1940-12-06

TRADE AGREEMENTS


Hon. J. G. GARDINER (Minister of Agriculture):: Mr. Speaker, may I say to the leader of the opposition (Mr. Hanson) and the hon. member for Qu'Appelle (Mr. Perley) that, if I may be permitted to do so later in 
these proceedings, I shall lay on the table the agreement in connection with bacon and a memorandum in regard to it.


Mr. HANSON (York-Sunbury):: Will copies be immediately available?



ST. LAWRENCE WATERWAY MESSAGE OF PRESIDENT ROOSEVELT TO SEAWAY AND POWER CONFERENCE-ENGINEERING PROBLEMS IN INTERNATIONAL SECTION

[Stage Direction]
On the orders of the day:
Mr. A. C. CASSELMAN (Grenville-Dundas):: Mr. Speaker, before the orders of the day are called I should like to ask a question of the Prime Minister	(Mr. Mackenzie King). In view of President Roosevelt's message to the Great Lakes seaway and power conference yesterday, in which he is reported to have emphasized, among other things, " that the St. Lawrence project would provide millions in new horsepower urgently needed to speed up defence production," will the Prime Minister make a statement outlining in general terms the progress that has been made from the Canadian standpoint with respect to the scheme advocated by the Canadian representatives on the joint board as between (a) a singlestage development, (b) a double-stage development, (c) a controlled single-stage, or other scheme?
Will the Prime Minister also state what is the attitude of the government with respect to the seaway proposal, and whether opportunity will be given to those whose property will be adversely affected by the choice of scheme to present their views?


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, my hon. friend advised me of his intention to ask the question he has. I had anticipated that some question would be asked with respect to the important message which the President of the United States issued yesterday through Mr. Berle in connection with a great lakes seaway and power conference which is being held in Detroit. I have therefore come prepared to make a brief reply to my hon. friend.
The house has already been advised through the correspondence tabled on November 12 of the agreement reached between the government of Canada and the government of the United States, regarding additional diversion of water for power purposes at Niagara and the appointment of committees to carry on the necessary additional engineering investigations in the international rapids section of the St.

St. Lawrence Waterway
Lawrence. The diversion has been made at Niagara and the power development is being utilized for Canadian industry. The committees appointed by the two governments have been actively at work in the study and analysis of the engineering problems in the international section.
As regards the wider questions involved in the Great Lakes-St. Lawrence development, it will be recalled that the Niagara convention of 1929 and the St. Lawrence treaty of 1932 failed to obtain the approval of the United States senate, and the negotiations were later resumed with a view to the possibility of combining the projects in a revised single agreement. Delegations of officials appointed by the two governments met in Ottawa and in Washington last January and the problems involved have continued to receive consideration by both governments. Those negotiations will be continued. Any agreement resulting from the negotiations will, of course, be submitted to this house for approval in due course. I have earlier indicated that any such agreement on this subject would not be brought before the Canadian parliament until it had received the approval of the appropriate United States authorities.
As I have already indicated, the committees appointed by the two governments are continuing their study of the engineering problems in the international section. They have not yet completed or reported upon their work, and no final decision has therefore been taken as to the details of the development in this section. The project under consideration, as I stated a few days ago, is a controlled single-stage development, which differs from either the single-stage development or the double-stage development that was under consideration some .ten years ago. On January 25 last the following statement as to the character of the project under discussion was issued after the conference of officials of the two governments:
The engineering advisers of the two governments have reached substantial agreement on the feasibility and desirability of a project in the international rapids section of the St. Lawrence river which would involve a main dam in the vicinity of Barnhart island, with a power house in each country, and a control dam upstream. This project is based upon a plan which was discussed in some detail in the 1926 report of the joint board of engineers. The engineers of the two countries are in agreement that such a project is sound from an engineering standpoint, cheaper in cost than the project on which the 1932 treaty was based, and affords full protection for all the interests in the various sections of the St. Lawrence river.
My hon. friend the member for Grenville-Dundas has inquired whether opportunity will be given to those whose property will be adversely affected by the choice of scheme, to present their views. Any scheme for development naturally affects some adjoining property. This was of course true of the project embodied in the treaty which was negotiated by the government of the Right Hon. R. B. Bennett in 1932. At the appropriate time the present government will be quite prepared to receive representations from those whose property will be adversely or, for that matter, beneficially affected.


Arza Clair Casselman: Did the Prime Minister make it clear that the agreement would first be submitted to the United States senate?


William Lyon Mackenzie King: To the proper authorities in the United States, yes.


Mr. CHURCH:: Will any agreement arrived at be reported to parliament before action is taken?


Richard Burpee Hanson: Yes.


William Lyon Mackenzie King: Parliament will have to approve of any agreement.


Richard Burpee Hanson: May I direct the attention of the Prime Minister to the fact that no reference was made in his statement to the seaway aspect of this matter. I understood up to yesterday that the question of navigation was in the discard, but according to the president's statement of yesterday the navigation aspect has been brought back to life.


William Lyon Mackenzie King: It is impossible to separate the development of the seaway from the power project. The two are interlinked; the one affecting power and navigation necessarily affects the other. Our purpose in seeking agreement is to provide that all phases of the question may be considered at one and the same time.


Mr. MacNICOL:: May I ask the Prime
Minister if this government has been notified by the United States of the recent order of the United States supreme court permitting Chicago to divert another 3,500 cubic feet per second for dilution purposes, increasing the dilution diversion to 5,000 cubic feet per second, the equivalent of the amount of water that will be poured later into lake Superior from northern Ontario? I should like to know also if this government has under consideration any means to control the level of the three centre great lakes. With another
5,000	cubic feet per second being diverted at

Business oj the House-Procedure
Niagara, and this 5,000 cubic feet per second being diverted at Chicago, the lake levels are going down six inches.


William Lyon Mackenzie King: About a fortnight ago I rather anticipated that my hon. friend would bring up this question and I had a full statement prepared in connection with the order the United States supreme court had made. I shall send him the statement, but speaking from memory at the moment I would say that the order was to provide means of meeting a rather serious immediate sewage problem in one of the United States cities. The order took cognizance of the problem. The statement of the court however helped to emphasize the permanency of the arrangement for controlling the level of the waters in the lakes, about which my hon. friend is concerned.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: I should like to ask the Minister of
Finance (Mr. Ilsley) a question as to procedure. In Votes and Proceedings No. 17 of December 2 the resolutions, which we are about to consider, along with the schedules, are printed in full. Then in the Votes and Proceedings of December 5 I find that part I of schedule 1 is to be amended. For instance, tariff item No. 163 as it appears in the original schedule covers wines of all kinds containing 26 per cent or less of proof spirit. On page ii of the Votes and Proceedings of December 5 I find that this item is being amended to cover wines of all kinds containing forty per cent or less of proof spirit. I was wondering if that is the usual practice. A number of other changes are being made, including the items having to do with artificial silk and paintings. These resolutions have had the force of law as of December 2 and I am wondering just how importers will be affected. I suppose the reason for this will appear later in the discussion, but I did think that this was rather unusual. I do not know enough about our practice and procedure to say whether or not it is improper. It may have been done on many other occasions; I do not know.


Hon. J. L. ILSLEY (Minister of Finance):: It is desirable to give notice of amendments if possible. When amendments are proposed while the house is in committee of the whole the committee has no notice. Whenever there is a chance to do so, amendments are printed in the votes and proceed-

ings so that hon. members will be aware of what is being proposed. The other point mentioned by the leader of the opposition did not occur to me, but I assume that some consideration will have to be given in the issuing of permits to the fact that they were not included in the first schedule.


Richard Burpee Hanson: I just
wanted to be sure that no injustice was being done.



SOLDIERS' PENSIONS


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I should like to ask the Minister of Pensions and National Health (Mr. Mackenzie)-we are glad to see him back in the house-if during the recess he will give consideration to providing some form of relief to the 15,000 men who have been discharged from the army, many of whom are destitute and unable to obtain any assistance. Will he have this matter taken up by the pensions committee which will meet next year? I draw his attention also to the fact that the pensions board has ruled that no pensions are granted in respect of men in military camps who are killed on the highways, it having been decided that they were not on military service. I should like this matter also to be considered by the committee. Will relief be granted to these other men this winter?
Hon. IAN A. MACKENZIE (Minister of Pensions and National Health): In connection with the first part of my hon. friend's question, that having to do with the 15,000 men who have been discharged from the army, may I say that my information is that most of these men have been absorbed into employment. The second part of my hon. friend's question refers to an order in council which was passed in May, 1940. All things of this nature will be considered by the committee to be established when the house resumes.



NICKEL AND SCRAP IRON


[Stage Direction]
On the orders of the day:
Mr. T. C. DOUGLAS (Weyburn):: Mr. Speaker, yesterday the Prime Minister (Mr. Mackenzie King) was good enough to read to the house a copy of a telegram that he had sent to Doctor Robert McClure. The press reports that Doctor McClure has replied to the Prime Minister, and I wonder whether

Nickel and Scrap Iron
the Prime Minister would care to place that reply on the record and give the assurance requested?


William Lyon Mackenzie King: I may say to my hon. friend that I am more than pleased to meet his request; for I certainly had in mind placing the telegram of Doctor McClure on Hansard to-day. It deserves something in the way of attention.
The house is already aware of the statement which was made by Doctor McClure at Toronto with respect to the export of nickel and of the fact that the Under-Secretary of State for External Affairs sent a telegram to Doctor McClure asking for an explanation of his statement and requesting particularly information as to the source from which he got his information. The following is the reply which the Under-Secretary of State for External Affairs has received:
Toronto, Ont., December 5, 1940. Dr. O. D. Skelton,
Under-Secretary of State for
External Affairs,
Ottawa.
In view of the disturbing reports I have been given from what I consider an authority, and in view* also of persistent rumours which have been given credence by less informed persons, I believe it would be in the best interest of Canada and the empire if you would unequivocally state that in addition to no permits being granted for the direct export from Canada to J apan of nickel, every precaution has been taken to ensure that no Canadian nickel, in any form whatsoever, is finding its way, even circuitously, to Japan or to any country dominated by or friendly to Japan from which transshipment might be made. I think your statement also should apply to Canadian copper in all forms and to zinc and lead. I do know from the disquiet in certain circles in China, Canada and United States that such a comprehensive, unequivocal statement would allay many fears. The information which I consider authoritative and on which I based my statement was not to the effect that shipments of Canadian nickel were being made directly from Canada to Japan but that they were reaching Japan after having been shipped from Canada to some other nations, such as United States or to some Pacific nations dominated by Japan. If the facts permit you to state that such transshipments do not occur, I will be most happy to apologize fully for having added to your cares at this time. Arriving Ottawa Friday evening.
McClure.
I might say to Doctor McClure that his apology is owing rather to the British government and to the other governments of the British commonwealth of nations for adding to the very difficult situation which at the present time exists between the governments of the different parts of the empire and other governments in the orient. These are days in which language cannot be too greatly
restrained, and the language used by Doctor McClure in his statement which I quoted yesterday was of a character to raise very considerable difficulties between the governments of the British commonwealth of nations and certain countries in the orient.
The communication I have read to-day, while it does not answer the one sent yesterday, is very different in its statement from the one which was made originally. It is now not direct shipments to Japan, but it is said that nickel may have been sent from Canada to some other country and have found its way from that other country around to Japan. The statement originally made by Doctor McClure was that he himself had been digging scrap iron which had come from Canada out of the bodies of Chinese and that he expected others would be digging nickel which came from Canada out of the bodies of British soldiers. That is a very different indictment from that which appears in his telegram that I have just read.


Richard Burpee Hanson: He did not say they were direct shipments; I think I should say that in justice to Doctor McClure. I do not know him at all.


William Lyon Mackenzie King: No, he did not. He did not say they were not direct shipments.


Mr. LAPOINTE (Quebec East):: The
inference was clear.


William Lyon Mackenzie King: Now, instead of Doctor McClure having information of his own knowledge, he states that his remarks were based on a statement which was made by some unnamed Canadian official and on information from some United States committee. Doctor McClure is to be in Ottawa, I understand, either this afternoon or to-morrow, and I have asked the Undersecretary of State to ascertain from him the name of the Canadian official who he says gave him this information, and also to enlighten us a little as to the United States committee that gave the information on which he based the extraordinary statement which he made.
I have already given the house information as to the export of nickel from Canada. Its export has been under extremely close control since the beginning of the war. Permits are required for its shipment from this country in any form to any destination, and permits have not been granted when there was any reason to believe that the nickel might directly or indirectly reach a hostile destination.
We have not only made certain that no nickel was exported direct from Canada to any dangerous or possibly dangerous destina-

Nickel and Scrap Iron

tion, but we have taken far-reaching precautions to see that nickel exported from Canada to another country is not re-exported in primary or fabricated form to any destination for which we would not grant an export permit for nickel in the first place. Our policy, as I have already stated, is to see that nickel is kept to meet the war needs of Britain, direct, and in articles being manufactured for Britain and ourselves in the United States. It is obvious that the secondary control cannot be as completely watertight as is our direct control over the shipment of nickel in its primary forms. Nevertheless, I have reason to believe that it is operating satisfactorily except with regard to nickel scrap. Here there is undoubtedly a small reexport trade from other countries to which the Canadian system of export control and guarantees cannot be extended.
I might add that I am prepared to arrange to have any member of the house furnished with full confidential information as to the control procedure in force in Canada, but it would not be advisable to make that particular aspect of the question public.



PRAIRIE FARM ASSISTANCE


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Might I direct a question to the Minister of Agriculture (Mr. Gardiner). How soon does his department expect to have sufficient data available to decide whether or not a crop failure area can be declared in Saskatchewan under the Prairie Farm Assistance Act?


James Garfield Gardiner: Mr. Speaker, I gave that information to the house yesterday and it will be found on Hansard.


Thomas Clement (Tommy) Douglas: The minister was not clear as to when. He said that he expected it would be done.


James Garfield Gardiner: The latest information we have is on Hansard of yesterday. I cannot state exactly when.



&quot;HIS MAJESTY'S GOVERNMENT&quot;


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I wish to say a word on a matter which I do not think can be called one of parliamentary privilege, and certainly it is not a matter of personal privilege, but it might be as well to clear it up.

I notice that the Montreal Gazette of to-day contains an editorial in which it finds difficulty in seeing why it should be necessary for this government to confer with the British government before deciding whether or not we should resume our sittings on the 17th of February. The language used in my motion respecting adjournment, on which the editorial is based, was that you, Mr. Speaker, in conference with his majesty's government, would decide whether or not it was necessary to have parliament reassemble earlier than February 17. The Gazette seems still to belong to an age which regards his majesty's government as the government existing in Great Britain. I might say that over thirty years ago Sir Wilfrid Laurier made clear to all parts of the empire that the governments of the different dominions were all his majesty's governments. Certainly for many years past, in official communications which have passed between the governments of Great Britain and Canada, the one is referred to as "His Majesty's Government in the United Kingdom," and the other as "His Majesty's Government in Canada." That is the present practice. When I speak of "his majesty's government," if I not specify, I have reference to His Majesty's Government in Canada.



PRIVATE BILLS


[Stage Direction]
On the order for motions:
William Lyon Mackenzie King: This is a matter of procedure. I move:
That, on account of the pending adjournment of the house, the six weeks' period allowed by standing order 92 for the presentation of petitions for private bills be deemed to expire on Wednesday, February 26, 1941, instead of on Wednesday, December 18, 1940.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The house resumed from Thursday, December 5, consideration in committee of Bill No. 8, to amend the Special War Revenue Act- Mr. Usley-Mr. Vien in the chair.
Sections 1 and 2 agreed to.
Schedule agreed to.
Bill reported, read the third time and passed.

War Exchange Conservation Act


[Stage Direction]
The house in committee of ways and means, Mr. Vien in the chair.
6. That the governor in council in order to increase Canada's supply of foreign exchange may, on the recommendation of the Minister of Finance, enter into agreements with individuals, partnerships or corporations to grant assistance by way of special tax credits and/or special allowances for depreciation or depletion under the Income War Tax Act and the Excess Profits Tax Act, if, in the opinion of the governor in council, such assistance is necessary in order that an expansion of the exports of any individual, partnership or corporation receiving such assistance may take place.
James Lorimer Ilsley: The leader of the opposition (Mr. Hanson) asked me yesterday to make a statement about clause 6. Before I do that, perhaps I should give a little information which was asked for by other hon. members.
The hon. member for Vancouver South asked for certain information about imports from various countries. These are estimates, since in some cases only parts of statistical items are included in the schedule. Further, imports which came from Europe in 1939 tended to come from the United States. In addition, a number of imports from other countries, such as Japan, are recorded as originating in the United States because they enter Canada from the markets of that country. For example, practically all our imports of raw silk are credited to the United States. With these qualifications, the best figures that I have been able to get for the hon. gentlemen
are these:
Total foreign imports	 $53,000,000
United States	 41,600,000
Japan	 1,800,000
Europe	 8,500,000
Other countries	 1,100,000
The recorded imports from individual countries can be given for most of the individual items as those items are discussed. It has not been possible in the limited time since last night to prepare a more particularized statement than this.


Mr. GREEN:: Could the minister say what is the value of the silk which comes from Japan through the United States to Canada?


James Lorimer Ilsley: Approximately $6,000,000.
Now, with regard to the request of the leader of the opposition for figures relating to the importation of motion picture film from the United States: for the eight months from April 1 to October 31, 1940, the amount of motion picture royalties paid was $3,199,047.07.


Richard Burpee Hanson: Is that item growing in quantum?
14873-47i


James Lorimer Ilsley: I could not say.


Richard Burpee Hanson: Of course that in itself is not a very large item, but it is an item; and at the risk, perhaps, of being a little rash, I suggest to him that a lot of these films, are in the category of magazines. I would not say that about the good films; I enjoy the good films; but there is a tremendous amount of trash coming in from the United States for which good Canadian dollars in the way of royalties are going out. I realize, however, that in the small communities they cannot afford to buy and pay for the good pictures, at least until the pictures are very old, and I hesitate to suggest to the minister that there should be anything in the shape of prohibition of these films. I suppose they are all censored by the provincial authorities. But there a tremendous number of them, it appears to me, are neither entertaining nor educational. I do not think I should say more than that. But it is an item to which the minister may have to give consideration later on.


The CHAIRMAN:: Carried?


James Lorimer Ilsley: I am quite content, Mr. Chairman, to have the resolution carry, but an hon. member asked that I make a statement with regard to it before it was considered by the house. In the speech which I made at the time these proposals were introduced I emphasized the extent to which the government is in a positive way attempting to increase our supplies of foreign exchange. We are not confining ourselves merely to negative, restrictive measures. The present provision as to encouragement of exports is in the nature of an enabling measure. It gives power to the governor in council to enter into agreements. It is anticipated that under such agreements the government would offer certain concessions in exchange for an undertaking on the part of a company or individual to provide additional exchange of some amount. The benefits would be conditional upon a certain undertaking having been fulfilled by the exporter to the government's advantage.


Richard Burpee Hanson: That is, to increase their exports?


James Lorimer Ilsley: Yes. While this method of proceeding may be regarded as unusual, I think it is fully justified by the unusual circumstances we have to face. The variety of situations with which we may have to deal makes it next to impossible to formulate legislation which will be sufficiently elastic. I should like to give the house an example of what I mean by this.

War Exchange Conservation Act
A company may be able, through certain additional capital expenditure, say to double its exports of pulp. If it did this it would probably find that 79-5 per cent of its profits on this business would be taken away in corporation income tax and excess profits tax. In British Columbia, for example,- a further ten per cent of profits would be taken by the provincial government if the profits exceeded a certain amount. In these circumstances the company would have only 10 * 5 per cent of its profits left. This margin of profits might not be sufficient to justify the capital expenditure for what might later have proved to be only a temporary market. In such a case a greater allowance for depreciation than is ordinarily allowed might be sufficient to induce the company to go ahead and take the risks involved. Another company might be able to expand somewhat its exports with little or no additional capital expenditure. Additional depreciation might not be of great assistance here. Different circumstances in this case might call for another type of incentive.
It is just possible after we have explored the possibilities further we may be able to generalize on some incentive provisions for certain industries. And here I might again emphasize that this is enabling legislation that we are concerned with. I would interject at this point that it was at first contemplated that we would ask the house for power to finance, to assist industries by loan or guarantee, if they would undertake to provide a certain amount of foreign exchange.


Richard Burpee Hanson: We really do not need that.


James Lorimer Ilsley: I thought it was too dangerous a power for the government to take and that the two classes of assistance authorized by this bill were sufficient, at least to start with. There are two classes, one being increased depreciation or depletion allowance, and the other tax credits, which would be proportioned to the exchange produced.


Richard Burpee Hanson: The minister has abandoned that idea?


James Lorimer Ilsley: No.


Richard Burpee Hanson: Of financing?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: If you
allow these companies to make a little money they will do their own financing. It should not in any degree become a burden on the country's credit.
[MY. Ilsley.]


James Lorimer Ilsley: I argued that the companies should be allowed to make a little money this last year, and my hon. friend was in favour of a 100 per cent excess profits tax.


Richard Burpee Hanson: Based on the English practice. Do away with the corporation tax.


James Lorimer Ilsley: They would not have had any incentive then. In other industries, it may not be possible even subsequently to lay down any general rules. For example, certain gold mines may be facing a situation where the margin of profit is so low-for instances, 50 cents a ton-that it is not in the interests of the company to attempt to continue operations. I think anyone who is familiar with the gold mining industry will realize that some mines can continue to look forward to a profitable future even with a very low rate of profit per ton, while in other cases a much higher rate of profit per ton may not be sufficient to justify continuing operations. In circumstances such as these, the house will realize that it would be uneconomical to offer concessions to all mines whose profit per ton is less than a certain amount. An arrangement of this sort would almost necessarily mean that many would be getting benefits which they do not need, while others which needed it were obtaining no relief whatever. It is in the face of situations such as these that it seemed necessary to take power to deal with individuals by means of contract or agreement rather than attempt the more wasteful and uneconomical method of providing benefits through general legislation.
It is the intention of the government to have such agreements as are entered into tabled in the house and available to members. Full details with regard to the administration of this provision have not yet been worked out. However, these details will be developed later as seems best.


Richard Burpee Hanson: Would
they be made available in the interim if parliament were not in session? They will be stale by the time we get back. As regards the question of depreciation and depletion, to which the minister has alluded, has he come to any conclusion with respect to the extra quantum of depreciation and depletion which may be allowed? Both are important. I am not opposing the suggestion at the moment, but I should like to have it elucidated.
I would point out, on the subject of depreciation, that consideration ought to be given the question whether the raw material is cut off a company's licensed lands, that is to say, lands held under licence from a provincial government, or whether the raw material is cut off

War Exchange Conservation Act
freehold lands owned by the company. May I tell the minister my own experience? Not so very long ago, in settling a tax claim against a taxpayer, I discovered that in the income tax department no discrimination was made, on the item of depletion, between pulp-wood cut on licensed land held under a licence from the crown in the right of one of the provinces and raw material cut on the company's privately-owned lands held in fee simple. The situations are entirely different. This was some time ago, and apparently the department had not before had the matter drawn to their attention. They adopted an arbitrary figure, say a dollar a cord

I cannot remember the exact figures-and applied it in both cases, whereas in the case of privately-owned land double depletion at least should be allowed on raw material cut on fee simple land owned by the company. The land can be cropped only once in so many years. There is not the capital invested in a timber licence that there is in privately-owned land, and if they are to be on the same basis it will work an injustice. Much greater depletion should be allowed for pulpwood cut on fee simple land than on licensed land. I am sure I convinced the commissioner that this was the proper thing to do and I hope he has been following out that practice. I wish to take time by the forelock to suggest that it be carried out.
Since we were here last evening there has appeared in the morning papers-I have before me a clipping from the Ottawa Journal of this date-an item which I suppose was supplied by the Canadian Press. The heading is:
Gov't to Aid Newsprint Industry
May give tax relief under special war measure.
The text reads:
The government is expected to take action, probably under a provision in the special war finance measures now before parliament, to give taxation relief to the newsprint industry.
This industry to-day ranks next to gold in commodity export to the United States and thus in the provision of the urgently needed United States dollars.
It goes on to tell a story and to give figures of exports, and it refers to the minister's speech on Monday in which he spoke of a "special allowance for depreciation or depletion of capital assets" being made to companies for the purpose of export trade. It adds:
That is a provision which may be worked out under the Excess Profits Tax Act.
May I ask the -minister if it is intended to do that through that legislation or by enabling legislation such as he has now referred to in connection with the matter at present under consideration?
I should like to make this statement with respect to the excess profits tax. Perhaps it is too late to start off on a new basis in connection with that tax; we have had for years the corporation tax. This is the thought I should like to convey to the minister: that these companies should not be taxed to death at the present time; they must be sound and able to withstand the depression that may come to this country after the war. That should be done not for the benefit of the companies themselves but so as to prevent them having to " go through the wringer," as they have had to do in days gone by; and more especially so that they may be in a position to give employment in times when employment may be sadly needed. Their resources should not be sapped too much. If you take away from them all their earnings in good times and give no consideration to the losses in bad times which most of them have experienced, some of these companies are going to find themselves, let us say, with expensive inventories at the expiration of this war. All the foresight in the world will not prevent some of them from having large and costly inventories on hand, and they may find that the value of their assets has shrunk overnight while their liabilities remain just the same. They may not be able to meet their obligations to their creditors, with the result that reorganizations are bound to follow.
What does that mean to the country? It means unemployment, reduced wages and generally bad times. I want to convey to the minister the idea of the need for broad vision; that these companies should not be taxed to death but should be put in a position to weather the next storm.


