firms with them in that project. Production is being planned at the rate of 30 tanks per month. Tanks ordered by Canada will be furnished of complete Canadian manufacture except for engines, which will be imported from the United States until Canadian production can be organized. The "Mark III" tank project has involved the creation of new types of Canadian industry, and all are well underway. British and Canadian orders are in hand for "Mark III" infantry tanks to a total value of 63 million dollars.
Munitions.-Canada's munition programme involves the manufacture of Lee-Enfield rifles, Bren machine guns, Colt-Browning aircraft machine guns, sub-machine guns, 2-pounder anti-aircraft guns and carriages, 25-pounder quick-firing guns and carriages, 40 mm. Bofors anti-aircraft guns, 3-7 anti-aircraft guns and mountings, anti-tank rifles, and 20 mm. Hispano-Suiza aircraft cannon. This programme of gun manufacture has in most cases involved the building of a new plant. Our largest gun plant is for the manufacture of 25-pounder, quick-firing, guns and carriages and heavy naval guns, and represents a capital investment of 10 million dollars. This plant will be in production before the end of the current year, and will be one of the largest and most modern gun plants in the British empire. The Bren gun plant has been placed in operation and is delivering guns in substantial quantity. The capacity of this plant is being doubled by building an addition, now underway.
In the matter of shells and ammunition, our programme is a large one, and demands for still larger quantities continue to be received. We now have 14 plants producing shells, which include 4 mm. shells, 18-pounder, 25-pounder, 3-7-inch, 4'5-inch, 6-inch and 9-2-inch. In addition, Canada is filling large orders for fuses, games, traces, primers, cartridge cases, copper tubes for driving bands, brass and cupro nickel strip, and, in fact, everything necessary to complete all types of shells.
Total orders placed for ammunition of all types, including component parts such as fuses, primers, and cartridge cases, amount to
69 million dollars, of which 9 million dollars represents capital expenditures to increase plant capacities. In the immediate future, these orders will be increased by some 33 million dollars, involving the production, amongst other items, of several million shells.
The production of small arms ammunition is being expanded rapidly. The capacity of the Quebec arsenal for the production of this material is being multiplied by six. Privately owned plants are being enlarged and two new plants are being designed. Definite orders for small arms ammunition placed to date total some 19 million dollars, and the ceiling will be our productive capacity.
Canada is building two large new explosive plants-one of which will be in production in September next. These plants produce TNT, nitro-cellulose powder and rifle cordite. Existing explosive plants are being expanded largely. The total capital investment in explosive plants at present in hand will amount to some 30 million dollars. Just to show how rapidly these matters move, may I point out that a cable was received this morning which will have the effect of doubling that programme, and will involve an explosives programme of 160,000,000 instead of $30,000,000.


Richard Burpee Hanson: It is all for the British government, is it not?


Clarence Decatur Howe: Partly British and partly Canadian. It is predominantly British, but we have a fair amount of capacity of our own.
A new shell filling plant is under construction, at an estimated cost of 8 million dollars. On its completion, all shells, fuses, components and the required explosives will be routed into this plant, and finished shells will be shipped abroad, or delivered for use in Canada. The operation of this programme has been placed in the hands of a wholly government-owned company, Allied War Supplies Corporation, which will, in addition, operate the secondary chemical and other industries incidental to the programme. This company will be responsible for the administration of new capital investments totalling some 110 million dollars. Additional munitions production includes anti-submarine nets, gas masks, depth charges, mines, pyrotechnics, smoke screen chemicals, and various types of bombs.
Glass: An interesting development is the construction, now in progress, of a plant which will manufacture optical glass, fire control apparatus and predictors, and sound detecting apparatus, none of which has previously been made in Canada. The processes to be incorporated in this factory have all been developed by our national research laboratories, to whose

Canada's War Effort-Mr. Howe
inventive genius Canada is indebted for a type of production that can only be the result of extensive scientific research.
Clothing and General Supplies.-Less spectacular than ships, aeroplanes and munitions, but most necessary to every member of the armed services are such supplies as boots, army dress, blankets, braces, caps, greatcoats, service shirts, shorts, shoe polish and tooth brushes.
Since the outbreak of war, this department and its predecessor boards have purchased over 18 million yards of woollen and cotton cloth, enough to stretch from Ottawa to Berlin and back again. This has been, or is being, manufactured into 400,000 service battle dress uniforms, 225,000 summer battle dress uniforms, 383,000 overcoats, winter and summer underwear and other items of clothing. Orders have been placed for 850,000 pairs of boots and shoes and production has been stepped up to 30,000 pairs per week. Production of battle dress is reaching 20,000 suits per week. Blankets are being produced at the rate of 30,000 per week; braces 18,000 per week; caps 18,000 per week; service shirts 12,500 per week; and greatcoats 7,000 per week.
It may be interesting to note in passing that 350,000 cattle have contributed their skins to make the necessary quantity of shoes worn by the army, the navy and the air force. Specifications covering the manufacture of these boots are most exacting, and not more than 50 per cent of the best quality hides obtainable in Canada are good enough to produce uppers or soles to government standard. So far as possible, the departmental purchase of barracks stores is geographically distributed in order that all parts of Canada may participate, and also to facilitate prompt shipment to destination.
General buying, which includes purchase of clothing, food and all personal equipment for the troops, as well as all purchases not directly included in the classification previously discussed, has totalled to date 245 million dollars, of which 44 per cent has been delivered and paid for. Of these purchases, 217 million dollars have been made in Canada, 22 million dollars in the United Kingdom, and $6,700,000 in the United States. During the week ending July 20, 1,434 contracts were placed, to the amount of over 7 million dollars, which is at the rate of 32 contracts per working hour, and spending at the rate of $2,650 per minute. This large scale buying has resulted in Canadian manufacturers undertaking the manufacture of many products not previously manufactured in this country.

Foodstuffs are bought through nine branch offices in the principal distributing centres across Canada, each office purchasing for the region that it serves. The magnitude of food purchases can be illustrated by butter, of which 305 tons were purchased during the second quarter of this year.
Secondary industries.

I now come to a discussion of the very important and difficult branch of our work, namely, the production of manufactured products essential for inclusion in the types of manufacture previously discussed. In many cases this secondary production involves large capital expenditure for new plants, and the highest degree of technical skill.
New plants have been built, or are under construction, for the manufacture of hexa-chlorathane, ammonia, ammonium nitrate, magnesia and magnesium powder, toluol, and a new chemical not previously manufactured in the British empire. These new chemical plants involve a capital investment of some 35 million dollars. A plant is being built to manufacture gas mask charcoal, and a number of unusual chemicals are being produced incidental to the manufacture of pyrotechnics and for other military and naval uses.
War production has created a tremendous demand for brass. A new plant for the manufacture of brass is being built, and an existing brass plant is being largely extended, this programme involving a capital expenditure of some 12 million dollars. The production of aluminum in Canada is in process of being doubled, and plants are under construction for manufacturing this metal into sheets, shapes, extrusions, and forgings, this programme involving some 20 million dollars. Aluminum is the present bottle-neck of the aircraft industry, and steps must be taken to restrict its use for domestic purposes.
The machine shop capacity of Canada it rapidly being taken over by war work. Canada's production of machine tools is being expanded through plant additions, and many million dollars worth of machine tools are being imported. The Citadel Merchandising company, a wholly government-owned company, is in charge of the procuring of machine tools, both for government and private account and has, since its formation six weeks ago, purchased on its own account machine tools and equipment valued at $1,300,000, and for private account for government contractors, some $15,000,000. This company is performing an invaluable service in expediting procurement and deliveries of machine tools, on which our entire production depends.
The manufacture of munitions involves large and intricate gauge production. Some thirty Canadian firms are now manufacturing gauges,

Canada's War Effort-Mr. Howe
involving precision workmanship to 1/10,000 of an inch, and this programme is being further expanded.
The plant survey branch of the department has continued to investigate the productive capacity of our industrial plants. The number of plants surveyed now totals over 2,000. This branch is most helpful in advising on the particular plant to which new production can be assigned and in assisting in overcoming difficulties in the initial stage of manufacture of new plants.
Primary Industries.-The war needs of Canada and Great Britain have placed a tremendous strain on our primary production, in fields that we have become accustomed to look upon as inexhaustible. Lumber and timber, particularly aeroplane spruce, have become difficult to obtain in sufficient quantity. Production of Canadian steel is being extended to the limit. While not yet a problem of production, petroleum products have assumed importance as a strain upon Canada's supply of foreign exchange. An adequate supply of wool has been a problem since the outbreak of war. Many products normally imported are becoming difficult to obtain.
The base metals, and particularly metals little used in peace time, are becoming difficult of procurement. The demand for boots and shoes for the service forces has outstripped the production of hides. To meet this situation and to obtain the maximum output of needed primary products, it is obvious that the government must have a thorough understanding of each industry, and that each industry must well understand the requirements of government. As a connecting link between government and industry, controllers have been appointed, with wide regulatory powers, in the lumber, petroleum, steel, and non-ferrous metal industries. At the outbreak of war, the war-time prices and trade board appointed a wool controller, who has performed invaluable service in arranging our supply since that time. A leather controller, similarly appointed, has also been of great assistance in our supply problems.
These controllers have been most helpful in organizing the productive capacity of their industries, in rewriting government specifications in a way that will permit maximum use of our raw materials, and in keeping us advised of any probable limitations of necessary raw material. These controllers are associated together in the war-time industries control board, which is headed by a member of our executive committee.
Two wholly government-owned companies have been organized to protect the supply of necessary imported raw materials that may be subject to interruption through causes beyond
our control. It is the duty of these companies to keep in stock a considerable supply of such materials, and to sell them to our contractors as circumstances warrant. To give the names or any further particulars of the work of these companies would defeat the purpose for which they are organized.
The economics branch of the department studies the desirability of creating new sources of supply, attempts to prevent unnecessary expenditure of foreign exchange, reports on the merits of alternative solutions offered for the same problem, and is available in a consulting capacity to any of our officers who may wish to have any particular problem studied.
In conclusion, let me say that the preparation of a report on the work of the Department of Munitions and Supply invites one to go into almost endless detail. The problems it is handling are of great general interest, and the expenditures involved are on a scale to impress anyone who is interested in the scope of Canada's war effort. I trust that I have given hon. members sufficient detail to permit them to understand in a general way the scope of our work.
We have been fortunate in having enjoyed the complete cooperation of Canadian industry. Practically every industrial plant in Canada has been placed at our disposal. Manufacturers have, in most cases, been willing to accept our decision as to a reasonable price for their product, and have subjected themselves to audit by a firm of chartered accountants if requested to do so. There has been no evidence of an attempt to obtain undue manufacturing profits. I can only hope that the manufacturers have found this department as cooperative as we have found them.
Labour throughout Canada has also entered into the spirit of Canada's war effort in a way that leaves little to be desired. At a time of emergency, labour was called on to work on holidays, on Sundays, and for all possible overtime work, and the response was nothing short of magnificent. It is well understood across Canada that this is every man's war, and few have shown a disposition to take any other view of the situation.
The pace at which our purchases are accelerating can be judged from the fact that since the inception of the Department ot Munitions and Supply on April 9, the average number of contracts awarded per week has been more than twice that of the war supply board, and almost eighteen times as large as that of the defence purchasing board. This has involved a continually enlarged personnel and great difficulty in finding accommodation. I cannot speak too highly of the manner in

Canada's War Effort-Mr. Gardiner
which the staff of the department has responded to the added burdens that are continually being placed on them.
In the last twenty years Canada has been geared to a peace-time economy. The change to a war-time economy has taken time, and has involved many problems, but nevertheless the change has been made to a very considerable extent. When the history of the war is written, I have every confidence that Canada's record as the arsenal of the empire will stand comparison with the records of her soldiers, sailors and air men.


James Garfield Gardiner: Mr. Speaker, it has been suggested that I review with the house work which has been done by the National War Services department. That department has been in being for about ten days only and therefore the record of its work up to date will not deal with as many subjects as other ministers have found it necessary to deal with.
I should at the beginning like to call the attention of the house to the fact that just a little more than two months ago the ministers representing each of the departments which have been reviewed within the last few hours reviewed the activities of their respective departments up until that time, and I am sure that members of the house must have been surprised at the remarkable development which has taken place during the two months in which we have been busily engaged with the work of this session.
Agriculture
On that occasion, on May 23, I placed on Hansard the position of agriculture in relation to our war effort. As I still am minister of the Department of Agriculture it is my intention to give a short review of the work of the department bringing our position up to date in general terms in relation to matters with which I dealt at that time.
It is not my intention again to place on Hansard the names of the different organizations which have been set up since the beginning of the war in order to assist in production and in the distribution of farm products. Those can already be found on Hansard. But it is my intention to review in a few words the position as it is to-day as compared with the position as it was two months ago.
I was able to show on May 23 that our production was up in the essential food products; that we had increased our exports to Britain in our essential food products; and that our storage of essential food products other than cheese was also up. In short, I was able to show that we in Canada were in a

position to provide Britain at any time with great supplies of wheat, and with greatly increased supplies of meat, dairy products, poultry, canned vegetables and fruit products. The possibility of providing food products to Britain has if anything been improved since that time.
We have an unprecedented carry-over of wheat, we have another crop about to be harvested, we have had a remarkable increase in the production of pork products, we have had a reasonable increase in the production of dairy products, and our surplus supplies of vegetables and fruit are substantial. We are, therefore, in a position to send greatly increased supplies of every food product to Britain on short notice.
This should be reassuring to Britain at a time when she will be denied supplies from many of the European countries from which she previously obtained a considerable part of her pork and dairy food products.
In May I was addressing the house as Minister of Agriculture and concluded what I had to say with these words:
We in this house who represent agricultural constituencies are interested in seeing that farm surpluses which do accumulate from time to time in the early stages of the war are properly taken care of, and that farmers do not have to assume too great a share of any losses which may be incurred during the early years of a struggle of this kind.
We do not expect that in this war the farmers will receive so high prices for farm products as they did during the last war, but we do hope that matters will be so managed during the period of the war that the farmer will secure his just returns.
Since that speech was delivered there have been a number of changes. I have been asked to assume the position of Minister of National War Services and am still administering the Department of Agriculture. When the Prime Minister was moving the second reading of the bill setting up the new department he stated that the immediate task of the new department was registration, publicity and organization of voluntary effort, as reported at page 1572 of Hansard under date of July 12, 1940. He then stated:
Problems of internal security, of economic organization and development, of meeting social, industrial, financial and other needs, will continue constantly to arise. These may be dealt with by the Department of National War Services, by itself or in conjunction with other departments of the government as authority for such purposes may, from time to time, be given the minister by the governor in council.
Where the problems which have arisen to date may concern our war effort and are at the same time associated with agriculture, they therefore come under one or other or both

Canada's War Effort-Mr. Gardiner
of the departments I am now administering. There is only one exception to that, and that is the marketing of wheat, which is under the Department of Trade and Commerce. Since the speech of May 23 was delivered, there have been changes in world relations which are much more far-reaching in their effects than anything which has or could have happened locally. The arms of Hitler have advanced across Holland, Belgium and northern France. Great areas of food crops have been destroyed. Untold numbers of cattle, hogs and poultry have been destroyed. Much of what may be left will find its way to the armies of Hitler or into Germany. In any case none of it will find its way into Britain. To the extent that this is true Britain will require our extra surpluses sooner or later. Cheese is already being required in greater quantities than our agreements call for, and we shall be negotiating a new agreement on bacon and other pork products during the month of August.
The situation relating to apples and wheat is still serious from the point of view of the producer and in relation to the economic position of Canada. We have an understanding in Nova Scotia in relation to apples which will assist the producer in that area but at some considerable cost to the treasury of Canada. We expect to negotiate some understanding with the other two apple growing areas of Canada within the next few days. As a matter of fact, their representatives are in the capital at present. The wheat problem is one which, while of no greater importance to the individual producer interested than any other, involves more individual producers and in its handling affects the economic and international relationships of Canada to a greater extent than any other farm problem and possibly any problem which is a direct result of the war. It is safe to say that Britain's imports of wheat from the continent just about balanced with Canadian exports to the continent over a period of recent years. This Canadian wheat can be made available to Britain in quantities which will render Britain's wheat supplies secure. We can easily supply Britain with all the cheese she previously received from the continent of Europe. She received from 35,000,000 to 40,000,000 pounds a year. This, added to what we sent last year, would not equal our exports to Britain before the last war. Britain received 546,000,000 pounds of bacon and ham from the blockaded countries of Europe in ten months this year; Canada supplied 169,000,000 pounds in that same period of ten months. Canada could, with her present production, easily increase her exports to Britain by 230,000,000
pounds during the coming year. This would take care of about 40 per cent of what Britain previously obtained from the blockaded countries. These supplies can go to Britain if they are desired by Britain.
I wanted to make that review of the situation as it exists at present in relation to food products in order to emphasize the fact that, from the point of view of the position which Britain holds to-day in the titanic struggle which is going on, we in Canada are in a position to supply her with food products to a greater extent than ever before and therefore to assist her in that direction in winning the war. I think I can say this in relation to the question which I am now discussing, without entering at all into the economic effects of price or anything of that kind, that the people of the Dominion of Canada are bent upon seeing to it that all Canada's food products which are a surplus over and above our absolute needs do go to Great Britain in order to assist her in winning this war.
National War Services
The Prime Minister stated, when setting up the department, that the immediate task to be assumed and assigned to the department by council was that of registering all persons in Canada over the age of sixteen. As indicated by the Minister of National Defence, the task of finding men for the training plan set up by the Department of National Defence has been assigned to the Department of War Services. The registration will place at the disposal of all departments of the government information which will assist in mobilizing both human and material resources.
I have given a short review of developments in relation to food products. The Minister of Munitions and Supply has just given to the house a detailed review of the efforts made to mobilize industry and the results obtained from that mobilization in the direction of supplying munitions and machines of war. It is my intention to place side by side with his review a method by which registration of human resources is to be made, the system under which men are to be provided to the defence department for training, without interfering unduly with industry, and finally an estimate of the human resources of Canada.
I think it will be agreed that although munitions and machines of war and material supplies generally are necessary to achieve victory, they can only function effectively when placed in the hands of men and women of healthy physique, fine spirit and good training. The nature of our country, with its wide spaces and free institutions, produces people

Canada's War Effort-Mr. Gardiner
with the first two qualities. It is the work of the government to add the third in preparation for our war effort.
At the expense of repeating some things already contained in the regulations tabled in the house, and statements already made in this house, I propose to review the whole procedure to be adopted by the department in registering our human resources, so that it can be found in one place in Hansard.
The national registration takes place on Monday, Tuesday and Wednesday, August 19, 20 and 21. The geographical units for the registration are the electoral federal constituencies which are, in turn, subdivided into polling subdivisions, the boundaries of which are the same as the polling subdivisions in connection with the dominion election of March last.
There will be two deputy registrars for each polling subdivision. It is not necessary to refer to the voluntary helpers who are being organized by members of this house and others in order to assist the deputy registrars.
At the conclusion of the registration period the deputy registrars in the polling subdivisions will segregate the cards of all single men between the ages of nineteen and forty-five, and they will make copies of the registration cards of the group so segregated, and these copies will be sent by the deputy registrars to the registrars for the electoral divisions. I might suggest in that regard that, particularly in polling subdivisions where enlistment is large, it might be wise for those who are organizing such registration to see to it that a number of tables are provided. It would be a very simple thing for one standing at the door to ask each individual as he comes in whether he is single or married; if single send the men to a table for single men, which would result in all the cards for single men being at one table at the end of the day, the single women to another table, and married men and married women to others, thus dividing the work into about four groups and making it possible for four persons to be working at the desk throughout the day. A division of that kind would make it easy to get the task finished in the three days provided.
The 19 and 20 years class are being extracted now, as they may be used, in the case of the 20 year class next year, and in the case of the 19 year class two years hereafter. This will save having next year and the year after to go to the dominion statistician to extract the cards-should they be required.
The registrar for the electoral district will then take all the cards and classify them into age groups, i.e., the cards of the 19 year olds in the district-single males-will be all put together. The cards of the 20 year olds will 
be put together, the cards of the 21 year olds and so on, so that there will be a separate group for each age class of single men between 19 and 45.
There are 11 military districts in Canada, namely, one in British Columbia, one in Alberta, one in Saskatchewan, one in Manitoba, three in Ontario, two in Quebec and two in the Maritimes. The Manitoba district includes a portion of that section of Ontario which borders on Manitoba and there may be a slight overlapping of military district boundaries from one province into another, but not of great consequence.
The registration, as I have said, is being made on an electoral district basis.
The 243 electoral districts of Canadr will be divided into 12 groups, the outer boundaries of each group being as nearly as possible the same as the boundaries of the military district.
The province of Prince Edward Island will be dealt with separately, so that while there are 11 military districts, there will be 12 organizations set up along the lines I propose to outline, 11 of them being as nearly the same as the military district, and the 12th being Prince Edward Island.
Twelve boards will be constituted, namely, one for each of these military districts and one for the province of Prince Edward Island.
Each board will be headed by a judge of a superior court, or where deemed advisable, by a judge of a lesser court, of the province in which the appropriate military district is situate.
The chief justice of the province will be asked to nominate this judge and he will be appointed by order in council. As a matter of fact, these judges have practically all been nominated in this manner already.
Each board will consist of three members and, as I have said, a judge shall be the chairman of each board. The other two members of each board will be representative citizens of the district in which the board will have jurisdiction.
It will be impossible, with a board of three, to have all the various phases of the economic life of the country represented on the board, but this will be kept in mind in the appointments, so that the members of the board will be fully conversant with the predominant industries of the district in which the board has jurisdiction.
These boards will be located at the same point as the headquarters of the military districts, except in the case of Prince Edward Island, where the headquarters will be in Charlottetown.

Canada's War Effort-Mr. Gardiner
Each board will have a district registrar whose duty it will be to look after the administrative end of the organization and who will be answerable to the Department of National War Services.
The registrars for the constituencies, after they have classified the cards of all the single men, 19 to 45, into age groups, will then send these copies of cards in to the district registrar.
It will be his duty to direct the tabulation and indexing of these cards, so that he will have in his office a complete record of all single men between the said ages for the whole territory under the jurisdiction of the board.
As stated by the Minister of National Defence, the military authorities will indicate the number of single men they propose to train within a year in Canada, and the Department of National Defence will advise this department of the number of men it wishes to call up for training at any one time.
All training of classes called up is to be completed within a year, and it is the intention to make eight calls within the year and to space these calls equally as nearly as possible.
As soon as the national registration is over, the registrar for each constituency will indicate to the Department of National War Services the number of single men in each of the age groups in the electoral district over which he is registrar, and thus we will know at once the number of single men in each group between 19 and 45 in Canada.
The Department of National Defence, with this information, will advise the Department of National War Services as soon as possible after this information is available, as to the number of men it wants called up on the first call.
As soon as possible after it is ascertained what year classes will have to be called to meet the first demand of the Department of National Defence, a proclamation will be issued, warning all persons within such classes, commencing with the 21-year-old class, that they will be called for service within a certain designated time.
This will be done to give them a chance of arranging their own affairs.
Every single person, male, who is medically fit, between the ages of 21 and 45 in Canada, may be compelled to take military training within one year.
It is possible that the requirements of the Department of National Defence will be satisfied by the calling up of single men from 21 to 35, and it may not have to go beyond this in the first year.
This factor depends on the result of the national registration and the number of men the Department of National Defence can train within the year. The only exceptions not subject to call will be as follows:
(a)	Judges of superior, district, or county courts of justice;
(b)	Regular clergymen or ministers of religious denominations, members of the clergy or religious orders;
(c)	Members of the naval, military, or air forces of Canada on active service;
(d)	Those who, in the opinion of the Minister of National Defence, have already received military training, within the previous twelve months, at least equivalent to that to be given to men being called up under these regulations;
(e)	Members of the Royal Canadian Mounted Police or provincial police forces;
(f)	Members of the police forces and fire brigades permanently employed in any incorporated city.
(g)	Wardens and officers of all penitentiaries, prisons, and lunatic asylums or mental hospitals.
Under an order in council passed in 1873, certain privileges with respect to military service were given to a sect of persons known as Mennonites, and under an order in council passed in 1898 certain privileges with respect to military service were granted to the sect known as Doukhobors.
It is the intention of the government to recognize these orders in council and a method of dealing with the individuals who feel they are entitled to the benefits of these orders in council will be worked out and duly announced.
Every employer of labour in the district, under the jurisdiction of the board, shall be required forthwith to furnish the board with a list of all single male employees between the ages of 21 and 45.
Any industry shall be entitled to submit a plan to the district registrar for the calling up for military training, within the said period of one year, of its single male employees from the ages of 21 to 45.
The plan so submitted must provide for the training of all their employees within the year but can be adjusted by the industries in such a way as to enable all to be trained within the year in a manner which will interfere in the least possible way with the conduct of the business of the industry. The men subject to call from any industry shall be divided into equal groups so that the same number of men will come up for training on each call.

Canada's War Effort-Mr. Gardiner
The district registrar, on receiving this, shall submit it to the board, and the board shall fix a date for hearing, and shall hear a representative of the industry submit the plan, and the board will have the right to either approve, reject or vary the plan.
After it is approved, either in the form submitted, or is varied, then the men therein listed shall be called as therein provided.
The Department of National War Services will submit to the board in each military district a list of the main seasonal industries within the jurisdiction of such board, and the periods during which it is inadvisable to call men for training from such industries, and it shall be the duty of the board so to adjust the call of men within its jurisdiction as to interfere as little as possible with the conduct of such seasonal industry.
The board will also have the right, in the case of a student at a recognized college or university, to postpone his call until the end of the scholastic year, provided the college or university has a system of compulsory military training in effect in the institution.
The Department of National War Services will be charged with the responsibility of having all men called up for training, medically examined, and will arrange for qualified medical men to be located at points throughout the district, under the jurisdiction of the board, convenient to those to be called.
All men called up will have to pass the same type of examination, as they would have to pass if they were volunteering for service in the non-permanent militia.
The medical examiners will place all persons examined in their proper medical categories in accordance with the practice of the Department of National Defence. It is intended to call up all men in the category of C-l and above that, in the classes from time to time called.
After each call is made, the person to be called up will receive a notice in writing telling him where to submit to his medical examination, and where to go for his period of military training.
He will, therefore, first be examined. If he is rejected as medically unfit, then he returns home, and this fact will be noted in the record. If he is medically fit, he will proceed to the point where he is to be trained.
These men will be furnished with transportation to the doctor who is going to make the examination and to the military training point.
All medical examinations will be subject to review by the medical branch of the Department of National Defence.

Severe penalties will be provided for the failure of any person called up to submit to the medical examination and to take his period of training, if medically fit.
Severe penalties will be provided for the medical man who fails to make a proper examination or fails to report the true facts of the state of health of the individual.
All employers of labour will be required, under penalty, to put the employee back in his job at the conclusion of his period of training, or into a job the equivalent of the one he had.
A representative of the Department of National Defence may attend at sittings of the board and make such representations thereto with respect to any matter being considered, as he may see fit, but such representative is not a member of the board.
This whole scheme, in broad terms, means this:
(a)	As a result of the national registration, we know the numbers of single men between the ages of 21 and 45 throughout Canada, and we know the number in each age class.
(b)	The military authorities decide the number of men they propose to train within the next year.
(c)	Every medically fit male Canadian, subject to above exceptions, between the said ages, up to the number the Department of National Defence can train, will be called up during the year for a period of thirty days training.
(d)	This will apply to every person, regardless of his occupation or any other consideration, save the small excepted list, that I have enumerated.
(e)	There will likely be eight calls within a year, and the age classes will be called up in consecutive order, and all must be trained within the year.
All arrangements are made by the Department of National War Services, and the only connection with the Department of National Defence is the furnishing by that department to the Department of National War Services of the total number of men they can train and the number to be called up in each group.
The Department of National War Services will deliver the men to the Department of National Defence for training purposes and then our duties in this regard are completed.
There is considerable anxiety as to what effect this registration and proposed training of men will have upon production of primary products and industry in Canada. It might be of interest to state in a few words what our human resources are.

