1941-05-05

CHANGES IN PERSONNEL OF STANDING COMMITTEE

Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the names of Messrs. Jackman, Hazen, Shaw and Nicholson be substituted for the names of Messrs. Black (Cumberland), Diefen-baker, Hansell and Maclnnis on the standing committee on railways and shipping.


[Stage Direction]
Motion agreed to.

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

Mr. BENCE:: 1.	What amount of money does the government of British Columbia owe to the dominion government?
2.	On what date, for what purpose and on what terms was each loan made?
3.	What payments have been made by the government of British Columbia?
4.	On what dates?
5.	Has the government of British Columbia defaulted on any of its obligations?
6.	If so, on what dates?
7.	What demands have been made upon the government of British Columbia for payment of outstanding obligations?
8.	On what dates were such demands made?


Mr. ILSLEY:: Stand.


Mr. HANSON (York-Sunbury):: I ask the minister to bring down an answer to this question, as well as a return to an order which was passed on March 31 dealing with the same matter. This return called for a copy of all correspondence exchanged between the Prime Minister or the Minister of Finance and the premier or the minister of finance of British Columbia with reference to the request of the dominion government that steps be taken to pay off or reduce the outstanding obligations to the dominion of the province of British Columbia. This return is long overdue and we should have liked to have it for the budget debate. I do not think we have been treated with due courtesy.


James Lorimer Ilsley: With regard to the question, it is in the hands of the deputy minister who has been absent from his office for several days because of illness. It is expected that he will be back on Wednesday, at which time I hope to be able to answer the question. I do not know of any reason for the return having been hung up in the department, but I shall look into the matter and see if it cannot be brought down at once.
Question stands.

Questions


CANADIAN BROADCASTING CORPORATION-EMPLOYMENT OF MEMBERS OF PARLIAMENT AS LEGAL COUNSEL
Mr. McGREGOR:: 1.	Has any member of parliament been employed by or acted on behalf of the Canadian Broadcasting Corporation during the past twelve months as legal counsel or attorney, representing such corporation before the copyright appeal board in respect of any copyright matters pending before the said board?
2.	If so, did such member of parliament receive, or has he been promised, any monetary compensation from the Canadian Broadcasting Corporation for his professional services so rendered?
3.	What were the amounts of such payments, if any, and on what dates were such payments made?


Mr. HOWE:: 1.	From the creation of the Canadian Broadcasting Corporation in 1936, Mr. Brooke Claxton, K.C., acted for the corporation, particularly in connection with performing rights. He continued after his election to parliament, March 26, 1940, to deal with matters which were in hand, and with which he was alone familiar, and he appeared for the corporation before the copyright appeal board.
2.	Not subsequent to his election.
3.	Answered by No. 2.



MUNITIONS AND SUPPLY-MONTREAL COTTONS LIMITED


Mr. ROY:: 1.	What is the total number of employees of the Bank of Canada?
2.	How many of such employees were born
(a) in Canada; (b) elsewhere?
3.	How many are French-Canadians?
4.	What is the total number of employees whose salaries are $3,000 or more per annum, and how many of these are French-Canadians?


James Lorimer Ilsley: This question relates to the Bank of Canada, which is not a government department. The information asked for is not of government record.
Question dropped.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. CARDIFF:: 1.	What ministers of the crown have spoken over the radio network of the Canadian Broadcasting Corporation since September 1, 1939?
2.	Upon which subject did each such minister speak ?


Mr. HOWE:: Return tabled.


CANADIAN NATIONAL RAILWAYS-BOARD OF DIRECTORS
Mr. HANSON (Skeena):: 1.	How many members constitute the board of directors of the Canadian National Railways?
2.	What are their names and addresses?
3.	What is the salary paid to each per year?
4.	What other allowances are they granted, if any?
5.	How much did they receive in allowances, if any, for the calendar year 1940?


Mr. CASGRAIN:: Return tabled.


EXPENDITURES FOR LEGAL SERVICES
Mr. BENCE:: 1.	What is the total amount paid by various departments and agencies of the dominion government since October 23, 1935, to J. C. McRuer, K.C., for legal or other services rendered, including travelling expenses and living allowances?
2.	What is the total amount paid by various departments and agencies of the dominion government since October 23, 1935, to Messrs. McRuer, Mason, Cameron and Brewin, for legal services?



MOTIONS FOR PAPERS


Mr. CARDIFF:: For a copy of all orders of the dairy products board since September 1, 1939.


Mr. GARDINER:: I have no objection to bringing down the orders of the board, except that some of them may be subject to being withheld as a matter of public policy. I just wished to say that at the moment, without knowing what the orders are.



SUPERANNUATION OF YUKON CIVIL SERVANTS

Mr. BLACK (Yukon):: For a return showing:-
1. The names and offices of all civil servants who during their term of office were stationed in Yukon, who were superannuated on superannuation allowances based on their contributions being percentages of their total remuneration made up of that part termed salary and that part termed living allowance, prior to and including 1930 and the amount of the superannuation allowance of each.
Motions for Papers

2.	The names and offices of all civil servants stationed in Yukon who contributed to the superannuation fund, who were superannuated on smaller superannuation allowance than those for which they contributed prior to 1931 and the superannuation allowance of each.
3.	The names of all civil servants formerly
stationed in Yukon and of the widows of such civil servants who are receiving superannuation allowances or pensions based only on that part of said civil servant's remuneration not including living allowance and showing:	(a) the
superannuation allowance or pension paid in each case; (b) the amounts that would be so paid in each case had the superannuation or pension been based on contributions of a percentage of the whole amount paid each and described in the Civil Service Superannuation Act as "salary."
4.	The names of all civil servants formerly employed in Yukon and who were superannuated since 1930 on superannuation allowance based on that part of their remuneration or salary not including living allowance and who were subsequently awarded superannuation allowance based on their whole salaries and showing the superannuation allowance or pension awarded in each such case.
5.	Copies of requests from any and all departments of government to the Department of Justice, minister or deputy minister of justice for an interpretation of the word "salary" as used in the Civil Service Superannuation Act.
6.	Copies of all such interpretations.
7.	Copies of all letters from the deputy minister of justice directing that an employee of the Department of Justice in Yukon should have five per cent deducted from his^ whole salary including living allowance as his contribution to superannuation fund.



LABOUR CONDITIONS-PECK ROLLING MILLS

Mr. MacINNIS:: For a copy of the report with any accompanying letter or other communications made to the Minister of Labour by Mr. Justice C. P. McTague, conciliation adviser, on the subject of the report submitted by the conciliation board which dealt with the dispute at the Peck Rolling Mills in Montreal.



POINTE A LA FREGATE, QUE., POSTMASTERSHIP

Mr. ROY:: For a copy of all reports, correspondence, telegrams and other documents in the possession of the Post Office Department, regarding the recent change in the postmastership at Pointe & la Fregate, Oaspe county, Quebec.


Mr. MULOCK:: Subject to the omission of the word "reports" I have no objection to the motion passing. The reports of departmental officials may have to be omitted from the return.



NATIONAL RESOURCES MOBILIZATION-DOUKHOBORS

Mr. DIEFENBAKER:: For a copy of all orders in council respecting liability of Doukhobors for military service, and all rules and regulations and instructions issued by the Department of National Defence or the Department of National War Services in connection with the calling up of Doukhobors
[Mir. G. Black.]
under the thirty-day training plan, or the four-month training plan, under the National Mobilization Act, and for a copy of all correspondence, telegrams and other documents passing between the Doukhobors and any department of government from June 15, 1940, to date with regard thereto.



VILLEMONTEL, QUE., POST OFFICE

Joseph Sasseville Roy: For a copy of all letters, telegrams, reports and other documents, exchanged during 1940 and to date, relative to the post office at Villemontel, Chapleau county, Quebec.


William Pate Mulock: Subject to the omission, of the,word "reports", I have no objection to the motion passing.



FARMERS' CREDITORS ARRANGEMENT ACT- MANITOBA

Mr. ROSS (Souris):: For a copy of all letters, telegrams, memoranda and other documents exchanged since August 7, 1940, between any minister or official of the dominion government and any minister or official of the government of the province of Manitoba with reference to the reapplication of the Farmers' Creditors Arrangement Act to that province.



INCOME AND CORPORATION TAX-SUGGESTED ABANDONMENT BY PROVINCES

Mr. TUSTIN:: For a copy of the letter addressed by the Minister of Finance to each provincial premier asking that the provinces should vacate the personal income tax and the corporation tax fields.



LICENCE REQUIREMENT FOR ERECTION OR EXTENSION OF COMMERCIAL BUILDING STRUCTURES

George James Tustin: For a copy of the order in council which requires persons or firms erecting or extending building structures for industrial or commercial use to obtain a licence.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day;
Mr. G. E. WOOD (Brant):: Mr. Speaker, I wish to direct a question to the Minister of Labour. My attention has been called during the week-end to a workmen's strike at the Waterloo Manufacturing company, Waterloo, Ontario, which produces a very important agricultural implement, namely, threshers, and also munitions of war. Has the department decided to condone these strikes, which add to the cost of production and make it highly

Cheese Production
competitive for the farmer to retain much-needed help necessary to carry on his part of the war effort, and also reduce the purchasing power of the taxpayers' money in the supply of munitions?


Hon. N. A. McLARTY (Minister of Labour):: The hon. member for Brant (Mr. Wood) was kind enough to notify me of his intention to ask this question. A number of men at the plant to which he refers went out on strike on Friday morning, but I believe they have now returned to work; in fact, they returned at midnight last night. The answer to the second part of his question, I would say, is in the negative.



CANADIAN BROADCASTING CORPORATION-QUESTION OF RECOGNITION OF ASSOCIATION OF TECHNICAL, EMPLOYEES

[Stage Direction]
On the orders of the day:
Mr. M. J. COLD WELL (Rosetown-Biggar):: I should like to direct a question to the Minister of Munitions and Supply. I have a letter from Mr. P. T. Dawes, national secretary of the association of technical employees, dated, at Toronto, May 3, 1941. Similar letters have, I believe, been sent to all members of the house. It states that although assured by the general manager of the Canadian Broadcasting Corporation that recognition had been granted to the association by the board of governors, the management has refused to enter into negotiations with the association's representatives. It states further that a board of conciliation has been applied for but that the Department of Labour has not yet seen fit to establish it.
Will the minister make a statement to the house regarding this matter?


Clarence Decatur Howe: This is a matter which the board of governors of the broadcasting corporation has been handling, and I am not familiar with the details. I believe there is a legal point involved as to whether the Canadian Broadcasting Corporation is an independent corporation such as the Canadian National Railways or whether it is an emanation of the crown. I am not sure what the decision of the justice department was, but I shall be glad to look into it.


Thomas Miller Bell: If it is an emanation of the crown, are we not entitled in this house to reports from the Canadian Broadcasting Corporation? If it is not a corporation independent of the crown, why are we not permitted to inquire into its operations?


Clarence Decatur Howe: I shall be glad to look into the whole matter and make a statement.



ENCOURAGEMENT OF PRODUCTION IN CANADA- INCREASES IN PRICE

[Stage Direction]
On the orders of the day:
Mr. M. C. SENN (Haldimand):: I should like to direct a question to the Minister of Agriculture. Recently I received the April number of a periodical, entitled Daily News Letter, which is issued by the marketing services of the Department of Agriculture. In it I found that for the first three months of 1941 there was a dropping-off in the production of cheese of forty-five per cent compared with the corresponding three months of last year. I know, of course, that this is a slack season of production, but I would ask the minister if the dairy products board or the Department of Agriculture are taking any steps to encourage the increase in production of cheese which is so badly needed at the present time.


James Garfield Gardiner: Yes, Mr. Speaker, the department are putting on an advertising campaign and a publicity campaign generally in order to bring about an increase in production. The information I have is that an increase is now taking place.


Mark Cecil Senn: I wish to ask another question along the same line. Is any consideration being given to providing for an increase in the price of cheese as an incentive to increased production?


James Garfield Gardiner: The price of cheese was increased to 15 cents on the first of April by the government of Canada. It was increased for certain grades of cheese in the province of Ontario by two cents, and also in the province of Quebec, by two cents, for cheese of a certain grade, about the same time.



SHIPBUILDING


[Stage Direction]
On the orders of the day:
Mr. J. H. HARRIS (Danforth):: I should like to address to the Minister of Munitions and Supply a question based upon a statement made by Prime Minister Churchill, with regard to munitions and material, that there is no time to lose; every week, every day, every hour must be utilized. My question has to do particularly with ships and shipbuilding.
Will the minister make a statement to the house explaining why shipyards in Toronto building ships and war equipment are not working twenty-four hours a day, seven days a week? What provision is being made to step up to a full seven-day twenty-four hours'
Supply-Unemployment

working schedule? Why is the Toronto dry dock, completing corvettes, working less than one-half of the week's hours?


Clarence Decatur Howe: Mr. Speaker, I might
explain that the Toronto shipyards are not shipyards in the ordinary sense of the word; they are more assembly plants. They fabricate the hull of the ship, but the machinery and equipment of all kinds are built elsewhere. The difficulty for some time has been that the assembly of hulls has not been coordinated properly with the building of equipment. The hulls are well ahead and the equipment is behind. Some smaller items of equipment were coming forward from England, and there has been trouble on the Atlantic, which has put back the work. The Dufferin shipbuilding company have contracts for sixteen steam-driven mine-sweepers, and as far as the work of the yards themselves is concerned, it is well up to schedule, but the work is more or less held up for the boilers, engines and components for these minesweepers.
Another firm in Toronto have a contract for two Fairmile motor type vessels ordered in December, 1940. There again the hull work is well ahead of the equipment, which is being built in another plant. As far as the Toronto dry dock is concerned, it plays a small part in this construction. A ship is placed in the dry dock for example, after trial trips and for the carrying out of such under-water work as is necessary prior to acceptance, which work is done at the requisition of the contractor. The dry dock is not a very large factor in the building of the government's work, and it is used when it is required; it is not on a full-time basis.


Mr. MacNICOL:: Did the minister mean corvettes or mine-sweepers when he spoke about the Dufferin construction company? They are building corvettes; are they also building mine-sweepers?


Clarence Decatur Howe: No, the Dufferin construction company are building nothing but mine-sweepers.



UNEMPLOYMENT-STATEMENT OF MR. DOUGLAS (WEYBURN) ON MOTION OF MINISTER OF FINANCE

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
Mr. T. C. DOUGLAS (Weyburn):: Mr. Speaker, a few weeks ago when the hon. member for Haldimand (Mr. Senn) made his

motion regarding the state of agriculture in Canada, I was on my feet seeking to bring before the house a matter of urgent national importance. I therefore have no apology to make to the house at this time for taking a few moments to draw to the attention of the government a matter the discussion of which has been too long delayed. I refer to the announcement by the Minister of Labour (Mr. McLarty) last winter to the effect that the federal government is discontinuing its contribution to unemployment relief across Canada.
Since that announcement was made the government have carried it into effect. In making the announcement, the minister said that this decision on the part of the federal government was in no wise connected with the failure of the Sirois report, and that this act of the government was not to be interpreted as one of revenge against the provinces. The minister gave two reasons for discontinuing the federal government's contribution to unemployment relief. The first was that unemployment had been reduced by virtue of war contracts and increased business activity which resulted therefrom. The second was that it was necessary to save money in order that the federal government could finance Canada's war effort. It is my intention to take a few moments to investigate and examine the validity of those twro arguments.
Let us look at the first one, namely, that the business activity arising from the influx of war orders has reduced unemployment to a point where federal assistance is no longer necessary. I think we shall all admit that this statement is partly true. It is true that in parts of Canada the business activity arising out of the war has considerably reduced unemployment. But that is not true of Canada as a whole. In parts of the western provinces, particularly on the prairies, there has not been an appreciable reduction in the number of unemployed persons on relief.
I have here the figures for March, 1940, which show that there were in that month on relief in Saskatchewan, 141,000; in Manitoba, 53,000; and in Alberta, 39,000. Last October, despite the fact that the acreage bonus which is paid under the Prairie Farm Assistance Act had taken thousands of farmers off agricultural relief, and that many of the provinces had ceased to pay agricultural relief, there were still in that month, in the province of Saskatchewan, 35,723 persons receiving relief, and by November last that figure had risen to 57,811. The figures for last November, which

Supply-Unemployment
are the latest on record, show that the total number of persons receiving relief in the dominion was 271,935, distributed as follows:
	Number in	Number of total in
	province	cities
Quebec	. . 81,045	77,880Ontario 	.. 64,944	63,110Manitoba	.. 27,022	26,017Saskatchewan .. .	. . 57,811	27,680Alberta 	.. 12,069	10,368
An examination of the figures over the last five or ten years will show-


Mr. REID:: Do these figures represent only unemployed adults, or do they include mothers and children?


Thomas Clement (Tommy) Douglas: They are the estimate of all persons on relief. I inadvertently omitted British Columbia. The number in the province was 27,035, of whom 25,183 were on urban relief. Over the past five or ten years the figures will show that there has been a tendency, from October to March, for the number of persons on relief to increase about fifty per cent for the whole of Canada. In Saskatchewan, the number of persons on relief from October, 1939 to March, 1940, more than doubled. Since there were 271,935 on relief last November it is safe to assume that during the past winter, although we have not the figures, that the number must have increased about 30 per cent.
I call these figures to the attention of the house in order to point out that while it is true that the stimulation of war industries has relieved the unemployment situation it has not done so uniformly in all parts of Canada. As a matter of fact, not only have the prairie provinces not benefited as a result of war industry; they have been adversely affected by the war. While other industries have expanded, agriculture, by virtue of the fact that its markets have been shut off, has suffered adversely. Few war contracts have been coming to the prairies, particularly the province from which I come-I believe Saskatchewan had one order, which went to Saskatoon. Our economy is essentially agricultural, and when the purchasing power of farmers is curtailed, as it has been and will continue to be under the legislation brought down recently by the federal government, then the normal occupation of people in the villages, towns and cities is bound to be affected. There is less business, less building, less railway traffic directly attributable to the agricultural population, with the result that the war industries which have so materially benefited certain sections of Canada have not helped other parts of the country and in consequence we have been adversely affected by the war.
When we add the fact that legislation recently brought down in this house will, it is admitted, curtail the agricultural income of western Canada by about 8100,000,000; when we realize that, as the Minister of Agriculture (Mr. Gardiner) said the other night, under the new wheat acreage reduction benefits there are classes of fanners who will not be helped and who consequently will have to depend upon the municipal, provincial or federal bodies for assistance, we can see that instead of the economic life of the prairies being bettered it has been made very much worse.
What are these provinces to do? They are being burdened with a responsibility which they are not in a position to assume. I wish to cite my own province. The premier of Saskatchewan, presenting his budget to the Saskatchewan legislature, stated that the amount of money spent for relief in Saskatchewan in the last fiscal year was 810,600,000, contributed in the following manner: federal government, $4,500,000; provincial government, $5,200,000; municipalities $900,000. It should be remembered that the contributions of the provincial and municipal bodies were largely borrowed with a dominion government guarantee.
Now that the federal government is withdrawing its contribution, the province of Saskatchewan is asked to assume this tremendous burden. In its budget of this year it has made provision for $1,000,000 for relief to meet a situation which, last year, cost the combined governments $10,600,000. That is a hopeless position to put any province in. What can the provinces do? They can do one thing; they can discontinue payment of relief. I read in the Montreal Gazette of February 26 that the government of the province of Quebec had notified the municipalities that relief would be discontinued on the 1st of April; and that, let it be remembered, with some 86,000 persons on relief in that province last fall.
No man in his right mind will suggest that the provincial governments of western Canada in particular, and some of the other provinces which are equally affected, can discontinue the payment of relief. That leaves another alternative, namely, that they shall assume not only their own portion of relief responsibility but also the 3hare which was formerly borne by the federal government. It may be that there are provinces which can assume that burden. British Columbia, which has a surplus this year, seems to be able to do so; Ontario, which this year has announced a surplus of $12,000,000, is in a position to do it. It is easy to understand why. Last year Ontario collected $23,000,000 from corporation taxes alone; in Saskatchewan we collected
Supply-Unemployment

