1941-05-13

[Stage Direction]
On the order of motions:
Hon. J. A. MacKINNON (Minister of Trade and Commerce):: Mr. Speaker, I wish
to announce that negotiations which have been going on for some time between the Canadian wheat board and the United Kingdom ministry of food have resulted in the sale of one hundred and twenty million bushels of wheat futures for delivery during the period ending May, 1942. This is the largest single wheat transaction in the histoiy of the world's grain trade.


Hon. R. B. HANSON (Leader of the Opposition):: Would the minister enlighten the
house as to the price or prices that have been fixed, if any?


James Angus MacKinnon: The United Kingdom ministry of food informed us that they would require the same assurances as those they had last year; that is, that the prices to be paid will not be disclosed, and that the market will remain open during the period of the transaction.

Munitions and Supply



CUSTOMS TARIFF


[Stage Direction]
On the orders of the day:
Hon. J. L. ILSLEY (Minister of Finance):: I thought the house might be interested in a telegram which has been received on behalf of the British government from the Secretary of State for Dominion Affairs:
London, May 2, 1941.
High Commissioner for Canada has informed us of further wide and substantial tariff concessions on United Kingdom goods for which the Canadian budget provides. We appreciate to the full the magnitude and generosity of these measures which are yet another example of Canada's wholehearted cooperation. We attach the greatest value to our export trade with Canada, and, within the limits of our resources, no effort will be spared to take every advantage 0f these concessions for which we wish to express our most grateful thanks.



WAR VETERANS


[Stage Direction]
On the orders of the day:
Mr. J. S. ROY (Gaspe):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. My question is based upon a communication which I have just received from Quebec city and which is signed by twenty-nine war veterans who give their serial numbers and their years of service in the great war of 1914-18. These veterans claim that they have made numerous attempts in the last few months to obtain employment in the various war sendees, which requests have been turned down because they were not known as partisans of the Liberal party. I table this communication for the minister's information. My question is: Is the government aware of this state of things, and will it tolerate it any longer?


Hon. J. L. RALSTON (Minister of National Defence):: My answer to my hon. friend is that the government is not aware of that state of affairs, and in my opinion it is absolutely incorrect.


Joseph Sasseville Roy: How can the Minister of National Defence say that the statement of these war veterans in Quebec is incorrect?


James Layton Ralston: I do not think my hon. friend is entitled to ask another question on the same point. What I say to him is this: When it is stated that veterans are refused employment, if it is in government services, because of the political views they hold, in my opinion that statement is absolutely incorrect.


Joseph Sasseville Roy: That is what they say in their petition.



MUNITIONS AND SUPPLY


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: Mr. Speaker, I should like to ask a question of the Minister of Munitions and Supply (Mr. Howe) based upon a telegram which I received this morning from a union official with reference to the mills of the Canada Car Company at Amherst, as well as to the aeroplane plant there. As I have sent a copy of this wire to the minister, there is no necessity of reading it. This matter has been brought to the attention of the minister several times in the past, and I should like to ask if he has any definite plans to utilize these plants, so that men may be employed in them to the best advantage in serving the country.


Hon. C. D. HOWE (Minister of Munitions and Supply):: The steel mill at Amherst is quite an old mill with no primary steel capacity. No situation has developed as yet in connection with which this steel mill could be usefully employed in war work. The aeroplane plant has received a large order, and I assume that the owners are developing the plant as rapidly as possible. A number of men have been training in Montreal for Amherst, and the jig and die work has been completed and sent down there. I think that as far as aeroplane work goes, employment will increase steadily, but I have no anticipation of larger employment in the steel mills.


Clarence Gillis: Is there any possibility of utilizing these men somewhere else?


Clarence Decatur Howe: Certainly.


SHORTAGE OF NATURAL GAS IN WESTERN ONTARIO FOR DOMESTIC USE
[Stage Direction]
On the orders of the day:
Clarence Decatur Howe: I should like to reply to the question asked yesterday by the hon. member for Waterloo South (Mr. Homuth) with regard to the natural gas situation in western Ontario. I shall table a report on this matter as soon as it can be obtained, but in the meantime I can say that the power controller and the oil controller have been in active negotiation recently in an effort to augment the supply of gas for the coming winter. I have been informed verbally that arrangements have been completed which will, I think, bring about a more satisfactory condition in the supply of natural gas in western Ontario.
Minimum Price of Butter


FIXING OF MINIMUM PRICES BY DAIRY PRODUCTS BOARD
[Stage Direction]
On the orders of the day:
Mr. J. A. BLANCHETTE (Compton):: I should like to ask a question of the Minister of Agriculture (Mr. Gardiner). In view of the fact that some time ago the governme:nt promised that a minimum price would be placed on butter, and also in view of the fact that there has been a gradual decline in the price of that commodity, is the minister able to inform the house whether this price will be set shortly?


Hon. J. G. GARDINER (Minister of Agriculture) :: The hon. member favoured me with
a copy of his question, and I have the following answer to make. By order in council, P.C. 143, of January 10, 1941, the dairy products board was authorized:
-upon the recommendation of the minister and with the approval of the governor in council, to establish minima prices at which butter may be sold.
Pursuant to the authority contained in the foregoing, order in council, P.C. 3230, of May 10, 1941, authorizes the dairy products board to fix minima prices in accordance with the following schedule. With the permission of the house, I shall have this schedule placed on Hansard in order that all information may be before hon. members. It is as follows:
Schedule No. 1
Minima Prices of Creamery Butter First Grade Creamery Solids Delivered to Purchaser 1941
In province of	May	June	July	August	September	Octobercents	cents	cents	cents	cents	centsBritish Columbia	
Ontario	per lb.	per lb.	per lb.	per lb.	per lb.	per lb.Quebec 	
New Brunswick	
Nova Scotia	
Prince Edward Island	
Alberta 	294	30	30J	31	314	32Manitoba	27 J	28	28J	29	29J	30Saskatchewan	26i	27	27i	28	28*	29First Grade Creamery Prints or Bolls	Delivered	to Purchaser	May	June	July	August	September	OctoberIn province of	cents	cents	cents	cents	cents	centsBritish Columbia	
Ontario	per lb.	per lb.	per lb.	per lb.	per lb.	per lb.Quebec	
New Brunswick	
Nova Scotia	
Prince Edward Island	
Alberta 	1	30J	31	314	32	32 J	33Manitoba	HN CO <M	29	29*	30	30*	31Saskatchewan	274	28	284	29	29*	30
It will be noted that the same minima prices are fixed for the provinces of British Columbia, Ontario, Quebec, New Brunswick, Prince Edward Island and Nova Scotia. These provinces, with the exception of Prince Edward Island, are all importers of butter, and Prince Edward Island's surplus is only approximately 500,000 pounds annually. Prices two cents per pound lower are fixed for the provinces of Alberta and Manitoba, and prices three cents

per pound lower for the province of Saskatchewan than for the other six provinces. These three provinces are exporting provinces, and the differentials provided are based upon existing freight rates to the principal markets of the exporting provinces.
Provision is made in the order for a minimum differential between solids and prints of one cent per pound. The average differential in Ontario and Quebec, in which provinces

Excise Act
about two-thirds of our butter is consumed, is approximately one cent per pound. It will be noticed that the minima prices are on a basis "of delivered to the purchaser," and it is felt that this is the only way in which fair competition in selling can be secured. It is felt that increases in the fixed minima prices from time to time, that is of one-half cent per month, throughout the production season will induce trading and support of the market by those who ordinarily store butter.
In accordance with the authority conferred by order in council, P.C. 3230, of May 10, 1941, the dairy products board has issued order No. 21. With the consent of the house I should like to place this on Hansard. It is: Order No. 21
The dairy products board hereby orders that
1.	For the purposes of this order
(a)	"Solid" or "solids" shall mean creamery butter solidly packed in boxes containing a net weight of approximately fifty-six pounds or more.
(b)	"Prints" or "rolls" shall mean packages of creamery butter of net weight of one-quarter pound, one-half pound, one pound or multiples thereof.
(c)	A "dairy produce broker" is one who does not warehouse or handle dairy products but acts as an intermediary between buyer and seller, selling on a brokerage basis.
(d)	A "dairy product commission agent" is one who warehouses and sells dairy products for the owner on a commission basis.
(e)	"Delivered to the purchaser" shall mean f.o.b. destination as mutually agreed between vendor and purchaser.
2.	No person shall sell or purchase first grade creamery butter in any province in Canada at prices below those specified in schedule No. 1 annexed hereto, for the month and province in which the same occurs. Sales shall be on a basis of the butter sold being delivered to the purchaser at the expense of the vendor.
3.	No vendor shall allow and no purchaser shall accept any discount or other consideration on account of the sale or purchase of first grade creamery butter, which would have the effect of reducing the net returns to the vendors below those specified in schedule No. 1 provided,
(a)	that if a dairy produce broker or dairy produce commission agent is actually engaged in any transaction, brokerage or commission fees at recognized rates may be allowed, and
(b)	brokerage fees shall be paid direct to the broker by either the vendor or the purchaser as may be agreed.
4.	If butter inferior in quality to first grade is sold at prices below those specified in schedule No. 1 such butter shall be correctly marked as to grade in accordance with the provisions of the regulations under the Dairy Industry Act respecting grade standards and sizes of type required for designating grades.
The foregoing order will be in effect from the date of publication thereof in the Canada Gazette.


Mr. SENN:: The minister stated that the prices are on the basis of purchaser's price. Does he mean the retail purchaser or the wholesale purchaser?


James Garfield Gardiner: The wholesale purchaser -the person who purchases from the maker of the butter.


SHIPBUILDING
[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: I should like to ask the Minister of Munitions and Supply if he will make available to the house the recommendations of the committee which was sent to British Columbia to investigate the shipyards of that province with a view to their doing more war work?


Clarence Decatur Howe: I should like to consider that question. This is a confidential report, and while I do not think there is anything in it that could not be made public, I am inclined to believe that no good purpose would be served by making it public. If I may, I will reserve a decision in the matter until later.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Vien in the chair.
EXCISE act, 1934
Resolved, that it is expedient to introduce a measure to amend the schedule to the Excise Act, 1934, and to provide:
1. That sections 3, 4 and 5 of the schedule to the said act be repealed and the following substituted therefor:
"3. Beer.
Upon all beer or malt liquor:-
(а)	brewed in whole or in part from any substance other than malt, per gallon-thirty-five cents;
(б)	imported into Canada and entered for consumption, per gallon-twelve cents.
4. Malt.
Upon all malt:-
(a)	manufactured or produced in Canada and screened (that is, malt from which the coomings have been removed) subject to the regulations of the Governor in Council with respect to absorption of moisture in warehouse, per pound-twelve cents;
(b)	imported into Canada and entered for consumption, per pound-twelve cents.
Excise Act
[Stage Direction]
5.	Malt syrup.
Upon all malt syrup as defined by paragraph (c) of section six of the Excise Act, 1934:-
(a)	manufactured or produced in Canada, per pound-eighteen cents;
(b)	imported into Canada and entered for consumption, per pound-thirty cents."
2. That any enactment founded on paragraph one of this resolution shall come into force on the thirtieth day of April, one thousand nine hundred and forty-one.
["At the beginning of\nthe discussion I agreed that when we reached the item for production service administration, we would continue the discussion with regard to wheat acreage reduction. Since it is almost eleven o'clock, I believe we might continue that discussion when we resume consideration of the estimates.\nItem stands.\nProgress reported."]
Richard Burpee Hanson: These
resolutions respecting the Excise Act need not take very long, but I think the minister should give the committee some explanation in regard to them. Perhaps he will put on the record the previous rates, the receipts by years over a period of years, and the revenue anticipated in the coming year. I should like the same detail with respect to malt and spirits.
While I am on the subject of spirits I would ask the minister to make plain just what the taxes on spirits are in Canada-customs, excise and what-not-so that the public may understand just how much of the purchase price of a bottle of whisky goes to the government. There is a substantial opinion in the country -it has reached me from every section of Canada-that the government in raising money by taxation should have resorted to further taxes on spirits, and in justice to the government itself I think the position should be made quite clear. Has the taxation on spirits reached such a point that it is thought that the law of diminishing returns may 'be in effect? I have an open mind on this question, but I do know that there is a substantial body of public opinion

no doubt it has been expressed to the minister-which objects to the government's not having increased the tax on spirits. There may be a good reason for it, but the whole position should be clarified.


James Lorimer Ilsley: Answering the first part of the question relating to beer, the present rates and the proposed rates of duty for malt, beer, and malt syrup are as follows: On malt, domestic, the present rate is 10 cents per pound and the proposed rate 12 cents per pound. On malt, imported, the present rate is 10 cents per pound and the proposed rate 12 cents per pound. The yield from those taxes-


Richard Burpee Hanson: On malt alone?


James Lorimer Ilsley: On malt alone, which is by far the main part of the beer taxes-nearly all of the taxes on beer are raised by the duty on malt. The malt duties to which I have referred yielded in the fiscal year 1940-41, 816,802,539.80. The estimated increase antici-

pated as a result of the new rate of 12 cents per pound is $3,360,507.96, so that the estimated yield from the malt duties for the present fiscal year 1941-42 is $20,163,047.76- which is a fine estimate, I may say.


Richard Burpee Hanson: The minister must expect an increased consumption.


James Lorimer Ilsley: Yes. The duties on beer are unimportant, but I had better give them to complete the story. The present rate on beer, dutiable, is 30 cents per gallon, and the proposed rate, 35 cents per gallon. The present rate on beer, imported, is 7 cents per gallon, and the proposed rate, 12 cents per gallon. The yield-


Richard Burpee Hanson: Before the minister goes on, when he speaks of duty, is he speaking of excise?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Is there in addition a customs duty on beer?


James Lorimer Ilsley: On imported beer, yes.


Richard Burpee Hanson: On imported beer; and is that the item referred to in section 3 (b), or is it only excise?


James Lorimer Ilsley: These are excise duties.
There is a duty in the customs tariff which is separate from these.


Richard Burpee Hanson: What is
the customs tariff on beer and malt?


James Lorimer Ilsley: I am sorry I have not that information, but it does not make very much difference because there is practically no beer imported. Beer is a domestic product.


Richard Burpee Hanson: Does any ale or porter come under this? They are under the definition of beer?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Surely
we import some Guinness' stout and porter, do we not?


James Lorimer Ilsley: Very little. It is infinitesimal compared with the consumption of beer. The yield from beer, dutiable, in the fiscal year 1940-41 was $411,970.98, and the increased rate of duty is estimated to yield an increase of $68,661.83, making a total yield from that source for the present fiscal year of $480,632.81.
On beer, imported, the present rate is 7 cents per gallon and the proposed rate, 12 cents per gallon. The yield in 1940-41 was $6,874.96, and the increase is estimated at $4,910.68, making an estimated total yield of $11,785.64.
On malt syrup the present domestic rate is 15 cents per pound, and the proposed rate is

Excise Act
18 cents per pound. The yield in 1940-41 was $98,951.53, and the estimated increase due to the higher rate is $19,531.56, making a total estimated yield of $118,483.09.
On malt syrup, imported, the present rate is 25 cents per pound, and the proposed rate is 30 cents per pound. The yield in 1940-41, partly at 21 cents and partly at 25 cents per pound, was $9,729.41; the estimated increase due to the higher rate is, for the present fiscal year, $2,211.05, making an estimated total yield of $11,940.46.
Of course, the estimates for the present year, while I have given them down to a cent, will not, being estimates, work out just that way; they are approximations.
The hon. gentleman asked me about spirits. The excise duty on spirits is $7 per gallon.


Richard Burpee Hanson: What is
the customs duty?


James Lorimer Ilsley: The British preferential
rate is $8 per gallon, and the general rate is $10 per gallon.


Richard Burpee Hanson: Eight
dollars?


James Lorimer Ilsley: Eight dollars, coming from
Great Britain.


Richard Burpee Hanson: Fifteen
dollars per gallon, the two together?


James Lorimer Ilsley: No. That is not it. It is
only $7 per gallon on the domestic product and $8 a gallon when imported from Great Britain.


Richard Burpee Hanson: There is
the sales tax in addition to that?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Any other tax?


James Lorimer Ilsley: No.


Richard Burpee Hanson: There is either the excise in the case of domestic production, or the customs of $8 in the case of importations.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Plus the sales tax in either event?


James Lorimer Ilsley: That is true.


Richard Burpee Hanson: That is the dominion tax?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: How does that work out per imperial quart?


James Lorimer Ilsley: Perhaps I had better take a little time and get that accurately.


Richard Burpee Hanson: The idea of asking these questions is to ascertain and to give to the public the exact facts with relation to taxation on spirits and beer. I think it would be useful information to give to the public.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: There is, as I stated, a demand that the rate of taxation on liquor of one form or another be increased in war time. Now, is that based on a practical state of affairs? I am not speaking in any sense of prohibition, or liquor control, or anything of the sort; I am seeking to learn whether it is practicable that we in Canada should put further taxes on spirits. If the minister cannot answer that now, he will be good enough to do it later.
What will be the effect of the increased tax on malt, on beer, and on malt syrup, on the price (a) of a glass of beer, (b) of a bottle of beer, (c) of a case of beer? What increased contribution are the consumers of beer to make to the national treasury in time of war: I will put it that way. The brewing business is a legitimate business, but, I suggest, it is in the luxury class. Although in England beer is looked upon as a staple, in Canada it is not quite in the same class. I merely wish to ascertain the true position, without making any reflection on anybody or seeking to drive the government into any other position. Will there be an increase in the price of beer to the consuming public, and how much will it be, and should it not be more?


James Lorimer Ilsley: Let me take these two questions in their order. The first relates to spirits. As I said before, the duty on spirits is now $7.


Richard Burpee Hanson: That is the excise?


James Lorimer Ilsley: The excise duty is $7 and the import duty is $8.


Richard Burpee Hanson: We have that.


James Lorimer Ilsley: The excise duty was raised from $4 in September of 1939 to $7-needless to say, a substantial increase.


Richard Burpee Hanson: Yes.


James Lorimer Ilsley: Some of the provinces, including Ontario, shortly or immediately after we raised the duty on spirits from $4 to $7 in the fall of 1939, also raised their mark-up on spirits, which in effect amounted to an increase in the provincial tax to correspond or practically correspond with the increase in the dominion tax. The result of that was that the sales of spirits in the liquor stores of
Excise Act

Ontario dropped off to a marked degree. Not only that; I was informed that smuggling of spirits into Ontario began to take on proportions, and this was regarded as sufficiently serious to justify the Ontario liquor commission in lowering its mark-up of spirits, which they did in November or December of 1939. This incident was taken by us, and I am sure by the government of Ontario, as indicating that the taxes on spirits, whether by way of dominion excise duty or of provincial mark-up, could not safely be raised without danger of increased illicit importation, illicit manufacture in Canada through stills and so on, and of course, illicit sales.


Richard Burpee Hanson: Bootlegging.


James Lorimer Ilsley: Yes. These are the main considerations which led us at this time not to increase the duty on spirits.


Richard Burpee Hanson: Having
already raised them a year ago.


James Lorimer Ilsley: Having already raised them so largely in the fall of 1939. I believe I stated in my budget speech that the consumption of spirits had not increased. I find that it increased somewhat, but not to any marked degree. The total proof gallons of domestic and foreign matured spirits entered for consumption for the fiscal year 1939-40 was 3.645,892.74. The quantity for the fiscal year 1940-41 was 3,850,238.82, showing a very small proportionate increase in the consumption of spirits. That is contrary to the impression which a good many persons in the country have, and it is in contrast to the large increase in the consumption of beer.


Richard Burpee Hanson: There has been a large increase in the consumption of beer?


James Lorimer Ilsley: Yes.


Mr. ROWE:: That is on spirits, though, the minister says?


James Lorimer Ilsley: The increase I have given is on spirits. It is very small; I do not know what percentage it is.


Richard Burpee Hanson: What is the increase on beer?


James Lorimer Ilsley: Eighteen to twenty per cent.


Richard Burpee Hanson: In volume?


James Lorimer Ilsley: Yes, in volume. The hon. gentleman asks whether this twenty per cent increase in the duty on malt will cause an increase in the price of beer. There are some indications, I am informed, that the breweries may absorb the increased tax, but I do not know about that. The brewers .might absorb the increased- tax, but I do not know. They will probably find some way of passing it on.


Richard Burpee Hanson: The minister cannot tell me what the increased tax would be spread over a case?


James Lorimer Ilsley: No, I cannot give that. I do not know what policy the brewers will pursue.


Richard Burpee Hanson: Assuming they passed it on, would there be figures available for that?


