1941-06-05

[Stage Direction]
Hon. N. A. McLARTY (Minister of Labour) moved for leave to introduce Bill No. 96, to amend the Industrial Disputes Investigation Act.
Mr. HANSON (York-Sunbury):: Explain.


Mr. McLARTY:: Mr. Speaker, the amendment proposed by this bill is an amendment of section 12 of the Industrial Disputes Investigation Act. As the section now reads it provides that no person shall act as a member of a conciliation board who has any pecuniary interest in the matter in dispute. In an endeavour to secure a more impartial board than in some instances we have secured, these words are being added to the bill:
-or who is then acting or has so acted within a period of six months preceding the date of the application for a board in the capacity of solicitor, legal adviser, counsel or paid agent of either of the parties to the dispute.
The purpose, I think, is obvious.


Richard Burpee Hanson: Is this the only section which is to be amended?


Norman Alexander McLarty: It is the only section to be amended under this bill. It is with the thought of securing an impartial board which can deal with matters in dispute.


Mr. CHURCH:: Does the act or the
amendment now apply to public utilities?


Norman Alexander McLarty: It applies generally to utilities, yes. The Industrial Disputes Investigation Act has always so applied.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. HOBLITZELL:: 1.	Has the attention of the government been drawn to a statement appearing in the Ottawa Citizen of Wednesday, May 28, in which Mr. Cottrelle, oil controller, answered criticisms made regarding oil regulations?
2.	Will the government give consideration to the suggestion of investigation outlined by Mr. Cottrelle?


Mr. HOWE:: 1.	Yes.
2.	This is a matter concerning government policy which will be announced in due course.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. CHURCH:: 1.	What are the details or break-down in sessional paper No. 281a, tabled recently, regarding the operation of the Toronto post office, showing a surplus over all expenses, maintenances, salaries and overhead of $1,531,551.06?
2.	What becomes of this surplus for the last year of record, and will the price of drop letters be reduced from two to one cent in the city?
Diversion of Water


FINES FOB SOLDIERS HITCH-HIKING
Mr. CHURCH:: 1.	How many soldiers at Camp Borden and Petawawa have been fined for a broach of a regulation issued under the authority of the officer commanding, preventing hitch-hiking?
2.	How many from Toronto were fined $5 each from their weekly pay?
3.	Who authorized this fine, and under what section of the statutes of Canada, the Army Act, the Militia Act, the Air or the Navy Act was it imposed?
4.	Was the scale of fines sanctioned by the government, and on whose orders?
5.	What becomes of these fines?
6.	Who authorized such penalties and will an inquiry be held in the matter?
7.	What fines were imposed on air men or navy herein?



LABOUR DEPARTMENT ACT


[Stage Direction]
Hon. N. A. McLARTY (Minister of Labour) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend the Labour Department Act to provide for the appointment of an Associate Deputy Minister of Labour.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution recommends it to the consideration of the house.
Motion agreed to.

[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: My hon. friend the member for Davenport (Mr. MacNieol) asked a question yesterday concerning the matter of diversions of water above Niagara. I was not in a position to give him an exact answer at the moment, and my hon. friend said he would bring the question up again, possibly on going into committee of supply. But as the Speaker leaves the chair without question being put, on going into supply both to-day and to-morrow, I have thought I should give my hon. friend immediately the information he desires and thus perhaps avoid the necessity for debate. I will summarize first the facts relating to diversions [DOT] and then discuss procedure.
In article V of the Boundary Waters treaty of 1909, Canada and the United States agreed not to divert more than a specified amount of water from the Niagara river above the
[Mr. Church.)
falls. There was no change in the amount of diversion until November, 1940, when, by an exchange of notes, the United States agreed not to object to an additional temporary diversion at Niagara by Ontario of water equivalent to diversions which Ontario was to make into the great lakes basin from the Albany river basin. This exchange of notes was tabled in the House of Commons on November 12, 1940.
The Great Lakes-St. Lawrence basin agreement signed on March 19, 1940, which is expressly subject to approval by the parliament of Canada and the United States congress, has two provisions affecting diversions at Niagara.
Article VIII of that agreement authorizes each country to use for power purposes any water diverted by it into the great lakes system. Article IX provides for the construction of remedial works at Niagara and for the subsequent additional diversion by each country of 5,000 cubic feet per second in excess of the amount specified in the Boundary Waters Treaty. These articles are, of course, not yet in force.
The exchange of notes signed on May 20, 1941, which was tabled in this house on May 29, provides, as a temporary measure in view of the present emergency, for an immediate additional diversion of 5,000 cubic feet per second by the United States and for an immediate additional diversion of 3,000 cubic feet per second by Canada. The temporary nature of this arrangement is made clear by provisions in the notes. The arrangement is expressed to be for the duration of the national defence emergency and, in all events, is subject to reconsideration by both governments on October 1, 1942. Furthermore, it is provided that the arrangement will be subject to the provisions of article IX of the Great Lakes-St. Lawrence basin agreement when that agreement comes into force.
The reasons for this emergency arrangement were explained in full by the hon. the Minister of Mines and Resources when he tabled the notes on May 29. It is not necessary to repeat these reasons, which lead to the conclusion that war needs make the increased diversion essential. As explained on May 29, the advisers of the Canadian government and representatives of Ontario and Quebec are satisfied that the increased diversions will not be detrimental or harmful to Canadian interests.
Turning now to the constitutional question of the proper procedure to be followed in

Diversion oj Water
such cases, as indicated in my reply of yesterday, under the British and Canadian constitutions, the crown enjoys the sole right of conducting all foreign relations, which includes the making and, if necessary, the ratifying, of international agreements of all kinds.
In the United Kingdom, it is a rare thing for the government to ask the approval of parliament or of the House of Commons before making or ratifying treaties, even formal and important ones.
In Canada, without derogating from the legal rights of the crown, a custom has developed different from that in the United Kingdom. On June 21, 1926, this house adopted a resolution which I moved, the final paragraph of which reads that the house considers that:
. . . before His Majesty's Canadian ministers advise ratification of a treaty or convention affecting Canada, or signify acceptance of any treaty, convention or agreement involving military or economic sanctions, the approval of the parliament of Canada should be secured.
On April 12, 1928, in the course of the debate on the International Sanitary Convention in this house, I said:
I submit that the day has passed when any government or executive should feel that they should take it upon themselves without the approval of parliament, to commit a country to obligations involving any considerable financial outlays or active undertakings. In all cases where obligations of such a character are being assumed internationally, parliament itself should be assured of having the full right of approving what is done before binding commitments are made. I would not confine parliamentary approval only to those matters which involve military sanctions and the like. I feel parliamentary approval should apply where there are involved matters of large expenditure or political considerations of a far-reaching character.
Since 1928 the custom in Canada, both under the government of Mr. Bennett and under the present government, has moved even farther away from the United Kingdom practice in the direction of more parliamentary control of international agreements. The present practice is that, except in the case of very unimportant agreements or in the case of great urgency, the Senate and House of Commons are asked to approve formal treaties, conventions and agreements, before they are ratified by or in respect of Canada.
However, while the practice has developed in this way in the case of formal agreements requiring ratification, it has never been the practice in Canada to ask parliament or the House of Commons to approve agreements which are in the form of exchange of notes. Generally speaking, agreements are made in the form of an exchange of notes either
because they are too unimportant for a formal agreement, or because they are intended to be of a temporary character.
In the opinion of the government, it would be a mistake to change the custom still further by asking parliament or the House of Commons to approve exchange of notes.
Following the principles which I have outlined, parliament was not asked to approve the exchange of notes of November, 1940, which authorized a temporary additional diversion at Niagara by the province of Ontario. So far as the question of procedure is concerned, there is no ground for distinction between that exchange of notes and the one signed on May 20, 1941. There was no reason to follow any different procedure on this occasion.
It might be pointed out that neither of these two exchanges of notes requires legislation in order to give them effect in Canada. The only thing which the Canadian government has promised to do in the notes of May 20 is to refrain from objecting to an additional diversion of water by the United States.
The United States government for its part desired to have the approval of the United States Senate before being bound by the latest exchange of notes. It would not be appropriate for me to attempt to explain the reasons for this decision. The constitutional provisions and practice of the United States in the matter of international agreements is, as I have said, not the same as that of Canada. It would not seem desirable that Canada's treaty procedure should be altered solely because the United States Senate is being asked by the United States government to approve this particular exchange of notes.
While it is not the practice in Canada to ask for parliamentary approval of exchange of notes, it is customary and desirable to table any such which are of importance or interest. The purpose of tabling them is not merely to inform the house, but' also to provide a basis for debate, if so desired, at the appropriate time.


Richard Burpee Hanson: For purposes of information may I ask whether the proposal immediately under discussion is not in effect a departure from the treaty itself? That is my understanding of it.


William Lyon Mackenzie King: My hon. friend may be correct; but certainly, as I have indicated in what I have stated, what is being attempted is simply of a temporary nature to meet an emergent situation, and the whole principle involved will come up for discussion when we are dealing with the treaty itself.
Diversion oj Water


Richard Burpee Hanson: I understand that is the theory on which the exchange of notes has been made, but it is a vain hope. Once this water is diverted it will never come back and therefore the diversion is not of a temporary nature. One more question. If my recollection is correct, the Prime Minister has stated the trend of policy and practice in Canada. But have we not in one important event at any rate departed from that practice, namely, the joint defence board?


William Lyon Mackenzie King: I should like
to give a little thought to the question which my hon. friend has just asked.


Mr. MacNICOL:: As I raised the question
I should like first to thank the Prime Minister (Mr. Mackenzie King) for his remarks to-day. I shall consider them thoroughly and perhaps not make a decision until early next week. That is, I will not interfere with the estimates as they come in to-day and tomorrow, but after reviewing the matter I may say something on Monday or Tuesday, because I am concerned about the principle involved.
As the.amount of water now referred to in the notes will raise the total diversion at Niagara Falls to I believe some 69,000 cubic feet per second, it is a matter of major importance to this parliament, and perhaps a brief statement on Monday or Tuesday might clear the air a little.


Thomas Langton Church: This very same matter,
the diversion of 5,000 cubic second feet, was before the house in 1929 and was debated on a proposed treaty which grew out of the Ship-stead act; then 10,000 cubic second feet diversion was to be given to each country for additional power from the Niagara river for power purposes. The matter came up in a debate in which I participated over a period of two days. The matter was then made the subject of a proposed treaty between the two countries. Half the power in the surplus water wa's to be given to Ontario, in accordance with the decisions on the various waterway cases before the privy council. Ontario owns half the river bed and the banks and rapids and the water for power purposes in half the river. The surplus waters in boundary waterway streams subject to navigation rights belong to the provinces and states. Under the 1929 treaty which grew out of the bill introduced by Senator Shipstead at Washington, Ontario was to get its half for public ownership under the Ontario hydro electric power commission. The treaty would have become law in 1929 but for the opposition of New York state which wanted to give its share to private ownership. Canada by that

proposed treaty consented to distribute one-half of the extra flow of this 10,000 cubic second feet which belonged to Ontario for public ownership; New York state wanted the other half for private ownership. For this reason the treaty was not adopted, though validated over here. I fear for the scenic beauty ever being preserved except by additional remedial works in the river. The levels are lower now than they were then.
I would ask the Prime Minister if, having regard to the decision of the privy council on the waterways, this can now be accomplished over the head of parliament as a war measure and not, as in 1929, by treaty. I suggest that he read the briefs and the debates which took place here in 1929 as to this new procedure. There is a great principle involved and all papers and plans should be tabled. If the executive can in this way part with public and private property over acts of parliament, then if the procedure is carried to its logical conclusion it could give away the whole country for a few pounds of Boston tea.


William Lyon Mackenzie King: My hon. friend has asked me about half a dozen questions, I think. I shall have to look at the record to see exactly what the points are upon which he wishes to be informed. I will seek to give him an answer in due course.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: I desire to direct a question
to the Minister of Labour. I have not given him notice, but I am satisfied that the minister will be able to answer-if not now, perhaps at a later stage in the day. Has any decision been reached by the unemployment insurance commission which will require all employers whose employees come within the scope and operation of the Unemployment Insurance Act to pay such employees weekly? If so, under what authority has this decision been taken? It is quite apparent that this would mean a substantial amount of increased cost. I have no doubt it would be a great convenience to employees. I am wondering whether this was the principle upon which the decision was reached, if it has been reached, or is it for reasons of administration; but particularly, under what authority is the action taken?
We know that most big corporations pay fortnightly, and that makes for permanency of employment. It no doubt would be a great convenience to employees to have wages paid

Wheat Shipments to Far East
weekly, but this would be upsetting the whole present modus operandi for most of those concerned.


Norman Alexander McLarty: As the leader of the opposition
stated, I had no notice of his intention to ask this question. The very suggestion comes to me as a considerable surprise, because I believe that the commission has been working with such organizations as the railway companies to arrange the most convenient way in which payments may be made under the Unemployment Insurance Act. However I assure the leader of the opposition that I shall take the matter up at once, although offhand I must say that I do not believe the suggestion given to him is correct.



REPORTED SHIPMENTS FROM BRITISH COLUMBIA TO THE FAR EAST IN JAPANESE BOTTOMS

[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: I desire to direct a question to the Minister of Trade and Commerce, of which I have given notice. I have been informed that there is now being loaded 4,000 tons of wheat, approximately 144,000 bushels, for Japanese account. It is further reported to me that the total sale by the wheat board is for 14,000 tons, or about 500,000 bushels, that 10,000 tons remain to be loaded in other vessels, and that the grain is being shipped in Japanese bottoms. Furthermore it is reported to me that the wheat is being loaded in sacks, which method is wholly unusual, to say the least, and lends support to the theory that the ultimate destination of this wheat is not Japan but other countries of the axis.
I should like to know from the minister whether this report is true; whether the Canadian wheat board is dealing with the Japanese government and Canadian wheat is being exported to that country, and whether inquiry is being made as to the ultimate destination of this wheat.


William Lyon Mackenzie King: Perhaps this is a question which as Secretary of State for External Affairs I should answer. I was told last evening that a press dispatch had come from Vancouver to the effect that shipments of grain to Japan were being made there. I immediately requested my office to issue a statement to make clear the nature of the shipments that were taking place, and the following communication was given to the
Canadian Press as a release and appears I think in the papers of to-day:
It is announced from Ottawa that the wheat that is at present being shipped to the far east from British Columbia was under firm order before the present export permit requirements came into force. The authorities state that practically all of this grain is destined for north China for consumption there.
In accordance with their policy with respect to the export of all commodities under wartime conditions the government are carefully watching shipments of wheat.
I might particularize a little in reference to that statement. Orders had been placed on the part of Japan for the wheat in question before any export permit requirements respecting wheat shipments had come into force in Canada. Shipments were actually stopped at the time because of export permit requirements coming at that moment into force, but on careful consideration of the whole matter it was felt that as the order had been placed before this requirement came into force, those particular shipments should be allowed to proceed. That course, I may add, is in accord with international usage.
My hon. friend referred to the shipments taking place in Japanese bottoms. I might explain the situation governing that aspect. As my hon. friend knows, all British bottoms are being requisitioned at the present time for use by the British empire, and in order to enable these wheat shipments to go forward it was thought best to require of the Japanese government that the shipments should be made in their own bottoms.
My hon. friend also asked as to the part of the wheat board in the transaction. I am informed that the wheat board had no part whatever in this transaction. It was a private firm transaction.
As to the loading in bags, I am informed that shipment by bag is the usual method where elevator unloading facilities are not available. I might add that inquiries made in Japan itself by our legation, and also inquiries that we have made of the Japanese minister here, give us every reason to believe that these shipments of grain are to go to north China. As my hon. friend is aware, the Japanese government control a large part of that area at the present time, and I understand that the people there are in a more or less famished condition. These shipments are, I understand, to serve the needs of those people.


Richard Burpee Hanson: I am
curious to learn how any private firm could make a commitment of this kind without obtaining the wheat from the wheat board, which owns all the wheat in Canada.
Fuel jor Heating Purposes


An hon. MEMBER:: No.


Richard Burpee Hanson: I may be incorrectly informed, but my understanding of the situation is that no one can ship wheat without the consent of the wheat board or without obtaining the wheat from the board. This is a large transaction, involving half a million bushels. The wheat board must be in the picture somewhere.


William Lyon Mackenzie King: My information is that it is not.



FUEL FOR HEATING PURPOSES


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I should like to ask the government a question with reference to the possibility of a coal famine next winter, and to direct attention to the meeting of a committee which took place in Toronto yesterday at which Colonel K. R. Marshall, president of the Standard Fuel Company of Toronto, warned the committee to expect a fuel shortage during the coming winter. The newspaper report states:
"I know one firm which is already 1,600 carloads short on their orders," Colonel Marshall said. "I foresee a shortage in both coke and fuel oil this winter."
In this connection I should like to direct attention to sessional paper 175C, brought down in this house last month, which I contend is insufficient and incomplete. This return had to do with this very matter of the supply of fuel for the winter, and this question was asked:
Was coal rationed by the government during the coal famine in 1917? If so, under what legislative action or rules and regulations?
What study is being made, or action taken, regarding the use of other forms of heating, as a substitute for coal?
The answers to these questions were not at all satisfactory, and I should like to know if a further study of the question will be made having in mind the full utilization of gas, oil and electrical energy for heating purposes during the coming winter, and also whether any action will be taken following this meeting in Toronto yesterday at which a coal famine was predicted by at least two-thirds of the coal dealers of Toronto.


William Lyon Mackenzie King: I noticed that in asking his question my hon. friend had to make use of information which has been handed to him or which he himself has written out. Sometimes it is a little difficult to tell whether the hon. member is asking a question or making a speech. I am afraid I shall have to ask him once more to let me look at the record before attempting to reply to his question.



CHIGNECTO CANAL


[Stage Direction]
On the orders of the day:
Mr. P. C. BLACK (Cumberland):: Is the Minister of National Defence in a position to make any statement with respect to the attitude of the United States and of his department towards the construction of the Chignecto canal as a defence measure, in association with the proposals having to do with the St. Lawrence development?


Hon. J. L. RALSTON (Minister of National Defence):: I am not in a position to make any statement at the moment.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: May I ask the Minister of
National Defence if at some stage during the remaining days of the session some opportunity will be afforded for a discussion of the question of national defence?


James Layton Ralston: My hon. friend has mentioned this matter to me already. As he knows, there are still some estimates of the Department of National Defence which have not been passed; apparently these are noted as being for other than war purposes. So far as I am concerned I shall be glad to have any matters which it is felt necessary or desirable to discuss taken up on those items. I suggest that the item covering the salary of the minister might be as good a place as any.


Richard Burpee Hanson: That is
statutory, of course, and not open to discussion. When could the discussion take place?


James Layton Ralston: I had in mind that the national defence estimates might be called at any time. I was not in the house last night when the announcement of to-day's business was made, but why not take them up to-morrow?


Richard Burpee Hanson: That would be satisfactory, but not in the evening.


James Layton Ralston: I hope my hon. friend will not impose too many conditions.


Richard Burpee Hanson: The minister knows the situation in this house on Friday evening.


James Layton Ralston: I should think to-morrow would b& satisfactory.

Air Cadet League



RAILWAY AMALGAMATION


[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANCOIS POULIOT (Temis-couata):	Will hon. members have an opportunity of discussing the question of railway amalgamation when order No. 7 is called, having to do with Canadian National Railways; and, if so, will it be called this morning, this afternoon or to-night?
William Lyon Mackenzie King: I am afraid I cannot indicate to my hon. friend just when the particular matter referred to may appropriately be considered. Mr. Speaker has a voice in some of these matters, as well as the leader of the house; I have no doubt, however, the hon. gentleman will have an opportunity to discuss the question.



WAR EXPENDITURES COMMITTEE


[Stage Direction]
On the orders of the day:
Mr. J. H. HARRIS (Danforth):: Perhaps
the government could tell the house when we may expect concurrence to be moved in the report of the war expenditures committee?


William Lyon Mackenzie King: I shall have to give my
hon. friend an answer to that question later.



AIR CADET LEAGUE


[Stage Direction]
On the orders of the day:
Hon. C. G. POWER (Minister of National Defence for Air):: In view of the wide
interest that has been taken throughout the country in the Air Cadet League of Canada, perhaps I may be permitted at this time to present a statement which the league has asked me to make. A great many hon. members of this house, as well as many people throughout the country, have been very much interested in this project, and if I place this statement on Hansard it may serve to clear up some difficulties which have presented themselves. I should add that this statement has been prepared in conjunction with Mr. G. B. Foster, K.C., of Montreal, president of the league.
Organization of the Air Cadet League of Canada was concluded at a meeting in Ottawa early this week. The directors of the league have returned to their provinces to set up provincial committees which will foster the movement in their provinces. As soon as these committees are ready it will be possible for public bodies, service clubs, school boards and public-minded citizens to apply to them for advice and guidance in sponsoring units in their districts.
Briefly, the plan is to have the operation * of the league decentralized. Each unit will be self-supporting and stand on its own feet. The minimum number of boys necessary to form a unit at this time is fifty senior air cadets, that is, between the ages of fifteen and eighteen. The provincial committees will further the objects of the league in their provinces and assist and advise the various regional committees who sponsor units, but once a unit is in operation it will deal directly with cadet headquarters in Ottawa on routine business, there being no such thing as regional or provincial branch offices of the league.
Boys wishing to be air cadets do not join through league headquarters. They should keep in touch with 'their local situation and join the unit in their district when it is formed.
The headquarters of the league is situated at 122 Wellington street, Ottawa. The officers of the league are as follows:
Patron: His Excellency The Right Hon. The Earl of Athlone, K.G., Governor General of Canada.
Honorary President:	Air Marshal W. A.
Bishop, V.C., D.S.O., M.C., D.F.C.
President: G. B. Foster, K.C., D.F.C.
Honorary Secretary-Treasurer:	Arthur L.
Melling.
Secretary-Treasurer: L. G. Dando.
The Board of Directors
President: G. B. Foster, K.C., D.F.C.
Hon. F. P. Brais, K.C.
H. R. Carson.
A. W. Carter, M.B.E., D.S.C.
Pierre De Varennes, K.C.
H. E. Drope.
Gilbert M. Eaton.
John D. Eaton.
Sir Ellsworth Flavelle.
Charles A. Gray.
George R. Hodgson.
R. H. B. Ker.
D. R. MacLaren, D.S.O., M.C., D.F.C.
Arthur L. Melling.
W. W. Rogers.
Hon. Ivan Schultz.
Earle Spafford.
R. W. Frost.
T. M. Sheard.
A representative to be selected from the province of Nova Scotia, and a representative to be selected from the province of Prince Edward Island.
Canadian Army-Recruiting



CANADIAN ARMY


[Stage Direction]
On the orders of the day:
Mr. G. S. WHITE (Hastings-Peterborough):: Will the Minister of National Defence, before the house adjourns, give a report on the recruiting campaign?


James Layton Ralston: I can tell my 'hon. friend now about the report with regard to the recruiting campaign. I had intended to do it on the estimates, but my hon. friend is concerned about it, and I shall be very glad to tell him vhat the situation is.
Reports this morning are that up to yesterday 24 per cent of the total allotment had been enlisted. That is, 24 per cent have been actually enlisted since the radio address which I made. That does not include those who were enlisted prior to that date, in connection with current reinforcements, which will have to be considered. I am not taking account of that now. That is, there is a total of 7,655.
I may say, with regard to the different districts, that each district is being informed not only as to the percentage which has been raised of its quota, but also of the percentages which all other districts have raised, so that each district may know just what increase is being made by it in comparison with other districts.
I may say, further, that to give a statement of this kind is perhaps not altogether fair to districts, for this reason: in connection with the call no less than 8,000 of the 32,000 which were asked for are asked for the purpose of replacing units of the fourth division which were absorbed by the armoured division. Those new units of the fourth division are just now in process of mobilization. The reserve units have been, in some cases, authorized to mobilize-I think perhaps in all cases now. But in some cases officers have not been completely appointed, and in districts where that is taking place the mobilization of those units will of course give a sudden impetus to the recruiting in such districts. We believe a large proportion of the personnel of the reserve units will come in at once. So that hon. members cannot be guided by time to time percentages until the recruiting of reinforcements and the recruiting of reserve units is complete.
In that connection my hon. friend gives me an opportunity to say this: we have had great help from civilian committees. I have been tremendously encouraged by the help which has been given, and the assurance as

to the work which the large civilian committees are doing. They are just, as a matter of fact, getting into their stride now. Recruiting has accelerated rapidly over the first days. I think yesterday was the second highest. It has more than doubled the recruiting of the first days after the call was made. I believe this improvement is due in large measure to the assistance which the civilian committees are giving, and I am sure to the assistance which the district officers commanding and their staffs are giving.
I only wish to say-I may have an opportunity to say it again-that I ask members to put their backs into this effort. I know they are doing so. I have had assurances from many of them, and also from members of provincial legislatures as well. I feel that at this time the thing to do, if I may say so, is to look at our particular corner of the vineyard. That is the place to work; and we have the right to expect that each person will do the same. I want to say to hon. members that most of what I have received by way of criticism has been constructive. There have been eases in which people have been blue, down and low. But that is what we have to take in connection with recruiting campaigns.
I consider this is partly a matter of raising men for units we have pledged to the British, and to fill up the fourth division as well. I have every reason to believe that with the acceleration which has taken place in the campaign, and with the assurances we have received, the campaign will be a complete success.


Thomas Langton Church: Would the minister reply to a question on enlistments and the present system of records in his department? I asked about the same thing the other day, as to whether it would be possible to have an official statement given out monthly as to the enlistments in the various forces. The minister said he would reply to the question which had been asked by me in the house regarding records as to enlistments being published according to municipalities, like the victory loan and income tax, on a unit system.


James Layton Ralston: I am afraid my hon. friend's question has been a bit obscured by conditions in the house. If I understood him correctly he was asking, roughly, for enlistments in the three arms of the services. I do not know that that is possible. It depends of course on what activities there are in the army, and whether there are sufficient enlistments at that time. I doubt if what the hon. member suggests would be advisable. However, I shall take it into consideration.

Yukon Act Amendment


Thomas Langton Church: The air force adopted that system at manning pools. It is an incentive to recruiting in each centre to know what each town and province is doing, and the deputy minister for air arranged it in Toronto last July.


Mr. COLDWELL:: The minister suggested that we should look to our localities. Could he tell us how military district No. 12 is proceeding?


James Layton Ralston: I shall be glad to tell my hon. friend. As I say, I do not think it is quite fair to the district officers commanding. As I have pointed out, the officers have a right to the information not only with respect to their own district, but with respect to other districts as well.


Richard Burpee Hanson: Would the minister be good enough to inform the house as to military district No. 7? It would be extremely gratifying to every hon. member in the house.


James Layton Ralston: Yes.



YUKON ACT AMENDMENT


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved that the house go into committee to consider the following resolution:
That it is expedient to amend the Yukon Act to provide for the appointment of stipendiary magistrates in and for the Yukon territory.
Motion agreed to and the house went into committee, Mr. Yien in the chair.
Mr. LAPOINTE (Quebec East):: This is a simple matter, arising from the substantial diminution of judicial business in the Yukon territory. It has decreased considerably from year to year. Conditions there are not at all what they were when the Yukon Act was enacted.
The Department of Mines and Resources, which is charged with the administration of the Yukon territory, suggested two or three months ago that when Mr. Justice Macaulay, who was the judge of the territorial court of the Yukon territory, retired, it would be better and much less expensive to have what is left of the legal business in that territory transacted by stipendiary magistrates, as is done in the northwest territory. Those magistrates are doing other work for the department, and the change would mean a substantial economy. Mr. Justice Macaulay has agreed to take his superannuation, and it became effective on the last day of May

only a few days ago. This authorizes the governor
in council to appoint a stipendiary magistrate to do what little work there is. He will also do other work for the Department of Mines and Resources. We will save the salary paid to the judge, and there will be other economies as well.
I regret that the hon. member for Yukon (Mr. Black) has had to leave, but I may say that I have discussed the matter with him. The first suggestion of the Department of Mines and Resources was to do away altogether with the position of the judge of the territorial court, but that is not what we are doing. We are not replacing him, but the position can be filled if this experiment does not prove satisfactory. The hon. member for Yukon would object to abolishing the position, but this bill was submitted to him before he left, and it meets his views.


Richard Burpee Hanson: I think the minister's statement covers the whole field. I am glad to hear him say that it is not intended at this time to abolish the position of judge of the territorial court, although on the grounds of strict economy such a course might be justified. No part of the country likes to see its status reduced, and that would be the effect. The minister has in mind the appointment of one stipendiary magistrate to act in lieu of the judge of the territorial court, who is at present an official of the government. Is there any objection to telling us who this official will be, and what are his qualifications? I am thinking that he should be a man with legal training.


Ernest Lapointe: Absolutely.


Richard Burpee Hanson: And of some standing in the community, because after all he is to administer justice. Will he have civil as well as [DOT]criminal jurisdiction?


Ernest Lapointe: Yes.


Richard Burpee Hanson: Will he. be clothed with the same jurisdiction as the judge of the territorial court?


