1941-04-08

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


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, on March 5 I made a brief statement on the situation in the Balkans as it affected citizens of certain of the Balkan countries. Upon instructions

The Late Loring Christie
from the government of the United Kingdom, his majesty's minister at Budapest has broken off diplomatic relations with Hungary. By reason of this action it is necessary for me to make a further statement.
There is no Canadian diplomatic mission in Hungary, and there are no Canadian government offices of any sort within that country. There has therefore been no occasion for any action by the Canadian government with a view to recalling Canadian government officials from Hungary. There are, however, two Hungarian consulates in Canada, and action is being taken with regard to them.
The breaking off of diplomatic relations does not necessarily bring about a state of war. On the other hand, it was not possible, even at an earlier stage, to overlook the fact that Hungary was contiguous to territory under German domination, and that Hungary's alignment with the axis, and the according to the enemy of privileges with regard to troop movements and like matters, was not consistent with neutrality. Hungary accordingly was made proscribed territory, and transactions with that country were subjected to the regime of the trading with the enemy regulations. These measures were precautionary, and consistent with the continuation of diplomatic relations. No steps were taken, however, to interfere in any way with the maintenance by the Hungarian government of its consulates within this country.
The action of the Hungarian government in enabling the enemy to use Hungarian territory as a basis for unprovoked and unwarranted aggression against Yugoslavia, as well as the action of the government of the United Kingdom in breaking off diplomatic relations, make it necessary to reconsider the position of the consulates. Arrangements therefore are already in progress to provide for the immediate withdrawal from this country of the Hungarian consulates, both at Montreal and at Winnipeg.
The position of Hungarians within this country is similar to that of Roumanians and Bulgarians. They are not, for the time being, being treated as enemy nationals, and, technically, a state of war does not exist with any of these countries. The overwhelming majority of the Hungarians in this country, including both Hungarian nationals and those who have become naturalized, are loyal and law-abiding citizens. They will not be disturbed so long as their conduct conforms to our laws and is consistent with the allegiance which, under the laws of Canada, is due from all residents, irrespective of their national status or racial origin.



THE LATE LORING CHRISTIE


William Lyon Mackenzie King: It is with deep regret that I inform the house of the death in New York, this morning, of Mr. Loring C. Christie. Hon. members may recall that, on February 17, I stated that the condition of Mr. Christie's health would necessitate a prolonged absence from his post as Canadian minister at Washington. At that time it was our earnest hope that a period of rest and relief from the duties and anxieties of his office would result in the restoration of his health. Unhappily that hope has not been realized.
In the passing of Mr. Christie, Canada has lost an exceedingly able and devoted public servant whose influence made itself felt in the shaping of national affairs and international relations during two very critical phases of our history. Mr. Christie was an adviser of the late Sir Robert Borden on questions of imperial and international relations throughout the last war, and at the peace conference at Paris in 1919. During the latter part of the conference on the limitation of armaments, which met at Washington in 1921-22, Mr. Christie acted as secretary-general of the British empire delegation.
In 1923, Mr. Christie resigned as legal adviser of the Department of External Affairs to form a business association. He returned to the public service in 1935. In the four years which preceded the outbreak of the present war, he served as counsellor in our Department of External Affairs where his extensive and intimate knowledge of constitutional and international law, his wide experience of international affairs, and his sound judgment were invaluable. In September, 1939, he was appointed Canadian minister to the United States. In that position he continued to render services of great value to Canada.
In Mr Christie's death, the diplomatic service of Canada has lost one who had contributed largely to its development, and whose premature passing will be felt as a great loss not only in Canada, but also in the United Kingdom and in the United States.


Hon. R. B. HANSON (Leader of the Opposition):: Mr. Speaker, .on behalf of the Conservative party and on my own behalf, I wish most sincerely to join in the eloquent tribute paid by the Prime Minister (Mr. Mackenzie King) to the memory of Loring Christie and in the sympathy to be conveyed to his widow and his son on his untimely passing.
Canadian Army-Enlistment

Through his training, his association and his wide experience, Loring Christie had obtained a knowledge of constitutional and international matters possessed by very few. His unquestioned ability usefully to employ that knowledge in the service of his country was well recognized. During the peace conference, in the capacity of technical adviser to the Canadian delegation, he came to be regarded in the same light as his intimate friend, Philip Kerr, the invaluable assistant to Lloyd George at that time. References to Mr. Christie as a highly efficient public servant and as a beloved companion are frequent and numerous throughout the pages of the Memoirs of Sir Robert Borden, whom he served so well It was a matter of sincere regret to those who appreciated well his qualifications that, for a time, the continuity of his public service was interrupted.
Our country has reason to regret the passing of so able and distinguished a Canadian.


Hon. J. L. RALSTON (Minister of National Defence):: May I be permitted to say just one word with regard to the passing of my friend Loring Christie. I am speaking not as a member of the government but as a fellow citizen of a boy whom I knew in my own home town. He was a schoolmate and boyhood friend, one whom I admired and whose companionship I cherished during very many years. I know that his home town of Amherst will be in mourning to-day over the passing of one whom we regarded as an illustrious son. I want to join in with what has been said in expressing the deepest sympathy with those who have been bereaved through his untimely passing.


Mr. P. C. BLACK (Cumberland):: May I be allowed, on behalf of the late Mr. Christie's family and his friends, in my home town and that of the Minister of National Defence (Mr. Ralston), to express my thanks to the Prime Minister (Mr. Mackenzie King) and to the Leader of the Opposition (Mr. Hanson) for their kindly references to Mr. Christie. Mr. Christie came of the best blood in the mari-times. He had energy, ambition, and industry. He associated with the ablest and most outstanding men in this country, in Great Britain, and in the United States. His death is a very great loss to Canada and to British people everywhere.



CANADIAN ARMY


[Stage Direction]
On the orders of the day:
James Layton Ralston: Some time ago, when the war
appropriation bill was under discussion in committee, I made a statement with regard to

the methods of enlistment, and I indicated at that time that I might take the opportunity to make a further statement. After that developed, questions were asked, and it seemed to me that the matter had been pretty carefully gone into and that a further statement was not necessary. I rise now only because of the fact that hon. members are going home for the Easter holiday and there was a report in the morning press with regard to a new plan respecting the integration of reserve and active units. I thought it might be due to the house and interesting to hon. members if I said just a word with regard to that matter and with regard to methods of enlistment.
The idea which seems to be abroad, that men are not needed for the army, is quite wrong. The fact that there has been so little pressure has helped, perhaps, to create that impression. As a matter of fact we have been enlisting an average of about 5,000 per month for the first three months of this year, and it is probable that between 5,000 and 6,000 will be needed each month under present conditions for the active army, to fill up and keep filled up and to reinforce the active units overseas and in Canada. The call has gone out for this month's quota. There will be room in practically every district for enlistment for all arms of the service. We look primarily to the reserve units to supply these men as their first duty. They can do their bit in no better way just now than in doing that, and it puts their training to practical use. Men not in the reserve units can enlist direct in the active army. All they have to do, as hon. members know, is to see or write to any recruiting officer.
Now I come to the plan. In connection with reserve units, we are endeavouring to see that local association is preserved, so that, as far as the needs of the service permit, men on active service will be with units from their own territory. In order to help obtain that objective a new plan has been worked out for "matching up", if I may use that expression, each unit of the reserve army with some unit of the active army from that same territory. That, we think, will help to foster the spirit of provincial and local pride and comradeship. We are thus trying to create a link between a reserve unit and an active unit so that the reserve unit in sending forward volunteers can feel that it has an associated unit as their definite destination. In this way, as hon. members will realize, the reserve unit will not have just the responsibility for furnishing reinforcements but it will have the credit and satisfaction of reinforcing its affiliated unit which represents it in the active army.

Business oj the House-Procedure


Richard Burpee Hanson: I should like to compliment the minister on that statement, especially as regards the building up of an esprit de corps between the active units and those which are reinforcing them. May I ask the minister if this is the total announcement with respect to recruiting? I had heard that we were to have this policy announced over the radio to-night and I thank the minister for not doing it in that way. But is this the whole policy?


James Layton Ralston: This is the whole policy. As a matter of fact, over the radio to-night, what I proposed to do was to outline generally what I had already outlined to the house with regard to the primary duty of reserve units and the method whereby men could enlist either as members thereof or as men who were not members of reserve units. I also intended to refer to the plan to which reference has been made to-day. The only thing that will be new in connection with anything that is said in the broadcast will be with respect to the plan for affiliation or integration of the reserves.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: Hon. gentlemen will remember the discussion that took place yesterday before we went into committee on the special estimate of $35,000,000. I rise now not for the purpose of complaining but to ask that the position be regularized as soon as possible. In the Votes and Proceedings of April 7, referring to the amendment of the hon. member for Haldimand (Mr. Senn) there is the statement:
Thereupon Mr. Senn withdrew his amendment.
The amendment was then withdrawn, and the question being put on the main motion, it was agreed to.
That is not what occurred. I am not going to traverse the whole ground. It was to meet the convenience of the government and especially the Minister of Agriculture (Mr. Gardiner), to get on with his estimate of $35,000,000 for wheat, that we agreed in a way to postpone discussion of the Senn amendment, so called, to the motion to go into supply. But no one, I think, will take it from the discussion that is found in Hansard of yesterday that the Senn amendment was to be dropped and had to be revived. Now I understand the position is, having regard to the record, that the Senn amendment is
gone unless revived, and it cannot be revived according to the rules until the next motion to go into supply-and no one knows when that may be.
I am sure the Prime Minister never intended anything like that. I certainly never did, and I should like to ask that, by unanimous consent, irrespective of the rules, we put the position where we thought it was going to be and that it be done now if it can be done.


William Lyon Mackenzie King: If the simplest way to
get the amendment back where it ought to be is to move that the house resolve itself into committee of supply at once, I shall be glad to move accordingly.


Richard Burpee Hanson: That
would be all right.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Right Hon. ERNEST LAPOINTE (Minister of Justice):: A few weeks ago, when the
estimates of the Royal Canadian Mounted Police were being discussed, members on all sides of the house strongly urged an increase in pay for members of the force. I have much pleasure in informing the house that the government has now decided to grant an increase in pay for the force from April 1, 1941. In broad outline, the increases are as follows:
Constables and corporals, 50 cents per diem.
Staff sergeants and sergeants, 75 cents per diem.
All officers below the rank of assistant commissioner, approximately $1.25 per diem.
Two junior assistant commissioners will receive an increase of little less than $1 per diem.
All other assistant commissioners and officers above that rank will not benefit by the increases.
The exact details of the increases will be set forth in the order in council, but the general situation is what I have already given. I am sure the house will be pleased.



THE MEMBER FOR KOOTENAY WEST


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: My colleague the Minister of Finance (Mr. Ilsley) has a rather long statement to make, but before he does so I should like to say a word which will be very brief but which I am sure will meet with general approval. When I came into the
Excess Profits Tax

house this afternoon I was greatly pleased, as I am sure every hon. member was, to see the member for Kootenay West (Mr. Esling), who is one of the oldest and best loved members of the house, again in his seat in this chamber. As hon. members are aware, our friend has suffered a rather serious illness. We are delighted to see him back looking hale and hearty, and I can say with all sincerity that we all hope he will so continue for a long time to come.



EXCESS PROFITS TAX


[Stage Direction]
On the orders of the day:
Hon. J. L. ILSLEY (Minister of Finance):: On Thursday of last week, when I announced that the budget would not be brought down until after the Easter recess, I indicated that before the house rose I would wish to make a statement in regard to certain amendments which we intend to recommend in connection with the excess profits tax.
The proposed amendments I refer to are those which will have retroactive effect for the past year. The reason which leads me to outline them now is to remove uncertainties which would otherwise exist in connection with the returns which will have to be filed and taxes that will have to be paid at the end of this month. Hon. members will, I am sure, appreciate that the present situation justifies this departure from the usual practice of not revealing tax changes in advance of the budget itself.
The house will recall that in the debates on fiscal matters last December, I announced that the government was willing to give careful study to any proposed changes which would tend to remove inequalities or extreme hardships which might arise under the Excess Profits Tax Act as it now stands, although at the same time I emphasized that the main principles of the act would be retained. That announcement has quite naturally given rise to some uncertainty in the business world regarding the permanence of several provisions in the present law. Particularly, in the case of depressed industries, taxpayers are apparently finding it difficult to file their returns for the past year with any assurance that they are complying fully with the legislation as it will be applied.
An announcement at this time will remove these uncertainties and enable taxpayers to proceed with the work of preparing tax statements and filing returns, the great bulk of which are due on April 30. Delay until the budget would merely aggravate the situation and would mean a great deal of unnecessary

work for taxpayers who otherwise might have to revise their returns at a later date. I wish to emphasize that the changes with which we are here concerned are not essentially revenue matters but are rather in the nature of improvements in the structure of the legislation for the purpose of removing inequities and anomalies. They will also greatly simplify and expedite administration. They do not, however, mean that any general relief from the weight of the excess profits tax is being offered. The main principles of the legislation are to be maintained intact, and will continue to operate with their original severity on those who would otherwise make exceptional profits as a result of war-time conditions.
In the budget speech of September, 1939, when I introduced the original excess profits tax legislation I expressed the opinion that it is extremely difficult to frame a law in this field which will achieve its main purpose without causing certain inequalities and hardship in certain cases. Subsequent experience has confirmed this opinion. During the past year much study has been given to the problems involved, and several officials of my department as well as of the Department of National Revenue have devoted a great deal of their time to hearing representations and examining specific cases where the present act would undoubtedly work a real hardship. It has been a relatively easy matter in many cases to work out an answer "on paper" for some of the problems. Such solutions, however, have to be workable from the point of view of administration. To make legislation of this kind work, and work speedily and with certainty, there must inevitably be a certain amount of compromise as between perfect equity on the one hand, and practicability on the other hand. The proposals I now place before the house have been carefully weighed from these two points of view, and I think they will be accepted on all sides as greatly improving the present legislation. In the paragraphs which follow, I will outline the nature of each proposed amendment, then give an explanation of its purpose and how it will work, and finally suggest a tentative form of amendment which would implement the proposal.
With the consent of the house I shall not read the tentative amendments because it would simply slow up what I wish to say, but I will put them on Hansard.


Richard Burpee Hanson: Could
there be put on at the same time the present law, for comparison? It would be very convenient.

