1942-06-05

[Stage Direction]
On the order for motions:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I received yesterday afternoon from the Chief Justice, Sir Lyman Duff, who had been appointed the commissioner to inquire into the Hong Kong expeditionary force, a copy of the commissioner's report. I now desire to lay on the table of the house a copy of the letter from the commissioner transmitting his report which was made pursuant to order in council P.C. 1160 relating to the Hong Kong expedition, also a certified copy of a minute of the meeting of the committee of the privy council approved by His Excellency the Governor General, to-day, which minute records the submission of the report to his excellency for his excellency's information. I also wish to table a copy of the report itself.
The report is divided into two parts. There is the report proper, stating the principal conclusions and some ancillary matters, and an appendix in which the facts are fully stated and the evidence is fully discussed. The report and appendix combined cover in typewritten form some 115 pages of foolscap: the report proper is contained in twelve pages. Having regard to the importance and interest attaching to the report and the frequently expressed desire of hon. members to have its contents made known just as

Hong Kong Commission
soon as possible, it would, I believe, be meeting the wish of the house if I were to give hon. members at once the principal conclusions of the commissioner. They are contained in the report proper, which is as follows:
Your Excellency:
The order of Your Excellency, P.C. 1160, authorizing this inquiry is attached to this report. By it, I am directed to inquire into the organization, authorization and despatch of the Canadian expeditionary force to Hong Kong in October, 1941. I am instructed particularly to examine the selection and composition of that force, the training of its personnel, the provision and maintenance of its supplies, equipment and ammunition and the provision of transportation therefor. The order in council states that the purpose of the investigation is to determine whether there occurred any dereliction of duty or error in judgment by those whose duty it was to arrange for the authorization, organization and dispatch of the force that resulted in detriment or injury to the expedition or its members. My duty is to determine whether there occurred any dereliction of duty or error in judgment "on the part of any of the personnel or of any of the departments of the government whose duty it was to arrange for the authorization and dispatch of the expeditionary force" and whether, if such dereliction or error occurred, there resulted detriment or injury to the expedition or the troops comprising it. If it is found that such dereliction of duty or error in judgment occurred, it is my duty to fix the responsibility therefor .
In this, my report proper, I am stating my principal conclusions touching these matters, together with some salient facts. A full statement of the facts and a full discussion of the evidence appear in the appendix hereto which is to be considered as part of my report.
First, of the authorization of the expedition. The principal considerations prompting the invitation by the government of the United Kingdom to the government of Canada to send reinforcements to Hong Kong (two battalions of infantry with first reinforcements, and by subsequent communications a modified headquarters staff) are set forth in the telegram containing that invitation, dated the 19th of September, 1941. These considerations were largely those which influenced the Canadian government in accepting the invitation. I have been unable to obtain the consent of the government of the United Kingdom to the textual reproduction of this telegram.
The chief of the general staff having expressed to the government his opinion that there was no military objection to the acceptance of the proposal and that the reinforcements ought to be dispatched, the view of the war committee, as disclosed in the evidence of three ministers of the crown, the Minister of National Defence, the Associate Minister of National Defence, and the Minister of National Defence for Naval Services, was that in the circumstances the only possible answer to the invitation was an affirmative one. The invitation was accordingly accepted and the expedition left Canada on the 27th of October.
The evidence discloses various reasons which appear to have actuated the war committee. In view of what other dominions had done in 
Abyssinia and Libya it was Canada's turn to help; Canada ought to share in the responsibility for garrisoning the Pacific area; just as Australia was assisting in Malaya; the military value of the reinforcement would be out of all proportion to the numbers involved; the arrival of the contingent in Hong Kong would have a great moral effect in the whole of the far east and would reassure the Chinese as to the British intention to hold Hong Kong; the moral effect of the expedition might operate as a sensible influence for the preservation of peace there; at that juncture, in September, to gain time was beyond measure important; such an appeal from the predominant partner in the common cause could not be rejected.
I am permitted to reproduce a telegram from the War Office, of the 30th of October, after the expedition had left:
"We are very grateful to you for despatching your contingent to Hong Kong at such short notice. We fully realize the difficulties of mobilization and of distance which have had to be overcome. The moral effect of their arrival in November will be much greater than it would have been two months later."
The terms of this telegram assist us in forming an idea of the hopes and expectations with which the request of September was sent.
It would perhaps be a possible view that the propriety of this decision by the government is exclusively matter for consideration and discussion by parliament. Since, however, I am required to pass upon the question, it is my duty to say that I have no doubt the course taken by the government was the only course open to them in the circumstances.
It was urged by Mr. Drew that the change of government in Japan on the 16th of October-: by which a cabinet notoriously sympathetic with the axis powers came into office, ought to have led the Canadian government to reexamine the question of policy raised by the invitation of the United Kingdom. I had the advantage of reading a number of dispatches from the government of the United Kingdom, which I am not at liberty to reproduce, as well as a dispatch from the Canadian military authorities in England, which is reproduced in part, dealing with the probabilities concerning war with Japan, and my conclusion is that, having regard to the information of which the government was in possession, derived from the best sources of information open to them, nothing emerged before the departure of the expeditionary force on the 27th of October which could have been considered to be a justification for the withdrawal by Canada from the responsibility she had undertaken. On the contrary, the reasons which prompted the acceptance of the proposal continued to operate with possibly increasing force up to the sailing of the expedition.
Second, of the selection of the units for the expeditionary force. The responsibility for advising the Minister of National Defence with respect to the composition of the expeditionary force devolved upon General Crerar, the chief of the general staff. In a communication to the minister, in which his reasons for his recommendation are stated at large, he recommended that the Royal Rifles of Canada from Quebec and the Winnipeg Grenadiers from Manitoba should be designated. In this communication he said that a primary consideration in making the selection was "that the units selected should

Hong Kong Commission
be efficient, well-trained battalions, capable of upholding the credit of the dominion in any circumstances". He adds, "both" battalions designed "are units of proven efficiency".
So long as the minister's confidence in the chief of the general staff remained unimpaired, the minister would not overrule such a recommendation upon a purely military matter; and he cannot be justly criticized for acting upon it.
It is my duty, however, to consider whether there was any error of judgment in General Crerar's recommendation. Nobody, of course, was in as good a position as General Crerar for arriving at a sound judgment upon the selection of the units. His decision, moreover, was not a mere expression of opinion; it was the basis of his recommendation, made upon his responsibility as the professional adviser of the minister, upon which he expected the minister to act and knew almost at once that he was acting. The evidence, which is discussed in the appendix, satisfies me that General Crerar's recommendation was made upon sound grounds and that he is not chargeable with any error in judgment, still less with any dereliction of duty in relation to it.
The principal criticism directed against this selection concerns certain platoon weapons which are included in the establishment of a Canadian infantry battalion, but which, before October, 1941, were not available generally for training purposes to the Canadian active army. General Crerar says:

"There were, however, in Canada at the time in question a number of battalions (among which were Royal Rifles and Winnipeg Grenadiers) which, although somewhat handicapped by lack of supplies of certain platoon weapons (mortars and anti-tank rifles), in my opinion were generally adequately trained to undertake defensive responsibilities such as those in prospect in Hong Kong."
He adds:
"The short supply of mortars and antitank rifles was general in all units of the Canadian Army and not peculiar to the Royal Rifles and the Winnipeg Grenadiers."
This, he adds, is the natural and inevitable handicap of a country which is unprepared for war and has war brought upon it.
If this handicap, as General Crerar describes it, from the "short supply of mortars and anti-tank rifles", was to be a reason for exclusion from the expeditionary force in the case of the two battalions in question, then that reason was based upon a condition that, to repeat General Crerar's words, "was general in all units of the Canadian Army and not peculiar to the Royal Rifles and the Winnipeg Grenadiers" and must have applied equally to all such units; with the logical result of excluding all.
This ground of exclusion indeed, if a proper one, was (as is fully explained in the appendix) applicable with still greater force to Canadian battalions generally than to the two battalions in question. In point of fact, these battalions were in a more advantageous position in respect of these weapons than the units of the army generally. The Royal Rifles had the three-ineli mortar for training purposes at least as early as April, 1941. Although they had no ammunition, the mortar platoon was trained in its mechanism and use, tactically as well as otherwise. The mortar platoon of the Winnipeg
Grenadiers was also trained in the mechanism and use of the same weapon; and further enjoyed the advantage of having, even before leaving for the West Indies, a number of antitank rifles (without ammunition) for training.
There were, moreover, solid reasons for believing that any deficiencies in training in such platoon weapons (with which General Crerar declares he was fully acquainted) could be made good before any encounter with the enemy. The evidence lends support to the expressed conviction of General Crerar and General Stuart (the present chief of the general staff) that this was done.
General Crerar adds:
"With information at my disposal concerning units of Force C and knowing professional ability and character of Commanding Officer Brigadier Lawson, I would say that Force C was certainly fit to meet an attacking force, even in superior numbers, and to give a fine account of itself by December 8th."
General Crerar says:
"Information at my disposal during latter part of September, 1941, indicated that outbreak of hostilities with Japan was not imminent and that time would, in all probability, be available to carry out intensive, adequate and possible extensive training of Canadian forces at Hong Kong after their arrival."
General Stuart agrees with this.
The evidence relating to the training, equipment and personnel of the two battalions is fully examined in the appendix. For reasons which there appear, I am satisfied that in respect of weapon training, as in respect of other matters, this selection cannot be justly impeached as affected by any error in judgment.
Third, of the steps taken to bring the units up to strength, including first reinforcements. The selection of the units made, it became necessary to provide "first reinforcements" for both battalions and to bring the Winnipeg Grenadiers up to strength. Both battallions were warned for service on October 9th and the ship which had been provided by the British government to take the expedition to Hong Kong was to sail before the end of the month. In an interval of not more than two weeks it was necessary to obtain the required additions, as well as to attend to the multifarious tasks involved in equipping the expedition. It must be remembered that all these preparations had to go forward, not only with urgency, but also with extreme secrecy. It was decided to obtain the men needed for the Royal Rifles in military district No. 2, with headquarters in Toronto, and those for the Winnipeg Grenadiers in military district No. 10, with headquarters in Winnipeg.
All men who were added to the two battalions prior to the departure for Hong Kong volunteered for service overseas with the battalion to -which they went. They were, in the case of each battalion, accepted as satisfactory by the officer commanding, or by officers designated by him. The steps taken by the battalion and district officers were taken under the direction of and were approved by National Defence headquarters at Ottawa and, in particular, of and by Colonel P. Henessy, the director of organization in the adjutant-general's department, upon whom devolved the immediate
Hong Kong Commission