Ernest Lapointe: Yes.


Richard Burpee Hanson: His status will be almost that of the territorial court judge, and he should be a man of experience and ability and possess judicial qualifications. He is to administer all justice, both civil and criminal, in a widely scattered territory and he should be fully qualified. If the minister does not care to indicate who he is, perhaps he would indicate his qualifications. It may not be desirable to name him on the floor of the house, but will the minister say that he is competent to exercise these functions?
Yukon Act Amendment


Ernest Lapointe: I have not the slightest idea as to who may be appointed, but he will have to possess legal qualifications. We have two stipendiary magistrates to-day in the northwest territories who are doing work for the Department of Mines and Resources. Both these gentlemen are qualified lawyers. They were appointed upon the recommendation of the Minister of Justice-because, after all, they have to administer justice-but it was done with the concurrence of the Department of Mines and Resources. To some extent this appointee will be an officer of that department. I do not know whether the department has anyone in mind; as a matter of fact I have not discussed with my colleague any name. My hon. friend may be assured that he will be a qualified lawyer-not, of course, with high court standing; we could not find one with that qualification to serve for the salary attached to the office. I believe the intention is to pay a salary of about $4,000.


Richard Burpee Hanson: Is that
extra or all told?


Ernest Lapointe: All told. He will have to live in the territory. His decisions will be subject to appeal to the appellate court of British Columbia, as were the decisions of Mr. Justice Macaulay.


Thomas Langton Church: As to this Yukon territory stipendiary magistrate, when the estimates of the Minister of Justice were being considered last spring reference was made to these judicial appointments, and the general principle applied1 in appointments. Recommendations have been made by the Canadian Bar Association in connection with the appointment of judges and other judicial officers-not in this case, but the principle is here. What are three separate justice departments in England are linked under the one minister here in Canada, all combined. I have received within the last few days two or three letters on this subject of law reform and our method of judicial appointments, and I urge upon the minister that he give consideration to the representations of the Canadian bar and other associations that more care be taken in making these appointments.


Ernest Lapointe: The
remarks of my hon. friend would apply more to appointments to provincial courts. In this case the Canadian Bar Association would hardly be making the suggestions my hon.

friend mentions. However, I shall be pleased to take his remarks into the fullest consideration.
Resolution reported, read the second time and concurred in. Mr. Lapointe (Quebec East) thereupon moved for leave to introduce Bill No. 97, to amend the Yukon Act.


[Stage Direction]
Motion agreed to, bill read the first and second times, and the house went into committee thereon, Mr. Vien in the chair.
On section 1

Appointment of stipendiary magistrates.
Ernest Lapointe: This is
merely the language of the resolution authorizing the governor in council to appoint stipendiary magistrates. It is the language which is used in the Northwest Territories Act, and the form of oath is exactly the same as the form which is in that act.


Richard Burpee Hanson: There is
an understanding that although authority is taken to appoint such number of persons as stipendiary magistrates as the governor in council may think fit, only one will be appointed?


Ernest Lapointe: One- and possibly temporarily.


Richard Burpee Hanson: All right.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed. CANADIAN NATIONAL RAILWAYS .

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee to consider the following resolution:
Resolved, that it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $29,414,206 in principal amount to provide the moneys necessary to meet capital expenditures made or capital indebtedness incurred during the calendar year 1941; to make provision for the purchase or refunding of capital obligations of the company or of any company comprised in the Canadian National Railways system and for the issue of substituted securities for such purposes; to authorize the governor in council to guarantee the principal, interest and sinking funds of securities issued by the company for the purposes aforesaid; to authorize the making of temporary loans to the said company secured by such securities and not exceeding $29,414,206 in principal amount to enable the said company to meet such expenditures and indebtedness; with authority to give financial aid and assistance to other companies of the said national system; to authorize the company to pay supplementary contributions to

C.N.R.-Guarantee oj Securities
certain railway employees' provident funds; and to authorize the making of further temporary loans to the said company for interim deficits, said loans to be reimbursed from the annual revenues.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
Richard Burpee Hanson: I ask the minister to make a general statement covering the necessity of this measure. I am aware that this is the usual resolution preceding the introduction of a bill. Certain portions of the resolution are obviously necessary, having regard to the operations of the railways, such as authorizing the company to make supplementary contributions to the employees' provident funds, the giving of temporary loans, and that sort of thing. But I should like the minister to give, for the purposes of the record, a break-down of the twenty-nine odd millions, and to explain why, with the revenues of the railway mounting beyond any previous levels-having regard, of course, to the great increase of traffic which is largely if not wholly due to the war-there is no indication on the part of the management that this year an operating surplus may be expected, which might be devoted to purposes other than, we will say, working capital. I am astonished that there is no suggestion of an operating profit this year. I am astonished, having regard to the growth of traffic, that last year we had to provide in the neighbourhood of 817,000,000. I am afraid that there is not the economy visible in the operation of the system that there ought to be. I am making no attack on the railway. I believe that the national railways are doing excellent work in connection with the country's war operations. In the eastern provinces, at all events, they are moving a very great amount of traffic. But the country is paying them at the approved rates for all this traffic, and they mukt be in receipt of very substantial sums of money from the war appropriation fund- millions in excess of what anybody knows about.
The railways are embarking on capital expenditures of a character which seem to me to be unnecessary at the moment. No great system of railways, indeed no business, can be carried on without annual capital expenditures. They cannot be static; they must go forward. But I wonder if the government has given consent to certain capital expenditures which have already been undertaken. I have in mind the installation of the electric control between Pacific Junction and Truro, which will cost at least one and a half million dollars and will probably run to two millions, involving also the expenditure of at least half
a million dollars of United States exchange at a time when there is need to conserve our exchange position, and that in respect to a project which must be regarded as somewhat of an experiment in a cold climate such as that of Canada.
Frankly, when I heard about this I wrote to one of the vice-presidents and received in confidence from him a statement of the railway position. I am bound to say that he made what was to me a convincing statement of the utility of the proposal. But there is in this country a view that at this time the government should not permit the railway company to embark upon expenditures of this kind, which can be justified only because of the war. And how many crimes are committed in that name? When the war is over this expenditure will be useless, I am informed. I believe it operates with great advantage in the winter time in countries which have not the severe weather conditions that we have in Canada, The idea is of course to relieve congestion. It is an electrical mechanical device intended to supersede employment on the railway itself. I am convinced that the proposal has its merits, but I want to know what is the justification at this time for this capital expenditure, having regard to the fact that it constitutes a substantial charge on the foreign exchange control position and on the conservation of our exchange.
I would ask the minister to give the house a statement with regard to the Montreal terminal, which is not yet completed and which will cost about $30,000,000, a very considerable portion of which was expended in war time. In no sense can this work be justified as a war measure, and it involves millions in foreign exchange. I should like the minister to give the house information with respect to what is being done in connection with the redemption of equipment trust certificates. This is an old problem in connection with the national railways. There is in effect what is commonly called the Philadelphia plan, whereby railways acquire rolling stock on the basis of deferred payments. As a rule the railways make an initial payment. The equipment is mortgaged under trust agreement to a trustee, who issues securities and the money is payable in a term of years, or from year to year in serial form. It was looked upon with great favour by investors in days gone by, but as regards the Canadian National Railways, especially in the darker days when the earnings were not sufficient, these equipment trust payments, if my memory serves me rightly, were not made out of earnings at all but out of sums advanced by the government against which long-term

C.N.R.-Guarantee oj Securities
securities were eventually issued, constituting in turn a dead-weight debt on the system, and covering in some instances a period expiring at a date beyond the lifetime of the equipment.
I should like to know how much of this $29,000,000 is in payment of equipment trust certificates issued and maturing, which the company is not able to take up out of operating expenses, which is the basis of the whole plan. I should be happy if the minister could assure me that none of this $29,000,000 is to be devoted to that purpose, though I know from past experience that substantial portions of capital authorizations have had to be so used because the railways did not have the moneys to retire these obligations. If the minister is able to assure the house and the country that in this connection the railway is taking care of its commitments and that no new securities will be issued against these payments, no long-term securities which the railway cannot absorb, it will be a matter of relief to all of us.
The particular point to which I desire to call the attention of the minister is the one I adverted to earlier in my remarks. Will he explain to the house why, with greatly increased traffic earnings, there is no budget before us looking to a credit balance in operations this year. It may be that my understanding is incorrect, but the country will expect that the system this year will take care of its operating expenses, interest on sinking fund charges and maturities falling due for equipment trust payments. But over and above that, with the revenues mounting, as I know they are, as we see in the press weekly, to heights hitherto unthought of or unheard of, I do not understand why there should not be a substantial credit balance to the treasury of the railway company, which in turn would be reflected in the operations of the Canadian treasury, to take care of some of the deficits of the past year or to reach such other destination as may be suggested. Or is it the theory of the railway company that it will not disclose to the house and country just what its actual expectations are, so that it may have in hand a substantial sum of money which it may use to embark on other enterprises, which parliament will not know anything about but of which of course, if they are capital, the ministry will know, and to which both the ministry and finally parliament will have to give consent on an ex post facto basis. That is what is happening. Expenditures are being incurred on capital account and all that parliament is called upon to do is to ratify what the management does.

I am not questioning the judgment of the management in most cases. Probably if left alone and freed from political interference the management would operate the road on a basis that would show returns, especially when the earning power is as high as it is to-day. But every once in a while some minister, like the Minister of Transport, steps into the picture and says, "You have to honour my election pledges." That is exactly what has happened in connection with the Montreal terminal. It is a shocking thing. I have said it on more than one occasion, and I repeat it here to-day: this country was called upon to pay an election debt of $30,000,000 because the Minister of Transport, then the Minister of Public Works, made an election pledge in a by-election in Montreal years before the war began. However desirable it was to clear up the railway situation existing in Montreal it is little less than criminal to keep on with the work when the country is spending at the rate of $5,000,000 a day on the war effort. We are being taxed to the limit to pay for this war, yet the country is asked to meet a $30,000,000 capital expenditure to fill up that hole in the ground in Montreal in order to redeem the word of the Minister of Transport, then the Minister of Public Works.
There are many other things that I could refer to, but generally speaking I want to know why it was that with all the traffic that accrued to the system, splendid increases during the last year, it went behind $17,000,000, and this year is budgeting for no profit on operations. It is incomprehensible to me. Every class one railroad on the north American continent is doing better. The United States has not yet entered the war but is approximating that position, and as a result there has been a great increase in railway traffic. Every railway in the United States is budgeting for increased earnings, in most cases sufficiently large to take them out of the red. I have in mind at the moment the New Haven system, which operates in New England. A very large portion of their revenue comes from passenger traffic, which has felt bus competition perhaps even in a greater degree than freight traffic has felt truck competition. Yet I saw the statement very recently that the New Haven is budgeting for a surplus on operations next year.
I am delighted to see that earnings are going up by leaps and bounds, because as long as that state of things continues it makes more remote the time when we shall be called upon again-if we ever are; I hope we never shall be-to pay operating deficits. But the minister and the management should explain why it

C.N.R.-Guarantee oj Securities
was that we had to pay an operating deficit last year of $17,000,000, in addition as I understand-I am subject to correction-to arrangements for new capital expenditure; and why it is that they are budgeting for no profit this year. This information is due to the Canadian people and I would ask the minister to give us the fullest possible statement.


Mr. POULIOT:: The hon. leader of the
opposition should not forget that a considerable amount of money has been already spent on the terminal station at Montreal. The plan was made a long time ago, but on account of the depression the work was suspended for some time. The money that has been spent is an investment and an asset, but it is a dead asset so long as the work is not completed.


Richard Burpee Hanson: I should
like to have the defence come from the minister, not the hon. member for Temiscouata.


Jean-François Pouliot: But as a member from
the province of Quebec I can say a few words before the minister answers. I am not answering in place of the minister. As a member from the province of Quebec I am answering complaints made by the leader of the opposition about expenditures made in the province of Quebec.


Richard Burpee Hanson: I was
not complaining because the expenditure is made in the province of Quebec. The hon. member for Temiscouata must not try to represent me as an enemy of Quebec or of the national system. I object to that. It is not the basis of my remarks, although I have no doubt that will be the basis of his remarks in the province of Quebec.


Jean-François Pouliot: I do not say that, and the leader of the opposition, like any other hon. member, should obey the rules. I have the floor. I did not utter the words that the leader of the opposition has imputed to me, and it is just as bad to put words in the mouth of a member who has not uttered them as to impute motives. Besides, although the hon. member for York-Sunbury is the leader of the opposition, be has no more rights than the member for Temiscouata or the member for any other constituency. Therefore when I have the floor I object strongly to the leader of the opposition rising as he did, unless he rises to a question of privilege or asks permission to interrupt me. I give him that little lesson in parliamentary practice; it may be useful to him. I do not want to be interrupted by him any more, and I do not want him to put words in my mouth that I have not uttered. He is a little older
than I am and it is time he read the rules. He has enough experience to be able to understand them.
That being said, I never stated that the leader of the opposition was an enemy of the province of Quebec. What I said was that it is because this money is being spent in Montreal that there is so much criticism.


Richard Burpee Hanson: Nobecause it is war time.


Jean-François Pouliot: No; it was undertaken before the war, and it is important to complete it now. When my hon. friend comes from his beautiful country into the city of Montreal he does not come into a station, he comes into a shed. The most shameful so-called station in Canada is that of the Canadian National Railways in Montreal. Every hon. member who has visited the metropolis of Canada knows that. It is filthy, it is abominable, it is a bad advertisement for Canada. I believe that the government was very wise not ;to spend at once the whole amount required for the construction of that station. It was done gradually as conditions permitted. But it was rightly done, and now there is a small amount, something like $2,000,000, required to complete it and make the dead asset a live* asset. Surely that is worth doing. It is very good business. My hon. friend must remember that at the time Mr. Bennett was in power

I do not know whether he was then a minister, but at any rate he was a member supporting that government-the big sign that faces up Windsor street in Montreal beside the Bonaventure station, the sign that is seen from the Windsor hotel, was not lighted for months and months, and it was only as a result of protests of Liberal members that it was lighted again. It was the Canadian Pacific Railway company that asked the government not to light it, because it was too good an advertisement for the national railways. That is the kind of petty thing that was done by the Bennett government for the Canadian Pacific railway and against the Canadian National railways.
Where does this protest come from? It comes from the Canadian Pacific railway. Either knowingly or not the hon. gentleman is arguing the case of the C.P.R. against the C.N.R. when he complains about the construction of the new terminal in Montreal. Montreal is a growing city. Montreal is much larger now than it was when the terminal was started, and the hon. gentleman has travelled enough to see that in many places the big railways have stations that are rather close together. But I would ask the hon. gentleman another question. Let him speak about the closing of the Canadian
C.N.R.-Guarantee of Securities

National station in his own beautiful city of Fredericton. After I am through I should like him 'to give some explanation about that. Fredericton is not as large as Montreal, but it is the capital city of the great province of New Brunswick and I do not understand why the Canadian National station there should be closed. When was it closed? And was it not the hon. gentleman himself who asked to have the Canadian National Station closed at Fredericton?


Richard Burpee Hanson: The hon. gentleman does me too much honour.


Jean-François Pouliot: Just a moment; my hon. friend will have an opportunity to speak when I am through. One spring there was so much ice in the river that the bridge at Fredericton was carried away; and it was due to the persistent effort and very excellent work of the hon. gentleman's illustrious predecessor, Hon. W. G. Clark, now lieutenant governor of New Brunswick and then one -of my best aides on the civil service committee, that the bridge was rebuilt. I am sure the hon. gentleman will not say that was a useless expenditure; I am sure he will not make any joking references to war-time expenditures in reference to the Fredericton bridge. But-1 wonder if it would have been rebuilt'if the Bennett government had been in power, and the hon. gentleman had been a member of that government. I know the trouble that was experienced by the great lieutenant governor of the great province of New Brunswick in having that bridge constructed; he did very excellent work, and he was successful. We did not complain about it; we realized that it was necessary and in the public interest.
The hon. gentleman is so much concerned about the importance of his functions that he does not like an ordinary hon. member to speak to him; he wants to be answered only by a minister of the crown. A privy councillor can be answered only by a minister, he believes; a back bencher, or a member of the rank and file, has not the right to answer the hon. gentleman. Well, I am not impressed by high hats. When I was a child I was told that a cat might look at a queen, I am not a cat; the hon. gentleman is not a queen; all comparisons are odious, but everyone will understand what I mean. I want the hon. gentleman to be just as generous to Montreal as Quebec members have been to Fredericton and Toronto, the holy city. We do not complain about anything when it is useful and necessary. Let' us not be narrow; let us not be pettifogging; let us not be hair-splitters, and in our humble spheres let us all try to be builders of Canada.


Mr. CARDIN:: The first criticism offered by the leader of the opposition had to do with the absence of a prospective surplus in the finances of the Canadian National for the year 1941. I am afraid the hon. gentleman is asking a little too much. The situation of the Canadian National is most encouraging, however, from the financial point of view; and if there is no indication of a surplus in dollars and cents for 1941 at least we have the pleasure of observing that this year parliament is not called upon to provide for any deficit, as we have had to do in the years gone by. The position of the railway this year is going to be better by at least sixteen or seventeen million dollars, and it is because the revenues of the Canadian National have increased that we are able to avoid the necessity of coming to parliament to make up the annual deficit.
My hon. friend made one observation which I aim quite sure did not come from his heart. He indicated, or rather insinuated, that the present directors of the Canadian National were not as free in their deliberations and the exercise of their judgment as they have been in the past. I can assure my hon. friend that nothing has been done to interfere with the free disposition of Canadian National affairs by the Canadian National board of directors. I have not interfered in any manner with the exercise of their judgment; I have not pressed my views upon them contrary to their will or against the public interest.


Richard Burpee Hanson: What
about your predecessor?


Pierre-Joseph-Arthur Cardin: I imagine I could say the same thing about my predecessors, but I would not like to go into that field because I might be inclined to say things as to which I have some information but about which I am not perfectly sure. At all events let me reassure my hon. friend that the board of directors is as free now as it has ever been since the inception of the Canadian National system.
The hon. gentleman referred to two capital expenditures which apparently he does not like. The first was the expenditure to be made in the establishment of a central traffic control between Pacific Junction and Truro.


Richard Burpee Hanson: I did not say I did not like it; I questioned the advisability of that expenditure in war time, and wondered whether the system would be efficacious in our climate.


Pierre-Joseph-Arthur Cardin: This recommendation came directly from the management of the Canadian National.


Richard Burpee Hanson: I have no doubt about that.

354i
C.N.R.-Guarantee of Securities


Pierre-Joseph-Arthur Cardin: The expenditure is being made on the basis of a strong recommendation coming from the technical officers of the Canadian National. I had no knowledge, and the government had no knowledge, of this matter before it was suggested to us in a report made by the officials of the railway, and the reason for it is the increase in traffic which has developed, more particularly since the beginning of the war.


Richard Burpee Hanson: I accept that without reservation.


Pierre-Joseph-Arthur Cardin: My hon. friend knows the situation exactly in that locality. The directors of the Canadian National admit that they might be able to 'handle the situation that exists at present in that section of the line; but with the traffic continually increasing, and having in mind representations of the Department of Munitions and Supply and other war organizations that during 1941 and 1942 the railway will have to look after much more traffic, they are afraid that a bottle-neck may develop in that section;, which is mainly a single track service.


Richard Burpee Hanson: And a one way service.


Pierre-Joseph-Arthur Cardin: Yes; and it is the, opinion of the technical men and officials of the company that otherwise it would be impossible properly and satisfactorily to handle a much heavier traffic over that line.


Richard Burpee Hanson: Will the minister say whether at any time, because of congestion in the winter season, which I admit, the transportation of goods for overseas has been delayed? In other words will he say that a single ship has been forced to stay at an eastern Canadian port for lack of cargo?


Pierre-Joseph-Arthur Cardin: No, I cannot say that; my hon. friend is quite correct. Up to the present time the railway facilities have been adequate to meet the situation, and as a matter of fact the Canadian National has taken more traffic to Halifax than the port has been capable of handling.


Richard Burpee Hanson: I think
that is true.


Pierre-Joseph-Arthur Cardin: But the port facilities of Halifax are being developed, and that development will increase tremendously during 1941. A proposal has been advanced to use a certain number of lighters, on which the freight will be transferred from the railroad cars to the ships in the port.


Richard Burpee Hanson: They are going to adopt a lighterage system?


Pierre-Joseph-Arthur Cardin: Yes, and the facilities at the port of Halifax are to be substantially developed. According to information we get from the officials of the Canadian National Railways there is not only the possibility but the probability that with the present railway facilities between Pacific Junction and Truro we would not be able to handle the traffic.


Richard Burpee Hanson: Would the
alternative be a double track?


Pierre-Joseph-Arthur Cardin: That would be more
expensive.


Richard Burpee Hanson: Yes, I
believe so.


Pierre-Joseph-Arthur Cardin: In all sincerity I can assure my hon. friend that the directors and technical men of the Canadian National Railways were in no shape or form influenced by the minister or by the government in proposing such an expenditure.


Richard Burpee Hanson: I am prepared to accept that.


Pierre-Joseph-Arthur Cardin: They thought it was in the best interests of the Canadian National Railways, and believed it to be absolutely necessary in order to avoid the creation of what is known as a bottle-neck in that section of our line.
I come now to another point with which my name has been often associated. On many occasions in different parts of the country and in the House of Commons it has been suggested that I forced the hand of the Canadian National Railways toward the completion of the Montreal terminal. That is not the situation.


Richard Burpee Hanson: Perhaps
that is a crude way of putting it.


Pierre-Joseph-Arthur Cardin: What I said in Montreal, and what I advocated not only on one but on several occasions, was only the adoption of a proposal which had come from the railway itself. The completion of the Montreal terminal is not being imposed upon the Canadian National Railways by the present minister or the government, either now or at any time. I advocated the completion of the terminal because the technical advisers and officials of the railway had expressed the view that it was desirable and in its interest that it be completed. One has but to remember what the situation was, in order' to realize the truth of that suggestion. Many people have a misconception of the whole situation. The terminal project was originated as far back as 1929, when the revenues of the railways were increasing substantially. Work was

C.N.R.-Guarantee of Securities
abandoned in 1931 or 1932, when we reached the depression years. But when the question was revived in 1939 the Canadian people had already invested in that terminal nearly $17,000,000. It was lying as a dead asset; it was bringing in no revenue, giving no facilities to the railway, in a word remaining in the same position as that in which it has stood for a long time.
It was decided in 1939 to proceed further with the work. I might add in passing that I had no responsibility with respect to railways at that time. The scheme was one which first of all involved an exenditure of $53,000,000 or $55,000,000.


Richard Burpee Hanson: A grandiloquent scheme.


Pierre-Joseph-Arthur Cardin: Yes. It was reexamined in 1939, and it was then established that with an additional expenditure of about $12,000,000 the work would be completed and facilities made available. It was thought at that time it would be in the interests of the Canadian National Railways to take advantage of the large expenditure which had been made up to that date, but which was then lying dormant, and to proceed with the work. The question has been before the committee on railways and shipping. It has been approved by a majority of the representatives of the people of Canada. It has been discussed and examined in all its aspects by members of the committee, and has been discussed openly in parliament.
When I spoke in Montreal-and I am not ashamed of what I said; I do not wish to retract one word-I only expressed the desire and indicated my determination to see that a project which had been proposed by the railway itself should be carried out. Any man who has knowledge of the city of Montreal, and of the facilities in that city at the disposal of the Canadian National Railways, will not hesitate to admit that something must be done at that point, if the Canadian National railway system is to expect to obtain its fair share of the traffic in freight and passengers. It is entitled to that traffic.
Any citizen of Canada, whether he lives in Montreal, Winnipeg or Vancouver, can be proud of and satisfied with work which will do away with that rat-nest which is called Bonaventure station in Montreal, and no people, except citizens of Montreal, would have tolerated such a condition so long.


Richard Burpee Hanson: And a
war on! We are always being told there is a war on.
[Mr. Cardin.J


Pierre-Joseph-Arthur Cardin: They are the only people
in Canada who have been tolerating a situation such as the one which has existed in Montreal since 1929. In 1939, $17,000,000 had already been expended, and to make the terminal useful there was involved the matter of adding $12,000,000 in order to complete the project and to make it a useful and profitable undertaking for the railway.
People are arguing as though the government were spending $30,000,000 this year on the Montreal terminal. We see articles in the newspapers and listen to speeches in which the question is asked: "What is the use of spending $30,000,000 to provide a terminal in Montreal?" That is not the situation at all. Those who speak that way simply desire to prejudice public opinion outside this house against the interests of the Canadian National Railways. I have explained that $17,000,000 had been spent before the work was stopped in 1931. Since 1939, when the project was revived, there will have been spent

including this year's expenditures-the sum of $12,000,000, to revive that project and to turn it into a reasonable and profitable undertaking for the railway.
This matter involves not only the building of a station. The Montreal terminal project covers the relaying of tracks and the opening of the coach yard at Point St. Charles, the unifying of five Canadian National railway stations, and does away with twenty level crossings in St. Henri, a very active centre of Montreal. What has been done? Up to the present we have disposed of eleven of those level crossings, which had been responsible for the deaths of many people and had caused enormous delays in the handling of freight and passenger trains, to the detriment of the Canadian National Railways.
If the project is completed, the remaining nine of the twenty level street crossings will be relieved to a large extent, because passenger traffic will be taken off them. Only the freight traffic to be handled at the Bonaventure and Turcot terminals will remain. When the new station is established the passenger, mail and express traffic will pass through the new station, and the Bonaventure and Turcot areas will be used only for the transportation of freight. This will give freight handling facilities to the railway covering an area of
21,000	square feet of space at present occupied by express and mail services in Bonaventure station. Instead of moving passenger coaches several miles from Bonaventure station to Turcot station, they will be moved to the new coach yard which has been established at Point St. Charles.

C.N.R.-Guarantee of Securities
Many people seem to have a misconception of the situation and express exaggerated views. Their minds have been affected to a certain extent by propaganda which has been put out, not in this house, against the Canadian National Railways and in favour of its competitor. I am not afraid to mention it; that is the situation. As a member of the government, as one having something to do with the Canadian National Railways, as a citizen of Canada, I want to give this organization of the people a fair opportunity of competing with its principal competitor and others in the handling of freight and passengers. It is of no use to complain that the Canadian National Railways is not doing this or that, is not up to standard. Let us give to the Canadian National Railways the necessary facilities to fight their own battles-as Mr. Churchill has said "give them the tools"- and they will be in position to show better results than they have shown in the past. Probably in the counse of a year or two they will be able to show what my hon. friends 'have been asking for, a surplus, which will help to reduce the indebtedness of the country in regard to this great undertaking.
I have no desire to hurt the Canadian Pacific Railway. I have the greatest respect and consideration for that company, and have always admired the men who have directed its affairs. At all times I have been proud as a Canadian of the developments which have resulted from the establishment of the Canadian Pacific Railway. But conditions have been such that the Canadian people now own a railway system which has been acquired with their own money. It is only right that we should give it a fair deal and provide it with all the reasonable facilities it requires for thg proper handling of freight and passengers and the betterment of its position.
Without wanting to be unfair or to hurt the feelings of anyone, which is not my practice, I must say I was surprised at the attitude taken by certain hon. gentlemen in regard to the Canadian National Railways. To a large extent the Canadian National Railways is the baby of hon. gentlemen opposite. It was in 1917, under the war measures act of that day and under closure, that the Canadian Northern Railway became the property of the Canadian people. A price of 810,000,000 was paid for the shares of a railway which was in such financial condition that it had to be purchased in order to preserve the service. It was during a war that that expenditure was made, and I think I have some reason for saying that to a certain extent it is the child of most of those who criticize the Canadian National Railways to-day. Apparently they are blaming us
because we are not ready to strangle their own baby, because we want to provide for its growing up, because we want it to be able to take a proper place in the affairs of the country. That is the situation. The Liberal party is not responsible for it. We accepted the gift when we came into power in 1921; we undertook the task. I can recall the speeches that were delivered then.


Richard Burpee Hanson: Does the minister not remember the attitude taken by the then member for La Prairie-Napierville, who sat about where the minister now sits, and who said that he was going to give it away for a dollar?