$600,000. Ontario is probably in a position to assume this relief responsibility. But the prairie provinces, and particularly the province from which I come, cannot assume the burden of relief. What are they doing? They have announced to the municipalities that the provincial government will assume 70 per cent of the burden of relief, and the municipalities are asked to assume 30 per cent. But having said that, the relief officers are sent out to the respective communities and are telling the people that relief stops on the 1st of May.
In the city of Weyburn where I live the relief official from the provincial government during the last week in April sat in the relief office, and as the relief recipients came up and were handed their relief vouchers he said:	"That will be your
last relief voucher." I have here statutory declarations, which I am prepared to place on the table of the house, from relief recipients who said that when they asked this relief officer, Captain Ellis, where they were to' get work or what they were to do, he said: "There is lots of room in the army." Now, I am glad to see any man join the army, but I object to economic pressure being used to force men into the army; and I object most strenuously to a relief officer of the provincial government being set up as a recruiting officer.
From any investigation I have been able to make I find that on a per capita basis the relief recipients have probably contributed as many men to the armed forces of the country as any other class of people. One man who had this said to him is forty-four years of age, and very unlikely to get into the army.
The province of Saskatchewan is trying to assume a burden out of all proportion to its financial resources. I ask that this house, and particularly the government, consider the effect upon the people of Canada of the step which they have taken. I ask them to consider its effect upon the credit of the respective provinces. These provinces are going to be faced with the necessity of choosing between feeding their people or meeting some of their financial obligations.	T
strongly suspect that that is why steps are being taken now to service their debt, because it is apparent that they cannot discharge their responsibility to their needy citizens and at the same time meet their financial obligations.
I ask this house to consider the effect on the morale of our people. There is no more vital faetor in the winning of this war than the human element. When I went back to my constituency I found a man in the little town of Griffin, Saskatchewan, with two sons in the Royal Canadian Air Force overseas;
(Mr. T. C. Douglas.]
this man and his wife and family were cut off relief because a part of the assigned pay of these two boys is coming into that home. When a daughter came home to stay with her parents, the parents were cut off relief because this daughter is getting a certain amount of her soldier-husband's pay. It does not help the morale of the people; it does not help the men of the fighting forces when they hear that those whom they love are being discriminated against simply as a result of their having entered the fighting services.
So I say that the first argument advanced by the Minister of Labour is not sound. There are areas in Canada that have not benefited by the business stimulation consequent upon the war; there are areas in which the problem of unemployment is as acute as ever, and threatens to become more acute, and the government cannot merely wash its hands of its responsibility.
The second argument-that the government needs this money in order to finance the war-needs only to be looked at to prove its fallacy. I have here a letter from the dominion unemployment relief commissioner, dated February 26, 1941, in which it is stated that the amount of the relief contributed by the federal government up to March 31, 1941, will amount to some $13,250,000. That is the amount of money that the federal government could save by discontinuing this contribution to relief on the basis of last year. It represents about one per cent of our war expenditure last year; it will represent about half of one per cent of our war expenditure this year. Does anyone suggest that thirteen and a quarter millions more or less will seriously affect our war effort? It seems to me that to advance such an argument is like a man taking a crust of bread away from a child to give it to his pet elephant on the ground that the latter is starving; the child is being deprived without satisfying the elephant. No one would seriously ask this house to believe that the thirteen and a quarter millions that might be saved by discontinuing the federal government's contribution to relief is going to make one iota of difference to the country's war effort.
The President of the United States, speaking on January 8 last, to the congress, used these very significant words:
It is our policy to retain the ideals and objectives of our social and economic programmes in the face of war changes. . . . We should realize .	. . that even with a fully
functioning defence effort there will remain special areas of need, and that social security, agricultural benefits and work relief contribute to total defence in terms of the health and morale of our people.
I think we will all echo those sentiments.

The Budget-Mr. Hanson ( York-Sunbury)
The Sirois commission, appointed by this government in its report placed at the door of the federal government the responsibility for unemployment relief and for those in need. It has become a truism to say that we are witnessing in the world to-day a gigantic struggle between two ways of life, the way of democracy and the way of dictatorship. The measure of the value of any economic system is the manner in which it treats the least fortunate in its society. Surely no one will suggest that if 813,250.000 must be saved to fight a war, the best place to find that money is from the least fortunate group in Canadian society.
I agree that there ought to be no need to pay relief to the people of Canada. We ought to be able to put these people to work building houses-because we have a housing shortage. We ought to be able to put them to work in war production of various kinds. We ought to be able to take the unemployed young men, many of them physically unfit for war service, and train them for war production. But until the government is prepared to bring down a programme of that kind it is their responsibility to care for these people.
I make this plea to the Prime Minister and to the government, that they shall not, like Pontius Pilate, seek to wash their hands of their responsibility, which has been too long neglected and ignored.


Mr. ROSS (Moose Jaw):: I do not think anyone expected this debate to come at this time; I believe a tentative arrangement was made that the leader of the opposition (Mr. Hanson) was to speak this afternoon on the budget. I therefore move the adjournment of the debate.


Angus MacInnis: A week ago to-day-


Richard Burpee Hanson: Mr. Speaker, I think I have the floor.


Angus MacInnis: Mr. Speaker-


Richard Burpee Hanson: I regret
that the arrangement made between the Prime Minister and myself was not communicated to the group at the other corner of the house, but I believe that notwithstanding the difficulty that has arisen these hon. gentlemen will have ample opportunity at a very early day to carry on the discussion wThich they are seeking to engage in this afternoon. In courtesy to myself I think at least they should have given us some notice that they intended to speak on the pro forma motion to go into supply for the purpose of enabling the government to have business with which to continue on Thursday and Friday of this week.
Motion agreed to and debate adjourned.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, April 29, consideration of the motion of Hon. J. L. Usley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Richard Burpee Hanson: Mr. Speaker, in the remarks which I have to make to-day I shall deal for the most part with principles and their application. I shall refrain from narrow or party viewpoints, be as judicial as I can, and above all in my contribution to this debate I shall endeavour to keep in mind always the fact that Canada is at war with a ruthless enemy, and that we are engaged in the greatest joint enterprise ever undertaken by any group of people.
If I should err in this endeavour I hope it will be attributed to me personally and not to the party which I represent in this house. For here and now I assert that this party has one end, and one end only, in view-the winning of the war, the preservation of liberty and freedom and the elimination of all the forces of evil so strongly arrayed against the democracies.
The lengthy budget statement of the Minister of Finance (Mr. Ilsley) on Tuesday last was no doubt received with mixed feelings by the Canadian public. But to that portion of the public which is most anxious that Canada shall put forward her utmost effort at this most critical juncture of the world war, it came as no surprise. In fact, there will no doubt be found a substantial body of public opinion in this country which will think that, speaking generally and in the abstract, the budget proposals perhaps have not gone far enough. There are only two costs in this war-and may I emphasize this-the cost of victory and the cost of defeat.
I have said from the very first that the Canadian people will willingly bear our share of the cost' of this war, either in the form of taxation or of loans to the government, provided always that the money thus raised is expended efficiently, wisely and economically, and without waste or extravagance. To-day, in the name of those same loyal people, I reaffirm that position, and say to the government that they will willingly bear the tremendous additional burden to be imposed upon them by the measures proposed by the Minister of Finance, on the assumption and theory that we are in this war until victory shall be won. We Canadians are determined to do our utmost, not only in terms of
2536	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
dollars and cents, but in man-power and material tilings, so that we may remain free men in a free country.
Undoubtedly there are those who will differ from the minister's proposals as to ways and means. That is to be expected, and much may be said in support of alternative proposals. But speaking generally there will not, in the minds of those who are determined to remain free men in a free land-and that should include all of us-be much, if any disposition to oppose the minister's proposals, provided the government puts into practical operation the theory that our contribution shall be an all-out effort, accompanied by a firm determination that waste and extravagance, incompetence and inefficiency shall not be tolerated.
To those who followed the Prime Minister's historical narrative on Monday last, to those who have analysed the situation on their own account, it must be apparent that with the loss of the battle of Greece the fortunes of our armed forces have not only suffered another very serious reverse, but that there is now extreme danger that the whole of the near east, the Levant, and the control of the Mediterranean area itself, may pass out of the hands of the British. If that does happen, then for all practical purposes the whole of western, central and southern Europe will have passed under the domination of the dictators. The gateway to the far east will be closed, and the whole position will have assumed a greater gravity than at any time since the opening of hostilities. If that position is attained, then we may anticipate that the enemy will further concentrate on the battle of Britain and the battle of the Atlantic. The mere mention of such eventualities will serve to impress upon us the seriousness of the whole position and will bring home to Canadians not only the danger of defeat but also the fact that the war is not so far away from the shores of North America as some people may have assumed.
I do not wish to be interpreted as being an alarmist. Quite the contrary. I am as firmly convinced as ever I was that the battle of the Atlantic will be won, that the invasion of Britain will be repelled, but I do not think we should lose sight of possibilities that might arise. We should be realistic and should, so far as lies in our power, be ready for any eventuality and to extend any and every aid within the compass of our powers and resources.
If you will recall the story of the Napoleonic wars, extending over a quarter of a century, you will remember that many times the British forces were driven out of Europe, but under one circumstance or another they always returned, and finally at Waterloo the

destiny of Napoleon was settled, and the position in Europe was stabilized. Britain has been in many wars and has lost many battles, but it is my comforting thought that come what may she has always won the last battle. History, no matter what may be our fears, has a habit of repeating itself, and I am as confident as I ever was of anything in my life that the battle of the Atlantic will be won, that Britain will not be successfully invaded, and that freedom and liberty will survive. But it will be at a great price, at great sacrifice in both blood and treasure. This herculean task will only be accomplished by the united effort of all the liberty-loving peoples of the world. We are indeed fortunate in having by the side of the empire at this time the active aid and support of the people of the United States, who 'have in a real sense made this war their own and who will, I feel certain, in due course make this gigantic struggle their fight also.
To Canadians this struggle has always been ours, and it is on this assumption and on this theory that we on this side of the house, casting aside all thought of partisanship and of party advantage and thinking only in terms of national unity and of concerted national effort and of ultimate victory, have pledged our support to this government in an all-out war effort; and following that pledge we are prepared to give our support to the provisions of this budget. It is at least one way in which we may exhibit that spirit of unity which should guide us at this critical juncture. There will be no amendment and no carping criticism from this party.
It may be, and it is wholly natural, that we should in a degree differ from some of the government's detailed proposals. We reserve in this discussion the right of analysis and of constructive criticism and suggestions. But with respect to the prime objective of raising adequate supplies of money to carry on the war we are in agreement and to that end I pledge the support of this party.
The minister was confronted with a gigantic task and in my view he acquitted himself with credit. I have already tendered him my personal congratulations and Shall not repeat them. He did not attempt to adorn the tale with any rhetoric or useless verbiage. He told us lucidly and in plain language what the position is and what the proposals are.
And what did he tell us the task was? He told us that the federal treasury for war expenditures and for peace-time activities required the huge sum of approximately 1,800 millions of dollars; and that in addition Canada has undertaken to underwrite or pay for $900 millions of war orders which Britain is asking us to produce and for which she cannot

The Budget-Mr. Hanson (York-Sunbury)
presently pay either in Canadian dollars or in sterling. This makes an astonishing total of $2,700 millions, a gigantic sum for twelve millions of people, equal to about $225 per head. If we add to this $2,700 millions the sum of $575 millions estimated for provincial and municipal expenditures during the same, or approximately the same, period, we reach the staggering figure of 3,275 millions of dollars, or $273 for every man, woman and child in Canada, which will have to be produced by taxes and by other means.
I mention these figures, not to magnify them, but to bring home to our people the size of the undertaking with which we are confronted. They are so great that many of us can scarcely comprehend them. But let us not be terrified by them. Let us not flinch or shrink. Let us rather review the situation in the light of the past, dispassionately but earnestly and realistically.
In 1916, as the minister stated, our total revenues were $172 millions; in 1919, $313 millions. Last year they totalled $871 millions, or five times that of 1916. I submit that this was a huge sum to take from the Canadian people in a single year, and some of it, notably that produced from individual income taxpayers, was heavy and onerous. There was not equality of sacrifice; but the burden was not comparable with that which they will have to bear as a result of the proposals now before us. But the fact is that the Canadian people did produce for the federal treasury $871 millions and this in addition to over half a billion dollars for provincial and municipal purposes. What a marvellous achievement for less than twelve million people!
This year we are asked to tighten our belts and produce in a full year $300 million more in revenue from increases in existing taxes and in yields from new taxes. If it were not for the urgent necessity, it would be unthinkable. But there is urgent necessity. The task must be undertaken, and it will be done. But having regard to the gigantic proportions of the task, to the fact that every one of us must meet the situation realistically, retrench in our private expenditures, reduce in most cases our standards of living, is it unfair for me to appeal to this government, to provincial governments and to municipalities to lead the way in retrenchment in all peace-time activities?
We are asked to give, to pay, to reduce our standards of living; but is the government setting an example? I fear not. I am appalled when I read that the total deficit of the Canadian National Railways was over $16 millions in a year when war transportation was at its peak, when it was hoped that the system would pay all its operations and all its carrying
charges, not to speak of or include its obligations to the federal treasury. Frankly, this result was far from satisfactory, and we should have some explanation from the ministry and from the management.
In this connection may I remind the house that in spite of the necessities for war expenditures and in spite of the problem of foreign exchange in relation to United States dollars, the railway went on with the Montreal terminal, a project that will cost, or actually has cost, over 25 millions of dollars, a substantial portion of which had to be paid in United States funds. That is not a comfortable situation; indeed I once characterized it as shocking. But the minister defended it on the ground of necessity and utility, a defence which, to me at least, was not convincing. Let us have an end of that sort of thing, and let the government, especially in peace-time activity, give an example to the people of Canada. The people are asking for it.
But is the government doing it? I do not think so. Recently I heard that because of traffic congestion between Moncton and Halifax the railway is contemplating, if it has not already arranged for, the installation of a remote electric control system of operating trains between Pacific Junction in New Brunswick and Truro, Nova Scotia. It will cost at a minimum, it is said, $1,200,000 and will likely reach one and a half million dollars. Of this, half a million dollars at the very least will be required to purchase certain equipment in the United States not available in Canada. United States dollars must be provided. Is this necessary?
I enter into no discussion as to the merits of this device. I do not know much about it. It may be wholly desirable; in fact I am inclined to believe that it would be very desirable in normal times, provided the money was available. I do not know much about it except what I have learned from the officials of the road. But this I do know, that while there may be congestion between Pacific Junction and Halifax, not one ship has been delayed at an eastern port for lack of cargo, that more freight is offering than can be moved. Now, in the light of these facts how can the government justify this expenditure?- for mark you, this is a new capital expenditure. It must have the approval of an order in council, if it has not already received such approval. How can the government consistently ask the Canadian people to raise $1,000,000,000 in taxation when it will not itself give the lead?
And what of our provincial governments and municipalities? What cooperation is there between them and this government with a view to cutting down expenditures through
2538	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
these avenues? None whatever is discernible. Our provincial legislatures have all prorogued, I believe, after budgeting in the aggregate for the largest taxation proposals and the largest provincial expenditures in the history of Canada. Even the municipalities are not substantially retrenching. In fact some of them have increased their budgets. Mr. Speaker, peace-time expenditures in every sphere of governmental activity will have to be cut to the bare bone, and I call upon the minister and this government to lead the way and set the example. If this is done, the new imposts will be paid, in most cases, cheerfully. But, without this retrenchment, there will be resentment, if not resistance.
I do not intend to go into the field of war extravagance and inefficiency, although I could do so. A multitude of instances have come to my knowledge. I may be permitted to mention only one. I hesitate to refer again in this house to Federal Aircraft Limited in relation to the Avro-Anson contract, especially after what the minister promised us and upon which promise in relation to production I had every right to rely. Recently it was brought to my attention that there was absolutely no control over costs, and there was no target of cost to shoot at, no standard by which claims may be judged. Now that is to me evidence of inefficiency in the management of Federal Aircraft. And, by the way, it may be of interest to the house to know that important engineering data, plans and blueprints, are not yet available; that numerous parts have not yet been ordered, or at least delivered, and that production of the frames and parts to be assembled in Canada are still being retarded, in any event have not been accelerated.


Clarence Decatur Howe: No.


Richard Burpee Hanson: I think it is true. I ask the minister to look into this and give to the house the result indicated by the recent interdepartmental report on the present status of this production, or else lay it on the table. It will astonish the country.


Clarence Decatur Howe: There is no such report.


Richard Burpee Hanson: There is such a report.


Clarence Decatur Howe: No.


Richard Burpee Hanson: There is such a report and I have seen it.


Clarence Decatur Howe: I have not.


Richard Burpee Hanson: I am not at liberty to use it. The minister will find, I think, that to say the least it is very disappointing. Again, if my fears are well founded. I would ask the minister to review

the whole problem of Federal Aircraft judicially and without bias and see for himself if there is not inefficiency.
If the Minister of Finance (Mr. Ilsley) does not know that there is unrest and dissatisfaction in the country over the lack of thrift in government expenditures, both peace-time and war, let me ask him to interview those who were in charge in the field of the war savings campaign, and I venture to say he will hear a few things that may be convincing. I think he has already heard them. I recently learned about this unrest and dissatisfaction at first-hand from a man, a friend of this government, who had charge of the organization of this campaign in one of our provinces. He told me of the resistance which was met and which had to be overcome, and which was only overcome by a united effort on the part of citizen committees who undertook the work. The chief complaint was against alleged unnecessary and extravagant expenditures on the part of the government in war as well as in peace-time activity, and right in the forefront was placed the cost of taking the census this year. In spite of warnings which must have reached Ottawa this work and expenditure is going on, but it will have its repercussions in the country and the government will have to take the responsibility.
I now desire to deal with a subject which we often hear about but which is not much discussed in this house; I refer to the question of the national income. Our ability to raise these huge sums in new and increased taxation is based on the theory of a greatly increased national income. That is the very foundation of the proposals, and I confess to some doubt as to the validity of this foundation-at least in such large increases. Recently I have attempted to give some study to this very complicated subject. Studies have been made by the bureau of statistics and by the economists of the Bank of Canada for the purpose of the Sirois report, and I find that neither study is mathematically perfect, that neither is exact, but that both are based on data and statistics which in some instances at least are purely estimates and in some very questionable.
I have found, too, that there is much difference of opinion as to the methods to be adopted in arriving at conclusions, and that there is disagreement between different schools of economic thought. On the whole I have arrived at the conclusion that this is one of the most obscure fields of economic investigation and that no method of computation is accurate, or even approaches accuracy.
I had held, in my ignorance, the view that the production of new wealth was, in a degree, synonymous with "national income".