Excess Profits Tax


James Lorimer Ilsley: I had not anticipated doing that. The sections are all referred to. It would be difficult, I think, to arrange them in parallel columns.


Richard Burpee Hanson: That may be good enough.


James Lorimer Ilsley: I wish to add, however, that these tentative arrangements will be subject to further study before the budget is brought down.
The following proposals for amendments to the act are given in the order in which the respective sections are at present found in the act:
1.	Proposal. That the definition of standard period, and also of standard profits, be amended to require the taxpayer to apportion to the four calendar years 1936, 1937, 1938 and 1939 the profits of their corresponding fiscal periods which do not coincide with the calendar year. The apportionment must be on an equal daily basis.
Explanation. Following representations received on the subject of the standard period the government has decided in the interests of the equality of treatment of .taxpayers that the standard period shall in all cases be the profits earned or deemed to have been earned from January 1, 1936, to December 31, 1939, inclusive.
2.	Proposal. That the definition of standard period, and also of standard profits, be amended to allow standard profits to be computed from the time of actual commencement of business rather than from the legal date of commencement of business, the date of actual commencement to be determined by the minister in his discretion in the light of the circumstances of the particular taxpayer
Explanation. It was found in some cases that actual business operations did not commence until a considerable time after the incorporation of the company and it seemed reasonable in determining standard profits that the act should not take this into consideration.
3.	Proposal. That the definition of standard period be amended to give the taxpayer the choice of his three best years if the profits of his fourth standard year were less than fifty per centum of the average of the profits of the other standard years.
In the case of taxpayers who have been in business only three out of the four standard years and the profits of one of the three years were below fifty per centum of the average of the other two years the proposed amendment will allow them to use the profits of the two best years in computing their standard.
Explanation. It is the experience of the department that a considerable number of taxpayers were claiming relief because one of their four standard years was unusually depressed. The provision of the Canadian act which defines the standard period is more severe than that of the British act because it allows no option. Under our act the relief to a taxpayer in such a case can be obtained only by appealing to the board of referees. It became apparent that a speedier and more satisfactory administration could be achieved by allowing taxpayers to choose their three best years if their fourth year or remaining year was so poor that the profits of that year were less than half of the average of the other three years.
The house will observe that this affords some relief in difficult cases but is not a measure which affords relief to the general run of taxpayers for whom the average of the four years is a reasonable standard.
Tentative Amendment. A rewording of paragraph (h) of subsection 1 of section 2 of the act along the following lines would give effect to the above proposals:
2. 1 (h) "standard period" means the period comprising the calendar years one thousand nine hundred and thirty-six to one thousand nine hundred and thirty-nine, both inclusive, including portions of fiscal periods therein, or such years or fiscal periods or portions thereof since January first, one thousand nine hundred and thirty-six, during which the taxpayer was in business;
Provided that where the profits of a taxpayer in any one calendar year were less than fifty per centum of the average of the profits of the other three or two calendar years as the case may be in the standard period the taxpayer may designate as his standard period the remaining three or two most profitable calendar years during the standard period, and
Provided further that if the date of legal commencement precedes the date of actual commencement of business of any taxpayer the date which the minister in his discretion shall fix as the date of actual commencement of business shall be deemed to be the beginning of the standard period of the said taxpayer.
4.	Proposal. That the definition of standard profits be amended by adding thereto a proviso that in no case shall a taxpayer's standard profits be less than five thousand dollars.
Explanation. It has been found that a great many small businesses, particularly unincorporated businesses, are encountering difficulties in computing their capital employed and would experience difficulty in presenting their cases to the board of referees. It is with a view to eliminating the necessity of appearing before the board of referees in such cases and also to provide a fixed standard for cases where the computation of capital is most difficult that the above proposal is made. Such a provision will greatly reduce the applications from this class of taxpayer to the board of referees. The aggregate amount of revenue involved is of minor importance.
Excess Profits Tax

Tentative Amendment. A rewording of paragraph (i) of subsection 1 of section 2 of the act along the following lines would give effect to this proposal as well as complementing the amendments to paragraph (h) required by proposals (1) and (2) above:
2. 1 (i) "standard profits" means the average yearly profits derived by a taxpayer in the standard period, or deemed by the minister to have been derived by the taxpayer in the portions of his fiscal periods that are within the standard period, profits being deemed to accrue on an equal daily basis, in carrying on the same general class of business as the business producing the profits in the year of taxation, or the standard profits as determined in accordance with section 5 of this act:
Provided, however, that losses incurred by the taxpayer during the standard period shall not be deducted from the profits in the standard period but the years when such losses were incurred or deemed to have been incurred shall nevertheless be counted in determining the average yearly profits during the said standard period, and
Provided further that in no case shall a taxpayer's standard profits be deemed to be less than five thousand dollars.
5.	Proposal. That the adjustment to standard profits by reference to any increase or decrease in depreciation allowances or other charges as provided by paragraph (d) of subsection 1 of section 4 be repealed.
Explanation. In view of the difficulty which has been encountered in attempting to define the sort of charges in respect of which adjustments in standard profits might properly be allowed it has been decided to repeal this provision entirely. Actually the adjustments possible under the present provisions of the act, if followed to their logical conclusion, would mean a complete equalization of the profits in the taxation period as compared with the standard profits. In the absence of the present provision extraordinary cases of hardship may be relieved by means of an order in council under the Consolidated Revenue and Audit Act.
6.	Proposal. That the adjustment to standard profits by reference to increases or decreases in capital be amended to provide for an adjustment at a fixed rate of seven and one-half per centum on the capital change, with the proviso that if new capital to the extent of thirty-three and one-third per centum has been added since the standard period the taxpayer will have the option of being considered a new business.
Explanation. The reason for this changed method of giving credit for new capital, or reducing standard profits in the case of withdrawal of capital, is to simplify the procedure in determining tax liability, both from the point of view of the taxpayers and the government. It has been ascertained that taxpayers
TMr. Ilsley.l
are finding great difficulty in computing their proper tax under the present provision of the act, in cases where there have been material changes in the capital employed. The present method requires the computation of the average capital employed during the standard period in the case of all taxpayers who have made a change in their capital since the standard period. By altering the method of adjustment, delays and uncertainty are eliminated, and the amount of work in determining tax liability is greatly reduced.
A possible hardship is avoided by the proviso that if new capital to the extent of thirty-three and one-third per centum, or more, is added since the standard period the business may apply to the board of referees on the basis of being deemed a new business.
Tentative Amendment. A rewording of paragraph (b) of subsection 1 of section 4, along the following lines, would give effect to these changes:
4. 1 (b) (i) adjust the standard profits, by reference to any increase or decrease in capital contributed or withdrawn since the commencement of the last year or fiscal period of the taxpayer in the standard period, by adding to or deducting from the standard profits an amount equal to seven and one-half per centum of the said change in capital;
Provided that if new capital to the extent of thirty-three and one-third per centum of the capital employed at the commencement of the last year or fiscal period of the taxpayer in the standard period has been so contributed the taxpayer may apply under section five hereof to have his standard profits determined by the board of referees as if he were carrying on a new business. .
(ii) adjust the standard profits by reference to any increase in capital employed during the standard period by adding to the profits of the standard years when such new capital was not employed an amount equal to seven and one-half per centum of the said new capital, and further, adjust the standard profits by reference to any decrease in capital employed during the standard period accompanied by a withdrawal of capital, and in the case of corporations, by a reduction of capital stock, by deducting from the standard years when the withdrawn capital was not present, an amount equal to seven and one-half per centum of the said withdrawn capital.
7.	Further Explanation. In addition to the above amendment, the proposal outlined in (6) above would require to be implemented by a rewording of the provision in section 5 of the act whereby new businesses may apply to the board of referees. This rewording, which in the amended statute would be called subsection 2 of section 5 would be on the following lines:
Tentative Amendment.
s. 5, ss (2). If on the application of a taxpayer the minister is satisfied that the business of the taxpayer was not in operation prior to January first, one thousand nine hundred and

Excess Profits Tax
thirty-eight, or that a change in capital to the extent of thirty-three and one-third per centum as provided for in paragraph (b) (i) of subsection 1 of section 4 of the act has occurred he may direct that the standard profits shall be ascertained by the board at such an amount as they think just. The standard profits shall be ascertained by the board in its sole discretion at an amount which represents a rate of return on capital employed by the taxpayer in the taxation year determined by the board in its sole discretion which is equal to the average rate of return during the standard period of taxpayers in similar circumstances engaged in the same or an analogous class of business.
8.	Proposal. That the procedure for a depressed business applying to have its standard profits determined by the board of referees on a capital-standard basis be altered so that the taxpayer may file his return and pay his tax on the basis of a standard profits computed by the taxpayer himself, at a percentage on capital which he deems fair and reasonable but being not more than ten per centum on "capital employed," as defined in the act, with the right of the minister to refer any case to the board of referees to have the standard profits finally determined by that body.
Explanation. The reason for this change is that some procedure is necessary to enable taxpayers to make a preliminary computation of their tax and pay on that basis. The onus will be on the department of sending to the board of referees those cases where the taxpayer has estimated his standard profits at too high a figure even though it is within the limit of 10 per cent of capital employed. Thus the depressed taxpayers will no longer wait until their cases have been heard by the board before estimating and paying their tax. The result will be greater certainty among the taxpayers and a much earlier and more orderly receipt of revenue by the government. In addition, instead of every depressed case going to the board of referees it is believed that the department will be in a position to send only typical cases.
Tentative Amendment. A rewording of section 5, repealing the present subsections 1 and 2 and substituting a subsection along the following lines would provide for this change:
5. (1) If the taxpayer is satisfied that his standard profits were so low that it would not be just to ascertain his excess profits with reference thereto, because either the business is of a class which during the standard period was depressed or because the business of the taxpayer was for some reason peculiar to itself abnormally depressed during the standard period when compared with other businesses of the same class, he may compute his standard profits at such greater amount as he thinks just but not exceeding an amount equal to interest at ten per centum per annum on the amount of capital of the taxpayer employed in
the business in the taxation year, computed in accordance with the first schedule to this act. If the minister is not satisfied that the taxpayer was depressed during the standard period, or if he is not satisfied that the standard profits as computed by the taxpayer is a fair and reasonable standard he may direct that the standard shall be ascertained by the board of referees. The board of referees shall thereupon determine the standard profits in its sole discretion at such an amount as they think just being an amount equal to interest of not less than five nor more than ten per centum per annum on the amount of capital of the taxpayer employed during the taxation period as computed by the board in its sole discretion in accordance with the first schedule to this act. The decision of the board shall not be operative until approved by the minister, whereupon the said decision shall be final and conclusive.
9.	Proposal. That power be given to the board of referees in the case of both new businesses and depressed businesses to ascertain a fair and reasonable standard profits on some basis other than the capital-standard basis in those cases where the capital employed in the business is so small when compared with the earning power of the business or where other special circumstances of the taxpayer are such that to utilize the capital-standard basis would result in an unjustifiable hardship or would create extreme discrimination or jeopardize the continued existence of the business of the taxpayer.
Explanation. In the case of a depressed business where the taxpayer considers that ten per centum on the capital employed is unfairly and unreasonably low as a standard profit and that he comes within the provisions of this proposal and is entitled to relief thereunder, he may tentatively determine his standard profits at an amount which he considers fair and necessary and file his returns and pay his tax accordingly, but every such taxpayer shall be referred to the board of referees which shall determine whether the taxpayer should be permitted to have his standard profits determined on any base other than that of capital employed and if so what is a fair and reasonable standard profit on such basis as the board thinks just.
The board will depart from the capital-employed basis only if it is satisfied that such basis would result in unjustifiable hardship, extreme discrimination or undue jeopardy to the continued existence of the business of the taxpayer.
Tentative Amendment. An addition to section 5 along the following lines, applicable both to new businesses and to depressed businesses of the above-mentioned type, would give effect to this proposal:
S. 5, ss. (3). If on the application of a taxpayer who either was depressed during the standard period or was not in operation prior to January first, one thousand nine hundred and
Excess Profits Tax

thirty-eight, the minister on the advice of the board of referees is satisfied that because of the nature of the business, or because of other special circumstances, of the taxpayer, a capital standard of earning is an inappropriate standard to be applied to the said taxpayer, and that to apply such a standard would result in an unjustifiable hardship or would create extreme discrimination or jeopardize the continued existence of the business of the taxpayer, by imposing excessive taxation on him under this act, he may direct that the standard profits of such taxpayer shall be determined by the board of referees on such other basis as they think just. The standard profits shall be ascertained by the board of referees in its sole discretion at such an amount as they think just having regard to the standard profits of similar taxpayers engaged in the same or an analogous class of business.
10.	Proposal. That the inventory-reserve provisions in the act be amended:
(a)	to give the taxpayer the right to provide against a decline in inventory values having regard to a normal quantity of stock in trade as indicated by the quantity on hand during the standard period;
(b)	to give the taxpayer the right to provide against a decline in inventory values either to the prices obtaining at the close of his 1939 period or to the prices obtaining during the month of August, 1939; and
(c)	to provide that a taxpayer who has any unutilized inventory reserve on hand at the end of the year when this act terminates shall have only the year following the said year of termination in which to utilize such reserve against any possible price decline and must add any unutilized portion of such reserve existing at the beginning of the second year following the said year of termination to the profits assessable to tax in that second year.
Explanation. Proposals (a) and (b) give taxpayers whose fiscal periods happened to end subsequent to the outbreak of war, the right to reserve their prices in respect of quantities indicated in paragraph (a) above down to a figure which is substantially equal to the closing figure of competitors whose fiscal periods closed prior to the outbreak of war.
Proposal (c) notifies taxpayers who have an inventory reserve that the reserve on hand unless utilized because of a price decline before the end of the year following the repeal of this act, must be added to profits for tax purposes in the second year following repeal of this act.
Tentative Amendment. A rewording of paragraph (b) of subsection 1 and also of paragraph (c) of subsection 2 of section 6 of the act along the following lines would implement the above proposals:
S. 6, ss. 1 (b), ss. 2 (c). Such reasonable provision as a reserve against future depreeia-[Mr. Ilsley.l
tion in inventory values as the minister in his discretion may allow having regard to a normal quantity of stock in trade necessary for the business as indicated by the quantity on hand during the standard period of the taxpayer: Provided that no such deduction shall be allowed which provides against a decline in inventory values below the inventory prices of goods on hand either at the end of the fiscal period of the taxpayer ending in 1939 or during the month of August, 1939;
And provided further that any reduction in such reserve shall be added to the profits of the year of reduction for purposes of taxation under this act, and any unutilized portion of such reserve on hand at the end of the year when this act ceases to apply to the taxpayer shall be available to the taxpayer to meet declines in inventory values during the immediately following year and if not exhausted by the end thereof, the unutilized portion on hand shall be added to the taxpayer's profits.
11.	Proposal. That the exemption from the provisions of this act given to taxpayers with profits of five thousand dollars or less be amended by a proviso to the effect that in the case of taxpayers with profits above five thousand dollars the tax imposed by the act shall not reduce the profits below five thousand dollars.
Explanation. Under the present wording of section 7 (c) the taxpayer with profits of $5,001 pays an excess profits tax, whereas the taxpayer with $5,000 or less does not pay. The former taxpayer might be required to pay a very heavy tax whereas the latter taxpayer, even though he has increased his profits over the standard by almost as much, is not required to pay any tax. This proposal is designed to remove such discrimination.
Tentative Amendment. This proposal would be effected by adding a proviso along the following lines to paragraph (c) of section 7:
Provided that if the tax exigible under this act shall cause the profits of the taxpayer to be reduced below five thousand dollars in the taxation year, before providing for any payments to proprietors, joint owners, or shareholders, by way of salary, interest or otherwise, then to the extent that it would so reduce the profits below five thousand dollars, such tax shall not be payable.
12.	Proposal. That the allowance for excess profits taxes and income taxes paid to Great Britain, other British dominions or dependencies, or to any foreign country allowing reciprocal deduction with respect to Canadian-paid taxes, be enlarged to provide a combined deduction of the British or foreign income and excess profits taxes from the combined liabilities to Canada for income and excess profits taxes.
Explanation. Double taxation must necessarily be alleviated. Reciprocity substantially exists among all countries to-day in allowing the taxes paid in foreign countries as a deduction from the domestic taxes. How-