Pierre-Joseph-Arthur Cardin: I remember that. I
remember quite well when the question was raised in the House of Commons in 1917. I was in the house at the time and I remember the bitter discussion that took place between the present leader of the Conservative party in the other house, and the Right Hon. Mr. Bennett. Those two gentlemen were not in agreement. In those days Mr. Meighen was advocating the purchase of the Canadian Northern and was using all the powers of his keen intellect to convince parliament that that should be done. He even went to Montreal in order to convince St. James street that it would be a good deal to buy the Canadian Northern. He was very effective in his argument and it was a pleasure to listen to him State his case. As a back bencher I was very much interested. But he got a strong reply from Mr. Bennett, who was full of enthusiasm in those days, as he always has been. He disagreed bitterly with Mr. Meighen. Many people in Montreal and in other sections of the country did not like the decision of the so-called union government in 1917 to acquire that railway, but they accepted it. Since that time the critics have never stopped trying to interfere-I repeat, not in this house-with the free and natural development of the Canadian National Railways. They have the same interests in mind that they had when they opposed the acquisition of the Canadian Northern.
The situation is not new. The arguments which are advanced to-day, are exactly the same as those that were advanced in those days. The same arguments have always been advanced at any time that the Canadian National Railways proposed something in the way of capital expenditure in order to better its position. It is the same position, the same thing. But now they add a new dement- the war. We are all ready to admit that during the war we must dispense with certain expenditures. But that policy should


Mr. COLD WELL:: This afternoon at one
o'clock I was going to make a few remarks, following the minister. I listened with a great deal of interest to the discussion this morning. When the promise that the station was to be completed in Montreal, was made 
during a by-election, I felt that a great disservice had been performed to the national railways. Having said that, I am not criticizing the completion of this project, because I believe the Canadian National Railways need a terminal which is a credit to the system. Several years ago when I was travelling west by train a gentleman from the United States was sitting beside me, and in the course of the discussion I asked him if he had ever travelled across Canada on the Canadian National railway. He said, "No; my impression is that it is a rather dilapidated institution." I said, "How did you get that impression?" "Well," he said, "I have seen its station in Montreal, and I thought the railway looked like a small affair,"-on account of the station at Montreal. As a matter of fact, of course, we know that the Canadian National railway operates, at least in its transcontinental service, as fine and as comfortable and as efficient a train with as good a service as can be found anywhere in north America. I believe therefore that the completion of the terminal at Montreal is justifiable from that point of view. Unfortunately, as I have said, the announcement of the construction was injected into a by-election, with the result that many people across Canada think that the government is fulfilling a pre by-election promise. It is unfortunate that that impression should be abroad.
With regard to the resolution now before us, expenditures upon the national railway have to be made in order to provide us with the efficient transportation service which we require. I am always suspicious when the national railway is under attack, because there are people in this country who would like to see the system taken out of public hands and returned to private control. But when we look over the record we find that the competing railway, efficient and privately-owned, has probably received, taking into consideration the times in which we live, greater, or as great financial assistance as the national railway has ever received.
The Drayton-Acworth commission's report in 1917 gave some figures which, I suggest, we might well look at occasionally. It will be found that to June 30, 1916, public subsidies to private railways amounted to $163,000,000; the proceeds of land granted, $158,000,000; loans, which were never repaid, $118,000,000; guarantees of securities, over $268,000,000, and the land grants exceeded 14,700,000 acres. If we examine the record of grants to the private railway with which comparisons are so often made, we find that gifts to the Canadian Pacific Railway alone amounted to $228,500,000, plus 11,482,132 acres of land valued by

C.N.R.-Guarantee oj Securities
the company itself at over $119,000,000. Our national railway system, or those who organized it after the various bankrupt institutions were taken over by the crown, have really done a remarkable job in welding it into a strong and efficient railway system. I am not going into the history of railway building this afternoon, but it will be recalled that when the government was constructing the transcontinental railway-the Grand Trunk Pacific linked up with the section built by the government across northern Quebec and northern Ontario-the same government at the same time was guaranteeing the bonds of a third transcontinental railway which was being promoted by Mackenzie and Mann.
If one looks back at the building up of the railway, nationally owned-or rather nationally controlled, for that is the more appropriate term, since we are really operating the railway not so much for the benefit of the people of Canada as for the interests that were on the verge of bankruptcy in 1917 and 1918-1 believe that the charges which are sometimes made of extravagance-and we have an inference of extravagance at the present time-may be regarded from the point of view that, if we compare the history of the two railroads, both have been guilty of certain extravagances, and that the one has no right to cast a stone at the other.
I was looking up some figures at noon to-day, and I found, for example, that between 1923 and 1931 over $450,000,000 of capital were expended on reconditioning the run-down railways which now comprise the Canadian National railway system. In the same period of time the Canadian Pacific Railway, which was in much better shape and had far less mileage, spent $253,000,000 for the same purpose. It was a period of reconditioning and rehabilitation of railways following the great war.
I have often heard criticisms of the Canadian National system on the ground of extravagance in the building of hotels. But again let us consider the comparative expenditures. The Canadian Pacific Railway, starting with $25,000,000 invested in hotel buildings, increased the investment to $48,000,000, an addition of $23,000,000. In a similar period of time the Canadian National Railways increased their expenditures on hotels from $10,000,000 to $22,000,000, an addition of $12,000,000. Let us keep this picture clearly before us.
There are still those to-day who advocate the amalgamation of the two railway systems. I have always opposed amalgamation because I believe that the propaganda in its favour has been put out by private interests who seek the control of our transportation systems.
I believe that the national road should be retained as a national asset, and that it is our responsibility to parliament to keep it out of politics in every particular. That is why I stated at the outset that in my opinion it was unfortunate and was a grave error to inject into a by-election the building of the terminal in Montreal. It may have elected an hon. gentleman; nevertheless it has caused a great deal of criticism all across Canada. Perhaps the hon. gentleman could have been elected without that promise. I do not know.
I support the bill in so far as it will further assist our railway system to meet the needs of the time; and in the expenditure of this money to make the railway more efficient I hope the government will take into consideration the promotion in every way of the business welfare of our own government road. I have no animosity towards the privately-owned road. It has rendered a great service to the country, but it has been very well paid for that service, and I trust that our national system will continue to render a still more excellent service than it has given in the past.


Richard Burpee Hanson: May I first of all extend my personal congratulations to the Minister of Transport (Mr. Cardin) on the vigorous manner in which he defended himself this morning. Time has not withered his intellect, whatever it may have done to his physique, and it was a pleasure to me to see him exhibit once more across the floor of this house some of that old fire which animated him in days gone by. I can safely say that as between us as individuals there has never been anything but the very best feeling, and if I made an attack upon him for the election promise he gave in the city of Montreal prior to the resuscitation of this Montreal terminal question, he will understand that I was attacking him as a politician and not as an individual.
In the course of his remarks the minister referred to .the birth of the national system. What he said in that regard was true. The system was set up by a former Conservative government on the theory, and because of the fact, that private interests had failed and that this country was at war, and that these railways could not or should not be allowed to go into the hands of a receivership at a time when the country's credit was being strained to its utmost to sustain a national war effort. That may have been a mistake; I do not know. I do not think I am in a position to judge, or that anyone is in a position to judge. At all events, that was the consensus at that time, and whether history



C.N.R.-Guarantee of Securities
has borne out the wisdom of that judgment I leave to hon. members to decide for themselves.
I do recall, however, having read with a good deal of intellectual pleasure the attacks that were made from across the floor of this house, from this place, upon the proposals then brought before parliament. If anyone wants interesting reading, I suggest that he read the speeches of D. D. McKenzie, house leader of the Liberal party when that legislation was brought into parliament. If he wants to come down to more modern times, let him read the speeches of the late Walter Mitchell in this house, delivered from that side of the house after the change of government in 1921. Let the reader see what he thought of the national railway system, and then reflect that later on the Liberal party sought to take into its bosom this orphan child which they would have condemned to death at the time of its birth.
We had better view this matter realistically. We have the national system and I think that as long as conditions are as they are to-day we shall have it. I do not want anyone to say that I am an enemy of the national system. I never have been. Personally I have consistently opposed the physical amalgamation of the two railroads. I am wondering, though, what will happen after the war. Some government may have to deal with a problem which was acute during the depression years. That is something we shall have to anticipate, and that is one reason why I want the management of the national railways at the present time to prepare for the rainy day that is bound to come, and if there is any possibility of doing so to set aside a reserve against the time which I think will come. Do not let anyone say that I have ever attacked the national system in this house. I have never had any professional connection with any railway except the national system. For ten years I acted as counsel for the system in the province of New Brunswick, between 1910 and 1921, and the former chief counsel of the railway did me the honour to say that I had won more lawsuits for the government railway system than any other counsel in any given period. I was proud of my connection with the national railways.


Mr. MARTIN:: They should have been proud of you.


Mr. HANSON (York-Sunbuiy):: Well, they paid me and I think they discharged fully their obligations to me as I endeavoured to discharge my obligations to them. My remarks with respect to the management in connection with the Montreal terminals are

based upon this theory. I know that a grandiloquent scheme was started by Sir Henry Thornton, estimated to cost $60,000,000, and having regard to the expenditures that were made at that time it would probably have run into far more money than that. The undertaking was stopped, of necessity, during the depression. I know the site was an eyesore in Montreal-that "ditch" as it has been called. There were operating difficulties, but they were operating difficulties which the railway encountered and overcame for a period of more than ten years.
It was always visualized, I believe, that either the scheme itself or something analogous to it would some day be completed. It is too bad that a start was made as a result of a political promise. The minister denies that. Shall I put it this way, that the management had an intelligent anticipation of the minister's wishes. That is the moit charitable view.


Pierre-Joseph-Arthur Cardin: It is a great compliment the hon. member is paying me.


Richard Burpee Hanson: I am complimentary to the minister. I have always been complimentary to him. He is of a mental and intellectual stature that commands my admiration. I dare say he is the most astute politician that ever came out of the province of Quebec. That remark is not uncomplimentary, and is not intended to be.
The resumption of this undertaking when the war broke out was astonishing. What was the government's policy with respect to all other public works? It clamped down on everything, in the interest of conservation of resources for the war effort. But this undertaking was not touched. That is what I am complaining of, and that alone. I could take hon. members down to the little city of Fredericton where an agricultural laboratory was being built. Some $7,000 was required to complete it, but the work was stopped, and unless great care has been taken the building must have greatly deteriorated. I understand arrangements were ultimately made to cover it in and save the structure. But no one has criticized that government policy. That was a proper course to pursue and is the course which ought to have been pursued in connection with the Montreal terminal. But they went on spending the money and are spending it now. Of course it would be silly to stop it at this stage and I am not suggesting that. What I was suggesting is that it could well have waited.
The hon. member for Temiscouata did me too much honour in suggesting that I was the instigator or father of the idea of union

C.N.R.-Guarantee oj Securities
terminals in Fredericton. What was the position there? Both railways enter that city; each had separate freight facilities and separate passenger facilities. The freight facilities of the national railway were incomparably better than those of the Canadian Pacific, and adjoined the Canadian Pacific tracks and yards. The Canadian Pacific Railway had a much better located passenger station. The officials themselves, in order to cut down expenditure during the war, met and agreed to combine the facilities. The arrangement was consummated before the public knew anything about it. The passenger facilities of the Canadian Pacific and the freight facilities of the Canadian National were to be used. It was a common sense arrangement, and has worked out well and to the satisfaction of the community, although the saving has perhaps not been as much as was hoped or anticipated. That is the sort of arrangement that should take place in a good many places in this country, with consequent elimination of duplicate services. All this question of amalgamation, or whatever you would call it, has receded into the background. No one hears anything more about it. Circumstances alter cases, and the question is not a live one to-day.
Coming back to the resolution, those of us who are not members of the standing committee on railways and shipping should have from the minister some definite information as to what really underlies this resolution. As I said this morning, a big railway system of necessity must have capital expenditures every year. It could not be otherwise. A portion of these capital expenditures is for refunding operations. These happen every year. But the membership of the house should be informed as to every aspect of the proposal underlying this resolution. And I am asking for information with respect to the refunding of equipment trust certificates.


Pierre-Joseph-Arthur Cardin: In the absence of the Minister of Finance I can give to my hon. friend at least a part of the information he seeks. But before doing so I cannot help expressing my thanks for his kind words in regard to myself and the little I have been able to achieve in my political life. I hope hon. members will understand that I am not as bad as he pictured me by overwhelming me with all kinds of compliments in regard to my political sagacity.	[DOT]
The amount of $29,414,206 which is required by the Canadian National railways for the year 1941 compares with an amount of $21,000,000 in 1940 and somewhat similar amounts which have been provided by parliament as far back as my recollection goes, up to 1937.
14873-224J
The first item is additions and betterments. This represents a proposed expenditure of $15,691,257. The second is new equipment purchases, $13,270,206. The new equipment which is required by the railway is requested mainly on representations made by the Department of Munitions and Supply and the war departments, which state that the traffic that will have to be moved during 1941 will exceed by a very large amount the traffic moved by the railway during 1940. As a result of examination of the requirements for munitions and war materials it has been represented to the railway that the amount of freight they will be expected to move during 1942 will exceed by far that which is expected for the year 1941. Basing their estimates on these representations, made to them by those who are supposed to know, as to the volume of freight that the railway will be called upon to move, it was decided by the management that they should provide additional cars and locomotives required for the movement of that additional traffic.
Next is the acquisition of securities, amounting to $340,000. I can give the details of those securities. They are: Atlantic and St. Lawrence Railroad Company, Toronto Terminals Railway Company, Northern Alberta Railways Company, Chicago and Western Indiana Railroad Company; total $340,000.


Richard Burpee Hanson: Are these annual accruals, or are they buying these securities in?


Pierre-Joseph-Arthur Cardin: No, they are annual. We provide also for maturing capital obligations, sinking fund and equipment payments. The amount of that item in round figures is $9,378,000. If my hon. friend desires I can give a list of the maturing capital obligations.


Richard Burpee Hanson: That is
the $9,378,000?


Pierre-Joseph-Arthur Cardin: Yes.


Richard Burpee Hanson: I have that here. Just on that point, if the minister will refer to page 5 of the Canadian National budget for 1941 he will see the heading, "Retirement of maturing capital obligations, sinking fund and equipment principal payments". Then follows a tabulated statement of the different issues, beginning with April 16 and running down to December 31. I see an issue dated May 1, of Canadian National four and a half per cent equipment trust certificates amounting to $1,000,000. Is this particular issue a serial maturity falling due May 1, 1941, issued to buy equipment in days gone by, which ordinarily, under railway practice, should be paid out of earnings? I am just '[DOT]*hing that as one illustration.

C.N.R.-Guarantee oj Securities


Pierre-Joseph-Arthur Cardin: I do not think I could do better than read from the evidence of Mr. Cooper, comptroller of the Canadian National, as it appears at page 96 of volume 2 of the minutes of proceedings of the railways and shipping committee:
This, of 'course, is purely a financial transaction. We are paying off funded debt, and repayment of funded debt has no effect on the income statement as such. It is simply a reduction of the funded debt liability account. If it is in your mind, for instance, that these annual instalments represent an annual charge to the operations for the wearing out of the equipment against which they were issued, then I think your idea is wrong. The charge to operations with respect to the wearing out of the equipment itself is taken care of by the charge for depreciation. ,


Richard Burpee Hanson: What is the position of the charge for depreciation on all the rolling stock?


Pierre-Joseph-Arthur Cardin: The estimated depreciation reserve increase for 1941 is $9,269,257, of which only $2,069,257 is going to be required for what is called physical retirement of stock. The balance of $7,200,000 is to be used for capital expenditure; and the bill which will be presented after the resolution is adopted will provide for the utilization of that balance of $7,200,000. I am told that it was agreed in 1940 that no sinking fund should be kept by the railway, that they should not invest the amount of money they might put aside in the depreciation account; but that if they required it they would have that fund for capital expenditures. The money would be there; it would be money or material acquired or purchased.


Richard Burpee Hanson: The minister said the reason for the large amount requested for capital expenditure was the need for new equipment. I direct his attention to page 3 of the railway budget, where I find this item: "New equipment purchases: Canadian National Railways: Freight cars, 125 ore cars." Is that a war requirement? "100 overhead refrigerator cars." Is that a war requirement? "250 70-ton triple hopper cars." Is that a war requirement? "200 52-foot flat cars." I would assume that to be a war requirement. Then there are to be purchased 25 air-conditional first-class coaches; 7 steel mail and baggage cars, and 8 second hand coaches. Are these coaches being bought in the United States?


Pierre-Joseph-Arthur Cardin: Yes.


Richard Burpee Hanson: The only item covering new locomotives is for the Grand Trunk Western, who are buying 25 locomotives and a very substantial number of

freight cars including 200 50-foot auto cars. I hardly think the budget bears out the minister's explanation with regard to war requirements.


Pierre-Joseph-Arthur Cardin: I was not expressing myself very clearly if hon. members understood me to say that all this was justified only in connection with war purposes. I am told by the technical officers of the Canadian National that they are short of equipment for the ordinary work of the railway as well as for war purposes. * They are short of passenger coaches, for example, even now; they are also short of those types of freight cars to which the hon. gentleman has just referred. If we want to cope with the present situation in regard to ordinary traffic, and also in regard to war traffic, we must have this equipment not only in Canada but in the United States. If the war had not occurred we would not require as much equipment, but these purchases are necessary partly for ordinary purposes and partly for war purposes.
My hon. friend mentioned the locomotives. We are providing for the transfer to Canada of twenty-five locomotives which are not entirely suitable to meet the necessities of the service on the lines in the United States but which will be quite sufficient to meet the necessities of the service in Canada. Therefore we are proposing to have twenty-five additiqnal locomotives built in the United States for service in that countiy. We propose to do this under an equipment trust by paying a certain amount of cash, as my hon. friend mentioned in his opening remarks this morning, and the balance in instalments. We are not building twenty-five locomotives in Canada. We could not, in war circumstances, readily build them here.


Richard Burpee Hanson: That position is unquestionable. I agree that the railway must have new rolling stock.


Pierre-Joseph-Arthur Cardin: Exactly. But I do not want to be taken too literally when I say this is required exclusively for war purposes. I may have gone a little too far in what I said previously in that regard, but the main expenditure is to cover the necessities of the war.


Joseph Henry Harris: My first observation is that I do not feel disposed to join in the mutual admiration society which occupied so much time, this morning. I hope the minister will understand that, and accept what I now say in the spirit in which it is offered.
For the last decade, ever since we first set up the committee on railways and shipping, time after time we have asked the management of the Canadian National Railways to set their accounts in the same order as obtains

C.N.R.-Guarantee oj Securities
in respect of class one railways in the United States. It has been suggested that they set up the depreciation necessary to take care of wear and tear, so that we might have at least some comparative statement when we were considering the statement presented by the management of the railways, and that which is placed before our committee.
At long last we have a recommendation in the report before us. The resolution states:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $29,414,206 in principal amount to provide the moneys necessary to meet capital expenditures made or capital indebtedness incurred during the calendar year 1941.
When one considers the first sentence in the resolution he must remember that when the report of the committee on railways and shipping passes the house the auditors will have mandatory powers to set up a depreciation account, in accordance with the rules of the interstate commerce commission, which governs class one railways in the United States. The amount of depreciation mentioned at one point is $11,307,000. I am of the opinion it will be a good deal more than that. That will immediately find its way into the liquid position of the railways. As I gathered from the minister's remarks, it can be used for capital expenditures, and it is possible that it should be used in that way. Nevertheless, it must be earned, and if, as the minister intimated, it is not going to be invested, and will go into capital expenditures, then I have no complaint. But if it is set up on the balance sheet as being earned, and then invested, I say to the Canadian National Railways: "Do not come back to the house next year and ask us to discharge the entire deficit, a portion of which would be accumulated from the mandatory powers asked for by the auditors in setting up depreciation reserve."
Further on in the resolution we find these words: "To authorize the making of further temporary loans to the said company for interim deficits." If this depreciation practice is proceeded with during 1941 there should be no necessity of further temporary loans to the company to take care of interim deficits, or for loans to be reimbursed from the annual revenues; use the depreciation reserves. That is all I have in my mind with regard to that part of the resolution.
Let us consider the very necessary additions to rolling stock, a condition which has been brought about by the war. Page 6 of the annual report of the Canadian National Railways sets out w'hat is required to meet anticipated war requirements. Then it adds
that the following equipment was acquired: 5 mail express cars, 4 coaches, 25 baggage cars, 60 refrigerator cars, 150 ballast cars, 15 cabooses and 21 work units. Evidently that is just for the ordinary use of the system throughout Canada, and is not necessarily related to war requirements.
I have in mind a constructive suggestion, and I am wondering if the idea I shall place before the committee has been explored. It would seem that the increased service which the Canadian National Railways have had to give because of war requirements cannot be chargeable entirely to Canadian account. A good deal of the extra traffic which to-day is carried on the Canadian National Railways arises from United Kingdom purchases in the United States. Purchases made in the mid-western states pass through Chicago and then through Canada to seaboard, and are carried in equipment of the Canadian National Railways. When our railways are transporting United Kingdom purchases in the United States they collect their toll, and thereby their revenue position is improved. Have we explored the possibility of charging to the Hyde Park agreement or to the lease-lend bill the cost of the extra equipment required to perform that service for the United Kingdom? If they were so charged could we avoid the necessity of making these further purchases of equipment, or of having our friends in the United States lend such equipment to us?
I have in mind the fact that taken as a whole our equipment is in good condition. With the cessation of hostilities the extra business we are now enjoying will disappear, and we shall have on hand a tremendous amount of equipment. That will have to be paid for, and it is possible that at the close of hostilities we may not be in too good a position to make payment of our maturities.
May I make one or two observations respecting attempts made in this chamber to get some conception of what is involved in the publicly-owned railway, and what was in the minds of some of us respecting the railway itself. The hon. member for Rosetown-Biggar (Mr. Coldwell) said he believed there were some who would still like to see this property revert to private ownership. When he made that statement someone in this corner interjected, "Where would they get the money to pay for it?" My opinion is that private funds are not available in sufficient quantities in any one repository, or in any group of privately-owned organizations, to purchase the Canadian National Railways.


Major James William Coldwell: I was referring to
private control.

C.N.R.-Guarantee of Securities


Joseph Henry Harris: I shall say more about private control in a moment or two. The. suggestion I am about to make may meet with the approval of the hon. member for Rosetown-Biggar. I make it after listening to debates in the house with respect to the Canadian National Railways during the last two decades. I am not going to trace the history of the railways for twenty years, but I know that I first sat in this chamber as the result of an election during which on every platform in my railroad constituency I advocated the public ownership of these more or less disjointed railways. I suggested that they become one entity, so that they might be of some real service to Canada. At no time have I changed my position-and 1 am still here. But at the same time, those of us who have followed that course consistently for twenty years cannot help hearing, ringing in our ears, the words, "Sell her for a dollar." That is what we heard for ten years from my hon. friends who now sit to the right of the Speaker.


Pierre-Joseph-Arthur Cardin: From one.


Joseph Henry Harris: But the cheers echoed right across this chamber, the "hear, hears" and the "yea, yeas". In those days the minister was not charged with the responsibility of the conduct of the Department of Transport, and at least he did not dissent. I cannot recall any dissenting speech on his part. However, I am not going to thresh old straw; I merely mention this to show that it is impossible to keep a problem of this kind out of politics. I use the word "politics" in the higher sense, if it is possible to use it in that way. When a minister makes a statement, whether in St. Henri or elsewhere, whether he is the head of the Department of Transport or of any other department, his voice is listened to across Canada as well as in the province of Quebec. Those who are charged with the management of the railways, from the personnel on the payroll up to the directors, do not need to throw up a straw in order to see which way the wind is blowing. They cut their coat according to their cloth, as we all know. It is just plain common sense; it is an attempt to follow out the ideas which emanate from this house and which are announced by those who occupy the treasury benches.
If that is so, and we will admit it, speaking on my own responsibility and not for the party with which I am associated or for any other group, I make this suggestion. The minister more or less sits in with the directors of the railroad. There is a number of groups in this house; why not appoint from time to time two members of this house to act as directors

of the Canadian National Railways for a dollar a year? Why not let them sit in with the directors and become acquainted with the railway problem? I hesitate to use the word "farce", but that is what it really is when we are asked in the short space of two or three weeks to try to analyse the statement and to know all about the Canadian National Railways.


Mr. JACKMAN:: Two or three days.


Joseph Henry Harris: 
Pierre-Joseph-Arthur Cardin: I referred to propaganda outside the 'house.


Joseph Henry Harris: I recall that the minister referred to propaganda outside the house. I submit that the foundation of the propaganda outside the house and the propaganda itself are two different things. Let me speak first of the foundation for the propaganda. In 1917 we had a number of disjointed railway lines spread across Canada and the people who depended upon those lines for their connection with other parts of Canada expected that they would continue to operate. Some lines served very remote parts of the country, and the people expected that the service would be maintained. There was a universal demand that these lines be placed under public ownership. That was the condition then. The condition now is that we have a rather good system. It is an expensive system, and portions of it are not economical, but in the main it is a good system. It is a good system because we have been extravagant during the last decade in the purchase of equipment. The rails upon which the heavy cars and engines operate have been renewed, and in the main the system is in first-class order, certainly as compared with its condition in 1917. With regard to to-day's expenditure I come to my next point. There is a marked difference between conditions then and conditions now. In 1918 the United States was in the war. When the war was on and after, the New York market was open for borrowings, and we did borrow millions; we got into the billion figure. We were able to get all the money we wanted-quick money with which to discharge our obligations at that time.
The position to-day has entirely changed. Due to the neutrality law of the United States, the Johnson act, our friends in the United States are unable to lend us money. It is true that they have gone a long way in
helping us with the lease-lend bill, and I hope the railway system will take advantage of anything they can obtain in the operation of that legislation. But that is not enough. We are still short of several hundred million United States dollars, and while the present acts are on the statute books at Washington, we have no place to go to get that money. So to-day, as I say, we are forced by sheer necessity to avoid all possible capital expenditures in the United States for railway supplies. Down in the maritimes, instead of doubletracking their road they are putting in safety equipment to the amount of a million and a half dollars, with the intention of assisting the movement of freight. The minister knows, I believe, the item I am referring to. Where is that equipment coming from? Rochester. How is it paid for? With United States dollars. There is a direct obligation upon the foreign exchange control board to provide a million and a half United States dollars. The degree of that necessity, in my opinion, should be measured against the necessity of providing United States dollars for war equipment, and the question should be given very serious consideration.
I turn to the next point, having reference to retirements of obligations which are coming due. As the statement is drawn this year, there is no analysis showing what part of this money has to be paid in Canadian dollars, or in sterling, or in United States dollars. For our convenience all these sums are shown in the same kind of currency. The minister should make a statement of exactly how many United States dollars we shall have to find this year, not only to meet the purchases which are being made, but to retire maturing obligations. As I have said on a previous occasion, every possible United States maturity should be renewed rather than paid off. I made a general criticism of the conduct of the treasury benches during the last three or four years, and part of that criticism is related to the Canadian National railway accounts. The first war cloud showed up some four years ago, or it may be more exactly dated about three years ago, when the Prime Minister made a statement to that effect, and the mistake which the treasury has made ever since that time was in not seeing to it that every dollar coming due in New York from then on, instead of being paid off, instead of our banks and insurance companies using the money we had in our tills to pay it off, and then tying up the cash by floating more Canadian bonds, should have been renewed. The net result of that mistaken policy is that to-day our till is bereft of liquid capital, and a great deal of that bereavement is chargeable to the fact, that,

C.N.R.-Guarantee of Securities
not only the railway maturities but all other maturities which have come due in New York during the last three or four years, were paid off Instead of being renewed. They were paid off because our banks and insurance companies were short of investments and thought they would like a few more Canadian bonds. And now, those obligations having been paid off, and having no chance of borrowing in the United States, we must endeavour at this late day to renew any obligations which are maturing in the future. There are very few such, but I emphasize that, no matter how few they are, they must be renewed in New York if at all possible.
To summarize the ideas I wish to leave with the minister: Conserve every possible United States dollar for the purchase of essential war equipment, even if you have to put a check-rein on the directors of the Canadian National Railways. Keep in mind the possibility of using the lease-lend bill operations for the carriage of United Kingdom purchases, whether it be the expense of carrying the material or the capital cost of the extra equipment necessary to carry it. Borrow as much equipment as you can in the United States and avoid the necessity of new purchases. And then-speaking personally for the moment-give consideration to placing on the board of directors of the Canadian National Railways two, or three, or if necessary even four, members of parliament so that they can take a special interest in the people's railway problem. After all it is the people's problem. Our directors, who are doing a good job for us, perhaps have not the same perspective as we have here, and they have no more responsibility than we have. In turn, we could interpret their ideas, perhaps, a little more ably and accurately to our fellow members of this house; the family might be a little happier, and they would not be coming here so anxiously to get their legislation passed and get away, if they have to sit morning, noon and night, to accomplish their object.


John Ritchie MacNicol: May I ask the minister if anything in the resolution refers to the Hudson Bay railway?


Pierre-Joseph-Arthur Cardin: No.


John Ritchie MacNicol: I notice this sentence
in the resolution:
-to make provision for the purchase or refunding of capital obligations of the company or of any company comprised in the Canadian National Railways system. . . .
The Hudson Bay railway is operated by the Canadian National Railways, is it not?


Pierre-Joseph-Arthur Cardin: No, it is not covered. It is not a part of the Canadian National railroad
system.


John Ritchie MacNicol: Where is it covered?


Pierre-Joseph-Arthur Cardin: It is operated by us, but it is operated as a separate organization.


John Ritchie MacNicol: There is a large defiicit on the Hudson Bay railway.


Pierre-Joseph-Arthur Cardin: It is not provided for in this particular resolution.


The CHAIRMAN:: There is an item in the estimates for the Hudson Bay railway.