direction and responsibility for the task of bringing the units up to strength and providing first reinforcements, and who became the senior administrative officer of the expeditionary force.
There were added to the Royal Rifles 154 men from military district No. 2, of whom 52 came from the Midland regiment and 102 from advanced training centres at Camp Borden. There were added to the Winnipeg Grenadiers, 282 men and 12 officers from military district No. 10. In the appendix I have examined in detail the training and qualifications of each group of the men added.
A period of sixteen weeks has been laid down as the standard period to be devoted to the training of an infantry recruit before sending his overseas. In individual cases and by reason of the exigencies of shipping, this standard has on occasion not been enforced. Of the men added to the strength of the Hong Kong expedition, all but six per cent had undergone more than sixteen weeks' military training after enlistment in the active army. As I have already said, all these men volunteered for service with the expedition and all were accepted as suitable by officers of the battalion to which they were going.
A number of officers gave evidence of the great value of the personal selection of men for a unit by competent officers of that unit. For example, Lieutenant-General McNaughton said (and with him General Crerar and General Stuart agreed):
"If I were the commanding officer and had had the chance to select the men and know them individually-see that they were all right I would not have worried very much whether they had completed the basic training or not, because character is the thing we lay most stress on, and, if they were people who were suitable in my judgment to incorporate in the battalion, I would have been perfectly happy to have had them. ... I would not have worried from the point of view of military efficiency one iota, because, if they are the right type of men, even on the voyage over I would have completed their individual training." I
* 6
I accept this evidence of Generals McNaughton, Crerar and Stuart and of other officers to
the like effect as of great weight in deciding
upon the propriety of the steps taken to bring the force up to strength and to provide it with first reinforcements.
A considerable amount of evidence was directed to show the effect of adding to two well-trained battalions groups of lesser trained men numbering about 6 per cent of the strength of the two units. That evidence conclusively establishes that an efficient battalion is, and must be, capable of absorbing recruits, who have not fully completed their training, up to a much greater proportion of its strength than
6 per cent, without at all detracting from the efficiency of the battalion as a whole.
From the whole of the evidence (which is fully discussed in the appendix) I have reached the conclusion that there was no unfairness either to the battalions, or to the expedition as a whole, from the addition of this small percentage of men who had not fully completed the standard period of training at the time they were accepted by the battalion officers. Nor have I any doubt that these men who volunteered for the expedition in order to enter 
upon active service would be quickly absorbed into their new units, or that in accepting them there was not any unfairness to the men themselves; and I am satisfied that the acceptance of these men had no detrimental effect upon the efficiency of either battalion. I have found no dereliction of duty or error in judgment in connection with the additions made to the strength of the two units.
In the course of my examination of the evidence I found that the inclusion of this small percentage of men was not the result of any shortage of fully trained men in Canada. It arose from the necessity of obtaining the men with great speed and secrecy and the impracticability in the time available of selecting them from a larger number of training centres.
Four, of the general organization and dispatch of the force, apart from the subject of mechanical transport. The facts are stated in the appendix and they require no comment here.
Five, of mechanical transport. With regard to the mechanical transport of the force, consisting of 212 vehicles, the troopship, the Awatea, provided by the British authorities had not sufficient cargo space to take them. The war office was most anxious that the troops should go on this ship, as another opportunity to sail was not likely to occur for two months. Shortly before the expedition sailed, space for the vehicles unexpectedly became available in an Amercian ship and that ship sailed with the vehicles on November 4, but did not reach its destination before the outbreak of hostilities, as she was diverted by the United States naval authorities. Had she been allowed to follow her normal route, she would have reached Hong Kong before the Japanese forces or before the Japanese attack opened. This miscarriage was not in any way due to any fault or mistake of any officer of the Canadian forces or of any official of the Canadian government.
There was a small amount of free cargo space in the ship carrying the force and some twenty vehicles were sent to Vancouver to fill it. These, how'ever, did not arrive before the ship sailed. Had more energy and initiative been shown by the quartermaster-general's branch, charged with the movement of the equipment for the force, the availability of this space would have been ascertained earlier and the vehicles would have arrived in time for loading on October 24; and there is, in my opinion, no good reason for thinking that, had they arrived at that time, they would not have been taken on board. There is no evidence, however, that the troops suffered through lack of them, or that they were not supplied at Hong Kong. The facts are fully examined in the appendix.
After an exhaustive inquiry at the hearings and a lengthy study of the evidence in the appendix of this report, I am able to add a general conclusion about the Hong Kong expedition as a whole.
In October, 1941, the Canadian military authorities undertook a task of considerable difficulty. Subject only to my observation concerning twenty of the two hundred and twelve vehicles of the mechanical transport, they performed that task well. Canada sent forward, in response to the British request, an expedition that was well-trained and (subject as aforesaid, in so far as shipping facilities allowed) well provided with equipment. In spite of the disaster that overtook it soon after its arrival in Hong Kong, it was an expedition of which Canada can and should be proud.

Air Training Plan
The war came upon us when we were unprepared for it. In such circumstances, recalling military history, one would perhaps not be greatly surprised to discover that even two years after its commencement some military enterprise had been undertaken which had proved to be ill conceived, or badly managed. The Hong Kong expedition falls under neither description.
All of which is most humbly submitted by Your Excellency's most humble obedient servant



L. P. Duff.

[Stage Direction]
His Excellency,	_
The Governor General in Council,
Ottawa,
4th June, 1942.
With the consent of the house, Mr. Speaker, I would move:
That 1,500 copies in English and 500 copies in French of the report made by Right Hon. Sir Lyman P. Duff, G.C.M.G., a commissioner appointed to inquire into all matters respecting the dispatch of a Canadian expeditionary force to the crown colony of Hong Kong, be printed in blue book form and that standing order 64 be suspended in relation thereto.
Hon. R. B. HANSON (Leader of the Opposition):: As this is to be on the record, I hardly see the point in printing it, although I have no great objection. I rise primarily to ask if the evidence will be tabled and made available. I have not had a copy of it, but I do not know that I am entitled to it.


William Lyon Mackenzie King: There will
probably be a demand for copies of the commissioner's report outside of the house as well as by members of parliament. The report and the appendix could be distributed1 in a more acceptable form if they were put out as a blue book. The report proper, which contains the conclusions I have read, will be printed in Hansard, and the report together with the appendix would be printed as a blue book. As to the evidence, I should have to inquire of the chief justice as to whether the evidence would be available to anyone. I assume that if it had been intended that it should be available, it would1 have been presented with the report. I believe it will not be available.


Richard Burpee Hanson: I was
surprised that it was not tendered with the report, because that is the usual practice with all royal commissions. I think it should be tabled.


William Lyon Mackenzie King: Of necessity this particular inquiry conducted by the Chief Justice of Canada was in the nature of a secret inquiry. Any publication of the evidence would certainly disclose many military secrets which should not be disclosed.


[Stage Direction]
Motion agreed to.


William Lyon Mackenzie King: Mr. Speaker, the Ottawa
air training conference has now concluded its deliberations. It was in reality two conferences. The first conference embraced fourteen of the united nations and was primarily concerned with the coordination of air training in north America. Immediately following this conference the delegations of the United Kingdom, Australia and New Zealand joined with representatives of the Canadian government in a conference to negotiate a renewal of the British commonwealth air training agreement of 1939.
Although the existing agreement does not expire until March 31, 1943, it had been considered desirable to lose no time in making adequate provision for its extension. A new agreement was concluded this morning by the heads of the four delegations; the United Kingdom government being represented by the Right Hon. Harold Balfour; Canada, by my colleague, the Minister of National Defence for Air; Australia, by the Hon. Sir William Glasgow; New Zealand, by the Hon. Frank Langstone.
I should like now to read to the house the formal announcement of the new agreement which will replace the agreement signed on December 17, 1939. A similar announcement is being made in all four countries participating in the British commonwealth air training plan.
A new agreement for the renewal and expansion of the British commonwealth air training plan was reached this morning in Ottawa. This brings to a successful conclusion the deliberations of delegations from Canada, the United- Kingdom, Australia and New Zealand, the four partners in the plan.
The new agreement replaces that which established the original British commonwealth air training plan on December 17, 1939.
Aircrews by the thousands, the product of that plan, now man the planes which in increasing numbers are carrying the war to the enemy. The plan has undergone changes and modifications. To meet changing war conditions its original scope was greatly increased during 1940. Moreover, because of the increased difficulty in training in combat areas, and because more and more aerodrome space has been required for operational squadrons, a considerable part of the Royal Air Force training organization previously functioning in England, has been transferred to this country by agreement with Canada.
Air Training Plan

The original British commonwealth air training plan agreement was timed to expire on March 31, 1943. The success of the plan, the necessity of adapting it to new developments, and the need for long-term planning, led the four participating governments to undertake the discussions for renewal of the agreement which has just been concluded.
The United Kingdom has been represented by the Right Honourable Harold: Balfour, M.P., Parliamentary Under-Secretary of State for Air, and the Right Honourable Malcolm MacDonald, M.P., High Commissioner to Canada; Australia by the Honourable Sir William Glasgow, High Commissioner to Canada; New Zealand by the Honourable Frank Langstone, High Commissioner to Canada; and Canada by the Honourable C. G. Power, M.P., Minister of National Defence for Air and the Honourable J. L. Ralston, M.P., Minister of National Defence.
The new agreement will take effect on July 1, 1942, and will terminate on March 31, 1945. Basically the plan remains the same. The original objective, of training in the speediest and most effective manner, the maximum number of aircrews to meet the demands of war, is still its goal. On a greatly expanded scale the extensive facilities in Canada will continue to be used by all four parties to the agreement. Australia and New Zealand, whose domestic air training has been increased because of the extension of the war to the Pacific area, will endeavour to participate in the expanded plan much the same as before. Canada will continue to supply a substantial proportion of the trainees, whilst the total number of pupils sent under the United Kingdom quota, including men drawn from various parts of the empire and from the European members of the united nations, will be augmented. In sum, many more men will be trained in Canada under the new agreement than were provided for in the original plan, as expanded from time to time.
Under the new agreement, there will be complete coordination of air training in Canada. The existing schools of the Royal Air Force in Canada, already organized, will retain their identity, but will for purposes of administration continue to be integrated with those of the air training plan under the control of the Royal Canadian Air Force. Further Royal Air Force units subsequently established in the dominion, will come under the plan. As a result there will be a single pool of trained personnel ready to be drawn upon as needed.
The new agreement provides moreover that there will be an increase in the number of

Royal Canadian Air Force squadrons overseas. In Canada, training on operational types will be on a scale much greater than hitherto. This is a notable development. It will mean that pupils will be trained in Canada, from the very beginning to the point where they will be ready to join Canadian squadrons, in action, against the enemy.
The new agreement provides for a redefinition of inter-governmental policy on many points relating to air training. Within the limitations of security these may be summarized as follows:
Finance: The costs of air training under the new agreement from July 1, 1942, to March 31, 1945, are estimated at almost one and one-half billion dollars. This will include all air training within Canada administered by the Dominion of Canada under the British commonwealth air training plan as expanded, including operational training units and R.A.F. transferred units.
The governments of Australia and New Zealand will each bear the cost of training of their respective pupils received into the plan. The United Kingdom will assume 50 per cent of the estimated cost less payments made by Australia and New Zealand. Canada will assume the remaining 50 per cent of the total as its share.
The United Kingdom's share of the costs will as far as practicable be in the form of a contribution of certain aircraft, engines, spare parts, technical equipment, bombs and ammunition and other supplies as required by the administrator of the plan.
Provisioning of aircraft and equipment. While the liability for providing equipment of the types referred to rests with the United Kingdom, the task of determining the nature of the equipment and the quantities required for agreed establishments will be the responsibility of Canada as administrator of the plan. In the past, this responsibility has, of course, rested largely with the United Kingdom in respect of the Royal Air Force schools and the change is, therefore, an indication of the greater degree of coordination of these schools to which reference has already been made. The willingness of the United Kingdom to entrust the Royal Canadian Air Force with increased responsibility in this important field of provisioning is a tribute to the Royal Canadian Air Force made by those best able to judge its efficiency in this regard.
Home war needs. Full allowance has been made, under the new agreement, to supply aircrews as necessary for the maintenance of any additional numbers of operational squadrons which may be retained in Canada for home defence.