An hon. MEMBER:: What about the
farmer?


Richard Burpee Hanson: Yes, I
agree, but at the moment I am not dealing with the farmer. These big companies provide the backbone of our employment in certain parts of eastern Canada-in my province, to a lesser degree in the minister's own province, and to a very large extent in Ontario and Quebec.
I do not want anybody to say that I am championing the bondholders of these companies. I know that thought will immediately arise in the minds of some. I have even heard it said that the whole basis of the Rowell-Sirois report is to protect the bondholders of the provinces at the expense of the dominion. I never thought that was the genesis of the report, and I do not think so yet; but there are people who will say it, and the minister will hear it before this session is over. That theory does not carry conviction to me. But the principle I am trying to

War Exchange Conservation Act
impress upon the minister is that these companies should be left reasonably sound in order to be able to weather the storms that may come. Revenue must be obtained, but let us take it from the ultimate recipients of the earnings of these companies. The principle followed in England is sound. We may have gone too far to go back to it now, but I do beg of the minister that he give consideration to what I know is a constructive suggestion with respect to company taxation and finance. Because after all, with the system of modern finance, these companies are the backbone of [DOT] industrial employment in Canada, and if they are not prosperous how can they give employment in bad times?
The minister has indicated the general trend of his ideas; he is going to make these allowances with respect to depreciation and depletion in return for certain undertakings to increase exports. The idea has a good deal of merit. I would like to have the principle developed a little further, and if he could be a little more definite it might be helpful in passing this resolution.
May I call the minister's attention to another consideration with respect to export trade and the increase in the volume of our United States exchange resulting therefrom. There is still in this country a substantial industry known as the lumber business, which for generation after generation was the backbone of the industrial life of the maritime provinces and eastern Canada, as I believe it is to-day of the industrial life of British Columbia. Is the minister prepared to say that consideration will be given to lumber companies which are not in the pulp and paper business but want to do an export trade, who have to suffer in a lesser degree in connection with the question of depreciation and depletion but will make a valuable contribution to the total import of United States dollars into Canada? I have an idea that our lumber men may be able to export a good deal more to the United States in coming days, especially if certain things happen, if the tempo of business is increased by certain eventualities in the United States which perhaps all of us are thinking about. Will the minister give consideration to extending this principle, rather nebulous yet, to export companies of that type, and not confine it so much to the bigger companies?-because I think it should go down the line. The line has to be drawn somewhere, but consideration might be given to all classes of business that are in the export trade in a reasonably large way.


James Lorimer Ilsley: They are included. There is no exclusion of lumber companies, or any kind of company for that matter.


Richard Burpee Hanson: I am
just calling the minister's attention to that.


James Lorimer Ilsley: I am anxious to get ahead, but let me say a word in respect to what the leader of the opposition says about taxation of companies. I am interested in hearing him take that stand, because hon. members cannot take two different stands-I am not talking about the hon. gentleman particularly. The feeling of this house last year certainly was that business interests were not to be allowed to use the war or the war period as a means of making profits in excess of ordinary normal profits. Now a doctrine has arisen-it may be a good one; I am not prepared to condemn it now. but it is certainly contrary to the former one. We find it in the financial press; to-day we hear it from the lips of the leader of the opposition. The sentiments he now expresses are very different from his stand last spring, when he was in favour of taking away from these companies all the excess profits that they earned during the war. If we are going to do that we cannot put them in a position to build up reserves against undefined losses in the future.
With regard to inventory reserves, the hon. gentleman referred to the probability that their inventories would suddenly drop in value at the end of the war. That was the experience at the end of the last war, and for that reason we embodied in the Excess Profits Tax Act a section providing, within certain carefully thought-out and defined limits, for inventory reserves. I do not see how we can possibly provide for general reserves against loss of profits due to some undefined circumstances that may arise in the post-war period. That would be equivalent to enabling them to prosper during the war, something to which the house was certainly opposed last session and to which I think it is still opposed.
There may be some middle ground. I pleaded for moderation last spring in this house; I said that in view of the fact that a great deal of our capital in this country had come from outside, and that a great many of our own people would do better if some profit incentive were left, I pleaded for moderation in this regard, and we were confronted by our friends of the Cooperative Commonwealth Federation who said. "No, take it all away from them." And my hon. friend, and many of the members of his party, joined them. What has happened is exactly what I expected would happen. I knew that at every session we would have more and more members who, having in mind the experience of certain companies, perhaps companies in their own districts, would say, "Be a little easier on those

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companies." Now, I am prepared to listen to all requests of companies, but I am not prepared to abandon the principle we laid down at the beginning, namely that companies during this war period shall not be allowed to strengthen or buttress their positions, or to build up reserves and make themselves prosperous, thinking that later there may be a loss of prosperity.


Mr. COLDWELL:: The minister made one very interesting admission, if I may say so, during the course of his remarks, namely, that the incentive which must be provided for industrial expansion is some additional profit. I want to draw the attention of the committee to that statement. We are appealing to our people to make sacrifices in a war period, yet the minister tells us that the government cannot take excess profits to the extent I believe they ought to be taken, because if that were done we should be providing no further incentive. Therefore the required incentive must be the incentive of profit, for that is what makes the wheels of industry go round.
In order perhaps to provide a little balance, the leader of the opposition having spoken as he did, I would say that we disagree with the point of view he has expressed. We object, too, to the powers given to the government under this proposal, whereby they may interfere with the excess profits tax. The house agreed this summer-members of this group dissenting-that the profits over and above the base period should be taxed at the rate of seventy-five per cent of the excess profit. That still left twenty-five per cent of the excess to the company.


James Lorimer Ilsley: Just to keep the record
straight: That, combined with the Income War Tax Act, left only 20-5 per cent. The combination of the two amounted to 79-5 per cent.


Major James William Coldwell: I am dealing with the excess profits tax, and the minister is bringing in some other tax. But we have left the companies with 20-5 per cent of the excess profits after excess and other taxes have been paid, an amount which, to my mind, is a considerable increase over what they had before.
I repeat now what we said in the summer, namely that to my mind the base is not equitable for the imposition of that tax. If we examine the records of some companies we shall find they made profits in 1939 as high as forty per cent, and their average would be around that for several years before. I would refer at this time to companies such as the Consolidated Mining and Smelting company, or Canadian Industries Limited.
Yet the proposal is that these plants shall be allowed to retain, if the government so permits, a percentage of the excess profits larger than that now allowed. I wish to register a most emphatic protest against the adoption of such a policy.
At the present time the gold mining industry is relieved from several forms of taxation. The ground given is that we require the gold. Of course, under existing circumstances, we require the gold in order that we may obtain the necessary dollar exchange in the United States. But in my opinion the necessities of this country, arising out of war effort, ought not to be the excuse for allowing corporations to escape taxation.
The other evening the minister said that the group to which I belong want to take over and to socialize all industry. That is not so.


Richard Burpee Hanson: Pretty
nearly.


Major James William Coldwell: No, it is not. We would take over at this time the industries essential to the carrying out of our war effort. We would take over the munitions industry, and if necessary the mining industry, and any others-


Richard Burpee Hanson: And the banks.


Major James William Coldwell: -essential to our war effort.


Mr. LACROIX (Beauce):: And the paper industry?


Major James William Coldwell: At the present time that industry is not essential to our war effort. I believe that by progressive steps this nation, and other nations too, will take out of private hands and operate for the good of the community those industries which to-day are private, profit-making monopolies. Indeed, as I have often said, and as I shall repeat this afternoon, we believe that more people should own more property and that a few people should own a great deal less property than they now own. That is the basis of our plea. Whether we like it or not, it is coming, and coming fast.
One of the factors which will bring this condition about more quickly than any other is the type of class legislation implied in this particular item. I protest against it on behalf of the group with which I am associated. I protest, because I believe when we are calling upon our men to relinquish their homes, their jobs and everything else, we have the right to ask these industries to do without the profit motive or profit incentive.

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Last night the minister gave the hon. member for Weyburn something in the nature of a verbal castigation because that hon. member had suggested that there were people in the country who were looking for profits and who ought to be controlled. Now we find, on the minister's own statement, that there are industries in Canada that we cannot expect to operate unless they show increased profits during war time.


Richard Burpee Hanson: No, that is not a fair statement.


Mr. COLD WELL:: Yes, it is a fair statement; and if the leader of the opposition and the minister will read Hansard to-morrow they will find that that is the effect of the statement made in committee this afternoon- namely, that they want a further incentive.
Let me proceed to the next thought in that connection. We are told that we must put those industries in a position whereby they may give after-war employment. But our experience in the past has been that there was no employment unless industry could see a profit.


Richard Burpee Hanson: That is not right.


John Ritchie MacNicol: That certainly is not
right.


Thomas Miller Bell: It is true.


Richard Burpee Hanson: Half the paper companies in Canada-


Thomas Miller Bell: I have the floor.


Richard Burpee Hanson: Then may I ask a question?


Major James William Coldwell: Yes.


Richard Burpee Hanson: Does the hon. member know that half the paper companies in Canada operated for years at a loss?


Édouard Lacroix: For thirteen
years.


Richard Burpee Hanson: For at
least ten years some of them operated at a loss, but they continued to give employment.


Major James William Coldwell: That may be true, but it does not affect the argument I am making, namely that unless industry can see the prospect-I shall use that word-of a profit, there will be no industry, and the industry that can show a profit will be the one which will be operated. All one has to do is to look at our own economy to know that that is true. Industries such as those owned by distillery and liquor interests operated continuously because they could obtain money and make a profit fMr. Cold well.]
while other industries which might have given work and essential services to our 'people were idle.


Mr. McCANN:: Does the hon. member
know of any essential industry which is closed because of inability to make a profit?


Major James William Coldwell: A number of essential
industries were shut down or on part time during the depression.


James Joseph McCann: This is war time.


Major James William Coldwell: In some cases they
were closed for days and weeks. Take the mining industry, for example. I know of mines that were closed down when people in the province in which I live were without coal. The need for the coal was there, but there was no profit because the people had no purchasing power and consequently the industry would not make deliveries.
A few days ago I asked for a return from the Minister of Munitions and Supply (Mr. Howe). I was anxious to obtain some information regarding new plants being built. I find that a great deal of the information which I require in order to understand what is going on has not been given because it is not considered to be in the public interest to give it. The government should tell the exact basis upon which plant extensions in private industry are being made. Many plants are being built and extended by the governments of Canada and Great Britain, and. if I understand the matter aright, there is a similar proposal involved in this.
If my information is correct, the rate of depreciation being allowed in privately-owned plants is such as these publicly-financed extensions can be written off in five years. My information may not be correct, and I have asked questions in order to get the correct information. If what I have just said is incorrect, then I want it corrected so that I may know precisely what is going on in the department. I want to protest against this method of making special allowances for depreciation or depletion to corporations under the Income War Tax Act and the Excess Profits Tax Act, if, in the opinion of the governor in council, such assistance is necessary in order that an expansion of the exports of any individual, partnership or corporation receiving such assistance may take place. That covers a great deal of ground, and in my opinion we are giving a very dangerous power to the government in providing that this type of assistance may be given to industry.


Mr. KINLEY:: I think the hon. member
has missed the important point of this resolution. The purpose of the resolution is to increase Canada's exchange. I cannot conceive

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of a healthy business without profit. It may be that the government will take that profit to carry on the war, but that is another matter entirely. Let us consider the individual. The profit that an individual makes is what he lives on.


Major James William Coldwell: Oh, no.


John James Kinley: The profit that an individual in business makes is what he lives on. If he has a loss, he will have nothing to live upon. In the case of a corporation, the officials are paid before the profit is computed and there is a slightly different situation. I do not think this resolution is framed for the rich or large companies. I can see in it possibilities for the fishermen in my riding. The herring and mackerel fishermen in the maritime provinces can catch fish, but the prices on the foreign markets are so low that they have no profit. If certain expenses can be eliminated, then these men can ship their product to foreign countries and we will have the advantage of the exchange. I have in mind the vinegated herring industry, or herring cured in vinegar. There are fishermen and dealers in my riding who operate in a small way but who produce thousands of barrels of these vinegated herrings. This product has a ready market in the western states but at present the price is not sufficient to make a profit possible. Surely it would be in the interests of the country to have this industry stimulated.
Then in connection with the newsprint and pulp industry, it seems to me that if this industry can increase its production it would bring more exchange to the country. At the present time no newsprint or pulp is coming in from Europe. Surely abnormal extension expenditures could be written off in a way that would not prove a burden when we return to normal times. I think this would be eminently in the interests of the people of the country. To make this resolution the subject of an attack on the capitalistic system is not in keeping with our war effort. The capitalistic system is not perfect; it was conceived by man and anything conceived by man is not perfect. But for the last hundred years it has been the best way devised for the orderly progress of society, and until I can see something better-I am always looking for something better-I am not prepared to step into some unknown which will reduce this country to a condition similar to that prevailing in the countries of Europe where the conflict is going on at the present time.


Mr. HARRIS (Danforth):: Last evening the minister said that if hon. members opposite to him were able to see some deep meaning in this legislation which he could not see, he 14873-48
wished they would tell him. This resolution provides for assistance to individuals, partnerships or corporations by way of tax credits or special allowances for depreciation or depletion. There are individuals, partnerships or corporations which have invested United States funds in this country to develop our natural resources. If in due time they have dividends to disburse and ask the foreign exchange control board for United States exchange, then I suggest to the minister that should any of these individuals, partnerships or corporations appeal for assistance under this section they should be told either to pay their dividends in Canadian funds or to refrain from going to the foreign exchange control board for United States funds with which to pay dividends.


James Lorimer Ilsley: The hon. member is referring to United States owned companies.


Joseph Henry Harris: I tried to make that abundantly clear last night. I have one other suggestion to make, apart altogether from this one, but having to do with the conservation of foreign exchange. Many United States owned companies make interplant shipments from Canada to the United States which are invoiced at prices far below the true market value. It is difficult to establish this, but these prices should be checked in the United States in order to make sure that we are getting the full United States exchange for these exports. Some commodities are shipped to the United States for further processing before being marketed. I have one firm in mind which placed $100,000 in their depreciation reserves for the day when commodity prices might drop considerably. When any of these individuals, partnerships or corporations appeal for concessions under this resolution I hope the department will see to it that they invoice shipments from their Canadian to their United States plants at the full market value in order that Canada may obtain the full exchange value of the shipment. I just throw that out as a suggestion.


James Lorimer Ilsley: I think the income tax
division takes some pains to see that that is done.
Mr. O'BRIEN: Mr. Chairman, so far I have remained almost mute in the deliberations of the house, and it is not my desire now to delay the committee. I find this discussion very interesting for the reason that as I am in business, as most of the members are, it is something that we can put our teeth into. The war discussion has been so abstract at times that I have felt bewildered.
During this discussion the word "incentive" has been mentioned, and the leader of the opposition (Mr. Hanson) has voiced a view



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which I should like to commend. The immediate incentive is not altogether the point, but, it seems to me, as he so ably suggested, that the future is a very important item to consider.	.
Coming as I do from the county of Northumberland, which depends almost entirely on the lumbering business, as do also the constituencies of Gloucester, Restigouche-Mada-waska, Victoria-Carleton, York, Kent, and virtually all the northern counties of New Brunswick, I know that this item is a matter of vital importance to our province and particularly to what I might term the owner-managed type of business. Some reference has been made to-day to corporations. Corporations I think are usually able to take care of themselves, but the smaller owner-managed type of business usually suffers owing to the fact that there is no organization in which their difficulties can be discussed with a view to getting relief. For that reason I wish to compliment the minister upon the degree of flexibility which is being achieved, because, as we all know, in times like the present there must of necessity be generally speaking, rigid control.
When a government or a department is dealing with matters of business, certainly business principles should be followed; for any business, to be successful, must of necessity have a great degree of flexibility in its structure. Therefore I am happy to note with reference to individuals, partnerships or corporations that each situation may be flexibly treated on its merits. That I think is a splendid thing.
Referring to the Ottawa Journal of this morning, to which the leader of the opposition also referred, it seems to me that the report as to government aid to the newsprint industry is a bit premature because that is what we are attempting to determine here at the moment. But if it should be the decision of this committee that aid should be given to the newsprint industry, and the department is given the necessary authority, I suggest that if relief is given, and I am in favour of the principle in the circumstances-


James Lorimer Ilsley: No relief is to be given
to the newsprint industry, but the same concession will be available to them if they can produce exchange as a result of the concession. But the idea is not to relieve the companies.
Mr. O'BRIEN: Concession or relief.


Richard Burpee Hanson: Before any return is made they must do thus and so.


James Lorimer Ilsley: Yes.

Mr. O'BRIEN: I would hope that we might follow along the same line in connection with the primary producer, the producer of pulpwood, for instance. I am not going to quote any figures here to-day because frankly I believe business should be smart enough to govern its own affairs and create its own destiny so that government would not be forced to interfere and control business.
Whether it be done by statute or by persuasion, and I much prefer persuasion, it seems to me that the newsprint industry should be informed that the primary producer of pulp-wood, the farmer, is not receiving a sufficient return in view of the increased profits and the much greater returns which evidently the newsprint companies are making to-day. I am informed that pulpwood in Nova Scotia-it may be so-called distress wood-is now being sold at $7 a cord, which I think is a price unfairly low. Whether the matter should be looked after by the war-time prices and trade board or by some other agency I do not know, but on October 29 I wrote the Canadian Pulp and Paper association drawing attention to the matter and stating my belief that the pulp and paper industry should consider it. I received a non-committal reply, almost a month later. I hope the pulp and paper business will be smart enough to realize that if this adjustment is not made voluntarily by the business itself it will eventually be done through government control.
There is another matter in connection with the small lumber business, to which I should like to refer. I wrote to the minister with regard to this and received a friendly and I think useful reply, stating that he would be glad to have any suggestions. In the lumber business as carried on in New Brunswick and Nova Scotia, the operations take place in small portable mills, which do not permit of any large capital investment; consequently depreciation on the plants used by these small owner-managed businesses is practically nil. I am convinced that those of us engaged in the lumber business in the maritime provinces wish to carry on that business in order to supply the necessary material required for Great Britain's war effort. We are not particularly anxious to make enormous profits. But as the leader of the opposition has suggested, provision should be made so that in the future some reserve may be allowed. That is perhaps looking too far ahead, but I have been wondering if it would not be possible to devise some scheme along this line. Let us say that a company pay a $5,000 tax-I am speaking of an owner-managed business. In return a certificate might be given to them for a certain portion of that tax to be re-issued

War Exchange Conservation Act
without interest to the person making the payment, so that in future years, when war business ceases and unemployment and depression are perhaps again our unhappy lot, the certificate might be taken by the lumber operator or the operator of any other line of business to his bank as security. Some future generation might thus reimburse the present day operators in view of the severe war conditions they have to contend with to-day. As a matter of fact I think such a certificate of the dominion would be as valuable to the bank as some types of bonds. I hope that when these concessions are being arranged-because I appreciate the necessity for creating exchange-some consideration will be given to the primary producer, particularly the small farmer pulp-wood producer.


Mr. CASSELMAN (Edmonton East):: Mr. Chairman, I rose for the purpose of asking a question of the hon. member for Rosetown-Biggar (Mr. Coldwell) but he has left the house so I shall have to leave that till later. Somebody had asked him whether he would consider farming an essential industry to be taken over by the government.


Thomas Clement (Tommy) Douglas: Surely the hon. member does not think that farming is a monopoly.


Frederick Clayton Casselman: I was talking not about monopolies but about industries. I should like to ask the minister if this section we are now dealing with is wide enough to enable the government to make whatever arrangements might be deemed desirable to assist coal. I have in mind particularly Alberta, where coal is a vital matter to us. My information is that about $93,000,000 went to the United States last year for the purchase of coal by Canadians. It seems to me that this is a very important question, much more important, in fact, as regards the conservation of exchange than the matters with which we have been dealing, although I do not quarrel with those at all. Is this section which we are dealing with wide enough to promote a greater market for Canadian coal in the way of subventions or lower freight rates or in any similar manner?


James Lorimer Ilsley: No. This measure does not affect industries which rely on the domestic market. This is to encourage export industries for the purpose of obtaining exchange.


Howard Charles Green: As I understand it, the
purpose of this resolution is to help increase Canada's supply of foreign exchange. That is being done by giving certain remissions of taxation in order to expand exports.


James Lorimer Ilsley: Yes.
14873-48}


Howard Charles Green: The discussion to-day has taken the form of considering exports to the United States. In British Columbia practically all the lumber which is exported goes either to Great Britain or to one of the empire countries, in which transactions, of course, there is no such thing as United States exchange. Is it the intention that this power shall be used to assist the lumber industry to expand its exports to British empire countries?


James Lorimer Ilsley: No, that is not the intention of the legislation. Although it is possible under this bill, it is not considered desirable to limit the powers so as to make that entirely impossible. But it is not my intention at the moment to recommend assistance except for the single purpose of increasing our supplies of par currency exchange.


Howard Charles Green: Last evening the hon. member for New Westminster (Mr. Reid) raised the question of promoting the production of silver. Frankly, I thought he made an excellent presentation. I believe that many of us in this house are in entire agreement with the stand he took. But the minister did not answer the hon. member's question. I would ask him to tell us the attitude of the government with regard to encouraging the production of silver so that it may be exported to the United States.


James Lorimer Ilsley: An application from the
silver mining industry for assistance under this measure would be considered. If the industry is exporting silver and feels that it could obtain exchange for this country by increasing, with assistance, its exports, it would be possible within the letter and spirit of the proposed legislation for the government te assist it. Whether that would be economically desirable I am not prepared to say; it might or it might not. It would depend upon the facts.


Mr. REID:: That does not quite answer
the question. The proposition made last night was that the government give consideration to doing the same with regard to silver as we are doing with regard to gold, so as to lend encouragement to operators of silver mines, to give employment in Canada, and to provide Canadian dollars in the United States. The answer given just now by the minister in reply to the hon. member for Vancouver South is not exactly in keeping with the argument which I advanced last night.


James Lorimer Ilsley: If the hon. member means,
would the government give consideration to amending the Excess Profits Tax Act so that the same rules should apply to silver as apply

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to gold, I think I can say that such consideration will be given. I am not in a position to say that I will introduce an amendment to that effect. The question was very fully considered last year, as to where the tine should be drawn. We drew it between the gold mines and the oil wells, on the one side, and other extractive enterprises on the other. But we are prepared to consider at any time the location of that line. That is all I can say.


Thomas Reid: That is well so far as it goes, but it does not answer my question. The question which was asked affects the argument under consideration at this moment. What We were asking was, would the same consideration be given to silver produced in this country, as regards being controlled by the mint and deposited in the United States under similar arrangements to those which apply to gold?


James Lorimer Ilsley: I do not know. I will consider it, if the hon. member will write me outlining the respects in which he wants consideration to be given. I have talked already about two of these, one, in answer to the hon. member for Vancouver South, the other under the Excess Profits Tax Act. The hon. member has a third of which I am not aware, and if he will write to me I will consider it.