Thomas Miller Bell: In the purchase of
equipment, rolling stock, and so on, does the railway buy the equipment outright? Does it rent a considerable amount of equipment, or does it buy it on time? Is it financed by one of the United States finance corporations, such as the American Guarantee company, the Chase National bank, or a similar institution? I have seen on certain of our engines a little plate stating that the engine is the property , of one of these organizations. It has always seemed to me that a government institution, at least, should not be buying on an instalment plan, with the interest and other charges which are involved in that form of buying. Is any of our equipment purchased in that manner? If so, why should we do that, when it is a government institution ; and, particularly at this time, why should we be paying dues to a United States corporation, in view of all the difficulties of exchange? If we are doing that, why not pay the balance owing and discharge ourselves of obligations which cause a good deal of concern at the present time?


Pierre-Joseph-Arthur Cardin: My understanding, Mr. Chairman, is that we only supply or vote the money to the Canadian National, and they themselves buy the equipment they require. I am informed that for a very long time there has been no issuance of money for the purchase of anything in the United States.


Major James William Coldwell: I do not mean buying in the United States; but do we purchase any equipment through finance corporations of the United States?


Pierre-Joseph-Arthur Cardin: No. The railways do that directly, and they own outright anything they buy.


Richard Burpee Hanson: That is
hardly correct. Under Sir Henry Thornton the Philadelphia plan did operate, and it is still operative, although no new financing may have been done, in that way. This is a well

C.N.R.-Guarantee of Securities
understood plan much in favour with the railways, and it has its advantages in financing the purchase of railway equipment. All railways do it, and they know their business in respect to matters of the kind. I am not criticizing it. All I suggested was that we had not paid annual instalments out of operation but refunded these amounts, and they are allowed to go into the debt of the railway. They were in days gone by, at any rate, and they will be there long after the equipment is worn out. It is not good business.


Pierre-Joseph-Arthur Cardin: We are at present providing, out of the fund which will be accumulated this year, $9,000,000 for the retirement of equipment.


Richard Burpee Hanson: For two years they have been doing it.


Pierre-Joseph-Arthur Cardin: I do not think I can say very much in answer to the hon. member for Danforth (Mr. Harris). He made certain representations that may be well worth considering, and I cannot go further than to say that I will make note of them. My hon. friend complains about the provision, in the bill which is to be introduced, for the temporary deficit in the operation of the railway. This is necessary because, as I am informed-I have a good deal to learn in these matters-in the first part of the year the Canadian National Railways cannot meet out of cash all expenditures, but by the end of the year they have sufficient revenue to cover advances made them by the government to meet a temporary deficit.


Richard Burpee Hanson: They have a large working capital.


Pierre-Joseph-Arthur Cardin: No. That is the explanation given me. The hon. member for Danforth also referred to the fact that the central traffic control, which was proposed to be established in the maritime provinces, was United States equipment and had to be paid for with United States dollars. That is perfectly true, but we could not procure the equipment elsewhere. What is the position of the minister or even that of the directors? To whom can they go for proper information to guide them in their decisions? They have only one course to follow, and that is to give heed to the' representations made to them by the officers and the technical employees of the company. If they do not go to these informed persons, to whom can they go? It is all very well to say that our judgment in parliament may be as good as the judgment of a man working for the railways. On certain questions I entirely agree with that view. But when it comes to 14873-225
technical matters, to purely traffic questions, I must confess that I do not feel qualified to balance my judgment against the judgment of the technical officers of the railway. We must take someone's word if we are to have a proper administration of the railways.
My hon. friend also complained that the procedure in the railway and shipping committee was not very satisfactory, that we are looking into accounts after the expenditure is made. That is true, but I wonder how it can be avoided. Speaking almost entirely as a layman, I submit that the Canadian National is more closely watched in its expenditures than any privately-owned organization, because at a meeting of a great corporation-we all know what it is-the shareholders have not the same means or facilities for acquiring information, nor have they the requisite audacity to go through all the statements of expenditures and to crossexamine the officers of the concern, as members of parliament have an opportunity to do. It is true there have been delays, and we have always had some complaints in that respect. There may be room for improvement there. Taking the system as a whole, however, while it may not be perfect it is to a large extent quite efficient, and provides the proprietors, the Canadian people, with a greater amount of detailed information than the ordinary shareholder of any large private organization ever receives. There may yet be room for improvement. I am not disputing my hon. friend's suggestion.


Joseph Henry Harris: Simply to preserve the sequence of the record, may I point out that this statement was issued at Montreal on March 19 and two months and one day thereafter, May 20, members of this house began to consider it. Why should there be a delay of from one to three months in every year?


Pierre-Joseph-Arthur Cardin: I am not objecting to my
hon. friend's observations, nor am I prepared to say that there is no foundation for some of his criticisms. I am speaking of the situation as a whole and I am trying to explain that with all the imperfections of our organization in connection with the Canadian National the people of Canada are more fortunate than the ordinary shareholders of any large private organization in the country.
The hon. member for Danforth said that we should renew the bond issues that we have in the United States instead of discharging them, because that will cost more. I understand that at present we are experiencing some difficulty in making new issues in the



C.N.R.-Guarantee oj Securities
United States on account of the neutrality act and other impediments and difficulties that exist there.


Joseph Henry Harris: The neutrality
act provides for the renewal of maturities.


Harry Rutherford Jackman: I wish the minister would clarify some figures with regard to the Montreal terminal. I may tell him that in Toronto the building of the Montreal terminal at the present time is a cause of considerable grievance, so much so that I ask the minister to give me figures. When I was in Toronto during the Easter recess I found myself in the position of having to defend the Liberal government. Everyone said, what about the Montreal terminal? I should like the minister to give me a good brief in the matter. In particular the minister made the statement that it was a shame to have this tremendous uncompleted asset in Montreal in such a state that it could not be used unless a few more millions, I think $2,000,000 was mentioned, were spent upon it; if that were done, it could be made useful. I find, however, according to sessional paper 92D tabled on March 26 last, that the sum of $3,599,000 was spent on the Montreal terminal in 1940. We are appropriating $4,100,000 to be spent during the present year. On top of that the dominion government appropriated under the heading of unemployment relief a further $1,500,000 which was spent partly in 1939 and partly in 1940; I think it is all spent now. Altogether that makes the substantial sum of $9,200,000 to complete the Montreal terminal since the beginning of 1940-we leave aside the few months of 1939 following the declaration of war. If my figures are correct it is quite evident that this very large sum was spent to complete the terminal during the last two years, which sum might better, in the judgment of many of us, have been retained for war purposes and the completion of the terminal left until the war is over when we may need to find work for the returned men.


Pierre-Joseph-Arthur Cardin: When I said that $2,000,000 would complete the Montreal terminal I had in mind new expenditure, new disbursements.


Richard Burpee Hanson: New
commitments?


Pierre-Joseph-Arthur Cardin: 
Richard Burpee Hanson: How much will that expenditure exceed the estimate that was made on the modified scheme?


Pierre-Joseph-Arthur Cardin: I am afraid I could not answer that question at the moment. I have not the information before me.
There is something more that I should give the committee to make the picture complete. Besides the expenditures that have been made since 1939, which I have just mentioned, there was in the fiscal year 1938-39 an expenditure under vote 631 of $30,449.52, and under the estimates for 1939-40, vote 586, an expenditure of $1,500,000 on the terminal under unemployment relief. In order to provide work in Montreal the government decided then to contribute half of the labour cost, of the work. These amounts of $1,500,000 and $30,000 are in addition to the figures I have just given.


Richard Burpee Hanson: Nearly
$12,000,000?


Pierre-Joseph-Arthur Cardin: Yes, and that was the estimate made at the time the project was revived in 1939 and the plans revised-that it would cost in the neighbourhood of $12,000,000 to complete the work.


Mr. HAZEN:: I should like to say a word and make a suggestion to the minister. The improved earning power of the Canadian National Railways last year was not due to any normal growth of business, nor was it brought about by any improvement in the management of the railway. It was due to an abnormal condition brought about by our war effort. We have no reason to believe that this increased business will continue after the war is over; on the contrary we have every reason to believe that after the war railway business will return to its former level, conditions will be difficult and we shall be faced with hard times. My suggestion is that the minister and the government should give consideration now to the problem that will confront the Canadian National Railways when the war is over, and should make plans to meet it. The time this problem should be considered is now, when conditions are

C.N.R.-Guarantee of Securities
comparatively good. The government should not neglect the matter because it is not pressing at the moment.
I had the honour of being a member of the standing committee on railways and shipping. When the president of the Canadian National Railways was giving his evidence before the committee I asked him this question:
Are the directors looking ahead to the time when peace will come again, with a view to adopting methods or policies to improve the position of the railroad after the war?
In reply the president said:
I think the experience of the war in respect to the increase in traffic and the improved financial result clearly indicates that what is wrong is the lack of traffic, and I do not see what the directors can do about that after the war, as it will depend entirely upon the conditions that obtain at that time.
I then asked him:
In all probability after this war we will experience a depression and be up against hard times. Are you looking forward to improving that situation at all? Have you considered it?
His reply was:
My point is this: I do not see what can be done on the part of the directors or anyone else to anticipate that condition. We do not know what it will be, and if the circumstances are such that the traffic is greatly reduced I do not know how the directors or anybody else can produce the traffic.
To suggest that if we cannot get enough traffic we shall not be able to do anything, that we shall just have to go behind, as I understand we did go behind at the rate of about a million dollars a week, in my opinion is to adopt a defeatist attitude. I do not think the government want to adopt that attitude. This is a problem to which the minister and the government should give attention now instead of waiting until after the war, when it will certainly have to be faced.


Mr. JAQUES:: The leader of the opposition has objected to this bill because, as he says, it is likely to interfere with our war effort. I think that is a very reasonable stand to take.


Richard Burpee Hanson: I did not object to the bill. I think the bill is inevitable, but I wanted certain information about it.


Norman Jaques: He objected to the rebuilding of this station; I believe that was a reasonable stand to take, and I agree with it. The hon. leader also said that it would be a good thing to leave all these projects until after the war, when they could be used to absorb some of our unemployed. The hon. gentleman who just took his seat referred to the inevitable depression that will follow this war, but what guarantee have we that 14873-225 V
the next depression will be regarded at all differently from the previous one? Before the luncheon recess the minister said this station had not been built before the war because of the depression. And why was nothing done during the depression? There was only one reason. Here were hundreds of thousands of men willing and able to do the actual construction work; miners, steel workers and so on all down the list, were looking for work, but nothing was done. Why? There was only one answer: because there was no money. And there was no money because, as the Minister of Finance told us on Monday afternoon, neither the government nor this house has any control whatever over the financial policy of this government. That is the reason.


Mr. ILSLEY:: I deny that I made that statement, Mr. Chairman.


Norman Jaques: Well, the Bank of Canada controls the financial policy of this country, and certainly the Minister of Finance told us that neither his department nor this house had any control whatever over the financial policy of the Bank of Canada.


James Lorimer Ilsley: I deny that I made that
statement. I said the government had no control over the internal operations of the Bank of Canada.


Mr. JOHNSTON (Bow River):: Oh, no.


James Lorimer Ilsley: Well, if I did not say that I meant to do so. We were talking about the internal operations of the bank at that time. I find that this matter was discussed at great length in the banking and commerce committee of 1939, and at that time the phrase used was "day to day operations." I had no intention of announcing any change in the policy that was laid down at that time. The distinction between having something to say about monetary or financial policy, and the government controlling the day to day operations of the Bank of Canada, was made very clear in 1939. Just before six o'clock the other evening I was the object of some rapid questioning here, and it may be that I went further than I should have gone. I have not looked at Hansard to see what I said, but I want to say to the members of the Social Credit party right now that I do not want them to attach any significance to any statements I made at that time in so far as they were at variance with the clearly established rule and policy laid down in the banking and commerce committee in 1939.


Norman Jaques: I am not blaming the minister, but I should like to quote his words.

C.N.R.-Guarantee of Securities


Thomas Vien: The hon. gentleman must accept the statement of the minister as to what he meant.


Norman Jaques: I accept his statement as it appears in Hansard.


Thomas Vien: The hon. gentleman cannot accept Hansard as against the statement of another hon. member of this house. When an hon. gentleman says that he made p, certain statement, and that what he said was so and so, any other hon. member must accept what he says.


Richard Burpee Hanson: If the record is the other way I would raise a point of order at once.


Thomas Vien: Hansard is not the record of the house; and Hansard cannot prevail against the statement made by an hon member. Hansard is only for the convenience of the' public; it is not the official record of the house, and under the rules no one can challenge a statement made by an hon. member as to what he did or did not say.


Norman Jaques: Then this makes the case even worse, because if the government had control-


Thomas Vien: Furthermore it is not permissible to quote anything said during a debate, other than the one now proceeding, which took place during the present session.


Norman Jaques: I am not quoting from Hansard; and of course I must accept the minister's word. But having done that I say that if this government and this house had complete control of the financial policy of this country, that makes the case even worse. Not only did this policy of deflation prevent the construction of this station and hold up every other public work that should have been and could have been done when we had the men and the materials available; it also prevented us from rearming in order to meet the challenge that we must have known was coming. Let me quote from a letter written to the London Times by Admiral of the Fleet Lord Chatfield, with regard to the loss of the Hood:
The Hood was destroyed because she had to fight a ship twenty-two years more modern than herself. This was not the fault of British seamen. It was the direct responsibility of those who opposed rebuilding of the British battle fleet until 1937, two years before the second great war started.
It is fair to her gallant crew that this should be written.
The reason the navy was not rebuilt was the same reason the station was not rebuilt- because they had no money.
[Mr. Jaques.l
Let me quote the words of a Conservative member in the British House of .Commons uttered on April 9, 1941, during the course of the budget debate. Remember, this was a Conservative member-not a socialist or a social creditor. He said this:
There has been a lot of talk about the period after the war. Many think it premature to discuss what will happen after the war. I think it right to do so. We have the lessons of the last war before us. I well remember coming back from France in 1919. This country was richer and had a higher prestige than ever before in its history. We had the greatest navy, the greatest air force, and the finest army in the world. We had the land of England better cultivated than it had been for two generations. We had more skilled mechanics, more skilled shipbuilders, in the country with magnificent new factories and machinery. The whole world was clamouring for our goods, and primary producers throughout the world had good incomes because prices were satisfactory, and they could pay for our goods, and they were demanding our goods. Our position was of immense wealth, but financial theory said: "You are poor," and for 20 bitter heart-breaking years we laboured to make the actual facts fit financial theory. Prices of primary producers throughout the world were forced down by our financial policy of deflation, we ruined the farmers of the world and the farmers of our own country. We destroyed shipbuilding yards, pulled down factories, scrapped machinery, forced our skilled mechanics and artisans to migrate to America and the Dominions; we made the soil of England go out of cultivation and become more derelict than it had been for hundreds of years. And at the end of 20 such years of bitter and hard work, we had made the actual facts fit the financial theory, and we were poor indeed and unable to keep up adequate armaments, and our prestige sank almost as low as it had ever been.
May I again remind the committee that these words were uttered by a Conservative member of the British House of Commons. One might say that anyone speaking there is facing death at any moment. In fact it was shortly after those words were spoken that the House of Commons met with the same fate as the Hood-and for the same reason.
There is a confession. When I hear any hon. member either on this side of the house or on that side make a similar confession, I shall have some faith in what is intended for this country after the war is over-and not before.


Mr. CASTLEDEN:: I was interested to hear the minister tell us in his usual impassioned way how fortunate we were as a Canadian people to be shareholders in the Canadian National Railways. I believe the records will prove that our fortune has been largely limited to the matter of paying annual deficits.
I notice in the resolution that we are asked to authorize the governor in council

C.N.R.-Guarantee oj Securities
to guarantee the principal, interest and sinking funds of securities issued by the company for certain purposes, and to authorize the making of temporary loans to the company, secured by such securities, and not exceeding $29,414,206. At what rate of interest will this money be available?


Pierre-Joseph-Arthur Cardin: I am afraid I cannot
answer that question. It will be at the market rate. I cannot say just now what the market rate will be.


George Hugh Castleden: I take it, then, that these securities will be sold through the ordinary channels at the ordinary rates, through some commission agent in the usual manner.


Pierre-Joseph-Arthur Cardin: It will be done in the usual manner.


George Hugh Castleden: What will be the
approximate guaranteed rate of interest?


Pierre-Joseph-Arthur Cardin: I am afraid I cannot answer that.


George Hugh Castleden: Not even within 2 per
cent?


Pierre-Joseph-Arthur Cardin: No.


George Hugh Castleden: It seems too bad we
cannot have that information,' because the resolution provides for the guaranteeing of the interest and principal of securities. I had expected to hear someone ask why we had to go on the open market for this money- money which will be guaranteed by the federal government, and which would be an absolutely gilt-edged security. Why should we have to pay interest to outside concerns? I cannot understand it. Why not use our own Bank of Canada? The people of Canada are beginning to wonder why we should have to pay interest from our tax revenues on guaranteed funds, when we are borrowing money guaranteed by this government. There can be no reason. Why should there be rates of interest, and why should we not know what rates we are going to guarantee?
The resolution provides for an expenditure of $29,414,206. It seems to me we are going to be buying up materials and using labour which, we are given to understand, is desperately needed at the present time. Until we are on the safe side in respect of production of armaments and effective equipment for our men, the using of this material and labour is almost sabotage.


Mr. GILLIS:: The resolution states that
a portion of the money will be used to authorize the company to pay supplementary contributions to certain railway employees' provident funds. I should like to have a brief description of what these funds are. Are they
pension schemes to which contributions are made by the employees? I have had correspondence which would seem to indicate that there has been some pretty mean administration in respect of employees' pensions paid by the Canadian National Railways. Of what do these railway employees' provident funds consist, and how are they administered?


Pierre-Joseph-Arthur Cardin: I regret that I am not in position to give complete information as to that, but I shall undertake to give it when the bill is under consideration. Speaking from recollection, I understand that this is a contribution to assist a fund which is not in position to sustain itself. I believe I have read somewhere that most of this fund has been invested in securities which are now frozen to a certain extent and cannot be used satisfactorily to meet pension obligations. The government is contributing to that scheme of pensions in order to keep it working during the period when the assets are frozen.


Richard Burpee Hanson: About
how much is going into the fund?


Pierre-Joseph-Arthur Cardin: I am informed that this provide only for authority to the company to make contributions out of revenues, that none of this $29,000,000 is to go into the fund.


Olof Hanson: Upon a reading of the resolution I think that will be found to be correct.


Clarence Gillis: If this is a contributory Scheme, and if the government assists in supporting it, what representation has the government on the board which disburses the fund?


Pierre-Joseph-Arthur Cardin: It is a contributory scheme.


Clarence Gillis: Under the complete control of the management of the railways?


Pierre-Joseph-Arthur Cardin: Yes.


Clarence Gillis: The government makes a contribution but has no jurisdiction?


Pierre-Joseph-Arthur Cardin: We are authorizing the railways to make a contribution. I repeat that none of this $29,000,000 will go into the fund.


Richard Burpee Hanson: There is an old fund whidh went back to the days of the Intercolonial railway, and which may be in the position to which the minister refers in that contributions are made by the government from time to time. My understanding is that this fund is operated by a board of trustees made up of representatives of the management and the employees.


Pierre-Joseph-Arthur Cardin: The government haa certain representation.

C.N.R.-Guarantee oj Securities


Thomas Langton Church: As a public ownership supporter I have been considerably interested in this resolution. During the last election, I believe both parties had a policy. This is one of the most important problems we have to consider, and it is unfortunate that more time is not given to its discussion in the house. We took three weeks on wheat. A select committee was appointed one day without notice being given on the order paper, and it has made two or three reports. Every Canadian is a shareholder in this road, and it is unfortunate that more attention is not given to this matter. Look at the interest that has been taken in public ownership and public utilities in Ontario. The financial statement issued there is just like a bank statement. This Canadian National railway system is made up of the old Intercolonial, the old Canadian Northern which should have been put into receivership, the old Transcontinental, the old Grand Trunk, and outside services in hotel and marine and other services and subsidies. It is a long Story.
Certain parts of the resolution do not conform to the policies which have been set out by two royal commissions. The first was the Drayton-Acworth, which sat in 1917, and the second was the Duff commission. One can learn little or nothing from the financial statement of this publicly-owned railway system. In my opinion the government made a great mistake in not having at the start moved t'he head office of this system to the city of Toronto. Ontario is a great public-ownership province, and the railway makes most of its money in that province.
I am a supporter of public ownership, but this is not real public ownership at all. It is the mistakes of private ownership from the start. The resolution shows that advances are to be made to subsidiaries which are operating at a deficit. It will be noticed that there is a difference in the way we finance the war and the way we finance these deficits, yet the war requires a much greater expenditure. In the case of the war, we are charging two-thirds to income and one-third to capital, reversing what was done in the last war; we are asking the people of the country to pay the greater part of this two-thirds by many new forms of taxation, although this generation suffer in flesh and blood as well. In this case many old debts are refunded from year to year, with a heavy interest burden. In my opinion there should be a different system of accounting and auditing and a different form of financial statement and set-up so that the workers and the business people of the country may understand the exact financial

set-up, and there may be a complete intelligent balance sheet easily understood by all.
So far as I can find out, since 1920 the deficits of the Canadian National Railways have taken $633,718,706 from the pockets of the Canadian taxpayers and no assets have been created. The Duff commission which was appointed in 1932 dealt with this matter of refunding and made a recommendation that in connection with the deficits of the system it was undesirable to issue securities guaranteed by the government, that the government should borrow the money and pay the deficits itself. I believe there has been some amendment to that. In my opinion the Bank of Canada should deal with this particular matter, be placed in charge of these securities, take care of deficits as a trustee, and consolidate these government and crown properties, and it should be consulted more regarding the financing of the whole proposition.
As regards the amounts the railways have made out of the war, it appears that $2,750,000 was earned by one railway and $2,500,000 by the other. The relief which would be obtained by the cessation of the annual deficits would aid in both peace and war to bring about prosperity; it would leave that much more money for the government to spend elsewhere, and reduce the annual tax rate. The fund now used to pay these losses would be available for other governmental purposes.
These deficits cannot be overcome by increased efficiency of operation. To my mind there is no evidence that, broadly speaking, this railway is not as efficiently managed as possible. There are some features which indicate extravagance and in respect of which no vision or foresight is shown, and the requirements by way of capital expenditure as set out in the resolution would be much less if such foresight had been shown. I have in mind the United States affiliations; I note how the luxurious cars in these trains compare with the cars in other trains within Canada, and especially those of the oldest rolling stock used in the transportation of troops.
I say, therefore, that the losses which are shown in the resolution will not be brought to an end by increased business. The railway is not progressive enough to recognize the inroads made by the motor bus as a factor in transportation. As a result, the railways have lost the cream of the business. Reduced mileage and cooperative effort between the two railway systems which will do away with unnecessary duplication of services constitute the only method of reducing the loss. There has been delay in acknowledging this fact,

C.N.R.-Guarantee of Securities
and a lack of courage in this particular matter. Compare the subject matter of this resolution with the way in which the railway problem is handled in the Union of South Africa, where new methods of operating and financing the railways, as to both capital and income, have been successfully tried also in the United States to some extent. In the great war that government took over the railways in the United States for the period of the war and consolidated services, and returned them afterwards to private operation, taking care of the deficits and charges in many ways as a war effort in part. In this country, however, little has been done under the statutes providing for coordination. Cooperation on a minor scale has not effected enough saving to meet the needs of the situation. The economies resulting from cooperation on a minor scale between the roads have had little effect in reducing the debt for either capital or maintenance. In nine months prior to July 1, the two railways cooperatively abandoned, were granted permission to abandon or were preparing to abandon 750 miles of lines estimated to bring about an annual saving of $647,040, but the total amount saved by the companies through piecemeal cooperation is only slightly under $2,000,000. In my opinion the amount asked under the resolution, $29,000,000, is too much, because only the surface of possible savings through coordination has been touched. Competitive lines are still being operated to take care of business which could be efficiently handled by one road.
Take the matter of the troop trains. I refer to the return I received to an order of the house, setting out the sums which I stated a few moments ago. I maintain that there has not been the coordination of services and cooperation there should be, and soldiers should be given better trains and services, and cut-rates much more than they are given.
The resolution makes reference to the refunding of capital obligations. Some of that debt is due to duplication of services in terminals and to equipment. In Vancouver one union station could easily take care of all business; yet two separate stations are being operated. The same is true of Winnipeg and more especially of the wastage on the Montreal terminal. In Toronto there are two or three stations. The one in North Toronto is practically closed and rented for the period of a year and one union station, while it effects many economies, is not what it should be. We all know the situation in the city of Montreal. The taxpayer has to pay for all this; he has had to hand over deficits averaging $45,000,000 or $50,000,000 a year for many years. I can
only say that so far as the revenues go, based on rates and returns per mile, per car mile, and all that sort of thing, the statement does not indicate very much relief for the taxpayer. I am sorry that we have not been given more information about the auxiliary services, namely, the hotels and the merchant marine. It would be a godsend if we had at this time, for use in the present war, all those fine merchant marine ships which were sold for a very small sum of money five years ago.
Three or four reports have been presented by the committee which considered this $29,000,000 issue of securities. The third report has not yet come before the house.
I hope that an opportunity will be given to deal with it, because in my opinion, if report No. 3 is a sample of the committee's work, they are not dealing with the facts of this situation from a commercial or business point of view, but are considering in their report solely the questions from the political aspect of carrying on and getting business for the branch lines and all the other projects which in their opinion have to be carried on.
We have had to suffer the consequences of the railway bungle almost since confederation. We have a railway mileage on two roads of
43,000	miles, equal to Germany, with a population of over sixty million, that of France, and that of England, whose population before the war was forty-six or forty-seven millions. I wish the national railroads every success. It is obvious that the taxpayer will again have to pay, and he should be given the facts. I believe the only proper statement I have ever seen was given -in 1937. The figures then stated may not be exactly applicable to the position to-day, because the deficits have been reduced. But a clear statement of the whole history of this road and all services was made by my former leader, Mr. Bennett, in the house in answer to three questions raised in 1937 by the hon. member for Kootenay West (Mr. Esling). It will take only a few moments to read those questions and answers, and I will therefore quote what appears in Hansard of January 29, 1937. The first question was:
1.	What is the total indebtedness of the Canadian National Railways to the public?
The answer was:
$1,184,612,248.59 at December 31, 1936.
The section question was:
2.	What is the total annual interest on this indebtedness?
The question referred to 1936. The amount has been reduced considerably since then, but the principal is the same. The answer is:
$49,184,622.87 in 1936.

C.N.R.-Guarantee of Securities
The last question is the most important one so far as this resolution is concerned:
3.	What is the total indebtedness of the Canadian National Railways to the consolidated revenue fund of Canada? That is, how much money from time to time did we pay out of our revenue fund to these properties?
The minister made this answer, and I conclude with the reading of the three paragraphs of his statement:
3. Of the total cash expenditures by the dominion, amounting to $1,468,611,114 (not including interest on loans) as shown on page 7 of the Department of Railways and Canals report for the fiscal year ending March 31, 1936, the following are the amounts that may be considered as charged against the Canadian National Railways:
Loans to C.N.R. (includes loans to former privately-owned roads) on which interest is
accrued^ but not paid	$ 645,527,455 83
Investment in Canadian government railways	 388,880,002 78
Stores and open accounts of Canadian government railways	 15,748,921 60
The following amounts are in - suspense:
Temporary loans (interest paid
currently)	
Expenditures under supplementary public works construction act, 1935 (unemployment relief)	
Balance covering all deficits, subsidies, and all other items which have been absorbed in the net debt of the dominion
36,390,204 25 5,068,081 85 376,996,447 69
Total	$1,468,611,114 00
I am in hopes that the government, instead of presenting all these 19-11 cumbersome statements, will be able to issue a clear budget such as is provided in Ontario in connection with public utilities developments, involving very large sums of money, of the hydro electric system. In the provincial and local hydro systems the method followed by the hydro board in making a report on the hydro municipal utilities gives a clear statement to the public. By means of page advertisements in the newspapers, the position of the Toronto transportation system and buses could be quite clearly presented.
As I have said, I wish the government every success in this operation. The time will come when some changes will have to be made. I am sorry to have detained the committee, and now, while I do not agree at all with his policies, I wish only to compliment the minister upon one thing; I am glad to see him this session with his health somewhat restored, and I know I am expressing the sentiments of every hon. member, because his health was said to be impaired

by overwork. I do not agree with all the minister has done, but I wish to pay him this tribute, and not only him, but I wish to pay tribute to the Speaker, the Clerk of the House, and the Chairman of Committees, the Deputy Speaker.
The Clerk of the House, by his vision, politeness, courtesy and efficiency has added greatly to the effectiveness of parliament, and I have found, over twenty years, the House of Commons to be a place of much kindness. I only hope the railway will consider these matters and that a better statement will be forthcoming. They are spending a great deal of money without any commensurate efficiency in some ways at times. I travel on the railway, and I can say that the service is not what it should be. The system is being starved, and no doubt for the money it costs it should be better. What is needed is a proper publicity department to put the facts before the people. There is, in connection with the railway, a publicity department which is costing the country a large sum of money, but the whole organization is not worth as much as it should be. All it does is to spend money on entertainment and on work that could very well be done without as an economy. The minister should consider closing the head offices in Montreal and moving them to Toronto. The Minister of Finance is sitting beside him, and I suggest that he should wield the big stick on the railway in this matter of expenditures, because there is too much expenditure and not enough efficiency to-day. An effort should be made to operate the system from the commercial aspect. The Minister of Finance should provide a part of the deficit from revenues without refunding a lot of money, which costs a great deal in interest rates. He should wake up the Canadian people to the fact that they are not getting the service to which they are entitled. There is duplication, waste and luxury in Canada's railway. I know that this exists in the other system, too, but the other system is a taxpayer while this is crown property. The people of Canada are the shareholders, and members of parliament, their representatives, should be able to go back to their constituencies and give a plain and intelligent statement of facts regarding the present financial condition of the road from the commercial aspect and every other phase of the railway.
Resolution reported, read the second time and concurred in. Mr. Usley thereupon moved for leave to introduce Bill No. 98, to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National

Income War Tax Act
railway system during the calendar year 1941, to provide for the refunding of financial obligations and to authorize the guarantee by his majesty of certain securities to be issued by the Canadian National Railway Company.
Motion agreed to and bill read the first time.