Air Training Plan
Royal Air Force units in Canada. Royal Air Force units in Canada will be administered by the Royal Canadian Air Force in the same manner as units constituted under the British commonwealth air training plan. Units now established, will preserve their Royal Air Force identity; all new training capacity created at the request of the United Kingdom will come under the British commonwealth air training plan. Present arrangements for consultation with the United Kingdom air liaison mission will be retained.
Royal Air Force elementary flying training schools, now established in Canada will be civilianized on similar lines to British commonwealth air training plan elementary schools, except that the flying instructional staff and certain specialist ground instructional posts will normally be filled by Royal Air Force personnel in uniform.
Including the trainees from the United Nations and various parts of the empire, the number of trainees sent to Canada by the United Kingdom will be greatly increased.
Control and administration of Royal Canadian Air Force overseas. The agreement provides for important changes in the administration and control of Royal Canadian Air Force personnel overseas. Provision had already existed for consultation on major operational questions. There will now also be a much closer liaison with regard to all other questions affecting the employment of Canadian personnel.
Royal Canadian Air Force overseas headquarters is given general supervision over Royal Canadian Air Force personnel attached to the Royal Air Force, and, subject to operational expediency, may recall any officer or airman so attached to serve with the Royal Canadian Air Force. Also subject to operational expediency the concurrence of Royal Canadian Air Force overseas headquarters is to be obtained in the selection of commanding officers for Royal Canadian Air Force squadrons and in posting of Royal Canadian Air Force officers of the rank of wing commander and above.
The Royal Canadian Air Force personnel reception centre in the United Kingdom is to be functionally controlled by Royal Canadian Air Force overseas headquarters. A Royal Canadian Air Force establishment will be formed in England to which Royal Canadian Air Force officers and airmen awaiting disposal, or convalescing after illness, may be sent.
National Identification. Under both the original and the new agreement, the United Kingdom government undertakes that pupils
of Canada, Australia and New Zealand, after training is completed, and so far as is practicable, shall be identified with their respective dominions. So far as Canada is concerned, the new agreement proposes to implement this purpose, as operational considerations permit, through the constitution overseas of squadrons and higher formations with all-Canadian personnel, commanded by Canadian officers; and through the policy of posting Canadian personnel to squadrons in which Canadians already are serving. At present, Canadian personnel is scattered in over 600 Royal Air Force units.
(1)	Bomber Squadrons. A Canadian bomber group to consist of R.C.A.F. bomber squadrons is to be formed and will be under the command of R.C.A.F. officers. Canada will furnish the ground crews for these formations. In preparation for the formation of the Canadian bomber group, and in order that they may gain the necessary experience of group control, a number of R.C.A.F. officers will be appointed supernumerary to posts at group headquarters. In order to keep the implementation of this policy to form a Canadian bomber group under constant review, a Canadian bomber group progress committee will be set up by air ministry. There will be Canadian representation in this committee.
(2)	Fighter Squadrons. It has been recognized that by reason of operational requirements, fighter squadrons must necessarily remain under the control of the commander-in-chief, R.A.F., fighter command. In pursuance, however, of the objective of national identification, R.C.A.F. fighter squadrons, so far as possible, will operate from stations which will be made R.C.A.F. stations, manned by Canadian staffs.
(3)	Coastal Command Squadrons and Army Cooperation Squadrons Overseas. Canadian coastal command squadrons overseas are to be manned as far as possible with Canadian personnel. Army cooperation squadrons allotted to Canadian army formations will be Canadian squadrons.
Commissioning of Aircrew. The general principle, is established that all pilots, observers, air bombers, and navigators, considered suitable according to the standards of their own countries, and who are recommended for commissions, will in fact be commissioned. The existing percentages governing the number of commissions given to wireless operator (air gunners) and air gunners will be maintained, but some flexibility will be permitted
Air Training Plan

to ensure that airmen in these categories with the necessary qualifications are not excluded from commissions on account of the quota.
Transfers Between Air Forces. The partners in the agreement will consider applications of individuals for transfer to the air forces of their own nationality.
The new agreement reaffirms and reinforces the determination and capacity of the nations of the British commonwealth to maintain the training of aircrews on a vast and increasing . scale. It emphasises the role of Canada, as "the airdrome of democracy", in this task.
The original training agreement was conceived in a spirit of vigorous enterprise. The agreement concluded this morning will be carried through in the same spirit and will play its part in building up with certainty and with speed air forces of overwhelming and terrifying strength.
Here the agreed statement ends.
My colleague, the Minister of National Defence for Air, expects to be able to table in the house next week the report of the Ottawa air training conference, at which representatives of the united nations were present, and also the agreement for renewal of the British commonwealth air training plan, which was signed this morning.
I believe hon. members would wish me, on their behalf and on behalf of the Canadian people, to express a word of appreciation to the delegations from our sister nations of the British commonwealth upon the speedy and businesslike conclusion of the new agreement. Their fine achievement is the result of the frankest and most cordial deliberations. It was particularly appropriate that the United Kingdom delegation should have been presided over by the Right Honourable Harold Balfour, Parliamentary Under-Secretary of State for Air, who shared in the negotiation of the original agreement, and whose special knowledge and continuous association with the enterprise were of exceptional value to the conference.
The wisdom of establishing the gigantic British commonwealth air training plan in Canada has been abundantly demonstrated. The most severe test came quite early; it was in the spring and summer of 1940 when the prospect of immediate danger might well have discouraged long range planning for ultimate victory. But Canada never wavered in her belief in British courage and British resolution, and in ultimate victory. This belief found its expression in our determination not only to go ahead with the plan, but also to speed up and

expand its development. This supreme act of faith was shared to the full by the United Kingdom, Australia and New Zealand, the other partners in the plan.
To-day, the governments of Australia and New Zealand find themselves in a position very similar to that of Britain in the summer of 1940. They have displayed like courage and resolution, and have made the same decision. The fact that, despite the approach of war to their own shores, Australia and New Zealand have decided to continue as active partners is another striking proof of the soundness of the original project. It is also a further earnest of the determination of their peoples to let nothing divert them from the main objective: the achievement of victory.
Hon. members will, I am sure, join with me in an expression of sincere and wholehearted appreciation of the part taken by the Minister of National Defence for Air as head of the Canadian delegation, and chairman of the conference. We all know how close, almost from its inception, the British commonwealth air training plan has been to his heart. He and his able civilian and service advisers have borne the brunt of Canada's share in negotiating the new agreement.
The gigantic and devastating raids over Germany, of the past few days, particularly those upon Cologne and Essen, have stirred the hearts of the peoples of the united nations. A very large proportion of the gallant young airmen from the United Kingdom, Canada, Australia and New Zealand, who took part in these raids, received their training in Canada in schools of the British commonwealth air training plan. There could be no more dramatic or convincing evidence of the magnitude and effectiveness of the plan.
I shall be availing myself of a particularly appropriate moment, if in concluding these remarks, I express on behalf of the parliament of Canada the unbounded admiration and appreciation of all its members of the gallant and important role 'which Canadian airmen so prominently played in the recent raids. Not only members of parliament but the Canadian people as a whole are filled with admiration of their achievements. We shall ever remember with gratitude what our brave young airmen are so valiantly doing to defend the security of their own Canadian homeland, and to preserve freedom in all parts of the world.

House of Commons



WAR RISK INSURANCE


[Stage Direction]
On the orders of the day:
Hon. J. L. ILSLEY (Minister of Finance):: I wish to announce that the government has approved the appointment of Mr. James Matson, Montreal, manager of the Royal Insurance company in Canada and of the Liverpool, London and Globe Insurance company and associated companies in Canada, to act as supervisor of war damage insurance. This appointment cannot be confirmed until Bill 56, at present before the House of Commons, has been passed, but in the meantime no time is being lost to organize the scheme of war damage insurance and arrange for its being put into effect as soon as possible after the passage of the bill.
In view of recent events emphasizing the possibility of enemy attack, the government is taking all necessary steps to provide the facilities whereby war damage insurance may be written by the established fire insurance companies and their agents throughout Canada, as soon as possible after the enactment by parliament of the pending legislation. It should be pointed out that any steps taken at the present time, including the appointment of Mr. Matson, and any other personnel, is purely tentative at the moment, and it is hoped that the public will not hamper their organizational work by besieging them with applications for war damage insurance. No war damage insurance can be written under the scheme until the pending legislation has been passed, and after allowing a short period thereafter for completion of the organizational work. The government will announce in advance when the scheme is ready and applications for war damage insurance can be received. In the meantime, until the legislation is passed and the scheme is fully organized there is the promise of protection by the government to the extent indicated by clause 6 of Bill 56, namely:
If any person, during the period between the tw'enty-fourth day of December, one thousand nine hundred and forty-one, and the thirtieth day after the commencement of this act, both inclusive, has sustained or sustains loss from war damage, and if he makes application to the minister on or before such thirtieth day aforesaid, to enter into a contract of insurance in respect of such property, the minister may enter into a contract of insurance in respect of such property effective from the beginning of the twenty-fourth day of December, one thousand nine hundred and forty-one, but the amount of the indemnity payable under any such contract in respect of war damage to such property during such period shall not exceed fifty thousand dollars.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. ANGUS MacINNIS (Vancouver East):: I have given the Minister of Munitions and Supply (Mr. Howe) notice of a question, but as he is not in the house I will state my question and it may be called1 to his attention. It arises out of a telegram received from John Thomson, secretary of the Canadian Pacific Railway System Federation, and has reference to what is described as a serious situation developing in the Canadian Pacific Railroad Angus shop at Montreal where Valentine tanks are being manufactured. The telegram indicates that 175 men will be laid off as from to-day and that more are to follow. The official reason given for the lay-off is the lack of necessary material and parts. I should like to have this drawn to the attention of the minister so that he may give the house an explanation on Monday.



CLOSING OF CANADLAN ASSOCIATED AIRCRAFT- DISCHARGE OF WORKERS

[Stage Direction]
On the orders of the day:
Mr. J. W. NOSEWORTHY (York South):: I sent to the Minister of Munitions and Supply notice of a question which I wish to ask, and probably the Minister of Labour would care to answer it. Have any steps been taken by the government to secure placement for the aircraft workers already discharged and about to be discharged by reason of the closing of Canadian Associated Aircraft Limited?


Mr. SPEAKER:: That is a question that
should be placed on the order paper.



EXPEDITING OF BUSINESS-EXTENSION OF SITTINGS

[Stage Direction]
On the orders of the day:
Mr. D. A. McNIVEN (Regina City):: Last evening I referred to a matter which the Minister of Mines and Resources (Mr. Crerar), who was leading the house, was good enough to assure me that I might bring up to-day on the orders of the day. The rules of the house provide for the adjournment of the house at six o'clock on Wednesday evening, and early in this session a motion was passed providing for adjournment at six o'clock on Friday evening until the following Monday at three o'clock. This is the eightieth day of the session and the amount of business that remains on the order paper which has yet to
House oj Commons