Canada's War Effort-Mr. Ihley
There are in Canada-at least this is the estimation, before we take the registration- between the ages of 18 and 44, approximately 4,700,000 people, of whom 2,400,000 are males and 2,300,000 females. Included in this total are approximately 1,198,000 single males. But this is by no means the full strength of our human resources. Between the ages of 44 and 59 the total male population is 950,000 and female 820,000. In those over sixty years there is substantial productive and directive capacity and I must not leave out of the national effort youths from 10 to 18. It is for the future of these that this conflict is being waged, as well as for the preservation of all our institutions of government.
It will be agreed after an examination of these facts that there are a sufficient number of men in Canada to provide the man-power for a much larger force than could be equipped at present, and at the same time carry on activities both primary and secondary. It should be remembered too that those called only for training return at the end of thirty days to their employment. In addition to these there are the millions contained in other categories to draw upon for industry. I may interject that in every long-drawn out war it has been found necessary, before the end, in many of our industries to depend upon people who in peace time would expect to be free from undertaking work in connection with those industries.
We know from our experiences to date with registration that we are going to have one hundred per cent cooperation from every section of our population from coast to coast. Ever since we indicated that we were interested in having people volunteer their services our desks have been piled high with communications from people in every part of Canada. Some of these communciations represented whole staffs in large organizations, determined to see that this registration is properly made in the shortest possible space of time. That cooperation is given to the end that every available man, every product of industry and primary production and the whole credit of Canada shall be placed at the disposal of the governments of Canada and Britain to drive back the forces of Hitler and reestablish freedom in the world. On this occasion the House of Commons, in passing the estimates to be brought before it, will be assisting in that cooperative effort on the part of all our population, so that we may get on with the prosecution of the war at the nearest possible future date, in a degree even greater than that which has been possible up to the present.


Thomas Langton Church: Here endeth the second
lesson in plain cooking.
Economic and Financial Activities


James Lorimer Ilsley: Mr. Speaker, I hope to be able to complete what I have to say before one o'clock, because I am going to speak only briefly on the financial and economic aspects of our war activity. It is only a month since our financial position and policies were reviewed in detail in the budget; therefore I propose only to recall to you the main facts and to mention a few developments that have taken place since the budget was presented.
You have heard the Prime Minister (Mr. Mackenzie King) and the ministers of national defence describe our military activities and plans. You have heard the Minister of Munitions and Supply (Mr. Howe) and the Minister of National War Services (Mr. Gardiner) discuss the means by which our resources of men and material are being organized for war service and the production of war supplies. These various activities are the primary ones. Behind them lie those secondary, though no less essential, economic and financial activities that enable the resources of the nation to be turned to war purposes. The task of finance is to provide the funds which are used to pay for the war services. But in a deeper sense the task of finance is, by taxation and borrowing, to restrict the civilian demand for economic resources in order that they will be free when the defence or supply departments require them. I cannot too strongly impress upon the house that this is the fundamental function of finance in time of war. It is vitally important that in discharging this function it keep in step with the defence and supply programme; for if finance proceeds more rapidly in curtailing civilian demand than defence proceeds in making use of the resources thus set free, there will be unemployment and waste, while, on the other hand, if finance lags behind the defence services, they will be faced with shortages and delays, and the competition between military and civil demands will bring about inflation.
In the first war budget speech delivered last September, the principles of war finance which we proposed to follow were set forth. I will not go over them to-day beyond merely recalling that it was indicated (1) that we would, so far as practicable, pay as we go by means of taxes based upon ability to pay,
(2)	that we would borrow as cheaply as possible and (3) finally, that we would continue to follow scientific principles in monetary management, avoiding inflation on one hand, and monetary stringency on the other.
These principles have been applied from that time to this.

Canada's War Effort*-Mr. Ilsley
I shall not weary the house by recounting in detail the financial activities of the government since war was declared.
Among their main features were these:
(1)	At the September session a war appropriation of a hundred million dollars, with provision of the necessary borrowing powers to the government and enactment at that session of the first new war taxes indicating the main lines of the government's taxation policies.
(2)	The establishment in September of various economic organizations, including the war-time prices and trade board and the foreign exchange control board.
(3)	A moderate and carefully controlled expansion of money and credit during the first three months of the war.
(4)	The negotiation of a loan of two hundred million dollars from the chartered banks upon an issue of two-year two per cent notes.
(5)	Repatriation of ninety-two million dollars of dominion government securities for the purpose of providing the British government with Canadian dollars with which to make purchases in this country.
(6)	Various other financial arrangements with the United Kingdom, including those connected with the British commonwealth air training scheme.
(7)	The first public war loan in January, which took the form of three and one-quarter per cent bonds issued at par, redeemable by lot over the five years from 1948 to 1952, and which resulted in a prompt and substantial over-subscription for the two hundred million dollars required in cash.
(8)	Unexpectedly buoyant revenues during the latter part of the fiscal year, enabling us to end the fiscal year with a deficit about seventy million dollars less than was anticipated in September and with a very strong cash position.
(9)	A reduction in the estimates for non-war expenditures for the new fiscal year to 448 million dollars from the comparable figure of 525 million dollars for the previous year.
(10)	Transfer in April to the foreign exchange control board of all our available holdings of gold and foreign exchange, including both private holdings and those of the Bank of Canada.
These, I think, are the main financial activities of the government since the beginning of the war, and have been, as I have said, more or less fully dealt with in the 
budget speech and other reviews of our financial activities. There are, however, a few other matters, most of them recent, to which I should like to refer more fully.
For example, there is our cooperation with the United Kingdom in economic warfare. Economic warfare has had its importance in waging the war. It has depended mainly upon the British naval blockade. But Canada has cooperated by careful control of trade to ensure that no Canadian supplies reach the enemy directly or indirectly. Direct trading with the enemy was, of course, prohibited from the outbreak of war, and this prohibition was extended to cover trading with agents or suspected agents of the enemy in neutral countries. The export of certain essential commodities, notably metals, was subjected to control by a permit system as from September 20. My colleague the Minister of National Revenue (Mr. Gibson) is responsible for the issuing of permits. Later, in January, all exports to countries contiguous to the enemy, or to territory occupied by the enemy, were subjected to similar control. This control was carried out in cooperation with the British ministry of economic warfare, and with the purpose of preventing any such exports reaching the enemy by indirect means.
Towards the end of May another important financial development took place with the launching of the war savings campaign. This campaign is a continuing and voluntary one. Its purpose is to sell war savings certificates and war savings stamps. This enables even the smallest sources of savings to be tapped effectively and regularly, and in this way everyone in Canada who can afford to save at all is given the opportunity of helping to finance Canada's part in the war, while at the same time investing those savings in the very best of securities yielding an interest return of more than three per cent.


Mr. HARRIS (Danforth):: They all go into the consolidated revenue fund?


James Lorimer Ilsley: Yes. A nation-wide voluntary organization is handling this savings campaign, and is doing so with efficiency and success.


Richard Burpee Hanson: Without wishing to interrupt, would the minister indicate what the sales have amounted to?


James Lorimer Ilsley: I shall do that immediately. The total sales of war savings certificates to July 27 had a face value of $16,690,435. For this amount there were 336,602 individual applications with an average of $49.58 per certificate.

Canada's War Effort-Mr. Ilsley


Joseph Henry Harris: I was hoping it would reach $50,000,000. It is a long way from that amount.


James Lorimer Ilsley: It was never anticipated that it would reach $50,000,000 at once.


Joseph Henry Harris: I was also
hoping the liability would be earmarked as such.


James Lorimer Ilsley: We had hoped the $50,000,000 would be reached in the course of the year, and less than two months have elapsed to date. These figures do not include the sales of such war savings stamps as have not as yet been converted into war savings certificates.
In each of the nine provinces provincial war savings committees have been formed and these committees are now in process of forming district and local committees, of which it is expected there will be about 1,500 in active operation by the end of next month. There are now about 35,000 retail outlets for the sale of certificates and stamps, including post offices, banks, investment dealers, brokers, retail stores and schools, all performing this important national work without remuneration.
At the present time there are 9,040 employers cooperating in a programme for obtaining war savings subscriptions by voluntary pay deductions on the part of employees. These 9,040 firms employ a total of 1,300,000 employees, and it is safe to say that there are now over 1,000,000 employees cooperating in the purchase of war savings certificates and stamps under the slogan of "serve by saving."
A breakdown of sales by provinces is now available for the period up to the end of June. I have here a table showing the dollar value of total sales in each province and the average amount per head of population. The table is as follows:
	Dollar	Dollar value
Province	value	per capitalPrince Edward Island.	$ 62,940	$0.67Nova Scotia 	529,910	0.97New Brunswick	342,020	0.77Quebec 	2,252,125	0.71Ontario	4,624,890	1.24Manitoba	1,005,935	1.40Saskatchewan	939,960	1.00Alberta 	837,935	1.07British Columbia	1,386,035	1.82Yukon	7,700	$11,989,450	$1.07
Before I leave this subject I think I should refer to an entirely new development in our financial programme, that is, the issue of interest-free certificates. We have been fortunate in having offered to us many interest-free loans by generous public-spirited individuals and corporations who wish to and feel themselves able to make a contribution to Canada's war effort by forgoing the interest return which they could have obtained by investing their funds in war loan bonds or other securities. The government is glad to receive such loans as free-will offerings and has made special provision for them by authorizing the issue of $10,000,000 of interest-free certificates. This amount will be increased from time to time as circumstances warrant. Certificates are issued in registered form only and can be made available in any denomination required. They are to be distributed, as in the case of our ordinary loans, through the Bank of Canada, to which all applications should be made. In the normal case, certificates will be issued to mature on June 15, 1945, but any holder who finds it necessary to ask for the return of his money before the maturity date may send in his certificate for redemption at par at any time after six months from date of issue.
While these certificates have been available for only a short time we have already received subscriptions from 87 individuals and firms, amounting to $2,262,203. Included in this total is a subscription from a large industrial company for $1,000,000, another for $500,000, and a number of very small subscriptions. I should add that this total does not take account of a considerable number of cases where purchasers of first war loan bonds and war savings certificates have donated to the government the interest accruing to them from their holdings of these securities for the duration of the war, or in some cases until the obligation matures. This sacrifice of interest may be a contribution which many of our citizens cannot afford to make, but I wish to express here publicly the appreciation of the government, and I am sure of parliament as well, to those patriotic persons and firms who desire and are able to make this type of contribution to Canada's war programme.
By the time parliament met in May the war situation had, of course, changed radically. The first action taken by parliament was the provision of a greatly enlarged war appropriation of $700,000,000. This figure is larger than the total expenditures of the dominion in any year in its history, except 1920 when the dollar was worth much less than at present. Moreover, it has already been indicated that even this figure must be increased by the sum of at least $150,000,000 to $200,000,000 as a result of commitments which have been made since the war appropriation bill was

Canada's War Effort

Mr. Ilsley
introduced. As it is anticipated that parliament will reassemble well before the end of the present fiscal year, the vote of these additional amounts will not be requested until parliament meets again.
Since the budget was brought down there have been several new financial developments. These were foreseen in a general way at the time of the budget, but they could not be discussed then. The first of these has been the restriction of the use of foreign exchange for pleasure travel. Since we require every available dollar of foreign exchange for the purchase of aircraft, engines, equipment and other war supplies in the United States, we felt that Canadians could be asked to do without the luxury of purely pleasure travel outside of Canada at this time.


Richard Burpee Hanson: I understand that there is no restriction on sterling exchange to be used for pleasure trips.


James Lorimer Ilsley: I do not think there is a reason for it.


Richard Burpee Hanson: I think the minister will find that I am correct.


James Lorimer Ilsley: I should think so. Exchange is still available for those who have to travel, either for business or personal reasons. We are confident that our United States friends will understand that we are just as anxious to see them and to visit them as ever. We are not trying to save money at their expense, but rather we are determined that as much as possible of our receipts of United States dollars shall be used for the purchase of those things we need for the war. This is a war lot only to defend Britain but to defend this continent as well. We want very much to have United States citizens visit us during the war and we are eager to see that they enjoy their stay in Canada and that they are treated as honoured guests and good friends.
The second new development is the provision this house has made for unemployment insurance. This is a far-reaching measure of social security for our working classes. It is also a vitally necessary preparation for the postwar situation. I do not believe, however, that even members of parliament, let alone the public generally, realize how useful this unemployment insurance may be from the point of view of war finance. Once it gets in operation it will result in the collection of about $4,000,000 a month-I think that is the estimate-in the form of employers' and employees' contributions. Since the amount
[Mr. Ilsley. 1
likely to be paid out in unemployment benefits during the war will be small, most of these contributions will be accumulated in the insurance fund. This fund will be invested in government securities and will therefore assist indirectly in financing the war. Secondly, and this too is important, it will involve the setting up of an active, national system of employment offices, which will serve as a placement service enabling all unemployed persons, whether or not they are covered by the unemployment insurance, to be brought into touch with those needing additional labour. This will be of great usefulness as labour becomes more and more difficult to find, and as it becomes more and more important to transfer what unemployed labour there is to the places where it is most needed. In fact, I should not be surprised if the employment service set up under this insurance scheme proves to be just as important, from the point of view of mobilizing our labour force, as national registration itself. For these two reasons the war makes it more desirable than ever to establish unemployment insurance and a thoroughly efficient system of employment exchanges.
The third new financial factor to be considered is the prospect of greatly increased British purchases in Canada in the next twelve months. You will have noticed from time to time in the last month or two announcements of new contracts or orders for munitions or supplies. In connection with our repatriation programme, I have recently been considering the total of these prospective purchases in various fields, and it is a very large one. It should result in a considerable increase in the demands on our production, both of raw materials and manufactured goods. In addition, however, it will also require a considerable increase in the amount of financial assistance given to Britain by way of repatriation of Canadian securities in order to provide Canadian dollars for purchases in this country. This will involve a substantial addition to the amount of financing to be done to meet our own deficit. It will be a great deal more than the figure of two hundred million dollars a year suggested in the budget. While the increased income resulting from the British purchases will help us to make the savings necessary to finance them, the additional borrowing cannot be done without a considerable effort.
Before closing I should like to impress upon you, Mr. Speaker, and upon others, the magnitude of the financial problem that we face, quite apart from taxation. The volume of

Canada's War Effort-Mr. Ilsley
savings that will be required to meet our own deficit and to assist Britain in purchasing in Canada is really enormous. Moreover, we must obtain these savings at a time when taxation is heavy-much heavier than ever before. We shall have the income from which we can, if we will, provide the savings. What is necessary is the voluntary effort to make the savings. They are necessary because we are determined to make the greatest use of our resources. We must not be misled by the existence of large surpluses of a few things- particularly of certain agricultural products or even of unskilled, untrained labour-into believing that war activity on the scale on which we are proceeding will not compel us to make the maximum possible use of all our man-power and our material resources. One of our most urgent economic problems now is to prepare for the transfer of resources, human and material, from places where they may not be needed for the present to places where they are or will be urgently needed.
I have said we face the need to raise large sums by borrowing. Part of this we shall obtain from the war savings campaign. Much of this part will take the form of deductions from pay envelopes, in addition to the deductions under the national defence tax and the unemployment insurance scheme. Some of our people may be worried by all these deductions. I appeal to such persons to realize that this is the form taken by their contributions to the cost of the war. Such contributions should not be considered as grounds for demanding increased wage rates or salaries. If they were, that would defeat the very purpose of these deductions, since they are supposed to be borne by the persons from whom the deductions are made, and not by the general public in increased costs and prices.
Despite these new sources of savings and despite our new high taxes, we must continue to rely upon a very large volume of savings in the form of subscriptions to war loans. These MUSI come irom voluntary savings, from real efforts to do without luxuries and even comforts in order to help win the war. Never before in our history have we faced a saving problem-an investment problem-of such magnitude. It will require sustained and determined effort, but the kind of effort of which the aroused Canadian people are now fully capable.
Last night I listened to the eloquent words of my colleague the Minister of National Defence (Mr. Ralston). I heard his ringing appeal to Canadians to fight, first in defence, then when the defensive phase of the war
is over, to carry the attack to the very haunts of the enemy. As I listened I felt like saying to him, as to his colleagues the Minister of National Defence for Air (Mr. Power), the Minister of National Defence for Naval Services, Mr. Macdonald, and the Minister of Munitions and Supply (Mr. Howe): See that Canada does her utmost-on the land, on the sea and in the air-and the cost, in so far as money can meet it, will be gladly and proudly paid.


Richard Burpee Hanson: Before the minister resumes his seat may I ask him if he will-perhaps not now, because I do not think he could do it at the moment-rectify what I think is an omission in the review oi the government's war effort, that is, the extent of Canada's commitments in dollars and cents under the programmes now under review and the portion which may be assumed by the British government. That is one of the things I mentioned when asking for this review, and I think we ought to have it. It may not be available to-day but later, perhaps to-morrow, the minister might be able to give us the information, having regard to the huge sums mentioned this morning by the Minister of Munitions and Supply.


James Lorimer Ilsley: I will try to get that.


Mr. STIRLING:: We have listened for
five hours to a detailed description by five ministers of Canada's war effort. I imagine that we are going to proceed in the ordinary way followed by estimates, even though this huge expenditure will not come before us in the form of estimates. Does the Prime Minister propose that we go on with the discussion at this stage, or should we wait until the house is in committee of the whole?


William Lyon Mackenzie King: So far as the procedure is concerned I should like to meet the wish and convenience of hon. gentlemen opposite. I had thought that perhaps what miglit best meet their conveippnpp wnnlH ha. that tne Speaker should now leave the chair and that the house should resolve itself into committee of the whole to consider one item under national defence. Item 205 relates to capital and current expenditure. True, it is other than for war appropriations, but it is sufficiently general, were it so understood, as to cover almost anything under the heading of defence. In committee of the whole a perfectly free discussion might take place in respect to all statements which have been made in the reviews by the different ministers and upon the matters referred to therein. If it were not the desire to go on with the com-
Canada's War Effort

mittee stage of the discussion to-day, either this afternoon, or this evening, it could be postponed until to-morrow morning, but I hope that it will not be necessary to postpone further consideration of defence matters beyond that time.


Richard Burpee Hanson: That would be quite all right. We could go into supply, call an item and then rise on the understanding that we resume the discussion to-morrow. These are very important and exceedingly lengthy statements.
While I am on my feet I should like to say that in an interjection I made last evening I hope I did not hurt the feelings of the Minister of National Defence (Mr. Ralston) too badly, because he and I are really good friends. Still I did think that a large portion of his statement was, shall I say, unimportant. There were other parts which were very important and which appealed to me.


Mr. RALSTON:: I must say that I did feel, not hurt, but that my hon. friend had not done himself justice in characterizing the statement as he did. I felt that the work which had been put on the statement was sufficient at least to justify perhaps a closer consideration than the interjection would seem to have indicated.


Mr. COLDWELL:: I could not quite hear the discussion across the floor as to the procedure to be followed. Do I understand that the debate on the minister's statements will proceed to-morrow?


William Lyon Mackenzie King: Yes, that is the intention. The house will go into committee of supply, where they can be discussed.
Motion (Mr. Mackenzie King) agreed to, and the house went into committee of supply, Mr. Yien in the chair.



DEPARTMENT OF NATIONAL DEFENCE

[Stage Direction]
Normal services.
205. To provide that expenditures of the Department of National Defence in the fiscal year ending March 31, 1940, chargeable to Capital Account by the Appropriation Act No. 3, 1939, be charged to ordinary account in the public accounts of Canada for the fiscal year ending March 31, 1940, and that no sums be voted or paid into the consolidated revenue fund to provide for the retirement of the said expenditures chargeable to Capital Account, $326,050.
Item stands.
Progress reported.
At one o'clock the house took recess.
The house resumed at three o'clock. BANKING AND COMMERCE

[Stage Direction]
Mr. W. H. MOORE (Ontario) presented the fourth report of the standing committee on banking and commerce.
Mr. HANSELL:: Will the chairman of the banking and commerce committee move concurrence in the report this afternoon, or tomorrow? We should like to discuss the matter.


Mr. CRERAR:: Not to-day.



BUSINESS OF THE HOUSE


Mr. ALPHONSE FOURNIER (Hub) moved:: That the order passed on May 21, 1940, appointing an order of business of the house for the present session be suspended in relation to private bills.


Richard Burpee Hanson: What is the effect of this motion?


Alphonse Fournier: A number of
private bills have been passed by the senate, and the motion passed on May 21 prohibits the introduction of these bills in the house. The effect of this motion is that the rule be suspended and that in due course we proceed with these private bills.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of and concurrence in amendments made by the senate to Bill No. 100, to amend the Excise Act, 1934.
He said: There is no objection to these amendments. They are purely of a verbal nature, and there is no reason, so far as I can see, why the house should not concur.
Richard Burpee Hanson: It seems to me they improve the English of the bill.


James Lorimer Ilsley: Yes.
Motion agreed to; amendment read the second time and concurred in.

Canada-Dominican Republic Trade



FARMERS' CREDITORS


James Lorimer Ilsley: This is a case where I feel that we should ask for a conference with the senate. Therefore I move:
That a message be sent to the senate respectfully requesting a free conference with their honours to consider certain amendments made by the senate to Bill No. 25, an act to amend the Farmers' Creditors Arrangement Act, 1934, to which amendments this house has not agreed and upon which the senate insist, and any amendment which at such conference it may be considered desirable to make to said bill, or amendments thereto.
That Messrs. Usley, Crerar and Tucker be appointed managers on behalf of this house of the above free conference and that a message be sent to the senate to acquaint their honours therewith, and that the clerk of the house do carry the said message to the senate.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of and concurrence in amendments made by the senate to Bill No. 103, to amend the Special War Revenue Act.
He said: The amendments are merely of a verbal nature, and there is no reason, so far as I can see, why the house should not accept them.
Motion agreed to; amendments read the second time and concurred in.


[Stage Direction]
The house resumed from Wednesday, July 24, consideration of the motion of Mr. MacKinnon for approval of the trade agreement between Canada and the Dominican Republic.
Richard Burpee Hanson: Before the resolution carries I desire to say a word or two. First, I am wondering why this matter was delayed so long before its introduction into parliament. I notice that the treaty was executed more than two months before parliament met, namely on March 8, and I think it should have been introduced into the house for ratification before the dying days of the session.
The treaty itself is not important, except with reference to the principle involved. I am glad to see that we are extending our trade with the West Indies, having regard to the loss of markets which we have sustained in other quarters, due to foreign exchange conditions, and due to the war. In 1934 the question of trade with this republic was up, and at that time our exports were entirely confined to fish. At the time they were threatened with being cut off, and we made some extraordinary efforts to retrieve the situation, though the amount involved was small, in which we were successful. I understand from the statement of the minister that later our exports declined, due to the imposition by the republic of internal revenue taxes. In 1934 our imports showed a very marked increase, consisting largely of sugar, I assume; in fact according to the minister's statement the total imports of $1,414,797 in that year included heavy importations of Dominican raw sugar. The following year there were no sugar imports at all. Our exports to that country, which reached a peak of $296,232 in 1938, fell off in 1939 to $111,616. As I understand it, those peak exports included a substantial amount of silver coinage sent from the mint here. Does the minister expect any increase in our exports of dried fish to the Dominican republic? I know of no part of our community that is in greater need of export markets than our fishing population, unless it be the wheat producers of the west.
While I am on my feet I might direct the minister's attention to the fact that there is now a grand opportunity to extend our market for dried fish in Cuba. Our exports of fish to that country have been cut off during the past few years, largely because of exports from other countries, and I think now the Department of Trade and Commerce should be alert to the openings which exist in that market. Any one who has ever visited these islands will agree that the purchasing power of Cuba, as compared with that of the Dominican republic, is probably as 100 is to 1 in favour of Cuba; and while I welcome the opportunity to send more of our fish and potatoes to the Dominican republic I would greatly welcome any step that might be taken to make possible greater exports of fish and potatoes to Cuba, where there is also a market for newsprint and sulphite pulp, which heretofore has been obtained in other countries.
I hope the minister will give some consideration to these points. I believe his trade commissioner to Cuba is now in Canada. I understand he has been conducting an educational tour of this country. He was recently in my own city, where he made the
2132	COMMONS
Canada-Dominican Republic Trade
statement that, the supply of fish from Norway having been practically cut off, fish exporters of eastern Canada and Newfoundland now have an opportunity to increase their sales in Cuba. If we could get our share of the Cuban market it would be a great thing for eastern Canada.
So far as I know there is not the slightest objection from any standpoint to the ratifying of this trade treaty. It is a very small thing, perhaps, but we should welcome it at this time. So far as I have 'been able to examine the treaty, it contains no unusual provisions. We give them certain considerations and in turn they remit certain taxes which have been very detrimental to our exports to that country. Has the minister any idea to what extent the exports of Canadian fish may be increased? I think any information on that point would be welcomed.


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: My hon. friend has commented on the seeming delay in tabling this treaty. I am sorry I cannot give any definite information as to that, unless possibly it resulted from the changes in the department. The treaty was tabled as soon as it came to the attention of the minister.
With regard to the increased trade that may result from this treaty, I believe the leader of the opposition (Mr. Hanson) mentioned particularly fish and potatoes from the maritime provinces. Obviously one of the results we hope to achieve through the signing of this treaty is an increase in the trade between the maritime provinces and the Dominican republic. In this connection I may say that I am very hopeful that this may be merely the beginning in effecting trade treaties with Central and South American countries, to the benefit of the producers of natural products in Canada.
Then the hon. gentleman mentioned the possibility of a trade treaty with Cuba.


Richard Burpee Hanson: The extension of our trade with Cuba.


James Angus MacKinnon: This matter is receiving the attention of the department. For some time the Canadian government has been examining the possibilities of entering into negotiations for the conclusion of a trade agreement with the government of Cuba. Renewed attention has been given this question in the light of changed conditions resulting from the war, and proposals have been made to the government of Cuba. It is hoped that when a reply is

received negotiations may proceed for the conclusion of a trade agreement with that country.
In the same connection, Mr. Speaker, I should like to make a brief statement with regard to the Canada-West Indies trade treaty. This agreement, which was concluded on July 6, 1925, covered a period of twelve years from the date of coming into force; and as it came into force on April 30, 1927, it could not have expired before April 30, 1939. According to the provisions of the agreement it was necessary for the Canadian government to give twelve months' notice of termination; and towards the end of 1938 the required steps were taken to give the necessary notice of termination of the agreement, to take effect on December 31, 1939. At the same time the intention was expressed of holding a conference some time during 1939 for the purpose of negotiating a new trade agreement to take the place of the existing trade agreement when it ceased to have effect.
The outbreak of the war prevented the holding of a conference to negotiate a new trade agreement; and towards the end of 1939 it was agreed with the government of the United Kingdom that the existing trade agreement should remain in force for a further indefinite period, subject to six months' notice of termination by either party. It is clear that under war conditions there will be no opportunity to hold a conference for negotiating a trade agreement; and the revision of the existing agreement must necessarily await the return of more stable conditions.
In conclusion, Mr. Speaker, may I say that the matter of increased trade with other countries on this continent is receiving the very closest attention of the officers of my department.


Richard Burpee Hanson: In view of the statement the minister has just made, that the Canada-West Indies agreement remains in effect subject to termination upon six months' notice, what effect will that have upon any negotiations in which we may engage with Cuba looking to increased trade with that republic? I think it will have a very marked bearing.


James Angus MacKinnon: I shall obtain information on that point.


[Stage Direction]
Motion agreed to.

C.N.R.-Guarantee oj Securities


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee to consider the following resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $15,104,000 in principal amount to provide the moneys necessary to meet capital expenditures made or to be made during the calendar year 1940, and to make provision for the retirement of capital indebtedness during the said calendar year and to issue substituted securities for refunding purposes; to authorize the governor in council to guarantee the principal, interest and sinking funds of such securities; and to authorize the making of temporary loans to the said company secured by such securities and not exceeding $15,104,000 in principal amount to enable the said company to meet such expenditures and indebtedness.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
Joseph Henry Harris: Perhaps in fairness to the committee the minister might give an explanation of the item.


James Lorimer Ilsley: This is the usual bill. A
bill of this kind is introduced every year. There is one new feature in the bill which can be explained when the measure has been introduced, and that is that power is taken to issue securities for refunding. Apart from that, the measure is similar to bills of the same kind introduced in former sessions. It provides for borrowing for purposes of retirement of maturing capital obligations, miscellaneous maturing or matured notes, and other obligations secured or unsecured, and payment of sinking fund, not exceeding S8,200,000. It provides also for borrowing for the purpose of meeting the cost of additions and betterments, including coordination and acquisition of real or personal property, not exceeding $6,904,000. These two sums together constitute the total of $15,104,000 mentioned in the resolution. The bill authorizes the Canadian National Railway company to issue bonds or other securities not exceeding that principal amount. It is to provide the amounts necessary to meet capital expenditures in the year 1940 for the purposes I have mentioned, namely the retirement of maturing capital obligations, general additions and betterments, and the purchase of new equipment.