INCOME WAR TAX ACT

[Stage Direction]
The house resumed from Tuesday, June 3, consideration in committee of Bill No. 87, to amend the Income War Tax Act-Mr. Isley- Mr. Yien in the chair.
On section 4-Earned income.
James Lorimer Ilsley: This is the clause which the hon. member for Peterborough West asked to have amended so that annuities would be regarded as earned income. I have gone into the matter carefully, and I regret that I am not able to agree to the amendment. I would ask that the section be allowed to pass.


[Stage Direction]
Section agreed to.
On section 16.
Richard Burpee Hanson: Has the government succumbed to the importunities, or threats, or whatever you like to call them, of the premier of Ontario? I am prompted to ask that question because in this afternoon's Journal there is a statement that the government is introducing an amendment to the act which will cancel the recently imposed 15 per cent tax on interest from provincial bonds held by non-residents of Canada, and that the amendment will restore the tax to the former 5 per cent level. If that is true, it is a great victory for provincial rights.


James Lorimer Ilsley: I have a statement to make in that regard. The hon. gentleman has not made it any easier for me to make that statement. I thought from his attitude the other night he was disposed to be helpful-


Richard Burpee Hanson: I always am.


James Lorimer Ilsley: -but I do not think his statement was. I would ask the committee to follow the statement which I am about to make, because it is a matter of great importance.
Before proceeding with this section, I wish to make a statement with reference to the controversy which has arisen in connection with the application of the increased tax imposed on foreign holders of provincial bonds. On Tuesday last I placed on Hansard a copy of the telegram which was sent by the Prime Minister to the Premier of Ontario on May 30. As the committee will recall,
this telegram stated that we learned with keen regret of the attitude which Mr. Hepburn continued to take with regard to the increase in the tax on interest going to foreign holders of provincial bonds, and that as a result of the imposition of this increased tax the government of Ontario considered it necessary to reject the offer made by the dominion to the provinces in the budget of April 29.
The telegram went on to reiterate our conviction that the tax was fair and reasonable; that it represented only an increase in a tax that had been in effect since 1933 without protest from the province of Ontario; that it was low compared not only with taxes imposed on other income earned in Canada but also with similar taxes imposed on non-residents by the countries of which our foreign bondholders are citizens; that it constituted no threat to the credit of Ontario or of any other province; and that it was validly imposed and could be enforced. Nevertheless the telegram indicated that the government consider that it would be most unfortunate were there to be any serious controversy between the dominion and the largest and wealthiest province of Canada at a time when the major consideration of all Canadians should be the most effective and most united prosecution of the war.
What was viewed with particular regret was that under such conditions the government of Ontario should feel it necessary to make the increase in this tax on foreign bondholders its reason for refusing to accept the offer made to the provinces in the budget. Were the matter to be left in this position, it was pointed out that the citizens of Ontario would be prevented by prospective double taxation of their incomes from making as large subscriptions to the 1941 Victory loan as otherwise they would be able and willing to make. Since this government was anxious to remove any possible excuse for the continuance of such a situation, the telegram concluded by offering to restore to its previous level the tax on interest received from provincial bonds by foreign bondholders if the government of Ontario on its part would be prepared to give the dominion prompt assurance of its willingness to accept the offer which was made in the budget.
On Saturday last the press of Ontario carried a statement purporting to have been made by Mr. Hepburn to the effect that the dominion was tying up the offer made in the budget with the increase in this tax on non-residents, and that it had intended all along to use this increased tax as a device for securing the acceptance of the other offer. I think I made
Income War Tax Act

it clear beyond peradventure the other evening, that it was Mr. Hepburn who had tied the two things together and that we were only trying to remove what he himself said was his reason for his refusal to accept the offer I made in the budget.
While in the telegram of last Friday the Prime Minister had asked for prompt assurance with regard to Ontario's position, we have not as yet received any reply from the Premier of Ontario. We cannot very well delay any longer in proceeding with this bill. We do not propose to allow our motives to continue to be misrepresented or to allow the action of this government respecting one item of taxation to be cited as a reason for the non-acceptance by the government of Ontario of the offer we made in the budget. I wish, therefore, to advise the committee that after very careful consideration we have reached the conclusion that we should remove all possibility of doubt as to the respective positions of the two governments in this matter. Accordingly I propose to introduce an amendment to the bill as it stands, in the form of an additional section, the effect of which will be that in so far as this tax is concerned, absolutely no change will be made in the law as it stands now and as it has stood for the last eight years, in respect of the tax imposed on foreign bondholders as a result of the interest they receive from their holdings of provincial bonds.
This amendment will take the following form:
That the said bill be further amended by inserting after section 17 the following as section 17A:
17A. Notwithstanding anything contained in sections 16 and 17 of this act, section 9B of the Income War Tax Act shall, in the case of interest received from or credited by his majesty in right of any province, have effect as if the said sections 16 and 17 had not been enacted.
It will be noted that not only will the foreign holder of provincial bonds be left in exactly the same position as before, but also that there will be no change whatsoever in the rights and liabilities of his majesty in the right of any province. We believe, and we are advised1 by the Department of Justice, that by the law as it stands and has stood since 1933 the tax has been validly imposed on interest received by foreign holders of provincial bonds, but this has been challenged by the government of one province. It may be that in view of the proposed amendment the government of Ontario will not widi to create any difficulties in the collection of a tax to which they have not objected during the last eight years under peace-time conditions. If, however, they think the foreign bondholder should not only not share to

gome extent wit'h all Canadians the increased burden imposed upon Canada by the war, but should also be relieved from taxes which they have been paying in peace time, and if, therefore, they request us to test the legal position in the courts, we shall immediately submit a reference to the Supreme Court of Canada in order that the whole position may be clarified.
There will, I am sure, be some hon. members who will criticize the action which I am now proposing and will strongly contend that we should not make any change at all. On grounds of strict logic, on grounds of the fairness of this tax on the foreign bondholder, and on grounds of the country's financial needs, their position is one with which it is hard to disagree. On the other hand, we have had to weigh the larger issues involved. In the first place, it would be, I repeat, a great misfortune if in war time there should develop a serious controversy between the dominion and the largest and wealthiest province allegedly over the proposed increase in this tax by the dominion. The fundamental matter to-day is the united and effective prosecution of the war, and we should all be big enough to recognize that simple fact.
In the second place, the revenue which we would receive from the increase in this tax on foreign bondholders is a consideration of minor importance compared with the importance of the dominion not doing anything which could be cited by the government of Ontario as an excuse for its refusal to accept an offer which would save the people of Ontario from paying an extra $29,000,000 or thereabouts in taxes.
Finally, the question of taxation of this kind seems to be a highly technical matter, and it appears to be difficult to get to the people of Ontario an unprejudiced view of the relative merits and demerits of this tax proposal. It is extraordinary to me that this should be so, but when I read some of the statements which have been made about this tax increase I am forced to the conclusion that the position of the dominion government must be made so clear as to permit of no possibility of misunderstanding or misrepresentation.
It is for these reasons that I offer the amendment which I have read.
I wish also to offer an amendment to section 16:
That section 16 of the hill be amended by adding thereto subsection 2 reading as follows:
2. That subparagraph (ii) of paragraph (e) of subsection 2 of the said section 9B be amended by adding thereto the following:
"Provided that in the case of motion-picture films, one-third of such payments shall not be subject to the tax under this section."

Income War Tax Act
The gross tax on motion-picture film rentals was for several years 2 per cent. In 1939 it was raised to 5 per cent. By the increase under this budget that was multiplied by three, raising it to 15 per cent. I am convinced after exhaustive investigation, having spent a great deal of time on the matter, that 15 per cent is too high and that 10 per cent is high enough. Therefore I am moving that only two-thirds of such payments be subject to the 15 per cent tax.
It may be remembered that between 1936 and 1939 the ordinary rate was 5 per cent, and that that was subject to a deduction of 60 per cent. Therefore I am merely proposing that the 15 per cent be subject to a deduction of 33J per cent.
If the committee should ask me why I selected 10 per cent I could not answer; it is more or less arbitrary. But 15 per cent is a terrific weight when applied to the rentals of motion-picture films.


John Ritchie MacNicol: Will this enable the
picture-show people to lower the prices of admission.


James Lorimer Ilsley: I do not think so.


Olof Hanson: Will this
leave any profit to the distributors?


James Lorimer Ilsley: Practically all the companies supplying motion pictures to Canada now have a loss on their operations. This reduces the loss.


Mr. GIBSON:: I move accordingly.


Thomas Vien: The question is on the amendment.


Thomas Langton Church: Under the Supreme Court Act no question can go to that court unless there are two. parties to the issue and a text to the reference. The reference in this case, if it goes to the supreme court under the Supreme Court Act will be the Attorney General of Ontario versus the Attorney General of Canada. I suggest that, since the same matters are involved, there should be a reference to the court not only of this particular question to which the minister refers if Ontario consents, but also on death duties and income taxes, about which there are grave doubts as to the powers of this parliament in view of the provisions of section 92 as to property and civil rights in the provinces and other sections. I suggest that these matters be included in the text of the reference as well; they are co-related, and also that the Minister of Justice, if there is a reference as a matter of law and public policy, should lay the text of it on the table of the house.


Thomas Miller Bell: I wish to say a few
words regarding the announcement the Minister of Finance has just made. I appreciate the difficulty in which the minister finds himself; but on behalf of what I believe to be a very large number of people in this country I wish to register a most emphatic protest against the release of foreign bond holders from the taxation which was proposed. We are at war, and it seems to many people that the burden of the cost of the war must be spread over all who can share the burden; not only who live in Canada but who have an interest in Canada. That, I believe, is a fair view of the situation.
I was a spectator at the dominion-provincial conference. There I heard the minister make it very clear indeed, not as a threat-I think anyone who was there realized that no threat was made or intended-that because of the failure to straighten out certain constitutional matters in the discussion of the report and recommendations of the Rowell-Sirois inquiry, the necessities of war would compel the dominion to enter into fields then occupied by the various provinces. This naturfilly was one of the fields contemplated; and I am of opinion that in spite of the fact that the government has been obliged to take this step as a result of the attitude of the premier of the largest province of this dominion, we should not let this occasion pass without registering our protest against any provincial premier interfering with our vital efforts to raise the revenue that must be obtained for the conduct of this war. Those who are giving lip-service to the Dominion of Canada's war effort ought to be prepared to do more than that; and if there is one province that is in a position to assist the government in every way, it is Ontario.
I am not going to enter into a discussion of the attitude of the premier of Ontario; but I have felt, as many others have felt, that all too frequently Mr. Hepburn speaks and acts for certain interests outside the Dominion of Canada. In this instance I think, on the very face of it, that would appear to be the situation. I wish to make a most emphatic protest against the government taking this step. As I say, I know the necessity is great; I realize that we must get this tangle straightened out, but I believe I speak for a number of people in this country when I say that the primary place to get money for our war effort is from accumulations of wealth. I believe those who have accumulated wealth invested in the Dominion of Canada ought to be prepared at this time to share the burden with those who reside in this country.
Income War Tax Act


Mr. BLACKMORE:: I wish to register, just as emphatically as possible, an opinion directly opposed to that expressed by the hon. member for Rosetown-Biggar. I believe the minister has done exactly the right thing under the circumstances. The very statement made a moment ago, that when this matter is taken to the courts it will be a question of the king as his power is vested in the Dominion of Canada versus the king as his power is vested in the province of Ontario, is sufficient to indicate the desirability of the dominion cooperating with the provinces in all respects.


Richard Burpee Hanson: Will the minister say whether this amendment will cover provincial guarantees, such as the bonds of the hydro electric commission of Ontario, which may be in foreign hands? As I understood this originally, it was not intended to cover municipal bonds which were in the hands of foreign investors.


James Lorimer Ilsley: No; it is just provincial bonds.


Richard Burpee Hanson: Direct
obligations?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Then it will not cover the hydro bonds?


James Lorimer Ilsley: I am sorry to say that I did not give consideration to that question. The whole point raised was in connection with payments of interest by his majesty in the right of the province, and that is the point covered.


Richard Burpee Hanson: Then I
suggest to the minister that he should have in his department some practical men who know about public financing, because the hydro bonds run into many millions of dollars, and he will find other publicly owned enterprises in Ontario in the same position, where they have issued their own bonds which are guaranteed by the province. The minister is giving relief to direct obligations, but he is not giving relief to indirect obligations, which, in effect, are the obligations of the crown in another corporate form. I am afraid the minister may run into similar difficulties in that connection, and I believe consideration should be given that point.


Mr. NICHOLSON:: I should like to support what has been so very well said by the hon. member for Rosetown-Biggar. It has been stated in this house on previous occasions that it is not only the people of Canada who are concerned about the outcome of the present conflict, that all who have money invested in Canada stand to lose or win according to the way the tide goes

in Europe. I think the hon. member made out a very good case for the suggestion that those who have investments in this country should carry their full share of the load, as originally proposed in the budget. Can the minister tell the committee what this compromise will mean to the treasury in terms of dollars and cents?


James Lorimer Ilsley: No; I cannot tell the committee that. It would be impossible to give an estimate that would be at all accurate.


Richard Burpee Hanson: With
respect to the film tax, I understood the minister to say that there is a loss in that industry, and therefore the effect of this taxation is to tax a loss. If that be true, this would not seem to me to be a very good field for taxation. I am astonished to learn that these people are operating in Canada at a loss, but of course the minister knows.


James Lorimer Ilsley: The commissioner tells me
that my statement that all had losses was too broad; that some had losses and some had profits, but that, as a whole, the industry seems to be operating at a loss if their statements are to be taken at face value.


Richard Burpee Hanson: I suppose that depends upon how they keep their books.


James Lorimer Ilsley: It depends upon their expenses and the principles under which they operate.


Richard Burpee Hanson: They may not be all losses?


James Lorimer Ilsley: The industry is in bad
shape.


Charles Edward Johnston: Is the tax on interest paid to non-resident holders of dominion bonds the same as the tax proposed on non-resident holders of provincial bonds?


James Lorimer Ilsley: No.


Charles Edward Johnston: There is no tax at all?


James Lorimer Ilsley: None in connection with
dominion bonds.


Charles Edward Johnston: I think
it is quite unfair that the interest paid on dominion bonds held by non-residents should not be taxed while the interest on the bonds of any province is taxed. If one is to be taxed I think the other should be taxed as well.


Richard Burpee Hanson: Then
what about the ethical question that arises? The dominion government sells its bonds to

Income War Tax Act
a non-resident, we say, "We will pay you so much money if you will lend us so much money." After that has been done, we turn round and take back, by jorce majeure, part of what we undertook to pay. Surely an ethical principle arises there.


John Horne Blackmore: Does the same principle not apply in the case of a province?


Richard Burpee Hanson: No,
because they are two different authorities.


Harry Rutherford Jackman: I do not think the
Minister of Finance should feel so very badly about giving way to the Premier of Ontario. I approach this problem from an entirely selfish point of view; that is, selfish from the point of view of the dominion or the province. These obligations which are expressed in terms of United States currency were created because we required the money to carry on our operations in Canada, or to carry on industrial development, or to construct public utilities such as the hydro electric and other similar enterprises. After the war is over, probably the time will come when we shall want to go back to the United States and borrow for development purposes, and in order to provide work for Canadian workmen. The question is not whether United States investors should bear their share of the burden of Canada's war effort. They bought these bonds on the understanding, perhaps implied on their part, that they would receive the full amount indicated on the coupons. Already these investors are faced with a discount, of 11 per cent by reason of the fact that our money is worth that much less than United States money; and if the 15 per cent provided in the original resolution had been added, it would have meant a discount of 26 per cent on the securities held in the United States. I do not mind this tax of even 15 per cent being applied to those who receive dividends on common stocks, the proceeds of which were invested in Canada, because they took their chance on the development of this country, and they expected to make a profit or receive an income higher than the bond return. Therefore they must in all equity bear their share of the expense of protecting that investment in this dominion.
The position of the bondholder is, however, somewhat different. Therefore, when we approach this problem from the selfish point of view of Canada, we must realize that we shall again require money from the United States for development, and there is no use in antagonizing the United States investor more than we need to. I believe, however, the publicity which has been given
to this 15 per cent tax has been out of all proportion to the feeling against it on the part of certain United States bondholders. It has become somewhat of a political tempest in a teacup.
I believe, however, the government of Canada may find it is doing a very good service to this country, and not merely obliging the premier of one of our provinces, in taking the attitude which has been indicated. There will come a day when we shall want capital. When the United States investor in our securities looks at the position in Canada he will not conclude that we have yet reached the limit of our own sacrifice, or that we have reached the point where we must place a tax on the United States investor. He will see that in our ordinary everyday life we do not seem to have had to sacrifice a great deal. It is true that there have been substantial financial sacrifices on the part of some, and others, of course, have enlisted in the armed services. I am speaking, however, of ordinary civilian life.
If the minister says that we do require money and that we must place a tax on the United States holder of our securities, then why not impose a 50 per cent tax? Possibly that could not be done in fairness, but the legal position would be much the same. Of course it is absurd.
I believe the policy which is now being adopted will redound to the material benefit of our country.


Mr. ROSS (St. Paul's):: I doubt very much if the rfelief which it is said will be given under this amendment will be sufficient. I imagine the debt of the Ontario hydro and the Temiskaming and Northern Ontario Railway, a great many of whose bonds are guaranteed by the province, would almost equal the amount of the debt of Ontario. As a matter of fact, they are Ontario government bonds, and are just the same as if they were issued by the Ontario government. I suggest that the minister should consider that point.


James Lorimer Ilsley: This amendment covers
amounts received from or credited by his majesty in the right of any province. That may cover the hydro, although I am not sure about that. It may be an agency, or an emanation, or something of that kind. The objection raised was, however, as to principle, with respect to the crown in the right of the province doing so-and-so.


Harry Rutherford Jackman: I am sure the minister knows that if it does not include the hydro and the Temiskaming and Northern Ontario, it will not be accepted as assuaging the
Income War Tax Act

difficulty. If the minister is going to go part way, then I suggest that he might as well go all the way and be quite explicit about the matter. Let us hope that some good will result from it.


Richard Burpee Hanson: I suggest that the minister pass his amendment now, and that the bill be held for third reading, until that position is made certain. The suggestion is made with a desire to be helpful.


James Lorimer Ilsley: I believe the point ought to stand until eight o'clock.


Richard Burpee Hanson: That is satisfactory.


Thomas Vien: Mr. Ilsley moves that section 16 stand.


James Lorimer Ilsley: No; 16 has passed, has it not?


Thomas Vien: Is it section 17?


Mr. ESLING:: I do not wish to interrupt the discussion, but I should like to say a word about that portion of the amendment relating to films. I recall that in 1936 the then Minister of Finance, Mr. Dunning, reduced 'the remittance tax on films, particularly and specifically, from 5 per cent to 2 per cent. The plea at that time was that after the films were used throughout Canada they were useless, and that, therefore, the film agencies were losing large sums of money.
In what I am about to say I shall refer to the report of the Department of Trade and Commerce, a government publication in black and white. It goes on to show that the films which we see thrown upon the screens are not the actual films brought into Canada. They are only prints. The actual film is a negative, and it is sent to a processing plant in Montreal. I suppose that it enters Canada in bond, and for purposes of valuation it is valued at five cents a foot, the rate of tax being 32^ per cent.
The negative goes to the processing plant in Montreal, and from it as many prints as are required by the agency are made, the negative then being returned to the owners or producers in the United States. The business with the various theatres or film agencies which, in 1936, numbered sixty-three, is done as between those agencies and the processing plant. The agencies pay the processing plant. Taking for example a standard film of seven thousand feet, we find they pay a processing fee of three and a quarter cents a foot, plus sales tax. Therefore each print as shown upon the screens of the various theatres represents something like $246, and no more. One would think that that sum would be taken in during the first showing in a large city

Returning to the report of the Minister of Trade and Commerce, we find that the total revenue from rentals to theatres received by the various film agencies in 1938 amounted to something like $8,500,000. I believe that is the last year for which we have the figures. The amount may have been $8,000,000. The report goes on to show that they take from that about $1,060,000 for wages and about $2,500,000 for cost of distribution of films to theatres across Canada. It shows, too, that after all these deductions, the film agency had at least $5,000,000 to remit to the picture producers in the United States.
One can see at once, therefore, that inasmuch as these are only prints, there can certainly be very little loss. It is also difficult to understand why the remittance tax affecting the picture producers in the United States should be decreased while a small United States investor in a Canadian mining property pays the full remittance tax.
It was on those very representations, taken from the report of the Department of Trade and Commerce, that either last year or the year before the Minister of Finance put the film tax back to 5 per cent. I am wondering whether those who offered the suggestions have had an opportunity to go through the figures in the report I have mentioned.


Charles Edward Johnston: May I point out to the Minister of Finance that I had no intention of implying that I was opposed to the imposition of a tax on bonds held by non-residents. I think the remark made by the leader of the opposition needs a little explaining. For the life of me I cannot see why the dominion should impose a tax upon provincial bonds, and not one upon dominion bonds, when both are held by non-residents. This will certainly affect the credit of the provinces. As the leader of the opposition says, it may be necessary for the dominion to go to foreign countries in order to get money, but I think we have a great deal more money here in Canada available through our Bank of Canada if necessary. If, however, it is necessary for the dominion to go to foreign countries for more money, it will be equally necessary for the provinces to do that. If the dominion has no money for its own needs, it certainly will not have any for provincial use.
One of the greatest dangers is the fact that if the dominion should take this action, should discriminate as between provincial bonds held by non-residents and dominion bonds held by non-residents, to tax the one and not the other, it will be forcing the provinces to come to the dominion for any money they need. Tn that way there will be a further centraliza-

Income War Tax Act
tion of financial control, making the provinces that much more subservient to the dominion. That is not the right principle to follow. In fact, I cannot see why provincial bonds should not be a better security than dominion bonds. After all, if it is true-I use the word "if" advisedly-that the provinces have complete control of their natural resources, then I cannot see where the security for dominion bonds comes in. Of course, when it comes down to the fine point I doubt that the provinces have that control. When that is challenged, they generally find they do not have it. This is a question of foreign exchange, and I can think of several ways in which we can get more foreign exchange if we are really serious about the matter. Again I use a word advisedly. We could save United States dollars, or perhaps I should say Canadian dollars, by using Canadian coal. The saving in exchange would amount to about $15,000,000 a year.


James Lorimer Ilsley: I am sorry to have to rise to a point of order, but I think a discussion on foreign exchange is irrelevant.


Charles Edward Johnston: The minister wants to raise money, and I am simply pointing out an alternative.


Thomas Vien: That would not come under section 16 or the amendment thereto. I thought the hon. member had almost finished his remarks; otherwise I was on the point of stopping him.


Charles Edward Johnston: I had just about finished in that respect. I was speaking about the 5 per cent taxation which is to be placed upon provincial bonds. I cannot see why it should be placed upon those bonds if it is not to get revenue.


James Lorimer Ilsley: There are two subjects under discussion; one is the conservation of foreign exchange, and the other is the obtaining of revenue. The conservation of exchange is not a question of increasing revenue; it is a question of keeping a supply of foreign exchange in the country in the hands of the foreign exchange control board. The two subjects are not the same and are not directly connected.


Charles Edward Johnston: I quite agree with the minister that the one has to do with increased revenues, and the other possibly would have to do with the conservation of foreign exchange. But speaking on this section directly, I think the dominion will bring about a great deal of trouble for itself by creating a distinction between provincial bonds and dominion bonds.


James Lorimer Ilsley: But we are not creating a distinction; we are simply continuing to do what has been done since 1933. The interest on provincial bonds has been subject to a 5 per cent tax while dominion bonds have always been free. The market has adjusted itself to that fact, and bonds have been bought and sold with that in mind. The hon. gentleman seems to be talking as though we were now creating a difference between the two.


Charles Edward Johnston: The
increase to 15 per cent precipitated the argument between the provinces and the dominion?


James Lorimer Ilsley: Yes.


Mr. LOCKHART:: The exception taken
applies only to moving-picture films?


James Lorimer Ilsley: That is right.


Norman James Macdonald Lockhart: There is no exception for other forms of amusement?


James Lorimer Ilsley: It is not a question of forms of amusement. We have a withholding tax of 5 per cent, and this is being increased to 15 per cent on:
All payments received directly or indirectly from Canadian debtors in respect of
(i)	any copyright, used in Canada, relating to books, music, articles and periodicals, newspaper syndicated articles, pictures, comics and other newspaper or periodical features and
(ii)	any rights in and to the use of any work, whether copyrighted or not subsequently, produced or reproduced in Canada, by way of the spoken word, print, or mechanical sound on or from paper, composition, films or mechanical devices of any description.
Those are subject to a gross withholding tax, heretofore of 5 per cent but from now on of 15 per cent. I am moving an amendment to make it 10 per cent in the case of this very important class.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 29-Machinery or equipment.
Mi'. ILSLEY: The hon. member for St. Antoine-Westmount (Mr. Abbott) had an objection to this section which I think was well taken, and I am proposing an amendment, which I shall ask my colleague to move.
Colin William George Gibson: I move:
That section 29 be amended by striking out the words "and is" in the first part of line 44 and the words "within the said period" at the end of the line.


James Lorimer Ilsley: The hon. member for St. Antoine-Westmount was referring to machinery which had been ordered, actually manufactured and paid for within the period and
Income War Tax Act

which was to be affixed but had not actually been affixed within the period to the premises of the taxpayer. We agreed that that classification should be covered.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 36 agreed to.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
On section 17-Collection and remittance.
Richard Burpee Hanson: Would the minister tell me what decision has been reached with respect to bonds guaranteed by the provinces?


James Lorimer Ilsley: I am about to do that,
under section 17A.


[Stage Direction]
Section agreed to.
Colin William George Gibson: That the bill be further amended by inserting after section 17 the following as section 17A:
17A. Notwithstanding anything contained in sections 16 and 17 of this act, section 9 (b) of the Income War Tax Act shall have effect as if the said sections 10 and 17 had not been enacted, in respect of interest and bonds or other obligations of or guaranteed by his majesty in right of any province and in respect of interest on bonds or other obligations provision for the payment of which interest is made by his majesty in right of any province pursuant to a statute.


Richard Burpee Hanson: This is a redraft?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: And is it limited in the latter part of the clause where it reads:
. . . and in respect of interest on bonds or other obligations provision for the payment of which interest is made by his majesty in right of any province pursuant to a statute.
Just what are the implications of that clause? Does it cover the case where a province pays the interest direct or where recourse may be made to the province in case the principal should make default? What is the position with respect to, say, the hydro electric commission of Ontario?


James Lorimer Ilsley: The case of the hydro electric commission, if its bonds are guaranteed by the province of Ontario, is covered, not by the last few words-


Richard Burpee Hanson: But by all of them?


James Lorimer Ilsley: -but by the words right in the middle of the section, namely, the words:
. . . interest on bonds or other obligations of or guaranteed by his majesty in the right of any province. . . .
The words from there on, namely, the last few words of the section, relate to certain cases, wholly or mainly in the province of Quebec, where the provincial government pays to certain charitable institutions money with which to pay their interest, and does so by virtue of statute. It is just a question whether that case should be covered, but we thought that probably it would be fairer to cover it. It is not the case of an obligation of the province to the bondholder. There is, however, a statutory obligation on the province to put the corporation or institution in funds, so that the corporation or institution can pay the bondholder.


Richard Burpee Hanson: In a
measure they are analogous, although there is no direct guarantee.


James Lorimer Ilsley: It is fairer, I think, to put it in.


Richard Burpee Hanson: The minister has not decided to do anything in respect of municipal obligations held outside the province?


James Lorimer Ilsley: No.


Mr. HOMUTH:: Then I think it is just too bad that the municipalities of this country do not raise the same protest that the premier of Ontario has done, because, apparently due entirely to the protest which the premier of Ontario raised, we granted him this concession. Here are large municipalities who have issued bonds, and they are going to be sitting back and holding the bag. I do not think it is fair. We are treating the municipalities most unfairly.


