1941-06-12

Right Hon. W. L. MACKENZIE KING (Prime Minister):: I desire to table copies of orders in council respecting the transfer of duties act transferring certain powers and duties to the Minister of National War Services (Mr. Thorson), and certain duties to the national film board.


Hon. R. B. HANSON (Leader of the Opposition):: Will the Prime Minister (Mr. Mackenzie King) follow the usual custom and lay on the table any correspondence which passed between himself and the retiring Minister of National War Services (Mr. Gardiner), and other related correspondence?


William Lyon Mackenzie King: I shall be glad to table all orders. Attached to one order is, I think, a single-line communication from the Minister of Agriculture (Mr. Gardiner) indicating his resignation from the Department of Natonal W'ar Services.



SENATE AND HOUSE OF COMMONS


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 102, to amend the Senate and House of Commons Act.﻿JUNE 12, 1941
Long Adjournment
He said: I should like to ask the leave of the house to introduce a bill which I think will receive general approval. A couple of days ago the leader of the opposition (Mr. Hanson) drew my attention to section 12 of the Senate and House of Commons Act which provides that service in the naval or military forces shall not render a member ineligible to sit in parliament. When that section was enacted there was no air force, and there is a possibility that some doubt might arise if the word "air" were not added to the section. There are members of the present house who are serving in the air force. This amendment merely adds the word "air" to section 12, and adds another section that the act shall be deemed to have come into force on the tenth day of September, 1939.
Motion agreed to and bill read the first time.
Mr. LAPOINTE (Quebec East) moved the second reading of the bill.
Richard Burpee Hanson: I had this matter under consideration and formed an opinion thereon. I wrote the minister and apparently this bill is the result. I think it is necessary to remove any doubt, and I concur in the proposed legislation. I may say that this matter was definitely raised for the first time by the hon. member for Lake Centre (Mr. Diefenbaker) who made it clear that the Senate and House of Commons Act was deficient in this regard. To him is due the credit for having raised the point. I merely followed up what he had to say in that respect.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee, reported, read the third time and passed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. NEILL:: 1.	Has the government decided not to build any cargo wooden ships on the Pacific coast?
2.	Will the government place any more orders on the Pacific coast for small wooden vessels such as Fairmiles or seine packers?


Mr. HOWE:: 1,	As no requisitions have been received for wooden cargo vessels, the government has not been required to make any decision.
2.	The placing of such contracts depends on the receipt of requisitions from the competent authorities.


BUSINESS OF THE BOUSE
William Lyon Mackenzie King: That when this house adjourns on conclusion of current business of the session it stand adjourned until November 3, 1941, provided always that if it appears to the satisfaction of Mr. Speaker, after consultation with his majesty's government, that the public interest requires that the house should meet at an earlier time during the adjournment, Mr. Speaker may give notice that he is so satisfied, and thereupon the house shall meet at the time stated in such notice, and shall transact its business as if it had been duly adjourned to that time.


Richard Burpee Hanson: Mr. Speaker, I am in accord
with the date of adjournment to the third of November, but I desire to direct attention to the phrase "if it appears . . . that the public interest requires that the house should meet at an earlier time during the adjournment." The right hon. gentleman (Mr. Mackenzie King) was good enough to consult with me before this motion was placed on the order paper, I understood the purpose of it and am in agreement with it, but I am wondering how the Prime Minister will interpret "the public interest". Does that include the calling back of this house before the third of November to consider ratification of the St. Lawrence waterway agreement? I should not think that the house ought to be called back in the middle of the summer for that purpose.


William Lyon Mackenzie King: Mr. Speaker,
as to what would be in the public interest, one would have to have regard to all the circumstances that would be existing at the time, and the government necessarily would have to take the responsibility for exercising its judgment in the matter. With regard to the St. Lawrence waterway agreement I doubt very much if the agreement will have been approved by the congress of the United States before well on into the summer, although, of course, I cannot say definitely as to that. If it should be approved at an earlier day it would be necessary to consider at once the time of calling this house together so as to have the agreement considered by both houses of the . Canadian parliament as soon as possible after its adoption by the United States congress. In these matters, however, I would seek to confer with my hon. friend, the leader of the opposition and try to arrange that the house would be called at a time that would be as nearly convenient to all hon. members as possible.
Long Adjournment


Richard Burpee Hanson: One word more, if I may, I want it distinctly understood that if the exigencies of the war situation should be such that the right hon. gentleman thinks this house ought to be called together I agree most readily and I should not even expect to be consulted in such an emergency. But if it should be for any other reason I would thank the right hon. gentleman if he would consult me.


Mr. M. J. COLD WELL (Rosetown-Biggar):: Mr. Speaker, we approve the resolution moved by the Prime Minister (Mr. Mackenzie King), holding, as we do, the view that the house should not prorogue but adjourn. We have been of the opinion that an adjournment should not exceed' ninety days, but in this particular case, with the harvest season running at least into the end of October, I think the date selected by the Prime Minister is a wise one. If the war situation, as the leader of the opposition (Mr. Hanson) says, should compel reconsideration of the date of reconvening, we understand that the house will be called.
May I also say that we hold the view that if the United States congress approves the St. Lawrence waterway agreement the house should be called to give to that matter the consideration which it deserves. Courtesy to our great neighbours to the south demands that we should not unduly delay the consideration of this matter.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, the members of my group agree with the Prime Minister's motion and we shall hold ourselves at his disposal whenever he sees fit to call parliament. We shall be glad to cooperate with him in every respect.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, I do not rise to oppose the motion but I believe that before parliament adjourns the Prime Minister (Mr. Mackenzie King) should inform the house what is Canada's foreign policy, whether it is that there shall be no further commitments and that parliament will decide in all these matters in the future as in the past. So far parliament has not been consulted at all. The executive does it. Private, secret agreements, notes and appeasements, have been made without parliament knowing anything about them. I think the Prime Minister should also tell us whether he proposes to continue the same appeasement policy respecting 500,000 bushels of grain to Japan and north China, because if Britain cannot appease them, how can Canada, as

has been demonstrated in the last three years with respect to Japanese action towards Britain at Shanghai and Hong Kong?
Second^, the Prime Minister has consulted some members of the House of Commons on Japan, secretly, unknown to other members of the house. All of it is known to our allies. In the recess of parliament no secret meetings of this kind should be held because we have a duty to the mother country and the other dominions, and the situation at the present time is too dangerous for these secret meetings and failure to give the house the facts.
Lastly, the Prime Minister should be in a position before the adjournment to inform the house as to the loss of Canadian merchant shipping off the coasts of Ireland, of men, food and munitions, part of which is reflected in our tax rate. Yesterday the United States was refused the use of these same empire bases off Ireland, and wre have not heard a word here as to what our policy is.
There should also be some stand taken immediately by this government as to the Vichy movement against the allies and our recognition of it here.
I should like to know whether the Prime Minister is prepared to make a statement on these three matters before the house closes. I support the motion, because in an emergency the members can be called together very quickly, but how can we and the people of this country know what is going on unless parliament .is given all this information? What is the use of looking for recruits and victory loans if the people are not informed of our foreign and defence policy? We should have an informed public opinion. We might as well meet in secret for all the information that has been given to the country throughout the whole of the sittings in the reports to the house or with regard to the unreported business.
Mr. JEAN-FRANCOIS POULIOT (Temis-couata): Mr. Speaker I should' like to offer a suggestion. The members of parliament were greatly inconvenienced last fall because the preparation of the revised edition of Hansard and the publication of the statutes for last session was proceeded with only after prorogation. As the first part of the session is now almost concluded, I wonder whether the government would not be disposed to give instructions so that the statute book will be published at the earliest opportunity on account of the important legislation that has been passed, and so that revised Hansard will also be published at the earliest opportunity?

The War-Canada's, Problems


William Lyon Mackenzie King: Mr. Speaker, I would say first of all to my hon. friend from Broadview (Mr. Church) that I hope he will not regard me as an appeaser. I seek to be a conciliator where that is likely to prove helpful. There is a great difference between the two. Perhaps, in the latter capacity, I may be pardoned if I do not provoke a discussion on the floor of this house with regard to some of the questions to which he has made reference. There is the responsibility of inviting discussion of certain matters; there is equally the responsibility of seeking to avoid discussion. If I thought it would help the position of the allied nations in the war at the present time to have a discussion here with respect to Japanese matters, bases in Ireland, and other questions which my hon. friend has mentioned, I would not have waited until this time to invite such discussion. But, where there are the strongest reasons for believing that no good purpose would be served by any such discussion, I prefer to take the responsibility of not inviting it. All the matters to which my hon. friend has referred have been carefully considered by my colleagues and myself, and. we have taken in these matters the course which we believed to be in the interests of the war effort of the entire British commonwealth.
As to my hon. friend's reference to myself and conversations with certain private members, he evidently refers to the meeting I had in my office with hon. members from the province of British Columbia. I believe it is not only the right thing, but very much the duty of one who understands the situation affecting constituencies of a particular province, to seek to make known to those in the parts affected matters of which they would wish to have full knowledge. But that does not imply that one is seeking to impart to others information, which one would not be prepared to impart to all. I could not have said what I said to hon. members from British Columbia in a statement to the entire house at that time; had I said at that time publicly in the house what I said yesterday, I believe the understanding of it by hon. members would have been quite different, and the intent of it on their part and by others might have been viewed quite differently from the way in which it was. I do not think I have anything further to add on that subject.
My hon. friend the leader of.the opposition (Mr. Hanson) asked me a day or two ago about the Canada-United States permanent joint defence board agreement, as to whether that was not in the nature of an agreement which should have been submitted to parliament. I did not catch at the time the full significance of my hon. friend's remarks, and I therefore said I would like before replying to give the matter a little further thought.
As my hon. friend knows, that agreement is an agreement for the study of certain matters affecting defence, by representatives of the two governments, and such recommendations as are made under that agreement, are made by the representatives of the two countries to their respective governments. The study relates to sea, land and air problems.. In the broad sense it has to do with the defence of the north half of the western hemisphere. There are no commitments made by the permanent joint board of defence. The board's representations are made to the respective governments by their respective representatives on the board. The governments then take up with their own departments and themselves decide as to the particular course to be taken. There is no commitment of the country in advance to any obligation. For that reason it has not been thought necessary to put the agreement before parliament for approval.


Thomas Langton Church: Was it not upon Canada's urging that the Anglo-Japanese alliance was abrogated in 1921, driving two of our best loyal allies, Italy and Japan, into the axis camp?


William Lyon Mackenzie King: My hon. friend will have to ask his leader in the senate as t-o that question, because I was not at the conference nor in office at the time the matter was raised.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: I desire to ask the Prime
Minister (Mr. Mackenzie King) a question, based upon the correspondence exchanged between himself and the premier of Ontario with respect to matters of taxation, and upon the recent request of Mr. Hepburn that the Prime Minister call a conference of all the provinces to consider the whole subject of the financial relations as between the dominion and the provinces. The reply of the Prime Minister was to the effect that, if requested so to do by all the provinces he would call such a conference. May I ask the Prime Minister if he will give further consideration to the proposal? I
The War-Canada's, Problems

would also ask the Prime Minister if he will, of his own motion, call such a conference, to be held at an early day, at which would be considered not only matters of finance and taxation but also the altered constitutional powers resulting from the invasion of the provincial field by the dominion under the provisions of the war measures and mobilization acts, and because of the necessities of war.
I have recently read a survey of public opinion as reflected) in the press and I am impressed with the almost unanimity of public opinion favouring such a conference, based on the theory of the promotion of national unity.
The Prime Minister may have felt that after what happened in January last and what has occurred since he could not, without loss of dignity, call the provinces together in conference without a unanimous request from the provinces. May I suggest-


Mr. POULIQT:: Mr. Speaker, this is a
speech, and this is not the time for a speech.


Richard Burpee Hanson: May I be allowed to proceed for just a moment? I am practically through.


Mr. SPEAKER:: I may say that in my opinion the position and status of the leader of the opposition are such that I have considered, and I believe the house has recognized, that when he addresses a question to the government with regard to policy he is entitled to more latitude than is extended to a private member.


Richard Burpee Hanson: Thank
you, Mr. Speaker. May I suggest to the Prime Minister that I feel sure that there would be no loss of position if he, upon high consideration of national unity, and in a sincere and honest effort to unite this country in a supreme war effort, were to call a conference for the purposes suggested. It would be an exhibition of magnanimity and would, I believe, be applauded by all the thinking people of Canada.
Right Hon. W. L. MACKENZIE KING
(Prime Minister):	Mr. Speaker, perhaps I
might refer at the outset to the concluding remarks of my hon. friend, in which he has suggested that there would be no loss of dignity on my part were I to call a conference, no loss of position if I were to do so, and that it would be an exhibition of magnanimity on my part and be applauded by all the thinking people of Canada if I were to call another dominion-provincial conference at this time.
I think my hon. friend will agree that I have never been one to stand on my dignity, nor

have I much regard for those who do. With respect to magnanimity, I think I have given ample evidence to the country that I am not afraid to assume that particular attitude in public. I have, to the best of my ability at all times, with respect to public affairs, sought to be as magnanimous as it would be possible to be not only towards my political opponents but towards any who may differ from me in opinion on any matter. As respects my hon. friend's remarks in that particular, I believe I need not say more.
But the leader of the opposition asks, would the Prime Minister of his own motion call such a conference, to be held at an early day, at which would be considered not only matters of finance and taxation but also the altered constitutional powers resulting from the invasion of the provincial field by the dominion under the provisions of the war measures and mobilization acts, and because of the necessities of war. Well, hon. members will recall that the conference which was held in January was, among other reasons, precisely for the purpose of considering the whole question of finance and taxation and the matter of the altered constitutional powers which might be necessitated by certain courses of action. But when the conference was held, one argument which was put forth for not continuing the conference-the argument which I heard most vigorously asserted-was that this was not a time-a time of war-to be considering constitutional questions; that ministers, particularly federal ministers should not be wasting their time discussing questions of finance, taxation and the like, but should be attending to their duties as ministers of the crown responsible for the war effort of Canada. We were told we had powers of taxation and it was for us not to talk about them but to exercise them as we thought the country's war needs required. That was the ground on which, broadly speaking, the last conference found it impossible to proceed. That ground was taken, not by myself nor by any member of the dominion government but by one or more of the provinces, and unless some of the provinces have had a [DOT] very material change of mind on that score I fail to see how another conference called at this time would not raise precisely the same arguments.


Richard Burpee Hanson: It might be a change of heart.


William Lyon Mackenzie King: Yes, it might be a change of heart, but some hearts change too often. I do not speak with any expert knowledge of changes of heart in domestic affairs, but I can say something about them in relation to public matters.

The War-Canada's, Problems
I am obliged to my hon. friend for bringing up this subject at this time because it may help me to clear what appears to be either an intentional or an unintentional misrepresentation of the reply which I have made to the Premier of Ontario with respect to the calling of a conference. My hon. friend says he has reviewed the press in regard to the matter. I have not found the unanimity of opinion that he has with regard to the wisdom of having another conference called. Very different views have been expressed in the publications I have read. What I have noticed, however, is that some of the journals of the country are stating that I had refused to have another conference held. What I said has been construed as representing an arbitrary stand; that I was unwilling to have another conference called.
May I read the concluding paragraph of the communication which I sent to the Premier of Ontario:
If, however, the premiers of the several provinces should unite in a request for another dominion-provincial conference, the dominion government will be prepared to give immediate consideration to any such request.
The words "immediate consideration" were used advisedly. They were not intended to imply that we would not call such a conference, but rather that, before deciding upon any question of this kind, it would be necessary to do so in the light of the circumstances as they might exist at the time. It might be wholly inadvisable, under conditions that cannot be foreseen at the moment, to call a conference at any one particular time. That is all that is meant about giving the matter consideration-considering the nature of the replies that might be received from the several provinces, and what it would be wisest to do in the circumstances existing at the time.
Let me make it perfectly clear that if the premiers of the provinces of Canada unite in a request for a conference that conference will be called. I have no hesitation whatever in saying if I receive from the different premiers of Canada communications to the effect that they believe it would be in the national interest, and in the interest of Canada's war effort at this time, to have a conference called that I will undertake to see that such a conference is speedily called. But without receiving such assurances from the premiers of the different provinces, I am afraid that in calling a second conference I should be open to exactly the same course of chastisement and criticism that was followed at the last conference.
My hon. friend, and rightly so, places his question on the ground of high considerations
of national unity. It is precisely on that ground that I would view the whole question of the wisdom of holding another conference. If I believed that another conference called at this moment would help to further Canada's war effort by giving to the nation an exhibition of national unity on the part of all, particularly with respect to questions of taxation, constitutional problems and the like, I would be the first to have a conference called immeT diately. The conditions that should govern are I believe those which I have stated in the telegram which I sent to the Premier of Ontario, as contained in the following paragraph:
Having in mind the circumstances which occasioned the failure of the conference of five months ago, our government is of the opinion that unless there were general agreement on the part of all the provinces upon the desirability of holding another dominion-provincial conference, such a conference called at this time might only serve to accentuate the differences raised at the last conference. Were such to be the case, it would certainly prove prejudicial rather than helpful to Canada's war effort.
I do not think that anyone can deny the accuracy of that statement. Let me make the position perfectly clear. The premiers of all the provinces will have full knowledge of this correspondence. They will see in the press this afternoon and to-morrow the statement which I am making at the present time. I do not wish any of them to wait to be asked what their views are. I invite them now, if they wish to have a dominion-provincial conference called at Ottawa, to write and so notify me and indicate in their letters the agenda they wish to have considered at the conference; and if I receive requests from all the provinces to have a conference called, and agenda are supplied to show what they would wish to have considered at the conference, I will take the matter up with my colleagues immediately to see if we cannot so arrange the agenda as to meet the wishes of all, and have a conference called at the earliest possible moment.
Mr. CHURiCH:	Does not the Prime Minister think it would be better to call off the battle of wits and get together and settle things with Ontario? The dominion government and Ontario are not so very far apart.


William Lyon Mackenzie King: Is the hon. member referring to his wits or somebody else's? If he is referring to his own, I cannot battle with him on that score.


Thomas Langton Church: If Ontario had a stronger
representation in the cabinet we would not have all this trouble with Queen's park.
Income and Corporation Tax


KING'S REGULATIONS AND ORDERS
[Stage Direction]
On the orders of the day:
Hon. J. L. RALSTON (Minister of National Defence):: The hon. member for Temiscouata (Mr. Pouliot) yesterday referred to a question he asked some time ago and I said I would look up the information. With regard to the publication of King's Regulations and Orders I am informed that all amendments to King's Regulations and Orders which have ' been made since the beginning of the war have appeared in the Canada Gazette, with the exception of three items which have been recently approved by the governor in council. These will appear in due course. The subjects of these three items are: 1. Qualifications of signal officers, "reserve forces.
2.	Change in district audit system providing for audits twice a year instead of once.
3.	As regards powers of commanding officers.
The Department of National Defence does
not issue King's Regulations and Orders with amendments to members of parliament.


RIGHT HON. R. B. BENNETT QUESTION AS TO BESOLUTION OF CONGRATULATION UPON HIS ELEVATION TO THE PEERAGE
[Stage Direction]
On the orders of the day:
Mr. J. G. DIEFENBARER (Lake Centre):: In view of the great honour that was conferred yesterday by His Majesty the King upon a former leader of the Conservative party and Prime Minister of Canada, the Right Hon. R. B. Bennett, would the government introduce a resolution of this house extending congratulations to him on his elevation to the peerage for distinguished services rendered to this nation and to the empire as a whole?


William Lyon Mackenzie King: I think that each individual member of the house is quite capable of conveying his own expression of views with regard to any honour conferred. I should not think that, having regard to the resolution of the House of Commons with respect to some of these matters, the introduction of a resolution on the subject to which the hon. member has referred would be appropriate at this time.


INCOME AND CORPORATION TAX
[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: Last evening, near the conclusion of the sitting, item No. 56 of the estimates of the Minister of Finance, subsidies and special grants to provinces, was on motion of the Minister of Trade and Commerce deleted. This refers to special grants and subsidies to six of the provinces, and the Minister of Finance is reported at page 3851 of Hansard as having said:
These are special grants, and all these are to be dropped with the provinces which accept the offer, and all these provinces have indicated their intention of doing so.
That is to say, he was indicating that six of the provinces were ready to withdraw from the corporation and income tax field for the duration of the war as outlined in the suggestions of the minister during his budget speech.
I would ask the minister if he would be good enough to lay on the table all the correspondence and other documents, if any, exchanged between himself and the Prime Minister or any member or officer of the government and the premier, provincial treasurer or any official of any provincial government with respect to the withdrawal of the provinces from the income and corporation tax field, upon which this motion for deletion was based.


Mr. ILSLEY:: Yes, I will do that.


Richard Burpee Hanson: To-day?


James Lorimer Ilsley: Yes, I will get it together at once. I want to say, however, that most of the communications were verbal. The provinces sent representatives here to discuss this in an informal and exploratory way, but indicating their intention of accepting this offer.


DAIRY PRODUCTS
[Stage Direction]
On the orders of the day:
Hon. H. A. BRUCE (Parkdale):: I should like to direct a question to the new Minister of National War Services. I had given notice to the Prime Minister of my intention to refer to this matter yesterday in the house and asked if he was prepared to make an announcement of the appointment of a new minister. He anticipated my question by making an announcement, therefore I did not put the question. I am sorry I have not had the

Supply-Finance
opportunity of sending the question to the new minister; therefore I shall give him plenty of time to do what I am going to ask of him.
My question is based on a statement made in this house on June 4 by the then Minister of National War Services that he had not authorized a recent press dispatch appearing in the New York Daily News which said that Canadian householders were unwilling to come within the scope of a British plan for voluntary creamless days in the United States, so that increased food supplies might be available for Britain. Will the minister give this his immediate attention and try to offset the unfortunate effect of what appears to have been a slip by the department over which he now presides? Secondly, will he try to bring about a creamless day in Canada also, and in this way make additional food supplies available for Britain?
Before sitting down may I offer my congratulations to the new minister, and express the hope that he will put his usual energy into the department over which he now presides.


Hon. J. T. THORSON (Minister of National War Services):: Before I deal with the question asked by the hon. member for Parkdale I should like your permission, Mr. Speaker, to express my very great appreciation of the kind manner in which the announcement of my appointment was received yesterday by the house. I should like to thank the hon. member for Rosetown-Biggar (Mr. Coldwell) for his expression- of good wishes, and I am deeply grateful to the hon. member for Davenport (Mr. MacNicol) for the kind reference he made to the race from which I come.
(Translation) I wish also to thank my friends from the province of Quebec for their cordial congratulations.
(Text) The hon. member for Parkdale will of course appreciate that I have not yet had the opportunity of entering upon my new duties, and therefore I cannot at this moment give any expression of opinion as to the questions he has raised. I shall be glad to give consideration to them.


OIL CONTROL
[Stage Direction]
On the orders of the day:
Hon. W. EARL ROWE (Dufferin-Simcoe):: I should also like to ask a question of the new Minister of National War Services, to whom I have already extended my congratulations and good wishes.
In view of the possible shortage of transportation for fuel oils, will he give some
consideration to the matter of gasolineless Sundays in Canada during the next few months?


An hon. MEMBER:: Why Sundays? SUPPLY
The house in committee of supply, Mr. Vien in the chair.


DEPARTMENT OF FINANCE
[Stage Direction]
86. Insurance. Expenses of work in the interests of fire protection, $10,580.
Mr. MacNICOL:: What have the officials in this department to do with fire prevention? Every province has a fire prevention department. Will these men have to do with the territories, or do they assist the provinces?


James Lorimer Ilsley: The work is almost entirely of an advisory, educational and consulting nature, maintaining records of fire losses and preparing reports upon fire prevention legislation and fire protection methods in Canada and foreign countries, with a view to establishing reasonable standards of fire safety and standardization of fire prevention measures throughout Canada. The item provides for the salary of a dominion fire commissioner and clerical assistance, also printing, stationery, travelling expenses and so forth, in the interests of fire prevention carried on by the Department of Insurance.
Mr. MaoNICOL: What is the name- of the fire commissioner?


James Lorimer Ilsley: W. L. Clairmont.


Richard Burpee Hanson: This is a peace-time activity, which- costs the country $10,580 a year. It is a branch of government which is purely consultative and I think it could very well be done away with at this time. The provinces are primarily interested in this matter and are doing the work. I suggest that this should be the last time this item appears in the estimates, at least for the duration of the war.


[Stage Direction]
Item agreed to.
476. To provide for compensation to provinces which agree to vacate the personal income and corporation tax fields for the duration of the war, the annual amount thereof being computed in accordance with and subject to the terms and conditions of agreements approved by the governor in council and entered into with such provinces by His Majesty the King in the right of Canada represented by the Minister of Finance and on a basis which will produce substantially the equivalent of either-
(a) The revenues which the province and its municipalities obtained from these sources during the fiscal year ending nearest to December 31, 1940, less the amounts collected after the close of such fiscal year by the
Supply-Finance
[Stage Direction]
province and its municipalities in respect of personal income and corporation taxes levied upon incomes of 1940 or prior years or based upon the status or operations of the taxpayer in 1940 or prior years; or
(b) The net debt service paid by the province during the fiscal year ending nearest to December 31,1940 (not including contributions to sinking funds) less the revenue obtained from succession duties during that period and less the amounts collected after the close of such fiscal year by the province and its municipalities in respect of personal income and corporation taxes levied upon incomes of 1940 or prior years or based upon the status or operations of the taxpayer in 1940 or prior years
and for the payment of fiscal need subsidies to such of said provinces as enter into such agreements and can demonstrate to the satisfaction of the governor in council that these are necessary: an amount not exceeding, $45,000,000.
James Lorimer Ilsley: This is an important item, and I promised that at some stage I would make reply to some questions which were asked by the leader of the opposition.
In his speech on June 2, on the motion for second reading of Bill No. 87, to amend the Income War Tax Act, the leader of the opposition asked that certain aspects of the proposed arrangement with the provinces be clarified, and I undertook to answer his questions when I had an appropriate opportunity of doing so. The first question dealt with the amount which would be payable to the province of Alberta in the event that province should choose option B. I quote from page 3386 of Hansard, where the leader of the opposition said:
What is to be the attitude of this government with regard to that province, having regard to the fact that for several years the government of Alberta has repudiated its solemn obligation to pay in full the interest upon its bonds, much to the loss of its credit and also potentially affecting the credit of other provinces? Is this government, in dealing with Alberta, to pay only to that province the actual amount of bond interest paid by that province, and thus recognize its default and thereby in effect condone its action? Or will it insist upon an arrangement being made by that province whereby the Alberta government will respect ts responsibilities?
Before I answer the question directly I should like to refer briefly to the proposal to the provinces which I described in detail in my budget speech. In that speech I dealt with the great difficulties with which we were confronted in our search for the necessary revenues with which to prosecute the war, because of the varying levels of taxation in the different provinces; and I said we had come to the conclusion finally that we should introduce taxes at rates which would be possible if the provinces were out of the personal income and corporation tax fields. At the same time we proposed to make an annual payment each year for the duration of the 
war to provinces which would temporarily vacate those two tax fields. It was difficult to decide upon a satisfactory formula for arriving at the amount of those annual payments to the provinces; indeed the one we decided upon would not do as a basis if a permanent arrangement were contemplated. But after very careful study we came to the conclusion that it was as good a formula as any that could be found for this particular and temporary purpose. It has the merit- when coupled with the proposal to discontinue the present annual grants to Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan and British Columbia, and when the proposal to pay fiscal needs subsidies to provinces which can show they require them is taken into account-of providing an annual payment which will leave all the provinces in substantially the position they were in, from the revenue point of view, in 1941.
The formula is to pay either: (a) the revenues which the province and its municipalities actually obtained from personal income and corporation taxes during the fiscal year 'ending nearest to December 31, 1940; or (b) the cost of the net debt service actually paid by the province during the fiscal year ending nearest, to December 31, 1940, not including contributions to sinking funds, less the revenue obtained from succession duties dhring that period. In simple terms, the annual payments to the provinces are based upon either the cash actually received from taxes in 1940, or the cash actually paid out in interest. The formula is not based on the taxes which should have been collected or the interest which should have been paid. It is based upon the amount of the actual cash receipts or the cash disbursements.
Now the question is asked whether in the case of Alberta the formula should be changed so that the dominion would pay either the taxes actually collected, under option (a); or, under option (b), the interest which would have been paid if Alberta had paid its bond interest in full. According to preliminary estimates made by the Alberta treasury department, which were presented for purposes of discussion only and are subject to checking and revision, the annual payment to Alberta under the present formula, if it accepts the dominion's offer, would be approximately $4,000,000 under option (a), or $3,200,000 under option (b). If option (b) were changed and, based upon the interest at full rates, irrespective of whether such interest was paid or not, then the amount payable under that option

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would be approximately $5,750,000. Under the present formula, therefore, Alberta would receive $4,000,000 under option (a), or approximately $800,000 more than it would receive under option (b). If option (b) were changed, however, and were based on the full amount of the bond interest, then the amount paid under this option would be increased to $5,750,000, which is $1,750,000 more than the amount which will be paid to Alberta under the present formula. I take it that no one would suggest that the dominion should pay an additional $1,750,000 to Alberta unless Alberta undertook to pay its bond interest in full. Otherwise, for no good reason, the dominion would be making a present to Alberta of a very large sum of money, which would be quite unjustifiable.
I must assume, therefore, that the suggestions which have been made that the annual payment to Alberta should be based upon the full amount of its bond interest are predicated upon an agreement by the Alberta government to pay its bond interest in full, but I have heard no suggestion on the part of the Alberta government that it would be prepared to pay this interest in full.


Richard Burpee Hanson: The privy council said it should do so.


James Lorimer Ilsley: I believe that is so. It
may be willing to do so, but I have not heard of it; and in the absence of any declaration to the effect that Alberta is prepared to pay its bond interest in full it seems to me the present formula is fair and reasonable, in that Alberta is dealt with in exactly the same way as all the other provinces. I do not see how, by the widest stretch of the imagination, this can be construed as condoning the attitude of the Alberta government in defaulting on its bond interest. To me such a construction does not make sense. Surely the dominion has given ample evidence of its attitude toward the repudiation of contractual obligations and of its desire, indeed of its anxiety, to find a constructive solution of the financial difficulties which have faced a number of the provinces as a result of depression.
While, therefore, I do not propose to change the formula for determining the amount which will be payable to Alberta if it accepts the dominion's proposal, this does not mean that the door is shut for all time, or that this government will not reconsider the matter if the situation changes. For example, if the Alberta government were to work out some refunding plan with its bondholders, and then ask the dominion to reconsider the basis on which the annual
payment is to be computed, we should be prepared to sit down and discuss the question, or any other reasonable proposal that might be presented.


Richard Burpee Hanson: Perhaps the minister does not wish to be interrupted at this stage.


James Lorimer Ilsley: It is all right.


Richard Burpee Hanson: Does the minister mean by that-and I ask the question for purposes of clarification-that if the Alberta government should indicate that it proposed by some scheme to refund its past due indebtedness and to observe the principles of the law as laid down in the privy council decision, this government would review the whole position and, assuming the proposal was accepted, make a grant sufficient to cover the debt service?


James Lorimer Ilsley: We should be prepared to sit down and discuss the question or any other reasonable proposal that might be presented. I cannot give any commitment further than that. I cannot see that any good purpose would be served by trying to cross this bridge before we come to it.
In case these remarks should be interpreted by bond speculators to mean more than they do mean, I should add, perhaps, that if in the future any such arrangement should be worked out, and the dominion were a party to it in any way, undoubtedly it would be necessary to impose a capital gains tax or take other practicable steps to ensure that speculators were not allowed to reap profits out of appreciation in bond values arising as a result of the discussion or negotiation of such a programme or its consummation.


Mr. JOHNSTON (Bow River):: When the minister refers to the obligation of the provincial governments to pay their past interest, does he mean the interest which is accruing now and which the government itself would meet, or that the provincial government would have to make up all these back payments?


James Lorimer Ilsley: I did not say either, and I did not mean either. I am making no commitment of any kind.


Charles Edward Johnston: The minister suggested that if the provinces would do this-


James Lorimer Ilsley: I said a new situation would be created which might be discussed; that is all.
The second question raised by the leader of the opposition had to do with the position of the municipalities which are now levying taxes on income and which will be asked to
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discontinue them. This problem is particularly important in New Brunswick, where many, if not all, of the municipalities collect income tax. In one or two other provinces some of the principal cities levy an income tax, but except in New Brunswick the practice does not extend to all municipalities and is not so general in its application. In discussing this the leader of the opposition read into Hansard what he described as a summary of the dominion tax proposals as submitted to New Brunswick and the other provinces. Although I do not see it in Hansard, my recollection is that at the time he commented on the fact that this summary did not touch upon the problem of the municipality.


Richard Burpee Hanson: By implication, not expressly.


James Lorimer Ilsley: In order to clear up any possible misunderstanding about this so-called summary, I should like to state that it is described in its heading as "a preliminary memorandum upon some of the points to be covered in the agreements with the provinces, if the offer outlined in Mr. Ilsley's budget speech on April 29, 1941, is accepted." This preliminary memorandum covers the points raised by the leader of the opposition and one or two others which I shall not read as they have no bearing upon this particular subject.
On May 16 an officer of my department wrote a letter to the Honourable J. J. Hayes Doone, provincial secretary treasurer of the province of New Brunswick, enclosing a copy of the preliminary memorandum referred to. As the letter comments on the question under discussion, I propose to read it. It is as follows:
Dear Mr. Doone:
Following our discussion the other day, you asked me to let you have a general outline of the basis on which the personal income and corporation taxes imposed by any of the provinces which accept the offer outlined in Mr. Ilsley's budget speech of April 29th last, will be discontinued. No final decision has been reached upon this matter, but I enclose a copy of a preliminary memorandum which may serve as a working guide for the time being, on the understanding that it is not binding upon the dominion in any way. You will see that this memorandum covers a number of the points which we have discussed, but that these are limited to the questions which will apply to all provinces which accept the offer. Other questions which apply particularly to your province, such as the arrangements which might have to be made with your municipalities if you accept the dominion's offer, are not dealt with in the memorandum, and presumably will have to be the subject of further discussion.
If there is any further information you would like from me in the meantime, please be sure to let me know.
Yours very truly,
W. L. Gordon.
It will be seen therefore that the problem of the New Brunswick municipalities was not overlooked. As the leader of the opposition himself stated, the municipalities are the creation of the province and their jurisdiction to impose income tax is derived from the province. The agreements which we are making will be with the provinces and not with their municipalities. The question is, should we stipulate in the agreements which we make with the provinces that they must deal fairly with their own municipalities, or should we leave this to the good judgment of the provincial governments concerned? I appreciate that in the opinion of the leader of the opposition it is desirable to include a definite stipulation respecting the position of the municipalities in any agreements which we make with the provinces. I think, however, that before arriving at a final conclusion I should prefer to discuss this further with the representatives of the government of the province of New Brunswick, who will be as anxious as the leader of the opposition to protect the position of their municipalities. On Tuesday, June 3, the leader of the opposition asked that a statement be placed on the record showing the net amount which would be payable to each of the provinces under option (a) and under option (b) of the proposal. In giving these figures I should make it quite clear that they are preliminary estimates only and are subject to revision:
	Amount payable under		Estimated
Option	Option	amount(a)	(b)	payableP.E.I	$ 250,000	$ 275,000	$ 275,000N.S	1,500,000	2,725,000	2,725,000N.B	2,575,000	3,250,000	3,250,000Que	17,000,000	1,975,000	17,000,000Ont	29,000,000	10,800,000	29,000,000Man	5,000,000	3,175,000	5,000,000Sask	2,075,000	6,300,000	6,300,000Alta	4,000,000	3,200,000	4,000,000B.C	12,600,000	6,000,000	12,600,000Total	
$80,150,000


Richard Burpee Hanson: Do the
figures for New Brunswick include the municipalities?