Joseph Henry Harris: The minister
has said that this is the usual bill which comes before us year after year permitting the Canadian National Railways to borrow money to take care of retiring maturities and securities
which are coming due. Well, the usual bill asking for more and more money each year, and asking endorsation by the government for the railway, is quite all right in ordinary peace times. But to-day the situation is different so far as the Canadian National Railways are concerned. First, the position in respect to borrowing in Canada is not the same to-day as it was one or two years ago, when our money was on a parity with money in New York. Second, as has been pointed out during the last five or six hours, every possible effort should be made to conserve exchange in United States funds for the purpose of making it possible for us to buy in the United States the necessary war equipment.
Now the government comes along with the usual bill, asking for an allotment of $15,104,000. In a day or two we shall be asked to vote, according to the estimates, $15,000,000 to cover the deficit of the Canadian National Railways. With regard to this particular block of money, it may truly be said that we owe it. Having regard to the set-up of the Canadian National Railways the indebtedness must be met; something must be done about it But if one were to take the time to analyse the figures he would find in those maturities certain sums representing assets entirely within the United States. Those sums are due in New York. For instance, on page 3 of the 1940 budget of the Canadian National Railways there is an item of $152,001 for Central Vermont Railway, Incorporated. Again at page 4 there is an item of $124,000 for the Chicago and Western Indiana Railroad company. There is a further item in connection with the New England Elevator company 3J per cent bonds. There is a further item of $283,000 in connection with the Grand Trunk Western railroad equipment trust, 1929. There is an amount of $427,528.54 for indebtedness to the state of Michigan, in connection with Woodward avenue. There is a further amount of $78,000 for the Central Vermont Railway, Incorporated, equipment trust, 1929.
These may be small items, but in the aggregate they amount to a large sum. In the present instance the Minister of Finance asks us to approve this measure in respect of which he will deal with maturities due in New York. Then, in turn, he will go to his own foreign exchange control board and pick up the necessary United States funds. In due course those maturities will be retired. That is ordinary business. It is his responsibility to see that the necessary moneys are available. But I would point out that we are drying up Canada's liquid position. We are taking from the control of Canada liquid moneys, at a time of war, and at a time when the neutrality legislation of the United States provides that

C.N.R.-Guarantee oj Securities
all our obligations coming due in New York, except equipment trust funds, may be refinanced. We are not refinancing in New York to the greatest possible degree. On the contrary we are using our foreign exchange unnecessarily to liquidate indebtedness. The Minister of Finance may say that these are small amounts, aggregating only $3,000,000 or $4,000,000 in the course of a year. I say to him, however, that at this time every possible dollar that we can refinance in New York should be refinanced. We should not take United States exchange out of the till of Canada to meet these maturities, when the only possibility we have of keeping ourselves in a liquid position and avoiding the necessity of our becoming frozen up is to refinance in New York every possible obligation.
It must be remembered that $22,000,000 of interest on our obligations in New York, in connection with the Canadian National Railways, will be due this year. That sum may have to be met. I suggested that we should consider whether we should permit the flight of Canadian dollars to meet obligations payable in New York. I was referring to interest on mortgages as well as on bonds, and any earnings by way of dividends or otherwise on purely Canadian enterprises, even though payable in New York. The Minister of Finance may say that that might involve the honour of Canada. But even though our friends of the United States are not in this war-in passing may I say I do not think they are very far from it-I feel that they would probably expand their ideas with regard to their neutrality act. I feel they would be ready to help us, perhaps not with regard to dividends, interest, and so on, which may be due on Canadian securities in which they have invested and from which they expect a return in United States exchange, but at least to the extent of helping us to conserve our exchange. As far as possible we should try to stop every Canadian dollar from going to the United States to meet obligations made in the United States if it is possible to refinance or renegotiate in New York in order that final payment may be held off until at least the war is over.
When the Canadian National Railways drew up their budget last December they did not know there was going to be such a surge of revenue into their tills as there has been during the first six months of this year. Last December they anticipated a deficit of $20,000,000 for 1940. After January, February and March had passed, after they had had the experience of those months, they were probably asked by the Minister of Transport: "How much do you want for your deficit 
for 1940?" The budget of December 31, 1939, showed that they wanted $20,000,000, and after the first three months had passed and they saw that revenues were increasing they still clung to their idea of a deficit of $20,000,000. The Minister of Transport said: "I think in view of your experience we will cut it down to $15,000,000."
We had an election on March 26. The meeting of parliament was delayed. April, May and June went by, and expanding revenues still poured into the tills of the Canadian National Railways, so much so that the original $20,000,000 of December, 1939, which had shrunk to $15,000,000 in April, 1940, was not necessary when we came to consider these estimates in July, 1940. The Minister of Finance and the Minister of Transport know that the estimate in this volume for $15,000,000 will not be necessary. I concede at once that if it is not necessary it will not be used, but the fact remains that the item of $15,000,000 is just as much part and parcel of the requirements of the railways as is this $15,104,000 of refinancing. As sensible men are we to pass an estimate for $15,000,000 when we know it will not be required? We do this because it is in the estimates and because the Minister of Transport has said: "If you amend that item, you defeat the government."
The president of the Canadian National Railways told the members of the special committee appointed to consider these estimates and the resolution now before the committee that when the earnings for the twelve months period got beyond $250,000,000, $1,000,000 of every $2,000,000 would go to take care of the deficit. The Minister of Transport must realize that before 1941 comes along there will be no need for $15,000,000, and certainly not for an extra $15,000,000. The reason is to be found not in any particular efficiency in the management of the railway, but in the sad circumstances that a war has developed and that the traffic on the road has increased tremendously. If we are to vote this $15,000,000 in the estimates, could we not as sensible members of the House of Commons arrange for the retirement of at least the Canadian portion of these securities? Certain of these securities are due, such as those involved in the Woodward avenue extension in Michigan. I cannot see why we could not ask our friends in New York to permit us to refinance these for at least the period of the war, thus avoiding the freezing of the liquid position of Canadian cash.
The Canadian people are being asked not to make pleasure trips to the United States, not to spend a couple of hundred United

C .N.R.-Guarantee of Securities
States dollars on a trip to New York. We were told this morning that our friends in the United States would understand why we were not spending United States money; we were told that they would realize that we wanted to conserve exchange. Yet at the same time the Minister of Transport says that an amendment to any of the ideas of the government in connection with the estimates or with this resolution will amount to a defeat of the government. I urge upon the Minister of Finance that he check and double-check with the Minister of Transport, and that he do likewise with the Canadian National Railways, to see if the maturities coming due in New York cannot be refinanced so that we may maintain an abundance of United States dollars in our treasury with which to buy supplies to prosecute the war.


Clarence Decatur Howe: Mr. Chairman, I dislike very much to quarrel with the hon. member for Danforth (Mr. Harris), especially when he is in such an optimistic mood. At times I have been accused of being too optimistic. I made a statement in 1936 that I expected to see the day when the Canadian National Railways would operate at a profit. At that time I was taken aside quietly and told that it was all right to be an optimist, but I should not make foolish statements of that kind.


Joseph Henry Harris: A war has occurred since then.


Clarence Decatur Howe: I wish the Canadian National Railways were making a profit this year above operating expenses, above interest and tax charges and every other charge. Unfortunately they are not likely to do so. My hon. friend is talking arrant and blatant nonsense when he says that I have come before this house to ask for money which is not needed and which is not going to be needed. What is the position? When the railroad officials are asked to prepare a budget for the coming year they in turn ask every superintendent to prepare an estimate of the business which he expects to move over his particular region during the following year, as well as an estimate of his operating costs.


Richard Burpee Hanson: When is that made up-in September?


Clarence Decatur Howe: Such estimates are made up early in the new year. Those figures are constantly revised until they are finally brought down in departmental estimates. The first budget sent in provided for a deficit of $25,000,000. I requested the directors to have another look at the matter. I told them . something of what we were doing and what we expected to do in the movement of munitions, orders for which were going out
in substantial amounts, and I asked them to reconsider the situation from an optimistic point of view. The directors reconsidered the matter and submitted a new estimate of $20,000,000 deficit. The board of directors could not bring the budget down below the $20,000,000 mark. When the estimates were brought down, rather late in t'he year, some time in April, the government considered the matter again. I had further talks with the management of the road, and the government took the view then that there was a possibility of the deficit being not larger than $15,000,000. The government decided to ask parliament to vote that sum, with the idea that if the management were more nearly correct than the government a deficiency estimate could be voted at the end of the year.
In the newspapers we have seen increases of 25, 30, and 35 per cent in gross revenues. That is all misleading. The first six months of the year are the thin traffic months; the last six months account for two-thirds of the earnings normally made in the year. These improvements in gross earnings are comparing the six months of good business this year with the poor six months last year. We had a budget for 1939 giving an estimated expenditure of $43,000,000 and in July, 1939, we were about $2,000,000 behind our budget. In the last six months we produced the second largest wheat crop that Canada has ever had, with free movement of wheat, and, with the impetus of the war coming in September, resulting in an immediate lift in traffic; and instead of an estimated loss of $43,000,000 we turned in a deficit of $40,000,000. What is the position to-day? I took the trouble two or three weeks ago to find out exactly what the position was then. I found that the budget of the Canadian National Railways, made up month by month, showed an improvement of $20,000,000, all in the months from January to August. The exact position to-day, or at any rate when I looked it up, was that we were about $1,200,000 ahead of the budget that provided for a deficit of $20,000,000, which is the budget made up by the directors for submission to the government as the Canadian National requirements for this year.
It may be said that the movement of munitions in the last half will be better than expected. Perhaps it will be; I hope it will be. We must remember however that our gross earnings from wheat alone last year were $24,000,000. To-day we have an embargo on the movement of wheat to Fort William. We have all storage space filled with wheat from Fort William to the Atlantic ocean, and we have some 15,000 railway cars loaded with

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wheat, which cannot be unloaded because there is no terminal space-and that at the end of a crop year with autumn movement two weeks away.
We have earned up to date this year $8,000,000 gross from the movement of wheat, and the best that the railways can hope for, the best estimate they can give, is another $4,000,000 from the movement of wheat.


Richard Burpee Hanson: For the rest of the year?


Clarence Decatur Howe: Yes, under the conditions
of congestion that prevail. So that we have this year probable gross earnings from wheat of $12,000,000 as against earnings last year of $24,000,000, and the bulk of the $24,000,000 was collected in the last five months of the year. It is true that net earnings on wheat are very small indeed. The effect on the net earnings is not going to be in proportion to $12,000,000 of gross earnings. We shall perhaps do better on our net than that loss of gross from lack of movement of wheat might indicate. The movement of munitions is somewhat ahead of estimates and there is a hope, I think, that we shall reach the $15,000,000 figure. If nothing intervenes, with the free movement of munitions through the fall, if the ports are then clear and lumber can move, and we have a free movement of war materials, we may even better the situation a little. But for the hon. member for Danforth having had the privilege of sitting in the railway committee, with all the officers of the railway present, having recently examined all the statistics that the railways could place before the committee, and having had the privilege of asking every question he liked, to stand up here and accuse the late Minister of Transport or the Minister of Finance of asking for money that they are said to know is not required, is, I think, nothing short of effrontery.


Richard Burpee Hanson: I object.
The language is unparliamentary.


Clarence Decatur Howe: I ask for the chairman's
ruling.


Richard Burpee Hanson: The minister has no right to use any such term at all. The other day the chairman ruled that "bluff" was unparliamentary. Effrontery is an offensive term and the minister should not use it. There is no necessity for it.


Clarence Decatur Howe: He accused me of deception.


Richard Burpee Hanson: I did not hear that.


Clarence Decatur Howe: Absolutely.
TMr. Howe.]


The CHAIRMAN:: If exception is taken
to the word as casting a reflection on the hon. member, and if it is regarded as offensive, I think the word "effrontery" should be withdrawn, though it is often used in ordinary parlance without any exception being taken to it. In the house, however, according to our rules, if an hon. member is shocked by the use of the word I think it should be withdrawn.


Mr. MacNICOL:: Shocked or shot?


Clarence Decatur Howe: Having shocked the house
by the use of one of the mildest words in the English language, I withdraw it at once. I do not think, however, that there is any foundation whatever for saying that the railway budget is not a reasonable one under present circumstances. If you take the budget of the railway as $15,000,000, which it was not-[DOT] the budget submitted by the railway was $20,000,000-we are some $3,800,000 behind on a budget of $15,000,000 at this time of the year, just as we are $1,200,000 better than the budget of $20,000,000 which was submitted by the railways. As for the financial charges, my hon. friend says the bill is brought down every year, that is true enough. The reason is that the Canadian National-Canadian Pacific Act of 1932, which my hon. friend helped to put through the house, makes it necessary to secure the approval of parliament before the Canadian National Railways can spend a five-cent piece on capital account.


Richard Burpee Hanson: That principle has always been in the law since 1919. No capital expenditure could be made without getting approval.


Clarence Decatur Howe: In any event the railways
must come to parliament for the approval of capital expenditures.


Richard Burpee Hanson: Right.


Clarence Decatur Howe: As for refunding in the United States, we shall all agree that amounts of $10,000, $50,000, $179,000, or whatever it may be; these small amounts cannot be refunded in the ordinary money markets. Of course the railway has earnings in the United States in United States funds-substantial earnings this year-and I have no doubt that in the actual working out of the situation the earnings that are made in the United States will be used to retire these small capital obligations. Nevertheless the accounting system in the United States and the accounting system in Canada make it necessary for a capital obligation becoming due to be refunded unless paid off out of surplus earnings. In any event I am sure that the Finance department and the Minister of Finance will watch that situation very closely and if there is anything to be

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gained by placing a domestic loan in the United States for other than war purposes I am sure the department and the Minister of Finance will not overlook that possibility.


Joseph Henry Harris: Mr. Chairman, I am anxious that the minister be put right with regard to the so-called "blatant nonsense" that he spoke about. He knows and I know and the rest of the members of this house know that there was no blatant nonsense in the observations I made. The minister is doing a great job of work for Canada and he is a very busy man, but his remark about blatant nonsense is not borne out by the facts which were deposed before the committee. He knows that the estimated increase in revenue of some 22 per cent, largely due to war conditions in the first six months, rose to 29 per cent. I do not think the minister meant just what he said when he used the term "blatant nonsense" as applied to an hon. member who had the privilege of sitting in the committee and observing that revenues had increased by 7 per cent. A simple mathematical calculation shows that 7 per cent on $200,000,000 amounts to $14,000,000, and the railway is asking for $15,000,000. The minister is engineer and mathematician enough to know what any boy who went through the fourth book at school would realize in respect to the meaning of this percentage increase if, as we hoped, it should be maintained during the rest of the year. But even if it were not, we have had six months' experience since the first estimate of $20,000,000 was given by the president of the Canadian National Railways, now increased to $25,000,000 as stated by the minister within the last few minutes, a figure which was never mentioned before-it was $20,000,000 in December, 1939, and now within the last three minutes it is $25,000,000. The minister knows and we know that it is war conditions that have made that increase possible, and that if the increase continues we shall not require this sum. We knew when the estimate was brought down that we should require only $15,000,000. As I said before, let us be sensible about this thing and vote only what is required.
I was surprised that the minister from his place in the house should belittle a suggestion coming from the opposition in the interests of Canada, especially in this difficult time when we should explore every possibility of refinancing having regard to the neutrality act of the United States. When the minister mentioned $10,000 he knew that within the confines of this $15,104,000 mentioned in the resolution there were many sums far in excess of $1,000,000. He knew, too, that we must have regard in this house to the major obligations 95826-135
which we must meet in New York. I am thinking of the amount of interest which must be paid on the indebtedness of over $1,000,000,000 against this system, payable in New York, and interest amounting this year to $22,000,000. If by collaboration between the government and those holding these securities the necessity of our finding that tremendous sum of United States money as it becomes due could be avoided, hon. gentlemen on the treasury benches would be doing a real service to Canada in keeping the money in our own till and thus maintaining our liquid position.
So that as to the blatant nonsense which the minister attributes to me-well, if there were no war on, Mr. Chairman, the minister would hear a little more about blatant nonsense. But I will take it. Any Britisher can take it, and this reference to blatant nonsense may be passed by, for the sake of Canada's interests in war-time. But if the minister does not feel disposed to withdraw the expression, an elephant does not forget. We have all been very generous to the minister and anxious to assist him in every possible way, not so much for his own sake as for Canada's. I hope when he rises again he will withdraw his remark about blatant nonsense with respect to a member who is charged with a certain responsibility to his Canadian fellow-citizens which he is trying to fulfil during these very difficult times.


James Lorimer Ilsley: Mr. Chairman, as I understand it the question of the amount that is voted to meet further deficits is not material in a discussion of this resolution, which is to authorize borrowing to meet capital obligations; therefore much of the discussion that has taken place has, I venture to say, been irrelevant. There was, however, one relevant observation, and that was with reference to refunding obligations in the United States. I may say to the hon. member for Danforth (Mr. Harris) that his suggestion in that regard will be carefully and seriously considered.


Richard Burpee Hanson: I want
to congratulate the Minister of Finance (Mr. Usley) on the attitude that he has displayed with respect to the suggestion of the hon. member for Danforth and ask him just to contrast it with that of his own colleague. I suggest to the Minister of Munitions (Mr. Howe) that he has received all through this session at least very decent treatment at the hands of the opposition, and the statement he made with regard to my colleague from Danforth will not make it any easier for him in the future unless he takes occasion-


Some hon. MEMBERS:: Order.



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An hon. MEMBER:: Blatant nonsense.


Clarence Decatur Howe: Like the hon. member for Danforth, I can take it.


Richard Burpee Hanson: Perhaps
you can, but such language is not conducive to the transaction of public business between two gentlemen across this floor, and I was sorry to hear the minister use the term which he did. My colleague is a business man from the city of Toronto, the city which pays the largest sum in taxes to this government of any city in Canada, bar none. He is a representative citizen and is entitled to more courtesy at the hands of the minister than he received this afternoon. That is all I have to say about that.
I suppose it would be pertinent under this resolution to discuss the Montreal terminal. Surely that is a capital expenditure. On a previous occasion, I think it was in the budget debate, I made reference to what I considered was the shocking expenditure in connection with continuing the work on this project. On that occasion I too was subjected to a lecture, in much milder terms than those addressed to the hon. member for Danforth, by the Minister of Transport, now the Minister of Munitions and Supply. In the debate on the budget he said that the remark I had made showed a complete lack of conception of what is involved in the Montreal terminal problem, I deny that statement. Before he ever was a member of this house I took occasion in 1927 to look into the matter when the late president of the Canadian National system brought forth his plan for the Montreal terminals as we understand them.
Before I go into that, however, I should like to point out that this proposal did not exactly emanate from Sir Henry Thornton. It was the grandiloquent idea of two railway promoters, the late lamented Mackenzie and Mann, who cost this country a good deal of money. One of their suggestions, in their effort to break into the Montreal situation, was the construction of an entrance into Montreal. That of course was a costly experiment for the treasury of Canada, because we had to take over every obligation that they had incurred.
I say that the scheme proposed at that time by Sir Henry Thornton was a most grandiloquent one. I admit that the coordinating of the facilities of the two systems which now comprise the Canadian National system on the island of Montreal, the old Grand Trunk and the Canadian Northern, gave rise to important problems and difficulties. But the plan as finally produced by Sir Henry Thornton and his engineers was costly and expensive beyond all reason. It will not

serve any useful purpose at the moment to debate the merits or demerits of the scheme, but had it gone to final completion it would have added close to 160,000,000 to the capital cost of the system. My recollection is that the estimate was $53,000,000.
Anybody who followed Sir Henry's operations knew that he too was an optimist, perhaps not in the same sense as the Minister of Transport, but I certainly never knew any greater optimist in the history of Canada than Sir Henry Thornton. His vision was beyond our capability of performance; it is not unkind to say that. He did admit that he had added something under half a billion dollars-at least nearly $450,000,000-to the capital charges of the national railways in the eight years in which he was the head of the system. I wonder where the Scribe hotel is to-day! I refer to that incident because it was the subject of one of the most interesting debates I ever heard in the House of Commons. At that time the excuse was that he was putting Canada on the map of Europe. Somebody remarked from this side of the house that he had better put the Canadian National on the map of Canada. But the Montreal terminal was a grandiloquent affair as conceived by its promoter. It was never demonstrated in this house or out of it that the capital expenditure involved, $53,000,000, let alone $60,000,000, could be justified.
I do not at the moment desire to express any opinion on the merits of union passenger facilities in Montreal. The idea of course is first rate from the point of view of the travelling public, and has been carried out in some of the largest centres in the United States, notably in the union station in Washington. It could have been achieved in Montreal, but it was not, because, as I understand it, of the inability of the twro systems to get together on it.
This work went on for a period and then there came to Canada a depression great in its intensity and in its effect on our fortunes. Because of the depression it was not feasible to continue with the project when we had to pay such large sums in operating deficits, and the work, quite properly, was stopped. There is no doubt that that open ditch in the heart of the great metropolitan city of Montreal was an eyesore; anyone who has seen it, and I suppose nearly every hon. member of the house has seen it at some time, will agree with that statement. But the remedy was a luxury which this country could ill afford, and public opinion I am sure approved the action of the government of the day in closing down the work on the terminal, even on a modified scale. From that time to this the Canadian National Railways have struggled with this

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problem of coordination, or lack of coordination, whichever you may call it. I believe the minister when he says that there is an operating problem involved. It could not be otherwise, since each of the two systems was put in there without any reference to the other or any thought of coordination. But I never heard that the operating cost occasioned by the lack of coordination was sufficiently great to justify this huge capital cost. That has never been demonstrated to me by anybody, and the minister in his remarks on July 4 did not even attempt to justify the expenditure as a matter of dollars and cents. He made a very good case from the point of view of ease of operation and coordination; I grant that. But from the point of view of the expenditure of public money it has never been justified on the basis of the cost for interest, maintenance and upkeep of the coordinating facilities which are now under way. It would be interesting if we had the matter "moneyed out," if that is a proper term, to show what the savings would be over the present movement in that locality.
Now the work was started up again, not because there was any considerable betterment in the operations of the railway, but because there was an election on in the city of Montreal. That is the milk in the coconut. The railways having been put back into politics by reason of a certain amendment made in this house after the hon. gentleman became Minister of Transport, the matter became a political issue. The work was started in fulfilment of an election pledge made by the Minister of Public Works (Mr. Cardin) on the eve of the St. Henri by-election. The fact might as well be admitted. If that was not the cause, it was at all events the effect. In order to carry the seat against the then mayor of Montreal, I think it was-I am subject to correction-it was announced that a modified scheme for completion of the terminals had been adopted by the board. The announcement, as I recall it, did not come from the board at all; it came from the minister's colleague, the Minister of Public Works, thus indicating that the railway was back in politics -party politics. There it is; there it has been ever since, so far as I know. That announcement was made just on the eve of the by-election and was intended to influence the result of that contest, as no doubt it did; and this was done at a time when the financial results of the system were, to say the least, very unsatisfactory, and when new capital expenditures, especially of such a substantial character, should have been avoided. The incident shows how completely the situation 95826-1354
down there with respect to the Canadian National Railways was dominated by political considerations, as it is yet so far as I know.
However, the work went on. Before the stoppage there had been expended nearly $17,000,000 of which, according to my recollection, a very large proportion was for land damages. I am told that the amounts paid for these land damages were very excessive, but it is too late now to hark back to that; the damage is done. I agree with the minister that in order to save the capital expenditure that has been made it was necessary to resume the work; but I do suggest that it should not have been done for political reasons and that only business considerations should have governed. On the one hand there was the operating condition to which the minister has referred, and the huge expenditures already made. On the other hand there was the financial condition of the system at that time and the condition of the country, with a .large recurring annual deficit, all of which made large additional capital expenditures forbidden, or as the Germans say, verboten.
None of these considerations prevailed. What did prevail were the political exigencies of the administration; and the board, as then and now constituted, yielded and approved of a modified scheme just in advance of the election. Commitments were made and the project went on. The cost, according to the minister's statement in the house, will now amount to $27,000,000 or about one-half the original estimate. The minister has justified the continuation of the undertaking on the ground of its need, the preservation of the expenditures already made, and the commitments entered into under the circumstances to which I have alluded. Against these factors there is to be weighed the status of a country at war. It might not have been feasible, as the minister suggests, to stop the work; but at least the whole question should have been reviewed, and if possible further expenditure avoided at a time when our people are being taxed to the limit; when we have added, taking into account the unemployment insurance measure which passed this house last night, not less than $500,000,000 in new taxes; when we are appealing to the people, as the Minister of Finance appealed to-day, to invest our money in war savings certificates; when every available dollar is or will be needed, and when we should be conserving all our resources to defend our country.
As between these two opposing and conflicting policies, Mr. Speaker, I leave the country to judge whether I was right in saying that this expenditure at this time is shocking, or

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whether the minister is right in holding that in order to correct an operating condition in Montreal-the cost of which in dollars and cents, and the annual saving to the system in connection with which he has never yet given to this house or to the country-we should finish this work.


Clarence Decatur Howe: This seems to be a day for accusations against the government. First we were accused of deception; then we were accused of bringing the railway into politics. As a matter of fact, I thought I had left the railway and that my last words in connection with it had been spoken. I always get a little too emphatic when I am defending the railway; I think it is a sort of complex, because I find that anyone who defends the Canadian National Railways is considered hardly respectable in a good many sections of this country.


Richard Burpee Hanson: I would not say that.


Clarence Decatur Howe: Now that the heat has died down, however, I apologize to the hon. member for Danforth (Mr. Harris) for the words I used. After all, he rode the government pretty well all through the sessions of the committee, and I thought he was using language that was rather extreme for this house. Possibly we are all even now, and at some future time, when the weather is cooler, he may apologize to me.
The leader of the opposition (Mr. Hanson) says that the Montreal terminal was etarted solely to win the St. Henry by-election.


Richard Burpee Hanson: No; I said
it was resumed.


Clarence Decatur Howe: All right; that is, my hon. friend presumes that the only reason we had for continuing work on the terminal was to win one by-election. The position is this. The depression j'ears caused a good many works to be suspended, and as a result, in 1935 there were across the country quite a number of sore spots in connection with the Canadian National Railways. I think we all can admit that Sir Henry Thornton was perhaps an optimist, possibly unduly optimistic, and that in the very prosperous days he started a good many things which perhaps would not be justified in ordinary times and which the depression that followed the good days warranted the government in halting. One such undertaking, I suggest, was a large hotel at Vancouver, constructed at a cost of some $8,500.000, which was standing empty, and on which taxes and interest accumulated with the passing years. My hon. friend has mentioned political expenditures. Perhaps I might

remind him that this undertaking had a great deal to do with an election when the Conservative party was in power. A contract for a very large amount was awarded just a month or two before the election took place.


Richard Burpee Hanson: But not for a $10,000,000 hotel.


Clarence Decatur Howe: It was $10,000,000 or $8,000,000.


Richard Burpee Hanson: It was $3,000,000.