be considered is such that, in my opinion, we should now consider the advisability of a motion suspending the rule for the adjournment on Wednesday evenings at six o'clock so that we may sit on Wednesday evening as on other evenings, and further that we should at the same time rescind the motion that was passed at an earlier date in the session with respect to Friday evenings.
When speaking last evening I suggested that the house might sit on certain mornings, including Sundays, but I am willing to withdraw the suggestion so far as Sundays are concerned, out of consideration for your Scottish principles, Mr. Speaker, and likewise in consideration of the opinion of my spiritual adviser, the member for Fort William (Mr. Mclvor). However, in making that withdrawal I am going to ask the government to consider favourably the making of provision for sittings on Monday mornings, Friday mornings and Saturday mornings at eleven o'clock. At the present time the house sits twenty-four hours a week; and it should be added that on Tuesdays, Wednesdays and Thursdays committees sit for a couple of hours in the morning. Hon. members have in , addition to that their mail and departmental work to attend to.
The British House of Commons sits from 2.45 in the afternoon continuously until 11.45 in the evening on Mondays, Tuesdays, Wednesdays and Thursdays; on Friday it sits continuously from 11 in the morning until 4.30 in the afternoon. The House of Representatives in the United States sits from 12 noon I think until 6 in the evening, although the records indicate that the hour of adjournment is at the discretion of the Speaker, and that the Speaker may name the hour on the following day at which the house will again convene. This means that the British House of Commons is sitting 401. hours a week, and the House of Representatives in the United States approximately 30 hours. We in this country ask labour in the munitions plants, in shipyards, in all kinds of war industries, to work anywhere from 55 to 70 hours a week. It seems to me that we as members of the House of Commons could well work a little longer, put in a few more hours in actual sittings, in order to provide the wherewithal for these men whom we expect to work as I have indicated.
The other day the Minister of Finance made reference to this matter during one of the committee meetings. He said: "It is high time that we had some regard for time. If we do not take it into consideration we shall be 
sitting here all summer." I appreciate fully that the Prime Minister and the members of the war cabinet are exceedingly busy men, and I would not for a moment make this suggestion if I thought it would require the continuous attendance in the house of the Prime Minister and members of the cabinet. But there are other members of the government whose estimates have not yet been considered, and during these extended hours of the session one minister after another could bring his estimates forward for discussion. It would expedite the business of the house; it would enable the war cabinet ministers to advance Canada's war effort, and it would permit members of the house to proceed to their homes at the earliest possible date.
I again refer to the Minister of Finance who the other day said: "There is something wrong with the House of Commons, and I am not able to tell what it is."
Custom, usage and tradition over a matter of seventy-five years have established the practice that there shall be no vote on Mondays or Fridays, and that committees, with the odd exception, shall not meet on either Mondays or Fridays. This practice has grown up with a view to the convenience of hon. members who find it possible to go home over the week-end.
I suggest that some of the things the Minister of Finance had in mind as being wrong with the House of Commons could be remedied if we were given to understand that there will be votes on Mondays and Fridays if necessary, and that committees will meet on Mondays and Fridays if necessary. And there should be some organization of the debates in the house. I believe that the senior whips and the whips of each group, if they were to meet, could so arrange future debates as largely to eliminate much of what the hon. member for Wellington North (Mr. Blair) spoke of the other afternoon.
As an alternative to the suggestion of morning sittings, possibly the Prime Minister would consider doing as they do in the British House of Commons-sit continuously through, and eliminate the dinner recess.
This institution, Mr. Speaker, the House of Commons, is one of the institutions of democracy for which this war is being fought, and we here are, for the time being, the custodians of its rights and its duties and its responsibilities. It becomes our immediate duty, our immediate responsibility, so to conduct this institution as to make it work, and work hard, for the people for whom it was created and designed.

House oj Commons


William Lyon Mackenzie King: I am sure there will be general appreciation of what the hon. member for Regina City (Mr. McNiven) has said with respect to the desirability of expediting the work of the session so that hon. members will not be kept here for the greater part of the year. But there are some matters of which perhaps he has not taken as full an account as might be desirable. One is the fact that the business done by parliament is not to be considered as comprised simply in the time hon. members spend in the House of Commons. My hon. friend's remarks would seem to imply that most of the work we do, is done while sitting here. Work mostly lies in effective preparation in advance of what is reported here. My feeling is rather that the work of the session would be greatly shortened if hon. members came here well prepared on the subjects to be discussed and sought to confine their remarks to the relevant and most important points which should be developed.
But certainly it would be impossible for members of the government, and I think also for most members of the house, to do the kind of work that is expected of them, to have in their minds the information which is essential for purposes of debate without some time for preparation. Nor do I see how they could manage other duties, if they do not have the forenoons, at least, for purposes of conference, and to deal with correspondence. As far as the government is concerned, ministers must have opportunity to confer with the members of their own staffs, some chance to take up with them the different questions that are likely to come, if they are to be prepared to discuss them when they come to the house. They must have some opportunity as well to see members of the house on different matters. All this and much else is a part of the business of parliament and time must be found for it.
My hon. friend spoke about sitting on Wednesday and Friday nights. Towards the end of the session it is customary to sit on Wednesday evenings as well as Friday evenings, and also to begin sittings in the mornings and to sit on Saturdays. But the right time to begin extra sittings is when the committees of the house are through with their work and when we see the end of the session in sight. The only effect of starting morning sittings too soon and of sitting every day until eleven at night would be that hon. members would become so fatigued that the
sittings almost certainly would tend to become more protracted than ever. The little break on a Wednesday and Friday evenings, the knowledge that the house will only be sitting in the afternoon on those days, enables most members so to adjust matters as to be more regular in their attendance upon the proceedings of the house and to come to the house more or less refreshed and with a feeling that they are able to concentrate on the business during the time the house is actually sitting.
I think my hon. friend is in error about the time taken by the British house in actual sittings. As a matter of fact I would cite the example of the British house as a reason why we should continue the practice we follow at the present time. The British house, as a matter of fact, since the war commenced, has very much abbreviated the time of its sittings. It has done so for the reason that there is so much more of very great importance that has to be considered that more time is required for study, reflection and preparation. Moreover the intensity of the strain on everyone is so much greater. The war itself, apart from ordinary business, puts a strain on all hon. members; the happenings from day to day are something which has to be taken into consideration, but the greatest strain of all is the exceptional importance of the questions which are being discussed, and the care that has to be taken in dealing precisely with every phase of important matters.
Since the war commenced the British house has been sitting on an average three days a week. I have the particulars here as to the length of the sittings in Britain since the war commenced. I gave them in part to the house once before; I repeat them now, since they may be of added interest to hon. members. I noticed my hon. friend's question of last night in Hansard, and therefore came prepared to answer him on this particular point this afternoon. I shall take the period after the 1940 election in this country, and the time taken by our sittings and compare it with that of the British house over a corresponding period. From May 21, 1940, to November 20, 1940, the British parliament had in all sixty-two sitting days. Our parliament in the complete session from May 16, 1940, to November 5, 1940, had sixty-one sitting days. The British parliament in a like period of time took one day longer than this parliament to transact its business; I think my hon. friend and all hon. members will agree that the British parliament has a much vaster
House of Commons

programme to cover, that the questions coming up from day to day are in degree at least, if not in kind, very much more significant than some we have to consider here. For the year following, during the complete session from November 21, 1940, to November 11, 1941, the British parliament sat 113 days in all. Here, in the complete session from November 7, 1940, to January 21, 1942, the Canadian parliament sat during 105 days. Let me give those figures again. For the first year there were sixty-two sitting days in England as against sixty-one here. The following year, which was last year, there were 113 sitting days in Britain, as against 105 in Canada. Now I come to this year. Since November 12, 1941, up to the present, the British parliament has sat for seventy-seven days. Our parliament, beginning only on January 22, not on November 12 as the British parliament did, has up to to-day sat for eighty days. In other words, we have in this time of war thus far sat this year three days longer than has the British House of Commons.
That, I think, affords a key as to how this existing situation may properly be met. It can only be met by what my hon. friend really has suggested, some organized effort; an arrangement made between the whips in the first instance and between the leaders of the parties, where that is also required, to have discussion in some way so limited that it will not take up an indefinite period of time. Take the present debate on the war appropriation bill. I am sure there might have been on the part of every group in the house an agreement that certain members would speak to certain questions, and all combined occupy a certain length of time. If there were an arrangement of that kind we should certainly get through with the business of this house in the same expeditious manner in which the business is dealt with in Britain. I see some hon. members smiling, but if it can be done in Britain certainly it ought to be possible here. I have no desire to limit anyone in regard to discussion, but I do suggest that some arrangement within the groups themselves as to the time that should be devoted to the discussion of different questions would materially shorten the time necessary to deal with the business of the session.


Mr. DOUGLAS (Weybum):: We could
organize our members, but could the government organize the hon. member for Temis-couata (Mr. Pouliot) ?

Mr. MACKENZIE KING; I do not think my hon. friend ought to lay that task upon the government; it will have to be taken in hand by the entire house. I am very glad the hon. member for Regina City has brought up this question, because I know it is in the minds of all hon. members and will become increasingly so as we get on into the summer months. There is a large programme still ahead of us, but in my own mind .1 am perfectly satisfied that we would not be facilitating the business of the house if at this stage of the session we sat in the mornings, or if we altered our present arrangements, at least until after further progress has been made.


Richard Burpee Hanson: I do not intend to enter into
any extended discussion of this question, but there are some observations which I desire to make. The Prime Minister (Mr. Mackenzie King) has in some respects presented my own point of view. I do not, however, quite agree with him with respect to the debate on the war appropriation resolution when I think of the time taken by the Minister of National War Services (Mr. Thorson), for instance, in defeating and delaying the passage of his own estimates, and that without giving us the information requested. I suggest to the Prime Minister that he talk to that hon. gentleman. I have seen other ministers in this house delay their own estimates. I recall with a good deal of amusement a gentleman who in days gone by occupied the position of Minister of Agriculture, who required only an invitation to give the House of Commons a real lecture. I am not saying that in any malicious spirit at all; I just call attention to the situation and to the fact that all the delay has not been occasioned by those on this side of the house.
With respect to the observations made by the hon. member for Regina City (Mr. McNiven), I do not think it is quite fair to publish to the country -the statement that we work only twenty-four hours a week while people in factories are asked to work sixty and sixty-five hours a week. That statement is definitely calculated to mislead the Canadian people. I wonder what the hon. gentleman knows about my working week.


Donald Alexander McNiven: I rise to a point of order. The leader of the opposition (Mr. Hanson) has said that my statement was deliberately calculated to mislead. What I said was that the House of Commons sits twenty-four hours a week, and I enlarged upon that

House oj Commons
by pointing out that members had to attend meetings of committees and perform other duties.


Richard Burpee Hanson: I could
not follow the hon. member's point of order, but if he takes exception to any imputation of motives against himself certainly I shall withdraw. But I will say this, that the statement which went forth from this house last night is calculated to lead the people of Canada to think that members of this House of Commons work only twenty-four hours a week, while we are calling upon labour in this country to work sixty, sixty-five and seventy hours a week.	[DOT]


Donald Alexander McNiven: On a point of order, Mr. Speaker, the hon. gentleman has repeated exactly what he said before, that my statement last night was calculated to create a wrong impression. If he would only quote what I said, he would see that my statement was that the House of Commons sits for twenty-four hours each week.


Georges Parent: I think the leader of the opposition is entitled to draw his conclusions from what the hon. member said.


Richard Burpee Hanson: I was
giving an interpretation which I think was justified and which I believe will be the interpretation placed upon the words by most people in this country, namely, that we work only twenty-four hours a week in this house. Nothing could be worse than to send out to the people of Canada an impression of that kind. Everyone in this house, everyone in the press gallery, knows that for the most part members of this house work long, weary hours. I do not mind saying that when 6 o'clock comes on Friday evening I welcome the release. I work at least fifty-four hours a week, not to mention the work I may find myself obliged to do on an occasional Sunday. I have had to work on Sunday, and I do not want to do that unless it is really necessary. To convey the impression that we only work twenty-four hours a week is, in my humble opinion, calculated to bring this institution into disrepute, and the statement is not based on the facts. What is the working day? We get here at 9 o'clock in the morning and, with the exception of a limited lunch period and an hour or so for the dinner recess, we are here until 11 o'clock at night.
I try to slip away at 10.30 p.m. I go home, and go to bed, tired out, and many hon. members do the same. I agree we ought to get along with our business. Of course the solution of our difficulty is a better organization of the work in the House of Commons and of the committee of the whole. After all, however, we are dealing with important problems here. The people of the country expect us to do this work, and to analyse situations. They expect us to investigate the country's operations, especially in relation to the war.
I should hope there may be some better organization of the work. But I do say this, that if we are to be asked to come here in the morning, and to sit morning, afternoon and evening for six days in the week, how in the world are we going to do the other duties which of necessity devolve upon members of the House of Commons, and especially, I should think, upon members of the government? We just cannot do it, and it is not quite reasonable to expect it of us.
I sympathize with the hon. member who is a long way from home, and who does not get home often. Geography is against him as, perhaps to a more limited degree, it is against me. I am not sympathizing with hon. members from Quebec and Ontario, who live nearby and who slip away on Friday afternoons, so that we do not see them again until Monday night. This is no handicap for them.