Richard Burpee Hanson: Has the minister any information as to the amount of municipal bonds issued by Canadian municipalities, payable in Canadian funds, which are held, we will say, in the United States? Is it a substantial problem or merely a small one?


James Lorimer Ilsley: I have not any information. It is however a small problem compared with that of the provinces, and that of the provinces is very small compared with that of the dominion, if we were to do anything about the dominion.


John Ritchie MacNicol: Is the minister sure of that statement?


James Lorimer Ilsley: No, I am not sure of it. I am informed that that is the situation.

Supply-Agriculture


John Ritchie MacNicol: I have a recollection
that the hydro-electric belongs to the municipalities and that they have guaranteed the bonds.


James Lorimer Ilsley: That is another point. I do not know.


Richard Burpee Hanson: I think the hydro-electric is a provincial corporation.


[Stage Direction]
Amendment agreed to.
Bill reported.
Mr. ILSLEY moved the third reading of the bill.
Mr. G. H. ROSS (Calgary East):: Large sums of money will be required to finance our war effort. This money will have to be raised by taxation or borrowing. I believe that the moneys required to satisfy the budget will be raised. I believe also that the moneys required to satisfy the loan which is now being floated will be raised. I am proud to point out that Turner Valley, which is in the riding of Calgary East, which I have the honour to represent in this house, was the first area in all Canada to "go over the top" in the way of raising its war loan quota. I have known for some tints that Calgary East was the leading riding in all Canada, and I hope that hon. members will also appreciate the fact. I hope that every district in Canada will emulate the high standard set by Calgary East and play its part in the raising of our war loan,
Motion agreed to and bill read the third time and passed.

The house in committee of supply, Mr. Vien in the chair.



DEPARTMENT OF AGRICULTURE

[Stage Direction]
27. Marketing service. Live stock and live stock products, $519,037.
Karl Kenneth Homuth: Some months ago the
government put through an order in council detailing the manner in which farmers must dispose of their wool, and setting forth certain regulations governing those who purchase that wool. Upon whose advice were those regulations made? Was it upon the advice of the officers of the department, upon the advice of the wool dealers, or upon the advice of the mills?


Hon. J. G. GARDINER (Minister of Agriculture) :: The provision was brought in by
the department but only after full discussion with the different organizations concerned and with their consent.


Karl Kenneth Homuth: From what I can gather, those who were concerned with this matter, and perhaps asked for their advice, were more particularly the wool dealers, the larger wool buyers or those who control the wool market of Canada. Certainly no regulation like this was ever passed after the farmers of the country had been taken into the confidence of the government and their advice sought. For years the farmers have been privileged to take their wool to the various small mills or to have the dealers call at their farms and purchase the wool there, and in most instances these farmers have received a pretty fair price. Under this regulation, however, the wool may be sold only to some one who is in a position to grade it. Wool must be graded and the various grades designated, a report being made out, and the farmer is paid according to the various grades he has supplied.
There are thousands of farmers who have always looked upon their wool as a ready cash sale. Farmers have come to our plant, but we are not buyers of wool to-day because we are not prepared to set up a grading station, and most of the small woollen mills in the country are in the same position. The result is that the farmer is almost forced to-day to send his wool to the cooperative wool growers of Toronto. The name in itself is misleading. It is simply a name; it is not what one would think it would be, with the name, Cooperative Wool Growers Association. People send their wool there and receive part payment for it, and they have to wait a long time before they get their final returns. It is not a cooperative concern, as suggested by the name, in the sense that the farmer eventually gets paid in proportion to the profit made by the company. It is a privately-owned company.
In my office on Saturday morning was a farmer who had 1,500 pounds of wool. He had always taken his wool to one of the small mills or one of the larger ones in our territory. The larger mills now say they will not buy it because they would have to set up a grading station. There must be some one to grade the wool and designate the various grades, setting a price, and in that whole territory where there are many mills none of the mills will handle wool. In the old days the farmer took the wool to the mill. The mills that were making blankets would not grade the wool because they would put it into their blankets as it was. The farmer to-day is practically forced to send his wool to the cooperative wool growers of Toronto, take part payment and then wait for months for his final settlement.
Supply-Agriculture

We are so regulating and regimenting the farmers that they cannot sell or do anything without filling out a lot of forms and complying with various conditions which are rather ridiculous, and many of these regulations are made by men who have approached certain sections of business in the country without having a practical knowledge of what should be done. This has worked a great hardship on the farmer who raises anywhere from fifty to 2,000 pounds of wool. There are farmers with thirteen, fifteen twenty, thirty or forty sheep, and every time we make regulations such as these we force the farmers into the hands of those people who have been making money by farming the farmers. The sooner we do away with many of these regulations, the better it will be for the farmers. This regulation was ill advised, and it is certainly working to the detriment of those men who have a few sheep on their farms.


Mr. KIRK:: The hon. member asked who had advised this legislation. I did not hear the minister's reply.


James Garfield Gardiner: My reply was that the department was responsible for the provisions, but they were brought in after different organizations affected had been consulted.


James Ralph Kirk: What organizations?


James Garfield Gardiner: All purchasing organizations and farm organizations such as cooperatives, and the mills as well.


Karl Kenneth Homuth: Surely the minister does not say that there are farm organizations which make up the Cooperative Wool Growers Association?


James Garfield Gardiner: There are in some parts of Canada, probably not in all.
Mr: QUELCH: Will the minister define and explain the respective provincial and federal fields in the grading of poultry and eggs? I ask this question because, while the grain rates to the consumer may be quite satisfactory, so far as the producer is concerned I am confident that they are not. I have heard a great deal of criticism, from many prominent poultrymen, of the method of grading eggs at country points. I have carried out some experiments to see whether that criticism was justified, especially in the rush season at the height of production. We have graded and candled a number of cases of eggs, put the culls in another case and shipped them all, and there was practically no difference in the returns on those cases, which convinced me that, in the rush season at any rate, returns are based upon average instead of upon individual shipments. Can the minister give us any information on that point?


James Garfield Gardiner: The grading of eggs is carried on under exactly the same conditions as the grading of butter or any other farm products. If the product is produced in the province where it is finally disposed of, it is the responsibilitv of the provincial government. They can, u they desire, handle that product, and the federal government would have nothing to do with it. If, however, the product enters into interprovincial trade, then it becomes the responsibility of the federal government, and likewise if it enters into international trade.
In actual practice, in order to overcome the difficulties inherent in the federal system the provinces have been following the practice of appointing the federal inspectors as their inspectors, and it is the federal inspectors and graders who do the actual inspection and grading of the different farm products, including eggs, butter, wool and so forth.


Charles Edward Johnston: Can the minister tell us what effect the size of the yolk has in the grading of eggs?


James Garfield Gardiner: I should not like to try. We pay experts to do that.


Charles Edward Johnston: When one goes to a restaurant and gets eggs, he is never consulted about the size of the yolk. I had a letter the other day complaining about this. This lady said she took some eggs to market and was docked on the price because the yolks were too large. That is the first time I have heard of grading according to the size of the yolk.


James Garfield Gardiner: If one waits long enough he will not need an expert to decide that question. As eggs become older, the yolks flatten out and tend to enlarge, and when the eggs get old enough you will not need an expert to tell you.


Mr. QUELCH:: Who is responsible for
checking up the egg graders in such plants as Burns, Swift's and other large buyers?


James Garfield Gardiner: The federal government is responsible for checking what is done by those graders, although I understand we do not pay them. They are employees of the buyers.


Victor Quelch: What check is made on
those graders? The opinion in the country is that these men are definitely working in the interests of the packers. Does the government check periodically the work of these men to see whether they are grading according to standard or are favouring the packing plant?

Supply-Agriculture


James Garfield Gardiner: There are checks made on the work done by these men. Last year there were some four to five thousand inspections made. If the eggs are not properly graded they are detained by the government. I was trying to find out from the officials what might happen to the grader; I assume if he made too many mistakes, the company that engages him would deal with him, if the eggs graded by him were being detained by the government.


Karl Kenneth Homuth: By "detained by the government" does the minister mean that the government confiscates them?


James Garfield Gardiner: They are detained until they are regraded, and of course loss of time and all that are involved.


Mr. CRUICKSHANK:: I understood the
minister to say that if an inspector made too man}' mistakes, the company would deal with him. What we in British Columbia are particularly interested in is-


Karl Kenneth Homuth: What side he made the mistake on.


George Alexander Cruickshank: If he came from Waterloo he would make a mistake no matter what he did. What I wish to know is what check is kept on these inspectors. As I understand the situation, a farmer in selling eggs is at the mercy of the company buying them as to what grade he gets, whether Al, or A2, or cracks, or whatever the grades are. Am I to understand that we have no inspectors in the federal department protecting the farmer on the grading of these private concerns?


James Garfield Gardiner: Perhaps I used the wrong term a moment ago. The graders are in the employ and under the control of the plant, but the inspectors are employees of the government. They move about from place to place; it is not always the same inspector who goes to a plant, but these inspectors inspect the work of the graders.


George Alexander Cruickshank: That being the situation, are there or will there be any inspectors under the federal government checking the plants and dealers in British Columbia on behalf of the farmers who are now at the mercy of private companies as to grades?


James Garfield Gardiner: Yes; there are inspectors who will be checking the grading in the British Columbia plants.


George Alexander Cruickshank: They will then be instructed to do a little more checking?


Victor Quelch: I am aware that action has been taken with regard to grading of eggs so far as the consumer is concerned, but I
have not heard of any action being taken on account of undergrading to the producer. I urge that closer inspection be made of the graders, and if it is found that they have been undergrading, instead of just detaining the eggs, I suggest that the graders should be fined, and fined more heavily if the practice is repeated. I am not making any criticism of hog grading, which, generally speaking, I have found satisfactory. In the past I think the trouble has been misunderstanding of weights rather than in grading. I have also no criticism of the grading of cream, but so far as poultry and eggs are concerned, I am satisfied that the whole thing is in a rotten mess and should be cleaned up.


[Stage Direction]
Item agreed to.
28. Marketing service. Marketing of agricultural products, including temporary appointments that may be required to be made, notwithstanding anything contained in the Civil Service Act, the amount available for such appointments not to exceed $13,000, $25,000.
Mr. WRIGHT:: With regard to the marketing of pork, a short time ago a regulation was passed by order in council limiting the amount of pork available for consumption in this country to, I believe, 40,000 carcases a month. That, I understand, was done in order to make more pork available for export to Great Britain. If the pork is needed there, we should make it available. During the month of March, however ,there were 47,000 carcases consumed in Canada, and during April, 51,000. We have now limited the number to 40,000, and so far as I can find, we have made no provision to see where these 40,000 carcases are consumed. We are allowing the old law of supply and demand to operate. The result has been that in many of the city shops the price of pork has advanced by from three to five cents a pound. Are the government taking any steps to remedy this situation?


James Garfield Gardiner: The situation is that last fall, as hon. members know, we undertook to deliver to the British government 425,000,000 pounds of Wiltshire sides. During the preceding year we had delivered about
330.000.	000 pounds. We estimated that this year we would be able to deliver the
425.000.	000 pounds, and therefore undertook to do so. Weekly deliveries during the winter months, beginning last October, ran very much higher than a year ago, and were even beyond the amount which it was estimated would be required to fill the new contract. It will be recalled that I announced in this house more than six weeks ago that this spring the British government asked us to complete our deliveries by an earlier date,
Supply-Agriculture

which meant that we were required to deliver within the year about 28,000,000 pounds more than we had contracted to deliver.
Last year the United States price for live hogs averaged three cents below the Canadian price. There was a gradual advance in the United States price during the winter, and about the time we were asked to increase our deliveries, prices in the United States reached just about the Canadian level and hogs began to move into the United States at various points, particularly further west. The price in Alberta, for example, is lower than in other parts of Canada, because the freight rate increases as one goes further west, but the price on the United States side of the line, in Portland, Seattle and other places, is sometimes even higher than the Chicago price. As a result, it is only natural that hogs should go into the United States at those points, and also over the mountains to Vancouver. There is also a tendency for hogs to move to the United States from as far east as Winnipeg at a much earlier date than would be the case in the eastern part of this country.
It was very important that we should deliver the full quota to Great Britain this year, not only because they need it so much but because we wish to establish ourselves as people who deliver what we contract to deliver. During the period we were negotiating with Britain, which negotiations brought about the higher price put into effect a short time ago of 85 shillings per 112 pounds as against the 80 shillings we were receiving previously, it became necessary to take some action in this regard. We can only estimate the number of hogs that will continue to come on to the Canadian market during the year, and in order to make absolutely certain that we would be able to deliver the full quota that we had undertaken to deliver this year, it was decided by the bacon board to say to the people of Canada and to the packing houses, "We think we in Canada should be satisfied for the time being with the same amount of pork products that we consumed last year," and I might add that last year we consumed more pork products than in any previous year in our history. Therefore the level which has been set for this year for the consumption of pork products is equal to the highest level we have reached in our history. For the time being, then, we are saying to those who deliver pork products to the trade, "We want you to deliver only the amount you delivered in the corresponding week one year ago."
On that basis the amount of pork being consumed in Canada to-day is reduced, to a

certain extent, below what it might have been if that regulation had not been imposed; and we are quite satisfied that under conditions as they now exist we shall be able to get along on that basis. But after the British price had been increased, the United States price continued to rise, and accordingly we added another 75 cents per hundred pounds of Wiltshire sides in Canada so that the price has been increased not only by the British government but also by the Canadian government. We are not certain how long we shall require to continue this regulation with regard to consumption in Canada, but it has been continued up to the present time.


Percy Ellis Wright: That does not answer the question I asked, which was whether the government were taking any steps to see that the consumers are protected while the amount of pork available is restricted.


James Garfield Gardiner: Of course, when you start to restrict the consumer you reach a point where you also restrict the producer with regard to the price he receives. After all, what the farmer gets out of the hogs he sells in Canada is the British price for the products sold in Britain plus the price received from the consumer in Canada, and those two prices are averaged in the proportion that these pork products are consumed in these two markets. About 64 per cent of our hogs are consumed in Britain and about 36 per cent in Canada; or, roughly speaking, about one-third in Canada and two-thirds in Britain. Therefore, if you increased the price of one-third of the hogs by three cents, and spread that increase over all the hogs consumed, it would mean an increase of one cent in the general price. I am not at all certain that we want anyone to step in and begin to control prices on our local markets too soon, at least in the interests of the producers of the hogs. Probably the Canadian people will accept the position, as I think it was accepted last night with regard to eggs, that we in Canada should be prepared to pay at least as much for the Canadian farm products we consume in Canada as the British are paying for them, and that in some instances we should be prepared to pay even more. Consequently I hope no one will start too soon to control prices of pork products or other commodities.


Percy Ellis Wright: The point is that the price the British are paying has risen by approximately SI per hundred; the price being paid by the consumer in Canada has risen three to five cents a pound, yet the price the farmer receives has not gone up $1 per hundred.


James Garfield Gardiner: If one were to examine the margin last year between the prices paid

Supply-Agriculture
the farmer and the prices received by the packer, as against the margin this year, it would be found that the margin had been sufficiently narrowed to take care of more than the difference which has been indicated.


George Alexander Cruickshank: As a farmer in British Columbia I never had much experience with hogs until I became a member of this house. Since the question of eggs has been brought up again, I should like to say that last night I thought the minister gave a very fine statement, one which I was quite prepared to accept. He dealt with the agricultural situation in a way that I do not think could be equalled by any other man in Canada. In his argument as to the setting of a minimum price for eggs-


Thomas Vien: 
George Alexander Cruickshank: Thank you. May I ask the minister a question?


Thomas Vien: Yes.


George Alexander Cruickshank: I presume that eggs are marketed as other farm products are marketed. Possibly my phraseology was wrong, and if it was, I shall have to correct it so that I may come within the bounds of item 28. Is any provision now being considered by the government to guarantee to the producer of eggs at least the minimum cost of production? If not, will it be considered? If so, will it be considered on the grounds taken with regard to butter? As I understand the situation, certain provinces have different prices set, on the ground that some provinces are exporters while others are importers of butter. In the setting of a minimum price for eggs, could it not be done on the assumption that some provinces are importers and some are exporters? Will any consideration be given to this question?


James Garfield Gardiner: Just to clear up the point we are discussing under item 28, may I point out that this is the vote under which we advance or attempt to advance the sale of Canadian farm products outside Canada, and under which we carry on our advertising to further those sales. To the extent that we have entered into an agreement with Great Britain, or to the extent that we may have negotiations with Great Britain with regard
to eggs, the matter may properly be discussed ' under this item. It is only to that extent that we are controlling the price of eggs in Canada at the present time.
During the month of May we shipped
180,000	oases of eggs to Great Britain. We have sold an additional 230,000 cases, to be delivered later in the season. The price basis of those eggs runs from sixteen up to twenty-two cents, depending upon the grade, and the type of egg being shipped. The fact that we are shipping out a very considerable part of the surplus does tend to set a minimum price; but up to date we have not gone beyond that in connection with eggs. As we go along, it may be necessary to take further action, but up to the present time we have not done so.


George Alexander Cruickshank: Does the minister consider the price of sixteen to twenty-two cents a price equal to the cost of production, let alone profit?


James Garfield Gardiner: The hon. member would have to tell me what farmer he is speaking about. I would not want to say.


George Alexander Cruickshank: I shall be delighted to tell the minister. I am speaking about the farmer from the Fraser valley. I appreciate what the minister has said, namely, that the taking over of the surplus automatically helps the Fraser valley, or any other poultry section in Canada. Am I, however, to conclude that the minister and his department are seriously considering paying a subsidy, or freight rates, or is he in some other way going to guarantee to the poultrymen exactly the same treatment as is being accorded to the wheat farmer?


James Garfield Gardiner: The British Columbia government does bonus eggs to the extent of three cents a dozen, and that has the same effect on eggs as other bonuses at other points have in respect of the prices of other products. It is only on account of that bonus of three cents that they are able to handle eggs under the prices which prevail in connection with the British shipments.


George Alexander Cruickshank: I still have not obtained an answer to my question.


James Garfield Gardiner: I am sorry, but I cannot answer that question without starting another discussion which would be entirely out of order under this item. I do not wish to get into that position.


Mr. HATFIELD:: I should like to ask the minister-


George Alexander Cruickshank: I asked a question and I am entitled to an answer.
Supply-Agriculture


James Garfield Gardiner: I have already covered the question in the item which has just been passed. I do not wish to go back and discuss it all over again. I do not wish to be the one to start a discussion by answering a question.


Heber Harold Hatfield: Why do we have this
great reduction in the item for marketing agricultural products?


James Garfield Gardiner: It is due to the fact that we are at war. The vote originally under this item was for $500,000. That was at a time whem we were trying to promote the sale of farm products in all European countries, Great Britain, south America and elsewhere. Since the war however, we have confined our activities largely to advertising within Canada, and to the negotiation of agreements with Great Britain. In view of the fact that the officials quite often come here, our expenses in connection with those negotiations are not as great as they formerly were.


Heber Harold Hatfield: But we have lost the European market, and we have to look up new markets in south America and other countries to take their place. I should think it would cost more money to develop new fields than to look after the old markets.


Percy Ellis Wright: The minister has not answered my question. What machinery has the government to ensure that the spread between what the farmer receives for his product and what the consumer pays is kept within reasonable bounds? At the present time the average price to the farmer is twelve cents a pound, dressed, while the consumer pays forty-five cents a pound for bacon and sixty cents a pound for ham. Every time the price the farmer receives rises half a cent, the price the consumer pays rises two cents. What is the reason?


James Garfield Gardiner: The advance on dressed pork products has been from one and a half cents to three cents a pound, depending upon which part of Canada is involved. That is comparable with an increase in the price of from three to five or six cents a pound on the different cuts of pork. Therefore, if the increases in the prices of cuts going to the consumer range from three to six cents, they are just about proportionate to the increase which has taken place in the whole dressed product, which includes most of the cuts, and some which are not termed cuts at all.


Percy Ellis Wright: My question is not yet
answered.


James Garfield Gardiner: The answer is that there is not any too wide a margin, so far as our check goes.


Percy Ellis Wright: The government has no machinery to ensure that that spread is kept within bounds; is that the answer?


James Garfield Gardiner: The bacon board is the machinery that is there especially to check on the price, to keep track of what is happening all the way across Canada, and to make agreements with Great Britain which will be satisfactory to both producers and consumers in Canada.


Percy Ellis Wright: Then the proper authority before which to lay complaints would be the bacon board?


Mr. McCUBBIN:: Coming as I do from
a beef and cattle district, I wish to say that our farmers have a bone of contention because when a farmer or drover ships cattle to the Toronto market, he is docked one dollar if the animal has a horn or a Stub of a horn. What check has the federal Department of Agriculture on that practice? How is it that the packer is able to take that dollar and put it into his own pocket? Why should the dollar not be put into a fund to improve our live stock?


James Garfield Gardiner: It is the packing
houses, I think, which put that dollar on, but in the three western provinces the three provincial governments, as I understand it, confiscate the dollar, and I think Ontario was considering doing the same thing. My information is that up to' the moment that has not been done in Ontario but is under consideration.


Heber Harold Hatfield: Who advised the department as to the order in council passed on March 25 with regard to the grades of United States potatoes that are imported? The grade specified in the order in council does not exist in the United States. They have no such grade.


James Garfield Gardiner: I am not so sure who
advised the government in the first instance on the grading of potatoes, because that would be long before my time. Changes are made from time to time in the grades. That is done after consultation with provincial authorities and others interested in the trade, and any changes made are based on the knowledge of the department as to the growing of potatoes across the country. The advice would be obtained directly from officials paid for such a purpose.

Supply-Agriculture


Heber Harold Hatfield: But the order in council of March 25 specified a grade in the United States which does not exist there. They have no such grade.


James Garfield Gardiner: My information is
that the officials in Washington have been consulted with regard to the matter. The whole matter has been discussed with them. While they have not at the moment the grades referred to in the order in council, it is their intention to have similar grades established.


Heber Harold Hatfield: In the meantime, in the month of May, about 200 cars of these potatoes came in from the United States. Had they been grown in Canada, they would not have been permitted to be marketed.


James Garfield Gardiner: I assume that the hon. member is referring to the new potatoes that come in early in the year, the smallsized new potatoes? I assume that is what he is complaining of, as he was this afternoon.
Mr. BLACIvMORE:	I think the minister
should go a little further with regard to eggs. He answered a question last night and said that he had answered it to the satisfaction of the hon. member for Fraser Valley because the hon. member had gone out of the chamber. Evidently, however, he did not satisfy him. I think some definite action should be taken by the dominion government with respect to the price of eggs. To me there are many indications that Britain is going to require many more eggs in the future than she has taken in the past. I doubt if there is any place in the British empire more admirably adapted to the production of eggs than the area in which the hon. member for Fraser Valley lives. I do not see any reason why the minister should not set a minimum price for eggs, something like the price of twenty-two cents which was guaranteed in the United States until, I believe, 1942. If the minister does not feel it is wise to set a flat price of twenty-two cents, I do not see why he should not recommend subsidizing freight rates on wheat moving to British Columbia or subsidizing freight rates on eggs coming east.
Surely something should be done about eggs so that we may be sure of a production that will be equal to the demand which may be made upon us at any time. To-day we are in this position:	If Britain should
need greatly increased importations of eggs, naturally we are going to let her have the eggs, but why should we not now prepare
to supply Great Britain with all she needs and still have sufficient for our own needs? In these days, eggs can easily be stored, and it seems to me a short-sighted policy to neglect production which would be stimulated by setting a minimum price. I should like to hear the hon. member for Fraser Valley tell us what he thinks would be a just minimum price for eggs. He asked whether sixteen to twenty cents would be-


Thomas Vien: Order. It is out of
order for an hon. member to cross-examine another, so to speak, or to question him. The hon. member must address himself to the Chair and direct his remarks to the item under consideration by the committee.


John Horne Blackmore: Then I am going to
ask the hon. member for Fraser Valley through you, Mr. Chairman, if he will tell the committee wrhat he considers would be a fair minimum price for eggs.


Thomas Vien: That is out of order.


Mr. FRASER (Northumberland, Ont.):: It is apparently becoming an indoor pastime in this chamber to break the rules of the house and be out of order, and therefore I wish to take about three minutes to be strictly out of order. Every time the group in the far corner talk for sixty minutes, Hitler is turning out in the Skoda works a sixty-ton tank. Whether some of us in this house know it or not, the people of Canada realize that we are wasting time in discussing matters of infinitesimal importance at a time when Canada and the rest of the empire are facing the greatest crisis in their existence. When the Suez canal is being bombed to-night, when Alexandria, Egypt, Malta, and Cyprus are in jeopardy, here we are, paid by the taxpayers, out of the money of the people of Canada, talking piffle, absolutely unadulterated piffle, in view of the crisis we are facing. These questions which hon. gentlemen are raising to-night can easily be discussed and settled in a democracy after the war is over. Just look at the headlines in the papers to-night. The one thing we need-


Some hon. MEMBERS:: Order.


Gordon Knapman Fraser: I
called "order" before I rose in my place, and I repeat "order" to you. If you can add anything to what I say, you can follow me. I say, Mr. Chairman, that the duty of every member of this House of Commons is to do what he can to educate the people of Canada to war-mindedness, to the fact that it is not wheat and it is not marketing that is the one
Supply-Agriculture

big question before us to-day. It is the very life of Canada and of the empire that is at stake to-day.


Victor Quelch: On a point of order, Mr. Chairman-
Mr.. FRASER (Northumberland, Ont.): Sit down until I finish. I have the floor. You sit down.


Thomas Vien: Order.


Gordon Knapman Fraser: My hon. friend has had his chance.


Victor Quelch: On a point of order, Mr. Chairman, what have the hon. members remarks to do with item 28?


Thomas Vien: The question before
the committee is item 28 of the agriculture estimates. I have already drawn hon. members' attention to the necessity of adhering strictly to the rules in discussing the estimates. There is a certain difficulty in deciding whether the questions which have been put fall under the item under review, but there is a great deal of truth in what the hon. gentleman has just said, that unless we cany on our proceedings in orderly fashion, our proceedings will fall into disrepute and the house itself will fall into direpute with the public. We are gathered here to discuss the legislation which has been brought down for the consideration of members of parliament. I would, therefore, draw the attention of hon. members to the necessity of proceeding in an orderly manner. To do so, speeches must be strictly relevant to the item under consideration.
Another rule of the house forbids the tedious repetition of the same question. The Minister of Agriculture has answered one question at least ten times. Repetition is out of order. When a minister has replied to a question, if his reply is not to the satisfaction of hon. members they have their remedy; they may vote against the item. But it is contrary to the rules continually to repeat the same question, because we must expedite within reason the work of the house. I am trying to do that. As Chairman, I am the servant of the committee. The House of Commons has passed rules and standing orders. It is my duty to apply them, and it is the duty of all hon. members to try to carry on discussions according to the rules and standing orders of the house.


Gordon Knapman Fraser: In view of the fact that I had the floor when you called me to order, Mr. Chairman, I wish to adhere strictly to the item of marketing, and I desire to say to my hon. friends that if they could market at a nickel a word the verbiage

they have perpetrated on this house, they would pay off the national debt of the dominion without any difficulty.


Some hon. MEMBERS:: Order.


Thomas Vien: In my opinion it is out of order to cast any reflections on the manner in which any hon. member has behaved in this chamber in a debate. If any hon. member is out of order, it is the privilege of another hon. member to raise a point of order, but it is not in order to make a general reflection upon the procedure or upon the manner in which any hon. member behaves in this house.


Gordon Knapman Fraser: I did not make a general condemnation. I made a direct reflection upon and condemnation of the time which is wasted in this house.


Some hon. MEMBERS:: Order.


Gordon Knapman Fraser: Listen to me. Whether I am wasting time or not, I have the right to rise in my place here and say what I think.


Major James William Coldwell: I rise to a point of order. This is entirely beyond endurance. Some of us have been in this house practically all the time, but I have not seen the hon. member very frequently in his place. I suggest that we try to follow the rules.


Thomas Vien: May we say that the incident is closed, and that we are now on item 28 of the estimates.


Richard Burpee Hanson: May I suggest to hon. members that we proceed in an expeditious and orderly manner so that we may have the business of this house dispatched. I know nothing about agriculture; I-admit.that at once. Hon. members have some rights; but I submit there has been a great deal of repetition, which ought not to have occurred. Let us get on with the business.


John Horne Blackmore: Mr. Chairman, are we to understand that it is no longer in order to discuss the question of eggs? If so, we just want to know about it.


James Garfield Gardiner: May I say that there is one rule which has not been referred to up to the moment? There is an orderly way of doing everything in the house. If we have passed an item which someone thinks ought to be discussed further, he can always move to revert to it. But so long as the item has been passed, and we have not reverted to it, I do not think anyone should bring the matter up and discuss it further. I might say that we stopped voting items last

Supply-Agriculture
night because the hon. member for Lethbridge requested the right to discuss eggs, and he was to have discussed eggs on item 27. I do not know whether he was in the house when item 27 was under discussion, but that item was held last night to permit a discussion of eggs. We have now discussed eggs and have passed item 27, and are now at item 28. We discussed eggs last evening for about an hour; we have discussed them again to-night for about half an hour, and I think we should go on with the discussion of the items, seeing that the hon. members who were here did pass item 27.