Clarence Decatur Howe: In any event my hon. friend will admit it was a fair sum to pay for an election even in those days. The position there was simply this, that we had a building which was worth nothing, which was actually a liability as it stood. The question was whether it was worth spending another $3,000,000 to try to transform that liability into an asset, or at least to prevent it from being a blot on the landscape of the great city of Vancouver. The management felt that it was worth spending more money on, so we put another $3,000,000 into that hotel, which is operating to-day and, I am glad to say, is paying something more than operating expenses, even though the tourist traffic has greatly declined.
That was one black spot erased from the system. Before the hotel was completed, it was a bad advertisement for our railway; to-day I think it is a very good advertisement. In Montreal we had a similar condition. We had spent something like $17,000,000 on the new terminal there. Expenses continued; we had to pay to the city of Montreal heavy taxes on the area occupied by the terminal. We were operating in that area five passenger stations, all of which will close when the new terminal is opened. It seemed reasonable that something should be done to remove that black spot from the railway, and certainly the fact that the Canadian National had left this eyesore in the centre of the city did not tend to improve public relations in Montreal as far as the railway was concerned. The directors of the railway were asked to study the situation, not in the light of building a $25,000,000 or $50,000,000 terminal but in the light of adding to what had been spent already what might be necessary to build a modest terminal in the new location.
This subject was thoroughly discussed before a committee of the house in 1938. The economics of the situation were laid before the members, in great detail. Savings were assessed. There was discussion respecting savings in operating station properties, savings in reduced terminal costs by reason of

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better switching facilities, and savings resulting from adequate and well located passenger terminals and car shops. All that was estimated, but the directors did not feel that the savings were in themselves sufficient to justify the project.
The government then offered to make a contribution to the work by way of assistance in connection with relief of unemployment in Montreal. This particular project was in the centre of an area in that city wherein a serious unemployment condition existed. The government of that day appropriated several millions of dollars to aid in projects which would relieve unemployment. Therefore I think under all the circumstances the government were justified in saying to the directors of the Canadian National Railways, "If you care to resume work on this terminal, we will pay in this year the cost of the direct labour involved, such cost not to exceed 40 per cent of the total expenditures for the year."
The directors reexamined the problem, taking account of the new factor, and discovered that with that contribution the situation was changed, and that the board was justified in resuming work on the terminal.
When the war came on, there was a new situation to examine. After all, you cannot go back and remake a situation created in earlier years. We had started the terminal. We would not have started it before war broke out, had we known war was about to break out. However, under the conditions of the previous year, when there was unemployment, when materials were reasonably cheap, when conditions for that type of building were favourable, and when we were stimulating the building of residences of all types as a means of relieving unemployment, I believe the government was justified in encouraging the directors of the railways to go ahead with the project. That is all that was done.
Then we had to reconsider the position in the light of the war. We were building the terminal then. To the $17,000,000 we added another $4,000,000 out-of-pocket expenditures, and made commitments for another $2,000,000.


Richard Burpee Hanson: Would the minister say if at that time contracts had been let for the complete work? That would be a factor to be considered.


Clarence Decatur Howe: Not for the entire completion of the work; but a very considerable part of the work had been placed. These contracts are continuing affairs. The contracts involved in the completion of the viaduct were completed, and a contract had been completed for the grading work on the far side of the Lachine
canal. I am not sure whether the steel contract for the bridge over the Lachine canal had been completed or not. In any event, when I looked into the matter we had spent between $3,000,000 and $4,000,000, and we were committed for perhaps another $1,500,000 or $2,000,000. In other words, if we stopped work then, we would have had to pay for certain materials on order in the various contracts. Then it became a question not of adding $12,000,000 to $17,000,000 but of adding perhaps $6,000,000 to $22,000,000, or $5,000,000 to $23,000,000, or something along that order.
Then we had to take into account the war traffic. We had to look back at the records of the last war in order to ascertain where the bottle-necks occurred. Ordinary traffic through Montreal to the maritime provinces does not fluctuate widely. Yet we know that during the last war there was a tremendous increase in such traffic, just as there is a tremendous increase in traffic to-day. Proportionately the increase in traffic on lines in the maritime provinces is vastly greater than that in any other part of the system. We had to count on that extra traffic passing through the terminal in Montreal, and we had to re-assess the value of having adequate trackage and an adequate layout in that area.
Having regard to all those factors, the government decided it should not again interrupt the work on the Montreal terminal.


Thomas Langton Church: Coming from a publicownership province from which this system has derived most of its earnings in the past, may I say that the people of Canada will be greatly disappointed with the action of this parliament with regard to the railway problems of this country. Now, in the dying days of a session we have a resolution with a four-fold principle, to issue securities for $15,104,000. It proposes to adopt the very principle which has been condemned in the Duff report-and of course I refer to the procedure of pyramiding the debt, and of capitalizing in geometrical progression, against all known laws of arithmetic, when one gets in the red.
The resolution is not far-sighted. In it we find a sum of $15,104,000 mentioned, which I might point out, is the exact sum mentioned in the budget of the Canadian National Railways for the year 1940. In the budget that sum is mentioned as the sum necessary to provide for the capital expenditures of the all-inclusive system, made or to be made in the calendar year 1940. In the second place the resolution is to make provision for the retirement of capital indebtedness during the
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That budget sum does not include new equipment purchased in 1939, or orders placed by the war supply board amounting to $14,909,144, which will have to be added to the $15,104,000. The first payment for this equipment purchased is to be made in 1941. Those are the general principles.
Then, the details of the betterments are set out at page 3 of the report, and it will be noticed that in connection with those general additions and betterments the province of Ontario, the central region largely, where to a great extent the money is obtained, is the forgotten province. We find that betterments in the Atlantic region are valued at $2,509,559, whereas those for the central region are only $1,992,859, and those for the western region are $2,525,046. For the Montreal terminals development the amount set out is $3,350,000, and the amount for general additions and betterments, including additions and betterments to equipment is placed at $2,123,502; Central Vermont, $152,000; Grand Trunk western road, $559,000; subsidiary companies, $412,713, less nine millions, retirements.
I must object to four or five economic principles indicated in this way of doing business. I come from that province in the British empire where the principle of public ownership has reached its greatest degree of perfection in the way of cheap light and power for the people. In the central region of this

railway even to-day the old Grand Trunk is making most of the money for the separate units of this all-inclusive system. Let me point out that the people in Ontario are very much dissatisfied with the administration of the railways in general and the duplication and waste in war time. It was hoped that these large deficits would to some extent be met by increased business and by methods of coordination. In view of the war, the board of review should be considering the railways problem, and doing something practical in coordination, to eliminate waste and inefficiency, and to administer this system from the commercial aspect in a wise and prudent way as trustees for the people who are heavily taxed for war and these deficits.
Look at what the McAdoo commission in the United States did in 1917 to coordinate the railways and reduce the waste and deficits, and reduce and wipe out the debt. Why should this system be'cluttered up with these deadends of railroads in the United States such as the Central Vermont and the others which I have named? Large sums of money are expended on betterments on these dead-ends by the people of this country, and this expenditure is saddled, like an old man of the sea, on the taxpayers of Canada, while we get few betterments in Ontario.
There has been no proper, war-time coordination, and this board of review, especially in war time, should move toward further coordination. The splendid Duff report, which no doubt cost this country some money, has been almost entirely ignored. It wisely recommended that more money should be provided out of income to meet the cost of some of the betterments. Old and dilapidated cars are used in Ontario which should have been scrapped long ago. We see magnificent and luxurious trains come in from Chicago and other central United States cities, into Montreal and other places along the seaboard, but we still have these old cars in Ontario. The British railways are forced to do something to economize and coordinate, but nothing has been done here in war time.
A committee was appointed, this session, but it was weighed in the balance and found wanting. I ask hon. members to read the detailed reports of this celebrated committee on railways and shipping. No notice was given of the appointment of this committee; the minister simply got up and moved that it be appointed. What did that committee do? Did they effect any economies? No. They just sat around the table, some of them smoking cigars, and listened to what the officials from Montreal had to say, and said, "Me too." Some parts of this system in the United States

C.N.R.-Guarantee of Securities
should be scrapped altogether, or made to pay their way by tariff increases. In the United States other systems are closing up a lot of their dead-ends, but ours go on for all eternity. Some of the minor dead-ends in Ontario have been closed up, lines which used to provide revenue and act as feeders to the main line, and would have paid if given a chance. They have got rid of some of the electric systems in Ontario, that could have paid as feeders if run wisely.
The report refers to the administration of the merchant marine and the hotel system. The showing is not at all good. Ships which cost from $1,500,000 to $2,000,000 and which could have been earning money now carrying supplies and food to Britain and all that kind of thing were sold, some without tenders being called, for prices ranging from $9,000 and $10,000 to about $50,000. The head offices of this system should be moved from Montreal to Toronto, the capital of the public ownership province of Ontario. That is where this system started years ago, and made its money as the old Grand Trunk. The Canadian Pacific railway have been alive to the situation. They know where the business in freight and passengers is coming from. They transferred their eastern lines head offices from Montreal to Toronto. The eastern lines are from Halifax to Winnipeg. This was done to meet the change of the whole situation to Toronto, the city of the future.
Some of these betterments should be charged to income. With the railroad earning more revenue with which to meet this huge burden of debt, why should there be such huge deficits? Why are we pyramiding this debt against all the known rules of arithmetic? I can tell you why. Our former leader on this side said a few years ago that this was the dead-heads railway. This railway issues no less than 300,000 passes a year, in long service annuals, other annual passes, trip passes and 208,639 passes, mainly to employees, according to page 45 of the Duff report. They cannot afford to carry 50,000 soldiers free at week-ends, but they can afford to issue 300,000 passes. The big "I" days were responsible for most of this deficit of $15,000,000. Those were the days when branch lines were built to the sun, the moon and the stars. A board of review was supposed to coordinate the two railway systems, but it does not seem to have made any improvement at all. There has been no efficient coordination as far as I can see.
This railroad should be operated and run as a business proposition. A new board of auditors or auditor is needed, and the audit system should be changed. I cannot find any audit which recommends improvements in
the system that are yet put into effect. I cannot find where one recommendation of the Duff report has been carried out in connection with coordination or financing or United States affiliations, or in connection with the board of review, the issue of securities, the method of financing and refunding, guarantees of principal and interest, the handling of the sinking fund, hotels, marine services and other matters. Sometimes loans are not used for the direct or indirect purposes for which they were intended but are diverted by further legislation, and we only hold a post mortem. As far as I can see there needs to be a shakeup in this system, and the sooner it occurs the better. This country cannot afford to have this system carried on as it has been any longer. If the United States affiliations are not satisfactory then something should be done through the board of transport to revise them. In my opinion the dying days of the session is not the time to bring down a resolution like this. The estimates of this system were before the committee for a few days and were examined in a most cursory, haphazard manner. The officials of the road appeared before the committee, but they recommended no improvement at all, and their reports were taken as read and confirmed. We should implement the Duff report and change the method of administration, financing and operation. We should eliminate all the dead-wood and institute a new method of financing and a shakeup in the system such as they had in Britain and the United States. In railroad administration business can no longer tolerate such methods of waste, inefficiency and lack of coordination with such a war as the one in which we are now engaged.


Ernest George Hansell: This resolution is one of those which come up every year for discussion and is to provide certain payments for a certain indebtedness. The resolution states that it is to make provision for the retirement of capital indebtedness during the calendar year and to issue substituted securities for refunding purposes. This resolution brings into the picture the debt structure of the Canadian National Railways. I think it is safe to say that if it were not for that debt structure the system could pretty well pay its own way. That is one thing which can be said to the credit of the system.
One does not deny the necessity of going into debt during a period of national expansion, especially when a huge railway like the Canadian National Railways is being built and must of necessity be financed. However, it is well to keep in mind that the day comes when that debt must be paid. To-day Canada

C.N.R.-Guarantee of Securities
is going into debt at a terrific rate. A year or two ago our national debt amounted to a little over three billion dollars; to-day it is close to four billion dollars. Perhaps it will not be long until it is more than that. A true picture is not given when we say that the national debt is so many billions of dollars. It does not give a true picture because the Canadian National railway is a government institution and the debt of the railway is therefore in a very real sense a public debt. I know the argument is used that the debt of the Canadian National railway is of a contingent nature; that is, we hope that some day or another the railway will be profitable enough to pay off its debts and the government of Canada will not then have this responsibility. But I would point out that a very large portion of the Canadian National railway debt is guaranteed by the dominion government. The dominion government itself did not borrow the money, but the railway borrowed it and a great portion of its loans were guaranteed by the dominion government. If we add to the national debt the guaranteed debt of the Canadian National railway we get a more accurate picture of the responsibility of the government.
Speaking to the resolution, I wish to present another phase of our debt structure which to me is interesting. It is that part of the debt
structure which is made up of perpetual bonds. In days gone by, it was more or less a business practice to issue what we know as perpetual bonds. But I think the day is past when that type of bond should be issued and carried by publicly-owned institutions. The perpetual bond issues of the Canadian National railway, as I have been able to glean them from the reports, form part of the total indebtedness of over one and a quarter billion dollars, in round figures. In addition, there is accrued interest of approximately fifty million dollars. If we add those amounts to our national debt, it makes our national debt a handsome sum. Part of it consists of these perpetual bonds. I have tabulated these perpetual bond issues from that part of the report of the railway which gives us a picture of the railway debt, and with your permission, Mr. Chairman, I should like to put this table on Hansard in order to save the time of the committee.


Alphonse Fournier: It can be done only with the unanimous consent of the committee.


Some hon. MEMBERS:: Agreed.


Ernest George Hansell: Thank you, Mr. Chairman. The table is as follows:
Funded Debt-Principal and Interest
	Issuing			Principal out-	
Name of Security	Date of	Date of	standing at	Interestcompany	issue	maturity	Dec. 31,1939	accrued 1939Guaranteed by domin-	ion government:	5% perpetual debenture stock	
5% G.W. perpetual	G.T.R.	1875 to 1883	Perpetual	$ 20,782,491 67	$1,039,124 58debenture stock and bonds 	G.T.R.	1858 to 1876	Perpetual	13,252,322 67	662,616 124% perpetual deben-	ture stock	
4% Nor. Rly. per-	G.T.R.	1883 to 1918	Perpetual	119,839,014 33	4,793,560 56petual debenture stock	G.T.R.	July 31,1884	Perpetual	1,499,979 67	59,999 184% perpetual guaran-	teed stock	G.T.R.	1884 to 1909	Perpetual	60,833,333 33	2,433,333 33Other issues:	Total	$216,207,141 67	$8,988,633 776% Northern railway 3rd pref. bonds	
4% perpetual cons.	G.T.R.	1868	Perpetual	$ 70,566 66	$ 4,234 00debenture stock	
4% perpetual cons.	Can. Nor.	1903 to 1912	Perpetual	44,943,019 40	1,797,720 74debenture stock	
4% perpetual cons.	C.N.O.	June 21,1909	Perpetual	8,724,113 20	348,964 50debenture stock	
4% 1st Mtge. per-	C.N.Q.	Oct., 1906	Perpetual	5,250,369 26	210,014 76petual debenture	stock 	Q. &L. St.J.	June 1,1912	Perpetual	4,252,503 06	170,100 14Total....	$ 63,240,571 58	$2,531,034 14Total	
$279,447,713 25 $11,519,667 91
. 1

C.N.R.-Guarantee of Securities
Hon. members will observe from the table which will appear in Hansard to-morrow that there are ten separate issues of perpetual securities, and one issue goes back to 1858, almost eighty-two years ago. It is not a large issue, about $13,250,000.


Mr. JOHNSTON (Bow River):: Is that
not large?


Ernest George Hansell: Not compared with some of the others. Another issue goes back to 1883, fifty-seven years ago, and that issue is for approximately $120,000,000 of perpetual bonds. It has accrued interest of approximately $5,000,000. The issue that goes back eighty-two years to 1858 bears interest at 5 per cent, and I have taken the trouble to figure out just how much has been paid on that issue. I think it will be found that the principal has been paid two or three times over, and we are still paying interest on that issue. It does seem to me that something might be done to bring the holders of these bonds into some agreement whereby the bonds could be refunded and be rid of their perpetual feature. Then there would not be this eternal responsibility on the country to pay interest on these perpetual bonds. Perpetual reaches out almost into infinity. It is not only for generations to come but for generations beyond counting until the Canadian National railway is no more, and interest has to be paid in perpetuity. It seems to me, Mr. Chairman, that we have passed the day when we can wrap our pharisaical robes around us and talk about the sacredness of our bonded indebtedness. It appears to me that in these days some agreement could be reached with these particular bondholders.
In other lines prices fluctuate; prices in industry fluctuate; prices of commodities fluctuate. That is only natural because the law of supply and demand comes into the picture. Prices of property fluctuate; property rises and falls in value, and even a property of a substantial nature, a building that may have been built to last for hundreds of years, eventually deteriorates. The value of substantial buildings fluctuates. But somehow or another the wages of money we have come to regard so religiously that their value must never fluctuate.


Charles Edward Johnston: That is
sound money.


Ernest George Hansell: It is beginning to sound a little bit too loud in the hearts and consciences of the people of this country.
To come back to the table of perpetual issues, the total principal of these ten different issues amounts to $279,447,713.25, or almost $280,000,000. That is a great deal of money.
Accrued interest on these issues amounts to over $11,500,000. Those are items which should be considered, and I believe that something should be done about the matter.


Charles Edward Johnston: What is the minister going to do about it?


Ernest George Hansell: That is an important question. I would ask the minister two questions. First, with reference to the borrowing of this $15,104,000, can he tell us at what rate of interest the government expects to borrow this amount of money? Second, has the government made any attempt to reach an agreement with the holders of these perpetual bonds? It seems to me most reasonable that in this day in which we are living the government should call in the holders of these bonds and say to them, "Gentlemen, this is our position". He should outline to them not only the position of the railways and the position of the government, but the necessities of the times, the day in which we are living, and the necessity for a change. It is not that we have no desire to give the holders of these bonds their rights; but some arrangement should be made, some satisfactory conclusion arrived at as to what can be done with reference to these perpetual bonds. Could not some refunding scheme be undertaken in connection with them? If for nothing other than the psychological effect, I believe that to have a perpetual bonded indebtedness upon a public institution of this kind is not a proper thing.


Charles Edward Johnston: Especially in war time.


Ernest George Hansell: Perhaps the minister
would answer those two questions.


James Lorimer Ilsley: With regard to >the first question, I cannot give the hon. gentleman any indication of the probable rate of interest that will be paid on this borrowing. All I can say is that certainly the government will not pay more than it has to, nor will the Canadian National Railways. With regard to the second question, the Minister of Munitions and Supply is better qualified to give an answer than I am. I understand that attempts have been made to ascertain the present addresses of the bondholders but I will request him to answer the question.


Clarence Decatur Howe: The position of the Grand Trunk 4 per cent perpetual bonds is this. A guarantee to the holders of these bonds was given as part of the price of acquiring the Grand Trunk railway. The finding of the board of arbitration was that the junior securities had no value, but that it was to be the continuing obligation of the government to



C.N.R.-Guarantee of Securities
protect the position of the bondholders of the Grand Trunk. So that in effect, by the decision of the board of arbitration, these bond issues were guaranteed by the government. There are other bonds, perpetuals, that are not in that position, and attempts have been made to negotiate with their owners. The holders are not in this country and naturally it is difficult to treat with them. I am sure the government are just as anxious as my hon. friend to do away with these perpetual bonds, and I can assure him the government will continue to make every effort to do so.


Joseph Henry Harris: I am anxious that tlhe record should ibe kept clear. Before making one or two observations, I should like to make a brief explanation with regard to the minister's suggestion that I had imputed deception to him. I accept what he has said, and if anything that I said might be so construed, naturally I withdraw it, because nothing was further from my mind than suclh a thing.
I am simply anxious to get on the record the situation in which we find ourselves to-day. The minister said it was difficult to refinance the ten, twenty, thirty, forty and fifty thousand dollar loans, but if he will turn to page 140 of the proceedings of the standing committee he will find that out of the large item of $8,200,000, at least $4,094,000 is repayable in New York. I mention that to illustrate the point with regard to the other $22,000,000 coming due, and in all that I have said to-day on this question I have simply wished to bring to the attention of the board of directors of the Canadian National Railways the fact that this treasury is not a wide-open pool into which they can dip at any time. Now that they will be in funds for the rest of the year, I say, through the minister, to the board of directors, from whom we did not receive the minutes of their different meetings, that Canada needs the money she has in the treasury to-day, and I would ask them to be provident, to be quite careful in their expenditures. This bill calls for $3,350,000 for Montreal terminals. The general observation I made in the previous sentence applies to this also.
I have the utmost confidence in the president and managing directors of the Canadian National Railways. I say to this honourable assembly that the president has done a wonderful job. He is a great Canadian. He has kept the labour situation well in hand, inspired confidence in the business of Canada, and he has the respect and admiration of all Canadians who are worried about the financial position not only of that road but of the dominion. The president of the road will

probably be retiring within the course of the next year or two and it behooves this administration to look for some outstanding citizen to take his place. I impress upon those charged with the responsibility in this matter the fact that this is a business institution and that they cannot come to parliament and expect to obtain funds as readily as they have been receiving them in days gone by, especially while a war is on.
In regard to the remarks of the member for Broadview (Mr. Church), the committee will agree, any of those who have observed the work of the standing committee will agree, that in the brief time at our disposal, owing to the fact that a war was on, we did endeavour to shorten up the inquiry, but that we did bring to the attention of the management itself and of the government some important points. The hon. member says we sat around and unanimously passed the bill. That is incorrect. As the minister and the chairman of the committee know, even though it was not indicated in the report- and I say that it should have been in the report

the committee divided on several questions. As the Minister of Finance has pointed out, however, that is a matter which will come up when the estimates are under consideration.


Mr. HOWDEN:: In the third and most important report it was indicated that the committee was not in entire agreement.


Joseph Henry Harris: The word
"approved" is in the report, but it should have been "approved on division." However, I again point out that $3,350,000 of the $15,104,000 will be for the Montreal terminals. Go ahead and complete the job with the least possible expenditure. At least 40 per cent of the obligations are coming due in New York. The management of the Canadian National Railways does not seem to appreciate the importance of our conserving Canadian funds. They think they can come to the Minister of Finance and ask, not for negotiation at all, but that Canadian money be provided for the purpose of discharging United States obligations. That is actually what is going on, and they should be brought to a sense of responsibility in that regard. Inasmuch as it is through the Minister of Finance they get funds for their deficits and their financing, I urge the minister to bring them to a sense of responsibility during these difficult times.


Mr. BLACKMORE:: Are the holders of
these bonds in the United States or in Great Britain?

CJV.R.-Guarantee oj Securities


James Lorimer Ilsley: Is the hon. gentleman talking about the perpetuals?


John Horne Blackmore: Yes.


James Lorimer Ilsley: They are held in England.


John Horne Blackmore: All of them?


James Lorimer Ilsley: Yes.
Resolution reported, read the second time and concurred in. Mr. Usley thereupon moved for leave to introduce Bill No. 120, to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National Railways system during the calendar year 1940, to provide for the refunding of financial obligations and to authorize the guarantee by his majesty of certain securities to be issued by the Canadian National Railway Company.


[Stage Direction]
Motion agreed to, bill read the first and second times, and the house went into committee thereon, Mr. Fournier (Hull) in the chair.
James Lorimer Ilsley: The bill has not been distributed. I wonder if it makes any difference. It is the same form of bill that has been introduced every year, and all the amounts were thoroughly discussed in the special comm ttee.
lvlr. HARRIS (Danforth):	Do not say
thoi rughly.


James Lorimer Ilsley: I was informed that they were discussed thoroughly. I should say that there is a new provision in the bill allowing borrowing for the purpose of refunding existing securities. If hon. members would like to see that with a view to critical examination, I shall have to leave it to another day. But I do not think there could be any exception taken to it whatever. If the committee takes no exception to it, perhaps we might go on with it now.


Joseph Henry Harris: Inasmuch as the Minister of Transport is in the house, if he will give an undertaking that when we come to vote the deficit and the estimates we shall be able to discuss this item, we can go on.


James Lorimer Ilsley: Yes.
Section 1 agreed to.
On section 2-Power to issue securities for refunding capital expenditures.


Joseph Henry Harris: In reference to paragraph (a), I would point out that the actual sum is $8,199,717.88, and when we pass 95826-1365
the round sum of $8,200,000 I hope the Minister of Finance will see that the Canadian National Railways are not allowed to interchange these moneys that are voted and use them for any other purpose.
With regard to paragraph (b), I hope, when the minister comes to the Chicago and Western Indiana Railway company requirement which is included in the 1590,000, that he will make an effort to refinance in United States funds.


[Stage Direction]
Section agreed to.
Section 3 agreed to.
On section 4-Minister of Finance may make loans for refunding and capital expenditures.
Joseph Henry Harris: There is nothing in it that goes beyond the $15,104,000?


James Lorimer Ilsley: No, nothing except this power to issue securities for refunding. The hon. gentleman understands that. This is the new power taken in this bill, which enables the Canadian National Railways, with the approval of the governor in council, to buy the securities of the Canadian National Railways before they are due, if they think it is advisable to do so. If that power is exercised it may enable them to save quite a good deal in interest.


Joseph Henry Harris: They have that power under the 1937 act.


James Lorimer Ilsley: It was not in last year's act, and I was told that it was a new provision.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On section 6-Power to aid other companies.
Joseph Henry Harris: Would the minister enlarge on paragraphs (c) and (d), which are new in the bill?


James Lorimer Ilsley: These just follow out what I have mentioned two or three times. Paragraph (c), for example, empowers the Canadian National Railways to apply the proceeds of the issue of substitute securities for the purpose of purchasing or refunding original securities. That is probably very clear to the committee. If they wish to buy in their own securities before they are due, they may issue new securities and get the money with which to do so.


Joseph Henry Harris: Strictly their own securities?

C.N.R.-Guarantee oj Securities


James Lorimer Ilsley: Yes. Then paragraph (d) is for the same purpose. It reads:
The national company may-
(cl) Make advances for the purpose of purchasing or refunding any original securities of any one or more of the companies or railways comprised in said national railway system upon or without any security at discretion.
That is, they may advance the money for the purpose of buying in these securities.


Joseph Henry Harris: What I had
in mind was the 83,350,000, which is included in the $15,104,000, for the Montreal terminal work. Probably there will be some land damages, and probably they will have to take over some rights held by others in joining up these railways. I was anxious to see to it that we had no repetition of a condition which obtained in days gone by, when the government's guarantee crept in on certain issues and made them really worth something. I did not want that condition to obtain in connection with any part of this $3,350,000. I just wished to make that observation.


[Stage Direction]
Section agreed to.
Sections 7 and 8 agreed to.
On section 9-Proceeds paid to credit of Minister of Finance in trust.
Joseph Henry Harris: I should like
to make the observation that the minute of the board of directors making this request for the release of these funds should be filed with the minister and made available to parliament, which in the final analysis has to find these moneys. Some question was raised as to whether or not the minute of the board of directors of the Canadian National Railways should be available. In a case of this kind I submit that these minutes should be a matter of record available to this honourable assembly.


[Stage Direction]
Section agreed to.
On section 10-Cancellation and cremation of original securities.
Joseph Henry Harris: This is a new
section. Perhaps the minister would tell us what is the purpose of this section or what is the necessity for it. There must be some reason for it.


James Lorimer Ilsley: This is just to follow out
the scheme of refunding the original securities before maturity, and is a provision for the cancellation and cremation of the original securities.


[Stage Direction]
Section agreed to.
Bill reported.


[Stage Direction]
The house resumed from Thursday, July 25, consideration in committee of Bill No. 113, to amend the Prairie Farm Assistance Act, 1939-Mr. Gardiner-Mr. Fournier (Hull) in the chair.	[DOT]
Section 1 agreed to.
On section 2-Board.
Mr. DIEFENBAKER:: There are a few observations I should like to make in regard to the measure generally, and this section inparticular. When introduced last year the legislation was a novelty, and in consequence a number of anomalies must necessarily have been expected to arise not only in connection with the operation of the act but in respect to the administration thereof.
If I understand aright the amendments now proposed, they are to remove difficulties in administration and in operation which in the past year have become evident. The act is divided into two parts, under the first of which the minister may in any year declare an emergency year, when the average price is below 80 cents a bushel. There is the further provision respecting crop failure assistance where, in so far as Saskatchewan is concerned, the measure applies when there is an average yield of wheat of less than a stipulated number of bushels in 171 townships. Anything I have to say to-day is not by way of captious criticism, but rather with a view to placing before the minister some difficulties in administration, and to show instances of uncertainty in connection therewith.
At the outset I suggest to the minister that under the provisions of section 3 of the act the year 1940 be declared an emergency year. In so far as the amendments to section 4 are concerned, my suggestion is that there should be greater cooperation among those charged with the administration of the act. I have had complaints placed before me which I have difficulty in understanding, complaints which have arisen in connection with the administration of the act. It has been pointed out to me that at one time in a year one decision has been made, and at a later time in the same year a decision diametrically opposed has been made.
Without going into too many details I shall mention one specific instance, namely, that of Wreford rural municipality, No. 280, in my own constituency. Township 30, range 23, west of the second meridian, applied for

Prairie Farm Assistance
assistance under the act and was passed on favourably, and when sent to the department at Ottawa for payment, the application was turned down. Later on, affidavits were taken from the farmers in the township, and the secretary-treasurer of the municipality, as a result of his computations, came to the conclusion that the average yield was 11-82 bushels to the acre. That information was forwarded to Ottawa, and on March 26, 1940, the departmental office in Regina sent the following letter to one of the farmers in that municipality:
I have your letter of March 14, received here March 21, with respect to the above township. This is to advise that we have received the statutory declarations and same have gone on to our department in Ottawa for final approval.
So far we have had no word in this regard but I can assure you that the matter is being dealt with with the greatest possible dispatch.
Later, on April 3 a letter was received by one of the farmers in this township from the superintendent of the Regina branch, in these words:
I am glad to advise that your bonus has been passed for payment and cheque, if not already received, will reach you in a few days.
That letter contained a definite statement, setting out the decision which had been arrived at. On account of those letters the farmers in question secured credit from their local merchants, believing that payments would be made, and that the promise secured from the department would be carried into effect.
About six weeks later-on May 30, to be exact-the decision was reversed.