James Lorimer Ilsley: It would be roughly ten
cents a case.


Richard Burpee Hanson: There is no legal or economic reason why the brewers should absorb it unless they feel that it is so small they would not want to raise the price to their customers, the taverns and so on. Does the minister not think that an increased tax on malt and all the other ingredients which results in an increase in the price of beer of only ten cents a case is a very moderate contribution to the war effort on the part of those who drink beer?


James Lorimer Ilsley: That is the increase.


Richard Burpee Hanson: I know,
but it is no increase at all to the consumer if the brewers absorb it. It does occur to me that here is a field which the minister can usefully explore to add something to the war effort of the country, and I suggest that he had better reconsider the matter. Ten cents a case on beer is a mere bagatelle.


James Lorimer Ilsley: There has been an increase of 100 per cent since the war. It was 6 cents per pound before the war and it was raised to 10 cents in September, 1939, and now 12 cents. We have doubled it.


Richard Burpee Hanson: Yes, and the minister has doubled the taxes on other things. But has he gone the limit on this to-day? I am suggesting that on these items, malt, malt syrup and all the rest of the ingredients that are raw material for the brewer, there is not enough being paid under the circumstances, having regard to the fact that a war is on.


James Lorimer Ilsley: It is a matter of judgment as to how far one ought to go. We have doubled the taxes on beer since the war broke out. The provinces rely on this commodity for a large part of their revenue.


Richard Burpee Hanson: The minister is very solicitous at the moment about the good of the provincial treasury, but he is not so solicitous about the provincial treasury in regard to succession duties, income tax and a host of other things, which fields he is now invading. Why be solicitous about the provinces in the matter of the retail sales of

Excise Act
liquor, and invade what heretofore has been their jurisdiction-I mean in practice-in regard to succession duty and income tax? The two things do not make sense.


James Lorimer Ilsley: I am not solicitous, but I am fair. I have never announced or practised a policy of hostility towards the provinces, and it would be fatal for me or any member of any dominion government to do so. The provinces are a part of the dominion and regard must be had to their interests. Regard is always had to the interests of the provinces, and one could not pursue a policy of deliberately and inconsiderately crowding the provinces out of a field in which they are established and upon which they rely for one of their main sources of revenue.


Mr. NICHOLSON:: 
Richard Burpee Hanson: I think
the minister has fairly stated the position in regard to bootlegging and illicit manufacturing. If you make the tax too high you will have all these dives in the country operating. Putting the tax up is asking for that sort of thing, and there is a point beyond which the tax should not go. I am only seeking information as to whether we have reached that point or not. The minister made it clear that at the outbreak of war the tax on beer was substantially increased. Still I think we might go a little further in this respect. I am told that the price in town has been raised 25 cents a dozen since the budget; I do not know whether that is correct, I assume it is. If the minister thinks the tax is as high now as it ought to be, 1 am content, at the moment anyway.


James Lorimer Ilsley: About every three months a fairly large still is found now, mainly in the cities. Hamilton, Toronto, Montreal and Winnipeg have been mentioned.


Richard Burpee Hanson: I have seen them in York county, New Brunswick, away back in the woods.


James Lorimer Ilsley: That is in addition to small stills all over the country. It is all very well to say that the officers of justice can pick them up, but the universal experience has been that if we make the profit large enough we are going to have them.


Alexander Malcolm Nicholson: There is a large profit now.


James Lorimer Ilsley: If you raise the duty from $7 a gallon proof spirits to, for example, $8, there is then that much additional incentive to run the risk of launching a still operation.
Excise Act


Alexander Malcolm Nicholson: Has the minister a comparative statement showing the retail prices of beer, spirits and wine in Canada and Great Britain?


James Lorimer Ilsley: No.


Alexander Malcolm Nicholson: Could the minister get it?


James Lorimer Ilsley: We have no figures. I think the hon. gentleman would be in just as good a position to get that as I am. It is the retail sale prices he is asking for. I do not think we have even the retail sale prices in Canada. It is not part of the government record.


Mr. COLDWELL:: The minister gave the figures regarding the consumption of spirituous liquor and the increase in the amount of malt liquor consumed. What has the increase been, either by gallons or in percentage, in wine?


James Lorimer Ilsley: I have not that information. The tax on wines is under the Special War Revenue Act, which is the subject of another resolution. I shall have it then.


Mr. DUPUIS:: Was the duty on spirits not around $10 a gallon some time during the last war? So far as beer is concerned, I learned through the press that the breweries are going to diminish the quantity in each bottle instead of increasing the price.


James Lorimer Ilsley: At one time the duty on spirits was higher than $7; the import duty was $10 and the domestic $9.


[Stage Direction]
Resolution agreed to.
['At one time the duty on spirits was higher than $7; the import duty was $10 and the domestic $9.']
James Lorimer Ilsley: I should like to take up the excess profits tax resolutions now.


Richard Burpee Hanson: That is
a very difficult item, and I do not think we are ready for it. As a matter of favour to me I would ask the minister to take up anything but the Excess Profits Tax Act, because I find it very difficult to understand, and I have not completed my study of it. But so far as I am concerned I am ready to go on with the Income War Tax Act.


James Lorimer Ilsley: The only reason I want to take up the Excess Profits Tax Act is that I made a statement before Easter on the excess profits tax resolutions, and these are the very proposals that I placed before the house at that time. Long notice has been given, and I thought we might consider them this afternoon.


Richard Burpee Hanson: I am
afraid I cannot discuss it.


James Lorimer Ilsley: Well, if the hon. gentleman prefers we will go on with the Income War Tax Act resolutions. There are one or two that I think will have to be changed a little.


Richard Burpee Hanson: Certain of them dropped?


James Lorimer Ilsley: No.
fMr. Ilsley.J
INCOME WAR TAX ACT AMENDMENT Resolved, that it is expedient to introduce a measure to amend the Income War Tax Act and to provide:-
1. That the rates of tax applicable to persons other than corporations shall be increased to the rates of tax set forth in the following schedules:-
A. Rates of tax applicable to persons other than corporations and joint stock companies:- On the first $1,000 of net income or any portion thereof in excess of exemptions, 15 per centum, or
$150 upon net income of $1,000 and 20 per centum upon the amount by which the income exceeds $1,000 and does not exceed $2,000, or $350 upon net income of $2,000, and 25 per centum upon the amount by which the income exceeds $2,000 and does not exceed $3,000, or $600 upon net income of $3,000. and 30 per centum upon the amount by which the income exceeds $3,000 and does not exceed $4,000, or $900 upon net income of $4,000. and 33 per centum upon the amount by which the income exceeds $4,000 and does not exceed $5,000, or $1,230 upon net income of $5,000, and 36 per centum upon the amount by which the income exceeds $5,000 and does not exceed $6,000, or $1,590 upon net income of $6,000, and 38 per centum upon the amount by which the income exceeds $6,000 and does not exceed $7,000, or $1,970 upon net income of $7,000, and 40 per centum unon the amount by which the income exceeds $7,000, and does not exceed $8,000, or $2,370 upon net income of $8,000, and 42 per centum upon the amount by which the income exceeds $8,000 and does not exceed $9,000, or $2,790 upon net income of $9,000, and 44 per centum upon the amount by which the income exceeds $9,000 and does not exceed $10,000, or $3,230 upon net income of $10,000, and 47 per centum upon the amount by which the income exceeds $10,000 and does not exceed $15,000, or $5,580 upon net income of $15,000, and 50 per centum upon the amount by which the income exceeds $15,000 and does not exceed $20,000, or $8,080 upon net income of $20,000, and 53 per centum upon the amount by which the income exceeds $20,000 and does not exceed $30,000, or $13,380 upon net income of $30,000, and 55 per centum upon the amount by which the income exceeds $30,000 and does not exceed $40,000, or $18,880 upon net income of $40,000, and 57 per centum upon the amount by which the income exceeds $40,000 and does not exceed $50,000, or $24,580 upon net income of $50,000, and 59 per centum upon the amount by which the income exceeds $50,000 and does not exceed $75,000, or $39,330 upon net income of $75,000, and 63 per centum upon the amount by which the income exceeds $75,000 and does not exceed $100,000, or $55,080 upon net income of $100,000, and 67 per centum upon the amount by which the income exceeds $100,000 and does not exceed $150,000, or
$88,580 upon net income of $150,000, and 70 per centum upon the amount by which the income exceeds $150,000 and does not exceed $200,000, or
$123,580 upon net income of $200,000, and 75 per centum upon the amount by which the income exceeds $200,000 and does not exceed $300,000, or

Income War Tax Act
$198,580 upon net income of $300,000, and 80 per centum upon the amount by which the income exceeds $300,000 and does not exceed $500,000, or
$358,580 upon net income of $500,000, and 85 per centum upon the amount by which the income exceeds $500,000.


Richard Burpee Hanson: On April 29, the day he delivered the budget speech, the minister wrote to each provincial premier with respect to income and corporation tax. A copy of that letter was brought down on May 9 in response to a motion dated May 5, as follows:
For a copy of the letter addressed by the Minister of Finance to each provincial premier asking that the provinces should vacate the personal income tax and the corporation tax fields.
The letter was as follows:
Ottawa, April 29, 1941.
Dear Sir:
To-day I sent you a telegram of which the following is a copy:
"In budget speech to-day I will on behalf of government of Canada make an offer to the government of each province in respect of provincial and dominion revenues for duration of war. I am writing you sending you a copy of my speech which contains particulars of offer and shall be pleased to discuss proposal with you at your convenience."
I am enclosing a copy of my budget speech, which contains the offer to which I referred in my telegram, fully explaining the proposal and the reasons why the government of Canada felt it necessary to make it.
I shall be glad to discuss this matter with you at any time at your convenience^ after you have had an opportunity of considering it.
Yours very truly,
(Original signed by J. L. Ilsley.)
Was this the first intimation the provinces had received, other than the suggestion at the time of the dominion-provincial conference -or threat; I do not know which designation the minister would apply to it, but I prefer "suggestion"-that the government would have to invade the provincial field? If so, why did the government not move before the legislatures had all adjourned, so that the provinces could adjust themselves to the new conditions? What has been the reply from the various provinces? Have they agreed to assist the minister by vacating this field, or what is the position?
In the course of his budget speech the minister made what I thought was a generous offer to the provinces if they should vacate this field; they were given not only one but an alternative proposal. In the remarks I made a week ago to-day I stated, as I do now, that it was a generous offer and I hoped the provinces would comply.
It is now two weeks since the minister made his speech, and I should like to know what the position is with respect to the
provinces. I quite understand that there will be great difficulty in the provinces adjusting themselves to such a proposal now that the legislatures are not in session. Their income taxes and corporation taxes are imposed and collected by virtue of statutes of their own legislatures. To ask them at this time to vacate the field for this year may cause a great deal of dislocation and delay. Yet I hope some accommodation will be arrived at, because I have very strong views on the question of double taxation, taxation by provinces and by dominion, taxation on the same money and taxes on taxes.
I understand that consideration is given in some fields to that last topic. I ask the minister to explain the whole position in respect to this matter, because it is one of very great importance, not only to dominion and provincial treasuries, but even more so to the individual taxpayer -who has to pay the bill. After all we are here representing the taxpayers, not the provincial governments. It is still fair to say that they have to be considered, and their financial position has to be taken into account. What is the situation? How far has the minister got?


James Lorimer Ilsley: The hon. gentleman was present when the conference to consider the Sirois report met in this chamber, and I am sure he heard what was said on that occasion. So far as I can recollect, there was no communication with the provinces that had anything to do with the matters that were discussed at that conference, until my budget speech. To that statement there should be this exception made, that we did notify them that we could not go on in this fiscal year with the payment of unemployment relief, that the dominion would discontinue those grants.
The reason the offer to the provinces contained in the budget was not made before was because it was not ready before. It was an offer that had to be carefully considered; and when I say "carefully considered" that is understating the case very greatly. It was an offer that could not be modified once it was made; an offer which, if accepted, would have very far-reaching consequences. It necessitated much research, investigation and knowledge of the corporation taxes in the various provinces, not only the ad valorem taxes but the specific taxes as well. It was an offer that could not lightly be made, and it took some time to prepare. And there was another reason, perhaps. It was an offer that had to be accompanied by definite action on the part of the Canadian government.


Richard Burpee Hanson: That is, compensating action?
Income War Tax Act


James Lorimer Ilsley: No, definite action in the imposition of taxes. Rightly or wrongly, that seemed to us to be the only course that could be pursued. We tried the conference course in January, without success.


Richard Burpee Hanson: That was on the basis of the Sirois report, but you did not try it on the basis of an all-out war effort.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: That was exactly the position taken by the Premier of Ontario. He said if the government would confer about these matters on the basis of an all-out war effort, for the duration of the war, they would sit in; but that offer was refused. I have no brief for the province of Ontario, but let us face the facts squarely.


James Lorimer Ilsley: I am sorry I have not before me the speech I made on that occasion.


Richard Burpee Hanson: I remember it very well.


James Lorimer Ilsley: Whatever the words of that speech, it was to the effect that we proposed the application of the Sirois report, that we definitely stood by it, and called the conference to discuss the application of that report. I gave the reasons why we were in favour of the adoption of the report. I stated our problems, and I said that unless the conference was prepared to discuss with us the application of the report, the adoption of our solution for it, or present an alternative offer of some kind which would meet those problems, I did not see what was to be gained by going on with the conference. Perhaps those were not exactly the words I used at that time, but certainly I suggested that some alternative suggestion be made. No alternative suggestion was made. The position taken by certain premiers attending that conference was that they would not discuss those problems on the basis of the Sirois report; and as that dealt with the whole field it was impossible to go ahead.


Richard Burpee Hanson: Of course that was founded on the theory that the recommendations of the Sirois report were not for the duration of the war but for all time. But the provinces did definitely offer to discuss some of these problems, perhaps all of them, not on the basis of the Sirois report but on the basis of united effort by the provinces and the dominion. That offer was not even considered; it was refused out of hand, and I think that showed a great lack of national leadership on the part of the federal government. I have not the least doubt about that.


James Lorimer Ilsley: The hon. gentleman is
entitled to his opinion, but I think plenty of leadership has been shown here. I believe that is also the opinion of the country.


Richard Burpee Hanson: Well, I am not so sure of that.


James Lorimer Ilsley: The hon. gentleman asked me what is the present position. The present position is that I have heard from all the provinces with the exception [DOT] of Ontario. I have had no indication from Ontario as to whether that province will or will not accept the offer I made.


Richard Burpee Hanson: What is the nature of what the minister has heard?


James Lorimer Ilsley: British Columbia stated that it was prepared to accept the offer in principle; and while I have not heard anything very definite from the other provinces, because I have not asked for anything very definite, the attitude is an acceptance in principle by most of them, if not all. You will understand, Mr. Chairman, that a province is in a somewhat difficult position with regard to saying "I accept that offer." The premier or provincial treasurer, or both, come to Ottawa or communicate with Ottawa and ask many questions. They say, "If we do this, what will you do?" They ask what this means, what that means; from what date will it start; what arrangements will be made with regard to arrears, and so on. They have a hundred questions.


Richard Burpee Hanson: They are exploring the whole position.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: That is
very zeasonable.


James Lorimer Ilsley: I should say that all the provinces are now exploring the position, with a disposition to accept the offer, with the exception of Ontario, from which I have not heard.


Richard Burpee Hanson: Are the replies, if they may be termed such, from the various provinces in writing? Take British Columbia, for example; have they put anything in writing in reply to the invitation which was extended on April 29, or has it all been verbal? Has any conclusion been reached in any case? I rather gather from what the minister has said that in no case -has a conclusion been reached?


James Lorimer Ilsley: No.


Richard Burpee Hanson: It was
interesting to learn from the minister, Mr. Chairman, that he has had no reply -from Ontario. I do not think we should infer from

Income War Tax Act
that silence that there will be no reply; I should think that courtesy at least would require that a reply be given, and that in due course the minister will hear from Ontario. But this appears to be a very important matter to the treasury of Ontario. If my recollection serves me aright, nearly half the entire income tax receipts under present legislation comes from Ontario. I have not the figures in mind at the moment, but undoubtedly the minister knows them. The percentage is very large, and for that reason the subject matter is of great importance not only to the government of Ontario but also to the people of this province. Until some accommodation has been reached between the government of Ontario and this government, does the minister propose to go ahead and place the taxpayers of Ontario in the position that they will have to pay a greatly increased income tax from now on? 1 do suggest to the minister that this would be a very bad situation. I do not wish anything I may say this afternoon to be taken as adding fuel to any flame that now may be burning in that respect. I have views on this subject; I expressed them on the budget. I think it would be wholly regrettable if an accommodation should not be reached; I say this on behalf of the taxpayers of the country. I would much rather see one income tax levied throughout the country than two or three. There may not be any relief in the volume of the tax, but there should be uniformity. I have the hope that there will be some saving in the cost of collection and administration.
In connection with the corporation tax, I had hoped that we would get this thing cleaned up, not only for the duration of the war but for all time. The way this corporation tax is inflicted-that is a good word to use in connection with my province-is beyond all reason. In that province it is imposed, not only on profits but on the capital structure of the corporation. If a corporation is not making any money, and there are still some that are not, the tax must be paid on the basis of the capital structure and to that extent the capital structure is impaired. That is a bad situation. I had hoped that if the provinces give up this field of corporation tax, a great inequity would be done away with. I have much more faith in the equity of dominion taxation than I have in that of the provinces. Many of the provincial taxes have grown up like Topsy. They have seized something here and something there in an effort to get more money. I am speaking particularly of the smaller provinces.
The tax upon public utilities is inequitable. The government has imposed a tax upon long
distance telephone messages with the idea, and properly so, that this tax will be passed on to the consumer or the customer. The government of New Brunswick imposes a tax upon the telephone company, a public utility, and has expressly forbidden any part of it being passed on to the customer. What has been the result? It has had to come out of the shareholders. They have not attempted to do what I think they ought to do, namely, go to the public utility commission and ask for an increase in rates to cover these increased taxes. The result so far has been a reduction in the dividend rates.


Mr. SLAGHT:: Is that not a matter for
the provincial government rather than for the dominion government?


Richard Burpee Hanson: I am
hoping that the provinces will surrender their jurisdiction. I am for this proposal; I am for anything that will cure hardship or injustices. I am simply showing that there is inequality. I am afraid that there will not be much relief because the increase in the income tax which will be paid by this particular class of company is so great that dividends will have to be impaired. If hon. members want to see the effect of this legislation all they have to do is to look at the quotations of Bell Telephone shares. People's capital has been wiped out indirectly because of the greatly increased taxation. The shares of this company have fallen below 140. The company has been paying eight per cent, but it is not known whether that rate can be maintained. Most of the stock was purchased at a cost of 150. I suggest to the minister that he ought to consider how far and how fast he intends to go with these income tax proposals, especially in the absence of any agreement with Ontario, which in the end will pay a large portion of the whole bill. Does he intend to go on or not?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Is there
any correspondence?


James Lorimer Ilsley: There was a letter from
Mr. Pattullo, and also one from Mr. Patterson, and of course there were many oral interviews. I cannot make my answer any more complete than that.


Richard Burpee Hanson: Could
the minister bring those down? The return does not contain them.


James Lorimer Ilsley: What is the date of the
return?
Income TC'ar Tax Act


Richard Burpee Hanson: The
order of the house was dated May 5 and the return is dated May 9.


James Lorimer Ilsley: I do not know of any return being asked for covering the correspondence.


Richard Burpee Hanson: No, I
guess it covers only the letter of the minister to the provincial premiers.