The Budget-Mr. Hanson (York-Sunbury)
Without going into a diagnosis, I am now convinced that I was wrong. I am now advised that the basis of the term "national income" is the measure of all economic goods and services produced by, and made available to, the people of the nation during any given year. It is stated to me that this figure is simply an aggregate of the net values of production of all economic enterprises, or, conversely, of the total incomes received from productive enterprises, paid out by, and/or accruing to all individuals in the country.
The economic enterprises of the nation are divided into two categories, governmental and private.
AVith respect to private enterprises, the calculation of the net value of production is comparatively simple, provided the data or statistics are available and complete. This proviso is important. The data are not always available and complete, and resort must be had to estimates.
The value of governmental services is much more complex.
The question is asked, what is the economic value of government activity? Well, judging by partisan standards and being cynical, one might say that it has little or no economic value. That would not be true, however. Laying aside some margin for extravagance, inefficiency and other factors, there is still a field left which has an economic value, and it would appear that those estimating national income must adopt a criterion which should be dissociated from and independent of what are termed subjective valuations and be consistent and practical. And the method adopted is to value the governmental contribution to the national income at the amount paid by the government to individuals for productive services rendered. Thus there are included salaries and wages paid to civil servants, military pay and allowances, other military expenditures of certain characters, rents paid by the government and interest paid directly or indirectly to individuals on government debts incurred, or for the acquisition of socially productive assets.
Presumably it would include the S400 million or more which the government has paid, or will pay this year, in connection with the operations of the wheat board in taking over an unsaleable asset. If so, I am not in agreement, for this at the moment is not a liquid asset. I am assured that it does not include government payments to individuals in the form of direct relief, non-contributory pensions and public welfare services, the exclusion of which seems sound in principle.
All this is a pretty large order, and I may be pardoned if I express some doubt as to the soundness of the basis of the factors
of calculation upon which the estimate of our national income is made, especially when I find differences of opinion among economists themselves.
I assert my belief that all such governmental expenditures as I have indicated are not true national income in the sense that a good sound business man would view them. Many governmental expenditures are not made for productive activity, and therefore a substantial allowance on this account should be made. Just how much, I do not know, and I do not propose to use any arbitrary deduction without some reasonably sound basis for my deduction. However, on the basis of the report of the Bank of Canada economists the national income for 1939 was $4,040 million. Apparently for the same period of time the bureau of statistics estimated the national income at $4,409 million-a very substantial difference: nearly $400 million. For 1940 the figures are stated by the economists of the Bank of Canada to be $4,594 million, as compared with $4,800 million estimated by the bureau of statistics. So you see there is a *wide variation. I think it will be admitted- indeed has been admitted by the bureau- that its estimate is altogether too high.
For 1941 an estimated income of $600 million over 1940 has been made. At the most this would total less than $5,200 million, and if proper reserves and deductions are made I suggest that the national income will be under $5 billion. Yet the people of Canada are being asked to provide in taxation and loans over $3,200 million, or in excess of sixty per cent of the estimated national income. This is a colossal sum, and I suggest to the government that the whole problem be reviewed. Revised estimates of national income should be made, and on the other side the most careful consideration should be given to retrenchment and economy in expenditures. Unless this is done, I warn the government that the going will be hard when the appeal is made to the public in June for the 1941 victory loan. The money will be raised, but it will be raised only by the patriotic action of the loyal people of Canada, who so far are not any too well pleased with the government's war effort as exemplified by actions and results, not as portrayed in terms of dollars and cents or in propaganda speeches of ministers of the crown. These loyal people most assuredly are not satisfied that a dollar expended means a dollar in value received.
The minister made slight and only casual reference to the amount to be borrowed this year, but it is quite clear from what he said that over a billion dollars will be required to be raised this year from the people, the business firms and institutions of the country.
2540	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
This is a staggering amount when we consider that the total savings of the people now in the chartered banks is much less than $2 billion.
To add to the difficulty, the individuals who will be expected to subscribe heavily and substantially to this coming war loan are the very people who have again been hit most heavily by the increased income tax proposals. Last year these same people found themselves confronted with sudden and tremendous heavy increases in their income taxes. They have no sooner adjusted themselves to the new situation and manfully endeavoured to meet their obligations to the state than they are met with new demands and impositions of a staggering character. The government has adopted the easy course. The people will comply as long as humanly possible, but how they can pay from forty to fifty per cent income tax increases and at the same time buy war loans is beyond my comprehension. You just can't have your cake and eat it too.
I now desire to deal briefly with the budget proposals generally. These are many and in some cases drastic. Obviously one cannot discuss them all, and I do not propose to do so. The outstanding feature, of course, is the extension of the principle of direct taxation.
The next outstanding feature is the marked invasion of the field of provincial taxation. In a degree this was inevitable. The income tax field was entered by the federal authority during the last great war-with some reluctance at the time, because then there was a tacit understanding that, speaking generally, direct taxation ought properly to be reserved for the provinces. If my memory serves me aright, only one province, British Columbia had at that time-in 1917-an income tax. Due largely to the extension of social services by the provinces and declining revenues from certain other sources, the provinces, with the exception of New Brunswick and Nova Scotia, have since entered this field. Certain municipalities have been in this field for years. Personally I have been paying income tax in my own city for nearly forty years. But all the provinces have in recent years imposed taxes on corporations-not only on profits but in some instances on the capital structure itself. In my own province, in the case of public utilities these taxes which fall on the capital structure are forbidden to be passed on to customers and clients, which I have always thought was, in certain given cases, unjust and unfair.
Now it is proposed that the provinces be invited to give up both their sources of revenue and receive adjusting compensation in

lieu. I express the hope that the offer will be accepted. The compensations offered are generous-perhaps too generous. It occurs to me that the proposal comes a little late. This is one of the things which should have been proposed and accomplished at the dominion-provincial conference which was so unceremoniously ditched by the subversive action of three of the provincial premiers-two of them favourite sons of the Liberal party-and by the lack of leadership displayed by the Prime Minister and his colleagues. I do not propose to debate this matter now. Suffice it to say that while the three recalcitrants made it abundantly clear that they would not confer on the basis of the Sirois report-one of them, in terms which were at least discourteous, if not actually insulting-they, or at least two of them, left the door open for a round table conference between the dominion and the provinces on the basis of a united war effort. This offer was summarily rejected by the Prime Minister, and for this he must be held responsible. It was at this juncture that he showed a lack of national leadership.
Now an effort is being made to repair the damage. Personally I hope it will be successful, and that the whole field of income tax will be transferred, for the duration at least, to the federal authority.
But do not let us delude ourselves. It does not and will not mean any relief for the taxpayer. At most, it can only mean that he will have one taxing master instead of two, or in some cases three, but the burden will not be reduced, save possibly in the matter of the cost of collection. Some economies may be effected there.
Already, I understand, one province has agreed to come into the scheme. Is this an eleventh hour repentance on the part of Mr. Pattulio? It would appear so. He is an astute politician. He has heard from the people of British Columbia.
The little provinces, such as the maritimes, will, I have no doubt, agree, because on balance they will probably find that it will be profitable to do so. But what of the municipalities, such as Fredericton, Moncton, and Saint John, in my own province, which have had substantial revenues from this source for many years? Will they be protected and will such part of the adjustment grants in lieu, which the dominion will pay to, say, the province of New Brunswick, as are equal to the loss sustained by these municipalities, be passed along to them? The minister's intention is, no doubt, that this will be done, but it is not clear, because the minister's language, at page 2345 of Hansard, is that:
. . . the dominion will offer to pay each year for the duration of the war to any province-

The Budget-Mr. Hanson (York-Sunbury)
Obviously he is thinking of dealing only with provinces.
-which, together with its municipalities, will temporarily vacate the personal income tax and corporation tax fields either
(a)	The revenues which the province and its municipalities actually obtained from these sources during the fiscal year ending nearest to December 31, 1940, or
(b)	The cost of the net debt service actually paid by the province during the fiscal year ending nearest to December 31, 1940 (not including contributions to sinking funds), less the revenue obtained from succession duties during that period.
Either of such payments is to be augmented by fiscal-need subsidies, whatever that may be construed to mean, where it can be shown that these are necessary.
What I want the Minister to make clear beyond peradventure is that whatever choice is made by a given province, the municipality giving up this source of revenue is protected one hundred per cent and will not, by reason of the province's decision, sustain any loss in revenue. I suggest that that is a reasonable request to make.
In my mind's eye, Mr. Speaker, I can see the premier of New Brunswick, surrounded by the little band of little men with little minds whom he calls his government, sitting down and sharpening his pencil and figuring, figuring, and endeavouring to see how much he can save or make out of the travail of the country. And then, being unable to determine which course to adopt, calling in that great master of finance, Mr. Neill MacLean, who is the political godfather and mentor of the provincial secretary-treasurer of New Brunswick, and waiting breathlessly for his decision. The Minister of Fisheries (Mr. Michaud) laughs. He knows that what I am suggesting is about true.
I now want to talk for a moment about succession duties. I confess I am perturbed over the further invasion of the provincial field by the imposition of succession duties. The provinces are not being asked to vacate this field. Up to date it has been their own. Personally I am convinced, after a careful study extending over a long period of years, that the smaller provinces do not get their just share of this tax, vis-a-vis the rich provinces of Ontario and Quebec. I could cite many reasons and examples, but I will just give one of them. Nearly all public securities are registered in either of those two provinces, because of the presence of stock exchanges in Montreal and Toronto and the necessity of being able to register quickly. For that reason, those two provinces exact in certain cases tribute-no other word will apply to the
case-from estates situate or domiciled in the small provinces, to the ultimate detriment of the small provinces. This has long been a source of vexation and trouble.
In essence and in practice, succession or death duties are not, properly speaking, taxes, but are in their nature confiscation of private property. Surely we will all admit that. I know the arguments the other way and I shall not repeat them-to do so would be futile because we have these imposts now and always will have them. They are an accomplished fact, not a theory, and we are dealing with facts, not theories. Nevertheless, I personally am not convinced that the dominion should enter this field at the present time. However, the government, because of the necessities of war, has been driven-at all events, it has decided to enter this field. And, mark you, without any previous consultation or arrangement with the provinces. That, I think, is a major mistake, and time should have been taken by the forelock long before the budget and some arrangement entered into under which consideration would have been given to the whole problem and some reasonable accommodation made, whereby the one sum of money would not be subject to two, perhaps three, imposts. Double or triple taxation is always odious. Consultation 'has not taken place. It could very properly -have taken place last January at the time of the conference. It is one subject which, if then contemplated, should have been dealt with.
Personally I think that the attempt should have been made. The opportunity was lost and is another example of lack of national leadership.
I shall not attempt at this stage to enter into a discussion of the scheme outlined or the general level of the proposed rates. That will come in the committee stage, and I Shall certainly have something to say.
The minister predicated his proposal on the assumption that, while this field had previously been used by the provinces and not by the dominion, neither has any exclusive legal rights to it. I agree. But he went on further to say that while some of the legislatures had exploited the field to a greater degree than others, he believed they had not fully occupied the field and that there was room for an additional and independent dominion tax. Evidently the minister is not familiar with the situation which has developed in the province of Ontario, and by no stretch of the imagination can it be assumed that he has had to deal with the treasury officials in the province of Quebec. I could tell some interesting experiences in that regard. I suggest to him that he is wrong in his assumption. In my view the field has been fully
25-12	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
occupied and exploited by all the provinces and especially by the two larger provinces. Now we are to have the two imposts on the same property, without any regard to the incidence of the tax except possibly with respect to the proposed rates.
I do protest against this injustice. I hope that between now and next year negotiations will be opened with the provinces with a view to reaching some conclusions so that double taxation may be avoided, at least so that there shall not be taxes imposed on taxes, as is so often the case to-day in other fields and as is the case to-day in connection with the provincial succession duties, where you have the situation that the very property going to pay the tax is in general itself taxed.
This is hasty legislation and should be reviewed. I do not mean the principle of the tax; for I fear that is too late, but the incidence of the tax.
I have no objection at all to many of the new luxury taxes. Some of them are overdue. But I wonder whether the minister has thought through to the end the effect of the twenty per cent tax on motion pictures in small towns of approximately three thousand people, when there is no new war industry or new community income. I want him to think about that. My information is that these people just cannot stand this tax and continue to exist. Neither have I any objection to the increased taxes on beer and malt. The only criticism I have to make is that they are not higher, but possibly I do not understand all the ramifications and underlying reasons for the moderate increase.
I am a little surprised that nothing has been done to increase taxes on spirits. Have we reached the saturation point in that regard? Is the law of diminishing returns in force? I do not know, but this I do know, that a lot of good temperance people in this country, especially shall I say in the province of Nova Scotia, are going to be disappointed with my hon. friend. Already many evidences of discontent with the greatly increased sale of strong spirits and of malt liquors in that province have reached me. Good people down there are perturbed, as they are in my own province, over the increased consumption. Well, all I can say is that my hon. friend has grievously disappointed some of his warm and loyal supporters. I leave him to make his own peace with them.
But I do want to discuss briefly the increases in the national defence tax. When this new tax was introduced last year I prophesied that this tax would produce a lot of money and was here to stay. It is imposed primarily to catch people in the lower income tax brackets.

I agree that these people should make some contribution, according to their ability to pay. But the tax is now raised to a much higher level. When you add to the new level the assessments for unemployment insurance, contributions by wage deductions to war savings certificates and an increase in the cost of living of, at the very least, ten per cent, you will find that an enormous burden has been placed upon the income of people in the lower brackets, many of whom are employed now for the first time in many years and have not been able to pay their debts in days gone by. When all these factors are in full operation you will find that something not less and probably much more than twenty per cent of a workingman's total income is being taken, I suggest that a man with a family cannot stand such severe taxation and live on a decent standard.
The inevitable result will be a constant and increased demand for more and more wages, and the vicious circle of inflation which is already on us will receive an increased momentum and velocity.
Then there is the question of the excess profits tax amendments. Before the Easter recess the minister brought down a statement of some seventeen or eighteen proposed changes in this act. We are now invited to consider several new and additional changes.
This is the third revision of the act, and I venture to suggest it will not be the last. It is a classic illustration of hasty legislation. I believe the inherent difficulties in operation and the inherent injustices occasioned by its operation will compel the minister to come back to parliament time and again for further revision as new or unforeseen situations arise.
The act is based on the theory that there shall be no fortunes made out of this war. Well and good. I agree. But does this mean that a company, for example, which in the harsh days between 1930 and 1939 suffered severely from the depression, shall not be allowed to recover and pay its old debts and be in a position to withstand the shock of post-war depression which is bound to come after this terrible storm of war is over? This act is an instance of yielding to the cry of the demagogues without thinking the matter through. I agree that neither the public nor the country shall be exploited for the benefit of the few. Most decidedly I agree. But I do suggest that the method is wrong. I have made some study of the situation, and I am convinced that the British treasury and the British taxing authorities know much more about this matter than we do. We cannot teach them anything about income or excess profits taxation. Per contra, we can learn much from them, and I suggest to the minister

The Budget-Mr. Hanson (York-Sunbury)
that it is not too late to review the whole position and to pattern our taxation proposals in this regard upon the British system. Tax profits as high as you like, but in the proper sphere. Collect them at the source, and collect them from those to whom they may accrue, but do not penalize these companies to such an extent that they cannot pay accumulations of debts incurred in depression times, or survive and give employment during the post-war period. Let them earn, and keep, reasonable standard profits; then take the excess if you will.
In England they have no corporation income taxes. Here we have them now to the tune of forty per cent, and we tax these profits twice-once in the hands of the company, and again in the hands of the recipients. This is wholly inequitable. Let us at least consider adopting the British practice, if it is not too late, and I believe it is not. Then after making provision for standard profits, which Shall be taxed as high as you like in the hands of the proprietors, take the whole of the excess, if you will, as they do in Britain. But do not make it impossible for these institutions, upon which the nation will rely for employment for our people after the war, to live. That principle will yield quite as much revenue, if that is what is sought, but it will not destroy.
I shall not allude in detail to any of the proposals, new or old. I do not understand them all. The minister has told us that the changes proposed are not intended to and will not result in any general relief from the weight of the tax. I do not think anyone has advocated that. But they have asked for more equitable treatment, more equitable distribution of the burden, and in particular that companies as vehicles for the effective use of accumulated capital devoted to production and employment may not be so weakened that in times of future adversity they may not survive. Many of these companies have been once through the wringer; if there ever was water in them it has all been wrung out. To put them into the hands of receivers again and repeat the process of reorganization will, to many, mean destruction.
Since I heard the budget I have been asking myself this question: Does the budget face with sufficient realism the question of unnecessary consumer purchasing?
There is little or no extension of the principles adopted in the December "baby budget," so called. The taxes imposed or increased are revenue taxes, not designed primarily to restrict consumption, although of course 6ome of them will have that effect indirectly. The tax on sugar is a revenue measure. The slight increase in the tax on motor vehicles,
on cosmetics and toilet preparations, and the withdrawal of building materials from sales tax exemption, would appear to be designed to restrict consumer purchasing. But are they sufficient?
I regret the removal of the sales tax exemption on materials for repairs on small holdings and on materials for new small houses. This I suggest might well have been left as it was.
One of the purposes of the budget should be to deflect the increased income of the nation from the purchase of unnecessary and perhaps wasteful and extravagant luxuries to the purchase of war savings certificates and victory bonds. The deflection of income in this manner would not only provide the public exchequer with additional funds for carrying on the war but would also ensure that our man-power is engaged in essential tasks which will contribute to the winning of the war. Make no mistake about it, increased civilian consumption means diminished war effort. On the other hand, deferment of immediate consumption would make available to our citizens an opportunity of consuming when the war is over. Deferred consumption would take up the slack which inevitably must result in the change-over from war-time production to peace-time production.
The minister has adopted this principle in the case of building, but I suggest to him that he has picked upon an industry which because of present conditions is least amenable to such treatment. At a time when serious housing shortages exist in many centres of population, and when it has been found necessary to set up a government-owned housing corporation, it seems to me to be the path of folly to discourage our people from pursuing the sound family policy of home ownership.
Deferment of expenditures and restriction of consumption could and should have been applied on a wide scale to luxury articles. I believe that our people were anticipating and were prepared for a severe curtailment of their right to purchase non-essential commodities of many kinds. The failure of the minister to take action in this respect will not only cause him difficulty in the promotion of his war savings drive but will mean that man-power and factory space which could be turned to essential war tasks will continue to be engaged in what is, for the present time at least, non-productive activity.
Just a brief word in conclusion. In common with all the other liberty-loving peoples of the world, Canadians are realizing more vividly and more fully each day the fact, which cannot be emphasized too frequently or too forcefully, that democracy and all the term implies stands to-day on trial and in
2544	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
peril. We who hare eyes to see and ears to hear cannot be blind or deaf to the sights and sounds that threaten our very existence. The issues at stake are clear. So essential are they to the maintenance and continuance of Christian civilization that our governments do not hesitate to place them above human life itself.
In every one of his many notable speeches, Mr. Churchill has warned us, clearly and unmistakably, that the battle for the vindication of our way of life will be long, fierce and costly. He has not only encouraged us to believe, but he has made us ashamed, indeed defied us, to doubt that out of our willing and increasing sacrifice, our untiring and unceasing effort and our constant mindfulness of the high purpose for which we fight, victory is assured. There is the cost of victory and the cost of defeat. Which shall we choose?
Never before in the history of the world has the individual responsibility for victory been so great and so serious. And never before has the individual had so much at stake-so much to gain by victory and so much to lose by defeat.
In this country of ours, free as yet from the devastation of bombs and fire, we are more and more beginning gratefully to recognize the protection we are receiving from our first line of defence in Britain. And out of our heartfelt gratitude is bom a firm and unflinching determination to hold fast that line at whatever cost, or whatever sacrifice it may entail. We know we must give freely of men, of money, and of resources. We must not fail in any one of those demands.
In the fulfilment of our purpose, no class, no race, no group in our population is excluded from active obligation. I think I have said before that in this conflict there is no grandstand for spectators. We need neither a cheer leader in our victories nor a gloom spreader in our temporary defeats. We need, and I hope and pray we may have, a united nation, its eyes fixed on the main purpose, its energies bent steadily and unceasingly on the accomplishment of that purpose.
I am firm in my belief that the Canadian people will willingly undergo the trials and sacrifices that so surely lie ahead of us. I am equally confident that their demand is for that high and inspiring leadership which a Churchill is giving in Britain and a Roosevelt in the United States, leadership which, setting the example, will fearlessly press on, light the way and guide our people along the path to ultimate victory.


Mr. VICTOR QUELCH (Acadia):: First, Mr. Speaker, I should like to congratulate the Minister of Finance (Mr. Usley) upon the presentation of his budget. By this I do not not mean to say that I am congratulating him upon his financial policy, but I appreciate the fact that the presentation of a budget, which at any time is a heavy task, in time of war becomes a task of major magnitude, because it involves the question not only of raising money but of how it may be raised without impairing the efficiency of our war effort. That entails maintaining a healthy, contented and united people, and I do not believe that can be achieved by the government showing a contemptuous disregard for the will of so many bodies, including the western provincial governments, the various farm organizations and even this parliament, as was the case recently with regard to the wheat policy. Sometimes it almost seems to me that we are becoming contaminated with the same disease that afflicts Germany; that is, that we are beginning to do things altogether too much in the totalitarian manner.
In the past it has been stated that the British always blunder their way to victory. This war, I believe, is somewhat different. Movements are made with such incredible speed that we may not have time to continue to blunder as we have done in the past. We entered this war under a very great disadvantage. For a period of seven years Germany had been doing everything physically possible to fit herself for a major war, while we in this country remained in a state of semi coma. Even after the declaration of war, in September, 1939, it took eight months and a major setback to awaken this government to a realization of the seriousness of the situation. Last year I was speaking to an official of the Department of National Defence with regard to certain matters, and he told me that we had been regarding this as a closed war, a private war, and perhaps I would be justified in saying, as Britain's war. Instead of industry being ordered to go full steam ahead, it had to wait for orders from Britain. Apparently we were still thinking in terms of money; we were still deciding whether we could afford to spend this much or that much on armaments, instead of giving the industries of this country orders to produce to their maximum capacity.
I appreciate the fact that we have made tremendous strides in expanding our production since May, 1940; nevertheless there is still something radically wrong in our attempts to achieve maximum production. For example, there are still thousands of unskilled men, thousands of students coming out of

The Budget-Mr. Quelch
our schools and colleges, who have been unable to find places in war industry. I have received many letters from these men, and I do not for a moment doubt that every member of this house has received letters to the same effect. I have referred these letters to the Minister of Labour (Mr. McLarty) and various other ministers, but invariably the reply is that these men should go to the employment agencies, to which, of course, they had applied before writing me. The result has been practically nil.