Thomas Clement (Tommy) Douglas: What is the date of the first letter?


John George Diefenbaker: March 26, 1940.


James Garfield Gardiner: The letter to which the hon. member for Weyburn refers is dated April 3. That was the date of the letter in which the statement was made that payments would be sent out.


John George Diefenbaker: Yes, it was on April 3 when the statement was made that bonuses had been passed. Then, on May 30, just eight weeks later, a letter was received by one of the farmers in this area, an excerpt from which reads as follows:
This township -was recommended for bonus by the P.F.A. branch but was not recommended by the committee of review, which examined all of the work done by this department, and on the basis of further information secured by itself made separate recommendation. Because of these different recommendations made to the Minister of Agriculture, affidavits were taken for farmers in that township as to their actual acreage seeded to wheat and actual bushels threshed from such acreage. This information together with all other information
with regard to this township in the possession of the P.F.A. branch in Regina, was forwarded to the deputy minister of agriculture in Ottawa, and it is a decision given by his office that no bonus is payable in this particular township.
It becomes difficult to understand how at one time this department should advise the farmers in that area that they were receiving a bonus, and that later on, some few weeks after the election, the decision should be reversed.


James Garfield Gardiner: Both decisions were after the election.


John George Diefenbaker: That is true. According to the letter of March 26 the matter was then before the department in Ottawa. I would suggest that things like that are not conducive to the proper administration of this act. I assume that one of the reasons for the setting up of a board of review is to guard against mistakes through non-cooperation between the various offices operated under the act and the central office in Ottawa.
During recent weeks I have noticed an increased multiplication in the number of positions in the government service. Numerous boards have been set up. Under the unemployment insurance legislation passed yesterday a large army of employees will be added to the already large number of civil servants. There should be more economy practised. Instead of setting up a new board of review and having to pay out additional salaries, I suggest that the services of the grain commissioner and the assistant grain commissioners be utilized. According to an answer given to a question which I asked on June 26, there are three assistant grain commissioners in the three prairie provinces. Each of these men receives 87,500 a year, and each has a staff under him. According to the return they have very little work to do. The total number of claims for damages or compensation dealt with in Manitoba in 1938 was nine, and the amount of those claims totalled $1,759.15. In other words, the assistant grain commissioner received a salary of $7,500 to look after claims amounting to less than $2,000. In addition to that, forty-six complaints were heard. In 1939 the total number of claims dealt with was fifteen, and the total amount involved was $2,897. Why could not the services of the assistant grain commissioner in Manitoba be used on the board of review?
In Saskatchewan the situation is even worse. In 1938 the total number of claims for compensation amounted to four, and the amount involved was $507.72. In 1939 there were only five such claims, amounting to
Prairie Farm Assistance

$204.53. In so far as Saskatchewan is concerned, the incumbent of the position is a most able man, as I have no doubt are the incumbents in Manitoba and Alberta. Why could not his services be utilized in war work, or, if not, his services might be used in connection with the board of review work under this act?
In Alberta the situation is slightly better. In 1938 thirty-one claims in all were heard, the amount involved being $3,604.17. In 1939 there were fifteen claims, amounting to $2,008.34. If these men cannot be transferred to other departments of the government so that their services may be used to greater advantage, they should be made use of in connection with the board of review. In two years the claims dealt with in the three provinces amounted to only $8,000.. Section 4 is the crop failure assistance section.


James Garfield Gardiner: We have not reached that section.


John George Diefenbaker: My understanding is that on the first section-


James Garfield Gardiner: There was a ruling of the chair the other night.


John George Diefenbaker: Perhaps the minister would wait until I finish what I have to say. My understanding was that the entire bill could be discussed on the first section.


James Garfield Gardiner: I urged that arrangement the other nigih't, but I was overruled by the Chairman. He stated that he intended to hold hon. members to a discussion of the different sections. I have no objection to a general discussion on the section, but the Chairman gave that ruling the other night.


@Acting Chair(man)? of Committees of the Whole: It could be done only with the
unanimous consent of the committee. If hon. members follow the rule, their discussion must be strictly relevant to the section under consideration.


Mr. PERLEY:: When the bill was put
through the resolution stage the other evening, there were many hon. members who were not present. I got here just after the bill had been put through the resolution stage and been introduced. I understood there was a distinct understanding that there could be a general discussion on this section 2, which deals with the board. While the Chairman did rule that we would have to confine our arguments to the particular section, I think the minister himself agreed that there should be a. general discussion.
'Mr. Diefenbaker.]


James Garfield Gardiner: I did agree the other night that it would be quite proper to have a general discussion on the first section, but the Chairman ruled against me. I then went on to state that I thought the sections of the bill covered everything which hon. members would want to talk about and that they could confine their remarks to the different sections as they went along. I have no objection myself; I was simply referring to the ruling by the chair.


Mr. ROSS (Souris):: There was a distinct understanding that we could discuss the bill entirely on the second section. I was prepared to speak the other evening, but with that understanding I was willing to wait.


Alphonse Fournier: I have no objection to general speeches being made on section 2, but I would remind the committee that there is a rule which can be set aside only by unanimous consent.


Richard Burpee Hanson: We shall save some time if we can have that unanimous consent.


Some hon. MEMBERS:: Agreed.


John George Diefenbaker: Under section 4 of the act provision is made that the governor in council, whenever the minister finds that the average yield of wheat in a stipulated area, as a result of anything other than hail damage, is five bushels an acre or less, may declare such area to be a crop failure area. My suggestion, in which I am supported by a resolution passed by the wheat pool committee when it met in convention in Regina on May 29 last, is that the words "other than hail" be deleted from the section. Within the last ten days there has been a terrific hail storm in Saskatchewan. It affected a portion of Rosetown, Lake Centre and Melville constituencies. I can see no justification for the inclusion of these words in the act, particularly in view of the fact that it is an act to provide assistance where crop failure occurs.
Every person who sells wheat or other grains within the meaning of the act contributes one per cent to a fund. The definition of a farmer, to whom payments may be made under this act, is a "person engaged in farming in a spring wheat area." For some reason or another, regulations were passed, with the approval of the governor in council, excluding from the operation of this act any farmer who did not reside upon his farm or contiguous thereto. In Saskatchewan there are numberless farmers who do not reside on their land or on land contiguous thereto, and it seems most unfair that they should

Prairie Farm Assistance
be denied the privileges of the act when they are required under it to contribute their share towards its operation.


James Garfield Gardiner: They are not denied.


John George Diefenbaker: Does the minister say that those who are not residing on the land or on land contiguous thereto do not have lo contribute?


James Garfield Gardiner: I know some who have received payment who have resided as far as twenty miles away from the land, provided that farming is the only occupation they have.


John George Diefenbaker: But those who are not resident, whether resident within twenty miles of the land or not, are still paying their share of one per cent on account of the wheat disposed of by them.


James Garfield Gardiner: If they live in the United States-


Ernest Edward Perley: Right in the province.


John George Diefenbaker: There have been instances where farmers resident in the province have been denied the privilege of benefiting under the act although required to contribute to its operation.


Ernest Edward Perley: There is one right here. I paid in myself.


John George Diefenbaker: The hon. member for Qu'Appelle (Mr. Perley) is an instance. It is a matter that should receive the attention of the minister. This anomaly-and it can be construed as nothing but an anomaly- should be removed from the operation of the act.


Mr GARDINER:: To clear up that point, the regulations provide that a resident farmer within the meaning of the act collects, but a resident farmer does not mean a farmer who lives on that land.


John George Diefenbaker: I know of an
instance where the administrative body in Regina defined "farmer" under the act as a person residing on the land or contiguous thereto, and the applicant was denied the right to share in the benefits although required to assume the responsibility of contributing, because he could not qualify under such regulation.


James Garfield Gardiner: There must have been some other reason.


John George Diefenbaker: That was the only reason which was given that he was not a farmer within the meaning of the act and the regulations. My suggestion is this, that where a man is engaged exclusively in farming or
whose main occupation is farming, then, regardless of where he lives, it is unfair and unconscionable that he should be required to contribute his share to the operation of the act and at the same time not be permitted to share in the fruits of that act, that is provided he is otherwise qualified.
These few submissions, Mr. Chairman, are made with a view to removing certain anomalies in the act, and I trust that the minister will give consideration first to utilizing the services of the board of grain commissioners on the review board, second, to including within the operation of the act areas destroyed by hail, and, third, to enlarging, if enlargement is necessary, the definition of farmer within the meaning of the regulations.


Thomas Clement (Tommy) Douglas: I should like
to say a few words generally before we go over the clauses, and to make one or two suggestions to the minister.
First, let me say a word about the administration of the act. This act was passed last year, and as was only to be expected there have been some difficulties in administration in the period of adjustment necessary to get the scheme into operation. Yet I do not think any person who had very much to do with the administration of this act and with the people who come under its operations would deny that a great deal more inefficiency and incompetency existed than was necessary.
The inspectors started out around the fifth of August last year to go over the territory. We watched month after month go by. Relief stopped for most of the farmers in July or August. September, October, November and most of December went by, with the farmers having to get credit at the local store or dispose of anything by which they could raise enough money to keep themselves and their families alive until the bonus came. In my constituency the first bonus cheques, covering only 5 or 10 per cent of those eligible to receive them, arrived on December 22, three days before Christmas. A few more arrived on Christmas eve, others well on in January, and a great many in February and March. I must say frankly, and I do not say it in any scolding way, that I have never seen anywhere anything quite so badly handled or causing as much hardship as the bonus scheme and the manner in which it was handled last fall. I want immediately to exempt from any blame some of the men who were at the central organization in Regina. I do not know all of them, but I had some contacts with both Mr. Mackie and Mr. Sinclair, and I found both quite competent, sympathetic and deeply interested in the welfare of the people who were coming under the benefits of the act.
Prairie Farm Assistance

In my opinion the reason why this act was administered so inefficiently lay much further back than the central organization in Regina. It lay out in the field. I have before me a return which I received as a result of a question asked in the house on June 11 of this session, and I find that for administration of the office in Regina and for the men out in the field the total expenditure was $230,459.81. Something in the neighbourhood of $200,000 was actually for field men in the form of salaries and expenses. I have the names of the different men here. As far as the southeastern part of the province is concerned, I think I know practically all of them. A good many of them are members of Liberal executives in my constituency or in neighbouring constituencies. This does not necessarily mean that they should not be doing that kind of work, but a good many of them were not competent to do the work required under the act. In many instances they were selected not because of their competency but because of the fact that we were on the eve of a general election, and I am afraid that in a good many instances more time was devoted to electioneering than to administering the act.


James Garfield Gardiner: The men there were
among the best municipal secretaries in that portion of the province.


Thomas Clement (Tommy) Douglas: Not in my
section.


James Garfield Gardiner: They were at the head
of both organizations.


Thomas Clement (Tommy) Douglas: They mayhave been at the head, but I am talking of the field men.


James Garfield Gardiner: They chose the field men.


Thomas Clement (Tommy) Douglas: I am willing to admit that. In the first week of August the superintendent of highways in my constituency, who has nothing to do with this act, and the Liberal candidate and the field men who were going to cover the territory got together to lay plans for covering it, and I know that the Liberal candidate drove over part of my constituency in company with some of the inspectors.


James Garfield Gardiner: The hon. member had a number of meetings too, which was perfectly proper.


Thomas Clement (Tommy) Douglas: But I did not travel with any of the inspectors. There were two men in the car, one to talk about the bonus and one to talk about the impending election. You cannot send out men who are primarily interested in duck shooting or in an

impending election and expect them to send back forms that will give the information you want to get. I know as a matter of fact that one of these men sent in forms that were hardly legible. They had to be sent back and the work done all over again. Some of these forms were still being gathered on the 13th of December because those who were responsible for sending in the forms in the first place were not competent to do the work. It is impossible, in my opinion, to run at one and the same time a political machine and a complicated act like this. A good part of the maladministration was certainly not due to the central office in Regina where much of the blame was put, nor was it due to the departmental officials here; it was due rather to the fact that in the field itself the most competent type of men were not selected for the work.
I believe the minister has moved in the right direction in making it possible to substitute part of an ineligible township for part of an eligible township, but I doubt whether it is going to meet the difficulty. As the minister said last year, the township basis was not the happiest one, but it was the best that could be devised for the purpose of getting started, and I agreed with him at the time. But the fact is that the township basis is not fair. Anomalies sprang up. There were too many discrepancies between farmers right across the road from each other. People with equally poor crops would be differentiated between, one getting the bonus and another not. But there were even worse situations. There would be a man with half a section on one side of the township line and another half on the other, and with no crop on either side; but one-half section was in the nonbonus area. Naturally the farmer does not get any bonus on land in the non-bonus area. But because he has three hundred acres or more in the non-bonus area, he cannot get any bonus in respect of the land in the bonus area. These were difficulties that could not be foreseen, but we are aware of them now and we should do something to meet them.
I do not think the act will ever be satisfactorily administered until it is possible to put it upon an individual basis, taking the individual farm unit as the basis. I am convinced that a good many of the field men, the inspectors sent out, are totally unnecessary. The act could be administered through the municipal office. No one knows more about the average farmer than does the secretary of the municipality; he knows what each man has on his farm and all about it. The farmer could come in and make a declaration early in the season as to how much land he had in wheat and in other grains. The secretary of

Private Bills
the municipality is a commissioner of oaths, and there should be a heavy penalty for perjury. The man could give the information, and the bonus could be computed on the basis of the individual farm unit and not on the basis of the question whether he happened to be fortunate enough to live in a township where the average was low, or to be unfortunate enough to live in a township where the average was high. I know of one instance where a man had thirty bushels to the acre. He lived in a township in which he was practically the only man with a crop and he drew the bonus. It would not happen often but it did happen there. I know the administrative difficulties would be great if the act were put on the individual farm basis, but I contend that they would be no greater than they are under the cumbersome machinery which now exists, and it would be much more satisfactory and more just in the long run to the people who come under the act.
If the minister finds it impossible at this late date to put the payment of the bonus on the individual farm basis, would he at least give consideration to the question of including in the act a provision that the inspector or the board of review shall have power to split a township? I mean more than a mere substitution. Under the substitution clause there will have to be an amount substituted. If you took an amount out of the eligible township, you would have to substitute an equal or a larger amount of an ineligible township. But there might be part of the township that ought to come in, and it should be provided that half or two-thirds of such a township could qualify.
A word about the regulations. Like most laymen, I know nothing about law, but I have always understood that it is not good business to have regulations which offset or nullify the meaning of a statute.


Richard Burpee Hanson: It cannot be done by law.


Thomas Clement (Tommy) Douglas: That is what I understand, but under this act there were passed regulations which to some extent did that very thing. I have in mind some of the definitions. Under section 2 as passed last year, paragraph (e) said that "farmer" means "a person engaged in farming in the spring wheat area"; but after the regulations were issued, they were as difficult to understand as the act itself, and so an interpretation was issued which had all the force of another set of regulations. The definition of "farmer", according to the interpretation, did not simply mean that he was "engaged in farming in the spring wheat area". His primary income must come from farming. All sorts of difficulties arose. There
were instances of a farmer living on the edge of a town and running an elevator. He got the bonus because he lived on the farm. Another man was running an elevator almost apposite, but he could not get the bonus because he lived in town. There were men who moved into town for a part of the year and engaged in blacksmithing or woodwork or something of that sort. They followed these vocations in the winter and farmed in the summer, and often there was a fine point of distinction. In some instances the decision was that farming was their primary occupation, while in others they were turned down because farming was not regarded as their primary occupation. I submit, as the hon. member for Lake Centre has done, that to these people who pay one per cent it is difficult to explain why, under what we call a crop insurance scheme, they should pay that levy on the grain they deliver and still not be eligible merely because they do not exactly comply with some legal interpretation which the officers of the department put upon certain provisions of the act.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Bill No. 76, for the relief of Peter Logush.- Mr. Factor.
Bill No. 77, for the relief of Goldie Wolfe Goldberg.-Mr. Factor.
Bill No. 78, for the relief of Ethel Witkov Myers.-Mr. Bercovitch.
Bill No. 79, for the relief of Tilly Fishman Constantine.-Mr. Factor.
Bill No. 80, for the relief of Rachel Ruth Levenstein Schwartz.-Mr. Bercovitch.
Bill No. 81, for the relief of Eleanor Mabel Campbell Townsend.-Mr. Abbott.
Bill No. 82, for the relief of Isabel Margaret Gill Bacon.-Mr. Mcllraith.
Bill No. 83, for the relief of Michele Fiorilli. -Mr. Factor.
Bill No. 84, for the relief of Gertie Schwartz Simak.-Mr. Bercovitch.
Bill No. 85, for the relief of Geneva Clementine Burley Picard.-Mr. Macdonald.
Bill No. 86, for the relief of Rene Gaudry.- Mr. Hazen.
Bill No. 87, for the relief of Fanny Costom Copelovitch.-Mr. Hazen.
Prairie Farm Assistance
[Stage Direction]
Bill No. 88, for the relief of William Gerald Dickie.-Mr. Bercovitch.
Bill No. 91, for the relief of Agnes Dorothy Smith Bruneau.-Mr. Hazen.
Bill No. 92, for the relief of John Eric Pitt.- Mr. Factor.
Bill No. 93, for the relief of Dennis Calvert Iverby.-Mr. Mcllraith.
Bill No. 94, for the relief of Camille Perks.- Mr. Bercovitch.
Bill No. 95, for the relief of Maria Cecilia Patricia Gation Rowell.-Mr. Tomlinson.
Bill No. 96, for the relief of Lemuel Athel-ton Lewis.-Mr. Homuth.
Bill No. 97, for the relief of Joseph Philias Hector Sauvageau.-Mr. Hill.
Bill No. 105, for the relief of John Bernard Hughes.-Mr. Bercovitch.
Bill No. 106, for the relief of Annie Block Smiiovitch.-Mr. Bercovitch.
Bill No. 107, for the relief of Charles-Auguste Armand Lionel Beaupre.-Mr. Abbott.
Bill No. 108, for the relief of Albert Lennon Brown.-Mr. Bercovitch.
Bill No. 109, for the relief of Talitha Emily Findlay.-Mr. Graydon.
Bill No. 110, for the relief of Joseph Armand Odilon Boucher.-Mr. Factor.
Bill No. Ill, for the relief of Doris Bertha Schwartz.-Mr. Cleaver.
Bill No. 115, for the relief of Lilias Augusta Shepherd Harris.-Mr. Bercovitch.
Bill No. 116, for the relief of Forest Wentworth Hughes.-Mr. Factor.
Bill No. 117, for the relief of Margaret Florence Stewart Corley.-Mr. Casselman.

[Stage Direction]
Bill No. 119, for the relief of Moora Lipsin Sagermacher, otherwise known as Mary Lipsin Sager.-Mr. Bercovitch.
Bill No. 121, for the relief of Robert Tester Gordon.-Mr. Hazen.


[Stage Direction]
The house resumed consideration in committee of Bill No. 113, to amend the Prairie Farm Assistance Act, 1939-Mr. Gardiner- Mr. Vien in the chair.
On section 2-Board.
Thomas Clement (Tommy) Douglas: At six o'clock I was drawing to the attention of the committee the fact that some of the regulations issued under this act had tended to nullify and negate its meaning. I was pointing out that under the act the definition of "farmer" 
applied to one "engaged in farming in the spring wheat area." The regulation No. 7, for instance, reads:
No acreage award shall be made on the following lands:
(e) Lands owned or rented by a farmer who as owner or tenant also operates more than three hundred acres of cultivated land situated in townships not eligible for an award under the act.
What happens there is that a man who has three hundred acres, even though there is no crop on it at all, if it happens to be in a non-bonus area is ineligible for the bonus on any land which he may have in an eligible area. For instance, the act as passed last year in section 2 (d) defined "cultivated land" as follows:
"Cultivated land" means land which had been cultivated prior to an emergency year or prior to the year in which a declaration has been made under section 4 of this act that an area including such land is a crop failure area, and which land has not reverted to natural prairie.
Subsequent interpretations kept restricting it down until actually it was only land which had been in crop the year before. These regulations ought not to eliminate people who ordinarily would come under the benefits of the act but who are removed by regulations or by legal interpretation of regulations.
I now come to the main point which I should like to draw to the attention of the committee; namely, the fact that since this act will be amended if the present bill is passed, it is quite possible that no bonus will be paid at all, or that large sections of people who were eligible for the bonus last year will not be eligible this year. First, there are two schemes under the act. Under section 3 there is an emergency plan. Under section 4 there is a crop failure scheme. Farmers came under section 3, the emergency plan, if their crop was twelve bushels to the acre or less. Last year was declared by this act to be an emergency year. There was no doubt about that, so any farmer anywhere who lived in a township in which the average crop was twelve bushels or less to the acre was bound to be eligible under the act. But this year, first of all the average price of wheat must be less than eighty cents a bushel. That cannot be determined until after November 1. Only after that time can consideration be given to bringing farmers in townships having twelve bushels or less to the acre into the scheme.
But that is not all. Even if the price of wheat is eighty cents or less and even if farmers are in townships that are eligible, unless the governor in council declares this year to be an emergency year no bonus will be paid under the emergency plan. That

Prairie Farm Assistance
should be clear. That wipes out all those people who came under the emergency plan last year unless the government declares this to be an emergency year. That limits us then to the second scheme, the crop failure plan. Farmers will only be able to come under that provided that there were fifty-four townships in Manitoba, or ninety in Alberta or 171 in Saskatchewan with an average of five bushels or less to the acre.
The point I should like the committee to appreciate is that if the government does not declare 1940 to be an emergency year, no bonus at all will be payable under this act as it stands unless there are large enough areas coming within the figures I have just enumerated. Therefore many thousands of farmers will pay the one per cent levy with no possible hope of getting a return.
Last year when the minister brought down this legislation we asked him why 1939 was being declared an emergency year. The minister gave a very good reason; he said that ten years of more or less continuous drought and crop failure constituted the reason. But the same reason is still there, except that there are now eleven years. All the factors that made it wise for this parliament in 1939 to declare that year an emergency year are present to declare this year an emergency year.


Charles Edward Johnston: Oh, no; what about the election?


Thomas Clement (Tommy) Douglas: I was not trying to suggest that 1939 was declared an emergency year because of the election.


Charles Edward Johnston: It may have had a bearing on the matter, though.


Thomas Clement (Tommy) Douglas: I wish to suggest, however, that if 1940 is passed by and the bonus is not payable in large sections of western Canada, there will be a tendency to feel that 1939 was declared an emergency year just because it happened to precede an election. This bill has been called a crop insurance bill, but as a matter of fact it is nothing of the kind.


James Garfield Gardiner: It was not called that by the government.


Thomas Clement (Tommy) Douglas: No. It has been called that by many speakers on both sides of the house, but actually it was designed to pay drought relief in another form and to levy a one per cent tax on those farmers who had crops to help pay the relief of farmers who had no crops. That is really what it boiled down to; and if we are going to levy that one per cent tax we ought to be sure that those farmers who qualified last year at least have a chance to qualify this year.
Before this bill goes through, I hope the minister will give consideration to doing one of three things: first, giving the committee an assurance that 1940 will be declared an emergency year; or, second, reducing the number of townships necessary to have an area considered a crop failure area; or, third, if it should turn out within the next few weeks that there will not be enough townships in Saskatchewan to constitute a crop failure area, giving us an assurance that in the event of our not coming under section 4 of this act, we shall come under section 3.
I do not think that is asking too much. With a poor crop; with the drought areas still seriously affected, it is not too much to ask that we be allowed to come under the crop failure plan, and if we cannot qualify under that, we should have some assurance that we shall come under the emergency year section of the bill. Otherwise the farmer will not come under either provision, and this act will be merely a mockery to him, something on the statute books that does not guarantee him anything. He will be left hanging in mid air, and as I said before, there will be a tendency to feel that this act was merely concocted on the eve of a general election and that the government had no serious intention of carrj'ing it on as a permanent piece of legislation.
I have offered these suggestions to the minister, and I hope they may be given some consideration. If I may review them briefly, they are: first, that the administration be brought under the secretary-treasurers of the municipalities and handled through the municipal offices without the cumbersome machinery of field men which has been built up in the last year or so. Second, that the government shall work towards making the individual farm unit the basis of operation; and if that cannot be done this year, that at least we should make provision for splitting a township so that half or more of that township would be eligible. Third, that steps be taken to square the regulations with the act, so that the regulations will not eliminate someone who otherwise would qualify. Fourth, that the government give us an assurance that we shall come either under the emergency year plan or under the crop failure scheme. We should not miss both of them and be left without any bonus at all. The situation could be met quite easily by the minister introducing a simple amendment to section 3, subsection 3, to the effect that for the purposes of this act 1940 shall be deemed to be an emergency year.
Prairie Farm Assistance


Thomas Langton Church: Section 3 has to do with the computation of the sum to be awarded as assistance, and it has been revised to provide that such assistance can be given only on the application of the province. As I said during the debate on the motion for second reading of this bill, there must be some principle behind this measure, and the original principle was that this was to meet an emergency for a year or two. Now this legislation is to be made permanent, and I object to the policy involved. During the war the industrial workers, who are paying income tax, sales tax and all the other taxes, cannot carry any additional burdens. Is there or is there not an emergency? There may be an emergency caused by crop failure, but what about the industrial workers of Canada and their emergencies? The farmers of this country were given the Farmers' Creditors Arrangement Act, which was extended in principle to the fishermen, probably because under the British North America Act the fishermen are to a certain extent the responsibility of the dominion. But the industrial workers, who include fifty per cent of the people of this country, come under trade and commerce which is exclusively a federal matter, and they have been driven to the wall by the war and the depression, and get no such protection as the farmers receive under this bill. The industrial workers have had failures too; they have lost their jobs and markets. There was an industry, A. R. Clarke and Company, on Eastern avenue in the city of Toronto, established eighty-seven years ago, which formerly employed nearly a thousand men. That industry is closed to-day because of the war and the gold situation.
I believe in the principle of protection for all the people all the time, not just for some of the people some of the time. This sort of thing is all very well for our free trade friends to the left and opposite, including the likable Minister of Agriculture. In the olden days on the prairies these hon. gentlemen preached the policy of free trade; they said that our markets lay north and south, instead of overseas in England and France. I do not object to protection if there is an emergency, but protection should be applied to everyone, not just to one class; it should extend to the industrial workers, the fishermen, the grain growers and others. I know the farmers are suffering; I know a great deal about them from what I have read and what I have learned on visits to the west. They are suffering, but others, including industrial workers and the farmers of the industrial provinces who do mixed farming, are also suffering.