Mr. DIEFENBAKER:: I am wondering
whether or not the minister has considered the implications of this type of legislation. I protested against this last evening, and I am going to repeat my protest, because I think it applies even more to this type of legislation than to that which I objected to last evening. This amounts in effect to parliament granting to the governor in council the right to interpret statutes according to the needs of foreign exchange at the moment. Under the provisions of the war tax act and the Excess Profits Tax Act, statutory provision is made for the deductions that can be made for depreciation and so on; and what in effect parliament will do if it allows this resolution to pass is to give approval to the dangerous proposition that statutes shall be on the statute books but may be applied in such way as the governor in council may consider advisable in the interests of foreign exchange. That is what it does.
If the war tax act is not sufficient, amend it. If the Excess Profits Tax Act goes too far, and I am not arguing that at the moment, why should not the government take it upon itself to amend it? This resolution in effect allows the governor in council to relieve any individual or company from the law of the

land, and I think this is a most serious matter. Surely there must be one law for all individuals and companies in this land. We have now come to the position where the government says, "We are going to leave on the statute book these statutes, the war tax act and the Excess Profits Tax Act, but we are going to make such orders in council as we deem necessary from time to time to relieve certain individuals, persons or companies from the application of the law of the land as set out therein."
I repeat my protest against this kind of legislation. I submit that its passage will create a dangerous precedent. It will destroy the rule of law. I realize that in time of war our people must give up some rights in the greater interests of the safety of the state, but I emphatically protest against legislation of this type, which will permit the executive to create inequalities under law in this nation. It allows the governor in council to say to one individual or company, "You shall operate under the law of the land," and to another individual or company, "You are to be relieved from operating under the law of the land." My submission is that this is a most dangerous principle, because the essence of law, whether in war or in peace, must be uniformity, certainty of application and reasonable definiteness. If we pass this type of legislation empowering the executive to enforce the law for one individual or company and relieve another from its application, we destroy the rule of law. We permit the law to be elastically applied and give to the executive power such as has never been asked of this house, nor, do I believe, of any other parliament.
Last night in reference to this very matter I asked why this type of legislation was being brought up, and the minister answered: "We had the power to act under the War Measures Act, because if ever there was a war measure this is one. We did not think, however, that that would be acting in the true spirit of the constitution. We thought that when parliament was here we ought to lay the matter before parliament and state what we intended to do." The minister nods agreement with that statement. "Does the minister contend that under the War Measures Act the executive of this nation had the right to say to one individual, "You shall pay the tax provided by the Excess Profits Tax Act," and to another individual, "You are relieved from it"?


James Lorimer Ilsley: Yes.


John George Diefenbaker: The minister says, yes. I do not think the courts of the land

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would ever uphold any government in discriminating, as the government would if it applied that principle.


James Lorimer Ilsley: My hon. friend is aware that the Department of Munitions and Supply provides for the construction of plants by assistance to private companies-$500,000 to this, $1,000,000 to another, and $2,000,000 to a third-in proportion to the value which they think the enterprise has in the carrying on of the war effort. Is not that a much more important discrimination between companies than would be a tax concession or depreciation allowance in return for a specific service rendered, namely, the provision of foreign exchange?


John George Diefenbaker: That is quite a
different thing.


Richard Burpee Hanson: The plea of confession and avoidance under the old common law procedure.


John George Diefenbaker: It is a different
principle, I submit. These are statutes which make certain provisions that apply to every person in the country, and what the government is now asking is that it shall have the power to relieve certain persons from the law to a greater or lesser extent. Against that type of legislation I protest.


Major James William Coldwell: I warmly support what has just been said by the hon. member (Mr. Diefenbaker). It seems to me we are in danger of placing on the statute book provisions which become more or less windowdressing, because people do believe that taxes are to be imposed as laid down by parliament in the budget of last summer. If we give the power implied in the government's resolution we have nothing but dead letters which deceive a good many people. I believe that the point made by the hon. member has been well taken.
I was out for four or five minutes just now and I understand a question was asked by the hon. member for Edmonton East (Mr. Casselman). I should like to answer it. As I understand it, the question was whether I considered that farms should be subject to socialization by the state. My answer is, no. To-day farmers are being squeezed by the monopolies of which I have spoken. We believe that when an institution exploits society so that it becomes a matter for the protection of society, it should be taken over. The farmer, the producer, never makes a profit in the sense in which I have used the term profit, which is the residue left after
all other costs including depreciation have been met. It is consequently a reward unearned which goes entirely to the ownership of capital.


Frederick Clayton Casselman: Was it only to monopolies the hon. member was directing his remarks?


Major James William Coldwell: Monopolistic industries.


Mr. NICHOLSON:: I take exception to this section 6. Last summer when the excess profits tax was imposed, the hon. member for Rose-town-Biggar (Mr. Coldwell) suggested that these mining corporations were already enjoying enviable profits. The Excess Profits Tax Act, according to the minister, allows them 20 per cent in excess of what they have enjoyed in the last few years. In view of the fact that we are appealing to all groups in Canada to make the fullest contribution to the war effort, I submit that the admission by the minister that there is some difficulty in getting some of these corporations to play their full part should warrant the government in carrying out the provision made under the National Resources Mobilization Act, section 2 of which provides:
Subject to the provisions of section three hereof, the governor in council may do and authorize such acts and things, and make from time to time such orders and regulations, requiring persons to place themselves, their services and their property at the disposal of His Majesty in the right of Canada, as may be deemed necessary or expedient for securing the public safety, the defence of Canada, the maintenance of public order, or the efficient prosecution of the war, or for maintaining supplies or services essential to the life of the community.
If any difficulty is being experienced in getting the necessary foreign exchange the government should at once take action under the act. I strongly object to giving the government the wide powers asked for in section 6.


[Stage Direction]
Resolution agreed to.
7. That any enactment founded on these resolutions shall be deemed to have come into force on the second day of December, 1940, and to expire on the date of the issue of a proclamation under the War Measures Act declaring that a state of war no longer exists or on such earlier date as may be fixed in a proclamation of the governor in council. ,
Richard Burpee Hanson: Before this resolution carries, would the minister say, having regard to what has been said this afternoon, especially the remarks of the hon. member for Lake Centre, that the whole position will be reviewed between now and the

War Exchange Conservation Act
next budget? I realize that, if one wanted to do so, one could raise grave objections to this kind of legislation.


James Lorimer Ilsley: Yes, I will do that.


Richard Burpee Hanson: The whole question ought to be reviewed. And in the meantime will he provide members with the information as to what has been done under this resolution?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Then in four months time we can review the whole position.


Mr. BLACKMORE:: Before this resolution passes may I make two or three comments? In the first place I wish to associate myself with the minister in his observation regarding profits, and in his endeavour to manage matters so that industry can make a profit. It is to this question of profit that I wish to refer.
In the first place the minister, without knowing it, has begun, in these provisions to assure a fair profit, to move in the direction of social credit in respect of the just price. I am afraid that statement may not appeal to him, but after a while it will not look nearly so bad. I believe that before the war is over, before production is at the peak at which we all want it to be, the minister will have to go a great deal further than he has gone already. Either he or the Minister of Munitions and Supply has already gone a long way in another direction-that of advancing money to assist in the establishment of distinctive war industries. Let us take as an illustration-I have no other in mind at the moment-the ammonia plant which I understand is to be established in Alberta. If the government were unable to find a company that dared to risk its capital in the construction of an ammonia plant, they might say to the people concerned: Look here, we realize that the war may end in a year or two, and that if you put your money in this plant you may lose it; we are therefore prepared to help you bear the burden. We are ready to- assume a certain amount of the risk; we will advance from government funds say half the total amount necessary for your capital expenditure.
Now, that is completely sound. It is some-tiling which has been done, is being done and will be done to a greater and greater extent before the war is over. What the government have undertaken to do there is to make productive loans. At the present time the government is either collecting that money from the people in the form of taxation, or borrowing it. But I contend very seriously that after a .(Mr. R. B. Hanson.]
while it will come to be seen quite clearly that the money might just as well be created. If the money can be spent when it is borrowed, or when it is taxed, without causing inflation, it can be spent when it is created without causing inflation. This is an extremely important matter, which I think has not yet become clarified in people's thinking. But men are making good progress. I have a passage here from a speech by Mr. G. W. Spinney-I suppose he would have a nightmare if he knew I was referring to him in support of social credit-before the shareholders of the Bank of Montreal on December 3, in which he made a remark which shows a great advance towards modern concepts of money.
Having used this illustration, may I point out that the minister is pursuing a perfectly sound principle in advancing money free of interest as a loan, as a gift to a producer who is going to bring into being commodities which the government or the people will sorely need. I believe that the informed thinking people in Canada will support the minister in doing that. Common sense would say that if we need ammonia, let us have ammonia, and if we have to give the money to a company to get the ammonia, let us do it. That is sound thinking, as I think the ordinary person will agree.
The minister can go still further. He can arrange to allow the company that is producing the ammonia to buy its raw materials at a reduced price brought about by a direct payment by the government of part of the price of the goods being used by the company. I do not know just what is used in the production of ammonia, but if, for example, it were zinc, the government could arrange to see that the company got its zinc at, say, ten per cent below the market price.
I am sorry to be taking so much time, but the discussion has been extremely interesting and valuable; I have not thus far taken up much of the time of the committee, and I believe I have a message that is important in relation to the matter under consideration.
I was speaking of a discount on the price of raw material. Or the government might say: We will remit part of the cost by paying part of the freight rate on the raw material. That again would be of direct assistance to the company and an assurance that they would make a profit. Or the government might go further and remit the sales tax on .the raw-material in order to enable the company to sell its product at greater advantage.
All these matters are devices which are in the minds of social crediters as possible means of helping producers produce. As I said the other day, there is no nonsense to it; it is

War Exchange Conservation Act
just common sense in action, as will be clearly seen by anyone who takes the time to examine these proposals calmly and dispassionately and without prejudice.
I turn to the matter of conserving exchange. It is clear that the government should advance money to help produce ammonia, say, but it has perhaps not become clear that the government can afford to advance money to producers of other things, say wool, or shoes, which happen to be needed. If the government carry this process far enough to assist in the production of shoes, for example, they will enable the people who are producing shoes in Canada to produce and sell at such a low rate that people will buy Canadian shoes instead of shoes from the United States. They will prevent the importation of shoes made in the United States, and thereby conserve exchange.
Let me turn for a moment to the remark of the hon. member for Edmonton East (Mr. Casselman) the other night. I believe I was just a little discourteous to him-


Mr. McNEVIN:: Will the hon. member
tell us how many shoes are imported from
the United States?


John Horne Blackmore: Well, if shoes are
an unfortunate example, let us take something else. If the hon. member is asking a sincere question, very well; but if he is asking it just to interrupt me, it is another matter. Suppose we are importing carrots. If the government advanced money to help someone in Canada build a greenhouse in which to produce carrots so as to supply our winter market, the principle would be the same; it would prevent the importation of carrots and other vegetables from the United States and thereby conserve exchange. Once this idea is apprehended by the people we shall approach from an entirely different angle the matter of conserving foreign exchange.


Thomas Bruce McNevin: What would happen to
the Canadian farmer if the United States did the same in respect to our cattle? We manufacture between ninety-seven and ninety-eight per cent of all our shoes.


John Horne Blackmore: The hon. member is asking a very good question but he is confused by the anomalies of our present system. He cannot tell to save his life what to do with the various commodities of which we now have a surplus, such as the wheat that the farmer of western Canada is producing in abundance. He raises these questions which confront us under our present system, whereby the country is cluttered up from end to end with unsalable products-in itself an indication that it is essential to have a change in the
system. We could eliminate the consumption of foreign goods just as Canada could eliminate the buying of United States steel if the production of Canadian iron were promoted and our dependence on United States iron done away with. We can in large measure eliminate the need for United States exchange without raising any difficulties or doing anything which might be objectionable. We can also gradually increase our own production, thereby avoiding inflation; we can increase our home consumption, which will raise the standard of living among the people, make for prosperity and happiness, and give the government a greater taxing base, which is another thing much to be desired.
What I am about to say now may not appear to bear directly on the question under discussion, but certainly it does relate to it indirectly. If the adjusting is done with created money instead of with borrowed or taxed money, the strain on the Canadian people will be removed. The only question which arises is whether such action will cause inflation. Again let me say that if we can borrow money which would not ordinarily be spent, and spend it without causing a rise in prices, we can create the same amount of money and spend it without giving rise to inflation. I believe that is quite clear.
If we create the money we will avoid inflation provided that we take care to look for four things. First, we must see to it that we have plenty of goods; second, we must have a sufficient variety of those goods; third, we must have plenty of resources to produce more goods, and, fourth, we must have the planning which will supply a still greater variety and a greater abundance.
For example, let us consider the facts in connection with wool. We may have the fear that if we permit money to go into circulation the price of wool will go up. But if we produce more wool we shall have then approached the matter from an entirely different angle. We could increase the wool production of Canada to such an extent that the Canadian people could not begin to buy all the Canadian wool, and endanger a rise in price. Once the government approaches the problem from that angle it will have an altogether different outlook concerning the whole inflation situation, and will understand what I said the other day-that it is following a niggardly policy with respect to Canada. It is starving the Canadian people down, instead of stimulating them to the greatest possible production and to consumption which will give them the greatest possible strength in the contest upon which we have only entered.
I shall now turn to the matter of profits. As the hon. member for Edmonton East will

War Exchange Conservation Act
probably see, by following the proposals I was making the other day when I said we were living in an age of plenty, he would see that we would have plenty of foreign exchange if we had plenty of production of a sufficiently great variety at a sufficiently low price. So that the problem would be cleared up.


Frederick Clayton Casselman: Provided you could get the other country to buy your goods.


John Horne Blackmore: Yes, but if you could not get the other country to buy your goods you would have accomplished one great thing when you produced plenty and enabled your own people to buy them.


Frederick Clayton Casselman: What about the production of more wheat?


John Horne Blackmore: I shall come to that. That is one of the things confounding people to-day; Canadians do not see how to deal with it. Before I finish my speech I wish to deal with it, although it is not part of the subject of the debate. If the hon. member wishes to ask questions when I have finished my observations I shall be only too pleased to answer them, because I am not advocating anything that is not scientifically sound.
Social credit is simply a new order, that is all. It is a way by which we can raise revenue without dragging ourselves down into a state of niggardly scarcity, through which we are in danger of being defeated.
This question may be raised: Why did the Social Credit party support the Cooperative Commonwealth Federation in their attitude toward the taking away of money from people who had money to spare? I would draw the attention of the house to the fact that the amendment then under consideration said, in effect, "We will take a compulsory war loan, free of interest, according to ability to subscribe-"


Thomas Vien: I am sorry, but the hon. member cannot refer to another debate of the same session.


John Horne Blackmore: I bow to your ruling, and shall not continue along that line.
I agree with the minister when he says that under the present system it is necessary that companies must have a profit. There is no possibility of avoiding it, and there are several reasons why. Companies need to have a profit because, as has been pointed out, they are afraid of the aftermath of the war. When a man invests $100,000 in a plant, knowing that almost any day the war may come to an end and his market may be lost and his investment thereby jeopardized, he will of course require a sufficient profit.

Canada could organize on such a basis that producers would not demand exorbitant profits. If there were an arrangement whereby we could guarantee to the farmer that no more wheat would be produced than could be used, he would not be taking such a tremendous risk if he were to invest $10,000 in a farm. The same reasoning is true with respect to a company. If we could guarantee that production and consumption would be planned and that prices would be maintained at stable levels, with no fear of disastrous changes in tariff or of loss of trade as a result of which a man might be ruined, there would be no necessity for all these great profits which companies are now so eagerly trying to get.
In my view, under the capitalistic system, the profit motive is quite sound. The hon. member for Queens-Lunenburg (Mr. Kinley) spoke wisely: without profits we simply cannot get along under the capitalistic system. The minute we try to do so, production is stopped. The only way to induce production would then be by threat of punishment. If that were done we would have regimentation.
We want profit, but we do not want exploitation. I do not think my hon. friends of the Cooperative Commonwealth Federation would object to profit so long as there were no exploitation.


John Ritchie MacNicol: Don't offer them any; they won't refuse it.


John Horne Blackmore: I think that is probably so. Perhaps my ideas are somewhat at variance with those of the hon. member for Rosetown-Biggar when it comes to a discussion of profits. But man has not yet found any effective incentive for production other than that of profit. It is dangerous to seek to abolish the profit motive. I believe the minister has realized that fact, and as a result he is now introducing these measures.


Thomas Reid: It is part of our lives.


John Horne Blackmore: Yes, I would say it is. We must take the choice between profit and regimentation-and I do not for one moment favour regimentation. It is said that Lenin brought in the machine gun to take the place of the profit motive. Well, that was not a good thing; it immediately brought about a dictatorship. I believe you can encourage people to produce all you want them to produce. You can encourage them to sell at whatever price you wish to prevail, if you just manage the profit properly. The profit motive is the only way of preserving democracy, because the very minute you force a man to raise wheat or to work, for example, in a mine, you have destroyed completely democracy.

War Exchange Conservation Act
I believe we must contrive to give a fair profit, or one adequate to encourage production; there must be a profit for all- for primary as well as for secondary producers, for farmer as well as manufacturer.
May I turn once more to the observations of the hon. member for Queens-Lunenburg. As I understand the situation, there are two distinct classes of production. First there is the primary producer, such as the fisherman or the farmer, who, generally speaking, lives on his profit. But the man engaged in, we will say, machine manufacturing, does not necessarily live on his profit. His wages or his living are included in the cost which goes into the price of his output.


John James Kinley: If he operates as an incorporated company.


John Horne Blackmore: Yes.


John James Kinley: He creates another person, in law, to carry on his business.


John Horne Blackmore: Yes. We must bear in mind the fact that the farmer simply cannot live without profit, because that is all the living he has. How can the fisherman live without profit? He must make money. We must distinguish between the profit of the primary producer who lives on his profit, and the profit of the secondary producer who does not live on his profit. But the secondary producer uses his profit to pad and to protect himself against eventualities to come. Therefore he needs profit-in fact a rather large profit. Once we get that in our minds we can stop worrying about big profits and big industry. The iron industry is a war industry. The man conducting such a plant is constantly worrying over what he is going to do after the war is over. He is thinking of the day when iron will not be needed to kill men, when there will be a surplus of that commodity in the world. He wonders how he will be able to sell iron then.
What could happen was seen in the last war when sugar production was increased to such a tremendous extent that after the war there was more sugar than the people could use and the sugar producers were almost all ruined. The men who are conducting our war industries are certainly worrying about what is going to happen when they are not able to sell their products. The man engaged in war industry should be dealt with in a particular kind of way. He has his own money invested and there is the investment of his shareholders. These are the main reasons why he needs considerable profits. There should be a fair profit for both the primary and the secondary producer.
May I suggest once more that consideration be given to what is known as the social credit just price by the creation and wise use of money based upon the goods-and-services-producing-and-consuming-power of the country. For example, the amount of money which can be created and given to farmers in price modifications depends upon whether there are plenty of things that are used by the farmers which the farmers can buy with the money they earn. If there are, the money will not cause inflation. Again: The amount of money which can be created and advanced to railways as freight adjustments depends upon what commodities the railways will spend the money which they receive, and whether there are sufficient goods for which they can spend the money without causing a rise in prices. The railroads will buy coal. Is there plenty of coal? They will buy oil. Is there plenty of oil? If there is plenty of oil and plenty of coal, there will be no rise in the prices of those commodities. As soon as we begin to look at the matter in this way, the dread of social credit proposals will be removed immediately.
To sum up, I agree completely with the minister when he says that there must be a fair profit. Measures must also be taken to help the producers not only to produce all we want, but to produce it at prices that will give the producers, both primary and secondary, a return for their production.


Mr. CASTLEDEN:: It is to be regretted that in the dying minutes of this part of the session we should have to consider such important legislation as this is embodied in this resolution. We spent weeks and days in the last session discussing the budget and amending the Income War Tax Act and the Excess Profits Tax Act, but by this one resolution practically the whole thing is being wiped out in that it places within the power of the governor in council the right to discriminate and grant special privileges.


Thomas Vien: I did not want to interrupt the leader of the social credit group, but the fact is that we are now discussing resolution 7.


Mr. JOHNSTON (Bow River):: Resolution 6 has not been passed.


Thomas Vien: Resolution 6 has been agreed to.


Some hon. MEMBERS:: No.


Thomas Vien: I should know whether it has been carried. Resolution 6 has been carried and we are now discussnig resolution 7.


John Horne Blackmore: We were under another impression.

War Exchange Conservation Act


Thomas Vien: Unless the committee is willing that the hon. member should revert to resolution 6, he will have to address his remarks to the subject matter of resolution 7.


George Hugh Castleden: Mr. Chairman, I have been waiting to speak on resolution 6. At the time you said that this resolution was agreed to, there were two hon. members on their feet.


Thomas Vien: Resolution 6 has been carried.


George Hugh Castleden: I think this resolution places the people of Canada in a precarious position.


Thomas Vien: Unless the hon. member secures the unanimous consent of the committee to revert to resolution 6, he cannot discuss this matter.


George Hugh Castleden: I call upon the committee to give its consent to my reverting to resolution 6.


Thomas Vien: Is it the pleasure of the committee that the hon. member shall have permission to revert to resolution No. 6?


James Lorimer Ilsley: I am inclined to think we should give the hon. gentleman a chance to speak. If there has been a misunderstanding, I think this permission should be granted. I thought of raising the point when the hon. member for Lethbridge was talking, but there seems to be some misapprehension in that corner of the house. I think we shall get along more quickly if we let these gentlemen say what they have on their minds.


Thomas Vien: Is the committee willing to give unanimous consent to the hon. gentleman reverting to resolution 6?


Some hon. MEMBERS:: Yes.


George Hugh Castleden: The trouble that I see in connection with this legislation is that it is bound to lead to some form of discrimination. An individual, partnership or corporation may be granted assistance by way of special tax credits or special allowances for depreciation or depletion under the Income War Tax Act. It seems to me that every company in Canada will be asking for this. These companies will be compelled to ask for favours from the administration, and I do not see how certain businesses can continue to exist in such an atmosphere. Already the government has taken certain representatives of big business into some of the departments, and it seems to me that the natural result of this legislation will be increased lobbying. There will be a disgraceful scramble for special concessions, and the successful lobbyists will be able to wipe out any opposition.

This creates a monopoly, and industries in less favoured parts of this dominion may suffer considerably. The resources of Canada are owned in a large part by monopolistic organizations. They own and control much of the machinery of production. Owning the natural resources of this country and having control of production, they are able to tell the primary producer what he shall get for the commodity he raises and can dictate to labour what it shall receive.


John Ritchie MacNicol: Will the hon. member name just one monopoly?


George Hugh Castleden: The oil industry and the power industry in eastern Canada.


John Ritchie MacNicol: We have the hydro
electric power commission in Ontario which is not a monopoly, but a public utility.


George Hugh Castleden: Beauharnois and Montreal Light, Heat and Power company.


Thomas Clement (Tommy) Douglas: Nickel is a world monopoly.


George Hugh Castleden: Also the General Electric Company of America. Many businesses can continue only upon the condition of their claims being favourably considered by government officials. I cannot see how justice can exist in such an atmosphere. I cannot see how we can continue to sit in this house and favourably consider legislation which will grant one kind of treatment to one group of people and give special privileges to another. It will be a sad day for the people of Canada if this thing should continue any further.