John Horne Blackmore: There is one thing which I think I should have the right to say, namely, that all day yesterday I had nothing to say on the items under consideration. Last night when I started to speak I was ruled out of order, and to-night, when we wish to discuss this matter, the hon. member for Northumberland, Ont., has the effrontery to rise and point to us over here as though we were the people who were causing the delay. All hon. members are discussing these matters; we are entitled to discuss them. While we are on the question of wasting time, I should like to know why we are here in this chamber, if it is not to talk, and whether there is anything more important to discuss than the matter of agricultural prices. I have now said my say.


Major James William Coldwell: Since this is the markets ing item, may I say something which is not strictly in order. It is this, that those of us who knew Doctor William Allen, who was in charge of our marketing services in Great Britain, would like to record our appreciation of the work he did for this country and our regret at the loss of a faithful civil servant. To his widow and family we would express our deepest sympathy. Those of us who knew Doctor Allen in Saskatchewan and the pioneering he did in agricultural economics feel that at some point, at least, in the discussion of the branch to which he was attached, some of us from that province-probably had the minister thought of it, he would have taken the initiative himself-may appropriately give public expression to the regret we feel that this valuable civil servant was lost at sea on his way to resume his duties in Great Britain.


Mr. HANSELL:: I do not wish to ask the minister any questions about eggs. I was here last night and purposely refrained from discussion. I wish, however, to make an observation and bring it to the minister's attention, it has to do with marketing eggs in Great Britain. Last fall, when eggs were selling in Canada for fifteen cents a dozen, people 14873-226
in Great Britain were paying eight cents each for the same kind of eggs. That cannot be helped now, but certainly the people in Britain who are being taxed to the limit, and particularly old people of scanty means, who may be on the old age pension, should not have to pay eight cents apiece for eggs which our farmers have sold for fifteen cents a dozen. I suggest that if there is any way to overcome a condition of that sort, it should be remedied.


Mr. CORMAN:: Could the minister give the committee any information regarding the possibility of sales of canned tomatoes to Britain in the coming year?


James Garfield Gardiner: At the present time a deal is being negotiated with Britain for
20,000	long tons of tomatoes.
In so far as the shipment of eggs to Great Britain is concerned-answering the suggestion made by the hon. member for Macleod-we have been discussing within the last twenty-four hours with representatives of the British government the marketing of eggs in Great Britain. As a matter of fact, those representatives were sitting in the gallery of this chamber last evening, listening to the discussions which were going on, and probably gathering considerable information. The representatives who are here have intimated to us that there is a reason why they cannot take Canadian eggs. It has nothing to do with price except that we have not suggested to them that they should pay more for the eggs than they are paying in some other places from which they get eggs. The real reason why they cannot take as many of our eggs as we should like them to take, or as they would like to take, is the question of shipping space. They have obtained eggs for a long term of years from China, and those eggs have come in dried form. But they are not able to get dried eggs from that source now. If we had drying plants in Canada to dry all the eggs we have, we could dispose of all the eggs we have in Canada as dried eggs which we are not eating ourselves, but we could not get a sufficient price for eggs in the dried form to equal that paid now.
Obviously there are problems of all sorts. They can take almost any quantity in the shipping space if they are dried, but in the form of fresh eggs which have to be put in cases and packed in the space required for shipping eggs in that form, there is a question in their minds whether they will take eggs at all for any considerable period of time. They bought 180,000 cases in May and contracted for another 230,000-and that means millions of eggs-but they did not say to us

Supply-Agriculture

that they .would like to contract for very many more at the moment. They are not sure whether their shipping space will be available, and if they contract for them they wish to take them. That all brings about difficulties in dealing with eggs at the present time.
I simply wish to add, to what was said by the hon. member for Rosetown-Biggar, the statement that this is the item under which Doctor Allen was paid for his services during the time he was in the employ of the government. As hon. members know, he was a veteran of the last war. He had been seriously wounded in that war, and he accompanied the group which went to Britain last fall to make agreements with the British government. He returned to Canada and explained these agreements to the farmers throughout the country. When he was on his way back to his post in London the boat on which he was travelling was sunk and he lost his life. I wish to add to the tribute paid him by the hon. member for Rosetown-Biggar by stating that he was one of the most faithful and most experienced servants the department has had. He was born in England; he homesteaded in this country, lived on a farm, went overseas in the last war, came back from overseas and took a university course to qualify himself for agricultural work, went to the United States and took a post-graduate *course, came back to Canada and served the farmers of Canada with that experience. There was no one in the service of the department whom it would have cost us more to spare at this time than Doctor Allen, and I regret very much the loss the department has sustained.


Heber Harold Hatfield: Will any of this money be used in the marketing of maritime potatoes in central and south America and in south Africa?


James Garfield Gardiner: Under the Minister of Trade and Commerce there was a mission to the West Indies and south America. It was under way earlier in the year, but, as we all know, the Minister of Trade and Commerce had to return to Canada earlier than he expected. I understand he intends to go back, but the expense of those negotiations will not be under thf'se estimates but under the estimates of trade and commerce.


[Stage Direction]
Item agreed to.
29. Special. Prairie Farm Rehabilitation Act and water storage, $2,500,000.
Mr. PERLEY:: There is no increase in this item. The item is a large amount, but there are no details. There is no page in the estimates to which we are directed for details. The minister might be well advised to give an outline of the work under the Prairie Farm

Rehabilitation Act. He might tell the committee the programme for the coming season. I went to the auditor general's report in order to obtain a few details with regard to the operations of the last year, but I am sure the minister would not care to have me read all the comments in the report in connection with the work that has been done. I must leave it there because I do not want to take up the time of the committee. I will say, however, that a great deal could be said by way of criticism.
Yesterday the minister had a bill passed through the house in short order, and at his suggestion there was no particular discussion on it, because he said we might ask questions with respect to the Prairie Farm Rehabilitation Act when we came to the item for that act. We refrained from discussion yesterday. The act gives the minister considerable power to undertake small projects up to $5,000, and I should like him to give an outline of what it is proposed to carry out this year and what he proposes to undertake under t'he act passed yesterday.
May I refer to another matter. Will he make a statement with regard to community pastures. I have a clipping from the Leader-Post in which it is said that there was to be a conference of community pasture managers. In the auditor general's report the statement is made that there are thirty or forty managers of community pastures, and there are only fifty-four community pastures in the west. That is out of proportion to the number of managers that could do the work. As the minister said on a previous item, the reason for a reduction of $75,000 this year was the war. We might take that to heart with regard to this work. We have a war on our hands, and it should be the minister's endeavour to curtail in every possible way expenditures on this work. It has been going on for the last six years, and I notice in the auditor general's report that there are thirty-one employees in the work drawing over $2,400 or more each, some as high as $4,000, one or two in the neighbourhood of $6,000, and their expense accounts run from $200 to $1,500 and, ini one instance, to nearly $2,000. That is one thing I should like to impress upon the minister; we have a war on, and while this work may be essential in some respects, I think he could curtail to a great extent and save, I would suggest, maybe half a million or a million dollars this year on this work without doing any injustice to those interested or to the west generally. Would the minister give us a statement with respect to what projects he proposes to undertake during the coming season?

Supply-Agriculture


James Garfield Gardiner: Regarding the statement that we might save on the total amount this year, I might say that we were spending about $3,500,000 a year before the war. Last year that was cut down by a million dollars, and this year we have voted the same amount as last. While we are not lowering the amount below what it was last year, we are cutting it by a million dollars a year during the war period to date.
The appropriation on water development for 1941-42 is 81,270,000. Out of that there is for administration, namely, salaries, travelling expenses, wages, rent, freight, express, communication, supplies, miscellaneous and equipment. $178,200. For small projects the amount is $301,800.


George Hugh Castleden: Is that smaller or
larger than last year?


James Garfield Gardiner: It is approximately the same, a little less.


Mr. DONNELLY:: Does that include the community dam, small dams and dug-outs?


Ernest Edward Perley: Water projects only?


James Garfield Gardiner: Small water projects only. Then, in connection with larger projects, there is $58,000, covered in practically the same items as were covered for administration in connection with small projects. There is a total of 8475,000 to be spent for the larger projects. For maintenance there is a total of 827,000. In connection with water storage there is $70,000 for administration and $30,000 for maintenance.


Ernest Edward Perley: In giving these, will the
minister state where the projects are?


James Garfield Gardiner: These projects are at
present only in the stage of being studied. I would rather not list them as absolutely authorized at present, because I am afraid that if they were published to-night as the names of projects we had undertaken to do, we might have to go ahead and do them, and some we might not wash to do after our examination is complete.


Ernest Edward Perley: We are all going home next week-


James Garfield Gardiner: I would not mind letting the hon. member look at the list, but I should not like to have names of projects published as having been authorized. There might be some that would not be proceeded with.
For surveys there is $60,000, making a grand total of $1,270,000 in connection with water.
The amount voted for land utilization for 1941-42 is $750,000. That vote has been increased, the vote for 1940-41 being $500,000.
Land utilization administration amounts to 833,840; construction of community pastures and reserved grazing areas, fencing, irrigation and so forth, $320,660. Management and operation of community pastures amounts to $104,500. This is the item to which I think the hon. member for Qu'Appelle was referring in connection with costs of management. These pastures are operated under grazing boards that are set up in the community. The manager is appointed by the government, and is the secretary of the board. But fees are collected in those pastures for the placing of live stock in them, and although this is not true of each one of them individually, taking all the pastures there has been a surplus of fees over the costs of management.


Ernest Edward Perley: How many pastures are there?


James Garfield Gardiner: I think fifty-four at present. The policy in connection with the larger pastures is that a manager is in charge of each one. He has charge of the cattle or live stock in the pasture; he is charged with the breeding policy, and in the case of some, there is a marketing policy associated with the organization which he also conducts for them.


Mr. DIEFENBAKER:: What is his salary?


James Garfield Gardiner: The salaries range
around $25 to $35 a month; they are not all the same. Just as there has to be a man to run a farm, there has to be one man at each of these pastures who has charge of the live stock for the year.


Ernest Edward Perley: Employed by the year?


James Garfield Gardiner: Yes.


George Hugh Castleden: He is paid by the government?


James Garfield Gardiner: He is paid out of the fees, but if there were a deficit it would be paid by the government. There is, however, usually a surplus.


George Hugh Castleden: The pastures are used by the people of the district?


James Garfield Gardiner: Yes; we take finst the group of farmers in the first row of the section, add those in the second row and so forth until we get enough owning sufficient stock to occupy the pasture. Those men form themselves into an association and determine among themselves how many stock each one is allowed to place in the pasture.


George Hugh Castleden: The control of the pasture is in the hands of the association?


James Garfield Gardiner: Except that the government pays the manager. He is the secretary
35S0
Supply-Agriculture

of the board, and he really is an official of the government, and keeps a check on what is going on.


George Hugh Castleden: Is he chosen by the association or appointed by the government?


James Garfield Gardiner: He is appointed by the government.


Ernest Edward Perley: How does the percentage of cattle in the pastures last year compare with the percentage the year before? Was there an increase or a decrease'?


James Garfield Gardiner: I have not the comparative lists. In any event, I am afraid they would not be useful because the number of pastures last year was much greater than the number the year before. The total number of live stock pastured last year was: cattle, 15,549; horses, 7,109; sheep, 646; or a total of 23,304.
I find I have the figures. The increase over last year was 11,382. That is, the number was about doubled.


Ernest Edward Perley: What percentage of
increase in the number of community pastures?


James Garfield Gardiner: From thirty-eight to fifty-four.


Ernest Edward Perley: It just ran about the same, then?


James Garfield Gardiner: Yes, about the same. As a matter of fact, when we set up the pastures there was a regulation to the effect that only a certain number of farmers would be allowed in, until there was enough live stock to take up two-thirds of the capacity of the pasture; then, before more cattle, horses or other live stock could be added to that number, the committee had to agree to the increase, and also had to agree on how the distribution of that increase should be made. In the beginning we insisted that only enough farmers to supply two-thirds of the live stock that could be maintained by the pasture would be allowed in, in order that the people coming along later, after the scheme was under way, could increase the live stock on the different farms in the community; and there would be some increases at some points as a result of action being taken to make that possible.
The next item is the purchase of land, land sales and records, $75,000. That is a decrease from the previous year, when the figure was $110,000. Then we supplied bulls to these pastures, in the same way that we supplied them to clubs under other policies, and the amount allotted for this item is $15,000. Reestablishment of farmers amounts to $50,000. There is no provision for federal

relief this year, nor was there any provision last year. Previously we had to pay some relief in connection with persons whom we were moving out of sub-marginal areas into other districts.
Then seed purchase and preparation, cultivation and harvesting operations on lands being irrigated by large projects, amounts to $100,000. That is, when these irrigation
projects are started we have followed the practice of operating some of these lands during the first year and seeding them down to alfalfa, so that, this land could be used by farmers as pasture land as soon as they took over the property. We have also seeded grain crops on some of the land, harvested them and, in some instances sold the grain. These lands are always sold to farmers on the basis of $10 an acre, under agreements which really never come to a final conclusion. In other words, the government always owns the land; the last payment is never made, and consequently the government is always in a position to prevent persons from getting control of all the lands and giving them a speculative value. Then there is grass seeding of community pastures; $20,000 in the Swift Current experimental farm district; $20,000 in the Scott district; $10,000 in the Indian Head district and $1,000 in the Brandon district, making a total of $51,000.
The headquarters administration item of $105,000 is made up as follows: administration of the Ottawa office, $9,500; administration at Regina, $45,000. This year there is nothing provided for the expenses of advisory committees; if they are called in, we shall have to make provision for those expenses out of the money that is not allocated. Aerial surveys amount to $500; last year the amount was $3,000. Economic surveys amount to $44,000; entomological surveys, $6,000.
Then come the cultural activities, namely experiments in research, including cooperative assistance to the prairie provinces in soil surveys and research, assistance to agricutural improvement associations, soil moisture and soil drifting, conservation projects, grazing surveys, the publication of experimental data and so forth, made up as follows: cultural publications and administration; publication of farmers' circulars, bulletins, and so forth, $29,300; district experiment sub-stations and reclamation stations, $130,125; grass investigations and coverage and range surveys, $30,645; tree planting, $39,065; soil research and soil survey, $68,155; agricultural improvement associations and soil drifting control, $54,000; cultural work on irrigation projects, $17,110; live stock surveys and sheep development, $6,600. We have nothing allotted for

Supply-Agriculture
reestablishing centres for pure seed grain production this year. That gives a total of $375,000, and this makes up the total expenditure.


James J. Donnelly: This act applies particularly to the district from which I come. The Prairie Farm Rehabilitation Act was instituted primarily for the purpose of assisting the people in the dried-out sections of western Canada. After four or five dry years, many people throughout the country, including many members of this house, said, "Well, that part of the country never should have been farmed; the people never should have been settled there at all, because it is not fit for farming." Even in that district we had people saying, "Probably the government made a mistake in asking us to come into this country and farm." Speaking in this house towards the end of the session of 1933-34, when the Conservative government was in power, I mentioned this situation and advised the government to make a thorough survey of that section of the country in order once and for all to settle the question of whether or not that area was fit for farming. If it was found to be unfit for farming, I suggested that they should move the people out of that district to some other part of the west. On the other hand, I said, that if that area was suitable for farming, then the government should go there and show the people how they should farm it.
I was, and still am, one of those who believe that that area should be farmed, that it was a good farming country. It is bound to have dry years; it has had them in the past and will have them again, but I was in that district for twenty years and had better crops there than I had in other parts of the west. It is true that for the last ten years we have had crop failures there, and we shall probably have them again, but I advised the former government that if this area was found suitable for farming, they should save every bit of water so that not a drop from that dried-out area would flow into Hudson bay or the gulf of Mexico. I said that we should keep all the water there, in order that we might have crops, because there is nothing wrong with that part of the country except lack of water. I said that we should dig dams and build reservoirs; that we should put in dug-outs and commence irrigation. Then I said that we should prevent soil drifting by strip-farming; that we should conserve the snow, and gather it together. We should plant trees so that the snow may drift round them. We should put fibre back into the soil by having our people sow grass in different sections.
The result of this was that in the next year, 1935, Mr. Bennett put into effect the Prairie Farm Assistance Act. He procured a site for a dam at Valmarie, and one at Eastend, and began operations there. Operations under the act have been continued ever since. It has been a great work and has done a great deal of good. We have learned many things, and particularly with regard to water. I claim that the great thing in connection with the holding of water is, in fact, the small thing. That is to say, the small dam, the little dug-out on the individual farm does more good than anything else. Anyone who has lived on a farm and who has hauled water four or five miles to water his stock knows what a great benefit it is to have water right at hand. These little dams and dug-outs give the farmer that water. They also enable him to irrigate a small piece of land, even if it is only a quarter of an acre, so that he may have a garden and grow a few vegetables. That does more good than anything else- more good, even, than the big dams.
We know that we have big irrigation schemes, but my opinion is that they are good only for purposes of show-window display. They show the farmer what can be done by irrigation. But if western Canada is going to depend upon irrigation, then the future of western Canada will not be very bright. That is all I have to say about the matter. All that the big dams and big irrigation schemes do is to show the farmer what can be done by irrigation. It shows them how to. go to work in the making of small dams and small irrigation projects on individual farms. Those small dams are good things; they are the things which are of great benefit to the farmer. I heard someone say in the house the other night that the building of community dams, and that sort of thing, had developed into a racket. So far as my district is concerned, it was not a racket. I do not know whether I have an honest electorate or an intelligent electorate, but I know that we had no racket in this connection; nor have we had any of the bigger community affairs.
We have no big irrigation schemes. My district is in the very centre of the dried-out area, and yet we have not had those big schemes. We have no big dams. We have small irrigation schemes put in by the individual farmers. We have many small dams and dug-outs, but they have all been constructed by the farmers themselves. They are not drag-line propositions at all. None of them had cats and tumble-bugs to pull stuff out of the bottom of the dug-out. This was all done by the farmer with horses.
Supply-Agriculture

I should like to see more of these small systems. Then, practically all the better farmers in the district are doing strip-farming. Fifty per cent of our land, is under cultivation and is sown to seed, and 50 per cent of it is summer-fallowed.


Ernest Edward Perley: The hon. member will not be in on the bonus this year.


James J. Donnelly: No. I might say that most of our farmers are sowing their grain, much the same as they did in other years. They are not reducing their acreage. They believe it is better to have wheat stored on their farms than to have nothing growing. They would rather have three or four thousand bushels in their granaries, in case we have another dry year.
Next we come to the matter of tree planting. All hon. members will realize that tree planting is of great importance. We have many men in western Canada who are familiar with the subject. I still believe, however, that a great mistake has been made in connection with the planting of trees on the bald prairies from which I come. In the first place, the wrong kind of trees have been planted, and, in the second place, they have been planted in the wrong places. When a farmer in western Canada builds his house he builds it on the highest part of his farm, but that is the very worst place to plant trees. Invariably, however, the farmer plants the trees round his house, so that they may serve as a wind-break. He should, in my opinion, plant his trees in the lowest spot on his farm. He should plant them down in a draw, so that the trees could catch and hold the snow, and thereby develop a place where he could have a garden. The farmer, however, plants his trees on the top of a hill, where it is more difficult to catch the snow because of the action of the wind. The snow is blown away and does very little good and, in that position, the trees can do very little to hold the snow. They are only something to look at.
I say, too, that the kind of tree which has been planted is wrong. Invariably the farmers plant trees which grow quickly, and they have shown a preference for Manitoba maples and poplars. Those trees grow their roots close to the top of the ground, they do not develop a tap root. The result is that in the event of an early spring, and a spell of fine weather, the snow melts; the trees-possibly because of tree instinct

imagine that the summer has come, and the sap goes up into the branches. Then, during the night cold weather may come back; the thermometer may drop, and the tree is frozen, splits and dies.
Not only that, but trees of that kind take moisture from the top soil, and in dry years

many of them die. I have seen dozens and dozens of beautiful hedges die out in dry weather on account of lack of moisture. If we would plant trees with tap roots, roots that go down straight into the ground, we would find that they would not be so quickly affected by the fine weather. The few warm days would not get down to the depth reached by the tap root. The result is that the sap would not come up until later; the tree would not be frozen and would not split. If we planted trees like the caragana, we would have much better results, because we know how well it grows, and the manner in which it develops its tap root. The same applies to the elm. It grows well in my section of the country. We need trees with tap roots which would go down into the ground, and live there even in dry weather, when trees living nearer the surface would be dried up and would die.
Then we have the other proposition, namely, the planting of grass, with the object of putting fibre back into the soil, and thereby preventing soil drift. Added to all that, we have had the project for the development of pastures. That is a good work. It has taken out of cultivation land which should never have been cultivated, and put it back into pasture. I commend the government for the work it is doing along these lines, although it requires some supervision. I hope to see the work continued, despite the fact that we are in the midst of a war. This is a development which is helping the farmer, and which has brought about a great change in the country. I hope it will be continued.


John Horne Blackmore: The hon. member who just resumed his seat has expressed my sentiments, although I would not agree with him in all he has said respecting irrigation. Possibly he has not had enough experience in that regard to appreciate its value. May I express my warmest approval of the minister's ideals in connection with rehabilitation work. So far as I have seen, I believe that his work has been well done, and that it will stand for generations after we are gone. Certainly it will greatly benefit western Canada.
Like the hon. member for Willow Bunch, I have great faith in the west, but it must be borne in mind that much of that land is in what is known as the Palliser triangle and probably should never have been settled. But now that it is settled, I do not believe in quitting. I believe that if we go forward with faith and put forward the amount of effort we need to put forth, we can make of that area one grand asset to the Dominion of Canada. The amount of money which is being voted here is not enough. I should have

Supply-Agriculture
been glad to see the minister bring down an appropriation of $4,000,000, and I would gladly have supported such a vote.
May I go on to urge that the minister continue to develop the larger areas of irrigation too? The dug-outs are suitable for certain areas. Indeed, I believe that each of the other activities in which the department is engaging and spending money are all good for the areas where they are. But there are some areas where it is not difficult to put a quantity of water out on land, which is fertile, and with a climate that is excellent, to develop a region where fine homes can be built which will be a joy and satisfaction to the minister and those associated with him as long as they live to see that good thing.
I wish once more to express my entire approval of the minister's plans and of the way he has worked them out, and to urge him not to be influenced by those who are talking too much economy. After all, let us remember that this war is perhaps only in its beginning. If so, we are going to need all the production that Canada can muster, perhaps long before this war is over. If it so be that we shall be blessed with an early termination of the war, we shall have these projects there; they will be good, and we shall manage somehow to raise the money to do the other things that are necessary.


John George Diefenbaker: I should like to
bring to the attention of the minister the condition of Long lake within my constituency. It is not for the reason that it is so situated that I bring it to his attention. It is one of the largest lakes in southern Saskatchewan and it is of importance to the people of the province as a whole. It has located on its shores several fine summer resorts. Its fishing industry is of considerable importance. It is a reservoir of many hundreds of square miles. It has been receding over a period of years, and in the last year or so, in an alarming degree. This is one place where expenditures could well be made in order to ensure that that lake shall not dry out and that moisture shall be conserved. I would ask the minister to let the committee know just what is being done in that regard.


James Garfield Gardiner: Long lake is situated, as many members of the committee know, almost directly north of the city of Regina, perhaps thirty miles north, and there are on that lake a number of summer resorts as the hon. member for Lake Centre has indicated. The lake is about seventy miles long and varies in width. It is one of the largest storage basins in the settled section of Saskatchewan and has been under consideration in this
house on quite a number of occasions. Many years ago it was used for navigation. A boat ran the seventy miles north, carrying passengers and freight up and down the lake. At that time there was a dam built on the Qu'Appelle river just to the south and east of the lake. That dam was constructed in such a manner as to catch the water when it came down in the spring of the year and force it into Long lake. Then, during the summer months, for a considerable part of the time the water was allowed to run out of the lake again and down through the valley. The government of Canada has had one or two lawsuits as a result of having changed the course of the water and raised the water levels-


John Ritchie MacNicol: May I ask if the
Qu'Appelle river had a branch flowing into Long lake?


James Garfield Gardiner: Yes; the natural flow of water did take that course. It ran into the lake in the early part of the season, and, as well, water was fed into the lake from all round. When the water reaches a certain level it starts to run out again down the Qu'Appelle. But the dam which was put in made that operation more effective than it was before. The dam has raised the water approximately six feet above the original level through forcing the water in.
There was a lawsuit many years ago by reason of the flooding of lands at the end of the lake for the purpose of making it possible to run the boat to which I referred, and the government as a result of the lawsuit had to pay $50,000. Later on, there was another lawsuit because the people below were not able to get water on to their hay lands at the proper time of the year. The water came down in June and, instead of helping to produce hay, helped to produce foxtail. The operation of the dam was accordingly changed to let the water come down in greater volume in the spring of the year, and ever since that change in the operation of the dam, the level of the lake has gradually been going down. During the drought years it has gone down to six feet below the level of the stream itself from the Qu'Appelle river into the lake, from which the water comes in, part of the time. An effort is being made so to operate the dam as to raise the level to some extent, but I am afraid that as a result of our experience, the effort may not be successful until we have years of greater precipitation than we have had in the last three or four or even ten years, during which period there has been a receding of these waters. Nevertheless the water has been running into that lake.
Supply-Agriculture

There have been some other things done on the river which affected the amount of water which comes in at least in the early part of the year, after these works were constructed. A dam was put across the Qu'Appelle river up where Moose Jaw creek enters the Qu'Appelle, directly north of the city of Moose Jaw. The water from Moose Jaw creek, if I understand the location of the dam, remains in that lake. That is what is known as Buffalo lake, and the drainage from the west that comes down the Qu'Appelle and down from the north from all the streams in that area also runs into that lake. Up to the present time this year there has not been the volume of water come down from Buffalo lake which came down before, and probably that has had some effect on the amount of water which has gone into Long lake this spring.
My view is that the amount of water which passes Buffalo lake this year and perhaps for some succeeding years will not affect greatly the level of Long lake. But we shall have to have a few years experience to learn to what extent that is true. It is not impossible to let the amount of water come down which would have naturally come down, and to let it come down over a longer period of time, because the dam 'Can be so operated at the end of Buffalo lake as to make it possible for that water to come down the Qu'Appelle and be run into Long lake through the operation of the dam at Craven.
That is the position at the moment. The committee which has been appointed by the summer resorts on the lake has been working on the problem, and I am to meet 'them when I go west after the session, discuss the matter further, and decide on any works that may be necessary to control the water in the interests of all the people living in that area.


Victor Quelch: Will the minister outline
briefly his programme with regard to the building of small dams? I understand that the department has a number of old applications before it to be dealt with. Is it the intention to accept new applications, and what will be the price paid? The minister will appreciate the fact that under the new agricultural policy there will be a swing back to the raising of stock. A great deal of new land will be used for pasture, land which to-day has no access to water, and it will be necessary that provision be made for the construction of dugouts on this new pasture land.


James Garfield Gardiner: In so far as the dug-outs for which there has been application in the past are concerned, our present intention is to make a survey of those which

have been actually passed and arrangements for the digging of which have been made, and to have those passed first; and if they take up the amount of money which is available, that will be all that will be proceeded with this year. I am, however, under the impression that a considerable amount of the appropriation will be left after we have dealt with these, and then we shall take the applications in the order that they come in from that time on, in order to have dug-outs constructed on the different farms. I may say that it is the intention, unless we are otherwise advised or convinced by the advisory committee, to insist upon getting back to the method which was outlined by the hon. member for Wood Mountain, and which he says has been followed largely in his constituency, namely, of having these dug-outs constructed as far as possible by the farmers themselves.


Victor Quelch: Is it possible to obtain the services of the inspectors or engineers to advise as to the construction of these dug-outs in the event of its not being possible to get financial help in the digging of them? Can a farmer get this expert advice and go ahead with the work even though he is not paid for it?


James Garfield Gardiner: Yes. When farmers
make application for engineering advice with regard to the building of dams or the construction of dug-outs on their land, we give that engineering advice free. We prefer, of course, that the farmer should do the work without assistance from the government. In most instances-I would say in 90 per cent- the farmer, because others are getting assistance, insists on having it too, and assistance for construction to the extent of four and a half cents a yard on the moving of earth is given in those instances.