Mr. MARTIN:: Does the hon. gentleman
mean the emergency war classes, when he refers to the schools?


Victor Quelch: 
Paul Joseph James Martin: We are training them.

The Budget-Mr. Quelch


Victor Quelch: I read a report of one technical school in Alberta which was taking on sixteen men to train. At the rate we are training these men, the war is liable to be over before their training is completed. And it will not be over in the way we wish it to be unless we awaken to realities and realize that this war is being fought at a terrific speed. There is no time to train men in the way in which they were trained in the past.


Paul Joseph James Martin: Does the hon. member know how many men are being trained at the present time?


Mr. DOUGLAS (Weybum):: You tell us.


Paul Joseph James Martin: I understand that under the present training scheme it is hoped to train something like 50,000 students in thirty-five technical schools.


Thomas Clement (Tommy) Douglas: By what date?


Paul Joseph James Martin: I am speaking from memory, but I think it will be within six months. I am not saying that this is all that we should do, but I think it ought to be mentioned.


Victor Quelch: The hon. member states that this year we shall train 50,000 men, but at the same time the minister tells us that this year we shall have to absorb 300,000. If we are going to train only 50,000, we shall still be 250,000 short. Again I stress the fact that we are not going at this problem as energetically as we might. If we can train men for the army in the time in which we seem to be able to train them, why cannot we do the same thing in connection with industrial life? I am not suggesting that these men should be conscripted, but they should be offered a fair and decent wage.


Paul Joseph James Martin: I agree with that.


Victor Quelch: On several occasions I have complimented the minister upon the general policy which he outlined in his budget of 1939. He rather reiterated that stand in his remarks on April 29. There are three main points with which I should like to deal. First, the minister stated that the government will insist upon equality of sacrifice according to ability to pay. Second, he stated that the country was to be brought as rapidly as possible to the full use of its resources and, third, he stated that as far as possible we were to follow a pay-as-you-go policy. When I spoke on March 20 I referred to this declaration of policy and deplored the fact that the government had not lived up to this declaration. I should like to deal briefly with some of these points from a slightly different angle.
First, there is the question of equality of sacrifice according to ability to pay. Generally speaking, I think the increases in taxation have been applied on a fair basis, with some

exceptions with which I shall deal later, perhaps when we are in committee. I have in mind the gas tax, the sugar tax and the need for the national defence tax exemption being raised from S660 to $750. I intend to refer also to the imposition of the sales tax upon lumber and building materials at a time when there is a shortage of houses. I consider this the most inopportune time to apply the sales tax to these materials. I wish, however, to congratulate the minister upon not having raised the sales tax. I wish it had been possible to reduce it because this is a tax which falls most unfairly upon the poorer classes. Under this tax the poor are paying upon practically all of their income, while the wealthy pay only upon a percentage.
Apart from taxation, I do not think the minister can possibly ask us to believe that the government is seriously and conscientiously trying to apply the principle of equality of sacrifice. I ask the Minister of Finance to study the new wheat policy imposed upon this country, not by parliament but by order in council. I ask the minister to study the agricultural situation which exists in western Canada to-day. I ask the minister to read the speeches made by the Minister of Agriculture (Mr. Gardiner) in this house and over the radio. I should like to quote from the remarks of the Minister of Agriculture, as follows:
They know that this policy is taking money out of their pockets and making it possible for this dominion to finance the war to the extent of at least $100,000,000 more than would be the case if the government did for the wheat growers of the west what they are doing for most of the other people of Canada.
The Minister of Agriculture points out that the wheat farmers are being called upon to make a greater sacrifice, to the extent of $100,000,000, than any other body of people. If the farmers of western Canada had been enjoying a period of prosperity there might have been some justification for this action, but such has not been the case. The farmers of the west have been suffering from long periods of low prices and drought. This ghastly policy is likely to have most serious repercussions. I am not speaking idly when I say that I am really worried over what may happen as a result of this absolutely unjustified action.
Then to add insult to injury, in addition to imposing a policy of this kind upon western Canada the government has imposed a three cent gasoline tax. Perhaps I should read what the minister said with regard to this tax. I quote:
The imposition of a much higher tax than three cents coupled with a system of refunds to tourists, farmers, fishermen and others was considered. It has been decided, however, to recommend a smaller tax and make no provision for refunds.

The Budget-Mr. Quelch
The minister pointed out that it would cost too much to administer the higher tax with refunds and that, as a rule, refunds are abused. There would be no difficulty in this regard in so far as Saskatchewan and Alberta are concerned. In both these provinces the farmers use a coloured gas which has been devised for the very purpose referred to by the minister. The use of this gas makes it impossible for the farmer to abuse the refund principle. I suggest to the minister that the three cent tax should not apply to coloured gas. There would be no question of refund involved; it would simply mean that the tax would be imposed upon the other types of gas and not upon the coloured gas.
At one time in Alberta, and I believe in Saskatchewan, it was the custom for a farmer to pay the usual price for gasoline. He would then apply for a refund upon that portion of the gasoline which was used on his farm. This privilege was abused, so the government put out a coloured gas which was to be used in tractors. The farmer was permitted to buy this gas without paying any tax, but if a policeman stopped his car and found coloured gas in the tank, he could be prosecuted. This gas was to be used only on the farm and not on the road.


Mr. HOWDEN:: Is the hon. member talking about distillate or gasoline?


Victor Quelch: I am referring to gasoline for tractor use.


John Power Howden: Most tractors use
distillate.


Victor Quelch: No, most of them use gasoline because of their high-compression engines.


Mr. EDWARDS:: The hon. member admits the correctness of the minister's contention with regard to the abuse of the refund principle.


Victor Quelch: It can not be abused in so far as Alberta and Saskatchewan are concerned.


Manley Justin Edwards: After all, the budget applies to all provinces.


Victor Quelch: Then I suggest that the other provinces can obviate this difficulty by following the example of Saskatchewan and Alberta. So much for the agricultural industry.
I wonder whether the minister considers that we are doing all in our power to lighten the burden of sacrifice of the Canadian soldier. Our soldiers are making the major sacrifice to-day, and I think we are all agreed that everything possible should be done to lighten their burdens. There is one way in which we could remove a great deal of the 14873-161
dissatisfaction which exists to-day in the army. That is the question of giving free railway passes for embarkation leave and furlough. I am not suggesting for one minute that every time a soldier wants a pass he should be given one free, but 1 do suggest that as regards embarkation leave, and furlough, which is granted every six months or yearly, the soldier is entitled to a free pass. The soldier is not consulted where he shall be trained, and he can be moved from one end of Canada to the other. Before embarking on a journey from which he may well never return, he naturally desires to see his loved ones. This may cost him in railway fare anywhere from fifty to ninety dollars, and very often he has not the money and must write his wife or other relative for the railway fare. We are all agreed, I think, that that is not a satisfactory condition, and undoubtedly it is causing a great deal of discontent. It is little things like that which become magnified in the minds of the soldiers and help to form a fertile ground for communistic literature and fifth-column advocates.
Another point to which I should like to refer in passing is the pension bill, to which I referred the other day, which destroys the insurance principle of the old Pensions Act. Not one member of the house was prepared to defend the destruction of that principle. Even the Minister of National Defence (Mr. Ralston) was not enthusiastic about it. Then we find out that the person responsible for having that bill drafted was the Minister of Finance, who called a meeting to draft the bill. So much for the declaration of equality of sacrifice.
Next to the government's declaration regarding maximum production. I have already dealt at some length with the question of shortage of skilled labour, which I think is one of the main causes of production being held up	at	the	present time. I pass that	byand go	on	to	the next point,	with regardto the government's declaration to follow so far as practicable a pay-as-you-go policy. Both the present Minister of Finance and his predecessor have on various occasions attempted to show that this group has advocated inflation. I most emphatically say to-day that at no time has this group advocated inflation, and I doubt very much if there is any group in this	house	which is more	opposed	to
inflation than we are.


Mr. BLACKMORE:: Hear hear; or that understands it better.


Victor Quelch: I would say that it was the failure of the government to maintain production	at	its	maximum level	during	the

The Budget

Mr. Quelch


Paul Joseph James Martin: Who suggested that that
was the proposal?


Victor Quelch: If the hon. member will
read any of the letters of the chartered banks, he will find that all of them insist that that is the only place to get it; and the Minister of Finance himself has repeatedly stressed that we sell to the pepole as many bonds as we can. I again say that, had we exercised our power of taxation as we should have, there should not be any surplus money for investment in bonds at this time. We know how a great deal of the money for bonds will be raised. It will be raised by a hidden form of inflation. The chartered banks will lend people the money to buy those bonds, just as the last war was financed in England, with the result that by the end of the war seventy per cent of those bonds were owned by the banks. Customers will be approached by the banks and told that they can borrow money for the purpose of purchasing a bond and that they can deposit the bond with the bank after it is purchased. At a later date, when they become hard up, they will sell the bond to the bank, or, if they are not able to meet their loan, the bond will be transferred. I guarantee that before this war is over, a great part of the issue of bonds will become the property of the banks.


An hon. MEMBER:: Where do they get
the money?


Victor Quelch: By the simple process of
writing figures in a book.


Mr. HANSELL:: Fountain-pen money.


Victor Quelch: 
The ACTING SPEAKER (Mr. Bradette):: According to Beauchesne, chapter VI, standing order 47, this amendment is out of order, because it is not seconded. Order 47 reads in part as follows:
All motions shall be in writing, and seconded, before being debated or put from the chair.


Victor Quelch: It is moved by myself, seconded by the hon. member for Macleod (Mr. Hansell), although that may not be stated upon the copy which was handed to you, Mr. Speaker.


Thomas Miller Bell: The minister, in introducing the budget this year, faced a colossal problem. He should, I think, be congratulated upon having presented a realistic picture of the financial task which confronts the Canadian people.
Some of the budget proposals are commendable, but many of its features invite serious criticism.
We are engaged in the most titanic struggle of all history, and in the past year we have had reason to realize that the way to victory will be hard and long. The present budget will bring this home very directly to the Canadian people.
We of this group desire to state as clearly and explicitly as we can that in our opinion every step necessary must be undertaken by this country to assist in the destruction of the menace of dictatorship which now threatens the entire world. Prior to the war we viewed with alarm and misgiving the disregard by our governments of the destruction of progressive movements, the incarceration of progressive people, and the conquest of defenceless Ethiopians, Chinese and others, by aggressor nations. It seemed to us that many of our leaders were more anxious to placate and cooperate with the aggressors than to use the machinery of collective economic action to stem the tide of aggression. Munich confirmed this opinion. The subsequent
The Budget-Mr. Coldwell


James Lorimer Ilsley: I wish my hon. friend would complete the story with regard to those 130 corporations and point out that t'he taxes were increased 150 per cent in 1940 as compared with 1939, and also that the shareholders are taxed again on a graduated scale when these reduced profits are distributed.


Thomas Miller Bell: I intend to deal more extensively with the excess profits tax when the item is before the committee. Last year, it will be recalled, I took thirty-t'hree companies, but unfortunately I have not yet been able to get the returns of the same thirty-three companies. They are not all available. I would say to the minister again, however, that it is not what they pay but what they have left that really counts. While I realize that there has been an increase in the amount levied on such corporations, my submission is that they still have a fairly substantial rate of profit left. In other words, as I said, if the suggestion is followed, we relieve the corporations of provincial income tax, but the new ten per cent dominion increase may not affect them to as large an extent as is generally believed. On the other hand-and this is the contrast I wish to make-a single person earning $20 a week will pay, in income and defence tax, a total of 8} per cent of that income. Add to this the rise in the cost of living, the cost of necessities, which as the leader of the opposition stated is now in the neighbourhood of ten per cent, and the direct contribution of a single person, exclusive of war savings certificates, donations and so on, will be 18} per cent. Similarly, a married man with two or more children who is earning $40 a week, will contribute about thirteen per cent of his income, and a married man without children, who is earning $40 a week, will contribute 18} per cent of his income. In other words, we have a reduction of two per cent in profits in the one case, which must be contrasted with the reduction of between thirteen and nearly nineteen per cent in the standard of living of the lower paid masses of the Canadian people.
There are other features of the budget which ought to be carefully considered by this house. We object particularly to any increase in indirect taxation, since so large a proportion of our revenue is raised by this method at the present time. Doubling the tax on sugar is particularly bad. I recollect how fiercely the sugar tax was assailed by the Liberal party when the government of the Right Hon. R. B. Bennett instituted it. At
that time is was condemned as a tax on the necessities of the poor and a toll taken on the children's candy. But the Liberal party did not abolish the tax; they reduced it, and now double it for revenue purposes.


Richard Burpee Hanson: The Liberal party did not reduce the tax; it was the Conservative party. The Liberal party promised to reduce it and has now increased it.


Thomas Miller Bell: My recollection was
bad in that respect; I am sorry. I should have known that a promise might not be fulfilled.
Sugar coming, as it does, from the sterling area, the question of foreign exchange is not involved. Of such taxes as that on sugar the United States Secretary of the Treasury, Mr. Morgenthau, said in his press conference of April 29 last:
The time may come, but not this year, when taxes on food may be necessary; but for the present I am opposed to this kind of tax one hundred per cent. A tax on the poor man's table goes against everything this administration has worked for and stood for.
On the same ground we are unalterably opposed to the sugar tax, and particularly to doubling it now.
The tax on gasoline can be justified only in so far as it applies to pleasure cars. To tax gasoline used for industrial purposes will increase the cost of living. It is another hidden tax which will enter into the prices paid by the consumer and by the poor. Exemption from this tax should certainly be given to the primary industries, and more particularly those of farming and fishing. To-day gasoline enters largely into the cost of agricultural production, and fishermen's operations on both coasts now depend largely upon the gasoline engine and, therefore, upon gasoline. Both these classes of producers are at present in a particularly bad way, and a tax of three cents a gallon on the fuel will further increase the difficulty of these depressed industries.
The hon. member for Acadia (Mr. Quelch) said that in several of the provinces, where gasoline is already taxed, specially coloured gasolines are available to farmers and fishermen for their operations. This fuel is tax-exempt. This principle should be carried into the new federal tax. That, I think, is easily undertaken. Particularly in the prairie provinces our people are used to the tax-exempt purple gasoline, and I am sure that the steps which have been taken to ensure that there shall be no abuses have prevented abuses; as a matter of fact, our people have never desired to take advantage of the purple gasoline for anything but its legitimate use.
Much the same criticism must be made of the transportation tax. Most people travel
The Budget-Mr. Coldwell

by bus, train or steamer because they must do so; people, for example, who do not own automobiles must travel by these methods. Business men and commercial travellers will merely charge the added cost in their expense accounts, and the amount will be added to the prices of their products. For them it will not, in many instances, mean much. Again, those who must travel in search of employment or from necessity, soldiers on leave, artisans moving from one place to another to take employment in war industries, will be unable to pass the tax on; hence it will be burdensome and inequitable. If a tax is to be placed on transportation, let it be placed on chair cars, drawing-room and other forms of luxury travel, but not on ordinary tickets.
The special tax on lower priced automobiles is to be increased from 20 to 25 per cent. We have been told many times that the object of the tax is to cut down the purchase of cars in war time, as well as to give some revenue. Obviously the tax has not achieved the first objective, for January, February and March this year made high records for automobile sales. Since this is coupled with the rationing of imported cars, it gives added protection to the highly protected Canadian automobile industry, or rather additional protection and profits to Canadian factories of certain United States corporations. We must cut down the manufacture of private cars; therefore let us do so by means of a priority system, which is the only fair method of approach. Indeed, if we are to fulfil our part in a total commonwealth war effort, there should be neither steel nor rubber nor machine tools nor labour for the building of any but the essential machines of war and the necessities of life. Britain cries aloud for mechanized war equipment; yet we continue to use material and labour in the manufacture of commodities we could do without. North America's role in this war must still be the provision of equipment in larger and larger quantities. The Right Hon. Winston Churchill, Prime Minister of Great Britain, said in a recent broadcast: "Give us the tools and we will finish the job".
In Canada we have not utilized either labour or machinery in the most efficient way. In Great Britain they have planned to diffuse their industrial effort over the whole country. To some extent this is done because they wish to escape the devastating air raids on concentrated industry, but why can we not do something of the same sort for different reasons? Western Canada, for example, with which I happen to be most familiar, has thousands of skilled mechanics who operate local and often small machine shops equipped with lathes, welding apparatus and so forth. Why cannot these men and their skill and 
machines be used to make parts for assembly into machines of war? In my opinion we have a vast reservoir of potential production which is idle at the present time. Such a plan, now in operation in Great Britain, and being considered to some extent in the United States, would not only utilize idle men and machines but prevent the breaking up of established 'homes through the concentration of industry in the large centres. It would do much to prevent congested housing conditions and to keep small communities in being. We must not depopulate the countryside and aggravate the housing situation in our cities, as well as invite still greater post-war problems that we shall have to face. In any event, our post-war problems will be very grave, especially in the industrial centres and around the new war industries.
In connection with the 'housing situation, we regard it as most unfortunate that the budget imposes the sales tax on building materials. By all means forbid the building of luxury homes, but let us do nothing to discourage the building of homes for our people. I do not propose to say much about this feature to-day, because one of my colleagues intends to deal with it more fully in the debate.
In the long run a healthy population is our best defence against aggression, both from within and from without. Health cannot be maintained under housing conditions such as exist in some of our cities, notably Halifax where many of our men of necessity must go at this time. The Minister of National Defence for Naval Services (Mr. Macdonald) made a rather bitter attack on this group because before the war we criticized defence estimates; because we were suspicious, and admitted it, of the people who were in charge of our international policy, as a result of not being told what international policy the government was following. But let me tell the minister that year after year, as premier of Nova Scotia, he sat within a few blocks of some of the vilest conditions in Canada, and allowed men, women and children to decay under his very eyes when he had the power at least-which we never had-to eliminate conditions which destroyed the human material upon which ultimately this country must rely in war and in peace. To my mind the building of homes should not be discouraged and the sales tax should not be imposed on building materials. If we are looking for minor sources of revenue I would suggest that the tax on whisky and other spirituous liquors could be further explored. It is argued that an increase would curtail consumption and thus lower our tax receipts

The War-Sinking of Ship
from that source. Well, we can curtail consumption of hard liquor to advantage at any time, so whatever the result, a higher tax on spirituous liquors would at least be a social gain.
In spite, however, of all these facts and criticisms, I realize that the Minister of Finance has tried to be fair within the limits of the economic environment which must determine his financial policy. The staggering conclusion is that within the limits of the present economic system a pay-as-you-go policy is not possible. After we have imposed relatively higher direct and indirect taxes, we shall have to borrow about a billion dollars, or find that amount in some other way, which may entail still further reductions in our standards of living. Under the profit or capitalist system there is no escape from this dilemma. The minister himself virtually stated this in so many words when he said that 'licences would be required for the erection or extension of buildings for industrial or commercial use, or for the installation of new machinery, and so forth. I quote the minister's own words:
This policy of controlling investment will have the important effect of providing a large market for government bonds, but it will have other important effects as well.
Thus war forces us to do what we would not consider doing to meet our many peacetime needs. Indeed, more and more the government which resisted all suggestions for economic and social planning is being forced to undertake it piecemeal, without a comprehensive plan and, therefore, without the effectiveness that it ought to have.
If this war has taught us anything, surely it has taught us that the democracies must learn to plan without regimentation. In the past we have mistaken industrial anarchy for freedom. The aim of this group is to replace the present competitive profit and capitalist system, with its inherent injustices, inhumanity and social and economic anarchy, with a social order in which economic planning will supersede unregulated private enterprise and competition, and in which genuine democratic self-government will be possible; for again let me say that there can be no real democracy and no real democratic selfgovernment until political democracy is rounded out by economic democracy. With our present equipment, and in this scientific age, we should be able to make men and women really free. Only the institution of such a system as is now being generally visualized, not by a few idealists here and there throughout the world but by great masses of thinking men and women, some of whom occupy dominant positions in our own
commonwealth of nations, would bring about the equality of sacrifice that ought to be attainable. Only in a cooperative, planned society would an all-out war effort, with a pay-as-you-go policy, become possible. We should be able to organize our effort on a realistic basis and say that so many units of labour, equipment and materials shall be used for war production, and so many for the production of those things necessary for the welfare of our people. We would then proceed to produce, without profit to monopolies, without interest to bondholders, without mortgaging our country and its future.