Major James William Coldwell: I am pleased that the dominion is taking over the field of income taxation, and I hope it will be possible to come to some arrangement with the provinces whereby this will be continued. I am also glad that it is entering the field of death duties. I do not agree with some of the remarks made by the leader of the opposition (Mr. Hanson) in connection with the recent conference on the Sirois report. I was here at the time and I do think that the Prime Minister (Air. Mackenzie King) should have given a more definite lead to the conference. I was under the impression that any problem having to do with the economy of Canada could be discussed under the report of the Rowell-Sirois commission. While I did not agree with all the recommendations made by the commission, I thought it most regrettable that the conference did not proceed.
As one who represents a Saskatchewan constituency, I am glad that the budget included a provision under which the dominion would service the provincial debt if the province would vacate the income tax field. I think that will be of material help to my province.
Can the minister give us a break-down of the money collected from the various divisions of taxpayers in the dominion, say for the last fiscal year or the year before? 1 have before me some figures which appeared in the Manitoba Free Press of May 7 and which purported to come from the bureau of statistics. I have not had time to check these with the bureau, but as a rule I find that any statistics given by the representative of the Manitoba Free Press who reports the proceedings of this house are accurate. I am accepting them on that basis. The figures are as follows:
Income	Taxpayers	Aggregate incomeUnder $ 2,000...	... 119,346	$240,000,000$2,000 to $ 3,000...	... 63,572	158,000,000$3,000 to $ 4,000...	... 33,392	100,000,000$4,000 to $ 5,000...	... 15,902	60,000,000$5,000 to $ 6,000...	... 8,627	40,000,000$9,000 to $10,000...	... 1,986	20,000,000Above $10,000...	200,000,000
The number of taxpayers having incomes above 810,000 is not given, but the aggregate income is almost as great as that of the 119,346 taxpayers with incomes of under 82,000. I do not think anyone in this country is going to complain about the income tax which is levied to enable us to carry out our part in this war, but I do suggest that we are reaching down lower than I think we ought to reach with our national defence tax. The question to my mind is not how much the taxpayer pays, but how much is left after the taxes are paid. Income tax is the fairest form of taxation, and for the purposes for which we are raising money now it is the best form of taxation; but there is a feeling across the country that wealth is being concentrated more and more, and that since the war broke out large accumulations of wealth have been encouraged. I have never been able to find any figures to substantiate the statement, but I have been told that since the war broke out something like twenty new millionaires have been created.


Mr. STIRLING:: Let us have the facts.


Richard Burpee Hanson: I should like to know where they are.


Major James William Coldwell: I said that I have not been able to find any figures to substantiate the statement.


Air. MAYHEW:: Has the hon. member been able to find one of these new millionaires?


Major James William Coldwell: I have no millionaires in my circle of friends or acquaintances, and so I cannot answer the question from personal knowledge. But statistics brought down in the way I have mentioned lend themselves to that type of criticism and to that kind of interpretation. Our people have the right to know exactly what the social results of the large expenditures for our war effort are, and how government expenditure and taxation affect various classes of people. Consequently I ask the minister if he can give us a breakdown of the income tax divisions for 1940, we will say; and I ask him in giving the figures not to stop at $10,000 and then simply say, "above $10,000 there are no individual figures but the aggregate income is $200,000,000." To-day we are raising taxation on a graduated scale, with categories of taxpayers with incomes ranging from less than $1,000 right up to $1,000,000, and in my opinion the time has come when there should be given a break-

Income War Tax Act
down of incomes or of the income taxes covering as many of these classifications as it is possible to include at this time. I realize, of course, that our graduated scale up to the present has not been in this form, but it has been in a form which would enable the department to give the committee a better breakdown than the one to which I referred, which as I say I got from the Manitoba Free Press a day or two ago.
We are often asked as to the accumulation of wealth in the hands of a few people in Canada, and I think it would be well for this house and the country to know whether or not the statements which are sometimes made are really based on the facts.
When we are discussing the schedules of taxation we should keep in mind that it is not what the taxpayer pays but the amount which the taxpayer has left that really counts. In the national defence tax and income tax we are reaching down into very low income brackets. In my opinion we are taking too much from the lower brackets. I believe all our people should make a contribution to the war effort, but their contributions should be based on something which is fair, equitable and just. It is for this reason that I ask that
the information I have requested be given before we proceed with further consideration of the schedules.


James Lorimer Ilsley: I think I can almost meet the hon. gentleman's request now. I have here a statement of the number of individual taxpayers and amount of net income on which assessments were approved during the fiscal year 1939-40, classified as to income class groups, and per cent. Take the first class; the number of individuals in the income class up to $2,000 is 124,132.


Major James William Coldwell: That is the net income?


James Lorimer Ilsley: Net taxable income. The taxpayer is allowed certain expenses if he is carrying on a business, and this is the net income after those deductions and before exemptions.


Major James William Coldwell: That is the only income that could be considered taxable?


James Lorimer Ilsley: That is right. I will put this table on Hansard, with the permission of the committee. I have not given the actual taxes; perhaps I might add a column showing the taxes assessed for the fiscal year 1939-40 under the different income classes.
Number of Individual Taxpayers, Amount of Net Income on which Assessments were Approved and Taxes Assessed during the Fiscal Year 1939-1940, Classified as to Income Class Groups and Per Cent
Net Income-Individuals
Income class	Number	Per cent	Amount	Per cent	Taxes assessedUp to $2,000	
124,132	42-352	$ 167,353.532	83	16	*73	$ 1.284 790$ 2,000	to	8 3,000	
68,420	23-344	169.109,545	16	16	[DOT]91	1.365,6153,000	to	4.000	
39,700	13-545	136,477,717	20	13	*64	1.583,6284.000	to	5,000	
19,409	0-622	86,525,433	28	8	[DOT]65	1,510,2615,000	to	6,000	
11,563	3-945	63.575,745	47	6	*36	1,603,9606,000	to	7,000	.... 7,243	2-471	46,869,386	12	4	*68	1.506,3037,000	to	8,000	
4,924	1-680	36,692,102	48	3	[DOT]67	1,430,8618,000	to	9,000	1-145	28,596,933	21	2	*86	1,299,0549.000	to	10.000	
2,534	[DOT]864	24,267,573	04	2-	*43	1^244,21510,000	to	15,000	
6,409	2-187	78,307,339	25	*83	5,384^81815,000	to	20.000	
2,408	[DOT]821	41,493,507	47	4-	15	4,214,90720,000	to	25,000	
1,084	[DOT]370	24,749,701	28	2-	*47	3,302^39225,000	to	30,000	
582	[DOT]198	16,506,414	49	1	[DOT]65	2,619,14630,000	to	35,000	
351	[DOT]119	11,609,115	19	1	*16	2,092,00235,000	to	40,000	
240	*082	9.140,758	26	*91	1,833^26840,000	to	45,000	
169	*058	7,386,851	40	74	1,593,91645,000	to	50,000	
91	-031	4,384,317	18	44	996,26950,000	and over	
483	[DOT]166	47,244,305	16	4-	*72	16,606,971Total	
293,097	100-000	$1,000,290,278	47	100-	00


Richard Burpee Hanson: What
would the average income be over $50,000?


James Lorimer Ilsley: I have not the average
here.


Mr. CASSELMAN:: Just about $100,000.


Alexander Malcolm Nicholson: Has the minister the
amount of income under the last item for the previous year?


James Lorimer Ilsley: I have not the figures at
the moment; I will see if I can get them.


Richard Burpee Hanson: About
one-third of their aggregate incomes.


James Lorimer Ilsley: Yes.


Mr. DOUGLAS (Weybum):: Could the
minister break down that last item-$50,000 and over?


James Lorimer Ilsley: No, I have no break-down
of that.


James Lester Douglas: Is it possible to get it?


James Lorimer Ilsley: It is possible, but it has
never been considered desirable. It gets to a place where it is just a matter of gratifying public curiosity as to how much individuals earn; you can identify the individuals the further you go up.


Major James William Coldwell: There is something
more than that. I think the statement that "we are creating millionaires during the war" might be met if we knew the break-down of the $50,000 and over; or, of course, it might be confirmed by the same break-down. It is not, I think, a matter merely of curiosity.


James Lorimer Ilsley: One would need to have
the figures for a year later than 1939-40, which ended on March 31, 1940. To find out how many millionaires there are in the country now, their income for the calendar year 1940 would be some indication.


Richard Burpee Hanson: The mere statement of income itself does not carry with it the argument that income is based on invested capital. It may be, and perhaps largely is, based on services rendered, which is quite a different thing.


William Earl Rowe: In calculating income tax
of those serving in the militia and in the naval and air forces, including private soldiers, is any other income he may have taken into account?


James Lorimer Ilsley: Besides his service pay?


William Earl Rowe: Yes.


James Lorimer Ilsley: Private soldiers and noncommissioned officers in the Canadian active service forces are not taxable, either for national defence tax or in respect of service pay and allowances. They are taxable on other income. Officers are not taxable on the pay and allowances which they receive while overseas or which they receive while

they are in a position the duties of which normally take them on the sea or in the air. I am not stating it exactly in the words of the statute, but that is substantially what the law is. But officers in the Canadian active service forces whose duties do not normally take them on the sea or in th< air and who are not overseas-that is, officers, here in Canada, with exceptions I have mentioned-pay income tax and national defence tax on service pay and allowances as well as on other income.


William Earl Rowe: I suggest the advisability of exempting officers as well as men in the militia and in the naval and air forces. Commissioned officers, while they may receive a reasonable rate of pay, have heavy obligations in many respects. They must procure uniforms if they are to look the splendid, well-groomed officers they are, and they have social as well as family obligations. I cannot help thinking that the men who are now in the service here but not on the high seas or participating in actual engagements are nevertheless not in any stay-at-home army. They are in the fight to the finish as we all are.
Those of us who watched the men returning from the last great war saw at that time, after four years of desperate conflict, officers coming back who were aged and worn by their service, and they returned to new fields of business activity. It does seem to me that in the period following this war, which now promises to be longer than the last one, men who are now old enough to become commissioned officers will have missed the opportunity to take prominent places in the business life of the country. Their earning capacity will have disappeared. Many of our commissioned officers of to-day are keen business and professional men. In many instances when they enlisted they gave up excellent possibilities. When they return they will find their places taken by those who have risen in the business ranks, by those who have benefited by increased pay in the interim. The war is bearing heavily upon all classes of taxpayers, down into the small brackets, affecting homes that have never heretofore known what income tax was. I realize that the minister is faced with a gigantic problem if he is to meet the obligations that fall upon a comparatively small population such as ours. I have every sympathy for the government, and I have sympathy for the taxpayers of Canada, especially those in the small brackets. The man with $50,000 a year income who has to pay $20,000 or $30,000 is not as hard hit as the man with a very small salary. But the soldier is in an entirely different position. When he returns

Income War Tax Act
after a long war lie will find probably that his possibilities of future advancement have vanished. Many of our commissioned officers are forty, forty-five and fifty, many are thirty, or thirty-five. When they come back after years of warfare they will have lost touch with the business activities of the country; they will be older army officers.
There is not an, hon. member who cannot recall the days after the last war when men came back and could not find places. I know of excellent men who were more or less out of a job from one war to the other. I suggest that the minister might well consider exemption for all. He has stated that he will exempt those on the high seas. Why make two bites at the cherry? I realize that he needs money, but the amount involved is not very large. I suggest that at least it might be set aside as a form of pension for these men. Even the man in the factory whose hourly rates of pay -have been increased has gained advantages, from increased number of hours and- consequent increase in remuneration, over the SI.30 a day which the private receives. I know he is not objecting to paying a reasonable tax on- the higher wages he will have, but besides receiving higher wages he has the possibility of retaining a job through the years. He has the possibility of advancement in his company through the ability and industry he may show.
When this war ends, thousands of men who come back will not find the place in business that should properly be theirs by reason1 of the ability they demonstrated before they left, or, no doubt, are demonstrating as officers. It appears to me that we might well give them consideration, and I urge it upon the government. I did not take the time of the house during the debate; I realized then that there was no amendment offered by my leader, but I have felt for some time -that we should give serious consideration to exempting all soldiers from income tax on their income received in the service, whether military, naval or air force. In addition, I might draw to the attention of the minister the danger these men face as they go overseas; these men are enlisting for service not so much here -in Canada as where the fighting is. We are building a fighting force; we are not building a stay-at-home army in this conflict which is now developing into a battle to -the death. These men are ready to sacrifice their lives as well as to lose their -opportunities. They must dress neatly and preserve the dignity of the Canadian Army; they have their social responsibilities; and with -the slightly increased salary, if they have some left I think it might be added to their capital for the rain3' 14873-1754
day that so often follows for an older army officer. I plead with the government to reconsider the tax on soldiers' incomes.


Arthur Graeme Slaght: I -would impress upon the minister something that goes part way along the road with my hon. friend who has just resumed his seat, namely, with reference to officers whose only income is their service pay. One can conceive that a gallant -man who had a substantial private income as an officer might not need or even desire exemption with regard to his military pay. But for an officer who abandons everything else and has no income other than that which he receives as an officer, I suggest that it should be exempt.


William Earl Rowe: If the hon. member will pardon my interruption I believe we are more or less in accord, but I think he misunderstood my statement. I am only proposing exemption on what they earn as pay. For instance, if an officer had a large income apart from his pay I do not mean that that should be exempt.


Arthur Graeme Slaght: I so understood the hon. member, but my proposal is not quite that.
With regard to the point raised by the hon. member for Rosetown-Biggar, that there should be a break-down of incomes of $50,000 or over, which are now included in one item, personally I cannot see any public interest that is served by not furnishing that break-down. The work would not be too onerous, and in the present mental attitude of the people with regard to seeing that those best able to pay bear the greatest burden, it would be a healthy thing to have added to the schedule which will appear on Hansard a further break-down of incomes of $50,000 and over, perhaps in brackets jumping $20,000 at a time.
One other suggestion I have, which perhaps is not feasible this year, is that instructions should be given to the commissioner of income tax-I think I can say our expert and worthy commissioner to whom this country is indebted, Mr. Elliott-that next year in connection with the break-down which will be given to parliament on this subject, earned income should be shown separately from investment income. In other words, when we get this statement next year there should be a breakdown of the total incomes in two columns, showing what portion of those incomes is earned and what portion accrues from investments. It is a good principle that this budget enunciates as I understand it, namely, that it discriminates to some extent between earned income and investment income. If I read the signs aright, the temper of the people, it will be that as we proceed with perhaps heavier war burdens in future, a greater burden should be placed upon unearned or investment incomes than on incomes which are earned.
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Mr. GRAYDON:: The government should exercise extreme care with regard to taxing the money which this country pays to the men of the fighting forces. I raised this question before in connection with the transportation tax; it applies to a large extent with regard to income tax as well. It seems to me that the principle of asking a man to fight, paying him, and then taxing that pay, ought to be carefully reviewed. I should like to associate myself in general principle with many of the views which have here been expressed.
My main reason, however, for rising this afternoon is to bring to the attention of the minister and the committee something by way of renewal of a matter which I and other hon. members raised at a previous session, and I think mention was also made of it this session in connection with the debate on going into committee of ways and means, namely, the matter of exemptions under the income tax act.
Hon. members will recall that when we met at the first session of this parliament, in 1940, there was quite a strenuous plea to extend the exemption to those of our taxpayers who were accommodating in their homes children evacuated from Britain. The minister and the government in their wisdom decided to limit the exemptions to those having children who were evacuated under the cooperative scheme sponsored by the governments of Canada and the United Kingdom, or of any of the provinces of Canada. Answering a question in the house on November 20, 1940, the Minister of Mines and Resources (Mr. Crerar) indicated that up to that date we had in Canada from Great Britain 1,532 guest children under the cooperative evacuation scheme. In addition to that, however, and outside of the government plans we had 4,326 children brought into private homes.
I think this is a fair principle to enunciate; I think it would be a fair principle for the government to adopt. If we have citizens of this country who are ready and willing to spend their money in what is perhaps one of the most important of our patriotic causes; If they are actually contributing in this way to our war effort-for this is really part and parcel of that effort-then I do not think it is asking too much to request that the minister seriously consider extending these exemptions to that extent.	_
We have an excellent example to guide us in this matter. Since the last session of this house the Ontario government has dealt with this subject; and of course the principles of the income tax legislation of the dominion and that of the province are very similar, except for changes in phraseology which are brought about by the fact that the one is the

dominion and the other is the province. The provincial income tax amendments brought down by the attorney general were further amended by the government before being put through the legislature; and I wish to commend to the minister the amendment adopted by Ontario in this regard. The section to which I have reference reads as follows:
Subsection 1 of section 5 of the Income Tax Act (Ontario) as amended by section 1 of the Income Tax Amendment Act, 1939, and section 3 of the Income Tax Amendment Act, 1940, is further amended by adding thereto the following paragraph:
(ee) Four hundred dollars for each child evacuated during the present war from the United Kingdom of Great Britain, Ireland or the British dominions beyond the seas under twenty-one years of age and dependent upon the taxpayer for support and maintained by the taxpayer in Ontario; provided that the tax reduction obtained as a result of such deduction shall not in any case exceed the amount of tax reduction which would be received by a married person without dependents in respect of an income of five thousand dollars.
I bring this to the attention of the minister and the committee as an indication of what another legislative body in this country has done in dealing with this question. I feel strongly about this matter; it does seem unfair to make a distinction between the two classes of children, because it costs about the same to maintain a child no matter under what scheme it may have been brought to this country. In the case of a child brought out under a private arrangement, the parents in England, because of exchange regulations, are not permitted to contribute anything to its support; the whole burden falls on the Canadian guardians, and I do not see the justification for the definite distinction that has been drawn between children brought here under the government scheme and those brought out privately.
I should like the minister, if possible, to give some consideration to this suggestion. I know there is a widespread feeling among many classes of our citizens that this taxation contains an element of injustice and unfairness, which I think should not be permitted to continue.


Mr. ROSS (St. Paul's):: Would the minister elaborate on the statement he made as to the number of individual taxpayers and the amount of the tax collected? When he makes up the statement he is going to place on Hansard, would he include the estimated tax increases for 1941 and also the estimated increases that will be brought about by the new taxes, which will be collected after March 31 next, in the categories set out in this table? We have all the other information,

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and I think it would be interesting and illuminating to have the increases in the various categories.


James Lorimer Ilsley: By income groups?


Douglas Gooderham Ross: Yes, the increases
by income groups.


James Lorimer Ilsley: There is no estimate available in that form.


Douglas Gooderham Ross: Has the minister
not an estimate made up?


James Lorimer Ilsley: In the total; yes.


Douglas Gooderham Ross: But not according to income groups?


James Lorimer Ilsley: No.


Mr. GREEN:: Would the minister be prepared to make a statement with regard to exemptions in respect of these guest children? I know several instances where people have had young relatives sent out to them, and it is a serious matter for them. They are people of modest means, and the exemption would mean a great deal to them. I do not believe the present provision is wide enough to meet the requirements; and also, as I understand it, no exemption at all is provided in respect of the national defence tax. Is that correct?


James Lorimer Ilsley: That will be changed. I
have an amendment in that regard.


Thomas Reid: While most hon. members
appear to be in sympathy with the suggestion that has been made, I would point out that in many instances people expect and are looking for payment, if not now at least when the war is over. In many instances such payment is simply deferred. I know that most of the people with whom I have come in contact never had in mind asking for or receiving any exemption at all; they did this as a grand gesture, without thought of reward. I would suggest that the minister should be careful not to make this exemption too wide, because I am sure many of these people expect to be fully paid after the war is over.


Gordon Graydon: In reply to that statement, if anyone feels that he does not wish to take advantage of the exemption he can simply ignore that part of the form when he fills out his income tax return.


Alexander Malcolm Nicholson: I should like to direct the minister's attention to a slightly different angle of this income tax question. I am speaking as one who recently paid income tax for the first time; and under the new rates I shall have to pay twice as much in the coming year. I am not making any complaint. People with small incomes, who find that this
year their income taxes will be doubled, are doing only what they expected to do in this emergency. In the table which appears at page 2348 of Hansard I notice these rates in the low income group:
Present Proposed
Income	tax	tax$1,250	
$25	$501,500	
30	752,000	
75	175
Going down the list, however, I find that those with large incomes still will be left with what I consider altogether too much for any family.


James Lorimer Ilsley: They are being increased
more in proportion, though.


Alexander Malcolm Nicholson: That is not the point. As the hon. member for Rosetown-Biggar said, the point is not how much income tax you pay but rather how much you have left after you pay your income tax.


James Lorimer Ilsley: If I may ask a question,
is that argument not based upon the theory that the net income remaining to all the people in the country should be equal?


Alexander Malcolm Nicholson: No, not necessarily.
I should like to deal with that. According to this table, an individual with an income of S50,000, which makes the salary of the minister seem like small change, will pay $26,965 under the proposed rates. But how much has he left? He has still left $23,035. These figures are so large that they do not mean anything. In order to reduce them to terms which I could understand, I calculated on the basis of six days a week, fifty weeks in the year, which gave me three hundred days. After an individual with an income of $50,000 pays his income tax on the new scale, he will still have left $76.78 a day. An individual with an income of $75,000 will have to pay a tax of $43,935, but he will still have left $103.55 a day. An individual with an income of $100,000 will pay under the new plan a tax of $61,875, but he will have left $127.08 a day. An individual with an income of $150,000 will have left $166.95 a day after paying his new tax. An individual with an income of $200,000 will have left $202.43 a day. An individual with an income of $500,000 will have left $329.60 a day.
I am not one of those who assume that even if you took the entire income of the 483 individuals who reported incomes of $50,000 a year you would solve the problem of financing the war, but I contend that if you took a larger amount from those who can afford to contribute you would be making a valuable contribution toward strengthening the morale of the Canadian people. Those with
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lower incomes are finding that the cost of living is increasing. They are being compelled to support national war savings campaigns; they cannot turn down these appeals, and they find it difficult to balance their budgets. I submit that those with really large incomes can pay a larger tax without seriously reducing their standards of living. While the minister has made some increases, I do not think he has gone far enough in increasing the tax upon incomes of 850,000 and over.