Major James William Coldwell: I should like to ask the minister a question about another phase of prairie farm rehabilitation work. I refer to the soil surveys. I believe that that work should be continued and extended into the northern area of Saskatchewan, and, perhaps, some re-surveys should be made. Probably one of the most valuable services which has been done to western Canada is the soil survey. Had we had information available earlier as to types and locations of various soils, we might have avoided many of the errors which were made in settlement in past days.
I mentioned this evening Doctor William Allen, who together with Doctor Hope made an economic survey of parts of Saskatchewan. I believe that an attempt is now being made

Supply-Agriculture
to relate the surveys of these gentlemen to the soil surveys which were largely supervised by Doctor Mitchell. I am wondering to what extent the work is proceeding and to what degree the officials who are undertaking this work in the capacity of soil scientists are within the department. Are they yet temporary employees, or are they now a part of the civil service? I believe they are doing a very valuable work not only for our province but for the entire west. I should like to see the soil survey made a definite branch of the service and every encouragement given to continue and extend these surveys. I have in mind at the moment the possibility that after the war other people will desire to go on the land. We have not, so far as we know, a great deal of good land now available for settlement; but we have a great deal of land, and if it were classified, and analyses made so that we would know for what it is best suited, we might be able to find homes for people who might not be able to find them for themselves.
One of the finest services performed for the province of Saskatchewan and for western Canada, has been done under the supervision of Doctor Mitchell, of the university of Saskatchewan. I should like the minister to say a word about this matter, if he would.


James Garfield Gardiner: Soil survey work has been going on in western Canada, as the hon. member for Rosetown-Biggar knows, for quite a number of years. It has been a cooperative effort as between the federal government and the provincial governments. Mr. Wyatt in Alberta and Mr. Ellis in Manitoba have charge of the work there, operating through the universities. In Saskatchewan the system has been worked on a rather different basis from that in the other two provinces. After the last war we had a considerable amount of money derived from overages from wheat. The overage fund was turned over to the three provinces. Saskatchewan set aside from its share of the fund about a quarter of a million dollars, and ever since 1926 they have been using the interest derived from that fund for soil survey work. All the province has been covered by that survey, and, in addition, there has been a survey of precipitation over the whole province. A map has been made covering the soil survey; a new map is in process of being made in which the moisture condition as related to the soil condition is mapped as well, and one can get a very full knowledge of the condition of any area by examining that map.
As a result of these surveys, there has been set up in the various provinces systems under which an attempt has beei made to get 14873-227
people off sub-marginal lands. In Alberta they have their special areas. They have been working at this scheme since 1922, and probably more people have been moved off sub-marginal lands in Alberta than in the other two provinces.
Since this particular plan has been put into effect, and since we have adopted the practice of setting up pastures on sub-marginal lands, we have taken approximately a million acres of land out of cultivation or out of the control of individual farmers and put it into these community pastures. By this means, about a million acres have been taken out of possible cultivation for the growing of grain. The position in relation to that is that we are spending about $68,000 out of this vote on that soil survey work. The provinces are going on with the work which they have been doing, as well. The universities are associated with us in this activity, and we are hopeful that within a comparatively short period we shall have a complete knowledge of the soil condition of all the settled portions of the three provinces.


Percy Chapman Black: Before this item carries, may I observe that the discussion has been almost entirely from the point of view of western Canada. Those of us from the east have great sympathy for the west. We in Nova Scotia have special reasons to feel sympathetic because so many of our people went out west and helped to build up that section of the country. But we in the east, too, have farm problems, and to us it is staggering what sums of government money have gone into the west for the benefit of agriculture, in comparison with what has been expended in the east.
At the head of the bay of Fundy we have a problem as great or greater than any now facing the west, with regard to water control. Ours, however, is the problem of too much water, rather than that of conserving it. The figures I have secured indicate that under this heading of farm rehabilitation, there has been expended up to the end of the fiscal year, 1940, $9,794,597. There was appropriated for the fiscal year 1940-11, $2,500,000; I am not sure whether the minister made a statement as to what amount was actually expended.
This vote is for a further expenditure of $2,500,000. This programme provides for 31,089 smaller water-control projects, a few of which have not yet been undertaken, and, in addition, sixty-three large projects. There are extensive irrigation undertakings; there are community pastures, grass seeding, soil survey, pasture survey, prevention of soil drifting, tree planting, moving people from one section to another. Many, many millions

Supply-Agriculture

of dollars have been expended in the west to assist the growers of grain. We have had before us this year an appropriation of $35,000,000 to restrict the growing of wheat, or to bonus people for not growing wheat.
In eastern Canada we have rich areas of alluvial soil at the head of the bay of Fundy, as rich as any in all Canada, soil that attracted our earliest settlers, three hundred years ago. Such land had a selling value up to $150 and $200 an acre fifty years ago. It was the most attractive possession a man or woman could have as an investment. This property is to-day hardly worth owning except to those who are able to use it in their farming operations and who work it with their own labour. That is due to the reduction in the Value of the crops in relation to the cost of harvesting, the great reduction in yield and the quality of the crops.
The tides are up to sixty feet in. height at the head of the bay of Fundy. Many of the dykes built by pioneer settlers to protect these rich lands have broken down, and the lands are flooded. They have not been re-built because the owners of the property have not received returns of sufficient value to enable them to keep these dykes in repair. They have not been able to keep the canals open and ditch the marshes, with the result that tens of thousands of acres of our richest lands are becoming valueless. There are dykes broken down, aiboideaux washed away, water courses filled up, and large areas flooded. That is the condition in the east, at the head of the bay of Fundy in the constituency of the Minister of Finance, in Colchester, in Hants, in my own constituency of Cumberland, in Westmorland, in Albert county. If the government is spending $15,000,000 on farm rehabilitation and the construction of more than 31,000 water-control projects, irrigation works and so forth in the west, something should be done for eastern Canada, and there should be an appropriation to assist owners of marsh lands in Nova Scotia and New Brunswick.
I appeal to the minister and ask him if a small portion of the vote now before the committee could not be appropriated for assistance in controlling water, protecting and draining these very rich marsh lands at the head of the bay of Fundy in eastern Canada.
I am not objecting to what is being done for western Canad'a, but what the farmers and farm owners in eastern Canada have been receiving is not a drop in the bucket compared with the moneys that have been provided by parliament to assist owners of land and growers of grain in western Canada. [Mr. P. c. Black.)


James Garfield Gardiner: I would not wish to get into a discussion to-night on the amount of money spent east or west in connection with agriculture, but I have seen the dykes in the bay of Fundy, and I know they must have served a good purpose at one time. In some instances they still serve a good purpose, but there are others which I have seen in a state of disrepair which would make it necessary to do something about them. I do not know whether the responsibility lies here or elsewhere; I have not acquainted myself fully with the facts. I am informed that at least some of the money which was put into the construction of dykes in the early years was put up by the federal authorities. I have not looked into the facts in that regard, but I know there are many works along the streams and inlets in the eastern part of Canada upon which expenditure is being made, not by this department but by the Department of Public Works and other departments.
So far as expenditures in western Canada are concerned, they do not apply to all the west, but apply only to what is generally known as the drought area. Roughly speaking, a line is drawn about that dried-out area, and expenditures are made south of that line. For example, we do not make expenditures up in the Peace River country or in the northeastern part of Manitoba or in the extreme north of Saskatchewan. The line starts down in the neighbourhood of Winnipeg and runs in a northerly direction. It crosses the Alberta boundary where the Saskatchewan river crosses and then runs in a southerly direction to the Rocky mountains through Alberta. Therefore this is not an expenditure which is made throughout western Canada but is only in the area where the people have been suffering greatly from drought. As a matter of fact, 'it is made largely in the area which we did not throw open to settlement until after 1908.
Many of the lands in that area were used by the federal government until 1931 when they were turned back to the western provinces. During the regime of the previous government a commission was set up to investigate the matter, and it was reported at that time that somewhere in the neighbourhood of a figure which has been submitted to-night as having been spent on these
activities-$10,000,000, if I remember rightly___
was devoted to the purpose. The commission decided that about $6,000,000 is due to Saskatchewan and a similar amount to Alberta. Four million dollars has already been paid to Manitoba as a result of investigations made. These amounts were considered to be due to these sections because of the balance

Supply-Agriculture
between expenditures made by the federal government and amounts obtained by the federal government out of the sale of land and the disposal of land generally in the west. Consequently the balance is not all against the area in which these activities have taken place. Lands of the west were partly homesteaded, partly given to the railways to get them constructed across Canada, and sold in part to settlers who went in. That was not done in any other part of Canada. There is, therefore, in connection with the whole matter a problem involving many questions which I would not wikh to discuss under this item.
We have been doing something to assist in connection with soil surveys in the eastern provinces on much the same basis as we have done in the west.


Percy Chapman Black: In conjunction with the provincial department?


James Garfield Gardiner: Yes, in cooperation with the provinces and the university staffs, by the making of grants. The other part of the work we have not done. We have not done it either in the east or in British Columbia or in the northern sections of the three western provinces. It is confined largely to what are known as the drought areas.


Richard Burpee Hanson: I wish to say a word in commendation of the subject matter raised by the hon. member for Cumberland. The locality to which he refer''' ' is not in my part of the province, but I spent five years in the immediate vicinity when I was going to school and am thoroughly familiar with it. In the last decade of last century, the nineties, there was no more prosperous part of eastern Canada, from the point of view of agriculture, than that part known as the Tantramar marshes. That statement is also true with respect to Grand Pre and other places in the counties of Kings and Annapolis in Nova Scotia. Their wealth was due to their productivity in hay and coarse grains. The lands have been protected over many years by these artificial barriers against the sea which were maintained under statutory authority by elected commissioners, I think in most instances under the control of the property owners themselves.
I well remember when I was going to school at Sackville marvelling at the number of carloads of beef cattle annually sent to the Halifax and Saint John markets from that community, many of them for the export trade to England. That has now to a large extent disappeared; just why, I have often wondered. I have made inquiry from landowners with regard to it, and they tell me that one of the 14873-227*
great blows to the prosperity of the country was the advent of the internal combustion engine, the loss of the market for the hay that came from the cultivated parts of those marshes, and the gradual loss of profit in the production of beef cattle. The result has been exactly as the hon. member for Cumberland stated.
We have in our community in the county of Sunbury and the county of Queens on the east side of the river St. John a comparable situation. We have the large plains of the St. John valley, the big alluvial deposits there and a large island section in the river. I remember that one of the first investments I ever made was in an island lot in the river St. John, from which I annually sold the standing grasses, and which fortunately for me I disposed of before the deluge came.
There is no doubt that there has been a great depreciation in the capital values of those lands nearly all of which were owned by the farmers. The minister has stated, mostly fairly I think, the situation of the west, and I sympathize with the condition he has delineated there. I am going to make a suggestion to the minister. Would he, and could he out of this vote or some vote in these estimates, send some scientific man or engineer to look over the whole position in the counties of Albert and Westmorland in New Brunswick and Kings, Cumberland, Annapolis and Colchester in Nova Scotia, with a view to establishing perhaps a policy in conjunction with the provinces-because I believe the provinces have an obligation also to do something to reestablish the fertility and wealth of a very large acreage of land which is unquestionably productive but which needs this protection from the sea water? It requires the rebuilding of dykes in certain places and drainage in and out of the sea. I do not think the amount of money required would be so very large The reason why it has not been done is the loss of profit from the product of these areas. Therefore the suggestion that occurs to me on the spur of the moment is that the minister's department interest themselves to the extent of sending a man this summer to make a survey of the whole position with a view to evolving some plan whereby the land would be reclaimed to a degree at all events, not only for the present owners but for future generations. I think something could be done. At all events, it would be a splendid gesture to the people of those counties. If the minister could see his way to divert even a few hundred dollars for a survey, then the whole situation could be considered at a later date. I am sure the
Sup-ply-Agriculture

hon. member for Cumberland, the hon. member for St. John-Albert, the minister who represents a very large area, and the hon. member for Colchester-Hants, would lend all the assistance they could in the way of showing the locality, perhaps driving the engineer round and interesting him in the problem, because it is a very real one.
All I would venture to ask of the minister to-night is that he take some money out of one of these votes and have a preliminary survey made. Then the whole problem could be considered and, if possible, some plan evolved which would save the situation. Time is, I think, somewhat of the essence. Unless something is done to protect these dykes, the whole country will sooner or later be inundated. I invite the minister to give his serious consideration, after the close of the session, to the suggestion I have made.


James Garfield Gardiner: I think the former
government and, I am sure, the present government have guarded jealously the expenditure of this money as to the areas in which it is to be expended. It is most difficult even to propose getting outside that area, and I quite understand why that should be the situation. The federal government naturally did not wish to expend moneys on lands which are largely under the control of the provinces, apart from the areas where they felt some responsibility for having induced people to go in during a time when it was questionable whether it should have been settled.
I question whether we should or can do anything with this other problem. We have experimental farms at Fredericton and Nappan, and the staffs there worked along with the provincial authorities in making a survey of the very problem which has been raised here. We have had a committee working on it; a preliminary report has been made, and the report so far as it has been made would indicate that there are certain difficulties, which will be understood by both hon. members who have spoken. One of the difficulties is an economic one arising out of the change in conditions. The time when these marshes were giving the greatest returns was when cattle were being produced in much greater numbers than now. There are two problems: one, that of reconstructing and maintaining the dykes, and the other, that of what would be done with the land as against what was done with it in days when it was most profitable, namely, the growing of hay and grasses for cattle. Whether we can get back to that or develop some other kind of agriculture upon these lands is one question. I may be wrong 
in this. I have not discussed it with any of the authorities; I only say it because of what was said to me when I was there looking it over a few years ago. My understanding is that there is a condition in that soil which makes it peculiarly suited to growing certain kinds of grasses, and the fact that it has been flooded periodically over a long period of time by salt water has created a condition which requires a peculiar kind of cultivation in order to grow other crops than those grasses.


Richard Burpee Hanson: That, I
think, would apply only to a very much limited part.


James Garfield Gardiner: That is part of the
problem. All these matters are being surveyed, and reports are being made. To-night all I can say is that when we have a final report I think it will be found that the federal government and this department will sympathetically consider anything that can be done, and will assist as far as may be possible.


Ernest Edward Perley: I do not wish to detain
the committee any longer than is necessary, but this work is being carried on under three or four distinct branches. For instance, there is water development and conservation, land utilization, community pastures and seeding down to permanent pastures, and soil drifting. Would the minister tell us briefly what, in his opinion, is the branch from which he is getting the best results in connection with the rehabilitation of western Canada?


James Garfield Gardiner: Of course they are all
related, and it would be difficult to name the one from which we are getting the greatest benefit. Water, in the form in which we are providing it, in most instances is only valuable if live stock can be maintained; and live stock can be maintained only if water and grass are available. Therefore the reseeding of land to grass is associated with the question of having water. Perhaps the work that has been done might be described in the shortest possible way by reading a letter I have before me I wrote to ask this lady for the privilege of using this letter on some occasion, and I do not know of any better time than right now, because I think it illustrates better than anything I could say the great benefit that is being obtained by our people on western farms from this work. I do not know this lady at all, but the letter is written by Mrs. George Calder, Junior, of Bow Island, Alberta,

Supply-Agriculture
addressed to Mr. Cavan, one of our officials, and it illustrates many of the things I have seen personally in the west:
Bow Island, Alberta,
October 29, 1940.
Dear Mr. Cavan:
I am writing to let you know how much my husband and myself appreciate the work of the PJ.EA.
Although we have been farming here for the past twelve years, this is the first year we have ever had a real garden. Thanks to the P.F.R.A. and its personnel whose assistance made this possible.
To those who live in areas where moisture is plentiful, a garden is taken as a matter of course, but to those of us in the drier areas who have struggled year after year only to see our garden dry out, to be able to grow a real garden and see it mature under the spell of plenty of moisture seems almost a miracle.
In spite of a constant fight against grasshoppers, we were able, by means of a small dug-out, a pump and an engine, to raise more than enough vegetables for our own use for the next year. I have canned over 125 quarts of beans, peas, corn, tomatoes and cauliflower, besides pickles galore. The _ cellar is full of potatoes, squash, beets, turnips, parsnips and citron. Besides, we had actually hundreds of watermelon and muskmelon. We had so many fresh vegetables during the summer that our grocery bill was $30 less than usual. The cash value of the garden for this year alone would be double the cost of construction, but to estimate the cash value of such a garden would cover only a small part of its real value. After seeing dried-out fields and lawns, to walk through or work in an oasis of thick green vegetables does something to one's morale and makes you feel as if life is worth living after all.
It gives one such a feeling of security to know that your cellar is full of vegetables, and every one knows that to maintain health we must eat vegetables. How much better to be able to grow them at home than to have to buy them in cans or depend on what the local store might have on hand!
We hope to be able to add fruits to our arden in another year. This will make the arm almost self-supporting, at a time when, due to the wheat situation, it may be needed most.
We sincerely hope that the dominion government will be able, in spite of the war, to carry on this wonderful work, so that many others will benefit as we have done.
Thanking you for your assistance, I remain, Yours very sincerely,
Viola E. Calder (Mrs. Geo. Calder, Jr.)
This letter describes better than I possibly could just what the construction of these dug-outs by the hundreds all over western Canada is doing not only for the economy of the west but also for the morale of the people; and, after all, I think the effect it has had on this woman, multiplied by a great number of families, is the most significant result we have had from the whole programme.


John Ritchie MacNicol: Did I understand the minister to say that the post office address of the writer of that letter was Bow Island, Alberta?


James Garfield Gardiner: Yes.


John Ritchie MacNicol: Then do I understand that this farm is on an island in the Bow river?


Mr. MacKINNON (Edmonton West):: No; Bow Island is not on or in any body of water. It is an inland post.


John Ritchie MacNicol: Then why is it called Bow Island?


James Angus MacKinnon: I am not just sure at the moment.


John Ritchie MacNicol: An island is something that is surrounded by water, is it not?


James Garfield Gardiner: A great many towns in western Canada have names that are hard to explain or understand. This may have been called an island because it is a dry
section of the country surrounded by different areas. If I may judge from this letter, that might be the situation.


Percy Ellis Wright: I should like to add my voice to those who have spoken in commendation of the work which has been carried on under the Prairie Farm Rehabilitation Act, which I think is one of the most constructive measures that has been applied to western Canada in a long time. The work done in connection with soil surveys has been especi ally advantageous. In the early days of th; drought area many settlers moved volun tarily to the north, while others were moved by the government. Some of these settlers were placed on land which was not suitable for agricultural purposes. After a soil survey was carried out some years ago, many of these families had to be moved once more and placed on new blocks, the last of which was established some two or three years ago. When these people left the south they were assured by the government that they would be properly reestablished in the north. Therefore I should like to ask the minister if any part of this money is to be used to complete that reestablishment. I know some of the people have not been satisfactorily reestablished, and I have particular reference to one block south of the Canadian National line from Prince Albert to Hudson Bay junction. This block was established only two years ago, and as yet these people have not enough land under cultivation to be self-supporting.
Supply-Agriculture

I believe the government should do something to help to reestablish these families. Will any of this money be used for this purpose ?


James Garfield Gardiner: No. Until this year we did have a fund, although not under this vote, which was used to help to take care of people who had been moved north. In 1932 the federal government undertook to pay one-third of the cost of moving a group of people from the southern parts of Saskatchewan and Alberta to the northern sections. I am not so familiar with what took place in Alberta; but, if I am not mistaken under this scheme about eight thousand people were moved to that area from the southern part of Saskatchewan. Many of those people got into difficulty, and we undertook to assist the provinces to take care of those people until they became sufficiently well established on the land to be able to take care of themselves. Since that time, the provinces have moved other people to that district, but that was entirely a provincial problem, and we did not spend any money to assist them. The fund which was in existence prior to last year has not been voted this year; the provinces are taking care of the problem themselves.


Alexander Malcolm Nicholson: Yesterday I inquired
with regard to a proposed project on the Assiniboine river near Preeceville. I mentioned the fact that a great many dug-outs had been provided in northeastern Saskatchewan, which are very much appreciated by the farmers who are trying to get into mixed farming. What is the policy with regard to larger commitments in connection with projects such as the one on the Assiniboine? Is it proposed to complete that project this year, and what will be the cost?


James Garfield Gardiner: There is a site at which the building of a dam would cost about $20,000. That is under consideration, but is not yet definitely passed. I believe it is in the vicinity of Kamsack. I would not be too sure about the exact location of it, but it is on the Assiniboine river. A number of dams have been under discussion, but the only one being considered for possible construction this year is one which would cost about $20,000.


Alexander Malcolm Nicholson: I understand that the only benefit which would result from the construction of this dam would go to the town of Kamsack. I was wondering if this money could be used for the benefit of towns and cities; I understood that it was to be used for the rehabilitation of agricultural areas. I know that the town of Kamsack is short of

water, and that the building of this dam would help. I do not, however, believe that it would benefit any farmer in that area.


James Garfield Gardiner: There are two dams listed here. I believe neither of them is in the mind of the hon. member. One is in the vicinity of Canora, on the White Sand river, and the other is in the vicinity of Preeceville. The engineer's description of the Preeceville dam is that it consists of storage works to be constructed on the Assiniboine river a short distance above the town of Preeceville, for the purpose of storing flood water in lakes Lomond and Annie Laurie-both Scotch. This water would be released at low-flow periods for domestic stock watering and for irrigation purposes for farmers in communities located adjacent to the Assiniboine river valley between Preeceville and Brandon,
The intention of building there is not just that of helping the town, although it may have that effect. The main object is, however, to provide water during the summer months in greater volume by storing it in the spring. At one time the headlands of the Assiniboine were clothed with poplar trees which held the snow in the spring. The intention of this kind of work is to bring about a similar effect by the artificial storage of water in lakes, and permitting it to go down during the summer months, thus avoiding a rush in the early spring. That is the intention; it is not that of helping any particular town, but rather of helping many areas all the way along.


[Stage Direction]
Item agreed to.
SO. Special. Prairie Farm Assistance Act, $500,000.
John George Diefenbaker: To-day we had presented to us an amendment in connection with the Prairie Farm Assistance Act. There is no act, the administration of which causes members representing rural constituencies more trouble than does this one. That arises because the administration of the act, in so far as the regulations are concerned, has departed from its intention. There are also certain anomalies in connection with the administration of the act which I should like to bring to the attention of the committee, and particularly to the attention of the minister, so that, if he sees fit so to do, he will cause the act to be amended accordingly.
In the first place let me point out that under the act "farmer" is defined as a person engaged in farming in the spring Wheat area.


James Garfield Gardiner: May I suggest that a bill amending the act is now on the order paper, and I had expected it would be before

Supply-Agriculture
the house to-night. If the hon. member does not object, I would ask that he defer what he has to say until the bill is before the house.


John George Diefenbaker: I shall not discuss the bill. If I may, I should like to discuss certain suggested amendments not covered by t'he bill.


James Garfield Gardiner: That could be done
when the bill is before the house. I do not believe this is the time to discuss amendments to the act, when a bill amending it is on the order paper.


Thomas Vien: It would be out of
order to speak about anything but the item before the committee.


John George Diefenbaker: I wish to deal with expenditures made under the act, and the unfairness which, in many instances, has arisen in connection with its administration.


Thomas Vien: The hon. member may discuss the manner in which expenditures voted last year were expended), when we are discussing the expediency of voting $500,000 this year. That, of course, would be in order. But to discuss the general scope of the act, or the general policy underlying it when it was first introduced, would be out of order, because that subject is not before the committee.


John George Diefenbaker: Thank you. What I intend to discuss is the manner in which last year's vote was disbursed.


James Garfield Gardiner: In that event may I
make a suggestion? There are only three items left in the estimates for my department. It would appear that the discussion of this item may take some time, and we have only a few minutes left. Could we not call the other items, and leave this one until we have passed the other two? This could be left for discussion until a later occasion. The other two items are to provide for assistance to encourage the improvement of cheese and cheese factories, and to provide for assistance for replacement of maple production equipment.


John George Diefenbaker: I have not wasted
the time of the committee, as someone has suggested.


James Garfield Gardiner: Then I move that this
item be allowed to stand.


John George Diefenbaker: We were advised
that the bill would be proceeded with this afternoon. I have waited here throughout the evening for this item to come up. But now that there is an opportunity to discuss it-


James Garfield Gardiner: But there is not; we
have only ten minutes left. My proposal is that we proceed with the other items, and then return to this one.


John George Diefenbaker: I do not feel disposed to give up the floor on this occasion.


Thomas Vien: Mr. Gardiner has moved that item 30 stand; is it the pleasure of the committee to adopt the motion?


John George Diefenbaker: On a point of order, when I have the floor is it permissible for the minister to make a motion, in order to deprive me of the floor?


James Garfield Gardiner: I am not suggesting
that we want to deprive the hon. member of the floor. He must realize, however, that he cannot discuss in ten minutes the subject he intends to cover. Certainly I cannot possibly reply to-night. I do not imagine the other two items would take much time; possibly we could deal with them in ten minutes. I am sorry the committee has taken so long to pass the other items. I had hoped we would have passed the bill, as well as the estimates. Since, however, we have taken so long, I am simply asking as a matter of convenience that we take the other items first.


Thomas Vien: When estimates are before the committee it has always been customary to accede to the wishes of the minister in charge, and to allow an item to stand if he so indicates. Generally speaking, the minister in charge of a bill will say that a certain section should stand, and the committee then proceeds to examine the other sections.


John George Diefenbaker: Mr. Chairman, the minister called this item.


James Garfield Gardiner: No, "the minister" did not; the Chairman called it.


Thomas Vien: Strictly speaking, the hon. member is right. An item being called, and an hon. member having risen in his place, if we are to follow the rules strictly we must rule that he is not obliged to yield. The minister in charge of his estimates has pointed out that the discussion of the item in question would certainly take more than ten minutes, so that the hon. member will necessarily have to come back to-morrow if he wishes to take part in a further discussion of this item.


John George Diefenbaker: That is the assurance I should like from the minister, that this item will be called to-morrow. I have been here all day waiting for it to come up.
Supply-Agriculture


James Garfield Gardiner: I cannot give the assurance that it will be called to-morrow. I shall not be here to-morrow. I have to catch a train in a few minutes, and that is why I was anxious to get the other two items cleaned up. But the item will, I imagine, be called next week.


[Stage Direction]
Motion agreed to.
Item stands.
SI. Special. To provide for assistance to encourage the improvment of cheese and cheese factories, $1,250,000.
Heber Harold Hatfield: How will this money
be spent, and in what provinces?


James Garfield Gardiner: It may be spent in any province of Canada, but it will be spent in order to improve cheese factories, and since most of the cheese factories are located in Ontario and Quebec, a greater part of this will be spent in those two provinces. But it can be spent in any province in which there is a cheese factory.


Heber Harold Hatfield: May it be spent in New Brunswick?


James Garfield Gardiner: It may be if application is made from New Brunswick, or in any other province from which application is made.


Heber Harold Hatfield: It will be spent to encourage the building of new cheese factories?


James Garfield Gardiner: No; it is spent for consolidation, where it is desired to bring two or more cheese factories under one construction in order to eliminate the number of factories and bring about more efficient production. It is not for the building of entirely new factories.


Mr. STOKES:: What percentage approximately of the cheese factories in Ontario have been equipped with modern refrigeration plants?


James Garfield Gardiner: There have been fifty-four assisted this year, and I understand that there are about 600 cheese factories in Ontario. It was about the same number the year before. It varies from year to year.


George Henry Stokes: Then I take it that the greater number of cheese factories are not equipped with modern refrigeration plants?


James Garfield Gardiner: Some may have been equipped before this policy was introduced. Our intention was to encourage factories to put in equipment to produce the type of cheese form which they desire to have in Britain. Another reason was that we wished

to encourage the putting in of storage equipment which would keep the cheese in good shape. Those two activities have been carried on in the different factories. Some had the equipment before, and others we have assisted.


George Henry Stokes: I should like to know what position a cheese company is in which had already got equipment and received a bonus from the department, then lost its building and outfit by fire. Will it be reimbursed? Will it get a subsidy towards a new building?


James Garfield Gardiner: The way that has been handled to date is that they get half of the difference between the cost of reconstruction and the insurance they collect as a result of the fire.


John George Diefenbaker: What is the reason for the increase of a quarter million dollars in this item?


James Garfield Gardiner: This includes premiums as well as what we have been discussing, the improvements in factories. There is a premium of one cent on cheese that scores 93 and two cents on cheese scoring 94. The amount of cheese which gets into these two grades is increasing year by year, and, in addition, there is an increased quantity of cheese manufactured. Cheese production has risen since this policy was started, from 120,000,000 pounds to 140,000,000 pounds, and we hope it will be higher this year.


Percy Ellis Wright: Does this vote take care of the extra cent which the minister announced the other day?


James Garfield Gardiner: No; that comes under war measures.


[Stage Direction]
Item agreed to.
32. Special. To provide for assistance for the replacement of maple production equipment, $75,000.
Heber Harold Hatfield: Where will this be spent?


James Garfield Gardiner: It will be spent in the province of Quebec. We had an agreement with them prior to the war under which we were to spend $300,000 a year, the Quebec government a similar amount, and those who had the equipment undertook to spend a similar amount to change over from the equipment used for making maple sugar and maple syrup. Lead poisoning got into the maple sugar and maple syrup from the equipment which had been used. It had a lead cover on it to prevent rust, and the Americans were refusing to take this product unless we undertook to change the equipment. Accordingly we made this agreement with the Quebec

The War
government, we paying one-third, they paying one-third, and the persons interested, one-third. This year they did not wish to spend the amount that we were providing, and we cut it down to $75,000.


[Stage Direction]
Item agreed to.
Progress reported.
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, June 6, 1941.