Excess Profits Tax
ever, now that two taxes in each country are being considered in respect of the same profits wherein in one country the income tax is a deduction in determining the excess profits tax, and that may be vice versa, in the other country, then this lack of parallel treatment produces in reciprocal tax considerations unusual burdens and difficulties.
Hence the necessity of referring to the income and excess profits taxes abroad in a combined sense being a deduction from the Canadian combined liabilities, provided always that substantially like treatment is afforded by foreign countries to those who have profits arising in Canada which are here taxed.
Tentative Amendment. This proposal would be effected by adding a proviso along the following lines to ss. 1 of s. 9:
Provided that the minister may in his discretion allow a .taxpayer to claim as a combined deduction from his combined income tax and excess profits tax liabilities the combined taxes paid to Great Britain or any of its self-governing dominions or dependencies or to any other country between which country and Canada reciprocity exists if the minister is satisfied in the case of such foreign country that a similar deduction of Canadian taxes is allowed against their combined income and excess profits taxes.
And also by inserting the words: "or under this act and the Income War Tax Act combined as provided for in the proviso to subsection 1 hereof" immediately after the words "payable under this act" in subsection
2	of section 9.
13.	Proposal. That the definition of capital be amended to require the deduction from the original asset values of the total amount of depreciation which has been taken into account in computing net income or loss for income tax purposes plus any accumulated depreciation reserves as at January, 1917, as recognized by the minister for purposes of the Income War Tax Act.
Explanation. Under the provision in section
3	(c) of the first schedule of the act as it is presently constituted the taxpayer is required to deduct only that depreciation which has been taken as a deduction from profits under the Income War Tax Act. This item in some cases is less than the total accumulated depreciation reflected in the depreciation reserve as computed for income tax purposes. This meant that depreciation reserves were composed of two parts, that part which had been advantageously used in reducing profits in years of profits and that part which was established as a reserve in years of loss.
It is now intended to use the reserve as a whole as a deduction in determining capital thus avoiding, as all accountants will agree, 14873-143
a very substantial technical analysis of many years of accounts to gain the advantage in increased capital which the law held out.
By removing the accounting problems we increase the burden but that burden is offset by alleviation in other directions, such as special reference to the board of referees when there is unduly low capital or negative capital.
Tentative Amendment. To effect this proposal paragraph (b) of section 3 of the first schedule would be repealed and a rewording on the following lines substituted therefor:
(b)	a reduction of the total amount of depreciation which has been taken into account in computing net income for income tax purposes in accordance with the Income War Tax Act, plus any accumulated depreciation reserves as at January 1, 1917, as recognized by the minister for purposes of the Income War Tax Act, and the total depletion reserve reflected on the books of the taxpayer.
14.	Proposal. That the definition of capital be amended to enable the non-interest-bearing advances from parent to subsidiary corporations, which advances are of a permanent nature and in fact represent invested capital actually employed rather than borrowed capital, to rank as equity capital rather than debts of the subsidiary.
Explanation. The provision in the act which requires that borrowed money be deducted from capital values is considered to work a hardship in cases where the parent has advanced to the subsidiary capital which is called a loan or advance but is equivalent to investment capital in all respects. This amendment gives the board of referees the right to recognize the reality of the situation notwithstanding the name or label attached to the form of investment in the taxpayer company.
Tentative Amendment. This proposal would be effected by adding to paragraph (c) of section 3 of the first schedule a provision along the following lines: and except the amount of indebtedness represented by a non-interest-bearing advance from a parent corporation to a subsidiary corporation which the minister is satisfied is of a permanent nature and is in fact invested capital actually employed in the business.
15.	Proposal. That the requirement in the first schedule that dividends paid during the taxation year shall constitute a deduction from the capital employed at the commencement of the period to the extent of one-half the dividends, shall be amended to make it clear that this applies only to cash dividends and not to stock dividends.
Explanation. Since the present provision in the act is designed to reduce the opening capital by a portion of the cash dividends paid out during the year or fiscal period, this

Excess Profits Tax

amendment to exclude from such provision the stock dividends paid during the year is obviously necessary since stock dividends do not represent any payment out of assets from the company.
Tentative Amendment. This proposal would be effected by adding the words, "in cash" to the proviso immediately after the words "dividends paid" in section 4 of the first schedule of the said act.
16.	Proposal. That all proposals above mentioned shall apply to the profits of the year 1940 and the profits of fiscal periods and portions thereof ending in 1940 and to the profits of all years and fiscal periods thereafter.
17.	Proposal. Every person liable to tax under the Excess Profits Tax Act in respect of the 1940 taxation period shall have until the 30th April, 1941, to estimate and pay their excess profits tax for 1940 without interest. Thereafter interest will be paid as in the Income War Tax Act provided, as if the fiscal period of all such companies had ended on 31st December, 1940.
I am advised by the commissioner of income tax that up to date some 545 standard profits claims have been filed.
These claims were filed for the purpose of having the board of referees determine the standard profits.
Inasmuch as the procedure outlined above by the proposed amendment will require each taxpayer initially to determine his own standard profits, subject to confirmation by the income tax division, those who have filed such claims should now proceed as follows:
First-those companies that have filed their standard profits claim together with their corporate returns-will file a memorandum, in duplicate, with the inspector of income tax for the district in which they filed their returns, setting out their method of calculating and determining their standard profits, and showing the amount of their liability under the tax measure and making payment accordingly on or before April 30, 1941.
Second-those companies that have filed their standard profits claim but have not filed their corporate returns-will now file their returns in accordance with the indications given in this statement, namely by setting out their method of calculating and determining their standard profits, calculating their tax under the act and making payment accordingly,
The proposals which I have just outlined and explained constitute the complete list of proposed amendments to the legislation which will have retroactive application. When the budget is brought down, it will, of course, con-[Mr. Ilsley.J
tain other proposed amendments which will have effect in respect of the profits earned in this and future years. Some of these will be of general application. Others will be designed to reduce special deterrents to expanded production on the part of particular industries. However, as they relate to the future, there is no real reason why I should announce them prior to the budget itself.
The house, I believe, will agree that the amendments with retroactive effect which I have just explained are thoroughly justified and designed to make the act a more equitable and more workable instrument. The overwhelming needs of the present emergency have made drastic taxation inevitable and indispensable, but the government on its part has spared no pains to remove inequalities, anomalies, unjustifiable hardships and other legitimate causes of grievance on the part of Canadian industry. On their part we expect whole-hearted cooperation in the war effort of Canada. Their cooperation has to date been enthusiastic and general. There have, however, been rumours that certain firms have incurred unjustifiable expenditures induced by the knowledge that the government was bearing most of these expenditures because of the 75 per cent rate of taxation applied. To the extent that this practice has prevailed, it is wholly reprehensible.
I have said before and I repeat that any manager, any board of directors which permits higher costs because the government through losses of taxes bears most of them is, in my judgment, guilty of serious misconduct. .
There may be little profit motive for vigilance in economy. But we do not offer the soldier, the sailor, the airman, a profit motive for vigilance at his post, a profit motive to risk his life. Nor should it be necessary to offer it to Canadian business for the prevention of inefficiency or waste.
Existing legislation has been framed with a view to the prevention of unjustifiable expenditures which would not have been made but for the high rate of taxation, an evil which I believe is not widespread, certainly not general. I am confident that the vast majority of Canadian business men have conscientiously discharged their responsibilities in this respect as in others.



PRESS REPORT AS TO USE BY PRIVATE COMPANY IN BRITISH COLUMBIA

[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: I should like to ask a question of the Minister of National Defence. I regret that owing to

// ousing
some misunderstanding in my office yesterday notice of this question did not reach the minister until a few minutes ago.
I wish to draw the attention of the government to a Canadian press dispatch dated Winnipeg, April 1, in which Mr. S. G. Blaylock, president and managing director of Consolidated Mining and Smelting company, stated that an armoured tank carrying four machine guns and six rifles is ready for instant action at his company's smelting plant at Trail, British Columbia. I would ask if this tank is owned by and under the control of the Department of National Defence. If so, upon what conditions is it loaned to the company and, if not, is it the policy of the government to allow private organizations to own fully equipped tanks armed with rifles and machine guns for instant use?


James Layton Ralston: Mr. Speaker, as the hon. member says, he gave me notice of the question only a few minutes ago. I have sent out an inquiry with regard to it, and I hope to have the information so that I may give the hon. member an answer before this afternoon's sitting is over.



ONTARIO AGRICULTURAL COLLEGE


[Stage Direction]
On the orders of the day:
Mr. M. C. SENN (Haldimand):: Perhaps the Minister of Munitions and Supply (Mr. Howe), or the Minister of National Defence (Mr. Ralston) would be best qualified to answer a question prompted by a communication I received this morning from representatives of the alumni association of the Ontario Agricultural College, which usually holds its annual gathering at the college some time in May. Is the minister prepared to make a statement respecting the intention of the dominion government to take over the Ontario agricultural college for war purposes? Have the negotiations with the provincial government been completed? If so, will all the institution be appropriated, or only a portion of it?


Hon. C. G. POWER (Minister of National Defence for Air):: Negotiations have been going on for some time, and I am under the impression that they have been completed, although I cannot say definitely. The Ontario agricultural college was offered to the Department of National Defence some time in December, 1939. The offer was accepted about two months ago. The work of the agricultural college will continue, with the exception of certain classes. The dormitories 14873-1431
will be taken over by the Royal Canadian Air Force, and I understand the students will live out in Guelph.


Mark Cecil Senn: When does the government contemplate taking it over? Would it not be possible for the alumni association to hold their gathering in May at that place?


Charles Gavan Power: I cannot inform my hon. friend at the moment as to the possibility of the alumni holding its meeting after the Royal Canadian Air Force has taken over. I believe, however, that I can give my hon. friend the information before six o'clock.



CHEESE BONUS


[Stage Direction]
On the orders of the day:
Mr G. K. FRASER (Peterborough West):: I am informed that the last instalment of the cheese bonus for 1940 has not yet been paid. This I believe concerns the last three months of last year. May I ask the Minister of Agriculture when this payment may be expected, and if such bonus will be paid during the current year?


Hon. J. G. GARDINER (Minister of Agriculture) :: The premium on cheese which was made available last year was paid from funds voted during the last session. In view of the fact that there was quite an increase in the production of cheese, as well as a greater improvement in quality than was expected, a supplementary was necessary in order to make final payments. I understand that the payments will be made as soon as the money is available.


Richard Burpee Hanson: The money is available now.



HOUSING


[Stage Direction]
On the orders of the day:
Gordon Knapman Fraser: Mr. Speaker, in view of the fact that it has been represented to me that the control of rents is tending to hinder the construction of houses, would the Minister of Finance give consideration to the exemption of newly-constructed houses from the authority of the rent control board?


James Lorimer Ilsley: That is a matter for the
Minister of Labour.


Hon. N. A. McLARTY (Minister of Labour):: The matter is entirely new to me,
but I shall be glad to discuss it with the
Strike in Schofield Plant

war-time prices and trade board and see if we can ascertain the benefits and disadvantages
of the proposal. It will receive consideration.



LABOUR DISPUTE


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: Mr. Speaker, I should like to address a question to the Minister of Labour arising out of a telegram received this morning from the national secretary of the Canadian Hosiery Workers' Union at Oshawa. I have no intention of reading the telegram; it is lengthy and the minister already has a copy of it. I would refer him particularly, however, to the reference in the telegram to a statement made by Mr. Ainsborough, that the department would forbid the company from paying higher wages than the previous rates. May I ask what action is contemplated by the department with relation to this dispute in Oshawa to have the conciliation machinery put in operation for the purposes for which it was established.


Norman Alexander McLarty: The hon. member for Cape Breton
South (Mr. Gillis), as he has said, sent me a copy of the wire he had received. The conciliation service of the Department of Labour has already been engaged in ironing out the difficulties which apparently have arisen and I was advised that all the difficulties had been ironed out as a result of conferences except the one with respect to wages. The company asked for a few days to consider what they should do with a view to meeting the wishes of the employees in that regard, but yesterday morning, without any warning and without any application for a board, approximately eighty employees went out on strike. The Department of Labour has, of course, a definite duty. I understand that there are certain war orders in this plant; consequently it would come under the Industrial Disputes Act and the order in council passed extending it. We notified the secretary of the association that the strike was illegal, and that unless the employees returned to work and put themselves within the law the department had the definite duty to see that the provisions of the Industrial Disputes Act were carried out, and that this will be done.
So far as the statement made by Mr. Ainsborough is concerned, I have no information whatsoever on that point. I doubt, however, if he would make the statement that the Department of Labour would not allow the company to increase wages.