Mr. QUELCH:: I find myself largely in
agreement with the remarks of the last speaker, but I certainly would not take this stand in peace time. In war time we have an entirely different situation. The aim in war time is to reduce spending in order to divert materials to our war needs. Therefore, I feel that everyone should be prepared to have his income cut down to a point where he is just able to maintain a decent standard of living. A man should not expect during war time to be able to save large amounts of money which, as I have often remarked, really represent to a large degree profits made from the war. The sale of bonds will have to come from exactly the saime place as the taxation. If we put into execution what I would term a reasonable scale of taxation for war time, the people would not have money with which to buy bonds. I would be quite prepared to increase considerably the taxation upon the higher salaries, say down to the level of $3,000 or $4,000, so that people will have just enough to maintain a decent standard of living. Then it would not be necessary to sell bonds. That is why I opposed the proposition of the Cooperative Commonwealth Federation that we should institute compulsory loans. If we had a proper scale of taxation there would be no money left with which to buy bonds. If people invest their incomes in war bonds, even though those bonds do not bear interest, at the end of the war they will have a claim against future production. That will be a claim against production representing profits made out of the war. I quite agree with the last speaker when he says that higher incomes should be taxed still further.


James Lorimer Ilsley: I do not know how far a discussion like this is likely to be fruitful. As I understand the position taken by the last hon. gentleman, it is that we should take everything from people except just enough to live on. If I understand their proposition correctly, that amount would be equal for all people.


An hon. MEMBER:: Not necessarily.


James Lorimer Ilsley: If it is not to be equal for everyone, then that is just what we have done now. We have taken a large proportion of the income of these people.


Alexander Malcolm Nicholson: Not from the people with large incomes.


James Lorimer Ilsley: An increasingly large amount. Most people earn small incomes. I have never had a very large income, and I find it difficult to see what a person could do with an income of $50,000. I would not know how to spend it, and I do not know just how they spend it. It is often considered an injustice that a lawyer is able to earn $500 a day in court. But not very far from him in the same city or town may be lawyers who are on relief. They had the same chance as the man who is able to earn $500 a day in court to get themselves into that position, but because they did not have the ability or the industry or the character, they were not able to.


Alexander Malcolm Nicholson: Not all lawyers get in that position.


Gordon Graydon: Would the hon. member like them to?


James Lorimer Ilsley: There are some people who, because of their application, industry and character, because of a certain firmness or determination, because of some other qualities which may or may not be admirable, have got themselves into a position where they are able to earn high incomes. When they do, they are likely to buy larger houses, have more extensive grounds around them, have many pieces of fine furniture, and so on. Suppose we come along and do as the hon. gentleman has suggested we should, take everything above $3,000 or $4,000. That would mean wholesale liquidation of property and a complete upset in the standards of living and the arrangements which have been established. I am not at all sure that that would be in the interests of the community. In fact, I am sure that a sudden inroad upon established arrangements of society would create so much dislocation that it would do more harm than good to our war effort. In imposing taxation of this kind some regard must be had for the manner of life in the country. In countries like England, the United States and Canada, the higher taxes imposed are proportionate to the other taxes. For instance, this year the increases in the taxes on the higher incomes have been greater proportionately-


Alexander Malcolm Nicholson: The percentage of
increase?


James Lorimer Ilsley: No; I see what the hon. member has in mind. We gave a great deal of thought to what would be a fair graduation

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of increases. If you have a ten per cent rate on a lower income and a sixty per cent rate on a higher income, when you double the ten per cent rate you cannot double the sixty per cent rate. You cannot make a proportionate increase like that. We took the amount of income that they had left after the payment of the taxes heretofore existing, that is the taxes for the year 1940-41, and the increase in taxes for the low income man would be, let us say, five per cent. For the man with a higher income tax levy, the increase would be six per cent of the amount levied. For the man with a higher income the proportion of that increase to the amount levied was a higher rate. You will find a complete graduation right through, and the proportion which the increase in taxation bears to the amount of income which the taxpayers have left rises progressively throughout the whole range. That is how we have graduated our increases, and I think it is the fair way.


Howard Charles Green: Will the minister make a
statement about guest children?


James Lorimer Ilsley: Yes; I made a statement
last year on that. I know there are quite a number of members in this house and quite a number of people in the country who can see only one side of this question and who think the government should contribute to the maintenance of these guest children in this manner, because that is what it amounts to. I gave the reasons very fully last year, and I do not think I need repeat them; but I wish to point out that if we are going to get away from status as a test of whether a deduction from income is to be allowed for dependents, we must stop somewhere, and if we are going to take the praiseworthiness of the foster parents as a test, or dependency without any relationship, without even legal relationship such as adoption, we should be going into a very wide field.


Some hon. MEMBERS:: Oh, no.


James Lorimer Ilsley: Oh, yes. I have received
only one letter from a member of parliament, not more, who pointed out that he had advocated in this house for years a deduction in respect of foster children, Canadians, taken into homes in this country. I have made inquiries to find how many instances of that kind there are, and I believe there is no record of it. Whether the census of 1931 would give it, I do not know. I am told, however, that in some parts of Canada there are large numbers of foster children. People take into their homes a young niece or a nephew, or some other relation; but we have refused consistently, as I said to the house last year, to permit a deduction in respect of
foster children, and I would not feel like agreeing to a deduction on behalf of guest children unless I was prepared to go further and permit a deduction to taxpayers who take in foster children, relatives of theirs, and others, without any adoption at all. I am not prepared to do that because we would run into a great variety of circumstances necessitating investigation as to whether there was real dependency, and so we have left the matter as it is, permitting a deduction when the child is the taxpayer's own child, either natural or by adoption. It sounds easy to say, adopt this proposal with respect to guest children. But somebody said there were something like five thousand guest children in this country; I think it was the hon. member for Peel (Mr. Graydon).


Gordon Graydon: The number is 4,326.


James Lorimer Ilsley: Let us say 5,000 for the
sake of making the figure even. If all the taxpayers who have guest children in their homes were paying on an income of $5,000, it would work out to $144 a child. That means a contribution out of the treasury of Canada of 5,000 multiplied by $144. But let us suppose that that is too high and that the average would be $100. That would be 5,000 multiplied by $100, which would be $500,000 out of the treasury of Canada. Hon. gentlemen can think the matter over for themselves. I ask them, do they think we should accept such a proposal at a time like this when we are taxing our low-paid girls working in department stores and our workmen on low incomes and other low-paid workers everywhere? We have to put heavy taxes on the low-paid people because the numbers are there and the additional wealth to a great extent is going there. At a time like that, are we to make a contribution out of the treasury of Canada of something like $100 for a child who has been brought here, not at the instance of the government at all, but by people who have taken these children out of their own generosity? Are we to come along and make a contribution such as I have indicated? I have every admiration for these people who take in these children, but they started to be generous themselves, and I think it is well enough for the government to leave it to them to handle the situation themselves. If it were a government-sponsored scheme, that would be a different situation entirely. It may be, I will admit, pretty hard to draw the line between cases, but it is not going to be half so hard as to draw the line between guest children and the rest, of

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the children who are in homes all over Canada but who are no relation to their foster parents. I do not know how big a drain on the treasury it would be if we had to do that


William Earl Rowe: If the minister will permit a question-I do not wish to interrupt him- the taxpayers of this country are allowed exemption on the contributions they make to funds for war victims overseas and various other patriotic funds. Does the minister think it fair to exempt such contributions and not to exempt the children who have come here from overseas? A man wishes to adopt a guest child, but some other family gets that child, and so the first man contributes instead, S500, we will say, to a war victims or war services fund, and his contribution is exempt from taxation. Does the minister think it is fair to exempt such contributions and not to make an allowance for the guest children?
Personally I do not think there is any comparison at all, because people are taking these guest children as a war effort, and many of the poorer parents in Great Britain will not be able to pay for the care of their children here after the war. Many of us in this house have tried to secure guest children but did not secure them, and if we do our duty we should, instead, contribute as much as we feel we can to some war services fund. The department allows us exemption for anything we contribute to these war services funds, and I think that is sound.


James Lorimer Ilsley: No; let me straighten my hon. friend out on that. As a general principle, no deduction on account of gifts to private charities is permitted.


William Earl Rowe: It is the same thing.


James Lorimer Ilsley: I am answering the hon.
gentleman, who said that if we give money for this purpose and that purpose, an exemption is allowed. When we give to public charities, a deduction of gifts to such charitable organizations is permitted, with one exception to which I shall refer, but only up to ten per cent of the taxpayer's net taxable income. The exception to that is the exception provided in the War Charities Act, under which donations to charitable organizations were permitted up to fifty per cent of the taxpayer's net taxable income, provided that these charities were approved by the government through the Secretary of State. Under that provision, charities such as the Red Cross and other approved charities-there were only six of them altogether-made their appeals, and taxpayers' donations were permitted as a deduction from income for income tax purposes up to fifty per cent. But we had so much
fMr. Ilsley.]
trouble with that and so much complaint of discrimination as between patriotic and nonpatriotic charities that we had to discontinue it, and I am proposing an amendment to that effect, of which I made announcement to the house in my budget speech. The national war services drive, however, was getting under way. The Red Cross had had the benefit of two appeals on the fifty per cent basis, and it was felt that the other organizations should be permitted their second appeal on the same basis. I agreed to a modification, but that provision was to terminate and apply only to subscriptions up to April 7, provided they were paid before December 31. But now the bars are up. I am not doing the whole thing myself because I am going to ask the house to agree with me in doing it.


William Earl Rowe: So there will be no exemptions then?


James Lorimer Ilsley: Exemptions only up to ten per cent. You cannot have one rule for the public charities which are doing such a tremendous work in the cities and towns of this country, and another rule for patriotic charities. I do not think it has any bearing on these private charities if I give money, if I take a child in my home. Canadians have been doing it since confederation, since there has been an income tax act, and they never got any exemption at all.


Mr. JACKMAN:: We did not have this income tax in the old days.


James Lorimer Ilsley: They did not get an exemption in respect of these children unless they made them their own children.


Harry Rutherford Jackman: At that time the Minister of Finance was not such an intruder in the homes of the people of Canada, and his demands did not affect so largely the incomes of the people. The situation which the minister has outlined is simply this: he says that these people who have very kindly taken in guest children from the old country invited them of their own free will to come to their own homes. But they did so with the idea that the income which they had to spend was a certain amount. Since then, income taxes have been raised very substantially, not once, but twice, so that a larger part of the family income is going to the Department of National Revenue. This makes it extremely difficult for them to carry on. I do not see, Mr. Chairman, that any amount of logic will rectify the injustice which the failure of the government to allow this exemption perpetrates.

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I should like to ask the minister why it is that the Department of National Revenue is not willing to grant the exemption for children to any person who looks after children in this country, whether or not that particular person happens to be the parent. I do not see why, if one's sister dies, her husband having predeceased her, and the brother looks after the children so that they will not become a public charge, that brother should not be granted relief in so far as exemption for those children is concerned. I put a question on the order paper after the minister had given his answer in the last budget debate, and the reply I got from the Prime Minister was. nil. The question went something like this, "How many foster children are there in the Dominion of Canada, and how many of these are related by blood or marriage to the foster parent?" The answer given to me was that a census would have to be taken to get this information, and the Prime Minister smiled, as if it were a semi-foolish question. But I pointed out to him that government policy was being based on the answer to this question; and the Minister of Finance has just said that the policy of not granting exemptions to any people except the actual parents of the children is a well-defined and well-settled policy, resting on something substantial. It is not resting on anything at all substantial that I can see. You do not know how many foster children there are in the country; you simply say that it might open a door and do away with a certain amount of revenue, and you refuse to grant exemptions in respect of these refugee children because you might have to grant exemptions on behalf of certain other children. I can see no basis for the decision. You have to raise money, but there is no reason why you must commit an injustice.


Howard Charles Green: 
James Lorimer Ilsley: I will go this far with the hon. gentleman: I think that where the government has to take charge of a child brought out by private arrangement and put it in another home, consideration should be given to those cases by the Department of National Revenue.


An hon. MEMBER:: I think that has been done.


Harry Rutherford Jackman: It seems to me an
invidious distinction.


Gordon Graydon: May I point out to the minister that apparently he has two lines of defence in this question: one, relating to the evacuated child who is in a private home; and the other, the foster child; yet in Ontario no such difficulty as he has suggested appears to have arisen in the minds of the legislators who were dealing with exactly the same problem. The situation as regards the dominion is that they say they can make no exemption for British children who came out under private auspices; but the fact is that those who have taken these children, when they are making out their income tax forms, if Ontario is to continue in the income tax field, are still going to be allowed exemption by the province on entirely the opposite principle, so far as British children are concerned. It

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does not seem to me that this indicates any uniformity of legislation as regards the situation created by the evacuation of these children.
I suggest that we could get over the matter in this way. If there is a possible difficulty in distinguishing between foster children and those evacuated under war-time conditions, why could not the amount which the taxpayer pays for the upkeep of the child from the British home, instead of being put under exemptions for children, be deducted as a contribution in the same manner as is done with the Canadian war sendees fund? That would get over all the difficulties so far as foster children are concerned. The minister's second line of defence would then be gone, and the maximum claim could be set at not more than $400. I suggest that that would fully meet the situation and avoid the difficulty of distinguishing between foster children and the others.


Mr. HARRIS (Danforth):: 
Robert Wellington Mayhew: I should like to say a word on the question of guest children. In the city of Victoria there is a large population of people from the old country. Many of them brought children into Canada just, about the time the war broke out. They now find themselves in an embarrassing financial position; funds coming from the old country have been stopped, but the children are here and they must be looked after. These people are struggling as best they can; they have in some instances asked their friends to take the children in and look after them, and I think those who do so are entitled to some consideration so far as exemption from income tax is concerned. If the hon. member who has just spoken wants an opportunity to assist in the care of guest children in Canada, we can give him that opportunity,
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because we have a school with two hundred in it at the present time. We have room for another fifty, but we have not the funds to bring them out and take care of them. The hon. member for Yale is one of the directors of that school with me, and I am sure we would be glad of a little extra cash to help it along.
I hope the minister will take what has been said to-day seriously and give some relief to those who are at the present time looking after guest children.


Harry Rutherford Jackman: A short time ago I
addressed a question to the Minister of Finance as to why the government adopted the policy of not granting to foster parents of children in Canada, whether British evacuees or not, the ordinary exemption for children. It is not clear to me why there should be this discrimination between natural children and children who, while not legally adopted, are nevertheless a charge on a man's income.


James Lorimer Ilsley: It is in the nature of private charity. I get letters from sisters looking after a sick sister, who think it unfair that they should not be allowed to deduct something on that account. In all relationships of life situations arise where there is a drain upon the income of certain persons for some generous private charitable purpose. Such instances have never been recognized. The hon. member asks, why are they not recognized? Because claims would be made from the Atlantic to the Pacific; there would be no end of checking necessary; there would be a great drain on the revenue, and it would be very difficult to administer. There is no law that there must be a deduction for all kinds of good-natured expenditures from a person's income before he pays his income tax; he is taxed on his income, not on what he has left after he makes certain expenditures.


Harry Rutherford Jackman: I quite appreciate that. On the other hand, ever since I have had any understanding of these matters, children, that is natural children, have been the subject of exemption. I presume there are good and sufficient reasons why a parent gets exemption for natural children. I do not know why the government has any objection to someone receiving exemption for every child in Canada. I do not see why,any particular distinction should be made as to whether the child is actually living with the parents or is being kept by someone else. In fact, the obligation is less upon some person other than the parent than upon the parent. I see no reason why every child under sixteen should not be the subject of exemption in the hands of

the person who is making the necessary financial outlay to maintain that child. Why does the government adopt this rigorous policy? I do not see that it has any ground in sociology or in taxation.


Mr. WOOD:: I have heard many hon. members prefacing their remarks with sympathy for the minister for this stupendous task which he has in distributing this burden equitably; but another phase of this question has not been brought out-and this surprises me. I refer to the case of children taken into homes which do not enjoy sufficient income even to qualify for the payment of income tax. I know several of them in my own community of Brantford. What is going to be done in those cases? I am prepared to say that if the situation were analysed it would be found that the most charitable homes very often, so far as taking in other people's children is concerned, would be found among that class of people whose income does not reach the income tax level. I think the minister is quite within his rights in bringing that to the attention of the committee. I have a great deal of sympathy for those who are paying income tax, but hon. members will have a hard job getting any sympathy from the average man on the street for those who qualify for the payment of income tax.


Richard Burpee Hanson: Before the committee rises, according to the arrangement made, I should like to suggest to the minister that when we meet next I want to discuss the question of the preservation of the position of the municipalities under the proposed arrangement with the provinces, particularly in relation to those provinces, like New Brunswick, which have no income tax and where there cannot be any compensation for the giving up of that tax. What will be the position there? If I can, I wish to preserve the position of the municipalities, so that if any concession is made to the provinces in respect of the municipalities giving up certain sources of revenue, that concession will be certain to be passed on to the municipalities. I comprehend that there will be some difficulty in connection with those provinces where there is no income tax at present, and I wish to direct the minister's attention to that position now in order that he may think it over in the interval.


James Lorimer Ilsley: We are going on at eight o'clock, are we not?


Richard Burpee Hanson: No; the arrangement was to take supply to-night.


James Lorimer Ilsley: Then may I make a brief statement which will be of interest to business, which I intended to make if the excess profits tax resolutions were reached. I intend to move

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that resolution No. 19 of the Excess Profits Tax Act be amended by adding thereto the following words:
. . . provided, howrever, that if any such fiscal period ending in 1941 does not coincide with the calendar year then that proportion of the profits shall be subject to the twenty-two per centum tax which the number of days of such fiscal period in the calendar year one thousand nine hundred and forty-one bears to the total number of days of such fiscal period, and the balance at the previously existing rate.
I am making this statement because a large number of companies are waiting to see whether or not that change is to be made.


Richard Burpee Hanson: And the minister is going to make it?


James Lorimer Ilsley: I am going to make that change, and I am making this statement now.


Howard Charles Green: That means that the increased rate will apply only for the year 1941?


James Lorimer Ilsley: That is right.


Richard Burpee Hanson: What
estimates will be taken up to-night?


Mr. CRERAR:: Agriculture.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.

The house in committee of supply, Mr. Fournier (Hull) in the chair.



[Stage Direction]
1. Administration service. Departmental administration, $121,925.
Victor Quelch: Under what item shall we
be able to discuss the new regulations?


James Garfield Gardiner: I think it would be best to leave
that until we reach the vote covering production service.


[Stage Direction]
Item agreed to.
3. Administration service. Advisory committee on agricultural services, $3,000.
Mr. DOUGLAS (Weyburn):: Was the
personnel of this committee changed last year?


James Garfield Gardiner: The personnel is the
same as last year. There are a number of
these committees, and the only change is the substitution of the new director of production service.


[Stage Direction]
Item agreed to.
(I. Science service. Animal and poultry pathology, $148,310.
Mr. PERLEY:: What is covered by the
increase in this item?


James Garfield Gardiner: Statutory increases, staff promotions, $3,315; less decrease in wages and travelling, $1,620; net increase, $1,695.


[Stage Direction]
Item agreed to.
7. Science service. Bacteriology and dairy research, $40,497.
Mr. PRASER (Peterborough West):: Does the same explanation apply here?


James Garfield Gardiner: The first increase is
from dairy specialist, $2,760, to agricultural scientist, an increase of $60. The second item is an increase from graduate assistant, grade 2, $1,880, to agricultural scientist, grade 2, $2,220. Then there is an increase from graduate assistant, grade 1, $1,620, to assistant bacteriologist, $2,040. The total is $4,320. Then there are statutory increases amounting to $600, making a total of $4,920.


[Stage Direction]
Item agreed to.
S. Science service. Botany and plant pathology, $285,097.
Mr. TUSTIN:: Will the minister explain
the increase in this item?


James Garfield Gardiner: It is practically all
statutory increases and increases in wages.


[Stage Direction]
Item agreed to.
9. Science service. Agricultural chemistry, $99,411.
George James Tustin: Would this work cover the preparation of the soil and so forth?