James Lorimer Ilsley: Option (b) is in connection
with the bond interest, but option (a) would take into account the income tax collected by the municipalities. Until we receive and carefully analyse complete statements from all the provinces, it will not be possible to say which provinces will be entitled to receive a fiscal need subsidy or the amount thereof. Generally speaking, I think that any of the provinces that think they may be entitled to a subsidy will have to prove it on the basis of their 1940 statements of revenues and expenditures adjusted to give effect to the changes which will result from the proposal.

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I should remind hon. members that these changes include the discontinuance of the present special grants which are voted annually, and which are as follows:
Prince Edward Island	 $ 275,000
Nova Scotia	 1,300,000
New Brunswick	 900,000
Manitoba	 750,000
Saskatchewan	 1,500,000
British Columbia	 750,000
Total	 $5,475,000
For budget purposes we made a rough assumption that the fiscal need subsidies would amount to 83,000,000 or $4,000,000, or say, $2,000,000 less than the present special grants.
The leader of the opposition also asked for information respecting the estimate of $90,000,000 which I gave in my budget speech as the net increase in the dominion's revenues from the changes in the personal income and corporation taxes, less the payments to the provinces. Hon. members will recall that the increased rates of graduated income tax, not including the national defence tax, were estimated to produce an additional $75,000,000 of revenue in a full year. The increase in the minimum rate of excess profits tax is estimated to produce $80,000,000, or a total of $155,000,000. If we add to this approximately $2,000,000 as representing the difference between the present special grants to the provinces which are to be cancelled and the fiscal need subsidies which will be paid in future, and $12,000,000 in special taxes to be imposed on banks, insurance companies, railway companies and other groups which might otherwise benefit from the discontinuance of existing provincial taxes, we get a total of $169,000,000. If we deduct from this the annual payments to the provinces which I have estimated at $80,000,000, we are left with a net increase in dominion revenues of $89,000,000. At the time I delivered my budget speech this estimate was placed at $90,000,000.
As I mentioned when the supplementary estimates were tabled, the total amount to be paid to the provinces in the present fiscal year will be much less than $80,000,000 plus whatever fiscal need subsidies may be necessary. From this total, whatever it may be, there will be deducted the amount of the taxes which the provinces are themselves collecting at the present time upon the taxpayers' incomes in 1940 or based upon the taxpayers' operations or status in 1940, and also their collections of arrears which pertain to 1939 and earlier periods. It is difficult to estimate the amount of such taxes which the provinces will collect this year, but it will be substantial, and the amount of the
dominion's payments will be reduced correspondingly. All things considered I think it is safe to say that the net payments to all provinces this year will not exceed $45,000,000, the amount called for in the estimate. If any of the provinces do not accept the proposal, the amount will be reduced.


Richard Burpee Hanson: Mr. Chairman, anxious as I am to facilitate the business of the house I must ask the committee to bear with me for just a few minutes to discuss this, one of the most important matters that will come before us. I regret that we have not more time for its consideration.
The minister's statement has the advantage of clarity, if in some respects it has not the distinction of finality. I want to deal with the second topic referred to, namely, the position of the municipalities in New Brunswick. I think I correctly stated their position when I dealt with the subject before. They are the creatures of the province, and this government cannot deal directly with them. But they are the same set of taxpayers who are paying to the dominion and to the provinces, and we have some obligation to protect them in any financial changes that are contemplated.
The only purpose I have in alluding to the position of the municipalities is twofold. The statement of the Minister of Finance did not make it clear that the municipalities would be protected. My hon. friend, I have no doubt, proceeded on the assumption to which he referred in his statement, that, the municipalities being the creature of the provinces, the provinces would be concerned in protecting them. This is an assumption which of course may be quite true. But I was fearful that at one time it might not be given all the consideration which it deserves. I do believe, however, that discussion of the matter in this house, calling the attention of the house and of the minister to the position, will have the effect I desire, namely, the protection of the municipalities.
If the minister cannot see his way clear to stipulate that the position of the municipalities be protected, I must say that I disagree with him. I think he can do it. He has the power and authority to make it a condition that the position of the municipalities shall be protected, and I think he should do so. If he does not do so, and they are not protected, there will of course be a tremendous reaction, in New Brunswick at all events. I am not going to say more than that. I am going to ask the minister to protect the municipalities if he feels that it is his duty, as it is undoubtedly within his power to do so.

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There is just one collateral point that has not been touched upon by the minister. Municipal income taxation, as I understand it, is to be frozen at some level. I do not know whether it would be possible to make the proposal elastic enough so that there might be an increase, or, on the other hand, a decrease, in the amount of the allowance to the provinces by reason of anticipated increase or decrease in the revenue of the municipalities from this source of taxation. I do know that with a rising national income there is a rising revenue from this source for all the municipalities, including the larger ones, and I must say including the smaller ones because it has come to my knowledge that certain municipalities, what I may term rural municipalities, until recently have not properly, shall I say, explored this avenue for revenue. It is only within the last year or two that certain municipalities have been invoking the law which was set up in their favour for that purpose. I am informed by my colleague the member for Victoria-Carleton (Mr. Hatfield), who is the warden of his own county, that the freezing of this source of revenue to the municipalities at the 1940 figure, say, will work a distinct detriment to that municipality, because they are just beginning really to enforce the law, and the 1941 taxation returns from that source, if I understood him correctly, will be substantially in excess of the revenues for 1940. I know this is quite a difficult point to deal with and that there must be some finality. How it can be measured in the future other than on the basis of a given year is not quite clear to me. I shall not discuss the point further; I think I have performed my duty by referring to it. I ask the minister to do what he can to see that the position of the municipalities in New Brunswick is safeguarded and that, if possible, it be stipulated in the agreement itself. If we have it in the bond, then of course we shall be sure. If we haven't it in the bond, anything may happen.
The position of Alberta is, I admit at once, a very difficult one, not only for the minister but also for us here in this house. I am obliged to the minister for the statement of his position, as to its clarity, although I am somewhat disappointed in the attitude which he has taken. The minister waved the big stick over those who are speculating or are said to be speculating or who, he intimated, might be speculating in Alberta bonds in the hope that they would make a killing if the government required the Alberta government to pay its bond interest in full. Let me say at once that I am not concerned with these individuals who are speculating in Alberta bonds. If there be such I am not aware of

them, and I have had no communication with them. I need not tell the minister that I am not myself an Alberta bondholder. That is one thing I have escaped-not many, but that is one. I am not a bit concerned about the position of the bond speculator. I do not think, however, that the volume of Alberta bonds in the hands of speculators can be very large. My understanding is that the greater part of these bonds are held by financial and municipal institutions;' that a substantial proportion of the holdings of Alberta bonds is in the hands of our municipalities and other governmental bodies in the form of sinking-fund investments, and that it is a very serious matter to them. The great bulk of the investment of Alberta bonds is in the hands of institutions such as insurance companies which gather together the savings of the people in small lots, and the position of which, as a result of the default, the deliberate default, of the Alberta government, has been impaired.
In addition to that, I suggest to the minister-probably his department knows it better than I can state it to him-that a substantial quantity of these bonds is held by foreign investors of the type to which I have alluded, namely, the association of insurance companies in the United States of America. I have had some communications from one or two of them; I can say to the minister that their holdings are substantial and that they were acquired not for speculative purposes but for the purpose of safe, sound investment, on the theory that in the belief that a Canadian province would never default in the payment of its solemn obligation, or that, if it were compelled to do so, this federal government, the government of Canada, would come to its assistance.


James Lorimer Ilsley: May I interrupt a moment? I want to make it clear that I was not stating that the bonds generally are held by speculators.


Richard Burpee Hanson: No, I do not think the minister did say that; but he waved the big stick against those who are in that category, and he raised the bogy of the speculator-we had it once before in this chamber-and a demagogic appeal was made not to save the bondholders. I know that that is a popular attitude to take in certain quarters, and I am not constituting myself in any degree a champion of the speculator. But I am one of those old-fashioned1 persons who have always believed in the sanctity of contract. The issue of a bond by a province and the sale of that bond to a bona fide investor is a form of contract and the contract should be carried out.

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May I point out what gave rise to this position. In 1935 a new government was bom in Alberta. In 1936 that government passed a series of statutes which, I believe, were intended to impair, or at least had the effect of greatly impairing, the financial position of the province. Among other measures, the provincial legislature in 1937 passed what is known as the Provincial Guaranteed Securities Interest Act, chapter 12 of the Statutes of Alberta, 1937, which act purported to reduce by one-half the interest on certain securities guaranteed by the province of Alberta; and the Provincial Securities Interest Act, chapter 13 of the same year-one statute following the other-which purported to reduce the interest payable on securities issued by the province to, in general, half the agreed rates. Those are the two statutes to which I refer: first, the direct obligations of the province, and second, the guaranteed obligations of the province.
The federal government, so far as my research has led me, did not intervene to disallow those statutes. It left the bondholders to fight their own battles, although, as was ultimately shown, the passing of these acts was a clear invasion of the federal authority and jurisdiction. The matter was tried first before Mr. Justice Ewing; then it went to the Appellate Division of the Supreme Court of Alberta, these proceedings being carried on in 1937, 1938 and 1939, and finally got to the privy council, but private interests had to bear the burden of demonstrating the invalidity of these statutes. The privy council decided that the underlying principle of both these statutes was in pith and substance dealing with the matter of interest within the meaning of head 19 of section 91 of the British North America Act, 1867, a subject matter within the exclusive legislative competence of the dominion parliament, and that the acts were therefore ultra vires of the province. The case is reported in 1940 Appeal Cases, 513, and I would refer to the judgment of the Lord Chancellor, Viscount Caldecote, at pages 531 and 535, where in substance that was the conclusion reached. I am not going to inflict a reading of the judgment upon the committee. It establshes beyond peradventure the illegality and unconstitutional position of the province of Alberta, and that position has never been corrected by the province. It has been, in my view, a defiance of the laws of Canada; I do not think there can be any gainsaying that statement. I should like to go just one step further and say it does not reflect any credit on the government of Alberta to defy the law of this country. The figures of their budgets have amply demonstrated that, with the increased income they have had as a
result of new sources of revenue and the invasion of certain fields of taxation, they could, for the most part, if not all the time, have paid this bond interest, and the people of Alberta would not have been reduced to the position where they cannot hold their heads up in common with other citizens of this country. Their province, and their province alone, has defaulted-I believe, much against the will of the best elements in Alberta.
This dominion government-I do not speak of it at all in its party sense-would, I am sure, have been quite as willing to help Alberta fulfil its obligations to its bonded creditors as it was to help other provinces, which I shall not name, which did endeavour to keep their contracts with the investing public. I remember very well one occasion upon which the former government assisted the province of Alberta, after the change of government, I believe. But when the incoming Minister of Finance found that these statutes had been passed he was amply justified in taking the stand that he did-that he could not properly assist the province of Alberta because it would not fulfil its obligations.
What is the position to-day? A war has intervened. Alberta has made default in the payment of its bond interest. It has been obliged to make default in payment of certain principal issues that have fallen due, and without any relief from the dominion, on the basis entirely of the theory I have suggested, namely, that the dominion could not and would not condone the action of that province. War has come, but in the meantime Alberta, as I said a moment ago, has increased its revenues and has entered into new fields of financial operations; and if one is to believe what one hears-I do not wish to guarantee the truth of the observation which I am about to make-Alberta has entered new fields of financial endeavour which have cost many hundreds of thousands of dollars and which may not redound to the benefit of the people of the province.
I am not in a position to express an opinion on that last phrase, but that is the position that has been stated to me. It makes it abundantly clear, however, that Alberta as at present constituted, desires to be generous, if I may say so, before it is just. That is the only thing I will say in that regard.
_ Coming down to the proposals, the necessity for increased revenues for the prosecution of the war is before us. No one knows better than the Premier of Alberta the necessity of an all-out effort in connection with this war, and that means money to his province as well as to anyone else. I have read some of his protestations in that regard. I do
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not question for a moment his bona tides with respect to participation; that is not the point at issue now. The Minister of Finance, however, in his budget proposals announced, in fact he intimated beforehand, that it would be necessary for the federal authorities to invade certain taxation fields of the provinces, and I think we all generally understood what was suggested. But in his budget speech on April 29 he was very definite and gave the reasons for his proposals, and as is well known, this House of Commons has unanimously concurred in the proposals in that regard. Now we are down to the point where it is intended to implement the position by voting the sum of 845,000,000 which the minister says it is anticipated will be required if the provinces enter into arrangements with the dominion to vacate the fields indicated, giving up their sources of revenue for the duration of the war.
Under the proposals the provinces are given the choice between two alternatives. I will not go over them; I have already alluded to them two or three times. The minister himself, in his observations to-day, again stated what they were, and I believe every one in the house and in the country who has given any study to the matter understands them. What I do suggest is that alternative (b), namely, the cost of net debt service actually paid by the province during the fiscal year nearest to December 31, 1940, not including contributions to sinking funds, less revenue obtained from succession duties during that period, and the wording of the estimate itself, clearly constitutes a recognition of the status quo with regard to the province of Alberta-and I have already indicated what that status is. It is a status of default.
The minister says that by no stretch of the imagination can it be declared that the wording of the estimate in the way it is drawn up, and the position he has taken, could1 be considered condonation of the position taken by Alberta. Well, that is pretty strong language. Assuming that is true, then it is a poor reflection upon the intelligence of a good many people in the country who have studied the situation. What can it be but condonation of the attitude of the Alberta government?


James Lorimer Ilsley: What is condonation? Is it not approval?


Richard Burpee Hanson: Answering the minister's interjection, I would say there are all kinds of approval. There is express approval by words and there is approval by action, and this comes within the second category. This is approval by action.


James Lorimer Ilsley: I do not agree.


Richard Burpee Hanson: And not only is there approval, but it constitutes a discrimination.


James Lorimer Ilsley: That is a different point.


Richard Burpee Hanson: That is another point, I agree.


James Lorimer Ilsley: I do not agree that this implies or expresses any approval.


Richard Burpee Hanson: I know the minister does not want to agree to it. That is the point. He does not want to be driven into the position of making any admissions. That was the whole tenor of his prepared argument here to-day. But I want to tell him that the investing public believes that it is condonation, and it will be a distinct blow to the credit of this Dominion of Canada-absolutely. He has it in his power to-day to say to Alberta, "If you accept a certain proposal here you must accept it on the condition that you fulfil your legal obligations to the people who have advanced you money." When is a bond not a bond? That is a question that has arisen in the public mind.


Mr. ROSS (St. Paul's):: When it is an Alberta bond.


Richard Burpee Hanson: I was not going to answer the question quite so broadly. The people are beginning to be fearful by reason of repudiation. That is a harsh word to use. It is conditional repudiation. That is what the position of Alberta is, and the government, by granting fiscal aid to the province in consideration of the vacating of certain fields of taxation, and by limiting the amount under (b), which is to be paid, to the amount of net debt service actually paid by the province, is putting the seal of its approval on that partial repudiation.
That is the position I take. I know that the government does not want to hear about it. I know that the Deputy Minister of Finance does not want to hear about this sort of thing. It is not a pleasant thing to say, that by implication or inference the federal Department of Finance is recognizing the position taken by the province of Alberta. It is not a pleasant thing to contemplate, but $45,000,000 for a part year and $80,000,000 for a full year is to be paid out to the provinces on certain considerations, and a substantial portion is to go to Alberta provided that accommodation or agreement is reached.
The taxpayers of this country who invested in Alberta bonds, the institutions which gathered the savings of the people of this country and in good faith invested them in Alberta bonds, have a right to assume that

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by no word or action, express or implied, will the federal government do anything to perpetuate a situation which the highest court in this land has declared to be illegal. I cannot state the position any better than that. I can argue the matter further and give illustrations which might clarify the view I take, and perhaps I should take a few minutes to do that. Reams have been written about this position in days gone by. Let me put this first position to the minister-I put two or three the other day, but this I think is the strongest I.can take, and it is qua the taxpayer of Alberta, not the investing public.
It is clear that the result of alternative (b) is to discriminate between the taxpayer of Alberta and the taxpayer of the other provinces. That is the second point to which I alluded and which the minister and I agreed was not the same as the question of condonation. Let us compare the position of the taxpayer of Alberta and the taxpayer of Saskatchewan. To illustrate it as pointedly as possible, let us assume they live in adjoining towns with the provincial boundary between them. Each will now have to pay this new dominion tax, the increased levies of every kind as a result of the budget now passed. Each is offered under alternative (b) a consideration, a quid pro quo. This quid pro quo in the case of the Saskatchewan taxpayer is substantially double what it is in the case of the Alberta taxpayer. That is a relative term, of course.


James Lorimer Ilsley: In what way?


Richard Burpee Hanson: Let me
proceed; I think I can demonstrate it.


James Lorimer Ilsley: The payment to some provinces of course will be greater than the payment to others.


Richard Burpee Hanson: The payments to Saskatchewan, which will pay its bond interest in full, are larger and therefore more effective on the Saskatchewan taxpayer than the payments to Alberta, .where they pay only half the interest. It may be exaggeration to say it is double, I have not figured out the ratio, but the principle is there. No amount of argument that this discrimination is justified by the action of the Alberta government can obscure the fact that it is a discrimination. In other words the Alberta taxpayer is being discriminated against in relation to his brother across the line. One is receiving more money on the same account than the other.


James Lorimer Ilsley: No, no.


Richard Burpee Hanson: The interest is not extinguished in the case of the Alberta taxpayer. It is held in abeyance.


James Lorimer Ilsley: If we were to pay Alberta
$1,750,000, all the taxpayers in Canada would pay more, to begin with.


Richard Burpee Hanson: Yes, I
agree with that.


James Lorimer Ilsley: That is what the hon. gentleman is advocating, that we ask all the taxpayers of Canada to pay $1,750,000 more for the benefit of the Alberta bondholders-


Richard Burpee Hanson: That is
not an answer to my argument.


James Lorimer Ilsley: Let me follow this through -provided the thing is practicable at all. But we have had no intimation from Alberta that they would pass this on. As a government they would be $800,000 worse off if they were to do that, and there is not the slightest intimation that they would do anything of the kind. Surely there should be some suggestion from that government before we take $1,750,000 of the money of the taxpayers of Canada and attempt to force it on them for the benefit of the holders of Alberta bonds. In saying that, we have not condoned anything. I express in the strongest way our disapproval of the repudiation by the Alberta government; I am quite prepared to do that and I do it, but no approval is implied here. The hon. gentleman is repeating the arguments of the committee representing the Alberta bondholders and making a suggestion made by that committee. For those gentlemen I have the highest respect; I know they are sincere and I think the leader of the opposition is sincere. But having given this matter the most careful consideration I can I do not think that when we are making an offer to the whole of the provinces we should go back of this: we will pay you on the basis of cash received in taxes, or on the basis of cash paid. We do not go into the moral history of these people; we do not by that act express approval or disapproval. I am willing to express disapproval here and now of that repudiation, but that is not implied in the offer we have made to Alberta.


Richard Burpee Hanson: When the minister rose I thought he was insisting on controverting the argument I was putting forward. But instead he rose to make a speech and got quite hot about it. I do not see any necessity for heat. I can discuss this matter as calmly as anyone.


James Lorimer Ilsley: The hon. gentleman has
been attacking the deputy minister and the department-
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Richard Burpee Hanson: No, I did not attack the deputy minister, I said the deputy minister would not want to hear even a suggestion of condonation.


James Lorimer Ilsley: And there is none.


Richard Burpee Hanson: Well I
am suggesting that there is. I have the right to suggest it if it appeals to my reason, and it does. The minister evidently does not want to hear any more argument about this thing. I have stated the position, that this is condonation and discrimination. I am not going to labour the matter. The minister has made it abundantly clear that he is not going to do anything about it, so lhat I am wasting my eloquence on the desert air. I have been trying to prove a position, but if the minister takes the flat-footed, inflexible position that he usually takes, what is the use? The minister will I think learn from time to time that there are other points of view besides his own. Usually he is courteous in hearing them; I have not much complaint on that score. But I suggest that there was nothing in what I said to-day to cause him to take the attitude he did and to impute to those who hold other views that in effect they are talking nonsense. Because that is what his original declaration that by no flight of the imagination could it be considered that there was condonation spelled to me. That is a poor compliment to my intelligence at least. Perhaps the minister did not intend it that way; I am willing to think he did not. But I do impress upon him that there is more than one point of view in this matter.


James Lorimer Ilsley: I realize that.


Richard Burpee Hanson: And that
the credit of Canada will suffer. Suppose the United States neutrality law should be lifted and this country should find itself in the position of having to go to the United States to borrow money. That is a possibility if the war goes on long enough. One of the first things the minister will be met with is this very question of the Alberta bonds. It is one of the things he would have been met [DOT] with if he had persisted in the 15 per cent tax on interest on provincial government bonds held by people outside the jurisdiction. The minister very properly, I think, went back from that position. I hope he did it not because of pressure from Mr. Hepburn, but because as a matter of national policy it was desirable to maintain the credit of the provinces, that that credit should not be impaired by federal taxation. I know the minister has heard some of these arguments before. Knowing the inflexibility of the minister's mind I have no hope that anything I may say will

be strong enough to induce him to change his position, but I am going to tell him that the whole financial world is watching this operation and the actions of the government. It is unfortunate that this discussion arose right in the midst of the victory loan campaign. I certainly hope it will have no bad effect; it is not intended to have such an effect, and if I had thought it would I never would have raised the question. As a matter of fact it should not have any effect on the loan situation to-day because these are two entirely different positions, and I have no doubt there will be no such effect.
I do say to the minister, however, that I think the government might very well have given consideration to the Alberta position to the extent of saying, "We will offer you not only the net debt service you have actually paid; if you will do your part we will offer you a sum sufficient to pay your debt service in full from now on, disregarding the past." I would not go any farther than that at the moment. Certainly we would not pay their arrears; and with respect to the principal obligations that have matured and are in default, certainly we should not offer to pay those at the moment. A matter such as this should be threshed out by the finance department with the province of Alberta and if possible they should be made to see that in war time the position adopted by the province is detrimental to this country's credit, and that position should be reversed.
Now, having regard to the heat with which the minister rebuked me, shall I say-no, I do not think he intended to rebuke me, but the heat with which he controverted and interrupted me-I do not think I will say anything more, because I am afraid it would be useless. But I do ask the minister and the department to review the whole position between now and when we meet again in November, in order to see if something cannot be done to remedy the situation. In the meantime I lay down the principle that if the present policy is pursued, on the one hand it is condonation and on the other it is discrimination.


Mr. OOLDWELL:: I want to say to the minister first that I was very glad to hear him make the statement that if the Alberta government had approached the dominion government, and if an arrangement had been made under which the full debt service would have been paid to that province, no speculator would have been allowed to benefit by any appreciation of the bonds, and a capital gains tax would have been instituted. It is a reiteration of the position the minister took during the dominion-provincial conference in January, though apparently that was overlooked

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by many of the critics of the conference who tried to make people believe that those of us who thought it better to straighten out difficulties as between the dominion and the provinces by conference before the end of the war, in order that we might continue the war and prepare for the aftermath, were friendly to the bondholders.
This morning we have listened for nearly an hour to the leader of the opposition making a plea for consideration of the bondholders and the creditors of the province of Alberta. I hold no brief for the government of that province, as I think everyone knows, but I do say that at the time Alberta found it necessary to reduce the interest on its bonded indebtedness the people of that province, like the people of Saskatchewan, were suffering one of the greatest financial and economic depressions that any people had ever been called upon to suffer. The necessities of the situation compelled the province, and I think perhaps ought to have compelled the neighbouring province of Saskatchewan, to do something in regard to the interest on its bonded indebtedness. I do not say that the right plan was adopted. I believe it would have been much better if the provinces of western Canada, in the situation with which they were faced, had entered into negotiations with a view to relieving themselves of a part of this burden. But let me say this also in defence of the province which did take a step in that direction, that the creditors during the years before the step was taken did not offer at any time to consider such proposals or to attend any such conference.


Richard Burpee Hanson: If the hon. member will allow me a word, is it not usual for a debtor to seek out his creditor, and is it not the duty of the debtor to do so if he wishes to make a compromise?


Douglas Gooderham Ross: And if I may ask a question, was not a thorough investigation made by the Bank of Canada as to the ability of the province of Alberta to pay its debts? Was it not found in that investigation that the one province which of all the western provinces needed relief least was Alberta? Was it not found by the Bank of Canada that they could pay their interest?


Thomas Miller Bell: Well, probably the hon. gentleman is right in a part of his contention. No doubt there were provinces on the prairies that required relief even more than Alberta, but that does not say Alberta did not require relief also. I was and still am critical of Saskatchewan in that it did not seek some relief at that time, because the failure to do
so placed a burden upon the people of Saskatchewan from which they have not as yet recovered.
I have in my hand a graph taken from the report of the royal commission on dominion-provincial relations, appendix 4, indicating quite clearly what happened. Taking 1926 as the base of 100 in dividends and interest payments, in 1930 these went up to just over 120 as compared with the 1926 level and then in 1933 dropped down to the lowest point, which was 78 as compared with 100 in 1926. But when you look at the condition of the people of the agricultural provinces, what do you find? Taking 1926 as the base of 100 we find that by 1932 they had reached the unprecedented depth of only 18 as compared with the 1926 level. And then my hon. friend the leader of the opposition speaks of the sacredness of a contract! I say that a contract ought to be sacred, but that human life, human happiness and human welfare are even more sacred.


Richard Burpee Hanson: Did not the Sirois report also recommend payment of the back interest; and did not Mr. Graham Towers, who made a survey of the whole position, say that Alberta could pay?
At one o'clock the committee took recess.
The committee resumed at three o'clock.


Thomas Miller Bell: Just before one o'clock the leader of the opposition asked me if I knew that the Bank of Canada and the Rowell-Sirois reports had stated that Alberta could meet her full indebtedness. I have not looked up the Bank of Canada report in that connection, but if my memory is correct the only statement that could be interpreted in that way is one to the effect that Alberta's debt was not out of line with the debt of other provinces. I find the following at page 239 of volume I of the Rowell-Sirois report:
National interest has been centred on Alberta's arbitrary reduction of debt charges. These have consistently been the highest of any province in Canada and it is perhaps not surprising that they were singled out for attack. Provincial net debt charges in 1930 were $4*3 million annually, and in 1937 at full interest rates would have been (after adjustment for interest received) $5-4 million; actually they were $3-6 million. Only 22 per cent of the provincial funded debt is payable in Canadian currency only, and more than one-half the debt bearing 4i per cent coupon rates or higher does not mature until after 1950. It is consequently evident that the provincial debt at its original coupon rates was in a technically rigid and vulnerable position, and only small reductions in carrying charges would have been possible through orderly refunding.
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However much we may dislike the idea of repudiation or forcible reduction, the Rowell-Sirois commission recognized that something more than was generally suggested had to be done about the matter. Although I am not defending the action of the Alberta government in making an arbitrary reduction, faced with the acute situation to be found on- the prairies at that time, I believe that they were justified in bringing about a reduction in the carrying charges of their debt. This morning I said that my criticism of the government of Saskatchewan was that it had dome nothing of a similar kind to relieve the 'terrible situation that existed. I am glad that in this suggestion of the Minister of Finance some removal of the debt burden will occur for that province. I should like to justify what I have said by quoting again from the Rowell-Sirois report at page 237:
Expenditures on education and public "welfare (excluding relief) were cut between 1930 and 1937 by one-quarter. Education was particularly hard hit-joint provincial-municipal expenditures on education were reduced 40 per cent and rural municipal expenditures were cut by two-thirds. In the long run, when the personnel affected can find alternative employment, these reductions must produce serious deterioration in standards, and, as we have observed elsewhere, this concerns not only Saskatchewan but the whole country. The reduction in public welfare expenditures at a time when needs were increasing on a gigantic scale is the cold statistical reflection of a tremendous amount of human misery. It is not a surprising, although a tragic, commentary that the pressure on mental institutions became particularly acute and beds are lacking for one-third of the serious eases. It is true that expenditures on a per capita basis are not materially below the Canadian average, hut in relation to the needs (and in relation to the previous standards which were maintained) they were inadequate.
What happened in Alberta was that the government, faced with the choice of maintaining certain social services-they were dropped to some extent-or maintaining contractual obligations on the bonded indebtedness, chose the former rather than the latter. When we discuss these matters in this house we should try to see both sides of the question. The minister, in making the statement that he did this morning was explicit when he said that even if some agreement were reached with Alberta, the speculators in provincial bonds would not be allowed to benefit. This will do much to relieve the minds of many people who have believed, quite honestly but without proper foundation, that the Rowell-Sirois report was drawn up from the point of view of bondholders rather than from the point of view of the welfare of the provinces.
I should like to repeat what I said yesterday, that if we are to maintain the morale of our people we must give them some assurance

that this parliament will endeavour to relieve distress now and, when the war is over, lay a foundation for something better than we have known. It seems to me to be useless to make speeches in this house decrying the attempts, however feeble or wrong they may be, that are made in that direction. The thing to do is to try to straighten out these difficulties and lay some foundation so that we may build more properly in the future. In the long discussion that has taken place I think there has been-I see the leader of the opposition is in his seat and I am going to make this criticism-a feeling on the part of some of us that the interests of the bondholders and the *financial elements in this country were being too well looked after, and that not enough attention was being given to the interests of the human family. I hope we can get the difficulties straightened out so that in the future we may be able to build for something better than we have known in the past.


John Horne Blackmore: In his tirade against Alberta the leader of the opposition probably overdid himself a little, and perhaps he merited a measure of attention on that account. May I proceed to give him that attention?
I gathered from what he said that he thought that the trouble in Alberta with respect to the cutting down of interest rates, default on maturities, et cetera, began with the election of a Social Credit government in 1935. It really is too bad that before the hon. member made such a reckless statement he did not more accurately inform himself concerning the history of Alberta. Considering,, however, the fact that he is rather new to his job and has a great many tasks thrust upon him, perhaps we must forgive him, but I believe it is my duty to point out to him certain facts so as to help him from falling into such errors again.
I am going to read some quotations from the Bank of Canada report on the financial position of the western provinces, but before I begin this rather tedious task may I observe, Mr. Chairman, that it is a great pity that people do not know more about the province of Alberta, and it is purely in the interests of giving general information to the people throughout Canada that I am imposing upon the committee this somewhat lengthy discussion this afternoon. May I now read from the Bank of Canada report, at page 4, concerning Alberta:
The policies pursued from the time the province was created (1905) until the year 1922, had a profound effect on the financial position of the government of Alberta. The roots of many of Alberta's present problems were

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developed during this period. Only the exceptionally rapid economic progress of the time can account for the fact that extravagant governmental expenditures, direct and indirect, were allowed to proceed on such a scale and to last so long as they did.
Almost immediately after the formation of the province, ambitious telephone and railway policies were launched. Poor judgment, loose administration and over-expansion were to make both utility ventures costly.
May I draw to the attention of the leader of the opposition the fact that any government which takes power in Alberta has to assume responsibility for the results of those policies, regardless of the name that government may bear; the behaviour of that government therefore is going to be in large measure controlled by those policies and their effects going on through the years?
May I now read another passage from the same Bank of Canada report, at pages 34 and 35. While I am finding this passage may I pause to congratulate the governor of the Bank of Canada on what I consider to be one of the finest services he ever did for the dominion when he went out and made an impartial investigation into the province of Alberta. When from coast to coast there was misrepresentation, misunderstanding, ignorance and foolhardy passion concerning the province of Alberta, this young man went out there and calmly and judiciously investigated conditions in the province and set down the facts as he saw them in this report. I quote from page 34:
In appraising the present financial situation of the province of Alberta, we found that special emphasis must be placed on the events of the years 1905-22. In 1922, after Alberta had been in existence for 17 years, the province's debt (including guarantees, subsequently implemented) was approximately $95 millions. This debt was over twice as large as that of Saskatchewan in the same year, and 50 per cent larger than that of the much older province of Manitoba. Substantially more than half of the Alberta total represented accumulated losses and deficits, and so-called assets which, in fact, were proving a constant drain.


Mr. HANSELL:: That was under a Liberal administration, too?


John Horne Blackmore: Yes. One could
remark about a Liberal administration but I do not wish to interject politics into this.


Mr. BRADETTE:: Oh, no.