Clarence Gillis: But if that statement is true, there is a possibility that it precipitated the situation that now exists in Oshawa.


Norman Alexander McLarty: I do not suppose we
should discuss the matter further now. My information is that the company had asked for a few days to consider the matter and that before the expiration of that time eighty employees simply went out on strike.


Clarence Gillis: The telegram states that the company had refused to consider the question.



CANADIAN NAVAL COLLEGE


[Stage Direction]
On the orders of the day:
Percy Chapman Black: Is it the intention of the government to establish a naval college at Halifax or elsewhere on the Atlantic coast? I regret that the Minister of National Defence for Naval Services is not in his seat. I sent him notice of my question before the house opened. Perhaps he will give the information later.

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



DEPARTMENT OF AGRICULTURE

[Stage Direction]
izz. Special. To providle for payments on reduction in wheat acreages, under conditions prescribed by the governor in council, for administration expenses in connection therewith, and for temporary appointments that may be required notwithstanding anything contained in the Civil Service Act, $35,000,000.
James Garfield Gardiner: Mr. Chairman, last night when the committee rose, I had agreed to take the suggestions of members of the committee back for consideration. I presented them to the government to-day and I have before me at the moment the results of our consideration of the regulations. I had hoped that as a result of the understanding yesterday we would go on with a further discussion of the item which has just been read from the chair, but I understand that some members of the opposition desire this afternoon to discuss the motion of the hon. member for Haldimand (Mr. Senn) rather than this item. It has been agreed, however, that I should at least place before the committee the record of the changes which we propose to make in the regulations. I had hoped that, within the next half hour or so, copies of the regulations would be on the desks of all the members and that I would be able at that time to read into Hansard the completed regulations so that they would

Supply-Agriculture-Wheat Acreages
be available for study by hon. members during the recess, but if we go out of committee and take up some other item before the regulations arrive, I shall not be in a position to do that. I can, however, indicate the changes which have been made.
It was suggested yesterday by the hon. member for Battle River (Mr. Fair) that the definition of either "farm" or "farmer" should be clarified. The definition as it reads in the resolutions which were presented to the house yesterday, is as follows:
"Farm" means the total land being farmed by any one farmer.
It now reads:
"Farm" means the total land being operated as a unit.
That, I think, overcomes the objection raised by the hon. member for Battle River, to the effect that there might be two or three different families involved in the operation of one farm or of two or three different farm units. A farm is now defined as "the total land being operated as a unit."
The hon. member for Rosetown-Biggar (Mr. Coldwell) suggested that there should be a change in the definition of "summer-fallow." The definition as it now reads is in these words:
"Summer-fallow" means the cultivation of fallow land prior to and including July 31, 1941, in such a way as to conserve soil moisture or to prevent soil drifting, or both.
Then there was quite a long discussion on section 2 of the regulations, namely, the one providing for payments and for combinations in order to arrive at the acreage for 1940. It has been decided by the draftsmen that it would be better to divide that clause into two. and have a new No. 2 and a new No. 3, reading as follows:
2. (1) For the purpose of these regulations the wheat acreage reduction on any farm shall be computed by deducting the number of acres sown to wheat on such farm in 1941 from the number of acres sown to wheat on such farm in 1940.
(2) For the purpose of computing the wheat reduction acreage.
And then follows the suggestion made by the hon. member for Moose Jaw (Mr. Ross) last evening.
(a)	In respect of any farm
(i)	on which the number of acres sown to wheat in 1940 is greater, by one-third or more, than the number of acres sown to wheat in 1939, or
(ii)	on which the number of acres sown to wheat in 1940 is less by one-third or more, than the number of acres sown to wheat in 1939,
the number of acres sown to wheat in 1940 shall be deemed to be the average number of acres sown to wheat in 1939 and 1940.
That means in effect that, where there is an increase of one-third or more in the acreage of 1940 as compared with 1939, the number of acres sown to wheat in 1940 shall be deemed to be the average of the two years; and where there is a decrease of one-third, the same thing happens.
Then:
(b)	In respect of any farm on which no land was sown to wheat in 1940, but on which farm more than sixty per cent of the number of acres under cultivation had been sown to wheat in 1939, the number of acres sown to wheat in 1940 shall be deemed to be sixty per cent of the acres under cultivation on such farm.
That is, it is presumed that, no land on the farm being sown to wheat in 1940, and a large proportion of it-over sixty per cent-having been sown to wheat in 1939, the amount allowed should not be greater than sixty per cent.
Then:
(c)	In respect of any farm on which the number of acres under cultivation was increased during 1940 by breaking any part or parts thereof not previously broken, eighty per cent of the number of acres by which the number of acres under cultivation on such farm was so increased shall be deemed ,to be included in the number of acres sown to wheat on such farm in 1940.
That is, four-fifths of all the land which was broken in 1940 is added to the wheat acreage of 1940 before the reduction begins.
Then:
(d)	In respect of any farm on which no land was broken prior to 1940, if any land was broken on such farm during 1940, eighty per cent of the number of acres so broken shall be deemed to be the number of acres sown to wheat on such farm in 1940.
That is, the general practice in the west has been, when a new farm is broken up, to sow the greater part of it to wheat the first year. If the farmer is using horses as power, he usually sows only sufficient coarse grains for feeding purposes. We have now stated that eighty per cent of the breaking is to be added to the acreage prepared for wheat this year.
3. (1) The minister may on or after July 1, 1941, in respect of any wheat acreage reduction on any farm, pay
(a)	the sum of $4 in respect of each acre which is summer-fallowed in 1941 in excess of the number of acres which were summer-fallowed in 1940.
(b)	the sum of $2 in respect of each acre which is sown to coarse grains or grass on or before July 31, 1941, in excess of the number of acres which were sown to coarse grains or grass respectively in 1940.
(2) The minister may pay an additional sum of $2 in respect of each acre, in respect of which any payment may be made under paragraph 1 of this regulation, which was sown to
2264	COMMONS
Supply-Agriculture-Wheat Acreages
grass in 1941 or which was sown to rye on or after August 1, 1941, and is in grass or rye on July 1, 1942.
That is the last one. The method of payment is the new No. 3, which before was No. 2. There is a new No. 6:
6.	If by the terms of any contract, agreement or lease, any farmer is bound to sow to wheat any part or proportion of his farm, and if such farmer desires to become eligible for any payment under these regulations, such farmer shall be entitled to reduce the number of acres sown to wheat on his farm to such extent as he sees fit and to sow to coarse grains or grass or to summer-fallow such wheat acreage reduction, notwithstanding the terms of such contract, agreement or lease, but the provisions of this regulation shall not be deemed to relieve him of the performance of any other of the terms or provisions of the said contract, agreement or lease.
The meaning of that is, that where there is a lease which involves the renter sowing a certain amount of wheat, a certain amount
of coarse grains, and a certain amount to be summer-fallowed, the renter may reduce the wheat acreage, contrary to the terms of the contract. He cannot reduce his summerfallowing and he cannot reduce his coarse grains, in accordance with the contract, but he can increase his summer-fallow and his coarse grains in order to make it possible to carry out the provisions of the regulations.


Mr. PERLEY:: How about hiring the work done? You do not say anything about hiring, done by labour.


James Garfield Gardiner: It is not involved in this regulation. This is just where there is a lease which involves certain terms that the renter must fulfil. The labourer would be hire^ by the day and instructions given, I assume, by the owner.


Mr. DOUGLAS (Weyburn):: Will the
regulation which the minister has just read replace what is now No. 5?


James Garfield Gardiner: It is a new No. 6. No; No. 5 has to do with another matter. The old No. 3 became No. 4; the old No. 4 became No. 5; there is a new No. 6-the one I have just read-which was not in the regulation at all. Then there is a new No. 7 in which I have tried to embody at least part of what was suggested by the hon. member for Swift Current (Mr. Graham), the hon. member for Weyburn (Mr. Douglas), and a number of others in the discussion last evening:
7.	If any landlord makes application for the payment of any moneys under these regulations in respect of any farm, notwithstanding the provisions of any dominion or provincial statute or any regulations or orders made thereunder

or anything done pursuant thereto, such landlord shall be entitled to a proportion of any moneys paid under these regulations in respect of such farm, as follows:
(a)	in the case of a farm in which the landlord is entitled to a share of one-third or more of the crop returns on the whole of the farm, a proportion of not more than one-third of the amount so paid,
(b)	in the case of a farm in which the landlord is entitled to a share of one-third or more of the crop returns of a part only of such farm, a proportion of not more than one-third of such part of the amount so paid as is in the same proportion to the whole amount so paid as the number of acres under cultivation on the part of such farm which is owned by such landlord is in proportion to the number of acres under cultivation on the whole of such farm-
That simply means that if there, for example, is three-quarters of a section and the mortgage is all on one-quarter, the mortgagee will be entitled to one-ninth payment, and similarly for other proportions.
(c)	in the case of a farm in which the landlord is entitled to a share of less than one-third of the crop returns on the whole or any part or parts of the farm, a lesser proportion of the amount so paid, calculated in a manner similar to that set out in the next preceding subparagraphs (a) and (b).
The change is in the next subsection:
7A. In any case where two or more persons make application to the minister for any moneys payable under these regulations in respect of the same farm, payment of any such moneys shall be made to the farmer jointly in the name of all such applicants.
That is, the cheque will be issued in the joint names of the applicants, but it will be forwarded to the farmer, and any discussions that take place as to who is entitled to different shares of it will take place among the different claimants to that particular amount of money.


Thomas Clement (Tommy) Douglas: How will they settle it if the farmer cannot get the cheque cashed until the others agree?


James Garfield Gardiner: I think they will finally settle it for that reason. None can get any money until they do settle it. The only way they are likely to settle it is in the terms above stated.


Thomas Clement (Tommy) Douglas: The others
can wait longer than the farmer.


James Garfield Gardiner: I do not think it will work out that way; they will settle in the manner outlined. One further change was made. I believe the hon. member for Acadia (Mr. Quelch) suggested that the word "knowingly" should be inserted in what is now section 10. It was section 8 under the old regulations. It says that the minister "shall" instead of "may" withhold payment, and so on. It reads:

Supply-Agriculture-Wheat Acreages
10. The minister shall withhold payment from any farmer who knowingly submits a false report of his acreage or a false claim for payment.
The word "knowingly" is inserted and the word "may" becomes "shall". The suggestion with regard to "may" did not come from the hon. member for Acadia; he suggested the word "knowingly".


An hon. MEMBER:: The member for
Battle River.


James Garfield Gardiner: These are the suggested changes in the regulations. One other question was asked by the hon. member for Qu'Appelle (Mr. Perley). I was asked to get a legal opinion on the question whether a member can collect under these regulations.


An hon. MEMBER:: I do not think they should.	*


James Garfield Gardiner: It does not matter what one thinks; this is what the Department of Justice says:
April 8. 1941
Re. Payment on wheat acreage bonus to members of parliament.
By the way, I should like to change that word "bonus" to "payment". I do not think it is a bonus:
With reference to your inquiry as to whether the acceptance by any member of parliament of any wheat acreage reduction payments would be in contravention of any provision of the Senate and the House of Commons Act with respect to the independence of parliament, I beg to point out that any opinion which might be given by me on the point would not be binding upon any member of parliament or upon the House of Commons and that the matter is one in which the member should be guided by the advice of his own counsel.
That, of course, always precedes the opinion of the department.
It is my understanding that such payment is not made pursuant to any contract or agreement between the person to whom payment is made and the crown and is not in connection with any office, commission or employment in the service of the crown. If my understanding is correct, I may say that the acceptance of such payment would not appear to be in contravention of the above-mentioned act or disqualify any member accepting such from his seat.
Yours truly,
W. Stuart Edwards,
Deputy Minister.
I gave an undertaking to the leader of the opposition that, after I had made this statement, if it was still the view of the committee or any members of the committee that we should have the committee rise and report progress and allow the discussion of the Senn motion to proceed, I was prepared to follow that course. I am in the hands of the committee.


Mr. ROSS (Souris):: Will hon. members receive copies of the regulations as amended?


James Garfield Gardiner: As I said at the 'beginning, I expected to have these copies in the house within a very few minutes. They are now being mimeographed for the members, and if they are not distributed here as a result of our getting out of this discussion, I shall have them made available.


Mr. CASTLEDEN:: The minister said that regulation 4 becomes regulation 5, and he added that there was a new section. Does that mean that regulation 6 in the original is to be done away with? That is the one respecting farms occupied by tenants in 1940 and by hired help in 1941.


James Garfield Gardiner: No; it does not mean that that is to be done away with.


Mr. COLD WELL:: Is there one that is being done away with?


James Garfield Gardiner: No. The new regulation 8 is:
8.	No payment shall be made under these regulations with respect to any farm which was operated by a tenant in 1940 and is operated by hired help in 1941.
I am not satisfied with the wording of that regulation. I should like to give further thought to it before attempting to change it. The principle of it we wish to apply, but I am afraid that in its present wording the thought may be read into it that even a person who is legitimately doing that kind of thing, operating a farm with hired help, is not in a position to do so. That is not the intention, and the regulation will be amended as time goes on and as we gain sufficient experience to change it properly so as to take care of that situation.


George Hugh Castleden: I was thinking of a man who had enlisted. He was a tenant and he hires someone to carry on his work. Such a person should be protected.


James Garfield Gardiner: There are a great many other cases. Take an old couple who last year may have had a tenant on the farm and this year cannot get one and may have to hire help. Such cases are not intended to be covered by this regulation, but there are others we want to cover and we do not wish to remove it until we can properly amend it.


Thomas Miller Bell: Are we going to proceed with the discussion of these regulations, or is the committee going to rise and report progress? It would help matters if we reached an understanding on the matter.


James Garfield Gardiner: The leader of the opposition should state the position he wishes to take. Whatever course he wishes to take, we are prepared to follow.
2266	COMMONS
Supply-Agriculture-Wheat Acreages


Richard Burpee Hanson: We understand that the regulations are not ready and they cannot be intelligently debated until they are. The committee ought to rise and report progress, and the house should be moved into supply so that the Senn amendment may be proceeded with.