James Garfield Gardiner: Chemistry is one of
the basic sciences dealing with all agricultural investigations. It has to do with nutrition, with the development of plant life, with the study of the foods necessary for the development of plants and for the feeding of animals; everything of that kind is based upon a study of chemistry.


Thomas Clement (Tommy) Douglas: Is the increase of $5,460 made up of increases in salaries?


James Garfield Gardiner: Permanent salaries,
$4,200, and temporary salaries, $2,820. There is a decrease of $460 in equipment, and a decrease of $1,400 in printing and stationery.
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James Lester Douglas: Is the increase in temporary salaries made up of increases in the salaries of those already employed or for extra help?


James Garfield Gardiner: Those already employed.


[Stage Direction]
Item agreed to.
10.	Science service. Entomology, $443,521.
Ernest Edward Perley: Would the minister give
the committee a break-down of this rather large increase, and would he make a statement with respect to conditions in western Canada in connection with cutworms and grasshoppers?


James Garfield Gardiner: It is a little early to
go into the studies that will be necessary in connection with the cutworm particularly [DOT]and other pests of that kind. In connection -with grasshoppers, reports up to date indicate that there will be a material reduction in Alberta and Saskatchewan with a moderate increase in Manitoba. The increases in permanent salaries amount to 31,815; in temporary salaries, $15,411; decrease in wages, $5,635; decrease in buildings and land, $500; increase in equipment, $797; miscellaneous, $300; rents, $610; supplies and materials, $1,098; decrease in telephone, telegraph and postage, $1; decrease in travel, $475.


Ernest Edward Perley: The minister said that there is a decrease in buildings? What does he mean by that?


James Garfield Gardiner: I am informed that we had $500 more than was necessary last year.


Mr. BLACK (Cumberland):: What headway has been made in investigations with respect to forest insect infestations? In the province of Quebec, in New Brunswick and to a smaller extent in Nova Scotia I understand that there have been serious infestations of the forests by the spruce sawfly and other insects.


James Garfield Gardiner: As has been reported previously, we are rearing large numbers of parasites to attack the spruce sawfly and certain other pests which destroy the forests. These parasites are being developed largely in laboratories at Belleville, Ontario, and they are being released from time to time to attack the sawfly and other pests. The battle against forest insects is going along fairly successfully. I am not in a position to state just to what extent we have been able to destroy these pests, but they are being attacked on the same plan this year as in previous years.


Percy Chapman Black: Have these parasites had the effect of controlling the spread of this infestation of the forests of eastern Canada?


James Garfield Gardiner: It is naturally impossible to give actual figures in this regard. In the first place there is no way of determining the number of pests that are there to begin with. But it can be stated that these parasites have established themselves in the vicinities where the pests are, and the spread of the infestation has been lessened in recent years compared with what it was some few years ago. That is about the only way in which we can gauge the effectiveness of the plan which is being followed. Our reports are that the parasites are becoming effective, but as yet are not operating to prevent infestation 100 per cent.


Percy Chapman Black: Can the minister state definitely whether the infestation is under complete control in any one area where these parasites have been used?


James Garfield Gardiner: There is no area where the pests have been completely exterminated, but they have been reduced very greatly in certain districts.


Percy Chapman Black: Is it the
expectation of the department that this menace will be completely controlled?


James Garfield Gardiner: This particular pest, the sawfly, I am informed, has never been entirely controlled either in this country or elsewhere through the use of parasites, but it has been materially checked in other countries and is being materially checked here. Our hope at least is that through the use of parasites we can still further check the destruction which has been caused by this pest.


Percy Chapman Black: What headway has been made by the department in checking the damage done to pine in areas where the pine tree grows? I believe the damage is done, not by an insect, but by a fungus; pine rust, I believe it is.


James Garfield Gardiner: That work does not come under this particular branch. It is not an entomological problem, because blister rust, as the hon. member suggests, is a fungus, not an insect. That is dealt with under botany, but the research work is done by this department. The control work comes under the forest service.


Percy Chapman Black: Is it expected that this rust will be controlled by the efforts of the department?


James Garfield Gardiner: If the hon. member does not mind, I would suggest that he wait until the estimates of Mines and Resources are before the committee, when the minister in charge of that department will probably give more complete information than I could.

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Percy Chapman Black: That will be satisfactory. I would ask also with respect to birch hardwood trees, which I understand have been damaged extensively in some parts of Canada?


James Garfield Gardiner: I am informed that the insect which attacks birch is known as the bronze birch borer. The department is working on the problem, but up to date no successful method of attack has been found. Officers of the department are advising operators regarding salvage of threatened or injured timber.


Gordon Knapman Fraser: Is the department going to put on a campaign this year to get rid of the corn-borer, which last year destroyed practically all the corn in our district?


James Garfield Gardiner: All of the control work in connection with the corn-borer is carried on by the province in which the corn is grown. We do the research work in cooperation with the provinces, but the actual control work is done by the provinces.


Mr. ROSS (Souris):: Can the minister
state, as a result of the surveys which have been made in the west, what the prospects are for a grasshopper infestation this year compared with last year's plague?


James Garfield Gardiner: Just before the hon.
member came in, the hon. member for Qu'Appelle (Mr. Perley) asked that question, and I stated that the indications were that the infestation in general this year will not be as serious as in recent years.


Victor Quelch: Just what form does the work of this department take? Does the department actually tackle this pest, or is its work purely advisory, or are grants given?


James Garfield Gardiner: We make the egg and adult surveys in connection with grasshopper infestations in order to locate the areas in which there is likely to be infestation, and we pass the information thus obtained on to the province. The province does the actual work of fighting the grasshoppers with the help of our officers.


Alexander Malcolm Nicholson: The amount spent for salaries is $227,595, and for temporary assistance, $120,585. The percentage for temporary assistance seems quite high. What is the number of temporary employees, and what percentage do they comprise of the total temporary and permanent staff?


James Garfield Gardiner: The hon. member will realize that much of the work in fighting the pests and of making the examinations and surveys associated with fighting grasshoppers, for example, is summer w'ork, and
that work is carried on by officials some of whom are part-time men. The same thing applies in connection with other activities, in forestry work and elsewhere, where much of the work is done in the summer and many of the employees are more or less temporary in the nature of their employment. The permanent staff numbers ninety-seven, and the temporary, 105.


Alexander Malcolm Nicholson: What percentage of the normal number of employees would the temporary assistants comprise? I understand that some of these temporary assistants have been working in the department for a number of years, but that they are still on a temporary basis. I should like to have some indication of the percentage of temporary employees compared with the permanent staff.


James Garfield Gardiner: As the hon. member
has indicated, there are two different kinds of temporary employees, and this applies to all departments of government. There is the temporary employee who is called "temporary" because he is only on part time; there is also the temporary employee who is taken on and cannot be considered for permanency until he has been at least six months in the service, but quite often, or at least sometimes, he is not made permanent until he has been on the staff for a number of years. In connection with the latter type, there is a general rule which applies to different departments, but not exactly in the same percentage, nor does it apply in exactly the same percentage all the way through the Department of Agriculture. Certain branches are allowed a higher percentage of permanents than are others; but generally speaking, it is about eighty per cent to twenty per cent; that is, eighty per cent permanents and twenty per cent temporaries, the idea being that we shall not have at any time on the staff more than a certain percentage who are permanent, and others are advanced in order to keep that percentage at about the same level.


[Stage Direction]
Item agreed to.
11.	Experimental farms service. Experimental farms administration, $59,970.
Gordon Graydon: I am not quite clear
as to just what is being done in connection with the Ontario agricultural college experimentation. There have been rumours from time to time, despite denials, that some of the grounds or some of the area there will be utilized by the air force. Whether or not that is the case I am not in a position to say, but I was wondering whether the central experimental farm or any of the other experimental stations have in mind taking over
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any work which would have to be discontinued at the Guelph college by virtue of the air force occupation there.


James Garfield Gardiner: I believe it has been explained to the committee before that the agricultural college buildings, or at least some of them, were offered to the air force or to the Department of National Defence for Air by the government of Ontario, and that that offer was accepted. They are not occupying all the buildings. As is known, they are occupying part of them. We have not any information which would indicate that any experimental plot or anything of the kind is being interfered with by the use which is being made of the buildings and grounds by the air force. In so far as the instruction is concerned we have, of course, no way of assisting in connection with that. I assume that if we were asked to take on some of that experimental work, or if it became necessary to do that, we would consider it and might do some of it. I am informed that some of it could not be transferred here; but, if there were any of it that could, I am quite sure that our staffs would be willing to attempt to cooperate in connection with the matter. But up to date there is nothing of that kind.


Gordon Graydon: It would be unfortunate if it were discontinued.


Mr. CASTLEDEN:: Have any of the experimental farms been closed during the past year?


James Garfield Gardiner: No, there has been
none closed since a year ago. I think I reported to the committee a year ago, at the time the estimates were going through, that either five or six were to be closed. We have earned through during the year the process of closing them, but no others have been added to the number.


George Hugh Castleden: The estimates are about the same for the next year as they were for the last.


James Garfield Gardiner: Last year's estimates were based on closing those experimental farms this year.


Mr. DIEFENBAKER:: One farm which was closed last year was the Rosthem experimental farm. When the estimates were before this committee the question was asked, what disposal would be made of the land comprising that experimental farm? I should like to know from the minister whether the land comprising that farm has been sold or leased; if leased, whether the lessee has an option to purchase under the lease; and if sold, to whom the sale was made, and at what consideration.


James Garfield Gardiner: We have had an offer for the Rosthem farm. I think we have had two offers, one at a lower figure, and the second one at a raised figure. We did not at the time feel inclined to accept the price which was offered. We have also had an offer to rent from the same individual who made the two offers to purchase. We have had under consideration a suggestion that the province might wish to take the farm over and operate it on a certain basis. I believe that a decision i3 to be reached this week. We expect the provincial minister of agriculture here before the end of the week in connection with the bacon board, and hope to have a final discussion with him at that time. If the province does not wish to take it over, it is just possible that we shall go through with the leasing arrangement for this year, with the understanding that the property may eventually be sold.


John George Diefenbaker: Would the minister advise who that person is, and the amount of the offer?


James Garfield Gardiner: I doubt very much whether I should reveal the name at this time. He is a farmer, I believe, in the vicinity of Rosthern. I would just as soon not give the name, because others may be interested and wish to bid as well; I do not know.


John George Diefenbaker: The same reason would not justify not answering the question as to the amount which has been offered. What were the two offers?


James Garfield Gardiner: I have some doubt about making a statement. I do not know whether it is publicly known in that vicinity or not. AVe called for tenders once, and the first bid was on that tender. It was the highest bid we received, but we considered it too low; and the same individual who had made the highest bid when tenders were called, later on raised that bid considerably. We still did not accept the offer which was made, although there is the possibility that it would be somewhere in the vicinity of any offer we were likely to receive.


John George Diefenbaker: When was the call for tenders made, how many were sent in, and what was the amount of the highest tender? We are surely entitled to have the information as to the amount of the tender.


James Garfield Gardiner: I have not the figures, but my recollection is that the tenders were called for last fall, although I have not the exact date. There was really only one bid. That can be understood. An experimental farm is one which has buildings that are of no use to anyone who wishes to run an

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ordinary farm. Moreover, it is planted with shrubs and trees which most persons would want to pull out for the same reason that they pulled out the original shrubs which were on the land when it was first broken up. A plot of that kind is not as useful to a farmer as it is as an experimental farm, and I imagine many in the vicinity were a little hesitant about bidding. We did get one bid, but it was not high enough.


John George Diefenbaker: Why is there difficulty in finding out what the amount of the bid was? This farm comprises several hundred acres of the finest farming land in Saskatchewan, close to the town of Rosthern, with buildings, and it cost $25,000 or $28,000. Surely the committee is entitled to know how much the individual offered for it.


James Garfield Gardiner: The first bid was $16 an acre, but we did not consider it high enough.


John George Diefenbaker: What was the
second bid?


James Garfield Gardiner: The second bid was not on a public tender, and it would be unfair, unless we called for tenders again, to say what that bid was. It was considerably higher.


Ernest Edward Perley: Does the minister propose to call for tenders again?


James Garfield Gardiner: We have not given consideration to that, but I should think that if much more time expires we shall have to call for tenders again.


Mark Cecil Senn: How many acres are there in the farm, and what does the minister consider the actual value of the farm for farming purposes? That is a fair question. I should like to know how many acres there are and whether it is worth the ordinary value of farming land in the district, more or less.


James Garfield Gardiner: It is approximately a section of land, which is 640 acres. I should not like to put a price on it. I am not a land expert, and I have not sufficient knowledge of the farm to state personally what ought to be paid for it. I will, however, say this. As minister of the department I will see that the government gets all it can for it. I am somewhat responsible for the stand, in the first place, that $16 an acre was not enough, with the result that a very much larger amount was offered, although we did not accept that either.


Mark Cecil Senn: What has been the cost of the farm up to the present time, in the purchase of the land, the erection of buildings and other work of that kind?


James Garfield Gardiner: I am not in a position to state what the original cost was. I understand that it was added to from time to time, and it would be very difficult, for the reasons I gave a few moments ago, to establish anything from the amount of money that has been spent on the land. We have far more housing capacity there than would be required on any farm operated as a farm. We have many more farm buildings than a farmer would find necessary; we have all sorts of trees for purposes of decoration and for experimental purposes in connection with fruit and other things which to the ordinary farmer would not be useful at all. If one added up all the costs of that kind on the farm it would be many times more than one could expect to get for a farm for farming purposes.


Mark Cecil Senn: What was the reason for closing it? Has it not been found to be worth while to continue operations on that farm, or is it because of other circumstances? What kind of experimental work was being conducted on the farm? Was it in connection with grain or fruit, or in what direction?


James Garfield Gardiner: This farm is located right across the road from Seager Wheeler's farm. Seager Wheeler was one of the men who did a great deal of experimental work in connection with different varieties of wheat. As a matter of fact, he was associated, using his own farm as well, with the department for a number of years and had a certain annual payment from the government, so that much experimental work of that kind was done in that community. He and those operating the farm have also experimented extensively in the growing of fruit trees suitable to that north country. In addition, there was some experimentation in connection with live stock, the same as the experimentations that take place on all experimental farms.
Some years ago, beginning in 1912, the agricultural college was opened at Saskatoon, with a farm associated with it, and about 1,600 acres of that farm are operated very much in the same way as the farm is operated at Guelph, with the result that within a comparatively short distance from the Rosthern farm there was being operated by the province a farm that was doing practically the same kind of work as was being carried out on the Rosthern farm, and under conditions somewhat, though not exactly, similar. A few years ago, during the time that Mr. Weir was Minister of Agriculture, another farm was opened at Mel-fort, which is further east. At that time it was considered necessary by the department to have that farm further east. As a result of these two developments, first, the farm at Saskatoon, which was opened by the province
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in conjunction with the agricultural college, and second, the experimental farm which was opened further east in an area which is rather different and further removed from Saskatoon, the department have been attempting for a considerable time to close this farm down. Much of the live stock which was originally on the farm had been moved away before the farm was actually closed down; and we considered that in view of the fact that a war is on; that in any event we desired to close the farm, and that its closing was a means whereby we could cut down some of the expense, it should have been closed last year, and we closed it.


George Hugh Castleden: I understand that five of these farms have been closed.


James Garfield Gardiner: Yes, five.


George Hugh Castleden: The difference is only about $400.


James Garfield Gardiner: 
Ernest Edward Perley: Can the minister give the committee the terms of lease or the rental basis of the Rosthern farm?


James Garfield Gardiner: It is not yet leased.
There is a possibility that it may be leased after this week, but it has not yet been leased. It is still under the control of the government.


Ernest Edward Perley: Has the minister called for tenders for the leasing of the farm?


James Garfield Gardiner: No, we are not likely to call for tenders. I think we would find difficulty in obtaining a renter for one year of more than a certain type, someone who was very close to it.


John George Diefenbaker: When were these tenders for the sale of this property advertised for, under what circumstances and in what
papers?


James Garfield Gardiner: I have not the exact date, but it was some time during the latter part of last summer. It was advertised in the papers throughout Saskatchewan. I have no hesitation in saying that there were many inquiries from the community itself, from persons right in Rosthern and outside, and there was a considerable agitation to the effect that certain things should be done with the farm, none of which has been done up to the present.


John George Diefenbaker: When arriving at a decision not to accept $16 an acre, or in other words, approximately $11,000 for property which I am informed has buildings on it worth more than $30,000-


An hon. MEMBER:: What does the hon. member mean by "worth"?


John George Diefenbaker: *-the minister must have had an independent valuation, otherwise he would not be in a position to turn down an offer of approximately $10,000. What is the amount of the department's valuation?


James Garfield Gardiner: I cannot say that; I am not a land valuator, but I know that when a certain bid was made by a certain individual for the farm and we refused to accept it and he offered very much more, that was sufficient reason for having turned down the first bid. Probably we are not justified in turning down the second.


John George Diefenbaker: I seem to have some difficulty in getting an answer from the minister. Was there an independent valuation of this property? How does this land, comprising the old Rosthern experimental farm, compare in value with adjoining land? Surely the minister has all that information.


James Garfield Gardiner: My hon. friend has lived in the vicinity; he knows that anyone who is living on a farm there and has made a home there would not sell his farm for $50 an acre, and he knows at the same time that anyone who wishes to sell a farm cannot sell it for $20 an acre. It is difficult to sell a farm anywhere in Saskatchewan to-day at $20 an acre if one is anxious to sell it. The man who has a nice home, has fixed it up and wants to live there would not sell that particular farm at $50 an acre; probably some would not sell at $100 an acre. But we are not placing on this farm the valuation that an individual would do who wanted to remain on a farm. Everyone in the vicinity knows that we desire to sell the farm. I venture to say, however, that we shall find it difficult to get as much money for the farm as we think it is worth.


James Arthur Ross: Why sell it?


James Garfield Gardiner: But I would say that the offer which has been made is a fairly reasonable one and if we do not get a higher one we may some day sell it.


Mark Cecil Senn: That seems to me to be quite a commentary on the position of agriculture in that section of the country as well as throughout Canada. I have from time to time from my place in the house advocated that the government should take some farm such as this and demonstrate to the farmers how

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farming operations can be carried on at a profit in different parts of the dominion. It seems to me that might be done in this instance. The minister has stated that there are farms there where the owners are not anxious to sell that could not be bought for S50 an acre. On the other hand, he tells us that this farm probably would not sell for $20 an acre. This appears to me to be an excellent opportunity for the department to take the farm which they cannot get off their hands at a reasonable price and demonstrate to the farmers of that section just how they can farm profitably on a farm of that kind. After all, the farmers have to live on their holdings; whether those holdings are large or small, they have to meet their obligations and make enough to live on. It seems to me it would be a good idea if the government at this particular time would undertake to demonstrate to agriculturists just how they can, under present circumstances and with present prices of farm products, make a reasonable profit - out of a farm of that kind.
That, however, is not what I rose to discuss. A few moments ago the hon. member for Peel mentioned the fact that the agricultural college at Guelph had been handed over to the air force. I understand that from time to time there has been collaboration between the federal Department of Agriculture and the provincial departments along certain lines of experimentation. The minister might at this time give the committee some inkling of what is being done along that line; in what way the federal department is collaborating with the provincial departments, how much money is being expended in that way, and just what results are being obtained.


James Garfield Gardiner: Certain activities are
being carried on in cooperation with the different provinces; they are not all the same in the different provinces. For example, we are carrying on soil surveys in certain areas in cooperation with the provinces, and we pay fifty per cent of the cost. Then we have investigations in connection with potatoes, for instance, diseases and methods of handling them. That is carried on in cooperation with the provinces. One could take almost any of the activities having to do with agriculture across Canada, and he would find that there is some cooperation between this department and the provincial departments of agriculture. For example, in the fighting of grasshoppers, we do the research and the province does the actual work of conducting the battle. The same thing is true with regard to fighting other pests; we do
the research work and the provinces do the actual work of putting the results of our research into practice. That runs all the way through the activities in connection with agriculture in the different sections.


Mark Cecil Senn: Up to a certain point the
minister has been definite enough with his information, but I think it would be of interest and enlightening to the committee to know in just what directions there is cooperation between the federal and provincial departments of agriculture, not only by way of experiment but in other directions. There is a considerable vote here for experimental work of one kind and another, and it would be of interest to know what proportion of these votes is being used to collaborate with the provincial departments. The minister might enlarge considerably on his statement with regard to what is being done in that direction.