An hon. MEMBER:: And some of them Thursday night.


Richard Burpee Hanson: Some of them Thursday night.


Mr. MacNICOL:: Not I.


Richard Burpee Hanson: No; that does not include my hon. friend the member for Davenport, because he sits here steadily. But I do suggest that we could, I believe, if we put our minds to it, limit the time in which we are engaged in the discussion of specific matters. I do not know what the government is going to do with the hon. member for Temiscouata (Mr. Pouliot); he is not my trouble or worry.
I shall endeavour to cooperate in every possible way with the government to expedite the business of the house, always having due regard to the public interest. I do not think I should go further than that. But I am not willing to work twelve hours a day for six days of the week, and then perhaps have to work on Sunday, too. I just cannot stand it, physically.


Angus MacInnis: Mr. Speaker, this group will be willing to cooperate with other hon. members in expediting the work of the house in every way possible. But if we look at the clock, and consider what we have done to-day, we shall have some idea
House oj Commons

of how well we can kill time. It seems to me that for an hour-other hon. members may-think differently-we have listened to the reading of a report which might as well have been tabled, printed, and distributed to the members. Then we have had this discussion, which has taken another half hour or so.
An hon MEMBER: An hour.


Angus MacInnis: No, not quite. So that almost two of the three hours we are to sit to-day have, in my opinion, been pretty well frittered away on non-essentials.
I am glad that both the Prime Minister (Mr. Mackenzie King) and the leader of the opposition (Mr. Hanson) referred to the statement made in the house yesterday evening by the hon. member for Regina City (Mr. McNiven). I believe his was a most unfortunate statement. As it appeared in the press this morning and as it was broadcast over the radio, it was made to appear that members were working only twenty-four hours a week. The hon. member for Regina City may have been speaking for himself, but certainly he was not speaking either for me or for members of this group. We are here at or before nine o'clock every morning, and we cannot find enough hours between that, and eleven o'clock at night when we leave, to attend to the work we have to do.
I believe it was the Prime Minister who said, and rightly, that the work an hon. member does is not all done in this chamber. This is where we either talk for a few hours, or are bored for five or six hours. But the largest part of a member's work is done in his office, in the departments or in committees, and every minute of our time is taken up.
We shall be glad to meet with representatives of the government, the opposition and the group to my left to do everything possible to carry out our work expeditiously and efficiently. But we should not forget that we are paid to come here to do the work for which we were elected.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, I think it is a good thing for us to express faith in parliament and in parliamentary institutions. There is altogether too much of a tendency on the part of people throughout the country and in the press to disparage the work of parliament. My impression, since coming here in the spring of 1936, is that this parliament does a difficult job, and does it well. That fact ought to be known throughout the country.
I do not believe the people realize the difficulties connected with governing this country. They do not appreciate the extent

of our dominion, the widely varying conditions, and the fact that we are treading over unknown ways. Members have to cope with these conditions and struggle to reach some sort of unity. That takes time, and a great deal of energy.
I have all confidence in this parliament, and all confidence in democratic institutions. We ought to stop talking down, and start talking up.
With respect to the length of our day's work, I sympathize with what has been said by the hon. member for Vancouver East (Mr. Maclnnis). I get here about eight o'clock in the morning, and I leave about eleven-twenty at night. I hardly have time to eat. Very few people realize how many problems come before a member of parliament in the course of a week. I have spent as much as twenty-five hours dealing with the problems of one man, and I am sure every hon. member has had similar experiences. Problems arise which simply have to be dealt with. Many of them require a great deal of thought, study, sympathy and care on the part of members and ministers.
As to the ministers, Mr. Speaker, I have found the ministers of the government sympathetic, earnest and willing to do the very best they can to govern well. That has been my experience. I believe if hon. members do their duty, they will be working with those ministers to help them govern well. If an hon. member does that, he will work much more than twenty-four hours a week.
We are passing through a time of transition. We are in an age of abundance, when all our experience has been in an age of scarcity. The result is that we do not know just exactly how to gauge ourselves. But we will find out how to carry on, and we will make this parliament everything we desire it to be.
I am prepared to cooperate with other members in expediting business.



FEED GRAINS


[Stage Direction]
On the orders of the day:
Mr. J. G. ROSS (Moose Jaw):: I should like to ask a question of the Minister of Agriculture. When speaking the other day he intimated that the government was considering the continuance of the payment of freight rates on feed from the middle west to eastern Canada and to British Columbia. Has the

War Appropriation-Finance
government made a decision on the point, and if so, is the minister ready to acquaint the house with that decision?


Hon. J. G. GARDINER (Minister of Agriculture) :: Mr. Speaker, the government has made a decision in the matter, and has decided to continue for an indefinite period the freight rates paid on grain moving east, and moving west.



CANADIAN FORCES


[Stage Direction]
On the orders of the day:
Hon. J. L. RALSTON (Minister of National Defence):: Mr. Speaker, may I put on Hansard the answers to two questions to which reference was made yesterday by the hon. member for Temiscouata (Mr. Pouliot) at page 3045 of Hansard. His first question, as reported at page 2292 of Hansard, was: "Of the total number of men enlisted from the thirteen hundred whose names appeared in the directory he held in his hand, how many were bilingual?" His second question was: "Out of that total number, how many officials both civil and military have been living in this country for the last five years?"
So far as the army is concerned, there are 871 names listed in the directory. Of these, 737 have resided in Canada during the past five years, and of these, 140 are bilingual and 597 are not bilingual. Three persons listed have not resided in Canada for the past five years, and of that number two are bilingual and one is not. One hundred and thirty-one persons whose names appear in the directory have been moved away from headquarters since the directory was prepared, and therefore details are not available.


Mr. NEILL:: How much time was wasted collecting that information?


James Layton Ralston: The calculation was that fifty hours' time would be taken in getting that information.



MAN-POWER ACCORDING TO AGE CLASSES-ENLISTMENTS, POSTPONEMENTS, REJECTIONS, ETC.

Mr. J. G. DIEFENBAKER (Lake Centre):: Following up the answers that have just been given, I should like to ask the Minister of National War Services whether he is now in position to answer the several questions that appear at page 2967 of Hansard in connection with the mobilization of man-power and the survey of man-power according to age classes.
The understanding was that this information would be given before the debate on the mobilization act amendment next week. Is the minister in position to give that information, as well as that asked for in question No. 26 standing in my name on to-day's order paper, which has to do with the subject matter?


Hon. J. T. THORSON (Minister of National War Services):: I do not recall having given any undertaking to obtain the information. I indicated the difficulties involved in getting it. I do not think I have anything to add to what I said on that occasion.



WAR APPROPRIATION BILL


[Stage Direction]
The house resumed from Thursday, June 4, consideration in committee of a resolution to provide sums not exceeding $2,000,000,000 for the year ending March 31, 1943, for granting to his majesty aid for national defence and security-Mr. Ilsley-Mr. Bradette in the chair.
John Horne Blackmore: Mr. Chairman, last evening the leader of the opposition (Mr. Hanson) made some adverse comment on the price ceiling which the minister had applied, criticizing it considerably. In the course of his remarks he involved social credit ideas and myself. When the minister answered him, he also involved our ideas and myself. At about fifteen minutes to eleven o'clock I rose and made such comments as I had time to make in defence of our views. I think it fitting that I say a little more this afternoon.
The belief was expressed by the minister and by the leader of the opposition that my group were not in favour of taxation or borrowing. I should like to place our position squarely and fairly before the members of the committee.
I did not say that we could carry on this war without borrowing and without taxation, and I have never said that. There is an error on page 3090 of Hansard which I think I should correct before it goes any further. It was probably due to a slip in my language. In answering the Minister of Mines and Resources (Mr. Crerar) I am reported as saying:
I did not say I would not tax. I said, "without additional borrowing."
That should be, "without additional debt." Hon. members will find that that is exactly what I had said; I was just repeating. What I did say was that the new money could be got without debt or taxation. .

War Appropriation-Finance

I said that social credit proposes to use the national credit to provide money without additional debt, without additional taxation. That puts an entirely different meaning on the expression used. Hon. members will find that my interpretation is correct. I can understand how the minister interpreted it as he did, but he will find that that is the meaning. In the same passage as reported on page 68 of Hansard of November 13, 1940, I went on to say:
Social Crediters maintain that in any well-organized and well-managed state with rich and varied resources, such as we have in Canada, the national credit can and should be used to provide fair prices and adequate home markets for all essential industries.
There are other passages which I believe ought to be read in this connection. I am doing this in order that the minister may realize that we are not so widely at variance in some respects. It is well that men do not misunderstand each other; in a time like this we need all the cooperation we can get. On page 70 of that same Hansard I quoted the remarks of Professor A. F. W. Plumptre, as they appeared in the October 5, 1940, Financial Post. I quote these words:
The government can always "get money" because it may, as an alternative to borrowing or even to taxation, create the required funds. This it can easily do nowadays through the leadership of the central bank and the cooperation of the chartered banks. In this way 200 millions were created in this fashion last autumn.


James Lorimer Ilsley: The amendment of the Social Credit party to the resolution reads-Hansard, 1940, page 68:
And this house further regrets the failure of the government to adopt a monetary policy that would permit a maximum war effort without either increasing debt or reducing the standards of living below that necessary for maintaining maximum efficiency.
Does that not indicate that at that time the policy of my hon. friend's party was to conduct the war effort without increasing debt?


John Horne Blackmore: The minister's observation is quite logical, and it will require some explanation in order to make clear the meaning. May I just use an illustration to show the minister that that is not the exact interpretation that should be placed on the amendment. The minister will understand that if he had used the national credit to ' give the western farmer, we will say SI.15 a bushel for his wheat, the western farmer would have been able to buy a great deal more. He would have bought more goods, which would have yielded the government
[Mr. Blackmore.l
more income from taxation, from the tariff and from other means. He would have been better able to pay taxes to his own province, and he would have been in a better psoition to pay his machinery debts, his grocery debts and his other debts. In this way if the income of the people throughout the country were improved, as the amendment clearly indicates the social crediters conceive it should be improved, then the country would move progressively out of debt. It is not easy in a short time to explain in detail this matter to the minister. In the minds of social crediters it is perfectly feasible. [DOT] The minister knows, without looking the matter up, that by refunding debts, he has paid off vast sums of money on the national debt in Canada while the war has been going on. He has paid those debts with more money which he has collected by taxation, and money that he has borrowed. If he had been using the technique of creating money, as far as he could do so safely, he would have been able to pay more of these debts with such money. I am sure he would have found out in other ways, as the great billion dollar gift which we made to Britain will indicate, if carefully studied and fully understood and interpreted, that the debt of the country could be progressively decreased while the war is going on without in any way interfering with the progress of the war. Whether we should be able to get through this titanic conflict with less debt than we started with, even under a social credit technique, I cannot just tell, but I should be quite sure that the debt would be far less than it will be under the system which the minister is following. Do I answer the minister sufficiently?


James Lorimer Ilsley: Yes.