Charles Edward Johnston: Mr. Chairman, I do not intend to speak at any length on this matter, but I wish to point out to the government that perhaps they should spend a little time in reading the remarks of the hon. member for Lethbridge (Mr. Blackmore). If that were done-and I say this advisedly-then as far as I am concerned there would be no objection to this resolution passing. As it now stands, however, I am definitely opposed to it because in my opinion it is class legislation. I think the minister must acknowledge that this is just another belt-tightening process and it will be something that will bear most heavily upon the common people. There is to be an increased price for washing machines, but I do not think anyone ever bought a washing machine as a luxury. When you begin to increase the price on articles such as this, you just make it that much more difficult for the common people. This resolution reads:
That the governor in council in order to increase Canada's supply of foreign exchange-

War Exchange Conservation Act
There are many other ways of increasing our supply of foreign exchange, as the hon. member for Lethbridge pointed out.
-may, on the recommendation of the Minister of Finance, enter into agreements with individuals, partnerships or corporations-
I fancy that the minister has not in mind the agricultural or fishing industries, and I am sure that he has not in mind the fruit growers. If this is to be class legislation, then it is definitely wrong.
-to grant assistance by way of special tax credits and/or .special allowances for depreciation or depletion under the Income War Tax Act and the Excess Profits Tax Act-
There is a great danger in these depreciation allowances.
-if, in the opinion of the governor in council, such assistance is necessary in order that an expansion of the exports of any individual, partnership or corporation receiving such assistance may take place.
According to the minister himself, these large corporations are making an excess profit of 20-4 per cent, so that besides making their regular profit over the base period, and an additional 20-4 per cent, we are going to grant still further concessions to them. Immediately following the resolution is a long list of items with regard to which the common people will have to tighten their belts a little more, so that they will really appreciate that W'e are at war. I really fear the outcome. This type of legislation is not going to stimulate patriotism; it is going to create dissatisfaction among those who joined the army because of economic insecurity, and it is not conducive to the creation of unity in Canada, which we so greatly need at this time.
We talk of equality of sacrifice and service. I am in favour of that principle, and I am convinced that if there were an indication to the public, even to the members here, that there was going to be equality of sacrifice and service for all classes and every part of Canada, such a step would do much to promote unity. But at a time when agriculture, fishing, and coal mining are not making the profit they did before; when many of the workers in those industries are still unemployed, and when the cost of living is going up for the common people, the government brings down legislation like this favouring the big industries still further. I recommend to the minister that he give close scrutiny to the speech which has just been made by the hon. member for Lethbridge.


[Stage Direction]
Resolution agreed to.
On schedule 1.
Customs tariff-20. Cocoa paste or "liquor" and chocolate paste or " liquor," not sweetened, in blocks or cakes.
James Lorimer Ilsley: There are amendments, Mr. Chairman, to some of the items so we shall have to take the schedule item by item.


Richard Burpee Hanson: Items 20 to 23 inclusive are the cocoa items. Do we import much?


James Lorimer Ilsley: Imports from non-empire
countries during the calendar year 1939 amounted under item 20 to $2,000; under item 21, $9,000; under item 22, $215,000; and under item 23, $42,000.


Richard Burpee Hanson: They are important items.


[Stage Direction]
Item agreed to.
Items 21, 22, 23, ex 45, 46, 65, 66, 67, 78, 79, 79a, 79b, 82(d), 82(e), and 85 agreed to.
Customs tariff-89. Vegetables, prepared, in air-tight cans or other air-tight containers:
(a)	Beans, baked or otherwise prepared.
(b)	Com and tomatoes.
(c)	Peas.
(d)	N.o.p.
Mr. CRUICKSHANK:: Is any provision being made to protect the farmer in Canada, particularly in British Columbia, who is producing vegetables and small fruits?


James Lorimer Ilsley: This item refers to vegetables, prepared, in cans, and not to fresh fruits and vegetables, which have not been prohibited for the reason I gave in the speech I made to the house.


George Alexander Cruickshank: Is the minister aware of the fact that while pears are rotting on the ground in British Columbia, pears are being imported into that province from the United States to be canned and preserved?


James Lorimer Ilsley: I was not aware of that.


Richard Burpee Hanson: This item deals with vegetables.


George Alexander Cruickshank: When I have to take my instructions from the leader of the opposition it will be a sad day for this house. I am not prepared to let this item carry yet. I stated that pears are being imported into British Columbia to be canned while our own pears are rotting on the ground, and I ask the minister if provision will be made to prohibit these importations from the United States.


James Lorimer Ilsley: We are taking no power
under this legislation to prevent the canning of fruits and vegetables.

War Exchange Conservation Act


George Alexander Cruickshank: Why not?


James Lorimer Ilsley: This is a measure for the conservation of foreign exchange, and we have put in the schedule the items we think should be there. I gave the other day the reason why we are not prohibiting the importation of fruits and vegetables.


George Alexander Cruickshank: I heard the minister speak this afternoon and he used the words-I have them exactly-"reserves for companies for future use". That was in reference to industrial concerns. In other words, industries producing shells or other essentials for war purposes ought to be allowed a reasonable profit and to prepare for the future. I would ask the minister if he honestly thinks there is any industry more necessary than agriculture. Is the farmer not to be protected, not only for the future but for to-day? I am telling the minister that pears from the United States are being dumped into British Columbia, and canned and preserved. I am speaking for the British Columbia farmers in my riding, and I am asking the minister how he can account for the fact that pears are imported from Washington and Oregon to be canned in the Fraser Valley ridings?


James Lorimer Ilsley: All I can say is that the matter has been gone into fully, previously in the debate.


George Alexander Cruickshank: Then I ask the minister, has the government any intention of making any provision to take care of these farmers?


James Lorimer Ilsley: For what?


George Alexander Cruickshank: Has the government any intention of making any provision to take care of all these farmers in the Fraser Valley riding who are now losing their farms owing to the fact that fruit from the United States is being dumped into British Columbia?


James Lorimer Ilsley: Not in this bill.


Major James William Coldwell: I wish to ask, arising out of this, in the event of fruit being brought in from Washington and canned in British Columbia, is it distinguishable as a Canadian or a United States or a British empire product? How is it marked? Is there any way of getting a mark on it?


James Lorimer Ilsley: Yes. If it has a certain British empire content, it has the advantage of the British preference in entering such other parts of the British empire as give special preferential rates. On account of war conditions, I do not know how important the trade is now.
[Mr. Ilsley.l


Major James William Coldwell: Is there any check on that?


James Lorimer Ilsley: Yes; there is the check of
the investigators of the Department of National Revenue. They have auditors specially qualified in the determination of British empire content.


[Stage Direction]
Item agreed to.
Item 90 agreed to.
Customs tariff-ex 99b. Apples, dried, desiccated, evaporated or dehydrated.
Ernest Lapointe: That item ex 99b be amended to read as follows: Apples, dried, desiccated, evaporated or dehydrated (not to include apple pomace imported for use in Canadian manufactures).


James Lorimer Ilsley: The reason for that is that
it is necessary for the preservation and continued operation of the pectin industry to import some apple pomace from the United States.


Richard Burpee Hanson: We do
not make it here?


James Lorimer Ilsley: Some is made in Canada,
but not enough, and such as is available has to come such distances that it is not an economic proposition.


Richard Burpee Hanson: It is not
a large item anyway.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Customs tariff-99f. Figs, dried.
Major James William Coldwell: Figs are used quite
largely by parents, sometimes for health purposes, for children. Is there another large source of supply?


James Lorimer Ilsley: I am not aware that there
is. The whole of the imports of figs comes from non-empire countries-$217,000 worth last year. Whether there is an alternative empire source, I do not know.


Richard Burpee Hanson: Palestine?


James Lorimer Ilsley: It may be that there is a
sterling area source. I am not aware of it.


[Stage Direction]
Item agreed to.
Item ex 99g agreed to.
Customs tariff-ex. 101.	Mandarins and
tangerines.
Howard Charles Green: Does that cover what are
commonly known as Japanese oranges?


James Lorimer Ilsley: Yes.

War Exchange Conservation Act


Howard Charles Green: Have the government, under their special powers, any intention of allowing any Japanese oranges to come in at this time, or is this prohibition to be a real prohibition?


James Lorimer Ilsley: There is no intention of
letting them in at all. I do not know just what the arrangements are regarding those ordered and to come within a certain time. That is a matter of detail in the hands of the Minister of National Revenue. But, subject to that, undoubtedly these are to be prohibited and no licences granted.


Howard Charles Green: It is practically all a Christmas trade, and I should like to know.


James Lorimer Ilsley: Well, I do not know.


Howard Charles Green: I should like to know whether this Christmas supply is to be allowed in.


Richard Burpee Hanson: They are all in now.


James Lorimer Ilsley: I do not know.


Thomas Miller Bell: I understand that citrus fruits from the United States are allowed to come in.


James Lorimer Ilsley: All except mandarins and tangerines.


Major James William Coldwell: We exclude mandarins and tangerines from the United States as well as other countries?


James Lorimer Ilsley: Yes.


George Alexander Cruickshank: I should like to ask the minister a direct question, will what are known as Japanese oranges be permitted to enter Canada this year?


James Lorimer Ilsley: I have to get the information from the Minister of National Revenue. I find that there is a customs bulletin affecting not only mandarins and tangerines, but everything, to this effect:
Goods ordered prior to December 2, 1940-
Goods which were ordered prior to December 2nd, and which arrive at the customs port of destination on or before February 28, 1941, will be admitted under general permit No. G-l. Full information, supported by a certified copy of the purchase order and such other documentary evidence as may be required, shall be presented to the collector. . . .
All precautions are taken to see that the order is bona fide. Therefore, if the mandarins or tangerines were ordered prior to December 2, and the order accepted, and if they come in prior to February 28, 1941, they will be admitted under this ruling of the national revenue department.


George Alexander Cruickshank: Has the government power under the War Measures Act to
overrule any order, so-called, that was passed before December 2, and cancel it? If so will they do so?


James Lorimer Ilsley: My opinion is that they have the power. My answer to the second part of the question is that they will not do so.


Howard Charles Green: What is the value of imports of Japanese oranges this year?


James Lorimer Ilsley: I cannot give the hon. member the information. My information is that imports from Japan are much smaller than formerly, although there are substantial shipments of mandarins and tangerines from the United States this year; they are much larger than in former years.


Howard Charles Green: I understand that the bulk of importations from Japan come through the United States, or at any rate, that they have to be paid for in United States currency.


James Lorimer Ilsley: That is so.


Howard Charles Green: What permits have been given for the purchase of United States exchange to buy these oranges? There has been a great agitation about this on the coast-


James Lorimer Ilsley: I know.


Howard Charles Green: -and the information would be most desirable.


James Lorimer Ilsley: I know there has been a great agitation about the matter, and I believe that, as a result, the orders have been very much smaller than usual. I have no information about exchange. It would take some time to trace that down, and I am told it is information which is extremely difficult to get. It is much easier to get the facts as to imports than it is to get the amount of exchange which has been made available for payment of those imports. It involves, I understand, the examination of every individual transaction to find out whether it was paid for in United States exchange or not. There is such a thing as paying for imports with Canadian exchange, the money remaining in this country.


[Stage Direction]
Item agreed to.
Customs tariff-102. Limes.
Mr. FULFORD:: Why are limes included in this list? Limes form a part of the diet of the British navy and have done so for one hundred and fifty years. One reason why British sailors are known as "limeys" is the fact that they use so many limes.


James Lorimer Ilsley: They are available from
British empire sources. The bulk of imports of limes have come from empire countries.

War Exchange Conservation Act
In 1939 we received $6,000 worth from nonempire countries and $23,000 from empire
sources.


[Stage Direction]
Item agreed to.
Items 103 and 104 agreed to.
Customs tariff-104a. Fruit pulp, other than grape pulp, not sweetened in air-tight cans or other air-tight packages.
George Alexander Cruickshank: Will the minister give an explanation of this item?


James Lorimer Ilsley: All I could do by way of explanation would be to read the item.


George Alexander Cruickshank: I have heard so many different explanations.


Thomas Miller Bell: Why is grape pulp prohibited under this item?


James Lorimer Ilsley: This simply follows the
wording of the tariff item.


Major James William Coldwell: I was wondering whether grape pulp was excluded because it is used in the wine-making industry.


James Lorimer Ilsley: It is not excluded here for that reason.


Major James William Coldwell: Only for the reason that these items follow the tariff?


James Lorimer Ilsley: Yes.


[Stage Direction]
Item agreed to.
Items 105, 105a, 105b, 105c, 105d, 105e, 106, 107 and 108 agreed to.
Customs tariff-109. Nuts of all kinds, n.o.p., including shelled peanuts, n.o.p.
John Horne Blackmore: Does the minister
think there are sufficient sources of supply in the British empire to warrant this item? Some people must have nuts to provide the necessary protein.


James Lorimer Ilsley: British India will be able to supply us with walnuts and cashew nuts, but to a large extent Canadians will have to do without these high-priced luxury nuts. The opinion is that this sacrifice is fully justified by the emergency. China and India are the principal sources of green peanuts. Coconuts and non-edible nuts are not listed.


John Horne Blackmore: What about almond nuts? Are there sources of supply in the empire?


James Lorimer Ilsley: They do not come from other parts of the empire. They are all from nonempire countries and are prohibited.


John Horne Blackmore: I mention this because there are people who are definitely unable to get the necessary proteins from any other

source, and it will be a great hardship on them unless some provision is made to meet their situation. Perhaps for the sake of health, provision could be made for the granting of a licence to obtain nuts where necessary. One person told me the other day that he would have to leave the country if he could not get nuts because he is so constituted that other kinds of proteins do not agree with him.


[Stage Direction]
Item agreed to.
Item 114 agreed to.
Customs tariff-121. Fish preserved in oil, n.o.p.
George Alexander Cruickshank: It seems to me
that the farmer has been the fish all his life. There is no provision being made to protect farmers, is there?


James Lorimer Ilsley: None is being made in the
present proposals.


George Alexander Cruickshank: Is it intended to
make any?


James Lorimer Ilsley: It is not the intention to
make any alterations.


George Alexander Cruickshank: Why not?


James Lorimer Ilsley: For the reasons already
given.


Richard Burpee Hanson: Does this item mean that we shall have no more Norwegian sardines?


James Lorimer Ilsley: Norway is enemy-occupied
territory.


[Stage Direction]
Item agreed to.
Items 123, 123a, 124, 125, 126, 127, 128, 141, 143, 143a, 144, 145, 146, 147, 147a, agreed to.
Customs tariff-150. Lime juice and fruit juices, fortified with or containing not more than 25 per cent of proof spirits.
Howard Charles Green: Does this include orange
juice and grapefruit juice, or are they allowed to come in?


James Lorimer Ilsley: Grapefruit juice is permitted entry under another item. Orange juice as such is prohibited.


[Stage Direction]
Item agreed to.
Item 151 agreed to.
Customs tariff-ex 152. Lime juice, fruit syrups and fruit juices, n.o.p. (but not including grapefruit juice).
Mr. BRUCE:: The other day a question
arose as to the relative vitamin content of orange juice and tomato juice. In order to clarify the situation, so that there might be no mistake either in this house or among the Canadian people, I got in touch with Doctor

War Exchange Conservation Act
Tisdall in Toronto. I can now give the exact result of an investigation made in the laboratory of the department of paediatrics in the university of Toronto, which is under the direction of Doctor Alan Brown, who has associated with him an eminent nutrition expert, Doctor F. F. Tisdall. The result of their investigation will be found in the June, 1940, issue of the Canadian Hospital, in which is given the total vitamin C content-vitamin C I should explain is ascorbic acid-as determined by chemical means, of various fresh and canned juices which were bought at retail in Toronto during the winter of 1939-40. The ascorbic acid (vitamin C' content is given in milligrammes per 100 cubic centimetres and per ounce, together with the milligrammes of ascorbic acid purchasable for one cent.
The vitamin C or ascorbic acid content of citrus juice varies considerably in the different varieties. In the table given, the content of vitamin C in one ounce of canned California orange juice is 11*3 milligrammes. In the best brand of sieved canned tomato juice it is 6-9 milligrammes. It takes, therefore, only a little over one and a half times as much tomato juice to get the same amount of vitamin C as there is in California orange juice. It will therefore be seen that the statement made by an hon. member the other day that it would take twenty times as much tomato juice is not correct. The juice of sieved Canadian canned tomatoes is as economical a source of ascorbic acid or vitamin C as the juice obtained from fresh California oranges, and also as useful for health as grapefruit juice or any other citrus fruit juice.
I think it will only be necessary to call the attention of the Canadian public to this fact in order to have them make a much wider use of tomato juice than they are now making, and also to enable them as a war measure to discontinue the use of orange or grapefruit juice and substitute in its place a homegrown product which will not only be as healthful but also be of advantage by conserving foreign exchange.
Just to complete this statement, I should say that because it does require a slightly larger bulk, for very young infants grapefruit juice or orange juice would be preferable. But that will be only a very small part of the requirements of the country.


Thomas Reid: Is the vitamin content of all
oranges the same as that quoted?


Herbert Alexander Bruce: It varies slightly. I have the list here, but I did not think I should trouble the committee with the complete story. It is all to be found in Canadian Hospital for June, 1940. It varies with the oranges; Florida oranges are slightly richer in vitamin C than
those from California, and the same with regard to grapefruit juice, but by only a small amount.


George Alexander Cruickshank: May I ask the
hon. member a question, because it may help me in voting. What vitamins are to be found in item 156a?


William Lyon Mackenzie King: May I interrupt the proceedings for a moment to ascertain the sense of the committee on the question of continuance of the present discussion. I believe it is more or less hoped and expected that it will be possible to reach adjournment of the house to-night until February 17, so as to avoid the necessity of hon. members coming back on Monday. If that were not within the realm of probability, I would not suggest what I am about to suggest.
If hon. members are agreeable, it might help to ensure that end if consent were given to continuing the discussion in committee of ways and means by running on at six o'clock-


Some hon. MEMBERS:: Carried.


William Lyon Mackenzie King: I notice many appear to be in favour of this and I hear none to the contrary. If that be the situation, I should wish to have His Honour the Speaker in the chair in order to move that there be no intermission between the hours of six and eight o'clock.
Progress reported.



BUSINESS OF THE HOUSE

William Lyon Mackenzie King: I move that there be no intermission between the hours of six and eight o'clock this day.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house resumed in committee of ways and means, Mr. Vien in the chair.
Customs tariff-ex 152.	Lime juice, fruit
syrups and fruit juices, n.o.p. (but not including grapefruit juice).
Mr. McNIVEN:: Citrus fruits are admitted into this country, but as I understand this item, orange juice, lemon juice and lime juice are to be excluded?


James Lorimer Ilsley: Yes.


Donald Alexander McNiven: Has the minister considered the industries that are carrying on the manufacture of carbonated beverages? In these products fruit juice syrups form a very small part of the cost of the completed

War Exchange Conservation Act
product. There are a number of such industries throughout Canada; there are several in my own province. They import the concentrated syrup and turn out a manufactured product. The cost of the beverage is small; the manufacture is largely labour, and the other ingredients are obtainable in this country. But the concentrated syrups are essential for the continuation of this business. Has the minister considered the position he is putting that business in?


James Lorimer Ilsley: I do not know that consideration has been given to the welfare of those particular businesses; the matter has been dealt with on different principles from that. Grapefruit juice has been left in because we are informed that it is the cheapest way of getting the vitamins required from fruit juices. Therefore, for the health of our population, we are permitting the import of grapefruit juice, and that is all that is necessary really in addition to tomato juice. From the point of view of health it might be a bad thing to shut out this cheap grapefruit juice which is an economical way for poor people to get vitamins, but to permit the importation of a variety of juices in order to keep people who use them in carbonated beverages in business, I do not think is a sufficiently important consideration to be taken into account in view of more important matters.


Richard Burpee Hanson: Good spring water is better for us.


Donald Alexander McNiven: Would the minister consider making the same amendment he made to another item a moment or two ago, and permit the importation when brought in by manufacturers for use in their own plant?


James Lorimer Ilsley: No; this is not necessary. These carbonated juices are not necessary. There are substitutes in Canada which are quite good enough. In this instance there is no question of going without fruit. There would be no harmful effects upon the population.


[Stage Direction]
Item agreed to.
Items 153, ex 156, 156a, 160 and ex 162 agreed to.
Customs tariff

163. Wines of all kinds, n.o.p., including orange, lemon, Strawberry, raspberry, elder and currant wines, containing 26 per cent or less of proof spirit, whether imported in wood or in bottles.
James Lorimer Ilsley: My colleague will move an amendment to this item.


Mr. McLARTY:: I move:
That item 163 be stricken out, and the following substituted therefor:
" 163. Wines of all kinds, n.o.p., including orange, lemon, strawberry, raspberry, elder and

currant wines, containing 40 per cent or less of proof spirit, whether imported in wood or in bottles."


James Lorimer Ilsley: This amendment is for the purpose of making absolutely clear that all wines dutiable under item 163 and the addendum thereto are prohibited. Item 163, which was quoted verbatim in the original resolution, provides for wines containing 26 per cent or less of proof spirits. The addendum provides for additional duties on wines from 26 per cent to 40 per cent proof spirits. Wines over 40 per cent proof spirits are classified under item 156. The effect is to shut them all out.


Richard Burpee Hanson: If it were left at 26 per cent, it would not cover those between 26 per cent and 40 per cent?


James Lorimer Ilsley: That is correct.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Customs tariff-165.	Champagne and all
other sparkling wines.
Richard Burpee Hanson: I suppose the minister knows that there are at present substantial quantities of these champagnes and wines in the country. I believe there would be enough to supply us for a couple of years. The department would have information about quantities on hand. Will there be any prohibition against taking these wines and champagnes out of bond?


James Lorimer Ilsley: In customs bond?


Richard Burpee Hanson: Yes; most of these commodities are taken out from time to time from bonded warehouses. The liquor commissions take them from the bonded warehouses as they need them, and pay for them in that way.


James Lorimer Ilsley: That matter would come
under the supervision of the Department of National Revenue-so long as delivery is taken on or before February 28.


[Stage Direction]
Item agreed to.
Items 181a, ex 184d, ex 169, ex 170, ex 171, 194, 195, ex 197, ex 197b, ex 198, ex 199, ex 181 and ex 509 agreed to.
Customs tariff-228. Soap powders, powdered soap, mineral soap, and soap, n.o.p.
Joseph Henry Harris: What proportion comes from sterling countries now, as compared with what comes from hard-currency countries, under item 228?


James Lorimer Ilsley: In 1939, $145,000 worth came from non-empire countries, and $92,000 worth from empire countries.

War Exchange Conservation Act


Joseph Henry Harris: Are those nonempire countries hard-currency countries?


James Lorimer Ilsley: Roughly speaking, that is
correct.


[Stage Direction]
Item agreed to.
Items 233 and 234 agreed to.
Customs tariff-284. Drain pipes, sewer pipes and earthenware fittings therefor, chimney fittings or vents, chimney tops and inverted blocks, glazed or unglazed, n.o.p.; earthenware tiles, n.o.p.
An hon. MEMBER:: Does that include
wall tile for bathrooms?


James Lorimer Ilsley: They would be included in one or the other of items 284 and 285.


[Stage Direction]
Item agreed to.
Items 285, 287, 288, 289, 323, 326(ii), ex 353, ex 353a, 362, 362b, ex 415, 415a, ex 415b, 425, 429, 433, ex 438a, ex 438g, 439, ex 439b, ex 440a, 440j, ex 443, 444b, ex 445, ex 445d, ex 445j, 450, 451e, ex 462, 465, and 468 agreed to.
James Lorimer Ilsley: I would ask my colleague to move an addition at this point.


Norman Alexander McLarty: I move:
That schedule 1, part I of -the resolution be amended by adding to the said schedule the following item:
"ex 473a, ex 475. ex 472. ex 180, ex 180d, ex 181, et al. Printing plates of all kinds, copper or other shells, matrices, positive or negative films, transfers, proofs, illustrations, covers, inserts or other printed matter, for use in connection with the production of the publications covered by item ex 184d et al of this schedule which were not printed in Canada during the three months immediately prior to December 1, 1940."


James Lorimer Ilsley: A number of publications are prohibited under item ex 184d. I believe it would be possible to have printed in Canada a number of magazines known in the trade as pulps. The publishers would simply have to transfer their plates from the United States to Canada, and print them in this country. This is to shut out the matrices, and thereby prevent that from being done. The justification is that it would involve a heavy expenditure of exchange to bring in those matrices. There is the further consideration that there does not seem to be much point in debarring the periodicals, if the difficulty can be overcome simply by moving their place of business.


[Stage Direction]
Amendment agreed to.
Item ex 473a, ex 475, ex 472, ex 180, ex ISOd, ex 181 et al agreed to.
Items 508, 511, 511b, 512, 514, 515, 518, 519 and ex 532 agreed to.
James Lorimer Ilsley: I will ask my colleague to move an amendment in substitution for item ex 532, ex 548, ex 555.


Norman Alexander McLarty: I move:
That schedule 1, part I of the resolution be amended by striking out item ex 532, ex 548, ex 555 and substituting therefor the following:
"ex 532, ex 548, ex 555. Articles made from woven fabrics and textile manufactures, wholly or partially manufactured, composed wholly or in part of cotton, flax, wool or other textile fibres, as specified, namely: sheets, blankets, quilts, counterpanes, bedspreads, comforters and other bed coverings; hassocks, pillows, cushions, including pin-cushions filled or not, pillow-cases, cushion covers and similar articles; tablecloths, napkins, tray cloths, dresser scarves, doilies and similar articles; diapers; towels, wash cloths, bath mats, bathroom mate, seat covers, curtains, drapes, window runners, decorative panels and similar articles; automobile rugs, steamer rugs and similar rugs or coverings; canopies, awnings and tents; removable coverings for automobile and furniture upholstery; textile manufactures composed in part of embroideries or lace."