John Horne Blackmore: Not at all, and I am talking, and no member knows what is in my mind except myself. I continue the quotation:
After making full allowance for the rapid economic development of the new province, and the legitimate cost of facilities provided by the government to aid and stimulate this development, it remains the case-in our opinion- that the 1905-22 period was characterized by 14873-245
waste, loose administration, and incurrence of debt to an extent which could not be justified even when allowance is made for the optimistic spirit of the times.
During the fiscal years 1923-30-on the whole a period of prosperity for all three prairie provinces-the Alberta government did not take the opportunity to improve its financial position; in fact, a deterioration would have taken place had it not been for the fact that the province was successful in selling its railways to the Canadian Pacific Railway and the Canadian National Railways in 1928 and 1929. In doing so, the province realized a substantial loss, but was fortunate in getting out of a venture which had cost, on the average, $3 millions per annum in cash advances and carrying charges during the twenties. The province was left with a residual liability of $244 millions, involving interest charges of approximately $11 millions a year. The advantageous sale of the railways enabled the province to regain its 1922 position in respect to net debt. As we had previously noted, the 1922 position was such a poor one that the necessity for an improvement should have been recognized at that time. The opportunity afforded by the years of prosperity was allowed to pass, and in only one year during this period would Alberta have had a real surplus on current account if allowance is made for the items which were capitalized instead of being charged to ordinary expenditure, where they belonged.
May I pause to point out that there again is the story of a series of events for which the Social Credit administration could by no honourable and fair-minded man be held accountable? The report goes on:
During the six fiscal years 1931-36, the net outstanding liabilities of the province increased by some $52 millions. Of this increase, approximately $16 millions was accounted for by deficits on current account.
May I stop there a minute? You notice that the report says "deficits on current account". Is the new administration coming into power in 1935 supposed to be able to run the province without a deficit of any kind? That is the question. And if it is to run the province without a deficit, then where is the safety-valve going to be? I continue the quotation:
Of this increase, approximately $16 millions was accounted for by deficits on current account, $13 millions by expenditures on fixed assets such as roads, bridges, buildings, irrigation, et cetera, and $19 millions by relief and relief works (including relief expenditures capitalized as public works). About half of the net increase took place during the first two years of the period, when capital expenditures were being continued on a substantial scale, and no marked retrenchment in ordinary expenditures was taking place. Moreover, debt charges were substantially increased during these two years, partly because of new borrowings to finance the capital expenditures and current deficits, and partly because of the large amount of refunding which had to be done under unfavourable market conditions.

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May I now read another passage from this same Bank of Canada report, this time at page 36:
Of the 1931-36 period as a whole, it may be said that delay in effecting the adjustments made necessary by the depression was responsible for a substantial increase in debt and debt charges. When measures of retrenchment were applied they were severe, but, even so, it was not possible to balance the budget on current account, much less provide for the province's share of relief costs.
Again, I read from page 25:
By the summer of 1935 Alberta had largely exhausted its liquid and realizable assets-
May I pause there to draw the attention of hon. members to this fact?
By the summer of 1935 Alberta had largely exhausted its liquid and realizable assets in order to meet its chronic cash deficiencies, and when a run on the savings certificates took place in August, 1935, the necessary funds were not available.
That run took place before the Social Credit government was elected and some time before the Social Credit government took office.
Now, if the leader of the opposition is going to be entirely fair, as I know he wishes to be, he will make allowance for facts such as I have outlined.
May I turn for just a few moments to the question of savings certificates, which was referred to in the last part of the excerpt that I just read. The savings certificates were, in a way, somewhat like our dominion savings certificates. For a good many years people in Alberta had been encouraged to lend their money to the province and to take a savings certificate in return therefor, with the guarantee of a specified rate of interest. As I recall it, the rate was four and a half per cent. As a result, a great deal of money had been lent by the people of Alberta to their provincial treasury, until, in 1934, their loans to the government totalled 812,000,000,- $12,000,000 of savings certificates which were, in effect, demand documents on the provincial government, just as though a person had money in a current account in the bank. Now it is quite clear that just as soon as people began to be uncertain about the stability of their government, or just as soon as they began to get into financial difficulties, there would be a heavy drain on that
812,000,000 and consequently a heavy drain on the government treasury.
In 1934 Alberta was off the money market of the world. I suppose the rumour has reached Ottawa that the Social Credit government destroyed the credit of Alberta. Never was a bigger lie created and foisted upon the people. The credit of Alberta had been des-

troyed in 1934, because in that year Alberta was already off the money markets of the world.
Again, there was a run on the savings certificates in the fall of 1934. In order that hon. members may be able to realize the import of that statement, let them call to mind that the Social Credit government was elected on August 22, 1935. There had been a run on the savings certificates in the fall of 1934. By 1935 the government then in power had redeemed $2,000,000 of these certificates in an endeavour to recover the financial stability of the province. But their cash was completely exhausted. As the Bank of Canada report points out, their liquid assets were gone. On July 28, 1935, the government suspended payment on the savings certificates. That meant immediately, of course, that the credit of the province was gone, if it could have been destroyed any further than it already was.
Those are not all the troubles. I am not complaining; all we want hon. members and the people of this country to realize is that when the new Social Credit administration of Alberta went into office it faced an exceedingly difficult task, and it set about to solve the problem confronting it with all the honour, the courage, the determination and industry that a group of men, honest and sincere, could command.
May I point out some other troubles which that group of men confronted when they assumed office on September 3, 1935. In the first place there was an overdraft at the bank against Alberta of $5,700,000. Let any hon. member of this committee imagine that he is the premier of a province taking office in a new administration; that he goes to the bank and finds an overdraft of $5,700,000 against him to start with. There were unpaid salaries of the civil servants amounting to nearly a million dollars. I notice that four or five hon. members have not begun to take this seriously at all, although others have.


Mr. PINARD:: Do not stop.


John Horne Blackmore: All right, I will go
ahead fast enough.


Joseph Albert Pinard: Pause once in a while;
then go ahead.


John Horne Blackmore: It is only a cough;
we will forgive it. I said that there were civil service salaries unpaid in the amount of a million dollars which had to be met; the money had to be got somewhere, and the administration had to get it with, already, an overdraft of $5,700,000 against them, with their province having been off the money market

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for over a year, and with $10,000,000 of savings certificates in default against them throughout the province.
That was not all their trouble. In 1935 the United Farmers of Alberta government borrowed a quantity of money in addition to its budget and committed the province for those borrowings to the extent of $8,927,000. It is almost as though the bird knew that it was going to get off the nest, and decided to do everything in its power to foul the nest before it got off! Further there were in Alberta on the books of the tax collectors $17,000,000 of uncollected taxes.


Mr. WOOD:: They should be an asset
against a liability of $5,000,000.


John Horne Blackmore: All one needed to
do was to try to collect those taxes in 1935, and he would soon find that they were not much of an asset. Wait till you hear the facts. So much depends on the facts. You are getting them, and you will get them a lot faster if you will let me do the talking.


George Ernest Wood: I am a bit dumb on social
credit.


John Horne Blackmore: This has nothing to
do with social credit. This is just the highly-lauded orthodox economics on which my hon. friend is such an authority.


George Ernest Wood: Well, I am always suspicious that we will get a shot of social credit before we are through.


John Horne Blackmore: I would suppose that
1935 was one of the most disastrous years in the history of Alberta. We were burnt out in the south, frozen and flooded out in the centre; we had too much moisture away in the north, and there was a great deal of hail. Once in a while a great calamity like that occurs. It occurred in Alberta's history in 1935. I remember having met members of the caucus of the Social Credit government when !hey first came together to consider the tasks which had been placed upon them, and I recall one man in the caucus saying that there was not a constituency from the north of the province to the south that was not seeking agricultural relief in that particular year, 1935. In 1936 there was a repetition of the drought, and in 1937, believe it or not, there was another repetition of it.
May I call the attention of hon. members to the fact that the first debenture security to become due for the new Alberta government fell due on January 15, 1936, before the new government ever had a chance to draft a budget at all. and while it was still struggling to adjust itself and to make ends meet under the last budget of the United Farmers of 14873-2454
Alberta. That maturity was $1,577,000. I am not going to weary the committee by repeating the figures I have already given, but if hon. members will take the trouble to go over
them,	taking the financial commitments and obligations which faced the new administration, they will be astounded. The amazing thing was that the administration was able to get under way at all.
I will read now a statement from the provincial treasurer of Alberta which was given last year in the banking and commerce committee. I am not going to run the risk of misstating anything. I have had only a very short time to prepare this speech, as hon. members can see, because the last thing I expected was an attack upon Alberta to-day- the very last thing I I certainly was not prepared to deal with anything of the sort. I have had to rush around and get together some information that would help to put the case for Alberta. Let me read from page 68 of the proceedings of the standing committee on banking and commerce of last year, 1940. Mr. Low is speaking:
Immediately after this government came into power, you will remember the premier and a number of his advisers-I was not then a member of the government-came down to Ottawa; and on September 26, 1935, these are the amounts which they borrowed from Mr. Bennett's government. By the way, they asked Mr. Bennett for a lump sum of money which he said at the time he was not prepared to advance because of the imminence of a federal election. But he did say to the premier at the time, "If you will be content with this much, then after the election is over, if we are returned to office, come back and we will consider the remainder. Then you will get along all right."
As I remember, the leader of the opposition was in the administration of the man who made that statement. You can see quite clearly from that incident that the Prime Minister, Right Hon. R. B. Bennett as he was
then,	was quite in sympathy with the financial situation which existed in Alberta, because he knew it thoroughly.
These sums were then taken back or arranged for at the time of the premier's visit to Ottawa, in September, 1935, just after we took office: For unemployment relief, $330,000, for which commitments had already been made,-
The previous government had said that the money would be paid and they went out of office and left the new government to pay. -for agricultural relief, $1,200,000, for which commitments had already been made. We had to have that money to pay the amounts that had been committed. For re-loaning to the city of Calgary, another $200,000 which had been promised them by the previous administration. Calgary had been promised $450,000. They obtained $250,000 in June by loan from the federal government and another $200,000,
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the balance of their request, in September. For completion of the trans-Canada-Jasper highway, a joint relief project of the dominion and the province, $300,000. The work had been done by September 26 and the contractors wanted their money; they came to us and asked us to pay it. We had to dig up the money somewhere. For public institutions, $25,000-for enlargement, by the way, of the mental institution at Ponoka; and for general purposes, including salaries of civil servants which were in arrears, $995,000. Those are the sums that were arranged for on September 26, 1935, on our first visit to Ottawa.
Mr. Donnelly: How much is that altogether?
The Witness: I have not the total here. I could figure it out for you if you just let me have a moment.
Further than that, in November of 1935, arrangements were made for further borrowings for unemployment relief of $1,000,000 for which no provision was made in the budget, but which we had to meet. These were absolutely uncontrollable.
January 15, 1936, is the date of the first debenture maturity after the Alberta government came into office. On that date $1,577,000 of bonds fell due, which amount had to be borrowed because no provision had been made in the budget; and for unemployment relief also in January of 1936, borrowings of $2,600,000.
May I point out once more to the members of the committee that the Social Credit government had not yet been able to draft a budget. They were still carrying on under the budget of the previous administration and had to meet commitments over which they had had no conceivable control.


Richard Burpee Hanson: They asked for it.


John Horne Blackmore: Just in the same way that my hon. friend will ask for control of this government in the next election.
There are one or two other matters that have a certain bearing on the question. Let me read now a statement or two from Right Hon. R. B. Bennett before he left this house- he is a viscount now. It is really too bad that the leader of the opposition of the present time was not a member of the house at the time his leader made these remarks; I think he would then have been sufficiently advised not to make the reckless statements which he has made. I am going to read from Hansard of April 9, 1937, at page 1410. I think we can pretty safely say that Right Hon. R. B. Bennett at that time was in an ideal position to pronounce definitely upon Alberta. He was himself the member for Calgary West; he knew Alberta as perhaps no other man in the dominion government at that time knew it; he had himself been in the Alberta legislature for a considerable time and understood the problems which were being considered; he had participated in the famous debate [Mr. Blackmore.l
in the Alberta legislature which destroyed one administration-the debate in connection with the Alberta and Great Waterways railway. Altogether he was in an admirable position to know whereof he spoke, and he was the man who was prime minister when Premier Aberhart first came and laid his cards upon the table and explained the situation. Mr. Bennett said:
When the minister said to the province of Alberta that he would not help them out of their difficulty by advancing them, through loans or otherwise, sufficient money to enable them to pay their maturing obligations, his statement was regarded as a policy. Many people scattered throughout the province in which I have long lived, as well as people residing in other parts of Canada, found themselves in straitened and difficult circumstances because their investments had been wholly in those securities the market value of which fell to a very low figure, and the interest upon which was reduced to half of what the coupons carried. If that policy is reversed, if it is not applied to the provinces of Saskatchewan and Manitoba, obviously a situation is created in which the people of Alberta have just cause to say they have been discriminated against. Because if the minister will accept what I think he will, namely that the implication of his refusal to assist Alberta involved the thought that the same policy was to be applied to all the provinces-
Mr. Dunning: And it was.
Mr. Bennett: No, no.
Mr. Dunning:	I refused British Columbia
and Saskatchewan at the same time and on the same grounds, in connection with the same class of matter.
Mr. Bennett:	Yes, but the provinces of
Saskatchewan, Manitoba and British Columbia have not defaulted. The province of Alberta defaulted.
Mr. Dunning:	If the right hon. gentleman
will permit, on the maturity which was the occasion of the default, both British Columbia and Saskatchewan had maturities at the same time and received precisely the same answer.
Mr. Bennett: Yes, but I am pointing out that Alberta defaulted.
Mr. Dunning: Yes.
Mr. Bennett:	And the others did not.
Alberta defaulted because it was unable to secure money from the dominion government to prevent it from defaulting;-
Note those words:
Alberta defaulted because it was unable to secure money from the dominion government to prevent it from defaulting; that was regarded as an indication of a policy which I believe, rightly or wrongly, should not have been put in force at that particular time.
May I read another statement coming from the same right hon. gentleman after he had had another month or so to reflect and to read over the Bank of Canada report. The leader of the opposition will be impressed by the fact that Right Hon. R. B. Bennett read through the Bank of Canada report with great care, the report from which I have quoted,

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and he estimated very accurately, I would say, the true situation with respect to Alberta. At page 2882 Mr. Bennett is reported as saying:
On a review of the report made with respect to that province-
That is, Alberta.
-I find that it has been treated entirely differently from the provinces of Saskatchewan and Manitoba. When Alberta first made application for a loan to enable it to meet its obligations, the application was refused. As a result of that refusal, and the statement made subsequently, they cut down their interest payments to half.
Now that is definite enough, surely!
As a result of that refusal, and the statement made subsequently, they cut down their interest payments to half.
Hon. members see where the Right Hon. R. B. Bennett placed the responsibility for the cut in the interest payments.
_ The report points out that if they had been in a position to discharge their obligations in that regard they would have been able, by securing money from the dominion, to be in exactly the same position as the other provinces of Saskatchewan and Manitoba. The report concludes in this way:
"Its position would be little worse than that of Manitoba, but distinctly better than that of Saskatchewan; and a claim for assistance would, no doubt, be considered in the light of these facts. It is the case, however, that Alberta's budgetary position differs materially from that of the other provinces, by reason of the fact that interest payments have been reduced by 50 per cent, or $3,400,000, and, other things being equal, its cash requirements have been reduced by the same amount. We can only deal with the situation as it is-not as it might have been in other circumstances. We find that Alberta can maintain its governmental services on as favourable a basis as Manitoba or Saskatchewan without receipt of additional assistance, and we therefore see no basis for recommending that temporary financial aid should be extended by the dominion government."
The Bank of Canada was taking it for granted that Alberta had cut its interest and was computing on that basis. Mr. Bennett continues:
Preceding that, the report states:
"Our recommendation of dominion government assistance in the cases of Manitoba and Saskatchewan was based on urgent needs of those provinces for cash during the time required for the examination which will be conducted by the royal commission. If Alberta were now paying full interest on its obligations the province in 1937-38 would presumably have to borrow its full share of unemployment relief from the dominion, and on the basis of budgetary estimates (not including debt retirement) would have had a cash shortage of about $600,000."
May I interject, before going on with Mr. Bennett's remarks, that the leader of the opposition made the statement that Alberta deliberately defaulted. Now I challenge the word "deliberately" as applied to the default,
except in this sense: men are faced with two very unpleasant and disagreeable paths, either of them is subject to many objections. They choose the one that they think is the less objectionable, the lesser of two evils. If the path they chose led to default, surely when the statement is made the qualifications and reservations should be included.
I read on from Mr. Bennett:
Then follows what I first read, and that condition exists because the government of this country declined to make an advance to that province which would have enabled it to meet its obligations. The minister may shake his head as much as he likes; it does not have any effect on my mind. I have read this report. Because of this refusal, because Alberta did not join the loan council, because it took the action it did, we find it treated differently from Saskatchewan, which was able to secure $3,000,000 from the Bank of Canada. Under the law that bank could no longer continue to loan that money, so it was compelled to purchase bonds of the Saskatchewan government, and to that extent it has made an investment in a bankrupt province, admitted by the bank to be such. Alberta has been unable to secure money from the bank or from the dominion; it has been denied any assistance, and as a result the bondholders have been compelled to take fifty cents on the dollar, while we are voting money to enable the other provinces to pay one hundred cents on the dollar in connection with their bonds.
May I interrupt here to express my admiration and my commendation of the Minister of Finance for the remarks he made in reply to the leader of the opposition. The spirit of fairness which he manifested in that speech will I believe redound to his credit for many a year. There was in it clearness of vision and willingness to be fair.


The CHAIRMAN:: Order. I have to inform the hon. gentleman that his time is up.


James Lorimer Ilsley: I should like to say a few words, not specifically in answer to the hon. gentleman (Mr. Blackmore) but in order to bring this debate back to where I think it ought to be. I would remind the committee that we are concerned with an item voting
845,000,000 to make good our offer to the provinces, and in discussion of that item the leader of the opposition (Mr. Hanson) suggested that our offer, so far as Alberta is concerned, should be amended; that we should not offer to Alberta the two alternatives we offer to all the other provinces, but should modify that offer so that one option should be not on a basis of cash paid but on the basis of cash which would have been paid had the bond interest of Alberta been paid in full. Upon the speech of the leader of the opposition some discussion has developed, and unfortunately I think has now developed
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into a debate as to whether the Social Credit government of Alberta was justified in taking the steps it did and whether dominion governments in the past have been fair in their treatment of Alberta.
I am not prepared to deal with those issues. I can hardly agree with the hon. gentleman who has just taken his seat, in his view as to the necessity of Alberta's default. I do not approve that default; I expressly disapprove it. I condemn it in no uncertain terms, and if the hon. gentleman had read some other parts of the report of the governor of the Bank of Canada he would have seen that the governor of the Bank of Canada took the same view. At page 39 of the report I find the following:
In our reports on the financial positions of the provinces of Manitoba and Saskatchewan, we expressed the opinion that the dominion government would be justified in extending temporary financial aid, pending the report of the commission referred to above.
As regards Alberta, we must note, in the first instance, that the decision of the government to pay only 50 per cent of the interest due on bond issues and savings certificates has had a major effect on the budgetary position and on the amount of the province's cash requirements. Yet we cannot report on the financial position of Alberta without expressing regret that this repudiation of interest liabilities should have taken place. There are legal and moral reasons for the fulfilment of contracts, but, leaving these entirely out of consideration (although we do not minimize their importance) we believe that self-interest alone should have induced Alberta to fulfil its contractual liabilities in respect of interest. Default produces a lack of confidence which is not confined to prospective buyers of government bonds. It has its repercussions on the investment of capital in enterprise, and hampers economic development. -In due course the government revenues are bound to be adversely affected by such a situation. If it were thought that Alberta was permanently on the down grade, that the era of expansion had ended, and that the government would have little or no occasion in future to provide the additional facilities which are needed by a growing and prosperous community, there are some who might claim that the loss of credit standing was of no great importance. We could not subscribe to any such pessimistic view of the future of Alberta. It is, therefore, our opinion that a situation which involves impairment or destruction of Alberta's credit standing also involves an indirect cost to the province far exceeding the immediate pecuniary advantage gained.
I want to point out that while the governor of the Bank of Canada thus somewhat decisively condemned the default of the province of Alberta, when he went on to make his recommendations, which appear at page 41, he did not suggest that the dominion should make a grant to Alberta on the basis of
[Mr. Ilsley.l
Alberta having paid or paying its bond interest in full. He said the situation would have to be taken as it existed. I want to quote from page 41:
With a scale of taxation no higher, and a scale of expenditure no lower than in Manitoba and Saskatchewan in 1937-38, Alberta expects to balance its budget on all accounts (ordinary, capital and relief) with the exception of debt retirement. Our recommendation of dominion government assistance in the cases of Manitoba and Saskatchewan was based on urgent needs of those provinces for cash during the time required for the examination which will be conducted by the royal commission. If Alberta were now paying full interest on its obligations, the province in 1937-38 would presumably have to borrow its full share of unemployment relief from the dominion, and on the basis of budgetary estimates (not including debt retirement) would have a cash shortage of about $600,000. Its position would be a little worse than that of Manitoba, but distinctly better than that of Saskatchewan; and a claim for assistance would, no doubt, be considered in the light of these facts. It is the case, however, that Alberta's budgetary position differs materially from that of the other provinces, by reason of the fact that interest payments have been reduced by 50 per cent, or $3,400,000, and, other things being equal, its cash requirements have been reduced by the same amount. We can only deal with the situation as it is-not as it might have been in other circumstances.
I want to call those words to the attention of this committee:
We can only deal 'with the situation as it is-not as it might have been in other circumstances. We find that Alberta can maintain its governmental services on as favourable a basis as Manitoba or Saskatchewan without receipt of additional assistance, and we therefore see no basis for recommending that temporary financial aid should be extended by the ' dominion government.
I am answering now both the hon. member for Lethbridge (Mr. Blackmore), who says that Alberta was unjustly discriminated against-


John Horne Blackmore: If the minister will
allow me, I should like to point out that I
did not say that. I was reading the words of Right Hon. R. B. Bennett.


James Lorimer Ilsley: That is correct; the hon. gentleman was quoting, with approval, Mr. Bennett's words, and Mr. Bennett was arguing that Alberta was being discriminated against. In answer to that I am quoting the governor of the Bank of Canada, whose report has been cited in this house with great approval by the hon. member for Lethbridge, and with which I also agree.


John Horne Blackmore: Perhaps the minister will allow me to say also that I was answering the leader of the opposition by quoting the words of his former chief.

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James Lorimer Ilsley: I am also answering or attempting to answer the leader of the opposition, who seemed to think that unless we deal with the province of Alberta as though there had been no default; that is, unless we pay them sums of money which perhaps we would have been prepared to pay if there had been no default, we are condoning that default. In 1937, when Mr. Towers made that report, it was never argued that we should pay the province of Alberta a large additional sum of money on condition that they pay it to the bondholders. Nor was it ever argued that this government condoned the action of Alberta because it did not take that step. I will come back a little later to the hon. member for Lethbridge, but the leader of the opposition argued strongly to-day that we were condoning or approving the action of Alberta by this step. My first point is that we are not doing so now, nor were we doing so in 1937 and 1938. We went upon the only possible basis, which is put very clearly in Mr. Tower's words; we can only deal with the situation as it is, not as it might have been in other circumstances.
The purpose of this offer to all these provinces is to make it possible for the dominion to collect the necessary tax revenues. The purpose of this offer is not to straighten up situations that may exist as between provinces and their creditors. Those situations might be various. We are now in a time of war, when we have to impose taxation efficiently and equitably, and the purpose of this offer to the provinces was to make a uniform offer which would be on the same basis for all and which would enable us to impose taxation efficiently and equitably. In making this offer it was important to have some regard to provincial sensibilities, shall I say, or at least certainly not to give the impression that we were wielding the big stick on the provinces. For that reason we made an exceedingly fair offer to the provinces, an offer which several times the leader of the opposition has said he thought was generous.


Richard Burpee Hanson: I think so yet.


James Lorimer Ilsley: When it became apparent that some provinces would) not want to leave the succession duty field, we made no attempt to get them to leave that field; we left them there and imposed moderate additional succession duties. It was pretty well known that some provinces wished to control their natural resources and to be left the right to tax those natural resources; so it was an express provision of this offer that the provinces would continue to tax their natural resources and that such taxation would not be
affected by this offer. In regard to the gasoline tax revenues it was not clear what the future would be with regard to the revenues which would be derived in that way; we therefore gave an undertaking to the provinces that we would see to it that their revenues from gasoline taxes were maintained at the 1940 level, provided that they did not alter the existing rates. We gave an undertaking that the arrangement would be entirely temporary, so that it could not be said1 that we were attempting to move into this field permanently, as we knew in all probability would be said. To ensure that it would be temporary we provided that any province could, at any time, withdraw from this arrangement.
The whole spirit of the offer was to give the provinces a chance to finance themselves and to raise their necessary revenues, and to give them all the necessary safeguards and guarantees. It would be inconsistent with the spirit of that arrangement if we went to one province and tied a condition on to the offer made to them. That is what is suggested-that we offer to pay Alberta a larger sum it is true than the amount mentioned in our actual offer, but that we attach to that a condition which in effect says to Alberta, "You, alone among the provinces, will get so much money, but you will get it only on the condition that we say what the destination of that money will be." That is contrary to the whole spirit of our offers to the provinces, which offers as I see them had a high regard for provincial autonomy, for provincial rights and for provincial sensibilities.
I cannot help saying again that I think the question is largely academic so far as Alberta is concerned. There is not the slightest indication that Alberta would want us to make an offer of the kind or would accept such an offer if we made it. They would be $800,000 worse off than they would be under the offer that is made, and I cannot help thinking that it would be just an idle gesture. It might muddy the waters, and it would place this province out of line with the others. It would be incorporating into these offers an element of domination by the dominion.
Before I conclude I should like to say something about the argument of the hon. member for Lethbridge which was, I think, that Alberta is not able or has not been able to pay its bond interest in full. That argument may have been quite good in 1936. I listened with interest to the facts which the hon. member has given but I should like to tell the committee that there has been a vast improvement in the financial showing of the province of Alberta since that time. I have Mr. Low's consolidated revenue and
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deficit account. It shows that for the fiscal year 1935 revenues were 115,698,000 and in 1940, $24,410,000. In 1935 the expenditures were $17,436,000 and in 1940, $21,922,000. These expenditures include ordinary expenditures and unemployment relief but do not include agricultural relief or capital expenditures. It is hard for Alberta to maintain its position that it is unable to discharge its obligation. It may have been unable to do this in the past, but I do not think it is now.


John Horne Blackmore: The minister is giving a fine dissertation on the matter, but I think it is only fair to point out that Alberta is reducing her indebtedness. She has cleared off over $3,000,000 of these savings certificates that were causing her trouble, and she has made commitments to meet her debts just as rapidly as she can. The day will undoubtedly come when, if Alberta sees she can do it, she will pay off all the debts that it is possible to pay.


James Lorimer Ilsley: Those are internal obligations; she is discriminating in favour of her own residents.
I conclude with a reference to the condonation which the leader of the opposition was pressing so hard this morning. He dealt with this matter before on May 26. It is most interesting to see the hon. gentleman's first reaction to this question of condonation, which I think was a sound one.


Richard Burpee Hanson: You think I am not sound to-day.


James Lorimer Ilsley: I think the hon. member has been misled by the representations that have been made to him, the same as have been made to me. His immediate reaction was sensible and natural and sound. I quote from page 3142 of Hansard:
Mr. Hanson (York-Sunbury): Has consideration been given to what it is proposed to do under the circumstances? Is it proposed, by making a grant in that particular instance, to put the imprimatur of this dominion upon the default of one of the provinces?
Mr. Ilsley: I do not think it does that.
Mr. Hanson (York-Sunbury): It may have that effect.
Mr. Ilsley: It is argued by certain Alberta bondholders that we have condoned the action of Alberta in arbitrarily cutting its interest in half.	[DOT]
Mr. Hanson (York-Sunury): I would not put it in that way. I do not think you have condoned, but I think that, when you come to work out the position with that particular province, consideration should be given to what I have indicated. It may have the effect- depending entirely upon the action to be taken after these negotiations have been completed- of condonation. I hope the minister will not put himself in that position.

Mr. Ilsley: The offer to Alberta is very clear. The offer is, the actual debt service assumed by the province, or the proceeds of the taxes-whichever the province likes-and since the amount collected in taxes for 1940 is higher than the actual debt service, undoubtedly the province will elect to take the amount collected in taxes.
Mr. Hanson (York-Sunbury): If they do, that would eliminate the situation to which I have referred. There would not be in that event any condonation of the default of the particular province.
Mr. Ilsley: That is what I think, but-
Mr. Hanson (York-Sunbury): At least, that would be my judgment. If, however, they should happen to accept the other alternative, the minister is faced squarely with this position: shall he, in consideration of their going out of the field, pay them a sum which would equal one-half of what, we shall say, they ought to pay if they keep their contract? That may be the alternative which the minister will have to face; and if he concludes an arrangement on that basis he will have said to the people who have invested their money in Alberta bonds, "We approve what has occurred in Alberta: we are going to pay that, and no more." Then, God help the credit of these provinces, because it will be an invitation to some other provinces to do likewise.
Mr. Ilsley: I do not think it is. For example, we offer to Saskatchewan their debt service or their taxes, whichever is the greater; and Saskatchewan will undoubtedly elect to take their debt service.


Richard Burpee Hanson: I cannot see any great difference between the language just quoted by my hon. friend and the position I have taken to-day. It may be that I was approaching the matter with caution; I was inquiring as to what the minister's position was to be, and I was giving my first reaction to this subject matter. I am not going to debate the matter further. The minister seemed to be so definite before the luncheon recess that further argument would appear to be useless. I had not quite finished my argument, but I am not going to make a further argument at this time. I should like, however, to make one or two observations.
A few moments ago the minister made it abundantly clear that according to the data available, Alberta could pay as of this date. I am going to leave it on the basis of the minister's statement. The second thing I should like to say is this: the Rowell-Sirois report recommended the same treatment for Alberta as for the other provinces. My recollection is that it went even a little further and recommended the payment of back interest. I may be wrong about that, because it is a long time since I have read the report, but I think I am correct. Mr. Towers' report, part of which the minister read and part of which the hon. member for Lethbridge (Mr. Blackmore) conveniently omitted to read, I think makes it abundantly clear that they

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could do the same thing now in the light of present-day figures. He recommended certain assistance in respect to both Saskatchewan and Manitoba, and said that he would make the same recommendation for Alberta had they been paying the full rate. Of course, it was apparent that they were not paying the full rate, but to-day they could. Therefore the same arrangement should be made with them. In the next place, at the conference it was proposed that Alberta should be treated on the same basis as the other provinces.
Just one word more and I am through with that subject. I think the minister should alter his second proposal to come to this position, that the amount paid to the province in each fiscal year during which the arrangement is to be in effect should be the amount of the total net debt service, provided that the amount so paid shall not in any year exceed the amount of interest due on the provincial indebtedness during the fiscal year ending nearest to December 31, 1940, not including contributions to the sinking fund, less the revenue obtained from succession duties during that period. That, I think, would put them exactly on a parity with the other provinces. The present wording of the estimate does not go that far.


Thomas Langton Church: We have no ministers
from the province of Ontario here this afternoon when this invasion is going on. What is the principle on which this vote in the supplementary estimates is based? The principle is this, that we shall revert to the old policy we had with respect to relief works, when the dominion, the provinces and the municipalities spent nearly a billion dollars on relief and relief works. At that time agreements had to be made between the governor in council here and the provinces, and that principle has now been extended to this particular vote, to provide compensation. We have had this compensation feature in our legislation for many years past, but Ontario has never got any compensation. Do not forget in connection with this principle that the loss of income tax and corporation taxes affects most seriously the provinces of Ontario and Quebec. When I entered the house in 1922, Mr. McCrea, the former government member for Sherbrooke, had a return brought down with respect to over-government and overtaxation in this country which showed that aside from the subsidies under the British North America Act the two central provinces, Ontario and Quebec, where we have so much real estate that is very heavily taxed, were paying 814 per cent of the cash taxes of the dominion. The taxes covered by this vote are cash taxes, and this proposal is going to
destroy our municipal institutions in this country. I know something about the burdens of our municipalities, as past-president of the Union of Canadian Municipalities, and I know that the municipalities in all the provinces have had a very hard time to live during the last thirty years. The city from which I come has a tax rate of 3i to 31 mills to carry purely federal burdens. The income tax was taken away from the municipalities in the first place and given by duplication to the dominion, and now it is to be taken away from the provinces and given to the dominion.
I know it is said that these agreements are to be made only for the duration of the war. This same game was played on the municipalities in 1917. I came to Ottawa with a delegation of municipalities at that time to protest against the invasion by the federal authorities of the income tax field. It was said that the invasion was only for the duration of the war and that after the war the income tax would be surrendered to the municipalities again, but we never got it back, and it will be the same with the corporation tax. Then some of the provinces invaded the income tax field and took it away from the municipalities.
Most of the income tax and corporation taxes are paid by the two central provinces. I have always believed in the principle, for all the provinces, of the old Cornish battle cry, " each for all and all for each," and that what should be for the benefit of one should be for the benefit of the other. But this big-stick proposal of the minister is going to make of Ontario a hewer of wood and a drawer of water for the rest of confederation and force a duplicate income tax on Ontario over the heads of the municipalities.
As to the Sirois report, I advised the government the day the report was on the table to forget it, and they did for six months. I advised them to commit it to the archives-earth to earth, ashes to ashes, dust to dust, in the sure and certain hope that it would never be resurrected so far as this government was concerned. It was only a half-baked scheme. If the Sirois report had been left alone you could have made a much better agreement with Ontario and other provinces for the duration of the war regarding income and other taxes, and coordination and cooperation, just as you made an agreement respecting the charitable fund. Business men from all the provinces agreed to give up certain features of their charitable war work so that all could get together and work together in unison under a harmonious system for the duration of the war. The same plan should have been followed with respect to income and corporation taxes. Where were the Ontario ministers
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when this matter-was raised this morning and this afternoon? I believe that the federal government should at once meet Ontario in a spirit of good-will, and this matter could then be settled in half a day or a day and a new interprovincial conference held immediately. Why should Ontario be soaked duplicate taxes? Why should we be made the goat of the proposals of the finance department in the dying days of the session by big-stick methods? I protest against it. You may criticize Premier Hepburn as you like, but if Ontario had the representation in the cabinet we are entitled to, we would get fair play in taxation as the chief taxpayer of Canada. The Premier of Ontario wants to protect provincial and municipal institutions.
I believe that the people of our province are very much disappointed with this budget, and with the proposal to assess all these costs and burdens of taxation against that province by duplicate taxation. I was one of those who brought forward a motion eleven years ago for parliamentary, cabinet, law, taxation and constitutional reform in this country; I proposed amendments to and a reconstruction of sections 91 and 92 of the British North America Act, and after ten years' work that resulted in the appointment of a commission to investigate the whole economic basis of confederation and those five matters now referred to. I believe that the report of the Sirois commission is not accepted by a large majority of the people of Ontario so far as its municipal and educational features and other sections are concerned. Some of the principles proposed are not fair in principle to the two central provinces. It is a case of robbing Peter to pay Paul in taxation matters and leaves no adequate compensation, taking away something from one province and giving it to another. Some of the provinces are bankrupt, as we found out in connection with relief appropriations. I say that you should not interfere with the financial arrangements of the province of Ontario and of the municipalities of this country in the way it is proposed to do here, after they have passed their annual budgets and added so to their taxes. How are the municipalities going to live? It is all right to make an agreement with the provinces about income tax as to compensation, but the municipalities will not be listened to by the province who will grab the bulk of what this vote gives back. If a municipality gets a new source of revenue to-day, within a week or a month the province appropriates it to its own purposes. The municipalities of this country are getting a raw deal from federal and local authority. The city of Ottawa is well looked after through 
various votes in the estimates, but other municipalities are not. I do not know anybody who wants to own a foot of real estate to-day in our municipalities of Canada because of the heavy taxation upon real estate.
It is said that this proposal of the Minister of Finance is only for the duration of the war, but we know that once these taxes are given over to the federal government as in 1917 they will be kept by the federal government.
While I believe that the four parties in this house should get together for the war, I do not propose to sit here and see any political theories or doctrines that are not relevant in war time put over on the country as a war measure, when the country is not ready for them, and they should not be brought forward if you want to have unity in this country during the wrar. The battle of wits, by a correspondence course, between the Premier of Ontario and this government could be settled in a day in my opinion if the two parties would get together and forget a few things at a time like this, but it will never be settled by correspondence, telegrams and telephone calls. There should be a meeting; otherwise there will be no agreement. From a reply the Minister of National Revenue made the other day, I understand that no effort has been made to meet or confer with Ontario before these big-stick methods are to be used on that province in income tax, death duties and corporation tax. How are the municipalities to live? It is all very well for two or three officials here in Ottawa to propose these things. The minister has surrounded himself in two or three lines in his department with a great many officials in Ottawa, and we have learned a great many lessons from theorists in the Department of Finance who only call for help from Ontario and the municipalities when their own plans break down. That is the only time we ever hear from them as provincial and municipal revenues are taken away.
Although a brief of the mayors of the largest cities of Canada was left with the minister last year to deal with, not one of the terms of their proposals has ever been discussed and their ideas have been discarded. Why are they not here to oppose all this? The municipalities and the provinces are at the mercy of those who, by means of this big-stick policy, take their revenues and lay by duplicate taxes the whole burden on real estate and industry. That is what we are coming to. The minister is just making a scrap of paper out of the fundamental principle and doctrine of confederation, which was an agreement between the provinces. They came into

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this union with an agreement that it should not be changed without their consent. The minister is upsetting the whole principle of taxation under confederation, and provincial governments might just as well be abolished, if all this big-stick taxation continues. It is true, as the report says, that we never should have had this overgovernment and overtaxation; indeed, we should never have had the province system in 1867; they were the creation of the fathers of confederation for political and not for economic reasons. There is no such system in Great Britain and we never should have had it here-a duplicate municipal system one within the other; for that is what it is, with both authorities fighting each other to grab each other's revenues and thus force taxes upon real estate, industry and labour.
I protest on behalf of the people of Ontario, who may be forced to pay duplicate taxes all along the line because the two sides will not- meet and settle it. They would have been compelled also to pay duplicate "sales taxes," under a bill introduced three years ago by this government, if the hon. gentlemen in the other part of the building had' not thrown it out so properly, and saved further duplicate taxes.