John Horne Blackmore: He goes on to say:
that is borrowing which creates additional money in the process.
That, from the bankers' point of view, is the way to do it. From the social crediters' point of view new money should not be borrowed. If the money can be created, social crediters urge it is a real asset to the state and should be regarded as such and be a clear addition to the revenues of the state to the extent that that creation can be carried on without causing inflation.
I endeavoured to illustrate to the leader of the opposition this power to create money by reference to the $26,000,000 which were created definitely in the last war by the Department of Finance under the Finance Act of 1914. This amount of $26,000,000 was used definitely for carrying on government business, probably paying expenses of the Canadian National Railways and other busi-44561-1961
ness just as ordinary revenue would be used. Those $26,000,000 were bills, from the printing
press.
Social credit, as its name implies, deals with credit. It conceives that most of the money that is created should be created not as bills but as credit; only enough bills should be created to facilitate the ordinary hand-to-hand business of the country in carrying on its affairs. I want to point out to the leader of the opposition that created money is sound. I do not know whether he knows this or not, but he does not act as though he understood it. As reported in Hansard at page 3080 he spoke in a somewhat disparaging way of the idea of creating money. This is what he said:
This is not fiat money, I would have the hon. member for Lethbridge understand. This is not printing-press money. This is real, good, hard cash paid by the taxpayers of Canada, and it is going to be paid to certain persons.
The leader of the opposition seems to think that money which was created by the state could not be real, good, hard cash. If the leader of the opposition thinks that, he is completely in error.
I wish to go on with several other matters. I believe I have made quite clear the social credit concept; if I have not, I would appreciate it if the minister would ask me questions. The social credit concept is that in any country of rich resources there can be created a certain amount of money depending upon the goods-and-services-producing-and-consum-ing-power of the country. Either that money can be created by the banking system as a debt and be borrowed by the government, or it can be created by the government as a sheer asset of the state, as the quotation I read last night from Vickers' "Economic Tribulation" clearly shows the writer believed. *
May I read a passage from another source which perhaps has escaped the minister's attention. This passage comes from the London Times of recent date and is quoted by the Montreal Daily Herald of June 4 in an editorial, "Will Protective Tariffs Disappear?" I am going to read the words from the editorial. I said last night, rather sternly I believe, that all progressive men everywhere are beginning to see the possibility of creating money. This passage will help to show that even the very orthodox and conservative London Times is beginning to see that possibility. The words are:
We are not likely to solve our post-war problems unless we make up our minds to treat money as a bookkeeping technique to facilitate the production and exchange of goods and services, not as something the supply of which sets a fixed upper limit to our productive activities.
War Appropriation-Finance

May I digress for a moment to point this out. Social credit, as I will develop it if my time permits, conceives that the credit of the state may be used greatly to increase the productive capacity and production of the state-which is an idea that is conveyed definitely by the words I have just read. To continue the quotation:
It plays much the same part in the economic life as railway tickets play in transportation. It is dishonesty, akin to inflation, to issue tickets for more trains than can be run. It is absurd to cut down the railway service because the ticket office has run short of tickets.
That is precisely the concept of social credit.
When we were talking in 1939 there was a vast amount of productive capacity and actual production in Canada which was not being used. We could have created enough tickets, enough money to have caused these productive capacities to come into use and all of these idle goods to be used. As an illustration of what might have been done, just think of the lumber which we were not having very much use for during six, eight or ten months; imagine what would have been achieved by means of a credit expansion which would have resulted in houses being built all over Canada and would have kept the lumber mills busy nine months of that year before they were brought into operation by the demand of war. What a change there would have been in the social conditions among the Canadian people! How much stronger we would have been to fight the war! Such credit expansion would have been an example of tickets created for the goods that were already in Canadian lumber yards-not enough tickets to bring about a scarcity of goods, but merely to stimulate, to motivate production to the highest degree possible. If at any time I do not make myself clear, I shall appreciate it if the minister will let me know.
I have never advocated a limitless creation of money. I hope that never again in this house will the minister or the leader of the opposition or anyone else accuse us even by implication of advocating any such thing. It was the favourite device of Mr. Dunning to say that sort of thing, apparently side-stepping the issue and getting people off on the wrong track. But that is not fair; it is not in the interests of the country. Reference was made last night in two places to unlimited creation of money. As reported at page 3077 of Hansard the minister used these words:
Sounder than the creation of unlimited sums of new money.
We have never advocated that, under any circumstances anywhere since we came to the house. Again as reported at page 3078 he spoke
[Mr. BlackmoreJ
of "the unlimited creation of money." That is a misinterpretation of our ideas. This is the rule:	The amount of money that can be
created and used, as I have said over and over again, depends upon the goods-and-ser-vices producing-and-consuming power of the state. That is the simplest way in which it can be expressed in general terms. It is a fairly accurate way of determining the amount of money that can be created and used. The minister himself has that concept; only he has not our concept of "creating" money; he has the concept of the degree to which the "banks" can create money without causing inflation.


James Lorimer Ilsley: May I say this for the
sake of clarification. The hon. gentleman seems to argue part of the time that we should run the banks. That is the Cooperative Commonwealth Federation policy. He seems to object to the private banking system. Instead of allowing the banks a profit on the carrying on of banking activities, he suggests that the government should carry them on; and, as presumably he would say, that the government should have the profit themselves. Is that the position of social credit?


John Horne Blackmore: No; that is not quite correct. The social credit movement believes that the banks can work for the government. The banks do not necessarily belong to the government. It may be quite all right for the government to buy the whole banking system. We would certainly never favour having the government seize it or cause any harm to the bankers. We do believe in private enterprise. That, the minister will find, is the distinctive difference between our movement and the socialistic movement, which seems to favour government ownership and direction. We believe it is better for the country to have private ownership.


James Lorimer Ilsley: I may become, I am afraid, a minister who delays his own estimates, but I should like to ask the hon. gentleman this question. If the private banks, the commercial banks, are to continue in private hands and continue lending money, are they not creating money in the sense which the hon. gentleman implies, and therefore perpetuating what he says should not be allowed to continue? Bear in mind that the hon. gentleman said a few minutes ago that the creation of money should be a state activity, that money is an asset to the country and should be created by the state. Is that position consistent with the position that the private banking system should be allowed to continue?


John Horne Blackmore: First, let me put it
in this way. The Bank of Canada prints bills

War Appropriation-Finance
to-day, and the government theoretically borrows those bills from the Bank of Canada, thereby creating a debt to the Bank of Canada, which is a debt to the government itself inasmuch as the Bank of Canada is a government institution, a branch of the minister's own department, as I understand. In that respect, the government can obtain bills and perhaps credit at a very low rate. It should be able to obtain it at cost of printing, cost of bookkeeping and cost of management.


James Lorimer Ilsley: What about cost of interest
on deposits?


John Horne Blackmore: We shall come to
that.


James Lorimer Ilsley: That is part of the costs.


John Horne Blackmore: I was dealing first of all with the central bank.


Mr. GILLIS:: I make no pretence at being able to follow the hon. gentleman all the way through, but one thing strikes me. How will you control the issuing of currency or tickets when your productive capacity is in the hands of private enterprise, when it is in someone else's hands and someone else controls it? On what are you going to base the issuing of currency?


John Horne Blackmore: I do not want to keep anyone from asking any questions, and perhaps the minister will allow me to answer the hon. member's question first. It would be better, however, if all questions could be deferred until I get through.


Clarence Gillis: I asked only one question.


John Horne Blackmore: It would be better if the hon. member would bring that up at the end, because to answer the minister's searching questions is enough for any hon. member, if the situation is to be made clear for the record.- Perhaps my hon. friend will bring it up later.
Answering the minister's question, I would point out in the first place that I was dealing with the central banking function, and theoretically the primary business of the central bank is not paying interest on deposits.


James Lorimer Ilsley: No.


John Horne Blackmore: When you come to the second ary or chartered banks you are dealing with another problem. The chartered bank has to pay interest on deposits. This causes the private or chartered bank to incur definite costs. Perhaps it costs them 3 per cent.


John Ritchie MacNicol: They pay only one and a half.


John Horne Blackmore: I said "perhaps", for the reason that there is a good deal of discussion about the matter. If hon. members will read the proceedings of the banking and commerce committee of 1939, they will see how difficult the question was then, and we in this house can hardly hope to settle it if that committee were unable to. But take 3 per cent as the rate and assume that it costs the Bank of Montreal 3 per cent to lend money to the people, taking into consideration what it pays for its own deposits. The social credit position would be something like this. Farmers are producing the very sinews of war, such as milk, honey, beef, wool and so on, and surely they should never be called upon to pay 6 and 7 per cent. That is adding to their costs; it is adding to the costs both to the community and to the government. It is unsound. Social credit would say that probably 2 per cent or even less is all that the farmer should ever have to pay for production loans. The question would be raised, how would the difference be made up to the bank? How would the bank of Montreal be saved from loss?


John Ritchie MacNicol: It would be the difference between three and two.


John Horne Blackmore: Yes, a loss of one per cent. I think it will come to be realized as the years go by that the people can afford to have the government subsidize the bank on that loan. If it costs the bank 3 per cent and the government wants the farmer to have it at 2 per cent, the government can afford to pay the 1 per cent; that is, provided the loan is for bona fide production. The increased business will rapidly increase the profits of the bank, which again is an important item. The minister as he realizes has opened up a highly technical question. That is perfectly all right, but it is one which it is difficult to deal with on the floor of the house, one which could be much better dealt with in the banking and commerce committee.


James Lorimer Ilsley: That is an additional subsidy for agriculture; that is all.


John Horne Blackmore: That is right.


James Lorimer Ilsley: There is nothing very difficult about that.


John Horne Blackmore: That is true. But it is a new idea that I find people do not apprehend quickly.


James Lorimer Ilsley: We are familiar with it.


John Horne Blackmore: The minister has
raised an important point After all is said and done, if the production of wool, which is

War Appropriation-Finance
disturbing people greatly to-day in Canada, is so vital to the welfare of Canada, why should the producers of wool be penalized by high interest rates? Looked at logically it never can be sound economics.
I think I have said enough on that point. If the minister has no further questions, I shall now turn aside to deal with the question of the hon. member for Cape Breton South before we lose track of him. The hon. member asked in effect: If the government creates through the Bank of Canada a one dollar bill which gives a claim to a bushel of wheat, how can the government create the one dollar bill giving that claim when the government does not possess the bushel of wheat?
Well, the bank of Montreal and every other chartered bank in Canada were doing that thing for scores of years. They were able to do it; they are able to do it now. When the dominion government created a one dollar bill under the Finance Act of 1914 the dominion did it; they do it now through the Bank of Canada, and that bill is a claim to a dollar's worth of fish, or a dollar's worth of coal-


Clarence Gillis: Then there is no necessity to change, if they are already doing it.


John Horne Blackmore: I am merely answering the hon. member's question.


Clarence Gillis: That is not answering it. The hon. member's argument is they are doing it and have been doing it. My understanding of his argument was that he desires a change whereby the government would take over the control of the currency of the country, based on the productive capacity of the country, and issue sufficient credit to keep things moving, as it were.


John Horne Blackmore: To effect exchanges.


Clarence Gillis: My question is, if your tickets are based on the productive capacity of the country, you still have no power to move those who control private enterprise as it is now; they are still in a position to keep the people at poverty level and keep the government in the position where they do not have anything to issue tickets against. As I see it, you must take out of the hands of private enterprise the machinery of production so that you can work your credits and the machinery of production in coordination; you must have control over that.


John Horne Blackmore: No. You exercise a certain amount of control over industry in this way: In the first place the power of legal tender which the government possesses enables the government to create a credit instrument which is a claim to the production of any
LMr. Blackmora.]
productive enterprise under the jurisdiction of that government. That is a principle which cannot be gainsaid. That is point No. 1. It matters not who owns the productive enterprise.
Point No. 2 is: Any industry is in business for a profit. It does not do an industry, say a coal-mining company, any good to own a coal mine if it cannot produce coal and sell it. The result is that the all-important matters to the coal business are markets and price. When the government creates a dollar bill it creates the means of buying the coal, providing a market, also the means of establishing price.