THE WAR


Hon. ANGUS MACDONALD (Minister of National Defence for Naval Services):: Mr. Speaker, I have an announcement to make to the house. I regret deeply that I should have to make it and that it should have to be in such terse form, but this is the form in which the British Admiralty desires that it should be made. The announcement, as authorized by the Admiralty is as follows:
Information has been received that a ship which included among its passengers a party of military personnel has been sunk. It is feared that among those lost are seventy-five military personnel. The next of kin of casualties have already been informed.
I may add that the next of kin of those who have been reported safe also have been informed by the Department of National Defence. I have only to add my own great personal regret at this loss. I am sure every member of this house shares that regret with me, and would like to have the relatives of those who have been lost realize how deeply the sympathy of this house goes out to them in this hour.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Mr. Ilsley for committee of ways and means.
Thomas Miller Bell: Mr. Speaker, on rising to resume the debate after the dinner recess, before which the Minister of National Defence for Naval Affairs (Mr. Macdonald) made an
The Budget-Mr. Coldwell

announcement of losses in the battle of the Atlantic, may I on behalf of our group-and I am sure I speak for members on all sides
of the house-express to the government our sorrow at the loss of more servants of the nation, and to those who have lost relatives, our deepest sympathy in their bereavement.
In my concluding remarks I was outlining what I considered to be the kind of organized society which we should be visualizing, both for the conduct of the war and in preparation for the peace that will follow. In such a social order individuality will not be crushed by a system of regimentation. What we seek is a proper collective organization of [DOT]our economic resources so that we may use them during this war to defeat aggression and afterwards continue to use them to enrich the individual lives of our people. This, in our opinion, summarizes the war and peace aims which our people need to have placed before them in order to secure their maximum effort in the struggle in which we are now engaged. We must show them that in every way Canada fights, not for an old way of life but for a newer, better, freer, more secure and just way of life.
It has been said that in some parts of the country there is a lack of enthusiasm for our war effort. If that is so, it is, I believe, not because the people do no wish to defeat the aggressor nations and all that they stand for, but because the issues have not been placed before the people in a sufficiently striking manner. When I say "the issues", I am thinking, not of the immediate issue of victory or defeat but rather of a much wider issue. For the past few generations we have been progressing toward a form of society different from any which we have ever known. This form of society has been evolving under our very eyes, and in my opinion our people should be encouraged to believe that this evolution will be deliberately speeded up by intelligent and conscious direction.
Some day we hope that most of our young men in uniform will return to us again; some day the men now engaged in our industries will finish their war-time tasks. These men will naturally wish to know what is to follow when peace comes. I have no doubt that ultimately the cause of freedom will triumph. Throughout all history, although freedom may have been trodden under foot for a time, it has inevitably risen victorious in the end. I have no fear that that also will be the outcome of the present struggle. But when it is over, there must not be and, if I read the desire of our people aright, there will not be another lost generation. In the lifetime of most of us in this chamber there has been, not one lost generation, but two. We lost

the flower of one generation in the great war, and another generation was wasted in the depression that followed.
I believe that the youth of our land, called upon to-day to make such heavy sacrifices, expect that this parliament, this representative body, this democratic institution, will now begin to prepare for the time when they will return. I repeat that we ought to be preparing now for the future. While we are calling upon the people of Canada to make the sacrifices outlined in the budget now under discussion; while we are asking our young .men to take their part in this struggle for human freedom, we ought to be making preparations for a fuller, better, more secure, and more democratic way of life. Therefore I wish to conclude with that thought, and to repeat what I have said in this house on former occasions. In my opinion we have been negligent in our duty because we have not yet fully established in this dominion a committee widely representative of labour, agriculture and industry to consider the preparations which we Should be making for the period that will follow this war.


Thomas Reid: Mr. Speaker, I should like to join with the Minister of National Defence for Naval Affairs (Mr. Macdonald) in expressing our deep sense of loss in the disaster which befell one of our ships, with the consequent loss of a number of our Canadian boys, the announcement of which was made by the minister before the house rose at six o'clock. In expressing our sorrow to the bereaved parents and relatives, I trust that there will be brought home to every one the fact that any financial sacrifices which we may be called upon to make cannot equal the sacrifices of those who have given their lives for their country.
Before I deal with the budget, perhaps the house will bear with me for a moment or two while I refer to an incident which took place on Saturday last and which was ol significant importance to one of the overrun countries of Europe which is still our gallant ally. I refer to Poland, whose people commemorated on Saturday, May 3, the one hundred and fiftieth anniversary of that country's constitution. It was on May 3, 1791, that the Polish diet adopted a new constitution which changed the political organization of that country and achieved great reforms on behalf of her people. It has been affirmed by some historians that the constitution set up in that year, and brought about without the shedding of blood, was one of the greatest events of the century I feel

THhe Budget-Mr. Reid
sure that members of the House of Commons will welcome an opportunity of tendering to the Polish consul and the stricken people of Poland our sympathy and felicitations upon their memorable anniversary, with the assurance that the people of Canada look forward with the utmost confidence to the day when the conqueror shall be banished from their land.
With regard to the budget, my first words are to commend the Minister of Finance (Mr. Ilsley) for his splendid presentation on Tuesday last. The minister's manner of delivery on that occasion left no doubt as to his absolute confidence in the willingness of the Canadian people to accept whatever burdens may be necessary. From the consensus of opinion which has been expressed throughout the country since the budget was brought down, this confidence would seem to be fully justified. The financing of our war expenditures, coupled with the difficulties of helping to finance Great Britain's purchases and the further difficulties in connection with payments to the United States, is a task of considerable magnitude. This is especially so when it is realized that we are endeavouring to cope with these new conditions by using the now out-dated methods which were used during the days when we operated under the gold system-a system which, by the way, only a few short years ago was pronounced by kings, prime ministers and financial experts alike in almost every country in the world as the alpha and omega of our very existence on this earth. How foolish it all sounds now when one remembers a speech made in 1930 by the then prime minister of Great Britain, the late Right Hon. Ramsay MacDonald, when he said that if Britain went off the gold standard it would be the end of all things. While we have gone quite a long way in our monetary system since then, I am confident that many changes will have to be made before we overpower the pagan hordes let loose in Europe to-day.
While I commend the minister for the steps he has already taken to pay as much of our war expenditure as possible out of taxes, I suggest to him that perhaps even a greater use might be made of the Bank of Canada. In fact, I believe we shall have to have some form of managed currency before this war is over, and I am not so sure but that that process has not already been started. Therefore, instead of thinking entirely in terms of money, let us not lose sight of the fact that so long as we have ample labour power plus land and the required materials, and so long as the sun shines and the rain falls from heaven, we must find ways and means to 14873-162
produce to our very utmost the weapons of war required, and that quickly. In other words, we must make our financial system fit into all the material things required to win out, such as food, guns, ships, tanks, aeroplanes, munitions and so forth, rather than continue to do what we have been doing in the past, making our financial system our first object of consideration; for it is true, Mr. Speaker, that to most of us nothing matters but the overthrow of this demon whose evident purpose now is the destruction of Great Britain and the other democracies.
The Prime Minister (Mr. Mackenzie King) has stated that during the present 'fiscal year Canadian shipments to Britain of munitions, raw materials and agricultural products will reach approximately one and a half billion dollars worth. While I am not at this time going to enter into a detailed discussion of how Great Britain will meet these commitments, might I suggest that we should prepare now by reducing further the tariffs we have placed against the entry of British goods into Canada. Canada, it is true, is straining every effort to produce the munitions of war which Britain so urgently requires, but we are buying back from Britain just as few goods as possible. In the past few years we have been keeping British goods out of this country to help Canadian manufacturers; but as Britain can pay us only in goods, should we now, in the light of what is taking place, continue to keep the door closed against goods from Great Britain?
Last year, in 1940, Canada purchased from Britain only $160,000,000 worth of goods, on which a duty of $16,500,000 was collected before the goods were allowed into this country. As has already been pointed out, Canada will ship to Great Britain this year over one billion dollars worth more of supplies than Britain will send to us. We are providing these supplies without cash payments, by a process known technically as the accumulation of sterling balances, the actual details of which have not yet for certain good reasons been made public. It is, however, well known to all who have given any study to such matters that if there is one thing more than another which has helped to contribute to the present world crisis, it is that practically every country prior to 1939 had built a tariff wall round itself, and for that policy both the United States and Canada must accept some responsibility. Selfishness and economic nationalism were largely responsible for a great deal of our difficulties before the war, and I suggest, Mr. Speaker, that if we are really serious in hoping for a better world in the days to come when this war is over, we had better start now working on new plans for

The Budget-Mr. Reid

the dawn of that better day. Our outlook on life must be much broader and more humane and must include the people of other lands as well as our own. It is pointed out in holy writ that it is not good for man to dwell alone, and this injunction applies with equal force to the nations of the earth. In other words, let us remember if we can that the brotherhood of man envisions all peoples.
I have nothing but praise for the assistance that is being given to Britain by our friends and neighbours of the United States. Not only are they providing the much needed war materials and ships, but at the same time they are"saying to Britain under the lease-lend act: Do not worry about payment.
It was refreshing to hear not long ago the words of a United States senator, who said that the United States was prepared to supply Great Britain with everything they had in the United States, and that if the Germans interfered, the United States would blow the hell out of them. Strong language, Mr. Speaker, but I am of opinion that a little of that kind of language would not hurt in this country.
The leader of the opposition (Mr. Hanson) some time ago paid tribute to that outstanding American Mr. Wendell Willkie, a tribute which I believe all Canadians heartily endorse. I cannot, however, help comparing Mr. Willkie's attitude towards the president and government of the United States since the last presidential election with that of the leader of the opposition and other members of his party in their criticism of our prime minister and members of the government since the last election. Mr. Willkie by his speeches and by his entire attitude of mind and purpose has done more, I believe, to help guide and unite public thought and opinion in the United States than has been the case with the opposing political parties in Canada, and I commend even at this late date to the leader of the opposition the example set by Mr. Willkie, who at a time when he might 'have spoken in a critical political way, nevertheless, realizing that the life of this country was in jeopardy, rose to the occasion and, sweeping aside all thoughts of political criticism, affirmed in those memorable words, "President Roosevelt is my president". This statement of Mr. Willkie showed that, although he had opposed Mr. Roosevelt during the election, 'he accepted the will of the people in the noblest sense of the word. I mention this not in any carping sense but simply because of the seriousness of war conditions to-day.
It may be true that our Prime Minister has no great flair for notoriety or glamour, but what other man in Canada to-day could hold the balance between this restless country with its diversified peoples as well as he does? What other man could so well maintain our 
position between Great Britain and the United States to the utmost advantage of all three?
I wish at this stage to sound a note of warning to the government regarding the farmers and farm conditions generally throughout the country. The farmers as a class are and have been more than eager to do their part fully in this crisis and to do everything in their power to help defeat Hitlerism. They have also been willing to share freely with the people of Britain what they grow and produce. They are, however, wondering about industry's part in this war and are seriously asking whether the government expects them to continue to produce the nation's food; at prices away below the actual cost of production whilst industry prospers. They are not objecting to industrial workers and others having plenteous and continuous employment at fair or better than living wages; but if the government is going to see to it that industrial wages are maintained at the year 1926 level, one cannot blame the farmer if he rebels or even leaves the farm on account of prevailing low farm prices and because no steps have been taken to protect him such as have been taken by the government respecting workers in industry. If the low farm prices, with the resultant distress accompanying such low prices, are ignored and the policy is continued whereby only the industrial workers in this country such as in shipyards, machine shops and war factories are assured of a decent living wage or standard of living, then I am afraid we are going to encourage a class discontent amongst our farmers which is not desirable, and Which might to some extent affect our all-out war effort. The farmers are, I think, fairly reasonable people, and when they ask for a reasonable price for their produce, comparable at least with that of 1926, I believe all will agree with me that they are not asking too much. We must expect sacrifices of some kind during this crisis, but no one group or class should be required to bear these alone.
The statement by the Minister of Finance that for the duration of the war no attempt will be made by the dominion government to reopen the question of the Sirois report will, I believe, be received with mixed feelings throughout the country. In my opinion one of the reasons for the failure of dominion-provincial conferences called to discuss amendments to the British North America Act is the great change which has taken place in our political set-up since 1867, and not to the fathers of confederation being greater intellects-great as they undoubtedly were- than the men of our own day, as some seem to think. In Canada to-day we have quite a number of political parties, and this fact tends, I believe, to influence discussions and

The Budget-Mr. Reid
255V
decisions at these conferences. I suggest that when future conferences of the provinces are called, the changed conditions compared with those of 1867 should not be overlooked, and more consideration should be given to possible representation from the various provinces invited to participate in such deliberations. However, I commend the Minister of Finance for the steps attempted as proposed in the budget to implement one of the chief, if not the chief recommendation in' the Sirois report, namely, income tax collections solely by the dominion government. In the light of the new income tax schedule in effect now, it is going to be rather difficult, I believe, for the various provinces not to agree to the proposals made by the minister; for, as it stands now, the onus or responsibility of further increased income tax payments from the Canadian people rests with each province. The dominion government has not nearly as good a case for entering the field of gasoline taxation as for invading the income tax field, when it is remembered that the responsibility for roads and road construction is taken care of by provincial governments. However, it is fully realized that money must be found for our war expenditures and commitments, and the fact that these are to be met as far as is possible out of taxation will be approved by the Canadian people generally. If the tax on gasoline is also the means of conserving much needed foreign exchange through a control of gasoline consumption, no great exception will be taken to the tax imposed of three cents a gallon.
Here may I say that I should have liked the minister to give the same assurance regarding the gasoline tax as he gave with regard to the income tax, namely, that it would be only for the duration of the war, because I am of opinion that once the dominion government have invaded this field, they may be inclined to stay in it.
This afternoon I listened to the hon. member for Rosetown-Biggar (Mr. Coldwell), the leader of the Cooperative Commonwealth Federation party, when he dealt particularly with the ten per cent tax imposed on railway, steamship, motor bus and aeroplane fares. I differ a little from him in my criticism of this impost, because, first of all, I realize how large a sum of money the government has to find with which to pay our war commitments, and I am mindful also of the fact that no one could introduce any form of taxation to which some objection could not be raised. My criticism regarding the ten per cent tax on railway and other fares is along different lines. I am wondering whether the government gave any consideration to H873-1621
including among those taxable under this proposal those who travel by way of free passes. It may interest the house to know that the number of passes issued in Canada for travel on our railways has reached the enormous ratio of about one in every fifteen of our population. Here are the actual figures of the number of free railway passes as given in the report of the royal commission on railways and transportation, 1931, which figures are the only ones procurable. Just why the number of railway passes issued should be regarded as secret I am at a loss to understand, but I have been informed that they are so regarded by the board of transport commissioners, a body about which, by the wav, I shall have something to say later on.
The figures I quote are from the Duff commission report, and relate to 1930, the latest year for which I can get information, because, as I have already pointed out, the board of transport commissioners contend that these returns are secret. These are the
figures: *
Long service annual	passes	 130.895
Railway employees and	dependents 555,298
Other trip passes	 38,209
Trip passes for members of parliament and senators and their dependents	 11,078
Total	 744,480
This number has, I believe, been increased since 1930, although the passenger traffic on our railways has decreased since then by some 20,000,000. In 1930 the total number of passengers carried was not much below 40,000,000, while in 1938, the last year for which I have been able to get figures, approximately only 20,000,000 passengers were carried.
Here we have on the one hand a large group or class who not only can travel free on our railways, but are also going to be exempt from the payment of this ten per cent tax, whilst on the other hand all those who pay for their transportation will be called upon for a further ten per cent. This is class legislation of a nature which to my mind is most unfair. No great objection was made when the ten per cent was placed on the costs of berths; for there, it was assumed that those who bought berths on the train were able to pay a tax of some kind. But when you come to the question of a ten per cent tax which is confined solely to purchased transportation, the principle is entirely different. Let us see what takes place with those who have to pay their fare on a journey from, say, Ottawa to Vancouver. On a round-trip fare the railway cost is $128 for the standard coach, which amount the ten per cent tax increases by S12.80. Or take the case of our
The Budget-Mr. Reid

enlisted soldiers who may wish to travel home. Is the government going to tax our fighting men ten per cent in addition to the cost of their fares, while certain privileged groups or classes are exempt from the payment of this tax and also travel free of charge? Either the government should tax everyone who travels on trains, boats, buses or aeroplanes, or it should rescind this tax entirely. Class legislation of this kind will tend only to create friction. It is not the tax alone which will be objected to, but the fact that thousands of others, who could pay, are exempt. I trust that the minister will take this matter under consideration before the budget finally passes.
The question of free railway passes is a matter apart from this, but something to which serious attention should be given. Grave abuses have grown up under this system. I am not unreservedly blaming those who make use of free railway travelling privileges, human nature being what it is. Even for members of parliament and members of the senate, the practice in use in Great Britain has much to commend it. In passing, I would call the attention of the government to the recommendation on this matter which is to be found on page 46 of the Duff commission report. It is there suggested that the powers vested in the board of transportation commissioners as to the issuance of passes be reviewed. This has not, so far as I know, been done.
There is one other matter of importance to which I should like to refer at this time. It is one which I brought up last year but about which nothing so far has been done; that is, the question of a high-powered short-wave radio station for Canada. We in this country can tune in on short-wave radio sets and hear what is going on in almost every other country in the world to-day, but we can only listen to what comes over the air; we cannot speak or answer back to people in other lands, which we could do but for the fact that Canada, almost alone among the countries of the world, has no short-wave radio station powerful enough for the purpose.
I am going to mention only some of the opportunities and advantages which Canada is missing owing to our not having such a station in use to-day. First, there is the fact that Canada is one of the great trading nations of the world, being fifth or sixth among the nations in the matter of total trade. Canada, again, has a perpetual and everlasting asset to sell, namely, that of our wonderful scenic beauty, particularly that of British Columbia. Apart from a few trade commissioners and some newspaper advertisements in foreign newspapers and magazines, we refuse to make

use of the modern means of telling the outside world the good things we have in abundance in Canada. It would almost appear as if we were afraid the other countries might get to know of these things; and, as I have already stated, we listen to all outside countries speaking to us but refuse to answer or even to speak to them.
There is no denying the fact that people in other lands, particularly in the countries of north and south America, would appreciate something direct from the great Dominion of Canada. In fact, they are wondering what is wrong with us that they do not hear direct over the air from and about Canada. Consider also the great help we could render Great Britain during these serious times if Canada could only speak direct to the conquered countries of Europe, yes, and even perhaps to the people of Germany as well. I wonder just when we are going to wake up to the fact that the radio is also one of the most powerful and effective means of terror propaganda which is being used by the Germans to-day and which we in Canada make no attempt to circumvent. In this regard, let me read to the house what one who knows has to say about it. I quote from an article which appeared in the Vancouver Sun of April 29 of this year under the heading "Expert Warns of 'German Radio Terror'":
The radio propaganda in Germany is "a menace and a terror" that has taken the place of the artillery barrage and with more effectiveness than any artillery in the last war.
Charles A. Siepmann, formerly with the British Broadcasting Corporation, now radio adviser to Harvard university, told members of the Vancouver Canadian club on Monday that there is danger that something of the kind may work just as ruinously in Canada and the United States.
The German radio propaganda has been "skilful beyond description" and at present it is aimed at the people of the United States through voices that carry the pronunciations and idioms of every section of the country.
He described the Canadian Broadcasting Corporation as "a brave experiment" in trying to put public service alongside a privately operated system of commercial broadcasting.
The great challenge to the CBC is that it is the one great integrating force for building a real sense of Canadian unity-for making the far-flung parts of the country known to each other.
To my mind, it is dangerous for us to sit idly by and do nothing to keep the people in all countries, including Germany itself, informed on matters which are deemed desirable; and, as everyone knows, we cannot prevent anyone in this country, if he so desires, from listening in to foreign broadcasts. In view, further, of the severe bombing taking place in Britain, Canada should construct this short-wave station right away and