What protection is given under this section? You have a board of review, if you please; a political board first, last and all the time. It may be that there is concurrent jurisdiction in regard to agriculture, but now this matter is to be turned over for review to the provinces. What about the industrial workers in Ontario and Quebec, who pay eighty-three per cent of the cash taxes of the dominion and receive no protection at all? I have referred to one industry which is closed at the present time. Surely the workers should have some protection as well. Let us have equality of treatment. Now they are even going to pay the farmer to store his own grain, if you please, one per cent a month. Do they pay the industrial worker who loses his job, his home and everything else? There is also to be a domestic price established for Canada, through the imposition of a processing tax of 15 cents a bushel; we are to have a quota system of deliveries, and there is to be an advisory committee. Who is to pay for all these things? They will be paid for in sales tax and income tax by the industrial workers of Ontario and Quebec, who have been driven out of their homes. There are many farmers in Ontario also. They carry on mixed farming, for the most part, so they will not qualify under this bill; but they are mixed farmers and they should receive the benefit of the same protection that is given the prairie grain farmer. For many years the western farmer was told by the free traders that all they had to do was rely on free trade and all would be well, but hon. members know what happened to the prices of grain because of the operations of the elevator companies, the middlemen and all the other combines that existed in this country.
I do not object to the principle of the measure, because I believe these people in western Canada should have reasonable protection. But my point is that that protection should be extended to the industrial workers, and also to all other classes of farmers in Ontario and Quebec. There are many hon. members in the House of Commons who represent the two industrial provinces, but they seem to be afraid to rise in their places and demand equality of treatment with the prairie provinces, and protection for all the people all the time.


James Arthur Ross: Mr. Chairman, when this legislation was introduced a year ago, while it was not so described I thought it was a step in the right direction, namely in favour of crop insurance. Much has been said by hon. members who have preceded me, notably the hon. member for Lake Centre (Mr. Diefenbaker) and the hon. member for

Prairie Farm Assistance
Weyburn (Mr. Douglas), as to the lack of administration last year. Might I point out that those who were appointed field inspectors were in most instances men who either were occupying political office, or were political workers. They were not, as was suggested by the minister, municipal officials in southeastern Saskatchewan.
It must be admitted that some of those field inspectors did a good job. But there were others who did a terribly inefficient job, and caused no end of grief from the time they went to work last fall until the present date. They had good political jobs.
It was my thought that it was the original intention that administration was to have been through municipal offices. I do not know whether the minister ever had that intention, or whether it was suggested to him; but that was the thought which prevailed throughout western Canada when the measure of a year ago was under discussion. To my mind it is the only feasible system of administration.
In the municipalities are the tax rolls. Those tax rolls are to be found in the municipal offices, and they show the cultivated acreages and farm layouts. After seeding, the farmer may go to the municipal office and make a declaration as to his seeded acreage. After harvest, he can make another declaration as to what he has taken off that land. I know some people will endeavour to point out some weaknesses. I might point out, however, that in Manitoba there is a law now existing whereby a thresher must have a weigher on his threshing machine, and I believe that system is meeting with approval. If the work were done as I have suggested, we would eliminate the necessity for the army of inspectors going around, as they do at present- a condition which I suggest is most unsatisfactory.
May I give a concrete example of what happened in the municipality of Arthur last year. The clerk of that municipality was notified in writing from the board at Regina that five townships would qualify for acreage bonus. I was told that the clerk was notified about November 1. It will be understood that those people had to make arrangements for their provisions for the coming winter for themselves and their families, and they did so with the merchants in the community. Then, much to their surprise and astonishment, on February 3 the clerk of the municipality received an undated letter from the same Regina office pointing out that three of those townships had been disqualified by the board, and would not qualify for acreage bonus. The communication also pointed out the system of appeal which might be followed.
Needless to say, those municipal officials immediately carried out a survey of the three townships in question. Declarations were taken from every farmer in those townships, and it was found that two of the townships were decidedly under the average yield of twelve bushels to the acre, and that one was only one-twentieth of a bushel over. An appeal on behalf of those two townships was then immediately forwarded to the minister. As a result, some time this spring payment was made to those people.
That is the manner in which I suggest the administration might be carried on. When there is difficulty, and an appeal follows, and when the final settlement is made it would come to the attention of the minister. Therefore I say that is the procedure which should be followed in the matter of administration, so that the prairie provinces might take advantage of the act in the interest of the individual farmers.
Then it was suggested by the hon. member for Lake Centre that the board of grain commissioners might handle appeals. He gave some enlightening figures respecting the salaries of the commissioners, and the decisions they have made each year, and I believe they might be used in connection with the administration of this act.
I suggest that the township basis of making decisions is very unfair. I know of an individual in a township who harvested over forty bushels to the acre and yet that township averaged under twelve bushels to the acre and was paid the acreage bonus. A neighbour of his not far away, but in another township, had an average of less than four bushels to the acre, but did not receive assistance because that township averaged over twelve bushels to the acre. I suggest therefore that a different arrangement should be brought about whereby such individuals could be cared for.
The suggestion was made that crops destroyed by hail in an emergency area should be included. That point might be given consideration. In the area from which I come there is a large strip which has been hailed out this year, and the farmers in that section are not carrying hail insurance.
In one respect I am pleased, so far as Manitoba is concerned. I note with pleasure that the number of townships has been reduced from one hundred and fifty-four, in order to establish it as an emergency area. We appreciate that assistance.
I suggest that the minister might give special consideration to the matter of administration. I believe he could reduce greatly the cost of administration, and in many respects it could be made much more efficient.
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I do not wish to take up further the time of the committee, but I hope the minister may see fit to embody in the prairie farm assistance bill some of the suggestions which have been made.


Ernest Edward Perley: May I at this time make a few observations respecting the measure before the committee? Undoubtedly this bill should have been introduced at least a month ago. For a long time it has been apparent that in a great many Saskatchewan townships there will be crop failures. In view of the experience we had last year in connection with the administration of the act, I suggest that it would have been well to have had before us at least a month ago any suggested amendments, so that they might have been given due consideration. We are now approaching a very late stage in the session. It is the intention in a few days either to prorogue or to adjourn, and we find that we must consider this important matter to-night in only a few hours. No doubt it will be passed. I must urge, however, that it is an important matter which should have had greater consideration. I believe the measure introduced last year was passed in the month of May, and was introduced in April. As some hon. members have pointed out, it was a relief measure, and in that respect it was good.
Our chief objection to the act passed last year has been with regard to the way in which it was administered. Even then it provided a certain amount of relief. Under the act the minister was given wide powers. He had powers to make regulations, and to state how the act would be carried out. Under certain conditions he could declare an emergency year, or that a crop failure existed in a certain area. He could state how to arrive at the average price, and the act then passed dealt with crop failure areas and cultivated lands. The minister could define the meaning of the term "farmer". I believe it was the hon. member for Weyburn who pointed out that the definition of the term "farmer" is not sufficiently clear, and I believe the necessary change should be made this year. Certain men who own land and pay all the expenses in connection therewith, but are living in towns, might be brought within the provisions of the act. I could give instances where, by not being included, men of that class experienced hardships.
The act last year provided for the setting up of a bonusing fund. There was provision also for the obtaining of a loan from the federal treasury provided the one per cent levy was not sufficient to meet the payments under the act. I suppose in due course the

minister will give us some figures with respect to the amount borrowed and how repayment is to be made to the federal treasury.
I have a complaint to make with respect to the way in which the act was administered last year. The administration was most unsatisfactory in a great many townships in our province. My first complaint is about the inspection. The minister was given the power to appoint inspectors who were controlled or supervised from an office in Regina, with a Mr. Mackie in charge. This inspection started early last year, and I should like to review my experience with it. I contend that politics were played to a much greater degree in connection with this inspection than has been claimed on the floor of this chamber so far.
I met one of the inspectors on July 29 when I happened to be in a farmyard talking to a farmer. This inspector drove in and asked the farmer who owned the land, wThat was the number of the section and a few other questions. Finally the farmer asked him what his business was and he said he was the crop inspector. I asked him what system he was going to adopt in order to inspect the crop, because the farmer did not intend to cut that crop for another week or ten days. He replied that he knew all about farming, that he could drive by and almost tell the average yield of that particular crop. He then said, "Anyway we will make it on the safe side; those are our instructions." The farmer then made one mistake when he asked the inspector if he would like to meet me. I cannot repeat the language he used when he asked me what I thought of my leader. It was easy to see that he had some little politics in his mind. I assured him that he need not worry about my leader, that there were other matters with respect to leadership which should concern him more.
Not a week after that I ran across another inspector at a spot not far from where I met the first one. This man was a school-teacher who had not been reengaged in his district. He had a cardboard carton about three feet square, with the ends cut out. He carried it over the grain and then dropped it with an open end down. Then he cut about two or three feet on the outside with some shears, raised the box, and then cut off the heads of the grain which had been surrounded by the box. He said he was going to have that threshed out, and from the result he could arrive at the average yield of that field.
I relate this simply to show that there was no uniform system of inspection.
Another inspector operated in my own district and in almost all of the district which the Minister of Agriculture represented in the last parliament. Every night this man

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drove forty-five to fifty miles to his home, and then drove back in the morning. It was a week or more before the municipality was informed of that, and a complaint was made in connection with his expenses. I met the man and asked how he was working with respect to expenses and he told me he was getting so much a mile for his driving. I then told him that he would be running up a nice amount if he drove fifty miles every night and back again the next morning. He was certainly making a living because he got most of his noonday and evening meals from the farmers.
This particular man had to do his work a second time. Then it had to be gone over a third time by another inspector, and finally it had to be done by the municipalities which took affidavits from every ratepayer in the district. At certain of the meetings the councillors would announce that if any ratepayers from a certain district were present they should remain after the meeting because the council had the forms to take the affidavits. This was as late as the early part of March.
Some suggestions have been offered this evening, and I intend to make one or two more. I think the municipalities should be permitted to do this work, and then the board of review provided for by this bill could be eliminated altogether. The office in Regina could supervise the work, but if this work were put up to the municipalities I am sure they would agree to do it and do it well. I know they would be ready to do it if they were given the amount necessary to pay the salaries and expenses of the inspectors for one month.
I have a further suggestion to make. The municipalities should be asked to make surveys. Where it was found that twenty per cent of the ratepayers of a municipality had an average yield of less than ten bushels to the acre, then the suggestion of the hon. member for Weyburn with respect to half-townships should be followed. A township is too large a unit. As has been explained here this evening, it is possible that one part of a township may have a good crop while the other part has a poor crop. This may result in those farmers with poor crops not getting anything because the average has been brought up by the good crops. The minister knows what I am talkiflg about. There is one township whose northern part is split by the Qu'Appelle river, part of the township being <n the minister's constituency and part in mine. This is township number 18-R-10-W2nd. The minister will remember that as late as
April I had a conversation with him in regard to this particular township. I may refer to this matter a little later.
As I say, the municipality should make a survey, and where it was found that less than twenty per cent of the ratepayers had an average yield of less than ten bushels to the acre, then- the municipality should be considered on the basis of the individual. If this is going to be a relief measure, we must get down to the individual. I do not think there will be any more paid out than was paid out last year or than will be paid out under the method which the minister proposes to adopt this year.
As I said before, I would pay the municipality to do this work; I would give them what it would cost to pay the salaries and expenses of the inspector for one month. I know they will do the job, because I have a report here in the Regina Leader-Post of July 13 that the secretaries of the municipalities, and I believe the reeves too, met in that city and offered to do work voluntarily this year. But I would pay them to do it because you want the job done. They are responsible for relief and most of them, I am sure, would do the right thing. In the local papers in part of my constituency, as any member can see by going into the reading room, municipalities are running an advertisement giving notice to the farmers that they must cut as much fodder as possible and use their crops in many instances for feed, where there is a poor crop, because no relief will be given by the municipalities this year since they will not receive relief assistance from the province. This shows that the municipalities are concerned with the farmer's welfare, and I believe they would do the right thing.
It may be suggested that the municipalities might overstep the mark and bring all the farmers under the benefits of this bonus scheme, but I believe they would be fair and would do the job properly.
I have already mentioned the part that politics played in the administration of the act last year. There is no question about that, and I protest against it here and now. I would not wish to see a repetition of what was done last year in the part of Saskatchewan which I represent or in the part which the minister represents. I do not think the minister would permit it this year; I will be fair enough to say that. I think he is now in a position where he is seized with the importance of cutting out politics and doing the right thing, and he can do it if he so desires. He has had .the reputation of handling a number of matters from a political point of view and of setting
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up a machine. I will say that he has set up one or two good machines, but I do not want to see the machine oiled up and started again this year. I have a letter from his deputy acknowledging that the bonus was paid to people who were not entitled to receive it, and the department is now seeking to recover it.


James Garfield Gardiner: I acknowledge that. We made some mistakes.


Ernest Edward Perley: The minister knows the
names very well. He knew long ago that these men were paid the bonus and were not entitled to receive it, while their neighbours who were better entitled could not get the bonus. I am going to wait and see how the department makes out in its attempts to recover the bonus. It is not necessary for me to put the whole story on Hansard because the minister knows the instances to which I refer. I do not wish to see a repetition of that this year. No matter whether the minister accepts some of the suggestions that are being made here or not, if he undertakes to carry out the act as amended I trust that he will see that the job is done properly.
There was an unnecessary delay in paying the bonus last year. Sixty per cent of the bonuses which had been earned and which were supposed to be paid in December were not paid until March. I received a letter only yesterday to the effect that the ratepayers in one municipality have received their bonuses only within the last week or ten days, and there are still a few cases in dispute.
Before we consider the bill clause by clause in committee, I shall now make a few general remarks about a conversation which I had with the minister in April last, when he was on his home farm. We talked over the telephone because we are practically neighbours, only twenty miles or so apart. Part of the township in question is in his riding and part in mine. Four inspections had been made, and a survey was also made by the municipality. the ratepayers being put on their oath. The survey made by the municipality showed an average crop of 11-80 bushels to the acre, I think it was, or slightly under twelve bushels an acre. The office in Regina refused to grant the bonus and referred the matter to the board of review in Ottawa. One thing I complain of is that the board of review sits in Ottawa. If it is going to be of any service it should be sitting in Regina at least during the survey work or until a decision has been reached in the matter of granting the bonus to the different areas. A board sitting in Ottawa cannot be as closely
I Mr. Perley.]
in touch with the farmers and the problems which the board has to consider, and having to refer matters to Ottawa means more delay.
On the occasion of our conversation the minister told me that he knew of the situation in this particular township in which we both are interested, and I said to him over the telephone, "You have the power, Mr. Minister, by regulation to go into the city of Regina," and he told me that he was going to do so the next day in order to take this matter up. The time was April and the farmers were ready to seed. They wanted the bonus, if it was coming to them, in order to buy seed, feed for their horses and other requirements. The whole township was involved. The minister said that he would give the matter his attention, and I believe he did so when he went to Regina. After consulting with the office there, he advised, I understand, that the farmers were entitled to the bonus and should get it. But the matter was referred to Ottawa and a telegram came back from Ottawa the next day. This is what I object to. The telegram from Ottawa did not come to the municipality, nor did it come to me. It came to the provincial member, who by the way went out on the street and said, "Here is a telegram from Ottawa. You are going to get your bonus at last. I did not know anything about it until Ottawa sent me this telegram." I think the minister should at least have done me the courtesy, after I had discussed the matter with him in a businesslike way over the telephone, of making known to me any decision that was reached. The telegram at least should have been sent to the municipality, but the news was given out in that roundabout way I have described. I am not saying that it was politics, but the information from Ottawa was made use of in the way I have mentioned.
No matter what amendments are made to the act, I believe that the minister, who is now seized with a sense of duty, if he will out out the system of inspection he had last year and pu-t it up to the municipalities, can have the whole thing done within a month and the bonus paid in proper time. The farmers need it. I know of instances where the bonus is needed right now. When we are in committee I shall have some suggestions to make to the minister but I just wanted to make these general observations at this stage.


Charles Edward Johnston: Listening to the observations that have been made by hon. members from nearly all the constituencies in the west, it would seem to me that there has been a great deal of complaint in regard to this legislation. The only constituency I have not heard complain is the one

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represented by the Minister of Agriculture (Mr. Gardiner) himself, so I suppose he must have got along all right.
The constituency which I represent is not affected by the drought situation so much as by another factor which up to the present I think has not been considered at all. I brought this same matter up a year ago when discussing the bill, when I urged that damage by hail be covered by its provisions. Provision was made in the bill with regard to both frost and rust, but hail was never touched. I think this legislation is most unfair in that respect. In my constituency a year ago there was more hail than there was anywhere else on the North American continent. We have the worst hail area anywhere on the continent.


James Garfield Gardiner: I would call the hon. member's attention to the fact that the hail section did not affect Alberta at all. The hail section only affects the crop failure area. It does not affect the other at all. There was no crop failure area in Alberta last year.


Charles Edward Johnston: That might be true, but I am saying that these people who are in the hail area, while they will get no protection at all, will be required to pay the cent.


James Garfield Gardiner: But the people in the hail area, if their crop was under twelve bushels to the acre, were paid the same as anyone else.


Charles Edward Johnston: Not unless there was a township. But I am speaking of something else. The hail-storm never takes in that whole area, but it will attack a strip of three or four miles and clean it out, leaving not a straw standing, while in other instances the hail goes through and puts the crop so far back that when the farmers come to thresh it they have only four or five bushels of an inferior grade to the acre. For every bushel sold of that inferior grade they are required to pay the cent, are they not? That is an unfair condition, and to add to the injustice there, when these people are hailed out and have to pay the one cent a bushel on the little crop remaining, they find, when they have to buy seed, that they have to buy it back at the regular price. They get no reduction, no assistance whatever. It is exceedingly unfair in that instance. This legislation should be amended so as to be of greater assistance and to be more of an insurance plan to the farmers. The suggestion has already been made to-night-and I heartily concur in it-that it should be on an individual farm basis. I do not believe, if that were done, the farmers would object if the levy
were increased another cent or possibly two cents and thus a definite assurance were given to every farmer, no matter whether the failure was caused by hail or frost or rust or drought, that all these people could come in. I am sure they would not object to the levy of another cent on their crop if they all participated. It would be more satisfactory and certainly would be more just.
As the act stands now, this is a levy which is made on the farming community alone. I mention this because it was brought up by the hon. member for Broadview (Mr. Church) when he said that the government should treat all alike. I am whole-heartedly in favour of that contention, because agriculture is the only industry that is required to stand on its own feet. All other industries are protected by tariffs. In this time of war all other industries are guaranteed cost of production, plus profit, and on top of that they are given a bonus if they are successful in lowering the cost to a certain degree. But here is agriculture, one of the most essential industries, especially in war time; yet the government sees fit to say to the farmers, "You must protect yourselves"; and so they levy one per cent on all production as far as wheat is concerned, and then that is distributed to the farmers themselves. That is, they carry their own insurance. Why, then, should it not be quite as just to say to the farm implement manufacturers of Canada, "If there is any farm machinery industry in this country that cannot succeed in making a profit, then we shall make a levy on the other industries that are profitable in order to assist this one which is not making good". It would be exactly the same thing. But we do not do that. This house sees fit to keep the tariff on with the result that prices rise and rise and the farmer has to continue to pay increased prices for his machineiy. The same applies in the manufacture of munitions and supplies. The government takes care of all costs, allowing for a profit and a bonus on top of that. I am sure that is not going to result in unity in war time; when you have such discriminatory legislation as that you will not have a contented people, and surely you will not have a contented farming community. You cannot expect it; you are not asking for it nor will you get it.
I am whole-heartedly in favour of having farm insurance. I think there should be farm insurance, but it should be farm insurance, that is, insurance of the farm so that every farmer when he pays his contribution will have some chance of getting returns. I hope the minister will take into consideration the suggestions that have been made here, or some of them at any rate, especially with
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regard to reducing the area, so as to make it possible for those who are suffering in consequence of hail to come under this protective legislation.


Mr. QUELCH:: I will be brief. After I had concluded my remarks when this measure was in the resolution stage, the hon. member for Comox-Alberni (Mr. Neill) suggested to the minister that in view of the fact that the western members had been busily engaged in criticizing this measure, he would be justified in withdrawing it. That hardly seems a logical stand to take. Surely it is possible to be heartily in accord with the principle of the bill and yet be opposed to certain sections of it which we may feel do not allow the bill to operate satisfactorily. However, in order that there may be no misunderstanding on that point, I emphasize the fact that the members of this group are absolutely in accord with the principle of the bill, that principle being that assistance shall be given those farmers in the west who suffer from crop failure.
But what we do object to is that owing to certain sections of the bill and certain parts of the regulations, there will be many instances where farmers may have a complete crop failure and yet will not be entitled to get any assistance under the act. That was the basis of my criticism when I spoke on this measure in the resolution stage. The Minister of Agriculture (Mr. Gardiner) stated that if I had waited until the amendments had been brought down I would have found that many of my complaints had been taken care of. Although I admit that the amendments do in some instances improve the bill, nevertheless the majority of the complaints I made, the majority of the complaints made to-night, are not taken care of by the amendments. It will still be possible for some farmers to thresh thirty bushels to the acre and get assistance. It will still be possible for many farmers to have a complete crop failure and get no assistance. Does the minister consider that satisfactory? If it is not satisfactory, why not change the bill until it is? It is a slipshod form of bill that allows farmers threshing thirty bushels to the acre to get the bonus while farmers with a complete crop failure will get no assistance.
What about the regulations? Certain sections of the regulations absolutely destroy the principle of the 'bill. Will that be allowed to continue? In this measure we give the minister power to draft regulations that can absolutely destroy the very sections of the bill that we have drafted. What is the good of this house taking all this time to draft sections of the act to deal satisfactorily with

this problem if the minister can pass regulations which will destroy the very sections of the act which we pass? That is the situation. It is true that section 4 as amended will be a slight improvement; but so far as Saskatchewan is concerned, the farmers will be worse off than they are at the present time. The condition in Alberta will be very slightly improved. If on the other hand this measure were put on an individual basis, as I believe it should be, section 4 would become super fluous and be wiped out.
I suppose the minister will say that the reason why this measure cannot be placed upon a really sound individual basis is the matter of expense. It seems to be just another instance of the efficiency of a measure being destroyed by the adherence of the government to the same old deflationary policy, a policy which in the past six years has destroyed practically every measure that we have tried to introduce in this house; it is always the same old story, that the money is not available to deal adequately with any situation. The hon. member for Weybum referred to the fact that there is a danger that this year will not be declared an emergency year, and he suggested that the minister should declare this an emergency year. I should like to see that done; I would be satisfied if the minister would give the committee the assurance that in the event of the average price of wheat being below eighty cents a bushel, this will be declared an emergency year. The act uses the word "may"; if the word "shall" were substituted, there would be no doubt. Section 3, subsection 1, of the act reads:
Any crop year in which the average price is less than eighty cents per bushel may be declared by the governor in council as an emergency year under this act.
So I hope the minister can assure the committee that in the event of the price of wheat being below eighty cents, this will be declared an emergency year.
I shall wait until the other sections come up before I discuss the bill any further.


Mr. NICHOLSON:: Coming from a constituency in which the farmers have not qualified to receive benefits under this act, I should like to make a few comments from their point of view. The farmers have not objected to the legislation which in the first stages required the northern farmers to pay their share of the levies. There are farmers in my constituency who have been farming for the past thirty-five years but would never have benefited under such a measure; yet they have experienced crop failures. Those familiar with western conditions know it is quite common for local showers to make all the

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difference between a good crop and a crop failure. The necessary changes should be made at the earliest possible time so that the benefits might be on an individual basis. When all the farmers are compelled to contribute toward this scheme, they should all have the right to receive benefits if they have a crop failure from any cause.
I should like to endorse the suggestion made by several hon. members that the work should be carried on by the rural municipalities. I have here a return, dated June 11, in reply to a motion moved by the hon. member for Weyburn, and was interested in noting that the rural municipalities recently suggested that they might be able to carry on this work on a voluntary basis. I find from this report that the cost of carrying on this work has been very large, namely, $230,449.81. On the first of nine pages of the return listing the names of the various inspectors we find that these inspectors were receiving wages of $5 a day and most of them received more for expenses than for wages. I am sure that if the municipal secretaries had a part of the sum given to these inspectors, the work of administering the act would be carried on much more efficiently. In my province the farmers have to have a statement from the municipal secretary before they are permitted to sell their grain in the fall. When this statement is being secured would be the logical time for all the evidence necessary in connection with the crop returns to be produced.
I should like to offer an objection to the increase in the number of townships necessary for benefit in Saskatchewan. In appendix 6 of the report of the Sirois commission I find that Saskatchewan has been affected more adversely by drought than the other provinces. Table 3 on page 14 gives the amount spent in the different provinces under the heading of the dominion share, dominion loans to provinces, provincial share, provincial loans to municipalities, and municipal share. I find that for 1931 in Saskatchewan we received 5 millions of the total, while Manitoba and Alberta together received 3-7 millions. In 1932 Saskatchewan received 23-2 millions and Manitoba and Alberta 14-9 millions, and so on; the total for the seven-year period being 113-8 millions for Saskatchewan . and 94-8 millions for Manitoba and Alberta.
I am not complaining about Manitoba and Alberta having an advantage, but the suggestion which is being made that will make it more difficult for Saskatchewan to receive benefits under this act, is not coming at this particular time, in the best interests of the act. I should like to see the number necessary in Saskatchewan remain at the 135 townships which prevailed a year ago.


James Garfield Gardiner: There are one or two
matters that have been referred to about which I should say a word. In order that I may not forget it later, let me deal first with the suggestion which has just come from the hon. member for Mackenzie and which was stated earlier by the hon. member for Qu'Appelle and, I think, by two or three other hon. members, namely, the suggestion that the administration of the inspection under this act should be turned over to the municipalities. One of the reasons given was that the inspection staff as now set up is more or less political.
I remember having quite a heated discussion in this house with the then leader of the opposition when relief was being administered in just that way by the municipal councils and the secretary-treasurers. The then leader of the opposition, supported by some of his followers-at that time he had only one follower from Saskatchewan

said that the municipal association of Saskatchewan was a part of the Liberal political machine. Perhaps that is one of the reasons why we thought it necessary to set up another organization to take care of the administration of this act. We had been accused of using the municipal association and the secretaries in Saskatchewan as part of the Liberal political machine. Now, when we have built up a different organization, a part-tipie organization only, to administer this act, we are asked to turn the administration back to those same officials. I have come to the conclusion that it does not make much difference, so far as the opposition is concerned, what we do, we are going to be accused of playing politics anyway.


Ernest Edward Perley: It might be the lesser of
two evils.


James Garfield Gardiner: In any event the act
has been administered this year by inspectors who were appointed for part time in order to make these inspections.
The suggestion was made by the hon. member for Lake Centre, supported by the hon. member for Acadia, that lands which are hailed out should be given greater consideration. Only one section in the act refers to hail, namely, the section which provides for the building up of relief areas or of crop failure areas in a province. It states that hail is not to be taken into consideration in computing the number of townships to bring that part of the province under the crop failure section. But once a crop failure area is built up, then if it hails in districts that have less than five bushels to the acre, the persons hailed out receive the same assistance as the other farmers. Hail is not mentioned under the emergency section, and if persons in areas
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that are under twelve bushels to the acre are hailed out, those persons receive assistance the same as other farmers living in those townships. It should be remembered also by members of the committee that we have hail insurance in all the western provinces, and any farmer who has the cash to pay the premium can at the present time insure his crop against hail.


Mr. SLAGHT:: They have a splendid new company now, too.


James Garfield Gardiner: My hon. friend says they have a new company, and that is so.


Mr. DONNELLY:: We also have municipal hail insurance.


James Garfield Gardiner: Yes; we have municipal insurance in the west to take care of hail, so there is no real reason why we should set up still another system of hail insurance.
The suggestion was made that we had perhaps gone contrary to the definition of a farmer in our regulations. "Farmer" means a person engaged in farming in the spring wheat area. Hon. members who were here a year ago will recall that this was not the definition first introduced here. That was a definition of a resident farmer, and after considerable discussion and reconsideration it was felt that it was better to define a farmer as a person engaged in farming in the spring wheat area. Then, in the section which gives us power to make regulations, it will be seen that the minister may, with the approval of the governor in council, make regulations excluding from the operations of this act farmers who do not reside upon farms within the meaning of the regulations. So nothing has been done contrary to the intention or meaning of the act. The intention of the act was to have defined by regulation what constituted a resident farmer, and if a farmer was not engaged in farming within the spring wheat area, then he could not receive assistance if he happened for the time being to be living in western Canada.


Thomas Clement (Tommy) Douglas: But that had nothing to do with income; and later, in the interpretation of the regulation, the eligibility of the farmer was based on his income and whether he was primarily engaged in farming.


James Garfield Gardiner: Of course the regulation provided that a man could be a resident farmer if he lived within the neighbourhood where he was farming. "Neighbourhood" has been defined very broadly. It has not been contended that a man has to live on the

adjoining piece of land in order to be considered a resident farmer. He could live in the village and operate his land. My hon. friend shakes his head, but that is so.