An hon. MEMBER:: Will the-


John Horne Blackmore: May I ask hon. members not to divert me from my discussion any more at the present time. I will go into this with the greatest detail, but I should like to finish the speech I am giving and then answer questions. It is not that I have any doubt of the soundness of what I advocate-


John Ritchie MacNicol: You are thoroughly convinced yourself.


John Horne Blackmore: Utterly, and I think by reference to the principles and practice to-day I can establish the soundness of what I have said.
I was saying that the amount of money that the government can create depends on the goods-and-services-producing-and-consum-ing-power of the country over which the government has jurisdiction.


James Lorimer Ilsley: That is a pretty indefinite criterion.


John Horne Blackmore: You cannot put it any other way; it is a general principle. If you had opportunity to go into details you would find it completely sound. I held that in the speech which I gave on March 8, 1938, when I moved a vote of want of confidence in the government. I merely recall that to show that our concept is permanent and stable. We have never advocated and are not advocating the creation of more money than the goods and services of the country justify; not enough to cause inflation.


James Lorimer Ilsley: If the social credit party is not against borrowing and is not against taxing and is not against private ownership, then the difference between the social credit party and the government comes down to this, just a difference in judgment as to how much money should be issued from time to time.


John Horne Blackmore: The minister is coming very close to it. The first great difference between the social credit concept and the gov-

War Appropriation-Finance
ernment concept is this: social credit says that all the money in the state, all that it is possible to create, fundamentally is the property of the people in the state and should be owned by the government to be used for the welfare of the state.


James Lorimer Ilsley: So do we. Of course the
monetary policy should be the policy that is in the interest of the welfare of the state. There is no difference between the social credit party and the government there.


John Horne Blackmore: Only that the social credit party says that new money should be
issued as a clear asset to the state, should be a definite addition to the revenues of the state.


Joseph William Noseworthy: Even the Conservatives did that.


John Horne Blackmore: I am not saying they did not.


James Lorimer Ilsley: What does that mean?


John Horne Blackmore: Take as an illustration the $26,000,000 we talked of last night. In the last war $26,000,000 of new money was created outright by the Department of Finance, and spent, just as though it had been borrowed or as though it had been taxed. The result was the $26,000,000 was definitely added to the revenue of the country, but it was revenue which did not entail a tax on the people and did not create a debt which would go on through generations.


James Lorimer Ilsley: The reason why the hon. gentleman takes that $26,000,000 is that at that time there was a gold standard, which was departed from to the extent that that $26,000,000 was created. To-day there is no gold standard, and to the extent that we borrow from the Bank of Canada, as we do to a limited extent, are we not doing exactly what that government did when it issued the $26,000,000?


John Horne Blackmore: I think you are going into debt.


James Lorimer Ilsley: We are not going into debt when we borrow from the Bank of Canada because we are the Bank of Canada. Therefore, the difference between the hon. gentleman and myself comes down to this, does it not, merely a matter of judgment as to how far we should go in borrowing from the Bank of Canada?


John Horne Blackmore: I think so.


James Lorimer Ilsley: I think the hon. gentleman does not say we should go the whole length. He does not say we should have borrowed $1,000,000,000 in 1940 and $2,000,000,000 in
1941 and $3,000,000,000 in 1942. He says now he does not mean that, and his party does not mean that. He believes we should go on borrowing otherwise than from the Bank of Canada, which is not borrowing at all but which is the creation of money. He says some money should be created, so the issue seems to have become just a matter of judgment as to degree. That is a very small issue, is it not?


John Horne Blackmore: The minister really should be on the other side of the house.


James Lorimer Ilsley: I was going to suggest that perhaps we could isolate these other people a little more, and the hon. gentleman might join us.


John Horne Blackmore: There is just one point that needs to be stressed right here. Of course this is just on the first fundamental principle of social credit. There are three great principles. The first is the creation of money. The second is the just price, and the government is far, far away from us on that. The third is a policy of financing consumption, and the government is a considerable distance from us on that; in fact it is far away from us on that.


James Lorimer Ilsley: What was the first one?


John Horne Blackmore: The first one is the creation of money.


James Lorimer Ilsley: I think that is reduced to a difference of opinion as to amount. The second one was the just price. That is a matter of a difference of opinion as to what is a just price. The hon. gentleman is advocating high prices all the time. There is nothing very difficult about that. He has a great many friends outside his own party on that. Then the third one was a subsidy to consumers. Well, there again there is nothing very fundamental about that, unless he means that there should be a general subsidy of so much to all consumers, regardless of their need, which I do not believe would be a rational policy.


John Horne Blackmore: It may come ultimately. Just to keep the record straight, let us put it in this way. The government's policy, if I interpret it aright as I have listened to it, has been to raise all that can be raised by taxation.


James Lorimer Ilsley: Absolutely.


John Horne Blackmore: And all that is possible by borrowing.


James Lorimer Ilsley: Yes.
War Appropriation

Finance


John Horne Blackmore: Whether or not the government creates any money in addition, I do not know. Social credit goes at it from the other angle. Social credit will say, create all that it is safe to create, and then-


John Ritchie MacNicol: Is that not a matter of judgment, too?


John Horne Blackmore: Yes.


James Lorimer Ilsley: We believe it would be quite unsafe to go any further than we have gone, in view of the danger of inflation. We do not believe we could control inflation by our price-ceiling policy if we went much further in the issue of money, because it would burst the price ceiling. If the price ceiling, by some miracle, should hold, then it would mean the indefinite continuance of the price ceiling after the war, because there would be such a volume of bank credit or currency or both that the removal of the price ceiling would be impossible, because prices would soar so desperately.


Richard Burpee Hanson: The whole theory means inflation; it cannot mean anything else.


James Lorimer Ilsley: The hon. gentleman denies that his policy means inflation. We argue and believe that it does, if it goes much beyond what we are doing anyway, or probably if it goes at all beyond what we are doing anyway. That is what we believe. We get the best advice we can; we exercise the best judgment we can, and our judgment tells us that we want to withdraw purchasing power from the consumers of this country. We want desperately to do that, because of the terrific upward pressure on the price level if we do not.


John Horne Blackmore: I appreciate the minister's position, and I sympathize with him.


James Lorimer Ilsley: Excuse me; there is just one more thing. We think the importance of the objective is so great that it is worth paying a price for it, a price we do not like; that, is, the increase of internal debt and the increased interest burden on the people. While that does not impoverish the country, because it is merely the payment of money from one set of Canadians to another set of Canadians, either in this generation or in future generations, we do not think that is a desirable thing to do. But we are so much impressed with the dangers of inflation, and with the inevitability of inflation if we depart from the policy that we are following, that we are prepared to pay the price by increasing the interest burden.


John Horne Blackmore: I think the minister
has put it very well.
I wish to go and discuss the question of inflation. It is quite clear, is it not that the whole discussion is going to centre round what constitutes inflation?


James Lorimer Ilsley: No.


John Horne Blackmore: We have pretty well
reached that point, have we not?


Joseph William Noseworthy: That also is a matter of opinion.


James Lorimer Ilsley: What constitutes inflation is one point as to which there should not be any disagreement.


John Horne Blackmore: The minister would agree, I think, that it comes about as a result of the scarcity of goods as compared with the amount of money in circulation?


James Lorimer Ilsley: I mean an increase in prices due to the issuance of money.


John Horne Blackmore: Would it not be just as true to say inflation is an increase in price due to the fact that there are less goods than there is money?


James Lorimer Ilsley: The hon. gentleman is not logical there; he is ascribing a reason which may be contentious. I thought he was dealing with a definition. I thought he was attempting to describe inflation. I do not think there is any difference between us on that.


John Horne Blackmore: There is just this difference. There has been, for a considerable length of time, propaganda going out through the banks in an effort to convey to people the idea that if the government should print a one dollar bill, that is inflation. It is not inflation at all unless there is a rise in price. What we need to do all over the continent of north America in this generation is to get definitely in mind the fact that there is no inflation unless there is a rise in price, and a rise in price does not necessarily occur unless there is a shortage of goods. Once that is granted we are on a basis from which we can reason, and we will go forward during the rest of the period on that basis.
The important thing in dealing with inflation is first of all to increase your production, both in amount and in variety. The next thing is to keep your price down, perhaps by means other than price ceilings, though the price ceiling is one way of keeping prices down. Do I make that quite clear, and does the minister agree with me there?


Mr. FURNISS:: What if you have not
enough men to create the goods?

War Appropriation-Finance


The ACTING CHAIRMAN (Mr. Bradette):: The hon. gentleman has now spoken for forty minutes, and in addition I have allowed him twenty-five minutes for answering questions and for interruptions.


John George Diefenbaker: 
James Lorimer Ilsley: With respect to value, does the hon. member mean the value to the importer or to the consumer?


John George Diefenbaker: To the importer. If the minister would answer the question I have already asked, I would ask two or three more arising from his answers. I suggest we ought to have that information now.

War Appropriation-Finance


James Lorimer Ilsley: I do not have it here. It would take until Monday to get all this information.


John George Diefenbaker: Surely the minister is in a position to inform the committee upon what he bases his expenditure for the next year at $50,000,000, in connection with subsidies?	.


James Lorimer Ilsley: I made it clear that it was possible to make an estimate, but I also pointed out that this $50,000,000 is not a close estimate. There is no way of knowing.


John George Diefenbaker: That is just the point I am making. If you go into the United States you find that economists over there say that during the present year Canada will have to expend $150,000,000 or possibly [DOT] more than that if it intends to uphold its price ceiling.


James Lorimer Ilsley: How do they know?


John George Diefenbaker: The minister himself cannot give us any indication. He says the basis of experience up to the present time-


James Lorimer Ilsley: Yes, I say that.


John George Diefenbaker: -is not sufficient to say to the house and to the country what the expenditures will be during the coming year.


James Lorimer Ilsley: That is correct; I do not know.


John George Diefenbaker: Can the minister tell us now how much would be expended in settlement of the claims at present before the department?


James Lorimer Ilsley: I can get it, but not in fifteen minutes.


John George Diefenbaker: I asked the question three or four days ago.


James Lorimer Ilsley: Not that question.


John George Diefenbaker: Yes, on the order paper; and it was stood over. I asked the question on June 2, and the Minister of Finance said that it should stand over and is still unanswered. That is one piece of information which the committee has a right to expect, and which it must have if there is to be an intelligent discussion respecting the operation of subsidies.


John Horne Blackmore: Would the hon. member permit a question?


John George Diefenbaker: 
James Lorimer Ilsley: I did not say I invented it.


John George Diefenbaker: But the minister left the impression that this was his own scheme, and that any criticism of it was answered by the fact that it had been adopted by the United States.
The Baruch scheme sets out certain things which must be done in order to make the scheme a success. He says that prices, rents, wages, commission fees and interest rates-in short the price of every item of goods or services should not be permitted to rise above the maximum of that date. They should fluctuate below this ceiling.


James Lorimer Ilsley: Then our scheme is not the
same as the Baruch scheme.


John George Diefenbaker: Just a moment;
I was coming to that. Everything was adopted, with the exception of that part relating to interest rates. Would the minister explain why that particular part of the scheme was not followed?


James Lorimer Ilsley: Does the hon. member want an answer now?


John George Diefenbaker: Yes.


James Lorimer Ilsley: The reason is that the risk
varies so greatly that we did not think we could put a price ceiling on it. Money is worth 6 per cent when it is lent on one class of risk and only 3 per cent when it is lent on another. You cannot do that unless you made it 10 per cent, 24 per cent or something like that. You could have a ceiling such as that, but it would completely prevent lending in many places where lending should take place. I may say that the matter was not overlooked.


John George Diefenbaker: Generally speaking, I think the discussion this afternoon has been far removed from the item before the committee. I believe it was suggested by the minister last November that managerial

War Appropriation-Finance
andi executive salaries, directors fees, et cetera, would be controlled. Have they been controlled?