Richard Burpee Hanson: The only difference is the deletion of the words "except silk and artificial silk or other synthetic fibres." That is the effect of the amendment. Artificial silk or other synthetic fibres are now included in the prohibition.


James Lorimer Ilsley: This is purely a technical matter. They are already included in another item, and it is not necessary to have them in this item.


Richard Burpee Hanson: It is simply taking them out of this item. This item can be carried without amendment, the amendment being to the next item.


James Joseph McCann: When the hon. member
for Parkdale (Mr. Bruce) was speaking a few minutes ago, he made reference to a statement wdlieh I had interjected when the leader of the opposition (Mr. Hanson) was speaking. According to the very sheet from which he quoted I submit that he deliberately failed to give the committee the proper information. Either that, or he and I were speaking of two entirely different matters. The information on the sheet from which he quoted, which information he failed to give the committee, is to the effect that in the case of canned tomatoes the juice is obtained by a thorough rubbing through a sieve. The remark which I interjected the other day when the leader of the opposition was speaking was that it took twenty times the quantity of ordinary tomato juice as sold in cans to produce the same amount of vitamin C as is produced by orange juice sold in cans. That statement still holds good. The figure given by the hon. member for Parkdale had to do

War Exchange Conservation Act
with specially prepared tomatoes which were put through a sieve. From his point of view his statement may be correct, but from my point of view my statement is equally correct.


Richard Burpee Hanson: You just did not mean the same thing.


[Stage Direction]
Amendment agreed to.
Item ex 532, ex 548, ex 555 as amended agreed to.
Item 532a, ex 548 agreed to.
Item ex 548 agreed to.
Customs tariff-ex 555. Clothing and wearing apparel, wholly or partially manufactured, composed wholly or in part of wool or similar animal fibres, but of which the component of chief value is not silk nor artificial silk, n.o.p.
Mr. POTTIER:: It seems to me that this is a good item under which to bring up a matter of overcoats. Yesterday the hon. member for Cumberland (Mr. Black) brought up a similar matter before the committee, and he is reported as follows on page 700 of Hansard:
Last week I was driving home from Amherst to Oxford and Pugwash and I overtook a soldier. He wanted to get home to his family in Oxford. I asked him where his overcoat was and he said that none had been issued to -him. I suggested that he must be an exception and he assured me that -there were 200 men in the North Nov-a Scotia Highlanders who had not yet been- given- greatcoats.
There were communications with Colonel Murdoch, the officer commanding the North Nova Scotia Highlanders stationed at Amherst, and he advises that all of his men are equipped with greatcoats except twelve who are of abnormal size, and that action has been taken to furnish coats to those twelve and they will be provided with them within three days. That is quite a different matter from 200 men -being without greatcoats.


Mr. BLACK (Cumberland):: Since the hon. member for Shelburne-Yarmouth-Clare (Mr. Pottier) brought up this matter, I should like him to complete his report and inform the committee whether this statement was of November 30, the date to which I referred. With the weather we have had in the last few days, I certainly hope that these men have been fitted out with greatcoats, especially when there are 411,000 of them on order.


[Stage Direction]
Item agreed to.
Items 560, 560a, 560b, 560d, 560e, 562, 564, 565, 567. 567a, 568, 568a. 568b, 568c, ex 569(i), ex 569(h), ex 569(v), 569a(i), 569a(ii), 569d, 578. 597, ex 597a, and ex 598 agreed to.
Customs tariff-598a.	Brass band instruments, of a class or kind not made in -Canada; bag pipes and complete parts thereof.
Thomas Reid: Why should this item be included here when the fact is no bag pipes come from the United States? I would have thought that bag pipes would be included in item ex 597a which covers musical instruments of all kinds. I raise this question because there is a growing sentiment among some of the officials of the department and among certain officers in the service forces which is quite prejudicial to these instruments. I am doing what I believe is right on behalf of a race which is just as proud of its lineage as any other in this country.


Richard Burpee Hanson: Is it not a fact that none come in from the United States?


James Lorimer Ilsley: I think that is correct.


Richard Burpee Hanson: Is it not
a further fact that a great number of the articles enumerated in this schedule do not come from the United States at all and that they are more or less window-dressing? A large number of these items refer to commodities that we do not get from hard-currency countries. These look much more impressive than they are, but on the whole they amount to a substantial quantity. When the minister gets through, I am going to ask him to be good enough to give the sum total of importations in, say the last fiscal year, under the items covered by part I of the schedule. Then we can appreciate the magnitude of the changes.


James Lorimer Ilsley: The total was $53,000,000.


Richard Burpee Hanson: But there are in the schedule many items of which we import nothing, and the item of bag pipes is perhaps the best illustration.


James Lorimer Ilsley: We took the exact wording
of the items in the customs tariff. Some parts of those items, like this one, would be a dead letter I have no doubt, but the reason for taking the wording of the present items is that the customs collectors have had long experience and are guided by a large number of rulings as to what comes within any particular item.


Richard Burpee Hanson: I quite
agree. May I ask, with reference to item 598, whether we make band instruments in Canada. We are starting up a number of bands for the soldiers.


James Lorimer Ilsley: We make a few in a small
way.


Richard Burpee Hanson: That is
what I thought. In my town they are starting a band for sixty cadets, and I am wonder-

War Exchange Conservation Act
ing where they are going to get their band instruments. May they get them from the United Kingdom?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: All right;
that is settled.


[Stage Direction]
Item agreed to.
Items 603, ex 604, 605a, 611b, 622 and 623
agreed to.
Customs tariff-Item 624. Bead ornaments, and ornaments of alabaster, spar, amber, terra cotta or composition; fane of all kinds; statues and statuettes of any material, n.o.p.
Mr. ILSLEY; There is an amendment to this item.
Norman Alexander McLarty: I move, Mr. Chairman,
to strike out item 624 and substitute therefor the following:
Customs tariff-Item 624 et al. Bead ornaments, and ornaments of alabaster, spar, amber, terra cotta, composition, or other material; fans of all kinds; statues and statuettes of any material, n.o.p.


Richard Burpee Hanson: The words "or other material" have been added. What is the significance of that?


James Lorimer Ilsley: It is estimated that it will
bring in about $100,000 worth of goods which otherwise would be left out.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Items 624a, 624b, 625, 629, 634, 634 (ii), 647, 648, 648a and 652 agreed to.
Customs tariff-Item 653. Brushes of all kinds.
Richard Burpee Hanson: Would
this keep out Fuller brushes?


Vincent-Joseph Pottier: Fuller brushes are made in Canada. Would this exclude them?


James Lorimer Ilsley: Brushes of all kinds are
excluded. It is just the importation that is
prevented.


[Stage Direction]
Item agreed to.
Items 655, ex 655a, 656 and 665 agreed to.
Customs tariff-Item ex 695a. Paintings in oil or water colours and pastels, valued at not less than twenty dollars each.
James Lorimer Ilsley: There is an amendment to this item which I will ask my colleague to
move.


Mr. MULOCK:: I move:
That item ex 695a be struck out and the following substituted therefor:
695a. Paintings in oil or water colours and pastels, valued at not less than twenty dollars
each (not to include paintings in oil or water colours and pastels to be used exclusively for printing or Lithographic reproduction purposes).


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Item ex 711, ex 362c, ex 427, ex 446a et al. agreed to.
James Lorimer Ilsley: There is an amendment to be made to item ex 415, Mr. Chairman, to which I will ask the committee to revert.
Customs	tariff-item	ex 415. Electric
vaecum cleaners and attachments therefor.


William Pate Mulock: I move, Mr. Chairman,
that this item be amended to read as follows:
Ex 415. Electric vacuum cleaners and attachments therefor, domestic or household type.
The amendment adds the words "domestic or household type" in order to exclude industrial vacuum cleaners.
Industrial vacuum cleaners are used in cleaning up large industrial plants, such as explosive plants. They are also used for cleaning furnaces and flues in military camps, and by automobile firms in the reconditioning of used cars. They are not made in Canada at the present time. They are also used in keeping machinery free from dust and dirt.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
On the schedule, part II.
Customs tariff-item 19. Cocoa shells and nibs.
Richard Burpee Hanson: Would the minister make it plain for purposes of the record that we are now dealing with another aspect of this legislation?


James Lorimer Ilsley: Yes. It is not intended to deal with the items in part II in the same way as with the items in part I. The items in part II come within the classes of goods as to which some licences will be issued, but on the whole on a decreasing scale, so as to shut out these imports gradually instead of abruptly.


Richard Burpee Hanson: Can the minister give us any indication of how long it is intended to carry on this policy? How long will it be before we arrive at the exclusion stage? There ought to be some care in dealing with this matter.


James Lorimer Ilsley: We will reach that stage as rapidly as possible. It may never be reached completely.


Alexander Malcolm Nicholson: What method is followed in determining the quantity of the goods?

War Exchange Conservation Act


James Lorimer Ilsley: At the moment normal imports will be allowed.


Richard Burpee Hanson: Under
permit?


James Lorimer Ilsley: Yes; but as it becomes possible to shut them out, they will be shut out. Take silk, for instance, which is an important item. To shut off importations of silk at the moment would cause great hardship in certain industrial centres, and it would not be practicable or desirable to do that. But if these industries can turn to the manufacture of something else which will take the place of silk products-and that is quite possible- then they will be denied the right to import silk from hard-currency countries. There is also power to prevent the importation of silk products from empire countries too, because otherwise an anomalous and unjust situation might arise.


Richard Burpee Hanson: I suggest that the minister make an appeal to the ladies of the country that in this type of weather they wear woollen hosiery and that next summer they wear lisle. I believe we should get a response from the women of Canada.


George Taylor Fulford: Better make their skirts longer.


Richard Burpee Hanson: All right. I have no objection to that, either.


[Stage Direction]
Item agreed to.
Items 20a, 77a, 109a and 142 agreed to.
Customs tariff-267. Crude petroleum not subjected to any other process than natural weathering and removal of foreign matter and water, when imported by oil refineries to be refined in their own factories:
(i)	-8155 specific gravity (42-0 A.P.I.) or heavier at 60 degrees Fahrenheit.
(ii)	Lighter than -8155 specific gravity (42-0 A.P.I.) at 60 degrees Fahrenheit.
Mr. ROSS (St. Paul's):: Would the minister explain generally what it is proposed to do in connection with petroleum products? The matter has been running through my mind because of the large consumption of gasoline in this country and the necessity of supplies in future. Is it proposed to do anything, by way of a tax or something of that kind, to curtail the non-essential consumption of gasoline?
Another consideration which appeals to me is that we need to curtail as far as possible duplication of effort. Take, for example, a city like Toronto. We have a good streetcar service and a bus service as well, so that a great many people could very well dispense with driving their cars down-town. In certain instances, of course, people need

to use motor cars to get to work. But in connection with this whole transportation system there seems to me to be a great duplication of effort. To-day motor buses compete with our own railroads, and altogether the consumption of gasoline is very large. I find from the "Canada Year Book" that our consumption in 1939 was 762,740,326 gallons, and refunds were allowed on 130,722,877 gallons, so that 632,017,449 gallons were used in motor cars and similar vehicles. I assume that the refunds represent the amount of gasoline used by farmers and essential to their requirements. But I think the commuter should have some idea of what the policy of the government is to be with respect to this matter.
There is no doubt that we shall need more and more gasoline for the air force, and I think that we have here one way whereby the people of Canada could conserve their dollars for war savings stamps, but that a little direction is needed. Has the government in mind putting on a tax of some kind? A cent a gallon does not amount to very much so far as the purchaser is concerned, but it would bring in over $6,300,000; two cents a gallon would bring in $12,600,000. It would be interesting if at this time the minister could give the committee a little further information with respect to these products.


James Lorimer Ilsley: As the committee knows,
there is an oil controller who has an organization and who is studying this whole question. It may be possible for importations of refined gasoline to be very greatly reduced.


Richard Burpee Hanson: That is,
the refined oil?


James Lorimer Ilsley: The gasoline itself-what
gasoline comes in.


Douglas Gooderham Ross: It is not mentioned in this schedule, is it?


James Lorimer Ilsley: Yes. But that cannot be done all at once, because it would mean too great a dislocation of existing businesses. I am not saying that it will be done; but this gives the power to do it, and it will be the object of the government, working on the advice of the oil controller, one of the officials of the Department of Munitions and Supply, to attempt to limit as far as possible importations of petroleum products which can be eliminated. But that is a different matter altogether; that is a different subject from that of controlling the consumption of gasoline in Canada, which perhaps would involve the allowance of so much to each person-the rationing of gasoline. I am not in a position

War Exchange Conservation Act
to make any announcement about a policy with regard to that, but it has certainly not been decided to do it.


Douglas Gooderham Ross: Is there any shortage of gasoline at the present time, or is there likely to be a shortage?


James Lorimer Ilsley: Oh, no.


Douglas Gooderham Ross: Does the minister think that some time in the future we shall have some regulations regarding curtailment of the use of gasoline? It seems to me that it is just as necessary as getting people to do without washing machines and articles of that kind.


James Lorimer Ilsley: It is worthy of consideration. There has been quite a lot of discussion about it, rumours about it, and so on, but it has not been decided upon as a policy of the government. Further than that, I cannot make any announcement.


Richard Burpee Hanson: Along that very same line, may I direct the attention of the Minister of Finance and the government to what I consider to be excessive use of gasoline in the armed services in Canada? The other day my attention was directed by the hon. member for Victoria-Carleton to the fact that, for a little training school in a little town in New Brunswick which I shall not name, a contract was let for 16,400 worth of gasoline. There is no motorized equipment there except a few automobiles which they are using. I was almost paralyzed to think that the government is paying out $6,400 for gasoline in that little town where there is no motorized equipment, excepting that a few officers may have their own passenger cars. That is just an instance where I think some saving might be made, and I thought if I had the chance I would mention it to somebody in authority.
Apart from the air force, whose position is different, it seems to me that the quantity of gasoline which is being bought by the army is enormous. One sees these huge trucks going round; before I came here I saw a whole train of them going through my town. I do not know where they were going to, but it seemed to me that a tremendous amount of gasoline was being used. As regards the specific item I spoke of, I could not conceive why it was necessary to order so much gasoline, so I wrote to the Minister of Munitions and Supply to find out why that contract was let. I have not yet received an answer. I mention the matter just as an instance of the directions in which we might exercise some economy.


Douglas Gooderham Ross: In that same connection, could the minister tell me where we shall get our crude petroleum? Can we get most of it from the Turner valley or out of some of the Ontario wells? Surely there must be something in the minds of the government as to where they are going to get their petroleum products in this country, instead of importing them. Is it intended to step up the production of the Turner valley?


Richard Burpee Hanson: For the time being, crude oil will be permitted as usual?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: From the usual channels and sources of supply, which are the Gulf and the Caribbean?


James Lorimer Ilsley: Yes.


[Stage Direction]
Item agreed to.
Items 267a and 267b agreed to.
Customs tariff-268. Natural casinghead, compression or absorption gasoline, lighter than [DOT]6690 specific gravity (80-0 A.P.I.) at 60 degrees Fahrenheit, when imported by refiners of crude petroleum for blending with gasoline wholly produced in Canada.
Mr. PERLEY:: This product is very important to western Canada. Farmers are using large quantities of gasoline which are being refined in Saskatchewan. The Consumers Limited have a small consumers' refinery there, and there is a cooperative refinery in competition with Imperial Oil. They have been getting most of their crude oil from the United States; it comes in under a duty of, I understand, half a cent a gallon. I should like to be sure that this will not have the effect of discriminating in any way against these refineries, which have started up in the last year or two, and from which farmers are getting a cheaper gasoline. It will be readily understood that, farming having been revolutionized, it is important that farmers be allowed to get their crude oil for refining in their own refineries so that they may have cheap fuel for the production of wheat and for other farming operations.


James Lorimer Ilsley: Crude oil will be admitted for the time being under permit.


[Stage Direction]
Item agreed to.
Items 269, 269a and 271 agreed to.
Customs tariff-272a. Petroleum greases and lubricating greases, n.o.p.
George Hugh Castleden: What was the value
of lubricating greases imported last year under this item?
7G6

War Exchange Conservation Act


James Lorimer Ilsley: Imports of petroleum greases from non-empire countries in 1939 amounted to $423,000, and from empire countries, $4,000.


George Hugh Castleden: What was the quantity of the Canadian production?
Mr.- ILSLEY:	I cannot give that information.
Mr. ROSS (St. Paul's)-:	Petroleum products are the largest importation into Canada. Can the minister give the total amount in dollars of petroleum products importations?


James Lorimer Ilsley: This item covers petroleum, asphalt and petroleum products. Only a very small part of it consists of asphaltic products. Total imports in 1939 had a value of $55,913,177.


Richard Burpee Hanson: A big
traffic.


James Lorimer Ilsley: Yes. By far the greater
part of it is crude petroleum for the refineries. That amounted to $39,564,000 from non-empire countries.


Douglas Gooderham Ross: Does that include gasoline?


James Lorimer Ilsley: The $55,000,000 does.


[Stage Direction]
Item agreed to.
James Lorimer Ilsley: I will ask my. colleague
(Mr. Mulock) to move the following amendment which will be found in Votes and Proceedings:
2. That Part II of Schedule 1 to the said resolution be amended by adding thereto the following items:
"Tariff Item-326 (i). Demijohns or carboys, bottles, flasks, phials, jars and balls of glass, not cut, n.o.p.; lamp chimneys of glass, n.o.p.; decanters and machine made tumblers of glass, not cut nor decorated, n.o.p.
Tariff Item-414. Typewriters and complete parts thereof.
Tariff Item-414a. Dictating, transcribing and cylinder shaving machines and complete parts thereof, including cylinders and unfinished wax blanks.
Tariff Item-414c. Adding, bookkeeping, calculating and invoicing machines and complete parts thereof, n.o.p.
Tariff Item-415d. Sewing machines, with or without motive power incorporated therein; complete parts of sewing machines.
Tariff Item-415e. Sewing machine attachments.
Tariff Item-434. Locomotive for use on railways, and chassis, tops, wheels and bodies for the same, n.o.p.
Tariff Item-434a. Motor rail cars or units for use on railways, and chassis for same; complete parts of the foregoing.
Tariff Item-438. Railway cars and parte thereof, n.o.p."
On the recommendation of the Minister of Munitions and Supply (Mr. Howe), an

order in council was recently passed prohibiting the manufacture of new models of a great many articles. The question then arose whether the importation of new models should not also be prohibited.


Richard Burpee Hanson: As a
corollary.


James Lorimer Ilsley: Yes. A number of difficulties arose in the application of that order in council to imported models. The situation was different in a number of ways. If hon. members will think about it, they will see that in Canada, if you held models as they are now, there would be no difficulty; but in another country models are changing from year to year and it is difficult to know what a new model is in the sense of the term as it was used in the order in council. It was thought best, therefore, to deal with the matter in this way. These items will take care of imported new models. The Minister of National Revenue (Mr. Gibson), by granting permits, by having power to deny permits for the importation of anything in these items, can see that there is no discrimination or injustice in the model situation as between imported models and models domestically produced.


William Pate Mulock: I so move.


[Stage Direction]
Motion agreed to.
Items 326(i), 414, 414a, 414c, 415d, 415e, 434, 434a and 438 agreed to.
Customs tariff-ex 438a.	Automobiles and
motor vehicles of all kinds, n.o.p. (but not to include passenger automobiles); electric trackless trolley buses; chassis for automobiles and motor vehicles of all kinds.
Howard Charles Green: Does this cover trucks?


James Lorimer Ilsley: Yes.


Howard Charles Green: Power is taken to exclude all trucks?


James Lorimer Ilsley: Yes.


[Stage Direction]
Item agreed to.
Customs tariff-ex 500. Railway ties.
Richard Burpee Hanson: Do we
import railway ties?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: How many and why? I am astonished to think that we do because we have been exporting railway ties.


James Lorimer Ilsley: They are imported in western Ontario, I am told. The value of imports in 1939 was $359,000.


Richard Burpee Hanson: They had better buy them in Canada.

War Exchange Conservation Act


Alexander Malcolm Nicholson: Has the minister any comment to make on the suggestion of the leader of the opposition?


James Lorimer Ilsley: There is power to carry it out if the railways can get them elsewhere. They are brought in by United States railways operating in Canada.


[Stage Direction]
Item agreed to.
Customs tariff-ex 503. Planks, boards, clapboards, laths, plain pickets and other timber or lumber of hardwood, not further manufactured than sawn or spliiit, whether creosoted, vulcanized, or treated by any other preserving process, or not.
Howard Charles Green: This and the next three or four items deal with hard woods. Why are soft woods not included? Apparently these are only the hardwood items. In other words, there are no restrictions on the importation of soft woods.


James Lorimer Ilsley: We do not desire to interfere with the soft-wood situation at all. Our export is very substantial and we have favourable treatment under the trade agreement. It is not considered desirable to take power to shut them out.


Howard Charles Green: When the minister says
our treatment is favourable, does he mean in the United States or Great Britain?


James Lorimer Ilsley: In the United States.


Howard Charles Green: The export must be from eastern Canada, because there is practically none exported from western Canada.


James Lorimer Ilsley: I will get the figures.


Richard Burpee Hanson: Do we
import any soft wood from the United States? -yes, southern pine. We have to have it, so I think that is proper.


[Stage Direction]
Item agreed to.
Items ex 504, ex 505. 505a, 507, 507a, 507b, 507c, 507d, 507e, ex 557, ex 557a, ex 557b, 558, 558a, 558c, 558e, 600, 601 and 602 agreed to.
On schedule 2.
Howard Charles Green: With regard to schedule 2 I asked the minister last night what proportion of the duty is being taken off. He gave the figures for last year on these items in schedule 2 as SI .950,000 collected on goods from empire countries.


James Lorimer Ilsley: Yes.


Howard Charles Green: But he did not say how
much would have been collected if the rates had been as now proposed. In other words, what does this reduction mean; how much are we giving Great Britain?


Richard Burpee Hanson: Before
leaving part II of schedule 1, would the minister put on the record the volume of business which will now be under permit under part II as he did under part I? I think he gave $53,000,000 that would be shut out.


James Lorimer Ilsley: I gave it.


Howard Charles Green: Yes, page 727 of Hansard, $71,150,000.


James Lorimer Ilsley: Yes; something like that. The figure of $1,950,000 given last night should have been the estimated loss in revenue. It was stated to be the amount collected.


Richard Burpee Hanson: The anticipated loss of revenue?


James Lorimer Ilsley: Yes, and the imports were estimated at $13,343,000. I have now what I am informed is a more accurate estimate. The first figure is $13,745,380 and the estimated loss of revenue on the basis of 1939 is $2,026,169. In round figures $2,000,000 would be as good an estimate as one could get.


Howard Charles Green: That means that all the
assistance we are giving Great Britain is the amount of $2,000,000?


James Lorimer Ilsley: No; I would not think so. What Great Britain gets is the value of what they ship in. This is what it costs us to allow it to come in.


Howard Charles Green: What was the total duty collected last year on those items?


James Lorimer Ilsley: I am informed it would
be about $3,000,000.


Howard Charles Green: From which different empire countries do these imports come?


James Lorimer Ilsley: Practically all from Great Britain; the nature of the articles shows that. They are nearly all manufactured articles.


George Hugh Castleden: Why is it that woollens seem to be so carefully excluded from schedule 2?


James Lorimer Ilsley: There are two or three
reasons. The British woollen industry is a strong one and the British control the sources of wool; sell us the wool. Moreover the British have been increasing substantially their sales of wool products in this market. Total imports of woollens from the United Kingdom for the first ten months of 1939 amounted to $16,466,000. For the first ten months of 1940 they amounted to $26,345,000. The increase is very substantial. It must be remembered they have more of the woollen trade in Canada now than Canadians. I am speaking from memory of the evidence

War Exchange Conservation Act
given before the price spreads commission which I think was something like this: Prior to 1930 the British had about 60 per cent of this market and Canadians about 40 per cent. With the higher duties imposed between 1930 and 1935, that proportion was altered so that the Canadian proportion grew to nearly 60 per cent at one stage, if I remember correctly. It would be something like 50 per cent. Now the British are apparently maintaining their position in this market with ease, and when it is borne in mind that the industry here is rather widely scattered, with quite a large number of small establishments, upon which the welfare of a great many communities depends; and when it is also considered that the British control the sources, the raw material, completely, and also that against the present duties they are doing pretty well, we did not think we were justified in making any difference in the duties on woollens.