Mr. FAIR:: According to the statement made by the minister, it does not make any difference whether 10 acres or 100 acres are under cultivation on the quarters on which the mortgage is placed; the man who holds the mortgage still receives one-third of the benefit. In my opinion the man who holds the mortgage is entitled to one-third on the quarter on which he holds the mortgage only.


James Garfield Gardiner: The reason for that provision is that it is quite possible for the reverse to be the case; that is for all the wheat to be on the land in which the mortgagee has an interest and none on the land in which the renter has an interest, or that the owner who has a mortgage on has an interest in. If this provision were not in, the mortgagee would draw one-third on all the reduction in the wheat acreage; but as it is now, if the mortgage was all on a quarter, then he would only draw one-third of one-third in the case of a three-quarter section farm. It makes it much better for the renter or owner.


Mr. QUELCH:: There is one point I should like the minister to clear up. I referred to it yesterday, as did also the hon. member for Medicine Hat (Mr. Gershaw). Summer-fallow has to be completed by August 1, but the bonus can be paid after July 1. If a man receives the bonus, say on July 7 or July 14, is there anything to prevent him from sowing that land to green feed? That is considered a sound practice in many parts.


James Garfield Gardiner: There is nothing to prevent him from doing it, but if he does so, it may result in the treasury, which after all pays the amounts, asking him to wait until it is absolutely certain that he has not cut it for grain before he can draw any payment on the summer-fallow. I would imagine what would happen would be that immediately it is sown, the payments would be held up until the farmer could prove that he had not cut this crop for grain.


Mr. JOHNSTON (Bow River):: It would be all right to cut it for green feed?


James Garfield Gardiner: I would think so, but I should not like to be too definite at the moment, because these regulations are not

interpreted by me when it comes to making payment; they are interpreted by the organization which checks payments.


Victor Quelch: If he cuts the crop when green, before it is sufficiently matured to thresh, that should be sufficient proof that he is not going to thresh it.


James Garfield Gardiner: It is pretty much the same as the rye, which might be handled in the same way, and they might refuse to make the final payment until later. I should not like to make an interpretation at the moment.


Ernest Edward Perley: I would be the last one in the house to try to hold up any of these proceedings; I am as anxious as anyone to help the minister to evolve something which would help the farmers of western Canada, but from what I have seen the last day or two, certainly there is confusion. I do not think there is any hon. member who understands these regulations now. We have an order in council dated April 2, and I presume there will have to be another to embody these other regulations.


James Garfield Gardiner: They are all passed.


Ernest Edward Perley: Briefly I want to protest against this whole proceeding. This house has been in session for over seven weeks, and we should have had this long ago. It is the same thing as the minister tried to put over last July 25. He wanted to have a bill proceeded with that was not even printed; other hon. members and myself protested, and we had to make an agreement then that the bill would be proceeded with and the general discussion take place afterward. We had not seen the bill at all. The same thing is happening to-day. We cannot intelligently discuss this matter as it stands; the committee might just as well rise and let the other discussion go on.


James Garfield Gardiner: The committee had all the regulations before them to discuss, had them presented here and discussed very fully yesterday evening. The committee now have before them all the changes; not in printed form, but they have been read in exactly the same way as the amendment to any bill is always read to this committee when changes are made. Whenever there are amendments they are simply read to the committee and the committee accepts or rejects them. They have been read this afternoon, but in addition I have asked the staff in the office to prepare as quickly as possible mimeographed copies of the whole regulations as now drafted and passed, and they should be here at any time. If it is desired by the committee-but I understand it is not-that the discussion should

Supply-Agriculture-Wheat Acreages
continue on these particular regulations or on the general policy itself, after all it is the vote that is under consideration, not these regulations particularly. The matter under consideration at the moment is the question whether we shall vote $35,000,000 for this purpose. The only thing we are going to do if we delay that is to prevent the payment of any money until at least some weeks after we come back here following the Easter recess. It will have no other effect.


Richard Burpee Hanson: If we do pass the estimate to-night the minister cannot spend any of that money, because a bill has to be based on the estimate. It must go through its readings here, go to the senate and receive the royal assent. That cannot possibly be done before May 15. So the minister's reasoning is wiped off the slate.
As to the illustration the minister gave with respect to amendments to bills passing through the house, I suggest that is hardly comparable with this. Here we have a new set of regulations. How can hon. members follow these things, no matter how elaborate the explanation the minister gives? To-day I attempted to follow a statement made by the Minister of Finance with respect to the excess profits tax proposals that will be included in the budget. Hon. gentlemen here gave close attention to those proposals; I wonder how many of them could state right now what the Minister of Finance was proposing. I have in mind three or four out of the dozen or so; they stick in my mind possibly because I approved them.
The minister does not need this money now; he cannot spend it legally until he gets this estimate through. I dare say he will want money for administration. He will have to secure that in the extraordinary manner that the Consolidated Revenue and Audit Act provides, and I have no doubt he will get it, since in days gone by he has not been backward in asking for governor general's warrants.


James Garfield Gardiner: One would, of course,
feel much more free in proceeding with the matter if the money were passed by the house before the recess. When we come back we shall have to go through the form of passing it, and some time may be taken in doing so, which may delay us considerably in getting on with the payments for administration. But the matter which is of much greater importance is emphasized by what has just been said. When a minister rises in his place and reads something to the house or the committee, it is impossible for hon. members listening to get the whole meaning of it. If, however, he were permitted to discuss it for an hour after it had been read,
I think we would all go away with a definite idea of what it means. The very remark made by the hon. member for Qu'Appelle is, I suggest, an important reason why that would be a good thing to do. He says he is going away from here confused as to what this means. As soon as this house adjourns I intend to leave for my constituency to see that the people there are not confused about what it means, and I presume every other hon. member would like to do the same thing. I would hope that every hon. member, on both sides of the house, whether he believes in it or not, will at least make known to the farmers the possibilities under it; and if an hour or an hour and a half could be spent in clearing up some of the confusion in the mind of the hon. member for Qu'Appelle, I think it would be time well spent.


Mr. PE RLE  Y@: Not only in my mind;
I think in the minds of the 245 members.


James Garfield Gardiner: I will not admit that
I am among that number, though that may be because I have had to direct the drafting of the regulations. The question is simply whether we wish to have full knowledge of what the regulations mean. I might suggest also that it will not make a great deal of difference, because, after all, I suppose we shall have to proceed with the debate on the amendment.


Major James William Coldwell: I do not like this whole policy; but I think if, before this house adjourns for the Easter recess, we can have a discussion of the regulations as amended, in order to understand them thoroughly, we shall be in a much better position to inform our constituents with regard to the policy. I should like very much to see the regulations, which now are being mimeographed, brought down and discussed. As I say, I do not like the policy; I think it is going to be very difficult to work out, and I do not believe it will assist the small farmer to the extent I had hoped. I am not going to discuss that phase of the question just now; but in spite of the fact that I do not care for the suggestions that have been made, still I think it would be in the interests of all if we could understand them. Then we would make no mistake in anything we said about them.


Victor Quelch: When we get back to our constituencies the farmers will be starting their seeding operations, and they will want to know exactly what is the policy of the government with regard to wheat. I should like to know whether the policy described by the Minister of Trade and Commerce is law. If so, I should like to know how it became law, whether it was passed by order



Supply-Agriculture-Wheat Acreages
in council. We have not had anything of that kind put through this house as yet. Can we assure the farmers that they will be paid on a quota based on sixty-five per cent of last year's wheat acreage? Is that definite, or is it just something the minister thinks may be put into effect? We have had published in the press already the regulations drawn up by the Minister of Agriculture, and the people of the west have been told that those are the regulations under which they are going to operate. But already those regulations have been amended to a considerable extent. Have we any assurance now that the policy set out by the Minister of Trade and Commerce is going to continue to be the policy, or will that be amended also? The farmers should know definitely and at once what is to be the policy of this government. Seeding is already starting, and it is not fair to the farmers to expect them to conduct their operations in such a way as to comply with regulations which may not be the policy a short time from now. We should have something definite before we leave this house.


Mr. MacKINNON (Edmonton West):: So far as my statement is concerned, the policy outlined is that of this government.


Victor Quelch: Has it been passed yet?


James Angus MacKinnon: Yes.


Victor Quelch: By order in council?


James Garfield Gardiner: No. The wheat board act provides for an initial payment of 70 cents and for participation certificates. It also provides for the setting up of a quota; the wheat board is given power to do that. There is no legislation required; that is a matter of policy which was decided last year. As I understand it, every organization interested has passed resolutions asking that the quota system be continued this year.


Victor Quelch: Is there anything to prevent the wheat board from changing that policy between now and harvest time, to say that they will accept on a basis of only forty per cent of last year's acreage, we will say? Is there anything to prevent that being done, or is the minister just telling parliament that this will likely be the policy? What assurance have we that this will be followed out? We have had many changes in the last few years, many amendments and many regulations. For instance, we had the Prairie Farm Assistance Act which was passed by this house; then regulations were introduced which largely destroyed the principle of certain parts of that act. I do not think this situation is at all satisfactory.


James Arthur Ross: Perhaps we could save a little time in this discussion. As I said the other day, I am very much opposed to the manner in which this question is being handled, but I quite agree with the hon. member for Rosetown-Biggar that we should be able to discuss this question with our people as intelligently as possible. We cannot discuss this matter intelligently without having the amended regulations before us, but those we have not got and cannot get. Could we not adjourn this discussion, continue the debate on the amendment, and then later come back to these regulations when we can discuss them more intelligently? I certainly think we should try to take home to our people as much information as possible.


Mr. NICHOLSON:: Speaking on March 12, the Minister of Trade and Commerce said:
To accomplish this a definite limit will be set on the amount of wheat which it will be possible to deliver either to the board, on the open market or otherwise, during the crop year 1941-42. The limit will be 230 million bushels -for the whole of Canada, an amount which it hopes can be sold in the domestic and export markets in 1941-42.
Is that amount definite? Have we legislation to the effect that not more than 230 million bushels can be sold, to the board or otherwise, during the course of the year? Or is there a possibility that this figure may be changed?
Mr. MacKINNON (Edmonton West)-: The amount set out, 230 million bushels, is the figure beyond which we do not propose to take wheat from the farmers of Canada.


Alexander Malcolm Nicholson: That is definite, is it?


James Angus MacKinnon: That is definite.


Victor Quelch: I should like to read a statement which shows the confusion existing at the present time with regard to the policy enunciated by the Minister of Trade and Commerce. I have before me a copy of an analysis sent out by the board of trade of Calgary, which states:
The policy in brief.
The wheat board to be authorized to accept from producers in all Canada, 230,000,009 bushels at a price of 70 cents basis No. 1 northern, Fort William.
Deliveries to be accepted from each individual producer on the basis of 65 per cent of last Shear's sworn acreage.
A general quota of 5 bushels per acre to apply to first deliveries.
That is the point that causes confusion:
Balance of total to be taken on_ a pro rata basis, based on average yield in 1941 at shipping points, as per schedule below:
APRIL S, 1941	2269
Supply-Agriculture-Wheat Acreages
To be
Where average yield is-	accepted
10 bushels	per	acre	
8-0615 bushels	per	acre	
11-8920 bushels	per	acre	
15-7125 bushels	per	acre	
19-5430 bushels	per	acre	
23-3735 bushels	per	acre	
27-1840 bushels	per	acre	
31-08
I notice that the publication issued by the wheat pool gives the same table. This has been sent throughout the country as the quota for this year. Can the Minister of Trade
and Commerce assure us that this will be the quota?


James Angus MacKinnon: I have seen the statement to which the hon. member refers; as a matter of fact, a copy was sent to me by the Calgary board of trade. I did not go into it very thoroughly, but I did read it, and I can say that the figure quoted with regard to the average yield of twenty-five bushels is correct. I have not compared that figure with other suggested or possible yields, but as I have already stated there will be a five-bushel general quota, and the succeeding quotas will be based on the yield at the shipping point, on 65 per cent of the wheat acreage of 1940.


Victor Quelch: The minister states that
19-54 bushels will be accepted on a 25-bushel . yield. I do not think that is correct. Supposing this year we had an average yield of twenty-five bushels to the acre. Can the minister say that the board would allow everyone to deliver 19-54 bushels on 65 per cent of last year's acreage, and pay the initial payment? They could not begin to do it, so that figure is not correct. It shows the confusion that exists. I do not know who is responsible for this thing being sent out-they are being 'sent to other countries, I believe. The Alberta wheat pool forwarded them, and I say there should be a statement by the government pointing out what the government's policy really is. At the present time no policy has been stated. The minister could not tell me what it is.


James Angus MacKinnon: No one can say at this time what the quota is going to be. That cannot be stated until we see what the crop is. It may be that we will be able to accept, in the amount of
230,000,000 bushels, all of the wheat grown in western Canada this year. But we will not know that until we understand the nature of the crop. We will not know it until we have an opportunity to survey the diversification of the yield in western Canada. We will not be able to state the quota until the crop is well under way.


Victor Quelch: Will it not be possible for the wheat board, the government, or the Department of Trade and Commerce to issue a statement to the press pointing out that there is no authority for the statement to which I have referred? Otherwise the farmers will be badly fooled in their operations.


James Angus MacKinnon: Neither my department nor any department of government so far as I know is responsible for the statement to which the hon. member refers.


An hon. MEMBER:: Where did it come from?


James Angus MacKinnon: I have no idea where it came from. As a matter of fact I am going on the air to-night to make a preliminary statement on wheat. I believe the Minister of Agriculture is going to use the radio, and from time to time the wheat board will be using it, to make statements concerning regulations.


Ernest Edward Perley: Will the open trade be in a position to take wheat? Is there anything in the act to prevent that?