James Lorimer Ilsley: They certainly have.


John George Diefenbaker: Is there complete
control in that regard?


James Lorimer Ilsley: As complete as we can make it without a terrible upset. Nothing has given us more trouble in our ceiling policy than our determination to control salaries. The hon. member heard what was said last night by the hon. member for St. Paul's (Mr. Ross). We have set up a salary controller and provided a board headed by Mr. Justice Hyndman to advise him. We have put an enormous amount of work on drafting orders in council and amendments to orders in council for the purpose of controlling salaries.


John George Diefenbaker: What is the control over directors' fees?


James Lorimer Ilsley: The order in council reads:
Unless otherwise permitted by paragraphs 3, 4 and 5 hereof, no employer shall, on or after November 7, 1941:
(c) pay fees to a director of a company at a rate in excess of the rate of fees paid to such director in the twelve months ending November 6,	1941, provided, however, that a newly
appointed director of a company may be paid fees at the same rate as that paid to other directors of the said company during the twelve months ending November 6, 1941, and the payment thereof to such newly appointed director shall not be regarded as an increase in the salary of the said director for the purposes of this order.


John George Diefenbaker: Can the minister give an estimate of how much has been expended to date for subsidies, assuming that all claims that have been filed are paid in full? Surely that estimate could be given within one or two million dollars.


James Lorimer Ilsley: 
John George Diefenbaker: Yes.


James Lorimer Ilsley: It would be most unsatisfactory to make an estimate.


John George Diefenbaker: Can the minister give one within a million dollars?


James Lorimer Ilsley: The secretary tells me that it would be less than a million dollars.


Richard Burpee Hanson: Cotton
goods are under the price ceiling, but we all
44561-t07i
know that the cotton companies are faced with having to replace their stocks of raw cotton at greatly increased prices. I am not certain, but I believe cotton has gone up to 18 cents a pound in the United States.


James Lorimer Ilsley: That much at least.


Richard Burpee Hanson: This means that the cost is doubled as compared with the cost of cotton that was fabricated before the ceiling went into effect. Subsidies on this will run into the millions.


James Lorimer Ilsley: It depends upon the arrangements made with the cotton companies.


Richard Burpee Hanson: These companies import millions of pounds every year, and the consumption of cotton textiles will certainly not decrease. The needs for the army may be decreased slightly if the summer uniforms have been. Will not this one item run into millions of dollars?


James Lorimer Ilsley: If we had to pay the difference between the present cost of cotton and that paid for goods sold during the basic period, it would amount to a considerable amount of money. If the hon. gentleman will look up the speech I made on subsidies, which I mentioned last night, he will see that there is a limiting factor. We will not subsidize a company into the excess profits tax category. This means that the Canadian companies will have to bear a large part of the additional cost.


Richard Burpee Hanson: The intention is to squeeze them. I do not know whether that is the right word to use.


James Lorimer Ilsley: That is the word we use.


Richard Burpee Hanson: That means they will have to reduce production.


James Lorimer Ilsley: Oh, no; their profits will be reduced.


Richard Burpee Hanson: This resolution has been before the committee for a long time, and I am going to suggest that the resolution be reported in order to permit the minister to introduce his bill. However, the minister should give us an undertaking that on the committee stage of the bill, or when any estimates are before us, full opportunity will be permitted hon. members to ask questions. This would be particularly necessary in connection with those departments which have not been covered fully, such as the Department of Labour which has just been touched upon in this series of interrogatories. I hope the committee will adopt this suggestion.
War Appropriation-Finance


James Lorimer Ilsley: I am much obliged for the suggestion, and I will give the undertaking asked for. If any member wishes to ask any question on the bill, he may.


John Ritchie MacNicol: On any one of these departments?


James Lorimer Ilsley: He is entitled to that privilege in any event.


Angus MacInnis: He is entitled to much more than that.


John Horne Blackmore: I should like to support the leader of the opposition's proposal, provided we are given complete liberty to discuss these matters. I think the matter we have been discussing is the most vital matter that has been discussed.


James Lorimer Ilsley: If I understand the rules correctly, hon. members will have the right, under the section of the bill which grants $2,000,-000,000-it is really $1,500,000,000-to enable the government to defray the expenses of the war, to discuss all the expenses of the war.


Richard Burpee Hanson: The only limitation that there might be on that is the interpretation which the chairman of the committee of the whole might place upon it. The minister knows that at times he is rather restrictive. I think the minister ought to undertake that there will be full discussion on the committee stage of the bill.


James Lorimer Ilsley: I will undertake that. I do not see how the chairman could rule otherwise under that section.


John Ritchie MacNicol: Let me be clear. Later on, when a bill is before the house, if I want to ask a question under the item, surveys and engineering branch, shall I be at liberty to ask a question about any amount mentioned under aids?


James Lorimer Ilsley: Is the hon. member talking about non-war estimates?


John Ritchie MacNicol: On the war appropriation.


James Lorimer Ilsley: On anything in the war appropriations, he may ask.


Angus MacInnis: I admire the generosity of the leader of the opposition and the leader of the New Democracy group. But my hon. friends monopolized most of the time available for discussion this afternoon. The hon. member for Cape Breton South has been waiting here for a number of days with something which he wishes to raise, and, being a man of polite instincts, he always allowed other people to get ahead of him. If we could continue for about ten minutes this afternoon and allow 
him to introduce the point he has in mind, we would be glad to let the matter go as was suggested by the leader of the opposition.


Richard Burpee Hanson: Do not attribute to me any time killing. I have not killed any time this afternoon. I think the Prime Minister took up all the time on other matters. But if any hon. gentleman objects to this procedure, he certainly has the right to do so, in order to hold this up. I was not speaking for anybody but my own group.


James Lorimer Ilsley: With regard to anyone getting ahead of the hon. member for Cape Breton South, I never heard of anyone that did. I am afraid that he may introduce something which requires some answer.


Mr. QUELCH:: Some of us are supposed to leave at six o'clock to meet some people outside.


Clarence Gillis: I do not wish to detain the committee. This matter which I have to bring to the attention of the minister has to do with the administration of the fuel control board, which comes under the wartime prices and trade board, and a portion of this appropriation is for their administration. I will be brief and explicit.
I think that organization, the fuel control board particularly, has wholly fallen down on the job and there is a serious situation developing in Canada as regards fuel. The Minister of Munitions and Supply (Mr. Howe) made the statement to the house that oil for domestic purposes is to be curtailed and that consumers of oil have to tighten their belts.


Richard Burpee Hanson: That was a little premature, was it not?


Clarence Gillis: Then Mr. Stewart, in a statement on June 3, points out that the coal situation in the United States is serious and that Canada depends for 60 per cent of her consumption on the United States. There is a long statement in the Ottawa Journal of May 4, to the effect that possibly coal will have to be rationed. Coal is an essential war commodity. The situation has become so serious in Britain that they have nationalized the industry and taken it over. In the face of the fuel controller making such statements, and the Minister of Munitions and Supply stressing the seriousness of the situation with respect to oil, we find in the east and in the west coal mines being closed or put on short time. The public is wondering about this.

War Appropriation-Finance
What I should like to bring specifically to the minister's attention is this statement released from Nanaimo, British Columbia, and printed in the Canadian Tribune of this week. I am going to read it for the minister's information, because in the back of my mind for the past two years I have had the definite belief that most of the trouble we have experienced in the mining industry was organized behind the scenes by an unseen influence, and the miners have suffered the consequences:
Declaring he had uncovered a situation that was "unbelievable until he investigated," John Stokaluk, District 18 vice-president of the U.M.W.A., charged at a meeting of several hundred coal miners here that oil interests were trying to slow production in Vancouver island coal mines.
Stokaluk flew to Nanaimo following walkouts of workers in two mines. The miners' action was taken after crude unsigned pencilled notices had been posted up and Stokaluk made the direct charge that certain members of the union local were being paid to stir up trouble.
I believe that, because I have gone through similar situations.
"There is plenty of coal," he said, "but the oil interests are trying to show the people of Canada and the government that this coming winter there will be a shortage of coal and miners.
"The more strikes and shortages we have the better for the oil interests," he added.
Stokaluk told the meeting that provided the miners' legitimate grievances were properly adjusted, Vancouver island mines can supply 800.000 tons of coal a year, sufficient to meet market requirements.
Demanding immediate action to settle these legitimate grievances, he declared "that the union would fight any unpatriotic efforts, oil or other interests might make to interfere with coal production.
I know that during the past two years there have been serious upheavals in the mining industry in Nova Scotia; and, knowing that situation very well, I have time and time again come to the conclusion that interests other than the miners were the cause of 75 per cent of the trouble which has taken place since the outbreak of war. I bring this to the minister's attention specifically. I believe that the charges made by Stokaluk in Nanaimo, should be examined by this government, and examined immediately, either through the fuel control board or through someone else. If it is true that the oil interests of this country, thinking in terms of after the war, are deliberately sabotaging the coal industry and preventing its expansion at this time in order that they may build up in Canada a market for oil in the aftermath of this war, and a continuation and expansion of their own industry, it is time that we found out.
These are specific charges as carried in the public press. If they are true in respect of British Columbia, they are true of other parts of Canada. A few days ago the executive board of the miners of Nova Scotia was notified by the heads of the coal companies that from now on the mines of Nova Scotia would be on short time. It is only a few months ago that the press carried full-page statements from the same coal company, when there was an upheaval there which was not, in my opinion, organized by the men, characterizing these men as saboteurs. To-day the companies themselves are sabotaging the industry, and it is time that the people of Canada, through the medium of their responsible elected officials, came to an understanding as far as this industry is concerned.


James Lorimer Ilsley: Well, Mr. Chairman, the hon. gentleman says that the companies are sabotaging the industry, and, he fears, at the instance of their competitors, the oil people.


Richard Burpee Hanson: I do not think that follows.


Clarence Gillis: That is the direct charge made by district 18 vice-president of the United Mine Workers' Association in British Columbia. He said that after investigation "he had uncovered a situation that was unbelievable", and he charged directly that the oil interests of Canada are sabotaging the mines. John Stokaluk has information of that kind at his disposal; that information should come to the government and something should be done about it.


James Lorimer Ilsley: May I say right now that if he will forward his information, it certainly will be investigated. I am doubtful whether there is anything definite about that. On what occasion did he make his speech, or in what form?


Clarence Gillis: Apparently, according to this statement, he was summoned to Nanaimo, where the mines are on short time or idle. He flew there and, addressing a mass meeting of the miners, he makes these charges. But what I am concerned about is the possibility of rationing fuel this winter. There is no oil available. The mines east and west are on short time, while the fuel controller, Mr. Stewart, is warning the people of central Canada that coal will have to be rationed. It is about time we found out why mines should be idle in such a situation.
Mr. ILSLEY; I will bring the remarks of my hon. friend to the attention of the coal administrator, and if the gentleman in Vancouver has definite information, the matter will be taken account of, if the charges and
The King's Birthday

statements are definite enough, and are based on anything except hearsay or surmise. I do not know much about the coal situation, but I am told there is a transportation bottleneck in regard to coal. That may or may not be so. I shall have to get further information.


John Horne Blackmore: I should like to know whether such matters as these, which affect inflation and price ceiling, may be discussed later on. Will it be in order to deal with these questions when we come to the discussion which the leader of the opposition has indicated?


James Lorimer Ilsley: Yes. I want to make it clear that the resolution about to be reported is the resolution as amended. There was a $500,000,000 reduction carried one night.
Resolution as amended reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 95, for granting to his majesty aid for national defence and security.
Motion agreed to and bill read the first time.
On motion of Mr. Crerar the house adjourned at 6.16 p.m.
Monday, June 8, 1942