The Budget-Mr. Fraser (Peterborough)
so have in this country a powerful radio station in reserve and in case of severe damage to the British Broadcasting Corporation, which might yet be put out of business for a time at least. How wonderful also if Canada could do as Australia is able to do and has been doing by speaking direct to our fighting men either in Great Britain or elsewhere!
Before I leave this part of my remarks I want, as seriously as I can, to warn both the government and the country that if Canada does not quickly avail herself of a powerful short-wave radio station, it may be, when we decide to have one, that it will be found we cannot do so. My information is that there are only a number of channels, or frequencies as they are called, available in the air, and that these are being taken up by other countries. In other words, radio lines in the atmosphere are not unlimited. There are only a definite number available, and soon- very soon-there will be none left. Canada cannot afford to wait much longer, and therefore I urge the government to make haste now and so secure for the Canadian people one of the still available channels of air, before it is too late. Are we, for the sake of half a million dollars, going to run the risk of losing out and so make Canada inferior to, or perhaps dependent upon, other nations for all time to come?
May I also at this time bring to the attention of the Minister of Transport (Mr. Howe) the position of the people in British Columbia with regard to radio under the Canadian Broadcasting Corporation. There have been provided by the Canadian Broadcasting Corporation in the maritimes, in Ontario, in Quebec and also for the prairie provinces, radio stations of fifty kilowatts or 50,000 watts. These are of such a power that no great difficulties are being experienced, I believe, by the people using radios in those provinces. In British Columbia the one station provided under the Canadian Broadcasting Corporation is located in Vancouver. This station, however, is only of a power of five kilowatts or 5.000 watts, just one-tenth of the power of each of the other stations mentioned. The result is that many people in British Columbia, especially those in the interior, get no radio service whatsoever from the Canadian Broadcasting Corporation station in Vancouver, and unless better service is provided it is suggested that the collecting of a S2.50 tax from those without such service be delayed until this state of affairs is rectified. We in British Columbia are surely entitled to some better consideration than has been given us, especially When it is
realized that the Canadian Broadcasting Corporation station for the entire province at Vancouver is only one-tenth as powerful as that provided in the other provinces.
Just a word or two in closing. The budget introduced by the Minister of Finance will, I believe, bring home to the Canadian people some realization of what Canada is doing in connection with our war effort. It is my firm belief that our people will respond willingly to the demands made upon them. To everyone who loves and values the right of the individual to have some say over his own life, there can be only one answer to the menace of Hitlerism. To any who may still have any doubts, I would ask them to inquire of the people in the countries overrun by the German hordes what they think now of the gestapo methods of government. The latest news from Germany, whereby it was decreed that some 80,000 of their own people should be put to death, whose only crime against the state was that they had grown old or were infirm, will, I trust, arouse our own people to a grave sense of the danger of not fully realizing the type of enemy we have to combat. The treatment meted out to these people is an example of what Great Britain, Canada and the other democracies may expect should Hitlerism prevail, and we in Canada will indeed be fortunate if no greater sacrifices are required from us than those that have been requested in the present budget.


Mr. G. K. FRASER (Peterborough West):: 
James Lorimer Ilsley: Under what section of the regulations?


Gordon Knapman Fraser: The heading is:
In accordance with memorandum series D No. 50 TD & R 18 second revision, the publications listed by titles hereunder are ruled to be exempt from the payment of the war exchange tax. . . .
These are issued every day or so; I will send one over to the minister. We have a war on at the present time, and I feel that it would be a great deal better to make these magazines pay that tax and use the money collected to reduce the national defence tax on our workmen. Thousands of magazines are coming in absolutely free.
I would suggest also that exemptions be allowed on income tax for children twenty-one years of age and over, at present attending school. As soon as children become twenty-one years old, the $400 exemption is removed. Many people have girls who are away at school or college, and their expenses amount to a great deal more than $400. I
2562	COMMONS
The Budget-Mr. Fraser (Peterborough)
know; I have one myself, and many others? have spoken to me about this matter. I would suggest that the exemption be allowed for girls only while they are at school, because a boy can get out during the summer holidays and make a few dollars for himself. I am sure many hon. members had to do that, as I did when I went to school, and I believe we were a great deal the better for it.
The hon. member for New Westminster (Mr. Reid) mentioned the matter of railway passes. I should like to quote from an editorial in this regard:
Word from Ottawa indicates that holders of passes will not have to pay the new dominion taxes on railway fares and theatre tickets. The, explanation is that the new order says the tax must be paid "by every purchaser of transportation," and the individual with a pass does not purchase transportation.
In theatres the tax is collected on the receipts, and those who have passes are not contributing anything to those receipts. And yet after having read the explanation one is inclined to ask that plain question: "Why are any exceptions made?" We are all in this thing together; we are all paying together, and we doubt if those who possess passes for transportation or anything else would ask to be excused while others are putting up their assessment.
The only exception I would make is to exempt the soldiers from paying a tax on their fares. A soldier coming home to Peterborough from Halifax must pay $23, whereas excursions have been run for $20 and some odd cents, giving the civilian a preference over the soldier.
The hon. member for New Westminster referred to the use of short-wave radio by the Germans as a weapon of war. This is perfectly true, and I mentioned this fact some months ago in this house. I would advise hon. members to read the speech made in the British House of Commons by Captain Leonard Plugge who is considered to be one of the best radio experts in the British empire.
I have made a few suggestions and I am going to make a few more. The Minister of Finance is looking for more money, and as much as possible we should try to pay our way as we go along. I suggest that a tax be put on meals served in restaurants or hotels and costing one dollar or more. If anyone can pay a dollar for a meal he can certainly afford an extra five or ten cents. This would bring in considerable revenue to the dominion. I think the suggestion put forward this afternoon by my leader (Mr. Hanson) was very good. At the present time the Minister of Agriculture (Mr. Gardiner) is bonusing the growing of rye and other coarse grains in the west. I think the Minister of Finance should tax rye, only the wet kind, and all other hard liquors. I am sure that this would be a popular tax.


An hon. MEMBER:: Not with everyone.


Gordon Knapman Fraser: Not with everyone, but the Minister of Finance has taxed beer, the poor man's drink. I believe 61,000,000 gallons of beer were brewed in Canada last year, but there is also a considerable amount of hard liquor sold in this country.


James Lorimer Ilsley: And it is taxed quite heavily.


Gordon Knapman Fraser: I know it is taxed quite heavily, but a person who can afford to buy rye, Scotch or other liquors can afford to pay another five or ten cents. The gasoline tax of three cents a gallon is quite heavy when considered along with the provincial tax of eight cents a gallon. I do not think this tax will discourage tourists coming from the United States if the dominion will place at all ports of entry signs stating that the Canadian gallon is one-fifth larger than the United States gallon. When that is taken into consideration, along with the premium paid on the United States dollar, it will be found that a tourist from the United States is not paying a great deal more for his gasoline.
In conclusion, I should like to repeat what I said in this house some weeks ago. The Minister of Finance should see that every person receiving from this government a wage, indemnity or pension of over $3,000 should be compelled to take at least ten per cent in war savings certificates, non-transferable and not to be redeemed for at least seven years. This must be done if this government wish to show the people that they practise what they preach.


Mr. J. A. GREGORY (The Battlefords):: Mr. Speaker, in making my first contribution in this house, may I say that I considered my first duty on coming to this house one year ago was to assist the government in every way by voting supply to carry on the war effort of Canada. I felt that it was my further duty to assist in passing the implementing legislation required to give this government the broad powers which all governments must have in times of war. I felt that all this could best be accomplished by refraining from making unnecessary speeches. Having confidence in this government and recognizing its ability, energy and zeal, I did not think it was necessary to enlarge upon these facts by much speaking. However, after listening to many of the speakers from various groups in the opposition, as well on this side of the house, I felt that this was the time for me to express myself on behalf of a goodly number of people in Saskatchewan and express a few

The Budget-Mr. Gregory
ideas Which may not have been expressed up to the present or which may not be in agreement with others expressed already.
Since this session was convened, a dominion-provincial conference was held to discuss the implementing of the recommendations of the report of the Sirois commission. As we all know, this conference was torpedoed. Something over two years ago when the legislative assembly of Saskatchewan met following the presentation of the Saskatchewan brief to the then Rowell commission, I had this to say in the new legislative assembly:
That a new bill of rights had been written for Saskatchewan and that the dawn of a better day was breaking if this brief was implemented in legislation.
I should like to point out that the western provinces were settled in a different manner from that in which the older provinces of Canada were. There were no forests to be cleared and there were comparatively few swamps to be drained. The land in the west was ready for the plough, and the population of the west was obtained by a national policy of advertising to the world that free homesteads and cheap land were available to those who wished them. The result was a tide of land-hungry immigrants which swept across Canada in increasing volume every year, until a peak of over half a million new settlers was reached in 1912-13.
The railroads followed in the wake of the settlers, rather than the settlers following in the wake of the railways. Villages, towns and cities sprang up, and municipal governments, rural and urban school districts and all other services incidental to modern life were thrust upon the new settlers. City improvements, schools, telephone lines, roads and bridges were constructed in a hurry. A great burden was placed upon the two new provinces of Saskatchewan and Alberta when they were formed in 1905. Legislative buildings had to be built and legal machinery provided. Court houses, land title offices, highways, bridges, gaols, mental hospitals, homes for the aged, and trunk telephone lines sprang up throughout the province like mushrooms. This, of necessity, created a heavy capital bonded debt. Since it was a new and untried country, high rates of interest were demanded on its bond issues. The price thus paid to create a modern civilized country out of western Canada was a heavy one. All our various institutions had thrust upon them within the space of a decade or two a task which was spread over at least three generations of our older provinces. Provincial government, municipal government, urban and rural, and school districts all carry an immense load of bonded debt in my province.
There is, however, another phase of economic life from which western Canada has suffered throughout its whole history.
I am speaking, Mr. Speaker, from a residence of forty-four years in western Canada and from an experience of thirty-six years spent in the city in which I now reside, the city of North Battleford. I think then, sir, I understand the problems of my province.
I say that there is another phase of economic life from which western Canada has suffered throughout its whole history.
I refer to the tariff, that hackneyed, outworn and time-honoured word, the tariff. This has been an increasing burden upon western Canada as the years have gone by. To the consumer it has meant a burden upon everything he buys. It has been estimated by the late Hon. Norman Rogers, who prepared for the Duncan commission that famous brief on the incidence of the tariff burden on the various provinces, that Saskatchewan annually was contributing $29,000,000 by way of tariff burden. Then, as regards the producer to the extent that the tariff operates as a prohibition against the purchase of foreign goods, just to that extent does the tariff act as a restriction on the sales of the producer's goods in those foreign countries to which those goods should be sold.
There is a further burden placed upon the western Canadian. There was a period within the memory of all present in this house when the tariff of Canada was the chief, almost the sole revenue of the dominion. As tariffs were raised by different governments, the revenues from this source diminished relatively, due to the higher tariffs acting as a prohibition against the importation of foreign goods.
Resort was then had to other forms of taxation-direct taxation, income tax, the sales tax, which has been increased from time to time, excise taxes on sugar, tobacco and various other items. Therefore western Canadians are not only penalized by paying high tariff penalties, but are again penalized by all these various forms of direct taxation.
For a moment let us consider the economic flow of wealth in Canada which has persisted for at least the last fifty years. I can remember when the maritime provinces had their own banks, trust companies, mortgage companies, insurance companies, and their own factory industry. I ask you, sir, where are those institutions to-day? Those
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Mr. Gregory

which have survived have largely moved to the central provinces, and by the central provinces I refer, of course, to Ontario and Quebec; or they have been absorbed by other institutions whose head offices are in the central provinces.
What has been the direction of economic flow of wealth so far as the west is concerned? For over forty years to my own personal knowledge, western Canada has produced prodigious wealth from the lands, the mines and the forests. Where is that wealth to-day? Certainly not in western Canada. Every cent of interest paid in that period of time to the banks, mortgage companies and land companies of all kinds has gone to the central provinces. Every insurance premium, whether it be fire, life, accident, sickness or casualty, has gone to the central provinces, and vast sums of our purchasing power have gone to the industries of the central provinces, mostly to the province of Ontario and the city of Montreal. The wealth of the west has made big banks out of small banks in the central provinces. It has made big insurance companies, big trust companies, big mortgage companies out of small ones in the central provinces. It has made big factories out of small factories in the central provinces, and again may I say, Mr. Speaker, that I am quite well aware of the size of the factories of Ontario when I left this province^where I was born and raised. I remember the size of the Massey-Harris company, Cockshutt Plow and all the rest of them in Ontario, and I am therefore speaking from first hand knowledge when I say that during the last forty years the wealth of the west has made big industries out of small industries in this province. It has created work in this province to increase capital outlay. It has created jobs by the hundreds of thousands to man the increased machines in the expanding industries in the central provinces.
The climax of my argument is this, that the wealth of western Canada has made small incomes in the central provinces large incomes, and small accumulations of wealth, large fortunes, and it is from these large incomes that provincial income tax is paid to Ontario and from these large fortunes that succession duties are paid to Ontario. My argument is that western Canada, which largely made it possible for these large income taxes and succession duties to be paid, has an equitable interest in these revenues which it has largely created, that these enormous revenues do not wholly belong to the province of Ontario by right, and that therefore these revenues should be collected solely by the federal government 
in trust for all the people of Canada, to be distributed back to the people on a per capita basis.
I have tried to show that all the various institutions of western Canada are heavily burdened by debt, that the original pioneer who made that country is heavily burdened by debt, that through the very nature and development of this country that had to be. Moreover I have tried to show that the development of western Canada has made a vast contribution to the wealth and welfare of the rest of Canada. It is, therefore, justified in asking for a recognition of its just claims under confederation. The rejection of even a discussion of the Sirois commission's recommendations was a death-blow to Saskatchewan, which cannot carry on under the present set-up. The demands of each institution of government, federal, provincial, municipal and school district, upon the individual taxpayer, already heavily indebted, are beyond human ability to meet. These demands cannot be met.
There remains but one avenue of escape, and that is for us in Saskatchewan to live more within the resources of the province. This would mean less fruit and fish and lumber from British Columbia, less coal from Alberta, and less of manufactured goods from Ontario. This is intended to be neither an expressed nor an implied threat of reprisals. It is simply a plain statement of fact arising from the impossible position in which my province finds itself. I place myself beside Premier Bracken of Manitoba and Premier Patterson of my own province of Saskatchewan in condemning the break-up of this conference and in urging, yes pleading, that there be a future and further consideration of these problems.
May I say one word with respect to a subject which likewise has been worn threadbare in this house and of which most hon. members are tired of hearing the name; I refer to the question of wheat. In the brief reference I have to make to the farming community in western Canada, let me say that no class in the country has suffered as has the western wheat grower. During the last war he was encouraged by the government of the day to grow more wheat as a national duty. He therefore bought more land at inflated prices. He bought large units of machinery, power-drawn, in order to meet the inflated wages of the day. He burdened himself with debt at high rates of interest. He met a national emergency as it was presented to him at that particular time. Then followed the collapse of 1921. Recovery set in some four years later, followed again by

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the collapse of 1929, which meant ruination to the farmer so far as prices are concerned. For the farmer in my country, every year since 1929 has been a ruinous year. Added to the deflation of the world crisis, drought has visited every part of western Canada intermittently since that time. Farmers have been selling below cost of production, when they had anything to sell, each year since 1929. In addition to the living which the farmer did not obtain, there is depreciation to consider, and interest on debts which have been piling up with no hope of better times. Secondary industry in Canada is pretty well assured against loss. Consideration has been given to wages of labour. With each of these, Mr. Speaker, I have no quarrel. The farmer is bearing his burden nobly and patriotically, and is prepared to carry his share of the load, but he cannot help thinking that in contributing his share of the national war effort he should be allowed at least to live.
I quite realize that there can be no satisfactory solution of the wheat problem while Hitler's armies are occupying the countries with which we normally trade. I would go further and say that there can be no satisfactory solution of the wheat question so long as narrow nationalism prevails in the countries of Europe. As you are aware, sir, fear of war created in the last twenty years these policies which we call narrow nationalism, and until war ceases and the fear of war vanishes from the earth there will be no free interchange of products amongst the countries of the world, each producing what it is best fitted to produce, selling the surpluses in foreign markets, and purchasing in exchange from foreign markets what each requires. That time has not yet arrived. What shall we do in the meantime? I assume that there is only one answer to that question. We must make a compromise agreement with respect to this wheat problem.
The other day we had a compromise agreement brought down for the consideration of this house. I realize that any cabinet decision upon a problem of this kind must be a compromise decision. There are in Canada many provinces and many interests, each presenting its viewpoint and each exerting its influence upon the national federal cabinet, and all decisions on questions of this kind by the government of the day must, therefore, be in the nature of a compromise. We in the west realize that the population of Canada largely lies east of the great lakes. We realize that the wealth and the organization and, therefore, the influence lie east of the great lakes, and that whatever treatment the west receives is with the consent of the east. We are prepared even to concede at times
that the east has viewed western problems with that broad outlook of the welfare of Canada as a whole. We wish to express our appreciation of that fact. But in all future considerations of the wheat problem-and I have no intention of raising any of the issues which have been fought and decided-may I ask our eastern friends to remember that western wheat is woven into the warp and the woof of the industrial, financial and commercial fabric of Canada, and because of that fact may I urge that this problem be approached in succeeding years by hon. members from the east with a broad charity and, I trust, a broader knowledge of the problems which the western wheat grower has been enduring ever since the collapse of 1929.
Since coming down to this house I have tried to learn something with regard to the financial religion of the Minister of Finance (Mr. Ilsley). I was pleased to read the following statement in a speech which he delivered at Timmins on Labour day, 1940:
We have learned, the world has learned, that sound monetary management in our modern industrial society requires flexibility and judgment in national monetary policies.
In that statement, I wholly concur. It would appear to me that the minister is following the good example of the previous Minister of Finance, who, I believe, in that capacity made his name as a great statesman and a great Canadian. I refer to the Hon. Charles A. Dunning. May I quote one or two sentences from a speech delivered by Mr. Dunning in this house on March 9, 1938, as recorded in the Regina Leader-Post:
The Bank of Canada did regulate currency and credit with the single purpose of promoting the best interests of the country. It was following an easy money policy, expanding the currency base and the volume of credit at a rate it believed to be in the best interests of the nation.
By the purchase and sale of securities and by the use of the discount rate, the bank regulated the volume of credit in circulation. Purchase of securities increased bank deposits and credit; sale reduced them. A higher discount rate curtailed business expansion. A lower rate fostered expansion.
Just one more sentence:
We are not now on the gold standard. We are not subject to its deflationary or other influence. For better or for worse we are now on a managed paper currency, just as the United Kingdom. The value of Canadian currency was determined, not by gold but by the factors operating on a managed currency, chiefly demand and supply. The Bank of Canada controlled the operations of the chartered banks by purchase and sale of securities. . . .
And so forth. That is all I will read from that speech. I have also been gratified since coming to this house to hear later statements
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from the Minister of Finance that credit has been expanded as rapidly as production and that there is at the present time in Canada sufficient credit to take care of production. Again, I wish to concur heartily in that statement read. My conception of a credit structure is one designed to meet all contingencies of production, one designed for the welfare of our citizens, and not managed and controlled for the welfare and profits of stockholders, a currency and credit structure so balanced that distribution may be the partner of production, and the effect of which will be that price levels of both commodities and labour will be kept on an even keel. I should like to feel that we have relegated to the dungeons of past barbarities those cruel instruments of torture of private banking methods which have been used so effectively in the past in creating inflation of price levels, followed by inhuman deflation of values, by which the greed of a few sucked in the assets of the many.
We have now in the Bank of Canada the necessary instrument to control the financial economy of our nation, and the people of Canada will hold this government and successive governments strictly to account for the proper use of this instrument.
If I may, for a few minutes, I should like now to refer to another phase of life in western Canada. We have another problem in my province of Saskatchewan, and, to some extent, in the whole of western Canada. I refer to the subversive propaganda which has been taught to the people from the public platform by those posing as leaders of the people, in some instances by those who should be leaders of the people in every sense of the word. I do not know who is financing the tours of some of these public speakers, but some of these meetings are held under auspices which, to say the least, are not outstanding in their zeal to assist in the war effort of Canada.
My province has a population of whom nearly 50 per cent are foreign born or are the offspring of foreign bom, and I think it is reasonable to assume that these people cannot be expected to have the same veneration for those things which we call British as those born of British stock, British traditions and British institutions, so dearly and so slowly won and fought for down through the ages. It should surely then, Mr. Speaker, be the duty of those coming from British stock to inculcate into the foreign bom the value of the heritage which became theirs in a British land-freedom, democracy, the right to choose and to live the chosen life within the law. It should be the duty of all public speakers at this particular time to inculcate two things and to insist upon these two things. The
[Mr. Greeory.l
first is the promotion of the war effort of Canada, to encourage the people to think in terms of the seriousness of the effects of this war upon Canadian life; and the second is to encourage the people to save, to give, to pay, to assist in the financing of this war. It should be stressed on all public occasions that, unless we win the war, democracy, freedom and our way of life are all gone, and that all should drop petty differences in the greater and more important task of defeating Hitler and crushing him and all for which he stands.
What do I find as I follow these speeches through Saskatchewan, Alberta, some in British Columbia and even in Ontario? I find that fear is being instilled into the minds of every audience-fear that the government has enslaved the people; fear that the government is domineering over the people instead of being the servant of the people; fear that the defence of Canada regulations have destroyed democracy and the rights and liberties of the people; fear that liberties lost in war time may not be regained in peace time. May I say right here, sir, that these opinions are not the beliefs and opinions of my constituents or of the people of Saskatchewan as a whole, and I believe I know the views of the people of Saskatchewan. I believe I know the opinions and the beliefs of the people of that province. I have seen most of them come into that province; I have seen nearly every mile of railway built in that country, and I think I am in a position to judge properly what the viewpoints and opinions of these people are.
I have noticed all through life, yes, through a fairly long life, that it does not require [DOT] courage or capacity to appeal to fear and prejudice and ignorance of masses of people and to arouse and disturb their minds with vague doubts. That is the simplest thing in the world. I have seen throughout my whole life demagogues do this on public platforms without possessing either balance or brillance, and set a peaceful people aflame with passion and prejudice. For any public speaker to suggest that the people are disturbed and bewildered and are filled with fear over the actions of this government or the operations of the defence of Canada regulations is only to suggest, to my mind, that if there be a shred of truth in that statement, then this disturbance or bewilderment or fear was not in the minds of these audiences until the speaker placed it there.
Parliaments are elected by the people of Canada, just as in England parliaments are elected by the people. That is democracy. Governments are selected from the majority party in the people's parliament. That is democracy. Laws are passed by majorities