Mr. DIEFENBAKER:: There are two matters connected with this problem to which I suggest the minister should give attention. The first is the reduction of acreage. If I understand correctly the proportion which
230.000.	000 bears to the crop in 1940, should the crop in 1941 be equal to that of 1940 it would mean that 46 per cent of the acreage now in crop would produce the amount of
230.000.	000 bushels. The result would be that the western farmer will have on hand many millions of bushels which would be unsaleable.
The other point is that the government has seen fit to continue the initial price of 70 cents a bushel. I think the committee has a right to know why 70 cents is going to be the rate per bushel this year, the same as it was last year. Having regard to the fact that the farmer will find himself on a reduced standard of living, in consequence of reductions he must necessarily effect, under the reduction of his saleable crop of wheat, why is it the House of Commons has not been informed as to the price being received by the wheat board from the United Kingdom? When the question was asked last session I believe it was the Minister of Trade and Commerce who said he could not give an answer because it would not be in the public interest so to do.
There has been a debate in the Saskatchewan legislature in the last few weeks, particularly on the last day of February, on
2270	COMMONS
Supply-Agriculture-Wheal Acreages
the subject of wheat. During that debate speeches were made by the premier of Saskatchewan and the provincial minister of agriculture. Certain recommendations were made by the legislature which have already been placed before this committee. I shall not go into detail respecting those recommendations, except to say that the first was that the minimum price for the 1941 wheat crop should be set at 85 cents a bushel basis No. 1 Fort William. The reason for the recommendation by that legislature-one which was unanimously adopted-calling upon the government of Canada to fix the price at 85 cents was that when the matter was before the legislature it was within the contemplation both of the premier and of the minister of agriculture of the province that there would be a reduction this year to 230,000,000 bushels.
Time and again we have asked the Minister of Trade and Commerce the price the Canadian government is receiving from the government of the United Kingdom. Hon. members have not been able to get that information. Yet they have the information in the legislature of Saskatchewan. The premier is reported to have said that-and I quote from the Canadian Press report:
The suggested price of 85 cents a bushel would not be acceptable to all-
He went on to point out that it would be impossible for farmers, even on that basis, to pay their debts.
-but it was an increase over the present price of 70 cents. The reason this figure was suggested was that it was the price which Great Britain was prepared to pay. It was reasonable and fair and would not be a burden upon the mother country.
I am asking the Minister of Trade and Commerce if the premier of Saskatchewan was justified in making that statement. Did he have any information which was not available to members of the House of Commons?
I turn now to the remarks of the minister of agriculture in the legislature of Saskatchewan. He would be in a particularly good position to say what the United Kingdom is paying for wheat, because, if I remember correctly, he accompanied the federal Minister of Agriculture to the old country. This is the press report concerning his comments: An objection that the price-
That is, 85 cents a bushel.
-was too high was not valid because Great Britain was already paying that figure for Canadian wheat now and was willing to continue paying it. Canada therefore would not be imposing on Great Britain.
Surely the minister could inform the committee what Canada is receiving, so that we may be in a position to know whether we 
would be justified in supporting the resolution now before the committee, and whether there is any justification for setting the price at 70 cents.
Speaking during the last campaign in western Canada the Minister of Agriculture made the statement on numerous occasions that the British government was paying sufficient to enable a further interim payment of from 10 to 12 cents per bushel. In other words, the British government was paying from 82 to 85 cents a bushel. That is the necessary inference from the statement. Surely this committee has the right to know now something which apparently is known to the premier of Saskatchewan and the minister of agriculture in that legislature.


James Angus MacKinnon: Mr. Chairman, I cannot say where the premier of Saskatchewan or the minister of agriculture in that province got the figures to which the hon. member has referred-


John George Diefenbaker: Are they not correct?


James Angus MacKinnon: but I can say they are not correct.


Charles Edward Johnston: Are they very far out?


Thomas Clement (Tommy) Douglas: The Minister has not given a satisfactory answer to the questions which have been asked. When the Minister of Agriculture introduced the vote on March 27 he placed on record representations made by the advisory committee of the wheat board and the Federation of Agriculture. Later I placed on record representations made by the Saskatchewan legislature. There has been no reference by the minister to anything of importance in those representations. I may add that the resolution passed in the Saskatchewan legislature had been accepted by the wheat pools and endorsed by the United Farmers of Saskatchewan.
All those representations referred to increased prices. In fact the resolution passed by the Saskatchewan legislature went so far as to suggest an initial price of 85 cents. Nothing has been placed before the committee giving any reason for the government's statement that it intends to leave the initial price at 70 cents. The impression has gone out among those in wheat circles that the price paid by the British government for the last consignment of wheat which the Minister of Trade and Commerce announced in the house last summer was close to 85 cents. I have heard the exact figure, but whether or not it is correct I am not prepared to put it on Hansard. My information is that it is slightly more than 85 cents. Now when the British

Supply-Agriculture

Wheat Acreages
government paid a price in that neighbourhood for our wheat, and when the wheat board gets a fifteen cent processing levy on every bushel of wheat milled for domestic consumption, and in view further of the fact that the government is going to take delivery of
230,000,000 bushels of wheat this year which will cover only the wheat sold to Great Britain and the wheat used for domestic consumption, this house should have a statement from the minister that it is not possible to pay an initial price of 85 cents without constituting a drain upon the treasury. Certainly the minister should state why the price should continue at 70 cents when the committee has good reason to believe that the wheat is being sold to Great Britain for more than 70 cents, and the wheat sold for domestic consumption is bringing in more than 70 cents. We should know why the wheat board proposes to leave the initial price this year at a figure which the government admitted last year was far below the cost of production to the wheat grower.


James Angus MacKinnon: Mr. Chairman, I do not think any member of this house from western Canada would deny that the Minister of Agriculture, the Minister of Mines and Resources and the Minister of Trade and Commerce, as three members of the wheat subcommittee of the cabinet, would be very anxious to increase the price upwards from 70 cents if the figure suggested now by the hon. member was what was received for our wheat. On that particular point, and speaking personally, I am not just sure that the same reason for secrecy prevails at the moment as it did when I made the statement last July that it was not in the public interest to give the exact figure for which the wheat was sold to the British government. Nevertheless I am not in a position to give that now. I should first want to consult our advisers, the wheat board, on whose advice largely we decided last year that it was not in the public interest to give the exact figures paid by the British government for the wheat we sold last year.


Charles Edward Johnston: It will
make it bad for you if you are getting more than that and the farmers are not getting a fair deal.


John George Diefenbaker: I was interested in the minister's explanation. May I ask what the difference was between-


James Angus MacKinnon: I do not propose to allow myself to be drawn into making a statement of that kind. I want to make very sure of what the position is before I give any figures.


John George Diefenbaker: The reason I ask is this. In the monthly bulletin of agricultural statistics issued by the Department of Trade and Commerce, at page 387, is set out the number of bushels of wheat that were shipped via the Canadian Atlantic seaboard to the United Kingdom in the four months ending November 1939 and for the same four months in 1940. The quantity shipped in the four months ending November 1939 was 14,747,148 bushels, and the amount paid by the United Kingdom was $10,194,765. During the same four months in 1940 the amount shipped by way of Atlantic ports to the United Kingdom was 23,984,555 bushels, approximately 24,000,000 bushels, for which the Canadian government received $21,630,721. Apparently therefore in the records of the minister's own department there is some indication of the price that was paid, which is well in advance of 80 cents, as a simple calculation will show. Are these the prices received by the Canadian government or by the wheat board f.o.b. an eastern port, or are they the prices received in the old country out of which freight has to be paid?


James Angus MacKinnon: It is not possible for me to give that information offhand. I am not sure whether the context from which my hon. friend is reading shows it or not, but if not I would have to make inquiries.


John George Diefenbaker: I am reading
from the monthly bulletin issued by the minister himself for December, 1940.


James Angus MacKinnon: There is no doubt that any document issued by the bureau referred to would be accurate, but whether that bears out the contention as to the price per bushel is a different matter.


John George Diefenbaker: What I am trying to get at is this. The statistics are available here. They have not been given to the house on the ground of public interest, but we can arrive at our own conclusion if the minister will state whether this is the net price received or the price out of which freight has to be paid.


James Angus MacKinnon: I cannot give that information now.


James Garfield Gardiner: If I might be permitted the newspaper report answered my hon. friend's question because it said there was a $6,000,000 loss. That was put out by the same authority which published the document from which my hon. friend is taking his
2272	COMMONS
Supply-Agriculture-Wheat Acreages
figures. It was put out three or four weeks ago, showing a loss of $6,000,000 on the 1939 crop.


John George Diefenbaker: The Minister of Agriculture must be astray; either that or he was not paying attention. I am reading from the monthly bulletin issued by the Minister of Trade and Commerce.


James Garfield Gardiner: Every week or every few weeks that same authority puts out a statement in the press, and it will be recalled that a very few weeks ago the statement was put out that there was a $6,000,000 loss on the 1939 crop. That $6,000,000 loss indicated that there must have been, between the 70 cents paid on the farmer's wheat and the price received from the British government, sufficient by way of costs to wipe out the entire difference and create over and above that a loss of $6,000,000.


John George Diefenbaker: I asked the Minister of Trade and Commerce for an answer to my question so that the committee would know exactly what price was being received. So far as the explanation of the Minister of Agriculture is concerned, that because there was a loss of $6,000,000, the wheat board did not secure a high enough price from the United Kingdom, let me point out that that was not the stand he took some time ago.


James Garfield Gardiner: I am not saying that they did not secure a high enough price from the United Kingdom. I say that the 70 cent advance paid to the farmer was sufficient to result in a $6,000,000 loss on the part of the 1939 crop sold, after you take the costs out of the price which the British government and others paid. I am not saying that the British government did not pay enough.


John George Diefenbaker: On this wheat
there was a loss of $6,000,000, according to the Minister of Agriculture, and it could have been sold last February and March by the wheat board, not at a loss, but at such a price that there would have been available to the farmers an additional 10 to 12 cents a bushel.


James Garfield Gardiner: It could not.


John George Diefenbaker: I will read what the Minister of Agriculture said.


James Garfield Gardiner: I know what you are going to read. You have read it often. I know what it says and what it means.


John George Diefenbaker: The people of
western Canada, having listened to what the Minister of Agriculture said, unfortunately put

a different interpretation upon his words than he meant to convey, if he meant to convey what he says to-day. This is what he said:
The Canadian government can sell to Britain,.-
I am referring now to the report of a speech made on March 6, 1940.
-through the wheat board, all the wheat they now have on hand, and thereby pay those who sold to the board an additional 10 or 12 cents per bushel, stated the Hon. James G. Gardiner, dominion Minister of Agriculture. . . .
Mr. Gardiner said that if the wheat were sold now, Britain would pay the storage until they actually took delivery, instead of the farmers who will pay the storage until it is sold.


James Garfield Gardiner: "If it were sold now."


John George Diefenbaker: If the wheat were sold now.


James Garfield Gardiner: And I might tell my hon. friend that the last time he read that document in -his own constituency, one of the men who was listening to him got up and gave the audience his interpretation of what I gave in the same hall, and it was what I gave.


John George Diefenbaker: That is perfectly true. But let me go on.


James Garfield Gardiner: In other words, I did not give a wrong interpretation.


John George Diefenbaker: Mr. Chairman, if
the hon. gentleman will just wait, possibly the last words will clear up the situation.


James Garfield Gardiner: But you are reading from a newspaper report.


John George Diefenbaker: The newspaper
report, now, is not correct?


Mr. ROSS (Moose Jaw):: It was not correct then.


John George Diefenbaker: In spite of this fact, Mr. Gardiner said, my government believes that it is better business for the farmers not to sell at the present price.
What possible meaning would there be in that, Mr. Chairman, other than this, that the government-


James Garfield Gardiner: The meaning was that
we did not know at the time that France was going to fall.


John George Diefenbaker: The answer now is that they did not know at the time that France was going to fall. The only difference which the fall of France made to the situation-


James Garfield Gardiner: Was a hundred million bushels of wheat.


John George Diefenbaker: Was fifty millions, including the Netherlands, France and Belgium.

Supply-Agriculture-Wheat Acreages


James Garfield Gardiner: Without a war.


John George Diefenbaker: Without a war?


James Garfield Gardiner: Yes, but there was
a war.


John George Diefenbaker: Fifty million bushels. Now I again ask the Minister of Trade and Commerce this question, why should the committee and the house not have this information? Are the farmers not interested? Is it not their wheat that is being dealt with? Have they not the right to know what is being received, what the proceeds are, when they are being asked to produce wheat during a time of war at a loss, in many cases-the only industry operating under that disadvantage? Have not they, being asked to do a patriotic duty-the one industry in Canada required to produce at a loss-the right to know what is being received for the product they produce?


James Angus MacKinnon: Mr. Chairman, I would not for anything attempt to interfere with my hon. friend making a speech, but I have already given him the answer to the question which he has just asked.


Thomas Clement (Tommy) Douglas: Not a very
satisfactory one.


James Angus MacKinnon: The answer is that I am not in a position to reveal the information asked for by the hon. member at this time.


Ernest Edward Perley: I should like to ask the
minister just what he meant on the first of August last when, answering a question, he replied that they had sold 100 million bushels of wheat at considerably over the present market price, which on that day was practically 73 cents. Then, next day, speaking in favour of the processing tax, he made this statement: that they were charging Britain more than they were charging the people of Canada, therefore the Canadian people ought to be prepared to pay the 15 cents processing tax. What did he mean by that-that they were charging Britain more than they were charging the people of Canada?


The CHAIRMAN:: Order. The question
is irrelevant because it refers to another debate in this session.


Ernest Edward Perley: That was not this session.
It was last session.


Thomas Vien: Oh, that is different.


Ernest Edward Perley: Let us have an answer to
that.


James Angus MacKinnon: Well, I am not prepared just at the moment to give an answer.


Ernest Edward Perley: That reply makes it all
the more evident that we should have a thorough investigation into this whole matter. The minister does not know anything about his department. I venture to say that he does not know to-day how much cash wheat they have, what options they are. selling, where their cash wheat is, what they have sold, and what they have sold it at. We should have a report on this whole matter. It is tied in with this other scheme, and we do not know the facts, and the minister doesn't know.


James Angus MacKinnon: He knows quite a bit about it.


James Garfield Gardiner: One or two matters have been brought up in the discussion, which, I think, require a statement in view of the fact that they bear upon both the policy announced by the Minister of Trade and Commerce and the policy which I announced the other day.
I have before me Hansard of November 14, 1940, and April 4, 1941. The latter contains three or four speeches which were delivered1 in committee on the estimate now under consideration, and in those speeches certain references were made to matters which have been under discussion during the last few moments. In these speeches, too, the speakers referred to addresses which they had made on previous occasions. I have here the address which was made by the hon. member for Souris, to which he referred, on November 14, and in which he made the statement that last year he had proposed a scheme very similar to the one which is now before the committee. But he did not enlarge upon it or indicate what he said to the house on that occasion, and I should like to put it on Hansard.