James Garfield Gardiner: I am afraid I would
be covering practically every vote there is in these estimates if I attempted to review all that is being done by the department in cooperation with the provinces. For example, our whole marketing service is carried on in cooperation with the provinces; we do the grading for the provinces. That is true of every section. If it is just in connection with experimental farm work that the question is asked, then I would say that the experimental work in connection with agriculture is carried on in cooperation with the provinces largely through such farms as the Guelph farm in Ontario where the agricultural college is situated, and through the colleges associated with the universities and some not in association with the universities. We subscribe certain funds toward the activities of the different professors in the colleges who are doing certain experimental work in connection with agriculture, such as soils, grasshoppers, fruit-growing; everything we are carrying on in Canada as related to agriculture. There is cooperation between the federal and provincial departments in experimental work, such as that associated with the handling of fruit. That is carried on only in provinces where fruit is grown, provinces like British Columbia, Ontario, and, to a certain extent, Quebec and the maritimes. The experimental work in connection with wheat and wheat tests is carried on largely in the prairie provinces, and we have in other provinces across Canada other activities in which there is cooperative effort.


Mark Cecil Senn: Still the minister has not given me anything to indicate just what amount of this experimental farm vote is being spent
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in that particular direction. May I say that I believe the experimental farms, not only those of the federal department, but also of the provinces, are doing very good work. If the minister cares to answer as to how much of this money is being expended in that way, he might at the same time indicate to the committee if any additional expenditures will be incurred by reason of the fact that the Guelph agricultural college, which he mentioned a short time ago, has been handed over for other purposes. Will that fact increase in any way the expenditures of the federal department in cariying on these experiments, or otherwise?


James Garfield Gardiner: The only activity which has been transferred from Guelph to any other point, for which we are expending a sum of money, has been transferred from Guelph to Vineland. That is only a very small amount.
In so far as the task the hon. member would like me to undertake is concerned, namely, that of segregating funds which are expended in cooperation with provinces or others, I am afraid that would be impossible. The staffs are working on the same type of work at the different places. Our staffs are engaged in doing work which is helpful to the provinces, and the provincial staffs are engaged in doing work which is helpful to us. There is, however, in the account, no segregation of the funds which would make it possible to answer the question in dollars.


Mark Cecil Senn: I suppose it varies from year to year?


James Garfield Gardiner: Yes.


Ernest Edward Perley: The minister's statement with regard to the Rosthem farm and the value of the farm land surrounding it has been most interesting. I would judge that it is similar to the Indian Head farm, which he knows very well. The land around there is worth $75 or possibly $100 an acre. I believe farmers have refused that for it in days gone by. I understand the land on the Rosthem farm is extremely fertile, and is good country for farming. As the minister said, it is worth something over $50 an acre. The minister should assure the committee that this farm will not be sold at a price or value which could not be considered fair, even taking normal times into consideration. I think it should be worth at least $40 an acre. The minister should assure the committee that the government will not sacrifice the farm for $16 an acre, or anything like that. He mentioned a few minutes ago that it might be leased within the next week, or that it might be taken over, or some deal made with the provincial government. He should give us information with

regard to that. How far have negotiations with the provincial government proceeded? I believe a good deal more information is due to the committee.


Mr. DONNELLY:: May I say a word with regard to the value of land to-day. I do not think there is any more difficult job in western Canada than that of estimating present-day land prices. Some people tell us that land has very little or no value; others tell us that it has a high value. For example, the loan companies send in their agents or valuators. I have had them come to my district. One man would value a piece of land at $40 an acre. Then probably the next day, along would come another valuator, from another company, and he would value it at SS or $10 an acre.
' When you ask a man, under present conditions, to come in and say what the value of a piece of land should be, and when he has to take into account future prospects with regard to wheat prices, and the fact that there have been crop failures in western Canada, he has before him an extremely hard job. Land companies in western Canada have a tendency to hold up prices, or to try to keep them up where they were some years ago. Other companies, or other people are endeavouring to keep prices down to figures they believe to be right and fair. That is happening under the Farmers' Creditors Arrangement Act.
Not long ago I heard men say in western Canada that there is no land there worth more than $10 an acre, because, in their opinion, the land is worth only the return it will bring. They urge that under present prices, and having in mind present prospects of future markets, a farm will earn not more than $10 an acre. Be that as it may, we hope and trust that, in the future, market prices for our farm products in western Canada will improve.


Mr. HOMUTH:: They will.


James J. Donnelly: I can understand that in these circumstances the Department of Agriculture is not anxious to give away this land. I have land for which I have been offered a low price. People have been trying to get me to sell it; but I am hanging on to it, and trying to keep it, although it is not being farmed to the greatest extent, particularly since the cut in wheat acreage. We hope, however, that future conditions will be better. I presume that is the way the Department of Agriculture are looking at the matter, so far as it affects the farm at Rosthern. They are hoping for better conditions in the future, and that they will be able to get better prices.

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Karl Kenneth Homuth: Better prices will come
with a new government.


Alexander Malcolm Nicholson: The minister has not commented on the suggestion made by the hon. member for Haldimand which, it seems to me, had a good deal of merit. In the minds of a great manjr farmers, officials in the Department of Agriculture are out of touch with the real problem of farming. It would be a worth-while gesture if some of the officials in the department would undertake to farm the experimental farm at Rosthern, and attempt to demonstrate that farming can be made profitable under present conditions. I should like to hear what the minister has to say, or as to whether he has considered calling on volunteers from his department to undertake an experiment of this sort.


James Arthur Ross: How about summerfallowing?


James Garfield Gardiner: There is only one thing I should like to say, and it is this: I do not think any experiments carried on by the government to try to demonstrate how one can run the farm at Rosthern would be beneficial either to the government or to the people in the surrounding district. The farmer who operates a farm in a community, and who makes a success of it, is the best guide to any farmer in the neighbourhood as to what it costs, and how a farm can best be run. The government, with the whole credit of the country behind it, attempting to operate a farm, is not in any sense in the same position as the individual farmer who is running his farm privately. Anything which the government might do might not be done by the ordinary farmer in carrying on his activities on such a farm.
Experiments have, however, been carried on not very far from Rosthern by an official who was for a number of years closely associated with this department-if he is not even yet-working with the department of agriculture of Saskatchewan. He is a brother of Doctor Kirk, who is at present in charge of a department in the agricultural college at Saskatoon. He operated a farm at Lockwood, which is not far removed from Rosthern. That farm was operated for the Saskatchewan government. It was a poor piece of land; that is, it was light, and sandy. I believe he gave as good a demonstration as could be given by a person hired by a government as to what it costs to operate on such land, and what can be done with land which is really under the average in value. I doubt very much if it had any
real value to the people living in that or other sections. He did as good a job as could be done.
We, on the other hand, attempt to give some demonstrations to farmers by having areas of certain farms rented, and by giving instructions to farmers in the community as to how to run those particular sections of their farm. Some demonstrations are given on those plots, and they are beneficial to persons operating their own farms in the immediate vicinity. But as to taking over Rosthern farm, with its decorative shrubs and all that kind of thing, and putting a farmer on it and telling him to operate it to prove to the farmers around what it costs to run a farm-well, I am afraid it would not be very successful.


Mr. TUCKER:: When this item was first
brought up I was attending a committee in another part of the building. Therefore I am not sure just what has been said up to now. I believe the question has been raised as to why this farm has not been sold.


Karl Kenneth Homuth: Why it should not be.


Walter Adam Tucker: I do not know whether
hon. members on this side of the house, who sit in opposition, have supported the selling of the farm. Last year I was against the sale of this farm, and I am just as much against it this year. I am quite satisfied that the hopes of the department so far as the saving of money is concerned have not been and will not be realized to any great extent. Most of the people drawing any salary to speak of at all have had to be moved to other farms and still remain on the payroll. So far as I can see, about the only money that will be saved is in connection with the few people who vTere working by the hour at no large wage and who were recruited from the town of Rosthern. As I pointed out at that time, there would not be a large saving through closing the farm.
If the dominion government feel, as apparently it does, that the work which could be done on this farm is something which should be carried on, not by the federal government but by the provincial government, I suggested and still hope they can get the provincial department of agriculture to carry. on the important work this farm can do. I am sure that this farm can continue to do a great service by supplying foundation cattle stock to the district as well as foundation stock for the swine industry which is becoming more and more important all the time. I understand that the reason why the offer to buy this farm has r ot been accepted is that it is still hoped
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that the provincial government will take over the farm and operate it as a foundation stock breeding and distributing station.
I am sorry that the government have seen fit to cease operating this farm as a federal experimental station, but I am glad that they have not disposed of it to a private individual. I understand they are still trying to get the provincial department of agriculture to operate it in the way I have mentioned. I hope that they will not dispose of the farm until every possible means has been explored to have the farm operated in the manner I have indicated. When the farm was closed they had a wonderful herd of Holstein cattle and people came from as far as two or three hundred miles away to get pure bred Yorkshire swine as foundation breeding stock for their farms. I am sure that if the provincial government took over this farm it would prove of great benefit to northern Saskatchewan, and the cost of operating it would be small compared with the amount of good that would accrue to the farming industry. I approve the government's attitude in not selling the farm.


Mark Cecil Senn: The hon. member for Rosthern (Mr. Tucker) has raised an interesting question, namely, whether this farm has been a paying proposition in years past and, if not, how much has been lost from year to year. I imagine that if it had been on a paying basis it would have been kept on by the department. This brings up the further question of operating these farms, as was suggested by an hon. member to my left and by myself. This farm could be operated as a demonstration farm to show how a farm of this kind could be operated at a profit. The minister says that it is impossible to do that, and I believe he is right. I have heard the statement made in years gone by, and it is still being made, that if farmers were to keep books, if they were to charge a reasonable price for their labour, property depreciation and everything else, as other businesses do, no one would ever put a plough in the ground. The minister might tell us whether this farm at Rosthern has been operating on a profitable basis and, if not, how much money has been expended from year to year over and above receipts.


James Garfield Gardiner: The cost of operating this farm over a term of jmars has varied from $14,000 to approximately $30,000. If I remember the figures correctly, last year we provided some $8,000, but it was thought that the farm would be operated for only part of the year. I think most hon. members realize that to make an expenditure of from $14,000 to $30,000 on a farm answers the question as to whether that farm can be 
operated, in the way in which the government operates it as an experimental farm, at a profit. I do not think there is any question that it could not be operated at a profit if experimental work is going to be carried on. The other question, as to whether the government could operate a farm and make it pay, is one which might arouse some curiosity. As I said a moment ago; however, I do not think it would prove anything.


William Earl Rowe: Everybody knows the answer.


James Garfield Gardiner: Some hon. member says, "everybody knows the' answer". Probably we would all give the same answer. That is a situation which I think can be dealt with only by experienced people who are carrying on farming in the way that an individual is compelled to carry it on. I doubt if the government going on to a farm and taking it over for the purpose of demonstrating whether it could be run at a profit or otherwise would be beneficial.


Karl Kenneth Homuth: No one would expect an experimental farm to pay a direct profit.


Mark Cecil Senn: I am not sure that it would not be beneficial. If the government undertook to operate a farm along the same lines as the average farmer and kept a system of books, it would show where the leaks and losses were to be found. I think everyone agrees that you cannot operate an experimental farm along the same lines as you would operate another farm so far as the question of profit and loss is concerned. I should, however, like to know whether the department has any idea of the loss incurred because of the experimental work done from year to year on this farm. We all realize that experimental work must entail a loss, but I should like to know to what extent that loss affects the revenues of the farm, what percentage of the loss incurred on that experimental farm or on the whole system of experimental farms would be due to the experimental work carried on.


James Garfield Gardiner: 
William Earl Rowe: Has the minister given any consideration to the zoning of the agricultural resources of this dominion in respect of what might be profitably produced in one section of the country and unprofitably in another?


James Garfield Gardiner: Zoning has been carried on by the farmers themselves in accordance with the natural conditions that exist in Canada, in addition to what the experimental stations demonstrate to be the proper thing to do. For example, they grow apples in the Annapolis valley.


William Earl Rowe: We know that.


James Garfield Gardiner: Yes, some people do, and apples are also grown in certain sections of Ontario and Quebec.


William Earl Rowe: And British Columbia.


James Garfield Gardiner: To that extent the growing of apples is zoned.


William Earl Rowe: That is twenty years old.


James Garfield Gardiner: In addition, we have zoning in connection with our cereal crops. We grow certain varieties, and within recent months we have been carrying on zoning in relation to the marketing of farm products. It was suggested a few months ago that we should establish one price for cheese all the way across Canada. We did not consider that that w7as good policy. We thought that cheese could be produced to advantage in certain areas of Canada and that in other areas it could not be produced to advantage. A certain flat price was established, and those producers who found it profitable to produce cheese have had their price increased by the giving of premiums or subsidies. The farmers in those areas can obtain a considerably better price for their cheese than farmers who undertook to produce cheese in areas that were
not so suitable. To that extent there has been recently, in relation to that particular product, some zoning which was not carried on previously. The same thing is more or less true in connection with the production of live stock across Canada.


William Earl Rowe: That is a reasonably complete
answer by the Minister of Agriculture. It pretty well shows that there has been nothing done by the department so far as the zoning of agriculture in this dominion is concerned, and what has been done has been done by the producers themselves. As the minister has intimated it has been shown what can be produced economically in one section of the country and what can be produced economically in another section, but it is left to the producers themselves to work out their problems in their own individual way, so that they may produce economically what they have been producing at a loss.
It seems to me that we have been behind the eight-ball in agriculture in this dominion for a very long time. We have listened to discussions of ways and means of finding profitable production for certain products in certain sections. We have heard discussions of how it can be made profitable not to produce at all. In fact, we have had the spectacle of seeing our farmers paid not to produce.
I cannot help thinking that the Minister of Agriculture should give careful consideration to the zoning of agriculture in this dominion. He has been over a large portion of Canada. I do not know any farmer in Canada who has farmed the farmers more than has the present Minister of Agriculture. He has shown them all the ways and means by which they can vote for his party.


James Garfield Gardiner: More successfully than you did in Ontario.


William Earl Rowe: Yes, but wait until your next test of public confidence comes, and it will be a greater debacle for you than I had in Ontario.


James Garfield Gardiner: I have heard those prophecies before.


William Earl Rowe: Wait until the next time comes. You have not had as much experience as I have.
Mr. GARDINER. I have been elected nine times.


William Earl Rowe: True, but I do not know any farmer who is looked upon with more suspicion than the present Minister of Agriculture.


An hon. MEMBER:: Shame.
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William Earl Rowe: It is no more shame to be looked upon in that way than for me to be referred to in that way. The present Minister of Agriculture is not infallible. We have had his maximum price for butter and to-day we have his minimum price for butter. He has changed right-about face. They say it is a smart politician who can turn twice in the one year, but the minister has changed his mind two or three times, so no wonder he is as smart as he thinks he is in gaining votes in Canada.
I say in all seriousness, Mr. Chairman, there has never been scientific zoning of agriculture in this dominion.


An hon. MEMBER:: Why did you not do it between 1930 and 1935?


William Earl Rowe: The Conservative party did more between 1930 and 1935 than the Liberal party has done since confederation, and that was when the Conservative party consummated the empire trade agreements in 1932 and stabilized the price of bacon and other products which we exported to the old land. Some hon. members shake their heads, but that type of member has been shaking his head ever since confederation. I am not playing that old dug-out kind of politics which the Liberal party and the Minister of Agriculture have played across this dominion. I say in all seriousness that the time has arrived when we should have a zoning policy for agriculture right across this dominion which would determine the zones in which certain products could be produced at a profit. Instead of that, the government's policy is to pay farmers $4 an acre not to produce at all.


Mr. GRANT:: What is the Conservative policy?


William Earl Rowe: My hon. friend is not a farmer, but I have learned from experience that it is the man who knows the least about a particular subject who talks the most about it. My hon. friend looks more like a lawyer and acts more like a doctor of philosophy. Does my hon. friend know that to-day farmers are battling with their backs to the wall? If he did, he would not talk so lightly about farm problems. I know farmers in this country, whose sons are fighting overseas, who are battling with the various elements of nature, *who are battling with the weather itself to meet the obligations they have on their farm; farmers in northern Ontario, farmers in old southern Ontario, farmers who know that their mortgages are increasing steadily, farmers who are on stony land, on rough pasture land. If my hon. friend knows as much as he fMr. Howe.]
endeavours to imply that he knows about agriculture, he will know that the best pasture lands we have are the stony, rolling, rough lands, with brooks running through them, which cannot produce wheat. He will know as well those flat areas in Ontario which are not adapted to producing old fall wheat but are well adapted to the production of live stock on an economic basis. My hon. friend from Manitoba knows well that in his district he cannot produce wheat, but can produce live stock.


Mr. LEADER:: We produce both.


William Earl Rowe: They produce both, he says. So can I, in the district which I represent. But I believe the time has long since passed when the farmers of this country should be left to zone their own districts. This is no new story as far as I am concerned. I have urged it upon successive predecessors of the present minister. I urged it upon the hon. gentleman from Melville; from 1930 to 1935 I urged upon the minister of the party to which I belong that we should zone this dominion; that we should set out in our bulletins from the Department of Agriculture those districts which are most adapted respectively to dairy production; to mutton, lamb and wool; to grain production, and to the production of fruit and other vegetable products; that, then, the Minister of Agriculture should coordinate his efforts with those of the Minister of Trade and Commerce, and no longer cling to this old and dusty free-trade doctrine by admitting fruit and vegetables into districts in which they compete with the local products.
We bonus western Canada for not producing wheat. Why should we build up in this dominion a lopsided agriculture, disregarding practically everything except wheat? I make that statement in all good faith. I have never pitted the west against the east. I produce, probably, as much wheat as the average Ontario farmer. Each year I grow between 75 and 100 acres of fall wheat, chiefly for the chaff and straw which it produces, and I feed the wheat, and have fed it for twenty years. I am not concerned about its price. I think I can get more benefit from feeding it to shorthorn cattle and Yorkshire hogs than by selling it in competition with the temporary price which is supported by the taxpayers of Canada.
In this country there are many districts now trying to grow wheat which would be better off if they produced live stock or dairy products. There are many other districts which would be better off producing mutton, lamb and v'ool products than in endeavouring

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to raise dairy and beef products. There are a few districts in Ontario which can economically produce wheat. We are paying western Canada $4 an acre not to produce wheat because we have developed a lopsided farming industry, and on the other hand we are having absolutely no regard to the prospects of many other fertile districts. The minister should give some consideration to the zoning of districts in a systematic way. Bonusing is a vicious policy. I was one of the first to propose it in this chamber in a time of desperate economic conditions, back in 1932. The men who then condemned it are now the proponents of it.


Thomas Vincent Grant: I thought the hon. member said a minute ago that times were good back in 1932?


William Earl Rowe: I never said they were good. The hon. member said they were bad. He did not need to tell the country that. Everybody knew it long before he did. In fact, if he had been in the business he would have recognized it as more serious than is indicated by his glib reference to it to-day. Nobody doubts that in 1932 times were bad. May I tell him that in 1929, and before his party left power in 1930, every grain elevator in Canada was bursting with unsold wheat, and every lumber yard was overflowing with unsold lumber. That depression did not come after 1930. In suggesting that it did, the hon. member is about fifteen years behind the times. In 1930 this country was facing a depression which started in ,1929. Any hon. member who is worthy of his place in this chamber knows that. The Minister of Agriculture laughs. Any man who knows the situation is well aware that the depression did not start in 1930; it began in 1929.


Mark Cecil Senn: He knows it, too.


Thomas Vincent Grant: It did not end in 1930, though.


William Earl Rowe: The Conservative party took office in 1930, as it did in every period since confederation when this country has faced a crisis, and let me tell hon. members opposite that we shall come into power again, because Canada is now heading for a depression. It was in 1929 that the stock-market debacle occurred. I heard hon. members on the front benches opposite say in 1929 that they were facing a crisis. The hon. member for York North laughs, but he knows what I say is true.


Ernest Edward Perley: What about Dunning's May
day budget?


William Earl Rowe: Yes, and Dunning's countervailing tariffs. The old free-trade party who said. "We will never raise tariffs," when the depression came along said, "We will set up a
countervailing tariff, and if tariffs are raised in Washington we will raise them too. We will do anything to avoid the depression which we see coming."


Thomas Vincent Grant: You and Dunning made a mess of it.


William Earl Rowe: Don't say that of Mr. Dunning. You can say it of me. Mr. Dunning
is a better man than any you have at present.


Thomas Vincent Grant: I meant Mr. Bennett.