George Hugh Castleden: What was the value of imports from the United States last year?


James Lorimer Ilsley: They are negligible.


Richard Burpee Hanson: I should like to make a brief statement with respect to cottons, if it would not be considered out of order.
At the time the Ottawa agreements were being negotiated, the cotton industry of Canada and that of Lancashire were asked to get together, to see if they could not reach an agreement. They did not agree very well. I believe Lancashire came to Canada with the idea that they ought to have the whole Canadian cotton market, and that our local industry should be scrapped. At least that was the information I got at the time. Of course, under conditions which then existed, that idea did not prevail.
The first .point is this: In connection with the cotton schedules, will the minister give the committee the assurance that this is for the duration of the war, and only for the duration of the war? That is in the statute. But once the duty is brought down, even if it is only for the duration, it will be difficult to get it up again. Will the minister give the assurance to the public -that there is to be no vested interest on the part of Lancashire in ou-r trade, in accordance with the schedules laid down- in these resolutions?


James Lorimer Ilsley: Yes, I certainly will.


Richard Burpee Hanson: That is one thing. I am obliged to the minister. We had some discussion yesterday with respect to costs.


James Lorimer Ilsley: I have in mind the figure the hon. member is going to mention. That figure is 43 per cent.


Richard Burpee Hanson: Yes.


James Lorimer Ilsley: I want to make a correction. The 43 per cent I had in mind was an estimate. I have no reason to think it was unreliable or inaccurate, but it was an estimate of the increase, not in the cost of production, as I somewhat loosely stated, but on the delivered value, or the duty-paid price of the cotton.


Richard Burpee Hanson: Which is quite different.


James Lorimer Ilsley: Yes, but I should not be a bit surprised if the cost of production went up that much, too.


Richard Burpee Hanson: That may be true. I think nobody can say arbitrarily just what the increase is. I believe that the minister has now made a fairer and truer statement of the position. In view of the increased cost of production on the other side, I do not think there will be in the immediate future any great influx of cotton goods into Canada. But it may be very valuable. I believe Lancashire knows that, because I saw some newspaper comments which appeared after the minister had delivered his speech, indicating that the cotton people of Lancashire were most profuse in their thanks. They were quite enthusiastic about this so-called let-down of the bars. It may work out that way.
At the moment I do not think there is any great danger, because -there are obstacles and impediments in the way. At the same time may I point out to the minister a few important factors. The cotton business in England has been rationalized, and cotton exports are being bonused by the association of cotton manufacturers in England. That is the information I have before me. The minister is letting in free this bonused production. That would seem to be the effect of the provision. No doubt the minister has expert factual information which is not available -to me, but I would ask him to give consideration to that phase of the matter. If that production is being bonused for export, then I suggest the position should be reexamined.
The second point to which I wish to call the minister's attention is this:	Canadian
cotton manufacturers have to pay a 10 per cent excise tax, as well as the ordinary foreign exchange premium on all cotton imported. But the British manufacturer does not have

War Exchange Conservation Act
to pay any such excise tax, and the result is that there is a 10 per cent increase in the cost of the raw material to the Canadian manufacturer. This would seem to be an unfair situation, and it should be compensated for by an excise tax on imported cotton goods or, as an alternative, on the cost of the raw cotton content thereof. That would balance the arrangement. In other words, there is a differential to the extent of that tax operating against the Canadian manufacturer. It would seem that our manufacturers are taxed in a way in which the British manufacturers are not taxed. The manufacturer in England will not have to pay the excise tax on his finished product. I suggest an examination should be made to see if he should not pay that 10 per cent tax on the value of the cotton content-not necessarily on the labour. I believe the condition I have described constitutes a serious handicap.


James Lorimer Ilsley: There are various factors
to be considered. The British manufacturer has a greater exchange disadvantage.


Richard Burpee Hanson: I realize
that. I suggest, however, that if, upon examination, the officials in the minister's department find any injustice, a correction should be made. The officials now sitting in front of the minister will appreciate the point I have made.
I would point out to the minister that labour costs in Canada were 60 per cent higher than corresponding costs in Great Britain. I do not know just what the situation is at the present time. It is impossible to give the Canadian worker the standard of living to which we believe he or she is entitled, and at the same time meet the competition of the cheaper labour used in the manufacture of imported goods. The important consideration is that there is a difference in the prices paid to labour here and labour over there.
I should dislike very much to see any necessity for a reduction in our wage scale. I do not think our workers could stand it because, no matter what the minister may say, the cost of living is going up. The wholesale index indicates an increase, and costs of retail goods have increased. I believe they will continue, willy-nilly to go up. In my community the price of milk is increasing steadily, the price being fixed by the milk board. Because of the processing tax on flour, the price of flour is going up. I do not know whether wages are keeping pace with these increases. They will, however, have to. I do not anticipate any great difficulty in this matter at the present time, but these are factors which must be kept in mind. If there is any injustice, steps ought to be taken to make the necessary correction.
I have tried to place before the committee the three points I had in mind which, it ' seemed to me, were important factors. I am not opposing the resolution before the committee, but I am simply describing the situation as I understand it.


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

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved for leave to introduce Bill No. 9,
respecting the conservation of exchange.
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.
On section 3-Prohibited goods.
Howard Charles Green: Will the minister not consider making reference in this section to parts I and II of schedule 1 ? We have had the bill in our hands for just a minute, but so far as I can see, there is no mention in it of parts I and II of schedule 1. That would appear to me to be rather loose draftsmanship. ,


James Lorimer Ilsley: I gave consideration to that last night, and there are reasons why I do not think it would be desirable. There will have to be some freedom to deal with even the items in part I. This is not ordinary tariff legislation; this is emergency import control. This is concerned with prohibition by licensing, not with duties. This type of control is exercised in all countries by administrative action. Every issue of the Board oj Trade Joumal contains changes in the list of products for which the government of the United Kingdom will grant licences. The fact that complete prohibition rather than merely duties is involved requires greater discretion and flexibility in administration. In many respects, if the government did not desire to use the W ar Measures Act, the logical procedure would have been to take power by legislation, place all imports under permit and then proceed by order in council under the aot to set up schedules of imports requiring permits and those for which permits would not be granted.
Out of consideration for parliament the government decided to include the schedules in the legislation and disclose to parliament just what action it is proposed to take. Wide discretion is required by the minister because certain imports may prove to be required for war or other essential services. Restrictions are by tariff items, and even the customs officials cannot name all the articles which may



War Exchange Conservation Act
be included in a single customs item. In the case of such goods as canned vegetables or wearing apparel a serious shortage might conceivably arise if the importation were prohibited and the minister had no power to grant permits at his discretion. In the case of imports under part II it may be necessary to discriminate even between importers in granting permits. One importer may seek a permit to increase his already large stocks of raw materials, while another may apply for a permit merely to replenish exhausted stocks.
I may say also that powers at least as wide as these are vested in ministers by other acts. For instance, there are the powers exercised by the Minister of Finance in connection with the export of gold and the powers exercised by the Minister of National Revenue with respect to export permits. He has a discretion in the matter of export permits, as well as in the matter of import permits for aluminium. These powers can be exercised and will be exercised with care. Powers are now vested in controllers under the Munitions and Supply Act which are much wider than the powers vested here in the Minister of National Revenue.
For these reasons I do not think we should go further than we have. We have divided these items into two parts, part I and part II, and stated to parliament what the intentions of the government are in reference to part I and what the intentions of the government are in reference to part II. I think it is necessary that there should be discretion vested in the minister to deny or grant permits regarding all the items in both parts, the principles upon which he will exercise this being understood and explained to the house.


Howard Charles Green: In order that the record may be clear to anyone reading Hansard, will the minister explain the difference between the treatment which will be meted out in connection with items in part I of schedule one, and in connection with items in part II?


James Lorimer Ilsley: I 'have done that twice
already.


Howard Charles Green: I think it should be stated again in order that people who read this will know.


James Lorimer Ilsley: Generally speaking, and
speaking with considerable approximation rather than accuracy, I would say that it is the intention to deny permits to those desiring to import any of the articles mentioned in part I. As I say, some exceptions may have to be made, but that is the prohibited list and it is not intended to grant permits for the importation of those articles. It is the

intention to grant permits as usual for the importation of the articles in part II, but to decrease the importation of these articles by the gradual denial of permits in so far as that is possible.


Howard Charles Green: With the intention of ultimately prohibiting the import of all articles in part II?


James Lorimer Ilsley: If possible. There may be some items in that part which can never be prohibited. But the intention is to get away from the importation of those articles as far as possible. I do not have any idea that we can get away for a great while from the importation of crude petroleum. We are importing $39,000,000 worth of crude petroleum and I would not like to say that the imports of that commodity will ultimately be shut off.


[Stage Direction]
Section agreed to.
Sections 4 and 5 agreed to.
On section 6-Power to permit entry, to reduce or remove duties.
Howard Charles Green: The government are taking power to reduce the duties as well as to prohibit importation. Is that the situation?


James Lorimer Ilsley: Yes.


Howard Charles Green: So that instead of prohibiting the entry of the goods, the government may simply reduce or remove the duty or, in other words, deal with it as they see fit. Are the powers intended to be as wide as that?


James Lorimer Ilsley: If a domestic producer undertook to take advantage of the prohibition unduly to enhance the price of his goods one way to deal with the situation would be to remove the prohibition, and in addition the duties could be reduced or removed. The governor in council takes power to do all this.


John Ritchie MacNicol: The government would have to take that power to prevent the enhancing of prices.


[Stage Direction]
Section agreed to.
On section 7-Duties of customs schedule 2.
Mr. HANSELL:: In connection with coal coming from Great Britain or other parts of the empire, just what in the opinion of the minister is going to be the effect of this provision upon the coal mining industry of Canada.


James Lorimer Ilsley: I have before me a statement from the technical adviser to the coal administrator, the material parts of which are to this effect: Any bituminous coal which we might be able to import from Great Britain would be used entirely in the Quebec and Newfoundland areas where, on account of

War Exchange Conservation Act
increased requirements of the railways and the pulp and paper industry, our own supplies must be supplemented by imports of bituminous coal from the United States. It is not anticipated that importations of British bituminous coal would in any way interfere with the present movement of Nova Scotia coal under subventions, nor would it be necessary under present conditions to extend the market for Nova Scotia coal beyond existing boundaries. A careful study is now being made of the situation with a view to determining the amount of British bituminous coal which might be absorbed in the eastern markets without disturbing present distribution.


Ernest George Hansell: I notice that these
observations were directed particularly to Nova Scotia, and I am wondering how the coal mining industry in other parts of Canada will fare. Alberta has quite a coal-mining industry; so has British Columbia, and there are other areas where a less amount of coal mining is done.


James Lorimer Ilsley: They would not be affected.


Ernest George Hansell: I am glad to know that, but I am under the impression that those in responsible positions in the coal-mining industry are not of the same opinion.
I believe there is need of some sort of conference being called by the government- it should be called here I think-where representatives of the coal-mining industry throughout the country could meet together. In addition to the calling together of representatives of the coal-mining industry of Nova Scotia, Alberta, British Columbia and other coal-mining areas, I believe that labour and other phases of the coal-mining industry should be represented, to determine upon an adequate and proper national coal policy for Canada. I do not believe we have what could be termed a really satisfactory national coal policy.
I have some very big files on coal and all sorts of reports-reports by all sorts of commissions, and reports by various delegations that have come to Ottawa. One report will be along one line and another report along another line. There is a report from a commission created to inquire into anthracite coal, and another report from another commission on some other phase of the coalmining industry. Therefore I believe that a conference should be called at which every part of the coal-mining industry of Canada will be represented, together with the coal committee of the cabinet, and there this whole question could be threshed out with a view to getting down to the business of establishing a really national coal policy. I do not 14873-491
know whether the idea is new to the minister, but I do wish he could say that he favours such a conference. I do not suggest that it be as large as the forthcoming conference on the Sirois report. Nevertheless the coalmining industry of Canada is one of our biggest industries, and I think it is time that something of this sort was done.


Mr. GILLIS:: In view of the minister's statement that a certain percentage of the coal imported from Great Britain would be utilized in the Quebec market, I wish to say that in my opinion it would seriously affect the Nova Scotia coal-mining industry. Last night the hon. member for Cumberland (Mr. Black) went into the story at length and quoted many figures, but he did not carry the story through. Reading Hansard, one would be led to believe that the coal-mining industry of Nova Scotia had expanded since the introduction of subventions. The reverse is true. By virtue of the subventions given to the coal-mining industry of Nova Scotia, the industry expanded to this extent, that 2,000,000 tons were marketed in Ontario. While the subventions have assisted the industry and enabled Nova Scotia coal to be marketed ' in Ontario, nevertheless during that time there has been a decline in the industry. In that connection I should like to refer to the "Coal Statistics for Canada" for the calendar year 1938, in support of my statement. It states:
Production from Nova Scotia coal mines in 1938 declined to 6,236,417 tons from the 1937 total of 7,256,954 tons. Mines in Oape Breton produced 4,676,730 tons or 14'8 per cent below the 1937 output. Cumberland district produced 713,768 tons compared with 807,651 tons >a year ago. The Inverness output was 7-2 per cent lower at 173,535 tons. In the Pictou district production declined 12-9 per cent to 672,384 tons.
That was in 1938 as compared with 1937, and that decline took place regardless of the fact that we were marketing our coal further west.
There is another matter to which I should like to make reference. I quote further:
Active mines in Nova Scotia in 1938 produced approximately 63 per cent of their possible output; 33*5 per cent of the output loss was due to lack of orders. Causes other than strikes were responsible for a production loss of 3,739,938 tons__
The reason why I put these figures on the record is to show that at the present time the coal-mining industry of Nova Scotia is on the wane. Unemployment has increased, and the figures quoted will show that the reason for that unemployment is lack of markets. We who have been engaged in that industry and do business with the coal

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companies know that they have no intention of expanding operations, because of lack of markets; and while I am absolutely in accord with the principle of assisting Britain, I am reasonably sure that the removal of the thirty-five cents duty on British bituminous coal will further affect our production.
At the present time a large part of the war materials being shipped overseas are leaving the ports of Montreal, Halifax and Sydney. I have seen at least 100 boats in convoy leaving a port. Most of those boats arrive without a cargo. By the removal of that thirty-five cents tariff these boats will be enabled to bring back a cargo. Most of them come back with water as ballast, if British bituminous coal is admitted duty free, most of those boats will, in my opinion, bring back cargoes of coal, and we in Nova Scotia cannot compete with it. That has been our experience. Time and again the operators have told us that because of lack of markets they have no intention of expanding the Nova Scotia industry. The statistics of 1938 show that they are away below their possible production, and the consequence is unemployment.
The measure before us is to conserve foreign exchange, and I am absolutely in accord with that object; but I believe that if it is to be effective with respect to the item under discussion, it will have to be carefully administered. I listened to the remarks of the hon. member for Macleod (Mr. Hansell) having reference to a conference of operators. That has been tried time and time again. Representatives of the east and of the west met in Ottawa and laid down a programme for the purpose of inaugurating a national fuel policy. All we ever got out of it was talk, talk, talk, a whole lot of recommendations, and a good deal of paper; absolutely nothing else.
In my opinion, if we are serious in our endeavour to give Britain a market in this country for her bituminous coal, there is only one way of doing it. Approximately ten million tons of bituminous coal is imported from the United States. The only way of marketing British bituminous coal is to place an embargo on United States bituminous coal which is coming into this country.


John Ritchie MacNicol: Or give them a quota.


Clarence Gillis: Or a quota. Decide upon the amount you intend to take from Britain, bring it in, and put an embargo on the equivalent amount of bituminous coal from the United States. That will have to be done, in my opinion, so as not to interfere with or dislocate markets controlled and handled at the present time by Canadian

operators. There is, in my judgment, no other answer to the problem if we intend to conserve foreign exchange.
I believe that the Nova Scotia industry has already felt the effects of British coal in the Quebec market. During last session there was brought to my attention the fact, which I could not then verify, but which I have since confirmed, that 200,000 tons of British coal which was consigned to France at the time France capitulated was diverted to Canada. I am informed that one of the big mining operators in this country handled and marketed that coal, and the figures which I have seen in one of the local papers reflect, I believe, the effects of the marketing of that coal. According to what I saw in a local newspaper, the Dominion Coal company, the biggest unit of Dominion Iron, Steel and Coal, had an output last month of 22,957 tons less than the output of October, 1939, and 39,396 tons less than the output of October, 1940. That should not be, because there has been created an abnormal market, as a result of the war. The boats constituting the large convoys in and out of a harbour with which I am acquainted are bunkered, and this coal company has done quite a business with the bunker coal. At the same time their output, on account of the additional imports of bunker coal, is in my opinion forty or fifty thousand tons less than it would otherwise be. It is my belief, although I cannot verify it, that that coal was marketed in Quebec, causing the output for the collieries for the last month as compared with the previous month to be down to that extent.


Mr. MACDONALD (Kingston City):: Does the hon. member ascribe the diminished output to any cause other than lack of markets?


Clarence Gillis: I tried to make that clear. I said that 200,000 tons -of British coal which was consigned to France at the time France capitulated came into eastern Canada and was marketed by one of our coal companies. I believe that that tonnage so brought in and placed in the eastern market would be a contributing factor to the monthly decline of the Dominion Coal company.


Angus Lewis Macdonald: Has my hon. friend any figures as to the number of tons of coal which were lost on account of the stoppage of work in the collieries?


Clarence Gillis: Yes, I have them right here.


Angus Lewis Macdonald: What are they?


Clarence Gillis: I will read the paragraph in the 1938 report entitled "Coal Statistics for Canada":

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Active mines in Nova Scotia in 1938 produced approximately 63 per cent of their possible output; 33-5 per cent of the output loss was due to lack of orders. Causes other than strikes were responsible for a production loss of 3,739,938 tons during the year while strikes accounted for an additional computed loss of 11,651 tons.
I had not any intention of making reference to that particular question, because of what I have heard in the past year from many government officials who have come to our conventions. The Minister of Labour went into 'Nova Scotia, tackled miners' organizations and everyone connected with them and gave them a severe talking to on the question of sporadic strikes and the amount of coal lost as a result of stoppages of work, and so forth. I think the amount of coal lost on account of stoppages of work is insignificant when compared with the amount lost-over three million tons-from other causes. If we are interested in the industry from the viewpoint of production, the other causes should be given as much analysis and investigation as this question of the sporadic strike.


Angus Lewis Macdonald: I think my hon. friend knows that the figure of 11,000 tons is entirely incorrect. He must know that.


Clarence Gillis: I do not compile those figures and I have not any way of finding that out.


Angus Lewis Macdonald: The hon. member knows that from his own experience.


Clarence Gillis: I am taking the government's word for it. I know there has been doubt cast on it, but I assume these figures are correct. They should be.


Angus Lewis Macdonald: They are not correct.


John Ritchie MacNicol: I want to ask the hon.
member a question, because I know he knows what he is talking about. How many tons is an ordinary day's production of coal? I want to try to estimate how much 11,000 tons would mean in shortages in terms of time. Would it mean more than an hour, or would it mean a day's production? The hon. member said that their loss through strikes was
11,000	tons' production, and I was just trying to ascertain what that means in time. Eleven thousand tons seems to be a very small amount. How much time would that represent? The hon. member is an expert and he must know.


Clarence Gillis: If we take the industry as
a whole, it would amount to practically nothing. One mine produces 4,000 tons a day. With regard to the accuracy of the figures here, that is something I cannot argue; I am accepting them as authentic, because I get them in cold statistics.
My intention in rising was to point out the seriousness of the mining situation in Nova Scotia. It is the basic industry in that province and employs over 100,000 men, and the whole economy of the province is wrapped np in the industry, whose operations are on the wane at the present time. I find, in most of the older mines, that there is no incentive for the companies to go ahead with new programmes. The question of the importation of bituminous coal into the Quebec market, where the minister says more will be used, is a serious one, because that is the only economic market the company has. If it is interfered with or dislocated, it will mean that the company will not go ahead with the programme of making new openings, and an already bad unemployment situation in those areas will be aggravated. We are facing a crisis and it is our intention to help Britain. I am in favour of that. But if we are to bring in any quantity of bituminous coal from Britain there will be no room for the coal from our operators in Canada. We shall have to put a quota on the border and keep out the bituminous coal coming from the United States. Millions of dollars going to that country could be saved.
The government should accept some responsibility with regard to the development of the coal areas in Canada. At the present time Britain is going through a terrific ordeal in consequence of the technique developed by the Germans of attacking town after town in an attempt to make a shambles of the country and to put it out of production. The mining industry there is not immune from destruction and while we are talking about importing bituminous coal from Britain the reverse may be true in six months' time. Canada may have to step in and supply Britain with coal. There are many undeveloped coal fields in Canada, particularly in the part of the country for which I am speaking, and the possibilities of expanding that industry should be probed.
Most of our coal has been shipped by water. It is only a seasonal matter during the winter months. From November until about May the coal is banked and that is a costly operation. An effort should be made to ship Cape Breton coal by rail. There are three factors that make it impossible, and a costly operation, to ship coal by rail, and these should

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be removed. In the first place, the assembly yard in Sydney is altogether too small; it should be enlarged; and ninety miles up the line, at Point Tupper, the assembly yard is also very small, being unable to handle much coal. Then there is the strait of Canso to contend with. A train of coal goes through and is shunted around in all directions to make room for it. Taking the train across on the Scotia is a slow operation and is not workable at the present time. It adds much to the cost of transportation by rail.
If the government are sincere in their effort to do something with regard to the industry in that end of the country, a good approach to the problem would be to consider the possibility of either tunneling the strait of Canso-it is only a mile or so-or bridging it, and at the same time enlarging the two yards to which I have referred, thus making it possible for coal to be shipped from that end of the country both summer and winter, and eliminating the necessity of banking the coal. The coal is banked twice, in Sydney and in Montreal, and coal company officials will tell you that this is one of the biggest factors in the question of cost-banking the coal and keeping it from catching fire. That is something which should be considered. The cost would be offset in years to come by the subventions that are now paid. The sum of $2,500,000 a year is now paid by way of assistance, and the industry will need still more assistance in time, or it will shrink to the point where it will take care of only our own domestic market. That seems to be the trend of events at present.
I leave these thoughts with the minister. They are factors that will have to be considered. That part of the country is not getting a fair deal. The people there are living in a completely different world from this part of the dominion. Something must be done for the development of the Nova Scotia coal industry or, I repeat, the industry will shrink to the point where it will take care of only its economic market. I hope the minister will consider these points.


John James Kinley: The hon. member for Cape Breton South (Mr. Gillis) told the house that there were 100,000 people employed in the coal mining industry in Cape Breton. I am afraid the figure is too large,


Clarence Gillis: The hon. member is wrong in that statement. I said that 100,000 people depended on it.


Mr. HANSON (Skeena):: He said it was the basic industry in Nova Scotia.


Clarence Gillis: So it is.
;Mr. Gillis.]


John James Kinley: 
Clarence Gillis: I beg the hon. gentleman's pardon, I did no such thing. I never made that statement. And by the way he might let H. J. Kelley do his own arguing.


John James Kinley: I refer to Hansard of
August 6, 1940, page 2549:
Mr. Gillis:	....I know positively without
having to guess about it at all, that no employment has been created for miners since the establishment of subsidies. As a matter of fact the reverse is true. On two occasions I have attempted to paint a picture of conditions in that industry during the past ten years. Coal mining in Nova Scotia is definitely on the way out. Since this session of parliament opened I have had telegrams, wires and letters stating that unemployment was widespread throughout the industry.
I have only a word more to say about subventions. I have been employed by the Dominion Steel and Coal Corporation, which controls coal mining in Nova Scotia, for a period of thirty years, and I am very sceptical in regard to the question of subventions. I would advise the government to examine closely into the question whether or not that subvention has been used for the purposes for which it was intended. I have not seen any benefits accruing to the man who produces or digs the coal. That is all I have to say on that point.

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Clarence Gillis: That is all right; does that say subventions are no good?