Mr. EDWARDS:: My observations with
regard to this resolution will be very brief, and I hope it will not be necessary to answer all the questions as to where, why and by what means the province of which I have the honour to be a citizen finds itself in the predicament in which it is to-day.
I suggest that if the minister would consider amending the resolution in one respect only, and with respect to one figure, Alberta would be placed in a position analogous to that of the other provinces.
The alternative contained in paragraph (b) of the resolution reads:
The net debt service paid by the province during the fiscal year ending nearest to December 31, 1940. . . .
I suggest that if the latter figure were changed to "1941", the minister would put Alberta in the position in which every other province of the dominion will find itself. From 1936 to the present time the government of Alberta has invariably said "We cannot pay our interest debt." Now, to all the other eight provinces the minister is saying, "We will put you in a position, if you vacate the income tax and corporation tax fields, where you can take care of your net debt service, in other words pay those people, wherever they may be, who bought your bonds, their full interest. You will be in that position by accepting (b) alternative, whereby every
province in this dominion will be able to carry out its contractual obligation to its bondholders."
The cut-off date here having been fixed as of December 31, 1940, Alberta is not put in that position. If the cut-off date were made December 31, 1941, then, without any dictation from this government or from any other body, Alberta would be put in a position similar to that of even' other province, whereby she could implement her contractual relations to her bondholders. Whether or not she would do it, she alone must take the responsibility; but at least it never could be said that this government in any way condoned or approved or attempted to take advantage of the situation in which the government of Alberta finds itself.
In round figures, the situation as I appreciate it is this. The net cost of carrying the debt of Alberta is approximately $6,000,000. The income in 1940 from the income tax and the corporation tax amounted roughly to 84,000,-
000.	Alberta will have paid for net debt service last year $3,000,000, by reason solely of the fact that she pays only half the interest on her bonded indebtedness. If she is put in a position analogous to that of the other provinces, she will receive out of the common pot $6,000,000, but perforce she must pay it all out in interest to those who hold her bonds, and she cannot get it unless she pays it out. All she will be able to get from the federal treasury is the amount she has paid to carry her debt.
This would put Alberta in the position of being treated on the same basis as all the other provinces. It means that the government of Alberta will be worse off by something less than one million dollars, which she will have to find from some other source. The only other source available to her is her own people, and from my knowledge of those people I feel quite satisfied that they will and can make up the difference.
I do urge upon the minister that the offer should be dated as of December 31, 1941. It is the only change which need be made in the resolution. If you put the responsibility where it belongs, you forever close the mouth of the government of Alberta with respect to the oft-repeated assertion that "we are not in a position to pay our bond interest." The fund is there available for that purpose; let her make her internal adjustments as she sees fit. I for one am, as I trust every Canadian is and should be, jealous of the credit not only of Canada but of the provinces-


John Horne Blackmore: Hear, hear.
Supply-Finance


Manley Justin Edwards: -not of one province alone, but of all, and it is a matter of regret if one of the daughters of this fair dominion repudiates her obligations. Alberta does not say that she repudiates: in the evidence given by Mr. Low before the banking and commerce committee he side-tracked and side-stepped and refused to admit that there was repudiation. He simply said, "We cannot pay". Now the other provinces, or at any rate some of them, faced with the same situation, did get from the federal treasury in years gone by funds wherewith to meet their obligations. I do not think there is any doubt about that, and I believe the reports will show that the dominion is still carrying those obligations. Why not now, without giving any assurance to speculators in Alberta bonds that the principal will be redeemed or that bygone interest will be paid, say to Alberta: "If you will pay your bonded indebtedness from this time on, you will be treated on the same basis as the other provinces, but if you do not pay, then the federal treasury, perforce, does not assist you."
I am concerned with respect to another matter, and the fairness of this proposition, if I may say so, is reflected in this, that of the nine provinces to which the Minister of Finance (Mr. Ilsley) referred .this morning, in making up his estimate of $45,000,000, five it would appear, or at least it is assumed, will resort to option (b), thereby indicating that the revenues from corporation taxes and income tax are not sufficient to pay their net debt charges. It is worthy of note that these provinces are the maritimes and the prairie provinces. It is a trite story in itself which we may not traverse this afternoon. I am suggesting to the minister that alternative (b) would be more advantageous and would undoubtedly be accepted by Alberta if it were made 1941; or if Alberta were in fact paying her interest charges, then undoubtedly alternative (b) would be the one.


James Lorimer Ilsley: No. We have not the
slightest indication that the Alberta government would take (b). If we had any such indication we would discuss it with them.


Manley Justin Edwards: Has the government any indication that other provinces will take the alternative which is the basis of his estimate.


James Lorimer Ilsley: Oh, yes.


Manley Justin Edwards: They have all so
intimated?


James Lorimer Ilsley: I would not say it is very definite, but it is assumed, so far as Saskatchewan is concerned, for example, because it will get a much larger sum under (b) than 
under (a), and it would be superfluous for them to say that they would take the larger sum. That is assumed.


Manley Justin Edwards: My suggestion is that Alberta should be put in the same position as it is assumed Saskatchewan's position will be, because there is no question that that province met its bond interest in years gone by as the result of grants in aid from the federal treasury.
There is another aspect of this matter that is likely to be overlooked. After all, this money is interest. We are dealing only with interest, and a substantial portion of the money which will be paid out by Alberta will in turn be recaptured by the Minister of Finance under his income tax proposals, so that the amount involved is not as large as might appear at first blush. I do urge upon the minister that if December 31, 1941, were substituted for the year 1940 he would have removed, so far as this government and the house are concerned, any question of taking advantage of the default, so-called, of Alberta.


James Lorimer Ilsley: I think I should say a word in reply. I can only repeat what I said in my statement this morning, that if Alberta were to work out some refunding plan with its bondholders and were then to ask the dominion to reconsider the basis on which the annual payment is to be computed, we should be prepared to discuss the question, or any other reasonable proposal that might be made. I cannot see any good purpose, however, to be served by trying to cross this bridge before we come to it.


[Stage Direction]
Item agreed to.

[Stage Direction]
SJiO. Administration service. Departmental administration, $126,480.
John Ritchie MacNicol: I do not see any particular item in the estimates under which I might ask a question in reference to the export of grain from Churchill.


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: It will be quite all right under this item so far as I am concerned.


John Ritchie MacNicol: I wish to know what plans the department has put into operation recently-last year, if I may suggest it-or any plans that are proposed for this fall for the shipment of grain from Churchill, Manitoba. In view of the war and the necessity for convoy, it may not be practicable at the present time, but it was a year or two ago. When I visited there a year ago I learned from people at the elevator that for the past year

Supply-Trade and Commerce
2,500,000	bushels of wheat had been in storage To whom does that wheat belong? Did any loss occur while it was in storage? Who bears that loss, and has the department any plans for the shipment of wheat from that port?


James Angus MacKinnon: I am glad to have the question asked under this item. With regard to the port of Churchill, there is stored in this elevator at the present time 2,617,000 bushels of wheat. The bulk of this quantity has been in the elevator since the fall of 1939. At that time charters were made for the movement of some of this wheat from Churchill, but immediately after the outbreak of war the British Minister of Shipping commandeered the boats intended to lift some of this wheat, and they were diverted to more urgent use. Since that time conversations have been carried on with the British Minister of Shipping, with a view to arranging for some boats for the Churchill movement; but owing to the difficulties of placing these boats in Churchill and then moving them to north Atlantic ports for convoy purposes, the British Ministry of Shipping consider that the boats cannot be spared for the additional period of movement, and the efforts to divert shipping to Churchill have not been successful. In view of the difficult shipping situation we feel that we should not press the ministry of shipping to do something which will affect their shipping programme.
Within the last week discussions took place with the agent of the British cereals committee in Canada with regard to the prospect of movements from Churchill, but his view was that the position was unchanged, and he could not hold out any hope for any movement from this port during the coming shipping season.
Mr. COLDWELL; Would the minister like us to ask questions now on this administration item, or would he prefer that we wait until the appropriate item comes up?


James Angus MacKinnon: It would be quite all right now.


Thomas Miller Bell: First I wish to draw the minister's attention to the freight car situation that arose on the prairies last year. I wrote to the minister and also to the wheat board about it. For many years there were railway car rights under the grain act for which the farmers had agitated over a period of years and ultimately secured. These rights were practically taken away from them during last season. There was set up under the Department of Trade and Commerce a committee known as the car allotment committee.
It decided that cars should be allocated between elevators not on the basis of the percentage of the grain they had handled during the preceding years but rather on the amount of elevator space, including the old annexes that had been built in former days. The temporary annexes, as the minister knows, were not included. In addition, cars of grain billed to Duluth, Portage la Prairie and Kenora, where some of the private firms had storage facilities, were not taken out of the car allotment. I believe it is now proposed that this shall be done during the coming year. The car order-book has not been maintained, a new car allotment committee taking the place of it.
This has affected adversely the farmer-owned and cooperative elevator companies in western Canada. These pool elevators to my knowledge-and I went over my own constituency, which was rather a strong pool constituency-were filled to the roof quite early in September of last year. I remember the situation was particularly acute at Beechy. There, if I may digress for a moment, one of the line companies still had, I think it was nine cars, to be filled-I speak from memory- and so long as they did not fill them, no further allotment of cars could be made to the pool elevator.
This situation caused a great deal of misgiving on the part of the farmers who were cooperatively minded. They were forced to market their grain through line elevator companies with which they had done no business for a number of years, and there was a serious amount of discontent, particularly among the keen and ardent pool members. The result was that over the province of Saskatchewan last year the pools did not maintain their percentage of crop receipts. I believe they dropped about 6 per cent, which is a considerable drop in percentage from around 45 or 46 per cent. This system undoubtedly played into the hands of the line elevator companies. Consequently there is at the present time a feeling of resentment on the prairies about .this whole system.
It has been suggested to me that since the wheat board has been handling the wheat, it might be well if the distribution of cars were placed entirely under the wheat board. At present the distribution is supervised by the car allotment committee, which I believe consists of nine persons, three representing the three western pools, two representing the two railway companies, three from the line elevator companies, and I am not sure how the remaining one is appointed. If that could be done it would assist materially in satisfying the farmers. But if the space is to be considered,
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then it seems to me the space in the new annexes should be considered as well as that in the old annexes. I can, however, assure the minister that last autumn as I moved around my constituency there was serious dissatisfaction with the condition. As I say, I took the matter up last September with the proper people and received prompt attention.
Further, why should the farmer not declare, when he applies for his permit, the elevator at which he wishes to deliver his crop, as well as the point to which he wishes to deliver it? That is, restore to the individual the right to decide through what facilities his crop shall be handled.
I place that suggestion before the minister because I believe that before the new crop moves, this matter should be given consideration, and at least this should be done, that the cars should be allotted not on the basis of space but on the basis of the percentage of the business of the elevator companies, during years that the minister thinks it right and proper to take, say 1937-38-39, the average of these years. Of course he would not take years when there was serious congestion as there was in 1940. On that basis I think there would be much more satisfaction with the local wheat-handling situation than there was last autumn.
At one point I was told that out of forty pool members only fourteen were able to deliver their wheat to their own cooperative elevator. The others had to find accommodation elsewhere with companies with which they had not been dealing in former years. That, of course, was bound to develop a good deal of dissatisfaction.


James Angus MacKinnon: I shall be glad to take note of the hon. member's suggestion that distribution of cars be placed entirely under the control of the wheat board. During the past season I had complaints about the alleged unfair distribution of cars; in each case they were investigated by me through the wheat board, and so far as I remember, reasonable explanations appeared to be given.


Thomas Miller Bell: I think attempts were made to minimize the difficulties. We appreciated what the department and the wheat board did.


James Angus MacKinnon: I appreciate the hon. gentleman's remarks. His suggestions will be given careful consideration.


John Ritchie MacNicol: May I ask who owns the elevator at Churchill?


James Angus MacKinnon: The Canadian government.
[Mr. Coldwell.l


John Ritchie MacNicol: Who owns the wheat in the elevator?


James Angus MacKinnon: The wheat board.	[DOT]


John Ritchie MacNicol: I understand that at the present time this elevator contains approximately 2,600,000 bushels of wheat. This would be the equivalent of five or six boatloads, which would be, sufficient to make up a convoy. It occurs to me that this wheat should be moved out, which would leave that space available for use this fall and perhaps eliminate the necessity for the construction of extra storage capacity on the prairies. Has the department considered this point?


James Angus MacKinnon: I am afraid the hon. gentleman did not quite follow what I said a moment ago. We have made attempts to have that wheat shipped out, but the difficulty is purely one of shipping accommodation. It would take eight or nine ships to move this wheat, and under ordinary circumstances the ships would have to go to Halifax or some other eastern port in order to join a convoy.


Mr. MacINNIS:: When we were discussing this item a few days ago and the question of the shipment of wheat to Japan came up, I asked the minister if he had any information as to whether lumber from British Columbia was being shipped to Japan at the same time. The minister said he would look into the matter and give a reply later.


James Angus MacKinnon: As a matter of fact I have not been able to make inquiries. I do know that no permits have been issued for the shipment of lumber or any other materials to Japan except in connection with orders which were placed before the permit system came into operation.
I will make, however, the inquiries to which the hon. gentleman has referred.


Angus MacInnis: At the time the British
Columbia members were advised that this wheat was being shipped to Japan the question of certain shipments of hemlock lumber was also discussed. Do I understand that there have been no permits for shipments of lumber other than those? When the minister has answered that question perhaps he would say whether these permits are continuous, or whether they apply only to a particular quantity of lumber.


James Angus MacKinnon: No shipping permits have been asked for or granted in connection with any orders not placed prior to the inauguration of the permit system. I know nothing about the logs

Supply-Trade and Commerce
referred to, but in connection with wheat I understand there are separate permits for each boatload that is shipped.


Angus MacInnis: Perhaps before the house closes, or before I leave Ottawa, the minister could obtain the information I have requested in regard to lumber.


James Angus MacKinnon: I
should be very glad to do so.


Mr. QUELCH:: I should' like to add a
suggestion to the one advanced by the hon. member for Rosetown-Biggar, which I thought was thoroughly sound. If the government cannot see its way clear to allocate cars on the basis of demand by farmers instead of on the basis of space, then the space in the annexes which are not connected with the elevators by an auger also should be taken into consideration. As I understand it at the present time, if an annex is not connected by an>
auger the space in that annex is not taken into consideration. At the point where I live the pool elevator, which is a large one, is not so connected and therefore the annex is not taken into consideration in this way.


James Angus MacKinnon: I am informed that this is being done.


Mr. WRIGHT:: Has the department given any consideration to the question of the freight rate to Churchill? On the line from Prince Albert to Hudson Bay junction the freight rate to Churchill is three cents less than the freight rate to Fort William; but if the grain grown by farmers on that line goes to Churchill they have to pay the Fort William rate, which makes a difference of about two cents a bushel on that grain. These farmers feel that they should have the advantage of the Churchill freight rate, since farmers living in Alberta have the advantage of the freight rate to Vancouver even though most of their grain goes to Fort William. I should like to know also whether the department intends to make an advance on grain stored in granaries on the farms this fall.


James Angus MacKinnon: The question of the rates to Churchill does not come under this department; it is under the Department of Transport.
Did I understand the hon. gentleman to ask whether it was the intention of the government to pay storage on farm-stored wheat?


Percy Ellis Wright: No; whether there would be a cash advance on farm-stored wheat.


James Angus MacKinnon: That matter has been given a great deal of consideration, not only by the government but also by the bodies advising the government in connection with wheat. No decision has been arrived at as yet, and no decision can well be arrived at until we see what will be the nature of the crop now growing.


Mr. FAIR:: When this item was under discussion a couple of days ago some hon. members brought up the question of section 17, and I was wondering whether anything has been done in this connection. I feel quite sure the minister realizes that farmers have certain costs to pay. In a great many cases they have no other way of paying those costs except by delivering their quotas, and if others are allowed to horn in on these quotas under this section the farmers may have difficulty in threshing their grain. The minister understands, I am sure, that at present in the various provinces threshing bills are a first charge on the grain, and in many cases farmers are compelled to obtain credit for twine, binder repairs and other things as well as groceries. I am sure the minister also realizes that the farmer is responsible for the wages of the threshing gang while they are on his farm; that is the rule in Alberta, and I believe in the other provinces as well.


Thomas Vien: Would the hon. gentlemen speak a little louder, so that I may understand what he is saying? What is the hon. gentleman reading from?


Robert Fair: I am not reading from anything, Mr. Chairman.


Thomas Vien: The hon. gentleman was quoting section 17.


Robert Fair: I was not reading from anything at all.


Thomas Vien: The hon. gentleman referred1 to a regulation. I must understand what he refers to, in order to determine whether this has any relation to the item under discussion.


Robert Fair: This is from order in council,
P.C. 3849, passed at government house at Ottawa, Friday, the 30th day of May, 1941, and section 17-


Thomas Vien: The order is in relation to what?


Robert Fair: In order that it may be clear
I shall read the order in council.


Thomas Vien: The hon. gentleman
must state what he is talking about. I believe he is out of order because he is not discussing
Supply-Trade and Commerce

the item now before the committee. The minister has allowed some latitude with respect to matters referring to the grain board, but that latitude must necessarily be restricted. If I understand the hon. gentleman correctly, what he is directing attention to has no relation to either item 340, now under discussion or item 349, to which the hon. member for Rosetown-Biggar made reference.


James Angus MacKinnon: I
understand what the hon. member wishes information about, and I think I can give it to him. What is bothering him as well as other members, including those of the government, is section 17 of the order in council referred to. The situation is very serious. There are two classes of purchasers, the farmer and the mortgagee. The matter has been discussed thoroughly by the wheat committee of the cabinet with the wheat board in the past week or so, and a decision was arrived at yesterday that the wheat board should go back to western Canada and take this matter up with the provincial governments concerned and see if some arrangement cannot be arrived at.


Robert Fair: Section 4 of order in council,
P.C. 3849, reads as follows:
4. No person unless he is duly authorized by the board so to do, shall during the crop year commencing on August first, nineteen hundred and forty-one, buy, take delivery of, or mill wheat and no person during such crop year shall sell, deliver, or otherwise dispose of any wheat to or have it milled by any person not so authorized by the board.
Should a farmer be unable to pay a debt owing to another farmer in cash, would he be permitted by this section to give him wheat instead? Would a storekeeper be permitted to take wheat in payment of a debt for groceries?


James Angus MacKinnon: The storekeeper could take wheat, but he would have no permit which would allow him to deliver it. Without having given the question much consideration, I do not think there is anything to stop one farmer from trading wheat with another farmer, or selling wheat to another farmer.


Robert Fair: Will a farmer who grows only coarse grains-his land may not be suitable for the growing of wheat-be allowed to deliver those coarse grains to the wheat board?


James Angus MacKinnon: There seems to be a mistaken idea with regard to coarse grains being taken by the wheat board. The only authority the wheat board
TThe Chairman.]
has under this order in council is in connection with the acceptance of coarse grains at the elevator, in order to give them the power to accept wheat quotas as arranged.


Major James William Coldwell: The other evening the hon. member for Moose Jaw (Mr. Ross) was explaining the operations of the grain exchange under war conditions, but I did not follow him as closely as perhaps I should have done. I certainly did not gather the informationi I wanted. Perhaps the Minister of Trade and Commerce can give this to the committee, or perhaps the hon. member for Moose Jaw could elucidate further the point he was making the other evening. From the explanation given, I am under the impression that in some way wheat sales pass through the grain exchange twice. There is a great deal of confusion in the minds of many hon. members, even in the minds of those who, while they do not speculate on the grain exchange, have made some little study of wheat marketing. We have been told that the cereals controller of Great Britain wishes the grain exchange kept open. On the other hand, we know that at the moment our wheat is being sold by direct deals between the wheat board and the cereals committee. I should like to know what function the grain exchange fulfils in these transactions. In order to have it perfectly clear, perhaps we , could be given the history of a quantity of wheat from the time it is delivered to the country elevator until it gets into the hands of the cereals committee in Great Britain. What does the export firm do in connection with such a transaction? How does the wheat come into contact with the grain exchange? How do these other organizations enter into the picture?


James Angus MacKinnon: During the last few days I have seen the hon. member for Moose Jaw around my office in earnest conversation with the officials of the wheat board. I do not know of anyone in the House of Commons better qualified to give this information than the hon. member, and I believe he is ready to do so.


Thomas Vien: I want to be fair to all members of the committee. It is absolutely impossible for the Chairman not to discriminate unless we follow the rules of the house. The minister has declared his willingness to discuss the administration of the Canada Grain Act, but there is only one way of doing that under the rules of the house. We shall have to do what was done the other day in connection with the estimates of the Department of Agriculture, that is, give unanimous consent to considering items 340

Supply-Trade and Commerce
(departmental administration), 349, 350 and 351 (Canada Grain Act) together. Is it the pleasure of the committee that these items should be taken together?


Some hon. MEMBERS:: Agreed.


Mr. ROSS (Moose Jaw):: The hon. member for Rosetown-Biggar (Mr. Coldwell) has asked me to explain the movement of wheat from the country elevator to export, and I shall endeavour to do that. When the wheat business was operating in the ordinary way on the open market, before we had a wheat board or even afterwards, grain was taken into the elevator, was purchased by the elevator company from the farmer and then was hedged on the Winnipeg market by the sale of futures. This was often done by wheat boards which acted prior to this one, I believe. It was done for the purpose of protecting the later sale of the wheat by the elevator company, but it is unnecessary now because the wheat board guarantees the price to the elevator of the wheat delivered to it for their account. Therefore, there being no necessity for futures trading in connection with that wheat purchased at the country elevator for the board, there is no futures trading in connection with wheat bought at the country elevator and delivered to the wheat board at Winnipeg.
The wheat is purchased for the board and comes to Fort William-Port Arthur. The board take actual possession of the wheat there and it becomes cash wheat in their hands. They pay the elevator companies under their contract with the wheat board for the handling of that wheat east to Fort William. The British cereals import board does not want to set up machinery in this country for the purchase of wheat. They have intimated that they would rather purchase wheat through the ordinary exporters in this country and that they would be willing to pay them a commission on the deal.


Thomas Miller Bell: They have already agreed to buy the wheat from the wheat board Where does the exporter come in?


John Gordon Ross: I got a little
ahead of myself. The wheat board this year have made a contract with the British cereals import board for the purchase by that board of 120 million bushels at a figure. I do not know what that figure is. Nobody knows it except the wheat board and the British cereals import board. That is not a trade through the grain exchange. It is a contract to deliver to the British cereals import board 120 million bushels of wheat over a period of time at a price. In order that the ordinary exporter in the trade can get that wheat into position
at our ports to be delivered when required, the wheat board then sells for cash to the Canadian exporter. A commission of one-sixteenth of a cent a bushel is paid to the cash broker who sells that cash wheat for the board to the Canadian exporter. The Canadian exporter moves that wheat down, but at the same time that he makes his cash deal when buying the wheat he sells back to the wheat board a delivery option in a future month.


Thomas Miller Bell: What for?


John Gordon Ross: In order to protect himself, at the time he buys the cash wheat on the market he sells a future option to the wheat board.


Charles Edward Johnston: What is the commission on that?


John Gordon Ross: It is one-fortieth of a cent a bushel. That trade is .made, and the wheat board, by buying that option, agrees to take delivery of that wheat, if necessary, at the end of the option. The wheat is moved down to the port. When the British cereals import board wish to take delivery of part of that wheat they get in touch with the different exporters in Canada who have that wheat in position, and these exporters make offers of their wheat. These offers are made on the basis of so many cents over a July future, or over an October future, or whenever they are selling. They have so many cents over for handling charges, insurance, freight, storage, brokerage or commission.


Charles Edward Johnston: What
would that amount to?


John Gordon Ross: In all, the charges would be around eleven cents.


Charles Edward Johnston: But what would be the brokerage on that last transaction?


John Gordon Ross: That brokerage is fixed by the British cereals import board. They know exactly what the exporter bought the wheat at; when he offers the wheat he knows exactly what he has paid in brokerage, and they make their deal in competition with other exporters in this country who have wheat in position.


Charles Edward Johnston: What is the brokerage on that transaction?


John Gordon Ross: I do not know exactly, but I would not think it would be over one-quarter to three-eighths of a cent a bushel. The British cereals import board then buy cash wheat from the Canadian exporter, and when they buy that wheat they buy it
Supply-Trade and Commerce

at so many cents over the option. Then they ask the Canadian wheat board to take in to their account that short option or to give a long against the short and close out the trade, which is closed through the clearing house at Winnipeg. There is a charge of one-fortieth of a cent a bushel on that trade on the Winnipeg grain exchange, and, as I understand the situation, the exporter pays one side of the trade and the wheat board pays the other side.
I said the other night that nobody could tell what the price was at which the wheat was sold. The hon. member for Qu'Appelle, who is not in the chamber at the moment, thought that perhaps that could be learned, but the reason why nobody can tell is this. No matter what that wheat is supposed to be sold at by the exporter at the port of shipment, that is not the price at which it is sold. That is the price at which the wheat was bought, plus freight, handling charges, insurance, storage and commission up to that point. They take back in the option; then an adjustment is made between the wheat board and the British cereals import board for the balance of the price whatever it may be, and nobody knows that except the wheat board and the British cereals import board.


Mr. HARRIS (Danforth):: Perhaps the minister-I am addressing myself to the hon. member for Moose Jaw who seems to be the minister at present-would tell us what the commission is and what the handling charges are.


John Gordon Ross: I was asked that question before by an hon. gentleman opposite, and I said that I did not know exactly but that it was probably one-quarter or three-eighths of a cent a bushel.


An hon. MEMBER:: There are five brokerage transactions in the handling of that wheat?


John Gordon Ross: The cash brokerage sale at Winnipeg carries a charge of one-sixteenth of a cent.. Then there is the exporter's brokerage which is paid by the British cereals import board, not by the wheat board, and it is paid by them because they would rather pay it than set up in this country the necessary machinery and offices to handle that part of the business. That is done at their request.


Percy Ellis Wright: The brokerage which the British cereals import board pay is a direct charge against our wheat. When the British cereals import board and the wheat board settle up, that brokerage is taken into consideration, and therefore we should know what 
that brokerage is because it enters into the price when the import board make their final settlement with the wheat board.


James Angus MacKinnon: The cereals import board pay that commission to the exporter, and it is not deducted from the price realized by the wheat board. It is an additional price for handling that wheat.


Mr. NICHOLSON:: If I got correctly the figures of the hon. member for Moose Jaw, there would be a total of nearly half a cent a bushel on these different transactions. Would that be about correct?


John Gordon Ross: There is one-sixteenth of a cent, cash wheat brokerage at Winnipeg; there is one-twentieth of a cent which covers two transactions-one each way -on the futures trade; that is all. In fact, that is more than all that comes out of the wheat board. There is only one-fortieth of a cent provided by the wheat board on the option trade and one-sixteenth of a cent on the cash wheat brokerage. The other brokerage spoken of, of the exporter, is over and above the price of the Canadian wheat and is paid by the British cereals import board direct to the exporter.


James Angus MacKinnon: I believe that all three brokerages amount to a little less than half a cent.


Thomas Miller Bell: We now have a much clearer picture than we had before. I was born in the old country; and when I hear about this extremely complicated way of handling a direct trade, I wonder how Great Britain has managed to wiggle through her wars and worries in the past.


Alexander Malcolm Nicholson: I followed very closely the remarks of the hon. member for Moose Jaw. He has explained how we dispose of $600,000 in connection with one transaction, and for the life of me I cannot see why the cereals import board want to spend $600,000 in that particular way. I could think of a dozen other ways in which the British people might spend $600,000 and which would do them much more good. I think we should have a little more information.


Thomas Vien: We cannot discuss the operations of an imperial board. Whether or not it intends to pay that commission over and above other outlays, for this committee there is only the question whether that is deducted by the Canadian board from the price paid to the farmer. The other question is outside the scope even of the four items taken together.


Thomas Miller Bell: In order to get the picture, we have to know this.

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Thomas Vien: I have allowed that; but I should not like suggestions to be made that they are wrong in their trading operations. I believe we are going much farther than the items call for.


Robert Fair: I was not going into that at all.


Thomas Vien: The hon. member did not, but another hon. member did. I was addressing myself to the hon. gentleman who spoke just before.


Robert Fair: Has the government considered the question of paying storage from September 1 until November 1 to the farmer who has grain stored on his farm?


James Angus MacKinnon: We have been discussing this question in the last few days, but no decision has yet been reached. A very large part of the threshing in western Canada has not started by September 1.


Robert Fair: What percentage of the grain in storage in elevators in Canada to-day is held and owned by the grain companies?


James Angus MacKinnon: By the wheat board?


Robert Fair: By the grain companies, or the wheat board? It does not make any difference -either one.


James Angus MacKinnon: I have not the figures available to answer that question properly. The cereals import committee of the United Kingdom have a very considerable quantity of grain still in Canada. The mills and elevator companies also hold a considerable quantity.


Robert Fair: Can a farmer sell wheat.direct to a grain company after this date?


James Angus MacKinnon: I did not hear the last few words of the hon. gentleman's question.


Robert Fair: I was just wondering whether it was legal for a farmer to sell grain direct to a grain company, as it has been during the past year.


James Angus MacKinnon: I would certainly think so.
Items 340, 349, 350 and 351 agreed to.
S42. Electricity and gas inspection services, including administration of the Electricity and Fluid Exportation Act, $270,905.


John Ritchie MacNicol: If the minister has the information, I should like to know how much electricity is shipped from the power companies in the province of Quebec, including Beauharnois, to the United States; that is, how much from each one; and also from Niagara to the United States.


James Angus MacKinnon: I have not that information before me here, but I shall be very glad to get it and submit it to the hon. gentleman, either directly or otherwise.


[Stage Direction]
Item agreed to.
344. Motion picture bureau, $159,810.
Thomas Miller Bell: What motion picture bureau is this? Does the national film board come under this item?


James Angus MacKinnon: No. This item relates to the motion picture bureau, which is, to a certain extent, the workshop of the national film board. As to this item and the later item of the national film board, I may say that these organizations have just passed out of the control of the Department of Trade and Commerce and are transferred to the Department of National War Services; I refer to the national film board and that portion of the bureau having to do with films.


Thomas Miller Bell: But the new Minister of National War Services will not pilot these items through the committee?


James Angus MacKinnon: No.


Thomas Miller Bell: The Minister of Trade and Commerce will. I think the committee should take some notice of the work which is being done by this bureau and by the national film board under the leadership of John Grierson. A tremendous amount of imagination has been shown in connection with our films which have been exhibited in some thousands of theatres in the United States, Canada and Great Britain. The money we are spending for the national film board-


James Angus MacKinnon: Will the hon. member permit me? This is not really the item under which the hon. member can appropriately deal with the work being done by Mr. Grierson. If, however, he likes to couple this with the other item it will be in order.


Thomas Miller Bell: That is what I was
going to do.


Thomas Vien: Which is the other item?


James Angus MacKinnon: Item 348.	1


Thomas Vien: Shall we consider item 344 and item 348 together?


Some hon. MEMBERS:: Carried.
Supply-Trade and Commerce

3b8. National film board, $39,100.