William Earl Rowe: I thank the hon. member for associating me with Mr. Bennett, because either of us is better than the hon. member is. But, Mr. Chairman, do not let us make this discussion trivial. Let us take off this veil of camouflage. All intelligent men know that 1930 and 1932 were difficult years. There is not an hon. member to my left or to my right who is not aware of that. Every country in the world was going through difficulties at that time. In 1932 there were millions of men in the world -looking for jobs. During that period almost every country in the world changed its form of government.


Mr. CRUICKSHANK:: We made a mistake.


William Earl Rowe: Canada made a mistake, I will admit, in 1935 in changing from one government to the other. Mr. Chairman, could anyone, even my sceptical hon. friend, blame the situation of Canada in 1931 upon a party which had been only six months in power?


Thomas Vincent Grant: They promised to end the depression at once.


William Earl Rowe: Yes, they promised to end the depression at once, but let me say this, in all frankness, that this party could never get into power if they did not start promising, because they saw their opponents living on promises. The Liberal party got into power and remained in power many years on promises. They promised to reform the senate.


The ACTING CHAIRMAN (Mr. Fournier, Hull):: Order. I must remind the hon. member that speeches in committee must be strictly relevant to the matter under consideration.


William Earl Rowe: Mr. Chairman, I beg your
pardon. I realize we have gone far afield.


Gordon Graydon: There are some farmers in the senate.


William Earl Rowe: The questions which have been asked by hon. members to your right, sir, have diverted me from the issue which is before the committee. I submit in all fairness that if hon. members are not prohibited from asking questions that are irrelevant to
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the issues before the committee, I should not be censured for answering such questions in a way that is relevant to present-day issues. I beg your pardon, Mr. Chairman, for having digressed so far, but I am trying to justify the position of the party to which I belong. I have urged upon the Minister of Agriculture on different occasions the desirability of zoning the great resources of this wonderful agricultural country, and I say to him in all seriousness that a careful survey should be made of the dominion to ascertain its potential resources. I am referring at the moment to fruit and vegetable production in Canada. I have been in sections of the great province of Quebec which are most adaptable to the raising of fruits and vegetable products. The minister has told me that they grow apples in Annapolis valley. Well, I have heard that before. He has told us that they grow apples in the valleys of Vancouver, and dandies at Indian Head.


Mr. HOWDEN:: And in Manitoba.


William Earl Rowe: My hon. friend says they grow apples in Manitoba. We believe we grow some pretty good apples in Ontario. In fact, we have beaten all the rest of Canada with the apples that we have grown in northern Ontario. The hon. member for Peel will tell you, Mr. Chairman, that they grow excellent apples in his district. Coming from Simcoe county, although I do not wish to boast, I can say that we produce champion apples there. These areas might well be zoned with a view to finding out their capabilities; and, after the facts have been tabulated, I suggest that the minister should cooperate with the Minister of Trade and Commerce with a view to getting something done in this regard. One is sometimes skeptical about how closely these two ministers cooperate on questions that are of common interest to their respective departments.
We have a great opportunity in Canada to produce our own commodities, and it would give us justification for imposing a reasonable tariff upon seasonable products, such as fruit and vegetables, that are brought into the dominion. The minister might study conditions in the districts that can produce beef cattle economically. If he found this out, then he might devise ways and means of stopping the importation from the Argentine of anywhere from 18,000 to 20.000 head of cattle which enter Canada in tin cans.


An hon. MEMBER:: Fifty thousand.


William Earl Rowe: I thank the hon. gentleman for the interruption because the last time I looked it up the importation was not as great as that. Evidently, since his party came into

power, more beef cattle have been coming into the country in cans. The minister might well survey these possibilities.
I would go further and make this suggestion. We have a great deal of unsold wheat in our granaries. Every hon. member who has had anything to do with the production of live stock or live stock products knows that one can produce fats from live stock by the use of this unsold grain. I contend that a large portion of the wheat in the country should be diverted to the production of animal fats instead of bringing in fifty or sixty train loads of vegetable oils. Let there be no misunderstanding about this. I say, rip off the camouflage of political hypocrisy that surrounds the importation of millions of pounds of vegetable oils. We have radio broadcasts urging the women of the country, with a view to baking better cakes and buns, and getting rid of odours in the kitchen, to use Crisco and vegetable oils, while the farmers of Canada can produce animal fats, which are better in a cold climate like this. According to the best medical advice, they are better than vegetable oil.


An hon. MEMBER:: Oh, no.


William Earl Rowe: The hon. gentleman who
interrupts is not a doctor, but I see a doctor and he nods his approval. I repeat, we might as well be frank in these matters. If we are to develop Canada as a great agricultural country, we must realize-and I address this remark particularly to the free traders, who say that they will buy where they can get things the cheapest-that we are capable of producing our own commodities for our own people, and it would be far better for us to do so than to bring in 50,000 head of cattle in tin cans and fifty train loads of vegetable oils, only to supplant the animal fats that can be produced in Canada with the use of the grain that is unsold here.
Let me make this suggestion to the Minister of Agriculture. I would ask him to urge upon the cabinet taking 100.000,000 bushels of wheat out of the quantity lying unsold in our granaries and giving it to China. With her back to the wall, China is fighting a fourth enemy. As her premier said this morning, the Chinese can defend their country; they can defend their civilization against Japan if they are supported by necessary supplies of natural resources. As it is, the women and children of China are starving for wheat. They are eating rice.


Alphonse Fournier: I must remind the hon. gentleman that the item under discussion relates to the administration of experimental farms.

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William Earl Rowe: The item refers to experimental farms, but before the minister sat down he said that what he was most concerned about was to make the farms of Canada pay. I am trying to tell the committee how we can make our farms pay. If we can sell economically the wheat that is produced in western Canada as well as in other parts of the dominion, we shall make our farms pay.
I say to the minister, who I am sure is interested in this problem and who is responsible for the department that has to do with the great industry of agriculture in Canada, that he should urge upon his colleagues the presentation to China of 100,000,000 bushels of wheat free of charge and have it sent from the Pacific coast. That would do two things. First, it would support China in her desperate battle against a more highly organized power, and, second, it would cultivate in the Chinese a taste for wheat instead of rice. It would thus develop possible future markets for wheat, something that we have been trying for years to do. Now is the time for us to make this move, and I ask the minister to recommend to the government that we send over 100,000,000 bushels free. At present prices it would not be very much in comparison with the haphazard, reckless policy which is being followed for western Canada. Clean out some of the elevators in Canada, and find ships to take this wheat over to China.
Teach the Chinese to eat Canadian No. 1 hard wheat and save them in their desperate battle and the part which they are playing in this desperate battle, which, as everyone knows, is very important in keeping Japan occupied. Japan, as the prime minister of China said this morning, can never whip China, but China can whip Japan if only she is given some support from those who have as vital a concern in this great conflict. I urge the minister-probably it is not apropos' to this issue-to urge upon his government the sending of 100,000,000 bushels of wheat to China. Last year I proposed sending 100,000,000 bushels to Great Britain, and I still urge it. Someone may say, we cannot find the ships. Send what you can find ships for. Teach China to eat our wheat, and help her to defend her shores in freedom's battle against Japan. We are in a battle to the death; let us play the game with our partners in civilization.


George James Tustin: A couple of years ago considerable experimentation was carried on with regard to the ranju tomato. Was anything further done in that matter?


James Garfield Gardiner: The experiments with
the tomato, two years ago I think it was, were rather unsatisfactory. The department is still carrying on work with the tomato, but it is not being recommended at present for further use until further experiments are carried on.


[Stage Direction]
Item agreed to.
IS. Experimental farms service. Branch farms and stations and illustration stations, $1,300,886.
George Hugh Castleden: Will the minister give a break-down of this item? Are these stations being continued in exactly the same number as in the preceding year?


James Garfield Gardiner: The discussion that
took place on experimental farms administration really covers this item as well. The Rosthern farm is one of the branch farms. Practically all the discussion that took place earlier had to do with these farms. We are operating the same farms with the exception of the five.


George Hugh Castleden: Will the minister give the names of the five that are closed?


Ernest Edward Perley: The minister might make
a general statement with respect to these branch farms and illustration stations. I refer of course more particularly to Saskatchewan. I think he would do well to make a statement with respect to the value of these different farms, the work they are carrying on, and whether there is not duplication of some of this work in the provinces.
I should also like to make one particular reference, namely, to the wages being paid on these farms in Saskatchewan. I think the rate of wages is unfair; in many instances it is below the average wage for similar work. Of course some of the stations, like Indian Head, adjoin the town, much of the work there is paid by the hour, and I think the rates by the hour and also by the day are below the average paid in the district for similar work. I have had many protests along this line from men employed on the farm. How does the department arrive at these rates, and what changes have been made in recent months, or what changes are they making for the coming season?


James Garfield Gardiner: To answer the last question first, the wage schedules run from around twenty-five cents to twenty-seven and twenty-eight cents on the farms in the west; in the east there are rates as low as twenty-five cents, a little higher at some places because of the location of the farms near the cities.
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With regard to the uses made of experimental farms as illustrated in Saskatchewan, the Indian Head farm is one at which the general activities in connection with agriculture through the greater part of Saskatchewan are carried on. As the hon. member knows-it is in the vicinity of his own home-perhaps the most important work done there is the cereal work and the live stock work. Close to the farm some work is carried on in connection with forestry, but that is not on the farm itself.
At Swift Current the work carried on has to do with irrigation and field crops, the control of blowing soils and soil work generally, also experimental work in connection with farm machinery. Some work in connection with farm machinery is carried on at Indian Head as well.
At Scott most of the work has to do with cereal crops. Recently there has been some forage crop work done, also some work in the control of blowing soil.
At Melfort the work has to do largely with live stock and forage crops, forage crops being more required in the northern section than in some other sections.
That will give a fairly general idea of the methods followed in the establishment and operation of experimental farms throughout Canada. An effort is made to associate the work of the farm with the type of agriculture that is being carried on in the different districts.
Where fruit is the important item, then fruit is experimented with. For example, the Summerland farm in British Columbia, in the Okanagan valley, carries on most of its activities in relation to fruit. Then we have the farm at Morden, Manitoba, where much of the work is in connection with horticulture and fruit, but there is other work having to do with cereal crops. I think the most successful experimental work done on the prairies with regard to fruit is done at the Morden farm.
In this section we have the central experimental farm. We have activities in connection with fruit at Vineland, and there are the activities carried on by the province of Ontario at Guelph in connection with their provincial farm which does the work that more or less coordinates the whole agricultural work of this province. The same principle is followed right across Canada to the Atlantic coast.


Mr. HAZEN:: What was the gross cost last year of carrying on the experimental farm at Fredericton, New Brunswick? Also was there any revenue derived from the farm, and what was the net cost of running it?


James Garfield Gardiner: The gross cost of the experimental farm at Fredericton for 1940-41 was 849,545. I understand that the produce sold amounted to some six or seven thousand dollars; I have not the exact figures here.


Mark Cecil Senn: Animal husbandry is one of the main subjects of experiment on our experimental farms, and rightly so, because animal husbandry and the production of beef and pork constitute one of our main operations on the farms of Canada. At the moment I am particularly interested in beef cattle. I know that in a number of the branch farms and experimental farms in Canada experiments are being conducted with regard to the raising of beef cattle. I would suppose in other farms experiments have been made concerning dairy cattle of different kinds. Would the minister state how many experimental farms are conducting experiments to-day and keeping herds of beef cattle, and what breeds of cattle they are. Will he tell us whether they are shorthorns, Angus, or Herefords? Will he tell us, too, how many of those farms are conducting experiments in connection with dairy cattle? It seems to me important that the farms should conduct experiments in the particular districts in which certain types of cattle might best be raised. After all, there are certain sections in which dairy cattle can be raised to better advantage than can beef cattle. Would the minister give us a comprehensive report as to the different localities, and the different experimental farms in which experiments are being conducted in connection with various breeds of cattle?


James Garfield Gardiner: Beginning at the east coast we find that there are general purpose cattle, namely, the milking strain of shorthorns, at Kentville. Then, there are shorthorns at Lennoxville, Ottawa, Kapuskasing, Indian Head, Melfort and Scott. At Many-berries station there are Hereford cattle. Then, at Lacombe there are shorthorns.


Mark Cecil Senn: Are those shorthorns dairy or beef cattle?


James Garfield Gardiner: At Lacombe, Melfort
and Indian Head farms they have all beef cattle. On the other farms they have general purpose cattle, with the exception of the Many-berries station, to which I referred earlier, where they have Herefords. On the other farms across Canada are found the dairy types of cattle.


Alexander Malcolm Nicholson: What are the methods pursued to correlate the activities of the federal and provincial departments? In connection with this estimate there are appropriations for poultrymen, beekeepers and herds-

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men. I understand there are pure-bred cattle at the Saskatchewan farm, and that they also have bees and different kinds of poultry. How is the experimental work distributed?


James Garfield Gardiner: The work done at Saskatoon is done in connection with the agricultural college. The same is true at Guelph. The provinces are responsible for educational work in connection with agriculture, in exactly the same way as they are responsible for general education. It has always been considered that the provinces, not the federal government, are responsible for education in respect of all topics. The same thing applies to agriculture.
In order to avoid overlapping, we have attempted to avoid placing experimental farms in the same. districts. That is why we have been desirous of closing up the Rosthern farm. That farm was opened before the Saskatchewan agricultural college was established at Saskatoon. Since that college was set up, there has been an effort to close the Rosthern farm. Finally, this year, we did close it in order to prevent overlapping in the locality.
However, while these are educational institutions, they do carry on experimental work for the benefit of the students. The very fact that this is done for the student makes it possible for the farmers in the surrounding area to receive the benefit from the experimental work done. They may receive additional benefits because of the educational work carried on. We have attempted to avoid overlapping by locating our experimental farms so as to keep them away from localities in which the educational institutions are situated.


Ernest Edward Perley: The minister has just made reference to overlapping and duplication of work. I believe there is a certain amount of overlapping which might be eliminated, through cooperation with the provinces. I have in mind particularly the health of animals branch. I know that in Saskatchewan the provincial department does a good1 deal of that work. That is only one instance.
The Indian Head experimental farm has been mentioned to-night. I believe the minister will agree that it is one of the finest experimental stations in Canada. Last Sunday I had the pleasure of driving through the central experimental farm at Ottawa. It certainly was a fine outing. We saw the beautiful display of flowers, and the wonderful work being done there. I would, however, point out to hon. members that I believe the Indian Head farm and forestry station will compare favourably with the central experimental farm at almost any time of the year, but particularly in the summer and the fall. I was there last fall, and had the pleasure of driving the hon. member for Peel through
those two farms. I believe what he saw was an eye-opener for him. We saw the flowers, the forestry and everything of that kind. Then we viewed the experimental work being carried on in connection with grain and stock. I would suggest that any hon. member who happens to be in that part of western Canada would do well if he were to spend the day at those two farms. I think all hon. members will agree that they are a credit to the dominion and to the department under which they operate. They are doing valuable work, and are real beauty spots. I should like to take this opportunity of expressing my appreciation and that of the people in western Canada for the work which is being done there.


Mr. HATFIELD:: Does the item of $49,000 include expenditures for experiments in connection with potatoes?


James Garfield Gardiner: Yes; the amount includes expenditures for potato investigations.


Mark Cecil Senn: I understand that a certain amount of work is being done in connection with investigations respecting the growing of tobacco. What operations have been or are being carried on? Are they still in progress?
While I am on my feet I should like to ask one or two further questions which the minister may answer at his leisure. Is anything being done by way of experiment in connection with the raising of landrace hogs, or have those experiments been discontinued? Further, wThat is being done by way of experimentation in connection with the production of flax? I understand that flax is an important item in our war effort, and is used in connection with the manufacture of certain articles.


James Garfield Gardiner: Tobacco experiments are being carried on at Delhi, at Harrow in Essex, at L'Assomption in Quebec, and here at the central farm in Ottawa. Experimental work in connection with tobacco has been carried on at all these places for some time.
A question was asked with regard to flax. Experiments in connection with flax fibre have been carried on at all experimental farms across Canada. These experiments have been carried on to the point where seed is being produced in Canada. Since the war started, this has been taken possession of by the government and distributed to producers in this country as well as in Ireland and England. These experiments have proven useful both in Canada and on the other side of the ocean.


Mark Cecil Senn: For fibre or seed?


James Garfield Gardiner: For fibre and for seed as well. The experiments in connection with the landrace hogs have been completed, and it
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has Deen proven to the satisfaction of the department that this animal would not improve our position in Canada.


Heber Harold Hatfield: How many new varieties of potatoes have resulted from the experiments carried on at the farm at Fredericton?


James Garfield Gardiner: I understand that no new varieties have been released from the Fredericton farm, but experimental work is going on.


Heber Harold Hatfield: For how many years have experiments been carried on, and how many varieties have been experimented with?


James Garfield Gardiner: For about four years on a large scale, and about eight years on less important experimental work.


Heber Harold Hatfield: How many varieties have been experimented with?


James Garfield Gardiner: I am informed that hundreds of varieties have been gathered from all over the world and tested on that farm. But as I said a few moments ago, no variety has been released as being more valuable to the potato growers than those already grown.


Heber Harold Hatfield: The great trouble with the potato growers in New Brunswick and Prince Edward Island is that they have to go to Maine to obtain new varieties. The experimental station there has released five or six new varieties.


James Garfield Gardiner: I understand that they have developed some 56,000 seedlings of different varieties of potatoes. These are being experimented with and developed, but none have been released.


Joseph Henry Harris: I should like to inquire with regard to illustration stations in connection with the fox farming industry, particularly those in New Brunswick, Prince Edward Island and Nova Scotia. There is a decrease of some $8,300 in the item under discussion, but I am informed that the decrease in the services rendered to this industry in the three maritime provinces is really more than that. How many illustration stations in the three maritime provinces have been closed? How many stations were there in Ontario, and how many have been closed? Next, how many stations were operating in Quebec, and how many have been closed? In that regard, I am thinking particularly of the lake St. John area where a considerable industry has grown up. What is the total decrease in the cost of operating illustration stations in the maritime provinces, and what is the amount of the decrease in Ontario and Quebec?
In passing, I may say that the silver fox industry is indebted to the government for their energy in seeing that the market for

these furs in the United States has been enlarged. The United States government has been induced to increase the quota of silver fox furs which may be imported into that country. To my mind this action saved this industry which was fast getting into serious difficulties because of the loss of export markets in Paris and London due to the war and the fact that the United Kingdom is no longer importing such luxuries. I think the minister knows a good deal about this subject, and perhaps he will be kind enough to make a frank statement as to the position of the silver fox industry in Canada. This decrease of $8,300 should be much more when we take into consideration the fact that the department in their wisdom have found it necessary to close illustration stations, particularly in the maritime provinces.


James Garfield Gardiner: The illustration stations related to the fox industry are all in the maritime provinces. There are two in Prince Edward Island: one at Montague and one at O'Leary Station. There are two in Nova Scotia:	one at Bridgetown and one at
Antigonish.


Joseph Henry Harris: Are they closed?


James Garfield Gardiner: No; they are operating.
There are three in New Brunswick: one at Salisbury, one at Chatham and one at Truro. The Truro station has been closed because an air-field has been opened in the vicinity, and it was not found possible to continue to operate a fox experimental station at that point. In connection with the importation of furs into the United States, difficulty was experienced when the war broke out. An arrangement was made with the United States whereby-I am speaking from memory-we were permitted to export about 58,000 pelts to that country, and by arrangement that was increased by about one-third later on, which permitted of the marketing of the greater part of last year's crop to advantage in the United States. If it had not been for the fact that it was necessary this year to reduce expenditures in the department generally, it was the intention of the department to open stations in Quebec and Ontario, and later on to have extended the same activities to the west, where there is a considerable production of fox furs.
As to the cost, the total cost in connection with fur activities is about $8,000 per station. Last year it was about $1,000 more than this year, the reason being largely that buildings were required last year which were not required this year.


Mr. McIVOR:: I do not know as much about farming as some of those who have spoken, but I was brought up under those who knew and practised the rotation of crops.

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There are some things however, which I know well. I know that the government should be commended for changing its policy from big experimental stations to smaller experimental sub-stations. In order to be sure of what was going on in my own constituency, I visited our sub-station last Saturday, and I found that the young man in charge of it was away ahead of any farmer in the district in having his ground ready and a lot of his crop in. I have been told that there are three types of farmer: the intensive farmer, the extensive farmer, and the pretensive farmer, and the purpose of the experimental substation is to eliminate the third class.
I am very glad that our sub-station has been left there, and it should be left there because of the good it does and the effect it has on the young farmers of the community. They are experimenting in fruits and vegetables, in seed and grain and grasses at the substation. I know that you cannot perhaps make much of an impression on the older farmers, who think perhaps they could teach even the specialists something, but the young farmer is quite willing to learn and in this way our sub-station has been making a splendid contribution to the farm life of our community. I hope, therefore, it will be left there for years to come.