James Arthur Ross: It is out of order.


James Garfield Gardiner: It is not out of order. That was last session.


James Arthur Ross: On a point of order, Mr. Chairman; you have just finished ruling one hon. member out of order for quoting or asking about something that had been debated at this session. I would remind you that November 14 was this session.


Thomas Vien: When I stated that the suggestion raised by the hon. member was out of order I thought he was referring to a statement made by the Minister of Trade and Commerce during the present session. When he stated that the Minister of Trade and Commerce had made this statement during the last session, I intimated that he was quite in order. I should like to point out that it is always advisable and necessary, when an hon. members reads from a statement, that he indicate what he is reading from; it is helpful in determining a point of order.
2274	COMMONS
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Agriculture-Wheat Acreages
As regards what the minister now proposes to do, it refers to a statement made on November 14 last, which was during the present session, in a different debate-in fact, the debate on the address. I therefore think the point of order is well taken.


James Arthur Ross: I have no objection to the minister quoting from what I said. I merely thought that we should be consistent in the matter of procedure.


James Garfield Gardiner: The point of order is well taken. I was under the impression when I started to read it that the speech was made at the previous session.


James Arthur Ross: Go ahead.


James Garfield Gardiner: But I would say this, that the hon. member brought the matter up the other evening in his address, and no exception was taken to it.


James Arthur Ross: Quite correct.


James Garfield Gardiner: And if the committee has no objection to my reading what he really did say, I think it will be well to have it on Hansard.


Some hon. MEMBERS:: Go ahead.


Thomas Vien: By unanimous consent.


James Garfield Gardiner: I quote:
I am going to suggest to the government also that earnest thought be given to a plan which might have a far-reaching effect. For some years I have thought that we must work out a soil conservation programme in western Canada. This has been done with success in other countries. I know some will object to the cost involved in any such programme, but let me state in general terms what I have in mind. Supposing you took the total cultivated area of the prairies and paid the producers $5 an acre for summer-fallowing one-third of that area.
That, I submit, is almost exactly what we are proposing here. The only difference is that this is $5 instead of $4.


James Arthur Ross: What is the total cultivated acreage?


James Garfield Gardiner: We are attempting to reduce the total cultivated acreage by 35 per cent, approximately one-third, by paying $4 an acre.


James Arthur Ross: Excuse me; that is the total cultivated acreage of all crops? This is wheat acreage.


James Garfield Gardiner: About 43 million acres is the total. He goes on:
That may seem to involve a tremendous amount of money, but I suggest that the cost would not be any greater than the amount paid under the acreage bonus and the guaranteed price, and certainly there would be a great improvement in farming methods.
[The Chairman.]
In the same speech my hon. friend went on to discuss matters of more grass, coarse grains, and so on. I am sure he will agree that the present policy is the proper one to bring before the house at this time, particularly in view of the fact that he himself has made a success of farming in that section of Manitoba where that kind of farming is absolutely essential. I would say the same with regard to the hon. member for Portage la Prairie (Mr. Leader). In a speech the other night he referred to an address he made in November of last year and also to the fact that he farms now very much in the manner we are suggesting that others should farm through the policy now before the house. I could understand either hon. gentleman objecting to payments by way of bonus being made to other persons in view of the fact that no bonus was paid to them at the time they undertook to farm in that way.


James Arthur Ross: I was not objecting to it.


James Garfield Gardiner: No, but I could understand if the hon. gentleman did object. I am sure, however, he will not object to this particular policy, as some other hon. members on the other side have done, since it is to carry out pretty much the principle which he was advocating last fall-and I think he made that fairly plain the other day when he was speaking in this house.
It was not to that matter in particular, however, that I wished to refer at the moment, but rather to the fact that the hon. member for Portage la Prairie made a statement in this debate on April 4 in which he said:
I was surprised when the Minister of Agriculture declared that he had embodied in this government proposal a large part of the recommendations made by the advisory committee of the wheat board and the Canadian Federation of Agriculture. Well, he may have adopted some of the minor suggestions but certainly none of the essentials.
Mr. LEADER.: That is absolutely true. That is a true statement.


James Garfield Gardiner: That is what my hon. friend stated. We will see about the other matter. On March 27 in this house I made a speech which included certain references to that particular policy, and some of those references were afterwards dealt with in the house by other speakers. On page 1922 will be found the report of what I said. Some time in January the Federation of Agriculture came to Ottawa and presented their resolutions, and the hon. member for Weyburn said it was January 27. I then proceeded to read the recommendations:
Wheat. In the days that lie ahead, it may be that a measure of adjustment of agricultural production may be found necessary in

Supply-Agriculture-Wheat Acreages
the great wheat-growing areas of the prairie provinces, which may involve the re-appraisal of western agricultural resources so that a balance in agricultural production may be established.
Well, is not that in exact line with the proposal that is before the house at the present time, that something ought to be done in the days that are ahead of us in order to have a re-appraisal of the kind of agriculture which we have had, and to encourage something in another direction?
In the meantime, the problem created by heavy surpluses is a very real one for the western wheat grower.
The Canadian Federation of Agriculture recommends:
Listen to the recommendations.
(1)	That while an adjustment programme may be found necessary in the future, it is not advisable at the present time to introduce compulsory restriction of acreage seeded to wheat.
We have not introduced compulsory reduction of acreage seeded to wheat. We have made a proposal exactly along the line suggested in the preamble to the resolution, that we should be preparing for the time ahead when some readjustment should be made, and we have given some inducement to farmers to change their method. But we have not said that they must change it.


Richard Burpee Hanson: But you are doing it indirectly.


James Garfield Gardiner: Not indirectly. There is no compulsion about it. A farmer can say to-morrow when he seeds his wheat, "I will pay no attention whatever to these regulations; I will go ahead and sow wheat, believing that some day there will be a government in Canada that will let me market all the wheat I grow." He can say that and go ahead.


John Gordon Ross: That is exactly what I am going to do.


James Garfield Gardiner: What we say with reference to the matter is this. We are not compelling the farmers of the west to reduce their acreage, but we are offering them some inducement to do so. The recommendations continue:
(2)	For the coming crop year, we believe that the dominion government, through the wheat board, should undertake to announce the total amount of wheat of which it is prepared to accept delivery.
We have announced that it is 230,000,000 bushels, but the hon. member for Portage la Prairie does not believe that that is essential to the carrying out of the policy. I would ask him, what is essential?


Mr. LEADER:: I have agreed to that.


James Garfield Gardiner: Yes, my hon. friend has agreed to it, but that does not mean that we do not accept any of the recommendations of the federation of agriculture.


Harry Leader: On a question of privilege,
I did not state that the government accepted all of the recommendations or did not accept them or left some of them out. I said that the essential was left out, which is the increased price which all farmers and farm organizations, the wheat board and the pools as well as myself in a previous speech have advocated- an initial higher price to take care of the average farmer.


James Garfield Gardiner: I have the floor. I did not interrupt the hon. member when he was speaking. Here are the words which the hon. gentleman used:
Well, he may have adopted some of the minor suggestions but certainly none of the essentials.
One of the essentials was the amount of wheat of which we were going to accept delivery. The recommendations go on:
We believe that the amount of wheat which may be delivered by the grower in the crop season of 1941-42 should be based on the estimated amount which the wheat board may be reasonably expected to market during the 1941-42 crop year, including both export and domestic sales.
We got an estimate of that amount from the wheat board, and we got it as the result of recommendations of the advisory committee of the wheat board, on which there are representatives of every organization of wheat growers, and the Canadian federation of agriculture.
Having established the maximum amount which may be delivered, we recommend that the individual grower's delivery quota should be based on a policy which will preserve to each farm unit an equitable share of such maximum amount in proportion to the past production of the crop district in which it is located.
That is exactly the policy announced the other day by the Minister of Trade and Commerce, recommended by the Canadian Federation of Agriculture, recommended by the wheat pools of all three western provinces, recommended by every organization that has discussed it, representative of the farmers that grow wheat; and that is an essential recommendation brought before this government.
We will come to another one. My hon. friend may consider others more essential, but we will come to them. I said the other day:
That is as near as one can get to a word description of what was read into the policy the other day by the Minister of Trade and Commerce (Mr. MacKinnon).
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Supply-Agriculture-Wheat Acreages
It is a description exactly of the whole policy announced, with the exception of the price section of it. Now coming to the price section:
That because of the restricted deliveries and in order to maintain the income of the western farm home, steps should be taken to increase the initial payment for wheat delivered in the crop year of 1941.
The only suggestion made as to the extent to which it ought to be increased was the proposal that there should be a processing tax of not less than SO cents a bushel, which, added to the processing tax of last year, would make the tax about three times the amount it was last year.
A processing tax of 50 cents a bushel would bring, under these proposals, about $24,000,000. That $24,000,000 it was proposed should be spread over the 230,000,000 bushels, which would result in about eleven cents a bushel being added to the price. Then it was suggested by some of the organizations that probably a little more than that should be added. There are reasons why a processing tax should be put on and reasons why it should not. Ever since this war began, we have been advocating that we should obtain the costs of the war as largely as possible from excess profits tax or income tax on those who have large profits or incomes as a result of the war. But a processing tax on bread or flour or wheat is not a tax levied on that part of the population. Such a processing tax is levied on bread and wheat eaters. Wheat is the food of the great mass of the people of this and all western countries. It is the food of the labouring people, the food of the farmers themselves. The two groups in Canada who would pay the greater part of this processing tax would be the labouring men and the farmers.


Ernest Edward Perley: They have a good increase in the price of their labour to-day.


James Garfield Gardiner: That is probably true so far as part of the labouring classes are concerned, but I think my hon. friend will find that at least as much bread is consumed by the farmers of Canada to-day as is consumed by those who can be termed labourers. In other words, the processing tax would come, in large proportion, right out of the pockets of the farmers themselves.


Ernest Edward Perley: Give them ten cents a bushel on the 230,000,000 and they will not kick.


James Garfield Gardiner: That is the net increase suggested. Let me recall that the processing tax, if put on, would provide $24,000,000 which it was suggested be added to the initial payment, and $7,000,000 of which is

already levied, and that that should be the price which the farmer should obtain this year-not an advance, but the price which the farmer should obtain. That has been the proposal throughout in many of the resolutions passed, that we should establish a new initial payment; that we should add on the processing tax, and that if we should not make that the price, then we should raise it a little higher and make that the price, and the suggestion has been made that that higher level ought to be 85 cents. This legislation gives the farmer the possibility of getting his 70 cents advance and also the possibility of having distribution among the farmers of western Canada of $36,000,000 instead of $24,000,000. In addition, it makes it possible for the farmers also to have participation to some extent in the price for which the wheat is sold. My hon. friends have been discussing past prophecies with regard to participation. Because of past experience in war time I am not going to make any prophecy at this time. Nevertheless the farmer knows the position; he has the possibility of dividing this $36,000,000, and a proper division of that sum will mean an added' return on his quota which everyone has agreed should stand. It will mean 86 cents a bushel to the farmers on the quota if they properly distribute it among themselves, as they can do under the provisions of these regulations. Hon. members can estimate as closely as I can what the participation may amount to.
Then we must take this into consideration, that if the farmer follows the practice of accepting a quota on 65 per cent of his acreage and growing his wheat on 40 per cent of his acreage, which he can easily do if it is a fair year, he will have the possibility of earning sufficient to put his wheat price up, on the quota that he is allowed to deliver, to approximately 89 cents, not at Fort William but at the point of delivery. I should like to suggest to the hon. member for Portage la Prairie (Mr. Leader) that if the essence of the suggestion of the Canadian Federation of Agriculture is not contained in the provisions of this policy, then it is not contained because this makes possible a higher return than the suggestions of the Canadian Federation of Agriculture.
It is all very well for my hon. friends to shake their heads, but all one has to do is to sit down with a pencil with the farmers in their constituencies and explain this policy to them, and the good hard-headed farmers of western Canada will tell them that this is really better than the suggestions that have been made by some hon. members.


Mr. BLACKMORE:: Purely theoretical.
APRIL S. 1941	2277
Supply-Agriculture-Wheat Acreages


James Garfield Gardiner: Theoretical until you
start to put it into practice, and then it is practical.


John Horne Blackmore: Yes, with no live stock or equipment and no money to get them.


James Garfield Gardiner: (5)	It is anticipated that at the end of the current crop year, all existing^ grain storage facilities will be filled. We believe that these surpluses of bread grains may become an important factor in our war effort and that in the meantime they should be regarded as a reserve which will ensure a constant supply of wheat to Great Britain in the event of possible crop failure in the course of the war, and also be available to meet the needs of the people of Europe when the war is won.
That is a statement with which I think we will all agree, at least all who come from western Canada.
(6)	In view of the foregoing, and because we believe that the maintenance of reserve stocks of grain on the farm provides an effective form of crop insurance under existing conditions, we recommend that the dominion government be asked to provide financial assistance to farmers for the construction of adequate farm storage facilities to enable the farmer to adjust his deliveries in accordance with the system outlined above.
I understand that the hon. member for Qu'Appelle and I disagree as to which proposed that kind of thing first. Nevertheless we both proposed it, so all I wish to say is that when I was placing this matter before the committee I stated that the time to make the final decision with regard to that part of the policy had not yet arrived; that if we have a good crop in western Canada this year, if on the acreage on which we are trying to grow
230,000,000 bushels we grow more than that- and I am scarcely correct in saying we are trying to grow 230,000,000 bushels; we are trying to grow 307,000,000 bushels, because it takes 77,000,000 bushels to take care of other demands apart from the consumption of wheat for flour-there may be a storage problem confronting the farmer and the government which may have to be given consideration, but other possibilities arise also.
Then No. 7:
It is recommended that the practice inaugurated during the present crop year, of paying farm storage, be continued through the coming crop season, and that the amount of the farm storage accruing due to individual farmers be used to repay any advances made to them which may be made for the purpose of providing additional storage facilities.


Ernest Edward Perley: Who suggested that first?


James Garfield Gardiner: I am not sure about that at the moment, but it does not make much difference; it was accepted by everyone.