Thomas Clement (Tommy) Douglas: Not if he had a job there.


James Garfield Gardiner: If he had a farm nearby and had his home within the village limits he could draw his benefits, and many such farmers did receive these benefits. But if a man were living in a village and running a general store or an elevator; or if he were living in the village and running a full-time gasoline station, even if he did have a farm he was not permitted to collect under this act, and it was never intended that he should. This act was placed upon the statute books in order to make it possible for farmers to establish and maintain homes on farms, and for no other purpose. A home on the farm was defined broadly enough to make it possible for a man to live within the limits of a town and spend his time farming outside those limits. We have in the west many instances of farmers who live in a village in order that their children may go to school. They drive out to their farms, which may be within four or five miles of the village. They go by car, carry on their farming operations and return home for the night, while their families live within the town limits. A farmer who was spending all his time farming under those circumstances would be eligible under this act. But we have had scores of applications from men who were travelling agents for concerns of one kind and another and who happened to own farms. They have written us time after time presenting long arguments as to why they should be considered farmers, and pointing out that they were paying this one per cent. In dealing with the payment of that one per cent, may I suggest to the hon. member for Acadia-


Ernest Edward Perley: Some were paid who had businesses in town and who were operating farms at the same time, were there not?


James Garfield Gardiner: I think there were a few of that kind. There was one gentleman living very close to the town from which my hon. friend comes who was paid $58 more than he was entitled to, and he put that money into an envelope and sent it back. He was one of the honest men who make possible the administration of an act like this. There was another gentleman in the same vicinity, a good political friend of mine, who was not paid. We had some correspondence about that, too; I think we had at least three lawyer's letters arguing that he was entitled to payment, but he was not paid. We have all sorts of instances of

Prairie Farm Assistance
that kind, and probably spread over the area there may be a score of instances in which we think people should return the money they received. Probably on some future occasion we may find a way of getting back some of that money. But, if in making payments to 58,000 farmers we did not make any more than one hundred mistakes, I think we were fairly successful in administering an act of this kind for the first time. So far as I know, there never has been an act similar to this on the statute books of any other country. This is the first time it has been attempted; and if we were able to pay 58,000 farmers an average of approximately $175 each without making more than a hundred mistakes, even though it may have taken seven or eight months to complete that operation, we have proven at least to our own satisfaction that this act can be made to work.
I was going to say that the hon. member for Acadia has shown some concern as to the individual farmer in some of these areas. He has been more concerned about having this act applied on an individual basis than perhaps some others who have spoken. We went over all that a year ago when we were putting this legislation through. We threshed the matter out; we argued it back and forth, but during the year we have found by experience that the arguments against putting it on an individual basis are very much stronger than the arguments in favour of doing so. One reason for saying that is to be found in the figures I gave a moment ago. I stated that about 58,000 farmers had received benefits under this legislation. The exact figures as at July 9, 1940, show that we paid 57,874 farmers in 1,889 townships in the three western provinces, at a total cost, in those provinces, of 89,763,186.21. Among those 57,874 farmers there may be 100, more or less, who were not properly farmers according to the definition contained in the regulations. Those were mistaken cases. Some of them we have written to, and received money in return; and some of them have not returned the money.
But the point I wish to make is this, that when we summed up all of the questionable cases early in the month of January, there were less than eight thousand questionable cases, affecting individuals. It did take a considerable time to deal with all of those questionable cases, because they concerned families of three or four. In some instances there were three or four male members in a family, each of whom claimed to be farming his own land. They included instances where men were running small businesses in towns, and operating farms outside those towns. They included instances of persons who were engaged professionally, and
at the same time were operating farms. And so on, all along the line, we had those matters to contend with.
We had to reinvestigate those cases. We had to get declared statements from some of them. In some instances we had to examine the municipal accounts to find out who did do the business in connection with a farm. We had to examine elevator accounts. In some instances we had to go to the merchants to find out who paid the bills. Finally we worked it down to a point where, we think, we did not make many mistakes.
Then, something has been said in regard to inspection.


Victor Quelch: Even though there may not have been many mistakes, I think the minister will agree that there were many farmers in the west who threshed considerably less than twelve bushels to the acre, and yet were not eligible for support under this act.


James Garfield Gardiner: The hon. member for Qu'Appelle led me away from that line of thought, a moment ago. I was going to reply to that suggestion. My hon. friend raised two questions, the first of which was why we did not pay individuals who happened to be on comparatively light land, living in some townships which had grown twelve bushels to the acre; and why in other instances we paid individuals living in other townships who had grown more than twelve bushels to the acre.
I believe I can best answer that by referring to what I said at the beginning of the discussion some days ago. I have with me to-night the records for three years of all the municipalities in Saskatchewan which received assistance under this act last year. I would point out, first of all, that in the whole of that province there are only two municipalities which got assistance under the act last year, which did not get assistance from the province by way of direct relief.
There has been considerable discussion as to whether or not Saskatchewan paid relief last year. The records show there are only two municipalities in the whole province which got assistance under this legislation, which did not get assistance from the province as well.


Thomas Clement (Tommy) Douglas: Not all the time, though.


James Garfield Gardiner: Through part of the year.


Thomas Clement (Tommy) Douglas: Part of the year, yes.


James Garfield Gardiner: They never did get assistance all the time, unless they had complete crop failures. That answers the question raised by the hon. member for Acadia. This legislation was never intended to take care
Prairie Farm Assistance

of all the relief responsibilities of all the governing bodies in the western provinces. This legislation was intended only to take care of the responsibilities of this government. The municipalities took care of the individual case which happened to be in a municipality. I am referring to instances where there were only one or two cases in the midst of a township which had a comparatively good crop. The councils were able to collect their revenues, and were able to take care of the one or two individuals who happened to come under their charge. I't was their responsibility to do so. If, under the provincial legislation which provided for taking people off light or sub-marginal lands, they permitted those lands to be farmed, then they had some responsibilities in the matter. Om the other hand, when the responsibility became too great for the municipalities to handle, the province came to their help. I could read to hon. members a list of municipality after municipality which received help from this government under the Prairie Farm Assistance Act, in various amounts of thousands of dollars, by way of relief.
That was given in order to take care of those small groups of half a dozen or a dozen in a municipality who did not come under this act or who during the early part of the season had not received any assistance under the act, and therefore still required some help from the province.
There is another point raised in this connection. Here we have an individual who is required to pay one per cent on his comparatively small crop. Probably he gets nothing, 'because he is in one of the townships which is not included. On the other hand, over there we have another individual with a comparatively high yield, but who may be in another township the general yield of which is less than twelve bushels to the acre. That man will receive payment. I think in all instances last year persons with comparatively high yields lived in townships that had somewhere from five bushels to the acre, upwards. There would be very few instances- in fact I do not recall any-where persons had twenty or thirty bushels to the acre in townships where there was a crop failure. Those instances are practically all in the areas ranging from eight to twelve bushels to the acre. So that the most an individual could draw would be one dollar an acre on half his crop acreage, with a limit of $200.
I shall attempt to make the calculation easy. If a man had twenty thousand bushels of wheat, and wheat was a dollar a bushel, at one per cent he would pay in $200. That is all he could draw out. So the man with 
twenty thousand bushels of wheat would not really draw anything out of the treasury of Canada. He would put in $200, under those circumstances, and draw out $200. Last year it would be only $140. He could draw out $200.


Thomas Clement (Tommy) Douglas: He would draw out less if he had three thousand bushels?


James Garfield Gardiner: If he had three thousand bushels he could not get more than $200. That is partly dealt with this year in the amendment to the legislation, as will be indicated as we go along.
But here is another instance of a mam living in the middle of the township, who has twenty bushels to the acre of wheat. But he has only forty acres of wheat. He put it on the best land he had. The land had been summer fallowed the year before, and was probably fertilized. On that land he happens to grow twenty bushels to the acre. He probably has three or four hundred acres of oats and barley. Any stubble land he had he seeded in oats and barley. If it is a dry season and he is going to be hurt, he suffers more on the stubble land than on any other. And every hon. member in the committee from western Canada knows that last year farmer after farmer had twenty bushels to the acre of wheat and had no coarse grains at all. A farmer could have twenty bushels to the acre, on a very small acreage, and have no coarse grains at all, and not be as well off as a man with ten bushels to the acre alongside of him on a wheat acreage, when he had sown some of his stubble ploughing to wheat, as well as his summer fallow. That is known to every man who has farmed in western Canada.
In other words, under this act we are not paying on wheat at all. Every man who has studied the act knows that we pay, even if a man grows no wheat at all. If he grows all oats or all barley, or part oats and part barley, if he grows feed grains only he can draw just as much as he could draw if he grew only wheat. Wheat is used in the townships only as a measuring stick. And men with experience in western Canada know that, generally speaking, what happened last year was an exception. As a general rule, when the wheat crop is poor throughout an area, any other crop is also poor.


An hon. MEMBER:: Poorer.


James Garfield Gardiner: Poorer, as a rule. Last year was the exception because wheat was a little better than coarse grains and some farmers suffered as a result. What I am pointing out is that it is not always correct to say that because a man has a yield of twenty bushels to the acre we are not treating

Prairie Farm Assistance
hi>m properly when we pay him at the same rate as we pay his neighbour, because he may be farming in an entirley different way. If he is raising live stock and growing coarse grains in order to feed them; if he has a little patch of wheat and happens to have a good crop, if we wanted to check him individually we would have .to check all his farming operations. In order to check the live stock and coarse grains sales of the 58,000 farmers, when nine out of ten do not keep any accounts, it would take us perhaps the next three or four years and I doubt if one-tenth of the payments would be made to date.


Thomas Clement (Tommy) Douglas: You do not take the live stock into consideration now.


James Garfield Gardiner: We take live stock into consideration when we check a township. A farmer who had live stock last year in an area which had ten bushels of wheat to the acre, but who had no coarse grain, had to go out and buy coarse grains or sell his live stock. A farmer with live stock and wheat but no coarse grains needed assistance even more than a man who had a crop of eight or ten bushels to the acre but no live stock. This bill is not intended to make payments only in connection with the growing of wheat; wheat is used as the measuring stick.
A good deal has been said with regard to collecting money from persons who can never expect to get it back. I said the other night that if this legislation had been in effect for the past eighteen years-I think this will answer what was said by the hon. member for Weyburn-in thirteen of those years the crop failure sections under the 135 townships provision of last year would have been brought into effect.


Thomas Clement (Tommy) Douglas: How many under this bill?


James Garfield Gardiner: I am not certain; I have not checked that. It would be a lesser number, but I do not think very much. I checked up further and found that the act would have been in force in fourteen out of twenty-one years. Then, in five of those years the emergency sections would have been brought into force because the price was under eighty cents. In those eighteen years we would have paid out $180,000,000, and through the one per cent levy on the marketed grain we would have collected $31,000,000. In other words, we would have paid out almost $6 for every $1 collected. We knew that when this bill was introduced this year. When the legislation was being put through last year, the former leader of the opposition, Doctor Manion, asked me what the average payments would be, and I said they would run from $10,000,000
to $15,000,000 a year. Last year it worked out to between $9,000,000 and $10,000,000, and that year was an average year.
He asked also what would be collected under the one per cent levy, and I said it would run from $1,500,000 to $3,000,000, the average being around $2,000,000. Last year we collected in the neighbourhood of $2,000,000 and paid out something over $9,000,000. My hon. friend asks why a farmer who is never going to be able to collect should be charged one per cent. This question was put to me in Manitoba during the election, in a municipality where they have never had a crop failure. They wanted to know why they should be asked to pay one per cent when they had never had a crop failure, did not expect to have one and would not hope to be able to collect under the legislation. I replied that we had asked the farmers of western Canada to pay about one-sixth of the amount necessary to carry this plan, while the people of Canada, including the farmers, were being asked to pay $5 for every $1 the western farmer was being asked to pay. I said "Suppose I go to Toronto or Montreal and tell them that the farmers in western Canada who grow good crops every year refuse to pay the one per cent, do you think those fellows will put up their $5?" They admitted that was clear enough. They realized that those who were successful were being asked to assist others through the difficult years when they were learning how to live in certain sections of western Canada.


Ernest Edward Perley: Is there any other industry where the government asks them to do that? Is there any other industry where the government asks them to do just what the minister has now outlined?


James Garfield Gardiner: I am afraid my hon. friend has not got my point. He should ask first:	Is there any other industry which
receives support from all the people of Canada in order to carry it through the difficult years? Under this plan, if it had been in operation for eighteen years, all Canada would have paid in $5 for every $1 collected under the one per cent.


Ernest Edward Perley: Is there any provision for that to be paid back?


James Garfield Gardiner: No; there is no provision for that to be paid back.


Thomas Clement (Tommy) Douglas: It is only about $4 for $1 this year.


James Garfield Gardiner: The farmer puts in one per cent which starts the fund. It might happen that a time will come when the fund is large enough to warrant payment back,
Prairie Farm Assistance

but judging from the experience of the last eighteen or twenty-one years there is no possibility of that happening. The only way in which it might be done is to follow the suggestion of the hon. member for Acadia. He has said that the farmer would not object to paying two or three per cent, but I suggest that it would have to be five or six per cent in order to take care of the whole amount being paid out under this scheme.


Victor Quelch: Provided that account was taken of the drought areas of western Canada. Speaking in this house two years ago, the minister admitted that we have a direct responsibility for the condition which exists in the drought areas. Therefore we should expect to make a grant to those areas.


James Garfield Gardiner: My hon. friend is simply advancing my own argument, but that is not the argument he used a moment ago. He was arguing that the farmers who have crops were assisting the farmers who have no crops. I am pointing out that many other people in Canada are paying into this scheme than the farmers who have good crops. People all across Canada are paying into it for exactly the same reason as that given by the hon. member for Acadia. They are paying in because they believe that the wheat industry of western Canada is of sufficient importance to the whole of Canada to warrant their seeing to it that the farmer has an opportunity of establishing himself in his home on his farm. We have managed to persuade them to do that. I think those are most of the criticisms which were made.
One other matter I want to deal with is the inspection itself. The hon. member for Qu'Appelle described one of the inspector's activities. He said that the inspector took a square of the crop, took the heads off, took them home and threshed them. I would suggest to the hon. member that that is pretty much the method which is followed in checking hail damage in western Canada. A man takes a hoop, throws it out into the field, then counts the heads inside the hoop and counts the number damaged by the hail.


Ernest Edward Perley: Fifty yards away in the
same field he would not have found any heads.


James Garfield Gardiner: Perhaps so, but if he did the job properly he would go over the field and take those squares at a sufficient number of places to give him the average wheat crop in that field. I am going to say this: Every inspector was asked to do that, and most of the inspectors did do it. Then we checked and found out that it had not been 
done carefully enough to be very useful. So that was discarded. Again I say that we are experimenting more or less with this legislation. There are probably only three men in western Canada and probably only a dozen or so in the United States who have made a life work of checking crops, and I think there are only three or four who have made enough of a reputation by it to have themselves employed by the great grain companies for the purpose of checking and estimating crops. These men travel through the whole crop area every year and they do estimate the crop very closely.


Ernest Edward Perley: There is one woman whom the minister forgot to mention, Miss Hind.


James Garfield Gardiner: Yes, Doctor Hind has
been doing it for many years and has been very successful, too. But I am pointing out that there are very few who have had that experience in checking crops, and we selected the best men we could get. I venture to say that there were not a dozen of them whom I knew personally. We had to take people's word whether or not they were capable of doing a job of that kind, and we took the recommendations of persons who were supposed to know. These men then went out and did the job, and I would point out to the committee that in spite of the fact that this legislation was new and had never been tried out before, out of 1,913 townships that were finally passed for payment on July 9, there were 1,535 about which there was no question at all. They were passed by all those who checked them-1,500 out of about 1,900 townships. I would say that if 159 inspectors can go out and check about 1,900 townships, and 1,500 of those townships are passed by the officials who checked them, the inspectors were not such bad inspectors, and we must remember it was the first year in their experience.


Charles Edward Johnston: It does
not necessarily follow that they were such good inspectors, because the final checking did reject some of their findings. It may be that there was overchecking.


James Garfield Gardiner: I come back to the
point I urged a moment ago. There has been considerable urging that I should make this an individual matter. These inspectors could drive through most of those 1,500 townships and gauge the crops as being, let us say, under five bushels to the acre in 260 townships, under eight bushels to the acre in a number of others, and no one would question it. The townships about which the hon. member for Qu'Appelle was talking were like the townships in my own constituency.

Prairie Farm Assistance


Ernest Edward Perley: I would suggest that the
minister and I were unfortunate in the inspectors sent to our districts.


James Garfield Gardiner: No, I do not think so.
We were in exactly the same position as the hon. member for Acadia. He was on the boundary line of the drought area; so was I; so was the hon. member for Qu'Appelle; and when you are on the boundary line you have all the questionable townships, like the townships he was speaking of, with 11-8 bushels to the acre. Is there any hon. member who would go to any township in Canada and take an oath that he could come within four points, four-tenths of a bushel, of the yield of that township?


John Ritchie MacNicol: It is two-tenths, is it
not?


James Garfield Gardiner: Yes.


Ernest Edward Perley: That was the fourth inspection.


James Garfield Gardiner: We had to make more
than four in some instances, and some we have not decided yet.


Victor Quelch: Could the government not
give the farmer the benefit of the doubt in those instances?


James Garfield Gardiner: He was given it in most instances because this is what happened. We started out, as the hon. member for Qu'Appelle has said, with the idea that we would make these inspections; that the result of them would be sent in to the central office in Regina, and that the central office in Regina would send on their recommendations to Ottawa. At this point I should like to explain to the hon. member for Souris that the only reason for the difficulties which existed in Manitoba and of which he spoke was this. When the director at Regina got his reports he had not been properly instructed from here, and he took it for granted that he had the right to make the decision. I was on the train between Ottawa and Toronto when I picked up the paper and noticed that the townships in Manitoba had been announced. I immediately telegraphed the director, telling him that he had no right to announce them, that he could not make the decision, that the act said that the minister had to make the decision, that the minister in that sense was the deputy minister at Ottawa, and that all the director had the right to do was to make recommendations to Ottawa, where his recommendations would be checked and decisions given accordingly. When these recommendations were checked, some of the townships he had recommended were not accepted. In other words, he did just what 95826-137
the hon. member for Acadia suggested a moment ago; he was inclined to give the fanner the benefit of the doubt. But the authorities here, the treasury authorities, said, and quite properly, that no one getting more than twelve bushels to the acre can be paid. If it is shown that the yield was a fraction of a bushel over twelve bushels to the acre, then under the law the bonus cannot be paid, and the auditor would not pass it. So all the recommendations had to be checked. When I returned to Ottawa we discussed the matter, and I suggested that in view of this mistake-and others said the same-we had better appoint an independent committee to do what the act had said the minister might do through the officials of his own department.
For the benefit of the hon. member for Lake Centre, may I say this. We took, as one of the members of that committee, the financial representative in the Department of Agriculture, the man who had been checking the records all the way through. Then we took the secretary of the wheat board in western Canada, which the hon. member said should be represented. He was the statistics official for agriculture in the Department of Trade and Commerce. We put him on the committee. Then we went up to what at one time was the home city of the hon. member for Lake Centre, Saskatoon, and we took Professor Hope out of the university of Saskatchewan, a man whose activities are partly financed by this government. We therefore took three men of the very type that has been suggested we ought to have-not men who were going to cost the government something more, but men who were already in the employ of the government, and we asked them to check these reports. I admit that if we had done this earlier in the season, that if we had been checking all the way through, there would not have been the delays which did develop.
That is the reason why we have a provision in this bill for a board to be set up, and this board will be set up immediately after this legislation passes. It will consist of officials already being paid by the government of Canada. This is not, and it could not be, a board in the sense in which we often speak of boards. There is no reason for having a continuous board operating throughout the year. The board is only required for three or four months while the work is being done, and we consider that we should have officials of the government doing that checking. So *that what we have in mind conforms with the views expressed a few moments ago. The men whom the hon. gentleman was criticizing are not in my department and I am not in a position to answer what was said this afternoon with regard (to them. I should expect
REVISED edition
Prairie Farm Assistance

that they would have considerably more to do than was indicated by what they did in inspecting four or five or half a dozen instances of the type stated. They must have more than that to do or they would not be paid the salaries they receive. But there is a possibility that one of these men could go on this board and do that kind of work. In other words, we shall be selecting men from among our employees somewhere to make these checks in order that it may not be said that they are political checks.
In answer to what was said by the hon. member for Qu'Appelle, I might point out that the deputy minister of agriculture at Ottawa was not appointed by the present government. He was selected by the previous government, and I wish to say this for the previous government, that they picked one of the best men they could find in Canada. I do not know anything about his politics, but I would doubt very much whether he has party affiliation.


Ernest Edward Perley: I was not complaining of his action as a political action. I said that when he was communicated with from Regina in this regard he might have telegraphed to some other person than he did.


James Garfield Gardiner: I do not know the particulars, but I should think that if Doctor Barton communicated with Mr. Fred Dundas, the local member, it would be because Mr. Dundas telegraphed him and asked him for information. I doubt very much whether the deputy minister of the department here would know Mr. Dundas was a member of the local legislature. I would be aware, from what I know of Mr. Dundas, that he would be busy in connection with anything that had to do with his constituency, working all the time.


Ernest Edward Perley: In this instance he said he did not know why they telegraphed him because he had not made any representations.


James Garfield Gardiner: I was not here, as the hon. member said. I was in the west, and the story is new to me.


Ernest Edward Perley: I will give the minister credit. We did get action afterwards.


James Garfield Gardiner: I know all the parties, and I do not think the present deputy minister of agriculture at Ottawa would allow politics to interfere in any way with any judgment he might make in connection with ithe administration of the act.


Ernest Edward Perley: I did not charge that at all.


James Garfield Gardiner: I think that is all I wish to say in a general way in connection with the measure. As we go through it we shall find that most of the difficulties mentioned in the discussion have been taken care of as well as it is possible to cope with them after one year's experience. Probably when we have had another year we may be able to correct some other difficulties that may arise as we go through the year.
There is one other point raised by the hon. member for Weyburn, but it has slipped my mind for the moment.
Mr. NICHOLSON. I asked the minister a question regarding the reason for the change to 171 instead of 135.


James Garfield Gardiner: As I stated the other day in introducing the resolution, we took 135 last year. Wre were absolutely sure when taking it that Saskatchewan would be in. Saskatchewan had 260 townships, so that it did not make much difference what we took, but we took 135 at that time. We took the figure 100 in Alberta because we were practically certain at the same time that Alberta would not be in the crop failure area. We had the same idea with regard to Manitoba and it turned out to be correct in all three provinces.
I said at the time that the matter was experimental, that we would experiment with it for one year and arrange about the number of townships in the next year which would be fair to all. This year we have taken fifty-four for Manitoba, 171 for Saskatchewan and ninety for Alberta, believing that these, as nearly as we can draw the line, indicate where it ought to be drawn as among the three provinces.


Alexander Malcolm Nicholson: How did the minister arrive at 171?


James Garfield Gardiner: In its relationship to Alberta. It is about double what Alberta is- not quite double-and Alberta is not quite double what Manitoba is. That is based largely on the areas which are usually afflicted by drought.


Thomas Clement (Tommy) Douglas: There are one or two matters upon which the minister has not touched. His explanation why we could not use the municipal set-up does not really hold water. The fact that it would turn to what someone in past days suggested was a Liberal machine does not meet the situation. Why build another one, then, if that was the situation? The fact remains that it could be handled through the municipal offices by a declaration made by the farmer in the spring and in the fall. In the new department which the minister has taken over, a great appeal is

Prairie Farm Assistance
being made throughout the country, and is being responded to everywhere, for voluntary action. The people will not take kindly to appeals for voluntary effort on the one hand, and on the other for an expenditure of $200,000 and more for inspectors to go out through the country as they did last fall.
With reference to the regulations, although the minister touched very well upon some points, he did not deal with the whole situation. It is true that the act bases the definition of "farmer" upon residence, but my point was that it did not base the definition of "farmer" on his income or the proof that farming was his primary occupation. As a matter of fact, many men were eliminated from the benefits of the act who actually did farm, on the ground that during a part of the year, in the winter, they operated a blacksmith shop or something of the sort. The onus was put upon them to show that farming was their primary occupation and blacksmithing secondary. In some instances the application was granted, and in others the opposite view was maintained.


James Garfield Gardiner: It will be found that the mistakes were made early in the season before the defining of the regulations was done at all. The defining was done because the mistakes were made, and explanations were sent out to all inspectors in order to see that these mistakes would not be repeated. At first some of the inspectors would say that because a man had a filling station in his front yard along the highway he was not entitled to payment. Another inspector would say that because a man was elected a delegate to the wheat pool he was not entitled. Still another inspector would say that although a particular man was blacksmithing in town, he had a farm, made most of his money on the farm and therefore should be paid. They had to define the dividing line sooner or later in order to get the cases properly settled. I admit that mistakes were made; it could not be otherwise.


Thomas Clement (Tommy) Douglas: That is natural. But it was a fact that a man who had three hundred acres in a non-bonus area was eliminated despite the fact that he might not have four bushels to the acre.


James Garfield Gardiner: It was assumed that
since the township was out, the responsibility for taking care of people in that township was laid on the municipality or the province as a result of the township being out. It was said that if a man lived in the township and had a half-section of land in that area, it was to be presumed that he was as well able to take care of himself as anyone else living within that area. That was the basis on 95826-137*
which it was done. I admit that there were some difficulties in connection with the administration of that regulation, and there will probably be an attempt made to change it this year. It is partly dealt with by the amendment in the bill which limits the amount on which a man can draw to three thousand bushels provided it is not over eight bushels to the acre.


Thomas Clement (Tommy) Douglas: The burden of the minister's argument lies in the fact that the people of Canada are paying, I think he said, five to one in this scheme. Actually it does not work out that way when we consider all the facts. Last year it worked out, I think, about four to one.


James Garfield Gardiner: Yes, four to one last year.


Thomas Clement (Tommy) Douglas: About $9,000,000 was spent and the farmers contributed $2,165,321. But may I remind the minister that while it is true, as he says, that those municipalities which did not come within the ambit of this act were supposed to receive provincial relief, in the drought areas of western Canada in the last few years provincial relief has been negligible. The important thing has been the emergency relief that has come from this parliament. I think it was about $13,000,000 last year and an even larger sum the year before. $18,000,000 if I remember correctly; very large sums from the dominion treasury to take care of the people in the drought area. When this bonus was paid, it is true the farmer was getting $4 for every $1 he put in, but the emergency relief was no longer paid.	-


James Garfield Gardiner: Let me give the figures on that. In the year 1937-38 the direct relief in these same municipalities that got assistance last year-not all in the province-amounted to $8,202,753.31, and they got $7,233,289 for feed and fodder. In 1939 the amount for direct relief was $5,157,000, and for feed and fodder only $432,000. For last year for the same municipalities direct relief was $1,298,000 and nothing for feed and fodder.


Mr. GERSHAW:: I point out that relief was a big factor in the administration of the act, and a hardship came about in this way. The municipality and the province would say to a man, "If you got more than twelve bushels to the acre you do not need relief and if you got less than twelve bushels to the acre you will get the bonus." The result was that the poor fellow could not get relief and he came up for investigation and in the end did not qualify, so he really suffered greatly on that ground.
Prairie Farm Assistance


Mr. ROSS (Moose Jaw):: Suggestions have been made from the other side of the house that the municipal secretaries should check up the average yield by getting a statement from the farmer. That, of course, would mean that no statement could be got until after all the threshing was done, and there have been many years in western Canada when the crop stood out all winter, the farmers being unable to thresh in the fall. If the matter is to be left to a system of that kind, some people will not be paid their bonus at all.


Victor Quelch: If the crop is going to stand out all winter how can anyone estimate what it will be? By the time the spring comes there will be no crop.


John Gordon Ross: Some apparently did not follow the system of estimating the crops under this act last summer at all. Some did. The system used was that when an area was found to be failing in crop, as soon as possible inspectors were sent in to judge the yield of the standing crop. When hon. members say that a municipal secretary can do that, let me say that the men who went out as inspectors started soon after daylight in the morning and worked steadily until dark at night-


Victor Quelch: Sometimes I think they went after dark too.