Ernest Lapointe: The hon. member does not say they are good.


Clarence Gillis: Might I be permitted to correct that statement?


John James Kinley: Well, it is in Hansard, I do not know what the hon. member wants to correct.


Clarence Gillis: First, the hon. member made the flat-footed statement that I said subventions were no good. He will find in Hansard that on two other occasions I thanked the government for the assistance given to the Nova Scotia coal-mining industry by way of subventions.


Olof Hanson: The hon. member has changed his mind.


Clarence Gillis: No; I did not change my mind, I appreciated and do appreciate that assistance, but the point I make is that since the subventions were inaugurated and coal moved westward, that industry has lost other markets somewhere, because according to the government figures production has decreased, and I know that unemployment has increased. I say that I see no benefit accruing to the men who dig the coal, because from 1921 until the present they have lost 37i per cent of their wages, and I cannot see where their standard of living has increased. I say that assistance is necessary, and probably will have to be increased because apparently we are losing the markets somewhere else while we are pushing our coal further west.
Mr. KINLEY; So far as subventions are concerned it is my understanding that the purpose is to enable -the commodity to reach markets which otherwise it could not reach. And the subventions have done just that, because in 1939-40 there were 2,600,000 tons coming to the upper Canadian market and in 1938-39 the amount was 1,300,000 tons.
We must not forget that the government has been pretty generous to the coal-mining industry of Nova Scotia. I have no coal mining in my constituency. The hon. member for Cumberland and the hon. member for Cape Breton South have a local interest in this coal-mining business. I have, however, a general interest -as one who is intensely interested in Nova Scotia generally. In my county we are, however, also interested in foreign markets and we use coal. Canada is a cold country, and to keep warm is an important matter. The government of Canada has been very generous, and the men who represented Nova Scotia here andl who secured
these subventions, with the assistance of the premier of Nova Scotia, ought to be commended. The subventions are splendid. I am told by men who know, that the industry could not survive as a national industry without the subvention, so I hope it will be continued.
With regard to British coal I am told that the price at the present time is advancing in Great Britain and freight rates are also high so that you really must have some special concession in order to get coal at all from Great Britain. I am informed that during this week immense quantities of coal have come up into the province of Quebec from the United States for the purpose of supplying war-time industries. Look at what this United States coal has to face. There is the exchange which is around 20 per cent; there is a 10 per cent excise tax, and the duty. It seems to me that might be called adequate protection. When this coal comes in in such quantities over such hurdles it is hard to talk on economic grounds.
I am told that there is not the slightest danger to Cape Breton coal or Nova Scotia coal. The cheapest coal to mine is in Cape Breton; the mainland mines bring up the average cost of production. But I am told that there is not the slightest danger because there is room for all. During this winter time any English or Welsh coal that will come to the maritime ports cannot get up the St. Lawrence on account of ice, and it will not get the $2 subvention to Montreal or $2.50 to Toronto. Surely that is a preferred position for the industry in this country. I think the hon. member should say that this government has done well by the coal-mining industry of Nova Scotia.
Let us look a little further. Under the legislation now before the committee we are restricting petroleum products. Some time ago there was an order in council which prohibited the use of petroleum for heating purposes in this country under certain conditions. That is all to the benefit of the coalmining industry. We are putting back the clock, as it were, in the interest of the coalmining industry; that industry is being helped because it is in the national interest. It occurs to me that my hon. friend is using a local economic problem in arguing against an item that is inserted because of the national interest and with an international aspect.
This legislation is for a purpose, that of stabilizing exchange as between the three great countries concerned in this war. It seems to me that if there is anything we can do in order to stop what might be called a financial traffic jam in the flow of money between the three countries, it should be done. All

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three will be benefited; and surely we in Nova Scotia need not put the red light of danger before this parliament in connection with that matter. It may be we should put the orange light of caution on so that we may watch it in future. But I think that with the reduction of 35 cents duty a ton on coal, there will not be very many people hurt.
The hon. member for Cape Breton South said that the 3 per cent excise duty was taken off United States coal when we raised the subvention a year or two ago. That is only 5 cents a ton; it is very little. The whole problem resolves itself into one of whether we must have teamwork for the interests of the whole country. If the British can send us some coal, if only for ballast for ships that go over there with the goods we produce, it is better than having them return to Canada empty. It will also mean that perhaps we shall have British coal, which will help the exchange situation, instead of more coal from our southern neighbours who are rich in exchange.


Clarence Gillis: I tried to have my remarks relevant to the matter before the committee. In 1939, approximately $18,000,000 worth of bituminous coal came in from the United States. I have tried to be patriotic. If we are going to market British coal in Canada on the basis of conserving foreign exchange, then we should exclude as much as possible of the United States product, and give the preference to Great Britain. The coal should be zoned, so that it would not dislocate the present Canadian market.


James Lorimer Ilsley: It will not.


Frederick Clayton Casselman: I am not a coal expert; I cannot quote figures, or anything of that kind, but I am from a province which to-day produces the second largest amount of coal in Canada. I refer to Alberta. It is safe to say that if we had the markets we ought to have in Canada, and that if we have any sort of national policy, then certainly we have the capacity in Alberta to produce very much more coal than any other province, or, in fact, than all the other provinces put together.
The measure with which we are dealing has for its purpose the conservation of foreign exchange, and has particular reference to the exchange position with the United States. I have before me some figures submitted by the western fuel dealers association, and I believe I may assume they are correct because they check with the figures appearing in the "Canada Year Book." In 1939, we imported from the United States 2,605.735 tons of anthracite. It may be argued that anthracite

is needed, that it cannot be supplanted, and that we cannot put bituminous coal in its place. The value of that coal is placed at about $27,000,000. In addition to that, we imported 9,836,110 tons of bituminous coal to a value of almost $63,000,000. If we add the $27,000,000 to the $63,000,000 we have a total of $90,000,000. Then, to that total could be added United States coke to the value of about $3,000,000.
If the government are really serious about this business of trying to save foreign exchange, surely I have shown a field which should be carefully explored by them. I may be asked what can be done. True, our coal is under subvention at the present time. I would, however, suggest to the government that, on account of the wheat situation in the west, a much smaller amount of wheat is moving along our railways. For that reason I assume rolling stock would be available for the movement of coal. I submit that the government might very well take up with the railways the matter of moving more coal to the east, and of having the railways reduce the present rate of $8, one which I believe applies to most of Alberta. If it were reduced only to the extent of 50 cents a ton, such a reduction would enable Alberta coal to go farther into Ontario.
My personal view is that it would be good business if the present subvention of $2.50 a ton were raised to $3, to serve that portion of Ontario which is not now covered by the $2.50 rate. I suggest that the government might very well take this matter into consideration, and for this reason: From all sides of the House of Commons we have heard discussion respecting national unity. It is admitted that practically all the war contracts are placed in the two central provinces. We in the west and the maritimes in the east are not receiving many contracts. We are not complaining, particularly, because, handicapped through lack of power, we have not as good facilities to offer. The fact remains, however, that we have some facilities which might be used. But if power is necessary, and since it is recognized that coal is a big factor in the development of power, I believe the part of Canada from which I come might be given further consideration in connection with the development of war industries.
My point is this: At the two extreme ends of Canada we have not the necessary industries. We still have a great deal of unemployment, much of which is in the coal-mining areas. In the winter time many of our farmers act as both farmers and coal miners. Many of the farmers are capable of doing

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coal-mining operations, and in that way they fill in their time and help fill out their limited incomes.
When we are thinking of national unity, I suggest that this is something we might keep in mind. The government should try to devise a policy which will give the people in the section of western Canada from which I come an opportunity to do something worth while. The more tons of United States coal which, through a measure of this kind, can be kept out, just to that extent do we save United States exchange. That is the purpose behind the measure before the committee. I leave the matter with the government, so that they may think about it.


Herbert Alexander Bruce: I was absent from the house this afternoon when the hon. member for Renfrew South (Mr. McCann) challenged the statement I had made earlier. Therefore I ask to be allowed to revert to the discussion of item ex 152 in the schedule.
The hon. member states that I deliberately failed to give the committee the proper information. Then he refers to his having interjected something into the debate of a few' days ago. The hon. member states that when the leader of the. opposition was speaking, he interjected that it took twenty times the quantity of ordinary tomato juice as sold in cans to produce the same amount of vitamin C as is produced by orange juice sold in cans. The hon. member is reported at page 654 of Hansard as follows:
But not in the same quantity. It takes twenty times as much tomato juice to give the same quantity of vitamins.
The hon. member makes no reference to its being in cans. In my statement today I clearly stated, in two paragraphs, that I was referring to juice from sieved Canadian canned tomatoes. I picked them out, specially, because I did not think it was too much to ask Canadian housewives at this time, when economy is necessary, and when the Minister of Finance is asking us to tighten our belts, to spend a little time in putting tomato juice through a sieve, particularly when the vitamin content is considerably increased by so doing.
If the hon. member prefers, I will give the figures respecting canned tomato juice which has not been put through a sieve. The amount of milligrammes per ounce in that instance stands at 4.9, using the figure given for the best brand selected from eight or ten different brands of tomato juice. If we take that as against 11.3 of orange juice, it gives the vitamin content of orange juice as being about 2^ times more than tomato juice.


John James Kinley: Of the one vitamin?


Herbert Alexander Bruce: Vitamin C, which is an important vitamin and one of great importance in nutrition. I have given these figures from table 3 of the report referred to, which has to do with the content of vitamin C in canned tomato juice. My hon. friend referred to it to-night, but he did not refer to it as canned tomato juice in his speech the other day.
I should like to give the average vitamin content which is given here in case I am accused again of not giving all the information. The average vitamin content of all brands of tomato juice is 3-6 milligrammes per ounce, while the average of all orange juice brands from various parts of the United States is 12-5 milligrammes; that is the average vitamin content in orange juice is less than four times greater than in canned tomato juice. I fail to understand why an hon. member who, I am sure, is interested in helping Canadians to dispose of their products and who, I am also sure, is interested in educating the public in the nutritional value of the tomato, should take the stand he has. The tomato is grown in every garden in Canada, by poor as well as by those able to afford orange juice. I would have thought that he would be interested in even exaggerating the importance of our own product.


Thomas Reid: Who shall decide when doctors disagree?


Herbert Alexander Bruce: I am quoting from a report of an investigation which was undertaken in Toronto for this specific purpose. I think the evidence is perfectly clear and I leave it to the committee.


John James Kinley: The hon. gentleman has referred to the value of juices in an evident attempt to extol the Canadian tomato. He is to be complimented upon that, but I want him to know that in Nova Scotia we think the apple is superior and we recommend it to the people of this country.


Charles Edward Johnston: Coming back to this coal question, I want to say that with resolution 6 we went to special lengths to assist Canadian industries which are a little hard pressed.


James Lorimer Ilsley: My hon. friend seems to have the wrong idea. It is not a case of relieving industries, it is a case of getting industries to do a job for us and making a tax concession if they will do that job.


Charles Edward Johnston: I am glad the minister brought that to my attention. In order to get these industries to do the



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job efficiently, we have to guarantee them a profit. We are guaranteeing them a profit of 24-4 per cent-I think that was the minister's statement-above their normal profit.


James Lorimer Ilsley: I do not want to get into any altercation over the Excess Profits Tax Act at this time. There is no guarantee of a profit to industry. If there was any guarantee, there would be no difficulty. Many of these companies risk as much as half a million or a million dollars. They cannot, unless some concession is made, make these large capital investments to meet a demand in what may prove to be a temporary market. I do not know whether they can or not, but they will not. I do not wish hon. members or the country to think we are taking power to hand out concessions to industries because we want to put them in the profit-making class or guarantee them a profit. Not at all, it is a question of asking them if they will produce so much exchange for us, in which event we will make certain concessions in connection with their depreciation or depletion or by way of tax credit.


Charles Edward Johnston: Nevertheless it is a concession to those industries. As the minister says, they may not make a profit, but if they do make a profit they are entitled to 20-4 per cent above the normal profit which they have made in the past three years. We take 75 per cent of the excess profits, but we leave them with 25 per cent.


James Lorimer Ilsley: Twenty-five per cent of
what?


Charles Edward Johnston: Twentyfive per cent above the average for the past three years, which was used as a basis. The minister corrected the hon. member for Rose-town-Biggar (Mr. Coldwell) and said that it worked out to about 20-4 per cent.


James Lorimer Ilsley: From what the hon. gentleman says, I am not at all sure that he knows what the 25 per cent is of. It is 20-5 per cent of the profit. That is, if they make a dollar profit, this tax takes 79i cents.


Major James William Coldwell: Of the excess profit.


James Lorimer Ilsley: If they make that profit
over and above what they made before.


Charles Edward Johnston: I understand that perfectly.


James Lorimer Ilsley: Then the provinces usually
take some more.


Charles Edward Johnston: But that
leaves them a good margin above their ordinary profit. It depends, of course, upon the business they do.

The point I want to make is that these industries are given every possible assistance in order that their production may be continued. Surely the minister would not say that we have not sufficient coal in Canada to take care of our requirements. As the hon. member for Edmonton East (Mr. Casselman) and the hon. member for Cape Breton South (Mr. Gillis) pointed out, we have an abundance of coal. What I am worrying about is why we should want to import more coal from Great Britain when we have thousands of people unemployed.
At Drumheller in my constituency there is one of the greatest coal industries in Canada. Every time I go there, these men come to me and wish to know what the government is doing. They say that all they want is a chance to work. I shall have to go back after this session and be faced with their questions as to why this government is letting in this coal from Great Britain. These men are sitting along the railroad tracks without any work to do. I cannot explain to these men that they are supposed to remain on the relief rolls, that their families are supposed to continue to suffer because they cannot get enough work to buy food and clothing. Yet here we are reducing the tariff so that coal from Great Britain may come in. I am not against coal coming in from Great Britain because we should give that country every assistance, but we should be consistent in our actions.
As the hon. member for Queens-Lunenburg (Mr. Kinley) has just said, it is quite possible that coal will be brought from Great Britain as ballast. It might prove to be in the interests of the shipowners to bring coal in as ballast, and if that is done the eastern mines will not be able to compete. It will only aggravate the situation in the east, which is already getting beyond our control. If there was not enough coal here, then I would say, bring it in from Great Britain.
We should shut off coal coming from the United States and thereby save in foreign exchange. I spoke at some length last session in connection with conserving foreign exchange by this action. If I remember the figures rightly, we would save something like $50,000,000 in foreign exchange if we produced our coal requirements in Canada instead of bringing them in from the United States. This would seem to be commendable action for the government to take. If that were done, then I would have no objection to coal coming in from Great Britain. But when we allow all this coal to come in from Great Britain and thus aggravate our labour troubles, it does not seem logical to me.

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Then we have a situation in the west with regard to wheat. We are now going to shut off the farmers; they are not to be allowed to make a profit of any kind. The coal miners are now going to be shut off and not be allowed to make a profit of any kind. The Minister of Labour (Mr. McLarty) is going to have difficulties on his hands because of the increased importations of coal that will be coming in, and I think he might very well review this legislation with respect to its effect on the coal industry of Canada. I think he should at least restrict the amount of coal coming in from the United States by the tonnage that we shall be importing from Great Britain. These importations will only aggravate the present unfavourable conditions in this whole industry. If we are going to preach unity to the people of Canada, let us be logical about the whole matter. While coal importations from Great Britain may not affect us very much in the west, the coal industry in eastern Canada is going to be seriously affected. Coal is a national problem, and I think the government would be well advised to formulate a national coal policy for the benefit of all Canada and not for just one section of it.


[Stage Direction]
Section agreed to.
On section 8-Agreements to grant assistance.
Thomas Clement (Tommy) Douglas: I want to
register my protest against what was said by the hon. member for Lake Centre (Mr. Diefen-baker) this afternoon. I am absolutely opposed to the principle contained in this section whereby parliament surrenders to the executive the power to declare by order in council what persons shall be compelled to pay a certain tax and what persons shall be exempt from paying it. From the point of view of democratic government this is a most dangerous and unsound principle.
I suggested to the minister yesterday that producers who wanted to increase the prices of their goods should appeal to the war-time prices and trade board, and the minister replied that the board would be simply swamped with applications. I can tell him that I imagine he will be swamped with applications under this section. Once he has the power of recommending to the governor in council the granting of exemptions, a great many firms will apply to him for the benefits of that exemption; and instead of being able to satisfy anyone, this power will only lead to a great deal of dissension and, what 's more serious, to many charges of favouritism and special privileges. Here in Canada for the first time the governor in council takes 14873-504
power to say that this firm or group of firms shall in certain circumstances be exempt from taxation under the Income War Tax Act and the Excess Profits Tax Act.


James Lorimer Ilsley: This is not the first time at all. Under the Income War Tax Act the Minister of National Revenue has power to fix rates of depletion and depreciation. Indeed, if he were so minded, he could fix one rate of depletion for one firm and another rate for another. As a matter of fact, a board is sitting in this city at the present time to make special arrangements about depletion and depreciation for war-time industries. It is doing that under order in council passed under the War Measures Act. The War Measures Act confers powers a thousand times greater than this and gives a power of discretion a thousand times greater than this.


Thomas Clement (Tommy) Douglas: But the
minister will remember that when that power was granted last year, we protested vigorously. This is an extension of the same principle, a principle which was never acted on prior to the outbreak of war. I register my protest against conferring these powers because I think it will inevitably lead to charges of favouritism and special privileges, and it will not make for the best type of morale in fighting this war.
May I ask the minister if he would give the assurance or include a provision that orders in council granting these exemptions or partial exemptions will be made immediately available to the members of the house. I do not mean tabling the orders in council six months afterwards; I mean publishing them immediately in order that the public may know the terms of the exemptions that are granted under this section.


James Lorimer Ilsley: I was about to move an amendment to this section in line with what I stated earlier in the debate, but I do not go as far as the hon. member is now suggesting because I do not think it is necessary.
The amendment I propose, Mr. Chairman, reads:
That section 8 be amended by adding thereto as subsection (2) the following:
(2) Whenever an agreement has been entered into under the authority of this section a copy thereof shall be laid before parliament by the Minister of Finance within fifteen days if parliament is then sitting, or if parliament is not sitting, within fifteen days after the opening of the next session of parliament.
Then the hon. member will have a chance to check us up, but I can tell him that we are pretty careful. I would ask my colleague to move the amendment.
St Lawrence Waterway


Norman Alexander McLarty: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 9 and 10 agreed to.
On schedule 1.
James Lorimer Ilsley: Mr. Chairman, by an inadvertence the printer or the law branch has included in part II of schedule 1 an item relating to apple pomace. It is item ex 99b- "apple pomace when imported for use in Canadian manufactures." That is all right. I am moving that that be inserted, although it has not been preceded by a resolution. The committee will remember that we took out the wording "when imported for use in Canadian manufactures," when dealing with the item in part I, but it is being put in part II where it does not do any harm at all. As it is printed, I should like to have it stand, because it will save reprinting.


Norman Alexander McLarty: I move:
That part II of schedule 1 be amended by adding thereto item ex 90b-apple pomace when imported for use in Canadian manufactures.


[Stage Direction]
Amendment agreed to.
Schedule as amended agreed to.
Schedule 2 agreed to.
Bill reported, read the third time and passed.

Mr. SPEAKER:: I have the honour to
inform the house that I have received the following communication:
Ottawa, December 6, 1940.
Sir:-I have the honour to inform you that the Right Hon. Sir Lyman P. Duff, Chief Justice of Canada, acting as deputy of His Excellency the Governor General, will proceed to the Senate chamber at 9.30 p.m., for the purpose of giving the royal assent to' certain bills.
I have the honour to be,
Sir,
Your obedient servant,
F. L. C. Pereira, Assistant Secretary to the Governor General.


ST. LAWRENCE WATERWAY STATEMENT AS TO ORDER OF UNITED STATES SUPREME COURT PERMITTING TEMPORARY DIVERSION AT CHICAGO
[Stage Direction]
Right Hon, W. L. MACKENZIE KING (Prime Minister):	Perhaps the house will
allow me to give to my hon. friend the member for Davenport (Mr. MacNicol) some information he asked me for a little earlier in the day with regard to the Chicago diversion. I

might mention to the house that the Minister of Pensions and National Health (Mr. Mackenzie) has a statement which he wishes to make in respect of rehabilitation and matters of orders in council and the like which it was promised would be made before the session is over.
That I think, is the only business. After the minister has made his statement, the house might suspend its sitting until 9.30 p.m.
What I wish to give to the hon. member for Davenport, if the house is agreeable, might be placed on Hansard.
Some hon. MEMBERS:: Agreed.


Georges Parent: By leave of the house.


William Lyon Mackenzie King: As the hon. member for Davenport mentioned, the press recently reported that the United States supreme court had permitted the Chicago sanitary district to increase its diversion from 1,500 to 10,000 cubic feet per second for ten days beginning December 2.
The main provision of the supreme court order issued on Monday, November 25, is as follows:
Upon consideration of the motion of the states of Wisconsin, Minunesota, Ohio, _ Pennsylvania, Michigan. New York and Illinois, and in accordance with the following stipulation, it is ordered that the sanitary district of Chicago be and it hereby is authorized to increase its diversion of water from the great lakes-St. Lawrence system or watershed through the Chicago drainage canal from 1,500 cubic feet per second in addition to domestic pump-age to 10.000 cubic feet per second in addition to domestic pumpage for one continuous period of ten days from an appropriate hour on December 2. 1940, to the same hour on December 12,	1940, after which period alii the
provisions of the decree entered April 21, 1930, shall be and remain dn_ full force and effect until further order of this court.
The stipulation contains statements that the agreement between the great lakes states and Illinois is not to be construed as in any way waiving, abandoning or prejudicing any of the positions taken by these states and is:
____not to be used as a precedent for any
future request for additional temporary diversions in excess of the amounts fixed by the United States supreme court decree of April 21, 1930.
The Special Master, the Hon. Monte M. Lemann, in suggesting this agreement, said:
... . it would be solely for the purpose of trying by this means to remove whatever slooculent active sludge deposits and sewage sludge may have accumulated in the Brandon road pool by reason of the introduction of untreated sewage and sludge from treated sewage.
It will be noted -that the increased diversion is limited to ten days and that it is

Post-War Reconstruction-Soldiers
stipulated that it is not in any way to constitute a precedent. By meeting in this temporary fashion any substantial element there may have been in the Chicago sanitary district's contention that an increased flow might be necessary for sanitary reasons, the court has removed any possible ground for urging an increased permanent diversion.
The attitude of the supreme court to the general question of Chicago diversion is clearly set forth in a decision on April 3, 1940, with regard to a request from Illinois for a permanent increased diversion. The decision will be found in the Congressional Record of April 17, 1940. It will be seen that the court said that the state of Illinois had failed to show that it had provided all possible means at its command for the completion of the sewage treatment system, and that no adequate excuse had been presented for the delay.