Thomas Miller Bell: I was just about to conclude. I merely wanted to say that having seen a number of these films, and having been interested for a number of years in visual education, because of my former profession, I think that the work which is being done under Mr. Grierson is remarkably fine, and that we should continue and extend it and do our level best to keep the man who is doing it in the position which he now holds. I do not mean that I assume there is any danger of losing him, but I hope that his services will be appreciated.
Items 344 and 348 agreed to.
3Jf6. Publicity and advertising in Canada and abroad other than in the United Kingdom and Europe, $54,360.


Ernest George Hansell: Will the minister give us some information as to the difference between advertising dealt with by his department and other advertising, coming under any department, which involves trade and commerce. What I have in mind is that I have noticed some advertising put out by the Minister of Agriculture having reference to beef and agricultural products. I have observed also advertisements by the ministry of fisheries with reference to fish. Does the Minister of Trade and Commerce advertise only such products as come within his particular department, such as wheat? That is the only matter that he could advertise as coming directly under his department. Will the minister elaborate?


James Angus MacKinnon: The department advertises its own services. The Department of Agriculture advertises those products which it handles, such as cheese, bacon and butter.


Charles Edward Johnston: Would
that be for uses in Canada? The Department of Agriculture would advertise those products for consumption in Canada?


James Angus MacKinnon: Yes.


Charles Edward Johnston: But the
Department of Trade and Commerce advertises products for use abroad?


James Angus MacKinnon: We try to interest British importers in the products of Canada.


Charles Edward Johnston: For consumption outside Canada?


James Angus MacKinnon: Yes.
[The Chairman,]


Charles Edward Johnston: The
department would have nothing to do with advertising any Canadian commodity for use within Canada?


James Angus MacKinnon: No.


John Ritchie MacNicol: The details are given on page 188 of the estimates. While it is interesting to note that the vote has been increased for advertising-in south American countries, I presume-I think it should have been increased a great deal more. The vote for the item as a whole has been cut down, but inasmuch as advertising in Europe is now and will be off during the war, and a market is open in south America and can be exploited, I have been wondering whether the minister next year will bring down a larger vote for advertising Canadian products in the south American countries.


James Angus MacKinnon: Economy is the only reason for the reduction in the vote. Whether it is wise or not, that economy is based on the judgment of the department.


Ernest George Hansell: I am not quite familiar
with the difference between advertising carried on by the Department of Trade and Commerce and advertising done by other departments. I am afraid that if I go to one department and suggest that they advertise certain commodities I shall be told that this comes under the Department of Trade and Commerce, and when I go to the Department of Trade and Commerce I may be told that the very same commodities come under some other department. Under which department would come the advertising of Canada's coal products?


James Angus MacKinnon: The Department of Trade and Commerce deals with exports. The question the hon. member raises would come under the Department of Mines and Resources.


[Stage Direction]
Item agreed to.
Sb7. Weights and measures inspection service, $436,840.
Angus MacInnis: Who is the director of
weights and measures inspection service, and who is the supervisor of short weight?


James Angus MacKinnon: The director of weights and measures is Mr. Way, and the supervisor is Mr. Cuddy.


Angus MacInnis: Has the minister any
knowledge of the report made by Mr. Cuddy to Mr. Way, director of weights and measures, under date of October 13, 1939, with reference to short weight in the coal trade in the city

Supply-Trade and Commerce
of Montreal? Has he any information in that regard, and is there anything he can do? The situation is, or at any rate ought to be, a very serious one for the citizens of Montreal.


James Angus MacKinnon: The matter has come to my attention two or three times, and I have gone into it carefully. The report was a confidential one made by an officer of the department.


Angus MacInnis: Has any action been taken in the matter? Has it been brought to the attention of the authorities in Montreal?


James Angus MacKinnon: The officers advise me it is a secret report. Action was taken by the department, but we were not consulted with regard to any prosecution.


Thomas Miller Bell: Some arrangement
should be made for the advertising of our Canadian goods. I asked [DOT] for a return to
certain questions, two of which were as follows:
2.	Which department of government is charged with the responsibility of advertising or otherwise encouraging the use of domestic coal ?
3.	How much was spent in 1940 by the government in advertising Canadian coal in Canada?
The answers were as follows:
2.	The Department of Mines and Resources is charged with the responsibility of administering coal subsidies and subventions but does not conduct any advertising with a view to stimulating the use of Canadian coal for domestic purposes.
3.	Nil.


James Angus MacKinnon: Who gave that return?


Thomas Miller Bell: It is sessional paper 175B.	.


James Angus MacKinnon: From what department?


Thomas Miller Bell: It was given me by the Secretary of State. The answer is from the Department of Mines and Resources.


Angus MacInnis: Why cannot the minister's department deal with the question of short weight, as referred to in this report?


James Angus MacKinnon: The report deals with coal weights in Montreal. In that city there is a municipal by-law covering coal and coal weights. The officers of this department have adopted the policy of not interfering beyond making any necessary investigation and reporting.


Angus MacInnis: Do I understand that so far as the Department of Trade and Commerce is concerned, operating through this
branch, all it does is to see that the scales weigh correctly, that if there is some other dishonest practice in connection with weighing, the department is not concerned, but is only concerned that the scales weigh sixteen ounces to the pound?


James Angus MacKinnon: I have a memorandum on this matter. As a matter of fact the principal duty of this branch of the Department of Trade and Commerce is the checking of weights and measures. In this particular case I might say that the only authority possessed by the department to enforce correct weight is the short weight provision of section 63 of the Weights and Measures Act. But there is no offence on which they can act until sale and delivery has taken place, and deliveries of coal cannot be check-weighed in private cellars. The alternative means of public protection is the check-weighing of coal in course of delivery, by city officials under municipal by-law, as practised in most cities. Such local supervision is both legal and valid, and has recently been declared so by Judge Constantineau in his judgment in the recent prosecution of the city of Ottawa.
The royal commission on coal, dealing with complaints of short weight, mixing, substitution, et cetera, stated:
The remedy appears to be in the strict enforcement of adequate regulations for the protection of consumers. These should include enforced public weighing, rigid inspection and checking of delivery slips, proper identification of trucks and men, and an appropriate but not prohibitive license fee. Any municipality has the powers and ought to have the competence to enact and enforce such regulations.


[Stage Direction]
Item agreed to.
Dominion bureau of statistics.
353.	Statistics, $934,520.
354.	Census of population, $2,886,350.
Alexander Malcolm Nicholson: At the outset I should like to express appreciation of the valuable work performed by the bureau of statistics. I do not suppose there is any service of government that is used as widely by all hon. members as this department.
But what I rise to complain about is the method that has been followed in carrying out the census at this time.


Thomas Vien: Is it the wish that we take items 353 and 354 together?


Some hon. MEMBERS:: Agreed.


Alexander Malcolm Nicholson: A year ago, when it was decided to take the national registration, the then newly appointed Minister of National War Services (Mr. Gardiner) appealed to all hon. members to give their
Supply-Trade and Commerce

whole-hearted support to the completion of this project. Although the then Minister of National War Services has never been supported in the west by this group, I am sure all members of the house gave him complete cooperation. In my own case I did what might seem an unusual thing, I named two Liberals to occupy the hey positions in my constituency of registrar and deputy registrar-


John Ritchie MacNicol: The hon. member was not playing polities, was he?


Alexander Malcolm Nicholson: I did this because these two men had recently completed the work of returning officer and clerk, and their services were, on the whole satisfactory; they knew the constituency, and I thought that experience should warrant their appointment for this responsible position. The people throughout the constituency carried out the work in the same spirit. They thought that with the war on, we should forget partisan politics.
I think the Minister of Trade and Commerce made a start on those lines in connection with the census.
I have here a return showing the correspondence that went out from the minister's office. I am sorry that he did not carry through. I find that a letter went out from the dominion statistician-there is no date on it-mentioning that he was sending out this letter on the request of the minister. The letter reads:
In this connection I am now writing on the instruction of the minister to bespeak your special care in selecting enumerators who are in every respect suitable for their duties and who will be acceptable to the general public. . . .
I am instructed also to direct that you make a fair distribution of the appointments from amongst the political parties represented in your district and to this end that you confer with both the sitting member and the defeated candidates for your constituency.
Hon. members on this side complain, about those instructions not being carried out. In my own constituency the instructions were carried out to the extent of consulting me, and I spent two or three hours in going over my constituency lists carefully. To fill one hundred positions I suggested some thirty names, giving special consideration to the requirements outlined in another letter which went out from the bureau of statistics, and which I have here. This other letter set out the special qualifications for the enumerators, and laid special emphasis on the fact that the enumerators should have certain qualifications. First, there should be a preference to men who served overseas; second, crop correspondents of the dominion bureau of statistics 
should be considered; third, officers and leading workers in farmers' organizations, live stock associations, et cetera, progressive farmers and their sons and daughters, and especialy young men and women who have attended agricultural colleges or universities. Then school teachers when available, and it was further suggested that in certain sections women would make excellent appointees, owing to the fact that in many instances the information must be obtained from the female head of the house. It said that in the last census several women had done excellent work as enumerators.
The next paragraph of course gave the commissioners a way out:
At the same time we want you to clearly understand that the appointment of enumerators rests solely with you and that you are responsible for the efficiency and accuracy of the census of your electoral district.


James Angus MacKinnon: What is the date of that letter?


Alexander Malcolm Nicholson: There is no date on
any of these letters.


James Angus MacKinnon: I
may be wrong, but I think the hon. gentleman must be quoting from notices or forms that went out on some other work, because I do not remember those forms going out on the census work.


Alexander Malcolm Nicholson: Perhaps I should have pointed out that I am quoting from sessional paper No. 290A, "copy of all letters, telegrams, recommendations and other documents in the possession of the department relative to the appointment of the census commissioner for the constituency of Mackenzie, Saskatchewan."
This last letter is No. 4, prepared by the Department of Trade and Commerce, R. H. Coats, Dominion Statistician, on "appointment of enumerators, eighth census of Canada, 1941."
I might mention that in the future I think these letters should be dated. There is a whole series here. There is no indication to whom the letter was sent, but I presume the policy was of writing to the defeated candidate.


James Angus MacKinnon: These were the general letters that went out first. I thought the hon. member was referring to communications direct with the census commissioners.


Alexander Malcolm Nicholson: I explained that I was reading the general instructions given in order that the enumeration might be carried on impartially with a view to having the information so collected that the people would feel

Supply-Trade and Commerce
that this money was being spent to get information which would be of use instead of appointments being made of friends of the party in power. Naturally I thought that these recommendations were going to apply to my riding.
As I said, I spent considerable time in going carefully over my lists, giving special consideration to returned soldiers and the other qualifications mentioned. I was given to understand from the commissioner that these recommendations would be taken into consideration. Out of one hundred to be appointed, I suggested thirty, if I remember correctly, but I have a list here of the hundred later appointed, and not a single name that I recommended appears on this list.


An hon. MEMBER:: The hon. member has not enough pull.


Alexander Malcolm Nicholson: I know that the commissioner has his way out, seeing he takes final responsibility. I am not saying that these people are not qualified. I am not suggesting that; I know many of these people will carry on their work efficiently; but so far as I can see, these appointments have been made on a strictly partisan basis, and that is not good enough.


An hon. MEMBER:: He would not accept any of the Liberals recommended by the hon. member.


Alexander Malcolm Nicholson: As a matter of fact
I did recommend two Liberals last year to the Department of National War Services, in order to indicate that for my part I was not going to play politics in this emergency. In carrying out this census the minister might have gone as far as the Minister of National War Services went last year, in order to see that all the people of the country were asked for their whole-hearted cooperation. I know it is too late now to do anything about the matter, but in future an important service such as this should be taken away from petty ward heelers, who seem to be doing most of the work this year. In every community throughout the country there are people who have a special flair for this sort of work. In my constituency I have people who for thirty-five years have been voluntarily sending information to the bureau of statistics because they are interested in compiling and studying statistics. I believe this department should have tried to locate people in the various communities across the country who will supply the department with a constant stream of valuable information every month and every year. After looking over this list, I think I am safe in saying that 90 per cent of these people will feel that they have no
further responsibility after they receive their pay cheques, and their interest in this work will end. This is one field where, as part of a permanent policy, we should get away from narrow partisan politics and see that appointments are made on the basis of merit.
I cannot let this item pass without a protest over the failure of the minister to carry out this census according to the outline he gave the house originally.	[DOT]


Major James William Coldwell: I should like to endorse what has been said by the hon. member for Mackenzie. I was not even approached with regard to my constituency; not that I particularly wanted to be, because I think these matters should be handled altogether apart from any member or any defeated candidate. In my constituency, however, there is a good deal of feeling that since many of the people volunteered their services in connection with the registration last year, and have been busy this year with the salvage campaign, the sale of war savings certificates and now the victory loan campaign, this census should have been handled altogether apart from local politics. As I say, I was never approached in my own constituency. I have sometimes said that I was suspicious that some so-called Social Credit candidates who were brought into Saskatchewan in 1935 became Social Credit candidates just in order to split the vote and elect the Liberal candidate. In my own constituency the gentleman who has been appointed commissioner was the Social Credit candidate in 1935, having transferred his allegiance from the Liberal party to the Social Credit party a few weeks before the election. When I was in my constituency at Easter I found that the people had been told they would have to approach not only the defeated federal Liberal candidate but the sitting Liberal members or defeated Liberal candidate for the provincial legislature. Apparently the recommendations were being received through the local provincial politicians for parts of my constituency which is a bad situation.


James Angus MacKinnon: We have nothing to do with that.


Thomas Miller Bell: I know the minister had nothing to do with that, but I am pointing out that the local political game is going to destroy any unity we may have in connection with our war effort. I should like to add that so far as this group is concerned, we have leaned over backwards in trying to play the game fairly with the government. There have been times when we might have been more embarrassing but refrained from doing so because we did not wish to do anything that would undermine confidence in Canada's
Supply-Trade and Commerce

war effort. We expect that in all constituencies there will be a measure of nonpartisanship exercised in government expenditures in war time. I want to protest most emphatically against what has been done. I quite agree that this practice has not been followed everywhere; that in many constituencies the sitting -Liberal member has tried to carry on this work more or less on a proper basis. But there have been constituencies, and mine is one of them, where the sitting member was never asked for a recommendation. I would not wish to be approached, because I do not believe in any form of political patronage. At the same time, however, I object to having what I may call- and I do not use this term disrespectfully but because I know of no other-local ward politicians making recommendations for remunerative government employment, when a great deal of voluntary service is being rendered by all the people of the constituency, irrespective of their political persuasion.


Mr. GILLIS:: I find myself pretty much in agreement with the hon. member for Rose-town-Biggar, particularly with regard to the question of political patronage. As I understand it, one of the fundamental principles of our organization is that political patronage is one of the first things we would eliminate if we were in a position to do so.
I find fault with the Minister of Trade and Commerce specifically with respect to this matter. I view the minister of any department exactly as I view the commander of a battalion or regiment in the army. He should be and is responsible for the discipline and direction of his department, and any violation of orders issued by the department is the direct responsibility of the minister. As the hon. member for Mackenzie pointed out, the minister did issue specific instructions to those selected as census commissioners across Canada, that with respect to appointments the commissioners were to get in touch with the defeated candidates and also the sitting members. I was in my constituency, in the very town where the commissioner for the constituency lives, for some weeks after the appointment was made, but I never saw or heard from this gentleman, whom I know very well. On May 7 I wrote the minister pointing out that I had not been consulted in any way, shape or form by the man to whom had been delegated the authority to appoint enumerators for the constituency. The minister replied on May 8 stating that he was suggesting to his permanent officials that they check up on this particular case, but to date I have heard no more about it.
[Mr Coldwell.]
I have nothing at all against the man who
has been appointed in my constituency. He is a local merchant; he is very well off, and I know many men better qualified and more in need of the work than this gentleman. I can say that without reservation. In my constituency it has always been the practice-I hope it still is, although I cannot say-in matters of this kind to make the fullest possible use of the ex-service men's organizations. They have always been given preference. This gentleman of whom I speak is not a returned man, nor do I expect him to become a returned soldier in this war, although I believe he is not too old to make his contribution. What I am finding fault with is this. I do not care whom the Minister of Trade and Commerce appoints; that is his responsibility, but when he sends out specific instructions to small-town politicians throughout the country, I expect him to see that those instructions are obeyed and followed out.
The registration campaign was conducted on a voluntary basis. I travelled throughout my constituency and checked every registration booth. A good job was done there. I am reasonably sure that the people who carried on that work will receive absolutely no consideration in this connection. I am adding my protest to those of other hon. members. When orders are issued by the government to -people on the outside, those orders should be carried out.
Progress reported.


INCOME AND CORPORATION TAX
[Stage Direction]
The house having reverted to the order for motions:
James Lorimer Ilsley: This morning the leader of the opposition (Mr. Hanson) asked me if I would lay on the table of the house the correspondence between this government and the governments of the provinces relating to the offer to the provinces. I told him that I would get the correspondence together and do so. I now beg to lay on the table this correspondence, but I wish to repeat what I said this morning, that some of the negotiations were by word of mouth, by telephone and otherwise. I should like to add also that this correspondence is not complete, there being certain letters which I do not think should be tabled. These relate to matters of detail which I do not think should be made public during the course of

Supply-Trade and Commerce
the negotiations. They will probably be subject to modification as the negotiations go on, and to make them public during the negotiations might occasion some embarrassment to some of the provinces. For that reason I have used my discretion and have left them out.

The house in committee of supply, Mr. Vien in the chair.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
DEPARTMENT OF TRADE AND COMMERCE Dominion bureau of statistics-
SSS. Statistics, $934,520.
85i. Census of population, $2,886,350.


John Ritchie MacNicol: Mr. Chairman, I can
agree with the hon. member for Rosetown-Biggar so far as the present census taking is concerned, but' if it were not for the war I would disagree because, in the past, census appointments have always been made by the party in power. Personally I take no exception to that method except in war time when we should all be united in our war effort. During the war I do not think these appointments should be made in a political manner, and to that extent I agree with the hon. member for Rosetown-Biggar.
I have no fault to find, so far as my own riding is concerned. When the registration was taken last year, the minister of the department sent out regulations that the sitting members should name both the chief registrar and the deputy registrar, and likewise the enumerators. When I received my instructions I at once got in touch with the Liberal candidate who had opposed me at the last election, and I said to him, "You name one-half of the appointments from top to bottom, and I will name one-half from top to bottom." Then I-and when I say "I", I mean my association-named the registrar, and the Liberal association named the deputy registrar. My association named 131 enumerators, and the Liberal association named 131 enumerators. In that way we eliminated politics in Davenport riding; the registration was taken efficiently, and everything was harmonious throughout.	,
When it came to taking the present census, the instructions sent out by the minister or by the department were quite clear to me, and, I am glad to say, quite clear to the commissioner who had been named by the department for my riding. He w'as a Liberal.
He got in touch with me, and when I was home on Saturday last I got in touch with Mr. T. W. Meriam, the president of my association, and asked him how the census preparations were going in my riding. He said, "Fine. The commissioner has been fair, and1 I have no cause for complaint. In fact, he was quite willing to give me more than I was entitled to." Therefore, so far as Davenport riding is concerned I have no fault to find, and I am convinced that if fault has been found elsewhere it has probably been on account of partisanship in the appointments. I have seen no evidence of that in Davenport, but here and there one will find a Liberal candidate or a Liberal member, perhaps as a Conservative candidate did in other times-


Mr. HOMUTH:: Oh, no.


John Ritchie MacNicol: -who has reverted to former times and appointed all Liberals or nearly all Liberals. But there are other ridings like Davenport in which everything has been eminently fair.
I have in my hand an editorial from the Huron Expositor, of Seaforth, of May 16, 1941. That is in the riding represented by the hon. member for Huron-Perth (Mr. Golding), who is not in his seat at the moment. He is the Liberal member for that riding, and this editorial shows that he deserves credit for what he did. I may say that ever since I have known him in this house I have always found him fair, and the way this newspaper represents him to be convinces me that he is fair. The editorial is headed "The Wrong Presumption" and reads:
Speaking of the forthcoming census, the Globe and Mail said in a recent editorial:
"On June 2nd seventeen thousand census enumerators, presumably all good Liberals, will sally forth with armfuls of nine different kinds of forms for the decennial stock-taking of the Canadian people."
As far as this riding is concerned, the Globe and Mail's presumption as to "all good Liberals" is very wide of the truth. In this riding of Huron and Perth, and, we understand, in a good many other ridings, the census enumerator appointments are made on a fifty-fifty basis-* half Liberal and half Conservative.
The hon. member for Huron-Perth told me that as soon as he received notice that the census was to be taken, he got in touch with his commissioner and instructed him to split the appointments from top to bottom. There is no trouble in Huron-Perth.
I would close by saying that had all the commissioners interpreted the regulations sent out by the department as they were interpreted in Huron-Perth and in Davenport,



Supply-Trade and Commerce
there would be little criticism of the department. But, as I said, there is the occasional partisan who cannot get away from partisanship even in war time. They will have to answer for that.


Mr. HLYNKA:: Before I say a word on this item, I wish to ask the minister three questions: First, whether or not there are committees set up in each constituency to act in an advisory capacity to the census commissioner, and, if so, by whose authority are such committees appointed?


James Angus MacKinnon: There are no such committees which have any authorization from the Department of Trade and Commerce.


Anthony Hlynka: The minister has repeated time and again on the floor of this house that census-taking will be conducted on a strictly non-partisan basis. I would ask the minister if he still considers that that is the attitude which all the census commissioners have taken, and is that the attitude which his department is taking?


James Angus MacKinnon: I
do not remember having stated that the census would be taken on a strictly non-partisan basis, but I do remember distinctly stating that so far as we could make it possible, the census would be taken on a non-partisan basis.


Anthony Hlynka: The third question is, will the minister give us the assurance that if something goes wrong in any constituency which should not be going on, will he check it immediately?


James Angus MacKinnon: It is a little late now to do very much more checking, but the department, the gentleman in charge of this work, and I, as minister of the department, have made a sincere effort to carry this on as reasonably and fairly as we possibly can.


Anthony Hlynka: So much for questions.
I understood from what the minister has told us that the census commissioner in each constituency would get in touch with the sitting member. In my case I have not heard from the commissioner. I wish to say that the Minister of Trade and Commerce has been very considerate in all dealings with me, and I wish to make it plain that the reflection is not upon him 'but upon the political machine which is 'being set up and which is disrupting the unity of this country. Let me illustrate what I mean. I hold in my hand

a letter written to a gentleman in my riding 'by the commissioner of the federal constituency of Vegreville. It is as follows:
Eighth Census of Canada,
Commissioner's Office
Vegreville, Alberta, May 17,1941.
Mr. D. Prokop,
R.R. 1, Andrew,
Alberta.
Dear Sir:
With reference to your recent letter, I regret I was unable to have your appointment^ made as enumerator, as there was some objection by the committee on the grounds that you were connected with the Social Credit work in the last election. However, if any enumerator fails to take his appointment, I will endeavour to put you in without having to resort to the committee.
Yours truly,
John Decore per JD
I should like to know what "committee" that was. Was it not a political committee, the Liberal committee in the constituency? Of course it was. Because of incidents of this kind I must lay at the door of this government some responsibility for the result of certain national efforts in which I have been asked to cooperate. I have here a telegram sent to me from my constituency, telling me that the victory loan campaign is going on very slowly in the riding for the simple reason that the people of the district are disgusted with politics. I should like to know why, in time of war, when we are confronted with the gravest responsibilities, we see fit to behave like school children. I should like to know what possesses grown-up men, in times like these, to make appointments upon a political basis. To be a true Canadian and a loyal citizen does not necessarily mean that one has to be a Liberal. I respect men who have Liberal views, but we want the Liberals to respect our views as well. That is why we have a democracy.


Angus MacInnis: What about Liberals with conservative views?


Anthony Hlynka: Well; it is quite a mixture. There is not much difference at times.
Mr. MacNICOL; That is why they are successful.


Anthony Hlynka: As member for one of
the western constituencies, I was asked to assist the government in the matter of national registration. I did my best, and with the cooperation I received from every group and from all parties the thing went over wonderfully. Next we were asked to help in the

Supply-Trade and Commerce
salvage campaign. I sent out a circular and invited the people in my constituency to help, and everything was done that could be done. Next, we were asked to help in the war savings certificates campaign. We enjoyed very general cooperation in that effort. I received a letter a week or two ago from the Minister of National Defence requesting help in the recruiting campaign. I have tried and am trying to do as much as I can along that line. Then came the victory loan campaign, and, of course, there are the Red Cross and other appeals which require our support. I wish now to make it clear that I am not going to stand for any party politics in connection with our national problems. I will go on. the platforms and just tear politics to pieces if anyone tries to introduce partisan politics in my constituency in times like these.


Mr. POTTIER:: Including the Cooperative Commonwealth Federation?


Anthony Hlynka: Anybody at all; I do not care who it is. In one district of my riding named Podola, where the people have not had. a good crop for ten years, they contributed to the Red Cross fund $100 last year, $100 this year, and have pledged themselves to contribute $100 every year until the end of the war. In that district the people, who are mostly Social Crediters, are really poor; yet that is what they have done. Now, when it comes to census enumeration, this chap writes and tells Mr. Prokop he cannot accept him because he is a Social Crediter. Is that not a shame? It is enough to break one's heart. I must confess that after coming to this house I soon became disillusioned. I do not wish to reflect unfairly upon any horn, members, some of whom are very good men, but I must admit to having been disappointed ait the petty attitude which is so. often shown at a time when we should cooperate, when we should try to understand the other fellow's point of view. Instead of doing so-, we play party politics; we do petty things which one would not expect of high-school kids. I have already given the .committee an example of what I mean.
The people of my riding are of varied racial origins. Let me tell you, Mr. Chairman, that it is quite a job to bring them together, to speak to them in, probably, two or three languages, to organize and to put anything over. Yet I have tried to do it, and I have had wonderful success. Then there comes along the Liberal political machine and spoils the whole effort.
To some this may be a laughing matter, but I say that in time of war we cannot stand this sort of thing. I do not wish to
14873-246J
say much more about this, but I insist that the people of Canada are sick and tired of party patronage; they are not in the mood for petty politics. As I have already said, I believe the minister is trying to do his best, and I do not wish to reflect unfairly upon him. But we in Canada must rid ourselves of these political machines which are being built up and which interfere seriously with our war effort.
I happen to be the only member in this House of Commons of Ukrainian extraction. I travel from one end of the country to the other trying to explain to our people the problems that face Canada. It is not an easy matter, and when I get letters and telegrams from my riding indicating that politics are carried on, it breaks my heart. It makes it hard for me to do much in other parts of Canada. I shall leave the matter at that. If there develops in my constituency anything that will interfere with the victory loan campaign-because there have already started some mass meetings which are being held protesting against politics of this sort-and if we are not able to get as good a result as we might otherwise obtain in all these campaigns, do not blame me, place the responsibility on the government.


James Angus MacKinnon: I have listened with interest to the remarks of the hon. member for Vegreville (Mr. Hlynka) on the question of partisanship. I have a very high regard for the hon. member, and I think he is playing an active, interested and earnest role in this house. I have considerable sympathy for him to-night, and I hope, therefore, that he will not resent what I am about to say with reference to his remarks concerning partisanship. About ten days ago the hon. member took the trouble, in a partisan way, to go to the constituency of Edmonton East and endeavour to keep the latest member of this house from taking her seat.


An hon. MEMBER:: Why shouldn't he?


James Angus MacKinnon: I am happy to say that his efforts in that partisan way anyhow were not successful.


Joseph Henry Harris: With some
degree of concern I have listened to the answer of the minister to the hon. member for Vegreville. With a good deal of what he had to say I am in accord, and in speaking for a moment or two I should not like to detract from the sentiment expressed by my colleague the hon. member for Davenport (Mr. MacNicol), but if I might be permitted to do so, I would amend it somewhat, or perhaps add to it a little, with regard to the idea which he enunciated, that all is well and
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that there is no partisanship or anything of a political nature occurring in the area whence he comes. I might say that he has not got out of the confines of his own little district, because in the first place the citizens of that community feel that this idea of spending two or three millions on this census is [DOT]wrong. The citizens of that community feel that they would like to step out and do this work without any cost to Canada, and perhaps help in a small way in the solution of Canada's problems at this time. They would like to be able to feel that in some small measure they are doing something to help in the war effort.


An hon. MEMBER:: Did they do it?


Joseph Henry Harris: They did it to perfection in connection with the registration which took place some time ago, and not only did they do it then but they are ready to do it at any time in order to help Canada through this difficult period. Partisanship has been displayed to a degree in my riding, but we can overlook that. There is something more important to-day than the little odd display of partisanship in the taking of the census. Any hon. member who to-day had the privilege of listening to the words that emanated from the United Kingdom would feel disposed, I should think, to sit in silence in his place to-night and allow this work to ^proceed and the estimates to go through without holding up the session. The Minister of Pensions and National Health says "Hear, hear" in that regard. Let me ask this chamber to absolve me from any attempt to hold up the proceedings of this session at any time. I do not, however, wish the record to go out with the suggestion that there has been a pure, undefiled sheet, so far as the conduct of this particular vote is concerned, in the area from which I come. Quite true, they said, "We will take one or two of your nominations". They have three of mine-three nominations out of some hundred odd; and when more were suggested they said, "Oh, we must take care of those who are assigned to us from the churches, those who are assigned to us from the returned soldiers, those who are recommended to us from the schools, the schoolteachers-yes, provided they have the right kind of stripe-and we must take care of those who belong to what is known in my constituency as the Liberal association of Danforth." All these must be looked after; and when these are all taken care of, the member for Danforth may make one or two nominations-make a dozen and get one or two appointed.
I have no complaint. Go to it; get the census over this year. That is your policy;

take the responsibility for spending S3,000,090. I say it is wrong. The excuses which the minister has given for spending the money are not sound. The representations he has made on the floor of the house that, so far as possible, he has tried to be fair and has done it just as it was done ten years previously-


James Angus MacKinnon: Very differently.


Joseph Henry Harris: -or twenty, or thirty or forty years previously, and all that sort of thing, are not good excuses. Surely we are living in a new decade and a new generation, and the people are quite aware of what is taking place. I do not complain too much, but at the same time I do protest a little, and I say 'that in time of war this expenditure of $3,000,000 odd, going through the mill of the political machine, does not help Canada at this juncture. I question whether it will have any bearing on the victory loan. Lot us subscribe our victory loan to the full, and those who would use this as an excuse for not subscribing to the loan, those who would use it as an excuse for not encouraging recruiting, are not real Canadians. This is a small, piffling political matter, and we cannot do anything about it. The minister is unable to do anything about it. It is part of the system. At the same time, however, let us not forget that this system, which in a time of war is almost iniquitous, is something which the minister, when he has to make decisions with regard to complaints that come from individual constituencies, should disregard, taking, instead, a broad and generous view. He should not base his decisions on any considerations arising out of the system. Let him not think of his place in a political party; instead, let him consider the difficult situation in which we find ourselves to-day and ask himself what would be best in the interests of Canada.
With these few comments, may I add what I have said as an amendment to the remarks of the hon. member for Davenport-not perhaps entirely a negative amendment-to show that it is not all sweet and well in the constituencies of the Toronto area.


Ernest George Hansell: I do not think the minister's remarks concerning the hon. member for Vegreville going into Edmonton East a few weeks ago are well taken. Perhaps I may have some right to say this because I also was one of the Social Credit members who went into Edmonton East then. I might say for the minister's information, if he is not yet aware of it, that the stand of the Social Credit forces in the Camrose provincial

Supply-Trade and Commerce
by-election was that in time of war the sitting member should have an acclamation. That was our stand in connection with the Edmonton East by-election. There would have been no Social Credit or New Democracy candidate in Edmonton East had not a certain gentleman from Toronto invaded that constituency and forced those people to a vote, which would have forced our own supporters either not to vote at all or to vote Liberal or to vote for that other gentleman. When the present hon. member for Edmonton East took her seat here yesterday, I w'as one of the first to go over and welcome her. 1 confessed to her that I did my best to keep her in Edmonton, but since the hon. lady is here and the people in Edmonton East have spoken, this group welcomes her to this house.
Some observations made by other hon. members speaking to this item in the estimates have revealed that appointments of enumerators have indeed been political. The fact that the hon. member for Mackenzie recommended thirty names not one of whom was appointed is evidence of that fact. The fact that a letter was sent out by the chief statistician to all chief enumerators suggesting to them that they communicate and confer with the sitting members; the fact that there are some chief enumerators who never did so -the hon. member for Rosetown-Biggar says he was not informed; I was not consulted in a single case; the hon. member for Bow River says he was not, and I suppose other hon. members could say the same thing-and the fact that the hon. member for Vegreville places on the record a letter which declares that one name was not considered for the particular reason that he was an active Social Creditor in the last election, certainly savour of politics. I would suggest that if the gentleman mentioned in that letter had been active in Liberal politics in the last election he would never have received a letter of that kind.
These conditions, together with the fact that we are now asked to vote nearly $3,000,000 in order to take the census in time of war, put the question to us whether or not we are justified in voting this huge expenditure. Therefore I move, seconded by the hon. member for Bow River:	[DOT]
That vote No. 354 be reduced to one dollar.


Mr. STOKES:: In connection with this
vote for the census-taking, which I must admit is an unpopular vote in the riding from which I come, I wish to say that, comparing my own position with that of the hon. member for Davenport who referred to the manner in which we made the registration last summer
in our various ridings, I think I went him one better; I made a Liberal the registrar and a Conservative the deputy registrar.


An hon. MEMBER:: Were they paid?


George Henry Stokes: A great many sub-registrars were not paid, but the full-time registrar was paid. In connection with this vote I should like to repeat a paragraph that was read by the hon. member for Mackenzie a short time ago from a letter of the dominion statistician in sessional paper No. 290:
I am instructed also to direct that you make a fair distribution of the appointments from amongst the political parties represented in your district and to this end that you confer with both the sitting member and the defeated candidates for your constituency.
I would ask the minister what penalty he would impose on a commissioner who did not follow out those instructions.


James Angus MacKinnon: There is no penalty; the act does not provide for any penalty. Just the ordinary procedure has been followed.


Mr. JACKMAN:: Will anyone who received the patronage in connection with these census enumerators and abused his privilege be given any further patronage by the Liberal government as long as the war lasts?