The Budget-Mr. Gregory
in parliament. That is democracy. The defence of Canada regulations are based upon the War Measures Act; that act was passed by this parliament. Those regulations are amended each year by a committee of the house and then presented to the house for further consideration. This parliament does the same as every other parliament in the British domains; in times of war this parliament proposes to give the government of the day very broad powers in order to carry on the war effort of the country.
The Royal Canadian Mounted Police are charged with the responsibility of investigating and tracking down disloyal activities, and surely no one will suggest that this force has not the respect and cofidenee of all Canadians. We in the west respected and admired and placed our confidence in this force for nearly two generations before the rest of Canada knew anything about the old Northwest Mounted Police. Reports, of all investigations, are made by this force to the Minister of Justice (Mr. Lapointe), and only on the authority of the minister does an internment take place. The internee then has the right to be heard before a tribunal, and who would suggest that the principles of British justice are violated in any respect in all the operations under the defence of Canada regulations?
Talking about governments tending to become our masters when they should be our servants is just a play upon words, just a hollow play upon words. I was surprised to hear the hon. leader of the opposition (Mr. Hanson) with his knowledge of law and constitutional development and of the Anglo-Saxon struggle for responsible government, express his sympathy with a statement made in this house to the effect that the government had become the masters of the people. Of course the government is the government. We expect it to be the government, the executive of the people's legislative assembly to carry out the powers granted it under the statutes passed by the people's parliament. In that regard it is the servant of the people, through the people's representatives. But at the same time we expect it to be the government of the people. When the time comes that the people of this country think this government is not sufficiently carrying out their wishes,-shall I say as their servant?- when that time comes all that the people of this country have to do is to elect another parliament of a different complexion, and there will soon be a change in the personnel of that government. Those are the checks, and those are the safeguards under which we operate in the British domains.
I have spoken longer than I intended, but there are a few other things I wish to say this evening, seeing it is the first time I have had the pleasure of speaking in this larger legislative assembly. I have here reports of a great many public meetings held throughout Canada. I shall refer this evening to only about four of them. I have the report of a meeting held in the city of Oshawa from the Toronto Star of December 9, last. The heading of the article is, "We behave like a bunch of cowards." I shall quote just an odd sentence or two:
We people in Canada, since those defence of Canada regulations were passed, have behaved like a bunch of cowards. We have felt afraid we would get into trouble if we raised our voice against them. . . .
At this meeting a resolution was passed in which it was stated:
We express it as our emphatic opinion that the defence of Canada regulations must be amended so as to guarantee the fullest freedom of speech, press and organization. . . .
We sometimes see puzzled expressions on people's faces when we speak of democracy. We use the word so glibly. What does it mean? . . .
The defence of Canada regulations . . . have destroyed the bulwarks of our freedom. We must get our freedom back. . . .
Then, from a meeting held in the town of Melville, Saskatchewan, I quote briefly:
In a democratic country the government . . . should be the servant of the people and not the master of the people as it had become in Canada.
(The speaker) indicated the people of Canada were asleep as they seemed to be ignorant of the loss of civil liberties under the defence of Canada regulations.


Mr. HOMUTH:: Who were these people?


John Albert Gregory: Would hon. members be good enough to allow me to develop this in my own way? I will satisfy their curiosity before I have finished.
A meeting was held in Winnipeg, in the dining room of the Hudson's Bay store at which Professor Lower of the United college was chairman, and this opinion was expressed, fear that civil liberties lost in war time might not be regained in peace time. After the speech was delivered, the chairman commented that he would have nothing to do with any "hysterical movement." There is no advance to be made along such lines. Let me add that with these remarks I wholly agree.
I have several reports of meetings here, and I should like to crave another ten minutes. I shall put on record just one or two opinions from people who are capable of expressing a clear opinion as to what they think of this class of propaganda that
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is going on throughout the length and breadth of Canada. The council of the Montreal board of trade appointed a committee for the purpose of making a thorough study of the defence of Canada regulations. I have before me their findings in full, but I shall quote only a sentence or two from a letter which the president sent out with copies of the full report:
The attached report has convinced the council of the board that no one can say with reason that these regulations do not conform with the principles of British justice, therefore no loyal citizen has anything to fear as a result of their enforcement. In fact it is the considered opinion of the council that the carrying out of these regulations, in their present form, is of the greatest importance in the protection of our Canadian homes, institutions and industrial activities.
It is strongly felt by the council that no Canadian can afford to be casual in this time of great danger and that any kind of propaganda or public statements that tend to weaken this instrument of protection should not he allowed to go unchallenged.
I should like now to refer to one or two other opinions expressed by some of our newspapers with respect to certain speeches.


Mr. DEPUTY SPEAKER:: I must inform the hon. gentleman that his time has expired, unless-


Some hon. MEMBERS:: Go ahead.


Thomas Vien: With the unanimous consent of the house.


John Albert Gregory: I have here an opinion expressed by the Windsor Daily Star regarding one of these speeches. I shall read only one paragraph:
In her anxiety to champion the cause of democracy, Mrs. Dorise W. Nielsen, M.P. is apt to become a shield for the communists, nazis, fascists and other subversive elements within our midst. They will be glad to hide behind her skirts. . . .
The St. Thomas Times-Joumal, which previously expressed the hope that the hon. member for North Battleford (Mrs. Nielsen) was to be different from Agnes Macphail, now declares that it has its doubts. Says the Times-J oumal of the hon. member's recent address in the House of Commons:
Her theme was the defence of democracy; the right of free _ speech, freedom of the press, freedom to criticize. She praised the spirit of the people of London in standing up so heroically to the air raids, and is reported to have added: "But their greatest victory so far has been in maintaining democracy and resisting any limitation of freedom of expression." That is sheer tosh, and if she went back to her native London, the people who have been suffering these terrifying and bloody raids would tell her so in the characteristically emphatic language of the cockney. We are surprised, also, to find Mrs. Nielsen protest against the internment of enemy aliens because no charge has been laid against them.
[Mr. Gregory. 1
I should now like to read just a sentence or two from the Toronto Telegram of Monday, December 9, 1940:
Mrs. Dorise Nielsen, M.P., came to Toronto with the message that the defence of Canada regulations had robbed Canadians of their democratic rights. ... It is only under democratic rule that people are allowed to talk such dangerous nonsense as characterized the generalities put forward by Mrs. Nielsen. . . . Her whole address was calculated to promote fear, not by the presentation of any reasonable ground for fear, but by vague or rash statements for which she offered no support. . . . As a person of intelligence-she was a former schoolteacher-she must know that it is vitally necessary for the government to have plenary powers in rvartime, and that the British government is clothed with the same powers. She knows that what powers the Canadian government enjoys were given it by parliament and can be taken away by parliament. She has not suggested, and cannot suggest, that these powers have been exercised by the government to stifle opposition in parliament. . . .
Mrs. Nielsen declared that the government's action was wrong in banning Jehovah's Witnesses, though she frankly acknowledged that she knew little about this organization. She said that the government had invaded the field of religion, though if she was more familiar with the situation she would have known that it was not for its religious tenets that the organization was banned but for its subversive activities.
Canada's woman member of parliament was purely soap-box when she declared herself ashamed that Canada could no longer say to the people of Europe "Here we have freedom and justice and w'e will give you sanctuary" . . .
She came to Toronto under auspices which have not been revealed, but she had the support of organizations which have not been noted for their contribution towards winning the war. She used her opportunity to indulge in generalizations and half-truths.
I have extracts from other papers as well, the Peterborough Examiner, the Saskatoon Star-Phoenix, the Regina Leader-Post and others, all condemning in the strongest terms the stirring up of fears, prejudices and bewilderment in the minds of the people at the present time, when we are engaged in a life and death struggle for our very existence, and for all those things which, having inherited, we consider worthy of maintaining.' In concluding this portion of my address I should like to quote a few sentences from the Saskatoon Star-Phoenix:
Very wisely and quite properly, the U.F.C. rejected efforts by the Nielsen group for endnr-sation of their Saskatoon resolutions. It is to the credit of the senior farm body that they quickly saw through the fog of irresponsible thought from which most of the so-called emergency conference resolutions emerged, and decided to stick to their own constructive policies. . . .
Attempts to stir up sectional animosities in this crucial period are definitely anti-Canadian and unpatriotic. This is a time for unity, not disruption. The farmer has a big part to play in this war-big and vital-and be is not only

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ready but anxious to accept the common sacrifice involved, despite efforts to influence him otherwise by those few who seem more desirous of seeking political aggrandizement than winning the war.
I shall not take up more of the time of the house in quoting further from these newspaper extracts. But having lived for thirty-six years in the city of North Battleford, which happens to be in the constituency which I represent and not in the constituency of the hon. member for North Battleford; having been in daily contact during that length of time with the people who came north of the Saskatchewan river; having been there when most of them came to that part of the country, I think I am in a position to say tonight, with full knowledge of the facts and in all kindness, that if a plebiscite were held to-morrow in the constituency of North Battleford to pass judgment upon the views and opinions expressed by the hon. member representing that constituency in this house, fully eighty-five per cent of the people would vote to condemn those views and opinions. The other fifteen per cent, Mr. Speaker, would consist of the communists, of whom there are many in that constituency, the anti-war propagandists, and other subversive elements.
I should now like to refer to the remarks of the hon. member for North Battleford which appear at page 2445 of Hansard for April 30 of this year. I cannot permit those remarks to go unchallenged in this house. I refer to such expressions as "political heelers"-


Thomas Vien: Order. The
hon. gentleman must not refer to another debate which took place during the present session.


John Albert Gregory: These remarks appear
in Hansard for April 30, 1941.


Thomas Vien: Apparently
the hon. gentleman has reference to another debate which took place during the present session.


John Albert Gregory: Would it be proper for
me to refer to the essence of what was said, without quoting the actual words?


Mr. MACKENZIE (Vancouver Centre):: Was the debate to which the hon. gentleman refers on a motion to go into supply during the present session?


John Albert Gregory: Yes.


Thomas Vien: Under the
rules of the house an hon. member is not permitted to refer to the subject matter of any debate that took place during the present session. The hon. gentleman can refer to
the opinions expressed by another hon. member, but without making reference to a particular debate.


Ian Alistair Mackenzie: I understood that the rule applied to a debate that had been concluded, and I believe the hon. gentleman is referring to a debate on a motion to go into supply, which debate is not yet concluded.


Thomas Miller Bell: I was just going to
suggest that the hon. member has been given a considerable amount of latitude and a great deal of time. While I am not objecting to that, I think that if we are going to accord this extra time to the hon. member for The Battlefords (Mr. Gregory), when some of the rest of us wish to overstep the time limit we should be granted a similar privilege. I just draw that to your attention, Mr. Speaker.


John Albert Gregory: The words to which I take exception are "political heeler" and "rotten political system in the west." For one moment I should like to defend the members of this house who come from western Canada, including myself. I feel that these words are a reflection upon the election of every hon. member from western Canada. It is something to which I think I should be entitled to make reference. In doing so, I wish to include all hon. members from western Canada, whether they be Conservative, Cooperative Commonwealth Federation, Social Credit, Liberal or what-not. To use the terms "rotten political system in the west" and "political heeler" seems to me to be creating the impression that every western member comes more or less under the shadow of that accusation. There is in that expression something sinister which I for one wish to resent, especially since it may refer to my particular constituency.
In using those terms, did the hon. member refer to government employees? Did she refer to paid organizers? Did she refer to voluntary workers who are willing to give their time for the welfare of their political party? Did she refer to all of these in her reference to a rotten political system? Government employees may be either provincial or dominion. Provincial employees may be inspectors under the Old Age Pension Act, under the relief act, or in connection with provincial revenues or resources or highways. They may be auditors in connection with education or other branches of the government. They may be federal field men, agricultural or otherwise. These would all come under the term "government employees." All governments require such employees. Not long ago we had in Saskatchewan a government made up of every "ism" that was ever heard of-I refer to
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the Anderson government. That government found it necessary to employ inspectors and auditors. The present government finds it necessary to have such employees. Any government, regardless of what political colour it may be, finds it necessary to have such employees travelling throughout the province. I do not know of a single instance in which these men have had time to engage in political work. They have a full-time job, and that is what they are paid for.
Does her remark refer to paid organizers? Every party, be it Liberal, Conservative, Cooperative Commonwealth Federation or Social Credit, has or has had paid organizers. I know one paid organizer of the Cooperative Commonwealth Federation who now sits as a member of this house. There is nothing wrong in that. The Social Credit party had an abundance of paid organizers in 1938 when Mr. Aberhart and his followers invaded Saskatchewan. I must have met two dozen of them in the city of North Battleford, and they radiated from there in all directions. There is nothing wrong in that.
Was she referring to voluntary supporters? There is nothing wrong in that. No one had more voluntary supporters than the hon. member for North Battleford. In addition to that, there were many communists, Cooperative Commonwealth Federation and Social Credit members who worked for the two years leading up to that famous united reform or united front convention which nominated the present member for North Battleford. Disgruntled Liberals formed a large part of the active workers. They were disgruntled because they did not have jobs. They were disgruntled because they had not been able to obtain grazing and timber leases. They were disgruntled because they had not been able to sell things to the government at exorbitant prices. AH these people who, for various reasons, were disgruntled, were actively working for the election of the present member.
I should like to say a word or two with respect to this famous convention. There was much going to and fro; there was much going backwards and forwards; there was much fluttering in the dovecotes of the ranks of the communists, the Cooperative Commonwealth Federation, the Social Credit party and the disgruntled Liberals for the two years leading up to this particular convention.


Thomas Miller Bell: The hon. member
includes the Cooperative Commonwealth Federation. I should like to inquire if he believes that the official Cooperative Commonwealth Federation was represented there?


John Albert Gregory: The hon. member is a
little impatient. If he will just be patient he will have an answer.


Thomas Miller Bell: We have been quite
patient, for twenty minutes I believe. In the years I have been here I have never known of a speaker being given as much latitude in time as the hon. member has been given. We certainly have been patient with him.


John Albert Gregory: All these people were
very busy for nearly two years. In reply to the question asked by my hon. friend of the Cooperative Commonwealth Federation, may I say that that party became so tainted by evil communications, so hybridized in that constituency, that the provincial leader disbanded the organization for the constituency and repudiated the group. When that constituency elected two or more delegates to go to Saskatoon to the provincial convention of the Cooperative Commonwealth Federation, they were refused admission. I wish to pay a tribute to the official Cooperative Commonwealth Federation and the Social Credit parties of Saskatchewan for being so desirous of keeping their political stock uncrossed and untainted.
I have not finished with the remarks of the hon. member with respect to the rotten political system in western Canada. Under our present system each political party stands for something, each political party has certain principles which it attempts to follow. Thus, we have Liberal principles, Conservative principles, Cooperative Commonwealth Federation principles and Social Credit principles. Each member of these groups has these principles as a chart to guide him on his course. He can do no other if he is honest with himself and true to his constituents. In my judgment, that is a good political system. Under it we know in what direction a member of this house will go. I ask you, Mr. Speaker, what you think of a system under which disgruntled Liberals, communists, Conservatives, members of the Cooperative Commonwealth Federation and. the Social Credit groups meet together in convention to nominate a candidate.
I ask you what chart had been given to that candidate? I ask you, what course should a member follow if elected by such a convention? Would it not lead to confusion and chaos in this house if such a course were followed generally? Would it not destroy representative parliamentary and responsible government? Would it not lead to the very thing which I quoted a moment ago, a rotten political system? I am only depicting the exact conditions which prevailed in North Battleford constituency, and I can best describe

The Budget-Mr. Boucher
the system by using the hon. member's own words, a rotten political system in the west- or that part of the west known as North Battleford constituency.
May I close with this last remark? We must be on our guard at the present time against subversive elements in Canada. It is commonly asserted that there is more communist money abroad in Canada at present than in peace time, and I believe it, because I have seen the evidence of it everywhere in Canada. It would be well to guard against being made an unconscious tool by communists or other subversive forces. In my judgment, a public speaker at the present time has a duty far transcending any other and that is to exhort the people, encourage the timid, direct the energetic, and stimulate the patriotism of all in the stupendous task of bringing victory to our cause by work, by enthusiasm, by enlistment, if you will, by saving our cash and giving it to the government. Everything else can wait, because everything else is futile if our arms do not prevail.