Gordon Graydon: Reference was made a moment ago by the hon. member for Qu'Appelle (Mr. Perley) to an interesting and instructive visit that I paid with him to the Indian Head district last summer. I should like to endorse what he has said with regard to the splendid work which is being done both at the Indian Head experimental farm1 and at the forestry station. To one who comes from and has lived all his life in eastern Canada, the type of growth to be found at the forestry station at Indian Head was bound to cause amazement in that the soil could produce such fine types of trees and horticultural products as it actually does.
I was particularly interested also in going north of Indian Head to that part of the country where the chocolate loam, as it is called in that district, is to be found at its very best, and going a little further into the northern part of Saskatchewan I was interested in the fruit and vegetable experiments I found being carried on at Henribourg by a man named Mr. Johns. He has an excellent orchard and market garden located some twenty miles north of Prince Albert, almost in the hinterland of the prairie provinces, and coming as I did from a fruit and vegetable district in Ontario, it was quite a surprise and a great encouragement to me to see the types of fruit and vegetables that he was growing successfully there.
I particularly wanted to draw the minister's attention to this point. In the area north of Tisdale and up toward Nipawin and White Pox, where I spent considerable time on that visit, extensive experiments, perhaps more than experiments because the work is on a commercial basis now, have been carried on in the growing of alfalfa. We in the county of Peel have had some experience in the past in the growing of seed for that particular kind of forage crop, and I was wondering whether the minister could indicate whether any experiments have been carried on in recent years in connection with the growing of alfalfa. The experience of so many of our farmers, including our experience on our own farm some years ago, was that, while for a number of years there would be excellent seed, over a considerable period of time there would be great difficulty in getting any abundant kind of yield at all, and no one seemed to know whether that was owing to the climate, or the variety of seed used, or whether the soil had become impoverished by a succession of crops. I do not think that during the sessions I have been here the question has come up of what experiments have been carried on with regard to alfalfa. While in the west in the area around White Pox and Nipawin they were having considerable	success	in growing
alfalfa, could the minister inform the committee whether there is any assurance that the same misfortune will not befall the growers in that territory as has befallen the alfalfa growers from time to time in some parts of Ontario?


James Garfield Gardiner: There is a certain
section in the northeastern corner of Saskatchewan, in the White Fox country and that vicinity, where alfalfa seed has been grown in considerable quantities. It is shipped out of that area, much of it going to the United States. They have cooperative organizations for handling the seed, and they have been shipping it out for the last two or three years. I understand that they did have some difficulty with the seed this year. Whether it was because the ground has been overly cropped, or what the real cause of the difficulty was, has not been established. It may be just some weather condition which prevailed this year. Practically all the experimental work with alfalfa that is being carried on in the west is being carried on at Saskatoon. This department operates the forage crop production at the Saskatchewan university farm and carries on experiments there in relation to alfalfa.
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I am quite sure that the hon. member for Peel will know of some of the difficulties which have been experienced with alfalfa in his own area. I am informed by the officials of the department that there are many things that have yet to be discovered with regard to the growing of alfalfa. It seems that there are difficulties which develop in relation to the soil. Probably there is taken out of the soil some food that is necessary to the plant, or some peculiar weather conditions may prevail from time to time which affect the production of alfalfa both as a forage crop and for seed purposes. Alfalfa has not been grown sufficiently long in that area for us to have established any definite principles in connection with any of the difficulties that are being experienced. This year, when there is quite an extensive use of grass seeds and probably will be a more extensive use towards the fall of the year as a result of the policy being followed, it is hoped that there will be a greater production of seed than there was a year ago.


Gordon Graydon: Do they use the same
type of seed in the White Fox area as here? Is it Grimm's or another Ontario variety which they are using?


James Garfield Gardiner: The variety is a little
different from what is used in the east. They are growing the Ladak variety there.


Mr. WRIGHT:: Has the department given consideration to the establishment of an experimental farm in that area to experiment more particularly with alfalfa? I hope that consideration will be given to establishing a station there, because a large number of settlers are entirely dependent upon alfalfa for their cash crop, and during the last two years the seed has failed in that area. This is thought to be largely due to weather conditions, but there may be other conditions which are not fully understood at the present time, and the establishment of an experimental farm or experimental plot in that area for the development of alfalfa would be helpful.


James Garfield Gardiner: There is an illustration station or an experimental station at White Fox, and the experiments being carried on there are related to the soil and to fertilizers which might 'be used to replenish the soil. At present, investigations are being carried on with the idea of establishing two more stations in the area in which the alfalfa seed is grown, the view of the department being that we should try to determine as soon as possible whether it is a soil condition or a weather condition which affected production of seed there in the past year.


Joseph Henry Harris: I am anxious not to interrupt the discussion on alfalfa, because I realize that it means a great deal more to Canada's economy than the silver fox fur industry. At the same time I should like to complete, as soon as possible, the discussion on the silver fox fur industry. It had its origin, as we all know, in Prince Edward Island, for the reason that that province is surrounded by water; and in the early days, when they first brought silver foxes from the Klondike area during the gold rush, and started the industry in Prince Edward Island, they had the idea, perhaps, that the foxes could not escape from the island. Now, inasmuch as the hon. members for the island do not seem to have escaped from it and reached the House of Commons to say a word on behalf of this $5,000,000 export industry of Canada, which is largely centred in Prince Edward Island, perhaps some of us who are landlubbers from towns in Ontario may be permitted to say something on behalf of the industry. The chocolate soil of Indian Head is, as the hon. member for Peel said, of great importance in the cultivation of alfalfa, but I thought that the red soil of Prince Edward Island, which harbours the great silver fox industry, should receive some mention. I have, therefore, a pointed question to ask, but before asking it I will lay a basis for the thought I have in my mind.
Norway, a large exporter of silver fox furs of high quality, amounting to several hundred thousand pelts a year, to that important market, the United States of America, has been cut off from contact with the New York and Boston markets. There has arisen, therefore, a great opportunity for Canada to produce more high-class silver fox furs for export to the various markets of the United States. But the government of the United States, in their wisdom-and I make no complaint- although they had signed an agreement which some people are wont to call a reciprocity agreement, in which the item of pelts of silver foxes is mentioned, demanded that Canada should be a party to a quota arrangement, as against the world, of 100,000 skins, our quota to be 58,300 pelts. Canada's normal export surplus of these pelts is well over a hundred thousand. This restriction immediately paralyzed the trade in Canada, to the detriment of silver fox pelt producers, particularly in the maritime provinces, and especially our friends in Prince Edward Island, with the result that there occurred a collapse in the market in that commodity. At that time Norway was still operating as an independent state. She was not, as she is to-day, in the hands of the hun, and she still found a market for her surplus pelts in New York and Boston.

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Even though this administration was party to an agreement which had been-I hesitate to use the word "violated"-interfered with by our friends in the United States in putting a quota on this industry; even though the industry found itself paralyzed by the export restriction I have mentioned, it took a long while and many meetings of the industry, not only in Charlottetown, but in New Brunswick, Nova Scotia, Ontario and Quebec, to wake up this administration to its responsibility for making representations to Washington that silver fox pelts were part and parcel of the agreement between Canada and the United States, and that no quota or restriction upon exports of those pelts should have been imposed. Realizing the position-and for this we in Canada were very thankful-the United States did to a degree, as the minister indicated in his previous remarks, moderate the restriction by permitting the import from Canada of an enlarged quota to the number of about 20,000 extra pelts. That relieved the position of the producers of silver fox fur pelts, in that it enabled them to remain solvent, but it did not improve the situation to nearly the extent that Canada would have liked.
Therefore the purpose of my remarks is. along this line. The minister will have an [DOT]opportunity of sitting in at further conferences when this matter is under discussion. Let him not be satisfied with the raising of the quota from 58,300 to 78,000-I thought it was more-but why not interpret the Canada-United States agreement in the manner in which it was presented to this house, namely, that we in Canada, by which I mean the silver fox fur farmers of Prince Edward Island-who are naturally the most important element in the industry-of New Brunswick, Nova Scotia, Ontario and Quebec, should have more or less free access to the United States market, so that the industry shall be developed to the utmost possible degree.
I am sorry to have to take up the time of the committee, but this is a Canadian industry. It is here. The Norwegian industry is gone for the present, and so is the Swedish industry. We in Canada have lost our market in London for the time being, but there is a vast potential market in the United States, particularly in the two centres I have mentioned, and it is a grand opportunity for us Canadians to gather a few United States dollars. I would ask the minister to use his good offices, even though this is a luxury industry, to see to it that our quota is increased, or that this restriction is removed altogether so that we may have trade [DOT]of that kind which we thought we should have 14873-177
when, with a blare of trumpets and loud noise from the other side, we heard the welkin ring for the passage of the Canada-United States agreement, in which was included this particular item, an item which in the course of the next twenty-four months found itself on the quota basis. I merely mention this so that the minister, when he sits round the table, will have in his mind those ideas that will help the industry. I would ask him to consider the matter carefully from the point of view of the quota which has been imposed and the necessity which the minister says he has been put under of cutting down illustration stations. That will have a tendency to slow down this particular industry. I hope it will not be done, but that will be the tendency. I trust we shall be able to maintain in Canada an exportable surplus of this commodity, which would help us to a very great extent to bring in those much-wanted United States dollars.
Let me ask the minister most pointedly this question. What is the annual cost of personnel? Has he found it necessary to dismiss people in order to reach his objective? I have no objection to the closing of these illustration stations at all, so long as the industry is maintained, first, for the purpose of giving a living to those people who are producing a product and, second, for the purpose of providing for Canada a flow of United States dollars which we so greatly need at the present time. Perhaps the minister's deputies could tell him whether the station at Summerside is definitely closed, and the personnel that have been dismissed. If the station has not been closed, what is it doing at the present time?


James Garfield Gardiner: There is only one man overseeing the different stations that are there. There are a number of men at the laboratories; there were five and there are now four. There was one man who passed away recently, and it may be necessary to close up another station on that account, but only one station out of the eight is closed, and that was the Truro station in Nova Scotia on account of the opening of an air field there.
In connection with the setting of the quota on pelts going to the United States, it is true that the Americans imposed quotas shortly after the war started. The reason for that was largely the fact that, when the war did start, the market which had existed in Great Britain, and which was really the world market for such furs, was closed or practically closed for the type of trade that had been carried on before. It was feared in the United States that this would result in dumping practically all the furs from the Scandinavian countries and Russia into the United States, which furs

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had originally gone to the British market. The United States, therefore, in self-protection put on quotas applicable to all countries, and they gave to Canada what looked like a fairly liberal quota. When it was found insufficient to take care of the production of that year, the United States increased it, and I believe I am speaking correctly when I say that the quota we have with the United States has fairly well taken care of surplus production of furs from Canada. There are some of the lower grades that are not admitted into the United States under the quota to the extent we would desire.
We must remember that the Americans are producing furs from their own fur farms, and I understand that most of these farms were provided with their breeding stock from Canada and Norway. The ordinary run of silver fox breeding stock came largely from Canada. In Norway they had developed a specialty line. Persons who buy furs for considerable amounts of money, the people who could afford such luxuries, had become more or less tired of seeing everyone with a silver fox fur. and in Norway the producers developed special types. In the constituency of the hon. member for Qu'Appelle there is the breeder in Canada who perhaps has been most successful in producing types very similar to those produced by the Norwegians, and these types-the platinum fox-are being shipped to the United States from that particular fox farm as breeding stock.
The experience is that fox farms in Canada, as was indicated by the hon. member for Danforth, developed largely from Prince Edward Island and this particular producer, Mr. McNeill, who is located south of Qu'Appelle valley, is a native of Prince Edward Island, who started breeding foxes originally brought from that province. They were taken to Saskatchewan, and he is now producing foxes selling as high as or higher than other foxes bred in Canada at present, and shipping them into the United States as breeding stock. There are, therefore,, two sides to the story. There is the fact that we are producing stock in Canada and shipping to the United States, and there is the fact that they are developing there an industry which is supplying a considerable part of their own market and are putting on quotas not only to protect themselves but partly to protect us. They discussed the matter with us and agreed to what looked like a fairly liberal quota for Canada. Associated with the arrangements for quotas in connection with silver and other foxes are the quotas we have with the Americans in connection with live stock and other farm products. For example, about the same time we asked them to permit our control of
(Mr. Gardiner.]
importation of hogs into this country. We have a quota on the export of cattle to their country. These arrangements were all made about the same time and for similar reasons.


Joseph Henry Harris: Does the minister say that the matter of quota was discussed at the time they put the restrictions on? Was it not rather after that time?


James Garfield Gardiner: No; my memory is that it was discussed with Canada before their quotas were actually put on or while they were being put on; it was a matter of discussion between the Canadian and United States governments. Later, there were further discussions in order that we might receive a higher quota.


Joseph Henry Harris: If they discussed them at the time, why did they change it to 5S,300 and raise it afterwards? That sounds rather-well, I will not pass any opinion.


James Garfield Gardiner: It was raised the following year.


Joseph Henry Harris: After our friends in the United States had put the quota on, we woke up to the fact that we were without sufficient export markets to absorb our surplus. We immediately got busy, and they in their generosity raised the quota. For the minister to say they discussed it with us prior to putting on the quota, to my mind needs explanation. That applies not only as far as the silver fox fur industry is concerned, but as far as all other industry is concerned.


George Alexander Cruickshank: In view of the fact that, according to the press, we may any day have an epidemic of parrot disease, I should like some information in connection with this experimental work, particularly because I wish to increase the flow of United States dollars to this country. Have the minister and his department given consideration to the increase in the production of 'white rats for experimental purposes?


Mark Cecil Senn: I have often wondered about the distribution of these illustration stations throughout Canada. I have here the report for 1940 which shows that there are some 235 illustration stations, and as I recall, district sub-stations. I find that in Saskatchewan there are fifty-one; in Quebec, fifty-five, while in Ontario, which of course I believe is the banner province of the dominion, we have only some eighteen. I am wondering how that peculiar distribution has come about. In addition, I find that Saskatchewan has nine experimental farms; Quebec, seven; while Ontario has only two. What is the deciding

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factor as to where these illustration stations are to be placed? Surely it cannot be that the farmers of one district are superior to those of another.


James Garfield Gardiner: So far as Ontario is
concerned, there has not been any considerable demand for experimental stations. I understand that some, even of those that were established, were later closed because there was not any particular desire to have them. I am not in a position to state just why that is, probably it is due to different causes. In Quebec there has been more demand for them. So far as Saskatchewan, and western Canada generally are concerned, most experimental stations there are related to the effort which was made a few years ago by the government that preceded this government to fight the drought problem in the southern part of the prairies. We followed along with the same policy and have maintained most of the stations that were established and have established some others. The number there is higher than in other parts of Canada largely because of the experiments carried on in connection with that and soil drifting and the different kinds of grasses and crops which can be grown in a drought area.


Heber Harold Hatfield: During the last eight years at Fredericton the department has experimented with thousands of varieties of potatoes, but in that time has never released one variety. During the same time, across the border at the little experimental station at Presque Isle in Maine they have released four new varieties. One of those new varieties represents fifty per cent of the planting of potatoes in Nova Scotia and New Brunswick to-day, and this last week we have been sending thousands of dollars of foreign exchange out of the maritime provinces to get these new varieties from Maine. They have done a wonderful job at Fredericton; one of the best experts in America is there, but what is the good of keeping on experimenting if you do not release these potatoes to the growers?


James Garfield Gardiner: The station in Maine is an old station established many years ago. It is true they have developed the varieties which are being grown most extensively in all that section of America, including the maritime provinces. Much of the work which is being done at the station at Fredericton is associated with the fighting of disease in potatoes, while other work is being carried on of the nature discussed earlier this evening for the production of new varieties. While no new varieties have been released from that 14873-1771
station, much of the work that is being done there has, as I say, to do with the fighting of
disease in potatoes.


Heber Harold Hatfield: My question was why some new varieties have not been released from Fredericton station. They have produced some wonderful varieties there; I have seen them, but they have never released any. What is the good of spending money in experimenting with new varieties if you do not release them to the farmers? In many of these stations throughout Canada the knowledge gained by experimenting is not given out to the farmers, so what is the good of experimenting?


James Garfield Gardiner: The production of new varieties of potatoes is an experiment that is very similar to the production of new varieties of tomatoes. It is a breeding process and extends over many years. It is cross-breeding of different varieties and different types. That must go on for a considerable length of time before a new variety can be stabilized to the extent that it can be distributed to the public. A question was asked earlier this evening which well illustrates the point: Two years ago we put out a tomato before it should have been put out; it was not properly stabilized. The result was that while there were some very good tomatoes growing in the field, there were just as many that were not good. Other plants are the same, including the potato; they must be stabilized; they must be grown and selected and regrown until that plant is established to the point where it will produce the same type again and again no matter how often it is planted. That takes considerable time, four years is not enough time to establish a new type of potato.


Heber Harold Hatfield: Four years seems to be enough in Maine. Four years ago the government started experiments with some 3,000 varieties of wild potato, and now they have got it down to about four varieties that the man at Fredericton contended were good varieties, but still they have never been released.


William Earl Rowe: Has any further consideration been given to an insect that is threatening crops in several sections of old Ontario, I think it is called the nematode? I was assured by the department at least a couple of years ago that attention would be given to this insect. Many sections of Ontario have been ravaged by it. Has any action been taken by the department to protect the spring crops of old Ontario from this menace?


James Garfield Gardiner: I am not very well informed with regard to the activities of this particular insect, but I understand it operates
Supply-Agriculture

in the soil, and attacks the roots of cereal and other crops. My information is that the only means discovered for dealing with it to advantage is by the rotation of crops. It can be dealt with by rotating crops, and by cultivating	carefully.	I	am,	however, notsufficiently	informed	to	give	any further
information.


William Earl Rowe: A large section of my riding has been seriously affected by this worm. Many farmers have practically lost their farms on account	of it. It	affects the	spring cropsof barley and oats,	and	they	turn yellow.
As the minister has said, the worm attacks the roots. Would he give some consideration to bonusing these farmers to produce wheat and hay-by rotating, which seems to be the only cure for the nematode-in view of the fact that he is bonusing, in the production of barley and oats, the western farmers who are in competition with the eastern farmers, who are contending with the nematode.


Mr. McNEVIN:: Have the experimental farms conducted experiments with regard to the destruction of weeds by spraying with chemicals? If so, what progress has been made?


James Garfield Gardiner: Experimental work is being done on several farms. The substance most generally used is sodium chlorate. It is used not only in Canada but in other countries, and there is a great demand for it. As a matter of fact, there is a considerable shortage. It has been found the different chemicals are used most successfully on plants with fleshy leaves.. On other plants it does not operate so successfully. The cost of operation is sufficiently high to make it most difficult to apply it in an extensive way in farm operations. Probably it can be used to good advantage on lawns, gardens and other limited areas, but it is too expensive to apply on large areas.


Thomas Bruce McNevin: I realize that the supplies of this material are limited and the cost is high. I do not know whether a change has taken place, but I believe there is a substantial duty on the importation of this chemical. Is that a fact?


James Garfield Gardiner: No. I am informed that sodium chlorate is produced in Canada in considerable volume. There is a demand for it from other countries, but we are still using a considerable part of it here.


Percy Ellis Wright: How is the information gained at illustration stations given to the public? Is it given in printed form or through the annual field days held at the stations?


James Garfield Gardiner: The information is given to the public through the use of field days.

People in communities are invited to attend, and officials of the department go to those stations and explain the results of different experiments. The plots are, however, always open to the public, so that it is at all times possible for any one to see what developments are taking place from time to time. Field days, plus the visits of individuals to plots, and explanations given by individuals in charge of farms are the methods used.


Percy Ellis Wright: Can one obtain in printed form the results of experiments at experimental stations?


James Garfield Gardiner: Information is put out to a great extent through press articles published in local papers.


[Stage Direction]
Item agreed to.
lJf. Production service. Production service administration, $35,560.
Alexander Malcolm Nicholson: It is now eleven o'clock.


An hon. MEMBER:: Not quite.


James Garfield Gardiner: At the beginning of
the discussion I agreed that when we reached the item for production service administration, we would continue the discussion with regard to wheat acreage reduction. Since it is almost eleven o'clock, I believe we might continue that discussion when we resume consideration of the estimates.
Item stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, May 14, 1941.