George Hugh Castleden: With regard to the
statement about considering the matter of paying storage, the Minister of Trade and Commerce said this in No. 5 of his recommendations :
The Canadian wheat board will continue to pay storage to the producers on the same basis as 1940-41 but only on the undelivered portion of the 230,000,000 bushels.
It is very definite.


James Garfield Gardiner: Yes, the minister indicated to the committee a few minutes ago that the policy anticipates that the government will take delivery of only 230,000,000 bushels this year, and we are asking the farmers to try to cut the acreage down to the point that there will be only 230,000,000 bushels to be delivered for sale during this coming year. I anticipate that the farmers are going to try to do that, and they may be successful. If they are not, there may be some other problems confronting us at that time. But we must find out first whether the crop is 307,000,000 bushels or more or less.


Then No.   S@: Since it is anticipated that practically no elevator storage space will be available at the time of the 1941 harvest, we recommend that the dominion government authorize the Canadian wheat board to make cash advances against that portion of the 1941 crop which the farmer can deliver under the arrangement outlined above during the crop year 1941-42.
All I wish to say in that regard is that this policy was advocated a year ago. When the Minister of Mines and Resources and I met a committee in Winnipeg to discuss the question, and did not accept that proposal, we were condemned from one end of western Canada to the other. We suggested that there should not be an advance made on the farmer's wheat in August, but that this matter should be left for consideration later in the season. That was done. Then the Department of Trade and Commerce, acting under the powers given it in the legislation of last session, set up quotas which distributed the delivery of the wheat over the entire year. This year every farm organization in western Canada, including the Canadian Federation of Agriculture, asked the government to continue that policy. Therefore, just because farm and other organizations agitate against a policy does not mean that in the long run that policy will not turn out to be the right one. In spite of the fact that there was greater opposition to the policy of a year ago than so far there has been to this policy, the policy of last year now is accepted by every farm organization in Canada as having been the best policy in the interests of the farmer. It has been accepted not only
2278	COMMONS
Supply-Agriculture-Wheat Acreages
by farm organizations. The retail merchants' association, whose representative at the Winnipeg meeting a year ago condemned the policy, are satisfied with it to-day. Grain organizations are satisfied with it. Implement companies are satisfied with it. Farmers are satisfied with it. Banks are satisfied with it, though nearly all these people condemned it a year ago. So I would suggest that hon. members may now be condemning something that they will be supporting a year from now, and that it is not enough to say that because someone condemns a certain thing at a certain time, that thing is not right.
To deal further with the question raised by the hon. member for Portage la Prairie, I would suggest that every single recommendation to which I have referred, which can be carried out, has been carried out with the exception of setting a higher price for the delivery of wheat in the initial stages. But I submit that this policy makes better provision, in the final disposition of the crop and the assistance it gives, than would the proposal which was placed before the government by the Canadian Federation of Agriculture.


An hon. MEMBER:: They do not agree with that.


James Garfield Gardiner: Well, ever since 1922 I have been receiving delegations from farm organizations almost annually, either as a member of a government, as leader of a government, as leader of an opposition or as a member of another government; and I have never seen the time when any government could accept all the recommendations placed before it by a farm organization or, so far as I know, any other organization. If on this occasion we have come so close to it as to miss out on only one recommendation, then I think we are about as close as any government ever came to accepting the resolutions of a farm organization. I believe that if we had accepted all their recommendations, they would have believed, after they left Ottawa, that their visit had been a failure; they would have thought they had missed out on something. Therefore, if we have not gone to the extent of giving them just what they asked for, in just the way they asked for it-


An hon. MEMBER:: Or any other way.


James Garfield Gardiner: -I still do not think we have departed very far from what they requested. An hon. member says "Or any other way." I would ask one question. Why was it that farm organizations from all across Canada, meeting in Toronto, were not able to insert a price in their resolution?
IMr. Gardiner.]


Charles Edward Johnston: Because they left it to the discretion of the government.


James Garfield Gardiner: Probably for the same reason that it would be difficult for any national organization to determine a price.


Charles Edward Johnston: Does the minister really think the farmers will get 89 cents for this crop?


James Garfield Gardiner: I really think some
farmers, who follow the principles of the resolutions now before the committee and put them into effect one hundred per cent, as they can be put into effect, will get 89 cents on their quota.


Charles Edward Johnston: Would the minister say the majority?


James Garfield Gardiner: I am not going to say the majority; I am not sufficiently acquainted with just what farmers will do under given circumstances.


Alexander Malcolm Nicholson: Would the minister
explain how that will work out?


James Garfield Gardiner: A certain number of farmers will get that return; and it will vary from about 80 cents up, depending upon what they do if they take advantage of these provisions. I should, however, like to add that this return will be on only a limited amount of wheat. I do not want anyone to go away from this house with the idea that the farmer would be making money if he received 89 cents on that limited quantity, because he will cut his wheat down to 40 per cent of what he grew last year, and he will collect that price only on his restricted deliveries.


Thomas Miller Bell: He will have a lower income.


James Garfield Gardiner: Probably in the long run he will have a lower income. This house is attempting to give the farmer back something of what this war has taken away from him. We are not trying to give it all back; and my judgment is that the farmers of the west, and the farmers of all Canada, do not expect the government to give them back everything they may be losing as a result of the war. They do expect two or three things. They expect this government will see to it that others who are engaged in work having to do with the war do not get away with excess profits as a result of such war activity.
I think they expect this government to see that wages are not paid which will take all the labour away from the farms and place it in industry. They expect these things, and

Supply-Agriculture*-Wheat Acreages
they have a right to expect some action to be taken in these two directions. But assuming that proper action will be taken with regard to these two difficulties, either by the men themselves in connection with labour, or by industry itself in engaging labour, or by industry itself in relation to profits, or by the government insisting that industry and labour take these steps, then I think the farmer will tell you that he is prepared to sacrifice just as much as anyone else in Canada in the interests of the mother country and in the interests of Canada itself, in order to press this war to a successful conclusion.
With this in mind I would suggest to the committee that no good purpose will be served by holding up this estimate. Probably this matter will be discussed all over again when we return after the Easter adjournment. We shall have to go on with the policy laid down in the regulations which have been adopted under the War Measures Act. I would suggest that we go on with it and do the best we can to make it work. Then, after we have done all we can, if it does not work I am quite prepared to come back here after the recess, or next fall, or any other time, and listen to severe criticism from all sides of this house because of the fact that, under this proposal, the farmer did not receive what he should have received, having regard to the difficulties with which we are faced at the present time. If we do that, I think we can get on with the other work of the house. When we go back to our constituents in the west we can say, "The house has passed the estimate. They have not agreed on the whole principle; they are not all satisfied that it is the right thing for you, but this is the way you can put it into effect." Then, having given them that guidance, let us watch over it for a season. And if we want to criticize, let us criticize. There is always the possibility that a year from now we may be feeling just about the same with regard to this as we feel with regard to the quota system which was put into effect last year.


Mr. CRERAR:: Mr. Chairman-


Harry Leader: On a question of privilege. I claim the right to answer the Minister of Agriculture.


Richard Burpee Hanson: That is not a question of privilege.


Harry Leader: Just a moment; on a question of privilege-


Thomas Vien: The hon. gentleman who is leading the house now has the floor. Is it the pleasure of the committee that lie should have the floor?


Some hon. MEMBERS:: Yes.


Harry Leader: No. I rise to a question of privilege. Surely, Mr. Chairman, a member lias some rights. On a question of privilege I ask permission to say a word or two in answer to the Minister of Agriculture.


Thomas Alexander Crerar: I would say to the hon. member for Portage la Prairie that no one in the house, least of all myself, wishes to deny him the opportunity of making any reply he thinks necessary, or replying to anything in the remarks of the Minister of Agriculture to which he may take objection. But it was understood that the committee would rise and ask leave to sit again this day in order that before adjournment of the house at six o'clock the amendment moved some weeks ago by the hon. member for Haldimand on the motion to go into supply could be reestablished on the order paper. I am sure the hon. member for Portage la Prairie will believe me when I say no one wishes to deny him the right to reply.


Harry Leader: Give me two minutes.


Thomas Alexander Crerar: This other matter was agreed upon, and the government wishes to live up to the understanding. I therefore move that the committee rise, report progress and ask leave to sit again this day.


Harry Leader: On a question of privilege, I take the stand that I am being denied the right to speak.


Thomas Vien: Order.


Thomas Alexander Crerar: Let the hon. member speak a few minutes, then.


Thomas Vien: The motion is not
debatable.


Thomas Alexander Crerar: If my hon. friend will finish what he has to say in a few minutes, so that we can handle the other business before six o'clock, it will be all right.


Harry Leader: It will not take long.


Thomas Vien: The motion will stand, then.


Harry Leader: I wish to say that I feel highly complimented in that the Minister of Agriculture should brood over and consider the speech I made in the house recently. Evidently it is the truth that hurts. I take this position in the committee to-day, namely, that in my speech I uttered nothing but the truth when I pointed out that the policy of the Minister of Agriculture does not embody the essentials. The first essential, as I take it, was that the people of Canada- and I will limit this to western Canada-should
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have a higher initial price. Another essential was connected with the processing tax. Never did the Minister of Agriculture or any other hon. member hear me defend the processing tax on the floor of the house. That was one of the essentials, I am willing to admit; but the essential thing is the increase in the initial price. They do ask for that. But what does the government do? The farmers have asked for bread and the government gives them a stone. I will defy the Minister of Agriculture to come out into my constituency, and I will resign to-morrow and I will fight this argument in that constituency.


James Garfield Gardiner: I have been in your constituency before.


Harry Leader: We are always glad to see you. I offer that invitation, to come out and settle it before the highest tribunal in the land.
I should like to put on Hansard what the minister did say:
I think that with the exception of the definite suggestion that a processing tax be levied and that the initial payment be increased-with nothing definite as to the amount-and with the possible exception of the proposal made in one other section of these recommendations, we have already embodied in the policy which is before the house the greater part of what has been asked for in the resolutions of both bodies.
I say the essential thing is the initial payment.


James Garfield Gardiner: My hon. friend has said he was surprised to hear me say that.


Harry Leader: I did not interrupt the
minister. They have given us what I claim, and what I believe the people of western Canada will claim is a fool policy, and not what the people of western Canada have asked for.


James Arthur Ross: As a matter of
privilege I should be allowed to answer the minister's reference to me.


James Garfield Gardiner: I shall have to have an opportunity to reply.


Thomas Alexander Crerar: I have moved that the committee rise, report progress and ask leave to sit again this day.


Thomas Clement (Tommy) Douglas: Shall we come back later to the committee stage?


Thomas Vien: The motion is "to sit again this day". Is it the pleasure of the committee to adopt the motion?
Mr. ROSS ISouris): Then, as a matter of privilege, I am not allowed to make a statement in reply?


James Garfield Gardiner: The hon. member made a forty-minute speech.


James Arthur Ross: I still have twenty minutes coming to me.


James Garfield Gardiner: I have not had an opportunity to distribute copies of the regulations. I shall leave them at the end of the table, and anyone who wishes to have one may take it. They are not exactly word-perfect, because I believe there are one or two points at which typographical errors may be found.
Progress reported.



AGRICULTURE-AMENDMENT ON MOTION OF MINISTER OF FINANCE

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
John George Diefenbaker: Mr. Speaker, at this stage I wish to move an amendment-


James Garfield Gardiner: I have the floor on this motion.


Richard Burpee Hanson: No, the minister has not the floor. This is a new motion.


James Arthur Ross: Let us have a little fair play.


John George Diefenbaker: I have risen to move an amendment based on the condition of agriculture. I think it will be agreed by all hon. members that in time of war the morale of this nation cannot be as it should be if agriculture is pauperized. Agriculture taken as a whole in Canada is in a lamentable condition, and it is an anomalous condition of affairs that Canada, a great producer of food, should, in a world which sooner or later will require foodstuffs, try to find means to bring about a reduction in the production of wheat.
I move therefore, seconded by the hon. member for Peel:
That all the words after "that" in the motion be struck out, and that the following be substituted therefor:
it be resolved that the government should take immediate steps to create a parity of prices as between agricultural and other products in order to improve the condition of Canadian agriculture and in order that it may receive a just and fair return, and thus be enabled to make that contribution to Canada's war effort which is so desirable, and which our agricultural population so greatly desire to make.
On motion of Mr. Diefenbaker the debate was adjourned.

The War-The Balkans



BUSINESS OF THE HOUSE

[Stage Direction]
Mr. CRERAR moved the adjournment of the house.
Thomas Clement (Tommy) Douglas: Are we to understand that we cannot now discuss the resolution which was before the committee of supply until the motion of the hon. member for Lake Centre is disposed of?


Thomas Alexander Crerar: I will say to my hon. friend that it was our intention at this point to move the adjournment of the house, and not to sit to-night. This matter can be taken up again at some future time, when the house reassembles. We have had a pretty lengthy discussion; the committee has been patient, and I am sure that most of the members will welcome as I do adjourning at six o'clock.
I trust that when we reassemble on the 28th of this month we shall all come back refreshed and reinvigorated for the work that lies ahead.


Thomas Miller Bell: Do I understand that
we are now adjourning until the 28th of April?


Thomas Alexander Crerar: Yes.


Thomas Miller Bell: That is a violation of
the understanding reached between us the other evening. It was agreed that the regulations would be discussed, and that if we agreed to forego a meeting of the house on Wednesday we would adjourn at eleven o'clock to-night. This is the first I have heard of any different arrangement, and I think the Minister of Agriculture (Mr. Gardiner) is right, that before we go back to the west we should know what the regulations mean.


James Garfield Gardiner: May I say this, to carry out an undertaking I gave to members from the west in the far corner of the house and in other parts. It was impossible for us to carry out the undertaking in connection with sitting to-night on account of the misunderstanding that apparently arose over the arrangement of yesterday, and the official opposition being desirous of going back to a discussion of the want of confidence motion to-day, which took us out of the other discussion. I am prepared to-night to meet in any room that may be named, any or all of the members from the west or from the east to discuss the regulations and go into them fully. I suppose the railway committee room will be available, and there or in any other room that is convenient I shall be glad to go into details of the regulations and to answer any questions that hon. members may wish to ask about them.


Charles Edward Johnston: Why not
carry on here as agreed?


[Stage Direction]
Motion agreed to, on division, and the house adjourned at 6.05 p.m. until Monday, April 28.
Monday, April 28, 1941.