Mr. G. R. BOUCHER (Carleton):: Mr. Speaker, in these days of stress and national emergency I take it to be the bounden duty of every Canadian to do his utmost to assist those in authority in the whole-hearted prosecution of our war effort.
Parliament is now discussing a budget, the largest and heaviest ever placed upon the people of Canada. We have just concluded our discussion of a war appropriation act calling for $1,470,000,000 for war purposes, and I believe that that, too, was the largest war appropriation act ever placed before the House of Commons. As a result, every loyal Canadian must, I am sure, be seized with a sense of the emergency that is facing us in these days. The whole world is in such a situation as to call for the utmost endeavours and the greatest efforts of all mortals to save democracy and even our civilization. In my humble opinion the people of Canada are in a mood that says in the loudest possible voice to the government: Carry on the war effort and provide the men and materials needed whatever the cost may be, but take he'ed that your taxation measures are equitable and the burden just. By that yardstick I believe we should judge the budget before parliament to-day.
I am also of opinion that the policy adopted by the Minister of Finance (Mr. Ilsley) of pay as you go, so far as that is practicable, is a sound one, but it must necessarily involve a great burden of taxation, one that must make us all sit up and take notice.
Many of us believe that the government has spent large sums of money not altogether economically, not with perfect efficiency;
nevertheless we feel that they are doing their part in this war and that we must give them our support. It is our duty therefore, I take it, to say nothing and do nothing that will interfere with or hinder or delay our war effort.
I see many commendable things in the budget. It calls upon those drawing an income to pay a heavy income tax, but I believe that the people of Canada who are receiving an income are even more anxious to pay taxes than this government is aware. I believe that they are of opinion that so long as the money is wisely spent to further our war effort, the taxes will be paid and the war prosecuted. Rather than condemn the government for exacting too many taxes, I believe that the people of this country are more inclined to say: Make a greater effort, even though it may cost more.
There are one or two matters I should like to draw to the attention of the house in connection with this budget. I feel that the middle-classman, the man with a small income, is being called upon to pay too great a share of taxation. I believe that the man with a small income should be given more consideration, and that certain groups of our people should be relieved. Just recently I was consulted by one of my constituents, and I should like to bring the point he raised to the attention of the Minister of Finance. He is a young chap with a small income. He found it his duty and his privilege to take into his home his sister-in-law and four children, recently arrived as guests from England. That, of course, casts a great responsibility upon a man with a small income. Even though it is a pleasure to him to do it, it seriously handicaps his opportunities. So far as I am aware, no provision is made in the budget whereby this man could get exemption from income tax on behalf of those four children and the mother, even though he can receive no assistance from his brother in England on behalf of the family. I would ask the Minister of Finance to take this case into consideration and see if the same exemption cannot be granted in respect of the four children and the mother as is granted in the case of ordinary dependents. I think that would be a proper gesture towards those generous-minded citizens of Canada who have come to the rescue of friends from overseas in time of trouble.
So far as the tax on gasoline is concerned, the government might have gone even further and limited the consumption of gasoline in order to save foreign exchange, and perhaps made the tax even higher on gasoline used solely for pleasure purposes.
But coming as I do from a riding that is largely rural and agricultural, I can see that the tax as now set up, of three cents a gallon,
The Budget-Mr. Boucher

places a heavy burden upon the farmer. The provincial legislature, in imposing a tax of this kind, saw fit in its wisdom to exempt from taxation gasoline that was used as fuel for power machines on the farm, and I think the Minister of Finance might very well adopt the same course with his tax. I believe everybody will agree that the agriculturists throughout our country are bearing a very undue burden at the present time and that they are a heavy casualty, not only of the war, but of the economic conditions in which we find ourselves.
Just recently I was reading a book written by our late Governor General, Lord Tweeds-muir. It is called "Memory Hold-the-Door", by John Buchan, and I came upon a paragraph dealing with youth and middle-class people which, I think, applies very well to the farmer in the broader sense. May I ask the indulgence of the house while I read a paragraph from the chapter entitled "The Other Side of the Hill":
In my lifetime I seem to note a change which is a graver thing than our other discontents, which, indeed, is in a large measure the cause of them. The outlook of youth has been narrowed, doors have been sealed, channels have silted up, there is less choice of routes at the cross-roads.
This affects principally the middle class. Let me define that odious word. At one end of the social scale is the plutocracy, whose sons will be sufficiently well dowered to indulge their fancy. If they enter a profession they have the security of means behind them. At the other end are the wage-earning classes, who in their health and wealth are largely the care of the state. Between come the "middling folk" in many gradations; their characteristics are that they have to earn their living, since they have no accumulated fortunes, that the state has little responsibility for them, that they have a reasonable average of culture and certain strong traditions in customs, manners and conduct. The class contains most of the knowledge and skill in the nation. Also, since our nominal aristocracy has been so copiously diluted, it contains most of the older stocks, the people with the longest proven descent.
For this great class the world has become more rigid than I remember it. A young man seems to me to have fewer avenues open to him, and fewer chances in these avenues. I leave out of account the preeminence of mind or character which we call genius, for that will always hew out a course. I am speaking of youth of reasonable capacity and moderate ambitions, which seeks a calling with hope and daylight in it, which is capable of a great effort of patience but must have a glimpse of some attainable goal.
I ask hon. members to reflect upon these passages as they deal with the agriculturist in Canada to-day. The man about whom we have heard so much during this parliament, the man who is, after all, the lifeblood of the nation, the agriculturist, who comprises 35 per cent of our population and is calculated to be earning about eleven per cent of our income.

For this class, particularly, I appeal with what vehemence I can, and, I might say, in every way I can, for the consideration of this house, and at the moment, particularly, of the Minister of Finance. I believe that in the imposition of the taxes, particularly the tax on gasoline, one means of coming to the assistance of the agriculturist would be by exempting him from payment of taxes on the gasoline and the oil he uses in his power machinery.
With the indulgence of the house I should like to express in a few words my opinion of what the true condition of agriculture is, particularly in my county. It is not a wheat growing county; it is a district of mixed farming, dairying, stock and poultry raising, butter and cheese making, the production of eggs and poultry. In the past ten years, according to my observations, great improvements have been made through the splendid cooperation of the departments of agriculture of both dominion and provincial governments. The quality of the farmer's products has been wonderfully improved. I believe that the consumer has greatly benefited through that improvement in quality. But I fear that the cost of the improvement, of the raising of the quality, has been borne by the producer, and that the governments, possibly through thoughtlessness, have failed to enhance the price to correspond with the increased cost of production.
Just recently I had an illustration of this condition brought before me so far as the egg-grading act is concerned. I should like to discuss it for a moment as emblematic of the type of discrimination or neglect which, in my opinion, this and other parliaments have shown towards the agriculturist. A new egggrading regulation was introduced in my district the first of the past month. We have had egg-grading regulations before, and the government, through its efficient employees, sponsored the establishment of a pool in one particular area of my riding. The government representative, with the egg and poultry regulation act in his hand, organized an egg pool. A meeting was held and directors were elected. He advised the farmers to elect a manager, pay him a salary, have him bonded for honesty, and ask him to send a return in to the government every week. He was compelled to give a return to every farmer whose eggs he graded. The return given to the farmer must show the quantity of eggs, the quality of the eggs, the name of the man from whom they were purchased, and the price paid. These things were compulsory. The report to be given to the Department of Agriculture-entirely optional, not by any means compulsory-provided that he report

The Budget-Mr. Gershaw
weekly the quantities sold, the grades of those quantities, not the price at which the eggs were sold, but the quantity sold.
A year elapsed in the operation of this particular egg pool, and here was the result. An auditor was engaged, with the cooperation of the Department of Agriculture, and he made an audit of the transactions of the past eight months. He found out, from what prices he could ascertain-and most of the prices he could not learn-that there was a big discrepancy. He came to the Department of Agriculture to find out what should be done. They could not ascertain to whom the manager sold the eggs, what the grading was, or what the prices received were. There was no compulsion upon the manager to give a report to the Department of Agriculture, and there was no way of punishing him if he rendered a wrong report.
Let us compare that situation with the legislation in operation so far as tradesmen are concerned. In the same week in which this matter came to my attention a carpenter came to my law office to ask me to defend him on a charge in the police court. He had, by statutory enactment, to send in a report to the local council, with a penalty if he failed to do so, giving the name of each man he hired, the place he worked, the hours he worked, and the pay he received. According to his own statement to me, he had paid a carpenter sixty cents an hour when the minimum was greater, and he was forced to pay the balance. Compare these circumstances; contrast the protection given to barbers, painters, decorators, plumbers, tinsmiths, with the protection given to agriculturists by way of legislation, by way of penalty for breaches of requirements or requests of the Department of Agriculture-for instance, in the grading of eggs.
In my opinion those things clearly indicate why agriculture has lagged behind in the progress of the times and why the farmers feel-and I have no doubt about it-that they are not getting for their labour the returns to which they are entitled. We in this part of the house urged that greater consideration be given, but the government did not see fit to comply with that request. However, I ask them now to pay some attention to this matter and grant some relief so far as the tax on gasoline is concerned.
I do not wish to delay the house any longer, but I would point out to hon. members and to the country at large that, according to my conception of public opinion to-day, the people of Canada feel that the government has not gone far enough in that they
show utter lack of courage and leadership in prosecuting this war. The people in my riding, in every part and parcel of it, are as it were champing at the bit in their desire to see a greater war effort put forth; and I as their spokesman wish to add my approval of the budget so far as it has gone and my exhortation that a greater effort be made, even though the cost be greater.


Mr. F. W. GERSHAW (Medicine Hat):: First of all, I wish to congratulate the Minister of Finance (Mr. Ilsley) upon the budget, which has been well accepted in the country and certainly by the members of this house. In order to avoid repeating what has already been said, and in view of the latitude which you, Mr. Speaker, have so graciously allowed in this debate, I shall confine my remarks almost entirely to rehabilitation problems. At the moment we all realize that the war is the overshadowing issue. It is being waged in the air, on the sea and on the land. It is being waged in offices, factories and workshops, and in the remote parts of the country men are saving their money to buy war savings certificates, women are working long hours to provide comforts for the soldiers, and even children are bringing their pennies to school as their contribution. No sacrifice is too great to help the valiant forces of democracy in this great struggle. It is true that the months ahead may be dark, but beyond that darkness there is the light of victory. Let us hope that with that victory there will come better social conditions, more equality of opportunity and happier homes undarkened by fear of unemployment and poverty.
Surely it is only the part of wisdom to prepare at this time for living conditions for the tens of thousands who will be released from war work and for the strangers who will come to our land. Some of the plans I will mention will cost a little money, but many of them can be carried out practically without expense.
First of all, look at the live stock industry. The tending of flocks and herds is the first industry of which we have any record, and all down through the ages it has been the principal occupation of mankind. Western Canada supported great herds of buffalo in days long gone by. We know this because of Indian records and because there are deep paths that can be seen to this day on the hill sides, paths made by great herds of buffalo as they wended their way to watering places. As the buffalo disappeared, large numbers of cattle spread over the western prairies; while there was the open range, ranchers prospered and were happy; and the romance
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of the west, with all that it means in the way of early characteristics and sentiments, owes its origin to these early adventurers. They lived their lives in the open and were generous and sociable. No one was ever turned away hungry from their doors. In fact, their attitude to life was expressed in the words: Ask why the eagle soars in air
And builds on high his craggy nest;
Ask why the fishes swim so deep Then ask me why I love the west.
It was this whole-hearted, open-handed mode of life that made the west a place where the smile was a little brighter and the welcome to strangers a little more spontaneous. As time went on, this industry fell on evil days, and support was needed in order to assure the stability and the security of the rancher. A great deal has been done along these lines, and if the policies are pursued and pursued vigorously, benefits will be reflected in every line of Canadian activity.
Recently a writer by the name of Mr. C. M. Short, in discussing conditions in Europe, pointed out that grain production was being expanded there in spite of the terrors of war, but that the herds were being depleted, and therefore we can look forward to a market for breeding stock, meats and dairy products in those countries when the war is over.
To illustrate how tariff conditions can ruin an industry, I would point out that the greatest blow to the ranching industry came in 1930 when the Hawley-Smoot tariff was imposed by the United States. It placed a tax of $3 per hundredweight on all cattle entering that market and weighing over 700 pounds, and S2.50 per hundredweight on those weighing less than 700 pounds. During the preceding five years the average number of cattle shipped to the United States was 142,123. When the blow fell in 1930, the export to that market dropped to 19,483, and during the next five years it declined until it reached the low level of 9,936. It is true that at that time great efforts were made to develop the far-away British market in competition with cattle from Ireland and other countries, but only 30,670 were annually shipped. The industry was not sustained; prices fell from 2 to 3i cents a pound, with losses to ranchers, and herds could not be kept up.
Then in 1935, with the change of government, and greatly to the credit of this administration, the successful United States-Canada agreement was consummated. Duties were cut from S3 to $2 and then to $1.50 per hundredweight, and a generous quota was arranged for Canadian cattle. There was great rejoicing. There was joy in the homes

of the cattlemen of the country because they felt they would be able to arrange a standard of living befitting people in their walk of life. However, it happened that after 1935 the succeeding years were years of drought. Prairie grass curled up under the blistering rays of the sun; forage crops failed to grow; streams that had never failed before dried up, and these summer conditions were followed by such hard winters that the cattlemen were not able to supply the United States market and, in some instances, relief measures had to be taken.
At that time the late Hon. Robert Weir was Minister of Agriculture, and I should like at this time to pay a tribute for the contribution he made to agriculture. He brought forward the Prairie Farm Rehabilitation Act to rehabilitate the drought and soil-drifting areas. Two years later, under the present minister, the scope of that act was enlarged to include land utilization and land settlement with all that that involved in the way of land surveys, gathering of records of practical experience, soil analyses, and so forth, over a wide area roughly bounded by the Palliser triangle and including a great part of three large provinces. This study of conditions was founded on the bedrock of actual experience by getting information from ranchers who had lived there up to fifty years, and also upon the cultural results worked out by the various experimental farms. It was not a method of teaching the farmer how to farm or the rancher how to ranch; agricultural improvement associations, shelter-belt associations and grazing associations were founded so that the knowledge of those engaged in the industry could be assembled and be made use of by those concerned. Soil surveys were made over 100,000,000 acres of land; community pastures were established and water conservation was encouraged. If any man had a ravine or a gully or a small stream running through his farm and felt that the spring run-off of water could be kept there, he was and still is given free engineering service and advice as to how best to construct that dug-out or stockwatering reservoir or small irrigation system which he might wish to make. In addition, he was given a fixed sum for every cubic yard of earth he moved in bringing about that construction.
This meant a great deal. It meant that he could have a garden, he could have milch cows, his home could be made more homelike. Some 17,000 of these structures have been made, and although the needs of the war are great, I believe that a mistake was made in reducing the vote for the Prairie Farm Rehabilitation Act, because it meant that this work could not be extended as it should.

The Budget-Mr. Gershaw
It is true that bonuses are given, but the money is soon spent, whereas the construction of works such as these is of a permanent nature and will be a blessing to those living on that land for decades to come. Long and bitter experience has convinced us that the rainfall cannot be depended upon. There will be wet years, but there will be many dry years too when the grass will fail, when milch cows cannot be kept, when food for stock cannot be saved. Therefore, if every cattleman and farmer could have a reliable supply of water to provide dairy and garden products for himself and his family, he would be in a much better position. The value of these things cannot be estimated in money.
Through the west some larger irrigation schemes were undertaken, and partly constructed, and those should be completed as soon as possible; that could be done at comparatively small cost. As has been pointed out by several hon. members, we are in great danger of losing our Share of the waters of the international streams, and there is great need for action and action in earnest so that our share of these waters shall be preserved for future generations. In southern Alberta there are great drought-stricken areas, and impoverished people are living on that land with a low standard of living. In the springtime from the hills and mountains small streams are running down, and their water is not being made use of, although so vitally needed. Eleven million acre-feet of water which is the precious heritage of the people of that country is flowing to the ocean unused. There are about 506,577 acres of land irrigated, and there could be three times that amount of land irrigated in that country. The climate is suitable, the soil is fertile, experienced management is available; the one thing that is needed is water storage facilities.
There are some 52,000,000 acres of nonwheat land in the west. I was surprised to learn that 10.000,000 acres of that land had been settled, but that the settlers had been forced to leave because they could not make a living and that 10,000,000 acres are now abandoned land. In order to deal with that, Hon. Doctor Motherwell, when he was Minister of Agriculture, started a ranching experimental station at Manyberries. There they have studied every branch of ranching practice, methods of re-grassing, relative values of different grasses, costs of producing range cattle and sheep, the use of salt, relative increases of weight for different classes of cattle, carrying capacity, ways of dealing with poisonous weeds, rotation of grazing and many other matters of that kind. In that ranching experimental station they have developed the value of crested wheat grass which has saved
many farms in this country and which to-day is being used extensively for runways on our different airports.
Annually at that place there is a great gathering of ranchers and farmers. They come for many miles in order to observe and learn the results of recent experiments which have been carried on. A great deal has been done for the sheep industry by this government. One action they took about a year ago meant an increase of six cents in the price of every pound of wool produced in Canada. A little more encouragement would help our sheepmen to produce a much larger portion of the wool we use in Canada. We have tremendous overproduction of wheat, but we are hardly filling our quota of cattle in the United States market and are producing only 12-4 per cent of the raw material used for our sugar. I hope the minister will still find it possible to make some concession as to the tax burden on sugar made from home-grown raw material, because it is along these lines that the greatest possibility of development exists.
Then we have the oil industry, and in Alberta particularly it is an important industry. Many new oil fields are being found. Just recently there was discovered at a place called Princess in Alberta, a promising well. Four or five other wells are being drilled around there, a great number of people employed, and the Standard Oil of British Columbia have spent a good deal of money without having asked anyone for a Canadian dollar. Such enterprise is worthy of support. Markets should be found for the oil that can be produced, and encouragement should be given by federal and provincial governments to encourage the search for more oil and the development of more oil fields.
On account of the tremendous magnitude of our war expenditures, Canada is very short of United States dollars. Our imports from the United States last year were valued at $953,000,000, much of course-more than half -being aeroplane engines and war material; our exports to the United States amounted to only $475,000,000. Strenuous efforts have been made to save United States exchange by expanding our exports, by increasing our gold production, by taking over the gold of the Bank of Canada and private holders, by the ten per cent exchange tax, by prohibiting the import of certain articles from nonsterling countries, by refusing money for pleasure travel in the United States, and particularly by the good-neighbour declaration which we heard from Hyde Park only a short time ago.
The Budget-Mr. Gershaw

One of the things that is being done to some extent should, I think, be done to a greater extent; that is, encouraging the tourist industry. False rumours have hurt that industry. In parts of the United States it is said that we are charging 90 cents a gallon for gasoline; that we are rationing our butter; that military supervision is very strict, and so forth. We know these things are not true; yet we know also that the tourist industry, which yielded an average of $230,000,000 annually for the last ten years, brought in only some $S7,000,000 last year. One of the ways to encourage the tourist industry is that which has been undertaken by junior boards of trade and rotary clubs; that is, writing to friends in the United States and inviting them to come to this country. Another way would be by establishing good roads. This is a policy that must be pursued if we are to have these welcome visitors in our midst. In years gone by, this government provided grants for the construction of the trans-Canada highway. Later, it provided money for the construction of roads in order to relieve unemployment. Still later, some roads were constructed in our national parks, but it is hardly worth while building roads in the parks if the roads leading to those parks are impassable. Therefore I do believe the government should consider the advisability of carrying on this work to a greater extent.
Much has been said about the wheat industry and the unfortunate position in which the farmer finds himself. He is in an unfortunate position. In 1913 a bushel of wheat would buy a certain quantity of goods. To-day that bushel of wheat will buy only 59 per cent of that quantity. The farmer is getting a very small proportion of the national income, so that it seems necessary to provide certain bonuses and grants. These have helped out in a great number of instances, but at the same time I believe it is quite impossible to distribute bonuses in an absolutely fair way. Some farmers get too much, while others get none at all. It creates bitter feeling when one man who has had a crop failure finds that he cannot get a bonus because he happens to be in an ineligible township, while at the same time he sees a man living not far away, who has had a good crop, enjoying a bonus as well. In addition, some are denied the bonus for technical reasons which they cannot understand. I believe that much bitterness and bad feeling are engendered, that resentment and loss of faith in the fairness of government measures are brought about. I believe the system of bonusing, while it greatly helps some and is
TMr. Gershaw.]
perhaps the best immediate solution, is not the fairest way to help the farmers.
If some attention could be given the matters I have mentioned, we would be preparing for the day when the war is over and new conditions will have to be met. Such activities as the Prairie Farm Rehabilitation Act, the ranching industry, the sheep industry, the oil industry, the beet sugar industry, irrigation, and particularly the construction of market roads and transcontinental highways, will help people to support themselves and bring back the old, self-reliant spirit of the early pioneers. We should look forward to and plan for the post-war period, and we must remember that people will never live in peace and happiness while we have the festering sores of unemployment and poverty. Wherever there is a sense of injustice, envy, fear and resentment, there will be upheavals. The great aim of science, religion, invention, finance, politics and education should be directed to and concentrated on bringing about a strong and healthy democracy which, in the words of President Roosevelt, implies an equality of opportunity for youth, jobs for those who can work, security for those who need it, the ending of special privileges for the few, civil liberties for all, and, above everything else, the enjoyment of the fruits of scientific progress in an ever-wider and constantly rising standard of living.
On motion of Mr. MacKenzie ONeepawa) the debate was adjourned.
On motion of Mr. Crerar the house adjourned at 10.57.
Tuesday, May 6, 1941.