Thomas Vien: The question put to the minister was not in relation to the motion. The motion is to the effect that vote No. 354 be reduced to SI.
Mr. MaeINNIS: It was not my intention to say anything with regard to this, and I am not going to detain the committee more than a moment. We ought to get on with the estimates because we have a great deal of important work to do.	t
So far as Vancouver East is concerned, I do not know whether a census is going to be held there or not. I never heard anything about it from anyone except one old gentleman in the constituency who wrote me asking if I would get him a job as enumerator. I took his letter rather as a compliment because he told me he had been a die-hard Liberal for fifty years. Not having anything to offer him, I forwarded the letter to the Minister of Trade and Commerce with my hope that he would do something about it. I think we should get finished with this, because, after all, there is nothing we can do about it.
Motion (Mr. Hansell) negatived on division.


Harry Rutherford Jackman: I asked the minister a question to which I should like an answer. In my riding there has been a flagrant violation of the instructions issued by the dominion
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statistician under the authority of the minister; and I asked the minister whether, if this is proved to be the case, further patronage during the period of the war will be given the gentleman who has had the patronage in connection with the census.


James Angus MacKinnon: I
wish to be very careful in my reply, and I do not wish to say anything that might provoke. Quite frankly, however, partisanship did not enter into the minds of those in my department who were in charge of this census, nor did it enter into the mind of the minister. The appointment of the census commissioners was proceeded with by the department in the ordinary way, and I ask hon. members to accept this statement in all sincerity. No request came to me for the nomination of any particular individuals; it was only after the matter had been taken up in this house, with regard to the selection of enumerators by the census commissioners, that I really took an interest in the matter, and that was the only time I thought of any political patronage or partisanship.


William Earl Rowe: I should like the minister to explain what he meant when he said that these appointments were made "in the ordinary way."


James Angus MacKinnon: I wish to avoid any argument about this, but this was done in the ordinary way, the way in which the census has been taken every year since 1871.


Harry Rutherford Jackman: The minister has not
yet answered my question.


Thomas Vien: I have already pointed out to the committee that in discussion the same question cannot be repeated ad nauseam. The question is put to the minister and he makes his reply. If hon. members are not satisfied with that reply, their remedy is to vote the item down. Tedious repetition of the same question is against the rules of the house.
Items 353 and 354 agreed to.
358. Mail Subsidies and Steamship Subventions. Atlantic ocean. Canada and South Africa, service between, $100,000.


Thomas Miller Bell: Is this a subsidy to some steamship service, or what is it? Then may I ask the minister if he has succeeded in obtaining any shipping space for the export of several million bushels of Canadian wheat to south Africa, if that matter comes under this item.


James Angus MacKinnon: This is a subsidy that has been granted for a number of years.
With regard to the shipment of wheat to south Africa, the difficulty in the way of meeting the wishes of south Africa and the desires of Canada is the question of shipping space. Very large shipments of war supplies from Canada to south Africa have made it almost impossible to secure space for the shipment of wheat. In addition, south Africa has been in the habit of buying a certain quantity of our hard wheat to mix with its own wheat. This year, on account of difficulties with regard to foreign exchange as well as lack of shipping space, south Africa is relying on its own wheat and also on the use of rye and soya beans. We are very anxious to sell wheat to south Africa or any other part of the empire, but the main difficulty at the present time is in connection with shipping space.


Thomas Miller Bell: I have in mind a particular case which I mentioned to the minister some three months ago, with regard to an order from south Africa for three million bushels of wheat, as to which I received some information. The difficulty at that time was in connection with shipping space; I spoke to the minister about it, and I have been wondering whether that amount of wheat, which I think was bought through James Richardson and Sons, had been shipped. The minister will perhaps recall the matter now. One of the shipping firms spoke to me about it when I was in Montreal.


James Angus MacKinnon: I recall the conversation I had with the hon. member. After making inquiries, I have been able to find no trace of any firm order for any such quantity of wheat.


[Stage Direction]
Item agreed to.
359. Mail Subsidies and Steamship Subventions. Pacific ocean.
British Columbia and South Africa, service between, $80,000.
Canada, China and Japan, service between, $595,000.
Prince Rupert, B.C. and Queen Charlotte Islands, service between, $22,000.
Vancouver and Northern ports of British Columbia, service between, $15,000.
Victoria, Vancouver, way ports and Skagway, service between, $10,000.
Victoria and West Coast Vancouver Island, service between, $10,000.
Mr. GREEN:: Will the minister explain the situation with regard to the service across the Pacific ocean now that the Canadian boats have been taken over by the Admiralty? As
(Mr. Jackman.]

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I understand it, all shipping across the Pacific ocean is now being carried in United States bottoms.


James Angus MacKinnon: The question of the Vancouver-Far East steamship service has given us a very great deal of concern. One after another the Canadian Pacific steamships on the Pacific have been requisitioned for war-time purposes, and the situation at present is that there is no Canadian or British shipping service between British Columbia ports and the Far East. Any shipping that is available at the present time consists of tramp steamers. If we could get any ships to carry our goods and our mails to the Far East, the subsidy could be paid, but at the present time no subsidy is paid because we have no ships available.


Howard Charles Green: 
James Angus MacKinnon: Yes; that is the item.


Howard Charles Green: In ordinary times, how is that divided between the shipping companies?


James Angus MacKinnon: This amount was to provide for seventeen trips by the Canadian Pacific ships, at $35,000 a trip.


Howard Charles Green: Those were the regular passenger steamers?


James Angus MacKinnon: Yes.


Howard Charles Green: Then, as long as they are out of the service, no subsidy will be paid to any firm at all?


James Angus MacKinnon: The Canadian Pacific have been trying so far unsuccessfully, to obtain other ships to take the place of those which have been requisitioned.


Howard Charles Green: Is any portion of this subsidy available for tramp ships, or ships of any other line than the Canadian Pacific?


James Angus MacKinnon: Any part of this item could be used, but it has not been contemplated to do that.


Angus MacInnis: Unless the Canadian
Pacific Ocean Services, Limited, are successful in getting other ships to replace those which have been taken, this item will not be used this year?


James Angus MacKinnon: That is correct.


William Earl Rowe: I notice that the second item
is for $595,000 for services between Canada, China and Japan.


James Angus MacKinnon: That is the one we have been discussing. Unless the Canadian Pacific can secure ships, it is not likely that any part of this item will be used. But we wanted it in the estimates because we want the services if we can possibly get them.


William Earl Rowe: Surely a subsidy should not
be paid for transportation services to Japan, when we are stopping the shipment of other products to that country.


[Stage Direction]
Item agreed to.
361. National research council. Salaries and other expenses of the national research council, $832,635.
Thomas Miller Bell: Is this vote to cover operations, or is it for capital account?


James Angus MacKinnon: There is an item in the supplementaries, No. 523.


Thomas Vien: Is it the pleasure of
the committee that items 361 and 523 be taken together?
Some lion. MEMBERS: Yes.
523. New .premises for annex laboratories- (revote), $342,754.


Thomas Miller Bell: Apparently item 523 is
for new premises?


James Angus MacKinnon: That is for capital account.


Thomas Miller Bell: Could the minister tell
us briefly what is being done here?


James Angus MacKinnon: The special committee on aeronautical, electrical and hydraulic research facilities, comprising representatives of the departments of national defence, public works and transport, and of the national research council, under which the project has been developed, held its first meeting April 12, 1939. The design of buildings and equipment is being carried out by the council staff. Contracts are let and construction supervised by the Department of Public Works. Expropriation proceedings were initiated in April, 1939, and active design of buildings and services commenced that month.
The new laboratories are located on a site of some 130 acres, adjacent to the Royal Canadian Air Force, Rockeliffe air station, at the corner of the Montreal and Skead roads, about four miles east of Ottawa. The original project comprised some fourteen separate laboratories and buildings. Subsequently, following the outbreak of war, the construction of four laboratories, not of direct war importance, was postponed. The present
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project includes ten of the original buildings and an explosives laboratory, a total of eleven structures.
Construction on the first building commenced October 17, 1939. The present position is as follows. Settlement of all expropriation claims has been affected. A water supply and distribution system has been installed; sewers laid, and construction of a system of roads is well advanced. The Hydro Electric Power Commission of Ontario has constructed a transmission line to the site and a transformer station on the property. The corner-stone of the aerodynamics building was laid on July 23, 1910. Construction of the following buildings is nearing completion and they are now occupied wholly or partly:
Aerodynamics building (wind tunnels and aircraft instrument laboratory).
Central heating plant.
Instrument and model shops.
Storage building.
Aircraft structures laboratory.
Gate house.
The following buildings are in various stages of construction and all should be completed by September 30:
Aircraft engine laboratory.
Model testing basin (floats and hulls).
Gasoline and oil laboratory.
Flammable storage building.
The design of the explosives laboratory is practically finished, and tenders are about to be called.


Thomas Miller Bell: What is the total estimated cost of this project?


James Angus MacKinnon: The total cost is $1,782,168.


John Ritchie MacNicol: Has the national research council been carrying out any investigations in connection with the extraction of magnesium from dolomite?


James Angus MacKinnon: As the hon. gentleman knows, that work is secret. I have no information on it, but something has been done.


John Ritchie MacNicol: Could any report on what the council has been doing be obtained?


James Angus MacKinnon: For reasons that will be readily understood, this report is not for publication. I do not ithink there would be any objection to giving such information to any hon. member.


John Ritchie MacNicol: I do not understand why it is not published.


James Angus MacKinnon: I am in the hands of my advisers.


John Ritchie MacNicol: During the past few months I have seen this metal being extracted

from dolomite most successfully. Perhaps this would come under the Department of Mines and Resources.
Items 361 and 523 agreed to.


Karl Kenneth Homuth: Before we leave the estimates of the Minister of Trade and Commerce, I should like to ask a question with respect to the Hecker H-0 company in my riding. I was unavoidably absent this afternoon when the minister's estimates came up. Could the minister make a statement now as to whether there has been any change in the situation with regard to this company getting permits to export to Great Britain?


James Angus MacKinnon: The hon. member for Waterloo South (Mr. Homuth) has spoken to me about this particular company and its shipments to the United Kingdom markets, and since it is a typical case, I think I should make a brief statement respecting the negotiations between this company and my department.
On the outbreak of war in September, 1939, the United Kingdom prohibited importation of many commodities and subjected others to import licence. From time to time new commodities were prohibited or restricted by licence control. Cereal breakfast foods, including "Force" manufactured by the Hecker H-0 company, were subjected to import licence as from March 21, 1940.
The Department of Trade and Commerce on March 21, 1940, instructed the Canadian trade commissioner in London to give every assistance possible to the representatives of the Hecker H.-O company in the matter of obtaining import licences for "Force". The trade commissioner replied on April 9 that the representatives of this company had received licence to import 8,700 hundredweights of "Force" during the ensuing three months.
In July, the Hecker H.-O company informed the department of further difficulty in obtaining licences for "Force". The Canadian trade commissioner was again asked to assist. He reported on July 18 that the matter had been discussed with the dominions office of the British government and also that a subcommittee of the Canadian Chamber of Commerce, comprising London representatives of different Canadian breakfast cereal companies, had been formed for the purpose of negotiating with the ministry of food over import licences.
Writing further on September 11, the trade commissioner stated that owing to the urgent necessity of concentrating overseas exchange resources and shipping and port facilities upon essential services, the rr inistry of food had decided that they could not issue licences for

Supply-State-Civil Service Commission
importation of breakfast foods. The general and economic situation had become even more critical than earlier in the year. The trade commissioner was of opinion that in view of the attitude of the authorities toward various staple food products, no useful purpose would be served by pressing the matter with the ministry. For example, about this time licence was refused for importation of packaged rolled oats.
A further effort was made to assist the Hecker H-0 company by furnishing a statement of their case to the Canadian delegation, headed by the Minister of Agriculture (Mr. Gardiner), which went to England in September, 1940. On their return, the delegation reported that discussions with the ministry of food definitely indicated that there was no prospect of any reversal of the position taken by the ministry regarding breakfast foods at this time. The whole matter is one of shipping space.


DEPARTMENT OF THE SECRETARY OF STATE
[Stage Direction]
SH. Civil service commission-salaries and contingencies of the commission, $406,900.
Howard Charles Green: Will the minister explain the attitude of the government with regard to that portion of the annual report of the civil service commission for the year 1940 which is to be found at page 5 and deals with salaries of employees in the lower grades who have been brought into the service since the war started? The passage reads:
The commission accordingly recommended that the salary of these employees should be increased on satisfactory service to $65 per month after six months' service, $70 after one year's service and $75 after two years' service. This recommendation was not approved by the treasury board, although an increase to $65 after six months' service was allowed, and a new class carrying a salary of $75 per month was set up for duties of a higher nature, to apply to certain employees giving exceptional service and having served for at least two years.
The commission goes on to use these significant words:
While this step affords some alleviation, the commission is still of the opinion that the form of increase originally proposed by it is' best suited to meet the situation, and that it is in the public interest that it should be applied.
Will the minister explain to the committee the attitude of the government with regard to that recommendation?


Hon. P. F. CASGRAIN (Secretary of State):: That is a matter to be dealt with especially by the treasury board. At the present time there is before the government a petition from the Civil Service Association with regard to that matter, and that, is under consideration as well as other representations 14873-247
received more recently from the Amalgamated Civil Servants. This will be considered, I think, at the same time as the other matter is being adjusted.


Howard Charles Green: What about the next paragraph of the recommendations of the commission found at the top of page 6, which has to do with the present limitation on the number of permanent positions in a department? The report reads as follows:
Difficulty has also continued during the year with reference to the granting of permanent status to employees who are performing work that is permanent in nature. This does not apply to war employees, but the reestablishment of the quota regulations limiting the number of permanent positions in any department to a definite proportion as set by the treasury board has renewed difficulties which it was hoped had disappeared when the original quota order was rescinded by order in council in 1939. The commission is of the opinion that permanency in tenure should depend not upon an arbitrary figure but upon the permanency of the work involved, and 111 at if the work is permanent, the employee, if giving satisfactory service, should also be permanent.
I think that is the belief of many members of this house as well as being the belief of the civil service commission, and I would ask the minister to explain why the government continues to insist on a certain percentage of employees in any one department not being allowed to become permanent.


Pierre-François Casgrain: I am given to understand that there is always a certain percentage of permanent employees in a department, 80 per cent, and that the rest are what are called "temporaries" by the nature of their service. It has been thought from time to time that certain temporary employees should be permitted a permanency. For instance, the other day, as the hon. member will recall, certain readjustments were recommended by the civil service commission with respect to the servants of this house, and the commission's report was adopted by the house whereby certain temporary employees on the house staff were made permanent. I have in mind to bring this matter up anew with a view to seeing that action such as my hon. friend has suggested be further considered.


Angus MacInnis: I should like to support what the hon. member for Vancouver South has just said. Until 1936, I think it was, the proportion of temporaries to the permanent staff fluctuated from time to time according to the needs of the departments. There was no arbitrary figure or fixed percentage of temporaries to permanents. The civil service committee which met in 1938 and again, I think, in 1939 reported on that question, and the passage just quoted from the commission's

3906	COMMONS
Supply-State-Civil Service Commission
report is, I believe, in accordance with the findings of the civil service committee of those years. That is a matter which should be taken into consideration at once by the minister, because it is not right that persons employed in work which is of a permanent nature should be continued year after year as temporary employees and thus debarred from participating in the advantages which come to the permanent staff.


Pierre-François Casgrain: I might say that this rule which I have mentioned, whereby 80 per cent of the employees are permanent and the remainder are temporary, is a rule of the treasury board. As to many of these cases, the hon. member should bear in mind that although there is a minister in charge of the operation of the civil service commission, all these matters which have to do with increases in salary that are recommened by various committees of the house which have sat from year to year, as well as changes in the personnel, have to be dealt with by the treasury board. They become, therefore, matters for the finance department. For that reason I am not in a position to say that all these recommendations will be carried out, because even though the minister made them, they would have to be scrutinized and passed by the treasury board.


Angus MacInnis: If the operation of the civil service commission comes under the Department of Finance, why is this item not in the Department of Finance estimates? How can we discuss estimates of a department unless the minister under whose jurisdiction that department comes is in the house so that he may be in a position to answer questions which are asked?


Pierre-François Casgrain: I wish I were able to give my hon. friend the answer he desires. At the present time the functions are distributed in this manner. The civil service commission is a public body created by parliament, and it so happens that its minister in the house is the Secretary of State. But when there is a question of adjustment of salaries, the civil service commission investigates them. When a body of employees of the civil service makes representations to the civil service commission that certain positions be made permanent, or with regard to other matters such as we have discussed this evening, they are referred to the civil service commission for attention. Then the commission makes its report, which is dealt with by the treasury board, and finally the government assumes the responsibility of either adopting or amending the recommendations.


John George Diefenbaker: On June 10, upon motion of the Prime Minister, a report of the civil service commission classifying certain positions to which employees on the temporary staff of the House of Commons are to be appointed on a permanent basis, laid on the table of the house on March 5, 1941, was approved, whereby it was provided that the six constables transferred to the messengers and cleaning branches in the reorganization of the house services be made permanent by the civil service commission at the same salaries as they are now receiving.
The last clause reads:
It is recommended that appointments of temporary employees with five years of service be authorized at their present salary rate, or, if there is no rate in the range equal to their present salary then at the next higher rate, but not exceeding, however, the maximum rate of the class.
I should like to inquire of the minister, regarding some of the sessional employees, such as messengers and the like, who have been here for a period of five years or more, not continuously, but just from session to session, whether they would come within the purview of this section which provides that "appointments of temporary employees with five years of service be authorized at their present salary rate." I speak particularly of these men, some of whom have been here for more than five consecutive sessions, some as many as ten, and I put in a plea on their behalf and ask the minister if he is able to bring them within the purview of that section, or, in any event, to enable their appointments to be made permanent.


Pierre-François Casgrain: My hon. friend knows that if the messengers and other employees of whom he has just made mention are among the classes of employees mentioned in the resolution adopted by the house, they would come under the recommendation and would be made permanent. If not, it would be for the internal economy commission of the house to make a recommendation to the civil service commission; the civil service commission would deal with it; another motion would be made such as was made on June 10, and then they would be made permanent. It is a matter for the internal economy commission of the house; it is then referred to the civil service commission for investigation and further report of the commission, and thence to the house.


John George Diefenbaker: I wish to find out from the minister whether these men do come within the purview of the section, because there is considerable doubt.

Supply-State-Civil Service Commission


Pierre-François Casgrain: I cannot express an opinion on that. Legally there may be some question about it, but it is my opinion that they would. Personally, I think they should. If a man has been here for over five years and has rendered meritorious service, he should have an opportunity to be appointed permanently.


Howard Charles Green: Is it possible for civil servants who have permanency to get regular increases at the present time?


Pierre-François Casgrain: I think they do. I understand that, as the law now is, employees who have been permanent for a certain number of years are entitled to what are called statutory advances in their salaries, which they get. I see here certain items wherein there are increases, in some of my estimates and in those of some other departments, and I am told that they are statutory increases. In some instances the amounts are $60; in others, $100 and more, according to the positions that are occupied.


Howard Charles Green: Has any order in council been passed which prevents them from getting statutory increases?


Pierre-François Casgrain: I am not aware of that. The answer is, no.


Mr. MAYBANK:: I have before me a copy of an advertisement of a civil service examination. I should like to ask a few questions, not exactly with regard to this particular position, but with regard to positions of a similar nature. This is an advertisement for a caretaker for an armoury in Winnipeg. The rate set is $60 a month, and the question to my mind is, who sets such a salary? While this has reference to a particular appointment, I have no doubt that it is typical of many positions.
The advertisement goes on to state that $15 additional will be allowed in lieu of quarters. It appears that as a rule, in positions of this sort, a man is employed at a certain rate and quarters are provided, but in this particular case quarters are not to be supplied, and that is the situation now in quite a number of such positions. I should like to know how the figure of $15 came to be set, because I should say at once that a salary of $60 for a man who has to be a mature person-in all probability the sort of man who would take this kind of position would be a married man with a family-is an entirely inadequate remuneration. I do not think it is a fair wage to offer any person for this sort of work.
In the second place, I cannot imagine who ever thought any person could rent a house in a city in Canada for $15 a month. I wish to know who is responsible for fixing so small 14873-2471
an allowance in lieu of quarters. I suppose that if I were to rent a tent here in Ottawa to camp out on the banks of the river and enjoy the view-and accommodation is so difficult to obtain that it might be necessary to get a tent and live that way-and if I were to put it up myself, it would probably cost me $7.50 a month. One cannot get quarters in any city in this country for $15 a month, and it seems absurd to me for some organization to have fixed such a figure.


Pierre-François Casgrain: The salaries are generally fixed by the treasury board, and the reclassification is recommended by the civil service commission. I will look into the case which the hon. member has mentioned and see what can be done.


Howard Charles Green: In the Department of Pensions there are returned men, married and with families, who although they are permanent are receiving only $60 a month, and yet in some instances they are training temporary men who sometimes receive as much as $125 a month. That situation is absolutely unfair, and there should be a change. I do not see how the government can expect any married man to carry on with a salary of $60 a month. In some instances people in charge of war veterans' allowance investigation receive that small a salary. In one of our largest cities such a man is getting a very small salary, and while I suppose it is nob the fault of the Minister of Pensions, who is bound by the salaries that are fixed, it is a disgrace to Canada. Something should be done about it. These men are actually training other men who come in as temporaries and who are getting nearly twice the salary.


Pierre-François Casgrain: I fully appreciate what the hon. member has said, and I may tell him that a few years ago I was prompted to make changes so that some temporary employees would not get as much as old permanent civil servants in similar situations. I do not know the facts of this case, but I will look into the matter myself to see if we cannot remedy it.


Howard Charles Green: It is a question, not of the temporary employee getting too much but of the permanent civil servant getting too little. In the cases I have mentioned I should have said that the salary is $60 plus $5 bonus.


Mr. ESLING:: If the treasury board is
responsible for such salaries as are paid to non-permanent employees, the government or whatever minister directs non-permanent employees should bring one circumstance to the attention of the board. Here is a young lady, an artist. She is an exceptionally capable
Supply-State-Naturalization

artist. She colours photographs for the government, and during the recent visit of their majesties in May, 1939, a large photograph was taken for presentation to the president of the United States. This young lady was sent to the archives to colour that photograph, making as nearly as possible a reproduction of the magnificent gown the queen had worn. That was a sufficient indication of her capabilities. She has been with the Department of Mines and Resources for nearly six years and receives the munificent sum of $60 a month. Surely some steps should be taken to remedy such a discrepancy. When the matter was brought to the attention of the minister the reply was that the treasury board would have to remove a permanent employee, who was a married man earning $60 a month, in order to advance this young artist to a permanent position which would give her a better salary. If the Secretary of State has any interest in that matter he will bring it to the attention of the proper authorities with a view to having the situation remedied.


[Stage Direction]
Item agreed to.
827. Naturalization branch, $60,470.
Richard Burpee Hanson: Will the minister make a brief statement of policy with regard to naturalization?


Pierre-François Casgrain: I cannot do much more ' than repeat what I said in March last when a certain question was debated in the house, and supplement the remarks I made on July 15 last, when I first presented my estimates. At the present time the naturalization proceedings follow their usual course as set out in the statute, but when reports of any judge come up, the case is subject to review by the minister. He has discretionary power under section 4 of the act to grant or to refuse a certificate. In practice we have a conference with the officials of the department. We have decided that persons who are of enemy origin or extraction, such as Germans or Italians, shall not be naturalized and we do not naturalize them. We do not issue certificates of naturalization to enemy aliens. As regards all other persons who have made out clear cases, if it is found, after further investigation in the department and by the Royal Canadian Mounted Police, that they are not connected with, or come within the orbit of people associated with the enemies of the empire, we look into the merits of each and every case and, if they are of reasonably good character, issue certificates.


Richard Burpee Hanson: Therefore certificates are being issued. How many were issued last year?


Pierre-François Casgrain: In 1940 the following
persons were naturalized:
Under section 4	 7,111
Under section 4,	paragraph	(5)_______ 182
Under section 6	 50
Under section 7,	paragraph	(2)....	19
Section 8	 5,902
Section 13,	paragraph	(4)	
75Section 13,	paragraph	(5)	
3,886Section 15,	paragraph	(2)	
1Total	
17,226


Howard Charles Green: How many of those were of German or Italian origin, and how many of Japanese origin?


Pierre-François Casgrain: I have not that information here.


Mr. NEILL:: Will the minister not say that a great many of those are not new naturalizations? There is a section of the act changing the three-year period to five years?


Pierre-François Casgrain: Yes.


Howard Charles Green: Are the judges hearing
naturalization applications still under instructions to hear applicants of enemy origin?


Pierre-François Casgrain: They have the right to hear the cases.


Howard Charles Green: The special committee on the defence of Canada regulations which sat last year recommended to the government that that practice should be stopped, because it meant that aliens of enemy origin were appearing before these judges where the public could see them; the public had the idea that they were being naturalized, and this caused great dissatisfaction. The committee recommended that that practice should stop and that these applications should not be heard. Why has the government not followed the recommendation of its own committee? It was our understanding last year the government would do so.


Pierre-François Casgrain: That declaration I made in the house in July of last year on this very matter practically stopped the applications of such persons from coming to the courts. I have been told that on good authority.


Anthony Hlynka: Would the minister advise the committee whether persons who owe for relief are refused naturalization on that account? I understand that some judges take that position and refuse to hear the case until the applicant pays back all the money he has drawn for relief. Is there anything in the act that requires these persons to pay back the money they owe for relief, be it provincial or local, before they can be naturalized?

Supply-State-Companies


Pierre-François Casgrain: I have not heard of such cases, and I am informed that there is nothing to that effect in the act.


Howard Charles Green: Has the practice been established of requiring an applicant for naturalization to produce some proof from his country of origin that they renounce all their claims against him before he can obtain naturalization in Canada?


Pierre-François Casgrain: I am afraid I do not understand the question.


Howard Charles Green: In other words, if a Japanese citizen applies for naturalization in Canada, must he produce a renunciation from the Japanese government of all further claims on him before he can obtain Canadian citizenship?


Pierre-François Casgrain: I am told that under the order in council passed in 1934 they have to produce a certificate of renunciation of their nationality.


Howard Charles Green: That is, a Japanese applicant would have to produce a certificate of renunciation from the Japanese government?


Pierre-François Casgrain: They have to produce a release from their government, the same as the people from Switzerland.


Alan Webster Neill: It is not exactly like that. They have to produce a certificate from the Japanese government that they have done their military service or for some reason are not liable for it. They have to do their national war service before this release will be given. That is absolutely so; I looked it up recently.


Pierre-François Casgrain: I do not know exactly what it is, but they have to produce a certificate of release from their country before they can get a naturalization certificate from this country.


Alan Webster Neill: And after all that is done, if they go back to Japan and reside there for three months they can regain their citizenship there.


Pierre-François Casgrain: That is not our fault.


Howard Charles Green: If that is the law in Canada, why is it that the Japanese government last year was allowed to take a census of the
Japanese in Canada?


Pierre-François Casgrain: That would be a question of international law. I should not like to speak on that.


Richard Burpee Hanson: Is it a
fact that they did take the census?


Victor Quelch: I have found in western Canada that British subjects and Canadians may be called up for military service, while on the other hand foreigners who have resided in this country for a long time are exempt. It is high time we said that when foreigners come to this country and have resided here for five years, if they do not think this country is good enough to become citizens of it they should be deported, unless they can show good reason for not having taken out their papers. I do not wish it to be inferred that I am suggesting that all foreigners who have not taken out papers should be deported, because I know that many apply and are refused.
I have in mind two or three cases with which I am familiar. I sat in at the court hearing when they made application. Apparently at that time it was not considered advisable to grant those men naturalization papers, and therefore they were asked a series of questions that I believe the majority of our Canadians could not answer. For example, they were given a geography test that the majority of Canadians could not answer and were asked many questions of that kind, obviously with the intention of making it impossible for them to obtain papers. Consequently, when I say that all foreigners who have not taken out papers should be deported, I am not referring to those who have tried but who through no fault of their own, have been refused citizenship. It is, however, causing a great deal of resentment at present throughout the country when there are two or three families of British origin and two or three of foreign origin who have not taken out papers, and the sons of the British families are called up for military service, while the-sons of the foreign families can jump in and take their jobs. That will not help recruiting. It is time we took a different attitude on this whole question of naturalization.


[Stage Direction]
Item agreed to.
S28. Companies branch, $45,000.
Mr. McNIVEN:: Montreal and Toronto vie-with each other for the financial leadership of Canada. By reason thereof, a large number of our national corporations have their head offices in those cities, or in the provinces of Ontario and Quebec. Most, if not all, of these corporations have their shares listed on the stock exchanges in Toronto or Montreal or from time to time offer their securities through brokers to the people of Canada. Response is made to that appeal from people all over Canada, and it is well that it should be so, that investments should be made in our national corporations from all parts of Canada. When this investment is made and something happens the holder of the security
Supply-Secretary oj State

and it becomes necessary to probate his estate, whether that estate be in Nova Scotia or British Columbia or on the prairies, it is necessary that letters of probate be taken out in the province in which the head office of that company is situated, and a permit must be obtained from the succession duties branch of that province before the securities can be disposed of. In a great many instances there are only a few shares of stock or a few bonds held. But the executors of the estate must go to the trouble and expense of obtaining letters probate and paying the succession duty, if any; yes, in some instances, double succession duties. The Bank Act makes specific provision for banks maintaining transfer agents in each province, so that if an individual is the holder of stocks or shares in a bank, or of any of its securities, at the time of his death, his executor may present those shares or bonds to the transfer agent of that province for registration, and he does not have to comply with the succession duty laws of the province in which the head office of the bank happens to be located.
My suggestion is that during the recess the minister might give favourable consideration to the introduction of an amendment to the Companies Act, similar in terms to the provision contained in the Bank Act, requiring [DOT]companies listed on the stock exchanges and particularly those national companies which [DOT]offer their securities to the people of Canada, to maintain transfer agents in each of the iProvinces in which their securities are held.


Richard Burpee Hanson: The idea
being that it shall be compulsory?


Donald Alexander McNiven: Yes, most assuredly.


Richard Burpee Hanson: I think it is open to any company to do that now under the Companies Act; I remember discussing the matter in 1934. The difficulty is that they must comply with the rules of the stock exchange, and I have run into that difficulty on many occasions. I sympathize with the hon. member in his desire, and I am all for it if it can be done.


Donald Alexander McNiven: My recollection is that
International Nickel, for example, maintains its head office somewhere in Ontario and has transfer offices in Montreal, New York and I think, Halifax. I know of several companies that maintain such transfer offices, and I think it would be a real service to the people of Canada if a simple amendment were introduced requiring those companies whose shares are listed on the stock exchange to maintain transfer offices in all the provinces of the dominion. I think it would help to promote unity in Canada, because many who

seek advice as to whether or not they should invest in these national corporations are told what is the situation, and refrain from so doing. People all over Canada should be encouraged to invest in our national corporations, and a step in this direction would do a great deal to promote unity within this country by making these matters as simple as possible.


Pierre-François Casgrain: I thank the hon. member and the leader of the opposition for their remarks. The question which has been raised is one which I can assure the hon. member I shall look into carefully during the recess, in order to see what can be done to remedy the situation.


Alan Webster Neill: I should like to add one more illustration to those already mentioned. The bonds of the Canadian National are widely held, and the head office of the company is in Montreal; while dominion government bonds are transferred here in Ottawa. Therefore an estate in Ontario holding these bonds would have to be put through both Ontario and Quebec, and I believe in Quebec the rate is charged not on the two or three hundred dollars worth of bonds that may be held but on the proportion of the whole estate.


Richard Burpee Hanson: Of course that is not the law. The Supreme Court of Canada, in the case of the National Trust Company and the provincial treasurer of Quebec, decided that where the bonds were locally situated in the province where the testator resided, they did not have to pay succession duty in Quebec. But the authorities of the province of Quebec will not obey the judgment of the Supreme Court of Canada.


Alan Webster Neill: Quebec will not sign the
releases?


Richard Burpee Hanson: That is so.


John Ritchie MacNicol: May I ask if there is any revenue from the administration of this branch and, if so, whether the revenue is greater than the expenditure?


Pierre-François Casgrain: Under section 121 of the Companies Act, the number of returns filed for the fiscal year 1940-41 was 6,544, and the fees amounted to S63,484.70.


[Stage Direction]
Item agreed to.
330. Trade marks division, $25,210.
John Ritchie MacNicol: I would ask the same question in connection with this item; is the revenue greater than the expenditure? If the minister has not the information at hand, perhaps he could send it to me.


Pierre-François Casgrain: I have not the information at the moment.


[Stage Direction]
Item agreed to.

Supply-National Revenue
SSI. Canada Temperance Act, $1,500.
Richard Burpee Hanson: Why is this old friend still in the estimates? I thought it was dead and buried long ago.


Pierre-François Casgrain: This is still necessary.
Only within the last few weeks I have received applications from different parts of the country to put into operation the law with regard to referendums.


Alexander Malcolm Nicholson: Is this the proper item under which to take up the question of the reduction of the drink bill in Canada as a wartime measure?


Pierre-François Casgrain: I am sorry I cannot
accommodate my hon. friend, because that does not come within the purview of my department.


[Stage Direction]
Item agreed to.
33$. Patent and copyright office. Patent division, $150,800.
John Ritchie MacNicol: May I ask if the revenue obtained by this branch is greater than the expenditure necessary to maintain it?


Pierre-François Casgrain: The fees received last
year amounted to $350,606.67, and therefore this branch is more than paying its way.


[Stage Direction]
Item agreed to.
335.	Patent and copyright office. Copyright and industrial designs division, $11,105.
William Kemble Esling: Will the minister during
the recess consider an amendment to the Copyright Act to provide that societies registering copyrights by assignment must pay the same fee for registration that is charged to individuals. Corporations and concerns, such as the Canadian Performing Right Society, are permitted to register without paying any fee, while an individual must pay a fee of $1. I think if what I suggest were done, it would bring to this dominion, in this time of war, a revenue amounting to nearly a million dollars, and I believe that is an item worth noting.


Pierre-François Casgrain: I thank the hon. member for these remarks. I can assure him that I will look into the matter and if what he has suggested can be done, I shall be glad to adopt his suggestion.


[Stage Direction]
Item agreed to.
336.	Patent and copyright office. Patent record, $36,320.
John Ritchie MacNicol: Do the revenues received from this publication exceed the cost?


Pierre-François Casgrain: It is not as good a paying proposition as the other, but we do not lose much money on it. This is a valuable service to engineers and others in industry.


[Stage Direction]
Item agreed to.

[Stage Direction]
195. Customs and excise divisions. Inspection, investigation and audit services, $1,134,530.
Mr. FRASER (Peterborough West):: Is there any commission paid to the collectors who take in the extra tax from the automobile companies?