John Gordon Ross: No they did not. I watched this very carefully all the time this acreage bonus business was being inspected last summer; I watched the job that the men had to do from the Regina office, and the inspectors did an excellent job in western Canada last year. Surely hon. members will be fair enough to admit that in the early part of the season it looked as if there were going to be a very good crop over practically the whole territory except the region in which the hon. member for Weybum and the hon. member for Assiniboia are located. The crop looked good until well on into July. Under the act only a small office staff, a small number of supervisors and inspectors, was provided to handle what looked to be a small area of dearth. Then late in July hot winds came through that part of the country and in a very few days much of the crop was ruined. Suddenly there was thrown on that office in Regina the task of trying to get supervisors and inspectors to cover a large territory. That was done to the best of their ability, and they did a really good job.
These inspectors went out-and I know it because I saw them working-and drove from early in the morning until dark checking the crop through the area. Some hon. members 
say, "Well such and such a field was not looked at." Of course it was not; the township average was what was being looked for. If a man went through a township taking pieces of land at regular intervals on the roads north and south and east and west, he would get the average yield of the township, and that is exactly what was done. At least fifty pieces were inspected in each township. The inspectors did not go to look for a good crop or a bad crop; they took definite distances between each check and thereby they got the average of the standing yield of the township. It is not hard for an experienced man to ascertain the yield from a standing crop. The minister said there are some men in western Canada and some in the United States-


Charles Edward Johnston: Three in Canada and eight in the United States.


John Gordon Ross: There may be more. These are known and noted men; I know some of them myself, I have travelled throughout western Canada with some of these men who make it their business the year round to inspect crops.


Thomas Clement (Tommy) Douglas: But they are not listed here..


John Gordon Ross: No; surely the hon. member would not expect to get that type of man.


Thomas Clement (Tommy) Douglas: That is
exactly the point.


John Gordon Ross: The men they got did a very good job, because when this board of supervisors, who gathered a great deal of reliable information from many sources checked the work of these inspectors they found that in at least nine cases out of ten the inspector was correct in his yield. I believe that they did a remarkably good job for the first year that they were on this work. What municipal secretary could spend all day long for at least two weeks driving through the townships in a rural municipality? If I know anything about the municipal secretaries in western Canada, they have more work to do now than they can do in the hours they have to do it.
The crop was inspected by these men in the fall. A second inspection was made, the hon. member for Qu'Appelle said, by using a square yard and determining the number of heads and the yield per acre in that way. But a remarkably good job was done, and in most years I believe that is the fairest and best way to get the yield in western Canada. From practically thirty years' experience in farming in western Canada I would say that this last year's crop was the worst crop we ever had to estimate in any way. We

Prairie Farm Assistance
had a high crop, with plenty of moisture in the early part of the season; a tall, luscious stem, and a root system that never had to go down for water. The result was that when the heat hit the crop, the stems were cooked. There was not a big enough root system to bring up subsoil moisture even if it had been there. Therefore many crops that looked good from the road were not good, because they had been considerably damaged by the heat. These men had the hardest crop to estimate that was ever estimated in western Canada, yet they did a remarkably good job of it. With regard to political action by these men, I want to state that they did not have time to talk to anybody, and they did not go in to talk to people while that inspection was proceeding, at least I never saw them doing so. They were inspecting field after field through the township; they had to cover the ground as rapidly as possible, because the crop was being ruined very quickly and the inspection had to be made within a few days. I think with the experience the department has had in this matter, and with the assistance of this board of supervisors, the system used last year will be followed again, and I believe it will work out well as. to my certain knowledge, it worked out last year.


Victor Quelch: There is just one point on
which I should like to comment. In the attempt to build up an argument against payment of the bonus on an individual basis the minister has repeatedly stated that the people of Canada have given six cents for every cent the farmers have given. That is not a statement of fact, as the minister must know.


James Garfield Gardiner: On a point of order, Mr. Chairman, I did not make any such statement. I did not say the people of Canada had paid six cents for every cent the farmers had paid. I stated that if the act had been in effect during the last eighteen years the people of Canada would have paid $5 for every SI the farmer would pay under it. I did not say he had paid anything.


Victor Quelch: The point is not whether
it is five or six.


James Garfield Gardiner: The point is that I did not make the statement.


Victor Quelch: They are not giving it;
that money has been advanced as a loan *which is to be repaid. That is specifically stated in the act, which I should like to read to the minister.


James Garfield Gardiner: I know what is in the act.


Victor Quelch: I will read it, because if
it is not meant in that way let us change it and make it a grant instead of a loan. Subsections 8 and 9 of section 6 read:
(8)	If at any time the fund is insufficient to pay awards made under this act the Minister of Finance may, out of unappropriated moneys in the consolidated revenue fund, with the approval of the governor in council, make an advance to the fund of the amount required to meet the deficit.
(9)	An advance made by the Minister of Finance under this section shall be repayable out of the fund without interest.
The money is to be repaid out of the fund. I would remind the minister of the statement made in this house last year by the then Minister of Finance, who said that if the next twenty years should be similar to the last twenty years he could see the basis for a considerable fund under this act. I do not believe he would make a statement of that kind without due thought. He must have had a reason for making it, and I suggest that reason was based on section 3 of the bill, the very point to which the hon. member for Weyburn referred. Section 3 states:
Any crop year in which the average price is less than eighty cents per bushel may be declared by the governor in council as an emergency year under this act.
Every year is not going to be an election year in Canada. I do not for a moment doubt that there will be years, when the average price is below eighty cents, when we shall not have an emergency year declared, and thereby it will be possible to build up a fund to repay advances made by the people of Canada. That is why I asked the minister if he would guarantee that in the event of the price being below eighty cents, this would be declared an emergency year. The minister has not answered that question. Is he prepared to give that assurance? I should like very much to hear it.


James Garfield Gardiner: That was the question
raised by the hon. member for Weyburn that I could not recall a moment ago. I can only say that the bill provides that if the average price of wheat between August 1 and November 1 is under eighty cents, then the government may declare the year to be an emergency year. That decision cannot be made until November. I am not in a position to state what the government will do in November. I am not in a position to state what will be the price of wheat or what conditions will be. I can say, however, that when the month of November rolls round, the matter will be given consideration by the government; and I think it can be
Prairie Farm Assistance

said of the government so far that usually they have dealt with matters of this kind in a fair way.


Alexander Malcolm Nicholson: Why was the announcement made a year ago?


James Garfield Gardiner: For the reasons stated
a few moments ago, that we had suffered ten crop failures. That was one of the reasons why we were not so careful last year in making payments to people who had large crops and large yields. We thought a man who had suffered ten crop failures was entitled to benefits under this legislation for at least one year, even with a good price; but we said that after one year that would not be the practice. The situation previously had been met through the payment of the eighty cent price, with a bonus averaging eighteen cents a bushel, and we thought some further assistance might be given through these payments. We have done that for one year. Now we are leaving the act as we passed it last year, and it will function in this way during the years to come.
To get back to the hon. member for Acadia and his suggestion as to there being money in the fund with which to pay back the advances made by the government, apparently I did not make myself clear. I stated that if the act had been applied exactly as it stood, taking only as emergency years those years when wheat was less than eighty cents a bushel; and if one took into account the years when the crop failure section would have come into effect, then the farmers would have collected $180,000,000 and would have paid in only $31,000,000.


Victor Quelch: If the five years had been declared emergency years.


James Garfield Gardiner: Yes, and I do not think there would have been any doubt about those years being declared emergency years, because one of them, 1937, cost us $28,000,000, and it could not have cost us any more under this measure.


Thomas Clement (Tommy) Douglas: Part of the minister's answer goes back to the point he was making in his earlier statement. The veiy fact that wheat being below eighty cents a bushel does not automatically declare a year to be an emergency year is the point which has been at issue in most of the discussion to-night.


James Garfield Gardiner: The provision with
regard to less than five bushels to the acre does not operate automatically either. The government has to pass an order in council in each case.


Thomas Clement (Tommy) Douglas: That is true, but this could be made to apply automatically. Earlier this evening the minister took the case of the farmer in good territory and said he must be prepared to pay into this fund because it is a general scheme of all the people. The farmers of Canada do not mind doing that, but the farmers in the good areas, where they have had fairly good crops over a long period of years, are not likely to come within the crop failure scheme under section 4. But there is a fairly strong probability that some year they may come under the emergency plan under section 3. As the minister says, in eighteen years there have been five years during which they would have come under it by virtue of the fact that the price was less than eighty cents. But then they would come in only if the government passed an order in council. I am inclined to think, with the hon. member for Acadia, that if the word "shall" were substituted for the word "may" it would clear up the matter. These men then would know that after paying a one per cent levy year after year, if at any time their township had an average yield of twelve bushels or less, and the price of wheat were less than eighty cents, they would automatically come under the scheme. But they have no such assurance. The very year in which they have no crop, and in which there is no crop in their township, may be the very year in which the government decides not to declare that year an emergency year. The point raised by the minister answers his own argument.


John George Diefenbaker: 
Charles Edward Johnston: The minister pointed out that last year was declared an emergency year because there had been a crop failure for the preceding ten years, and that that was why people who had thirty bushels to the acre received a bonus, in addition to the price they got for their grain. That was the reason he gave for not paying more to those fellows who had a bad crop. I would point out that right there is one of the unfair features. Surely those men in the areas which were not declared under the act, but who did not have a crop at all, had a greater right to receive aid than those men in the dried-out areas who had thirty bushels to the acre.


James Garfield Gardiner: They did.


Charles Edward Johnston: That is an unfair situation, and there should be a change.


James Garfield Gardiner: I think we have already carried out the undertaking. I would suggest that hon. members should not make three or four speeches on a general section. Those matters should be left until we come to them in the bill. We have had a general discussion.


Alexander Malcolm Nicholson: I should like to pursue the question of declaring this an emergency year.


James Garfield Gardiner: I have already dealt with that.


Thomas Clement (Tommy) Douglas: I understood the minister to say that this board of review would be a board of departmental officials. Would they sit here in Ottawa?


James Garfield Gardiner: They might sit in
Ottawa. Last year they sat part time in Regina and part time in Ottawa, depending on what they were considering. If the matter under consideration required calling people from the area in question, they sat in Regina, and if it required taking up matters with the treasury, they sat in Ottawa.


Thomas Clement (Tommy) Douglas: It would be well to have them sitting in Regina the greater part of the year. Last year some townships were passed and were then referred to the board of review in Ottawa. There was a good deal of feeling that they were being turned down by men a long distance away who were not familiar with local conditions and problems.


Ernest Edward Perley: Since the first payment is made in December, I believe it would be advisable for the board of review to sit in Regina in October and November, when the survey is practically completed.


James Garfield Gardiner: That is about the time it would be required to sit.


[Stage Direction]
Section agreed to.
On section 3-Computation of sum awarded as assistance.
Mr. CASGRAIN:: I move:
That subsection 2 in section 3 of the bill be amended by deleting the word "unorganized" in the fifth line thereof and substituting the word "other" therefor.


James Garfield Gardiner: "Unorganized" is intended to cover local improvement districts, but there are some districts that are not local improvement districts and not municipalities; so we used the word "other".


[Stage Direction]
Amendment agreed to.
Thomas Clement (Tommy) Douglas: This is the section which has to do with the emergency year. In view of some arguments advanced last year, which need not be repeated, would the minister give consideration to making 1940 an emergency year?


James Garfield Gardiner: The matter has been discussed, and it has been decided to leave the bill as it is this year.


Alexander Malcolm Nicholson: Last year the bill was passed on June 3. As the minister pointed out, we had had ten crop failures, and for that reason an emergency year was created. In the present instance we have had eleven crop failures, and it is now July 30. On Saturday I crossed Saskatchewan on a train, and I saw farmers cutting crops with their mowers in what were obviously crop-failure areas. In view of the lateness of the season I suggest that something should be done.


James Garfield Gardiner: A few minutes ago I corrected a statement made by one hon. member. I did say a year ago that one of the reasons for the declaration was that we had had ten crop failures. But I added to that the further fact that in the year previous we had paid eighty cents a bushel, which resulted in
Prairie Farm Assistance

our paying a bonus of eighteen cents a bushel. That was added to the other. I said this year that we were quite prepared in the drought areas where it appeared from information we had at that time, that we were likely to have drought again, to take whatever chances we did in connection with overpayment of some people; but that we would come in, even if the price was high last year, in order to assist people who in the previous year got no benefit at all from the eighty cents, because they had no wheat. We said that in order to assist those people last year, even if wheat were above eighty cents, for one year we would do that. And we did it. This legislation is intended to take care of crop-failure areas. We should not be giving consideration every year to the fact that there was a crop failure in the previous year, when we now have legislation on the statute books to take care of crop failures from year to year.


Alexander Malcolm Nicholson: It is now the end of July. I should think it would not be unreasonable to expect that the department might make a decision.


James Garfield Gardiner: Last year declarations as to crop-failure areas were not made until representations were made by the province to the effect that there were more than 135 townships in which the crop was less than five bushels to the acre, and then only after our inspector had checked those townships, and found that there were more than 135. Already this year representations have been made by the government of Saskatchewan that there are more than 135 townships in Saskatchewan with less than five bushels to the acre. I assume they will require to check again if they are not certain that there are more than 171. When representations are made we shall check the number of townships, and if there are 171 we shall probably declare it a crop-failure area.


Ernest Edward Perley: Is there any inspection being made through the west?


James Garfield Gardiner: Yes.


Thomas Clement (Tommy) Douglas: What is the minister's objection to making this emergency plan automatic provided the price goes below eighty cents?


James Garfield Gardiner: When I was piloting the bill through the house last year the opposition insisted that I have the consent of the governor in council before anything was done. I had considerable difficulty in getting the power to do anything as minister. Where I did get it, it was only after a battle for a number of nights.


Thomas Clement (Tommy) Douglas: It has always been "may"; it has always been optional. Why should the section not be altered to make it automatic? If it should happen that there are not 171 townships in Saskatchewan with a yield of under five bushels to the acre and the province thus be unable to qualify under section 4, perhaps the minister would be prepared to say that it could qualify under section 3 provided the price was below eighty cents.


James Garfield Gardiner: I would be prepared to say that if there were no crop failure area in Saskatchewan ot in any other province and the price of wheat remained below eighty cents, the government would be more likely to declare it an emergency area than we would if there were crop failure areas. That is about as far as I think I can go.


Thomas Clement (Tommy) Douglas: I hope there is no possibility of the province being shut out from the provisions of both sections.


James Garfield Gardiner: There is a possibility if the crop is not so large or if the area is small.


Victor Quelch: According to the regulations, applications must be made by August 15, and the minister has stated that the regulations will have to be adhered to this year. For obvious reasons it is not always possible to state with any certainty whether an average yield will be above or below the base. Can the minister say what the regulations will be this year and whether the date will be set back?


James Garfield Gardiner: The intention is to set back the date. I am saying that subject to the fact that these regulations have to go before the council. It is difficult to be absolutely certain by August 15.
Section as amended agreed to.
Section 4 agreed to.
On section 5-Conditions for declaring area a crop-failure area.


Mr. DOUGLAS (Weybrun):: Could the minister give us some idea of what money was spent last year, divided between the two schemes under sections 3 and 4?


James Garfield Gardiner: The figures up to July 9, 1940, are as follows:
	Town-		Amount
ships	Farmers	paid$1.00 category..	1,074	35,027	$4,132,206 07$1.50 category. .	499	13,799	2,617,830 95$2.00 category. .	56	822	173.951 81$2.50 category. .	260	8,226	2,839,197 38 $9,763,186 21
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217?


Thomas Clement (Tommy) Douglas: Has the
minister any estimate as to what areas in Saskatchewan will come under this section this year?


James Garfield Gardiner: I have only what I referred to a moment ago, that is, the statement from the Saskatchewan government that there will be at least 135 townships with a yield of five bushels or less.


Thomas Clement (Tommy) Douglas: I hope this addition of thirty-six townships will not be sufficient to keep them out.


James Garfield Gardiner: That statement came in about two or three weeks ago. In view of the weather that they have had since, the number will probably be up to 171 by now, but I have no definite information.


Thomas Clement (Tommy) Douglas: I do not hope that it will go up to 171, but for the sake of the people in the 135 townships I trust that they will not be eliminated. If the minister has had information from Saskatchewan that the province would qualify under the act as it now stands, I think it is too bad that it should be changed in such a way as possibly to disqualify them. I have not heard any valid reason for increasing the number of townships in Saskatchewan. According to the draft bill last year, all that was necessary to qualify was fifteen municipalities in any one province.


James Garfield Gardiner: Twenty-five.


Thomas Clement (Tommy) Douglas: It was changed to fifteen. There were three separate drafts of that act, and in the second draft we got it to fifteen municipalities in any one province, or 135 townships. Alberta and Manitoba were both reduced to 100 townships and they are now being reduced further. I have no objection to that because I think it is quite justifiable in view of their experience of the last few years. But I do object to Saskatchewan being increased to nineteen municipalities or 171 townships, which may be just sufficient to keep Saskatchewan out of the operation of this section. On account of the lateness of the hour I shall not labour this point. It is hot and everyone wants to get on with the business of the house, but I do protest against the government adding four municipalities or thirty-six townships which may be just enough to rule out Saskatchewan.


Victor Quelch: What is the situation in Alberta with regard to the number of townships having five bushels or less to the acre?


James Garfield Gardiner: I have not had any representations from Alberta up to date.


Ernest Edward Perley: I should like to associate myself with the protest made by the hon. member for Weyburn. Has the minister had any preliminary reports based on inspections which have taken place in Saskatchewan to indicate that that province would not come under the bill if the number of townships is increased to 171?


James Garfield Gardiner: I have not had any definite information with regard to inspections. That information came to me some time ago. I assume the inspectors are now working, but I have not had any report to indicate whether the province will come under the act.


Ernest Edward Perley: Will the minister give consideration to changing it back to 135 townships?	-


James Garfield Gardiner: The matter has been definitely decided.


Mr. FAIR:: A province to be safe should make application for everything there is under the act, because we know from experience that many things may happen to the crop in July and in the early part of August. I say that because experience has told us that crop experts, employed mostly by the grain companies, go round the country and usually predict a yield far above what it actually turns out to be, and the result of their forecasting is a drop in the price of grain. We have heard a good deal about the wonderful work done by the inspectors during the past year. I am not going to criticize their work, but I would point out that no inspector is able early in August to estimate what the crop yield will be. I know on my own farm last year in one field I had a yield of ten bushels to the acre and it took less than half a pound of twine to tie the crop, while in a field less than a mile away I had twenty-five bushels to the acre, and it took three and three-quarter pounds of twine to tie it up, so I feel that no expert is able to estimate anywhere nearly correctly the yield in any particular field.


Mr. McILRAITH:: Could the minister tell us how many townships there are in Saskatchewan?


James Garfield Gardiner: There are 301 organized municipalities with nine townships in each. That makes 2,709 townships in the organized areas in Saskatchewan. Then there is quite a number of areas that are not organized, I presume about half as many more.


Victor Quelch: Could the minister give us some idea how many times a crop failure would have been declared in Alberta during the past twenty years on a ninety township basis?

Prairie Farm Assistance


James Garfield Gardiner: I do not think the
records in connection with either of the other two provinces are kept in a way that would make it possible to give the information.


Victor Quelch: Would there have been
two years even?


James Garfield Gardiner: Yes, there have been two recently.


Thomas Clement (Tommy) Douglas: In how many years would Saskatchewan have qualified on the basis of 171 townships?


James Garfield Gardiner: I am not in a position to state.


[Stage Direction]
Section agreed to.
On section 6-Board of review established.
Ernest Edward Perley: Section 5, subsection 3
states:
The board shall decide, under the act and regulations, any question concerning the eligibility of any farmer or class of farmers for an award under this act.
I would ask the minister to make the eligibility of any farmer or class of farmers a little more definite.


James Garfield Gardiner: I cannot say any more than I have said already, but probably it will be pretty much on the basis of last year, that a farmer will be a man who is operating his land and making his living at that. If he happens to be doing, incidental to his farming, something which does not bring in very much by way of return he would not be rejected on that account, but if he is receiving a high rate of pay at some full-time job or approximately full-time job apart from his farm, he would not be considered as maintaining his home by farming.


Thomas Clement (Tommy) Douglas: What does
section 5, subsection 3 mean? It reads:
The board shall decide . . . any question concerning the eligibility of any . . . class of farmers.


James Garfield Gardiner: The class of fanners is exactly the point which the hon. member for Qu'Appelle had in mind. There are certain groups of farmers who do certain things. There is a group who live close to sidings on the railway where there is only one elevator, and the farmer may run the elevator for a few hours each day and take in the little wheat that comes in. He is really a farmer, and there is a considerable group of these men. Other men do threshing as well as farming. Anyone will agree that they are farmers. They do work that has to do with actual farming in addition to their own farm work.


Thomas Clement (Tommy) Douglas: The minister has not in mind any separate class such as market gardeners.


James Garfield Gardiner: Market gardeners were ruled out last year. Certain ranchers were also ruled out. Farmers operating irrigated farms are not counted in estimating the yield in townships.


Robert Fair: Would a man who was running a farm for somebody else and operating on the side his own half-section be eligible for the half-section that he owned?


James Garfield Gardiner: I should not like to
decide that without having all the facts before me.


Victor Quelch: Can the minister explain what happens in a situation of this kind? I know of some instances where a father and a son live in the same house, but each has his own outfit and each was paid the bonus. In another instance, under exactly the same circumstances, the bonus was paid to only one. Just what is the determining factor?


James Garfield Gardiner: The representations
before the superintendent or the board would not be exactly the same in the two instances. It must have been shown in the one instance that the son was actually running his own business and operating part of the land. They might have been using the same equipment, but the son must have been operating the land either under lease or under ownership. Whether it was under lease or ownership, it did not make any difference that they were living in the same house.


Victor Quelch: In the one instance both father and son got the bonus. I had this information from Ottawa, but as time went on, the regulations were tightened up and only one bonus was paid. I was wondering what the regulations would be in the future.


James Garfield Gardiner: Whether my hon. friend received it from Ottawa or not, it never was intended by the office at Regina or by the inspectors or by anyone else from the very beginning that the bonus should be paid to an owner unless he was operating land of his own or rented land for which he had a lease.


Mr. CASTLEDEN:: I understand that the one per cent levy will go on year after year whether the government declares an emergency or not.


James Garfield Gardiner: Yes, the one per cent levy goes on as long as the legislation is on the statute books.

Prairie Farm Assistance


George Hugh Castleden: It is quite possible, if an emergency is not declared for two or three years, that the rest of Canada will not have to contribute to keep western Canada going.


James Garfield Gardiner: You would have to take in as much for four years more to pay what was paid out this year, and you would have to take in six times as much as would have been taken in during the last eighteen years in order to have paid it out.


Ernest Edward Perley: The minister should have the board publish the regulations under section 5, subsection 3, so that everybody will understand what is meant by "farmer". The board should set out exactly what is meant.


Thomas Clement (Tommy) Douglas: The board has no power to issue regulations, has it?


James Garfield Gardiner: The regulations will be issued by the minister, but on the recommendation of the board and other persons concerned in the administration.


[Stage Direction]
Section agreed to.
On section 7-Regulations by minister.
Thomas Clement (Tommy) Douglas: Will the
regulations of the past year continue in effect, or will new regulations be issued?


James Garfield Gardiner: New regulations will be required as a result of these amendments.


Thomas Clement (Tommy) Douglas: The section reads:
The minister may with the approval of the governor in council make regulations
(g) excluding from the operation of any section of this act any lands in the spring wheat area and any grain grown thereon.
I assume that is carried out by regulation No. 7.
I would ask the minister to give consideration to paragraph (e), to which I referred earlier this evening.


James Garfield Gardiner: That is one of the regulations under consideration and we are trying to draft it in such a way as to be fair.


Victor Quelch: Will the minister see that in future regulations and amendments made are forwarded to members, at least to those who are interested in the act. I never saw a copy of the regulations and was never informed that the regulations were made. I suggest that members should not be kept in the dark.


James Garfield Gardiner: I will undertake to see that regulations when formulated are given to hon. members.


[Stage Direction]
Section agreed to.
95826-138*
On section 8-Part of an ineligible township may be substituted for part of eligible township.
Pierre-François Casgrain: There are certain amendments which I wish to move:
_ That clause eight of the bill be amended by inserting the words "immediately after section six thereof" after the word "inserting" in line twenty-one.
That section seven of the act as contained in clause eight of the bill be amended by striking out the words "local improvement district" in line twenty-four and inserting the words "any other area".
That the said section be further amended by striking out the words "municipality or, in the case of an unorganized area," in lines twenty-eight and twenty-nine and inserting the words "rural municipality or, in the case of any other area,".
That paragraph (a) of section eight of the act as contained in clause eight of the bill be deleted and the following substituted therefor: -
"(a) receive in any year with respect to the same land both emergency assistance under section three and crop failure assistance under section four, and in the event that a farmer has land in a township eligible for emergency assistance and in another township land eligible for crop failure assistance, no award shall be made with respect to more than two hundred acres of cultivated land calculated on a proportionate acreage basis: Provided that where not less than one-half of the total eligible acreage of such farmer lies within a crop failure area, he may be paid an award calculated on such basis or the sum 'of two hundred dollars, whichever is the greater."


Thomas Clement (Tommy) Douglas: Can the
minister undertake, by regulation, to have a township split where there is not a proportionate amount that can be substituted from an ineligible township?


James Garfield Gardiner: The bill does not permit the splitting of a township under any other condition than that laid down. I do not know of any way in which it could be done without taking a smaller area than the township as the basis, and I would not suggest that this year.


[Stage Direction]
Amendments agreed to.
Section as amended agreed to.
Sections 10 and 11 agreed to.
On section 12-Expenses.
Ernest Edward Perley: I think we should have something definite with respect to expenses. The amount allowed last year was seven cents, and the men drove back and forth, running up expense accounts that were unreasonable. I have here a statement showing the salaries and expenses of 159 inspectors. They were out of propqrtion to the services rendered, and something should be put in this section to control these travelling expenses.
Interim Supply


James Garfield Gardiner: The expense rates are fixed by the treasury board, seven cents a mile being allowed for that kind of work throughout the service. It is possible that some employees do abuse the provision. We keep as close a check as possible on it, and where there is any abuse we dispense with the services of the person doing the driving.


James Arthur Ross: What was the basis
of remuneration of inspectors? Was it a daily basis?


James Garfield Gardiner: Yes, five dollars a day.


[Stage Direction]
Section agreed to.
Sections 13 and 14 agreed to.
Bill reported.
Thomas Vien: When shall the bill be read the third time?
Mr. STIRLING. Next sitting.


James Garfield Gardiner: If there is no real
objection, I wish the house would allow the bill to go to the senate. I move that the bill be read the third time.


[Stage Direction]
Motion agreed to, and bill read the third time and passed.
[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
He said:	I spoke to the leader of the
opposition (Mr. Hanson) and he said he had no objection to granting interim supply in the amount of one-twelfth. To-morrow is the last day of the month and interim supply is required. I hope the house will, by consent, suspend the eleven o'clock rule for the few minutes necessary to get interim supply through.
Motion agreed to and the house went into committee of supply, Mr. Vien in the chair.

James Lorimer Ilsley: Resolved, that a sum not exceeding $20,727,533.23, being one-twelfth of the amount to be voted, as set forth in the main estimates for the fiscal year ending March 31, 1941, laid before the House of Commons at the present session of parliament, be granted to His Majesty, on account, for the fiscal year ending March 31, 1941.


Thomas Clement (Tommy) Douglas: Will any supplementary estimates be brought down this session?


James Lorimer Ilsley: Some may be necessary,
but they will, I hope, be of a formal type. There will be no extended supplementary estimates.


Thomas Clement (Tommy) Douglas: I was thinking of the Department of National War Services.


James Lorimer Ilsley: There may be some.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
James Lorimer Ilsley: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending March 31,	1941, the sum of
$20,727,533.23 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 122, for granting to his majesty certain sums of money for the public service for the financial year ending March 31, 1941.
Motion agreed to, bill read the first and second times and the house went into committee thereon, Mr. Vien in the chair.
Sections 1 and 2 agreed to.
Bill reported, read the third time and passed.
On motion of Mr. Crerar the house adjourned at 11.06 pan.	|
Wednesday, July 31, 1940