SOLDIER REHABILITATION
[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Pensions and National Health): Mr. Speaker, I had a statement prepared dealing with the general question of the programme of the government respecting the rehabilitation of ex-service men. I sent that statement this morning to the leader of the opposition (Mr. Hanson) and to the leaders of the other groups. With the consent of the house I should like to have that statement, which is entirely informative and interpretative of the various orders in council and the policies already adopted by the government, placed upon the records of this house.
The house has been informed by several of my colleagues of the tremendous scope and scale of Canada's war activities from military, industrial and financial standpoints, but we are all acutely conscious that, following the tremendous upheaval of war, there will come the even more difficult problems of post-war reconstruction, with which my own department, that of Pensions and National Health, is inevitably associated in the public mind.
There is not only the problem of rehabilitating the ex-service men-that task is already with us, and in a measure has been grappled with-but that is only one aspect of the vastly greater and more complex task of reorganization and readjustment of our whole national life from a war-time to a peace-time basis.
The government has established an organization for the purpose of planning and directing the country's activities during this critical transitional period. Necessarily the existing organization of the Department of Pensions and National Health has been called upon to take an important part in this programme.
Now let us speak of the discharged soldiers and of the after-war problems, dealing first with those concrete and specific measures which have been already taken to provide for the welfare of the men whose services with the forces have already been terminated and with the measures taken looking towards the problem of demobilization and rehabilitation in its broader aspects after the war.
On September 2, 1939, by P.C. 2491, the benefits of our Pension Act and the whole machinery of the Canadian pension commission were placed at the disposal of the members of the naval, military and air forces of Canada who, while serving on active service, suffer disabilities.
In the same way, the dependents of such members of the services who met death in the performance of their duties on active service were brought under the benefits of the existing pension legislation.
Later, in the light of administrative experience, P.C. 1971 was passed on May 21, 1940, providing certain regulations for the guidance of the Canadian pension commission in administering the act in its relation to men on active service in the present war.
The chief principle involved in the order in council of May, 1940, was a clearer definition of the responsibility of the state, in relation to those whose service occurred in Canada.
It was provided that, where the man served in Canada only, the liability for war pension should exist only when disability or death arose as a direct result of the performance of military duties.
It will be realized that thousands of the men on active service in Canada are engaged in their military duties for only a limited number of hours per day and that, in the evenings and on week-ends, they are at liberty in very much the same way as the ordinary civil employees of the government.
In fact, thousands of men are being enrolled in this war with the avowed intention that their service shall take place entirely in Canada. I need only mention the ground crews employed in the air training plan. These men are in uniform and. are subject to military discipline because that is the form of organization in which they are employed.
Actually, many of them are living normal civilian lives except for the hours during which they are on duty. Full protection is given where death or disability arise as the
[Stage Direction]
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result of the performance of duty. But a number of cases arose in which men were the victims of accident while away from their military duties and under circumstances in no way associated with their service. It was not considered that any claim for war pension should arise from the consequences of accidents and incidents which come to all of us in the course of our ordinary lives.
A special regulation was necessary to meet this set of conditions because the original pension act was based on the conditions of the last war, when the assumption was that every man enlisted would proceed as rapidly as possible to a theatre of war.
A further amendment to the pension legislation was adopted on September 25, 1940, by P.C. 63/5079.
This order in council provides that Canadians who have joined the imperial forces since the outbreak of war shall receive pension at the Canadian rates.
Specifically the order in council provides that the Canadian Pension Act shall apply to persons who were resident and domiciled in Canada at the outbreak of the war and who, subsequent to September 1, 1939, have become members of the naval, military or air forces of the United Kingdom.
The benefits of the Canadian Pension Act shall apply to such persons if they suffer disability or death in respect of which a gratuity or pension is awarded under the laws or regulations of the United Kingdom, provided that the benefits shall be paid to persons who are residents of Canada, and only during the continuance of their residence therein.
The object of this was to provide for pension at the Canadian scale to bona fide Canadians who since the outbreak of war, have joined the imperial forces or been transferred thereto, and who return to live in Canada, or whose dependents, in the case of death, reside in Canada.
The large number of Canadians who have entered the service of the Royal Air Force and of the Royal Navy are, of course, the chief persons affected.
These men have offered their services in the manner in which they can best be applied to the common cause of the empire. I am sure it is the desire of all Canadians that, because circumstances have caused their services to be rendered in the forces of the United Kingdom, they shall not be deprived of the benefits of our legislation in any particular where the Canadian law provides greater or better assistance than would be received under the laws of another part of the empire.
During the present month, a further order in council (P.C. 204-6613, dated November 18,
[Mr. I. A. Mackenzie.J
1940) has been adopted, to meet a problem which many members have had drawn to their attention. It is necessarily and rightly the function of the armed- forces to have on their strength only men who are fit for service, or who are expected to recover from any accident or illness which they experience, and return to service.
As soon as it is determined that a man is no longer fit for service, he has no place in the armed forces, and he is very properly discharged.
It was found, however, that the Department of Pensions and National Health had no authority to admit men to hospital after their discharge, unless and until it was ascertained that the disability was pensionable. The new order in council overcomes a very serious difficulty.
It is now provided that, if a man is in hospital under the department at the time of his discharge, treatment Shall be continued, and a special allowance equal to assigned pay and dependents' allowance .to the man's dependents shall be continued until treatment is concluded, or it has been determined whether the man is eligible for pension.
If a ruling is given that the man is not eligible for pension, the allowance shall continue for a period of seven days thereafter. Treatment, however, may be continued by the Department of Pensions and National Health until completed.
This order in council will, it is felt, avoid much hardship which would otherwise accrue to the families of men who are found unfit for further military service during the time required to adjudicate on the question of pension entitlement.
There have been approximately 20,000 discharges from the armed services, but many of these represent persons who did some temporary guard duty in their own localities.
Some served for a few days or few weeks and the majority were never far away from their own provinces. It cannot be said that their contact with civilian life was completely disrupted for a long period, and in fact the majority have been reemployed.
About 1,000 men have returned from service overseas, about two-thirds of whom have been discharged to civil life.
Although the tremendous amount of war industry and general commercial prosperity resulting from the large war expenditures have created a most favourable employment market in Canada, special problems have already developed in connection with the placement and welfare of these discharged men.
At my personal request, one of my principal advisory officers made a tour of the chief Canadian cities investigating present condi-

Post-War Reconstruction-Soldiers
tions, and his observations were placed before a general advisory committee, whose functions I intend later to describe in detail.
Following a most careful study of the problem, in the course of which the views and experience of many private organizations and agencies interested in the welfare of the soldier were obtained, the government has decided to create, in the Department of Pensions and National Health, a new division, to be known as the veterans' welfare division.
There will be representatives of the division in all principal centres where such representation is needed and there will be a chief administrative officer at Ottawa.
The duties of this division and its representatives will be as follows:
(a)	To interview, advise and assist former members of the forces.
(b)	To become conversant with all regulations relating to pensions, allowances, medical treatment, employment, training, social welfare and other policies that may be of assistance to the ex-service men.
(c)	To make a study of all occupational opportunities in the areas at which sub-divisions are established.
(d)	To encourage employers to reemploy discharged men who were formerly in their
service.
(e)	To endeavour to secure preference for ex-service men in employment by industry generally.
(f)	To keep in constant touch with the employment service of Canada, with regard to available employment.
(g)	To obtain information from the Department of National Defence with respect to members of the forces arriving in the several areas for discharge, to arrange for notification to be sent to their families and to encourage volunteer local committees to welcome them.
(h)	To maintain contact with veterans' organizations, with a view to fostering interest in the rehabilitation of former members of the forces, and to keep in touch with all other agencies likely to be of assistance.
(i)	To develop favourable public opinion regarding the reestablishment of former members of the forces.
(j)	To report to Ottawa on the activities and requirements in each district, and upon the results of the various types of reestablishment activity.
At the same time, I am able to inform the house that the auxiliary services of the Department of National Defence have instructed their local representatives to establish contact with all men at the time of discharge, and refer them to facilities that have been organized to assist in their reestablishment.
With the creation of the veterans' welfare division to coordinate civilian activities, a complete liaison will now be established, so that the man will be informed of all measures available to assist him in his return to normal civil life.
Prior to the establishment of the veterans' welfare division, measures had been taken in all chief centres to bring together the voluntary agencies desirous of assisting the ex-service men. The representative of the department, whose tour of Canada I have just described, held meetings in the following centres: Montreal, Quebec, Saint John, Halifax, Kingston, Toronto, London, Winnipeg, Regina, Saskatoon. Calgary, Edmonton and Vancouver.
In many of these centres he found citizens' committees already in existence, awaiting only some guidance and official machinery which would bring them into direct contact with the problem. In other centres representative groups were called together and arranged to create such committees. The form which the committees take will vary, according to the desires of the community itself.
Thus, in New Brunswick it was decided to ask the Red Cross society, which has branches in every community, to undertake the formation of committees throughout the province to interest themselves in the placement of men returned from overseas.
In several cities, particularly in the west, it was felt that the already established machinery of the veterans' assistance committees should be utilized and it was decided to add to the personnel of the voluntary committees to make them more broadly representative of the community at large and of those in a position to assist.
In Toronto, a citizens' committee, consisting very largely of outstanding industrial leaders, was in existence and had already placed some 250 men. Other organizations, such as the greater Toronto war services advisory council, agreed to cooperate.
One large industrial company has agreed to offer the facilities of its personnel division as a centre in which any official selected by the government might be trained in vocational guidance and placement work in the Toronto area, without cost to the public. I wish to express my personal appreciation of this splendid offer, because it is very evident that trained placement and vocational guidance personnel will be required by the department in increasing numbers as the problem develops.
As an illustration of the type of voluntary committees now being formed, it is interesting to note that in Saskatoon there were
[Stage Direction]
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representatives on the committee of the Canadian Legion, of organized labour, of the government employment service, of the youth training programme, and of the board of trade.
It is the desire of the government that organizations such as these shall be represented in the local committees on as wide a basis as possible and I wish to express my personal appreciation of the extreme willingness to cooperate which was found in all parts of Canada.
Generally speaking, the problem of employment is not acute at the present time, although, admittedly, there are individual problem cases which can best be handled by these local committees familiar with the personal and family history of the men themselves and with the local conditions to which thev must be adjusted.
At this stage, I should like to inform the house that amendments to our pension legislation have so far been enacted by order in council under the authority of the War Measures Act. This was considered essential in order that problems arising out of administrative experience might be dealt with promptly.
It is intended, however, at the present session of parliament to introduce a bill incorporating into the act the amendments already adopted by order in council, in order that they may have the consideration and sanction of parliament.
I am particularly anxious to bring these matters before the house in order that the whole question may be considered by a committee of the house in consultation with the government's principal advisers such as the chairman of the Canadian pension commission and the officers of the Department of Pensions and National Health.
The several amendments adopted to date were the result of very careful study and deliberation by staff committees and the government as a whole.
Nevertheless, there is no desire on the part of the government or the department to assume the role of omniscience in connection with this very human and complex problem,
The government is most anxious to receive the cooperation and advice of this house in connection with its pension legislation, and 1 look forward with keen anticipation to the work of the committee to whom the house will be asked to refer the bill, which it will be my duty to present at an early stage of the present session.
The foregoing measures just described are applicable especially to the men now being discharged, and constitute the nucleus of legislation and administrative measures out of

which will be developed the nation's programme for the demobilization period, when several hundred thousands of men will suddenly be transferred from war-time to peacetime activities.
It was recognized from the outset that the demobilization period calls for long range planning, and that no single government department could begin to cope with a problem of such magnitude-affecting as it must every phase of the national life.
On December 8, 1939, by P.C. 406S-j, the government created a special cabinet subcommittee on demobilization and rehabilitation to study and advise upon measures which will be required to meet the problems arising from demobilization and the discharge from time to time of members of the forces during and after the war.
The Minister of Pensions and National Health was designated as convener of the committee and the other members are the ministers of Public Works, National Defence, Agriculture, Labour, and the Hon. J. A. MacKinnon, who is now the Minister of Trade and Commerce.
The cabinet committee was authorized to appoint advisory committees selected from the personnel of government departments and to consult provincial and municipal authorities and public service organizations generally.
A general advisory committee, under the chairmanship of the Canadian pension commission, was organized and a series of subcommittees dealing with specialized phases of the problem was formed.
These committees have been functioning for some months and exceedingly valuable preliminary reports have been received.
However, this fall, it was found necessary to give legal status to the advisoiy committee and this was done by P.C. 5421, dated October 8.
It is provided that the advisory committee shall consist of:
The chairman of the Canadian pension commission, who shall be chairman;
The chairman of the war veterans' allowance board, who shall be vice-chairman;
And of the following members:-
The chairman of the civil service commission.
The deputy minister of labour and two other members nominated by the Minister of Labour.
The deputy minister of public works and two other members nominated by the Minister of Public Works.
The director of auxiliary services, Department of National Defence, and two other members nominated by the Minister of National Defence.

Post-War Reconstruction-Soldiers
Two members nominated by the Minister of Agriculture.
The deputy minister of pensions and national health, and two other members nominated by the Minister of that Department.
Two members nominated by the Minister of Finance.
One member nominated by the Minister of Trade and Commerce.
Broadly speaking, the chief governing principles which are guiding the committee in its work may be stated as follows:-
1.	To avoid duplication of machinery and clashes of jurisdiction on the one hand, and to avoid gaps in administration on the other.
2.	The Employment Service of Canada established under the Unemployment Insurance Act will give specialized attention to the placement of ex-service men.
3.	Information, guidance and directional services to be furnished by the Department of Pensions and National Health.
4.	Pension and other legislation to be extended and modified from time to time, to meet the new conditions of the present war, as may be found advisable.
5.	The work of the general advisory committee to be kept strictly advisory in character -administrative responsibility being assumed by appropriate departments and branches of the executive government.
Prior to the passing of this order in council, the work was being done almost entirely by government officials. But authority has now been granted to name recognized experts from outside the service to assist on the subcommittee.
The general advisory committee is also authorized to bring before it persons specially qualified to advise on any matters coming within its terms of reference.
A small secretariat has been established for the purpose of compiling the results of the efforts of the committee and its several subcommittees.
I have already indicated very largely the extent to which action has been taken as a result of the deliberations of the cabinet committee and the several staff committees. But it will be of interest to the house to know in a general way the subjects under reveiw by the various subcommittees.
Subcommittee on post discharge pay and service gratuity:	This committee is by no
means satisfied that the gratuity paid to every discharged man at the end of the last war constituted the most scientific and effective use of the very large sum of money involved in the interests of the ex-service men themselves, and is making a comprehensive study of possible alternative measures-taking into
account the deferred pay situation, the rates payable by the unemployment insurance commission, training allowances, and similar factors.
Subcommittee on vocational and technical training and retraining. There is a strong sentiment in this committee in favour of occupational training-
For those who are disabled in such a way as to prevent them from returning to their former occupations;
For those who have served for twelve months and whose technical, academic, or industrial training or education has been interrupted;
For others, honourably discharged after twelve months' service, who are considered by competent vocational guidance officers by reason of their age, aptitudes and inclinations to be benefited from such training.
In this connection, the work of the Canadian Legion war services, in affording secondary education facilities to the men while serving, has been noted with great satisfaction.
The work of the committee has been divided into specialized groups dealing with allowances, a survey of technical courses, a survey of agricultural courses, training for public sur-vice opportunities, documentation on vocations and employment opportunities.
In the study which this committee has already made, there has developed a feeling that the maximum use should be made of the youth training plan already established under the Department of Labour, in cooperation with the several provinces.
It is also felt that provincial and local facilities should be utilized in any programme developed under this heading.
Subcommittee on retraining of special casualties. This committee has been especially concerned with the Mind, the deaf, the maimed, etcetera.
In this connection, definite decisions have been made affecting those who may lose their sight.
An agreement has been entered into with St. Dunstan's hospital for the treatment and training of overseas casualties of this nature up to a certain point in England at the expense of the government of Canada.
In connection with those suffering from tuberculosis, it has also been decided that the existing provincial sanatoria shall be utilized, and that ex-soldiers shall be provided with their treatment there on a civilian basis.
There is a pronounced sentiment, among those who have given special study to the problem of amputation cases, that every effort should be made to return this type of casualty to Canada at the earliest possible moment, rather than to prolong their treatment and convalescence in the United Kingdom.
[Stage Direction]
Post-War Reconstruction-Soldiers
The Canadian National Institute for the Blind and the Amputations Association have rendered very valuable advice and assistance to this committee, and I wish to express my cordial appreciation of the voluntary cooperation received from these quarters.
Subcommittee on home settlement. This committee has made an intensive study of the soldiers' settlement schemes of the last war and is disposed to recommend a more limited measure of assistance which will avoid the setting up of burdensome debt contracts. It will also bear in mind that the permanent settlement of the ex-service man and his family in a home whether in the town or in the country is the ultimate aim.
Subcommittee on administration of special funds. Following the last war, it will be remembered that there were surpluses from the patriotic fund, canteen funds and various other sources which were devoted to the welfare of ex-service men. None of us is altogether satisfied that these funds were applied to the best advantage. It is contemplated, therefore, that a very close eye should be kept on the probable extent of any such special funds, and that the proper steps be taken to ensure that the maximum benefit shall accrue to the ex-service men in their rehabilitation.
Subcommittee on preference in public employment. The chairman of the civil service commission is presiding over this committee with a view to evolving such recommendations as may be deemed to be practicable.
Subcommittee on employment service. It is anticipated that the greatly strengthened Employment Service of Canada, under the Unemployment Insurance Act, will be the agency responsible for bringing together the man seeking a job and the job seeking a man.
It is contemplated that there will be a special service for ex-service men in this department.
This subcommittee has developed a form upon which the vocational experience and aptitudes of men in the services may be recorded, and this form has already been found to be of great value to the Department of National War Services in connection with any redistribution of labour which may be found necessary, in order that the country's man-power may be applied to the greatest advantage in our war effort.
I have enumerated the subcommittees now existing, but it is recognized that these by no means exhaust the field to be covered.
It is contemplated that additional committees will be formed to take up other fields of investigation, such as-
Returned soldiers' insurance.
Distinctive badging for ex-servicemen.

Organization of voluntary effort.
Cooperation of provincial governments.
Urban home settlement.
General family welfare.
Preferences in employment and public services other than dominion and in industrial and commercial enterprise.
Post-war public works.
It may be found advisable to cover even wider territory as time goes on.
In repaying our debt to these men we must neither patronize nor demoralize our service men. We trust we shall not make our efforts in this regard matters of political controversy.
Our men of Canada will fight a great fight; our men of Canada must be given the chance to finish the course with a fair field. We at home hold all Canada in trust for their return. They must never be permitted to return to a devitalized homeland.
Parochialism would be a grave disservice to men fighting and dying for this dominion and this democracy.
We cherish our federal framework of government. As long as we are truly federal we can never be fascist. We are conscious that unitary government would be destructive of unity in Canada. But our men are fighting for Canada, not for any local or parochial aim, and therefore we must realize and recognize that the remaking of Canada will constitute the major post-war reconstruction into which all our rehabilitation plans must be shaped and fashioned.
In all this work of planning and perfecting of rehabilitation arrangements, we must reinforce the patriotism of those whom we seek to help. Their opportunity of serving their country in war must be enlarged for service in peace, when peace comes. Consequently, home settlement, training, and employment will bulk largely in our plans and our policies.
The blueprints for the main fabric are in the Rowell-Sirois report. It is fitting that at this time there should be called a dominion-provincial conference to lay the foundations of the structure in which a living democracy can grow and develop.
When our young men are offering their lives as they are to-day, we who are less fortunate must not be less generous in the contribution which we should make to our nation, to the sacred cause and the unity of our nation.
I have always felt that the essentials of our Canadian citizenship can be stated very simply. They involve consent-the will to live together worthily;	conservation-the
preservation of our liberties and institutions; cooperation-conference with one another and courtesy.

Post-War Reconstruction-Soldiers
But, most important of all, contribution- both individual and corporate.
Our ancestors have won for us many rights -sometimes we have taken these for granted -that life, liberty, and the pursuit of happiness are the inalienable rights of every citizen of a true democracy. This was a banner for every man on this continent and all over the world.
Now I think we must go farther. Our method has served us well but the tempo of democratic action must be speeded up, and the purpose of our whole way of life must be reaffirmed and reestablished.
Let us capitalize the deficiencies of the totalitarian schemes and values. Democracy in the days to come must roll up a counterrevolution that will recall everywhere to the banner of human freedom all the resurgent elements of human progress and definite reforming purpose, all free men and free women who believe in the necessity of constant endeavour and of constant change.
Harold Laski, in his latest book, has said and they are very true words:
Our choice is between the dark age of privilege and the dawn of an equal fellowship among men.
Progress, combined with consent, will avoid the legacy of bitterness and hatred that extremist policies would leave behind.
We war to-day against a fanatical creed combined with fiendish efficiency and cosmic aims.
In our life and death struggle to win, we must satisfy the craving of the ordinary man for a dynamic creed and a burning faith in a new social justice that will move the mountains of despair.
Our ancestors won for us liberties which are now the great pillars of democracy- liberty of speech, thought and writing; toleration, equality before the law, and government of the people.
We shall never know the meaning of these priceless liberties until they are lost to us.
We must now move on to ensure that every man will have the essentials for the pursuit of happiness; facilities for training if there is aptitude and inclination, a widening range and variety of employment, with a sufficiency of food and clothing and shelter and warmth.
With these rights should go minimum duties which will form a sound and solid basis of reciprocal benefit in the upbuilding of our nation.
We must expect our people to serve their country to the utmost of their capacity, but with this expectation and hope there must be fashioned and formed a charter of
true democracy, security without slavery, freedom without poverty, progress without violence.
As I have said, we face the difficult problem of laying down equitable pension rules, of establishing ways and means of absorbing men from the armed forces back into civilian life.
It is a long-term programme, as the last war has taught us, which requires our serious consideration even in the midst of this great struggle.
What form of social or economic life is to be our lot following these tragic days, is, I am sure, the deep concern of every man in this assembly. It would indeed be bold to suggest now any specific system which would remedy most of the ills of the days gone by which are now so apparent.
But nothing in the story of human progress is more valuable, in my opinion, than men with inquiring minds.
So that perhaps it would not be amiss to put forward the view that while the "sweet red wine of youth" is being spilt to defend those constant companions along the broad highway of all human progress-yes, and all man's highest dignity, liberty and freedom- we who occupy another form of public service might spend our time at least building the fabric into which may be incorporated a sounder system which will reveal a higher conception of public service.
I do not wish to condemn completely economic, monetary, social systems of the past, but surely our future society can be better built if we benefit from the mistakes of the past and preserve the fundamental principles which existed in the period that lies behind-and supplemented, strengthened and buttressed by whatever constructive thoughts we may each and every one of us contribute to the system in the future.
I am not one of those who subscribes to the very much used phrases "the post-war period of economic chaos"-and-"never again in our time will we see civilization as we have known it."
I believe with all my heart-as does every man in this free House of Commons-that in all adversity lies great opportunity.
I believe in the capitalistic system, or rather in true and controlled capitalism. Capitalism as I understand it-and I am sure you all agree-is simply man sharing in the benefits of nature. In other words-sweat and toil applied to the natural world. Men using their hands and their muscles to create natural wealth and industry, instead of through idleness, enjoying the unearned increment of capital.
[Stage Direction]
Post-War Reconstruction-Soldiers
I have no prejudice against men who, through success and enterprise, have accumulated some measure of material wealth. But the principle that has been rapidly growing of living off the unearned increment of capital instead of digging and providing capital to mankind has been one of the cardinal departures from fundamental principles, which, to say the least, has caused distress, class distinction and unhappiness.
May I say that, in my judgment, there is no man in this parliament who would not honestly accept his part in the honest mistakes of the past.
I would consider it a great honour and privilege, in these serious days when we are bending our will to the preservation of our very lives, to work with all members regardless of political views.
I assure you, Mr. Speaker, my time will be available to work in cooperation with any member of the house to explore ways of contributing to success and victory in the difficult, terrible and anxious days ahead.
Mr. STIRLING:: There are two questions I should like to ask, if I may be permitted. Is it the intention of the government to set up, when we return in February, a special committee to deal with soldiers' affairs?


Mr. MACKENZIE (Vancouver Centre):: Yes.


Grote Stirling: The second question is this. We have read on a good many occasions recently of from fifteen to twenty thousand men who have been discharged since the beginning of this war. Surely this does not represent the medically unfit.


Ian Alistair Mackenzie: I shall have to get the information from the defence services with regard to the latter part of the hon. gentleman's question. I have not that information at the moment.


Mr. MacINNIS:: I understood the minister to say, in answer to the hon. member, that a committee would be set up to deal with the affairs of returned men. Will there be a committee to deal with the general problems of reconstruction?


Ian Alistair Mackenzie: No. That committee will deal only with the question of the adequacy of pensions administration and the War Veterans' Allowance Act.


George Hugh Castleden: I believe the minister assured us last July that a health committee of the house would be set up. Can he give us an assurance now that this committee will be functioning in February?


Ian Alistair Mackenzie: I do not recall such an assurance, but there is an unofficial committee of the house which will act in cooperation with the Department of Pensions and National Health.


[Stage Direction]
SUSPENSION OF SITTING

On motion of Mr. Mackenzie King the sitting was suspended until 9.30 p.m. this day.
The house resumed at 9.30 p.m.

[Stage Direction]
A message was delivered by Major A. R. Thompson, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Honour, the deputy of His Excellency the Governor General, desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, the house went up to the
Senate.
And having returned.
Mr. Speaker informed the house that the deputy of His Excellency the Governor General had been pleased to give in His Majesty's name, the royal assent to the following bills:
An act to amend the Special War Revenue Act.
An act respecting the conservation of exchange.
On motion of Mr. Mackenzie King the house adjourned at 9.45 p.m. until Monday, February 17, 1941, at 3 o'clock.
Monday, February 17, 1941.