Hon. C. W. G. GIBSON (Minister of National Revenue):: No; there is no commission paid to collectors. This is all done by our own men who are on salary.


[Stage Direction]
Item agreed to.
499. Income tax division. General administration, including authority to create positions and make appointments, within the division, notwithstanding anything contained in the Civil Service Act and the said positions and staff so appointed are hereby wholly excluded from the operation of the said act-further amount required, $57,710.
Thomas Miller Bell: Just what does this item mean?


Colin William George Gibson: The income tax division does not come under the civil service commission; while the salaries are set by the commission, selections are made by the division.


Thomas Miller Bell: Are they made by competitive examination, on the basis of merit or upon recommendation?


Colin William George Gibson: People apply to the different district offices, and they are examined by the district inspector of income tax. He makes recommendations to the minister for appointments.


Angus MacInnis: How do applicants know that there are vacancies? Are the positions advertised, or is news of a vacancy carried by word of mouth, by someone already in the branch telling someone else that there is a vacancy?


Colin William George Gibson: No; it is not altogether that. We generally have a long list of applications on file, and when a vacancy occurs, it is filled from that list.


Angus MacInnis: How do names get on the list?


Colin William George Gibson: We generally have a number of applications coming in, and they are kept on file so that they can be used when a vacancy occurs.


John Ritchie MacNicol: Why should there be an item in the main estimates for $433,000 and then this one in the supplementaries for $57,000? Why could not both amounts be in the one vote?
Supply-National Revenue

. Mr. GIBSON: A great many changes have taken place since the time when the main estimates were drawn up. Income taxes may now be paid in monthly instalments, and this has created considerable additional work. The national defence tax has added to the duties of the branch, and now we have the new succession duties coming into force. All these require an increase in staff.


John Ritchie MacNicol: Sometimes applicants for positions in the Department of National Revenue are not politically minded, and occasionally they make mistakes. A short time ago a man came to me and told me that he had applied for a position in the national revenue office in the district-I shall not mention the office because I do not want to comment upon any official in the service-and had been told that he should get a letter from the Liberal member. Not being politically minded, apparently he did not know whether I was a Liberal or a Conservative, and he came to me and told me the story. I want the minister to rise in his place and assure this committee that, so far as he is concerned, during war time partisanship will be eliminated entirely in making appointments to his department. This is particularly necessary when the department is not under the civil service commission.


Colin William George Gibson: My assurance is that we endeavour to get the best assistance we can. That is the one deciding factor in making appointments. We are having difficulty in getting people with the necessary qualifications, especially for the income tax division. This is especially true in the case of assessors because business concerns are picking up many of these men. No young man without special qualifications who is eligible for army service is taken on.


John Ritchie MacNicol: A man's political persuasion is not referred to when he makes an application?


Colin William George Gibson: Not at all.


John Ritchie MacNicol: Then I ask the minister to instruct his officials not to ask applicants to get a letter from the Liberal member of parliament.


Colin William George Gibson: That complaint has been made before, and I have already given those instructions.


[Stage Direction]
Item agreed to.

[Stage Direction]
99. Departmental administration, $134,543.
lot. Combines Investigation Act, $45,315.
John Ritchie MacNicol: Mr. Chairman, since this item relates to combines which are investigated under the Department of Labour, I should like to bring to the minister's attention the experience of a gentleman whom I have known for years, a man of very high character, whose story is this, and I have implicit confidence in his integrity. He told me that he had been an employee of a company manufacturing electrical equipment. Having had a lot of experience in salesmanship myself and having engaged salesmen, in my judgment this gentleman would be one of the best salesmen who could be employed by anybody. He worked for this electrical equipment company and was so accomplished in selling electrical equipment that another company obtained his services, then another, and then a fourth company. That is the way the story is told me. In due course, it is alleged, these various companies got together and decided how this or that contract was to go; that company No. 1 for instance, was to get, say, a contract for "X" specifications, the other companies, it is alleged, laying off going after that particular order. This man, being such an excellent salesman and so capable, apparently was able to get all kinds of orders, and he was given orders that he was not supposed to take, with the result that in the end, it is alleged these companies agreed among themselves not to employ him, and he was laid off and has not been able to obtain a position since that time. In my judgment that is a serious matter. The question I would ask the minister is this: If the gentleman to whom I refer will submit to the department a bona fide statement, supported by evidence, would this be a matter for investigation under the Combines Investigation Act?


Hon. N. A. McLARTY (Minister of Labour):: Mr. Chairman, I find it a little
unusual that a man cannot secure employment because he is too efficient, but the circumstances outlined by the hon. member for Davenport (Mr. MacNicol) are, I think, such as would justify a preliminary investigation under the combines act if the facts as alleged are correct, and appropriate action can be taken.


Joseph-Arthur Bradette: Mr. Chairman, I presume I am in order in making a few observations on a matter which was mentioned in the house last fall by the hon. member for Cape Breton South (Mr. Gillis), dealing with gold mining and silicosis in my section of the

Supply-Labour
country. I shall deal with the matter, not in a critical way but rather in a constructive and national way. Since that time I have had the pleasure of meeting the hon. member for Cape Breton South personally, and no one can doubt his sincerity of purpose, also his. profound knowledge of the workers' problems and trade union interests throughout Canada.
Last fall he made mention-it was not an accusation-of silicosis in northern Ontario. A few weeks ago he made another trip to the gold mining section of northern Ontario. Only last Monday, the 9th of this month, the hon. member stated, and rightly so, that he knew conditions in the coal mining industry in his own constituency because he represented a coal mining riding. The same remark should apply to myself with reference to gold mining, for I represent a gold mining section, and it is my duty to correct a misapprehension that the hon. member may have left on the minds of the Canadian people by his remarks on silicosis.
I do not think on his last trip the hon. gentleman visited the Porcupine section. He was at Kirkland Lake, and he was quoted by the Northern News of May 27 as having made the statement with reference to the silicosis situation, "You have to stir up trouble to get anything done." Of course the word "trouble" may be interpreted in several ways. I do not want to tell any member of parliament or any labour leader who visits my section of the country or anybody else what their line of behaviour should be, but it would be fine if some of the so-called labour leaders, because some are real and some are not, would see the management of Canada's nationally known mines. They will find them alert and progressive. I have in mind a labour leader whose name is well known in every section of Canada who made it a point to see the management of some of our mines in this country during his last visit, and I believe the interviews and conversations he had were beneficial both to the labour leader and to the mine management.
I am going to read to the committee a letter that was issued by the Ontario Mining Association in February, 1941. If my information is correct, this letter was sent to every member of parliament. It deals with the problem of silicosis, and I believe it is worth while putting this letter on Hansard. I have wanted to speak on this matter before, but I had to wait for the department to get in, and always it seemed I waited a little too long. I repeat, however, I believe it is my duty for the welfare of the workers, for the
good of labour unionism and of the gold mining industry itself that I should bring this matter before the committee in an absolutely unbiased way. I impute no motives to anyone, and certainly none to the hon. member for Cape Breton South. The letter dated February 15, 1941, reads:
Dear Sir:
In the House of Commons Debates, as published for November 18, 1940, Mr. Clarence Gillis (Cape Breton South) is recorded on pages 180 and 181 thereof as having made certain remarks relative to-


Clarence Gillis: I rise to a point of order. Is it permissible for the hon. member to read into the records of this house a letter with reference to statements made by a member of the house? I observed your ruling last night, Mr. Chairman, when the hon. member for Mackenzie was speaking, and that is why I raise my point of order now.


Thomas Vien: It is not in order for an hon. member to read from a letter a criticism of any statement that has been made by a member of the house. A brief reference to such letter may be made, or a member may assume as his own a statement that has been made by others. Paragraph 306 of Beauchesne's Parliamentary Rules and Forms states.
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the house and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the house.


Joseph-Arthur Bradette: I certainly wish to abide by the ruling, but I am astonished to hear it. I have not spoken much during the present session, but I yet have to be accused of reading speeches. I have never done it, over a period of sixteen years. I wish to place on record-


Thomas Vien: The point of order was, not that the hon. member was reading his speech, but, if I understood rightly, that he was reading from a private letter, written by somebody outside the house, commenting upon and criticizing a statement made by an hon. member. That is out of order.


Joseph-Arthur Bradette: Then I shall read a
brief dealing with the facts as far as silicosis is concerned, and dealing with the gold-mining industry of northern Ontario, without making any comment upon the statement made by the hon. member for Cape Breton South. I hope that in this I shall be in order.


Thomas Vien: The hon. gentleman
will understand that my ruling does not prevent him from commenting, on his own
Supply-Labour

responsibility, upon a statement made by any other hon. member. But it is not permissible to read a comment or a criticism made, by somebody outside the house.


Joseph-Arthur Bradette: I am going now to give the facts, answering some of the arguments made by the hon. member last fall. I believe I shall be in order in making these statements on my own responsibility, as a citizen of northern Ontario who has lived in that goldmining section for the last thirty-four years, I know something about the gold-mining activities dealing with the problem of silicosis.
The Workmen's Compensation Act of Ontario was amended on April 8, 1926, to include silicosis as a compensatable disease.
Since that time, the Ontario mining industry has paid, solely in connection with silicosis, the following amounts to the workmen's compensation. board:
(a) Paid for silicosis claims, completed and	active	
$3,843,198	80(b)	Paid for administrative expenses and	for	referee board..	109,756	91(c)	Paid for X-ray examinationof miners	
560,388	59(d)	Assessment for silicosis for1940	
534,911	36
Total silicosis costs to Ontario mining industry to end of 1940 $5,114,255 66
To the end of 1939, 462 claims for silicosis were allowed by the workmen's compensation board. The sums paid into the silicosis fund as outlined above indicate the extent to which benefits have been provided for the mine workers and their dependents on account of silicosis.
No industry could face such a staggering burden without making a complete study of the situation with a view to all possible improvements. The Ontario mining industry has taken the following steps:
The Ontario Mining association has a very active silicosis committee which has been constantly studying the problem and which has actively joined in research work conducted under other auspices. This committee employs two engineers who investigate conditions at the mines and who make recommendations to the managers for improvements in mining practice to effect the lowering of silicosis incidence. This has cost the mining industry
858,000.
The McIntyre Porcupine mine, at Porcupine, has been exceedingly active in research work in connection with silicosis. Their investigators, the late J. J. Denny and Doctor W. D. Robson, made important discoveries indicating the preventive effect and possible curative effect, of aluminum dust on silicosis. They have actively carried on this work for many [The Chairman.]
years and for a great part of this time in conjunction wdth the Banting institute. This company has not published the cost of this work, but it cannot have been less than
870.000.
Three years ago I had the great honour of meeting the late Sir Frederick Banting, who was spending some time in the Porcupine section and also in the Kirkland section in order to study silicosis right on the ground, and make reports. Even at that time the mining industry believed they had found an aluminum dust which would prevent silicosis to a very large extent. I am sorry, however, to have to state that it was not found to be applicable; it was not a remedy for that disease but laboratory work is still going on.
To enable the Banting institute to study general silicosis problems and to cooperate with the McIntyre mine in the study of the effects of aluminum dust on silicosis, the Ontario Mining association has supplied them with funds each year as requested. These investigations were made by members of the staff of the Banting institute, particularly Doctor D. A. Irwin, under the personal direction of Sir Frederick Banting. Contributions to the Banting institute up to date have amounted to $61,000.
In 1939, the mines of Porcupine supplied funds for the setting up of a clinic in Timmins for experimental treatment of men who had contracted silicosis. The matter was handled by the Ontario department of health and the workmen's compensation board. The work is being conducted under the direction of doctors from the Queen Alexandra sanatorium, London, Ontario. While more funds will be supplied as needed, the first cost to the Porcupine mines was $25,000.
In 1940, the silicosis committee suggested a still further investigation of one aspect of the effect of aluminum dust on a non-occupational disease, by the doctors of the Queen Alexandra sanatorium, London, Ontario, and the Ontario Mining association granted for this purpose the sum of 84,000.
It was early recognized that lessening the dust content of mine air would automatically lessen the incidence of silicosis. Studies for the furtherance of this object have been carried on by many mines and by the silicosis committee. The underground practice in ventilation, drilling, blasting, et cetera, has been improved immeasurably since 1926, and constant further improvements are being sought. This has been the major effort of the industry, and while figures cannot be presented for this, we know that these improvements have cost the industry many hundreds of thousands of dollars.

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I also know personally, Mr. Chairman, that at the present time the mine managements are trying to diamond-drill every one of their holes, every one of their shafts, hoping that by that means they will do away with the hard-rock dust which is responsible for silicosis.
I have seen some of these experiments, and there are great hopes in all the hard-rock sections of this country that something will come out of these activities in helping the fight against that terrible disease.
The workmen's compensation board of Ontario maintains four X-ray examination stations in the principal mining centres. These are staffed by doctors and mechanicians who have become real experts in this work. Well over 25.000 X-ray examinations are made every year in these stations. All the X-ray films are studied carefully and filed for record, each workman's films being kept in a separate file.
When the films disclose a disabling silicotic condition, the workman in question is advised by the examining doctor to file a claim for compensation. A very large proportion of the claims are made in this way. Shortly after the claim is made, this man appears before a referee board-of three doctors-which gives him a thorough physical examination and examines his X-ray films and the records of same which have been kept for this purpose. The workmen's compensation board either grants or disallows the claim depending upon the finding of this referee board. Should a claim be disallowed, it is subject to review from time to time as the case may warrant.
The referee board is composed of three doctors from the Ontario department of health. The members of this referee board are all specialists on lung diseases. They have been functioning since 1927 and have acquired great skill in interpretation of the X-ray films in correlation to the physical condition of the man himself.
Workmen are examined at the X-ray stations before being permitted to work in dust-hazard occupations. Only men free of lung and chest disorders can get work cards. Thereafter they are examined yearly, and should they begin to show signs of silicosis they are examined every six months, or oftener, as the examining doctor may decide. Each man's accumulated X-ray films and the records of same are available to the referee board when a claim for silicosis compensation is made on his behalf.
Every device known to >be useful for the purpose has been employed on this work. The members of the referee board and the examining doctors have maintained constant
contact with known authorities on lung diseases. Nowhere on this continent have more complete facilities been set up for this purpose than in Ontario. This is evidenced by the stream of inquiries received from all over the world.
Comparisons on a question of such importance are always odious. However, I listened attentively to the arguments of the hon. member for Cape Breton South wherein he stated, and no doubt sincerely, that Nova Scotia is more advanced in the treatment of silicosis than we are in Ontario. If that is so, it is the duty of the department of health of Ontario and of the mining interests , as well to study the problem as it affects Nova Scotia. I would go further. We are coming to the stage where we are going to have more and more hard-rock mining, and I think some credit should be given the hon. member for bringing up the question, because it is undoubtedly becoming increasingly a national problem. There is hard-rock mining in all Canada to-day with the exception of Prince Edward Island-in eight of the provinces-and wherever you have hard-rock mining you are bound to have silicosis which, as hon. members know, is practically incurable.
We have made wonderful strides with tuberculosis in the last twenty-five years, and although we have done something in grappling with silicosis we have been unable to find any permanent cure. The problem is becoming so grave that the time is not far distant when the federal authorities, through the Department of National Health, will have to undertake the study of it as a national matter. They have the necessary machinery in the national research council, and they could cooperate with the different provinces in which miners are occupied in hard-rock mining. I leave that thought with the government, and I urge upon them the importance of trying to find some means of dealing with this question.
The hon. member mentioned an individual case. I know of a few that are very sad indeed. There are times when these men, although they are properly taken care of, although they are given hospitalization by the management and financial help through the compensation board, tend to get impatient. They believe that sufficient progress is not being made in the treatment of their cases. There may have been some acceleration. I do not want the committee to be under the impression that Ontario particularly and the gold-mining industry as well have not been doing their utmost to solve the problem. The solution of the problem would be welcomed
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by the workers, and also certainly by the mine managements. I make this statement in no spirit of antagonism.
I know it is hardly proper at this late hour to make any long speeches, but I have not inflicted myself upon the house to any extent this session, and I wish to say a few words on the question of labour organization and unionism.
I have always been in favour of the proper organization of labour. I have always advocated the greatest cooperation between capital and labour, and I believe that so far as our section of the country is concerned, there has been cooperation between capital and labour to an admirable extent. But even in our own section of the country-and I say this in all sincerity-men who would like to belong to labour unions are baffled. They do not know where to go. We have some wonderful labour leaders, such as the Moshers, the Drapers, the Charpentiers, the Meikles, and others who have had at heart the welfare of the workers, but in. my opinion what labour unionism stands in need of to-day is house-cleaning. In my own section we have the spectacle, in one mine, of three or four different kinds of unions trying to establish leadership, and there is rivalry among them. I want labour to have its full share of the comforts of life; but, I repeat, our workers are baffled. They do not know whether it is for membership fees that they are approached or because one particular section desires to get the upper hand over the rest so as to hold the whip-hand over the other sections. I appeal to all labour leaders in Canada; it is not sufficient to talk of union; you must unite in your own ranks.
Speaking of labour leadership, I have never been in favour of class representation. I represent tens of thousands of gold miners, but I wish to see the problem studied from all its angles-management, administration, labour, farmers, bushmen, professional men, and everything else. The same applies to the sulphite and newsprint industry in my constituency.
As regards most of the miners and workers in northern Ontario, the section of the country I know best, I can say that they are not socialists, and the moment any labour organization or any labour leader tries to tie up the principles of socialism with unionism, there is a profound reaction among the workers. They want to know why an attempt is being made to tie them up with socialism. The labour leaders will experience the same antagonistic reaction if they advocated their belonging to the Liberal party, or the Conservative party, or the Social Credit group, or the Cooperative

Commonwealth Federation? Labour unionism has a right to be represented in this house or any legislature in Canada, but I make this statement on behalf of real labour organization, that it should be divorced from any outside "ism". It is heavy enough and important enough to stand by itself. There are terrific conflicts going on at the present time within the labour leadership, and to prove the truth of this statement I should like to quote a few passages from an article that appeared in the Canadian Unionist in February, 1941- and no one can doubt the national spirit of that publication. This is what it says:
Canadian labour is far from being ready to take advantage of the opportunities which to-morrow is almost certain to bring. It is just as well to face the situation frankly now while there is time to do something about it, for in a year or two we are either going to drift before the historic forces now bearing down upon us or we are going to use those forces to direct society toward a way of life which will be worthy of human beings.
Labour is taking a leading part in Great Britain in giving direction to this better way of life. In Canada, however, labour is by no means ready for the task which this involves.
This article goes on to say there is no unity within the ranks of labour. But the author of the article, Mr. Lee McIntyre, makes the same mistake as do most of the labour unions, namely, that he relies on socialism as a panacea for all the workers' problems. I have no quarrel with socialism, although personally I feel that it borders on utopianism, or with the representatives of that philosophy in Canada; but I do say emphatically that when it comes to applying that principle to our section of the country, it is absolutely repugnant not only to the mine owners but to the workers themselves, because these workers know that there are different blueprints of socialism, and there is no agreement, and absolute disunity in the manner of its application. Moreover, most of our miners become property owners. They own their own homes in many instances. The housing commission will bear me out in that statement. The business of gold-mining in our country could never have been developed to the stage it has reached to-day had it been carried on under a socialistic system or governmental regimentation.
I believe in governmental regulations, but I suggest that in many cases of strikes the trouble is not so much dissatisfaction with the management of certain industries as dissatisfaction among the workers with leadership which is given by so-called labour leaders. I wish to pay this compliment to many speeches I have heard on labour, that they were constructive, logical and practical; but the same

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cannot be said of the views of some so-called labour leaders we have in our section of the country. Some are out-and-out communists, who set out to destroy the work of the Moshers, the Drapers and others. They do not want a solution of the problem, and it is up to our national labour leaders to see that Canadian workers are properly led. We have also the sad spectacle of agitators endeavouring to destroy Canadian unionism, and I speak on this question as a working man; for I spent my youth in connection *with railway construction, farming and lumbering work. In my day the trouble was not as pronounced as it is at the present time, but I have seen a good deal of it in the Porcupine area and in northern Quebec. I have seen people who have never had at heart the solution of the workers' problems keeping up this sort of agitation. In my opinion, there is need of house-cleaning so far as labour unionism is concerned, and the practical sense of the workers realizes and feels strongly about that situation.
That is all I wish to say at the moment. I could enlarge greatly on that problem. I want to thank the committee for giving me this opportunity of stating to a limited extent the problem we have in our section of the country. I could cite case after case of big mines which have done everything possible for their workers-life insurance, bonuses at Christmas, improvement of working conditions. The' situation is not perfect yet, and it is the duty of the workers themselves to do all they can to work with the management for further improvement.
The other day I had the good fortune to visit the Sault Ste. Marie section and was speaking with some labour leaders of the Algoma Steel corporation, and I found there that collective bargaining was working to perfection. I found a union-management cooperation committee and one of the managers told me, "This thing has not only been good for the workers; it has been a wonderful institution for the management"; showing that in that big steel industry proper leadership and organization will do wonders to help labour and industry to work together to their mutual benefit. Labour has passed the diaper stage; it has taken on heavier responsibilities the same as industry has. We have some Bourbons among industrialists, and we certainly have a few of them among labour leaders also. This is not a time to play into the hands of any subversive or mushroom organization, anything that would be a bar to the efforts of our loyal workers in this country,
and the closest cooperation possible between capital and labour, and this for the welfare and progress of Canada.


Clarence Gillis: I am sorry I had to object to the hon. member's reading of that letter. I did so because that letter was circulated by the Ontario Mining association to every hon. member of this house; they were familiar with the statements in that letter, and we on this side of the house are religiously held to that rule. I have no objection to the hon. member making his own argument, but I did not think he could bring in the analysis of the mining association. I did not intend to raise this matter at this time, although I did intend to speak of it on the estimates of the Minister of Pensions and National Health.
I am very much impressed by the fair and reasonable way that the hon. member made bis presentation. That leads me to believe he is interested in the question, and the fact that he has raised it here is, I think, a vindication of my statement that if the working people of this country are to obtain redress of their problems, they must of necessity bring them to the notice of those who can deal with them. That is what I meant when I told the workers in northern Ontario that until they became vocal and could bring their needs, desires and. aspirations in an intelligent way through an organization to the people in authority, no attention would be paid to those problems.
The only comment I have to make with reference to that letter is this:	I accept it
from the mining association because it is the kind of letter I would expect them to write. I am not discounting the activities of the government of Ontario with respect to finding a solution for the problem of silicosis. I have a fair conception of the medical difficulties surrounding that question. They are perhaps doing the best they can with the machinery they have. I am not discounting the work done by the Banting institute. But I would say this in reference to the figures presented by the mining association. They say, "We, the Ontario Mining Association, have paid this amount of money." I say that the Ontario Miming Association did not pay any money. The man who goes under the ground and gets the ore that creates the wealth of those who live on that wealth within the structure of that organization that functions above ground paid the bill 100 per cent.


Joseph-Arthur Bradette: That applies to all industry.


Clarence Gillis: Exactly. The first charge on any industry when you are negotiating a wage agreement is compensation, and the miners
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of Ontario will find that out when they begin to sign collective agreements with that association, which I am reasonably sure they will be doing in the near future. In the final analysis the men pay the bill, but the mining association takes the credit.
There is one statement they make here which I am not going to say is wrong; for we have no access to the facts and figures, and we must accept the statement they make. They say that in the settlement of silicosis claims they have paid out the sum of $3,843,198.80, and then in the next paragraph they say:
To the end of 1939, 462 claims for silicosis were allowed by the workmen's compensation board. The sums paid into the silicosis fund as outlined above indicate the extent to which benefits have been .provided for the mine workers and their dependents on account of silicosis.
If 462 claims cost the mining association or the workmen's compensation board $3,843,000, that would work out at about $81,000 a claim, and I cannot see any individual claim settled by the compensation board costing $81,000.


Joseph-Arthur Bradette: The hon. member could easily get all the statistics he wants from the workmen's compensation board as to the money paid in individual cases. It certainly never meant $80,000 to each individual case.


Clarence Gillis: Exactly. I say the statement can be questioned on the face of it. That letter in my opinion did not refute anything I said. I brought this matter to the attention of the government for that section of the country on account of the fact that at a convention of unions in Toronto about a year ago I met one of the gold-miners from Kirkland Lake who brought to my attention the fact that I pointed out here. He handed me a copjr of the last will and testament of a man employed for a considerable time in the mines of that section who developed silicosis, and had considerable difficulty in the establishment of his claim. They ruled that he did not have silicosis, and in order to protect his family after his death he willed his body to his friend in order that an autopsy might be performed and his family protected in the event of silicosis being diagnosed. I thought that was a peculiar situation. Our situation in Nova Scotia is much better than that because we do not have to pass away to establish our claim. That man has since died; an autopsy was performed some three months ago, but to date there is not any report as to the cause of death. That is the information I got two weeks ago in Kirkland Lake.
I recognize silicosis as a national problem. When I find in the Department of Pensions 
and National Health an appropriation being made for industrial hygiene I think that includes research work into industrial diseases, and the minister agrees. Therefore I bring the matter up here.
I had the pleasure of an invitation to a miners' union that was in process of formation at that time. They asked me, not as a politician but as a unionist with considerable experience in the legitimate trades union movement, to give them the benefit of my experience in laying out a proper organization, free from the subversive elements described by my hon. friend. I made it clear that I was not there representing any political party. I firmly believe, and instructed them so, that in order to get anywhere politically in the labour movement you must first ground yourself in your economic organization and set up your trade unions. Then they will judge for themselves where they are going politically.
One of the first and fundamental things they have to do is to form a collective bargaining organization. I discussed these matters with the men themselves. They have no organization that is functioning; they have no contract with their employers, no understanding and no recognition; they have not the necessary machinery to deal with compensation boards and provincial governments. They told me their stories individually, and with all due respect to the efforts of the people of Ontario, that story was disturbing. For example, when they are X-rayed and silicosis is diagnosed, even in the incipient stages, they are taken above ground and given work, and then X-rayed every four, five or six months. They may be kept working above ground for a year, two years or five years, but in the latter stages silicosis becomes tuberculosis. If, after five or six years of service, a tubercular condition develops, it is said that they are suffering from tuberculosis, regardless of the fact that it was caused by silicosis, and when they die, their families receive no compensation.
I think my hon. friend will agree that round these mines there are many men who have been brought above ground. They are not paid compensation; they are given work above ground in order that the condition may have a chance to clear up. It is, however, something that does not clear up very easily. When that silicate gets into the lungs it rots them; in the end the diagnosis is tuberculosis, and many cases are ruled out in that way. I also met many men in that section who, after working in the mines for perhaps twenty years and reaching the age of forty, when they began to go down hill, were laid off, not because they were unable to work, but

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Labour
because they had reached the point where they might be more susceptible to this disease. I am sure my hon. friend will agree with that.


Joseph-Arthur Bradette: On the contrary, I know some men over seventy years of age who are still working underground. They certainly were not let out at the age of forty.


Clarence Gillis: I do not deny that, but I am only dealing with those I met. These men of seventy years of age did not come to see me, and I have no knowledge of them. I did meet many men of forty or forty-two years of age who had no work, who apparently were considered unemployable.


Mr. GRANT:: Were they dead?


Clarence Gillis: No; they were not dead.


Joseph-Arthur Bradette: But they received some compensation.


Clarence Gillis: No; the hon. gentleman
misunderstands what I am saying. For the moment I am referring, not to silicosis but to men who have been laid off because they have reached the age of forty or so. In that section of the country a man cannot get a job if he is forty years of age.


Joseph-Arthur Bradette: Not if he just applies for one; but if he has been working, he is not laid off then.


Clarence Gillis: After they pass the age of forty, many of them are let out. I met many men in Timmins and Kirkland Lake who told me that story. I think if you check in any of these mining sections you will find perhaps two or three hundred men working in and around these mines who have been diagnosed as suffering from silicosis but who have not reached the point where they have to be laid off. Their fear is that when the silicosis reaches a certain stage and tuber-closis develops, they will not be eligible for compensation. That is the story which was told to me, and that is why I bring it up here. That is why I asked the Minister of Pensions and National Health to use the machinery at his disposal in order to look into this question, to augment the work already being done. If I am wrong in what I say, someone should prove me wrong; if the men in that section are wrong, they should be given that assurance, but if the system at present followed in that section of the country is continued-


Mr. MACKENZIE (Vancouver Centre):: Did I not send my hon. friend a thorough report on this whole question last year?


Clarence Gillis: Yes; I was coming to that. I wish to pay tribute to the Minister of Pensions and National Health, because, after
the matter was raised in this house, I received enough information from him to give me a pretty fair education in it.


Joseph-Arthur Bradette: The hon. gentleman could very easily have obtained that information from me, because in that part of the country we have been living with this problem of silicosis for many years.


Thomas Vien: Order, please. I have allowed this discussion to continue because I thought it had to do with industrial disputes, which come under the Department of Labour. I have had serious doubts, however, as' to the propriety of this debate under these items. Now that the hon. gentleman has spoken at this length, I would not wish to curtail his remarks unduly, but I do not think I should permit this discussion to continue very much longer.


Clarence Gillis: I never would have raised the question if I had not been brought into it.


Thomas Vien: I appreciate that.


Clarence Gillis: I have no intention of continuing the discussion. I should, however, like to pay tribute to the Minister of Pensions and National Health, because he did not let the matter drop after it was raised here. He got in touch with many experts in Ontario and sent me copies of all the reports he received from them, and as a result I obtained a fair education with regard to this question. I am now quite satisfied to let the matter rest, because it is receiving some attention, and I believe we shall get somewhere with it. I am glad that the hon. member for Cochrane has become interested in this question, since he lives in that section of the country.


Joseph-Arthur Bradette: The hon. member must realize that I have been interested in it for a long time.


Angus MacInnis: But the hon. member never raised it in this house.


Joseph-Arthur Bradette: Perhaps I am just as conversant with this problem as anyone else in this house.


Clarence Gillis: While I am on my feet, there are one or two matters I should like to bring to the attention of the minister. I wish to support what has been said with respect to the question of organization in that section of the country. I know that for a number of years the miners in the gold-mining districts have been endeavouring to build up an organization, and have met with considerable opposition on the part of the operators. That organization made some progress within the last few years, but I believe the wrong elements got into it and did much to discredit it. Last
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November, however, I had the pleasure of visiting that part of the country; I was there also two weeks ago, and to-day in northern Ontario they have a legitimate organization, sensibly and intelligently led, with ninety-nine per cent of the men heading the organization employed in the gold-mining industry and living in that area. They have made a great deal of progress during the last few months. I believe the minister would be well advised if he got in touch with some of these men who are making an effort to establish legitimate unions there. With respect to strikes, sabotage, and the wrong kind of people leading these unions, just so long as the operators remain unaware of their own interests and those of the country and continue their opposition to signing agreements, establishing satisfactory working conditions and cooperating with committees of their employees, then just so long will the door be left wide open to every subversive element to play upon the fact that in this country we have no industrial democracy; and just so long shall we continue to pave the way for the trouble we are experiencing in many sections of industry to-day.
That is all I have to say on this point. I believe the minister is fully aware of these matters, and I hope that within the near future he will utilize his department in an effort to bring about the results I have suggested.
I should like to bring to his attention a matter that came to me in a brief from Sydney, htova Scotia; possibly the minister has received a copy of the brief as well. It is from the Sydney organization of carpenters and joiners, and I should like to read one paragraph:
We have been employed in the construction of huts in this district for the Department of National Defence, to accommodate the troops stationed here, in some instances 50 per cent of those employed were men in uniform, while a large number of local mechanics including carpenters, painters and labourers could not secure employment.
They go on to give more specific information. I wish to know if the labour end of this national defence work, especially with respect to wages, is under the Department of Labour. Apparently this was a unionized project, and these men object to men in uniform receiving $1.30 a day being used on construction work.


Thomas Vien: This discussion would properly come under item 102. Shall we take that item with this one?


Norman Alexander McLarty: We shall probably confuse matters if we take too many items at once. I would sooner clean them up as we go along.

Perhaps the hon. member would be willing to let his remarks stand until we reach that item.


Clarence Gillis: I am quite satisfied.


Thomas Miller Bell: How many men engaged in the mining industry in Canada were killed, injured or disabled by disease during 1940?


Norman Alexander McLarty: I am sure we would not have that information in the Department of Labour.


Thomas Miller Bell: Where would it be?


Norman Alexander McLarty: In the Department of
Pensions and National Health. I know that the question of silicosis would be under that department. It is possible that we have those statistics, but I should be surprised.


Thomas Miller Bell: I was reading an article dealing with the diseases which affect miners, and this quoted figures given out by the British ministry of labour. The number of killed, injured or disabled by disease between 1928 and 1937 is given as 1,602,497, and the comment in it is that it is a startling figure. I was wondering whether we had comparable figures so that we might be able to see how we were progressing in meeting the diseases referred to by the hon. member for Cochrane (Mr. Bradette) and others.


Norman Alexander McLarty: I imagine that the only way we could obtain those figures would be from the workmen's compensation boards of the various provinces.


Thomas Miller Bell: We shall take it up
with the Minister of Pensions and National Health a little later.


Angus MacInnis: Perhaps this would be
the time to have a statement from the minister on the general labour situation. During the last few days the labour situation has received a great deal of publicity. That eminently respectable and utterly reactionary organization, the Canadian Manufacturers' association, has been holding a convention in the congenial atmosphere of the Seigniory club at Lucerne, Quebec. They appear to be greatly disturbed over the activities of less fortunate people who are not able to hold conventions at the Seigniory club and enjoy its many pleasant and comfortable facilities. The press tells us that their three-day convention was largely taken up with labour questions, not with the ordinary business of the Canadian Manufacturers' association; not in discussing ways and means of improving production and the efficiency of their industries. They ended the convention by sending a long telegram, a most amazing telegram, to the Prime Minister. They asked the government to intern

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everybody who might, interfere with the Canadian Manufacturers' association doing as they jolly well pleased. Those are not the words I should like to use, but parliamentary procedure compels me to use them. There are certain words in this telegram which all trade unionists should enlarge and frame, for they compose the best illustration of unmitigated gall that I have seen in the last twenty-five years.


Ian Alistair Mackenzie: I understand there is consent that we sit until twelve o'clock, and therefore a formal motion will not be necessary.


Angus MacInnis: This telegram is printed
in the Ottawa Journal of to-day, and it reads in part:
Second, that you immediately make these laws effective by the internment, not only of those who are guilty of inciting to illegal strikes and generally doing their utmost to create discontent and unrest, but also the disseminators of subversive propaganda, written or oral, whose object is to obtain control so as to degrade decent unionism, sabotage the efforts of industry and play into the hands of our enemies to the end that our war effort may fail.
I refer particularly to the words "to degrade decent unionism." How long since has the Canadian Manufacturers' association come to the conclusion that there was any such thing as decent unionism? If unionism is decent, why have they opposed unionism of every kind right up to this very minute?


John Ritchie MacNicol: Oh, no; do not make it
so all-inclusive. I was in business myself.


Angus MacInnis: Let us be quite clear on this.


Thomas Vien: I fail to see how the
opinion of the Canadian Manufacturers' association on unionism would come under this item. The opinions of the Canadian Manufacturers' association certainly would not come within the ambit of the administration of the department, and therefore I cannot see that this debate is in order.


Angus MacInnis: The opinion of the Canadian Manufacturers' association is of the utmost importance in dealing with the labour question because, when the opinions of that organization clash with the opinions of the workers who are attempting to organize or who are organized, trouble is created, and the Department of Labour is called in to solve the difficulty in one way or another. Consequently the opinion of such a body as the Canadian Manufacturers' association or any labour organization, is of importance in a discussion of this item, the administration of the Department of Labour.


Thomas Vien: Except that this is not a public forum in the meaning generally given to that phrase. This discussion might be in order when the house was discussing labour legislation, when it was discussing underlying principles which should be laid down. But when we are confronted with estimates or the administration of the Department of Labour,
I would say that it is not in order to discuss all kinds of labour questions and opinions.


Angus MacInnis: I think, Mr. Chairman, you are trying to inject something entirely new into the discussions in this house. If this house is not a forum for the discussion and airing of those problems which confront us from day to day, we ought to close the house and go home, for there is nothing here for us to do.


Thomas Vien: I am relying on standing order 58, subsection 2, which I have quoted time and again and which says that in committee the discussion must be strictly relevant to the item under consideration. The hon. gentleman is discussing general labour policies. General labour policies may be in order when discussing legislation but are not in order on a specific item of administration expenditures in committee of supply.


Angus MacInnis: But, Mr. Chairman, this is not a specific item; it is a general item of departmental administration expenditures, and if we cannot discuss on this general item the whole work of the department which it covers, where in the world and on what item can we discuss it?
- The CHAIRMAN: I have mentioned twice that general labour conditions and general labour problems or policies may be discussed when legislation is before the house, and otherwise perhaps, but certainly not on a specific item of the estimates. The discussion on a specific item of the estimates must be relevant to that particular item, and I must rule that the hon. member is out of order.


Ian Alistair Mackenzie: With the utmost respect for the Chair I would submit that on an item for departmental administration in any department it is absolutely in order to discuss questions of general policy affecting that department. I think it has always been the practice on items of general administration, whether concerning the labour department or the health department or any other department, to have a general discussion on questions of policy respecting the department under review, and I think for the sake of progress in getting along with the business of the house it would be far better to allow hon. members to have a full and free discussion on this particular item.
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Thomas Vien: I have always seen a general discussion on an administrative item of a department take place by unanimous consent. I must say with all due respect for the minister's opinion that it is not done without unanimous consent, and by standing order 58 it would be out of order to discuss general policies on the item that is before the committee, except by unanimous consent.


John Horne Blackmore: With all deference to yourself, Mr. Chairman, I think the hon. member for Vancouver East (Mr. Maclnnis) is quite in order, and I submit that it is also in the interests of progress that he should be allowed to continue his discussion.


Norman Alexander McLarty: I do not believe, Mr. Chairman, that there would be the slightest difficulty in obtaining the unanimous consent of this committee.


Thomas Vien: Is it the pleasure of this committee that the hon. member shall have unanimous consent to proceed with his remarks?


Thomas Miller Bell: I was going to suggest respectfully to you, sir, that we do not require unanimous consent. As the Minister of Pensions has just stated, under the general administration item all matters concerning the department which come under the supervision of the minister should be open for discussion, and we should not create any precedent here and now by giving unanimous consent, because we do not require it. There is one place and one place only in this parliament where private members are supreme, namely, in supply when discussing the estimates. This is his majesty's purse, and the age-old right of members of parliament is to decide to what extent his majesty's purse shall be filled. That is what we are doing now, and I certainly wish to protest against any precedent being established that would curtail the right of this parliament to discuss any matters in connection with the administration of the minister's department, the minister's salary, or any question of general policy.


Thomas Vien: The house itself has established rules of procedure, and standing order 58, subsection 2, says that discussion in committee must be strictly relevant to the item under discussion, and the word "strictly" is there in all its letters. The item of administration for any department is not capable of covering any kind of discussion of any opinion such as the one to which the hon. member referred of the Canadian Manufacturers' association. It has been my experience that when a minister in charge of the estimates of a department has desired to open

discussion freely, it has always been done, in order to sustain standing order 58, with the unanimous consent of the committee.


Karl Kenneth Homuth: Speaking to the point of order, Mr. Chairman, I think hon. members will recall that throughout the whole of the session when discussion has arisen on certain bills, members of the house have been told that when the estimates come up they will have the privilege of discussing all these matters. On two or three occasions I recall that the leader of the opposition raised that point, and if that be so, surely the Chairman ought to see that that leeway is given to all members.


Thomas Vien: If there is the unanimous consent of the committee, to sustain the rule.


Thomas Miller Bell: I am objecting, Mr. Chairman, to that limitation of our privileges as members of the house.


Ian Alistair Mackenzie: Let us agree to proceed.


Thomas Vien: I take it that the hon. gentleman has the unanimous consent of the committee to proceed?


Thomas Miller Bell: I protest against you putting it that way, Mr. Chairman. I maintain that we do not need unanimous consent to discuss general matters on an item involving the expenditure of money for general administration and supervision.


Thomas Vien: Let us proceed. Everybody is unanimous.


Angus MacInnis: I have been in the house, Mr. Chairman, for the past ten or eleven years, and this is the first time I have found even an attempt being made to limit general discussion on the item in a department's estimates for departmental administration. Certainly these questions I have been discussing come under the Department of Labour, and certainly the Minister of Labour and his department have to deal with them because they affect people outside this house. Otherwise we should 'have no opportunity to speak on their behalf. ' The Chairman may not like my opinions, but that is no reason why I should not state them to this committee.


Thomas Vien: Order. The ruling of the chair is not debatable. The hon. gentleman will proceed with his argument.
Mr, MacINNIS: The reason why I raise this matter at this time is that within a day or so we hope we shall have finished our business here for the present, parliament will adjourn and the members will leave for their homes. What I am fearful about is that pressure such

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as was indicated by the telegram to which I referred and part of which I read may be brought to bear upon the government and action be taken which will not make for industrial peace in this country. If industrial unrest has come to the stage that the Canadian Manufacturers' association maintain it has, then, as was told them at one of their convention meetings by Mr. Ralph Bell, director of aircraft production, the fault is largely their own. If we are going to have orderly and harmonious labour relations in this country, we can have them only by encouragement and recognition of labour organization.
We can leave it to the workers themselves, when they have established decent working conditions and decent wages, to take care of subversive activities within the organization. But when we resist, as employers in this country have resisted, trade union organization, there comes a stage when only desperate men will be heard, and the ordinary, orderly trade union official has no chance at all. Any hon. member who has had experience in the trade union movement knows that is correct. I could give any number of authorities to prove the point. The late Hon. Norman Rogers, in addressing labour on New Year's eve, 1938, stated that most of the labour disputes during the previous year had been caused by the refusal of employers to recognize the trade union organizations of their employees.
Therefore I earnestly plead with the Minister of Labour, who, I know, is just as anxious in this matter as I am, not to let himself be stampeded by pressure of a kind which I know is even now being used, to take action which would not only be harmful to our war effort, but would embitter labour for many years to come.
I am not going further into this question at the moment, but as we get into other items there are other specific points I wish to raise. I wish, however, to refer to one statement made by the hon. member for Cochrane. He referred to the necessity of keeping politics out of trades union movements.


Joseph-Arthur Bradette: Isms.
Mr. MaoINNIS: You will have the isms anyway.
We look to-day with high regard and with hope to the labour movement in Great Britain. Possibly nothing which has happened in the last year gave us more hope than the entrance of labour's representatives into the Churchill cabinet last May. I met Sir Walter Citrine when he was in Canada last winter. Walter Citrine had no apologies to make for labour being in politics. As a matter of fact, he
said, they found it necessary to create their own political party. When he spoke in Vancouver as a guest of the trades and labour council I had the honour of a seat on the platform with him. Sir Walter Citrine was not a bit ashamed of saying that he was a socialist-


Joseph-Arthur Bradette: Certainly a mild
socialist.


Angus MacInnis: -and said that there would have to be a great many changes such as he and the labour movement in the old country were demanding, before there would be any hope of a better world organization. I am not, however, going into that; the Chairman could very well have brought me to order for referring to it.


Norman Alexander McLarty: I understand that these estimates are to be discontinued at half-past eleven, and I should like to make a more lengthy reply to the hon. member for Vancouver East. I will say at this time, however, that in the matter of collective bargaining this government has gone about as far as any government can go. We passed section 502A of the criminal code, making it an offence to discharge a man for the sole reason that he is a member of a trade union. In our order in council No. 2685 we recommend, as one of the principles on which better labour relations can be established, the freedom of any man or group of men to engage in collective bargaining.


Angus MacInnis: Will you take into consideration interning employers who won't carry it out?


Norman Alexander McLarty: I have nothing to do with internment, nor am I a great advocate of internment unless necessary evidence is there on either side. But I consider it would be undesirable to make compulsory that provision in order in council 2685. When you enter the field of compulsion, the principle works both ways and, I believe, inevitably gets you into trouble.


Karl Kenneth Homuth: That is what we are fighting in Europe.


Norman Alexander McLarty: Exactly. If you compel one side you have to compel the other, and eventually it leads to a form of government such as we are fighting in Europe.


John Ritchie MacNicol: Conciliation is much
better.


Norman Alexander McLarty: Much better. The hon. member referred to Sir Walter Citrine's visit. I wish we had in this country the happy situation they have over there, in that they have one large trade union congress, the only one
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body with which it is necessary to deal. In this country we have a number of bodies, and it increases the difficulty where a unanimous opinion cannot be obtained on a number of questions.
In addition to this, the hon. member referred to the conference of employers held at Lucerne. I must say that I received the telegram only yesterday afternoon. The same telegram was received by the Prime Minister and the Minister of Justice, and so far I have not replied. But I would point this out, that the telegram is largely directed toward subversive activities. The Department of Labour cannot deal with subversive activities. I have prepared a short statement which I wish to make in this connection.
In another place it was suggested that when difficulties arise, the Department of Labour washes its hands of the problem and turns it over to the Department of Justice.
It has also been suggested that the Department of Labour should not tolerate any subversive action.
Might I make this perfectly clear, that the Department of Labour has never been and cannot be the appropriate department to deal with breaches of the law, or any subversive activities. It has no police force, nor has it any machinery to conduct prosecutions.
It is quite true that subversive activities may make the work of conciliation much more difficult, but it was never intended that the Department of Labour should become a department for carrying out any provisions for the enforcement of law and order, or for the punishment of subversive activities.
In fact, so far as the Industrial Disputes Investigation Act is concerned, the department is definitely precluded from doing so.
The only possible course of action which the Department of Labour can take in the event of an illegal strike is to report the matter to the law officers of the crown, and they take such action as may be necessary to enforce the penalty provisions of the Industrial Disputes Investigation Act.
The Department of Labour is not the department to enforce the law, whether the subversive activities refer to a labour dispute or to any other acts of a subversive nature.
In other words, Mr. Chairman, the impression seems to be abroad that the Department of Labour should clamp down on labour; that it should apply the law in a rigorous way to the activities of labour. That is not my conception of the duties of this department. We are there to provide for fair wages, to provide conciliation, to furnish facilities for

settling a dispute once it arises. But it is not and cannot ever be the function of this department to act as a police force.
I do not know that there is anything more I would care to say to-night on that particular point. I thank the hon. member for Vancouver East for according me an opportunity of making that statement.
Items 99 and 101 agreed to.


DEPARTMENT OF NATIONAL DEFENCE
[Stage Direction]
182. Normal services. Cadet services, $171,500.
Mr. COCKERAM:: I wish to make a statement on the militia department set-up and on training in this country. About a year ago the department was completely reorganized. A new minister was appointed, a new chief of general staff, a new adjutant general, a new quarter-master general, a new master-general of ordnance. Those of us who have been serving in the forces had) great hopes that there would be a decided improvement in the efficiency with which the department was run.
The third and fourth Canadian divisions have been mobilized now for over a year. During that year the basis on which we have been trained does not in my opinion compare with the intensive training which the men received in 1914 and 1915, when I was a private in the 21st battalion, whereas in my opinion the training should be based on the type of war to be met in 1945 and 1950, because, certainly we should have on the general staff men who can think of the possibilities of the future and the type of fighting we may have to come up against. During the year in which those divisions have been mobilized we have had, so far as the fourth Canadian division is concerned-


Thomas Vien: We are on item 182,
cadet services.


Alan Cockeram: If I understood the
minister correctly, he said that we might discuss any subject.


Thomas Vien: Not on cadet services.


James Layton Ralston: I did not notice the number of the item called. I suggested that anything could be discussed on the salary item, but I am quite satisfied for the hon. member to proceed on the item of cadet services. I said that there would be an opportunity to discuss general subjects and I suggested the item of minister's salary, which is statutory. If, however, my hon. friend desires to discuss the subject now, I have no objection.


Thomas Vien: The minister moves
that the discussion be general on item 182.

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James Layton Ralston: I do not move it. I
intimate that I am satisfied if the committee is agreeable that that be done.


Alan Cockeram: So far as the fourth
division is concerned, we were organized as from June 8, 1940. We had our artillery organized, and the other technical units. Early this year, after the announcement that the fourth armoured division was to be formed, these troops were transferred over to that division and as a result we of the fourth Canadian division

and I think I can speak for the third too-have had no training in cooperation with other arms of the service.
After thirteen months of active sendee, surely the department should be in a position to bring about the combined training of all arms of the service. After all, if we go on active service we must have that training before we can possibly be fit to go into action. We have had no brigade or divisional training, and nothing that would fit us for active service if we had to meet that situation to-morrow.
Again, the fourth division has been organized for a year but we are still without a divisional commander, and without a divisional staff. I cannot see any business man taking on his workmen first without having a management to carry on the business. I suppose the government have not yet decided to whom they wish to give that political plum; but there is no question about it that, as a division, we are entitled to know who is to command us if we go on active service.
Reverting to the fourth division we were regarded as an overseas division. The men of that division gave up their civilian employment on the word of the minister that we were an active service unit. In all the speeches made by the minister during the last few months no suggestion has ever been made that the fourth division will go overseas as a division, and the minister owes it to those men who took his word they were enlisting for active service, to make a statement to them and so hold out some hope that the division will go overseas as a unit and not be broken up like the fifth division in the last war.
The minister knows as well as I do that the third and fourth divisions are still under strength, the fourth division especially so, on account of the transfer of certain services to the armoured division. In forming the armoured division, the militia department did not take the units which had completed their basic training. They mobilized completely new units, and as yet they are not up to strength. Had we had an efficient militia department, they would have taken complete units out of the fourth division or some of
the unbrigaded units and transferred those units to the armoured division, so that the armoured division would have the benefit of completely trained units. What will happen is that the manner in which new units have been taken on will retard the progress of that armoured division.
Speaking of the armoured division, the Minister of Munitions and Supply said the other - day that after a short period tanks would be produced at the rate of three a day. If I know my figures correctly, it will take at least six months to supply the tanks necessary for that division. Then again, let us take the equipment for artillery units. There is no up-to-date artillery in this country, and I am surprised that the department has not improvised such equipment. I understand that on the coast they are still using 18-pounders from the last war and 75-pounders they got from the French, whereas the arm of the artillery is the 25-pound field howitzer.
We come now to the question of vocational training. Last December it was decided by the Minister of Labour, together with the Minister of National Defence, that tradesmen in the various units would be sent to school. The unit with which I am connected sent something like forty-eight men to trade schools in Hamilton and Brantford. After three months, those men came back to us, and we did not know what to do with them. They stayed with us for about a week, and they were sent away on another course. The consequence is that the men do not know what is going to happen to them. Within the last few days, before the unit moved from Toronto, they were struck off the strength, and they do not know what fate is going to overtake them.
Regarding the medical boards, I think the minister will agree with me, that when he served during the last war, once a man was in the army he was in the army and he did not get out. But it seems that we in Canada have demobilized well over a division of men. In other words, half of the 32.000 recruits which the department is looking for to-day have been demobilized on account of the medical boards. There is something wrong there. Surely when a man gets in the army, although his category may be changed, there is something he can be given to do to keep him busy.
Then we come to the question of national defence headquarters, district headquarters, and various headquarters of the army service corps, ordnance corps and other branches of the service. It seems to me that with the minister conducting a great recruiting campaign at this time, he should comb out those departments,
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and men who are A-l should wear their uniform in the front line or the field of action, not in the headquarters in Ottawa and other places. I do not think there is any job in national defence headquarters, and district headquarters that cannot be filled by a man who saw service during the last war, who has the capability to do it and who would not be willing to fill the job. The minister should make a clean-up of that situation. I could give him names of officers who served in the militia in peace time, who are here doing senior staff jobs and who never saw active service. That condition is definitely wrong. I think everyone will agree that those of us who wore the uniform in peace time should fight in the front line.
Then we come to the recruiting. If the Minister of National Defence had organized his recruiting campaign as the victory loan campaign has been organized, he might not have been faced with the difficulty he appears to be facing with regard to recruiting to-day.
I was very much surprised to hear that certain suggestions or guidance to speakers had been sent out. In this there is one paragraph to which I take great exception. This paragraph states:
While the empire theme has naturally many attractions for the public speaker it should not be stressed too frequently. Rather for recruiting purposes Canadians should be taught to think of this war in terms of the battle of Canada.
That does not seem to me the right way to get recruits, at any rate not in the province from which I come. We believe that we are fighting for Canada and fighting for the British empire. Whoever was responsible for sending that out should be disciplined.
Last July the Department of National Defence organized what they call to-day the reserve army. There have been so many changes in the designation of the active force and the reserve army in the last six months that I doubt whether anyone in the reserve army or in the active army knows definitely what initials are supposed to come after the name of a regiment, whether it is Canadian Army active, or what have you. It seems to me they must have someone in the Department of National Defence who must be playing alphabet instead of doing a job with maximum efficiency. I am positive that the men who are serving in the army to-day have not the confidence in the Department of National Defence that they had six months ago. Orders are made, and no sooner do you get them than they are changed. It is like the old habit, when men were marching, they would yell, "Lost again." I think there are many officers in the Department of National (Mr. Cockeram.)
Defence who are lost again. As one who served in the last war and in the militia for a period of years, and one who is serving to-day, I am not satisfied with the direction of the militia. If we have to defend this country, we must have faith in those who are going to be in charge of the defence of the country. This country does not lend itself very well to defence; we have too many roads; supposing the Bismarck had been able to land her extra thousand men somewhere along our coastline with the necessary equipment, and the Prim Eugen had a similar number of men, I am sure that with the equipment our men have for the coastal defence we would be licked; they could do anything with us.
Let me give an illustration of what I mean as to lack of equipment. I believe the minister stated in this house on March 31 that equipment would be coming along; I think the third division was to be completely equipped at this time and those of us of the fourth division would be getting equipped. Since that date the regiment to which I belong has not received one additional piece of what we call technical equipment. We are on our way to the east coast, presumably to defend this country. Our establishment of Bren guns for instance is fifty; we have twelve. We have some obsolete Lewis guns,
I think twelve of them. We are supposed to have ten carriers; we have none. We are supposed to have two 3-inch trench mortars; we have one. In that connection the department waits until we get trench mortars before teaching the men how to operate them, instead of giving them a prior course so that when we receive the equipment they would know how to operate them. We are supposed to have twelve 2-inch mortars; we have none. We are supposed to have six anti-tank rifles; we have one. That is the condition in which the regiment to which I belong is going to defend the east coast of this country. What would happen if we were attacked? Surely it is time that the Department of National Defence came to life and that some system of training should be conceived and that bottle-neck removed. I ask the minister to see if he cannot have a clean-up in that department. Let those of us who are serving in the army know that we have guidance that we can trust, because we do not have it now. We have no faith in the officers directing the destiny of this country.
Possibly every member of this house and the people of Canada are responsible for that, because over the period of years we have had a militia, a great deal of it carried on by voluntary effort, with the result that those members of the service who were permanent became nothing but senior civil

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servants. They had nothing to work with, and any imagination that they may have had and anything they may have learned during the last war have definitely disappeared. I am of opinion that there should be drastic changes. When General Crerar was appointed chief of the general staff, although I had been in the militia for many years I had never heard his name until he was appointed commandant of the Royal Military College. He was sent over to England with General McNaughton, and I had high hopes that when he came back he would be able to put into that department the pep that is necessary if we are to have a well trained army. I would hate to think of the third division leaving here and being sent to the island of Crete, for example, with the amount of training it has had to date. I appeal to the minister to do something, to give us some dynamic system of training that will put renewed vigour into our men, because he must know that with the system of training which prevails to-day, the morale of our men is going down. I think the minister has the ability to do this; he has been a soldier for some years, but for some reason or another we are getting nowhere. With these remarks I shall resume my seat.


James Layton Ralston: Mr. Chairman, I think my hon. friend forgets just what the situation is and has been in Canada with regard to the training of large formations. What my hon. friend is suggesting is, I think, that there should be training of divisional formations, or training of brigades. My hon. friend knows, or should remember, that in the last war we never had a division formed in Canada. In the last war the first 33,000 men went overseas and the division was formed. After that, all the divisions were formed in England, and were trained there. Here we are endeavouring to form the divisions in Canada and to complete, so far as we can, the individual, platoon, company and battalion training here. So far the units which have gone overseas have not had sufficient time to do formation training; and if my hon. friend will remember, there is at present in Canada only one formation which is concentrated. That is the armoured division, which is concentrated at Borden; but even that division is not completely concentrated there, because both the artillery and engineers are at Petawawa, where the facilities exist for their training.
My hon. friend should realize that we must walk before we can run in connection with training, and I wish to say to him that the training which is being done here is basic training, and that is required before the
higher formation training can be attempted. Let me read to him what the chief of the general staff of the United States, General Marshall, said only a short time ago:
Our training programme is building a seasonal body of men who have the basic knowledge and skill to handle any job we may give them. We are making soldiers and leaders.
. . . The fact is that each individual soldier must receive the basic training of an infantryman no matter in what branch he will ultimately serve.
Later, speaking of the soldier, he says:
He has spent his time learning the things that make a man efficient in combat, that make him act intelligently in an emergency and that toughen him physically to withstand the rigours of modern warfare.
Let me say to my hon. friend that contrary to the idea he seems to have, I have received- and I am not complacent or contented about it-not from Canadian officers but from British officers who are at present at Borden, the highest testimony with regard to the quality of the men we have at Borden at the present time, and the training that is being given them.
With regard to the third division, the hon. gentleman will remember that this division was organized, that is to say mobilization was ordered, in July; but as a soldier my hon. friend knows that mobilization is only the first step-that you cannot have effective mobilization, and training cannot begin, until the officers themselves have received training, and until there is a trained cadre formed. In the old days we would mobilize a battalion of officers and men, who would go into camp together. The officers would have had no special training, with the result that we never had the concentrated and intensive training which is being given to-day. At the present time the method of mobilization is to warn the units so that they may have their men enlist; but in the meantime, before you actually call them up and before unit training commences, the senior and junior officers train so that they may be able to take care of the men when they actually come into the unit. That takes time; .and let me tell my hon. friend that although the third division, was actually ordered up for mobilization, I think in June or July, two brigades of that division were concentrated at Debert, I believe as late as November, if I am not mistaken. Even at that, I believe one brigade was two battalions short, and those two battalions did not arrive until some time later. As a matter of fact one battalion did not go into camp until early this spring.
There has been no opportunity, as yet, for brigade training. There has been less opportunity, of course, for divisional training,
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because even when the two brigades were there at Debert there was still a brigade over at Sussex. We did not plan to accommodate them down there. These men were placed as a mobile force, and at the same time to do all the training possible. The general officer commanding the third division was appointed; he came over here, and he has been conducting an intensive system of training during every waking hour. He is not a man who was given some political plum, to use the words of my hon. friend. He is a seasoned soldier, a man who gave fine service in the last war, a man who has devoted his life to soldiering and who was recommended in the highest terms by General McNaughton himself.


Alan Cockeram: To whom is the
minister referring?


James Layton Ralston: Major-General Sansom.


Alan Cockeram: I agree with the minister there, but it was another gentleman to whom I was referring.


James Layton Ralston: There was no political plum in what my hon. friend was talking about. Those are the facts with regard to the third division, which is carrying on its unit, platoon and company training every day. I believe, when that division leaves Canada, it will go in as high a state of efficiency as any formation that has ever left this country, and I think that is saying something.
Let me now say a word with regard to the fourth division. As my hon. friend knows, the fourth division was mobilized later and was not concentrated. The fourth division was in different camps throughout the country during the winter. Training is difficult in winter; nevertheless training was carried on intensively. Then, when we came back from England, and the decision was made to send over an armoured division, my hon. friend is quite right when he says that we did take the artillery and the technical units from the fourth division and put them iqto the armoured division, and probably they were very glad to get into that formation. What we are doing now, as I have said-I have made no secret of it whatever-is recruiting men to fill up the technical units of the fourth division.
1 say to my hon. friend that I feel he is a little impatient about this. I do not pretend to be an expert in training, but I believe that in the chief of the general staff, General Crerar, we have a man who does understand training and who has put into effect a system of training which, I believe, will show excellent results.
[Mr. Ralston.}
My hon. friend has said that he never heal'd of General Crerar before. That is unfortunate, but at the same time I do not think it is anything against General Crerar. Let me say to the hon. gentleman that when I wanted a chief of tilie general staff I did not appoint him myself; I did not ask my colleagues with regard to the matter; I did not select someone to be given a political plum. I asked General McNaughton to recommend to me the best man he had over there, the man he would recommend as chief of the general staff. General McNaughton himself had been vicechief and chief of the general staff and knew what was required. He had served under General MacBrien, and had acted as chief of the general staff himself. He recommended General Crerar to me in no uncertain terms, the gentleman to whom my hon. friend has referred. General Crerar has been on the job constantly ever since. The changes which have been made from time to time-I admit they are many, and I make no apology whatever for them-have been due to no small extent to the recommendations which General Crerar has made.
Let me to say to my hon. friend that if I could take up the time of the committee I could go over the training syllabus, go over the schools which have been established in order to train men in every branch and every arm of the service. There is the question of training men in their units with their officers or training them in training centres. I had a recommendation the other night from an officer commanding an active unit. The question was whether or not a second battalion would be formed in order to reinforce that unit. This officer, like my hon. friend, had been an officer in the last war. He had spent three or four months at a training centre, and he said th" t he would prefer to have reinforcements from a training centre than reinforcements from the second battalion, mobilized in the ordinary way. The testimony from United States officers who have been in England, and the testimony from British officers, is unanimous that the training centre system which has been adopted during the last year is the only system which can be adopted in order to give results.
I say to my hon. friend that nobody is satisfied with the training, and he should not think that General Crerar is satisfied with the training. The officers at headquarters are doing everything they can to improve it. What are they doing? We sent the director of military training to England, and I believe he spent two months with the different units in England, with General McNaughton and his staff, finding out what the necessities of training were. He came back here and put

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these suggestions into effect. We are doing more than that. We are sending officers and non-commissioned officers to England in order to get training in their special arms of the service. We are bringing officers from England to take charge of training and to deal with the special problems which have arisen in connection with this war.


William Earl Rowe: Does this change the original policy of having men rise from the ranks rather than through the, training centres?


James Layton Ralston: My hon. friend has misunderstood me. The. men in the training centres are men in the ranks. .


William Earl Rowe: I understood the minister to say that the men from the training centres were highly trained officers.


James Layton Ralston: There are officers' training centres, and there are other ranks' training centres. I am speaking of the other ranks' training centres. I was saying that the training centre system is the system which has proved itself to the British and to the United States authorities, and I believe it will prove itself to the people of Canada when they see the results.
Only to-day I was called upon by a gentleman who had been most critical last July. He is a man who knows a great deal about training, and he called upon me with regard to that matter. He has been watching this training quite closely, being in charge of an officers' training centre. He said that in his opinion the present training far exceeds anything that has been done before. I am not puffed up about that, I only wish to say to my hon. friend that there are some people who do not agree with him in connection with this matter of training. This training has been done on the advice of officers in whom I have the greatest confidence, and it is producing results.
My hon. friend" spoke of demobilization on account of medical boards. I dealt with that matter as frankly as I could not very long ago. I told the house that I considered the 10,000 that had been discharged as excessive, and I said that steps were being taken to correct this matter. Yesterday I had a talk with the director general of medical services. He had made a personal tour of all parts of Canada and, in addition, has sent medical officers to the different centres in order to see that the medical boards are doing their duty. The complaints I am receiving is that the medical examination is too strict. It is that way because we do not want to have these medical discharges if they can be avoided.


Howard Charles Green: How many men have been
discharged from the active army since the war began?


James Layton Ralston: Since September, 1939,
14,000.


Howard Charles Green: Not only those by medical
boards, but also those discharged on other grounds?


James Layton Ralston: I have not those figures.


Howard Charles Green: We were told in the special committee on pensions that they are being discharged at the rate of 1,800 a month, even yet.


James Layton Ralston: I do not know that.


Howard Charles Green: Could the minister get those figures?


James Layton Ralston: Yes.


Mr. CASSELMAN:: Does that cover only those who have been sent back from overseas?


James Layton Ralston: No; all who have been
discharged anywhere, in Canada too.


Frederick Clayton Casselman: Could the minister
give the proportion of those sent back from overseas?


James Layton Ralston: I cannot give that tonight. My hon. friend referred to front line officers and suggested, to use his own words, that I clean out national defence headquarters. We have sent quite a number of national defence headquarters officers overseas, and we shall be sending more from time to time. We are also bringing officers back from overseas.


Alan Cockeram: I am talking about
A1 men who should be utilized for active service, men who did not see service during the last war.


James Layton Ralston: I heard what my hon.
friend said. I thought he was talking about officers.


Alan Cockeram: Officers and men.


James Layton Ralston: Every endeavour is being made, not only in connection with this recruiting campaign, but at all times, to see that, wherever possible, civilian employees are used. Without wanting to reflect upon my colleagues, I think national defence, army services will show a favourable record compared with the other service departments, with regard to the number of civilian employees compared with military clerks. When I was overseas I found a demand for military staff clerks in the units which is very difficult to supply. We have to keep and train a certain number of military staff clerks in order to supply that demand. A number of military staff clerks went down on the Nerissa. They were being sent overseas partly to fill the demand. I say to my hon. friend that I have in mind what he has in mind, and I assure him that men who can be spared,

Supply-National Dejence

will be replaced by men who are not physically fit, or by women. We are glad to do that at National Defence and will see that it is done.
My hon. friend referred to his own unit, which is in the fourth division. He knows that our present commitments are for an army tank brigade, for a third division and for an armoured division. Those are the commitments we made for this year, and our endeavour naturally is to see to it that these units are supplied with equipment just as rapidly as possible. I cannot get equipment for these units any faster than Canadian industry turns it out. I can assure him that every step is being taken so far as my department is concerned to see that the equipment is turned out as rapidly as possible. At times I have felt I have almost gone too far in butting into matters which are for my colleague, the Minister of Munitions and Supply (Mr. Howe). I have frequently visited plants and interviewed executives of plants which were engaged in the production of this equipment, and endeavoured to impress upon them the seriousness and urgency of equipping our forces.
Just a few days ago I interviewed a man who was most anxious for me to see his plant. He was getting together components to prepare for production. I told him I appreciated what he had shown me but that I should like to take him down to some of the camps; since he had shown me what he had to show, I should like to show him men who needed equipment. He said, "There is no use in your taking me down there; I know what the situation is, and I assure you that I am working just as hard as you are in trying to get this equipment out; it will be in your hands just as rapidly as possible." One of the jobs of the vice-chief of the general staff is to keep up tables, from month to month, of equipment supplied and forecasts of deliveries. He endeavours to see to it that industry, through the Department of Munitions and Supply, lives up to the forecasts which are made. I assure the committee that the equipment position is improving. I could name over a dozen items in respect of which there has been marked improvement, even since I spoke in March last. It is true that there are some items which it will be difficult to get for some time to come. There still is a serious shortage in equipment, but that shortage is being made up just as rapidly as Canadian industry can do it. I took the trouble to go yesterday to the meeting of the Canadian Manufacturers' Association to say a few words about that very matter.
With regard to the fourth division, I say to my hon. friend that his Bren guns will come

along before his unit is called upon to meet any operational situation, and that the other items of equipment, in so far as they are procurable, will come along too. When he says that he has no confidence in the officers at national defence headquarters, let me say to him that I do not share his views. Judging from the results which I have seen since they took the situation in hand, I believe they know their business. Some changes may have to be made, and I do not propose to hesitate to make them. As a matter of fact, I am not making any reflection on other officers, but I have felt that round pegs should go in round holes and square pegs in square holes. I was not in the defence department veiy long when, as my hon. friend suggests, I did make a number of changes in the senior positions. He will find that there is not a district officer in this dominion to-day who was occupying the position of district officer commanding in the same district a year ago. Those are the changes we endeavoured to make, and a number of them have been new appointments entirely. My hon. friend will not find any political plums among them. At all events my political friends do not think so, judging from what I hear. These appointments are being made on account of merit and on the recommendation of a board of officers in whom I have confidence, and who know the qualifications of these officers. I have no complaint whatever against my hon. friend for bringing this matter up. I am not complacent; I am not contented; I am not satisfied about the matter; but I assure him that if hard work and industry, if concentration, if faithfulness to a job and determination to do it count, he will find that national defence headquarters will fulfil his expectations.
Item stands.
Progress reported.	.



SUPPLY-CONCURRENCE

Ian Alistair Mackenzie: That the reports of the committee of supply made to the house this day be now received, read a second time and concurred in.


Mr. STIRLING:: Is that a formal stage of the proceedings now?


Ian Alistair Mackenzie: No; it is in order to have the resolutions printed in the Votes and Proceedings tomorrow.


[Stage Direction]
Motion agreed to.
On motion of Mr. MacKenzie (Vancouver Centre) the house adjourned at 12.05 am.

The War-Review
Friday, June 13, 1941.